4.

What precisely is the nature of the anomaly of which the Roquette company and the French Government complain? As an example, the representative of the Roquette company quoted the Belgian starch producer who buys maize in France and, then sells the starch produced from it without having to pay any compensatory amount, while the French producer Who exports starch to Belgium has to pay a compensatory amount commensurate with the quantity of maize used. This represents manifestly unequal treatment of two Community undertakings for which, given the object of the system of compensatory amounts, there can be no justification and which runs counter to one of the principles underlying the Community legal system. Suffice it here to recall the principle, expressed in the last paragraph of the preamble to the basic regulation, that the compensatory amounts should be limited to the amounts strictly necessary to compensate the incidence of the monetary measures on the prices of basic products. In the example before us, it is obvious that this principle is breached because the Belgian producer has paid for the basic product in the same currency and at the same price as the French producer. The example could be taken a stage further by considering a situation in which starch produced from French maize is exported from Belgium into France. On the basis of the way the Commission applied Article 4 a (2), the exporter in that situation would receive a compensatory amount which manifestly could not serve, as it should, to offset the incidence of the monetary measures on the basic product, because the product was bought in France and exported to Belgium without being subjected to compensatory charges. It is true that the real source of the trouble can be identified not as the fact that a compensatory amount is imposed on the French starch exporter but rather as the exemption of the Belgian purchaser of French maize from paying an equivalent charge on exportation of the basic product concerned. Such a charge would, perhaps, have been more consistent with the structure of the compensatory amount system by restoring, in the working of the Community organization of the agricultural markets, the balance which the various fluctuations of national currencies' placed at risk. This is the situation to which, now that application of the provision has been suspended, we appear to be returning, at least for the time being. But, despite failure of the legislature to act in time, would it have been possible, during the material period, to have avoided the anomalies arising from application of the rule? To answer this question, the provision in Article 4 a (2) must be looked at in the light of the system of which it forms part, the other rules and its own basic objects and principles. First of all we must bear in mind the general rule in Article 2 (2) of Regulation No 974/71 laying down that the compensatory amount on the processed product shall be equal to the incidence which the compensatory amount applied to the basic agricultural product has on its price. This general prescription for parity, embodied in the mechanism provided for under Article 4 a, would therefore have the effect of depriving the fixed components of the levy, which are not determined by the price of basic agricultural products, of any real importance because they could not serve to increase the compensatory amount on the processed products' beyond the limit permitted under this general prescription. Thus, in cases where the compensatory amount on the raw material which would be applied if Article 4 a did not exist was, in accordance with this rule, reduced to zero (as, indeed, happens when the amount of the levy on imports of the basic product from third countries is nil), no compensatory amount could be applied even to the derived products. It is true that, on a strictly formal view, it would not, in order to produce this result, be necessary to interpret the concept of ‘charge on importation’, which underlies Article 4 a (2), in such a way to relate it exclusively to the variable component of the charge on importation from third countries. As the Roquette company points out, it would, even on the wider interpretation, be sufficient in applying the provision to have regard to the general prescription for parity laid down under Article 2. But this, in practice, means that the fixed components of the charge on importation from third countries could not influence the calculation of the compensatory amount, because it is only in respect of conditions reflecting world prices of raw materials which are higher than or very close to Community prices (i.e. when the variable component of the charge on importation is nil or extremely small) that taking these fixed components into account could have any impact on the level of the compensatory amount. To my mind, this last conclusion defeats the contention of the Danish Government, which is based on the argument that the object and economic effect of the fixed components are to ensure higher prices for products processed in the Community, and thus to cover the higher costs which the Community producers have to meet; from this argument the Danish Government draws the conclusion that it is necessary to have regard to these components in order to make an indirect comparison of prices in accordance with Article 4 a (2).