Opinion of Advocate General Léger delivered on 13 March 2001. - Kingdom of the Netherlands v Council of the European Union. - Case C-110/97. - Antillean Rice Mills NV v Council of the European Union. - Case C-451/98. - Association of overseas countries and territories - Imports of rice originating in the overseas countries and territories - Safeguard measures - Regulation (EC) No 304/97 - Action for annulment.



European Court reports 2001 Page I-08763



Opinion of the Advocate-General

1. By these actions, brought under Article 173 of the EC Treaty (now, after amendment, Article 230 EC), the Kingdom of the Netherlands and Antillean Rice Mills NV, a company registered under the law of the Netherlands Antilles, ask the Court to annul Council Regulation (EC) No 304/97 of 17 February 1997 introducing safeguard measures in respect of imports of rice originating in the overseas countries and territories and to order the Council of the European Union to pay the costs.

I - Legal and procedural background to Cases C-110/97 and C-451/98

EC Treaty

2. By Article 3(r) of the EC Treaty (now, after amendment, Article 3(s) EC), Community activities are to include the association of the overseas countries and territories (hereinafter the OCTs) in order to increase trade and promote jointly economic and social development.

3. Article 227(3) of the EC Treaty (now, after amendment, Article 299(3) EC) provides that the association arrangements are to apply to the OCTs listed in Annex IV to the Treaty, which includes the Netherlands Antilles.

4. According to the second paragraph of Article 131 of the EC Treaty (now, after amendment, the second paragraph of Article 182 EC), the purpose of association is to promote the economic and social development of the OCTs and to establish close economic relations between them and the Community as a whole.

5. Article 132(1) of the EC Treaty (now Article 183(1) EC) states that the Member States are to apply to their trade with the OCTs the same treatment as they accord each other pursuant to the Treaty.

6. Article 133(1) of the EC Treaty (now, after amendment, Article 184(1) EC) provides that customs duties on imports into the Member States of goods originating in the OCTs are to be completely abolished in conformity with the progressive abolition of customs duties between Member States in accordance with the provisions of the Treaty.

7. Article 134 of the EC Treaty (now Article 185 EC) provides that, if the level of the duties applicable to goods from a third country on entry into a country or territory is liable, when the provisions of Article 133(1) have been applied, to cause deflections of trade to the detriment of any Member State, the latter may request the Commission to propose to the other Member States the measures needed to remedy the situation.

8. Pursuant to Article 136 of the EC Treaty (now, after amendment, Article 187 EC), the Council is to determine the detailed rules and procedure for the association between the OCTs and the Community. Those measures were most recently laid down by Council Decision 91/482/EEC of 25 July 1991 on the association of the OCTs with the European Economic Community.

The OCT decision

9. Under Article 101(1) of the OCT decision, products originating in the OCTs are to be imported into the Community free of customs duties and charges having equivalent effect.

10. Under Article 1 of Annex II to the OCT decision, a product is to be considered to be originating in the OCT if it has been either wholly obtained or sufficiently worked or processed there.

11. Article 2(1)(b) of Annex II to the OCT decision states: vegetable products harvested in the OCT are to be considered wholly obtained in the OCTs.

12. Under Article 3(1) of the abovementioned annex, non-originating materials are considered to be sufficiently worked or processed when the product obtained is classified in a heading which is different from those in which all the non-originating materials used in its manufacture are classified.

13. Article 3(3) of Annex II to the OCT decision lists working or processing considered as insufficient to confer the status of originating products on OCT products.

14. Article 6(2) of that annex provides:

When products wholly obtained in the Community or in the ACP States undergo working or processing in the OCT, they shall be considered as having been wholly obtained in the OCT (the cumulation of ACP/OCT origin rule).

15. Article 109(1) of the OCT decision allows the Commission to take safeguard measures, or to authorise a Member State to take them, if, as a result of the application of the decision, serious disturbances occur in a sector of the economy of the Community or one or more of its Member States, or their external financial stability is jeopardised, or if difficulties arise which may result in a deterioration in a sector of the Community's activity or in a region of the Community. The Commission is then required to follow the procedure specified in Annex IV to the OCT decision.

16. Under Article 109(2) of the OCT decision, priority is to be given to such measures as would least disturb the functioning of the association and the Community; those measures are not to exceed the limits of what is strictly necessary to remedy the difficulties that have arisen.

17. Under Article 1(5) and (7) of Annex IV to the OCT decision, any Member State may refer the Commission's decision to implement safeguard measures to the Council within 10 working days of receiving notification of the decision. In such a case the Council, acting by a qualified majority, may adopt a different decision within 20 working days.

Regulation (EC) No 21/97

18. On 8 January 1997, at the request of the Italian and Spanish Governments, the Commission adopted Regulation (EC) No 21/97 introducing safeguard measures in respect of imports of rice originating in the OCTs.

19. Article 1 of Regulation No 21/97 provides that imports into the Community of rice originating in the OCTs falling within CN code 1006 and benefiting from exemption from customs duties is to be restricted during the period of 1 January to 30 April 1997 to the following quantities:

- 4 594 tonnes for rice originating in Montserrat;

- 1 328 tonnes for rice originating in the Turks and Caicos Islands; and

- 36 728 tonnes for rice originating in other OCTs. This category predominantly concerns the Netherlands Antilles.

Regulation No 304/97

20. The regulation at issue in this case repeals and replaces Regulation No 21/97.

21. It was adopted by the Council following a reference by the United Kingdom, in accordance with Article 1(5) of Annex IV to the OCT decision. In its reference the United Kingdom Government sought an increase of the share allocated to Montserrat and the Turks and Caicos Islands. The Netherlands Government also asked the Council to adopt a new decision.

22. The Council acceded solely to the United Kingdom Government's request. Article 1(1) of Regulation No 304/97 provides that imports into the Community of rice originating in the OCTs falling within CN code 1006 and benefiting from exemption from customs duties shall be restricted during the period of 1 January to 30 April 1997 to the following volumes:

(a) 8 000 tonnes for rice originating in Montserrat and in the Turks and Caicos Islands, made up of:

- 4 594 tonnes originating in Montserrat; and

- 3 406 tonnes originating in Montserrat or the Turks and Caicos Islands; and

(b) 36 728 tonnes for rice originating in the other OCTs.

23. Under the second paragraph of Article 8, Regulation No 304/97 is to apply from 1 January to 30 April 1997, except for the second indent of Article 1(1)(a), which is to apply from the date of entry into force of the Regulation, namely the date of its publication in the Official Journal of the European Communities.

24. It was in those circumstances that, on 17 March 1997, the Kingdom of the Netherlands commenced an action for annulment of Regulation No 304/97.

25. On 27 February 1997 ARM brought a parallel action before the Court of First Instance for annulment of the same regulation. By order of 16 November 1998 the Court of First Instance declined jurisdiction in that affair in favour of the Court of Justice.

II - The factual background to Cases C-110/97 and C-451/98

The Community market in rice

26. There are three main varieties of rice: round-grained rice, semi-long grained rice (otherwise known as Japonica) and long grained rice (otherwise known as Indica). Only Japonica and Indica rice are consumed in the Community.

