61964J0032

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COMMON CUSTOMS TARIFF - ESTABLISHMENT - PRODUCTS IN LIST G - SILK - ITALIAN MARKET - ISOLATION - SUPPORT FOR THE INTRODUCTION OF PROTECTIVE MEASURES - NON-BINDING NATURE - NO DEROGATION FROM THE EEC TREATY - POWERS AND OBLIGATIONS OF THE COMMISSION

( EEC TREATY, ARTICLES 14, 15 AND 226 )

PROTOCOL NO VIII, ARTICLE 2 OF THE AGREEMENT OF 2 MARCH 1960 REGARDING THE ESTABLISHMENT OF A PART OF THE COMMON CUSTOMS TARIFF CONCERNING PRODUCTS IN LIST G ( OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES OF 20 DECEMBER 1960, P . 1855 )

ARTICLE 2 OF PROTOCOL NO VIII LAYS DOWN A POLICY WHICH THE COMMISSION MUST TAKE INTO ACCOUNT WITHOUT BEING BOUND BY ANY SPECIFIC LEGAL OBLIGATION . AS THIS PROVISION HAS NOT LAID DOWN ANY POSITIVE MEASURE OF LAW IT NEITHER INVOLVES A DEPARTURE FROM ARTICLE 14 OR 15 OF THE EEC TREATY, NOR SUBSTITUTES FOR THEM A SPECIAL RULE CONCERNING ITALIAN SILK PRODUCTS . MOREOVER, ARTICLE 2 OF PROTOCOL NO VIII INVOLVES NO DEPARTURE FROM ARTICLE 226 OF THE EEC TREATY . WHILE EXPRESSING ' SUPPORT FOR THE APPLICATION OF ARTICLE 226 OF THE TREATY ', THE MEMBER STATES INTENDED TO REMAIN WITHIN THE ACTUAL FRAMEWORK OF THAT ARTICLE AND LEAVE INTACT THE DISCRETIONARY POWER VESTED BY IT IN THE COMMISSION .

IN CASE 32/64

GOVERNMENT OF THE ITALIAN REPUBLIC, REPRESENTED BY ADOLFO MARESCA, MINISTER PLENIPOTENTIARY, DEPUTY HEAD OF THE DIPLOMATIC LEGAL DEPARTMENT OF THE MINISTRY OF FOREIGN AFFAIRS, ACTING AS AGENT, ASSISTED BY RENATO CARAFA, DEPUTY STATE ADVOCATE - GENERAL, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY,

APPLICANT,

V

COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY, REPRESENTED BY CESARE MAESTRIPIERI, LEGAL ADVISER OF THE EUROPEAN EXECUTIVES, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF H . MANZANARES, SECRETARY OF THE LEGAL DEPARTMENT OF THE EUROPEAN EXECUTIVES, 2 PLACE DE METZ,

DEFENDANT,

APPLICATION FOR THE ANNULMENT OF ARTICLE 3 OF THE DECISION OF THE COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY OF 22 MAY 1964 PUBLISHED IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES OF 4 JUNE 1964, PP . 1373 ET SEQ ., TO THE EXTENT THAT THE AUTHORIZATION GRANTED TO THE ITALIAN REPUBLIC DETERMINES, BY WAY OF PROTECTIVE MEASURES VALID UNTIL 25 FEBRUARY 1965, CERTAIN CUSTOMS DUTIES ON THE PRODUCTION OF VARIOUS SILK-BASED PRODUCTS APPEARING IN CHAPTER 50 OF THE ITALIAN CUSTOMS TARIFF,

P.372

THE APPLICATION BROUGHT BY THE GOVERNMENT OF THE ITALIAN REPUBLIC AGAINST THE DECISION OF THE EEC COMMISSION OF 22 MAY 1964 AUTHORIZING VARIOUS PROTECTIVE MEASURES SEEKS, FIRST, SUSPENSION OF THE OPERATION OF ARTICLE 3 OF THE SAID DECISION AND, SECONDLY, ITS ANNULMENT .

THE APPLICATION TO SUSPEND THE OPERATION OF THE CONTESTED DECISION

ARTICLE 3 OF THE ABOVE DECISION AUTHORIZES THE ITALIAN REPUBLIC FOR A PERIOD OF TEN MONTHS TO LEVY CERTAIN CUSTOMS DUTIES, THE AMOUNT OF WHICH IT FIXES FOR ITSELF, ON THE IMPORT OF VARIOUS WOVEN SILK FABRICS .

THE APPLICATION TO SUSPEND THE OPERATION OF THIS PROVISION IS BASED UPON THE IRREPARABLE NATURE OF THE DAMAGE CAUSED BY THIS PROVISION TO ITALIAN SERICULTURE AND THE ITALIAN SILK INDUSTRY .

