Judgment of the Court of 10 March 1998. - Federal Republic of Germany v Council of the European Union. - Framework Agreement on Bananas - GATT 1994 - Final Act. - Case C-122/95.



European Court reports 1998 Page I-00973



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

1 Actions for annulment - Time-limits - Point from which time starts to run - Date on which the measure came to the applicant's knowledge - Subsidiary criterion - Council decision approving an international agreement on behalf of the Community - Date of publication

(EC Treaty, Art. 173, fifth para.)

2 Actions for annulment - Actionable measures - Council decision approving an international agreement on behalf of the Community

(EC Treaty, Art. 173)

3 Actions for annulment - Actionable measures - Decision 94/800 concerning the conclusion of the Uruguay Round agreements - Action for annulment of the decision to a limited extent - Whether admissible

(EC Treaty, Art. 173; Council Regulation No 3290/94; Council Decision 94/800)

4 International agreements - World Trade Organisation - GATT 1994 - Framework Agreement on Bananas between the Community and certain third countries - Decision 94/800 - Division of tariff quota into national quotas - Discrimination - None - Right to property - Acquired rights - Freedom to pursue a trade or business - Principle of proportionality - Infringement - None - Introduction of an export licence system affecting only Category A and C operators - Breach of the principle of non-discrimination

(EC Treaty, Art. 40(3); General Agreement on Tariffs and Trade 1994; Council Regulation No 404/93; Council Decision 94/800)

Summary

5 It is clear from the wording of the fifth paragraph of Article 173 of the Treaty concerning the period prescribed for instituting proceedings that the criterion of the day on which the measure came to the knowledge of the applicant as the starting point of that period is subsidiary to the criteria of publication or notification of the measure.

Since it is consistent practice for Council measures embodying the conclusion of international agreements binding on the Community to be published in the Official Journal of the European Communities, a Member State which brings proceedings for the annulment of a decision approving such an agreement on behalf of the Community is, even though it had knowledge of that decision as soon as it was adopted, legitimately entitled to assume that the contested decision will be published in the Official Journal. Moreover, if such publication in fact took place less than two months after the adoption of the decision, it is the date of publication which marks the starting point of the period prescribed for instituting proceedings even if the text is published under the heading `Acts whose publication is not obligatory'.

6 The right of a Member State to bring an action for annulment of a Council decision concerning the conclusion of an international agreement and to apply for interim relief at that time is not undermined by the fact that that agreement was concluded by the Community without reservation and that it binds the institutions and the Member States in both Community law and international law.

7 An action for annulment of Decision 94/800 concerning the conclusion on behalf of the Community of the agreements reached in the Uruguay Round multilateral negotiations, to the extent to which the Council approved therein conclusion of the Framework Agreement on Bananas with certain third countries, is not rendered inadmissible by the fact that that framework agreement is only one of that set of agreements.

First, it does not appear that annulment of the decision at issue, only to the extent to which it records the conclusion of the Framework Agreement, would render inoperative other reciprocal commitments and concessions agreed upon in the Uruguay Round negotiations. Second, in the agricultural sector, those agreements were implemented internally, through Regulation No 3290/94, by means of separate adjustments to the various Community regulations on the common organisation of the agricultural markets, so that annulment of the contested decision, to the extent indicated above, would not be liable to affect the adjustments made to sectors other than that of bananas.

8 The regime established by the Framework Agreement on Bananas concluded by the Community and certain third countries, embodied in an annex to GATT 1994 which, in turn, constituted an annex to the agreement establishing the World Trade Organisation (which was approved on behalf of the Community by Decision 94/800), provides, in Point 2 of the Framework Agreement, that the tariff quota for imports of third-country and non-traditional ACP bananas is to be divided into specific shares allocated to different countries or groups of third countries, a given percentage being reserved to the contracting States to the Framework Agreement, and, in Point 6, that only operators in Categories A and C, to the exclusion of those in Category B (including operators who have marketed Community and/or traditional ACP bananas) are obliged to obtain export licences from the competent authorities of the contracting States in order to import bananas from those countries.

The division of the tariff quota into national quotas, which favours certain third countries and thus limits the opportunities of Category A and C operators to import bananas originating in other third countries, does not infringe the general principle of non-discrimination.

There is no general principle of Community law obliging the Community, in its external relations, to accord third countries equal treatment in all respects, and if different treatment of third countries is compatible with Community law, then different treatment accorded to traders within the Community must also be regarded as compatible with Community law, where that different treatment is merely an automatic consequence of the different treatment accorded to third countries with which such traders have entered into commercial relations. However, the restrictions on import opportunities which the introduction of country quotas is likely to entail for economic operators in Categories A and C are the automatic consequence of differences in the treatment afforded to third countries, depending on whether or not they are parties to the Framework Agreement and on the size of the quota allocated to them in that agreement.

