Opinion of Mr Advocate General Lenz delivered on 5 December 1990. - Nakajima All Precision Co. Ltd v Council of the European Communities. - Dumping - Definitive duty - Imports of serial-impact dot-matrix printers originating in Japan. - Case C-69/89.



European Court reports 1991 Page I-02069

Swedish special edition Page I-00149

Finnish special edition Page I-00161



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

A - Facts and preliminary remark

I - Facts

1. The applicant in this case is contesting an anti-dumping regulation adopted by the Council. It is Regulation (EEC) No 3651/88 of 23 November 1988 imposing a definitive anti-dumping duty on imports of serial-impact dot-matrix printers originating in Japan.(1) The applicant is one of the manufacturers named in Article 1(2) of that regulation whose goods sold for export to the Community were subjected to a definitive anti-dumping duty, which in the applicant' s case was fixed at 12%.

2. Under Article 2 of that regulation (hereinafter referred to as "the contested regulation"), the amounts secured by way of provisional

anti-dumping duty under Regulation (EEC) No 1418/88(2) were collected at the rates of duty definitively imposed, since in the applicant' s case the definitive duty was lower than the provisional anti-dumping duty. Although it is not itself challenged in the application, Regulation (EEC) No 1418/88 (hereinafter referred to as "the regulation imposing the provisional duty") is the subject of numerous references in the contested regulation.

3. With regard to the legal basis of those measures, a change occurred in this case between the time of the adoption of the regulation imposing the provisional duty and the time of the adoption of the contested regulation. This factor had a bearing on broad aspects of the dispute in the present proceedings. The regulation imposing the provisional duty was still based on Regulation No 2176/83(3) (hereinafter referred to as "the former basic regulation"), whereas the contested regulation is based on Regulation No 2423/88 of 11 July 1988 (hereinafter referred to as "the new basic regulation").(4)

4. One of those changes concerns Article 2(3)(b)(ii) of the regulation (in both versions). That provision deals with the construction of the normal value (the reference value used for determining whether the export prices applied reveal the existence of dumping). Both versions are reproduced in full at points 10 and 11 of the Report for the Hearing, and consequently I need here only mention that the applicant claims that the new provision is invalid and that it was incorrectly applied to it in this case.

5. Among the various alternatives contained in that provision and which describe methods by which the selling, general and administrative expenses (hereinafter referred to as "SGA expenses") as well as the profit margin to be used for the construction of the normal value may be determined, the applicant points to the following passage:

"If such data(5) is unavailable or unreliable or is not suitable for use they shall be calculated by reference to the expenses incurred and profit realized by other producers or exporters in the country of origin or export(6) on profitable sales of the like product."

6. The pleas in law which concern the validity and the actual application of that provision and on which this dispute hinges rest inter alia on international law rules on anti-dumping measures, and so I must also outline those rules. While anti-dumping duties are governed by Article VI of the General Agreement on Tariffs and Trade ("the GATT"), a number of the contracting parties to the GATT have laid down in this regard more detailed rules of application in adopting the "Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade"(7) (hereinafter referred to - in accordance with Part I of that agreement - as "the Anti-Dumping Code"). The Community is also a party to this agreement and it was on its behalf that the Council approved the Anti-Dumping Code by a decision of 10 December 1979.(8) According to their preambles, the two basic regulations are founded on Article VI of the GATT and on the Anti-Dumping Code.

7. For a more detailed account of the facts and in particular of the various pleas in law, I would refer to the Report for the Hearing. Where necessary I shall refer to the report in the course of my Opinion.

II - Preliminary remark

8. My preliminary remark concerns the sequence and extent of the review.

9.1. As far as the sequence is concerned, I consider it appropriate to depart from the structure of the application (and the structure consequently used in the subsequent pleadings and the Report for the Hearing). Under that structure a distinction is drawn between two main points - the objection that the new basic regulation is inapplicable and the annulment of the contested regulation, and to each of them is attached a number of pleas in law which correspond to the grounds set out in the first paragraph of Article 173 of the EEC Treaty. In this Opinion I consider it to be in the interest of clarity to concentrate more on the conditions governing the imposition of anti-dumping duties (and, where appropriate, the correct determination of the amount of that duty).

10. In the first part of my Opinion I shall therefore deal with the question whether essential procedural requirements were infringed upon the adoption of the contested regulation, while in the second part I shall examine the pleas in law concerning the conditions for the imposition of an anti-dumping duty and the amount of that duty.

11.2. As far as the extent of the review is concerned, the Community institutions are often required to appraise complex economic situations under the provisions applicable to anti-dumping measures. In this case, the judicial review must be limited to the question whether the procedural rules were complied with, the question whether the facts on which the contested decision was based were correctly determined and the question whether there was any manifest error in the assessment of the facts or any misuse of powers.(9)

B - Legal assessment

First part - Infringement of essential procedural requirements

I - Breach of paragraphs 1 to 3 of Article 2 and of Article 8 of the Council' s rules of procedure(10)

12.1. The applicant claims first of all that paragraphs 1 to 3 of Article 2 and Article 8 of the Council' s rules of procedure were not complied with because the Commission proposal for the adoption of the contested regulation was not submitted to the Council until about 18 November 1988, which was only five days before the Council formally adopted that regulation. That proposal could therefore not have been included in the provisional agenda which the President is required to send to the other members of the Council and to the Commission at least fourteen days before the beginning of the meeting, in addition to the documents referred to in Article 2(3) and Article 8.

13. The Council admits that the Commission proposal had not been available in all language versions fourteen days before the beginning of the meeting (of 23 November 1988). Apparently it also does not deny that the proposal for the adoption of the contested regulation was not included in the provisional agenda. On the other hand, it does contend, without being contradicted, that this item was included in the definitive agenda, in accordance with Article 2(5), which provides that the Council is to adopt the agenda at the beginning of each meeting. The inclusion of items not appearing on the provisional agenda requires unanimity in the Council. Items thus included may be made subject to a vote. This means that a failure to include an item in the provisional agenda and a failure to comply with the requisite forms and time-limits (paragraphs 1 to 3 of Article 2 and Article 8) are not irregular if the Council unanimously includes the item concerned in the agenda pursuant to Article 2(5). The applicant' s argument on this issue must therefore be rejected.

14.2. The applicant also argues that, in view of the length and complexity of the instrument, it is very unlikely that when voting the Council would have had before it all the language versions as required by Article 8 of its rules of procedure. The Council disputes this assertion and points out that the contested regulation was published in the Official Journal on

24 November 1988, only one day after the decision was taken.

15. The applicant rightly points out that in view of the internal nature of the Council' s working documents it can do no more than conjecture about the observance or non-observance of the procedural rule in question. On the other hand, I consider the point made by the Council to be valid. It is completely out of the question that the contested regulation could have been published on 24 November without all the (published) language versions being available the previous day as proposed texts. Since it appears from the statements of the parties that the Commission proposal was the direct object of the one vote taken by the Council, it must be assumed that the draft text voted on corresponded in every respect to the Commission proposal.

16. The applicant' s arguments concerning Article 8 of the Council' s rules of procedure must therefore be rejected, with the result that the plea in law alleging a breach by the Council of its own rules of procedure is entirely unfounded.

II - Infringement of the rights of the defence

17.1. According to the applicant, the Council, by adopting the contested regulation, infringed in several respects the applicant' s rights, in the first place with regard to the calculation of the normal value.

18. (a) The applicant' s first argument relates to its treatment in the anti-dumping proceeding concerning electronic typewriters. In view of the particular structure of the applicant, the normal value in that proceeding was determined on the basis of SGA expenses corresponding to it as an undertaking, plus a reasonable profit, and this resulted in the termination of the proceeding.(11) The decision to terminate that proceeding was based on the finding that the applicant' s structure differed from that of competing Japanese undertakings. In view of those circumstances, the applicant argues, the Commission, in order to respect the applicant' s rights of defence in this case, ought to have explained why it had abandoned the criterion of similarity between the undertaking concerned and other undertakings whose accounting data had been taken into consideration.

19. In this regard I would point out first of all that the only proceeding which concerns us now is that which resulted in the adoption of the contested regulation. The possible illegality of the regulation imposing the provisional duty could affect the legality of the contested regulation only in so far as the latter requires the provisional duty to be collected definitively. On this point, however, the Court has ruled that a defect in the regulation imposing the provisional duty may lead to the illegality of the regulation imposing the definitive duty only in so far as the defect is reflected in the regulation imposing the definitive duty.(12) In this context, it must be examined whether it was necessary to set out the reasons for the method applied.

20. In order to respect the rights of the defence, the undertakings concerned must be given the opportunity during the administrative procedure to make known their views on the truth and relevance of the facts and circumstances alleged and, if necessary, on the documents used.(13)

21. I consider it doubtful that internal matters such as the legal considerations which are to form the basis for a discretionary decision should also be included among those requirements. However, this question does not arise in this case because Article 2(3)(b)(ii) of the new basic regulation - published more than three months prior to the contested regulation - expressly provides for the method which was applied to the applicant. Thus, whatever the legal position under the former basic regulation may have been, the new basic regulation itself provides the explanation for the method applied.

