3.

The application of Article 95 to the present case, which concerns goods imponed from a French overseas department seems questionable in that the said first subparagraph of Anide 227 (2) does not include the tax provisions (Chapter 2 of Title I of Pan Three of the Treaty) in its list of the provisions of the Treaty applicable to such departments whilst it does contain the entire title on the free movement of goods, including the chapter immediately preceding the chapter on tax provisions (competition rules). The second subparagraph of Article 227 (2) then states that ‘The conditions under which the other provisions of this Treaty are to apply shall be determined, within two years of the entry into force of this Treaty, by decisions of the Council, acting unanimously on a proposal from the Commision’. However the Council has not yet adopted any decision concerning the application of the tax provisions of the Treaty to the French overseas departments. With regard to this second subparagraph of that article the following interpretation might be advanced: namely that the Council had two years within which to determine the conditions under which the provisions of the Treaty which were not included in the above list were to apply and on the expiry of that period the Treaty became applicable in its entirety. Nevertheless for such an interpretation to be accepted it would not be sufficient to confer a narrow interpretation on the words ‘the conditions [under which the … provisions of this Treaty] are to apply’; it would be necessary to be able on the basis of Article 227 (2) to infer that in principie the Treaty in its entirety was applicable to the French overseas departments, subject to a period of grace amounting at the most to two years within which to determine the conditions under which the provisions not included in the list in the first subparagraph were to apply. A point in favour of this argument might be discerned in the fan that Article 227 (1) provides for the application of the Treaty ‘to … the French Republic’ which certainly includes both the metropolitan departments and the overseas departments (Articles 6, 74 and 76 of the French Constitution refer, for example, to the ‘overseas territories of the Republic’). It should however be noted that it has been the practice of the Council (and of the Commission) to continue the exercise of the powers conferred under the second subparagraph of Article 227 (2) even after the expiry of the transitional period and up to last year: I recall in particular the Council Decision of 14 June 1971 applying Anide 51 to the French overseas departments, the Council Decision of 8 November 1971 applying Anides 123 to 127 of the Treaty to those territories and Council Reguladon No 1795/76 of 20 July 1976 concerning the application of Article 40 (4) of the Treaty to the French overseas departments, with regard only to the Guidance Section of the European Agricultural Guidance and Guarantee Fund. This practice shows that such powers were exercised both with a view to arranging gradually for the application of given provisions of the Treaty (or of given provisions of secondary legislation) and in order to govern the conditions under which they should be applied. Ultimately this appears to me the most accurate interpretation of the powers conferred upon the Council under Article 226 (2): an interpretation which leaves to the Community executive power to select which provisions of the Treaty must be applied to the French overseas departments. With regard to the time-limit of two years prescribed in the said anide, I consider it difficult to regard this as the end of a period after which the Council lost the power conferred upon it since no such restrictive view has been taken of the general provision in Article 8 (7) to the effen that the expiry of the transitional period shall constitute ‘the latest date by which all the rules laid down must enter into force and all the measures required for establishing the Common Market must be implemented’. At this point it might seem that there is justification for the view advanced in dus case by the Commission to the effen that Article 95 does not apply to the French overseas departments. Nevertheless dose consideration should be given to the opposite point of view which the German Government has put forward, on the basis of the connexion between Article 37 and Article 95: the German Government considers in fact that Anide 37, which clearly applies to the said departments, ‘repeats in this connexion the general prohibition against discrimination through tax measures with regard to the treatment applied to the importation of products which are covered by a national monopoly’. In this connexion I should like to observe that the idea of including, on the basis of Anide 37, a tax provision in the category of provisions applicable to the French overseas departments is at first sight at variance with the view adopted in the case-law of the Court of Justice to the effect that in principle it is impossible for situations covered by Article 95 to be governed at the same time by the rules applicable to the free movement of goods (I refer in this connexion to my opinion, delivered on 6 June 1978 in Case 142/7, Larsen). However, the clear and necessary distinction between the proper scope of Article 95 (prohibition of discriminatory internal taxation) and that of Articles 9, 12, 13 and 16 (considered from the point of view of charges having an effect equivalent to customs duties) does not preclude the possibility that the function of Article 95 may be complementary to that of the provisions contained in Tide I of the Treaty. The Court of Justice had occasion to emphasize this point in its judgment of 1 July 1969 in Case 24/68, Commission v Republic of Italy ([1969] ECR 193) where it stated that Article 95 ‘is intended to fill in any breaches which a fiscal measure might open in the prohibitions laid down’ — that is, in the prohibitions specified in Article 9 (paragraph 5) On the other hand, whilst Arode 37 is placed in the chapter concerning the elimination of quantitative restrictions, it is worded in such a wav as to produce effects outside that sphere. This is shown both by the reference in Article 37 (2) to the articles dealing with the abolition of customs duties, and the wording employed in paragraph (1) (the requirement that there shall be ‘no discrimination regarding the conditions under which goods are procured and marketed … between nationals of Member States’) to which, as I have noted above, the Court of Justice has given a wide interpretation. Ultimately, then, Article 37, the only anide in the Treaty of Rome concerning monopolies of a commercial nature, must be understood as a special provision, logically connected both with the rules on the free movement of goods and with the provision prohibiting all discriminatory internal taxation. For that reason, regardless of the problem of the present validity of Article 37, it may be held that, when the authors of the Treaty laid down that this article should be applied from the outset to the French overseas departments, by implication they also rendered applicable Article 95 as a provision complementary to Anide 37, with a view to the abolition of all discriminatory effects produced in matten of taxation by monopolies of a commercial nature. It is further necessary to point out a strange and anomalous result which would follow from accepting the Commission's view that Article 37 was in force only during the transitional period and that Article 95 does not apply to the French overseas departments. There is no doubt that, since Article 37 is one of the provisions which have been declared applicable to such territories, a tax measure connected with a national monopoly and discriminating against goods imported from the above-mentioned departments would have to be regarded as incompatible with that article and therefore unlawful if it were adopted during the transitional period. On the other hand if the same measure were introduced after the end of the transitional period it would escape both the prohibition in Article 37, which, according to the Commission, is no longer in force, and that in Article 95 which, again according to the Commission, does not extend to the territories in question. Thus, contrary to the logic of tne Community system, the ending of the transitional period would have had an adverse effect in the sphere in question, detracting from the scope of the principle of non-discrimination and having a detrimental influence on the free movement of goods. The Commission has finally observed that the application of the rule in Article 95 to the French overseas departments fails to take account of the actual conditions prevailing since such departments are subject to a fiscal system which to some extent differs from the system in force in the metropolitan territory. The first point to be made against this is that, according to the above argument, that rule would apply only to the tax arrangements connected with monopolies. In any case it must also be emphasized that in the course of the present proceedings the French Government itself has maintained that Article 95 is applicable to the overseas departments, thereby showing by implication that it is prepared to an accordingly even in the absence of a decision of the Council, with regard infer alia to the application of its own tax legislation in those territories. On the basis of all these considerations I consider that the question of tax discrimination at issue here, which is connected with the existence of a commercial monopoly and concerns goods imponed from French overseas departments, must be appraised in the light of Article 95 as well as of Article 37 of the Treaty of Rome. This means that, in assessing the weight to be accorded to the provision on nondiscriminatory tax treatment, the case-law of the Court of Justice developed in connexion with Article 95 may be applied even though the present proceedings are distinguished by the connexion between the tax arrangement and the monopoly.