Nor does the division into country quotas constitute a breach of fundamental rights or of general legal principles.

As regards the right to property, no operator can claim a right to property in a market share which he held before the adoption of the regime in question or claim an acquired right or a legitimate expectation that a situation existing before that time would be maintained. The restrictions on the right to import third-country bananas, resulting from the division of the tariff quota, are inherent in the objectives of general Community interest pursued by the establishment of a common organisation of the market in the bananas sector and therefore do not improperly impair the freedom of the operators affected to pursue their trade or business. As regards, finally, the principle of proportionality, it does not appear that the division of the global third-country quota into country quotas for some of those countries was manifestly inappropriate for achieving the objectives pursued, namely the marketing of Community and traditional ACP banana production and integration of the previously compartmentalised national markets.

As regards, on the other hand, the difference in treatment consisting in the exemption of Category B operators from the export-licence system, as a result of which only Category A and C operators have to pay a price for bananas from the third countries concerned which is some 33% higher, that difference in treatment is incompatible with the prohibition of discrimination laid down in the second subparagraph of Article 40(3) of the Treaty, which is merely a specific enunciation of the general principle of equality, one of the fundamental principles of Community law. Decision 94/800 must therefore be annulled in so far as the Framework Agreement exempts Category B operators from the export-licence system for which it provides.

Admittedly, the common organisation of the market in bananas, as established by Regulation No 404/93, and in particular the system of tariff-quota allocation, involves certain restrictions or differences in treatment detrimental to Category A and C operators which are not contrary to the general principle of non-discrimination in so far as they are inherent in the objective of integrating previously compartmentalised markets, bearing in mind the different situations of the various categories of economic operators before the establishment of the common organisation of the market. It is also true that pursuit of the objective of common organisation, which is to guarantee disposal of Community production and traditional ACP production, entails striking a balance between the various categories of economic operators in question.

However, it has not been shown that that balance, in so far as it has been disturbed by the quota increase and the concomitant lowering of customs duties provided for in the Framework Agreement, which also benefit Category B operators, could be restored only by granting a substantial advantage to that same category of operators and, thus, at the cost of introducing a new difference in treatment detrimental to the other categories of operators who had already, when the tariff quota and the machinery for dividing it up were introduced, been subjected to similar restrictions and differences in treatment.

Moreover, the introduction of the export-licence system is intended not only to reestablish that balance but also to provide financial aid for the third countries party to the Framework Agreement and thereby to offset the limitations which Regulation No 404/93 imposed on the marketing of bananas from those countries in favour of Community and ACP bananas. However, it is not evident that the increase in the tariff quota and its division into country quotas, together with the concomitant reduction of customs duties, were not sufficient to offset those limitations and that that objective therefore had to be achieved by the imposition of a financial burden on only some of the economic operators importing bananas from those countries.

Parties

In Case C-122/95,

Federal Republic of Germany, represented by E. Röder, Ministerialrat in the Federal Ministry of Economic Affairs, and B. Kloke, Oberregierungsrat in the same ministry, D-53107 Bonn, acting as Agents,

applicant,

supported by

Kingdom of Belgium, represented by J. Devadder, General Adviser in the Ministry of Foreign Affairs, External Trade and Development Cooperation, acting as Agent, with an address for service in Luxembourg at the Belgian Embassy, 4 Rue des Girondins,

intervener,

v

Council of the European Union, represented by R. Bandilla, Director in its Legal Service, A. Brautigam, Legal Adviser, and J.-P. Hix, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of A. Morbilli, Director-General of the Legal Affairs Directorate of the European Investment Bank, 100 Boulevard Konrad Adenauer,

defendant,

supported by

Kingdom of Spain, represented by A. Navarro González, Director-General of Community Legal and Institutional Affairs, and R. Silva de Lapuerta, Abogado del Estado, of the State Legal Service, acting as Agents, with an address for service in Luxembourg at the Spanish Embassy, 4-6 Boulevard E. Servais,

French Republic, represented by C. de Salins, Head of Subdirectorate in the Legal Directorate of the Ministry of Foreign Affairs, and G. Mignot, Foreign Affairs Secretary in the same directorate, acting as Agents, with an address for service in Luxembourg at the French Embassy, 8B Boulevard Joseph II, and

Commission of the European Communities, represented by T. Christoforou and U. Wölker, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of C. Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

interveners,

"APPLICATION for annulment of the first indent of Article 1(1) of Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1), to the extent that the Council thereby approved the conclusion of the Framework Agreement on Bananas with the Republic of Costa Rica, the Republic of Colombia, the Republic of Nicaragua and the Republic of Venezuela,