22. Whether, in the light of the circumstances of this case, that method ought to have been applied is, of course, a quite separate question. However, the applicant could have effectively made known its point of view on this question before the adoption of the contested regulation by arguing that the conditions governing that method, with which it was familiar from the regulation imposing the provisional duty, had not been satisfied (in particular, that the application of that method was unreasonable in the light of the first two sentences of that provision) or by arguing that the new basic regulation was itself invalid.

23. Since, according to the Council, the Commission proposal for the adoption of the contested regulation was made on 23 October 1988, - according to the applicant, it was not even made until 18 November 1988 - (14) there was in any event sufficient time to put forward those arguments to allow the Commission to take account of them when drafting its proposal.

24. With regard to the argument put forward by the applicant in the same connection, to the effect that the new basic regulation itself infringes its rights of defence on the ground that it deprives it of the opportunity to demonstrate the particular nature of its structure in contrast with the structures of its Japanese competitors, this is not in fact a matter concerning the rights of the defence but concerns the question whether the fact that the Council was able, in the course of the administrative procedure in this case, to adopt the new version of a provision still in force was compatible with the principles of legal certainty and the prohibition of retroactive measures. The applicant takes the view that the new version is more unfavourable to it than the original version and that it was introduced for the purpose of justifying a posteriori the approach adopted under the regulation imposing the provisional duty, which would not have been lawful under the former version. This is a point to which I shall return later.

25. It must therefore be concluded that the Commission did not infringe the principle of the rights of the defence by failing to inform the applicant in detail of the reasons why, for the purposes of the contested regulation, it departed from the method applied in the anti-dumping proceeding concerning the importation of electronic typewriters.

26. (b) The applicant also considers its rights of defence to have been infringed by the fact that the Council did not inform it before

20 September 1988 of the names of the undertakings whose accounting data had been taken into consideration for the purpose of determining the SGA expenses and profit for the construction of the applicant' s normal value. The Community authorities ought to have explained how, on the basis of the accounting data of those undertakings, they arrived at the "weighted average" which, according to recital 36 of the regulation imposing the provisional duty, was applied to the applicant. As the applicant did not have that information during the entire proceeding, it was unable to express its views on those matters and in this way its rights of defence were infringed.

27. That argument does not withstand examination. It is clear from the minutes produced by the Council that the applicant was aware at the commencement of the proceeding, or at the latest on 5 November 1987, that accounting data of other undertakings would be used for the purpose of constructing the normal value. It also appears that from 17 March 1988 the applicant was aware of the percentages which the Community authorities intended to use for the SGA expenses and profit in the constructed normal value. As the documents on the case file demonstrate, those percentages were much higher than those of the applicant. From this the applicant must have been able to conclude that the figures which would be used corresponded to undertakings with structures different from its own. It thus had available to it all the information necessary to mount an effective defence. The individual accounting data used for the purposes of weighting, and thus also for the percentages applied, had to be regarded as confidential information within the meaning of Article 8(3) of the new basic regulation(15) and for that reason could not be divulged to the applicant.

28. Inasmuch as in this connection the applicant also objects that no reply was received to its letter of 2 September 1988 requesting information on the method used to determine the SGA expenses and profit and on the adjustments made to exclude from the calculation expenses and profits arising on sales on the domestic market, it suffices to point out that under Article 7(4)(c)(i)(cc) of the basic regulation (in its former and new versions) such requests for information must be received by the Commission not later than one month after publication of the imposition of the provisional anti-dumping duty (in this case, therefore, by 26 June 1988). By sending a letter on 2 September 1988, the applicant failed to comply with that time-limit.

29. (c) In the applicant' s opinion, its rights of defence were also infringed by the fact that the Commission led it to believe that it would still be able to present its arguments regarding the method of constructing the normal value at the disclosure conference. That conference, however, was not held until 23 August 1988, which was thus at a date subsequent to the entry into force of the new basic regulation which, in so far as it provides expressly for the method criticized in this case, was more unfavourable for the applicant than the former basic regulation.

30. As far as the factual core of this argument is concerned, it is clear that the disclosure conference referred to was not held until 23 August 1988. In addition, it appears from a letter sent by the applicant to the Commission on 18 March 1988 that it was apparently "agreed" to discuss this point more fully at the disclosure conference. I am unable to ascertain from the documents what importance is to be attached to this agreement. However, even if the Commission was here attempting (as the applicant apparently believes) to use delaying tactics in order to postpone discussion to a date after the adoption of the new basic regulation, I would not regard this as an infringement of the rights of the defence. Either the new basic regulation is more unfavourable to the applicant, in which case the matter must be examined from the perspective of legal certainty and the prohibition of retroactive measures. The applicant' s rights of defence will have been infringed in this regard only if it had insufficient time to submit its arguments, on the basis of that regulation, for account to be taken of them when the Council took its decision. I have already demonstrated that this is not the case. Or the new basic regulation does not make the applicant' s position more unfavourable, in which case the applicant' s arguments have no foundation. In any event, the applicant had already set out in its letter of 21 June 1988 all the arguments which it presented during the procedure before the Court of Justice. The extent to which the "agreement" prevented the applicant from submitting additional arguments (at whatever stage) cannot be determined. The applicant' s plea in law must therefore be rejected.

31.2. Apart from the questions dealt with above, which concern the construction of the normal value, the applicant also contends that its rights of defence were infringed in the determination of the injury. It points out in this connection that, for the period preceding that covered by the investigation, it supplied only overall figures, and only for the years 1984 and 1985 (not for 1983), as no figures for individual printer models or individual market segments had been requested for those years. In so far as the effects of alleged dumping had been established prior to the period covered by the investigation on the basis of "further investigation" (see recital 59 of the contested regulation), that is to say by the examination of accounting data of Community manufacturers, the applicant' s rights of defence were infringed.

32. It is certainly undeniable that recital 59 does indeed mention dumping and thereby apparently also refers to a period beginning in 1983 and preceding the period covered by the investigation. On the other hand, it is not disputed that the Community authority, over this period, investigated only an injury in the sense that it established that Japanese imports were having an effect on the economic development of Community producers.(16) The question whether this is sufficient to establish a causal connection between dumping and injury where the period of investigation and that in which the injury was established to exist are not wholly concurrent is not a question touching on the rights of the defence, but rather one which relates to the substantive legality of the contested regulation. The applicant has submitted further arguments on this point, which I shall also consider. So far as the determination of injury is concerned, it would appear that this was done on the basis of the study carried out by the consultancy firm of Ernst & Whinney, which was submitted by the Japanese printer manufacturers themselves, and that this study also covers the year 1983. The applicant was also informed, by a Commission letter of 28 September 1988, that this study would be used. The data relating to the applicant itself for the years 1984 and 1985 are included in the questionnaire which it submitted in the course of the administrative proceeding. Finally, with regard to the data on individual European manufacturers, these are confidential in nature and for that reason could not as such be communicated to the applicant. However, it is not disputed that the file opened by the Commission, to which the applicant had access pursuant to Article 7(4)(a) of both the new and former basic regulations, contained non-confidential summaries. The applicant was thus informed of, or at least had access to, all the material on which the determination of injury had been based. There was consequently no infringement of its rights of defence.

III - Failure to provide a statement of reasons

33.1. According to the applicant, the first failure to provide a statement of reasons in the contested regulation occurs in recitals 21 and 22, which concern the construction of the normal value. The applicant refers in this connection to the anti-dumping proceeding concerning imports of electronic typewriters originating in Japan,(17) in which the SGA expenses and profit were calculated on the basis of the applicant' s accounting data, which led to the termination of the proceeding in so far as the applicant itself was concerned.(18) Since that method was abandoned for the purposes of this proceeding, the Council ought to have specified the reasons for this change of method for determining the normal value and how it could avoid discriminatory treatment when applying the new method which it had selected.

34. According to the established case-law of the Court, the statement of reasons required by Article 190 of the EEC Treaty must be appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review.(19) In this case, in recital 21 of the contested regulation the Council referred to Article 2(3)(b)(ii) of the new basic regulation, which provides expressly for the method applied in this case. It also addressed the question of discrimination raised by the applicant by pointing out (in the second paragraph in the above recital) that:

"the fact that a particular exporter does not sell the product concerned, and accordingly, does not have a sales organization on its domestic market, should not alter the basis for estimating selling, administrative and other general expenses and profit in the construction of that exporter' s normal value."

35. It follows from that passage that the Council does not regard the particular characteristics of the applicant' s structure as providing any reason for treating it any differently than other exporters, or that those structural differences do not justify the view that the situations are fundamentally different. It is thus evident that the Council is proceeding from a completely different standpoint from that of the applicant, and that this explains the measure adopted and the method applied. The possibility for the Court to exercise its supervisory control is thus ensured; in particular, the Court is in a position to ascertain whether the Council' s position on the question of discrimination is correct. The plea in law alleging a failure to provide reasons is thus unfounded in so far as it concerns recitals 21 and 22 of the contested regulation.

