CELEX: 61988CC0026
Language: en
Date: 1989-03-16
Title: Opinion of Mr Advocate General Van Gerven delivered on 16 March 1989. # Brother International GmbH v Hauptzollamt Gießen. # Reference for a preliminary ruling: Hessisches Finanzgericht - Germany. # Origin of goods - Assembly of previously manufactured components. # Case C-26/88.

Important legal notice

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61988C0026

Opinion of Mr Advocate General Van Gerven delivered on 16 March 1989.  -  Brother International GmbH v Hauptzollamt Gießen.  -  Reference for a preliminary ruling: Hessisches Finanzgericht - Germany.  -  Origin of goods - Assembly of previously manufactured components.  -  Case C-26/88.  

European Court reports 1989 Page 04253

Opinion of the Advocate-General

++++Mr President,  Members of the Court,  1 . The Hessisches Finanzgericht ( Finance Court, Hessen ) has referred the following questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty :  "( 1 ) Is Article 5 of Regulation ( EEC ) No 802/68 of the Council of 27 June 1968 on the common definition of the concept of the origin of goods ( Official Journal, English Special Edition 1968 ( I ), p . 165 ) to be interpreted as meaning that even the mere assembly of imported, previously manufactured, individual parts into a new article, as the last substantial process or operation that is economically justified, determines the origin of the article, or, apart from assembly, is a separate intellectual contribution also necessary for assembly to determine the origin?  ( 2 ) If the mere assembly of previously manufactured, individual parts determines the origin for the purposes of Article 5 of Regulation ( EEC ) No 802/68, is Article 6 thereof to be interpreted as meaning that the mere fact that exports are diverted using existing manufacturing premises that are already available justifies the presumption that the object of the diversion is to circumvent the applicable provisions on anti-dumping duty?"  Reference is made to the Report for the Hearing for the facts of the case and the proceedings before the national court .  The questions put by the national court are more important than may at first be thought . As Brother stated in its written observations, the national customs authorities of the United Kingdom, the Netherlands and France are at present levying, under Council Regulation ( EEC ) No 1698/85 of 19 June 1985 imposing a definitive anti-dumping duty on imports of electronic typewriters originating in Japan, ( 1 ) an anti-dumping duty on electronic typewriters of the Brother group originating in Taiwan . The answer to the questions submitted will therefore also be of interest to those authorities and not only to the Hauptzollamt Giessen .  In order to see the action taken by the national customs authorities against the importation of typewriters from Taiwan in proper perspective, it is necessary to bear in mind the following facts . In December 1985 the Commission gave notice that it was initiating anti-dumping proceedings in relation to the importation of electronic typewriters originating in Taiwan . ( 2 ) Those anti-dumping proceedings were terminated by the Commission Decision of 23 May 1986 ( 3 ) on the ground that the goods did not originate in Taiwan . In the Commission' s view the cost of the operations carried out in Taiwan was insufficient for those operations to be regarded as the last substantial process as required by Regulation ( EEC ) No 802/68 of the Council ( 4 ) to confer Taiwanese origin on the products . An application by Brother Industries Ltd, Taiwan Brother Ltd and Brother International Europe Ltd for annulment of that decision of 23 May 1986 and a memorandum dated 5 June 1986 from the Directorate-General for External Relations concerning imports of electronic typewriters originating in Taiwan was rejected as inadmissible by Order of the Court of 30 September 1987 in Case 229/86 (( 1987 )) ECR 3757 .  It is in fact by means of a reference for a preliminary ruling that the problem raised in the anti-dumping proceedings in relation to Taiwan now comes before the Court . The question from the national court is whether the Hauptzollamt Giessen did not wrongly treat the imports of electronic typewriters in question as originating in Japan and thereby subject to the anti-dumping duty imposed by the Council instead of regarding them as originating in Taiwan . The present proceedings thus concern the application of the same rules concerning origin as those applicable to the anti-dumping proceedings in relation to Taiwan which the Commission terminated .  2 . The Community rules on origin are contained in Regulation No 802/68 . Article 1 of Regulation No 802/68 provides :  "This regulation defines the concept of the origin of goods for purposes of :  ( a ) the uniform application of the Common Customs Tariff, of quantitative restrictions, and of all other measures adopted, in relation to the importation of goods, by the Community or by Member States;  ( b ) the uniform application of all measures adopted, in relation to the exportation of goods, by the Community or by Member States;  ( c ) the preparation and issue of certificates of origin ."  The anti-dumping measures whose application is at issue before the national court obviously fall under Article 1(a ). In the general Community rules on dumping, moreover, it is recognized that Regulation No 802/68 applies to anti-dumping measures . In particular, Article 13(7 ) of Council Regulation ( EEC ) No 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community ( Official Journal L 209, 2.8.1988, p . 1 ) provides :  "In the absence of any special provisions to the contrary adopted when a definitive or provisional anti-dumping or countervailing duty was imposed, the rules on the common definition of the concept of origin and the relevant common implementing provisions shall apply ."  It is also necessary to consider the territorial field of application of Regulation No 802/68 . Under Article 2 there may be derogation from the regulation  "by agreements which derogate from the most-favoured-nation clause ... and in particular those establishing a customs union or free-trade area ".  That has been done in particular in relation to trade with countries of the European Free Trade Association, trade with developing countries which enjoy certain tariff preferences and trade with a number of other countries . Neither Japan nor Taiwan fall within any of those categories and therefore the ordinary law of Regulation No 802/68 applies to trade with those two countries .  It may be regretted that the question of origin is thus raised in this context and not in actual anti-dumping proceedings which after all contain more procedural guarantees for the undertakings concerned . That point, however academic it may be, shows once again the importance of the present case .  The first question  3 . Article 5 of Regulation No 802/68, to which the first question relates ( see point 1 above ), provides :  "A product in the production of which two or more countries were concerned shall be regarded as originating in the country in which the last substantial process or operation that is economically justified was performed, having been carried out in an undertaking equipped for the purpose, and resulting in the manufacture of a new product or representing an important stage of manufacture ."  In the question submitted to the Court the national court considered that it was established that the operations carried out in Taiwan which involved attaching certain components made in Japan ( such as resistors, condensers and transistors ) to printed circuits also manufactured in Japan and subsequently assembling a typewriter from such printed circuits and other parts made in Japan must be regarded as an assembly resulting in a new product . ( 5 ) That means that the last part of the sentence in Article 5 (" process or operation ... resulting in the manufacture of a new product or (( alternatively )) representing an important stage of manufacture ") is not in issue . Thus the first question in fact relates solely to the first part of the sentence in Article 5 and in particular to the interpretation of the words "last substantial process or operation that is economically justified ... in an undertaking equipped for that purpose ".  The first question submitted to the Court is in fact even more specific : the parties to the main proceedings hardly touched on the question whether the assembly was "economically justified" and whether Brother' s factory in Taiwan was "an undertaking equipped for the purpose ". The second part of the sentence is mentioned in connection with the second question submitted to the Court ( see point 16 below ). The specific question submitted to the Court is thus whether and, if so, subject to what conditions, an assembly may be a substantial process or operation such that it may determine the origin of the product .  4 . The observations lodged by Brother, the Commission and the Netherlands and French Governments refer at length to the case-law on the subject and also base arguments on the Commission' s implementing regulations in respect of certain products, but not the product at issue . ( 6 ) The judgments of the Court already delivered on the subject occupy an important place in those observations but they are interpreted differently . Different theories are put forward . Without wishing to overestimate the significance of those theories, I should like nevertheless to describe them briefly as follows : ( 1 ) the theory that there should be a technical or technological test based on the characteristics of the product ( see point 5 et seq . below ), ( 2 ) the theory that there should be an added value test, or, in broader terms an economic test ( see point 6 below ); and ( 3 ) some other theories of lesser importance including one referring to the criterion of classification in another subheading of the customs tariff ( see point 5 below ). In this opinion I shall first of all cite the case-law of the Court, then I shall briefly mention the different conclusions which the parties draw from it and finally I shall give my own view .  The case-law of the Court  5 . In the judgment of the Court of 26 January 1977 in Case 49/76 Gesellschaft fuer UEberseehandel mbH v Handelskammer Hamburg (( 1977 )) ECR 41, paragraphs 5 to 7 of the judgment, the Court answered a question put by the Verwaltungsgericht Hamburg as to whether untreated casein obtained in a third country and ground in a Member State to make it fit for use originated in that Member State . The Court held as follows :  "( point 5 ) in these circumstances, it would not seem sufficient to seek criteria defining the origin of goods in the tariff classification of the processed products, for the Common Customs Tariff has been conceived to fulfil special purposes and not in relation to the determination of the origin of products;  on the contrary, in order to meet the purposes and requirements of Regulation ( EEC ) No 802/68, the determination of the origin of goods must be based on a real and objective distinction between raw material and processed product, depending fundamentally on the specific material qualities of each of those products;  ( point 6 ) therefore, the last process or operation referred to in Article 5 of the regulation is only 'substantial' for the purposes of that provision if the product resulting therefrom has its own properties and a composition of its own, which it did not possess before that process or operation;  in providing that the said process or operation must, in order to confer a particular origin, result in the manufacture of a new product or represent an important stage of manufacture, the abovementioned Article 5 shows in fact that activities affecting the presentation of the product for the purposes of its use, but which do not bring about a significant qualitative change in its properties, are not of such a nature as to determine the origin of the said product;  ( point 7 ) the grinding of a raw material such as raw casein to various degrees of fineness cannot be considered as a process or operation for the purposes of Article 5 of Regulation ( EEC ) No 802/68, because the only effect of doing so is to change the consistency of the product and its presentation for the purposes of its later use; it does not bring about a significant qualitative change in the raw material;  furthermore, the quality control by grading to which the ground product is subjected and the manner in which it is packaged relate only to the requirements for marketing the product and do not affect its substantial properties ".  In that judgment the Court clearly rejected the point of view, which had sometimes been put forward hitherto, that classification under a different heading of the Common Customs Tariff might be used as a criterion for the purposes of Article 5 . On the contrary, that judgment adopted a technical criterion relating to the specific characteristics of the product : to be substantial, the process or operation must result in a product which has its own specific properties and composition which it did not have before; the modification must affect more than just the "presentation ".  6 . In its judgment of 31 January 1979 in Case 114/78 Yoshida Nederland BV v Kamer van Koophandel en Fabrieken voor Friesland (( 1979 )) ECR 115, the Court declared Commission Regulation ( EEC ) No 2067/77 of 20 September 1977 concerning the determination of the origin of slide fasteners ( Official Journal L 242, 21.9.1977, p . 5 ) to be invalid . According to that regulation the production of slide fasteners in the Community did not constitute an operation determining origin if sliders originating in non-member countries were used . The Court held inter alia :  "( point 11 ) it follows from the examination of these various operations that the last substantial process or operation must be interpreted as being constituted by the combination of operations ( c ), ( d ), ( e ) and ( f ) ( 7 ) resulting in the manufacture of a new and original product which, in contrast to each of the basic products, is a linking element which can be separated over and over again and is used to join objects, in particular pieces of fabric;  the slider constitutes only a particular part of this whole, the price of which cannot moreover have an appreciable influence on the final cost of a slide fastener and which, although it is a characteristic feature thereof, is however of no use unless it is combined in a harmoniously assembled whole;  ( point 12 ) the Commission, in taking the view that it had to go back beyond the last process to the process of the manufacture of the slider and make that a binding condition for the grant of a certificate of origin, relied upon an operation which is extraneous to the objectives of Regulation ( EEC ) No 802/68 which requires a real and objective distinction between raw material and processed product depending fundamentally on the specific material qualities of each of those products;  the requirement that virtually all components of a product must be of Community origin, even those of little value which are of no use in themselves unless they are incorporated into a whole, would amount to a repudiation of the very objective of the rules on the determination of origin;  the Commission has therefore by that very fact exceeded its power under Article 14(3 ) of Regulation No 802/68 ".  Two conclusions may be drawn from that judgment . In the first place, by declaring the contested regulation to be invalid the Court refused to isolate a particular element ( in that case, the slider of the slide fastener ) as being the most characteristic component which had in any event to be manufactured in the Community in order to confer Community origin on the whole ( the slide fastener ). In the second place, a technical criterion was once again cited in that judgment, as in the previous one, but ( and this is of importance in the appreciation of the present case ) in conjunction with a cost and value-added criterion to serve as a supplementary criterion .  The technical test consists of determining whether, after the process or operation has been carried out, the material qualities of the product are objectively different from those of the basic products or parts . According to the Court, slide fasteners do meet that requirement since the slider, which is of no use unless it is combined in a harmoniously assembled whole, acquires, in combination with the other components, new material qualities and, in particular, becomes fit for many uses . The supplementary cost and value-added test is implicit in the part of the sentence beginning with the words "cannot moreover" in paragraph 11(2 ) and in the part of the sentence beginning with the word "even" in paragraph 12(2 ) of the decision : the low cost of the slider and its little value to the consumer, compared with the cost and value of the slide fastener, are such as to show that the slider does not determine the origin .  7 . In the judgment of 23 March 1983 in Case 162/82 Cousin (( 1983 )) ECR 1101, concerning the validity of another Commission implementing regulation and a question regarding Article 30 of the EEC Treaty, the Court stated :  "( point 20 ) The Commission has provided no explanation relating to the nature of the products and the processes in question which might justify such a difference in treatment between the process of dyeing and other finishing operations carried out on cloth and fabrics on the one hand and on cotton yarn on the other .  ( point 21 ) In these circumstances, it appears contradictory and discriminatory for Regulation ( EEC ) No 749/78 to provide substantially more severe criteria for the determination of the origin of cotton yarn than for the determination of the origin of cloths and fabrics . Although the Commission possesses a discretionary power for the application of the general criteria contained in Article 5 of Regulation ( EEC ) No 802/68 to specific working or processing operations it cannot however, in the absence of objective justification, adopt entirely different solutions for similar working or processing operations ".  Once again ( only ) a technical criterion was used .  8 . In its judgment of 23 February 1984 in Case 93/83 Zentrag v Hauptzollamt Bochum (( 1984 )) ECR 1095, which concerns an implementing regulation in relation to meat, the Court held :  "Article 5 of Regulation ( EEC ) No 802/68 of the Council of 27 June 1968 must be interpreted as meaning that the processing of the meat derived from beef quarters by boning, trimming, drawing the sinews, cutting into pieces and vacuum-packing does not confer upon it the origin of the country where those operations are carried out ".  The Court gave the following reasons :  "( point 13 ), it should be borne in mind that, as the Court stated in its judgment of 26 January 1977 in Case 49/76 Gesellschaft fuer UEberseehandel (( 1977 )) ECR 41, the last process or operation referred to in Article 5 of Regulation ( EEC ) No 802/68 is only 'substantial' for the purposes of that provision if the product resulting therefrom has its own properties and a composition of its own, which it did not possess before that process or operation . Activities altering the presentation of a product for the purposes of its use, but which do not bring about a significant qualitative change in its properties, are not of such a nature as to determine the origin of the said product .  ( point 14 ) In the present case, it may be accepted that the operations in question facilitate the marketing of the meat by enabling it to be sold to the consumer through commercial undertakings which do not have their own butcher . However, these operations do not produce any substantial change in the properties and the composition of the meat, and their main effect is to divide up the different parts of a carcass according to their quality and pre-existing characteristics and to alter their presentation for the purposes of sale . A certain increase in the time for which the meat will keep and a slowing down in the maturing process do not constitute a sufficiently pronounced qualitative change in substance to satisfy the requirements mentioned above . Finally, while the market value of a whole beef quarter which undergoes the operations at issue is increased, according to the calculations supplied by Zentrag at the hearing, by 22%, that fact is not in itself of such a nature as to enable those operations to be regarded as constituting the manufacture of a new product or even an important stage of manufacture ".  From that judgment it should be noted that operations which do not bring about a significant qualitative change in the properties and composition of the meat, since they involve only a division according to quality and an alteration in the presentation, do not constitute the manufacture of a new product or an important stage of manufacture ( once again there is application of a technical criterion ). ( 8 ) A significant increase in the commercial value of the goods, that is to say significant added value ( namely 22 %) was not sufficient "in itself", as the Court stated, for the operation or process to determine the origin, notwithstanding the technical criterion, from which it is apparent that the criterion of added value was indeed adopted by the Court, but only as a supplementary criterion .  Interpretation given by the parties  9 . What general conclusions may be drawn from that case-law? First of all it is necessary to point out that each of the four judgments cited concerns a specific question differing from that at issue in the present case, which relates to the assembly of machines . Caution is therefore called for in referring to individual passages from those judgments since in this field the specific factual circumstances have a considerable influence on the application of the rules of law .  In Brother' s view it is clear from the case-law of the Court that it is necessary to make an objective technical comparison between the product ( or products ) before and after processing . By way of illustration : in Case 49/76, the product casein was ground to various degrees of fineness, but it was already casein before being so ground . Case 93/83, the other case in which the operations in question did not alter the origin, was concerned with quarters of beef which were processed into pieces of beef individually packaged and ready for consumption . In Brother' s view the present case is quite different : components are converted into a product with functional characteristics the components do not have . The number of stages and the costs involved in the manufacturing process intervening between the two situations are, in Brother' s view, of less significance; the term "substantial" thus does not involve so much a condition of length, intensity or degree of difficulty in the operation or process, provided that the situation before the operation differs "substantially" from the situation thereafter . Does that mean that criteria of a more economic nature, such as the input of capital, provide no indications? Brother would not go as far as that, as became clear at the hearing .  The Commission attaches much importance to the last-mentioned judgment and in particular the product' s "own properties" referred to therein . The Commission contends that an assembly never adds new properties to a product, and certainly does not do so in the present case . Does that mean that a whole is never more than the parts of which it is composed? Such a contention would be hard to make out in the light of the judgment of the Court of 31 January 1979 ( see point 6 above ). Another possibility, ruled out by the same judgment, is the contention that the most characteristic part determines the origin of a product . That point of view, which was rejected in relation to the slider of the slide fastener, is contrary to the terms of Article 5 under which origin is determined not by the most substantial process or operation but by "the last substantial process or operation ". The Commission sees the following general thread as running through the case-law of the Court : for an assembly to be "substantial", regard must be had to two criteria, namely, on the one hand, the work done and the expenditure on material and, on the other, the value added . In practice those two criteria largely overlap . ( 9 ) Together they form what may be described as the economic criterion .  10 . Before coming to my own assessment I should like to point out that both Brother and the Commission rightly reject the condition of an independent intellectual element in the assembly operation . Great importance had been attached to that condition by the national court, which, according to Brother' s uncontradicted statement, relied on the German rules prior to the Community regulation . ( 10 ) The insertion of a condition of intellectual content or creativity in order for assembly to determine origin is supported neither by the wording of Article 5 nor by the case-law of the Court and would amount to an economically unjustified preference for certain artisanal methods of production . In addition, it would be a very difficult criterion to apply since it is not easy to assess whether or not any intellectual content or creativity is involved .  Simple or substantial assemblies  11 . As I have said ( see point 3 above ) the question put by the national court is essentially whether and in what circumstances is an assembly a substantial operation or process such that ( if it is also the last economically justified operation or process ) it may determine the origin for the purposes of Article 5 of Regulation No 802/68 .  Certain further guidance may be found in the International Convention on the simplification and harmonization of customs procedures drawn up under the auspices of the Council for Customs Cooperation . Annex D.1 to the Kyoto Convention of 18 May 1973 ( 11 ) contains rules on origin . The Community accepted the annex subject to certain reservations which are not relevant to the present case . ( 12 ) Where two or more countries have taken part in the production of the goods, the origin of the goods shall be determined according to the "substantial transformation" criterion ( Rule 3 ). In that respect, Rule 6 which was accepted by the European Economic Community, provides :  "Operations which do not contribute or which contribute to only a small extent to the essential characteristics or properties of the goods, and in particular operations confined to one or more of those listed below, shall not be regarded as constituting substantial manufacturing or processing :  ( a ) operations necessary for the preservation of goods during transportation or storage;  ( b ) operations to improve the packaging or the marketable quality of the goods or to prepare them for shipment, such as breaking bulk, grouping of packages, sorting and grading, repacking;  ( c ) simple assembly operations;  ( d ) mixing of goods of different origin, provided that the characteristics of the resulting product are not essentially different from the characteristics of the goods which have been mixed ".  