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, C. Gulmann, M. Wathelet, R. Schintgen (Rapporteur) (Presidents of Chambers), G.F. Mancini, P.J.G. Kapteyn, J.L. Murray, D.A.O. Edward, J.-P. Puissochet, G. Hirsch and P. Jann, Judges,

Advocate General: M.B. Elmer,

Registrar: H.A. Rühl, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 4 February 1997, at which the German Government was represented by E. Röder, the Belgian Government by J. Devadder, the Council by A. Brautigam and J.-P. Hix, the Spanish Government by R. Silva de Lapuerta, the French Government by F. Pascal, Attaché d'Administration Centrale in the Legal Directorate of the Ministry of Foreign Affairs, acting as Agent, and the Commission by U. Wölker, P.J. Kuyper, Legal Adviser, and K.-D. Borchardt, of its Legal Service, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 24 June 1997,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 10 April 1995, the Federal Republic of Germany brought an action under the first paragraph of Article 173 of the EC Treaty for annulment of the first indent of Article 1(1) of Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1, hereinafter `the contested decision'), to the extent that the Council thereby approved the conclusion of the Framework Agreement on Bananas with the Republic of Costa Rica, the Republic of Colombia, the Republic of Nicaragua and the Republic of Venezuela (hereinafter `the Framework Agreement').

2 Title IV of Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organisation of the market in bananas (OJ 1993 L 47, p. 1) substituted a common regime governing trade with third countries for the various national regimes previously in force.

3 Article 18(1) of Regulation No 404/93, as originally worded, provided that a tariff quota of 2 000 000 tonnes (net weight) was to be opened each year for imports of third-country bananas and non-traditional ACP bananas. Within the framework of the tariff quota, imports of third-country bananas were subject to a customs duty of ECU 100 per tonne, whilst there was no duty on imports of non-traditional ACP bananas.

4 Article 19(1) of that regulation subdivides the tariff quota opened as follows: 66.5% to the category of operators who previously marketed third-country and/or non-traditional ACP bananas, 30% to the category of operators who marketed Community and/or traditional ACP bananas and 3.5% to the category of operators established in the Community who started marketing bananas other than Community and/or traditional ACP bananas from 1992.

5 Article 20 of Regulation No 404/93 requires the Commission to adopt detailed rules for implementing Title IV.

6 The Commission thus adopted Regulation (EEC) No 1442/93 of 10 June 1993 laying down detailed rules for the application of the arrangements for importing bananas into the Community (OJ 1993 L 142, p. 6). That regulation reproduces the above allocation of the tariff quota among the three categories of operators, referred to as `Categories A, B and C'.

7 On 19 February 1993 the Republic of Colombia, the Republic of Costa Rica, the Republic of Guatemala, the Republic of Nicaragua and the Republic of Venezuela asked the Community to open consultations under Article XXII:1 of the General Agreement on Tariffs and Trade (hereinafter `GATT') in relation to Regulation No 404/93. The consultations were unsuccessful and therefore, in April 1993, the Latin American States concerned initiated the dispute settlement procedure provided for in Article XXIII:2 of GATT.

8 On 18 January 1994 the panel set up under that procedure submitted a report concluding that the import regime introduced by Regulation No 404/93 was incompatible with the GATT rules.

9 That report was not adopted by the parties to GATT.

10 On 28 and 29 March 1994 the Community came to an arrangement with the Republic of Colombia, the Republic of Costa Rica, the Republic of Nicaragua and the Republic of Venezuela, in the form of the Framework Agreement.

11 The Framework Agreement comprises two documents: the first, entitled `Agreed outcome of the negotiations between Colombia, Costa Rica, Nicaragua, Venezuela and the European Community on the EC's import regime for bananas', constitutes a sort of preamble to the agreement itself; the second document, entitled `Framework Agreement on Bananas', contains the technical provisions of the arrangement with the Latin American countries.

12 The first document states:

`The attached draft agreement on bananas represents a satisfactory outcome of the negotiations on bananas in the context of the Uruguay Round.

The agreement also constitutes the outcome of Article XXVIII negotiations and consultations on bananas between the EC and the abovementioned countries.

Furthermore, the agreement constitutes a settlement of the dispute on bananas which is the subject of a GATT panel report. It was agreed, therefore, that Colombia, Costa Rica, Nicaragua, Venezuela and the EC will not pursue the adoption of the said panel report.

Colombia, Costa Rica, Nicaragua and Venezuela agreed that they would not initiate GATT dispute settlement procedures against the EC's regime for bananas for the duration of the attached agreement.'

