Paul Chevassus-Marche v Conseil régional de la Réunion.
Date: 1998-02-19
20 It must be borne in mind from the outset that, as has consistently been held, one and the same levy cannot at the same time fall within the class of charges having an effect equivalent to a customs duty, referred to in Articles 9 and 12, and within that of internal taxes, referred to in Article 95 of the Treaty (Case 193/85 Co-Frutta v Amministrazione delle Finanze dello Stato [1987] ECR 2085, paragraphs 8 to 11). The essential feature of a charge having an effect equivalent to a customs duty which distinguishes it from an internal tax resides in the fact that the former is borne solely by an imported product as such whilst the latter is borne both by imported and domestic products, applying systematically to categories of products in accordance with objective criteria irrespective of the origin of the products (Case 90/79 Commission v France [1981] ECR 283, paragraphs 12 to 14).
24 In Case C-45/94 Cámara de Comercio, Industria y Navegación, Ceuta v Municipality of Ceuta [1995] ECR I-4385, the Court considered whether a system of taxation levied in principle on both local and imported products, but providing for exemption for local products, was compatible with the Treaty.  It held that in order to determine whether such taxation is to be classified as a charge equivalent to a customs duty, falling under Articles 9 and 12 of the Treaty, or as internal taxation, falling under Article 95 of the Treaty, it must be analysed in the light of the wording of the provisions imposing it and in relation to the manner in which the administrative authority applies it.  A charge liable to be borne by imported products or certain categories thereof, to the exclusion of local products in the same category would, in any event, be incompatible with the Treaty.
25 In Case 78/76 Steinike und Weinlig v German State [1977] ECR 595, at paragraphs 28 and 30, the Court held that any charge demanded at the time of or by reason of importation and imposed specifically on an imported product to the exclusion of a similar domestic product would have the same restrictive consequences on the free movement of goods as a customs duty and would thus be incompatible with Articles 9, 12 and 13 of the Treaty.  If, however, the charge in question formed part of a general system of internal taxation applying systematically to domestic and imported products according to the same criteria, it might still infringe Article 95 if it affected domestic products and imported products differently in terms of rate, basis of assessment or method of levying.
32 In Case 148/77 Hansen v Hauptzollamt Flensburg [1978] ECR 1787, at paragraph 10, the Court recalled that Article 227(2) made provision for the Treaty to be applied to the French overseas departments by stages, and in addition it made available the widest powers for the adoption of special provisions commensurate to the specific requirements of those parts of the French territories.
33 As regards the matters listed in the first subparagraph of Article 227(2), the Court noted, at paragraph 11 of its judgment in Hansen, that that provision precisely stated certain chapters and articles which were to apply as soon as the Treaty entered into force.
35 Furthermore, at paragraph 11 of its judgment in Hansen, the Court held that Article 95 of the Treaty, as part of those tax provisions, was not applicable to the French overseas departments as soon as the Treaty entered into force.  On the other hand, in the absence of decisions taken by the Council on a proposal from the Commission under the second subparagraph of Article 227(2), all the other provisions of the Treaty, including Article 95, became automatically applicable to the French overseas departments.
36 At paragraph 37 of its judgment in Lancry, cited above, the Court specified that, by expressly authorising the Council to determine the conditions of application only of those Treaty provisions not listed in its first subparagraph, Article 227(2) excludes the possibility of derogating from the application in the French overseas departments of the provisions which are mentioned therein, including those relating to the free movement of goods.  To interpret Article 235 of the Treaty as allowing the Council to suspend, even temporarily, the application of Articles 9, 12 and 13 of the Treaty in the French overseas departments would be to disregard the fundamental distinction established by Article 227(2) and to deprive its first subparagraph of its effectiveness.
37 It follows that the Council cannot, on any view, authorise a system of general or systematic exemptions which would amount to the reintroduction of a charge equivalent to a customs duty, contrary to Articles 9, 12 and 13 of the Treaty.
42 Such conditions limiting the possibility of derogating from the Treaty rules are all the more necessary in the present context in that the Treaty provisions applying immediately to the French overseas departments at the end of the two-year period include not only Article 95, which supplements the provisions on the abolition of customs duties and charges having equivalent effect (Case 168/78 Commission v France [1980] ECR 347, paragraph 4), but also the provisions relating to freedom of movement for workers and other natural and legal persons.  The enjoyment by Community nationals of rights enshrined in the Treaty provisions referred to in the second subparagraph of Article 227(2), which form part of their legal patrimony, cannot be allowed to be eroded over time by Council decisions.
44 In the first place, it must be borne in mind that Decision 89/688 was adopted by the Council on the basis of Articles 227(2) and 235 of the Treaty, following the Poseidom decision.  The programme provided for in the Poseidom decision steps up Community support for the French overseas departments with a view to promoting their economic and social development, since they suffer from a serious structural lack of development.
45 In the second place, the system of exemptions authorised by Article 2(3) of Decision 89/688 constitutes an exception to the general rule, stated in Articles 1 and 2 thereof, that the new octroi de mer arrangements are to apply to all products whether imported into or produced in the French overseas departments.
46 In the third place, the system of exemptions, as a support measure for local production, which encounters difficulties as a result of its isolation and distance from metropolitan France, is subject to strict conditions.
47 First, under the first subparagraph of Article 2(3) of Decision 89/688, the exemptions must contribute to the promotion or maintenance of an economic activity in the French overseas departments and be in line with the economic and social development strategy of each French overseas department, taking account of its Community aid framework.
48 That Community aid framework is reserved for Community structural intervention and is drawn up by the Commission on the basis of a regional development plan presented by the Member State concerned and provided for by Council Regulation (EEC) No 2081/93 of 20 July 1993 amending Regulation (EEC) No 2052/88 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1993 L 193, p. 5).
49 It follows that the decision authorises only exemptions which are necessary, proportionate and precisely determined.
50 Next, under the second subparagraph of Article 2(3) of Decision 89/688, exemption arrangements are to be notified to the Commission, which is to define its position within two months on the basis of the conditions laid down in order to qualify for an exemption - including the proviso that the terms of trade must not be adversely affected to an extent contrary to the common interest - thus allowing for strict control by the Commission of local production benefiting from the exemption.
51 Finally, under the first subparagraph of Article 3 of Decision 89/688, the Commission must submit to the Council a report on the implementation of the exemption arrangements in order to ascertain their effect, in particular, on the free movement of products within the Community.
52 The imposition of the strict conditions laid down in Article 2(3) of Decision 89/688, interpreted in the light of the limits laid down in Article 226 of the Treaty for derogations from the provisions of the Treaty, must be held to be such as to ensure that the system of precisely determined exemptions is compatible with the Treaty.