61992CV0002_EN
Grounds
Operative part
Grounds
The Court of Justice has received a request for an opinion, which was lodged at the Court Registry on 4 September 1992, made by the Kingdom of Belgium pursuant to the second subparagraph of Article 228(1) of the EEC Treaty (incorporated in substance in Article 228(6) of the EC Treaty), according to which
'The Council, the Commission or a Member State may obtain beforehand the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the provisions of this Treaty.
Where the opinion of the Court of Justice is adverse, the agreement may enter into force only in accordance with Article 236.'
I - Description of the request for an opinion
By this request, the Belgian Government, represented by J. Devadder, Director in the Ministry for Foreign Affairs, Foreign Trade and Cooperation with Developing Countries, acting as Agent, assisted by J.V. Louis, Adviser to the director, Head of the Legal Department of the National Bank of Belgium, seeks the Court's opinion on the competence of the Community or one of its institutions to take part in the Third Revised Decision on international treatment of the Council of the Organization for Economic Cooperation and Development (hereinafter 'the Third Decision'and 'the OECD').
More specifically, the Court has been requested to give its opinion on the following questions:
'- Is the dual legal basis (Articles 57 and 113) proposed by the Commission for the Council decision on the Community's participation in the Third Decision justified?
- If the reply to the first question is in the negative, which would be the correct legal basis?
- Does the Community's competence to participate in the Third Decision exclude participation by the Member States, or is "mixed" participation justified?'
The Third Decision constitutes a feature of the OECD's activities designed to facilitate international investment and, more specifically, to accord national treatment to undertakings controlled by nationals of an OECD Member country, where such undertakings operate on the territory of another OECD Member country.
It was adopted by the Council of the OECD in December 1991.
The text of the decision is attached to the request for an opinion.
II - Procedure
In accordance with Article 107(1) of the Court's Rules of Procedure, the request for an opinion was served on the Council and on the Member States.
Written observations were submitted by the Greek Government, represented by N. Mavrikas and V. Kontolaimos, Assistant Legal Advisers in the State Legal Service, by the Spanish Government, represented by A. Navarro González, Director-General for Community Legal and Institutional Coordination, and R. Silva de Lapuerta, Abogado del Estado, of the Community Legal Affairs Department, by the French Government, represented by J.-P. Puissochet, Director for Legal Affairs in the Ministry of Foreign Affairs, and C. de Salins, Deputy Director in the Directorate for Legal Affairs at the same Ministry, by the Netherlands Government, represented by A. Bos, Legal Adviser in the Ministry of Foreign Affairs, by the United Kingdom, represented by S. Cochrane, of the Treasury Solicitor's Department, assisted by D. Wyatt, Barrister, by the Council, represented by J.-C. Piris, Jurisconsult, and R. Torrent, of the Legal Service, and by the Commission, represented by J.-L. Dewost, Director-General of the Legal Service, and J. Sack, Legal Adviser.
The European Parliament, represented by J. Campinos, Jurisconsult, J. Schoo and J. Pantalis, of the Legal Service, was given leave, at its request, to submit observations.
The Belgian Government, represented by J. Devadder and J.V. Louis, the Danish Government, represented by P. Biering, Legal Adviser in the Ministry of Foreign Affairs, the German Government, represented by E. Röder, Ministerialrat in the Federal Ministry for Economic Affairs, the Greek Government, represented by V. Kontolaimos and P. Stangos, University Professor, the Spanish Government, the French Government, represented by E. Belliard, Deputy Director in the Directorate for Legal Affairs at the Ministry of Foreign Affairs and C. de Salins, and by H. Renié, Principal Assistant Secretary in the same ministry, acting as Agents, the Netherlands Government, represented by A. Bos, the Portuguese Government, represented by L. Fernandes, Director of the Legal Affairs Directorate in the General Directorate for Community Affairs, and by L. Duarte, Legal Adviser in that directorate, the United Kingdom, represented by J.E. Collins, of the Treasury Solicitor's Department, assisted by M. Wyatt, the Council, represented by J.C. Piris and R. Torrent, the Commission, represented by J.-L. Dewost and J. Sack, and by P.J. Kuyper and T. Christoforou, of the Legal Service, and the European Parliament, represented by G. Garzon Clariana, Jurisconsult, and J. Schoo, submitted oral observations at the joint public hearing in these proceedings and in the proceedings in Opinion 1/94, which was held on 11 October 1994.
The Advocates General were heard by the Court sitting in closed session, in accordance with Article 108(2) of the Rules of Procedure, on 2 December 1994.
III - Appraisal of the decision
A - Background
The OECD is the successor of the Organization for European Economic Cooperation ('OEEC').
Under Article 231 of the EEC Treaty, the Community was required to establish close cooperation with the OEEC.
It therefore took part in the creation of the OECD in 1960.
Under Additional Protocol No 1, referred to in Article 13 of the Convention establishing the OECD, the representation of the Communities within that organization is to be determined in accordance with the relevant provisions of the Community Treaties; the EEC Commission, the Euratom Commission and the High Authority of the ECSC are to take part in the OECD's work.
The Community has thus taken part in the work of the OECD from the outset, even though it is not a Member of that organization.
So far as concerns the adoption of decisions that are binding on Members, the Council and the Commission established an ad hoc procedure in 1988 in agreement with the OECD.
It was agreed that, where the proposed measure relates to matters falling within the competence of the Community, the Member State holding the presidency of the Council is to make a declaration drawing the attention of the other Members of the OECD to that situation and to the need for the Community to accept the decision.
The Commission is to make an additional declaration accepting the measure on behalf of the Community and is to advise the Members of the OECD of the need to carry out the necessary Community procedures, if they have not already done so.
Once those procedures have been completed, the Commission is to inform the OECD.
The OECD's activities concerning international investments led to the adoption in 1961 of the Code of Liberalization of Capital Movements and of the Code of Liberalization of Current Invisible Operations, which have been regularly improved since.
Those are binding measures concerning direct initial foreign investment, the right of establishment and the restrictions imposed on non-resident investors.
Those measures also led to the adoption of the 'Strengthened National Treatment Instrument'('the Strengthened Instrument'), concerning the treatment of established foreign-controlled undertakings.
It consists of two parts, namely the Revised Section on National Treatment in the Declaration of 21 June 1976 on International Investment and Multinational Enterprises (hereinafter 'the Revised Declaration'), and the decisions annexed thereto, including the Third Decision which forms the subject-matter of this request for an opinion.
In the Revised Declaration, which is a policy statement, the OECD Member countries express the intention to accord to undertakings already established in their territory and controlled by nationals of another Member country treatment which is no less favourable than that accorded in like situations to domestic undertakings, subject to certain exceptions or derogations.
The decisions annexed to the Revised Declaration, including the Third Decision, are binding on Member countries which did not abstain when those decisions were adopted.
The Third Decision repeals and replaces the Second Revised Decision of the Council of 17 May 1984 on national treatment.
B - Content of the decision
Article 1 of the Third Decision introduces a procedure for notifying the OECD of all measures constituting exceptions to national treatment within 60 days of their adoption by Members and of any other measures which have a bearing on national treatment.
It is stated in a footnote that 'Members'means all the parties to the decision.
Under Article 2, the OECD is to examine periodically, and in principle at least every three years, the exceptions and other measures notified to it.
The examinations are designed to assist Members to withdraw their exceptions and, as a general rule, are carried out by country.
Article 3 authorizes any Member to refer to the OECD if it considers that another Member has retained, introduced or reintroduced measures contrary to its undertakings with regard to national treatment.
Under Articles 4 and 5, the Committee on International Investment and Multinational Enterprises is to consider all questions concerning the interpretation or implementation of the Third Decision or of other Acts of the Council of the OECD relating to national treatment.
More specifically, the Committee is responsible for the examination procedures under Articles 1, 2 and 3.
Article 6 provides that the decision is to be reviewed within three years.
Under Article 7, the decision, as well as any further decision amending it, is to be open for accession by the European Economic Community.
Finally, Annex A to the decision lists the exceptions to national treatment notified by Members under Article 1.
C - Procedure for approval on behalf of the Community
On the Commission's recommendation, the Council authorized the Commission on 28 May 1990 to negotiate a decision on national treatment within the OECD.
On 27 November 1991, the Commission sent the Council a communication concerning the outcome of the negotiations which it had conducted within the OECD on the National Treatment Instrument, and a proposal for a decision based on Articles 57 and 113 of the EEC Treaty concerning the participation of the Community in the Third Decision.
The Commission called on the Council:
'(i)
to authorize it to declare on behalf of the Community that the Community endorses the principles contained in the Declaration on International Investment and Multinational Enterprises adopted by the Governments of the Member States of the OECD on 21 June 1976;
(ii)
to declare, in accordance with the procedure agreed with the OECD, that the Community intends to be a party to the Third Revised OECD Council Decision after completion of the internal procedures;
(iii)
to adopt the annexed decision.'
When the Third Decision was adopted by the Council of the OECD, the representative of the Kingdom of the Netherlands, the Member State which at the time held the presidency of the Council of the European Communities, drew attention to the fact that, in so far as the decision related to matters within the competence of the Community, the Member States would be bound by it after accession by the Community.
The Commission's representative stated that the Community intended to accede to the Third Decision after completion of the necessary Community procedures and that it associated itself, as regards matters within its competence, with the Section relating to national treatment in the Revised Declaration.
On 13 January 1992 the Council consulted the European Parliament under the cooperation procedure, in accordance with Articles 57 and 113 of the Treaty.
On 13 November 1992 the Parliament passed, on the first reading under the cooperation procedure, a legislative resolution in which it expressed a favourable opinion and proposed the addition of a recital.
IV - Summary of the written observations submitted by the Governments and the institutions
A - Whether the use of certain documents and information is permissible
The Council maintains that the request for an opinion uses certain internal documents of the Council and confidential information concerning discussions within its working parties, without the Council's authorization.
In its view, that constitutes an infringement of Article 18 of the Council's Rules of Procedure.
The Court is accordingly requested not to take into account the documents and information in question.
B - Admissibility of the request for an opinion
The Belgian Government, relying on Opinion 1/75 ('Local Cost Standard'[1975] ECR 1355) and Opinion 1/78 ('International Agreement on Natural Rubber'[1979] ECR 2871), maintains that the aim of the procedure for an opinion under Article 228 of the Treaty, which is an exceptional procedure, is to enable the Court to resolve all questions relating to the substantive or formal compatibility of the agreement envisaged in order to avoid any subsequent challenge which might undermine the international standing of the Community.
The annulment or declaration of the invalidity of a decision to enter into an international agreement could paralyse the application of the agreement in the Community legal order, which would undoubtedly have repercussions at international level.
More specifically, questions relating to the legal base of the measure whereby the Community participates in an international agreement could affect the division of powers between the Community and the Member States.
In any event, Opinions 1/75 and 1/78, cited above, show that it is not the Court's intention to adopt a restrictive interpretation of the subject-matter of the request under Article 228 of the Treaty.
The Greek Government expresses its reservations as to whether the Court has jurisdiction to give an opinion on the legal basis of a measure concerning the conclusion of an international agreement by the Community.
In its view, a distinction should be drawn between the conclusion of an agreement at international level and the internal Community procedure resulting in the decision to conclude the agreement.
The Court's review should relate only to the compatibility of the former with the Treaty, since the latter is exclusively an internal matter for the Community.
The procedure for an opinion under Article 228 of the Treaty is an exceptional procedure.
Its aim is to resolve only the question of the compatibility with the Treaty of the clauses of the agreement examined and it cannot be extended to the choice of the legal base to be referred to in the measure concluding the agreement.
In Opinions 1/75 and 1/78, cited above, the Court did not tackle that problem directly, but dwelt on the question of the respective competence of the Community and the Member States to participate in an international agreement.
According to the Spanish Government, it is apparent from Article 228 of the Treaty that the Court's power to give an opinion is limited in two respects.
In the first place, the Court can give an opinion only on the international agreement envisaged and not on some other provision of Community law.
Secondly, the opinion can deal only with the compatibility of the agreement with the Treaty, to the exclusion of any other matter.
The internal measure concluding an international agreement could be the subject of an action for annulment under Article 173 of the Treaty.
However, the procedure for an opinion under Article 228 of the Treaty has as its sole aim the prior verification of the compatibility of a proposed agreement with the Treaty, so as to prevent the Community from being able to enter into any international obligations which are contrary to its own constitutional rules.
Furthermore, the annulment by the Court of a measure concluding an international agreement on account of the incorrect choice of the legal base does not entail any of the risks referred to by the Court in Opinion 1/75, since the Community's international commitment is not called in question.
It is for the Council, in accordance with Article 176 of the Treaty, to take a new decision founded on the legal base specified in the judgment.
In laying down that an agreement on which the Court has given an adverse opinion may enter into force only in accordance with Article 236 of the Treaty, Article 228 implies that the Court's opinion can only be favourable or unfavourable as regards the compatibility of the agreement with the Treaty and cannot in any circumstances relate to the legal base to be adopted for the conclusion of the agreement.
That interpretation is confirmed, moreover, by Article 107 of the Rules of Procedure.
Finally, consideration of the opinions already given under Article 228 of the Treaty reveals that the Court, whilst adopting a broad conception of the term 'international agreement'and extending its review of compatibility to all the rules of the Treaty and to all matters likely to raise doubts as to the validity of an agreement in the light of the Treaty, has never sought to review a rule of internal Community law or the legal basis of the decision concluding the agreement.
The French and Netherlands Governments defer to the judgment of the Court to resolve the issue whether the request for an opinion is admissible.
The United Kingdom has reservations as to whether the Court has jurisdiction to give an opinion on questions designed to elicit the appropriate legal basis for the Community to participate in the agreement.
It considers, moreover, that the competence of the Community is not in issue in this case and that the parallel competence of the Member States may be readily demonstrated without reference to the question of the legal base.
Opinions 1/75 and 1/78 contain certain statements which would seem to support the admissibility of the present request.
However, in none of the opinions given so far has the Court been asked to rule on the appropriate base for an envisaged international agreement.
It dealt with that question only in so far as it was necessary to resolve it in order to dispel any uncertainty as to whether the Community or the Member States were competent to participate in the agreement in question.
The exceptional procedure provided for in Article 228 of the Treaty is designed to avoid a situation in which the Court is impelled to annul or invalidate an international agreement, or at any rate the Community measure providing for the conclusion or implementation of the agreement, after the agreement has been concluded.
Uncertainty as to the appropriate legal base for a Community measure of that kind is not capable of giving rise to such difficulties, since it cannot give rise to irreconcilable conflicts between the external relations of the Community and its internal legal order.
That is apparent, in particular, from the judgment in Case 165/87 Commission v Council [1988] ECR 5545, concerning the legal base adopted for the Council decision concerning the conclusion of the International Convention on the Harmonized Commodity Description and Coding System and of the Protocol of Amendment thereto, and from the judgment in Case 45/86 Commission v Council [1987] ECR 1493, in which the Court annulled two Council regulations applying generalized tariff preferences on grounds relating to the absence of a proper legal base and lack of reasoning, but held that the effects of the annulled regulations must be declared to be definitive pursuant to the second paragraph of Article 174 of the Treaty.
Finally, the United Kingdom considers that if the request is admissible in so far as it has the purpose of ending a genuine state of uncertainty as to the respective competence of the Community and the Member States to participate in the agreement envisaged, that should not affect the admissibility of the questions relating to the legal base.
The Council confines itself to the issue of the admissibility of the request for an opinion.
It invites the Court to apply Articles 91, 92 and 38 of the Rules of Procedure by analogy and to declare the request inadmissible.
The application to non-contentious procedures of those provisions which, according to their actual wording, are concerned with contentious proceedings, is necessary in order to ensure their effectiveness and is based on precedent, namely the order in Case 233/82 K. v Germany and Parliament [1982] ECR 3637.
That solution is appropriate in this case because the questions submitted to the Court are devoid of purpose and because the request for an opinion deflects the procedure introduced by Article 228 of the Treaty from its goal.
The Council pays some attention to the subject-matter of the request and to the description of the Community procedure for the adoption of the measure concluding the decision.
It maintains that the substance of the request and the first two questions submitted to the Court relate not to the competence of the Community or of its institutions, but to the quite different question of the choice of a legal base for the internal measure whereby the Community decides to assume obligations at international level.
The third question submitted to the Court relates, according to the wording, to problems of competence as between the Community and the Member States, but the formulation of that question is not justified by any arguments in the request for an opinion.
The Council points out that the proposal submitted by the Commission does not envisage the joint participation of the Community and the Member States in the Third Decision and that it involves another aspect, namely the Community's participation in the Revised Declaration by the Governments of OECD Member countries, which relates to a number of areas, including national treatment.
In November 1991 the Council agreed to a declaration being made within the OECD on the Community's intention to associate itself with the National Treatment Instrument, but that decision concerned only the Section on National Treatment in the Revised Declaration.
Furthermore, the declarations made to the OECD by the representatives of the Kingdom of the Netherlands and the Commission were not at that stage legally binding and were equivalent, at most, to signature of an international agreement subject to ratification.
Finally, the fact that an OECD declaration is not legally binding does not mean that the Community's association with such a declaration does not require a legal base or an assessment of the Community's powers.
Accordingly, the aim of the Community procedures set in motion is not only to enable decisions to be taken regarding the assumption of legal obligations at international level, but also to define and formalize policy commitments announced within the OECD.
The Council also points out that the request for an opinion was made even before the Parliament had given its opinion in the first stage of the cooperation procedure, at a time when discussions with a view to adopting a common position within the Council had not even tentatively begun, pending the opinion of Parliament.
Following those introductory remarks, the Council recalls the distinction between an international agreement containing undertakings which the Community may or may not agree to give, on the one hand, and an internal decision concluding the agreement, on the other.
Only the first of those acts regulates relations between the Community and the other contracting parties and contains international commitments that may be incompatible with the Treaty.
For that reason, Article 228 of the Treaty applies only to international agreements and not to a decision concluding such an agreement, as is clear from the wording of the provision.
The Court's opinion can only be favourable or adverse and, in the latter case, the agreement cannot enter into force until after it has been renegotiated, in order to bring it into line with the Treaty, or else after the Treaty has been amended.
The choice of the legal basis reflects a different approach and is wholly unconnected with the review of the Treaty since, whatever legal base is adopted, the Community has already been recognized as possessing the powers necessary to conclude the agreement.
For that reason, the compatibility of the agreement with the Treaty falls within the scope of the action for annulment under Article 173 and of the procedure for an opinion under Article 228 of the Treaty, whereas the choice of the legal base for the internal decision concluding the agreement can only be the subject of an action for annulment.
If the Court were to allow such an action, its decision would not give rise to the serious repercussions on international relations referred to in Opinion 1/75 since it would be possible for, and incumbent on, the institutions, in accordance with Article 176 of the Treaty, to approve the decision concluding the agreement anew, using the legal base considered appropriate by the Court.
In the meantime, the Court could apply by analogy the second paragraph of Article 174 of the Treaty, which, according to its wording, applies only to regulations, in order to safeguard the effects of the decision declared void.
In the Council's view, the references to Opinions 1/75 and 1/78 set out in the request for an opinion are not relevant.
Although in those cases the Court examined the specific basis of the Community's powers under various articles of the Treaty, that was because the issues raised before it related to the sharing of powers between the Community and the Member States.
Those issues fall within the scope of the Article 228 procedure and, in the Council's view, cannot be resolved except by considering the provisions of the Treaty on which the Community's powers are based, which is not the case here.
The choice of the legal base for concluding an agreement is a problem which arises only where the nature of Community action at international level can vary and involve the exercise of different Community powers according to the matters covered.
However, provided that the agreement is compatible with the Treaty, the choice of the legal base in such a case is a matter for the legislature, subject to review by the Court subsequently.
In the case of the Third Decision, which covers all matters affecting the legal position of undertakings, a wide variety of options are open to the legislature in determining the extent of the Community's participation.
It is necessary to establish, in particular, whether participation is to be based on an overall approach or on a case-by-case approach, whether any reservations are to be attached to the Community's participation and, if so, which ones, and whether participation must relate only to those areas in which the Community has already exercised its internal powers or extend to areas in which its powers have yet to be exercised.
In the latter case, a line should be drawn between the Community's obligations and the Member States'obligations.
Those difficulties would increase still further if the Community were also to participate in the Revised Declaration which, given its connection with the Third Decision, would itself have to be submitted to the Community legislature for consideration.
The Council considers that in any event the possibility of the joint participation of the Community and the Member States in the Third Decision cannot be called in question since its core, namely the system applicable to undertakings, does not fall within the exclusive competence of either the Community or the Member States.
Neither the Commission's proposal nor Belgium's request for an opinion calls such joint participation into question.
In conclusion, the first two questions submitted by Belgium are devoid of purpose since the Community legislature has yet to define the aim and the nature of Community action.
For the Court to express an opinion on the legal base to be adopted would prejudge the legislature's policy choices.
The answer to the third question depends on the answer to the first two and, consequently, it is also inadmissible.
Even if viewed in isolation, the question concerning the exclusive or composite nature of Community participation is devoid of purpose, since the powers of the Member States have never been called into question.
Not even the request for an opinion casts any doubt on that point.
Accordingly, the only reason for the inclusion of the third question is to justify the request for an opinion under Article 228 of the Treaty and the case-law of the Court, which constitutes an abuse of process.
The Commission observes, in the first place, that the Third Decision, as a binding measure designed to take effect outside the OECD, constitutes an agreement between the Community and non-member countries or an international organization, without there being any need to determine the precise identity of the other contracting party.
Secondly, it points out that the choice of the appropriate legal base may, as such, be submitted to the Court for an opinion under Article 228 of the Treaty, as is clear from Opinions 1/75 and 1/78.
That solution is necessary in order to avoid the complications which could arise at international level either from the annulment by the Court of the measure concluding the agreement on account of the incorrect choice of the legal base or from the impossibility of settling the differences regarding that choice.
In this case, the Community has given the OECD an undertaking to apply the Third Decision, but the dispute concerning the legal base prevents it from honouring that commitment since the Council is unable, in view of the absence of the unanimity required to amend the Commission's proposal, to adopt the measure required for that purpose.
Finally, in the case of the present request, the questions concerning the legal base are closely connected with the third question raised by Belgium.
In particular, if the legal base to be adopted conferred exclusive competence on the Community, the latter should participate in the decision alone and not jointly with the Member States.
On the basis of Opinion 1/78, that question is inadmissible in any event.
The European Parliament states that it is taking part in these proceedings solely with a view to protecting its rights and powers in the Community decision-making process.
In those circumstances, it defers to the judgment of the Court so far as concerns the admissibility of the request for an opinion.
C - The legal basis to be adopted for the Community to participate in the Third Decision
The Belgian Government observes that the Strengthened Instrument covers a broad range of situations falling within very different areas, including transport, fisheries, taxation and public procurement.
It was for that reason that the Commission chose Article 57 of the Treaty as a horizontal basis upstream of the various specific areas affected, in addition to Article 113 of the Treaty, likewise relied upon on account of the close links and mutual influences between foreign investment and trade.
According to the Belgian Government, it is possible as a result of the Court's case-law to identify the criteria to be applied in selecting the correct legal basis.
In particular, the Court has stated that recourse to Article 235 of the Treaty is justified only where no other provision of the Treaty gives the Community institutions the necessary power to adopt the measure in question (judgments in Case 45/86 Commission v Council, cited above, Case 242/87 Commission v Council [1989] ECR 1425 and Case C-62/88 Greece v Council [1990] ECR I-1527).
Article 235 cannot be regarded as a 'catch-all'provision, which would make it possible to dispense with multiple legal bases involving other procedural requirements.
The Court is mindful of the fact that the application of different procedural rules may affect the content of the measure in question (judgments in Case 45/86 Commission v Council, cited above, Case 275/87 Commission v Council [1989] ECR 259 - Summary publication - and Case C-62/88 Greece v Council, cited above).
With regard to Article 113 of the Treaty, the Belgian Government first points out that, according to Opinion 1/75, the concept of commercial policy has the same content whether it is applied in the context of international action by a State or to action by the Community.
That key concept removes from the outset any temptation to adopt a restrictive interpretation.
Furthermore, the Court's reasoning in Opinion 1/78, culminating in the inclusion of commodity agreements within the common commercial policy, could easily be transposed to the area of services, in view of its importance in international trade.
Finally, in order to determine the system applicable to an international agreement, it is necessary to consider its essential purpose; accordingly, the fact that it may cover specific areas must not necessarily lead to the adoption of specific rules for its conclusion which differ from those of the agreement as a whole.
The Greek Government notes that the matters covered by the Strengthened Instrument fall within different areas, such as taxation, employment, environmental protection, industrial activity, public procurement or transport.
Accordingly, Article 57 of the Treaty cannot be regarded as a 'horizontal'base encompassing various distinct areas which, in certain cases, fall within specific provisions of the Treaty or, in others, fall outside a well-established Community policy.
With regard to Article 113 of the Treaty, it is common ground that the list in paragraph 1 of a set of commercial policy measures is there for guidance and that the Treaty provisions relating to commercial policy must be given a broad interpretation, such as to encompass measures indirectly connected with trade (judgment in Case 8/73 Massey-Ferguson [1973] ECR 897, Opinion 1/75 and Opinion 1/78).
However, it cannot be argued that national treatment with regard to investments is accorded in the context of close relations and of arrangements involving interaction with trade.
Investments in the tertiary sector of production cannot be included within the definition of commercial policy.
Furthermore, trade in goods with non-member countries is not necessarily the result of prior investment.
Finally, the Third Decision concerns a highly specific set of obligations, so much so that there is no connection, even an indirect one, with the common commercial policy.
In the Greek Government's view, therefore, Article 235 of the Treaty should be taken as the legal base, without that being contrary to the ancillary nature of that provision.
That is so because the aim pursued by the Third Decision differs from the purpose of each of the special legal bases which can be found in the Treaty.
The Spanish Government has no observations to make on the substance of the questions relating to the legal base.
The French Government considers that the Strengthened Instrument does not fall within the scope of commercial policy or, consequently, within that of Article 113 of the Treaty.
In its case-law the Court did not define the concept of a common commercial policy in abstract terms, describing it as broad and variable in content.
This reflects the fact that the scope of international negotiations has grown steadily wider, in terms of both the sectors and the instruments concerned, in step with the progress achieved in such negotiations.
As is clear from Opinion 1/78 and the aforesaid judgment in Case 45/86 Commission v Council, a measure falls within the scope of commercial policy only in so far as, if adopted separately by the Member States, it might jeopardize the Community's ability to achieve a common commercial policy and could lead directly to distortions of trade between Member States in goods coming from or bound for non-member countries.
The aim of the Strengthened Instrument is not to influence cross-frontier trade but to encourage the pursuit, in a given country, of economic activities by foreign nationals.
Even if national treatment were capable of indirectly affecting patterns of trade, the measures in question cannot be viewed as commercial policy instruments, otherwise that concept will be diluted and embrace all powers, for instance, in monetary matters.
Furthermore, the Strengthened Instrument has a direct bearing not on foreign investment but on discrimination between economic operators established in a particular country on grounds of their nationality or of the origin of the capital employed, which is not a matter of national commercial policy or, consequently, of common commercial policy.
The Commission had failed to demonstrate that equal treatment would have serious consequences for trade with non-member countries.
On the contrary, the Community measures likely to be affected by the Strengthened Instrument are those whose legal base is Article 57 (access to local credit), 84 (air transport), 98 (fiscal harmonization), 100 and 100a (harmonization especially in the field of public contracts) and not those adopted on the basis of Article 113 of the Treaty.
Since national treatment is not likely either to affect trade or to jeopardize the Community's ability to conduct a consistent commercial policy, therefore, Article 113 of the Treaty does not constitute an appropriate legal base.
The French Government has thus considered recourse to a single legal base, namely Article 235 of the Treaty.
Its intention was not to disregard the case-law of the Court, which treats that provision as entirely ancillary, but to apply it since, if the Court's reasoning in the 'titanium dioxide'judgment (Case C-300/89 Commission v Council [1991] ECR I-2867) were to apply to measures adopted under an agreement, Article 235 would appear to be the only suitable legal base.
According to the AETR judgment (Case 22/70 Commission v Council [1971] ECR 263) and Opinion 1/76 ('European Laying-up Fund for Inland Waterway Vessels'[1977] ECR 741), the Community's external competence can, in the absence of express provisions in the Treaty, be deduced from its internal powers to act.
The Third Decision affects Community measures based on different provisions, namely Articles 57(2), 99, 100, 100a and 130s of the Treaty.
However, none of the matters covered can be identified as a primary factor overriding the others.
Nor do the applicable Treaty provisions lay down different rules both as regards voting within the Council and participation by the Parliament.
It is clear from the 'titanium dioxide'judgment, cited above, that those legal bases combined are such as to empty the cooperation procedure of its very substance and it is therefore appropriate to select, from amongst the legal bases available, that which is most appropriate.
In this case, however, there is no provision or group of provisions which effectively embraces the others in scope.
The situation is equivalent to one in which Community action appears necessary to achieve, through the operation of the common market, one of the aims of the Community, although the Treaty has not laid down the powers required for that purpose.
Accordingly, the Community's participation in the Third Decision can be based on Article 235 of the Treaty alone, in order to provide an empirical solution to what might have had the appearance of a legal deadlock.
The French Government, however, questions the relevance of one of the fundamental assumptions on which that reasoning is based, namely the application of the 'titanium dioxide'judgment to the conclusion of international agreements.
For one thing, the new version of Article 228 of the EC Treaty, as set out in the Treaty on European Union, clearly distinguishes between two categories of agreements: those concluded with the assent of Parliament and those concluded after consulting Parliament.
For another, in some cases, such as this, the application of the 'titanium dioxide'judgment may be hindered by the impossibility of finding, amongst the different legal bases, one or more capable of covering the agreement in its entirety.
The French Government considers that this problem would not be resolved if the AETR judgment were applied in such a way as to found the Community's competence not on the provisions which constitute the legal bases of the Community measures affected by the Strengthened Instrument but on those which confer powers on the Community in relation to nationals of Member States with regard to national treatment.
Articles 54(2) and 57(2) of the Treaty would then come into their own, but would not cover all the measures concerned, in particular fiscal measures.
It would thus be appropriate to add Article 99 (for indirect taxation) and Article 100 (for direct taxation).
In so far as those provisions envisage the application of the cooperation procedure, in the case of Article 54(2), and of the unanimity rule, in the case of Articles 99 and 100, their concurrent application would also be contrary to the 'titanium dioxide'judgment.
In conclusion, the French Government considers that if the 'titanium dioxide'judgment were applied to this case, the Community's participation in the Third Decision would have to be based on Article 235 of the Treaty.
If not, Articles 54, 99 and 100 of the Treaty would constitute the appropriate legal base.
According to the Netherlands Government, there are a number of connecting factors between the Third Decision, in view of its procedural nature and the horizontal effect of the principle of national treatment, and various Community policies, more particularly Articles 75 and 84 (transport), 92 and 93 (aid), 98 and 99 (direct and indirect taxation) and 100a (internal market, including public contracts).
Article 57 of the Treaty is of lesser interest, since the Treaty provisions on establishment do not apply to undertakings from non-member countries, which are covered by the Third Decision.
In addition, the Revised Declaration excludes from the scope of the principle of national treatment the entry of foreign investments or the conditions for the establishment of undertakings.
Similarly, Article 113 of the Treaty cannot be taken into account.
Admittedly, the Third Decision may have implications for the Community's trade relations with non-member countries, but it is not expressly designed to regulate those relations.
Furthermore, it covers not only the movement of goods but also the provision of services.
Since the various connecting factors referred to earlier, whether viewed individually or in combination with one another, do not confer on the Community the competence necessary to take part in the Third Decision, and the factor relating to commercial policy is at most of an ancillary nature, the Netherlands Government concludes that only Article 235 of the Treaty can constitute the legal base for the decision to be adopted.
The United Kingdom considers that the appropriate legal base for the Community to participate in the Third Revised Decision comprises Articles 57(2), 75 and 84(2) of the Treaty.
Articles 52 to 57 of the Treaty are concerned, in particular, with ensuring that undertakings within the meaning of Article 58 of the Treaty may carry on business in the territory of the Member States without discrimination on grounds of nationality.
Equal treatment under those articles is very wide in scope, as is clear from the General Programme for the Abolition of Restrictions on Freedom of Establishment of 18 December 1961 (OJ, English Special Edition, Second Series IX, p. 7) and from the case-law of the Court (judgments in Case 197/84 Steinhauser [1985] ECR 1819, Case 270/83 Commission v France [1986] ECR 273 and Case 79/85 Segers [1986] ECR 2375).
Only the transport sector is not subject to the application of Article 52 et seq., since Title IV (Transport) constitutes a lex specialis in that regard.
Accordingly, the external competence to participate in the Third Decision flows from the legal bases inherent in Articles 57(2), 75 and 84, consistently with the AETR judgment (cited above).
On the other hand, neither Article 235 nor Article 113 of the Treaty constitutes an appropriate basis to participate in the decision in question.
Article 235 can be excluded because, even though many aspects are covered by the decision, they are all covered by Articles 52 to 58 of the Treaty and there is no need for recourse to Treaty provisions affecting, for instance, fiscal matters or State aids.
Article 113 can be excluded for the same reasons, notwithstanding the links between foreign investment and trade, or the fact that certain aspects of national treatment (for instance access to import quotas) are concerned with commercial policy.
Finally, the AETR judgment confirms that the Community's external competence can be derived from the internal rules of the Treaty, even though the agreement to be concluded is concerned with the activities of undertakings from non-member countries within the Community.
The Commission points out, in the first place, that the appropriate legal base for the Community to participate in the Third Decision is that which should have been adopted for the Strengthened Instrument as a whole, if the latter had been in the form of a binding measure.
The procedural matters which form the subject of the Third Decision should be defined in relation to the substantive rule on which all the provisions concerned are based.
The obligations imposed on the Community by the Strengthened Instrument should therefore be examined in their entirety.
The Commission proceeds to describe the significant stages in the development of international trade negotiations.
In the post-war period, negotiations focused on questions concerning access to the export market, as is clear in particular from the GATT basic agreement and the results of the first rounds of negotiations conducted within that framework.
From the end of the 1970s, however, related questions have grown in importance since their role in connection with what are generally known as the terms of trade has in the meantime been recognized.
The conditions and prospects for trade depend not only on classic tariff and quantitative measures in respect of goods but also on services and investment opportunities connected with trade (transport, insurance, banks, marketing, advertising, after-sales service and capital transfers), which are beginning to play a dominant role at a time when conventional tariff and quantitative measures are losing ground as a result of liberalization.
Community practice confirms that the expression 'international trade'is now used in the broad sense which includes services (see Article 185 of the Fourth ACP-EEC Convention, concluded by Decision 91/400/ECSC, EEC of the Council and the Commission of 25 February 1991, OJ 1991 L 229, p. 1).
That reflects economic realities, which reveal a growing interpenetration between the supply of goods and the provision of services.
In some cases, users can gain access to equipment either through the purchase of services or by buying the equipment.
In other cases, the supply of goods is accompanied by the purchase of new related services (consulting, after-sales services, maintenance, software).
In the case of data processing, software can be supplied with the equipment, or in the form of a service (cable transmissions or programme signals).
In the case of some forms of acquisition, leasing for instance, the 'goods'and 'services'are so closely connected as to be virtually indistinguishable.
Logically, the centre of gravity of the negotiations within the framework of GATT has shifted appreciably and the Uruguay Round was dominated by questions connected with the rules relating to market access.
Another example is the Code of Conduct for Liner Conferences, drawn up within the framework of UNCTAD (United Nations Conference on Trade and Development), which apportions the market for a particular service (maritime transport) by reference to trade in goods.
In view of that interrelationship, it has become virtually impossible to negotiate a commercial agreement for trade in goods alone.
Every time it is necessary to take account of mutual concessions in the two sectors, goods and services, since the advantages gained in one sector may offset the sacrifices made in the other.
On the basis of those considerations, the Commission takes the view that the refusal to acknowledge the relevance of Article 113 of the Treaty as the legal base rests on an outdated conception of the common commercial policy, which seeks to limit that article to measures regulating imports and exports directly.
Ever since Opinion 1/78, however, the Court has rejected that narrow conception, based on factors which still held sway in the 1950s.
In those circumstances, the fact that the Strengthened Instrument has only a limited impact on rules governing trade in goods is not decisive.
The Commission goes on to consider the effects of according national treatment to undertakings established in the Community but controlled by citizens or undertakings of non-member countries.
Such undertakings may be engaged in the production of goods or the provision of services, or both at the same time, and may be in the form of an independent company, a subsidiary having its own legal personality or a branch.
For the first two categories, national treatment accorded by the Community to undertakings from OECD Member countries has to a large extent already been achieved through Article 58 of the Treaty.
The Strengthened Instrument undoubtedly has an impact on classic measures for regulating trade in goods so far as concerns, in particular, access for undertakings from non-member countries to import or export licences provided for by Community legislation as instruments of commercial policy.
In so far as those undertakings engage on equal terms in import and export transactions, such undertakings, on account of their privileged relationship with their countries of origin, increase the volume of trade with those countries.
That impact on trade is in fact the primary purpose of granting national treatment.
In those circumstances Article 113 of the Treaty undoubtedly constitutes an appropriate or necessary legal base for the adoption of the proposed act, which is one of the 'more elaborate means', according to the terms used by the Court in Opinion 1/78, of which the Community should avail itself with a view to carrying on its commercial policy.
That is not a recent approach, moreover, since it reflects a well-established practice on the part of States to regulate in their commercial agreements questions concerning trade in both goods and services.
The same approach has been taken by the Community since the 1970s, when concluding a number of agreements covering the two sectors alike.
Accordingly, although Article 113 of the Treaty constitutes, in the Commission's view, an appropriate basis for adopting the proposed decision, some additional factors need to be considered in order to determine whether that provision is the only valid basis.
The Commission advocated that position at first but subsequently accepted the dual basis, Articles 57 and 113, in a spirit of conciliation with regard to the Council and so as to take account of the interests of the Parliament.
In those circumstances, notwithstanding its proposal, the Commission first submits to the Court those arguments militating in favour of exclusive recourse to Article 113 as the legal base, in keeping with the Commission's basic outlook.
It follows from that point of view that the common commercial policy covers not only questions concerning trade in goods and the investments and services connected therewith, but also trade in services in the broad sense.
In this case the Court is not required to consider whether all kinds of trade in services fall within the scope of Article 113.
The Strengthened Instrument, which concerns only the activities of undertakings already established, applies only to the provision of services through (or with the assistance of) an establishment, excluding services not so provided and services supplied to customers moving to another country in order to receive them.
However, it is practically impossible to dissociate the category of services that is directly relevant from international trade in services as a whole.
Accordingly, it is appropriate to determine whether the dynamic conception of the common commercial policy outlined by the Court in Opinion 1/78 can include, in general, an entire sector for which there is no established practice so far.
In that regard there are three main schools of thought.
According to an extreme view, which is fast losing ground, Article 113 is limited to trade in goods and, at most, to related matters.
For those who take a middle course, it is possible to go beyond the strict framework of trade in goods, while adopting a selective approach with regard to the sectors covered, including services in particular.
A third school of thought takes the view that Article 113 covers the Community's external economic relations in their entirety.
The first trend is based on a purely historical and systematic approach to the question.
The common commercial policy features in the general scheme of the Treaty as the external aspect of the customs union, which is confirmed at first glance by Articles 3, 9, 10 and 110 of the Treaty.
Militating against that view, however, is the consideration that the Treaty does not contain any definition of commercial policy, that the provisions on the customs union and those on the common commercial policy are very far apart from each other in the Treaty and that the latter, concluded for an indeterminate period, pursues objectives which go well beyond the achievement of a mere customs union between the Member States.
