Judgment of the Court (Fourth Chamber) of 12 July 1984. - Les Rapides Savoyards Sàrl and others v Directeur Général des DDouanes et Droits Indirects. - Reference for a preliminary ruling: Cour de cassation - France. - Free-trade agreement between EEC and Switzerland - Concept of originating products. - Case 218/83.



European Court reports 1984 Page 03105

Spanish special edition Page 00747



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

INTERNATIONAL AGREEMENTS - AGREEMENT BETWEEN THE EEC AND THE SWISS CONFEDERATION - PROTOCOL NO 3 - ORIGIN OF GOODS - DETERMINATION - RESPONSIBILITY OF THE EXPORTING STATE - RELIANCE WHICH MUST BE PLACED ON THE ACTS OF THE ADMINISTRATIONS OF THE PARTIES TO THE AGREEMENT - RECIPROCAL RECOGNITION OF DECISIONS TAKEN PURSUANT TO THE PROTOCOL

( AGREEMENT BETWEEN EEC AND SWITZERLAND OF 22 JULY 1972 , PROTOCOL NO 3 )

Summary

THE AGREEMENT BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE SWISS CONFEDERATION OF 22 JULY 1972 AND , MORE PARTICULARLY , PROTOCOL NO 3 ANNEXED THERETO CONCERNING THE DEFINITION OF THE CONCEPT OF ' ' ORIGINATING ' ' PRODUCTS AND METHODS OF ADMINISTRATIVE COOPERATION MUST BE INTERPRETED AS MEANING THAT THE ASSESSMENT OF THE ELEMENTS USED IN DETERMINING THE ORIGIN OF A PRODUCT AND , ACCORDINGLY , IN DETERMINING WHETHER IT IS ELIGIBLE FOR THE PREFERENTIAL TREATMENT PROVIDED FOR BY THE AGREEMENT , IS THE RESPONSIBILITY OF THE CUSTOMS AUTHORITIES OF THE STATE EXPORTING THE FINISHED PRODUCT WHICH APPLIES TO COMPONENTS IMPORTED FROM THIRD COUNTRIES , AT THE TIME OF THEIR IMPORTATION , ITS OWN RULES ON CUSTOMS VALUE AND EXCHANGE . THE SYSTEM LAID DOWN BY THE PROTOCOL , WHICH IS BASED ON COOPERATION BETWEEN THE CUSTOMS AUTHORITIES AND ON THE RELIANCE THAT MUST BE PLACED ON THE ACTS OF THOSE AUTHORITIES , CAN FUNCTION ONLY IF THE CUSTOMS AUTHORITIES OF THE IMPORTING STATE RECOGNIZE THE DETERMINATIONS LEGALLY MADE BY THE AUTHORITIES OF THE EXPORTING STATE .

Parties

IN CASE 218/83

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE COUR DE CASSATION DE LA REPUBLIQUE FRANCAISE ( COURT OF CASSATION OF THE FRENCH REPUBLIC ) FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN

LES RAPIDES SAVOYARDS SARL , WHOSE REGISTERED OFFICE IS AT ANNEMASSE , HAUTE-SAVOIE ,

DIFFUSION MARKETING INTERNATIONAL SARL , WHOSE REGISTERED OFFICE IS AT STAINS , SEINE-SAINT-DENIS ,

ROGER DEJUSSEL , EMPLOYEE OF LES RAPIDES SAVOYARDS , WITH AN ADDRESS FOR SERVICE AT ANNEMASSE ,

AND

DIRECTEUR GENERAL DES DOUANES ET DROITS INDIRECTS ( DIRECTOR GENERAL FOR CUSTOMS AND INDIRECT TAXES ),

Subject of the case

ON THE INTERPRETATION OF THE AGREEMENT BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE SWISS CONFEDERATION OF 22 JULY 1972 AND OF PROTOCOL NO 3 , ANNEXED TO THAT AGREEMENT , CONCERNING THE DEFINITION OF THE CONCEPT OF ' ' ORIGINATING ' ' PRODUCTS AND METHODS OF ADMINISTRATIVE COOPERATION ,

Grounds

1 BY JUDGMENT OF 29 JUNE 1983 , WHICH WAS RECEIVED AT THE COURT ON 29 SEPTEMBER 1983 , THE FRENCH COUR DE CASSATION ( COURT OF CASSATION ) REFERRED TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE INTERPRETATION OF THE AGREEMENT BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE SWISS CONFEDERATION OF 22 JULY 1972 AND , MORE PARTICULARLY , OF PROTOCOL NO 3 , ANNEXED TO THAT AGREEMENT , CONCERNING THE DEFINITION OF THE CONCEPT OF ' ' ORIGINATING ' ' PRODUCTS AND METHODS OF ADMINISTRATIVE COOPERATION ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( 31 DECEMBER ), P . 190 ).

2 ON 8 JUNE 1977 LES RAPIDES SAVOYARDS SARL , AND ITS MANAGING DIRECTOR , ROGER DEJUSSEL , IMPORTED FROM SWITZERLAND ON BEHALF OF DIFFUSION MARKETING INTERNATIONAL SARL , WHOSE REGISTERED OFFICE IS AT STAINS , SEINE-SAINT-DENIS , A CONSIGNMENT OF BALLPOINT PENS COMING UNDER TARIFF HEADING 98.03 , COVERED BY A EUR 1 MOVEMENT CERTIFICATE , ISSUED BY THE SWISS CUSTOMS AUTHORITIES IN PURSUANCE OF PROTOCOL NO 3 AND CERTIFYING THAT THE GOODS WERE OF SWISS ORIGIN .