36.2. The second argument relied on, alleging a lack of a statement of reasons for the contested regulation, concerns the issue of injury; in this argument doubt is expressed with regard to recital 60 of that regulation, which, according to the applicant, shows that the Community authority attributed the consequences of imports from third countries other than Japan to the dumping (by Japanese manufacturers).

37. I see no evidence of such a statement in that recital. It refers only to imports which became "substantial only after the end of the period under investigation". In any event, to conclude that there was no statement of reasons would likewise not be justified if it was clear from the text criticized by the applicant that the Council had imputed injury to the imports covered by the anti-dumping proceeding in the present case which had nothing to do with them. If the Council had done this and referred to this step in the contested regulation, this could not constitute a failure to provide reasons but would at the most amount to a breach of the basic regulation (see the second sentence of Article 4(1)). It is therefore not possible to agree with the applicant on this point.

Second part - The substantive legality(20) of the contested regulation

I - Definition of the (like) products taken into consideration

38. The applicant objects to recital 5 et seq. of the contested regulation. In its view, the group of products falling within the category of "like products" was not properly defined for the purposes of this anti-dumping proceeding. A distinction ought to have been drawn between two segments comprising the printers taken into consideration (lower and upper segments). Those two segments may be distinguished according to the intended purpose of the machines, the target customers and the expected profit. The Council did not draw any distinction according to segments and this, in the opinion of the applicant, constitutes an error in the assessment of the facts.

39. That argument can be rejected at once. In the first place, the applicant does not indicate how the method applied by the Council had a more unfavourable effect upon it. Secondly (and this point seems to be closely connected with the point above), it states in its reply (in response to the arguments set out by the Council in its statement of defence) that opinions may in fact differ as to the criteria to be applied in order to divide the category of printers in question into segments; according to the applicant, the Council should none the less have endeavoured to apply one or other of those criteria. It thus admits that there are no generally accepted criteria for making such a division, and this is a view shared by the Council. The argument is accordingly unfounded.

II - Normal value

40.1. So far as the arguments relating to the construction of the normal value are concerned, it is first of all necessary to examine the argument which, relying on Article 184 of the EEC Treaty, goes to the applicability of Article 2(3)(b)(ii) of the new basic regulation.

41. (a) In this context, I will first of all examine the applicant' s criticism of the reasons given for that provision and the doubt it casts on its substantive legality before passing (at point (b)) to its applicability in time under Article 19 of the new basic regulation.

42. (aa) The applicant takes the view that, in view of the requirements set out in Article 190 of the EEC Treaty, insufficient reasons are given in the preamble to the new basic regulation(21) for the provision to which objection is taken in the present case. It considers first of all that the Community authority ought to have stated that it was a new, substantive provision which represented a substantial amendment and did not correspond to normal Commission practice.

43. It suffices to note here that the wording in the fourth and thirty-third recitals of the new basic regulation presents the resultant textual amendment as a mere clarification of the former basic regulation.(22) The intention of the legislature is thereby made sufficiently clear. If the wording of the provision were to go beyond that aim, that might justify a restrictive interpretation or, if that were not possible, an examination to ascertain whether the principle of proportionality was observed. I see no failure to state reasons in this regard.

44. The applicant goes on to argue that the Community authorities ought to have explained how the application of the new rule would not discriminate against undertakings such as the applicant. In the case of such undertakings, there would have been added to the actual production costs the expenses and profits of other undertakings, without any examination as to whether the latter essentially exhibited similar characteristics. It would have been necessary to demonstrate, where appropriate, how that discriminatory effect could be avoided or offset. However, in my view, the legislature is not obliged to provide, for all provisions capable in one way or another of being applied in a discriminatory manner, a statement of reasons covering this specific point. The prohibition of discrimination is a general principle of Community law. In applying every provision of secondary law, the Community institutions must do their utmost to comply with that principle. If a provision does not allow this to be done, this does not constitute insufficient reasoning but a breach of the prohibition of discrimination.

45. Finally, the applicant believes that it has identified a contradiction between the thirty-third recital and Article 2(3)(b)(ii) of the new basic regulation inasmuch as the text of the provision itself does not provide that SGA expenses and profit may be determined on "any other reasonable basis".(23) I would refer the applicant on this matter to the final sentence in the provision in question which states that:

"If neither of these two methods can be applied the expenses incurred and the profit realized shall be calculated ... on any other reasonable basis."

46. It is thus clear that the applicant' s argument that the new basic regulation exhibits a number of failures to state reasons cannot be accepted.

47. (bb) I now come to the questions relating to the substantive legality of the new basic regulation.

48. (1) The first breach of Community law alleged by the applicant relates to Article 2(4) of the GATT Anti-Dumping Code.

49. (a) According to the applicant, the method applied by the defendant in this case under Article 2(3)(b)(ii) of Regulation (EEC) No 2423/88 results in the use, for the purposes of constructing the normal value, of expenses and profits which are not "reasonable" within the meaning of the abovementioned provision of the Anti-Dumping Code.

50. The applicant undertaking consists simply of a factory; it has no sales staff or distribution structure and has a limited number of customers. It produces only a limited number of various products (typewriters and printers). For each country of exportation there is one buyer who is responsible for dealing with the orders submitted by a distributor who is responsible for distribution throughout the country in question. Reference to undertakings which, in their structures, are not comparable to the applicant is unreasonable within the meaning of the requirement set out in the Anti-Dumping Code. This becomes even clearer when the treatment accorded to the applicant in the anti-dumping proceeding concerning electronic typewriters is considered. Account was taken in that proceeding of the applicant' s particular structure, and this led to the termination of the proceeding.(24)

51. In this connection, the applicant takes the view that either Article 2(3)(b)(ii) of the new basic regulation is inconsistent as such with the Anti-Dumping Code if in cases such as this it restricts the discretion of Community authorities by limiting it to the method here applied, or alternatively that the Community authorities retained under that provision the discretion which they have under the Code, in which event it is the method chosen in this case which is contrary to the Code.

52. (b) Of those two possibilities set out by the applicant - breach of the Anti-Dumping Code by the new basic regulation or by the method of applying that regulation - it is only the former which is susceptible of review under Article 184 of the EEC Treaty.

53. (aa) I would first of all like to point out in this regard that the Code, to which the Community is a contracting party, may indeed be the subject of a review under Article 184 of the EEC Treaty. Under Article 228(2), international agreements concluded by the Community are part of Community law. As is clear from the wording of Article 228, they stand somewhere between primary Community law (Treaty law) and secondary law, and may therefore be classified among the "rule[s] of law relating to [the Treaty' s] application". This view is confirmed by the Court' s case-law on Article 177 of the EEC Treaty, according to which such agreements are to be considered as acts of the Community institutions in respect of which the Court accordingly has jurisdiction to give rulings on their interpretation in the Community legal order,(25) and in which the Court has reviewed the validity of provisions of secondary Community law from the perspective of an infringement of agreements entered into by the Community.(26),(27) With regard to the Anti-Dumping Code, the Court of Justice would appear to have proceeded on the basis of the same principles in the Cartorobica case.(28)

54. (bb) The question which then arose in this case is whether the provisions of the Anti-Dumping Code are directly applicable to individuals - in this case, the applicant - which the applicant, but not the defendant, considers to be the case.

55. The defendant' s position is based on the case-law of the Court concerning a number of provisions of the GATT,(29) Article VI of which has, as we know, been given concrete expression in the current Code. That

case-law refers to the spirit, the structure and the wording of the GATT; from the provisions on exemptions from the general rules, the provisions on measures which could be adopted in the event of exceptional difficulties and the provisions on the settlement of differences the Court concluded that the various GATT provisions were not directly applicable. In a later judgment in the Fediol III case(30) the Court had to rule on an objection of inadmissibility raised by the Commission against an action brought against a Commission decision rejecting a complaint based on Regulation (EEC) No 2641/84.(31) That regulation provides for measures against illicit commercial practices which include all practices of third countries which, with regard to international trade, are incompatible with the rules of international law (Article 1). Reference is thus made, inter alia, to the GATT.(32) Under Article 3, certain persons and associations may lodge a written application for the opening of a procedure. The Court ruled that the previous case-law on the direct applicability of the GATT did not mean that applicants could not rely on the provisions of the GATT in order to obtain a ruling on whether conduct objected to in a complaint constituted an illicit commercial practice.(33) The Court held that the regulation entitled applicants to rely on the GATT provisions in their complaint and that consequently they were entitled to request the Court to exercise its powers of review in this connection.(34)

56. It would certainly be interesting to examine in theory the question whether the Court should hold the Anti-Dumping Code to be directly applicable. However, according to the case-law cited above,(35) a mere review of validity does not in any event presuppose that the question whether the relevant provision in the agreement governed by international law is directly applicable has already been determined. Admittedly, the situation is quite different in the case of agreements whose provisions are so vague that they cannot be regarded as justiciable. On this point, the Court has ruled, in its judgment in Fediol III,(36) that, for the purpose of establishing the existence of illicit commercial practices, the rules of GATT may be interpreted and applied by the Court and thus satisfy that requirement. As far as the Anti-Dumping Code is concerned, I have no reservations about review by the Court in the sense indicated, particularly since the basic regulations (in particular the former basic Regulations Nos 3017/79(37) and 2176/84) are based broadly on the wording of the Code. As regards the provision on the constructed normal value, Article 2(3)(b)(ii) of Regulation No 2176/84 and the Anti-Dumping Code are almost completely identical as far as the point at issue here is concerned.