ACCORDING TO ARTICLE 83(3 ) OF THE RULES OF PROCEDURE AN APPLICATION TO SUSPEND THE OPERATION OF ANY MEASURE ADOPTED BY AN INSTITUTION ' SHALL BE MADE BY A SEPARATE DOCUMENT '.

THIS HAS NOT BEEN DONE IN THE PRESENT CASE .

BY TERMS OF A SINGLE DOCUMENT THE COURT IS REQUESTED ' AFTER MAKING AN ORDER TO SUSPEND THE OPERATION OF THE DECISION IN QUESTION ' TO ' ANNUL ARTICLE 3 THEREOF '.

SINCE THIS REQUEST WAS NOT SUBMITTED IN A SEPARATE DOCUMENT BUT IN THE APPLICATION FOR ANNULMENT ITSELF, INTO WHICH IT WAS INCORPORATED AND FROM WHICH IT CANNOT BE SEPARATED, IT MUST BE DISMISSED AS INADMISSIBLE FOR FAILURE TO OBSERVE THE ESSENTIAL REQUIREMENTS OF ARTICLE 83(3 ) OF THE RULES OF PROCEDURE .

MOREOVER, THE APPLICATION TO SUSPEND THE OPERATION OF THE DECISION HAS BECOME POINTLESS BY VIRTUE OF THE PRESENT JUDGMENT ON THE MAIN ISSUE .

P.373

THE APPLICATION FOR ANNULMENT

( A ) INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT .

( A ) INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT

IT IS COMPLAINED THAT THE REASONS STATED FOR THE DECISION FIXING THE PROTECTIVE MEASURES ONLY TAKE ACCOUNT OF THE COST OF THE RAW MATERIAL AND NOT THE OTHER FACTORS INVOLVED IN THE COST PRICE OF THE FABRIC, IN PARTICULAR THE OVERHEADS .

IT CAN BE SEEN FROM THE DECISION, HOWEVER, THAT THE REASONS GIVEN INCLUDE AMPLE EXPLANATIONS FOR THE LIMITATION ON THE CUSTOMS DUTIES AUTHORIZED IN PARTICULAR AS REGARDS THE RATIONALIZATION OF THE PRODUCTION OF RAW SILK AND THE PRICES BOTH OF THE LATTER AND OF WOVEN SILK FABRICS .

THESE REASONS APPEAR SUFFICIENT TO JUSTIFY THE OPERATIVE PART OF THE DECISION .

ALTHOUGH THE COMMISSION IS CRITICIZED FOR NOT HAVING CONSIDERED OTHER FACTORS WHICH MIGHT HAVE LED IT TO TAKE A DIFFERENT DECISION, THIS COMPLAINT IS NOT ONE WHICH COULD APPLY TO THE REASONS FOR THE DECISION BUT RATHER CONCERNS A CONSIDERATION OF THE SUBSTANCE OF THE DECISION .

THIS SUBMISSION MUST THEREFORE BE DISMISSED .

( B ) INFRINGEMENT OF THE TREATY

THE ITALIAN REPUBLIC HAVING, BY VIRTUE OF PROTOCOL NO VIII ANNEXED TO THE AGREEMENT OF 2 MARCH 1960, REQUESTED AUTHORIZATION TO TAKE PROTECTIVE MEASURES WITHIN THE MEANING OF ARTICLE 226, THE COMMISSION, BY THE TERMS OF THE CONTESTED DECISION, FIXED VARIOUS CUSTOMS DUTIES ON WOVEN SILK FABRICS TO BE IMPOSED BY THE APPLICANT, BUT CONSIDERED BY THAT PARTY TO BE, FIRST, AN INFRINGEMENT OF ARTICLE 2 OF THE SAID PROTOCOL AND, SECONDLY, CONTRARY TO ARTICLES 14(2 ) AND ( 3 ) AND 15(1 ) AND ( 2 ) OF THE TREATY AND, FINALLY, VITIATED BY MISUSE OF POWERS .

IN PARTICULAR, IN SUPPORT OF THESE VARIOUS ARGUMENTS, IT COMPLAINS THAT THE COMMISSION WRONGLY RESTRICTED THE PROTECTION REQUESTED TO THE DIFFERENCE BETWEEN THE ITALIAN AND JAPANESE PRICES FOR RAW MATERIALS ALONE BY CALCULATING THE AVERAGE OF THESE PRICES OVER ONLY ONE YEAR AND BY FAILING TO TAKE INTO ACCOUNT THE EFFECT OF THE OVERHEADS ON THE ITALIAN FINISHED PRODUCT AND OF THE PROTECTION DUE TO THE PROCESSING INDUSTRY ITSELF .

