OPINION OF MR ADVOCATE-GENERAL GAND

DELIVERED ON 23 OCTOBER 19681

Mr President,

Members of the Court,

At the instance of the Commission of the European Communities the Court is asked to give judgment on the compatibility with the Treaty of Rome — or more precisely with Article 16 thereof — of certain provisions in the Italian Law of 1 June 1939 on the protection of objects of artistic, historic, archaeological or ethnographic interest. In order to keep a particularly precious heritage intact as far as possible, the Law provides a whole range of measures directed especially at exportation. In the first case, exportation is simply forbidden when, having regard to the importance of the object in question, its exportation would represent a serious loss to the national heritage which is what has to be protected (Article 35). In the other cases, the exporter must sign a declaration indicating the market value of the object and obtain a licence which is subject to payment of a tax increasing by stages (Articles 36 and 37). Further, the State may acquire, within two months from the date of the declaration, at the price indicated therein, articles which are of particular value to the national heritage (Article 39).

It seemed to the Commission that to continue to levy such a tax on exportation to Member States was not compatible with Article 16 of the Treaty, which provides that ‘Member States shall abolish between themselves customs duties on exports and charges having equivalent effect by the end of the first stage [that is, by 1 January 1962] at the latest’.

After an inconclusive exchange of views, it felt obliged to take action under Article 169 of the Treaty, the terms of which are, of course:

‘If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.

If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice.’

The reasoned opinion issued on 24 July 1964 called on the Italian Republic to take the necessary implementing measures within two months, such period being subject to extension in so far as it was necessary to comply with parliamentary procedures laid down by national law.

That is precisely what occurred. The Italian Government informed the Commission that a parliamentary committee had been set up to amend the laws for the protection of works of art and was to study a different system of export tax, and a further extension of time was granted until 31 December 1965. which exempted exports of antiques, and works of art to Member States of the EEC from payment of the disputed tax, and was adopted by the Senate, it had not been discussed in the Chamber of Deputies by the time the latter was dissolved on 11 March 1968.

Some days earlier, on 6 March, the Commission asked the Court to confirm the alleged failure of the Italian Republic to fulfil its obligations.

I

Before broaching the arguments developed by the two parties, I should like to say a word on the admissibility of the Commission's application. Not that it is formally disputed by the Italian Government, but the latter has pointed out that the action was brought at at time when the dissolution of Parliament was regarded as certain. Further, although it agrees that the Commission is entitled to choose the time at which it wishes to bring the matter before you under the second paragraph of Article 169, the Italian Government complains that in the present case the Commission did not act in accordance with the spirit of the Treaty as embodied in Article 2, and that this omission might in certain circumstances involve the question of inadmissibility of the application which the Court could raise of its own motion.

One need only look again at Article 2 to see that, as is stated in the authorized commentary cited at the hearing, although it expresses clearly and comprehensively the objectives of the Community, it is restricted to general statements to be elaborated in more concrete form in the special system of rules contained in the succeeding articles. The heart of the matter lies, as to the substance in Articles 16 and 36, which I shall examine later, and, as to the role of the Commission in Articles 155 and 169. It is for the Commission, under Article 155, to supervise the application of the provisions of the Treaty; that is what it did in initiating the procedure laid down in Article 169. The first discussions date from 1960, the reasoned opinion was issued in July 1964 and the period given to the Italian Republic to adapt its legislation to the requirements of the Treaty was extended until 31 December 1965. It must be admitted that this temporization did not produce results. By refusing to wait any longer before bringing the matter before you, the Commission has not disregarded any provision of the Treaty, and the admissibility of its application is beyond doubt.

II

Let us now pass to the subject-matter of the case. It is not concerned with either the export prohibition or the right of preemption but only with the retention, after the end of the first stage, of the provision in the Law of 1939 imposing a tax increasing by stages on the exportation of works of art to Member States. The Commission must regard such a tax as a tax having an equivalent effect to a customs duty on exports within the meaning of Article 16 and there fore as prohibited.