27. The rice-producing countries in the Community are essentially France, Spain and Italy. The variety of rice most commonly produced is Japonica, of which there is surplus production. On the other hand, the Community does not produce enough Indica rice to meet its own needs. For this reason the Community has encouraged the culture of Indica rice by granting temporary aid per hectare to Community producers.

28. Before they can be eaten, the different varieties of rice have to be processed. There are four stages of processing. At each one of these stages the unitary value of the rice is increased. The processing stage is therefore always shown with the price or tax applicable to the rice.

29. There are generally four processing stages:

- paddy rice: this is the rice as harvested, as yet unfit for consumption;

- brown rice: this is the rice after the husk has been removed. It is fit for consumption but can also be processed further;

- semi-milled rice: this is the rice after part of the pericarp has been removed. It is a semi-finished product generally sold for processing rather than for consumption;

- milled rice: this is fully processed rice after both the husk and the pericarp have been removed.

30. The Community produces only milled rice. By contrast the Netherlands Antilles only produce semi-milled rice. Semi-milled rice originating in the Netherlands Antilles must undergo a final transformation before being consumed in the Community.

ARM's activities in the Netherlands Antilles

31. ARM is a company registered under the law of the Netherlands Antilles whose activities comprise the processing of rice in the Netherlands Antilles.

32. In the course of 1992, ARM concentrated on the processing of brown rice originating from Surinam and Guyana into semi-milled rice with the intention of exporting it to the Community.

33. There are about six or seven undertakings in the Netherlands Antilles engaged in processing brown rice into semi-milled rice.

III - Admissibility of ARM's action in Case C-451/98

34. ARM's pleas and claims in Case C-451/98 are more or less the same as those of the Netherlands Government. Since ARM has raised the question of the admissibility of its action, I will deal with this question first.

Arguments of the parties

35. The Netherlands Government and ARM submit that the latter should be regarded as an undertaking concerned within the meaning of the judgment in Piraiki-Patraiki and Others v Commission.

36. In this respect, ARM submits that, before the adoption of Regulation No 304/97, it had concluded various contracts for the supply of semi-milled rice with customers established in the Community and then had purchased husked rice in Surinam in order to honour those contracts. It alleges that the contracts could not be performed as a result of the adoption of the regulation at issue.

According to ARM and the Netherlands Government, the Council was aware of the particular situation of the applicant before the adoption of the regulation at issue since it intervened in the application brought by ARM against the safeguard measures adopted in 1993. The Council could not therefore be unaware that ARM was one of the few undertakings specifically engaged in the processing of rice from African, Caribbean and Pacific States (hereinafter ACP States) for export to the Community.

ARM states that, in its letters of 3 and 24 December 1996, it had moreover informed the Commission and the Council of its specific situation, and had indicated that the safeguard measures would be of concern to it. It submits that its activity is entirely centred on the export of rice to the Community and that the safeguard measures inevitably mean that this will cease. Therefore ARM argues that the safeguard measures are of concern to it as a rice processing undertaking. It points out that, following the example of six other undertakings established in the Netherlands Antilles, it entered into sizeable investment so as to increase its production capacity. That fact is such as to distinguish it from other rice producers established in the Netherlands Antilles.

37. The Council, the Commission and the Spanish, Italian and French Governments submit that Regulation No 304/97 is not of individual concern to the applicant. They point out that in the ARM-1 case the Court of First Instance did not expressly rule on the admissibility of ARM's action because the application was admitted on the basis of the admissibility of another applicant. They conclude that this clearly does not imply that ARM is not entitled to act, but neither does it show that the measure in question is of individual concern to it. They point out that, in this case, ARM has not sufficiently shown that it effectively occupies the position of an undertaking concerned within the meaning of the Court's case-law. On this point, they advance three arguments.

Firstly, in respect of the contracts for the supply of semi-milled rice entered into with customers established in the Community, they note that the two contracts put in evidence by the applicant were concluded after the Commission had let it be known that it would be adopting safeguard measures. This shows that, at the time of entering into those contracts, the applicant could not be unaware that safeguard measures were likely to affect their performance.

Secondly, they claim that it appears from the documents submitted by ARM that the non-performance of the contracts with its customers established in the Community was not caused by the application of the regulation at issue.

Thirdly, they dispute the assertion that the applicant's activities were entirely centred on the export of rice to the Community and that the adoption of the safeguard measures suddenly left ARM at a standstill. They further submit that the investment made by the applicant with a view to increasing the processing capacity of its rice mill was very small by comparison with the value of the finished products.

Assessment

38. In accordance with the fourth paragraph of Article 173 of the Treaty, any natural or legal person may institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former.

39. Since the contested regulation is not a decision addressed to ARM, within the meaning of the fourth paragraph of Article 173 of the Treaty, it is necessary to consider whether it is an act of general application or whether it should be regarded as a decision in the form of a regulation.

40. In order to determine the general applicability or otherwise of an act, it is necessary to consider its nature and the legal effects which it is intended to, or does in fact produce.

41. By Regulation No 304/97 the Council adopted legislative measures that are applicable without distinction to all economic operators in the rice trade between the OCTs and the Community. The regulation at issue is thus intended to limit and has the effect of limiting imports of rice originating in all the OCTs into the Community. On the other hand, the regulation does not contain any provision requiring rice producers to reduce their particular production capacity.

42. That regulation, by its nature, therefore, is of general application and does not constitute a decision within the meaning of Article 189 of the EC Treaty (now Article 249 EC).

43. It cannot be ruled out, however, that an act may, notwithstanding its general application, be of direct and individual concern to certain natural and legal persons. It is necessary to see whether ARM meets those two conditions.

44. In accordance with settled case-law, the Court has held that natural or legal persons may be regarded as individually concerned by an act of general application adopted by a Community institution if it affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons. In that case an undertaking is regarded as an undertaking concerned, in the sense that it can show that it belongs to a limited circle of economic operators whose legal position is affected by reason of circumstances in which they are differentiated from all other persons and distinguished individually just as in the case of the person addressed.

45. ARM claims that it fulfils these two conditions.

46. Firstly, it states that its entire activity is centred on the export of rice to the Community. It concludes for this reason alone that it is affected by the regulation at issue by reason of attributes peculiar to it.

47. Having regard to the evidence on the file, I doubt whether ARM operates exclusively in trading in rice originating in the OCTs with the Community. However, even if this were the case, the mere status of exporter-trader of rice to the Community claimed by the applicant is not sufficient to bestow on it an attribute peculiar to it which sets it apart from any other undertaking operating in the same market.

48. The Court's judgment in Plaumann v Commission, cited above, was to that effect. In that case the company, Plaumann, claimed that, as an importer of clementines, its action for the annulment of a Commission decision refusing to allow the Federal Republic of Germany to partially suspend the customs duty payable on fresh mandarins and clementines imported from third countries should be held admissible. The Court declined to find that that fact alone was such as to distinguish the company, holding that: the applicant is affected by the disputed decision as an importer of clementines, that is to say, by reason of a commercial activity which may at any time be practised by any person and is not therefore such as to distinguish the applicant in relation to the contested decision as in the case of the addressee.

49. Secondly, ARM relies on a factual situation that distinguishes it from all other persons operating in the same sector. It states that, before the adoption of Regulation No 304/97, it had entered into various contracts for the supply of semi-milled rice with customers established in the Community, and then bought husked rice in Surinam to honour those contracts. It considers that these contracts could not be performed by reason of the application of the regulation in issue. That factual circumstance is said to prove that it is individually concerned by the said regulation within the meaning of the Court's case-law.