All those considerations have impelled the overwhelming majority of authors to reject the minimalist argument in favour of the dynamic approach chosen by the Court.
Amongst the authors of the second trend, some draw a distinction between trade in services, which can be brought within the scope of the common commercial policy, and freedom of establishment, which cannot.
However, that is an artificial distinction.
It would lead to an unnatural division of the services sector at a time when, at international level and particularly within GATT, an overall approach is gaining ground, and would result in the treatment of identical situations in a discriminatory manner.
In the circumstances the Community could, in the context of the common commercial policy, grant national treatment to traders from non-member countries who carry on business in the Community without having an establishment of their own, but it would be unable to accord such treatment to traders who already have an establishment in the Community.
Such an outcome could only arouse misgivings.
There are, however, some powerful arguments which militate in favour of the inclusion of the provision of services in any form within the common commercial policy.
For one thing, that would be consistent with the development of the concept of a common commercial policy at international level.
For another, that solution would take account of the fact that, internally, every aspect of trade in services falls within the scope of the Community's competence.
Accordingly, the situation is similar to that of the customs union, where the creation of the common market as regards the movement of goods called at once for a common trading arrangement vis-à-vis non-member countries.
Although there is no express provision in the Treaty for a comprehensive external system in respect of trade in services, that is because the sector in question was relatively unimportant at the time, which is no longer the case now.
When the need to regulate in broader terms the external aspect of the services sector grows more acute, it is wholly inadequate to adopt a legal base whose decision-making machinery would differ considerably from that applicable to goods since a solution of that kind would undermine the Community's capacity to act swiftly, effectively and consistently in the two sectors.
Accordingly, the same legal base, namely Article 113, should be selected for the two sectors, except in cases where the Treaty provides for a highly specific legal base, such as Article 28 or Article 103(4) for goods and the second paragraph of Article 59 for providers of services who are third country nationals already established in the Community.
Alternatively, the Commission considers that if the Court did not treat Article 113 as the sole legal base for the Community to participate in the Third Decision, the addition of Article 57 would be sufficient to cover those aspects of the rules on establishment and trade in services not covered by Article 113.
In that case, the concomitant application of the criteria laid down by the Court in the AETR judgment and Opinion 1/76 would make it possible to regulate, on a single Treaty base, all the horizontal and general aspects of external relations concerning freedom of establishment and trade in services.
The AETR judgment can be applied in this case even though it was given by the Court in the common policy areas.
All that matters is the existence of an internal power for the achievement of a given aim, as is also shown by the practice of the institutions.
The fact that Article 57 provides in principle only for the adoption of rules applicable within the Community itself is equally immaterial, since that is precisely the situation in which the AETR judgment is to be applied.
Finally, although Article 58 of the Treaty does not extend to branches or agencies the Community treatment accorded to undertakings from non-member countries constituted in the form of a company under the law of a Member State, that does not mean that the grant of such treatment by means of an act based on Article 57 is prohibited.
In the further alternative, the Commission argues that Article 100a(1) of the Treaty could be added to Article 113 as the legal base for the proposed decision.
According to the principles laid down by the Court in AETR, it should be possible on the basis of Article 100a to introduce the various aspects of the internal market in external relations as well.
Consistent Community action with regard to national treatment is essential, within the framework of the internal market, in order to avoid isolated steps by the Member States which may distort the conditions of competition and result in ever more favourable conditions being offered to undertakings from non-member countries in order to attract their investments.
In any event, there can be no question of resorting to Article 235 of the Treaty.
According to the case-law of the Court, that provision cannot be adopted as the legal basis except in the absence of any other specific base.
The Court has even pointed out in its judgment in Case 165/87 Commission v Council, cited above, that recourse to that article is not justified where a measure properly based on a different provision of the Treaty is likely to affect another measure, itself based on Article 235 of the Treaty.
The European Parliament refers back to the views it had already expressed in the opinion it gave on the first reading under the cooperation procedure which was to lead to the adoption of the proposed decision.
The dual legal base, Article 57 and Article 113 of the Treaty, is necessary because the implementation of the Community policy on the taking up and pursuit of activities by self-employed persons involves the conclusion of external agreements which ensure the balanced development of that policy.
The second sentence of Article 52 and Article 57(2) of the Treaty confer express powers on the Community for the gradual abolition of the restrictions on freedom of establishment, in particular for undertakings from non-member countries referred to in Article 58, in accordance with the AETR judgment, as supplemented by the judgment in Joined Cases 3, 4 and 6/76 Kramer and Others [1976] ECR 1279 and by Opinion 1/76.
This means that the Community is empowered to assume the international obligations necessary for the achievement of that aim.
Furthermore, it should be noted that the Community's participation in the Third Decision is aimed at liberalizing policies relating to direct foreign investment, in particular so far as concerns the entry, establishment and treatment of foreign-controlled undertakings, and that the freedom of establishment accorded to those undertakings contributes, in particular, to the development of intra-Community trade.
It follows that Article 113 of the Treaty cannot constitute the sole legal base for participating in the Third Decision.
The addition of Article 57(2) of the Treaty is necessary in any event and the Treaty provisions relating to transport could be taken into account in the case of Community measures constituting exceptions to national treatment in that area.
Furthermore, the Revised Declaration does not forbid Member States to adopt such measures as they consider necessary for the maintenance of public order and the protection of their essential security interests.
Since, under the EEC Treaty, those matters fall within the competence of the Member States, the latter can give undertakings in that regard under the Third Decision, which would be incompatible with the choice of Article 113 as the legal base for the Community to participate in that decision.
The Parliament also maintains that to resort exclusively to Article 113, on the basis of a broad interpretation of that provision, may seriously undermine the institutional balance, in particular so far as concerns Parliament's role with regard to the conclusion of international agreements.
To exclude the participation of Parliament altogether would be contrary to the will, expressed in the Single Act, of developing the Community along increasingly democratic lines, and to the approach taken by the Court in its judgment in the 'titanium dioxide'case.
Finally, recourse to Article 235 of the Treaty is to be ruled out on account of the ancillary nature of that provision.
D - Exclusive or mixed participation by the Community in the Third Decision
The Belgian Government points out that the Member States of the Community are also Member countries of the OECD, whereas the Community does not possess that status.
The close cooperation provided for between the Community and the OECD by Article 231 of the Treaty has not resulted in the Community's accession to the OECD.
The Belgian Government raises the question whether that fact justifies mixed participation in the Third Decision.
The Greek Government observes that the Third Decision takes effect within the framework of the Revised Declaration, to which the Community would not seem to have acceded.
What is more, some of the matters covered by the provisions on national treatment are not covered by existing Community policies, but fall within the scope of national law.
From that point of view, exceptions to the principle of national treatment may be introduced both at Community level and at national level.
Mixed participation in the Third Decision is therefore justified.
The Spanish Government maintains that during the preliminary negotiations the 12 Member States and the Commission agreed that the Community's participation in the Third Decision did not raise any question of compatibility with the Treaty, that the Community had adequate powers for that purpose and that its participation did not exclude that of the Member States.
The Third Decision, which deals with the system applicable to undertakings, falls within the competence of the Community or that of the Member States, according to whether the subject in respect of which rules are to be laid down is a Community matter or a national matter.
Accordingly, powers are shared between the Community and the Member States with regard to its adoption.
According to the French Government, the Community's participation in the Third Decision can be viewed from three angles.
In the first place, Articles 54 and 57 of the Treaty confer certain powers on the Community with regard to national treatment.
Second, the Community's competence stems from the existence of Community exceptions to the application of national treatment, which the Community is to notify to the OECD.
Third, the Strengthened Instrument may in the future affect the Community's prospects of introducing different treatment for foreign-controlled companies and for companies controlled by Community nationals.
However, the competence of the Community does not displace that of the Member States, who retain the power to determine the treatment to be accorded to direct branches and subsidiaries of companies established in non-member countries.
Furthermore, since Article 52 of the Treaty applies only to the exercise of freedom of establishment within the Community by nationals of the Member States, it does not prevent Member States from maintaining or renegotiating their agreements on establishment with non-member countries.
