1.

Lead and zinc, which are products of acute concern for the Italian Republic and which hold an important place in the economy of the least developed areas of Sardinia, appear in List G annexed to the Treaty of Rome. For this reason the duties applicable to them in the Common Customs Tariff were to be determined by negotiations between the Member States; they were in fact so determined by an agreement of 2 March 1960. At the same time, however, Protocol No XV concerning these two products contained provisions intended to meet the differing interests of the Member States. First, on the application of the States concerned the Commission authorized the Federal Republic of Germany, Belgium and Holland to introduce a certain number of zero-duty tariff quotas as from the first stage of the introduction of the Common Customs Tariff. Secondly, the Member States expressed ‘support’ for the application of Article 226 of the Treaty entailing the isolation for a period of six years from the signing of the Protocol—that is, until 2 March 1966—of the Italian market in lead and zinc, both as regards other Member States and third countries.

To deal with the second aspect of this problem, the decisions of the Commission of 27 July 1961 and 28 February 1962 respectively authorized the Italian Republic to maintain until 7 August 1962 the specific minimum duties in force on 2 March 1960 on, first, unwrought lead and zinc and, secondly, the waste and scrap of these two products. These decisions were successively renewed and amended by other decisions which took into account the programme of rationalization and reorganization of the mining and metallurgical industry undertaken in this sector by the Italian Government.

Thus, it was a decision of the Commission of 6 July 1966, as amended by the decisions of 22 March and 1 August 1967, which finally authorized the Italian Republic to impose duties on imports from Member States and third countries in excess of those which would have been in force had the provisions of the Treaty and of the acceleration decisions already been applied. This decision was valid until 31 December 1967. However, it only accepted in part the Italian Government's request for, first, the maintenance until 30 June 1968 af the protective measures authorized by the decision of 20 December 1963 and, secondly, the fixing of the time-tables and detailed rules for the gradual reduction of intra-Community customs duties and the full application of the Common Customs Tariff for the period after 30 June 1968.

Subsequently, on 7 December 1967 the Italian Government sought the introduction of a further protective measure involving the maintenance until 30 June 1968 of the duties authorized by the decision of 6 July 1966 and the application of reduced duties until 31 December 1969, at which date the end of the transitional period prevented further recourse to Article 226. Its application was rejected by the Commission on 20 March 1968. A further application, submitted on 24 June 1969, was rejected on 24 July 1969.

2.

In the meantime, however, the Council took its decision of 26 July 1966 (OJ No 165 of 21.9.1966, p. 2971/66) from which the whole dispute stems. As it considered that economic development within the Community rendered possible the total abolition of customs duties on imports as between Member States and the application of the Common Customs Tariff in its entirety sooner than anticipated, the Council adopted the following measures for all products except the agricultural products listed in Annex II to the Treaty:

3.

The Commission's argument is therefore as follows:

For the period from 1 January to 30 June 1968, the obligations imposed on the Italian Republic did not arise out of the Acceleration Decision, but directly out of Article 23(1)(c) of the Treaty. In accordance with the provisions of this article, as Italy was no longer covered by any protective measure it should have applied the second reduction of 30 per cent of the difference between the rate applied in practice on 1 January 1957 and that laid down in the Common Customs Tariff. Furthermore, by virtue of the Acceleration Decision it should have applied the Common Customs Tariff in its entirety as from 1 July 1968.

It is not disputed—and on this point I need merely refer to the figures appearing in the report of the hearing—that during the first half of 1968 the Italian Republic imposed duties which exceeded those which would have resulted from the application of Article 23(1)(c) of the Treaty, both as regards lead and zinc and the waste and scrap of those two products. It is also established that as from 1 July 1968 it applied the Common Customs Tariff only to waste and scrap and continued to charge duties in excess of that tariff on imports of lead and zinc.

It is on the basis of these findings that, in a letter dated 13 September 1968, the Commission requested the Italian Republic to submit its observations. As it did not consider these to be satisfactory the Commission on 2 April 1969 delivered a reasoned opinion on the failures of the Italian Republic to fulfil its obligations under both Article 23(1)(c) of the Treaty and the decision of the Council of 26 July 1966; it is on the basis of these two provisions that it has brought the matter before you.

1.

The first is that, as we are aware, the parties do not agree on the terms of the statement made during the meeting by the Italian Government. The file shows the various positions which were successively adopted by this country's delegation during the preliminary discussions between the Permanent Representatives; at times it merely reserves the question, at others it draws attention to the problem raised by Protocol No XV, as the delegation did not wish the Acceleration Decision to constitute a factor which would prevent the possible application of Article 226 of the Treaty. These provisions give rise to no argument.

This does not apply, however, to the meeting of the Council; you have before you two different versions of the proceedings, one of which appears in the draft minutes of the 191st meeting of the Council in July 1966, which is dated 7 May 1968. In this document the Council signifies its agreement with a certain number of statements :

This document is, however, only a draft of the minutes which has apparently never been approved or made the subject of a request for correction. However, during the oral procedure, the Agent of the Italian Government refused to regard it as an exact expression of the thinking of his government; the correct text, as he read it to you, should be the following: ‘The Italian delegation draws attention to the problem raised by Protocol No XV concerning lead and zinc attached to the agreement relating to List C. This delegation desires that the Acceleration Decision should not constitute an obstacle if it becomes necessary to prolong the customs support measures for the lead and zinc industry, even by means of Article 226 of the Treaty’.

