61994V0003
OPINION 3/94 OF THE COURT
13 December 1995
Request made to the Court under Article 228(6) of the EC Treaty by the Federal Republic of Germany for an Opinion on the compatibility with the Treaty of the Framework Agreement on Bananas between the European Community and Colombia, Costa Rica, Nicaragua and Venezuela.
Background and Facts
I — Historical background to the Framework Agreement
1.
The Community's strategy for the conduct of the Uruguay Round negotiations was laid down in a communication from the Commission to the Council entitled Overall Approach', approved by the Council on 16 and 17 June 1986.
2.
As regards agriculture, the Commission was instructed to
‘—
help to restore the balance of world markets, which cannot in any case be achieved without closer cooperation by the countries involved in trade in agricultural and food products;
...
—
allow reasonable access to import markets;
...
—
ensure participation by the developing countries under conditions appropriate to their agricultural economies and balanced food strategies.’
3.
In the Punta del Este Declaration of 20 September 1986, adopted with a view to the Uruguay Round negotiations, the GATT contracting parties declared that they wished to
‘achieve greater liberalization of trade in agriculture and bring all measures affecting import access and export competition under strengthened and more operationally effective GATT rules and disciplines ...’.
In the same declaration, the contracting parties agreed to respect the status quo as regards the creation of new barriers to international trade and acknowledged that the negotiations would aim to reduce or eliminate non-tariff measures, in particular quantitative restrictions.
4.
On the same day, on the recommendation of the Commission, the Council approved that declaration and authorized the Commission to open the negotiations provided for within the framework of the directives issued by the Council.
5.
Under Title IV, ‘Trade with third countries’, of Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organization of the market in bananas (OJ 1993 L 47, p. 1), the 20% customs duty bound within the framework of GATT was to be replaced by a system of import quotas subject to fixed-rate levies.
6.
On 19 February 1993, Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela asked the Community to open consultations under Article XXII: 1 of GATT, in the light of Regulation No 404/93. As those consultations did not result in a satisfactory solution, the Latin American States in question initiated in April 1993 the dispute settlement procedure provided for in Article XXIII: 2 of GATT.
7.
On 22 March 1993, in the framework of the Uruguay Round negotiations, the Commission submitted in the name of the Community a proposal relating to banana imports which reproduced the provisions on trade with third countries of Regulation No 404/93.
8.
On 3 June 1993, prior to the entry into force of Regulation No 404/93 on 1 July 1993, the Commission submitted to the Council a draft recommendation for a Council decision authorizing the Commission to begin negotiations under Article XXVIII: 5 of GATT on the compensation to be offered by the Community to certain GATT contracting parties in exchange for the abolition of the 20% bound import duty on bananas.
9.
On 18 and 19 October 1993, following that recommendation, the Council authorized the Commission to open negotiations, specifying that they were to be conducted on the basis of existing GATT rules, that compensation was to be provided to GATT members in accordance with GATT rules and that the negotiations were not to undermine Regulation No 404/93.
10.
On 14 December 1993, the day before the deadline for the close of the Uruguay Round negotiations, the Commission communicated its ‘final’ proposals concerning, inter alia, banana imports to the Director General of GATT. Those proposals had been approved by the Council at a meeting on 13 December 1993.
11.
The proposals relating to bananas were based on the Community's most recent offers to the Latin American countries in the framework of the negotiations under Article XXVIII: 5 of GATT.
12.
The communication to GATT specified:
‘[...] the offer on bananas [...] is dependent upon agreement being reached with the Latin American supplying countries members of GATT [...] If this turns out not to be the case, the European Communities' offer will be as set out in its [previous] communication [...] on 22 March 1993.’
13.
On 18 January 1994, the panel set up under the dispute settlement procedure presented a report in which it found that certain of the provisions of Regulation No 404/93 were inconsistent with the GATT rules. That report was not adopted by all the contracting parties.
14.
By judgment of 5 October 1994 in Case C-280/93 Germany v Council [1994] ECR I-4973, the Court of Justice dismissed an application by the Federal Republic of Germany for the annulment of Regulation No 404/93. The Court held that the applicant could not invoke the provisions of GATT to challenge the lawfulness of the regulation.