57. (cc) If I do not therefore go into the question of the direct applicability of the Anti-Dumping Code, it is because the possibility that the new rules may be incompatible with that Code is most certainly ruled out.

58. The starting point for any examination must be the requirement of "reasonableness" with which, according to the Code, both the margin of profit and the SGA expenses to be used in calculating the constructed normal value must comply.

59. The precise meaning of reasonableness in this connection will naturally depend on the aim pursued under the Code in the construction of the normal value. Two views may be held in this regard. The first would suggest that the construction of the normal value serves to define the selling price for a product as it would be if that product were sold in the exporting country or the country of origin. This was how the Court described the purpose of the construction of the normal value in the cases relating to the importation of electronic typewriters.(38) The other view was espoused by the applicants in the aforementioned cases. Under that view, the constructed normal value is the reasonable value of the exported goods.

60. It is not possible to ascertain from the Code whether only one of those views is correct. Apart from the rule that the production costs to be taken into account are those of the country of origin, a point which is obvious and does not support one or the other of the two views, it is only the provision relating to profit which makes some reference to the country of origin (or to the exporting country; see Article 2(3) of the Code). According to that provision, the addition for profit may not exceed the profit normally realized on sales of products of the same general category in the domestic market of the country of origin (final sentence of Article 2(4) of the Code). This, however, constitutes only a "general rule", which does not itself concern in any way at all the determination of the profit to be taken into consideration as a whole, but simply lays down a maximum limit.

61. For the rest, the general provision in Article 2(1) of the Code does not take us any further since the construction of the normal value concerns precisely those cases in which the conditions of the reference case have not been satisfied. The fact that upon the application of the alternative criteria set out in Article 2(4), the main criterion (comparison with sales on the domestic market) need not necessarily be regarded as the decisive test is clear from the nature of the first alternative criterion. According to that criterion, the dumping margin is to be determined by means of a comparison with a comparable price of the like product when exported to any third country.

62. These considerations, which I shall expand at a later stage, are sufficient to enable this argument of the applicant to be addressed and to conclude that the new basic regulation has not been infringed in the way suggested.

63. Despite the fact that at the hearing the applicant attempted to demonstrate, with figures relating to sales of typewriters on the Japanese market, that it was possible for it to sell large quantities of needle printers on that market, its objection is really directed at the choice of method of evaluation between the two approaches which I have just described. That consideration, however, cannot in any case entail the invalidity of the second method mentioned in Article 2(3)(b)(ii) of the new basic regulation. It is undeniable that this method clearly results in the calculation of a normal value such as it would be if the manufacturer in question actually sold on the domestic market of the exporting country, whereas the applicant takes the view that the application of that provision is not "reasonable" in view of its particular circumstances.

64. This, however, could lead to the invalidity of the provision in question, even on the basis of this consideration, only if that provision required an "unreasonable" calculation of the normal value to be made in this case. This, however, is not the case.

65. It follows from the structure of Article 2(3)(b)(ii) of the new basic regulation that each of the methods set out in that provision must be applied in the light of the principle of reasonableness, which is referred to twice in the first two sentences of that provision. Inasmuch as this approach is not clearly evident from the wording of the three methods set out, it is necessary to refer to this criterion. Furthermore, independently of that requirement, each of the three methods referred to is subject to a proviso of reasonableness. Thus, it is appropriate to go from the first method (determination of the relevant expenses and profit margin on the basis of sales of the manufacturer/exporter on the domestic market) to the second method at issue in this case, in particular where the use of the figures thus obtained would not be reasonable.(39) If "neither of these two methods can be applied", it is necessary to go on to apply the third method mentioned (reference to sales in the same economic sector within the domestic market) or to determine the expenses and profits on any other reasonable basis. This introductory formula clearly lays down the conditions for proceeding from the first to the second method, which signifies that the second method may itself only be applied if it is reasonable. As far as the third method mentioned is concerned, this is ensured by the final part of the sentence ("or on any other reasonable basis.")(40) which thus has a double function: it is a proviso of reasonableness for the third method mentioned as well as a clause referring back to the basic test laid down in the Code.

66. For the sake of completeness, I would also point out that the mere fact that a condition expressed in very general terms in the Code (in this case, the requirement that the expenses and profits taken into account be "reasonable") is subsequently put into concrete terms by the legislatures of the various contracting parties when anti-dumping laws are adopted may not be regarded as a breach of the Code. The Code does not require its signatories to reproduce the agreed text word for word in the provisions which they each adopt. It stipulates simply that such provisions must "conform" to those of the Agreement,(41) that is to say - as is confirmed by the use of the expression "greater uniformity" (and not complete uniformity) in the preamble - that they must not be contrary to the rules of the Agreement - to the detriment of traders affected by anti-dumping measures.(42) It must certainly be borne in mind that the putting of imprecise concepts into concrete terms may in the end entail a departure from the Code in some individual cases where because of the adoption of more concrete terms the person concerned is placed in a worse situation than that in which he would have been under the Code alone. However, as my remarks on the wording and structure of the provision have demonstrated, Article 2(3)(b)(ii) of the new basic regulation cannot be criticized, particularly with regard to the second method of calculation in point here. That provision cannot therefore be regarded as being contrary to Article 2(4) of the Anti-Dumping Code.

67. (2) The applicant goes on to argue that, as a result of the second method of calculation to which it objects, the normal value and the export price are compared at different levels of trade, contrary to Article 2(6) of the Anti-Dumping Code. The normal value is not then comparable to the export prices existing in the case of structures such as those possessed by the applicant, that is to say on the ex-factory basis. It considers that the adjustments provided for in the new basic regulation are insufficient to resolve these problems.

68. Under Article 2(6) of the Anti-Dumping Code, the export price and the domestic price in the exporting country are to be compared "at the same level of trade, normally at the ex-factory level".

69. This argument is not relevant to the problem in point, which in reality is very closely linked to the determination of the normal value.(43) If it is unreasonable to use the expenses and profits in question here (those arising where a sales structure exists for the domestic Japanese market), that must, as I have already explained, affect the determination of the normal value inasmuch as they are not included in the normal value and this is calculated according to a different method. In which case, the method of comparison objected to by the applicant is likewise not at issue. On the other hand, if those expenses and profits are to be included because this is reasonable, then the considerations set out below apply.

70. A proper comparison between the normal value and the export price at the ex-factory level (Article 2(6) of the Code) presupposes in the first place that those two values are compared at the level of the first sale to an independent buyer. This means in particular that the normal value is to be compared after inclusion of the SGA expenses and profits of distribution companies which, though legally independent of the parent production company, are not economically independent.(44) Only the sales of those companies to an independent buyer form the basis of the constructed normal value. This is no more than one aspect of the principle that all expenses and profit resulting from actual sales on the domestic market are included in the normal value. The Court expressly confirmed this principle in its judgment in the TEC case. That case involved the construction of the normal value for an undertaking which did not sell the product which was the subject of the proceeding (electronic typewriters) on the Japanese market. The Council had constructed the normal value by including it in the SGA expenses of a dependent distribution company which sold other goods and had compared that value with the export price. On this point, the Court ruled as follows:

"The foregoing considerations are likewise grounds for the rejection of TEC' s argument that the method used by the institutions is contrary to Article 2(9) of Regulation No 2176/84, which provides that the normal value and the export price should 'normally be compared at the same level of trade, preferably at the ex-factory level' . In fact, it is precisely by taking account of the first sale to an independent purchaser that the normal value at the 'ex-factory' level can be correctly established where there are production and sales arrangements of the kind adopted by Tokyo Electric Company Limited for the products it sells on the Japanese market."(45)

71. I see no reason not to apply those considerations to the profit margin to be taken into account for the purposes of calculating the normal value.(46) It may also be assumed that those remarks are applicable mutatis mutandis to the interpretation of the Code, which, on the point concerned, is consistent with the former basic regulation applied in the judgment cited above.

72. The provision criticized by the applicant is clearly compatible with the resultant principle that the comparison made at the ex-factory level concerns the prices charged in each case to the first independent buyer. The expenses and profits referred to in Article 2(3)(b)(ii) of the new basic regulation are solely those which concern "other producers or exporters",(47) that is to say to the exclusion of those persons who purchase the goods from those producers or exporters.

73. The applicant takes the view that, in its case, the expenses and profits were treated unequally as regards the normal value and the export price because in the case of normal value those factors were established on the basis of sales at a level of trade subsequent to the ex-factory stage (ex-distributor) whereas the applicant' s export price is an ex-factory price. In this regard, it must be acknowledged that in Article 2(9) and (10) in particular the new basic regulation does not provide for any adjustment in respect of different general expenses and different profits.