Although Annex D.1, as part of an international convention, seems to be intended for a narrow field of application ( 13 ) it does nevertheless serve, in my opinion, to support the answer which is called for .  It is clear from that international convention that under Regulation No 802/68 simple assembly operations cannot be regarded as substantial and accordingly as determining origin, for they "do not contribute or ... contribute to only a small extent to the essential characteristics or properties of the goods ". It seems to me that the reference to the essential characteristics of the goods is to a technical criterion whereas the smallness of the contribution is reference to an economic criterion ( see below ).  12 . It remains necessary to define what assemblies are not simple assemblies but substantial operations . To answer that question it is necessary to take as a basis the terms of Article 5 of Regulation No 802/68 in its various versions . The process or operation is described as "ingrijpende" in Dutch, "substantielle" in French, "wesentliche" in German, "sostanziale" in Italian and "substantial" in English .  It seems to me that the word "substantial" has two complementary meanings enabling two additional criteria to be read into Article 5 .  In the first place "substantial" has a technical meaning which the Court has hitherto generally applied . Understood in that sense, an operation or process is substantial when it involves an alteration of substance, that is to say of the specific characteristics or composition of the product which is the subject of the operation or process . A product which in its finished state after a final operation or process is ready for use is fundamentally different from the product or its components which were not ready for use before such operation or process . In this case the last operation was a substantial one in view of the present finished and ready-for-use state of the product : it fundamentally altered the product . In the case of the consumer goods in question, "ready for use" means ready for use without any "professional" intervention, that is to say without any intervention other than what the normal consumer can carry out with simple tools . In the present case the national court could, in my opinion, easily conclude that the assembly in question created the essential functional qualities of the typewriter and for that reason was substantial according to the technical criterion .  It follows from the foregoing that the "technical" criterion does not necessarily have to be understood as meaning a criterion of a physical or chemical nature relating to an intrinsic alteration of the products subject to an operation or process : it is rather a matter of functional characteristics and properties which the purchaser or consumer in the case of consumer goods has in mind on the purchase of the ready-for-use product and which from the point of view of the normal user, were not yet present in the unprocessed product or in its components or at least could not easily have been obtained from them . Thus, for example, it is not possible to classify as substantial from the technical point of view the assembly of an easily put-together bookcase ( of the kind which is often also sold in knock-down form to consumers who have the few tools needed ) for in the eyes of the consumer the functional characteristics of the final product are already present in the "do-it-yourself" kit in an easily accessible form .  Does that technical criterion suffice? I do not think so . In addition to the technical criterion, the Court has always applied, when necessary, an economic test as a subsidiary criterion . ( 14 ) The Dutch words for "substantial", "ingrijpend" and above all "substantieel", also have the non-technical and more general economic meaning of "considerable" or "financially significant ". In my opinion the economic criterion must therefore be taken into account, not as the main criterion, the sole criterion or even just the first criterion, but as a complement and, if necessary, a qualification to the aforementioned technical criterion . As I have already pointed out ( see point 9 above and the footnote thereto ) the economic criterion must be understood both in terms of cost and from the market aspect of "added value ". Considered together they refer to the significance of "the means of production applied ".  13 . In concrete terms, the combined application of a main technical criterion and an ancillary economic criterion leads to the following approach : a technically substantial operation or process, as defined above, which involves only a small increase in value and/or only relatively small costs is not a substantial operation or process within the meaning of Article 5 . If the national court is convinced by the Commission' s contentions in the present case that the assembly operations in Taiwan increase the value of the product by much less than 10%, ( 15 ) it must in my opinion necessarily conclude that such assembly operations are not "substantial" even if, from the technical point of view, a new product results from the assembly which is ready for use .  In that respect I would emphasize that in my opinion the national court should not reach such a conclusion in reliance on the allegedly low intellectual content of the tasks carried out in Taiwan, for the question whether the production in Japan of the printed circuits exported to Taiwan is not also mechanical mass-production with little intellectual content has not in fact been considered . On the other hand, the fact that the production process in Taiwan as part of the global production of electronic typewriters represents a small proportion of the total cost and/or the added value is certainly of significance for the purposes of such a conclusion . The fact that staff and capital input in Japan for the design and manufacture of printed circuits and components to be affixed thereto is many times greater than the staff and capital input in Taiwan for the purposes of the assembly of the various components on the printed circuits and the typewriters as a whole may well therefore prevail in the final decision in my opinion .  14 . The criterion put forward above seems to be the only realistic one in view of the large variety of products for which Article 5 of Regulation ( EEC ) No 802/68 may be relevant .  That criterion is also consistent with the wording of Article 5 in so far as it mentions the "last" substantial process or operation and not "the most" substantial process or operation; in many circumstances differing from those in the present case it is possible that three or four successive operations carried out in three or four different countries each make a not inconsiderable economic contribution . However it is only the last, which from an economic point of view need not necessarily be the most important of the three or four operations, which confers origin . Not only is that view consistent with the wording of Article 5, but it has already indirectly been confirmed by the Court on several occasions . ( 16 )  In order to determine in such situations whether the last operation or process is substantial it will therefore in my opinion also be necessary to have recourse to an economic criterion for that enables successive stages of production to be assessed by the same standard .  Answer to the first question  15 . In view of the foregoing I propose that the following reply be given to the national court :  "The mere assembly of imported, previously manufactured parts into a new article cannot constitute a substantial process or operation which determines origin within the meaning of Article 5 of Regulation ( EEC ) No 802/68 of the Council of 27 June 1968 on the common definition of the concept of the origin of goods ( Official Journal, English Special Edition 1968 ( I ), p . 165 ) if the assembly represents only a relatively insignificant proportion of the production cost or the added value of the new product ."  The second question  16 . Article 6 of Regulation ( EEC ) No 802/68 to which the second question relates ( see point 1 above ) provides :  "Any process or work in respect of which it is established, or in respect of which the facts as ascertained justify the presumption, that its sole object was to circumvent the provisions applicable in the Community or the Member States to goods from specific countries shall in no case be considered, under Article 5, as conferring on the goods thus produced the origin of the country where it is carried out ."  Only Brother, the French Government and the national court have given some consideration to Article 6 . The French Government produced statistics showing that the pattern of the rise and fall of numbers of electronic typewriters assembled in Taiwan supports the view that there was reaction to the decisions of the Community institutions . But certainly in view of the emphasis in the reference for a preliminary ruling and Brother' s observations on the rule of law, such statistics do not prove that the condition in Article 6, namely that the "sole object was to circumvent the provisions applicable" is satisfied . In a free and developed market economy, characterized by extensive division of labour, commercial decisions based on grounds of business efficiency must generally be respected . That would not be the case if the public authorities were able to classify as an abuse any decision which might in part be interpreted as a reaction to measures taken by public authorities . In view of that context, statistics which show a change in trade flows as a reaction to the decisions of public authorities or reference to the fact that the factory in Taiwan was previously used for the manufacture of sewing machines cannot be regarded as establishing that the law has been circumvented . It is necessary to prove in addition that the transfer to Taiwan of part of the production served no other economic purpose than to circumvent the measures taken by the public authorities .  