OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 11 OCTOBER 1973

My Lords,

These cases come to the Court by way of references for preliminary rulings by the Arbeidsrechtbank of Antwerp. They raise questions of considerable importance in relation to the impact of the common customs tariff.

A Belgian statute of April 1960, as amended in July 1962, prescribed that (with immaterial exceptions) there should be levied upon all imports of rough diamonds into Belgium a contribution, of 1/3 % of their value, to the Sociaal Fonds voor de Diamantarbeiders. This body, as its name suggests, is charged with the duty of providing certain social security benefits for workers in the Belgian diamond cutting industry. It is the plaintiff in the proceedings before the Arbeidsrechtbank. In those proceedings it seeks to recover from the defendants, who are importers of rough diamonds into Belgium, the contributions to which they are, under the statute, liable for the year 1968, together with penalties and interest. The defendants have pleaded, among other defences, that the levying of such contributions, and therefore also of the attendant penalties and interest, is contrary to Community law.

This is not the first time that the question of the compatibility of that Belgian statute with Community law has arisen. It did so, Your Lordships will remember, in Cases 2 and 3/69 Sociaal Fonds voor de Diamantarbeiders v Brachfeld and Chougol (Rec. 1969, p. 211). In those cases this Court held in effect that contributions of the kind imposed by the statute were charges having an effect equivalent to customs duties within the meaning of that expression in Articles 9 and 12 of the EEC Treaty. From this it followed that a Member State was precluded from introducing them on imports from other Member States. But the Court held that there was nothing in the Treaty to forbid the imposition of such charges on imports from third countries, at all events in the period before the establishment of the common customs tariff. The Court was not, in those cases, concerned with what the position might be in relation to imports from third countries after the establishment of the common customs tariff, for the contributions that were there in issue were for the period 1 January 1960 to 30 September 1963. The Court left that position open, saying only that the unilateral introduction or maintenance in force of such charges by a Member State might impede the attainment of the purposes aimed at in the uniform application by all Member States of the common customs tariff in their relations with third countries, particularly where the principle of the free movement of goods in free circulation in a Member State did not suffice to correct the effects of such national measures. In those circumstances, the question might arise whether the Treaty implicitly restricted the freedom of Member States in the matter. The reservation could not have been more cautiously expressed.

Consistently with the decision of the Court in Cases 2 and 3/69, the plaintiff has abandoned its claims to contributions on the defendants' imports from other Member States (which form a comparatively small part of their total imports) and the Arbeidsrechtbank has held that there is nothing in Community law to preclude the levy of contributions on their imports from third countries for the period up to 1 July 1968, this being the actual date of the establishment, by Regulation (EEC) No 950/68 of the Council, of the common customs tariff. The questions referred to the Court by the Arbeidsrechtbank thus relate only to imports from third countries in the period beginning on 1 July 1968. In other words Your Lordships are now called upon to decide the questions that the Court left open in Cases 2 and 3/69.

My Lords, the argument for the defendants is founded on two main propositions. The first is that the introduction or maintenance by any Member State of charges having an effect equivalent to customs duties on imports from third countries is inherently inconsistent with the establishment for all the Member States of a common customs tariff, which was one of the objectives of the Treaty. The second is that, that being so, Article 5 of the Treaty imposed on each Member State an obligation to abstain from introducing or maintaining such charges after the establishment of the common customs tariff.

My Lords, it would be supererogatory for me to rehearse the very attractive and persuasive arguments that were put forward on behalf of the defendants in support of those propositions. I confess that it is with regret that I have come to the conclusion that they ought to be rejected.

The matter is essentially one of interpretation of the Treaty.

The first mention in the Treaty of the common customs tariff is to be found in Article 3, which lists the ‘activities’ that the Community is to undertake in order to achieve the purposes set out in Article 2. The first two of these activities are:

‘(a) the elimination, as between Member States, of customs duties and of quantitative restrictions on the import and export of goods, and of all other measures having equivalent effect;

(b) the establishment of a common customs tariff and of a common commercial policy towards third countries;’

There are also mentioned, among other things:

‘(d) the adoption of a common policy in the sphere of agriculture;

(e) the adoption of a common policy in the sphere of transport;

(f) the institution of a system ensuring that competition in the common market is not distorted;’

One sees at once that whilst the elimination of measures having an effect equivalent to customs duties or quantitative restrictions is expressly mentioned in paragraph (a) in relation to trade between Member States, there is no such mention in paragraph (b) in relation to trade with third countries. This raises the question whether the authors of the Treaty considered the abolition by individual Member States of charges having an effect equivalent to customs duties on trade with third countries to be part and parcel of the establishment of a common customs tariff or regarded it as an element in the adoption of common policies in other spheres, and in particular of a common commercial and of a common agricultural policy. To find the answer to that question one must look, as Article 3 itself enjoins, to the later provisions of the Treaty.