74. This argument calls for two comments.

75. First, this problem has nothing to do with the method applied to the applicant pursuant to Article 2(3)(b)(ii) of the new basic regulation. If a Japanese manufacturer sells on the domestic market through the intermediary of an associated distribution company, the normal value is not constructed but is determined on the basis of the main criterion of Article 2(3)(a) of the (new or former) basic regulation. In this case, exactly the same comparison problem arises with sales made within the Community directly by the exporter to an independent buyer without the intervention of an intermediary. The situation is no different upon the application of the third method of determining the normal value set out in Article 2(3)(b)(ii) of the new basic regulation (calculation on the basis of sales within the same economic sector).

76. The fact that the new basic regulation does not provide, with regard to such situations, for adjustments to be made for the purposes of the comparison might give rise to the question whether the provisions relating to the comparison (Article 2(9) and (10)) are valid. However, I perceive no argument supporting the invalidity of the provision criticized.

77. Secondly, the Court of Justice has on several occasions addressed the question whether under the relevant basic regulation (Regulation (EEC) No 3017/79 or No 2176/84) the normal value and the export price must be determined according to the same methods for the purposes of the comparison. It expressly replied in the negative to that question. The Court took the view that the normal value, the export price and the comparison were each subject to distinct rules(48) and that the various adjustments relating to the export price and the normal value had different purposes and were governed by different conditions.(49) On this basis, the Court, with reference to the applicable basic regulations, rejected the argument that expenses having no direct connection with sales should not be deducted from the normal value for comparison purposes, even if such a deduction was made in respect of the export price pursuant to Article 2(8)(b) (of all the basic regulations since Regulation (EEC) No 3017/79).(50)

78. In the TEC case, cited above, the Court had to address this question once again with regard to the SGA expenses, and it summarized its case-law on this point as follows:

"As regards the argument to the effect that the SGA expenses must be treated in the same way when the normal value is constructed as when the export price is constructed, it need only be pointed out that that argument was clearly rejected in the judgments of the Court of 7 May 1987 (in Cases C-240, 255, 256, 258 and 260/84, concerning an anti-dumping duty on imports of ball-bearings, [1987] ECR 1809, 1861, 1899, 1923 and 1975), in which it is stated that there are three sets of distinct rules, each of which must be complied with separately for the respective purposes of determining the normal value, establishing the export price and making the comparison between the two."(51)

79. I have no doubt that that pronouncement in principle applies in like manner to the profit included in the normal value which, as the Court will recall, cannot be adjusted under the new basic regulation (or under the former basic regulation - see the enumeration of the adjustment factors in Article 2(9)).

80. Advocate General Sir Gordon Slynn(52) correctly pointed out that the systematic division applied in that case-law also exists in the

Anti-Dumping Code, as is clear from Article 2(4), (5) and (6). As far as the question of the adjustment of general expenses and profits upon sales by the exporter or by an independent company at a level of trade subsequent to the ex-factory level is concerned, these do not fall into any of the categories mentioned in the second sentence of Article 2(6) of the Code. This is clear from a comparison with the third sentence of the provision. The purpose of the adjustments provided for in the third sentence is "the establishment of a sales price corresponding to normal commercial conditions".(53) For this purpose, allowance must also be made "for costs, including duties and taxes incurred between importation and resale, and for profits accruing". In relation to the export price in the special case dealt with in the third sentence of Article 2(6) of the Code, those factors are to be applied along with the factors set out in the second sentence, as is shown by the use of the word "also" in the third sentence. Accordingly, it follows that the "conditions and terms of sale" cover only those cost factors which are directly connected with sales (thus excluding general costs). It would appear that the applicants in the ball-bearing cases cited above also used this terminology.(54)

81. With regard to the profits, a comparison between the second and third sentences shows that these do not come under "other differences affecting price comparability" either.

82. While it is open to the signatories to the Code to apply to the parties against whom any anti-dumping measures are directed more favourable treatment than that allowed by this interpretation, this does not preclude the Community authorities from making full use of the discretion which they have under the Code.

83. In the result, it would appear that Article 2(3)(b)(ii) of the new basic regulation is not contrary to Article 2(6) of the Anti-Dumping Code.

84. (3) As regards the arguments relating to the validity of that provision, which allege the infringement of general principles of law, these either object to its actual application to the applicant, regardless of its applicability in time, such as those based on the following principles:

- prohibition of discrimination;

- proportionality;

- fair and equitable application of Community law, from the point of view of legal certainty also;

- respect for vested rights;

- protection of legitimate expectations;

- estoppel,

or concern the applicability of the contested provision in time (see Article 19), such as those based on the following principles:

- legal certainty;

- non-retroactivity.

85. None of these arguments is thus directed against the validity of the provision in question as such. Solely for the purpose of completeness, I shall examine here the only point which, if one intended to interpret the arguments of the applicant differently, could be relevant to the question of validity, namely the question of equal treatment. It is well known that the Community principle of equal treatment not only precludes comparable situations from being treated in a different manner unless the difference in treatment is objectively justified,(55) but also prohibits different situations from being treated in the same way unless such treatment is objectively justified.(56) The use of accounting data relating to the expenses and profits of undertakings other than the undertaking in question may be problematic from the point of view of the equal treatment of unequal situations if the undertaking to which that method is applied differs in important respects from the other undertakings considered and from competing undertakings which are also the subject of the anti-dumping proceeding. However, the provision here in question can be invalid on the basis of the abovementioned consideration only if, in such a case, it did not allow account to be taken of the prohibition of discrimination; this, however, is not the case. In the first place, the application of the contested method is, as I have already explained, subject to the requirement that it is reasonable in nature. It follows from the meaning and purpose of the anti-dumping legislation - to compensate for injury arising from conduct which affects equality of opportunity in matters of competition - that it can never be "reasonable" to treat an undertaking in a discriminatory manner in the course of an anti-dumping proceeding. On the other hand, a provision of secondary Community law which is capable of being interpreted must, as a general rule, be interpreted within the meaning of higher-ranking Community law; only where such an interpretation is impossible is it possible to accept that the provision is contrary to higher-ranking Community law which renders it invalid.(57) Since the wording of the contested provision at any rate keeps open the possibility of using the figures of comparable undertakings or, if that is not possible or is not reasonable, of using another reasonable (non-discriminatory) method, I am unable therefore to discern any breach of the prohibition of discrimination.

86. (b) The applicant goes on to put forward a series of arguments concerning the applicability in time of Article 2(3)(b)(ii) of the new basic regulation and which are directed against Article 19 of the new basic regulation. It argues that that provision is contrary to the principles of legal certainty and non-retroactivity. It argues that the new basic regulation, which is disadvantageous to it from the point of view of the construction of the normal value, introduced a new method during a current anti-dumping proceeding (namely the proceeding which led to the present case). The applicant takes the view that this constitutes a breach of the principle of legal certainty and that it is also retroactive. On those grounds, and in view of the absence of a statement of reasons, Article 19 of the new basic regulation is, in its opinion, invalid.

87. (aa) On closer inspection it appears that those arguments are based on two separate notions. First, the new basic regulation makes it possible, in circumstances such as those in the present case, to construct a normal value which is more disadvantageous for the exporter concerned than that calculated according to the method possible under the former basic regulation. Secondly, that the new basic regulation imposes a method and a type of calculation which the former basic regulation may have permitted but did not impose as compulsory in a case such as that of the applicant, so that the more favourable method applied to the applicant in the case concerning imports of electronic typewriters is in future automatically excluded.

88. Before examining each of those arguments, it is necessary to consider those two hypotheses.

89. (1) As far as the first hypothesis is concerned, I believe that it has been refuted by my remarks on the compatibility of the new provision with the Anti-Dumping Code.

90. I have already explained that each of the methods set out in Article 2(3)(b)(ii) of the new basic regulation is subject to the requirement of reasonableness. Under the former basic regulation, this criterion was the sole criterion to be applied for the purpose of determining the SGA expenses and profit (under the Code, there was a standard maximum limit for profit). In this respect, the former basic regulation and the Anti-Dumping Code were in full accord. The criterion of reasonableness is thus a thread which is discernible throughout all the legal bases, passing from the

Anti-Dumping Code through the former basic regulation and on into the new basic regulation. While the new basic regulation lays down various methods of calculation and the order in which they have to be considered, the limits drawn in each case are those drawn by the requirement of reasonableness and these are also those which applied under the former basic regulation.

91. (2) I shall now examine the second hypothesis according to which the new provision imposes an obligation to apply the contested method in certain cases, such as the present, in which the former basic regulation also allowed for the application of the method used in the earlier proceeding (and which led to the termination of that proceeding).