1. To that the Italian Government replies, first, with a very general argument. In its opinion, the articles taxed fall completely outside the natural scope of the Treaty. The Treaty, as was said at the hearing, was concluded in order to create an economic community and not a community in articles of artistic, historic or ethnographic interest. These articles, which cannot be compared to merchandise, are the subject of a special rule, namely Article 36, and therefore it is in the light of that Article only and not of Article 16 that the tax should be considered. That works of art are more than mere common-place merchandise is quite clear. But it nevertheless remains true that they can be and in fact are traded in, as every-day experience shows; the transactions to which they give rise are part of that vast market which the Treaty is trying to harmonize between all the Member States. Thus, they do not escape the general limits of the Treaty even though it accords them special treatment in certain respects. The Italian Government has invoked Article 36 which provides that: ‘The provisions of Articles 30 to 34 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on the grounds of… the protection of national treasures possessing artistic, historic or archaeological value… Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.’ But we must be careful here. That article — like Articles 30 to 34 to which it provides an exception — appears in Chapter II of Title I which concerns the elimination of quantitative restrictions as between Member States. It cannot therefore be interpreted as exempting the matters which it governs from all the other rules of the Treaty. As you had occasion to say in Grundig v EEC Commission its scope is limited to Chapter II; it does not prevent other provisions of the Treaty from being applied to works of art such as those on the approximation of laws (Article 100) or those in Chapter I, Section I, on the elimination of customs duties on exports and charges having equivalent effect.

2. We must therefore find the true nature of the tax in question and link it either to Article 16, or to Article 36. It seems clear to me that it belongs to Article 16. In the first place — as is obvious — it is a tax applicable solely to articles intended for export, a matter governed by Article 16. To be sure, the Italian Government argues that as opposed to customs duties this tax does not aim at protecting national production, and that in view of the very small contribution to the State budget which it represents it does not have a fiscal purpose. But these two objections in no way dispose of the matter. What distinguishes customs duties on exports is not that they protect the national industry but that they increase the price of goods and thus tend to hinder their exportation and, without prohibiting trade in the goods, to make it more difficult. Secondly, Article 16 prohibits the retention of customs duties or charges having equivalent effect even when they are in no way of a fiscal nature. I will not dwell on either the opinion of writers in the different countries as cited by the Commission, or your judgment of 14 December 1962 in Joined Cases 2 and 3/62, Commission of the EEC v Grand Duchy of Luxembourg and Kingdom of Belgium [1962] E.C.R. 425 which has already laid down the criteria for charges having equivalent effect; I need only say that according to that judgment the effect of the measure must be taken into account. Further, just like a customs duty on exports, the tax in question increases the price of the product and thus renders its exportation more difficult; that is sufficient to show that it comes under Article 16.

3. The Italian Government tries, however, to show that the tax is compatible with the Treaty in the light of Article 36, but its argument is more skilful than convincing. It argues, first, that that article authorizes measures justified on the ground of the protection of national treasures and that that is the aim of the tax in question. That may be so, but Article 36 does not permit any and every measure. You were also told at the hearing that it was a restriction which only affected goods not pre-empted by the State and did not prohibit exportation and thus was in the nature of a ‘quantitative restriction’ which the Treaty allows for the protection of national treasures. This seems to me to be sheer misuse of language, for the measure complained of does not involve the fixing of any quota, which is normal in the case of quantitative restrictions, but merely the issue of a licence granted on request. Furthermore, a quantitative restriction could not be accompanied by the payment of a tax without thereby going beyond the limits of Article 36. Finally it was argued that the provision complained of is not such as to render exportation impossible and so is limited in its effects. But the Treaty reveals in several of its articles (for example Article 226 on protective measures) a preference for measures which are likely to cause the least disturbance to the functioning of the Common Market. Here again the argument seems specious. A measure as radical as the prohibition of export of works of art is authorized by Article 36 because it is for the protection of the national heritage; a ‘softer’ measure which subjects the authorization to export to the payment of duties is not compatible with the Treaty for, without protecting that heritage, it ends in burdening a commercial transaction with a tax, something which Article 16 prohibits. This last argument of the Italian Government cannot, any more than the preceding ones, be upheld.

My opinion therefore is:

— that the Court should declare that, by continuing after 1 January 1962 to levy the progressive tax provided for in Article 37 of the Law of 1 June 1939 upon exports of works of art to other Member States, the Italian Republic has failed in the obligation imposed on it by Article 16 of the Treaty;