13 Point 1 of the second document, which constitutes the Framework Agreement properly so called, fixes the global basic tariff quota at 2 100 000 tonnes for 1994 and 2 200 000 tonnes for 1995 and the following years, subject to any increase resulting from the enlargement of the Community.

14 In point 2, the Framework Agreement lays down the percentages of that quota allocated to Colombia, Costa Rica, Nicaragua and Venezuela respectively. Those States are to receive 49.4% of the total quota, whilst the Dominican Republic and the other ACP States are granted 90 000 tonnes for non-traditional imports, the balance being allocated to the other third countries.

15 Points 3 to 5 deal with the application or modification of the country quotas in the event of one country being unable to fulfil its quota or in the event of an increase in the global quota.

16 Point 6 provides that the management of the quotas, including any increase, is to remain unchanged as laid down in Regulation No 404/93. That point provides further:

`the supplying countries with country quotas may deliver special export certificates for up to 70% of their quota, which, in turn, constitute a prerequisite for the issuance, by the Community, of certificates for the importation of bananas from said countries by "Category A" and "Category C" operators.

The authorisation to deliver the special export certificates shall be granted by the Commission in order to make it possible to improve regular and stable trade relations between producers and importers and on the condition that the export certificates will be issued without any discrimination among the operators.'

17 Point 7 fixes the in-quota customs duty at ECU 75 per tonne.

18 Under points 8 and 9, the agreed system is to be operational by 1 October 1994 at the latest and to expire on 31 December 2002.

19 Points 10 and 11 provide:

`This agreement will be incorporated into the Community's Uruguay Round Schedule.

This agreement represents a settlement of the dispute between Colombia, Costa Rica, Venezuela, Nicaragua and the Community on the Community's banana regime. The parties to this agreement will not pursue the adoption of the GATT panel report on this issue.'

20 Points 1 and 7 of the Framework Agreement were incorporated in Schedule LXXX to GATT 1994, which lists the Community customs concessions. GATT 1994 in turn constitutes Annex 1A to the Agreement establishing the Word Trade Organisation (hereinafter `the WTO'). An annex to Schedule LXXX reproduces the Framework Agreement.

21 On 25 July 1994 the Federal Republic of Germany sought an Opinion from the Court as to the compatibility of the Framework Agreement with the Treaty.

22 By judgment of 5 October 1994 in Case C-280/93 Germany v Council [1994] ECR I-4973, the Court dismissed the action brought by the Federal Republic of Germany for the annulment of Regulation No 404/93.

23 In a declaration entered in the minutes of the Council meeting of 20 December 1994 concerning adoption of the decision concluding the Uruguay Round agreements, planned to take place on 22 December 1994, the German Government made it clear that `notwithstanding its approval of the Council Decision on the conclusion by the Community of the WTO Agreement, the Federal Government considers the Framework Agreement ... to be illegal' and that that approval `cannot be interpreted as approval' of the Framework Agreement.

24 On 21 December 1994 the Commission adopted Regulation (EC) No 3224/94 laying down transitional measures for the implementation of the Framework Agreement on Bananas concluded as part of the Uruguay Round of multilateral trade negotiations (OJ 1994 L 337, p. 72).

25 On 22 December 1994 the Council unanimously adopted the contested decision, the first indent of Article 1(1) of which is worded as follows:

`1. The following multilateral agreements and acts are hereby approved on behalf of the European Community with regard to that portion of them which falls within the competence of the European Community:

- the Agreement establishing the World Trade Organisation, and also the Agreements in Annexes 1, 2 and 3 to that Agreement.'

26 That decision was published at page 1 et seq. of issue No L 336 of the Official Journal of the European Communities, dated 23 December 1994, under the heading `Acts whose publication is not obligatory'. According to information from the Office for Official Publications of the European Communities, issue No L 336 of the Official Journal of the European Communities was not available until 13 February 1995.

27 Council Regulation (EC) No 3290/94 of 22 December 1994 on the adjustments and transitional arrangements required in the agriculture sector in order to implement the agreements concluded during the Uruguay Round of multilateral trade negotiations (OJ 1994 L 349, p. 105) has an Annex XV relating to bananas. That annex provides that Article 18(1) of Regulation No 404/93 is to be amended so that, for 1994, the tariff quota is fixed at 2 100 000 tonnes and, for the following years, at 2 200 000 tonnes. In the framework of that tariff quota, imports of third-country bananas are to be subject to a customs duty of ECU 75 per tonne.