92. It could be argued that this hypothesis is simply the converse of the first hypothesis. However, this is not entirely true. It is not logically impossible that under the former basic regulation the method applied to Nakajima with regard to imports of electronic typewriters and the method used in the present case might both withstand the test of reasonableness, whilst the new basic regulation should narrow down the possibility of choice left by that test - this being the margin of discretion of the Community institutions - to the method which has been applied in this case.

93. In my view, however, the two methods are so fundamentally different from one another that only one of them can be reasonable for a particular situation. As I explained earlier, it follows from the meaning and purpose of the anti-dumping rules that the test of reasonableness is also meant to avoid discrimination between undertakings affected by anti-dumping measures. From that point of view, it cannot be possible to regard as reasonable the application of different methods to the same situation.

94. (bb) On that basis, I need only make a few remarks on the applicant' s arguments.

5. (1) The contentions that the principles of legal certainty and

non-retroactivity were infringed fail at the outset in view of the fact that Article 2(3)(b)(ii), the amendment of which is challenged by the applicant, remained unchanged with regard to its legal effects. No amendment took place affecting a proceeding already in progress, which could have given rise to problems with regard to legal certainty. Secondly, there is no retroactive effect either, since past situations were not regulated differently from the way in which they were regulated before the reform. This point is of particular importance for the definitive collection of the provisional duty (Article 2 of Regulation No 3651/88), which in my view is a retroactive measure, which means that if Article 2(3)(b)(ii) of the new basic regulation made the legal position of exporters worse in the respect complained of by the applicant, that provision would have had retroactive effect with regard to that measure, through Article 19.

96. In my view, those considerations are sufficient to hold that, for the purposes of the present proceedings, Article 19 of the new basic regulation must be regarded as being free from any substantive defect. Admittedly, the new basic regulation does introduce a number of other reforms, the repercussions of which I have not yet examined; if the new provisions should prove more unfavourable to exporters than the old provisions, this would give rise to the same problems as those which would have arisen if we had found such a worsened position under Article 2(3)(b)(ii). However, I take the view that in the context of Article 184 we need only examine the points which have been raised. That provision refers to a part of the review which takes place in direct actions, namely under Article 173 of the EEC Treaty. Logically, it does not provide for a general review of validity but for a review of "inapplicability" on "the grounds specified in the first paragraph of Article 173". Any party may "plead" those grounds. The limitation of the review to the grounds pleaded, as it applies to

Article 173 of the EEC Treaty, thus also extends to Article 184 of the Treaty.

97. (2) It is also from this perspective that the plea in law alleging insufficient reasoning must be examined. In my opinion, Article 19 of the new basic regulation did not require any special explanation in the preamble to that regulation. Since that provision does not create any problems of retroactivity or of legal certainty but, on the contrary, merely renders the detailed rules of the new basic regulation applicable to proceedings already in progress, it represents only a part of the overall rules introduced by the new basic regulation and falls within their general scheme.(58) Furthermore, the thirty-third recital in the preamble to the new basic regulation makes it clear that Article 2(3)(b)(ii) constitutes a clarification, which explains indirectly the function of Article 19 in so far as that function relates to Article 2(3)(b)(ii).

98. (2) The applicant also submits that the Council acted wrongly in applying to it the second method set out in Article 2(3)(b)(ii) of the new basic regulation.

99. In response to that point, I would like, as part of this review, to begin by examining only those grounds of challenge which relate to the construction of the normal value as such and which are not concerned with the comparison between the normal value and the export price. The arguments relating to the second point will be the subject of a separate examination (in section IV).

100. (a) In the context thus delineated, three arguments must first be examined together; they essentially relate to the same subject-matter and concern the exercise of the Council' s discretion in the light of the

Anti-Dumping Code and a number of general principles.

101. The applicant submits in the first place (as an alternative to the argument, already refuted, that the provision applied was itself contrary to the Anti-Dumping Code) that the application of that provision in the present case is contrary to the Anti-Dumping Code. It argues that its structural characteristics distinguish it from other undertakings, in particular from those which were specifically selected for the purpose of determining expenses and profits, and that, in view of those particular characteristics, the manner in which the Council proceeded by using the method in question was, contrary to the Anti-Dumping Code, "unreasonable". Secondly, the applicant claims that, when applying the provision in question, the Community institutions ought to have exercised their discretion in such a manner as to take account of the applicant' s different structure. By failing to do so, the institutions acted in breach not only of the new basic regulation, which imposes an obligation to determine the normal value on a reasonable basis, but also of general principles of law, namely the principle of the fair and equitable application of Community law and the requirement of proportionality. Thirdly, the applicant argues that this conduct is discriminatory and therefore contrary to the principle of equality.

102. First of all, I can confirm that the Council was correct in constructing the normal value (Article 2(3)(b)(ii) of the new basic regulation), since it is not disputed that the applicant does not sell printers on the Japanese market, which excludes the possibility of proceeding according to Article 2(3)(a) of that regulation, whilst the choice is left between the alternatives set out in points (i) and (ii) of Article 2(3)(b).

103. It follows from the structure of Article 2(3)(b)(ii) of the new basic regulation that the three methods specifically set out therein must be considered in the sequence indicated. Only when none of those methods can be applied is recourse to be had to the general provision providing that expenses and profits must be calculated "on any other reasonable basis".

104. In this connection, the Council rightly did not apply the first method set out,(59) since the applicant does not sell like products on the Japanese market. For the sake only of completeness, I would like here to explain the significance of this method, as I understand it, since the applicant considers its scope of application to be unclear. In my opinion, it is a method based on domestic sales of one or more models of a specific category of products; with reference to those sales, the normal value of other (exported) models of the same category can then be determined. In the German version the term used is not (obviously for this reason) "gleichartige Ware" but a wider expression ("Waren gleicher Art"). In most of the other language versions, this difference in relation to "gleichartige Ware" (see Article 2(12)) is reflected only by the use of the plural; only the Danish and Italian versions do not make this distinction.

105. In those circumstances, the Council had to check (and in this regard its conduct cannot be subject to criticism) whether the second method objected to by the applicant had to be used. Following the opinion of the Commission the Council decided that it did. I cannot agree with that view. By so acting, the Council infringed the rule set out in Article 2(3)(b)(ii) that the SGA expenses and profits should be determined on a reasonable basis.

106. In this regard, it is essential to examine in greater detail the meaning and purpose of the construction of the normal value and to examine the consequences which that construction entails as far as the test of reasonableness is concerned.

107. I have already pointed out that in the cases concerning imports of electronic typewriters the Court took the view that the construction of the normal value was designed to determine the selling price at which a product would be sold if it were sold in its country of origin or in the country of exportation. While that approach is undoubtedly appropriate in many cases, it does not, in my opinion, call for unlimited application.

108. In order to explain that proposition, I would like to examine the aforementioned pronouncements of the Court by putting them in the context in which they were made.

109. In the cases concerning imports of electronic typewriters, the Court had to rule on three different situations. In the Brother, Canon and Silver Seiko cases, cited above, for those models which the exporters sold on the Japanese market, the normal value was determined according to Article 2(3)(a) and for the other models it was constructed. In the latter case, the SGA expenses were determined by taking account of the costs of the distribution companies dependent on the three producers mentioned. Profits were based on the margins which had been determined in respect of models sold on the domestic market.

110. In the TEC case, although the applicant also had a dependent distribution company, it did not distribute electronic typewriters on the Japanese market, either through this dependent company or through any other channels. However, a number of other electronic goods which, according to TEC, also included "office automation equipment", were sold on the Japanese market. The distribution company sold cash registers, electronic scales and other products. In those circumstances, the SGA expenses were determined by reference to the expenses of the distribution company and the profits were determined on the basis of the profits made by the Canon company on sales of electronic typewriters on the Japanese market through the intermediary of its distribution company.

111. In the Sharp case,(60) the applicant sold only very few electronic typewriters on its domestic market. However, it apparently sold other products on that domestic market although the Report for the Hearing does not indicate the extent of the volume of such sales. In common with other producers who had brought proceedings against the regulation introducing a definitive duty in that case,(61) the applicant owned a dependent distribution company. In its case, the SGA expenses and profits were determined as in the TEC case.

112. As that survey shows, the degree of involvement of the aforementioned typewriter manufacturers on the Japanese market was different - it was much greater in the case of Brother, Canon and Silver Seiko and less pronounced in the case of TEC and Sharp. While in the cases of TEC and Sharp, a distribution company was their only sales structure for the Japanese market, Brother, Canon and Silver Seiko also sold electronic typewriters on the Japanese market, even if such sales did not involve all the models exported to the Community. This distinction is also reflected in the considerations adopted by the Court in its judgments in Brother and Sharp. At paragraph 19 of its judgment in Brother and paragraph 10 of its judgment in Sharp, the Court points out that there would be discrimination between manufacturers if the normal value of products, the manufacturer of which sells like products on the domestic market of the country from which they are exported, was constructed in a manner different from the normal value of the products which the manufacturer does not sell on the domestic market.

113. It seems appropriate at this point to establish the connection between the case-law cited and the meaning and purpose of the construction of the normal value under the new basic regulation and to expand on the considerations into which I have entered elsewhere.

