1 BY ORDER DATED 19 JANUARY 1973, LODGED AT THE REGISTRY ON 5 FEBRUARY 1973, THE BERLIN FINANZGERICHT REFERRED TO THE COURT FOR A PRELIMINARY RULING THE QUESTION OF THE INTERPRETATION AND VALIDITY OF VARIOUS PROVISIONS CONTAINED IN REGULATION ( EEC ) NO 974/71 OF THE COUNCIL OF 12 MAY 1971, CONCERNING CERTAIN MEASURES OF CONJUNCTURAL POLICY TO BE TAKEN IN AGRICULTURE FOLLOWING THE TEMPORARY WIDENING OF THE MARGINS OF FLUCTUATION FOR THE CURRENCIES OF CERTAIN MEMBER STATES ( OJ L 106, 12 . 5 . 1971, P . 1 ), AND, IF APPROPRIATE, OF SOME OF THE PROVISIONS OF REGULATIONS ( EEC ) NOS 1013/71, 1014/71 OF THE COMMISSION ( OJ L 110, 18 . 5 . 1971, P . 8 AND 10 ), AND 548/72 ( OJ L 66, 18 . 3 . 1972, P . 1 ) IMPLEMENTING THE ABOVE REGULATION NO 974/71 .
2 ON 24 MARCH 1972, THE PLAINTIFF IN THE MAIN ACTION REQUESTED CUSTOMS CLEARANCE FOR CHEESE OF SHEEP' S MILK WHICH IT HAD IMPORTED FROM BULGARIA INTO THE FEDERAL REPUBLIC OF GERMANY, AND WAS CHARGED, UNDER REGULATION NO 974/71, COMPENSATORY AMOUNTS AT THE RATE OF 45.50 DM PER 100 KG, A RATE CALCULATED, FOR PRODUCTS UNDER TARIFF HEADING 04.04 OF THE COMMON CUSTOMS TARIFF, BY REFERENCE TO THE ANNEXES TO REGULATION NO 548/72 OF 16 MARCH 1972 FIXING THE COMPENSATORY AMOUNTS APPLICABLE AT THE TIME OF THE CLEARANCE IN QUESTION . THE PLAINTIFF BROUGHT AN ACTION BEFORE THE FINANZGERICHT DISPUTING THE AMOUNTS CHARGED, CLAIMING THAT THE SYSTEM OF COMPENSATORY AMOUNTS INTRODUCED BY REGULATION NO 974/71 WAS INCOMPATIBLE WITH THE TREATY . ANALYSIS OF THE COMPENSATORY AMOUNTS SYSTEM
3 AS A RESULT OF THE INCREASING INFLUX OF FOREIGN CURRENCY AND SHORT-TERM SPECULATIVE CAPITAL IN THE EARLY MONTHS OF 1971 AND THE EFFECTS PRODUCED BY THIS IN SOME MEMBER STATES, ESPECIALLY THE FEDERAL REPUBLIC OF GERMANY AND THE NETHERLANDS, THE COUNCIL INDICATED IN A RESOLUTION OF 9 MAY 1971 ( OJ C 58, 10 . 6 . 1971, P . 1 ) THAT IT WAS PREPARED TO ENVISAGE " THAT, IN CERTAIN CASES, THESE COUNTRIES MIGHT, FOR A LIMITED PERIOD, WIDEN THE MARGINS OF FLUCTUATION FOR THE EXCHANGE RATES OF THEIR CURRENCIES IN RELATION TO THEIR ( PRESENT ) PARITIES ". IN THE SAME RESOLUTION, THE COUNCIL EMPHASIZED THAT UNDER NORMAL CIRCUMSTANCES A SYSTEM OF FLOATING CURRENCIES SUCH AS THIS WOULD NOT BE COMPATIBLE WITH THE PROPER FUNCTIONING OF THE COMMON MARKET, AND, " SO AS TO AVOID RESORT TO UNILATERAL MEASURES ", DECIDED THAT IT WAS DESIRABLE FOR IT TO ADOPT " IMMEDIATELY, IN ACCORDANCE WITH ARTICLE 103 OF THE TREATY ... " APPROPRIATE MEASURES IN THE AGRICULTURAL SECTOR .