The French Government therefore considers that the Member States and the Community must participate jointly in the Third Decision.
The Netherlands Government considers that, having regard to the powers of the Member States in this area, their independent participation in the Third Decision is justified.
The United Kingdom considers that the Member States'competence to participate in the Third Decision cannot be called in question, quite irrespective of the appropriate legal base for participation by the Community.
The treatment of undertakings controlled by third country nationals and operating within the territory of the Member States is governed partly by the provisions of national law and partly by the provisions of Community law.
Since the Third Decision imposes certain obligations concerning the notification of such measures, the Member States as well as the Community are competent to participate in the decision.
In addition, those obligations regarding notification cover, in particular, measures taken on grounds of public policy, public security and public health.
It is clear that notification of those measures falls within the competence of the Member States, since the Treaty, and in particular Articles 55, 56, 66, 223 and 224 thereof, acknowledges their right to adopt such measures in the absence of harmonization by Community rules.
The Council maintains that the possibility of joint participation in the Strengthened Instrument by the Community and the Member States cannot be called in question and flows from the nature of the instrument itself.
According to whether the system applicable to undertakings falls within the scope of Community powers or national powers, obligations may be assumed at international level by the Community or by the Member States respectively.
In the Commission's view, if Article 113 of the Treaty were the sole legal base for the adoption of the proposed measure, the Community would have exclusive competence to participate in the Third Decision.
That outcome could create a degree of uncertainty inasmuch as national treatment is not concerned exclusively with Community legislation but also with national legislation in a number of areas, some of which will probably never be the subject of harmonization.
It is generally acknowledged, however, that an agreement concluded by the Community may have such consequences for national law.
Thus, the grant by the Community of most favoured nation status had an impact on the application of national legislation, in particular customs legislation, before it was almost totally harmonized and unified.
Similarly, the conclusion by the Community of the Agreement relating to technical barriers to trade (Council Decision 80/271/EEC of 10 December 1979 concerning the conclusion of the Multilateral Agreements resulting from the 1973 to 1979 trade negotiations, OJ 1980 L 71, p. 1) affected areas covered by national legislation that had not always been harmonized at Community level.
In any event, the fact that the Member States retain certain internal powers cannot necessarily be relied upon for the purpose of conferring external powers on them, since that would be tantamount to what the Commission describes as 'reverse'AETR reasoning.
Finally, if recourse to Article 57 or to Article 100a alongside Article 113 were considered necessary, the Community legislature would have a discretion in accordance with Opinion 1/76 to assume all the obligations imposed within the framework of the OECD or to make way, to some extent, for the Member States in areas not covered by Community legislation.
The European Parliament considers that the Member States are competent to participate in the Third Decision alongside the Community, but it refers to this point only in its observations on the question of the legal base.
Opinion of the Court
I
GROUNDS CONTINUED UNDER DOC.NUM: 692V0002.1
1.
The request for an opinion made by the Kingdom of Belgium pursuant to the second subparagraph of Article 228(1) of the EEC Treaty (substantially reproduced in Article 228(6) of the EC Treaty) relates both to the legal basis to be adopted for the Council decision on participation by the Community in the Third Revised Decision on national treatment of the Council of the Organization for Economic Cooperation and Development (hereinafter 'the Third Decision'and 'the OECD', respectively) and to the question whether the Community has exclusive or joint competence to participate in that decision.
2.
The Third Decision was adopted in connection with the OECD's activities concerning the treatment to be accorded to foreign-controlled undertakings established on the territory of OECD Member countries.
It forms part of what is known as the 'Strengthened National Treatment Instrument', which is in two parts, namely the Revised Section on National Treatment in the 1976 Declaration on International Investment and Multi-national Enterprises (hereinafter 'the Revised Declaration'), and the decisions annexed thereto, including the Third Decision.
3.
In the Revised Declaration, the OECD Member countries and - in matters falling within its competence - the Community express the intention to accord to undertakings operating in their territories which are owned or controlled directly or indirectly by nationals of another Member country, treatment which is no less favourable than that accorded in like situations to domestic undertakings, subject to certain exceptions or derogations.
4.
In the Third Decision, the contracting parties undertake, in particular, to comply with a procedure for notification and examination, within the framework of the OECD, of measures constituting exceptions to national treatment, and any other measures which have a bearing on national treatment.
5.
On the Commission's recommendation, the Council authorized the latter on 28 May 1990 to negotiate a decision on national treatment within the OECD.
On 27 November 1991 the Commission sent the Council a communication concerning the outcome of those negotiations together with a proposal for a decision, based on Articles 57 and 113 of the Treaty, on participation by the Community in the Third Decision.
6.
In December 1991, when the Third Decision was adopted by the Council of the OECD, the representative of the Kingdom of the Netherlands, the Member State which at the time held the presidency of the Council of the European Communities, stated that, in so far as the decision related to matters within the competence of the Community, the Member States would be bound by it after accession by the Community.
On the same occasion, the Commission representative stated that the Community intended to accede to the Third Decision after completion of the necessary Community procedures and that it associated itself, as regards matters within its competence, with the Section on National Treatment in the Revised Declaration.
7.
On 4 December 1992 the Kingdom of Belgium submitted its request for an opinion on the following questions:
- 'Is the dual legal basis (Articles 57 and 113) proposed by the Commission for the Council Decision on the Community's participation in the Third Decision justified?
- If the reply to the first question is in the negative, which would be the correct legal basis?
- Does the Community's competence to participate in the Third Decision exclude participation by the Member States, or is "mixed" participation justified?'
II
1.
The first point to note is that the Revised Declaration is not a legally binding instrument.
However, the Third Decision, which forms the subject of this request for an opinion is binding on the Member countries of the OECD and will bind the Community after its accession.
Accordingly, at this stage it must be treated as an agreement envisaged between the Community and non-member countries.
The Court considered in Opinion 1/75 ([1975] ECR 1355, especially at pp. 1359 and 1360) that in its reference to an 'agreement', the provision in question uses the expression in a general sense to indicate any undertaking entered into by subjects of international law which has binding force.
This request for an opinion, therefore, correctly refers to the Third Decision only.
2.
However, the Council has asked the Court to apply by analogy, in particular, Article 91 of the Rules of Procedure and has raised the objection that the request for an opinion is inadmissible.
It argues inter alia that the first two questions submitted to the Court relate neither to the compatibility of the Third Decision with the Treaty nor to the competence of the Community and its institutions in that regard, but to the quite different problem of the legal basis, which is unconnected with the scope of the procedure for an opinion under Article 228 of the Treaty.
According to its wording, the third question is indeed concerned with the division of powers between the Community and the Member States.
On the one hand, the answer to that question depends on the answer to the first two questions; on the other hand, even if taken in isolation, the question whether the Community has exclusive or joint competence is devoid of purpose, since the competence of the Member States has never been called into question.
According to the Council, the inclusion of that question was designed solely to justify the request for an opinion under Article 228, and therefore constitutes an abuse of process.
3.
Some of the governments which have submitted observations have also expressed reservations as to the admissibility of the questions relating to the choice of the legal basis of the measure to be adopted to conclude an agreement.
The Spanish Government and the United Kingdom maintain, in particular, that the relevance of the legal basis of a measure of that kind could be challenged in proceedings for annulment under Article 173 of the Treaty, but cannot be dealt with in the context of the procedure for a preliminary opinion under Article 228.
4.
Article 91 of the Rules of Procedure cannot be applied in connection with the consultative function entrusted to the Court by Article 228 of the Treaty.
The aim of Article 91 is to enable the Court to give a decision on certain preliminary objections or other preliminary pleas, before the parties put forward their arguments on the substance of the case.
That clearly does not apply to the procedure for an opinion.
Accordingly, the Council was not entitled to rely on Article 91 for the purpose of raising an objection to the admissibility of the request for an opinion.
However, in view of the objections raised, it is incumbent on the Court to examine the admissibility of the request for an opinion.
5.
As the Belgian Government confirmed at the hearing, the request for an opinion concerns the extent, in the light of the rules of Community law, of the powers which the Community and the Member States have in regard to the matters forming the subject of the OECD measures relating to national treatment, so that the answer to be given to that question depends on the scope of the provisions of Community law which are capable of empowering the Community institutions to participate in the Third Decision.