114. Depending on the facts on the basis of which the normal value is determined, the economic situation is different in each case, so that the economic justification for the introduction of anti-dumping duties will also differ from case to case.

115. Pursuant to the main criterion provided for in Article 2(3)(a) of the new basic regulation, the comparable price actually paid or payable in the ordinary course of trade for the like product intended for consumption in the exporting country or country of origin is higher than the export price. In such a case it is clear that the manufacturer (or exporter) concerned discriminates between two markets (the domestic market and the export market in question). It is immediately obvious that such conduct does not accord with the idea of fair competition, for such a situation gives rise to the danger that the producer or exporter will finance the low prices on the export market through the high prices on its domestic market, thereby ensuring an unfair advantage vis-à-vis other competitors operating on the export market.

116. If, however, there are no sales of the like product in the ordinary course of trade on the domestic market of the exporting country or country of origin (Article 2(3)(b)(ii) of the new basic regulation), the choice has to be made between two subsidiary criteria. Under the first of these (point (i)), the normal value is the comparable price of the like product when exported to any third country. This case is essentially distinguishable from that of Article 2(3)(a) only in so far as the discrimination is not found to exist between the domestic market of the manufacturer or exporter and the export market concerned, but between that export market and another export market. In this case, the economic consideration which makes the introduction of an anti-dumping duty appear justified is thus very similar to that in the main case envisaged.

117. I now come to the construction of the normal value. The applicants in the cases concerning imports of electronic typewriters took the view, as the Court will recall, that the constructed normal value had to be the reasonable value of the exported product. From an economic point of view, that approach does not strike me as being implausible, for in the course of such an examination it is ascertained whether the exporter sells its products on the export market at prices which cover all expenses and include a reasonable profit margin. If the prices are below that threshold, the exporter thus creates for itself an opportunity to eliminate from the export market the competitors present on it (without its lower prices being justified in economic terms). Subsequently, depending on the degree to which it has succeeded in eliminating other competitors from the market, it can subsequently compensate for the disadvantages of this pricing policy by raising its prices once again. It is clear that, in situations of this kind, anti-dumping law is designed to provide a compensatory mechanism.

118. However, for the construction of the normal value the Court looks at a situation which would exist if the product were sold on the domestic market of the exporting country. In doing so it seeks to bring the result of the construction of the normal value as close as possible to the normal value under Article 2(3)(a). However, in such cases the economic justification for the imposition of an anti-dumping duty underlying Article 2(3)(a) does not always exist. A trader who does not sell on the domestic market cannot discriminate between that market and the export market and procure unjustified advantages from such discrimination. This, however, does not mean that the approach adopted in the case-law cited is always impossible to follow in such cases. In my opinion, the construction of the normal value should follow the scheme set out in Article 2(3)(a) where the situation in question is similar to the case covered by that provision. The main focus must be on the possibilities for the undertaking in question to bring about at any time the situation in Article 2(3)(a) or to prevent the existence of dumping within the meaning of that provision from being found because certain models belonging to a uniform category are not sold on its domestic market, even though it has the possibility of effecting such sales (see the third sentence of Article 2(3)(b)(ii) of the new basic regulation). This approach can also be envisaged where the undertaking sells on its domestic market products which, while technologically related to the exported products, still cannot be regarded as "like" or "similar" products(62) (see the sixth sentence of Article 2(3)(b)(ii) of the new basic regulation). However, I do not consider it acceptable to determine the normal value by reference to a price which would exist in the case of sales of like products on the domestic market if such sales, or at any rate sales in the same sector, appear to be a purely hypothetical possibility. In such a case the Community authorities must, if they wish to proceed on the basis of this method, await further developments and if necessary introduce an anti-dumping duty at a later stage.

119. Viewed from this perspective, it can no longer be surprising that in the Brother, Canon and Silver Seiko cases the Court confirmed the approach chosen by the Council for the construction of the normal value. For those manufacturers sold electronic typewriters on the Japanese market through an existing distribution structure (a dependent distribution company). By virtue of the existing structures, those manufacturers could at any time have placed on the market other of the exported models if that had made economic sense. The SGA expenses and profit were logically determined on the basis of sales actually realized on the Japanese market.

120. The need to adopt the same approach towards TEC and Sharp (in respect of SGA expenses) is less evident but is, nonetheless, explicable. TEC, after all, had its own distribution structure and sold on the domestic market articles which it described as "office automation equipment". The sales in this case were in the same sector and there was a sales structure which could have been used for sales of electronic typewriters.

121. In the case of Sharp, there were negligible sales of electronic typewriters on the domestic market through a distribution company dependent on the parent company, and also negligible sales of other products. Here again, it would not appear to be fundamentally wrong to determine the normal value as if there had been a sufficient volume of sales of electronic typewriters on the Japanese market, particularly if (on this point, however, the Report for the Hearing sheds no light) the volume of sales of electronic typewriters affected by Sharp itself in Japan was only slightly below the insignificance threshold. In any event, Sharp could have attempted to increase sales through its distribution structure.

122. It is not appropriate here, nor is it necessary, to discuss in detail each of the individual cases then before the Court or to examine the application of the method by which the normal value is constructed on the basis of a hypothetical sale of the product in the country of origin or the exporting country. In this case, we have a different situation in which there is no justification for an approach of that kind: the applicant does not sell any needle printers on the Japanese market, nor does it have a distribution structure which it can use for that purpose. According to the Council, such sales would, however, presuppose a structure such as that of the other undertakings referred to for the calculation of the normal value (a distribution company having the appropriate staff and material assets).

123. Such a situation does not correspond to the basic situation envisaged in Article 2(3)(a) of the new basic regulation nor is it in any respect similar to it. If we consider the case with sole regard to that basic situation, there appears to be no discrimination between the Japanese market and the Community market or possibility of it being created in the short term nor is any abuse of organizational facilities, concealment or circumvention conceivable.

124. In this case, Nakajima would suffer discrimination vis-à-vis the other undertakings if it were to be treated in exactly the same manner as those other undertakings; this, as I have already pointed out, would render the measure unreasonable and contrary to the new basic regulation. As regards the higher SGA expenses of the other undertakings, which have their own sales structure, these do not, and cannot, arise in the case of Nakajima. Similarly, there is no connecting factor to justify imputing to the applicant the profit determined in respect of sales by other manufacturers on the domestic market.

125. At this juncture it might be asked whether this approach leaves any scope for the application of the method contested by the applicant, that is to say the second method set out in Article 2(3)(b)(ii) of the new basic regulation. The result I have reached here might appear to contradict my original finding that this second method is compatible with the requirement of "reasonableness", as it is laid down in the Anti-Dumping Code. And yet the profit margin of other undertakings was included in the calculation of the normal value in the Sharp and TEC cases. This appeared to be permissible for the reasons already given. The construction of the normal value in accordance with this method can also be envisaged where domestic sales are made at a loss. In such a case, Article 2(4) of the new basic regulation provides that the normal value in particular may be constructed and I then see no objection to the use of the method contested by the applicant.

126. Nakajima, obviously in response to the Council' s point that the applicant' s arguments have already been refuted by the Court' s decisions on anti-dumping measures against imports of electronic typewriters, attempted to demonstrate at the hearing, aided by figures relating to sales of typewriters in Japan, that even with its simple structure it could still sell large quantities of needle printers on its domestic market.

127. Disregarding the procedural issue of late submission, I also take the view that those figures do not have any evidentiary value since they consist of absolute sales figures with no indication of market shares. Even if the applicant' s line of argument could be pursued, to ascertain penetration of the market in typewriters in this way and then go on to deduce a corresponding penetration of the market in printers and, with the help of this figure, to arrive at the absolute (possible) sales figures for the applicant in the printer sector would in any event be out of the question. Besides, the figures cited at the hearing exhibit considerable variations from one year to the next, which would suggest that the sales in question were sporadic. In respect of electronic typewriters and the period covered by the investigation in the anti-dumping proceeding in question (from 1 April 1983 to 31 March 1984 - see recital 6 of Regulation No 3643/84)(63) the applicant also clearly admitted that its sales were sporadic in nature and thus that they were not suitable as a basis on which to construct the normal value.

128. Finally, by far the largest proportion of sales since 1984 relates to mechanical typewriters, which are not related to printers either technologically or functionally - a factor which increases yet further the difficulty in evaluating possible sales of a certain product by drawing certain conclusions from sales of another product.

129. The interim conclusion is therefore that the second method set out in Article 2(3)(b)(ii), to which the applicant objects, should not have been used because that approach was not reasonable, contrary to the first and second sentences of that provision. Since the arguments relating to the breach of the Anti-Dumping Code and of general principles of law touch on precisely the same problem, it is not necessary to examine them separately.

130. It follows from my arguments regarding the sales of typewriters that the third method mentioned cannot be taken into consideration either, so that reference must be made in the final resort to the general clause in Article 2(3)(b)(ii), which provides for the normal value to be determined "on any other reasonable basis". Under that provision, the normal value was to be calculated on the basis of the actual expenses incurred upon exportation and a reasonable export profit margin in order subsequently to establish, by means of a comparison with the export price, whether that price was a dumping price or not (if it is not a dumping price, it being economically reasonable).