15.
On 7 March 1994, the Council decided to sign the Final Act of the Uruguay Round and authorized the President of the Council and the Member of the Commission in charge of the negotiations to do so; at that date, the Community's offer on bananas had reverted to the 22 March 1993 position, since negotiations with the relevant Latin American countries had broken down.
16.
On 25 March 1994, the Commission submitted a final version of its market access commitments; Schedule LXXX set out again, with regard to bananas, the offer of 22 March 1993.
17.
On 28 March 1994, the Commission reached an agreement with Colombia, Costa Rica, Nicaragua and Venezuela, known as the Framework Agreement on Bananas.
18.
On the following day, 29 March 1994, the Commission sent the General Secretariat of GATT a corrigendum to its proposals contained in Schedule LXXX, to which was appended a copy of the Framework Agreement.
19.
At meetings of the Article 113 Committee at Marrakesh on 11 and 14 April 1994, the delegations of the Federal Republic of Germany and other Member States objected to the fact that the Commission had incorporated the Framework Agreement on Bananas into the list of the Community's commitments contained in Schedule LXXX and expressed their disagreement with the contents of that agreement.
20.
The Foreign Affairs Council, meeting at Marrakesh on 15 April 1994 implicitly and unanimously confirmed its decision to sign the Final Act of the Uruguay Round. In a statement, the Commission took note of the various statements made by the national delegations at the meetings of the Article 113 Committee with regard to the import regime for bananas.
21.
On 22 December 1994, the Council adopted Council Decision 94/800/EC concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).
22.
On 1 January 1995, the Uruguay Round agreements, including the schedules containing the Community's commitments in relation to banana imports, entered into force.
II — Contents of the Framework Agreement
1.
The Framework Agreement on Bananas comprises two documents. The first, entitled ‘Agreed outcome of the negotiations between Colombia, Costa Rica, Nicaragua, Venezuela and the European Community on the EC's import regime for bananas’, signed in Brussels on 28 March 1994 by the Member of the Commission responsible for Agriculture and Rural Development and by the Colombian Ambassador to the Community, constitutes a sort of preamble to the agreement itself; the second, entitled ‘Framework Agreement on Bananas’, contains the technical provisions of the agreement with the Latin American countries.
2.
The first document stipulates:
‘The attached draft agreement on bananas represents a satisfactory outcome of the negotiations on bananas in the context of the Uruguay Round.
The agreement also constitutes the outcome of Article XXVIII negotiations and consultations on bananas between the EC and the abovementioned countries.
Furthermore, the agreement constitutes a settlement of the dispute on bananas which is the subject of a GATT panel report. It was agreed, therefore, that Colombia, Costa Rica, Nicaragua, Venezuela and the EC will not pursue the adoption of the said panel report.
Colombia, Costa Rica, Nicaragua and Venezuela agreed that they would not initiate GATT dispute settlement procedures against the EC's regime for bananas for the duration of the attached agreement.’
3.
Point 1 of the Framework Agreement itself fixes the global basic tariff quota at 2100000 tonnes for 1994 and 2200000 tonnes for 1995 and the following years, subject to any increase resulting from the enlargement of the Community, and Point 2 divides that quota up between the four contracting parties, the Dominican Republic and other ACP States concerning nontraditional quantities, and other States.
Points 3, 4 and 5 deal with the application or modification of the country quotas in the event of one country being unable to fulfil its quota or in the event of any increase in the quota.
Point 6 provides that management of the quotas, including any increase, is to remain as laid down in Regulation No 404/93. That point provides further:
‘the supplying countries with country quotas may deliver special export certificates for up to 70% of their quota, which, in turn, constitute a prerequisite for the issuance, by the Community, of certificates for the importation of bananas from said countries by “Category A” and “Category C” operators.’
Point 7 fixes the in-quota tariff rate at ECU 75 per tonne.
Under Points 8 and 9, the agreed system is to be operational by 1 October 1994 at the latest and to apply until 31 December 2002.
