1. 

The action brought before the Court under Article 169 of the EEC Treaty by the Commission for a declaration that Ireland has failed to fulfil its obligations under the Treaty concerns the Community rules applicable to the circulation of new potatoes imported into the Community from Cyprus.

Under an Association Agreement concluded in 1973 between the Republic of Cyprus and the European Community (Official Journal L 133 of 21 May 1973, p. 2) the Republic of Cyprus benefited initially from annual tariff quotas, free of customs duties, in respect of imports of new potatoes into the United Kingdom, the annual tariff quota taking into account ‘the traditional United Kingdom imports from Cyprus’. Later, potatoes originating in Cyprus and imported into the Community were admitted at reduced rates of duties under the Common Customs Tariff, by virtue of a supplementary Protocol laying down certain provisions relating to trade in agricultural products between the European Economic Community and the Republic of Cyprus (Official Journal L 172 of 28 June 1978, pp. 3 and 11).

It appears from the documents in the case that until the entry into force on 1 March 1980 of the Community plant health system, the consequences of that Association Agreement had not been felt on the Irish potato market because of the national rules applicable in the matter until then. According to the Irish Government, large quantities of new potatoes were imported into Ireland from the summer of 1980 onwards. Since, according to the Irish Government, the national market has always been self-sufficient, if not slightly in surplus, the effect of the imports was to destabilize prices and to pose a serious threat to the income of the country's small potato growers.

It was in that context that an order of the Minister for Agriculture entitled ‘the Potatoes [Regulation of Import] Order’ (hereinafter referred to as ‘the Order’) entered into force in Ireland on 6 March 1981 and established a system of licences for the importation of potatoes into Ireland. Articles 3 and 4 of the Order read as follows :

Following a complaint received in April 1982 from an Irish importer who had been refused an import licence for new potatoes originating in Cyprus, the Commission decided to initiate the procedure laid down in Article 169 of the EEC Treaty on the ground that Ireland was applying that provision not merely to potatoes directly imported into Ireland from nonmember countries but also to those which had been in free circulation in another Member State before being imported into Ireland. On 1 August 1983, it formulated a reasoned opinion requesting Ireland to abolish the requirement that a licence be obtained for the importation of potatoes in free circulation in another Member State. In the statement of the reasons for its opinion, it reminded the Irish Government that it could apply to the Commission for an authorization under Article 115 of the EEC Treaty to exclude potatoes originating in nonmember countries from Community treatment and that the Commission would then verifv whether the conditions for the grant of the authorization were fulfilled. By a letter in reply to the reasoned opinion, dated 25 October 1983, Ireland maintained its standpoint, namely that the sole purpose of the Order was to give effect in Ireland to the true intention of the Community provisions. It also applied for retroactive authorization under Article 115 in respect of the matters complained of.

2. 

Although it is clear from the context outlined above that the Order was promulgated for the purpose of alleviating the harmful affects on the Irish market of imports of potatoes originating in Cyprus, it is however above all from the point of view of the principles of Community law that the case must be considered.

It is clear just from reading Articles 3 and 4 of the Irish Ministerial Order of 6 March 1981 that only potatoes produced in the Member States of the European Economic Community are excluded from the requirement to obtain a licence. The Commission rightly argues that the Order could be applied to all potatoes produced in nonmember countries. No distinction is made between products directly imported from a nonmember country and those which have already been imported into another Member State of the Community and in respect of which any customs duties or charges having equivalent effect which are payable have been levied in that State.

A common organization of the market has not yet been established for potatoes, notwithstanding the work carried out towards that end since at least 1976 (see Written Question No 1253/80 by Mr Blaney to the Commission of the European Communities and the answer given by Mr Gundelach on behalf of the Commission, Official Journal C 335 of 22 December 1980, p. 15). Consequently, in the absence of specific rules, potatoes are subject to the general rules of the Treaty regarding trade in goods. The Court has thus decided that

‘... Article 38 (1) provides that the common market shall extend to agriculture and trade in agricultural products, while paragraph (2) states that, save as otherwise provided in Articles 39 to 46, the rules laid down for the establishment of the common market shall apply to agricultural products.

Accordingly, following the end of the transitional period, the provisions of Articles 39 to 46 cannot be relied upon in justification of a unilateral derogation from the requirements of Article 34 of the Treaty, even in respect of an agricultural product for which no common organization of the market has yet been established.’ (judgment of 16 March 1977 in Case 68/76 Commission v France [1977] ECR 515, paragraphs 20 and 21 at p. 531) (my emphasis).