Of these, it is those relating to the customs union, ushered in by Article 9 (1), that are most directly material. I do not think that Article 9 (1) itself throws any real light on the problem. It provides:

‘The Community shall be based upon a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.’

This shows that there was, in the minds of the authors of the Treaty, an affinity between the elimination of customs duties and of charges having equivalent effect between Member States on the one hand and the adoption of a common customs tariff on the other hand — an affinity that was not shared by the other activities referred to in paragraphs (a) and (b) of Article 3, namely the elimination of quantitative restrictions and of measures having equivalent effect as between Member States, and the adoption of a common commercial policy towards third countries. It goes no further than that.

Nor do I think that Article 10 which was also referred to in argument, points to any particular conclusion. It clearly envisages the payment on goods imported into Member States from third countries of charges having an effect equivalent to customs duties. But these could be charges levied by individual Member States before the establishment of the common customs tariff or charges imposed by the Community itself. Article 10 is clearly not a charter for the imposition of such charges by individual Member States for ever. The same can be said of Article 112 (2) which contains a similar allusion.

What has convinced me, as I have said reluctantly, that the arguments of the defendants ought to be rejected is a perusal of the Articles of the Treaty that are to be found under the heading ‘The Customs Union’. These are in two sections. Section 1, comprising Articles 12 to 17, is headed ‘Elimination of Customs Duties between Member States’, Section 2, comprising Articles 18 to 29 is headed ‘Setting up of the Common Customs Tariff’. The contrast between the provisions of the two Sections is striking.

Article 12, the first Article of Section 1, provides:

‘Member States shall refrain from introducing between themselves any new customs duties on imports or exports or any charges having equivalent effect, and from increasing those which they already apply in their trade with each other.’

Here one has an echo of Article 3, and indeed of Article 9, in the express mention of charges having equivalent effect in the same breath as the mention of customs duties in the context of trade between Member States.

Article 13 provides:

‘1. Customs duties on imports in force between Member States shall be progressively abolished by them during the transitional period in accordance with Articles 14 and 15.

2. Charges having an effect equivalent to customs duties on imports, in force between Member States, shall be progressively abolished by them during the transitional period. The Commission shall determine by means of directives the timetable for such abolition. It shall be guided by the rules contained in Article 14 (2) and (3) and by the directives issued by the Council pursuant to Article 14 (2).’

So the procedure for the progressive abolition of customs duties between Member States and the procedure for the progressive abolition of charges having equivalent effect between them were to be different. The conclusion is inevitable, and indeed was drawn by this Court in Cases 2 and 3/69, that, in the eyes of Community law, there is a real distinction between customs duties and charges having equivalent effect. The Court held, in Cases 2 and 3/69, that the concept of ‘charge having equivalent effect’ included any pecuniary charge, other than a customs duty in the strict sense, imposed on goods by reason of the fact that they cross a frontier. This makes it impossible to argue that references in the Treaty to customs duties should be construed widely and that the references to charges having equivalent effect should be regarded as merely having been inserted ex cautela.

Article 14 is a lengthy Article prescribing in detail the timetable for the successive reductions in customs duties between Member States and the method of determining the amount of each. As one would expect after reading Article 13, it nowhere mentions charges having equivalent effect. Clearly it applies to these only referentially to the extent provided by Article 13 (2).

Nothing much turns on Article 15. It too refers only to customs duties and does not mention charges having equivalent effect.

Article 16 provides:

‘Member States shall abolish between themselves customs duties on exports and charges having equivalent effect by the end of the first stage at the latest.’

Article 17 is significant, for it emphasizes the strict sense in which the authors of the Treaty used the term ‘customs duties’. It begins:

‘1. The provisions of Articles 9 to 15 (1) shall also apply to customs duties of a fiscal nature. Such duties shall not, however, be taken into consideration for the purpose of calculating either total customs receipts or the reduction of customs duties as a whole as referred to in Article 14 (3) and (4).’

Article 17 goes on to make detailed provision about customs duties of a fiscal nature.

The conclusions to be drawn from an analysis of the Articles contained in Section 1 accordingly seem to me to be these: The authors of the Treaty drew a conscious distinction between customs duties on the one hand and charges having equivalent effect on the other. When they intended to refer to both they did so expressly. When they referred to customs duties alone they did so because they deliberately meant to.

It is in my opinion with these considerations in mind that one must approach the perusal of Section 2 dealing with the setting up of the common customs tariff.