Points 10 and 11 provide:
‘This agreement will be incorporated into the Community's Uruguay Round Schedule.
This agreement represents a settlement of the dispute between Colombia, Costa Rica, Venezuela, Nicaragua and the Community on the Community's banana regime. The parties to this agreement will not pursue the adoption of the GATT panel report on this issue.’
III — The request for an Opinion
1.
The German Government, represented by E. Röder, Ministerialrat in the Federal Ministry of the Economy, and J. Sedemund, Rechtsanwalt, Cologne, acting as Agents, asked the Court of Justice to deliver an Opinion on the following questions:
‘(a)
Was the Framework Agreement on Bananas which was signed by the Commission on 28 and 29 March 1994 duly negotiated from the point of view of procedural law, that is to say,
—
on the basis of a sufficient negotiating mandate from the Council and
—
in compliance with the relevant negotiating directives laid down by the Council?
(b)
Is the Framework Agreement on Bananas compatible with the EC Treaty from the point of view of the substantive law?’
2.
The German Government states that the admissibility of the request for an Opinion cannot be questioned. Its purpose is to examine the compatibility with Community law of the procedure by which the Framework Agreement was concluded and of its content. The question whether the Agreement might have to be renegotiated is undeniably of importance both with regard to the Community's external relations and with regard to the situation of Community undertakings. The Framework Agreement is not yet binding in public international law, since the reference to its incorporation in the schedule of the Community's Uruguay Round commitments is to be construed as subject to ratification. The Framework Agreement is separable from the Final Act of the Uruguay Round: it is set out in a purely declaratory manner as an annex to Schedule LXXX to the Final Act; in addition, only the rules in Points 1 to 7 of the Framework Agreement form an integral part of Schedule LXXX; finally, that incorporation did not take place until after the Council had decided to sign the Final Act. Consequently, the Community is entitled to ratify the Final Act with the exception of the provisions on bananas if the Framework Agreement should be contrary to the Treaty. The fact that the Commission signed the Framework Agreement separately shows that it too assumed that the Framework Agreement was separable from the Final Act.
At the hearing, the German Government submitted that Article 228(6) of the Treaty requires only that the agreement should be envisaged at the time when the Opinion is requested. The Treaty does not require that the agreement should not have been implemented at the time when the Opinion is delivered. Accepting the contrary view would mean that a swift conclusion of the agreement would negate the Article 228(6) procedure and would prejudice the judicial protection of the institution or the State which had requested the Court to deliver an Opinion. A request to the Court under Article 228(6) of the Treaty should suspend the procedure for concluding the agreement pending the Opinion of the Court.
3.
With regard to the substance, the German Government asserts that the Commission had no authority to conduct negotiations or at least went beyond the Council's instructions, that the Commission was not authorized to sign the Agreement, that the procedure followed was contrary to the usual practice in such matters and that the Framework Agreement contravenes the substantive provisions of the Treaty.
(a) Authority to negotiate
In the German Government's view, there was no authority — as required under Article 228(1) of the Treaty — to negotiate the Framework Agreement. No such authority is to be found in the Council's decision to open the Uruguay Round negotiations, in its decision to open negotiations under Article XXVIII of GATT or in its decision authorizing the signature of the Final Act.
The Uruguay Round negotiations were conducted by the Commission on the basis of the two decisions of the Council in 1986 approving the overall approach and the Punta del Este Declaration. The aims of the negotiation of the Framework Agreement were, however, different. Far from seeking a liberalization of trade, the aim of that negotiation was to prevent the panel report from being adopted and to maintain the provisions of Regulation No 404/93; that regulation, however, conflicts with the Punta del Este Declaration, in particular by introducing higher customs duties, quantitative restrictions and import licences.