4 THE ORGANIZATION OF AGRICULTURAL MARKETS IS DESIGNED, INTER ALIA, TO ENSURE A FAIR STANDARD OF LIVING FOR THE AGRICULTURAL COMMUNITY AND TO STABILIZE MARKETS, IN PARTICULAR BY MEANS OF A STABLE PRICE SYSTEM WHEREBY TARGET PRICES, THRESHOLD PRICES AND INTERVENTION PRICES ARE DETERMINED ON THE BASIS OF FIXED PARITIES FOR THE CURRENCIES OF THE VARIOUS MEMBER STATES BY REFERENCE TO A SINGLE UNIT OF ACCOUNT . SINCE IT WAS NOT POSSIBLE TO FIX NEW PARITIES WHILE THE DM AND THE GUILDER WERE FLOATING, THE PRICE LEVELS CONSIDERED TO BE APPROPRIATE CONTINUED TO BE DETERMINED AND CALCULATED, FOR PRODUCTS WITH FIXED INTERVENTION PRICES AND FOR PRODUCTS WHOSE PRICE DEPENDS ON THE PRICE OF THE FIRST - MENTIONED PRODUCTS, ON THE BASIS OF THE PARITIES PREVIOUSLY DECLARED TO THE IMF, EVEN FOR THE NETHERLANDS AND THE FEDERAL REPUBLIC . BUT WHILE THESE PRICES THUS REMAINED UNALTERED IN THEORY, THEY WERE IN FACT REDUCED - PARTICULARLY WHEN THEY WERE EXPRESSED IN DM - IN PROPORTION TO THE EFFECTS OF THE DE FACTO REVALUATION OF THIS CURRENCY, CAUSING DISTURBANCES IN AGRICULTURAL TRADE DETRIMENTAL TO PRODUCERS AND CAPABLE OF DISRUPTING THE INTERVENTION SYSTEM ESTABLISHED BY COMMUNITY LEGISLATION .
5 AS A RESULT, THE COUNCIL DECIDED THAT THE MEASURES TO BE TAKEN IMMEDIATELY SHOULD CONSIST IN THE INTRODUCTION OF A SYSTEM OF COMPENSATORY AMOUNTS WHICH THESE MEMBER STATES WOULD BE AUTHORIZED TO CHARGE ON IMPORTS AND GRANT ON EXPORTS IN THEIR TRADE BOTH WITH OTHER MEMBER STATES AND WITH THIRD COUNTRIES, WITH A VIEW TO OFFSETTING THE EFFECTS OF THE MONETARY MEASURES ON THE PRICE OF BASIC PRODUCTS FOR WHICH INTERVENTION PRICES HAVE BEEN IMPOSED, AND FOR AGRICULTURAL PRODUCTS WHOSE PRICE DEPENDS ON THE PRICE OF THOSE PRODUCTS .
6 UNDER ARTICLE 2 OF REGULATION NO 974/71, THE COMPENSATORY AMOUNTS ARE OBTAINED BY APPLYING TO THE PRICES OF AGRICULTURAL PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS THE PERCENTAGE DIFFERENCE BETWEEN THE OFFICIAL PARITY AND THE TRUE PARITY OF THE NATIONAL CURRENCY IN RELATION TO THE U . S . DOLLAR . FOR THE OTHER PRODUCTS COVERED BY REGULATION NO 974/71, THE COMPENSATORY AMOUNTS ARE EQUAL TO THE INCIDENCE, ON THE PRICE OF THE PRODUCTS CONCERNED, OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICE OF THE PRODUCT ON WHICH THEY DEPEND . MOREOVER, ACCORDING TO THE LAST SENTENCE OF ARTICLE 1 OF THE REGULATION, COMPENSATORY AMOUNTS CAN BE CHARGED ONLY WHERE THE MONETARY MEASURES WOULD LEAD TO DISTURBANCES IN TRADE IN THE AGRICULTURAL PRODUCTS MENTIONED . IT IS FOR THE COMMISSION, AFTER OBTAINING AN OPINION FROM THE MANAGEMENT COMMITTEES, TO DECIDE WHETHER OR NOT SUCH A SITUATION EXISTS . FINALLY, ARTICLE 8 OF THE ABOVE REGULATION STATES THAT THE LATTER SHALL CEASE TO BE APPLICABLE AS SOON AS ALL THE MEMBER STATES CONCERNED AGAIN APPLY THE INTERNATIONAL RULES ON MARGINS OF EXCHANGE-RATE FLUCTUATION AROUND OFFICIAL PARITY .