Articles 9 and 10 of the Treaty are therefore applicable to this case. Article 9 deals with the abolition of obstacles of a customs nature to imports and exports between the various Member States of the Community, provides for the adoption of a common customs tariff for trade with nonmember countries, and extends the application of Articles 12 to 17 and 30 to 37 of the Treaty to products which are in free circulation in Member States.

Article 10 (1) gives the following definition of products in free circulation :

‘Products coming from a third country shall be considered to be in free circulation in a Member State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that Member State, and if they have not benefited from a total or partial drawback of such duties or charges.’

In its judgment in Case 41/76 (judgment of 15 December 1976, Donckerwolcke v Procureur de la République [1976] ECR 1921, particularly paragraphs 14 to 18 at p. 1935), the Court had occasion to refer expressly to that definition.

The customs duties and charges referred to in Article 10 of the Treaty are either those contained in the Common Customs Tariff as regards relations with nonmember countries having no special elationship with the Community, or those which are the result of an agreement reducing the rates provided for in the Common Customs Tariff, such as the Agreement concluded with Cyprus in 1973, as later supplemented (Agreement and Supplementary Protocol of 1978, cited above; Council Regulation (EEC) No 3746/81 of 21 December 1981 laying down the arrangements applicable to trade with Cyprus beyond 31 December 1981, Official Journal L 374 of 30 December 1981, p. 4; Council Regulation (EEC) No 671/82 of 22 March 1982 opening, allocating and providing for the administration of a Community tariff quota for new potatoes ... originating in Cyprus (1982), Official Journal L 79 of 25 March 1972, p. 3; Council Regulation (EEC) No 1226/83 of 16 May 1983 replacing the aforementioned Regulation No 671/82, Official Journal L 131 of 20 May 1983, p. 3).

The Court has deduced from the total and definitive assimilation to products originating in the Member States of products which are in ‘free circulation’ that:

‘The result of this assimilation is that the provisions of Article 30 concerning the elimination of quantitative restrictions and all measures having equivalent effect, are applicable without distinction to products originating in the Community and to those which were put into free circulation in any one of the Member States, irrespective of the actual origin of these products.

Measures having an effect equivalent to quantitative restrictions prohibited by the Treaty include all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.

This provision precludes the application to intra-Community trade of a national provision which requires, even purely as a formality, import licences or any other similar procedure.’ (judgment in Case 41/76 Donckerwolcke cited above, paragraphs 18 to 20; see also judgment of 10 December 1974 in Case 48/74 Charmasson v Minister for Economic Affairs and Finance [1974] ECR 1383; judgment in Case 68/76 Commission v France, cited above; judgment of 29 March 1979 in Case 118/78 Meijer BV v Department of Trade [1979] ECR 1387; judgment of 29 March 1979 in Case 231/79 Commission v United Kingdom [1979] ECR 1447; judgment of 25 September 1979 in Case 232/78 Commissioti v France [1979] ECR 2729).

However, in Case 41/76, cited above, (paragraphs 27 and 28 of the judgment, [1976] ECR at p. 1937), the Court pointed out that:

‘The fact that at the expiry of the transitional period the Community commercial policy was not fully achieved is one of a number of circumstances calculated to maintain in being between the Member States differences in commercial policy capable of bringing about deflections of trade or of causing economic difficulties in certain Member States’,

and that

‘Article 115 allows difficulties of this kind to be avoided ... ’.

The Court made it clear however that that article gives the Commission the power to intervene inasmuch as it may

The Court took care to emphasize that

‘as full responsibility in the matter of commercial policy was transferred to the Community by means of Article 113 (1) measures of commercial policy of a national character are only permissible after the end of the transitional period by virtue of specific authorization by the Community’ (Case 41/76, cited above, paragraph 32).

The Court thus clearly affirmed:

Consequently, it was only under Article 115, and, moreover, in accordance with the procedure laid down for the application of the provisions of that article in the Commission Decision of 20 December 1979‘on surveillance and protective measures which Member States may be authorized to take in respect of imports of certain products originating in third countries and put into free circulation in another Member State’ (Official Journal L 16 of 22 January 1980, p. 14), that Ireland could seek to have limits placed on free circulation within the Community of new potatoes.

Let us apply those principles to this case. It must be stated that since there is no express exclusion, the Order also applies to new potatoes originating in a nonmember country and in free circulation in another Member State. To that extent, and irrespective of the way in which it may have been applied, that provision, introduced unilaterally by Ireland without complying with the Community procedure laid down in Article 115, breaches the principle established by Article 30.