28 Commission Regulation (EC) No 478/95 of 1 March 1995 on additional rules for the application of Regulation No 404/93 as regards the tariff quota arrangements for imports of bananas into the Community and amending Regulation No 1442/93 (OJ 1993 L 49, p. 13) is concerned with the adoption of the measures necessary for implementation, no longer on a transitional basis, of the Framework Agreement.

29 In its Opinion of 13 December 1995 (Opinion 3/94 [1995] ECR I-4577) the Court found that there was no need to respond to the request for an Opinion made by the Federal Republic of Germany, that request having become devoid of purpose because the Framework Agreement, incorporated in the agreements reached in the Uruguay Round multilateral negotiations, had been concluded after the request was submitted to the Court.

Admissibility of the application

30 The Council raises several objections to the admissibility of the application, arguing that it was lodged out of time and that the Framework Agreement, once approved, is binding on the Community and the Member States and constitutes a part of the whole agreement establishing the WTO.

31 First, the Council, supported by the Kingdom of Spain, the French Republic and the Commission, contends that the application is inadmissible on the ground that it was not lodged, as required by the fifth paragraph of Article 173 of the Treaty, within the period of two months following the day on which the contested decision came to the applicant's knowledge, in this case 22 December 1994, the date on which it was adopted by the Council.

32 In support of that objection of inadmissibility, the Council contends that the date of publication in the Official Journal of the European Communities - or, where, as in this case, that does not correspond with the date on which the Official Journal of the European Communities actually became available, the date on which it actually appeared - can be regarded as the starting point of the period prescribed for instituting proceedings only in the case of acts whose publication is obligatory, a category into which the contested decision does not fall.

33 The Federal Republic of Germany states in reply that it is clear from the wording of the fifth paragraph of Article 173 of the Treaty that the day on which the measure came to the knowledge of the applicant can be relied on only if the measure was not published or notified, and that the fact that the contested decision is not a measure whose publication is obligatory is irrelevant.

34 Under the fifth paragraph of Article 173 of the Treaty, the proceedings provided for in that article must be instituted within two months of publication of the measure, or of its notification to the applicant, or, in the absence thereof, of the day on which it came to the knowledge of the latter, as the case may be.

35 It is clear simply from the wording of that provision that the criterion of the day on which a measure came to the knowledge of an applicant, as the starting point of the period prescribed for instituting proceedings, is subsidiary to the criteria of publication or notification of the measure.

36 It is, moreover, consistent practice for Council measures embodying the conclusion of international agreements binding on the European Community to be published in the Official Journal of the European Communities.

37 The applicant was therefore legitimately entitled to assume that the contested decision, by which approval was given on behalf of the European Community of, in particular, the agreement establishing the WTO and the agreements in the annexes to it, including GATT 1994, would be published in the Official Journal of the European Communities.

38 Such publication in fact took place less than two months after the adoption of the measure by the Council, since the issue of the Official Journal of the European Communities in which it appeared was available on 13 February 1995.

39 In those circumstances, it must be concluded that in this case it was the date of publication which marked the starting point of the period prescribed for instituting proceedings.

40 Since the Federal Republic of Germany brought this action within less than two months of the date on which the issue of the Official Journal of the European Communities containing the contested decision actually appeared, the first objection of inadmissibility, namely that the application was lodged out of time, must be rejected.

41 Second, the Council contends that a Member State may not challenge an international agreement, which was concluded by the Community without reservation and which binds the institutions and the Member States in both Community law and international law, by means of an action for annulment of the measure concluding that agreement on behalf of the Community.

42 In that regard it need merely be noted that in paragraph 22 of Opinion 3/94, cited above, the Court expressly found, when explaining why there was no need to respond to the request for an Opinion pursuant to Article 228(6) of the Treaty where the international agreement to which the request related had already been concluded, that, in any event, the State or Community institution which had requested the Opinion was entitled to bring an action for annulment of the Council's decision to conclude the agreement and, in that context, to apply for interim relief.

43 Third, the Council contends that the Framework Agreement represents only one of the many agreements reached in the Uruguay Round multilateral trade negotiations and that its annulment cannot therefore be sought in isolation without compromising the delicate balance of the reciprocal commitments and concessions negotiated in that context. In support of its objection the Council refers to Joined Cases 31/86 and 35/86 LAISA and CPC España v Council [1988] ECR 2285, in which the Court held that it was not permissible to challenge certain provisions of the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23) since they formed part of a larger set of measures embodying the results of the accession negotiations.

44 In that connection it must be observed, first, that in paragraph 18 of that judgment the Court dismissed the actions for annulment as inadmissible on the ground that the contested provisions formed an integral part of the Act of Accession and did not therefore constitute an act of the Council within the meaning of Article 173 of the Treaty.