In fact, in my opinion this new wording is not very different in scope from that of the draft minutes. It deals with a possible application of Article 226; it is a desire expressed by the Italian delegation but it does not imply on the part of the Council the recognition of an unconditional right for the Italian Republic to benefit from new protective measures under Article 226, especially if the statement in question is compared with that made by the Commission. As the Commission says, Italy wished to obtain confirmation—which was not necessary—that until 31 December 1969 Article 226 might be applied if necessary; it has never been said that it should be applied automatically.

2.

In addition—and this is the second observation called for by the argument put forward by the Italian Government—in order to ascertain the scope of the decision in dispute and whether it may be reconciled with reservations which would reduce its scope, one must examine the legal nature of this decision and its place in the system established by the Treaty.

On this point, there can be no doubt. It is a decision taken under Article 235 of the Treaty, which, once made, has all the effects attributed to a decision by Article 189.

There is no need to recall that under Article 235 if action by the Community should prove necessary to attain, in the course of the operation of the Common Market, one of the objectives of the Community and the Treaty has not provided the necessary powers the Council shall, acting unanimously on a proposal from the Commission and after consulting the Assembly, take the ‘appropriate measures’.

This occurred in this instance. If reference is made to the reasons for the decision in dispute, it can be seen that one of the objectives of the Community is to realize the establishment of the Common Market within the shortest possible period, that action by the Community is necessary for this purpose and that as the Treaty has not provided the necessary powers in specific provisions it is necessary to resort to Article 235 of the Treaty. It refers to the Commission's proposal and to the opinion of the Assembly. It was on this basis that the Council adopted its decision, Article 4 of which states that it is addressed to the Member States.

The form taken by the Council's action under Article 235 may of course vary according to the circumstances, since this article refers to ‘appropriate measures’. It may be a regulation (cf. for example Regulation No 167/64/EEC of the Council of 30 October 1964 on the levy applicable to certain blends of milk products and certain preparations containing butter, Official Journal No 173 of 31 December 1964, p. 2752/64). It may also be, as in this instance, a decision within the meaning of Article 189 and therefore ‘binding in its entirety upon those to whom it is addressed’. Such decisions are, of course, subject to special procedures and require the unanimous consent of the Council, but once these conditions have been fulfilled—and they are in the present case—it falls within the scope of the ordinary law set out in Article 189. Consequently, I am unable to share the opinion expressed at the hearing by the Agent of the Italian Republic when he referred to ‘this agreement which is called a decision, but which is in fact an international agreement’. To do so would lead you on to the shifting ground of decisions taken by the representatives of the governments of the Member States in Council, such as the two previous Acceleration Decisions of 12 May 1960 and 15 May 1962. However, contrary to what happened on that occasion, we are here dealing with a measure adopted by a, wholly and exclusively Community institution, which, once it has been adopted, is binding upon those to whom it is addressed, that is, upon the Member States. Such an act cannot give rise to any refusal to implement it or to any reservations on the part of those Member States, and the only remedy open to them is that provided under Article 173.

If any additional proof was sought that the measure adopted by the Council is really a decision within the precise meaning of Article 189 it would be sufficient to refer to the terms used in the various language versions of this provision. This measure is called an ‘Entscheidung’ in German and ‘Beschikking’ in Dutch, which are the terms used in Article 189, whereas, for example, the wider and less precise terms ‘Beschluss’ and ‘Besluit’ have been used for the acceleration decisions taken by the representatives of the governments of the Member States in Council.

However that may be, the wording of the decision in dispute is perfectly clear. Apart from the agricultural products listed in Annex II, it applies to all commodities covered by the customs tariff; it provides for no exception, restriction, qualification or period of grace for any product whatsoever, in particular for lead and zinc. In accordance with your established principles it is unnecessary to refer to the preliminary discussions; it is sufficient to apply the provision as it stands.

1.

During the first half of 1968 the Italian Republic applied to imports from other Member States of unwrought lead, unwrought zinc and the waste and scrap of those products customs duties which exceeded by 15 per cent those applied on 1 January 1957. In so doing, it failed to fulfil its obligations under Article 1 of the Council's decision of 26 July 1966.

During the same period, it applied to imports of the same products from third countries customs dutise in excess of those applied in practice on 1 January 1957, as reduced by the difference between these latter duties and those in the Common Customs Tariff. In so doing, it failed to observe the provisions of Article 23 (1) (c) of the Treaty.

2.

On 1 July 1968 it failed to abolish customs duties on imports from other Member States of unwrought lead, unwrought zinc and lead waste and scrap; on the same date it failed to apply the duties in the Common Customs Tariff to unwrought lead and unwrought zinc imported from third countries. In so doing it failed to fulfil its obligations under Articles 1 and 2 of the decision of the Council.

Finally, I consider that the Italian Republic should be ordered to pay the costs.