7 OWING TO THE DETERIORATION OF THE MONETARY SITUATION, PARTICULARLY THE SUSPENSION OF THE CONVERTIBILITY OF THE DOLLAR ON 15 AUGUST 1971 AND THE SUBSEQUENT FLOATING OF BELGO-LUXEMBOURG ECONOMIC UNION CURRENCIES FROM 23 AUGUST 1971, THE SYSTEM OF COMPENSATORY AMOUNTS WAS EXTENDED TO A WIDER RANGE OF PRODUCTS AND TO THE EXPORTS AND IMPORTS OF THOSE MEMBER STATES . AT THE WASHINGTON CONFERENCE ON 18 DECEMBER 1971 THE RATES OF EXCHANGE WERE CLOSELY RE-DEFINED IN RELATION TO THE DOLLAR IN THE FORM OF CENTRAL RATES, THE MARGINS OF FLUCTUATION REMAINING, HOWEVER, WIDER THAN THOSE AUTHORIZED UNDER THE BRETTON WOODS AGREEMENTS . NEVERTHELESS, SINCE NO OFFICIAL CHANGE OF PARITIES FOLLOWED THESE DECISIONS AND THE MONETARY SYSTEM WAS STILL IN DISARRAY, THE COMPENSATORY AMOUNTS SCHEME WAS EXTENDED TO FRANCE AND ITALY AND TO ALL THE AGRICULTURAL PRODUCTS MENTIONED IN ARTICLE 1 OF REGULATION NO 974/71 .
8 SUBSEQUENT TO THE FACTS GIVING RISE TO THE ACTION, THE COUNCIL, BY REGULATION NO 2746/72 OF DECEMBER 1972, MADE THE COMPENSATORY-AMOUNTS SCHEME COMPULSORY AND " INCORPORATED " IT INTO THE FRAMEWORK OF THE COMMON AGRICULTURAL POLICY, GIVING ARTICLES 28, 43 AND 235 OF THE TREATY AS ITS BASIS .
9 THE CIRCUMSTANCES OUTLINED ABOVE AND THEIR CONTINUING DEVELOPMENT MUST BE BORNE IN MIND IN CONSIDERING THE INTERVENTION MADE BY THE COUNCIL AND THE COMMISSION . I - QUESTION ONE
10 THE FIRST QUESTION ASKS WHETHER REGULATION NO 974/71 IS VALID INSOFAR AS IT PROVIDES FOR THE COMPUTATION AND CHARGING OF COMPENSATORY AMOUNTS ON IMPORTS OF MILK PRODUCTS FROM BULGARIA . ( A ) THE LEGAL BASIS OF REGULATION ( EEC ) NO 974/71
11 THIS QUESTION CONCERNS, FIRST, WHETHER THE VALIDITY OF THE ABOVE REGULATION COULD BE AFFECTED BY THE FACT THAT IT IS BASED ON ARTICLE 103 OF THE TREATY, WHICH DOES NOT TOUCH ON THE COMMON AGRICULTURAL POLICY, THE LATTER BEING GOVERNED BY THE SPECIFIC PROVISIONS OF ARTICLES 38 TO 47 OF THE TREATY, AND THAT IN ANY CASE, THE SAID ARTICLE 103 AUTHORIZES ONLY THE ADOPTION OF CONJUNCTURAL MEASURES, WHICH THE DISPUTED MEASURES ARE NOT .
12 ARTICLE 40 OF THE TREATY STATES THAT MEMBER STATES SHALL BRING THE COMMON AGRICULTURAL POLICY INTO FORCE BY THE END OF THE TRANSITIONAL PERIOD AT THE LATEST AND THAT, IN ORDER TO ATTAIN THE OBJECTIVES SET OUT IN ARTICLE 39, A COMMON ORGANIZATION OF AGRICULTURAL MARKETS IS TO BE ESTABLISHED . THE SAME ARTICLE PROVIDES THAT THIS COMMON ORGANIZATION MAY INCLUDE ANY MEASURES REQUIRED AND IN PARTICULAR REGULATION OF PRICES, AIDS FOR PRODUCTION AND MARKETING, STORAGE AND CARRY-OVER ARRANGEMENTS AND COMMON MACHINERY FOR STABILIZING IMPORTS AND EXPORTS . BY VIRTUE OF THE THIRD PARAGRAPH OF ARTICLE 43 ( 2 ), THE COUNCIL SHALL ( ON A PROPOSAL FROM THE COMMISSION AND AFTER CONSULTING THE ASSEMBLY, ACTING, AFTER THE END OF THE SECOND STAGE OF THE TRANSITIONAL PERIOD, BY A QUALIFIED MAJORITY ) MAKE REGULATIONS, ISSUE DIRECTIVES, OR TAKE DECISIONS IN THIS SPHERE . IT IS EVIDENT FROM THESE PROVISIONS THAT THE POWERS CONFERRED FOR IMPLEMENTING THE COMMON AGRICULTURAL POLICY DO NOT RELATE MERELY TO POSSIBLE STRUCTURAL MEASURES BUT EXTEND EQUALLY TO ANY IMMEDIATE SHORT-TERM ECONOMIC INTERVENTION REQUIRED IN THIS AREA OF PRODUCTION, AND THAT THE COUNCIL IS EMPOWERED TO RESORT TO THEM IN ACCORDANCE WITH THE DECISION-MAKING PROCEDURES THERE SET OUT .