45 Further, in this case the Council has not given any specific indication of how annulment of the contested decision, to the extent only that it approves the conclusion of the Framework Agreement, would render inoperative other reciprocal commitments and concessions agreed upon in the Uruguay Round negotiations.

46 Furthermore, in the agricultural sector, the agreements reached in the Uruguay Round multilateral trade negotiations were implemented internally, through Regulation No 3290/94, by means of separate adjustments to the various Community regulations on the common organisation of the agricultural markets. In those circumstances, annulment of the contested decision, to the extent that it approves the conclusion of the Framework Agreement, would not be liable to affect the adjustments made to sectors other than that of bananas.

47 Thus, none of the Council's objections of inadmissibility can be upheld and the application is therefore admissible.

Substance

48 The Federal Republic of Germany, supported by the Kingdom of Belgium, claims that the regime introduced by the Framework Agreement impairs fundamental rights of Category A and C operators, namely their freedom to pursue a trade or business and their right to property, and discriminates against them as compared with Category B operators. Moreover, the agreement contravenes the principles of the protection of legitimate expectations and of proportionality.

49 In support of those pleas, the applicant states that the allocation of country quotas to third countries which are parties to the Framework Agreement limits Category A and C operators' opportunities for importing bananas from other third countries. It is also liable to deprive such operators of the value inherent in product brand-names based on the countries of origin and forces them to undertake costly diversification of their sources of supply.

50 The Federal Republic of Germany also maintains that the export-licence system involves the payment of charges to the issuing countries and thereby makes imports from those countries more expensive. Accordingly, application of the export-licence system only to Category A and C operators means that they are discriminated against as compared with Category B operators, who are already privileged by the fact that the basis of quota allocation introduced by Regulation No 404/93 applies to the increase in the tariff quota provided for in the Framework Agreement. According to the applicant, such discrimination is not justifiable by the Community interest in bringing to an end the proceedings initiated before the GATT authorities by the third countries concerned against the Community banana import regime.

51 The Council, supported by the Kingdom of Spain, the French Republic and the Commission, denies that the Framework Agreement contravenes the fundamental principles of Community law relied on by the applicant. It contends that the introduction of country quotas and of the export-licence system does not undermine the competitive situation of the Category A and C operators. It maintains that the increase in the tariff quota and the lowering of the customs duty agreed upon in the Framework Agreement increase the availability of third-country bananas and improve opportunities for competition between operators of all categories.

52 The Council and the interveners supporting it add that the difference in treatment arising from the exemption of Category B operators from the obligation to obtain costly export licences is objectively justified by the need to restore, between them and Category A and C operators, the competitive balance which Regulation No 404/93 was designed to establish. They state in that connection that, in Germany v Council, cited above, the Court recognised the legality of certain advantages afforded to Category B operators because of the need to achieve such a balance. However, the increase in the tariff quota and the lowering of the customs duty provided for in the Framework Agreement had the effect of disturbing that balance to the detriment of Category B operators.

53 It is necessary, in assessing the merits of this application, to examine first the plea alleging breach of the general principle of non-discrimination and then the pleas alleging infringement of the right to property, of the freedom to pursue a trade or business, of the principle of the protection of legitimate expectations and of the principle of proportionality.

The plea alleging breach of the general principle of non-discrimination

54 In considering the merits of the plea alleging breach of the general principle of non-discrimination it is necessary to distinguish between the introduction of country quotas and the exemption of Category B operators from the requirements of the export-licence system.

55 With regard to the first aspect, it must be emphasised that, in Germany v Council, cited above, the Court held that it was lawful to introduce the global tariff quota for imports of third-country and non-traditional ACP bananas as distinct from traditional imports from the ACP countries which enjoyed favourable terms under the Lomé Convention.

56 It must also be borne in mind that there is no general principle of Community law obliging the Community, in its external relations, to accord third countries equal treatment in all respects. Therefore, as the Court held in Case 52/81 Faust v Commission [1982] ECR 3745, paragraph 25, if different treatment of third countries is compatible with Community law, then different treatment accorded to traders within the Community must also be regarded as compatible with Community law where that different treatment is merely an automatic consequence of the different treatment accorded to third countries with which such traders have entered into commercial relations.

57 Here, it is clear that the restrictions on import opportunities which the introduction of country quotas is likely to entail for economic operators in Categories A and C are the automatic consequence of differences in the treatment accorded to third countries, depending on whether or not they are parties to the Framework Agreement and on the size of the quota allocated to them in that agreement.

58 The plea alleging breach of the general principle of non-discrimination must therefore be rejected as unfounded as regards the introduction of country quotas.