In fact, the Commission conducted negotiations pursuant to Articles XXII and XXIII of GATT with a view to bringing to an end the dispute settlement procedure concerning the banana import regime. The formal reference to Schedule LXXX to the Final Act, containing the Community's proposals, is insufficient to bring the Framework Agreement, ex post facto, within the scope of the negotiating mandate for the Uruguay Round, since the substance of the Agreement does not comply with that mandate. Any other interpretation would deprive the second half of the first sentence of Article 228(1) of the Treaty of any meaning, since the Commission could use extensive negotiations such as the Uruguay Round to achieve different objectives.
The fact that the Council granted a special negotiating mandate — on the Commission's proposal, moreover — in the context of Article XXVIII of GATT further demonstrates that the Commission did not consider that the authority given for the Uruguay Round negotiations was sufficient to negotiate the Framework Agreement. Finally, the content of the authority to negotiate in the Uruguay Round was too indefinite to serve as a basis for the specific, technical negotiations involved in the Framework Agreement. The authorization provided for in the first sentence of Article 228(1) of the Treaty cannot involve granting the Commission a blanket authority.
According to the negotiating instructions issued to the Commission, the aim of the Council's decision of 18 and 19 October 1993 on opening negotiations under Article XXVIII of GATT was to consolidate the fait accompli contrary to GATT embodied in Regulation No 404/93. The purpose of those negotiations was to reach a consensus with certain Latin American countries in order to obviate the initiation of a dispute settlement procedure and preclude the conclusion of the pending procedure.
The Council's decision of 7 March 1994 on the signature of the Final Act of the Uruguay Round was taken at a time when the negotiations on the Framework Agreement were not yet completed and when that agreement did not yet form part of Schedule LXXX.
(b) Compliance with the Council's instructions
In the alternative, the German Government claims that the Commission did not comply with the guidelines laid down for the negotiations.
The guidelines for the Uruguay Round negotiations, laid down in the Punta del Este Declaration, did not authorize any new restrictive measures; the negotiation of the Framework Agreement, however, was aimed at preserving Regulation No 404/93 which derogated from GATT.
The Commission further infringed the guidelines for the negotiations under Article XXVIII of GATT. Contrary to instructions, the Framework Agreement contravenes Regulation No 404/93 by still further restricting traders' freedom of action. The German Government cites the allocation of fixed quotas for individual countries, thus consolidating supply structures and market shares, the introduction of export licences and the imposition of new burdens on exporters and importers of third-country bananas through the levying of a charge for export licences. That will entail an additional deterioration of the competitive situation of importers of third-country bananas, reinforcing the discrimination already existing under Regulation No 404/93. The Commission further ignored the instruction to negotiate a compromise with the Latin American countries to offset the unbinding of the customs duty.
(c) Authorization to sign the Framework Agreement
On 7 March 1994, when the Council authorized the Commission to sign the Final Act, the text of the Framework Agreement was not yet in existence and Schedule LXXX reproduced the Community's previous proposals of March 1993. That decision cannot, therefore, be construed as authority to sign the Framework Agreement.
(d) Departure from the Commission's customary practice
The fact that the Commission did not submit a proposal to the Council for the conclusion of the Framework Agreement and that the agreement was incorporated after the event into the Final Act of the Uruguay Round runs counter to the consistent practice of the Community institutions.
(e) Cnmvatihilit.v of the Framework Agreement with the Treaty
In the German Government's view, the Framework Agreement infringes the EC Treaty. The German Government stresses in particular the discrimination against Category A and C operators compared with those of Category B. Under Point 6 of the Framework agrccmcnt, oniy category n and C operators are subject to the export-licence scheme, which represents a significant additional financial burden for them which does not apply to Category B operators.