13 ON THE OTHER HAND, ARTICLE 103 REFERS TO MEMBER STATES' CONJUNCTURAL POLICIES, WHICH THEY MUST REGARD AS A MATTER OF COMMON CONCERN . CONSEQUENTLY IT DOES NOT RELATE TO THOSE AREAS ALREADY SUBJECT TO COMMON RULES, AS IS THE ORGANIZATION OF AGRICULTURAL MARKETS . THE REAL OBJECT ENVISAGED BY ARTICLE 103 IS THE COORDINATION OF MEMBER STATES' CONJUNCTURAL POLICIES, AND, ACCORDING TO THE TERMS OF PARAGRAPH 2 OF THAT ARTICLE, THE ADOPTION OF COMMON MEASURES APPROPRIATE TO THE SITUATION .
14 THE FLOATING OF THE EXCHANGE RATES FOR THE GERMAN AND DUTCH CURRENCIES, DEEMED ESSENTIAL IF THE WAVE OF SPECULATIVE CAPITAL INTO THE FEDERAL REPUBLIC AND THE NETHERLANDS WAS TO BE CHECKED, IMPERILLED THE UNITY OF THE COMMON MARKET AND MADE MEASURES DESIGNED TO SAFEGUARD THE MACHINERY AND OBJECTIVES OF THE COMMON AGRICULTURAL POLICY IMPERATIVE . THE INTRODUCTION OF COMPENSATORY AMOUNTS WAS NOT INTENDED TO PROVIDE EXTRA PROTECTION, BUT TO MAINTAIN UNIFORM PRICES, THE FOUNDATION OF THE PRESENT ORGANIZATION OF THE MARKETS, DESPITE THE TEMPORARY DEPARTURE FROM FIXED PARITIES, THUS PREVENTING THE COLLAPSE OF THE INTERVENTION PRICE SYSTEM AND PRESERVING THE NORMAL FLOW OF TRADE IN AGRICULTURAL PRODUCTS BOTH WITHIN THE COMMUNITY AND WITH THIRD COUNTRIES . THESE MEASURES, INTENDED TO COMPENSATE TEMPORARILY FOR THE HARMFUL EFFECTS OF NATIONAL MONETARY MEASURES, SO THAT THE PROCESS OF ECONOMIC INTEGRATION MAY MEANWHILE CONTINUE ITS PROGRESS, ARE OF AN ESSENTIALLY TRANSITORY NATURE AND WOULD NORMALLY HAVE HAD TO BE ADOPTED BY VIRTUE OF THE POWERS CONFERRED ON THE COUNCIL BY ARTICLES 40 AND 43 AND IN ACCORDANCE WITH THE PROCEDURES SET OUT THEREIN, IN PARTICULAR AFTER CONSULTING THE ASSEMBLY .
15 HOWEVER, OWING TO THE TIME NEEDED TO GIVE EFFECT TO THE PROCEDURES LAID DOWN IN ARTICLES 40 AND 43, A CERTAIN AMOUNT OF TRADE MIGHT THEN HAVE PASSED FREE OF THE REGULATIONS, AND THIS COULD JEOPARDISE THE RELEVANT COMMON ORGANIZATIONS OF THE MARKET . THERE BEING NO ADEQUATE PROVISION IN THE COMMON AGRICULTURAL POLICY FOR ADOPTION OF THE URGENT MEASURES NECESSARY TO COUNTERACT THE MONETARY SITUATION DESCRIBED ABOVE, IT IS REASONABLE TO SUPPOSE THAT THE COUNCIL WAS JUSTIFIED IN MAKING INTERIM USE OF THE POWERS CONFERRED ON IT BY ARTICLE 103 OF THE TREATY . CONSEQUENTLY - WHILE THE SUDDENNESS OF THE EVENTS WITH WHICH THE COUNCIL WAS FACED, THE URGENCY OF THE MEASURES TO BE ADOPTED, THE SERIOUSNESS OF THE SITUATION AND THE FACT THAT THESE MEASURES WERE ADOPTED IN AN AREA INTIMATELY CONNECTED WITH THE MONETARY POLICIES OF MEMBER STATES ( THE EFFECTS OF WHICH THEY HAD PARTIALLY TO OFFSET ) ALL PROMPTED THE COUNCIL TO HAVE RECOURSE TO ARTICLE 103 - REGULATION NO 2746/72 SHOWS THAT THIS STATE OF AFFAIRS WAS ONLY A TEMPORARY ONE, SINCE THE LEGAL BASIS FOR THE MEASURE WAS EVENTUALLY FOUND IN OTHER PROVISIONS OF THE TREATY . ( B ) THE FORM IN WHICH THE DISPUTED MEASURE WAS ADOPTED
16 THE NEXT QUESTION IS WHETHER REGULATION NO 974/71 IS INVALID ON THE GROUND THAT ARTICLE 103 OF THE TREATY, NOTABLY IN PARAGRAPH 3, AUTHORIZES THE ADOPTION OF MEASURES ONLY IN THE FORM OF A DIRECTIVE OR DECISION, NOT IN THE FORM OF A REGULATION . IT IS ALLEGED THAT SUCH AN INTERPRETATION IS BORNE OUT BY THE WORDING OF ARTICLE 103 AND IS JUSTIFIED IN VIEW OF THE FACT THAT IN THE REALM OF CONJUNCTURAL POLICY NO MORE THAN A COORDINATING ROLE HAS BEEN GIVEN TO THE INSTITUTIONS .
17 ALTHOUGH BY ARTICLE 103 ( 1 ) MEMBER STATES ARE BOUND TO REGARD THEIR CONJUNCTURAL POLICIES AS A MATTER OF COMMON CONCERN, THE WORDING DOES NOT PRECLUDE COMMUNITY INSTITUTIONS FROM HAVING POWER TO LAY DOWN THEMSELVES, WITHOUT PREJUDICE TO OTHER PROCEDURES SET OUT IN THE TREATY, CONJUNCTURAL MEASURES ON MATTERS WITHIN THE SPHERES OF THEIR COMPETENCE . ON THE CONTRARY, ARTICLE 103 ( 2 ), BY DECLARING THAT THE COUNCIL MAY, " ACTING UNANIMOUSLY ... DECIDE UPON THE MEASURES APPROPRIATE TO THE SITUATION ", CONFERS ON THAT BODY - SUBJECT TO THE CONDITION REFERRED TO ABOVE - THE POWERS NECESSARY TO ADOPT, IN PRINCIPLE, ANY CONJUNCTURAL MEASURES WHICH MAY APPEAR TO BE NEEDED IN ORDER TO SAFEGUARD THE OBJECTIVES OF THE TREATY . WITHOUT SOME SUCH FACULTY, THE NATURAL CONCOMITANT OF ANY KIND OF ECONOMIC ADMINISTRATION, THE INSTITUTIONS OF THE COMMUNITY WOULD FIND IT IMPOSSIBLE TO ACCOMPLISH THE TASKS ENTRUSTED TO THEM IN THIS FIELD .
18 THE PHRASE " MEASURES APPROPRIATE TO THE SITUATION " IN ARTICLE 103 ( 2 ) MEANS THAT AS REGARDS FORM, TOO, THE COUNCIL MAY CHOOSE WHICHEVER SEEMS BEST SUITED TO THE CASE IN HAND . SUBJECT TO THE REQUIREMENT OF A UNANIMOUS DECISION, ARTICLE 103 ( 2 ) REFERS TO THE GENERAL PROCEDURES WHEREBY THE COUNCIL MAY EXERCISE ITS POWERS, DESCRIBED IN ARTICLES 145, 155 AND 189, INCLUDING THEREFORE, ITS RIGHT TO DELEGATE TO THE COMMISSION THE IMPLEMENTATION OF REGULATIONS IT HAS LAID DOWN . ARTICLE 103 ( 3 ) DIFFERS FROM ARTICLE 103 ( 2 ) IN THAT, AS THE USE OF THE PHRASE " WHERE REQUIRED " SHOWS, IT ENVISAGES THE POSSIBILITY THAT THE COUNCIL MIGHT NOT BE ABLE TO REACH THE UNANIMITY REQUIRED TO CARRY INTO EFFECT THE RULES FOR THE APPLICATION OF THE CONJUNCTURAL MEASURES DECIDED ON . IN THAT CIRCUMSTANCE ONLY, THESE RULES WOULD BE BINDING ON MEMBER STATES AS FAR AS THEY CONCERNED THE RESULT TO BE OBTAINED, BUT WOULD HAVE TO LEAVE TO THE NATIONAL AUTHORITIES THE CHOICE OF FORM AND METHOD . ( C ) THE QUESTION OF PROPORTIONALITY
19 THE NEXT QUESTION ASKED IS WHETHER REGULATION NO 974/71 CONFLICTS WITH THE PRINCIPLE OF PROPORTIONALITY AND WITH ARTICLES 39, 40 AND 110 OF THE TREATY AND ARTICLE 19 OF REGULATION NO 804/68 OF THE COUNCIL OF 27 JUNE 1968 CREATING A COMMON ORGANIZATION OF THE MARKET IN MILK AND MILK PRODUCTS ( OJ L 148, 28 . 6 . 1968, P . 13 ), ON THE GROUNDS THAT THE COMPENSATORY AMOUNTS ARE NOT BASED ON ANY PROFIT MADE BY THE IMPORTER ON THE RATE OF EXCHANGE, BUT SOLELY ON THE RELATIONSHIP BETWEEN THE OFFICIAL PARITY OF THE DM COMPARED WITH THE DOLLAR AND ITS TRUE PARITY .