59 As to the exemption of Category B operators from the export-licence system, that difference in treatment is not, it must be noted at the outset, the automatic consequence of any difference of treatment of some third countries as compared with others.

60 That difference in treatment derives not from the fact that the export-licence system, as provided for in the Framework Agreement, is applicable to imports from certain third countries, whether or not they are parties to the Framework Agreement, but from the fact that, among the Community operators who have entered into commercial relations with third countries imports from which are subject to the export-licence system, some are under an obligation to obtain export licences whilst others are exempt from that requirement.

61 It constitutes, moreover, a clear difference in the treatment of Category A and C operators as compared with Category B operators, since, as asserted by the applicant and expressly admitted by the Council, application of the export-licence system to Category A and C operators means that they have to pay a price for bananas from the third countries concerned which is some 33% higher than that paid by Category B operators.

62 It is therefore necessary to consider whether that difference in treatment is incompatible with the prohibition laid down in the second subparagraph of Article 40(3) of the Treaty, which is merely a specific enunciation of the general principle of equality, one of the fundamental principles of Community law (see in particular Joined Cases 117/76 and 16/77 Ruckdeschel v Hauptzollamt Hamburg-St Annen [1977] ECR 1753, paragraph 7, Joined Cases 124/76 and 20/77 Moulins et Huileries de Pont-à-Mousson and Another v Office Interprofessionnel des Céréales [1977] ECR 1795, paragraph 16, Case 125/77 Koninklijke Scholten-Honig v Hoofdproduktschap voor Akkerbouwprodukten [1978] ECR 1991, paragraph 26, and Joined Cases 103/77 and 145/77 Royal Scholten-Honig v Intervention Board for Agricultural Products [1978] ECR 2037, paragraph 26), or whether, on the contrary, it may be objectively justified, as contended by, in particular, the Council and the Commission, by the need to restore the competitive balance between those categories of operators.

63 In that regard, it must be emphasised that, as the Court recognised in Germany v Council, cited above, the common organisation of the market in bananas, as established by Regulation No 404/93, and in particular the system of tariff-quota allocation, involves certain restrictions or differences of treatment detrimental to Category A and C operators, whose opportunities for importing bananas from third countries have thereby been restricted, whereas Category B operators, who had previously been obliged to market essentially Community and ACP bananas, have gained an opportunity to import specified quantities of third-country bananas.

64 The Court held that such a difference in treatment is not contrary to the general principle of non-discrimination in so far as it is inherent in the objective of integrating previously compartmentalised markets, bearing in mind the different situations of the various categories of economic operators before the establishment of the common organisation of the market, and that pursuit of the objective of the common organisation, which is to guarantee disposal of Community production and traditional ACP production, entails the striking of a balance between the various categories of economic operators in question (paragraph 74).

65 Accordingly, where the balance thus achieved by Regulation No 404/93 has been disturbed because one or more of the parameters on which it is based - such as, for example, the level of the tariff quota or that of the customs duties on imports - have been changed, albeit for reasons unconnected with the common organisation of the market in the bananas sector, it may prove necessary to restore that balance. The question remains, however, whether in this case it was proper to do so, to the detriment of Category A and C operators, by means of a measure such as the exemption of Category B operators from the export-licence system.

66 The system for the allocation of the tariff quota, as established by Regulation No 404/93, which reserves 30% of it to Category B operators, is also applicable to the increase of that quota agreed upon in the Framework Agreement.

67 Category B operators therefore benefit, in the same way as Category A and C operators, from the quota increase and the concomitant lowering of customs duties which, according to the Council and the Commission, are the cause of the disturbance of the balance between the various categories of operator concerned. In addition, the restrictions and differences in treatment to which Category A and C operators are subject as a result of the banana import regime set up by Regulation No 404/93 also apply to the part of the quota corresponding to that increase.

68 Therefore, in order to justify recourse to a measure such as the one at issue in this case, the Council should have demonstrated that the balance disturbed by the increase in the tariff quota and the concomitant lowering of customs duties, which also benefit Category B operators, could be restored only by granting a substantial advantage to that same category of operators and, thus, at the cost of introducing a new difference in treatment detrimental to the other categories of operators who had already, when the tariff quota and the machinery for dividing it up were introduced, been subjected to similar restrictions and differences in treatment.

69 In the present case, however, the Council's statement that that balance had been disturbed, and the mere assertion that exemption of Category B operators from the export-licence system was justified by the need to restore that balance, does not establish that to be the case.

70 The Council expressly accepts, moreover, that the introduction of the export-licence system is intended not only to reestablish a balance between the various categories of Community operators but also to provide financial aid for the third countries party to the Framework Agreement and thereby to offset the limitations which Regulation No 404/93 imposed on the marketing of bananas from those countries in favour of Community and ACP bananas.