3 IT APPEARS FROM INFORMATION PROVIDED IN THE PROCEEDINGS , WHICH HAS NOT BEEN CONTESTED , THAT THE PENS WERE MANUFACTURED AND ASSEMBLED AS FOLLOWS : THE CARTRIDGES WERE IMPORTED BY DIFFUSION MARKETING INTERNATIONAL FROM THE UNITED STATES OF AMERICA , RELEASED INTO FREE CIRCULATION IN FRANCE AND RE-EXPORTED TO SWITZERLAND UNDER THE TEMPORARY EXPORTATION PROCEDURE . IN SWITZERLAND THEY WERE FITTED , BY A SWISS MANUFACTURER WITH CHROMED CAPS AND CASINGS OBTAINED IN SWITZERLAND ITSELF AND WITH BARRELS AND , FOR CERTAIN PENS , CLIPS IMPORTED INTO SWITZERLAND DIRECTLY FROM THE UNITED STATES OF AMERICA . THE FINISHED PRODUCT , BEARING THE TRADE-MARK OF THE SWISS MANUFACTURER ( LINDY ), WAS DECLARED , ON IMPORTATION INTO FRANCE , AS A PRODUCT ORIGINATING IN SWITZERLAND , AT THE EX-WORKS PRICE EXPRESSED IN SWISS FRANCS . THE PLAINTIFFS IN THE MAIN PROCEEDINGS REQUESTED THE APPLICATION OF THE PREFERENTIAL CUSTOMS RATE OF 2.6 % OF THE CUSTOMS VALUE , WHICH APPLIED AT THAT TIME BETWEEN SWITZERLAND AND THE COMMUNITY .

4 THE FRENCH CUSTOMS AUTHORITIES ANALYSED THE VALUE OF THE PRODUCT IN QUESTION AND RE-ASSESSED THE VALUE OF THE VARIOUS COMPONENT PARTS ACCORDING TO WHETHER THEY HAD ORIGINATED IN THE UNITED STATES OF AMERICA OR IN SWITZERLAND , IN ACCORDANCE WITH ARTICLE 35 ( 8 ) OF THE CUSTOMS CODE . THAT ARTICLE PROVIDES THAT , WHERE THE VALUES USED TO DETERMINE THE NORMAL PRICE OF A PRODUCT ARE EXPRESSED IN FOREIGN CURRENCY , THE CONVERSION MUST BE CARRIED OUT ON THE BASIS OF THE OFFICIAL EXCHANGE RATE PREVAILING ON THE DATE ON WHICH THE DECLARATION IS REGISTERED , IN OTHER WORDS AT THE TIME OF IMPORTATION . THE CUSTOMS AUTHORITIES CONSIDERED THAT , ACCORDING TO THEIR CALCULATIONS , THE VALUE OF THE COMPONENTS COMING FROM THE UNITED STATES OF AMERICA IN THE FINISHED PRODUCT EXCEEDED THE THRESHOLD OF 5 % WHICH IS THE LIMIT IMPOSED BY PROTOCOL NO 3 AND LIST B OF ANNEX III THERETO , ON THE INCORPORATION OF COMPONENTS ORIGINATING IN THIRD COUNTRIES , FOR A PRODUCT TO BE RECOGNIZED AS BEING OF SWISS ORIGIN . THE CUSTOMS AUTHORITIES THEREFORE APPLIED THE GENERAL RATE OF THE COMMON CUSTOMS TARIFF WHICH WAS AT THAT TIME 13 % , SUBJECT TO THE DEDUCTION OF CUSTOMS DUTIES ALREADY PAID ON THE IMPORTATION OF THE CARTRIDGES .

5 THE PLAINTIFFS IN THE MAIN PROCEEDINGS LODGED AN APPEAL WITH THE COMMISSION DE CONCILIATION ET D ' EXPERTISE DOUANIERE ( CUSTOMS ASSESSMENT AND ARBITRATION BOARD ) WHICH WAS REJECTED ON 16 MAY 1978 . THE CUSTOMS AUTHORITIES BROUGHT THE MATTER BEFORE THE TRIBUNAL D ' INSTANCE ( DISTRICT COURT ), SAINT-JULIEN-EN-GENEVOIS , WHICH , BY JUDGMENT OF 19 JUNE 1979 CONFIRMED THE DECISION OF THE ARBITRATION BOARD . THE PLAINTIFFS IN THE MAIN PROCEEDINGS APPEALED TO THE COUR D ' APPEL ( COURT OF APPEAL ), CHAMBERY , WHICH UPHELD THAT DECISION BY JUDGEMENT OF 11 MAY 1981 . LES RAPIDES SAVOYARDS SARL , ITS REPRESENTATIVE , ROGER DEJUSSEL , AND DIFFUSION MARKETING INTERNATIONAL SARL APPEALED AGAINST THAT DECISION TO THE COUR DE CASSATION .

6 IT APPEARS FROM THE DOCUMENTS BEFORE THE COURT AND FROM THE SINGLE GROUND OF APPEAL CITED IN THE ORDER FOR REFERENCE THAT THE DISPUTE BEFORE THE FRENCH COURTS CONCERNS , IN THE FIRST PLACE , THE RATE OF EXCHANGE APPLIED BY THE FRENCH CUSTOMS AUTHORITIES IN ASSESSING THE DIFFERENT ELEMENTS OF VALUE TAKEN INTO ACCOUNT IN ORDER TO DETERMINE THE ORIGIN OF THE PRODUCT IN QUESTION AND , MORE PARTICULARLY , THE RELEVANT TIME FOR THE PURPOSE OF DEFINING THE EXCHANGE RATE RELATIONS BETWEEN THE VARIOUS CURRENCIES INVOLVED . THE PLAINTIFFS IN THE MAIN PROCEEDINGS CONSIDER THAT THE EXCHANGE RATE APPLICABLE MUST BE THAT PREVAILING AT THE TIME WHEN THE VARIOUS COMPONENTS WERE IMPORTED , EITHER INTO FRANCE OR INTO SWITZERLAND . THE CUSTOMS AUTHORITIES , ON THE OTHER HAND , TAKE THE VIEW THAT ALL THOSE VALUES ARE TO BE DETERMINED AT THE TIME PRESCRIBED BY ARTICLE 35 ( 8 ) OF THE FRENCH CUSTOMS CODE , NAMELY THE TIME OF THE IMPORTATION OF THE FINISHED PRODUCT INTO FRANCE . THE PLAINTIFFS IN THE MAIN PROCEEDINGS CONSIDER THAT THAT METHOD IS INCOMPATIBLE WITH THE PROVISIONS OF PROTOCOL NO 3 BECAUSE OF THE UNCERTAINTY WHICH IT CREATES AS TO THE ORIGIN OF A PRODUCT FOLLOWING CHANGES IN THE EXCHANGE RATES WHICH MAY OCCUR BETWEEN THE TIME OF THE IMPORTATION OF THE COMPONENT PARTS AND THE TIME OF THE IMPORTATION OF THE FINISHED PRODUCT .

7 IT ALSO APPEARS FROM THE DOCUMENTS BEFORE THE COURT THAT IN THE PROCEEDINGS PRIOR TO THE APPEAL TO THE COUR DE CASSATION AND IN THE FORMULATION OF THE GROUND ON WHICH THAT APPEAL WAS BASED , THE PLAINTIFFS IN THE MAIN PROCEEDINGS DID NOT CONTEST THE FRENCH CUSTOMS AUTHORITIES ' POWER TO REASSESS , AT THE TIME OF THE IMPORTATION OF THE FINISHED PRODUCT , THE ELEMENTS TO BE TAKEN INTO CONSIDERATION IN DETERMINING THE ORIGIN . DISCUSSION WAS CONFINED TO THE QUESTION WHETHER IT WAS COMPATIBLE WITH THE FREE-TRADE AGREEMENT AND ANY COMMUNITY REGULATIONS WHICH MIGHT BE RELEVANT TO APPLY THE EXCHANGE RATES PREVAILING AT THE TIME OF THE IMPORTATION OF THE FINISHED PRODUCT TO THE ASSESSMENT OF THE COMPONENTS PREVIOUSLY IMPORTED INTO SWITZERLAND .

8 IT IS IN CONNECTION WITH THE DISPUTE AS THUS DEFINED THAT THE COUR DE CASSATION DECIDED TO REQUEST THE COURT OF JUSTICE TO GIVE A RULING ON THE FOLLOWING QUESTIONS :

1 . MUST THE AGREEMENT OF 22 JULY 1972 CONCLUDED BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE SWISS CONFEDERATION , PROTOCOL NO 3 THERETO AND THE COMMUNITY REGULATIONS BE CONSTRUED AS MEANING THAT , WHERE THE VALUES ADOPTED IN ORDER TO DETERMINE THE CUSTOMS VALUE OF A PRODUCT ARE EXPRESSED IN A CURRENCY OTHER THAN THAT OF THE MEMBER STATE IN WHICH THE EVALUATION IS MADE , THESE BE CONVERTED AT THE OFFICIAL RATE OF EXCHANGE PREVAILING ON THE DATE ON WHICH THE DECLARATION IS REGISTERED?

2.IF NOT , HOW , ACCORDING TO COMMUNITY LAW , MUST THAT RATE OF EXCHANGE BE CALCULATED?

9 IN THE COURSE OF THE PROCEEDINGS BEFORE THE COURT , THE PARTIES TO THE MAIN PROCEEDINGS ESSENTIALLY REPEATED THE ARGUMENTS WHICH HAD ALREADY BEEN ADVANCED BEFORE THE NATIONAL COURTS . ON THE OTHER HAND THE COMMISSION AND THE GOVERNMENT OF THE ITALIAN REPUBLIC SUBMITTED TO THE COURT CRITERIA FOR INTERPRETATION BASED ON THE FREE-TRADE AGREEMENT AND PROTOCOL NO 3 , WHICH HAD NOT BEEN CONSIDERED BY THE COURTS IN THE EARLIER PROCEEDINGS .

10 THE COMMISSION AND THE ITALIAN GOVERNMENT MAINTAIN THAT IN ORDER TO REPLY TO THE QUESTIONS SUBMITTED TO THE COURT BY THE COUR DE CASSATION IT IS FIRST NECESSARY TO EXAMINE THE DIVISION OF POWERS AS BETWEEN THE SWISS CUSTOMS AUTHORITIES AND THE CUSTOMS AUTHORITIES OF THE COMMUNITY AS REGARDS DETERMINATION OF THE ORIGIN OF PRODUCTS IN TRADE BETWEEN SWITZERLAND AND THE EEC . THE COMMISSION EMPHASIZES THAT THE SCOPE OF THAT PROBLEM GOES BEYOND THE FACTS OF THIS CASE , IN VIEW OF THE FACT THAT CLAUSES SIMILAR TO THOSE IN PROTOCOL NO 3 APPEAR IN ALL THE FREE-TRADE AGREEMENTS CONCLUDED BY THE COMMUNITY WITH THE MEMBER STATES OF THE EUROPEAN FREE TRADE ASSOCIATION ( EFTA ) AND THAT THE RULES RELATING TO ORIGIN APPLY IN IDENTICAL TERMS BOTH TO GOODS EXPORTED BY THE STATES IN QUESTION TO THE COMMUNITY AND TO GOODS EXPORTED BY THE COMMUNITY TO THOSE STATES .

11 THE COMMISSION AND THE ITALIAN GOVERNMENT STATE THAT ACCORDING TO ARTICLES 6 , 8 AND 10 OF PROTOCOL NO 3 , IT IS FOR THE SWISS CUSTOMS AUTHORITIES TO ESTABLISH THE ORIGIN OF PRODUCTS EXPORTED TO THE COMMUNITY AND , IN THE CASE OF PRODUCTS INCORPORATING ELEMENTS IMPORTED FROM A THIRD COUNTRY , TO DETERMINE WHETHER OR NOT THE VALUE OF THOSE ELEMENTS EXCEEDS THE 5 % LIMIT PROVIDED FOR IN THE PROTOCOL . WHERE THAT LIMIT IS NOT EXCEEDED , THE SWISS ORIGIN OF THE PRODUCT IS CERTIFIED BY THE ISSUE OF A EUR 1 MOVEMENT CERTIFICATE , AS LAID DOWN IN THE PROTOCOL .

12 THE COMMISSION AND THE ITALIAN GOVERNMENT ALSO STATE THAT THE COMMUNITY CUSTOMS AUTHORITIES ARE NOT ENTITLED TO SUBSTITUTE THEIR OWN CALCULATIONS FOR THE ASSESSMENT OF THE ELEMENTS OF VALUE TAKEN INTO CONSIDERATION BY THE AUTHORITIES OF THE EXPORTING STATE IN ORDER TO DETERMINE ORIGIN . THEY ARE THEREFORE UNDER AN OBLIGATION TO APPLY THE PREFERENTIAL TREATMENT PROVIDED FOR BY THE AGREEMENT TO GOODS WHOSE SWISS ORIGIN IS DULY CERTIFIED . THE COMMISSION EMPHASIZES THAT IT IS IMPORTANT THAT THE DECISIONS TAKEN BY THE SWISS CUSTOMS AUTHORITIES CONCERNING ORIGIN ARE RESPECTED IN THE COMMUNITY IN VIEW OF THE FACT THAT THE COMMUNITY , FOR ITS PART , MUST BE ABLE TO EXPECT THAT SUCH DECISIONS TAKEN BY THE CUSTOMS AUTHORITIES OF THE MEMBER STATES ARE ALSO RECOGNIZED IN SWITZERLAND .

13 THE COMMISSION AND THE ITALIAN GOVERNMENT CONSIDER THAT ONLY THAT METHOD IS CAPABLE OF ENSURING THAT THE DETERMINATION OF ORIGIN IS THE SAME IN ALL THE MEMBER STATES OF THE COMMUNITY , SINCE THE APPLICATION OF NATIONAL RULES SUCH AS THE FRENCH CUSTOMS CODE MIGHT LEAD TO CONFLICTING DETERMINATIONS OF THE ORIGIN OF THE SAME PRODUCT DEPENDING ON THE FLUCTUATIONS OF THE DIFFERENT NATIONAL CURRENCIES . SUCH DIFFERENCES OF DETERMINATION WOULD IN TURN LEAD TO DEFLECTIONS OF TRADE AND DISTORTIONS OF COMPETITION .

14 IN CONCLUSION THE COMMISSION AND THE ITALIAN GOVERNMENT TAKE THE VIEW THAT IT IS NECESSARY TO REPLY IN THE NEGATIVE TO THE FIRST QUESTION SUBMITTED BY THE COUR DE CASSATION INASMUCH AS IT IS FOR THE NATIONAL CUSTOMS AUTHORITIES TO RE-ASSESS , ON THE BASIS OF THE OFFICIAL EXCHANGE RATE PREVAILING ON THE DATE OF IMPORTATION , THE ELEMENTS USED TO DETERMINE THE ORIGIN OF THE GOODS ON THE BASIS OF THE DIFFERENT COMPONENT PARTS OF A PRODUCT . THEY CONSIDER THAT IN REPLY TO THE SECOND QUESTION IT SHOULD BE STATED THAT THE VALUES TO BE TAKEN INTO CONSIDERATION IN ORDER TO ESTABLISH THE ORIGIN AND CONSEQUENTLY , TO DETERMINE WHETHER THE PREFERENTIAL TREATMENT PROVIDED FOR BY THE FREE-TRADE AGREEMENT IS TO BE APPLIED , MUST BE ASSESSED IN ACCORDANCE WITH THE DIVISION OF POWERS PROVIDED FOR BY PROTOCOL NO 3 ANNEXED TO THE AGREEMENT CONCLUDED WITH THE SWISS CONFEDERATION . THE COMMISSION DRAWS ATTENTION TO THE FACT THAT ARTICLE 16 OF PROTOCOL NO 3 IMPOSES ON THE MEMBER STATES AND SWITZERLAND THE OBLIGATION TO ASSIST EACH OTHER IN CHECKING THE AUTHENTICITY AND THE ACCURACY OF EUR 1 MOVEMENT CERTIFICATES AND THAT ARTICLE 17 ENABLES THOSE CERTIFICATES TO BE CHECKED SUBSEQUENTLY WHERE THERE IS ANY DOUBT AS TO THE ACCURARY OF THE INFORMATION REGARDING THE TRUE ORIGIN OF THE GOODS IN QUESTION .

15 IN THE COURSE OF THE ORAL PROCEDURE , THE PLAINTIFFS IN THE MAIN PROCEEDINGS REFERRED TO THEIR FIRST ARGUMENT AND STATED THAT THEY WERE ALSO PREPARED TO ACCEPT THE COMMISSION ' S LINE OF REASONING WHICH , IN THEIR VIEW , LEADS TO THE SAME RESULT AS THAT PROPOSED BY THEM .

16 THE FRENCH CUSTOMS AUTHORITIES RAISED TWO OBJECTIONS TO THE ARGUMENTS ADVANCED BY THE COMMISSION AND THE ITALIAN GOVERNMENT . IN THE FIRST PLACE THEY MAINTAIN THAT THE QUESTION AS FORMULATED BY THE COMMISSION AND THE ITALIAN GOVERNMENT WAS NOT SUBMITTED BY THE COUR DE CASSATION AND THAT THE COURT OF JUSTICE SHOULD CONFINE ITSELF TO REPLYING TO THE QUESTIONS WHICH HAVE BEEN REFERRED TO IT FOR A PRELIMINARY RULING . THEY FURTHER STATE THAT IT WOULD BE INCOMPATIBLE WITH THE SOVEREIGNTY OF MEMBER STATES IN CUSTOMS MATTERS TO IMPOSE ON THEM DETERMINATIONS MADE BY FOREIGN CUSTOMS AUTHORITIES AND THEREFORE IT IS NOT POSSIBLE TO RESTRICT THE APPLICATION OF THE RULES OF THE FRENCH CUSTOMS CODE SOLELY TO THE ASSESSMENT OF THE CUSTOMS VALUE OF THE FINISHED PRODUCT AT THE TIME OF ITS IMPORTATION WITH A VIEW TO DETERMINING THE BASIS FOR THE ASSESSMENT OF THE CUSTOMS DUTY PAYABLE . THE CUSTOMS AUTHORITIES MUST ALSO ASSESS THE VALUE OF THE COMPONENT PARTS OF A FINISHED PRODUCT WITH A VIEW TO ESTABLISHING ITS ORIGIN AND , IN CONSEQUENCE , TO DECIDE WHETHER IT QUALIFIES FOR THE PREFERENTIAL TREATMENT UNDER THE FREE-TRADE AGREEMENT OR WHETHER IT MUST BE SUBJECT TO THE GENERAL RULES OF THE COMMON CUSTOMS TARIFF .

17 REGARDLESS OF THE VIEWS PUT FORWARD BY THE VARIOUS PARTIES CONCERNING THE FACTORS TO BE TAKEN INTO CONSIDERATION IN ORDER TO DETERMINE THE CUSTOMS TREATMENT OF PRODUCTS IMPORTED FROM SWITZERLAND INTO THE COMMUNITY , THE REPLY TO THE QUESTIONS SUBMITTED BY THE COUR DE CASSATION MUST BE GIVEN IN THE LIGHT OF THE WHOLE SYSTEM ESTABLISHED BY THE FREE-TRADE AGREEMENT AND PROTOCOL NO 3 . THUS IT IS NECESSARY FIRST TO REFER TO THE RELEVANT PROVISIONS OF THOSE INSTRUMENTS , PARTICULARLY BECAUSE THE PROTOCOL WAS AMENDED AFTER THE ENTRY INTO FORCE OF THE AGREEMENT .

18 THE AGREEMENT BETWEEN THE EEC AND THE SWISS CONFEDERATION APPLIES , ACCORDING TO ARTICLE 2 THEREOF , SUBJECT TO CERTAIN SPECIFICATIONS , ' ' TO PRODUCTS ORIGINATING IN THE COMMUNITY OR SWITZERLAND ' ' . ARTICLE 11 OF THE AGREEMENT PROVIDES THAT ' ' PROTOCOL NO 3 LAYS DOWN THE RULES OF ORIGIN ' ' . TITLE II OF THAT PROTOCOL , CONSISTING OF ARTICLES 8 TO 17 , WAS AMENDED BY DECISION NO 1/77 OF THE EEC/SWITZERLAND JOINT COMMITTEE OF 14 DECEMBER 1977 , IMPLEMENTED IN THE COMMUNITY BY COUNCIL REGULATION NO 2933/77 OF 20 DECEMBER 1977 ( OFFICIAL JOURNAL 1977 , L 342 , P . 27).THUS IT WAS BROUGHT INTO FORCE SHORTLY AFTER THE IMPORTATION WHICH IS AT THE ORIGIN OF THESE PROCEEDINGS . HOWEVER IT DOES NOT SEEM NECESSARY TO DETERMINE WHETHER THE DISPUTE , THROUGHOUT ITS VARIOUS STAGES , IS GOVERNED BY THE FORMER RULES OR BY THE NEW RULES , SINCE THE RELEVANT PROVISIONS ARE IN SUBSTANCE EQUIVALENT IN THE TWO SUCCESSIVE VERSIONS OF THE PROTOCOL , EVEN THOUGH THE TERMS OF THE NEW VERSION ARE MORE EXPLICIT .

19 ACCORDING TO ARTICLE 1 ( 2 ) OF THE PROTOCOL , THE FOLLOWING PRODUCTS ARE TO BE REGARDED AS ORIGINATING IN SWITZERLAND :

' ' ( A ) PRODUCTS WHOLLY OBTAINED IN SWITZERLAND ,

( B)PRODUCTS OBTAINED IN SWITZERLAND IN THE MANUFACTURE OF WHICH PRODUCTS OTHER THAN THOSE REFERRED TO IN ( A ) ARE USED , PROVIDED THAT THE SAID PRODUCTS HAVE UNDERGONE SUFFIENT WORKING OR PROCESSING WITHIN THE MEANING OF ARTICLE 5 . ' '

20 UNDER ARTICLE 5 ( 1 ), INTER ALIA , ' ' ( B ) WORKING OR PROCESSING SPECIFIED IN LIST B ' ' IS TO BE CONSIDERED AS ' ' SUFFICIENT ' ' . LIST B , WHICH CONSTITUTES ANNEX III TO THE PROTOCOL , INCLUDES AT THE TOP OF THE THIRD COLUMN , A RULE CONCERNING , INTER ALIA , BALLPOINT PENS COMING UNDER TARIFF HEADING 98.03 . THAT RULE , AS AMENDED AND SUPPLEMENTED BY DECISION NO 3/74 OF THE JOINT COMMITTEE OF 31 OCTOBER 1974 , IMPLEMENTED IN THE COMMUNITY BY REGULATION ( EEC ) NO 3288/74 OF THE COUNCIL OF 2 DECEMBER 1974 ( OFFICIAL JOURNAL 1974 , L 352 , P . 31 ), STATES AS FOLLOWS : ' ' INCORPORATION OF NON-ORIGINATING MATERIALS AND PARTS . . . IN THE PRODUCTS CONTAINED IN HEADING ( NO ) . . . 98.03 DOES NOT MAKE SUCH PRODUCTS LOSE THEIR STATUS OF ORIGINATING PRODUCTS , PROVIDED THAT THE VALUE OF THESE PRODUCTS DOES NOT EXCEED 5 % OF THE VALUE OF THE FINISHED PRODUCT . ' '

21 THE DETERMINATION OF THE ELEMENTS OF VALUE WHICH ARE TO BE TAKEN INTO ACCOUNT IN CALCULATING THE 5% VALUE LIMIT IS GOVERNED BY THE FOLLOWING PROVISIONS OF THE PROTOCOL .

22 ARTICLE 6 ( 1 ) OF THE PROTOCOL PROVIDES IN THAT CONNECTION AS FOLLOWS :

' ' WHERE THE LISTS A AND B REFERRED TO IN ARTICLE 5 PROVIDE THAT GOODS OBTAINED IN THE COMMUNITY OR IN SWITZERLAND SHALL BE CONSIDERED AS ORIGINATING THEREIN ONLY IF THE VALUE OF THE PRODUCTS WORKED OR PROCESSED DOES NOT EXCEED A GIVEN PERCENTAGE OF THE VALUE OF THE GOODS OBTAINED , THE VALUES TO BE TAKEN INTO CONSIDERATION FOR DETERMINING SUCH PERCENTAGE SHALL BE :

ON THE ONE HAND ,

AS REGARDS PRODUCTS WHOSE IMPORTATION CAN BE PROVED : THEIR CUSTOMS VALUE AT THE TIME OF IMPORTATION ;

AS REGARDS PRODUCTS OF UNDETERMINED ORIGIN ; THE EARLIEST ASCERTAINABLE PRICE PAID FOR SUCH PRODUCTS IN THE TERRITORY OF THE CONTRACTING PARTY WHERE MANUFACTURE TAKES PLACE ;

AND ON THE OTHER HAND ,

THE EX-WORKS PRICE OF THE GOODS OBTAINED , LESS INTERNAL TAXES REFUNDED OR REFUNDABLE ON EXPORTATION . ' '

23 ACCORDING TO ARTICLE 8 ( 1 ) OF THE PROTOCOL , ORIGINATING PRODUCTS WITHIN THE MEANING OF ARTICLE 1 OF THE PROTOCOL , ON IMPORT INTO THE COMMUNITY OR INTO SWITZERLAND , ARE TO BENEFIT FROM THE PROVISIONS OF THE AGREEMENT UPON SUBMISSION OF A MOVEMENT CERTIFICATE . THAT CERTIFICATE IS NOW THE EUR 1 CERTIFICATE WHICH WAS SUBSTITUTED FOR THE A.CH . 1 CERTIFICATE PROVIDED FOR IN THE ORIGINAL VERSION OF PROTOCOL NO 3 BY DECISION NO 10/73 OF THE EEC/SWITZERLAND JOINT COMMITTEE OF 12 DECEMBER 1973 , IMPLEMENTED IN THE COMMUNITY BY REGULATION ( EEC ) NO 3600/73 OF THE COUNCIL OF 27 DECEMBER 1973 ( OFFICIAL JOURNAL 1973 L 365 , P . 135 ).

24 ACCORDING TO ARTICLE 10 OF THE PROTOCOL , THE CERTIFICATE , WHICH IS ISSUED BY THE CUSTOMS AUTHORITIES OF THE EXPORTING COUNTRY WHEN THE GOODS TO WHICH IT RELATES ARE EXPORTED , SERVES AS THE DOCUMENTARY EVIDENCE FOR THE PURPOSE OF IMPLEMENTING THE PREFERENTIAL TREATMENT PROVIDED FOR IN THE AGREEMENT .

25 FINALLY ARTICLES 16 AND 17 OF THE PROTOCOL AFFORD THE COMMUNITY CUSTOMS AUTHORITIES THE WIDEST SCOPE FOR RESOLVING , IN COOPERATION WITH THE SWISS CUSTOMS AUTHORITIES , ANY PROBLEMS THAT MAY BE CAUSED BY THE DETERMINATION OF ORIGIN AND THE ISSUE OF MOVEMENT CERTIFICATES .

26 IT FOLLOWS FROM ALL THOSE PROVISIONS THAT THE DETERMINATION OF THE ORIGIN OF GOODS ACCORDING TO PROTOCOL NO 3 IS BASED ON A DIVISION OF POWERS BETWEEN THE CUSTOMS AUTHORITIES OF THE PARTIES TO THE FREE-TRADE AGREEMENT INASMUCH AS ORIGIN IS ESTABLISHED BY THE AUTHORITIES OF THE EXPORTING COUNTRY AND THE PROPER WORKING OF THAT SYSTEM IS MONITORED JOINTLY BY THE AUTHORITIES CONCERNED ON BOTH SIDES . THAT SYSTEM IS JUSTIFIED BY THE FACT THAT THE AUTHORITIES OF THE EXPORTING STATE ARE IN THE BEST POSITION TO VERIFY DIRECTLY THE FACTS WHICH DETERMINE ORIGIN ; MOREOVER , IT HAS THE ADVANTAGE OF PRODUCING CERTAIN AND UNIFORM RESULTS REGARDING THE IDENTIFICATION OF THE ORIGIN OF GOODS AND OF THEREBY AVOIDING DEFLECTIONS OF TRADE AND DISTORTIONS OF COMPETITION IN TRADE .

27 HOWEVER , THAT MECHANISM CAN FUNCTION ONLY IF THE CUSTOMS AUTHORITIES OF THE IMPORTING COUNTRY ACCEPT THE DETERMINATIONS LEGALLY MADE BY THE AUTHORITIES OF THE EXPORTING COUNTRY . RECOGNITION OF SUCH DECISIONS BY THE CUSTOMS AUTHORITIES OF THE MEMBER STATES IS NECESSARY IN ORDER THAT THE COMMUNITY CAN , IN TURN , DEMAND THAT THE AUTHORITIES OF OTHER COUNTRIES WITH WHICH IT HAS CONCLUDED FREE-TRADE AGREEMENTS ACCEPT THE DECISIONS TAKEN BY THE CUSTOMS AUTHORITIES OF THE MEMBER STATES CONCERNING THE ORIGIN OF PRODUCTS EXPORTED FROM THE COMMUNITY TO THOSE NON-MEMBER COUNTRIES .

28 THERE IS NO DANGER THAT THE APPLICATION OF THOSE PROVISIONS MAY ENCOURAGE ABUSES , IN VIEW OF THE FACT THAT ARTICLES 16 AND 17 OF PROTOCOL NO 3 , IN PARTICULAR IN THEIR NEW VERSION , HAVE SET OUT IN DETAIL THE METHODS OF COOPERATION BETWEEN THE CUSTOMS AUTHORITIES CONCERNED , WHERE THE ORIGIN IS CONTESTED OR WHERE THE EXPORTERS OR IMPORTERS HAVE ACTED FRAUDULENTLY .

29 THE FUNCTIONING OF THAT SYSTEM - BASED , AS HAS BEEN STATED ABOVE , ON A DIVISION OF DUTIES BETWEEN THE CUSTOMS AUTHORITIES OF THE PARTIES TO THE FREE-TRADE AGREEMENT AND ON THE RELIANCE WHICH MUST BE PLACED ON THE ACTS OF THOSE ADMINISTRATIONS IN THE EXERCISE OF THEIR POWERS - DOES NOT ENCROACH ON THE FISCAL AUTONOMY OF THE COMMUNITY AND ITS MEMBER STATES OR OF THE NON-MEMBER COUNTRIES CONCERNED , SINCE THE RULES LAID DOWN IN PROTOCOL NO 3 WERE ESTABLISHED ON THE BASIS OF RECIPROCAL OBLIGATIONS PLACING THE PARTIES ON AN EQUAL FOOTING IN THEIR DEALINGS WITH EACH OTHER .