My Lords, it is not necessary for me to take up Your Lordships' time with a detailed survey of the Articles in Section 2. It is enough to say that they contain provisions for the progressive introduction of the common customs tariff, including a timetable and provisions as to the amounts of successive changes in rates of customs duties to be made by Member States, that are just as detailed as those in Section 1 providing for the progressive elimination of duties as between Member States. The significant fact is that nowhere in Section 2 is there a single mention of charges having equivalent effect. Throughout, the references are to customs duties alone. The irresistible inference, to my mind, is that the authors of the Treaty did not mean the elimination or harmonization of charges having equivalent effect imposed by Member States on trade with third countries to be part and parcel of the introduction of the common customs tariff. If they had meant it to be so, they would have provided expressly for it to be so.

It is not necessary to enquire why the authors of the Treaty adopted the course that they did, though it is interesting to note the observation of the Commission that the one-sided abolition by all Member States of all charges having an effect equivalent to customs duties on trade with third countries would have weakened and would weaken the position of the Community in its negotiations on tariffs and trade with those countries. It is also interesting to note (though it is no more than that, because the views neither of the Council nor of the Commission can bind this Court) that the interpretation of the Treaty which I am inviting Your Lordships to adopt accords with that upon which the Council and the Commission have consistently acted. The Commission in its observations reviews in some detail what has actually happened about charges having an effect equivalent to customs duties on trade with third countries. It can I think be summarized by saying that, as regards agricultural products, all such charges have been eliminated (under the legislation establishing the common agricultural policy, and that, as regards other goods, they have been eliminated) in many cases under agreements negotiated by the Community with third countries as part of the common commercial policy.

My Lords, the defendants relied, in support of their argument, on the judgments of this Court in Case 40/69 Hauptzollamt-Oberelbe v Bollmann (Rec. 1970, p. 69) and Case 74/69 Hauptzollamt Bremen-Freihafen v. Krohn (ibid. p. 451). But I think that those cases are distinguishable. They were concerned with whether is was open to a Member State to lay down by its own legislation the interpretation and effect to be given to Community regulations. In the present case, in contrast, the Belgian statute in question, if I am right in my interpretation of the Treaty, operates altogether outside the domain of the common customs tariff.

It is true of course that, in certain situations, the levying by Member States of charges having an effect equivalent to customs duties may result in such distortions of trade or in such interference with competitive conditions as to hinder the attainment of the objectives of the Treaty. But, in the absence of a positive obligation expressly or by necessary implication imposed by the Treaty on Member States to abolish all such charges, I think that action to deal with such situations can only be taken on the initiative of the Commission. Any other view would entail attributing to the authors of the Treary an intention to confer on the Courts of Member States a jurisdiction which many of them are not equipped to exercise, involving as it would the determination of mainly economic issues affecting the Community as a whole, and that by reference to very imprecise criteria. I observe that one thus reaches, although by a slightly different route, the same conclusion with regard to charges having an effect equivalent to customs duties as this Court reached in Cases 51 to 54/71 International Fruit Company v Produktschap Groenten en Fruit (Rec. 1971, p. 1117) with regard to quantitative restrictions and measures having an equivalent effect to them.

It may be of course that, as the Commission suggests, Member States were precluded, by the combined effect of Articles 5 and 113, from introducing any new charges having an effect equivalent to customs duties after 31 December 1969. But that question does not arise for decision in the present cases.

Nor is it necessary for Your Lordships to decide whether in fact the levying of the contributions imposed by the particular Belgian statute in question in these cases has a distorting effect on trade or on competition. I say this because certain statistics were put in by the plaintiff in support of the view that it did not, and the Defendants offered to put in evidence to negative that impression. If I am right on the law, that question of fact falls to be determined neither by this Court nor by the Arbeidsrechtbank. Even if I am wrong, however, the question cannot fall to be determined by this Court on these references.

Turning to the questions actually put by the Arbeidsrechtbank to this Court, one finds that they number eight, that they are to some extent repetitive and that, in some respects, they range over a wider field than it is actually necessary to explore in order to dispose of these cases. Thus, as I have just pointed out, it is not necessary in order to dispose of these cases to consider whether any and, if so, what restrictions have been imposed and from when, on the freedom of Member States to introduce new charges having equivalent effect to customs duties. The contributions with which these cases are concerned have been leviable since 1962 and it is already clear from the decision of this Court in Cases 2 and 3/69 that, when first imposed, they were, in so far as they applied to trade with third countries, lawful.

I am therefore of the opinion that the questions referred to the Court by the Arbeidsrechtbank should, instead of being answered individually, be answered as follows:

1. Neither the EEC Treaty nor Regulation (EEC) No 950/68 of the Council on the common customs tariff imposes on Member States an obligation to abolish all charges having an effect equivalent to customs duties on the import of goods coming directly from third countries;