It is true, as the Irish Government contends and as the Commission confirms, that before it was promulgated the Order had been the subject of informal consultations with the Commission, which did not immediately raise any objection after the text was communicated to it on 15 July 1981.

It is also true that in 1982 licences were refused in respect of 38000 tonnes of potatoes originating in Cyprus and that it is consequently unlikely that all of that quantity had been in free circulation.

That is not important. What is at issue here is the application of a principle prohibiting hindrances, even if only potential ones, to the free circulation within the Community of products lawfully imported into a Member State.

The temporary silence of the Commission cannot have had the effect of depriving it of the right to exercise its powers or of conferring on Ireland a right which it was entitled to exercise only with Community authorization.

3. 

Since this case concerns the application of a principle, I could end my observations on that subject at this point. None the less, I prefer not to leave without an answer to Ireland's argument to the effect that it was entitled to promulgate the Order in so far as the Republic of Cyprus had not respected the undertaking it gave to the Commission by letter of 18 March 1981, in which it stated that

‘... as regards the tariff reduction laid down in the Protocol between the Community and Cyprus for the importation of new potatoes originating in Cyprus, the Government of Cyprus undertakes to channel its exports to the Community to its traditional market, the United Kingdom’.

Such an undertaking, which mentions the Member State of primary destination, could not deprive the products concerned of their status as products admitted into ‘free circulation’ and consequently could not reduce the scope of the principles set out above.

As a result, whatever may have been done on the basis of that undertaking, the scope of the Court's decision in the Donckerwolcke case remains undiminished.

4. 

It now remains to consider the submission that the Order was justified on grounds of public policy.

Relying on the provisions of Article 36 of the EEC Treaty, the Irish Government contended that ‘the provisions of Articles 30 to 34 do not preclude prohibitions or restrictions on imports which are justified on the grounds of public policy’. Protection of the national market raised a problem of public policy both because of the serious adverse affects which could have resulted from the flooding of the market by imported potatoes and because of the unwillingness or inability of the Commission to promote a harmonious development of economic activities between Member States in accordance with the objectives of the common agricultural policy (Article 39 of the Treaty) or, more generally, in conformity with the task of the European Economic Community (Article 2 of the Treaty).

According to the Irish Government, since the Commission had failed to take measures within the framework of the Association Agreement with Cyprus which would guarantee effective protection of the markets of each of the Member States, the Order was absolutely necessary for the attainment of the objectives specified in Article 39 of the Treaty.

That submission must be rejected.

As the Commission points out, citing the judgment of the Court in Case 7/61 Commission v Italy (judgment of 19 December 1961 [1961] ECR 317, in particular at p. 329), Article 36

‘... is directed to eventualities of a non-economic kind which are not liable to prejudice the principles laid down by Articles 30 to 34, as the last sentence of the article confirms’.

That last sentence provides that ‘such prohibitions or restrictions’, based inter alia on public policy,

‘shall not... constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States’.

However, Ireland essentially intended to protect a large number of its farmers whose incomes largely depended on the sale of their own potato crops. It was thus clearly a case of protecting interests of an economic kind.

In such circumstances, as is affirmed in the abovementioned decisions of the Court (see in particular the judgment in Case 232/78, cited above, [1979] ECR at p. 2739, paragraph 8), it is for the Community institutions to take action to harmonize the national markets or, as an alternative, to introduce the necessary corrective mechanisms. For that reason the Commission, under the terms of Article 115 of the Treaty may authorize ‘Member States to take the necessary protective measures, the conditions and details of which it shall determine’.

Faced with the threat, which may have been real, of a disturbance on the national potato market, it was for the Irish Government to apply to the Commission for an authorization under Article 115. It failed to submit a request which complied with the established procedure and which was accompanied by the necessary supporting evidence and contends that such a request would have been useless in the sense that the time required by such a procedure would have been too long to ward off an imminent danger.

However, according to Article 3 (6) of the aforementioned decision adopted for the purpose of implementing Article 115, the Commission must decide on the request of a Member State within five working days of its receipt.

The fact that it could not to any useful purpose have submitted a request to the Commission for an authorization to take the protective measures which it considered necessary cannot confer on Ireland the benefit of a sort of presumption that a necessity existed which justified the contested provision.

5. 

Consequently, I would conclude that the Court should: