OPINION OF ADVOCATE GENERAL

LÉGER

delivered on 17 February 2005 ( )

Case C-40/03 P

Rica Foods (Free Zone) NV

v

Commission of the European Communities

Case C-41/03 P

Rica Foods (Free Zone) NV

v

Commission of the European Communities

(Appeal – OCT arrangements – Sugar market – Safeguard measures)

1. In 1999 and 2000, the Commission of the European Communities adopted safeguard measures in respect of certain sugar and cocoa imports from the overseas countries and territories (OCTs). The Commission took the view that the imports at issue disturbed the operation of the common organisation of the markets in the sugar sector.

2. Those safeguard measures have been the subject of several actions brought, in particular, by the company Rica Foods (Free Zone) NV (‘Rica Foods’) before the Court of First Instance and by the Kingdom of the Netherlands before the Court of Justice.

3. The actions brought by Rica Foods were dismissed by the Court of First Instance in three judgments of 17 January 2002 ( ) and 14 November 2002. ( ) Two of those judgments are now the subject of an appeal, which will be examined in this Opinion.

4. Examination of the actions brought by the Kingdom of the Netherlands was suspended by the Court pending the Court of First Instance’s delivery of its judgments in the above-mentioned cases. They are examined in the Opinion that I am delivering today in Cases C‑26/00, C-180/00 and C-452/00 Netherlands v Commission.

I – Legal background

5. The relevant rules for the purposes of examining the cases are the rules on the common organisation of the markets in the sugar sector (Heading A), the rules on the arrangements for association of the OCTs with the Community (Heading B) and the contested safeguard measures in this case (Heading C).

A – The common organisation of the markets in the sugar sector

6. Council Regulation (EC) No 2038/1999 of 13 September 1999 on the common organisation of the markets in the sugar sector ( ) consolidated Regulation (EEC) No 1785/81 of 30 June 1981, ( ) which had established that common organisation, following its many amendments. The purpose of that common organisation is to regulate the Community sugar market in order to increase employment and the standard of living among Community sugar producers.

7. Support for Community production through guaranteed prices is limited to national production quotas (A and B quotas) allocated by the Council to each Member State, which then divides them amongst its producers. Quota B sugar (B sugar) is subject to a higher production levy than quota A sugar (A sugar). Sugar produced in excess of the A and B quotas is termed ‘C sugar’ and cannot be sold within the Community unless it is transferred to the A and B quotas for the following season.

8. Apart from exports of C sugar, exports outside the Community benefit, under Article 18 of Regulation No 2038/1999, from export refunds to make up for the difference between the price on the Community market and the price on the world market.

9. The quantity of sugar which can benefit from an export refund and the total annual amount of refunds are governed by the World Trade Organisation (WTO) Agreements (‘the WTO Agreements’), to which the Community is a party, in accordance with Council Decision 94/800/EC of 22 December 1994. ( ) By the 2000/2001 marketing year at the latest the quantity of sugar exported with refund and the total amount of refunds were to be limited to 1 273 500 tonnes and to EUR 499.1 million, which represents a reduction of 20% and 36%, respectively, in relation to the figures for the 1994/1995 marketing year.

B – The arrangements for association of the OCTs with the Community

10. Under Article 3(1)(s) EC, the activities of the Community are to include the association of the OCTs in order to increase trade and promote jointly economic and social development.

11. Pursuant to Article 299(3) EC and Annex II to the EC Treaty, the Netherlands Antilles and Aruba form part of the OCTs.

12. According to 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. 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.

13. Pursuant to Article 187 EC, the Council adopted several decisions laying down the detailed provisions and procedures for the association of the OCTs with the Community. The relevant decision in this case is Council Decision 91/482/EEC of 25 July 1991, ( ) which, according to Article 240(1) thereof, is to apply for a period of 10 years from 1 March 1990.

14. Various provisions of that decision were amended by Council Decision 97/803/EC of 24 November 1997 amending at mid-term Decision 91/482. ( ) Moreover, on 25 February 2000, the Council extended that decision until 28 February 2001. ( )

15. Under Article 101(1) of the OCT Decision, products originating in the OCT are to be imported into the Community free of import duty. Article 102 of that decision adds that, ‘[w]ithout prejudice to [Article] 108b, the Community shall not apply to imports of products originating in the OCT, any quantitative restrictions or measures having equivalent effect’.

16. The first indent of Article 108(1) of the OCT Decision refers to Annex II to that decision (‘Annex II’) for a definition, in particular, of the concept of ‘originating products’. Under Article 1 of that annex, a product is to be considered as originating in the OCTs, the Community or the African, Caribbean and Pacific States (‘the ACP States’) if it has been either wholly obtained or sufficiently processed there.

17. Article 3(3) of Annex II contains a list of types of working or processing which are insufficient to confer the status of originating products on products coming from the OCTs in particular.

18. Article 6(2) of Annex II, however, provides: ‘[w]hen 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.’ These are known as ‘the EC/OCT and the ACP/OCT cumulation of origin rules’.

19. Pursuant to Article 6(4) of Annex II, those EC/OCT and ACP/OCT cumulation of origin rules apply to ‘any working or processing carried out in the OCT, including the operations listed in Article 3(3)’.

20. Decision 97/803 none the less limited the application of those cumulation rules by inserting Article 108b into Decision 91/482. Paragraph 1 of that article provides that ‘[t]he ACP/OCT cumulation of origin referred to in Article 6 of Annex II shall be allowed for an annual quantity of 3 000 tonnes of sugar’. Decision 97/803 did not, however, limit application of the EC/OCT cumulation of origin rule.

C – The contested safeguard measures

21. Article 109(1) of the OCT Decision makes it possible for the Commission to take ‘the necessary safeguard measures’ in two situations. The first is where ‘as a result of the application of [the OCT] 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’. The second situation is where ‘difficulties arise which may result in a deterioration in a sector of the Community’s activity or in a region of the Community’.

22. In both cases, however, the Commission must, under Article 109(2) of the OCT Decision, give priority to ‘such measures as would least disturb the functioning of the association and the Community’. Moreover, ‘[t]hese measures shall not exceed the limits of what is strictly necessary to remedy the difficulties that have arisen’.

23. On 15 November 1999, the Commission adopted, on the basis of Article 109 of the OCT Decision, Regulation (EC) No 2423/1999 introducing safeguard measures in respect of sugar falling within CN code 1701 and mixtures of sugar and cocoa falling within CN codes 1806 10 30 and 1806 10 90 originating in the OCTs. ( ) By that regulation, applicable until 29 February 2000, the Commission made imports of sugar with EC/OCT cumulation of origin subject to a system of minimum prices and imports of mixtures of sugar and cocoa (‘mixtures’) originating in the OCTs subject to the Community surveillance laid down in Article 308d of Regulation (EEC) No 2454/93, ( ) as amended by Commission Regulation (EC) No 1427/97 of 23 July 1997. ( )

24. On 29 February 2000, the Commission adopted, also on the basis of Article 109 of the OCT Decision, Regulation (EC) No 465/2000 introducing safeguard measures for imports from the OCTs of sugar sector products with EC/OCT cumulation of origin. ( )

25. The preamble to that regulation reads:

‘(1) The Commission has noted that imports of sugar (CN code 1701) and of mixtures … falling within CN codes 1806 10 30 and 1806 10 90 originating in the [OCTs] have been increasing greatly since 1997, particularly those imports with EC/OCT cumulation of origin, which have gone from zero in 1996 to more than 48 000 tonnes in 1999 … .

…

(4) In the past few years difficulties have arisen on the Community sugar market, a market in surplus. Sugar consumption is constant at some 12.7 million tonnes, while production is between 16.7 and 17.8 million tonnes. Any imports into the Community therefore involve a corresponding quantity of Community sugar which cannot be sold on that market having to be exported. Refunds for that sugar – within the limit of certain quotas – are charged to the Community budget (currently at around EUR 520/tonne). However, exports with refund are limited in volume by the Agreement on Agriculture concluded as part of the Uruguay Round and have been reduced from 1 555 600 tonnes for the 1995/96 marketing year to 1 273 500 tonnes for the 2000/2001 marketing year.

(5) The operation of the CMO in sugar may be greatly destabilised by these difficulties. For the 2000/2001 marketing year, which starts on 1 July 2000, it is planned on the basis of the most cautious estimates currently available, to reduce Community producers’ quotas by some 500 000 tonnes … . Any further import of sugar or products with a high sugar content from the OCT will mean a greater reduction in the quota for Community producers and a greater guaranteed income loss for them.’

26. The Commission therefore decided to restrict EC/OCT cumulation of origin as referred to in Article 6 of Annex II to the OCT Decision to a quantity of 3 340 tonnes of sugar for sugar and mixtures.

27. Article 3 of Regulation No 465/2000 provided that the Regulation was to apply from 1 March until 30 September 2000.

28. On 29 September 2000, the Commission adopted, again on the basis of Article 109 of the OCT Decision, Regulation (EC) No 2081/2000 providing for the continued application of safeguard measures for imports from the OCTs of sugar sector products with EC/OCT cumulation of origin. ( )

29. The preamble to that regulation reads:

‘(1) The Commission has noted that imports of sugar (CN code 1701) and of mixtures … falling within CN codes 1806 10 30 and 1806 10 90 originating in the [OCTs] increased greatly between 1997 and 1999 …, from zero tonnes in 1996 to more than 53 000 tonnes in 1999 … .

…

(4) In the past few years difficulties have arisen on the Community sugar market, a market in surplus. Sugar consumption is constant at some 12.8 million tonnes per year, while production under quota is around 14.3 million tonnes per year. Any imports of sugar into the Community therefore involve a corresponding quantity of Community sugar which cannot be sold on that market having to be exported. Refunds for that sugar, within the limit of certain quotas, are charged to the Community budget (currently at around EUR 520/tonne). However, exports with refund are limited in volume by the Agreement on Agriculture concluded as part of the Uruguay round … and have been reduced from 1 555 600 tonnes for the 1995/96 marketing year to 1 273 500 tonnes for the 2000/01 marketing year.

(5) The operation of the COM in sugar may be greatly destabilised by these difficulties. For the 2000/01 marketing year, the Commission decided to reduce Community producers’ quotas by some 500 000 tonnes … . Any further import of sugar or products with a high sugar content from the OCT will mean a greater reduction in the quota for Community producers and a greater guaranteed income loss for them.

(6) As a result of these continuing difficulties, there is a risk that a sector of Community activity will deteriorate …’.

30. The Commission therefore restricted EC/OCT cumulation of origin to 4 848 tonnes of sugar for products falling within CN codes 1701, 1806 10 30 and 1806 10 90.

31. Article 3 of Regulation No 2081/2000 provided that the regulation was to apply from 1 October 2000 to 28 February 2001.

II – The actions before the Court of First Instance and the judgments under appeal

32. By applications lodged during the year 2000, several sugar-processing undertakings established in the OCTs (Aruba and Netherlands Antilles) brought actions before the Court of First Instance.

33. Each of those undertakings claimed, in particular, that Regulations Nos 465/2000 and 2081/2000 (‘the contested regulations’) should be annulled and that the Community should be ordered to make good the damage which they considered that they had suffered as a result of the adoption of those measures.

34. By its judgments in Rica Foods II and Rica Foods III, ( ) the Court of First Instance dismissed those applications and ordered the applicants to pay the costs of the proceedings.

III – The procedure before the Court and the forms of order sought on appeal

35. By applications lodged at the Court Registry on 29 January 2003 (Cases C‑40/03 P and C-41/03 P) Rica Foods appealed against those judgments.

36. Rica Foods claims that the judgments under appeal should be set aside and that the Commission should be ordered to pay the costs of the proceedings. It also asks the Court of Justice to decide on the merits of the cases itself and grant the applications for annulment and damages that it lodged at first instance.

37. In both cases, the Commission, the defendant, and the Kingdom of Spain, an intervener at first instance, contend that the appeal should be dismissed and that the appellant should be ordered to pay the costs of the proceedings. The French Republic, also an intervener at first instance, seeks the same forms of order in Case C-41/03 P.

IV – The appeals

38. Although the appeals are relatively unclear, Rica Foods may be regarded as relying on six pleas in support of the forms of order it seeks:

– infringement of Article 109(1) of the OCT Decision;

– errors in the assessment of the effects of the imports at issue;

– distortion of the contested regulations;

– errors in the interpretation of Article 109(1) of the OCT Decision;

– infringement of Article 109(2) of the OCT Decision, and

– infringement of the preferential status of the OCTs.

39. Before examining those various pleas, it should be pointed out that the grounds of the judgment in Rica Foods II are almost identical to those of the judgment in Rica Foods III and also that the appellant puts forward the same complaints against the two judgments. Simply for reasons of convenience, I shall therefore refer solely, in the rest of my Opinion, to the first judgment and to the appeal against it without pointing out, on each occasion, that my arguments also apply to the second case.

A – The first plea: infringement of Article 109(1) of the OCT Decision

40. The first plea is directed against paragraph 86 of the judgment in Rica Foods II.

41. In that paragraph, the Court of First Instance held that ‘the Community institutions have a wide discretion in the application of Article 109 of the OCT Decision’. It added that, ‘[i]n cases involving such a discretion the Community Court must restrict itself to considering whether the exercise of that discretion contains a manifest error or constitutes a misuse of power or whether the Community institutions clearly exceeded the bounds of their discretion’.

42. Rica Foods submits that, by attributing such a discretion to the Commission, the Court of First Instance misinterpreted Article 109 of the OCT Decision. It takes the view that that provision is a derogation from the principle, set out in Article 101(1) of the OCT Decision, prohibiting customs duties on products originating in the OCTs and that, like all derogations, it should have been interpreted strictly. The Court of First Instance could not therefore, according to Rica Foods, attribute to the Commission a wide discretion in that field.

43. It must be pointed out that, in recognising that the Commission had such a discretion, the Court of First Instance was merely applying the settled case-law of the Court of Justice. The Court takes the view that the Community institutions have a wide discretion in the application of Article 109 of the OCT Decision and that, in cases involving such a discretion, review by the courts must be restricted to verifying whether the relevant rules governing procedure and the statement of reasons have been complied with, whether the facts on which the contested choice was based have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. ( )

44. Contrary to Rica Foods’ submission, there is no link between recognising that a Community institution has such a discretion and whether or not the provision at issue is a derogation.

45. In the light of the case-law, it seems to me that it is possible to draw a distinction between two categories of ‘discretion’. The first category is one which could be called discretion of a ‘political’ nature. The institutions are generally recognised as having such a discretion where they act in their capacity as ‘political’ authorities and, in particular, where they legislate in a given field or where they lay down guidelines for a Community policy. In that case, recognition of such a discretion is justified by the fact that the institutions must generally reconcile divergent interests and thus select options within the context of the policy choices which are their responsibility. ( ) Discretion which is ‘political’ in nature thus corresponds to the political responsibilities which a Community provision confers upon an institution. ( )

46. The second category would cover what might be called discretion of a ‘technical’ nature. Such discretion is generally allowed to the institutions where they act in their capacity as ‘administrative’ authorities and, in particular, where they adopt individual decisions in competition or State aid matters, and also where they take specific protective measures against dumping. In that case, the discretion allowed to the institutions is justified by the complexity of the technical, economic and legal situations they have to examine and of the assessments which they have to make. ( )

47. It is common ground that, in both cases, recognising that an institution has a discretion entails a limitation on judicial review. As has been noted, ( ) the Court of Justice takes the view that, in cases involving such a discretion, judicial review must be restricted to verifying whether the relevant rules governing procedure and the statement of reasons have been complied with, whether the facts on which the contested choice was based have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers.

48. As has been pointed out by Advocate General Poiares Maduro, ( ) the limitation does not therefore relate to the scope of judicial review, since, in any event, the review is based on the various infringements set out in Article 230 EC, namely lack of competence, infringement of an essential procedural requirement, infringement of a rule of law and misuse of powers. The restriction relates rather to the intensity of the review, in that the Court will confine itself to verifying whether there has been any evident infringement or manifest error in complying with the applicable legislation or in assessing the relevant facts.

49. That said, it seems to me that the intensity of judicial review varies according to whether the nature of the discretion is political or technical. Indeed, even though, in both situations, judicial review is clearly restricted to ‘manifest error’, it seems to me, in the light of the case-law, that judicial review is less exhaustive where the measure at issue is the result of an institution’s exercise of discretion of a political nature.

50. Be that as it may, those various factors are quite sufficient to establish that Rica Foods’ first plea is unfounded. It follows that recognising that an institution has a discretion is not, by any means, linked to whether the provision at issue is or is not a derogation. The discretion corresponds, in this case, to the political responsibilities that Article 109 of the OCT decision confers upon the institutions. ( ) Moreover, case-law provides numerous examples of cases in which the institutions have been recognised as having a wide discretion in the context of the application of derogating provisions, such as Article 87(3) EC, ( ) Article 81(3) EC before the entry into force of Regulation (EC) No 1/2003, ( ) or Article 108(3) of the EEC Treaty before the entry into force of the Maastricht Treaty. ( )

51. Having regard to those factors, I propose that the Court should reject the first plea as unfounded.

B – The second plea: errors in the assessment of the effects of the imports at issue

52. By its second plea, Rica Foods submits that the Court of First Instance committed several errors in the assessment of the effects of the imports at issue.

53. At first instance, it had contested several of the Commission’s statements. It had submitted, in particular, that the additional imports of sugar with EC/OCT cumulation of origin did not increase the surplus of sugar on the Community market and that they did not lead to any additional costs for the Community budget.

54. The Court of First Instance rejected those arguments for the following reasons:

‘95. … it is clear from statistics from the Statistical Office of the European Communities (Eurostat) produced by the Commission that in 1996 imports of sugar originating in the OCTs amounted to 2 251.1 tonnes and there were no imports of mixtures originating in the OCTs. [It is common ground that] the 2 251.1 tonnes of sugar imported was sugar with ACP/OCT cumulation of origin [and that] in 1996 there were no imports of sugar into the Community under the EC/OCT cumulation of origin regime … .

96. Next, it is clear from the Eurostat statistics that in 1999 sugar imports into the Community under the EC/OCT cumulation of origin regime amounted to 35 791.8 tonnes whilst imports of mixtures amounted to 12 420 tonnes.

97. The Commission was therefore correct in finding … that imports into the Community of sugar falling within CN code 1701 and of mixtures of sugar and cocoa falling within CN codes 1806 10 30 and 1806 10 90 originating in the OCTs with EC/OCT cumulation of origin went from zero in 1996 to more than 48 000 tonnes in 1999 [and that they were] increasing greatly … .

98. [T]he applicants challenge the statement … that imports into the Community of sugar under the EC/OCT cumulation of origin regime lead to exports with refund of a corresponding quantity of Community sugar … .

99. In that regard, the Court observes first of all that the applicants acknowledge that there is a surplus on the Community sugar market. Community production of A and B sugar, that is to say, sugar which may be sold on the Community market and which receives a refund on export, already exceeds the Community sugar consumption … .

100. In addition, as the Court held in Case C-17/98 Emesa Sugar, paragraph 56, the Community is under an obligation to import a certain quantity of sugar from non-member countries under the WTO Agreements.

101. In those circumstances, if the production of Community sugar is not reduced, any additional imports of sugar under the EC/OCT cumulation of origin regime will increase the amount of surplus sugar on the Community market and will lead to an increase in subsidised exports (see Emesa Sugar, cited in the preceding paragraph, paragraph 56).

102. The Court therefore finds that the Commission was right in stating … that any imports into the Community therefore involve a corresponding quantity of Community sugar which cannot be sold on that market having to be exported. …

…

116. Lastly, the applicants observe that … sugar imports from the OCTs do not constitute a drain on the Community budget. In so far as such imports involve a corresponding quantity of Community sugar having to be exported, the export refunds for such exports are borne by the European beet sugar producers under the self-financing system and so ultimately by European consumers … .

…

118. The Court notes that the difficulties mentioned in the contested regulation are the fact that imports of sugar or mixtures qualifying for EC/OCT cumulation of origin increased greatly, the surplus on the Community sugar market giving rise to subsidised exports, and the obligations arising under the WTO Agreements … .

119. In view of the surplus on the Community market, imported sugar of OCT origin will be substituted for Community sugar, which must be exported in order to maintain the balance of the common organisation of the markets.

120. Even if exports of Community sugar are to a large extent financed by the Community sugar industry and hence by the consumer, the Court finds that the WTO Agreements limit export subsidies irrespective of who ultimately bears the cost of those subsidies, and that each additional import aggravates the situation on a market which is already in surplus.

121. It follows from the foregoing that … the arguments put forward [by Rica Foods] can[not] be upheld.’

55. The second plea comprises two parts, which should be considered in turn. ( )

56. In the first part, Rica Foods puts forward several arguments seeking to show that, contrary to what the Court of First Instance held in paragraphs 99 to 102 of the judgment under appeal, imports of sugar with EC/OCT cumulation of origin did not have the effect of increasing the sugar surplus on the Community market. ( )

57. In that regard, it should be noted that, according to settled case-law, ( ) the Court has no jurisdiction to establish the facts or, in principle, to examine the evidence which the Court of First Instance accepted in support of those facts. Provided that the evidence has been properly obtained and the general principles of law and the rules of procedure in relation to the burden of proof and the taking of evidence have been observed, it is for the Court of First Instance alone to assess the value which should be attached to the evidence produced to it. That appraisal does not therefore constitute, save where the clear sense of the evidence has been distorted, a point of law which is subject as such to review by the Court of Justice.

58. In this case, the Court of First Instance found, on the basis of the information in the file, that, since Community sugar production is already in surplus, ‘any additional imports of sugar under the EC/OCT cumulation of origin regime will increase the amount of surplus sugar on the Community market and will lead to an increase in subsidised exports’. ( )

59. In those circumstances, the first part of the plea is clearly inadmissible. Since the appellant has not shown, nor even submitted, that the Court of First Instance had distorted the facts and evidence produced before it, its assessment as regards the increase in the sugar surplus on the Community market constitutes an assessment of fact which cannot be challenged in the context of these appeals.

60. In the second part, Rica Foods submits that the Court of First Instance erred in holding, at paragraphs 118 to 120 of the judgment under appeal, that imports of sugar with EC/OCT cumulation of origin would result in additional costs for the Community budget. It points out that the export refunds for A and B sugars are wholly financed by producers, through levies which they pass on to consumers. Since the imports at issue throw onto the export market a corresponding quantity of Community sugar, those imports do not therefore have an effect on the Community’s budget.

61. In that regard, it is sufficient to note that, in the judgment under appeal, the Court of First Instance did not hold that the imports at issue resulted in additional costs for the Community’s budget. On the contrary, it stated that, in view of the surplus on the Community market and the restriction on subsidised exports provided for in the WTO Agreements, each additional import of sugar aggravates the situation ‘irrespective of who ultimately bears the cost of those [export] subsidies’. ( )

62. Consequently, the second plea of Rica Foods must be rejected.

C – The third plea: distortion of the contested regulations

63. The third plea relates to paragraphs 107 and 108 of the judgment in Rica Foods II, in which the Court of First Instance held that:

‘107. The applicants claim that neither the increase in imports into the Community of sugar and mixtures under the EC/OCT cumulation of origin regime, nor surplus production, nor obligations under the WTO Agreements constitute difficulties within the meaning of Article 109(1) of the OCT Decision which would justify the adoption of a safeguard measure.

108. The Court observes, by way of a preliminary point, that the Commission has never claimed that each of the difficulties it has identified could on its own justify the adoption of a safeguard measure. On the contrary, it is clear from the contested regulation[s] that the difficulties cited by the Commission are all closely linked. According to the Commission, the effect of the market surplus is that each additional imported tonne leads to an increase in export subsidies, an increase which in turn is likely to run up against the limits laid down in the WTO Agreements.’

64. Rica Foods submits that, in that regard, the Court of First Instance distorted the contested regulations. Contrary to what the Court of First Instance held, the Commission never took the view, in the contested regulations, that the ‘difficulties’ referred to in Article 109 of the OCT Decision were the result, in that instance, of a combination of the three factors referred to above, namely the surplus on the Community market, the increase in the imports at issue and the limits imposed by the WTO Agreements. The Court of First Instance therefore substituted its own reasons for those of the contested regulations.

65. It should be borne in mind that although it is for the Court of First Instance alone to assess the value which should be attached to the items of evidence produced before it, ( ) the issue of whether those items of evidence or the contested measure have been distorted is an issue which may be subject to review by the Court of Justice in the context of an appeal. ( ) A plea alleging distortion of the contested measure must establish that the Court of First Instance has changed the meaning, the content or the scope of the contested measure. Thus, the distortion may be the result of a change in the content of the measure, ( ) of a failure to take into account its essential aspects ( ) or of a failure to take into account its context. ( )

66. Since this plea alleges that the contested regulations have been distorted, it is, therefore, contrary to the French Government’s suggestion, ( ) admissible under the case-law of the Court of Justice.

67. However, I think that this plea is clearly unfounded.

68. It may be seen from a mere reading of the contested regulations that the Commission has in fact taken the view that, in this case, the ‘difficulties’ referred to in Article 109 of the OCT Decision were the result of a combination of three factors.

69. Thus, having noted that imports of sugar and mixtures from the OCTs ‘have been increasing greatly’, ( ) the Commission points out that ‘[i]n the past few years difficulties have arisen’. ( ) It explains that ‘the Community sugar market [is] a market in surplus [and that] [a]ny imports into the Community therefore involve a corresponding quantity of Community sugar … having to be exported’. ( ) It also states that ‘[r]efunds for that sugar … are charged [but that] exports with refund are [henceforth] limited in volume by the [WTO] Agreement[s]’. ( ) From that, the Commission infers that ‘[a]ny further import of sugar or products with a high sugar content from the OCT will mean a greater reduction in the quota for Community producers and a greater guaranteed income loss for them’. ( )

70. It follows that the Commission in fact considered that the difficulties referred to in Article 109(1) of the OCT Decision were the result of a combination of several factors, namely the increase in the imports at issue, the surplus on the Community market and the restriction on export refunds under the WTO Agreements. Contrary to Rica Foods’ submission, the Court of First Instance did not therefore distort the contested regulations in that regard.

D – The fourth plea: errors in the interpretation of Article 109(1) of the OCT Decision

71. By its fourth plea, Rica Foods alleges that the Court of First Instance committed several errors in its interpretation of Article 109(1) of the OCT Decision.

72. At first instance, Rica Foods had submitted that the factors put forward by the Commission could not be regarded as ‘difficulties’ which might result in a ‘deterioration in a sector of the Community’s activity’ within the meaning of Article 109(1) of the OCT Decision.

73. The Court of First Instance rejected those arguments. With regard, first, to the existence of ‘difficulties’ within the meaning of Article 109(1) of the OCT Decision, it pointed out:

‘108 … it is clear from the contested regulation[s] that the difficulties cited by the Commission are all closely linked. According to the Commission, the effect of the market surplus is that each additional imported tonne leads to an increase in export subsidies, an increase which in turn is likely to run up against the limits laid down in the WTO Agreements.

…

112. As regards the surplus production and the obligations under the WTO Agreements, the applicants observe, first, that there has been surplus production for some 30 years and, second, that the WTO Agreements, which lay down ceilings for subsidising sugar exports, were concluded in 1994. These are not therefore difficulties within the meaning of Article 109(1) of the OCT Decision.

113. The Court observes that the volume of sugar exports which may be subsidised was reduced under the WTO Agreements, in particular by Schedule CXL. Although in the 1995/1996 marketing year the volume of exports which could be subsidised was 1 555 600 tonnes, that volume was reduced to 1 273 500 tonnes for the 2000/2001 marketing year.

114. In view of the surplus on the Community sugar market, any additional sugar imports into the Community involve a corresponding quantity of Community sugar having to be exported … . An increase in imports of sugar or mixtures qualifying for EC/OCT cumulation of origin is therefore likely to raise difficulties with regard to the obligations under the WTO Agreements.

115. Even though the ceiling for the 2000/2001 marketing year had been known since 1994 and even though the surplus on the Community market had existed for decades, it was still reasonable for the Commission to consider that the fact that imports of sugar and mixtures under the EC/OCT cumulation of origin regime increased greatly constituted, in the light of the surplus on the Community market, a difficulty within the meaning of Article 109(1) of the OCT Decision, all the more since the ceiling laid down in the WTO Agreements already necessitated a substantial reduction in Community production quotas for the 2000/2001 marketing year …’.

74. With regard, second, to the existence of a risk of ‘deterioration in a sector of the Community’s activity’, the Court of First Instance put forward the following line of reasoning:

‘123. The applicants claim that if there were a fall in prices on the sugar market or a radical deterioration in the situation in the sugar sector which is translated into losses, redundancies, etc. there would be a deterioration or threat of deterioration within the meaning of Article 109(1) of the OCT Decision. However, the European sugar industry is in good health. Sugar prices are not falling.

124. The Court considers that the circumstances to which the applicants refer are such as to show that there is deterioration or the threat of deterioration in a sector of the Community’s activity within the meaning of Article 109(1) of the OCT Decision. However, a situation in which a reduction in the production quotas of Community producers is necessary is also indicative of a deterioration in a sector of the Community’s activity. Such a reduction directly affects the incomes of Community producers.

125. The applicants contest the need to reduce Community sugar production quotas by 500 000 tonnes as a result of the WTO Agreements … .

126. The Court notes in that regard that Community sugar production exceeds sugar consumption within the Community … . Moreover, as the Court pointed out in Emesa Sugar, (paragraph 56), the Community is obliged to import a certain quantity of sugar from non-member countries under agreements concluded within the [WTO]. Added to all this are imports of cane sugar from ACP States to meet the specific demand for that product (Emesa Sugar, paragraph 56).

127. The applicants do not dispute that there is a link between compliance with the obligations under the WTO Agreements, on the one hand, and the reduction of the Community production quotas announced in the contested regulation, on the other. They do, however, dispute the figure of 500 000 tonnes contained in the contested regulation.

128. It is clear from Commission Regulation (EC) No 2073/2000 of 29 September 2000 reducing, for the 2000/2001 marketing year, the guaranteed quantity under the production quotas scheme for the sugar sector and the presumed maximum supply needs of sugar refineries under the preferential import arrangements (OJ 2000 L 246, p. 38), that the Commission did in fact reduce the production quotas for the 2000/2001 marketing season by 478 277 tonnes for A and B sugar … .

129. The applicants next submit that the level of imports of sugar and mixtures into the Community under the EC/OCT cumulation of origin regime is negligible, when the volume of imports of sugar originating in the OCTs is compared with the Community production of sugar and the quantities of sugar imported from some non-member countries.

130. [Rica Foods] calculates that in 1999 imports of sugar and mixtures qualifying for ACP/OCT and EC/OCT cumulation of origin represented 0.320% (CN code 1701) and 0.102% (CN code 1806) of Community production. In 1999 imports with EC/OCT cumulation of origin represented 40 000 tonnes, that is to say, less than a single ACP State like Barbados (49 300 tonnes) can import into the Community each year.

131. That argument cannot succeed. The Court notes in that regard that it was reasonable for the Commission to consider that the fact that imports of sugar and mixtures under the EC/OCT cumulation of origin regime increased greatly in the specific context of the surplus Community sugar market and the obligations under the WTO Agreements constituted “difficulties” within the meaning of Article 109(1) of the OCT Decision.

132. Taking into account the obligations under the WTO Agreements, which limit export subsidies, it is reasonable to consider that [a]ny further import of sugar or products with a high sugar content from the OCTs will mean a greater reduction in the quota for Community producers and a greater guaranteed income loss for them … . The Court makes clear in that regard that imports of sugar or mixtures qualifying for EC/OCT cumulation of origin represented at the time when the contested regulation was adopted approximately 10% of the reduction in Community production quotas announced in the contested regulation and that the capacity for sugar production in the OCTs was between 100 000 and 150 000 tonnes per annum … .

133. The Court of Justice has held that a reduction in Community production in order to meet an increase in imports of sugar originating in the OCTs “disturbs the common organisation of the market[s] in sugar … and is … contrary to the objectives of the common agricultural policy” (Emesa Sugar, paragraph 56).

134. In that context, it was reasonable for the Commission to consider in … the contested regulation[s] that the common organisation of the markets in sugar could be greatly destabilised by increased imports of sugar originating in the OCTs.’

75. In the judgment in Rica Foods III, the Court of First Instance added:

‘127 The applicants further maintain that a reduction in production quotas for A and B sugar does not necessarily lead to a loss of income for growers, who may decide to grow other crops.

128 However, the Court finds that, irrespective of the question of whether other crops might prove as profitable as sugar, the need for a substantial reduction in production quotas for A and B sugar establishes per se the existence of a deterioration, or at least the threat of deterioration in a sector of Community activity within the meaning of Article 109(1) of the OCT Decision.’

76. Consequently, the Court of First Instance held that the Commission had not committed a manifest error of assessment by taking the view that the increase in the imports at issue constituted ‘difficulties’ which might result in a ‘deterioration in a sector of the Community’s activity’ within the meaning of Article 109(1) of the OCT Decision.

77. Although the appeals are particularly unclear in that respect, the fourth plea can be regarded as comprising four parts, which I shall examine in turn.

78. In the first part, Rica Foods points out that the various factors put forward by the Commission – namely the increase in imports at issue, the surplus Community production and the restriction on export refunds – were not only foreseeable, but also, to a certain extent, desired by the Community legislature. Accordingly, under the OCT Decision, the development of imports of OCT products was the main objective of the trade cooperation established by that decision. Similarly, the restriction on export refunds, set out in Schedule CXL, was the result of a deliberate choice by the Community legislature.

79. Rica Foods adds that those various factors already existed when the OCT Decision was adopted and, in any event, when it was amended in 1997. Accordingly, the Community sugar market had been in surplus since 1968. In those circumstances, the Court of First Instance should not have regarded those factors as ‘difficulties’ which might result in a ‘deterioration in a sector of the Community’s activity’ within the meaning of Article 109(1) of the OCT Decision.

80. In my view, that first part is based on an incorrect premiss. It is clear from the judgments under appeal that until 1997 there were no imports of sugar and mixtures into the Community under the EC/OCT cumulation of origin regime. In paragraph 110 of the judgment in Rica Foods II, the Court of First Instance pointed out that the imports at issue ‘went from zero in 1996 to more than 48 000 tonnes in 1999’. It is therefore incorrect to state, as the appellant does, that the ‘difficulties’ identified by the Commission already existed when the OCT Decision was adopted in 1991 or even when it was amended in 1997.

81. The foreseeable or desired nature of some of those factors, assuming that it were established, ( ) was not, in itself, such as to prevent the Commission, and subsequently the Court of First Instance, from finding that those factors constituted ‘difficulties’ within the meaning of Article 109(1) of the OCT Decision. The very fact that a safeguard clause was inserted into the OCT Decision, when the decision’s objective was to develop trade with the OCTs, shows that such trade, despite being desired, might very well be regarded, one day, as creating ‘difficulties’ or a risk of ‘deterioration’ in a sector of the Community’s activity.

82. In the second part, Rica Foods submits that, contrary to what the Court of First Instance held in paragraph 128 of the judgment in Rica Foods III, the reduction in production quotas, which is caused by the imports at issue, would not lead to any reduction in income for Community producers. The only consequence of the reduction in quotas would be that producers would grow other crops and would benefit from another agricultural guarantee scheme.

83. That argument must also be rejected. The appellant adduces no evidence to establish that, in the event of a reduction in production quotas, Community producers would in fact be able to turn to other crops. Moreover, that statement is seriously challenged by the Commission. ( )

84. In any event, Rica Foods has not established, nor even submitted, that the Court of First Instance erred in law by finding that ‘irrespective of the question of whether other crops might prove as profitable as sugar, the need for a substantial reduction in production quotas for A and B sugar establishes per se the existence of a deterioration, or … the threat of deterioration in a sector of Community activity within the meaning of Article 109(1) of the OCT Decision’. ( )

85. In the third part of its plea, Rica Foods points out that the volume of the imports at issue was negligible compared with Community production. Thus, in 1999, imports of sugar with ACP/OCT and EC/OCT cumulation of origin represented only 0.320% (CN code 1701) and 0.102% (CN code 1806) of Community production. The appellant therefore considers that the Court of First Instance erred in law by finding that such minimal quantities could constitute ‘difficulties’ within the meaning of Article 109(1) of the OCT Decision.

86. In that regard, it should be borne in mind that, in the judgment in Emesa Sugar, the Court held, in relation to the adoption of an annual quota of 3 000 tonnes for imports of ACP/OCT sugar, that ‘any additional quantity of sugar reaching the Community market, even if minimal compared with Community production, would have obliged the Community institutions to increase the amount of the export subsidies … or to reduce the quotas of European producers, which would have disturbed the common organisation of the market in sugar … and would have been contrary to the objectives of the common agricultural policy’. ( ) It should also be borne in mind that, in 1996 and in 1997, when the quota referred to above was adopted, imports of OCT sugar into the Community amounted, respectively, to 2 251.1 tonnes and to 10 372.2 tonnes. ( )

87. When the contested regulations were adopted, in 1999, the same imports amounted to 51 969.5 tonnes. ( )

88. In those circumstances, it is impossible to see how the Court of First Instance could have erred in law. Indeed, since, in February 2000, the Court of Justice took the view that imports of sugar of the order of 10 000 tonnes constituted a risk of disturbance for the common organisation of the market in sugar, it was logical, in November 2002, for the Court of First Instance to consider that imports five times greater constituted ‘difficulties’ and a risk of ‘deterioration’ for the same common organisation of the market.

89. Finally, in the last part, the appellant submits that the Court of First Instance erred in law by finding, in paragraphs 112 to 115 of the judgment in Rica Foods II, that imports of OCT sugar in the 1999/2000 marketing year had an effect on the Community’s obligations under Schedule CXL. Rica Foods takes the view, in the light of the detailed rules implementing the ceilings provided for by that schedule, that the Community had sufficient leeway to accept the increase in imports of sugar and mixtures with EC/OCT cumulation of origin during the 1999/2000 marketing year.

90. In that regard, suffice it to say that, in paragraphs 112 to 115 of the judgment in Rica Foods II, the Court of First Instance did not examine whether the ceilings fixed by the WTO Agreements allowed the imports at issue to be accepted for the 1999/2000 marketing year. On the contrary, it examined the applicant’s argument that the surplus production and the obligations under the WTO Agreements did not constitute ‘difficulties’ within the meaning of Article 109(1) of the OCT Decision on the ground that ‘there has been surplus production for some 30 years’ and that ‘the WTO Agreements … were concluded in 1994’. ( )

91. Having regard to those various factors, I therefore propose that the Court should reject the fourth plea in its entirety.

E – The fifth plea: infringement of Article 109(2) of the OCT Decision

92. The fifth plea is directed against the Court of First Instance’s assessment concerning the proportionality of the contested measures.

93. At first instance, the Court of First Instance considered that the Commission had not failed to respect the principle of proportionality set out in Article 109(2) of the OCT Decision by restricting imports of sugar and mixtures with EC/OCT cumulation of origin to 3 340 tonnes in Regulation No 465/2000, and then to 4 848 tonnes in Regulation No 2081/2000. ( )

94. In its fifth plea, Rica Foods submits that that assessment is contrary to the principle of proportionality. It makes two complaints against the Court of First Instance.

95. First, it takes the view that the ceilings fixed by the Commission in the contested regulations, namely 3 340 tonnes and 4 848 tonnes, are far too low in relation to the quantities of OCT sugar imported into the Community.

96. In my view, that first complaint is clearly inadmissible.

97. According to settled case-law, ( ) it follows from Article 225 EC, the first paragraph of Article 58 of the Statute of the Court of Justice and Article 112(1)(c) of its Rules of Procedure that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal.

98. However, in this case, Rica Foods, in its appeals, stated only that:

‘… the [Commission] and the Council have not yet plausibly or comprehensibly explained … what interests and grounds … existed for limiting imports of OCT sugar to the 1997 level, that is to say to a quantity which is:

– entirely negligible in relation to European production, to European imports and exports, to the European surplus and to any other factor relating to the European sugar organisation;

– entirely inadequate to provide the OCT sugar industry with a reasonable foundation for the future’. ( )

99. The appellant does not therefore specifically indicate how the Court of First Instance failed to respect the principle of proportionality set out in Article 109(2) of the OCT Decision.

100. Second, Rica Foods submits that the quantities of OCT sugar imported into the Community were so minimal that they could not justify the adoption of the contested quotas. ( )

101. However, that argument is not concerned with the proportionality of the contested regulations. It is concerned with whether the imports at issue could be regarded as ‘difficulties’ justifying the adoption of a safeguard measure under Article 109(1) of the OCT Decision. Furthermore, it was examined as such in the context of the fourth plea, alleging errors in the interpretation of Article 109(1) of the OCT Decision. ( )

102. I therefore propose that the Court should reject the fifth plea.

F – The sixth plea: infringement of the preferential status of the OCTs

103. The last plea is directed against the Court of First Instance’s assessment concerning the preferential status of products originating in the OCTs.

104. That assessment is set out as follows: ( )

‘198. The applicants contend that under Article 3(1)(s) EC and the provisions of Part Four of the EC Treaty …, Community institutions must abide by the principle of the order of preferences. According to that principle, institutions cannot place goods originating in the OCTs in a less favourable position than that of goods coming from the ACP countries or other third countries … .

199. First, the applicants point out that Article 213 of the Lomé Convention totally excludes the adoption of safeguard measures for sugar. The adoption of the contested regulation[s] thus infringes, they claim, the preferential status enjoyed by the OCTs in relation to the ACP countries.

200. [Rica Foods] also compares Article 109(1) of the OCT Decision with other safeguard provisions … . The same applicant concludes that since the OCTs enjoy the highest level of preference the Commission should avoid adopting safeguard measures under Article 109(1) of the OCT Decision against imports coming from the OCTs where the conditions for taking such measures are not met as regards imports from less privileged third countries.

201. Second, the applicants observe that under Protocol No 8 to the Lomé Convention the Community granted the ACP countries a quota of over 1.7 million tonnes of sugar, which those countries may fully or partially import duty-free into the Community and for a guaranteed price. By restricting sugar imports originating in the OCTs under the EC/OCT cumulation of origin regime to 3 340 tonnes for seven months the Commission infringed the principle that goods originating in the OCTs cannot be placed in a position that is less favourable than that of goods coming from the ACP countries or other third countries.

202. The Court observes that, in the context of its review, it must, as the Community Court, restrict itself to considering whether the Commission, which had a wide discretion in the present case, committed a manifest error of assessment in adopting the contested regulation[s] … .

203. Even though the products originating in the OCTs enjoy preferential status under Part Four of the Treaty, the Court of Justice and the Court of First Instance have already held that Article 109 of the OCT Decision, which authorises the Commission to take safeguard measures, does not per se in any way infringe the principles of Part Four of the Treaty … . It cannot therefore be inferred merely from the … adoption of a safeguard measure under Article 109 of the OCT Decision that the preferential status of products originating in the OCTs has been infringed.

204. As regards the status of sugar in the Lomé Convention, the Court notes that in Protocol No 8 annexed to that Convention the Community makes a commitment to the ACP countries to purchase sugar at guaranteed prices and to import a specific annual quantity of sugar (1.7 million tonnes). Those imports are made totally or partially duty free. In order to prevent that guarantee from becoming a dead letter, Article 213 of the Lomé Convention provides that the safeguard clause (Article 177 of the Lomé Convention) is not to apply within the framework of Protocol No 8.

205. In contrast, under Article 101(1) of the OCT Decision, all products originating in the OCTs, and hence in principle sugar also, are to be imported into the Community free of import duties. Sugar originating in the OCTs therefore clearly enjoys preferential status as compared with ACP sugar. The fact that the Commission adopts a safeguard measure – a measure which is by nature temporary – does not change that state of affairs. The Court repeats in that regard that the contested regulation concerns only sugar and mixtures imported under the EC/OCT cumulation of origin regime. It does not impose any ceiling on imports of sugar originating in the OCTs under the ordinary rules of origin, if such production were to exist.

206. The argument deriving from the preferential status of sugar originating in the OCTs as compared with sugar originating in the ACP States must therefore be rejected.

207. On the same grounds, the applicants cannot base an argument on the safeguard clauses contained in the agreements the Community has concluded with certain third countries.

…

210. In the light of those considerations, it must be found that the contested regulation[s] did not result in the ACP countries and third countries being placed in a competitive position which was manifestly more advantageous than that of the OCTs.’

105. In its last plea, Rica Foods submits that that assessment disregards the preferential status of products originating in the OCTs. According to Rica Foods, the Court of First Instance did not take into account the major difference in treatment, under the safeguard measures, between, on the one hand, imports of products originating in the OCTs and, on the other hand, imports of products originating in the ACP States and the most favoured nations, and even imports from certain other non-member countries.

106. Like the Commission, I think that that plea is clearly inadmissible.

107. In paragraphs 198 to 210 of the judgment in Rica Foods II, reproduced above, the Court of First Instance clearly set out the reasons why, in its view, the contested safeguard measures did not result in the ACP countries and third countries being placed in a competitive position which was more advantageous than that of the OCTs.

108. In its appeals, Rica Foods does not indicate how the reasoning of the Court of First Instance is vitiated by an error of law on that point. The appellant merely repeats that ‘[t]he OCT products enjoy a privileged position on the basis of their preferential status in the Community’ and that, ‘[b]y the [contested] safeguard measures, the respondent [has] appl[ied] … a major difference in treatment between, on the one hand, imports from the ACPs and most favoured nations … and, on the other hand, [those] from the OCTs’. ( )

109. In those circumstances, the plea must be rejected as clearly inadmissible, in accordance with the case-law cited in point 97 of this Opinion.

V – Conclusion

110. In the light of all the foregoing considerations, I therefore propose that the Court should dismiss the appeals and order the appellant to pay the costs of the proceedings, other than the costs incurred by the interveners, in accordance with Articles 69 and 118 of the Rules of Procedure of the Court.