17 . I therefore propose that the following reply be given to the national court :  "If the mere assembly of previously manufactured parts determines the origin for the purposes of Article 5 of Regulation ( EEC ) No 802/68, Article 6 thereof cannot be interpreted as meaning that the mere fact that exports are diverted using existing manufacturing premises justifies the presumption that the object of the diversion is to circumvent the applicable provisions ( on anti-dumping duty )".  (*) Original language : Dutch .  ( 1 ) OJ L 163, 22.6.1985, p . 1 .  ( 2 ) OJ C 338, 31.12.1985, p . 7 .  ( 3 ) OJ L 140, 27.5.1986, p . 52 .  ( 4 ) OJ, English Special Edition 1968 ( I ), p . 165 .  ( 5 ) It is established that the first operation, namely the attaching of resistors and other components to printed circuits was done in Taiwan only on three models of the electronic typewriter in question . For the other models that operation was done in Japan .  ( 6 ) Since, as will appear later, the answer to the question of law put in the present case stems from the case-law of the Court in relation to Article 5 it will not be necessary to refer further to those implementing regulations .  ( 7 ) See paragraph 10 : ( c ) the attaching of the metal scoops or the nylon spirals to the tapes and the subsequent joining of the tapes; ( d ) the attaching of bottom stops and top stops to the tapes; ( e ) the insertion and where necessary the colouring of the sliders; ( f ) the drying and cleaning of the slide-fastener lengths followed by the cutting of them to make individual slide fasteners .  ( 8 ) In this case the criterion is used to determine whether the operations under consideration led to the manufacture of a new product or constituted an important stage of manufacture and thus amounted to a substantial operation . That shows that the interpretation of the different parts of the sentence in Article 5 overlaps and is determined to a large extent according to the same criteria . It is, however, different in the present case ( see point 3 above ), because the national court has rightly assumed that in this case the assembly of the separate pieces has given rise to a new product and therefore it has concentrated in its questions on the "substantial" nature of that assembly .  ( 9 ) The criterion of "work done and material expenditure" is an accountancy approach in terms of cost . The "added value", that is to say the value added by the processor, refers to the difference between the sale price of the finished product and the purchase price of the raw material, energy and, if necessary, rent and so forth . Theoretically the latter criterion differs from the first in two respects : apart from payment for labour, it also includes capital and real property costs, two production factors which are missing in the calculation of the "work done and material expenditure" and it is based on the market prices arising from the interplay of supply and demand . In practice those differences are of little importance : the first difference is slight and foreseeable ( and may be replaced by a flat rate ), no doubt in view of the relative importance of the production factors as part of the total cost or the added value of the final product; the second difference is purely theoretical in many cases and certainly in the present case, for there is no sufficiently wide and transparent market for the various separate ( Brother ) components for electronic typewriters . In the absence of such a market it is necessary to have recourse to the approach based on cost .  ( 10 ) See, for example, Bail/Schaedel/Hutter : Kommentar Zollrecht, F IV, note 8 in relation to Article 5 of Regulation No 802/68 .  ( 11 ) Council Decision 75/199/EEC of 18 March 1975 concluding an International Convention on the simplification and harmonization of customs procedures and accepting the annex thereto concerning customs warehouses ( OJ L 100, 21.4.1975, p . 1 ), to which the convention is annexed .  ( 12 ) Council Decision 77/415/EEC of 3 June 1977 accepting on behalf of the Community several annexes to the International Convention on the simplification and harmonization of customs procedures ( OJ L 166, 4.7.1977, p . 1 ).  ( 13 ) See the last paragraph of the introduction : "The annex deals solely with the customs aspects of rules of origin . It does not, for example, extend to measures taken to protect industrial or commercial property or to ensure respect for origin indications or other trade descriptions in force ".  ( 14 ) See Mr Advocate General Warner' s Opinion in the judgment of 26 January 1977 Gesellschaft fuer UEberseehandel case, (( 1977 )) ECR 61; paragraphs 11 and 12 of the judgment of 31 January 1979 cited above in point 6 and ( for a rebuttal of the view that the economic criterion should be the main criterion ) the last sentence of paragraph 14 of the judgment of 23 February 1984, cited above in point 8 .  ( 15 ) Thus it is substantially less than the 22% referred to by the Court in paragraph 14 of the judgment of 23 February 1984, cited above in point 8 .  ( 16 ) See the last two sentences of paragraph 12 of the judgment of 31 January 1979 cited above in point 6 and the Opinion of Advocate General Sir Gordon Slynn, (( 1983 )) ECR 1128 and 1129 in the Cousin case, cited above in point 7 .