6.
As the Court has consistently held, its opinion may be sought pursuant to Article 228 of the Treaty, in particular on questions which, as in this case, concern the division of powers between the Community and the Member States (see, most recently, Opinion 1/94 [1994]ECR I-000, paragraph 9, and the case-law cited).
7.
In reply to the objections raised by the Spanish Government and the United Kingdom, it should be noted that the fact that certain questions may be dealt with by means of other remedies, in particular by bringing an action for annulment under Article 173 of the Treaty, does not constitute an argument which precludes the Court from being asked for an opinion on those questions beforehand under Article 228.
As the Court pointed out in Opinion 1/75, that procedure must be available for all questions capable of submission for judicial consideration, in so far as such questions give rise to doubt as to either the substantive or the formal validity of the agreement with regard to the Treaty.
8.
Accordingly, it is appropriate for the Court to accede to this request for an opinion.
III
1.
The Council also maintains that in the request for an opinion unauthorized use is made, in breach of Article 18 of its Rules of Procedure, of certain documents and certain confidential information concerning the work of its various bodies.
It has asked the Court not to take those documents and information into account.
2.
The Court considers that the documents and the information in question are not material and can therefore be disregarded.
IV
1.
In its request for an opinion, the Belgian Government argues that participation by the Community in the Third Decision falls within the Community's exclusive competence in the field of commercial policy which it has by virtue of Article 113 of the Treaty.
The Commission, notwithstanding the fact that it had submitted a proposal to the Council to adopt the decision on participation by the Community in the Third Decision on the basis of Articles 57 and 113 of the Treaty, has also propounded the view before the Court that Article 113 should constitute the sole legal basis for the adoption of the proposed measure which would confer exclusive competence on the Community in the matter.
2.
The Member States which have submitted observations, and the European Parliament, maintain that Article 113 does not confer any powers on the Community in regard to matters covered by the Third Decision.
3.
In view of those conflicting views, it is necessary to determine the scope of Article 113 of the EC Treaty, which substantially reproduces the provisions of Article 113 of the EEC Treaty, regard being had to the subject-matter of the Third Decision.
In view of the purely procedural nature of that Decision, the Court's examination must focus on the substantive rule to which it relates, namely the national treatment rule set out in Article II.1 of the Revised Declaration.
4.
That rule concerns the situation of undertakings, regardless of the sector in which they carry on their activities, which operate, in particular through branches and subsidiaries, on the territory of the Member States of the Community and which are owned or controlled by nationals of other OECD Member countries.
5.
It is important to note that the Revised Declaration, according to Article II.4 thereof, does not deal with the right of OECD Member countries to regulate the entry of foreign investment or the conditions of establishment of foreign undertakings.
6.
The Report of the Committee on International Investment and Multinational Enterprises (C/MIN(91)7/ANN2), which revised the declaration, refers in paragraph 10 to five categories of measures to which the national treatment rule applies, namely measures concerning (1) government procurement, (2) official aids and subsidies, (3) access to local finance, (4) tax obligations and (5) the rules applicable to investments other than direct investment operations and investment by 'direct branches', that is to say branches whose parent company is a non-resident.
7.
Although it is apparent from the foregoing that the national treatment rule concerns mainly the conditions for the participation of foreign-controlled undertakings in the internal economic life of the Member States in which they operate, the fact remains that it also applies to the conditions for their participation in trade between the Member States and non-member countries, conditions which are the subject of the common commercial policy of the Community.
8.
So far as the participation of foreign-controlled undertakings in intra-Community trade is concerned, such trade is governed by the Community's internal market rules and not by the rules of its common commercial policy.
9.
Accordingly, the national treatment rule relates only partially to international trade with non-member countries: it affects internal trade to the same extent as international trade, if not more so.
10.
Furthermore, as the Court stated in paragraphs 48 to 52 of Opinion 1/94, international agreements in the field of transport fall within the scope of the common transport policy and not within that of the common commercial policy.
To the extent that it concerns the conditions under which foreign-controlled undertakings are involved in international transport to or from non-member countries, the national treatment rule also falls outside the scope of Article 113.
11.
It follows from the foregoing that Article 113 does not confer exclusive competence on the Commission to participate in the Third Decision.
V
1.
In the alternative, the Commission argues that participation by the Community in the Third Decision could be based not only on Article 113 but also on Article 57 and, in the further alternative, on Article 100a.
In both cases, the Commission considers it appropriate to apply the principles laid down by the Court in the AETR judgment (Case 22/70 Commission v Council [1971] ECR 263) and in Opinion 1/76 [1977] ECR 741, according to which, in the absence of express provisions in the Treaty, the external competence of the Community can be inferred from its internal powers.
The Commission considers that, if that argument were accepted in this case, the Community legislature would have a discretion either to assume all the obligations arising within the framework of the OECD or to leave the Member States some latitude in matters not covered by Community legislation.
2.
A number of the governments which have submitted observations, as well as the European Parliament, argue that the matters forming the subject of the Third Decision fall within Treaty provisions other than Article 113.
They cite, in particular, Articles 54(2), 57(2), 75, 84, 92, 93, 98, 99, 100 and 100a.
The Greek, French and Netherlands Governments maintain, relying on different arguments, that recourse must also be had to Article 235 of the Treaty.
The governments which have submitted observations and the European Parliament are agreed that, in any event, the Community and the Member States share joint competence to participate in the Third Decision.
3.
In that regard, the Court has consistently held, most recently in Opinion 1/94 (paragraph 77), that the Community's exclusive external competence does not automatically flow from its power to lay down rules at internal level.
As the Court pointed out in the AETR judgment (paragraphs 17 and 18), the Member States, whether acting individually or collectively, only lose their right to enter into obligations with non-member countries as and when there are common rules which could be affected by such obligations.
4.
It is true that, as the Court stated in Opinion 1/76, the external competence based on the Community's internal powers may be exercised, and thus become exclusive, without any internal legislation having first been adopted.
However, this relates to a situation where the conclusion of an international agreement is necessary in order to achieve Treaty objectives which cannot be attained by the adoption of autonomous rules (see Opinion 1/94, paragraph 85).
It is undisputed that that is not the case here.
5.
Accordingly, it is necessary to ascertain whether the matters covered by the Third Decision are already the subject of internal legislation containing provisions on the treatment to be accorded to foreign-controlled undertakings, or empowering the institutions to negotiate with non-member countries, or effecting complete harmonization of the rules governing the right to take up an activity as a self-employed person.
It follows from the case-law of the Court (see, in particular, Opinion 2/91 [1993] ECR I-1061 and Opinion 1/94) that in those circumstances the Community has exclusive competence to enter into international obligations.
6.
It should be noted, first of all, that although the Community has adopted measures capable of serving as a basis for an exclusive external competence in accordance with the aforesaid case-law and falling in particular within the scope of Articles 57(2), 75, 84 and 100a of the EC Treaty, it is undisputed that those measures do not cover all the fields of activity to which the Third Decision relates.
7.
It follows that the Community is competent to participate in the Third Decision, but that such competence does not cover all the matters to which that decision relates.
8.
Article 235, which enables the Community to cope with any insufficiency in the powers conferred on it, expressly or by implication, for the achievement of its objectives, cannot in itself vest exclusive competence in the Community at international level.
Save where internal powers can only be effectively exercised at the same time as external powers, internal competence can give rise to exclusive external competence only if it is exercised.
This applies a fortiori to Article 235 (see Opinion 1/94, paragraph 89).
Furthermore, as the Court has consistently held (see most recently the judgment in Joined Cases C-51/89, C-90/89 and C 94/89 United Kingdom v Council [1991] ECR I-2757, paragraph 6), recourse to Article 235 is justified only where no other provision of the Treaty gives the Community institutions the necessary power to adopt the measure in question.
Operative part
In conclusion,
THE COURT
gives the following opinion:
(1)
The Community is competent to participate in the Third Revised Decision of the OECD.
(2)
The Community and the Member States share joint competence to participate in that decision.