131. Since this was not done and such an approach would, according to the undisputed submissions of Nakajima, have led to a result more favourable to it, the contested regulation must be annulled to the extent sought.

132. This conclusion would be the same even if one were to regard the evidence offered by the applicant at the hearing as having been adduced. For this would mean that, upon the construction of the normal value on the basis of domestic sales which would then come into consideration, it would in any event be necessary to include the applicant' s unaltered SGA expenses in the normal value and to leave out of account the higher SGA expenses of other Japanese undertakings. This method would indeed be the one which is provided as the third possibility in Article 2(3)(b)(ii) of the new basic regulation.

133. Even in this case, the application would have to be upheld without its being necessary to undertake any separate examination of the other arguments concerning the same issue.

134. In view of that conclusion I could conclude my Opinion at this point. For the sake of completeness, however, it is also necessary to examine the applicant' s other submissions in case the Court should not share my view.

135. (b) The applicant also claims in this context that the Council misused its powers (the final ground referred to in the first paragraph of Article 173 of the EEC Treaty).

136. Before I examine the arguments submitted on this issue, I would like briefly to recall the definition of misuse of powers under Community law.

137. The primary instance of a misuse of powers is where Community authorities exercise their powers for purposes other than those provided for in the relevant legislation.(64) According to the case-law on Article 33 of the ECSC Treaty, powers are also misused where, through want of foresight or serious lack of care amounting to disregard for the purpose of the law, the authority in question pursues objectives other than those for which the powers provided were conferred upon it.(65)

138. In my view, the difference between those two alternatives lies in the fact that in the first case the Community authority acts intentionally whereas in the second case it acts with such a serious degree of negligence that its action is tantamount to being intentional.(66)

139. In order to make a submission based on misuse of powers succeed, the applicant must submit objective, relevant and consistent facts which point to such conduct on the part of the authorities.(67)

140. Once those principles are applied, the possibility of a misuse of powers can be excluded in this case.

141. If I have correctly understood the lengthy arguments advanced by the applicant on this point, it is asserting that two objectives, not covered by the (former or new) basic regulation, were pursued:

- the deliberate infliction of injury upon the applicant;

- the avoidance of proceedings in which other Japanese manufacturers might rely on the present case as a precedent.

142. The applicant first of all takes the view that the conduct of the Community authorities leads to the conclusion that they did not exercise their discretion. It contends that the Community authorities ignored the evidence produced by the applicant about its particular structure. They did not reply to the applicant' s letter containing an explanation of its special structure or to the applicant' s request made in that letter that it explain the method chosen for the calculation of the normal value.(68)

143. First of all, as far as the complaint of a failure to examine evidence is concerned, it must be borne in mind that the Community authorities were already quite familiar with that structure as a result of the proceeding concerning electronic typewriters. As I have already pointed out, the Council' s error does not lie in an inaccurate assessment of the facts but rather in the legal consequences which it drew from the uncontested facts.

144. With regard to the other two arguments, I cannot see how the failure to reply to the applicant' s letter of 2 September 1988 can constitute evidence of a misuse of powers as claimed by the applicant. I would refer in this connection to Article 7(4)(c) of the new basic regulation and to my comments at paragraph 28 of this Opinion.

145. As regards the applicant' s assertion that the Council incorrectly described the disputed method of calculation as the "normal practice" of the Commission, I also see no evidence of a misuse of powers. I understand by this argument that the method applied to the other undertakings in the proceeding concerning the importation of electronic typewriters, which then came to be considered before the Court, ought now to be applied to the applicant.

146. Finally, with regard to the argument that in a letter of 13 February 1989(69) the Commission based the calculation of the normal value on Article 2(4) of the new basic regulation, I would regard the statement in question, which undoubtedly refers to an irrelevant provision, as a manifest drafting error. Moreover, it is entirely unclear what conclusions should be drawn from a Commission letter, sent long after the contested regulation had been adopted, with regard to a misuse of powers by the Council. It follows from all the foregoing that the ground of challenge alleging a misuse of powers must be rejected.

147. (c) The applicant then goes on to submit a number of other arguments relating to the principle of legal certainty.

148. (aa) In this connection, it relies essentially on the fact that the method on which the present measure was based was not applied to it in the anti-dumping proceeding relating to electronic typewriters. It points out that in that proceeding account was taken of its special structure. That had been the reason for the termination of the proceeding.(70) The Community authorities had there expressly recognized that its structure was different. The applicant refers on this point to the grounds given in recital 5 in the preamble to the decision terminating the above proceeding, which state inter alia as follows:

"Contrary to all other Japanese firms involved in the proceeding concerning electronic typewriters from Japan, [Nakajima] was basically a factory only without a conventional sales force or sales structure for any of the very limited number of products it manufactured. Nakajima only sold to a handful of customers

world-wide.

It was therefore considered unreasonable to apply to Nakajima the same profit margin as that referred to in Regulation (EEC) No 1698/85, which was determined for a firm with completely different characteristics.

No other exporter involved in this proceeding for which a profit margin on its domestic sales could be established was structured in a way comparable to Nakajima.

...

Nakajima submitted further evidence with regard to certain other aspects of the normal value computation, especially cost elements, direct and indirect labour and research and development. After examination, the data submitted were found acceptable."

149. The applicant also relies on the Council' s argument in the TEC case; this is summarized as follows in the Report for the Hearing:(71)

"With regard to the profit margin finally determined for Nakajima in the Commission' s Decision of 12 February 1986, the Council emphasizes that, as was clearly explained in that decision, Nakajima was unlike any of the other companies concerned since it was basically a factory manufacturing a limited number of products which were sold to a limited number of customers and it lacked a conventional sales force or sales structure. One company' s profit margin cannot be used for constructing another company' s normal value unless the two companies are broadly similar. Those findings have not been contradicted by the applicant."

150. Finally, according to the applicant, it also follows from the judgment delivered in the case cited that the Court regards the different treatment accorded to the applicant as acceptable. It refers to paragraph 18 of this judgment, which provides as follows:(72)

"In that connection, it must be observed that, since Nakajima' s exclusion from the number of companies subject to a definitive

anti-dumping duty stems from the aforesaid Decision 86/34, discrimination in favour of Nakajima could not, even if it were established, lead to the annulment of the regulation imposing a definitive anti-dumping duty on TEC, which was adopted on the basis of findings correctly made in the course of the anti-dumping investigation and in accordance with the rules laid down by Regulation No 2176/84."

151. In the proceeding in the present case, the Council explained that the method was changed because experience had shown that the method applied in this case is more appropriate. So far as the judgment in the TEC case is concerned, the Council takes the view that in that case the Court did not rule on the method applied to the applicant at that time but only on the anti-dumping measures adopted in respect of the applicants in that case.

152. (bb) Of these arguments, I would first of all like to address the point concerning the interpretation of the judgment in the TEC case. In this regard, I can only concur with the Council. The wording of paragraph 18 of the TEC judgment makes it quite clear that it is only the measure contested in that case which the Court considered to be unobjectionable and that it expressly left open the question of the legality of the termination of the proceeding in respect of Nakajima.

153. (cc) Next, it is necessary to examine the various submissions based on the principle of legal certainty.

154. (1) First, the applicant contends that there has been an infringement of the principle of the protection of vested rights. It is clear from the case-law that such a right does exist under Community law.(73) The Court has also treated the freedom to engage in a trade or profession as a right protected in the legal order of the Community.(74)

155. However, in that respect I cannot identify any infringement whatever of that right in this case.

156. If the Court should follow the view I have taken in this case with regard to the construction of the normal value, the judgment delivered in the TEC case would then, in principle, also be correct from this point of view (subject to the details of the calculation). The basis requiring the normal value in this case to be constructed in the way sought by the applicant would then, however, not be the result of a vested right acquired by virtue of an earlier decision but would reside in the (new) basic regulation.

157. If, on the contrary, the Court should take the view that the treatment accorded to the applicant in the earlier proceeding was unlawful, there can likewise be no question of a vested right.

158. The question really only arises if it is assumed that both methods are covered by the discretion of the Community authorities. Even if this is so, however, the mere fact that in a separate earlier proceeding the Community authorities, in the exercise of their discretion, applied the relevant provisions in a certain way or made specific comments on this subject in the course of proceedings before the Court does not create a right, as regards the freedom to exercise a trade or profession, to expect those same authorities (again) to exercise their discretion in the same manner in a later case. The correctness of this view is confirmed by three points of guidance provided by the case-law. In the first place, the Court made it clear in its judgments in Hauer and Nold, cited above, that the right to exercise a trade or profession must be considered in the light of the social function of the protected activity. For that reason, rights of this type were in general protected only subject to limits imposed in the public interest. It also appeared to be justified under Community law to impose on those rights certain restrictions justified by the Community objectives serving the general good, provided that the rights were not affected in their essential aspects. So far as the protection of unde