20 ACCORDING TO THE FINAL PARAGRAPH OF THE PREAMBLE TO REGULATION NO 974/71, THE AMOUNTS ADOPTED SHOULD BE LIMITED TO THOSE STRICTLY NECESSARY TO COMPENSATE THE INCIDENCE OF THE MONETARY MEASURES . IT IS NOT DISPUTED THAT, OWING TO THE FACT THAT A SINGLE OVERALL CRITERION WAS SELECTED, IMPORTS INTO GERMANY FROM COUNTRIES WHOSE CURRENCIES ARE FLUCTUATING IN RELATION TO THE DM TO AN EXTENT DIFFERENT FROM THAT OF THE DOLLAR, ARE AFFECTED BY COMPENSATORY AMOUNTS WHICH DO NOT ALWAYS CORRESPOND PRECISELY TO THE EFFECTS IN THE MONETARY FIELD OF THE REVALUATION OF THE DM . THE PLAINTIFF IN THE MAIN ACTION CLAIMS THAT THE COUNCIL OUGHT EITHER TO HAVE VARIED THE COMPENSATORY AMOUNTS IN ACCORDANCE WITH THE RATES OF EXCHANGE AGAINST THE DOLLAR OF THE DIFFERENT CURRENCIES OF COUNTRIES IMPORTING FROM OR EXPORTING TO THE FEDERAL REPUBLIC AND THE NETHERLANDS, OR TO HAVE COMPUTED THEM ON THE BASIS OF A SET WEIGHTED AVERAGE DEPENDENT ON THE VOLUME OF TRADE .
21 FACED WITH THE NECESSITY OF DRAWING UP MEASURES OF IMMEDIATE EFFECT AND APPLICABLE TO ALL IMPORTS AND EXPORTS OF THE PRODUCTS CONCERNED, IN A SITUATION DEVELOPING CONSTANTLY AND MORE OR LESS UNPREDICTABLY, THE COUNCIL CONTRIVED TO MAKE AN OVERALL ASSESSMENT OF THE ADVANTAGES AND DISADVANTAGES OF THE SYSTEM TO BE INTRODUCED . IT WAS ABLE TO CONCLUDE THAT TO VARY THE COMPENSATORY AMOUNTS ACCORDING TO THE GEOGRAPHICAL ORIGIN OF THE PRODUCTS WOULD HAVE PREJUDICED THE PRACTICABILITY OF THE SCHEME, LARGELY BECAUSE OF THE MULTIPLICITY OF INDIVIDUAL SITUATIONS, SUCH AS THOSE WHICH MIGHT ARISE FROM THE MULTIPLE-RATE SYSTEMS EMPLOYED IN SOME COUNTRIES, OR FROM THE SPECIAL CHARACTERISTICS OF STATE-TRADING COUNTRIES . A SYSTEM OF THIS KIND MIGHT IN ANY CASE HAVE TENDED TO PROVOKE DIVERSIONS OF TRADE, WHICH WOULD BE DIFFICULT TO REGULATE OTHERWISE THAN BY MEANS OF SYSTEMS INVOLVING CERTIFICATES OF ORIGIN OR BY CONTROLLING THE MOVEMENTS OF GOODS IN SUCH A WAY AS TO INHIBIT THEIR FREE CIRCULATION . FURTHERMORE, THE CHOICE OF CONTRACTUAL CURRENCY MADE BY THE PARTIES COULD HAVE RENDERED THE SYSTEM NUGATORY . BY DETERMINING THE SIZE OF THE COMPENSATORY AMOUNTS, FOR EACH MEMBER STATE AUTHORIZED TO INTRODUCE THEM, ON THE BASIS OF A COMPARISON BETWEEN THE OFFICIAL AND THE TRUE PARITY OF THE NATIONAL CURRENCY AS AGAINST THE DOLLAR, THE COUNCIL SOUGHT TO TAKE INTO ACCOUNT THE FACT THAT ON IMPORTS MADE INTO MEMBER STATES, A SIGNIFICANT PROPORTION OF THE DEALING IS EXPRESSED IN DOLLARS, AND THAT FOR EXPORTS, PARTICULARLY TO THIRD COUNTRIES, THIS WAS SO AT THE TIME IN THE LARGE MAJORITY OF CASES .