IV — Procedure
In accordance with Article 107(1) of the Rules of Procedure of the Court of Justice, the request for an Opinion was served on the Council, the Commission and the Member States. Written observations were submitted by: the Commission, represented by P. Gilsdorf, Director in the Legal Service, and T. Christoforou, of the Legal Service, acting as Agents; the Council, represented by J. Huber, Legal Adviser, and J.-P. Hix, of the Legal Service, acting as Agents; the Belgian Government, represented by J. Devadder, Director of Administration in the Ministry of Foreign Affairs, External Trade and Development Cooperation, acting as Agent; the Netherlands Government, represented by A. Bos, Legal Adviser in the Ministry of Foreign Affairs, acting as Agent; the Spanish Government, represented by A. Navarro Gonzalez, Director-General for Community Legal and Institutional Coordination, and Rosario Silva de Lapuerta, Abogado del Estado, of the Legal Service for Community Affairs, acting as Agents; the French Government, represented by E. Belliard and C. de Salins, Assistant Directors in the Legal Affairs Directorate of the Ministry of Foreign Affairs, acting as Agents; and the United Kingdom, represented by J. E. Collins, of the Treasury Solicitor's Department, acting as Agent, and by D. Wyatt and D. Anderson, Barristers.
The German Government, represented by E. Roder and J. Sedemund; the Belgian Government, represented by J. Devadder; the Greek Government, represented by G. Karipsiadis, specialist research associate of the Legal Service for Community Affairs in the Ministry of Foreign Affairs, acting as Agent; the Spanish Government, represented by Rosario Silva de Lapuerta; the French Government, represented by J.-F. Dobelle, Deputy Director in the Legal Affairs Directorate of the Ministry of Foreign Affairs, acting as Agent; the Netherlands Government, represented by M. Fierstra, Deputy Legal Adviser in the Ministry of Foreign Affairs, acting as Agent; the United Kingdom, represented by D. Wyatt; the Council, represented by J. Huber; and the Commission, represented by P. Gilsdorf, presented observations at the hearing on 25 October 1995.
V — Observations of the Governments and of the Community institutions
(a) The admissibility of the request for an Opinion
At the hearing, the Spanish and French Governments, the Council and the Commission argued that the conclusion and the entry into force of the Framework Agreement, in the context of the Final Act of the Uruguay Round, meant that the request for an Opinion was devoid of purpose. According to the Belgian and Netherlands Governments and the United Kingdom, the request for an Opinion is admissible and the Court must respond to it.
(b) Authority to negotiate
1.
The Belgian and Netherlands Governments agree with the German Government that there was no authority to negotiate.
The Framework Agreement is distinct from the Final Act of the Uruguay Round. It was concluded under the GATT Article XXVIII procedure and is not covered by the authority to negotiate for the Uruguay Round; it was signed separately with the Latin American countries concerned and contains a specific date of entry into force.
2.
The French and Spanish Governments, the United Kingdom, the Commission and the Council assert that the Commission was authorized by the Council to negotiate the Framework Agreement.
The Spanish Government and the Council refer to the decision of 18 and 19 October 1993 authorizing the Commission to open negotiations under Article XXVIII of GATT; the Spanish Government points out that the Framework Agreement provides for a reduction of the in-quota fixed-rate levy from ECU 100 to ECU 75 per tonne.
The French Government, the United Kingdom and the Council also refer to the Council's decision of 16 and 17 June 1986 approving the overall approach and that of 20 September 1986 approving the Punta del Este Declaration. In the French Government's view, the outcome of the negotiations with the Latin American countries falls within the framework of the Uruguay-Round negotiations inasmuch as, by increasing the quota and reducing the fixed-rate levies, the Framework Agreement improved third-country access to the Community market, converted the quantitative restrictions into a tariff system and included a concession by the Community to the countries concerned through the introduction of export licences.
The Commission stresses that the Council must authorize the opening of negotiations and did so by the 1986 and 1993 decisions.
(c) Compliance with the Council's instructions
1.
The Belgian and Netherlands Governments submit that the Agreement goes beyond the scope of the Uruguay Round negotiations in that it brings to an end the dispute settlement procedures pending. The incorporation of the Framework Agreement into the Schedules to the Final Act of the Uruguay Round cannot be described as a corrigendum but amounts to an amendment of the Treaty text.
2.
The French and Spanish Governments, the United Kingdom, the Council and the Commission deny that the Commission went beyond the guidelines laid down in the authority to negotiate.
The French and Spanish Governments state that the Framework Agreement complies with the 1993 guidelines. The exportcertificate system ensures access to the Community market for the contracting States and enables them to control their production and flow of trade themselves; it cannot be described as a barrier to trade. The Agreement complies with the obligation to offer compensation, since it provides for an increase in the quota and a reduction in the fixed-rate levies, and respects the fundamental principles in Regulation No 404/93.