50. The fact that the Commission is required, by specific provisions, before adopting a decision, to have regard to the negative repercussions which its decision might have either on the economy of a State or for interested undertakings may be such as to single out the latter provided that they demonstrate proof that they are in a factual situation that distinguishes them from all other operators. The Court has also found that Article 109(1) of the OCT decision contained obligations of that nature.

51. In the context of the safeguard measures adopted by the Commission on the basis of Article 109(1) of the OCT decision, or by the Council on the basis of Article 1(5) and (7) of Annex IV to the same decision, supply contracts may, if certain conditions are fulfilled, single out an undertaking and enable it to be considered an undertaking concerned within the meaning of the Court's decision in Piraiki-Patraiki and Others v Commission, cited above. According to that judgment, those conditions are as follows:

- the supply contracts entered into with customers established in the Community must have been concluded before the adoption of the act introducing the safeguard measures;

- the application of the act at issue must be the cause, either solely or in part, of the non-performance of those contracts.

52. In this case, it appears from the evidence adduced by ARM that, contrary to its assertions, the contracts entered into with customers established in the Community, specifically in the Netherlands, for the supply of 4 800 tonnes of semi-milled rice were signed on 17 December 1996, that is to say after the Commission had informed the Netherlands Government of its intention to adopt the measures at issue. It also appears from the file that, at that date, ARM knew that safeguard measures were going to be adopted by the Commission. Having decided to enter into contracts after the Commission had expressly made known its intention to introduce safeguard measures, ARM cannot justifiably criticise the latter for not having taken account of a situation that, by definition, did not exist at the time when the Commission was drafting its decision.

53. It also appears from the documents produced by ARM that, contrary to its assertions, the contracts entered into with customers in Surinam for the delivery to Bonaire of 8 400 tonnes of brown rice were concluded on 16 August 1996, that is to say, before those entered into with customers established in the Community. ARM cannot, therefore, claim that the Surinamese contracts were intended to enable it to meet its undertakings to its Netherlands customers.

54. Finally, at the hearing, ARM confirmed that it had not sought certificates that would, nevertheless, have enabled it to honour its undertakings to its customers established in the Community. In defence of that position, it maintains that its customers did not wish it to do so because of the amount of the security required for such import licences which they considered prohibitive. This statement proves that the performance of the contracts was not prevented by the application of the safeguard measures of Regulation No 304/97, namely the quota system for semi-milled rice originating in the OCTs. It thus appears from the evidence on the file that no consignment of rice from the OCTs was en route for the Community at the time when the measures at issue were upheld.

55. Having regard to those various factors, it appears that ARM has not shown that it was affected by the regulation at issue by reason of attributes peculiar to it or of a factual situation that distinguishes it from all other persons.

56. Having failed to prove that it is individually concerned by the regulation at issue, it is therefore unnecessary to consider whether the applicant is directly affected by it.

57. It follows from the foregoing that ARM cannot be regarded as an undertaking concerned within the meaning of the Court's case-law. I therefore propose that its application be held inadmissible.

58. Consideration of the substance of its application is therefore unnecessary.

IV - Pleas in law and claims of the Netherlands Government in Case C-100/97

59. The Netherlands Government advances five pleas in law in support of its action. The first alleges breach of Article 109(1) of the OCT decision. This plea is made up of two limbs. Under the first of these the Netherlands Government principally contends that Article 132 of the Treaty does not permit the Council to adopt safeguard measures for reasons connected to the quantities or price-level of rice originating in the OCTs. Additionally, under the second limb, the Netherlands Government submits that the Council has not shown that the quantity or price-level of rice originating in the OCTs caused, or risked causing, substantial disturbance to the Community market.

The second plea in law, alleging a breach of Article 109(2) of the OCT decision, is further divided into four limbs. Under the first limb, the Council is said not to have respected the order of preference of EC/OCT/ACP/third countries laid down by the Treaty, because the effect of the contested regulation is to render OCT rice more expensive than that from third countries or ACP States. Under the second limb, the applicant submits that the Council failed to consider whether the safeguard measures adopted could have adverse effects on the economies of the Netherlands Antilles and Aruba. Under the third limb of this argument, the applicant submits that the Council has infringed the principle of proportionality in choosing, as a safeguard measure, a tariff quota instead of a minimum price. Lastly, under the fourth limb, the applicant considers that the contested regulation disregards Article 109(2) of the OCT decision, in that the amount of the guarantee demanded from importers renders the legislation on the special detailed rules for applying the import licence scheme in the rice sector inapplicable.

By its third plea in law, the applicant submits that there has been a misuse of powers by the Council and the Commission in that they have used their competence under Article 109(1) of the OCT decision for a purpose other than that for which it was intended.

By its fourth plea in law, the Netherlands Government criticises the Council for having failed to apply the revision procedure for safeguard measures provided by Annex IV to the OCT decision. In its view the Council failed to examine for itself the circumstances prevailing on the market in rice when it replaced the Commission's safeguard measures.

By its fifth and last argument, the applicant considers that Regulation No 304/97 was not reasoned as required under Article 190 of the EC Treaty (now Article 253 EC).

V - Discussion

First plea in law, alleging breach of Article 109(1) of the OCT decision

First limb of the first plea in law

Arguments

60. Under the first limb of its first plea, the Netherlands Government submits that it follows from the provisions of Article 132 of the Treaty that the advantages accorded to the OCTs in the context of the progressive stages of the association cannot be called into question for reasons connected with the quantities or price-level of products imported from the OCTs.

61. The applicant states that the purpose of the OCT decision, under Article 131 of the Treaty, is to promote the economic and social development of the OCTs and to establish close economic relations between the latter and the Community. Under Article 133 of the Treaty, the complete abolition of customs duties on goods originating in the OCTs upon their entry into the Member States constitutes one of the means of bringing about the abovementioned objectives.

62. In the view of the applicant, the realisation of these objectives presupposes that the volume or price of products originating in the OCTs cannot justify the adoption of safeguard measures. If one were to accept that these reasons justified the adoption of such measures, the realisation of the objectives of the OCT arrangements, which include, according to Article 3(r) of the Treaty, an increase in trade, would be permanently compromised. The effect of the safeguard measures would thus be to reduce to nothing the natural development of trade, which is the purpose of the Treaty.

63. The applicant accepts that the Community can adopt safeguard measures, but only when the conditions laid down by Article 134 of the Treaty are satisfied.

Assessment

64. The Court has rejected the Netherland Government's interpretation of Articles 131 to 134 of the Treaty.

65. In its judgment in Emesa Sugar the Court confirmed that although the dynamic and progressive process characterising the association of the OCTs with the Community requires that account be taken by the Council of the experience acquired as a result of its earlier decisions, the fact nevertheless remains ... that the Council, when adopting measures under the second paragraph of Article 136 of the Treaty, must take account both of the principles set out in Part Four of the Treaty and of the other principles of Community law, including those relating to the common agricultural policy.

66. The Court also accepted that, in two situations in the context of the exercise of its powers under Article 136 of the Treaty, the Council may be prompted to curtail certain advantages previously granted to the OCTs.

67. In order to reconcile the different objectives set by the Treaty, the Council is therefore authorised, exceptionally and temporarily, to remove or curtail the advantages previously granted to the OCTs where the application of the association arrangements causes, or risks causing, significant disturbance to the operation of a common market organisation.

68. The Court has also rejected the argument that safeguard measures may be taken only under the conditions set out in Article 134 of the Treaty [in so far as] Article 134 and the second paragraph of Article 136 pursue different aims ....

69. I conclude therefore that, contrary to the assertion of the Netherlands Government, Article 132 of the Treaty cannot be interpreted as meaning that the advantages accorded to the OCTs in the context of the progressive attainment of the association cannot be called into question for reasons connected with the quantities or price-level of products imported from the OCTs. The first limb of the first plea in law is accordingly unfounded.

Second limb of the first plea in law

Arguments

70. By the second limb, the Netherlands Government submits essentially that the Council has failed to show that the importation of rice from the OCTs risked causing serious disturbances on the Community market for rice by reason of the quantities or price-level concerned.

71. The Netherlands Government, referring to data supplied by the Commission, seeks to show that the quantities of rice imported from the OCTs into the Community could not constitute a risk factor or disturbance to the Community market, because the Community's production of Indica rice in 1995/1996 was not enough to meet demand. On this point, it submits that, during that period, the deficit was calculated to be the equivalent of 365 000 tonnes of milled rice. According to the data produced by the Italian Government which were used in the request for safeguard measures, imports of rice from the OCTs for the 1995/1996 season amounted to 212 087 tonnes of milled rice. Comparison of those two figures shows that the imports of rice from the OCTs were not enough to satisfy the Community's needs for Indica rice. The Netherlands Government deduces from this that the Council wrongly stated that the quantity of imports of rice from the OCTs threatened to disturb the market or that these imports caused disturbance to the market.

72. The Netherlands Government also submits, on the basis of data in the Weekly Rice Market News, that the statement in the preamble to Regulation No 304/97 that rice from the OCTs can be sold on the Community market at a lower price than that at which Community rice can be sold, given the level of processing involved, is clearly wrong. It argues that since producers in the Community do not produce semi-milled rice, it is necessary, in order properly to compare the price of Community rice with OCT rice, to look at the price of rice in its final processing stage - that is, as milled rice - and not in its initial, paddy rice stage.

The Netherlands Government points out that Community rice is sold in the form of paddy rice, and that the buyers - usually millers in the Member States where the rice is grown - process that Community paddy rice into milled rice. However the processing of husked rice from the OCTs into semi-milled rice and, then, the processing in the Community of that semi-milled rice into milled rice include an additional element in the cost of processing and also the mark-up of the intermediary miller. It claims that a summary of Italian and Spanish rice prices in 1997 compared to the intervention price for paddy rice shows that Community paddy rice remained below the intervention price, even during the period when the safeguard measures were in force.

73. The Netherlands Government, lastly, considers that the Council has failed to prove a causal link between imports of rice from the OCTs and the threat of disturbance on the Community rice market. It submits that the price on the world market is significantly lower than that of rice from the OCTs. Therefore it is imports of rice from third countries (including the United States of America and Egypt), exempt from import duties, which are a determining influence on the Community market. Since neither the price nor the quantity, taken separately, result in disturbance or threat of disturbance on the internal market, the Netherlands Government concludes that these two elements, taken together, are even less likely to cause disturbance or threat of disturbance to the market.

74. The Council, the Commission and the Spanish, French and Italian Governments dispute the allegations of the Netherlands Government. They submit in substance that, pursuant to Article 109 of the OCT decision, the Council has a wide margin of discretion and that, in this case, it could reasonably conclude that the imports concerned, having regard to the combined effect of their quantities and price-level, cause disturbance to the Community rice market. They submit that the data relied upon by the applicant are questionable, since they are based on partial analysis which cannot be a proper substitution for the global analysis undertaken by the Council. The Council has stated that its figures were supplied by Eurostat (Statistical Office of the European Communities).

75. In respect of the quantities of imports from the OCTs, the Spanish, French and Italian Governments submit that imports of rice from the OCTs tripled over the course of the last three years and that this staggering increase, combined with the enormous potential production of the OCTs, by reason of the rule on the cumulation of ACP/OCT origin, was the determinant factor for the adoption of the safeguard measure.

It appears from the evidence produced by the Council that imports of milled rice from the OCTs for the relevant period were as follows:

- 1992/1993 77 221 tonnes;

- 1993/1994 101 022 tonnes;

- 1994/1995 108 394 tonnes;

- 1995/1996 212 087 tonnes.

76. As for prices, the Commission and the Spanish and French Governments submit that it is necessary to compare like with like, that is, at the milled rice stage or husked rice stage since it is at that stage that rice of different origin competes. It follows that the fact that rice from the OCTs requires an extra stage of processing is irrelevant.

77. They submit that, economically speaking, that additional processing stage is certainly not necessary because semi-milled rice from the OCTs undergoes the same type of processing as husked rice from the Community (or third countries) in the rice mills of the Community. They state that, in ARM-1, the Court of First Instance found that the Commission had not committed a manifest error of assessment in setting prices on the basis of the semi-milled rice stage.

78. The Commission states that the fact that the significantly lower price of rice from the OCTs compared with prices on the Community market disturbed the Community market can be even more easily shown. The Commission bases its reasoning on the findings of the Court of First Instance in the ARM-1 judgment.

At paragraph 130 of the ARM-1 judgment, the Court of First Instance stated: The Court considers that the Commission did not commit any manifest error of assessment by comparing the two raw materials at that stage [namely the semi-milled stage]. First, its choice to do so demonstrates the Commission's diligence in comparing the two products concerned at the same stage of processing. In addition, since Antillean rice is offered on the Community market as semi-milled rice, it was reasonable for the Commission to compare the two products in competition at that level and to calculate for that purpose a theoretical price for Community semi-milled rice. With regard to that price, the Court considers that the applicants have not succeeded in refuting the calculations put forward by the Commission, since they have confined themselves to alleging that the processing and additional costs were too high or challenging the conversion rate used as between the various levels of processing, without submitting any proof of those allegations ... . Finally, the applicants cannot complain that the Commission calculated a theoretical price for Community semi-milled rice, since the comparison which they themselves propose is also based on the calculation of a theoretical price, that of milled rice produced from Antillean semi-milled rice ....

The Court concluded, at paragraph 131 of the same judgment, that: The Commission therefore rightly found that there was a considerable difference between the price for Community rice and that for Antillean rice, which might have caused the collapse in the price of Community rice between September 1992 and January 1993.

79. The Commission considers that it follows that the Court of First Instance accepted that the Commission had shown that Antillean rice was significantly less expensive than Community rice. The factual situation which enabled the Court of First Instance to reach that conclusion is set out at paragraph 124 of the ARM-1 judgment, which states that, during the period in question, the floor price of Community paddy rice was higher than the price of semi-milled Antillean rice. The method of calculation adopted by the Commission having been judged correct by the Court of First Instance, the Commission proposes that the same be applied in this case. It points out that, in December 1996, the floor price of Community paddy rice increased by 8.5% over the 1993 price and that that of semi-milled Antillean rice fell by 11% over the same period.

80. The Commission concludes from this that Antillean rice, which in 1993 was already less expensive than Community rice, became even cheaper in 1996, whilst Community rice which, in 1993, was more expensive than Antillean rice, became even more expensive in 1996. The difference between the prices has therefore increased to the detriment of Community rice.

81. Lastly, as regards the causal link, the Council, the Commission and the Spanish, French and Italian Governments argue that, in the context of the application of Article 109 of the OCT decision, the Council has a wide discretion and that, in this case, it could reasonably conclude that the imports concerned, by the combined effect of their quantities and price-level, caused disturbance on the Community market in rice. They point out, referring to the ARM-1 judgment, that the Court of First Instance held that, on the basis of a considerable fall in the Community price coupled with a considerable increase in imports of Antillean rice, the Commission was entitled to find that the conditions defined in Article 109(1) of the OCT decision were met. They submit that the unreasonable increase of imports from the Antilles again set in train a sudden drop in the price of Community Indica rice which put it well below the intervention price, and necessitated an urgent Council initiative to maintain the coherence of the common agricultural policy. They consider that it is, therefore, sufficient for the adoption of safeguard measures that there are reliable indications that imports from the OCTs are causing or may cause problems within the Community, and that reference to the notion of a causal link serves only to create confusion.

82. The Spanish Government adds that, instead of treating the questions of price and volume separately, the Council should have concentrated on the essential factor, namely that the ultimate basis for safeguard measures lies in the combined effect of the quantities imported and the level of prices.

Assessment

83. Article 109(1) of the OCT decision authorises the Commission to adopt safeguard measures in two situations:

- if application of the OCT decision results in serious disturbances in a sector of the economy of the Community or one or more of its Member States, or their external financial stability is jeopardised;

- if difficulties arise which may result in a deterioration in a sector of the Community's activity, or in a region of the Community.

84. In the first case the existence of a causal link must be established because the purpose of the safeguard measures must be to iron out or reduce the difficulties which have arisen in the sector concerned. In the second hypothesis, on the other hand, it is not a requirement that the difficulties which justify the imposition of a safeguard measure result from the application of the OCT Decision.

85. The features of the two hypotheses laid down in Article 109(1) may be present in the same factual situation and nevertheless enable the Commission to adopt safeguard measures in accordance with its powers under the OCT decision. In Piraiki-Patraiki and Others v Commission, the Court ruled that, even though the texts distinguish between the conditions entitling the Commission to adopt safeguard measures, that does not mean that factors relating to one or the other of those conditions may not be taken into account generally in order to arrive at the conclusion that the request for a protective measure made by a Member State is justified.

86. According to the Court's settled case-law, the Council has a wide discretion in the application of the provisions of Article 109 of the OCT decision.

87. Very recently, the Court set out in the following terms the extent of judicial review which may be exercised in such circumstances: in a sphere such as this, in which the Community institutions have a broad discretion, the lawfulness of a measure can be affected only if the measure is manifestly inappropriate having regard to the objective pursued. The Court's review must be limited in particular if the Council has to reconcile divergent interests and thus select options within the context of the policy choices which are its own responsibility ....

88. That case-law can be compared to that to which the Court systematically refers when asked to rule on the legality of acts adopted by Community institutions which involve the assessment of complex economic situations. In that type of situation, the Court starts from the premiss that the Community institutions have a wide discretion and that only the manifestly inappropriate nature of a measure in relation to the objective pursued can affect its legality.

89. Thus in reviewing the legality of the exercise of powers which requires complex economic appraisal on the part of the Community institutions, judicial review must be limited to verifying that there has been no manifest error of assessment of the facts or misuse of powers, that the procedural rules have been complied with, that the reasons on which the act is based are properly stated and that the facts on which the contested choice is based have been accurately stated.

90. In addition, the Court has also stated that the discretion which the Community institutions have when assessing complex economic situations can be exercised not only in relation to the nature and scope of the provisions which are to be adopted but also, to a certain extent, to the findings as to the basic facts, especially in the sense that it is free to base its assessment, if necessary, on findings of a general nature.

91. Lastly, in its review, the Court must take into account the information available to the Council at the time when it adopted the measures in issue.

92. It is clear from the documents before the Court, from the answers to the questions posed by the Court, from the hearing and from the preamble to the regulation at issue that the Council took into account various factors before deciding on the need to adopt safeguard measures.

93. Thus, as regards the quantities of rice imported from the OCTs, the Council considered on the basis of data supplied by Eurostat, which carries out global analysis, the reliability of which was not disputed by the Netherlands Government, that imports of rice from the OCTs were increasing rapidly and substantially.

94. It also follows from these proceedings that the Netherlands Government acknowledges that imports of rice from the OCTs increased substantially during the period in question, but it states that the Community's demand for Indica rice was still not being met in spite of that large-scale importation of rice from the OCTs. The Netherlands Government seems to deduce from this that safeguard measures against the OCTs would be justified only if there was surplus internal production of Indica rice.

95. In my opinion, if the reasoning of the Netherlands Government were followed, that would, to a certain extent, amount to enabling it alone to define the common agricultural policy on the market in Indica rice and to determine how and from where the Community's needs in that respect would be met. It seems that, in the rice sector of the common agricultural policy, the Community decided to encourage Community producers to switch from the production of Japonica rice (where there was a surplus production) to the production of Indica rice. I believe that the efforts to restructure this agricultural sector would be seriously compromised if the OCTs were allowed to meet the whole of the Community's demand for Indica rice.

96. It follows from the foregoing that the Netherlands Government has failed to show a manifest error on the part of the Council in finding that imports of rice from the OCTs had increased substantially and that that increase called for the urgent adoption of control measures.

97. On the question of price-level, the differences between the appraisals of the Netherlands Government and of the Council arise from their diametrically opposed views of the processing stage at which the price of the raw materials should be compared and the methods of price calculation, in particular as regards the conversion rate to be used between the various processing stages.

98. In the ARM-1 judgment, as we have seen, the Court of First Instance precisely analysed those various methods of calculation. Its reasoning and the conclusions which it reached seem to me to be applicable in this case. The Netherlands Government has not been able to show in this case, any more than it did before the Court of First Instance in ARM-1, that the Council's method of calculating the level of rice prices from the OCTs and from the Community was manifestly wrong. It is common ground that the calculation methods put forward both by the Council and the Netherlands Government are based on a theoretical price.

99. The Netherlands Government has therefore also failed to show that the Council committed a manifest error of assessment in finding that there was a significant gap between the price of Community rice and that of Antillean rice, having regard to the information available to it at the time when it adopted the safeguard measures provided for by the regulation at issue.

100. As regards the causal link, the fact remains that the Netherlands Government does not dispute the fact of substantial disturbances on the internal market for rice during the period in question. It acknowledges that the price of Community Indica rice did not stop falling during that period in spite of the deficit in that sector and improved harvests in Spain. It claims however that those disturbances were caused by massive imports of rice from third countries, in particular the United States and Egypt. On this point the Council states, without having been contradicted by the applicant, that no implementation agreement pursuant to Council Regulation (EC) No 1522/96, of 24 July 1996 opening and providing for the administration of certain tariff quotas for imports of rice and broken rice, has yet been concluded with the United States, which has been accorded a substantial share of the said quotas. Thus for the most part, that quantity is still no more than potential as regards the market. The Council lastly states that only Japonica rice is grown in Egypt. That information has not been the subject of any debate.

101. Therefore the Netherlands Government has not shown that the substantial disturbance to the rice market noted by the Council was caused by the large-scale importation of rice from third countries.

102. It follows from the foregoing that the Council, being required to implement competing policies, pursuant to the provisions of Article 131 et seq. of the Treaty, on the one hand, and of Article 40 of the EC Treaty (now, after amendment, Article 34 EC) et seq., on the other hand, could legitimately consider, having regard to the imbalance already existing on the internal market, the continued increase in imports of rice from the OCTs, and the reduction in the price of OCT rice, that:

- disturbances on the Community market in rice were caused by the combined effect of the quantity and price-level of OCT rice;

- the situation would only deteriorate if safeguard measures were not adopted.

103. In the absence of proof of a manifest error of assessment on the part of the Council, I propose that the Court hold the second limb of the first plea to be unfounded.

Second plea in law, alleging breach of Article 109(2) of the OCT decision

104. By the second plea in law, which is divided into four separate limbs, the Netherlands Government complains that the Council breached the principle of proportionality as set out in Article 109(2) of the OCT decision. That provision states - it will be recalled - that priority shall be given to such measures as would least disturb the functioning of the association and the Community. These measures shall not exceed the limits of what is strictly necessary to remedy the difficulties that have arisen.

105. In this respect the applicant submits that the safeguard measures adopted by the Council in this case:

- breach the order of preference EC/OCT/ACP/third countries (first limb);

- have negative repercussions upon the economy of the Netherlands Antilles and Aruba (second limb);

- are unsuited to the objective pursued in that the introduction of a minimum price would have been more suitable (third limb);

- are too restrictive and manifestly disproportionate to the objective pursued (fourth limb).

106. The Netherlands Government therefore seeks to show that the safeguard measures provided for by Regulation No 304/97 are manifestly inappropriate to the objective pursued by the Community legislature, that they are unnecessary for the achievement of that objective and that recourse to other less onerous means would have been possible.

107. These different arguments amount to an allegation of breach of the principle of proportionality, which requires that acts adopted by the institutions do not exceed the limits of that which is necessary and appropriate in order to attain the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aim pursued.

First limb of the second plea in law

Arguments

108. By this first limb, the Netherlands Government complains that the Council has breached the principle of proportionality in that the safeguard measures adopted under Regulation No 304/97 had the effect of placing the OCTs in a disadvantageous position by comparison with the ACP countries and third countries. They allowed the latter to import greater quantities of rice into the Community than the OCTs were authorised to import. The applicant therefore submits that the Council failed to respect the order of preference EC/OCT/ACP/third countries provided for under the special association arrangements in Part Four of the Treaty.

109. The Netherlands Government points out that, in the period from January to April 1997, the effect of the safeguard measures introduced by Regulation No 304/97 was to restrict imports of husked rice from the OCTs exempt from customs duties to 44 728 tonnes, whilst at the same time the application of Regulation No 1522/96 authorised the import into the Community of the equivalent of 69 488 tonnes of husked rice exempt from customs duties from third countries.

110. The applicant concludes that in so doing the Council placed the OCTs in an economically unfavourable position by comparison with third countries.

111. The Council, the Commission and the Spanish Government contest those claims.

Assessment

112. In the light of the principles referred to above, the Court can condemn the Council for not having respected the order of preference EC/OCT/ACP/third countries only if it committed a manifest error of appreciation. That would be the case if, as a result of the data available to the Council when the safeguard measures were adopted, it was obvious that implementation of Regulations Nos 304/97 and 1522/96 would necessarily have the effect of placing the ACP and third countries in an indisputably more favourable competitive position than the OCTs.

113. It follows from the evidence in this case that, when the Council adopted the safeguard measures in question, Regulation No 1522/96, authorising third countries to import into the Community exempt from customs duties Indica rice from those countries, was not being generally applied. No implementation agreement in respect of that regulation had been entered into with the United States. That country is accorded a substantial share of the quotas. Article 1(3) of Regulation No 1522/96 provides that, as regards the quota provided for under Article 1(a) of the regulation - namely 63 000 tonnes of rice covered by CN code 1003 30 free of customs duty -, 38 721 tonnes is to be allocated to the United States. Furthermore, because of the provisional nature of the safeguard measures at issue, in force for four months only, the Council could legitimately consider that imports of rice from third countries at zero duty had little chance of competing with rice from the OCTs. It should also be pointed out that, of the remaining 27 279 tonnes, third countries could profit from the favourable scheme implemented by Article 1(a) of Regulation No 1522/96 during the period in question only up to 19 000 tonnes.

114. Furthermore, as the Commission points out, unlike imports from the OCTs, imports from third countries and from the ACP are in principle subject to customs duties. In addition, those countries, unlike the OCTs, never benefit from the cumulation of origin rule, which means they may not artificially increase their production capacity.

115. It follows from the foregoing that application of Regulation No 304/97 did not place the ACP and third countries in a clearly more advantageous competitive position than that of the OCTs.

Second limb of the second plea in law

Arguments

116. The Netherlands Government complains that the Council did not take into account, when Regulation No 304/97 was adopted, the impact of the safeguard measures on the economies and development of the Netherlands Antilles and Aruba.

117. In this respect the applicant submits that implementation of this condition necessitated a proper dialogue between the Community authorities and the countries affected by the adoption of these measures. It says that the meeting organised by the Commission in December 1996 was purely formal since the Commission had already formed its opinion on the need to take safeguard measures.

118. It submits that this method of proceeding was in breach of the principle of the protection of legitimate expectations. Undertakings with consignments of rice from the OCTs en route for the Community at the time when the said measures were adopted are said to have been betrayed.

119. The Council, the Commission and the Spanish Government dispute these arguments.

Assessment

120. In my view, the allegations of the Netherlands Government are unfounded.

121. The applicant in this case has adduced no evidence in support of its assertion that the Commission organised a consultation meeting in December 1996 on the need to introduce safeguard measures although it had already made up its mind to do so.

122. Similarly, the Netherlands Government has not shown that the situation of the Netherlands Antilles was not examined in depth, particularly as regards the likely impact on their economy of the safeguard measures.

123. As for breach of the principle of the protection of legitimate expectations, it should be borne in mind that, according to the settled case-law of the Court, traders cannot claim to have a legitimate expectation that an existing situation which is capable of being altered by decisions taken by the institutions within the exercise of their discretionary power will be maintained.

124. The Court has none the less held that the Community legislature may not, without breaching the principle of the protection of legitimate expectations, adopt measures which deprive a trader of rights which he may legitimately claim, except in the overriding public interest. A finding that that principle has been breached is reached in particular when the measures in question have retroactive effect.

125. It follows from points 53 to 55 of this Opinion that that is not the case here.

126. The second limb of the second plea in law is therefore unfounded.

Third limb of the second plea in law

Arguments

127. By the third limb, the Netherlands Government submits that the safeguard measures introduced by Regulation No 304/97 are unsuited to the objective pursued by the Community legislature. In its view, the choice of a minimum price would have been more appropriate. This would have enabled two objectives to be achieved - namely, avoiding the overproduction of Antillean rice and meeting the deficit in the production of Indica rice on the Community market. Such a measure ought moreover to have been chosen by the Commission in 1993.

128. The Council, the Commission and the Spanish, French and Italian Governments dispute those assertions.

Assessment

129. Having regard to the principles referred to above, this complaint can be upheld only if evidence is adduced that the measure in question is not capable of bringing about the intended objective, that it is unnecessary and that recourse to other, less onerous yet equally effective means would have been possible.

130. Regulation No 304/97 is intended to restrict imports exempt from customs duty of rice originating in the OCTs falling within CN code 1006. It is neither intended to, nor does it prohibit imports of those products, once the quota is filled, provided that the traders concerned pay the customs duties required. It should also be pointed out that the regulation at issue was adopted pursuant to Article 109(1) of the OCT decision. It follows that the principles and objectives of that decision must be respected.

131. The objectives of the OCT decision are, in accordance with the provisions of the Treaty, to promote trade between the OCTs and the Community, to enable customs duties between the OCTs and the Community to be progressively abolished, and to promote the economic and social development of the OCTs.

132. Contrary to the assertions of the Netherlands Government, the safeguard measures in question, consisting in the introduction of tariff quotas, are suited to the objective pursued by the Community legislature, as set out in Regulation No 304/97 and the OCT decision.

133. The measures authorise the Netherlands Antilles to import into the Community, first, a certain quantity of Indica rice exempt from customs duty and, second, an additional quantity subject to the payment of the appropriate customs duties.

134. It has not been shown that the introduction of a minimum price would have entailed less disturbance for the OCT economies and would have been as effective in the attainment of the Community legislature's objective. Moreover, in the ARM-1 judgment, the safeguard measure challenged consisted precisely in the introduction of a minimum price. Traders established in the Netherlands Antilles blamed that type of measure for making Antillean rice more expensive on the Community market than rice from the ACP and third countries. Therefore, they were asking the Court of First Instance to find that this measure exceeded that which was strictly necessary for remedying the difficulties created on the Community market for rice. The Court of First Instance found for the applicants on that point.

135. It follows from the foregoing that the third limb of the second plea in law is unfounded.

Fourth limb of the second plea in law

Arguments

136. By the fourth limb, the Netherlands Government submits that the amount of the security required from importers is such that the legislation laying down special detailed rules for the application of the system of import licences for rice is rendered inapplicable.

137. In support of this complaint, the Netherlands Government submits that the amount of the security required is disproportionate to the objective of the OCT decision. It considers that it is completely abnormal that the amount of the security applicable to imports from the OCTs is equal to the customs duties applicable to third countries.

138. The Council, the Commission and the Spanish Government dispute these arguments.

Assessment

139. The purpose of the measure at issue is to prevent speculative conduct. It is intended to dissuade traders who have no real intention of importing rice originating in the OCTs into the Community from requesting import licences. If no security were attached to the import licence, a very large number of operators would apply for such licences so as to keep open the option to exploit that entitlement.

The effect of such speculative conduct, in view of the limited quantity of rice that may be imported free of customs duty, would be to deprive those traders who genuinely wished to import into the Community of the opportunity of doing so. Without that type of measure, the quota would be rapidly filled without any certainty that licences had been judiciously issued to operators genuinely intending to use them. The security thus attached to the import licence is intended to allow regular operators to obtain a share of the quota more easily.

140. Furthermore, such a measure does not prevent those operators who seriously want to enter the market as importers of rice into the Community from so doing. They are required to pay the amount of the security before they obtain an import licence. The security will be paid back once they have demonstrated that the operation has been carried out.

141. I therefore conclude that the measure in question is necessary and appropriate to the objective pursued.

142. Lastly, it should be pointed out that the Netherlands Government has not suggested any other mechanism capable of attaining the objectives set out above. The inference can be drawn that the principle of the appropriate and necessary character of the arrangements complained of is not being disputed by the Netherlands Government. As for the complaint that the amount of the security is too high, it should be pointed out that the Netherlands Government has not shown that a lower figure would have been as effective. It has not, therefore, shown that the Council has committed a manifest error of assessment.

143. It follows from the foregoing that the Netherlands Government has not adduced evidence to show that the Council, in adopting the measure in question, has breached the principle of proportionality. I therefore propose that the Court hold the second plea in law to be unfounded.

Third plea in law, alleging misuse of powers

Argument

144. The Netherlands Government criticises the Council and the Commission for having used their power under Article 109(1) of the OCT decision for a purpose other than that for which it was intended.

145. It considers that Article 109(1) of the OCT decision does not confer the right on the Community legislature to stop or substantially reduce imports of rice from the OCTs. Only amendment of the OCT decision, pursuant to the procedure laid down - namely by unanimous vote of the Council - would have allowed the Community legislature to achieve this end.

Assessment

146. An act is vitiated by misuse of powers where it appears, in the light of objective, relevant and corroborating factors, to have been adopted with the sole purpose, or at the very least, the determining purpose of achieving objectives other than those put forward by the defendant institution or for circumventing a special procedure laid down by the Treaty for dealing with the circumstances of the case.

In fact, this plea allows challenges only to measures whose author had an illegal motive or circumvented a procedure specifically laid down, to the exclusion of acts seemingly founded on objective considerations or adopted by the exercise of a circumscribed power.

147. This plea can only succeed, therefore, if it was the case that the regulation in question was not adopted for the purpose of remedying the disturbances on the Community rice market, but for other ends, or that Article 109 of the OCT decision does not give the Council the right to suspend or reduce imports of goods from the OCTs for reasons connected to disturbances arising or which may arise on the internal market from imports of rice from the OCTs into the Community.

148. It is common ground that the Netherlands Government has not adduced evidence that the regulation at issue was adopted for purposes other than those of remedying disturbances on the Community market in rice or of avoiding more serious disturbances than those already existing. It must therefore be concluded that the contested regulation was adopted in order to achieve the objectives intended by the Community legislature.

149. As for the choice of procedure provided for by Article 109 of the OCT decision, I have already set out, in considering the first plea in law, how this article authorises the Commission and the Council to introduce safeguard measures, such as a tariff quota, so as substantially to reduce imports of rice from the OCTs. The Council cannot therefore be legitimately criticised for having used that right, and, in doing so, misusing its powers.

150. I therefore propose that the Court declare the third plea in law unfounded.

Fourth plea in law, alleging infringement of the revision procedure for safeguard measures under Annex IV to the OCT decision

151. Firstly, by this plea in law, the Netherlands Government complains that the Council did not examine the conditions on the rice market independently, when it repealed the measures laid down by the Commission by Regulation No 21/97 and replaced them with those of Regulation No 304/97.

152. In its view, the nature of the revision procedure laid down by Annex IV implies that the Council, when it decides to adopt a decision different from that previously adopted by the Commission, is to proceed independently of the findings of the Commission; it may, in particular, not refer to those findings.

153. The Netherlands Government claims that the Council did not act in an independent manner, but instead confined itself to a partial assessment of the legality and appropriateness of the measure based on the assertions of the Commission that the conditions laid down by Article 109 of the OCT decision were satisfied.

154. Secondly, it submits that the Commission, in adopting the safeguard measures provided for by Regulation No 21/97, breached the provisions of Annex IV to the OCT decision in that the said measures applied only with effect from 1 January 1997.