22 MOREOVER, A WEIGHTED SYSTEM, BECAUSE OF ITS FLAT-RATE NATURE, WOULD BRING THE SAME DISADVANTAGES AS THOSE CRITICIZED, YET WITHOUT SUPPLYING THE COMPLETE PROTECTION DEEMED NECESSARY IN RELATION TO THE WORLD' S LEADING EXPORTER OF AGRICULTURAL PRODUCE . SINCE ONE OF THE AIMS OF THE CONJUNCTURAL MEASURES PLANNED WAS TO PROVIDE A SHORT-TERM REMEDY FOR THE CONSEQUENCES OF THE REVALUATION OF THE DM WHICH MIGHT PLACE IN JEOPARDY THE GOAL OF A FAIR STANDARD OF LIVING FOR THE AGRICULTURAL COMMUNITY, IT WAS REASONABLE TO CONTEMPLATE THE NECESSITY OF ALLOWING A MAXIMUM CORRECTIVE FACTOR . IN EXERCISING THEIR POWERS, THE INSTITUTIONS MUST ENSURE THAT THE AMOUNTS WHICH COMMERCIAL OPERATORS ARE CHARGED ARE NO GREATER THAN IS REQUIRED TO ACHIEVE THE AIM WHICH THE AUTHORITIES ARE TO ACCOMPLISH; HOWEVER, IT DOES NOT NECESSARILY FOLLOW THAT THAT OBLIGATION MUST BE MEASURED IN RELATION TO THE INDIVIDUAL SITUATION OF ANY ONE PARTICULAR GROUP OF OPERATORS . GIVEN THE MULTIPLICITY AND COMPLEXITY OF ECONOMIC CIRCUMSTANCES, SUCH AN EVALUATION WOULD NOT ONLY BE IMPOSSIBLE TO ACHIEVE, BUT WOULD ALSO CREATE PERPETUAL UNCERTAINTY IN THE LAW . AN OVERALL ASSESSMENT OF THE ADVANTAGES AND DISADVANTAGES OF THE MEASURES CONTEMPLATED WAS JUSTIFIED, IN THIS CASE, BY THE EXCEPTIONALLY PRESSING NEED FOR PRACTICABILITY IN ECONOMIC MEASURES WHICH ARE DESIGNED TO EXERT AN IMMEDIATE CORRECTIVE INFLUENCE; AND THIS NEED HAD TO BE TAKEN INTO ACCOUNT IN BALANCING THE OPPOSING INTERESTS .
23 THE COURT IS NOT SATISFIED, THEN, THAT IN WEIGHING UP THE ADVANTAGES AND DISADVANTAGES OF THE SYSTEM LINKING COMPENSATORY AMOUNTS TO THE RELATIONSHIP WITH THE DOLLAR OF THE NATIONAL CURRENCY OF EACH MEMBER STATE CONCERNED, AND IN OPTING FOR THE SYSTEM IN FORCE, THE COUNCIL IMPOSED BURDENS ON TRADERS WHICH WERE MANIFESTLY OUT OF PROPORTION TO THE OBJECT IN VIEW . ( D ) CONTRAVENTION OF ARTICLES 39 ( 1 ) ( C ), 40 ( 3 ) ( SECOND PARAGRAPH ) AND 110 OF THE TREATY
24 ARTICLE 39 OF THE TREATY SETS OUT VARIOUS OBJECTIVES OF THE COMMON AGRICULTURAL POLICY . IN PURSUING THESE OBJECTIVES, THE COMMUNITY INSTITUTIONS MUST SECURE THE PERMANENT HARMONIZATION MADE NECESSARY BY ANY CONFLICTS BETWEEN THESE AIMS TAKEN INDIVIDUALLY AND, WHERE NECESSARY, ALLOW ANY ONE OF THEM TEMPORARY PRIORITY IN ORDER TO SATISFY THE DEMANDS OF THE ECONOMIC FACTORS OR CONDITIONS IN VIEW OF WHICH THEIR DECISIONS ARE MADE . IF, OWING TO DEVELOPMENTS IN THE MONETARY SITUATION, PREFERENCE HAPPENS TO BE GIVEN TO THE INTERESTS OF THE AGRICULTURAL COMMUNITY, THE COUNCIL DOES NOT IN SO DOING CONTRAVENE ARTICLE 39 . MOREOVER, IT HAS NOT BEEN ESTABLISHED THAT THE MEASURES QUESTIONED GAVE RISE TO PRICES WHICH WOULD APPEAR OBVIOUSLY UNREASONABLE ON SELLING TO CONSUMERS .