THE INFRINGEMENT OF ARTICLE 2 OF PROTOCOL NO VIII

ACCORDING TO THE TERMS OF ARTICLE 2 OF PROTOCOL NO VIII ANNEXED TO THE AGREEMENT OF 2 MARCH 1960 ' THE MEMBER STATES SUPPORT THE APPLICATION OF ARTICLE 226 OF THE TREATY ENTAILING THE ISOLATION, FOR A PERIOD OF SIX YEARS FROM THE SIGNING OF THE PRESENT PROTOCOL, OF THE ITALIAN MARKET IN THOSE PRODUCTS APPEARING IN CHAPTER 50 OF THE COMMON CUSTOMS TARIFF FOR WHICH SUCH ISOLATION APPEARS NECESSARY, BOTH AS REGARDS OTHER MEMBER STATES AND THIRD COUNTRIES '.

FAR FROM LAYING DOWN A MANDATORY RULE THIS PROVISION IS A MERE EXPRESSION OF ' SUPPORT '.

THE DUTY OF THE COMMISSION WAS THUS TO ATTEMPT TO TAKE ACCOUNT OF THIS POLICY WITHOUT BEING BOUND BY ANY SPECIFIC LEGAL OBLIGATION .

CONSEQUENTLY, THE DECISION COULD NOT BE ANNULLED FOR INFRINGEMENT OF THE RULES OF LAW ALLEGEDLY LAID DOWN BY THE PROTOCOL IN QUESTION .

THE INFRINGEMENT OF ARTICLES 14(2 ) AND ( 3 ) AND 15(1 ) AND ( 2 ) OF THE TREATY

ARTICLES 14 AND 15 OF THE TREATY, WHICH LAY DOWN THE TIME-TABLE FOR THE REDUCTION OF THE CUSTOMS DUTIES AND THE POSSIBILITY OF MEMBER STATES ANTICIPATING THE REALIZATION OF THESE MEASURES, ARE NOT RELEVANT TO THIS CASE .

IT DOES NOT APPEAR FROM THE WRITTEN PROCEDURE OR THE HEARINGS THAT THESE ARTICLES WERE INFRINGED BY THE CONTESTED DECISION .

AS ARTICLE 2 OF PROTOCOL NO VIII DID NOT ENACT ANY POSITIVE MEASURE OF LAW IT COULD NEITHER HAVE RESULTED IN A DEPARTURE FROM THE ABOVEMENTIONED ARTICLES OF THE TREATY, NOR SUBSTITUTED FOR THEM A SPECIAL RULE CONCERNING ITALIAN SILK PRODUCTS .

MOREOVER, THE DEROGATIONS SOUGHT BY THE APPLICANT PREVENT IT FROM CLAIMING AN INFRINGEMENT OF THE VERY ARTICLES WHICH IT IS SPECIFICALLY TRYING TO AVOID .

THE CLAIM THAT THE COMMISSION ACTED ULTRA VIRES

IT APPEARS THAT THE COMMISSION IS BEING ACCUSED BY A SUBMISSION RELATING TO ULTRA VIRES ACTS OF HAVING MISUSED ITS POWERS .

ACCORDING TO THE APPLICANT THE COMMISSION SHOULD HAVE TAKEN INTO ACCOUNT THE POLICIES OUTLINED IN PROTOCOL NO VIII WHEN EXERCISING ITS POWERS UNDER ARTICLE 226 .

P.375

HOWEVER, ARTICLE 2 OF PROTOCOL NO VIII INVOLVES NO DEPARTURE FROM ARTICLE 226 .

ON THE CONTRARY, BY DECLARING THEREIN THAT THEY ' SUPPORT THE APPLICATION OF ARTICLE 226 OF THE TREATY ' THE MEMBER STATES INTENDED TO REMAIN WITHIN THE ACTUAL FRAMEWORK OF THAT ARTICLE .

MOREOVER, IT CANNOT BE MAINTAINED THAT THE COMMISSION MISUSED ITS POWERS BY FAILING TO TAKE THE SUPPORT IN QUESTION SUFFICIENTLY INTO ACCOUNT IN ITS ASSESSMENT IN APPLICATION OF ARTICLE 226 .

IN FACT, THE SUPPORT EXPRESSED FOR THE ISOLATION OF THE ITALIAN MARKET LEAVES INTACT THE DISCRETIONARY POWER VESTED IN THE COMMISSION UNDER ARTICLE 226 .

THIS DISCRETIONARY POWER IS ESPECIALLY EMPHASIZED IN SO FAR AS THE PROTOCOL REQUIRES THE ISOLATION TO APPEAR NECESSARY BOTH AS REGARDS OTHER MEMBER STATES AND THIRD COUNTRIES .