155. In its view, Article 1(4) of Annex IV to the OCT decision provides that the decision shall apply with immediate effect and is not retroactive.

156. The incompatibility thus identified between Regulation No 21/97 and Annex IV to the OCT decision on this point has not been remedied by the Council in Regulation No 304/97.

157. The Council, the Commission and the Spanish Government contest these arguments.

Assessment

158. It should be pointed out that, in exercising the powers conferred under Article 109 of the OCT decision, the Community institutions enjoy a wide margin of discretion. The Court would deem it necessary to censure the exercise of these powers only if it clearly appeared that the acts adopted were inappropriate to the objective pursued by the Community legislature, or if it were shown that there had been a manifest error of assessment of the facts or an error as to the accuracy of the facts.

159. As far as the first limb of this plea in law is concerned, I do not subscribe to the analysis of the Netherlands Government that the Council, when carrying out the review procedure provided for by Annex IV to the OCT decision, must carry out an independent assessment in the sense that it may not refer to the file on the basis of which the Commission decided to adopt the safeguard measures.

160. In the context of the revision procedure, the task of the Council is to carry out a reassessment, that is, as the word suggests, a check to see whether the measures previously adopted have not become inappropriate. It seems to me therefore entirely logical, legitimate and useful that the Council should take into account the data upon which the Commission adopted the safeguard measures.

161. Furthermore, as regards the argument that the Council relied on the Commission's presentation of the economic situation, I would only point out that the Netherlands Government has not put forward any evidence in support of its assertions.

162. Lastly, it is not acceptable, in my view, to claim that the Council did not carry out a proper examination of the Commission decision when it proceeded to revise that decision.

163. The argument that the Council did not comply with Article 1(4) of Annex IV to the OCT decision, which requires the adoption of measures with immediate effect and which are not retroactive, does not seem to me to be relevant. It expressly appears from the second paragraph of Article 8 of the regulation at issue that the Council ensured that the new measures adopted as a result of the revision procedure should take effect immediately, without retroactive effect.

164. Furthermore, the assertion, which I have already examined, that supply contracts were in the course of being performed when the Commission and the Council decided to adopt the regulation at issue is unsupported by any evidence.

165. It follows from the foregoing that the plea in law alleging infringement of the revision procedure provided for by Annex IV to the OCT decision is unfounded.

Fifth plea in law, alleging infringement of Article 190 of the Treaty

166. The Netherlands Government complains that the Council confined itself to reproducing, almost literally, the usual statement of reasons set out by the institutions when they decide to adopt safeguard measures on the basis of Article 109 of the OCT decision.

167. It submits that the regulation at issue contains no concrete information, nor any details of the criteria and facts that were taken into consideration by the Council to justify the validity of the measures adopted in this case. Thus, in the sixth recital to the preamble of Regulation No 304/97, the Council confined itself to stating that rice from the OCTs can be sold on the Community market at a substantially lower price than that at which Community rice can be sold, given the level of processing involved, without indicating the processing stage taken as the basis for the calculation of prices, or specifying the price-level determined as a result of this calculation.

168. The Council, the Commission and the Spanish and French Governments take issue with these arguments.

Assessment

169. According to settled case-law, the extent of the requirement to state reasons depends on the nature of the measure in question and, in the case of measures intended to have general application, the statement of reasons may be limited to indicating the general situation which led to its adoption and the general objectives which it is intended to achieve.

170. Likewise, the Court has repeatedly held that the statement of reasons must show clearly and unequivocally the reasoning of the Community authority which adopted the measure so as to inform the persons concerned of the justification for the measure adopted, and to enable the Court to exercise its power of review.

171. Furthermore, according to settled case-law the statement of reasons for a measure is not required to specify the matters of fact or of law dealt with, provided that it falls within the general scheme of the body of measures of which it forms part ....

172. By that formulation, the Court means that it is necessary to take into account the fact that the measure in question forms part of a series of regulations in an overall scheme. In such a case, the Court considers that the Community legislature may confine itself to referring to other regulations and their statements of reasons in order to explain the reasons which led it to adopt the measure in question.

173. Since measures which form part of a body of regulations are usually technical provisions aimed at those involved professionally, the Court considers that a statement of reasons that proceeds in this way - by reference to earlier regulations - may be perfectly comprehensible to its addressees.

174. Lastly the Court has stated that, in areas in which the Community legislature has a wide margin of discretion as to the choice of measures necessary for the achievement of a complex policy, it suffices that the contested measure brings out the essential objective pursued by the institution. It would be excessive in such a case to require a specific statement of reasons for the various technical choices made.

175. Thus in a similar case, the Court applied those principles, explaining that, in the context of the adoption of measures intended to apply to the common commercial policy, it is for the Council to determine whether, in the light of the consequences resulting from implementation of the legislation it has enacted, it is necessary to amend it in certain respects. Accordingly, and in contrast to the view taken by the [applicant] Government, the Council was not required to set out in the statement of reasons the changes in the circumstances which led to the fixing of the original quota. The Court also stated that since the Council had explained the objectives pursued, it was not required to justify the technical choices made, in particular the size of the increase in the contested quota.

176. In this case it should be pointed out that the regulation at issue is an act of general application forming part of a series of regulations laid down by the Community institutions in order to implement and reconcile two complex policies, that pursued by the common agricultural policy on the market in rice, and that sought by the economic policy drawn up in the context of the arrangements for association with the OCTs.

177. It further appears that the reasons given in the regulation at issue set out the overall situation which led to its adoption.

Thus, it is stated in the first recital in its preamble that the Italian and Spanish Governments were the instigators of the safeguard measure. It reports those Governments' letters, the content of which is not set out, but which, it is not disputed, the Netherlands Government was in a position to ascertain and therefore to have access to the complaints and evidence on which the complaints were based. It is, furthermore, stated that, by the combined effect of prices and quantities offered by the OCTs, rice from the OCTs was causing a disturbance on the Community market in rice. It is further explained that the Community market in rice was in a fragile situation, caused by drought in 1994/1995 and 1995/1996 and by underproduction of Indica rice.

178. The reasons given in the regulation in issue also set out the general objectives that it is intended to achieve.

It is, in particular, explained that the disturbance on the Community market in Indica rice caused by imports of rice from the OCTs could wholly undermine the attempts of the Community legislature to encourage Community producers to produce Indica rice by means of temporary aid per hectare and that it was therefore appropriate to adopt safeguard measures intended to prevent these disturbances from getting worse and the efforts of the common agricultural policy to diversify production in the rice sector from being compromised.

179. It must be concluded that the Council set out in a clear and unequivocal manner the reasoning behind the adoption of the regulation at issue.

180. It follows that the last plea in law must be rejected.

Conclusion

181. For the reasons set out above, I propose that the Court should:

(1) In Case C-110/97

- dismiss the application;

- order the Kingdom of the Netherlands to bear its own costs and to pay those of the Council of the European Union;

- order the Kingdom of Spain, the French Republic, the Italian Republic and the Commission of the European Communities to bear their own costs.

(2) In Case C-451/98

- declare the application inadmissible;

- order Antillean Rice Mills NV to bear its own costs and to pay those of the Council of the European Union;

- order the Kingdom of Spain, the French Republic, the Italian Republic, the Kingdom of the Netherlands and the Commission of the European Communities to bear their own costs.