71 The Council has not, however, provided the Court with sufficient information to explain why the increase in the tariff quota and its division into country quotas, together with the concomitant lowering of customs duties, were not sufficient to offset the limitations which Regulation No 404/93 had imposed on the marketing of bananas from the third countries party to the Framework Agreement and why that objective had therefore to be achieved by the imposition of a financial burden on only some of the economic operators importing bananas from those countries.

72 Consequently, it must be concluded that the plea alleging breach of the general principle of non-discrimination is well founded as regards the exemption of Category B operators from the export-licence system provided for in the Framework Agreement.

73 It is therefore necessary to examine the merits of the other pleas only to the extent to which they are directed against the introduction of country quotas.

The pleas alleging infringement of the right to property, of the freedom to pursue a trade or business, of the principle of the protection of legitimate expectations and of the principle of proportionality

74 It must be recalled that the pleas alleging infringement of the right to property, of the freedom to pursue a trade or business, of the principle of the protection of legitimate expectations and of the principle of proportionality were relied on by the applicant in Germany v Council, cited above, in challenging the regime governing trade with third countries established in Title IV of Regulation No 404/93 and in particular the opening of a tariff quota for imports of third-country and non-traditional ACP bananas and the arrangements for dividing that quota up among the Community's Category A, B and C operators.

75 Thus, the applicant had claimed that the loss of market share thereby suffered by Category A operators undermined their right to property and freedom to pursue their trade or business, as well as their acquired rights. It also maintained that the regime for trade with third countries contravened the principle of proportionality in that the objectives pursued could have been achieved by measures that would have had a lesser impact on competition and on the interests of certain categories of economic operators.

76 In its judgment in that case, however, the Court held that none of those pleas was well founded.

77 It considered in particular that no economic operator could claim a right to property in a market share which he held before the adoption of that regime (paragraph 79) or an acquired right or a legitimate expectation that a situation existing before that time would be maintained (paragraph 80). It also held that restrictions on the right to import third-country bananas resulting from the opening of the tariff quota and the machinery for its subdivision were inherent in the objectives of general Community interest pursued by the establishment of a common organisation of the market in the bananas sector and therefore did not improperly impair the freedom of traditional traders in third-country bananas to pursue their trade or business (paragraphs 82 and 87). Finally, it found that the contested measures did not infringe the principle of proportionality since no evidence had been produced that they were manifestly inappropriate for achieving the objectives pursued (paragraphs 94 and 95).

78 As regards the right to property, the freedom to pursue a trade or business and the protection of legitimate expectations, the same considerations apply, in this case, to the division of the tariff quota into country quotas.

79 As regards the principle of proportionality, the applicant has failed to prove in what way, contrary to the Court's finding regarding introduction of the global third-country quota itself, the subdivision of that quota into specific country quotas for some of those countries was manifestly inappropriate for achieving the objectives pursued, namely the marketing of Community and traditional ACP banana production and integration of the previously compartmentalised national markets.

80 Furthermore, in so far as those various pleas seek to emphasise that the introduction of country quotas affects Category A and C operators differently from Category B operators, they coincide with the plea alleging breach of the general principle of non-discrimination.

81 Accordingly, the pleas alleging infringement of the right to property, of the freedom to pursue a trade or business, of the principle of the protection of legitimate expectations and of the principle of proportionality must, in this case, also be rejected as unfounded.

82 It follows from all the foregoing considerations that it is necessary to annul the first indent of Article 1(1) of the contested decision, to the extent that the Council thereby approved the Framework Agreement, in so far as that agreement exempts Category B operators from the export-licence system for which it provides, and that, for the rest, the application must be dismissed.

Decision on costs

Costs

83 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. However, Article 69(3) provides that the Court may order that the costs be shared or that the parties bear their own costs if each party succeeds on some and fails on other heads, or where the circumstances are exceptional. Since each of the parties has been unsuccessful on one head, each should bear its own costs. Under Article 69(4) of the Rules of Procedure, Member States and institutions which have intervened in the proceedings are to bear their own costs.

Operative part

On those grounds,

THE COURT

hereby:

1. Annuls the first indent of Article 1(1) of Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994), to the extent that the Council thereby approved the conclusion of the Framework Agreement on Bananas between the European Community and the Republic of Costa Rica, the Republic of Colombia, the Republic of Nicaragua and the Republic of Venezuela, in so far as that Framework Agreement exempts Category B operators from the export-licence system for which it provides;

2. For the rest, dismisses the application;

3. Orders the parties, including the interveners, to bear their own costs.