CONSEQUENTLY, THE COMMISSION, BEING REQUIRED TO OBSERVE THE LEGAL OBLIGATIONS OF ARTICLE 226 AND TO ATTEMPT TO TAKE INTO ACCOUNT THE SUPPORT EXPRESSED IN PROTOCOL NO VIII CAN ONLY BE CRITICIZED IN ITS ASSESSMENT OF THE ECONOMIC SITUATION OF THE ITALIAN PRODUCTS IN QUESTION IN THE CASE OF A SERIOUS FAILURE TO CARRY OUT THESE DUTIES .

THE FACT THAT IT CALCULATED THE AVERAGE REFERENCE PRICES OF THE RAW PRODUCT UPON THE BASIS OF 1963 ALONE DOES NOT CONSTITUTE SUCH A FAILURE, SINCE THIS METHOD OF CALCULATION INVOLVES A CONSIDERATION OF THE CONSIDERABLE INCREASE IN THE JAPANESE PRICE IN 1963 .

NOR DOES THE DECISION TO DISREGARD IN ITS CALCULATION OF THE CUSTOMS DUTIES AUTHORIZED AS PROTECTIVE MEASURES THE OVERHEADS INCURRED BY THE UNDERTAKINGS AND THE SPECIAL PROTECTION REQUIRED BY THE PROCESSING INDUSTRY CONSTITUTE SUCH A FAILURE .

PROTOCOL NO VIII IN FACT RECORDS THE ANXIETY OF MEMBER STATES TO PROTECT PRODUCTION OF THE RAW MATERIAL .

IN ARTICLE 4 THE MEMBER STATES AGREED TO RECONSIDER THE SITUATION AT THE END OF THE PERIOD OF SIX YEARS LAID DOWN IN ARTICLE 2 AND DECIDED THAT THE DUTY SHOULD THEN BE REIMPOSED WITHIN THE FRAMEWORK OF ARTICLE 28 IF AT THAT DATE THE COUNCIL FINDS ' THAT PRODUCTION OF RAW SILK IN ITALY HAS AT LEAST MAINTAINED ITS PRESENT LEVEL ( 840 METRIC TONS ) AND THAT FOR COMPARABLE QUALITIES THE PRICE OF THIS PRODUCT IS NO HIGHER THAN THE WORLD C.I.F . PRICE AT COMMUNITY PORT PLUS 10 PER CENT '.

THE AIM OF PROTOCOL NO VIII WAS THUS CLOSELY LINKED TO THE PRODUCTION OF RAW SILK AND IN DIRECTING THE PROTECTIVE MEASURE TOWARDS THIS OBJECTIVE THE COMMISSION DID NOT FAIL TO CARRY OUT THE ABOVEMENTIONED DUTIES .

THUS, IT CANNOT BE CLAIMED THAT THE COMMISSION REFUSED TO ESTABLISH EITHER A SPECIAL PROTECTION TAKING ACCOUNT OF THE OVERHEADS INCURRED BY THE UNDERTAKINGS OR ADDITIONAL PROTECTION FOR THE PROCESSING INDUSTRY .

MOREOVER, IT IS CLEAR FROM THE DOCUMENTS PRODUCED AT THE HEARING THAT DURING 1964, THE YEAR AFFECTED BY THE CONTESTED DECISION, AGGREGATE IMPORTS INTO ITALY OF WOVEN SILK FABRICS DECREASED PERCEPTIBLY IN QUANTITY AND VALUE .

ITALIAN EXPORTS IN 1964 APPEAR TO HAVE REMAINED AT A LEVEL COMPARABLE TO, IF NOT HIGHER THAN, THAT OF THE PRECEDING YEAR .

THUS, THE STATE OF THE MARKET AFTER THE CONTESTED DECISION WAS TAKEN DOES NOT REVEAL THAT IN AUTHORIZING THESE MEASURES THE COMMISSION COMMITTED ANY MAJOR ERROR OF JUDGMENT LIKELY TO HAVE SERIOUS CONSEQUENCES .

THIS SUBMISSION MUST THEREFORE BE DISMISSED .

UNDER THE TERMS OF ARTICLE 69(2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

THE APPLICANT HAS FAILED IN ITS SUBMISSIONS .

IT MUST THEREFORE BE ORDERED TO PAY THE COSTS .

THE COURT

HEREBY :

1 . DISMISSES AS INADMISSIBLE THE APPLICATION TO SUSPEND THE OPERATION OF THE DECISION, CONTAINED IN APPLICATION 32/64;

2 . DISMISSES APPLICATION 32/64 AS UNFOUNDED;

3 . ORDER THE APPLICANT TO PAY THE COSTS .