30 IT FOLLOWS FROM ALL THE FOREGOING THAT SINCE THE GOODS IN QUESTION WERE ASSEMBLED IN SWITZERLAND , IT IS FOR THE SWISS AUTHORITIES , IN ACCORDANCE WITH PROTOCOL NO 3 , TO ESTABLISH THE ORIGIN OF PRODUCTS INTENDED TO BE EXPORTED TO THE COMMUNITY . IN CONSEQUENCE , THE CUSTOMS RULES AND THE EXCHANGE RULES OF THE SWISS CONFEDERATION APPLIED TO THE DETERMINATION OF THE ELEMENTS INVOLVED IN THE CALCULATION OF THE VALUES USED TO ESTABLISH WHETHER OR NOT THE PRODUCT IN QUESTION COULD BE CONSIDERED TO BE A PRODUCT ORIGINATING IN SWITZERLAND . IN PARTICULAR , IT WAS FOR THOSE AUTHORITIES TO DETERMINE THE CUSTOMS VALUE OF COMPONENTS IMPORTED FROM A THIRD COUNTRY , AT THE TIME REFERRED TO IN THE FIRST INDENT OF ARTICLE 6 ( 1 ) OF PROTOCOL NO 3 , NAMELY THE TIME OF THE IMPORTATION OF THOSE COMPONENTS INTO SWITZERLAND AND , AT THE SAME TIME , TO CARRY OUT THE EXCHANGE OPERATIONS IN ACCORDANCE WITH THEIR NATIONAL RULES . THE ISSUE OF THE EUR 1 MOVEMENT CERTIFICATE FOR THE PRODUCT IN QUESTION BY THE SWISS CUSTOMS AUTHORITIES CERTIFIES THAT THE SWISS ORIGIN OF THE PRODUCT HAS BEEN ESTABLISHED CORRECTLY , IN ACCORDANCE WITH THE PROVISIONS OF THE PROTOCOL .

31 IN THE LIGHT OF THE PROVISIONS OF PROTOCOL NO 3 , THE COUNTRY IMPORTING SUCH A PRODUCT HAS THE POWER ONLY TO ASSESS , AT THE TIME OF IMPORTATION , THE CUSTOMS VALUE OF THE FINISHED PRODUCT , FOR THE PURPOSES OF APPLYING THE PREFERENTIAL TREATMENT PROVIDED FOR IN THE FREE-TRADE AGREEMENT .

32 IN REPLY TO THE QUESTIONS SUBMITTED BY THE FRENCH COUR DE CASSATION , IT MUST THEREFORE BE STATED THAT THE AGREEMENT CONCLUDED BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE SWISS CONFEDERATION OF 22 JULY 1972 AND , MORE PARTICULARLY , PROTOCOL NO 3 THERETO MUST BE INTERPRETED AS MEANING THAT THE ASSESSMENT OF THE ELEMENTS USED IN DETERMINING THE ORIGIN OF A PRODUCT AND , ACCORDINGLY , IN DETERMINING WHETHER IT IS ELIGIBLE FOR THE PREFERENTIAL TREATMENT PROVIDED FOR BY THE AGREEMENT IS THE RESPONSIBILITY OF THE CUSTOMS AUTHORITIES OF THE STATE EXPORTING THE FINISHED PRODUCT WHICH APPLIES TO COMPONENTS IMPORTED FROM THIRD COUNTRIES , AT THE TIME OF THEIR IMPORTATION , ITS OWN RULES ON CUSTOMS VALUE AND EXCHANGE .

Decision on costs

COSTS

33 THE COSTS INCURRED BY THE GOVERNMENT OF THE ITALIAN REPUBLIC AND THE COMMISSION OF THE EUROPEAN COMMUNITIES , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE .

34 AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , COSTS ARE A MATTER FOR THAT COURT .

Operative part

ON THOSE GROUNDS ,

THE COURT ( FOURTH CHAMBER )

IN ANSWER TO THE QUESTION REFERRED TO IT BY THE COUR DE CASSATION DE LA REPUBLIQUE FRANCAISE BY JUDGMENT OF 29 JUNE 1983 , HEREBY RULES :

THE AGREEMENT BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE SWISS CONFEDERATION OF 22 JULY 1972 AND , MORE PARTICULARLY , PROTOCOL NO 3 ANNEXED THERETO CONCERNING THE DEFINITION OF THE CONCEPT OF ' ' ORIGINATING ' ' PRODUCTS AND METHODS OF ADMINISTRATIVE COOPERATION MUST BE INTERPRETED AS MEANING THAT THE ASSESSMENT OF THE ELEMENTS USED IN DETERMINING THE ORIGIN OF A PRODUCT AND , ACCORDINGLY , IN DETERMINING WHETHER IT IS ELIGIBLE FOR THE PREFERENTIAL TREATMENT PROVIDED FOR BY THE AGREEMENT IS THE RESPONSIBILITY OF THE COUSTOMS AUTHORITIES OF THE STATE EXPORTING THE FINISHED PRODUCT WHICH APPLIES TO COMPONENTS IMPORTED FROM THIRD COUNTRIES , AT THE TIME OF THEIR IMPORTATION , ITS OWN RULES ON CUSTOMS VALUE AND EXCHANGE .