The Council considers that the argument that the Commission went beyond the scope of the negotiating directives is irrelevant. The Council's decision to sign an agreement negotiated by the Commission implies approval of its contents and makes good any irregularity during the course of the negotiations. In practice, the Commission is often led to go beyond the scope of its directives when negotiating an international agreement; in such circumstances, rather than modify those directives during the course of the procedure, the Council merely accepts the final outcome by signing the agreement.
The Commission stresses that although the Council must authorize the opening of negotiations it is not obliged to lay down negotiating directives. In any event, the Commission considers that it did comply with the 1986 and 1993 directives. By increasing the tariff quota and reducing the fixed-rate levies, the Framework Agreement liberalizes trade in bananas. The contracting parties regarded the Framework Agreement as appropriate compensation for the unbinding of the 20% duty. The Framework Agreement is consistent, moreover, with the central provisions of Regulation No 404/93 and does not conflict with the basic rules of GATT, which allows tariff quotas. The Framework Agreement is the outcome of two parallel sets of negotiations: the general trade discussions of the Uruguay Round and the specific GATT Article XXVIII procedure.
(d) Authorization to sign the Framework Agreement
1.
The Belgian and Netherlands Governments agree with the German Government that the Council did not authorize the Commission to sign the Framework Agreement.
2.
In the view of the French and Spanish Governments, the United Kingdom, the Council and the Commission, the Council did decide to sign the Framework Agreement.
The Spanish Government refers to the Council's decision of 7 March 1994 authorizing the Commission to sign the Final Act of the Uruguay Round, to which the Framework Agreement is appended. That decision was not affected by subsequent amendments to the schedules, since offers could be amended up to the signature of the Final Act in so far as improving market access was concerned.
The French Government further points out that the Framework Agreement forms an integral and inseparable part of the results of the Uruguay Round. Its signature by the Member of the European Commission does not constitute the signature of an agreement for the purposes of the Vienna Convention of 23 May 1969 on the Law of Treaties but a mere initialling or the signature of minutes of negotiation.
The French Government and the United Kingdom accept that on 7 March 1994 the Framework Agreement did not form part of the Community's commitments. On 15 April 1994, when the Council unanimously confirmed the decision to sign the Final Act, Schedule LXXX did include the contents of the Framework Agreement. Contrary to the German Government's submission, the overall results of the negotiations under the title ‘Framework Agreement on Bananas’ were incorporated into the Community's schedule of commitments.
The Council and the Commission also point out that the Framework Agreement forms an integral part of the results of the Uruguay Round. The incorporation of the provisions of the Framework Agreement in Schedule LXXX does not amount to a declaratory copy of an independent agreement but fixes the Community's commitments. As may be seen from the minutes of its meeting on 7 March 1994, the Council authorized the signature of the Final Act of the Uruguay Round in the knowledge that the legal texts in existence at that date were not final and that further negotiations were necessary, particularly with regard to the Community's commitments. With that in mind, meetings of the Article 113 Committee were called at Marrakesh on 11 and 14 April 1994. At its meeting on 15 April, the Council implicitly and unanimously confirmed its decision to sign the overall results of the Uruguay Round as they existed on that date, including the Framework Agreement forming an integral part of Schedule LXXX. The statements in the minutes by certain of the national delegations cannot affect the legality of the Council's signature of the Final Act on 15 April 1994.
(e) Compatibility of the Framework Agreement with the Treaty
The French and Spanish Governments, the United Kingdom, the Commission and the Council point out that the criticisms put forward by the German Government broadly coincide with those which were rejected by the Court in its judgment in Germany v Council, cited above.
The aim of the export-licence scheme is to enable the exporting States to maintain their market shares in the Community. Category B operators are not subject to that scheme because the situation of those importers of Community bananas and traditional ACP bananas on the markets of those third countries is different from that of the traditional importers of third-country bananas.