25 ACCORDING TO THE SECOND PARAGRAPH OF ARTICLE 40 ( 3 ) OF THE TREATY, THE COMMON ORGANIZATION OF THE MARKET SHALL BE LIMITED TO PURSUIT OF THE OBJECTIVES SET OUT IN ARTICLE 39 AND SHALL EXCLUDE ANY DISCRIMINATION BETWEEN PRODUCERS OR CONSUMERS WITHIN THE COMMUNITY . IT APPEARS FROM THE REFERENCE TO THIS PROVISION MADE BY THE NATIONAL COURT THAT THE LATTER CONTEMPLATED THE POSSIBILITY THAT DISCRIMINATION HAD OCCURRED BETWEEN PRODUCERS AND CONSUMERS TO THE DETRIMENT OF THE CONSUMERS .
26 ARTICLE 40 REFERS ONLY TO DISCRIMINATION BETWEEN PRODUCERS OR BETWEEN CONSUMERS, WHILE THE BALANCE TO BE HELD BETWEEN THE CONFLICTING INTERESTS OF THESE TWO GROUPS IS DEALT WITH IN ARTICLE 39 . THE COUNCIL DID NOT, THEREFORE, CONTRAVENE ARTICLE 40 BY ADOPTING THE MEASURES IN DISPUTE .
27 LASTLY, THESE MEASURES DO NOT CONTRAVENE ARTICLE 110 EITHER, SINCE IT HAS NOT BEEN ESTABLISHED, NOR HAS THERE BEEN ANY OFFER TO DO SO, THAT BY ADOPTING SUCH MEASURES THE COUNCIL OVERSTEPPED THE BOUNDARIES OF THE WIDE POWERS OF ASSESSMENT CONFERRED ON IT BY THIS PROVISION IN MATTERS OF COMMERCIAL POLICY . ( E ) CONTRAVENTION OF ARTICLE 19 OF REGULATION ( EEC ) NO 804/68
28 ARTICLE 19 OF REGULATION NO 804/68 PROHIBITS, IN TRADE WITH THIRD COUNTRIES, THE LEVYING OF ANY CUSTOMS DUTY OR CHARGE HAVING EQUIVALENT EFFECT ON PRODUCTS SUBJECT TO THE COMMON ORGANIZATION OF THE MARKET IN MILK AND MILK PRODUCTS .
29 ALTHOUGH THE COMPENSATORY AMOUNTS DO CONSTITUTE A PARTITIONING OF THE MARKET, HERE THEY HAVE A CORRECTIVE INFLUENCE ON THE VARIATIONS IN FLUCTUATING EXCHANGE RATES WHICH, IN A SYSTEM OF MARKET ORGANIZATION FOR AGRICULTURAL PRODUCTS BASED ON UNIFORM PRICES, MIGHT CAUSE DISTURBANCES IN TRADE IN THESE PRODUCTS . DIVERSION OF TRADE CAUSED SOLELY BY THE MONETARY SITUATION CAN BE CONSIDERED MORE DAMAGING TO THE COMMON INTEREST, BEARING IN MIND THE AIMS OF THE COMMON AGRICULTURAL POLICY, THAN THE DISADVANTAGES OF THE MEASURES IN DISPUTE . CONSEQUENTLY THESE COMPENSATORY AMOUNTS ARE CONDUCIVE TO THE MAINTENANCE OF A NORMAL FLOW OF TRADE UNDER THE EXCEPTIONAL CIRCUMSTANCES CREATED TEMPORARILY BY THE MONETARY SITUATION . THEY ARE ALSO INTENDED TO PREVENT THE DISRUPTION IN THE MEMBER STATE CONCERNED OF THE INTERVENTION SYSTEM SET UP UNDER COMMUNITY REGULATIONS . FURTHERMORE, THESE ARE NOT LEVIES INTRODUCED BY SOME MEMBER STATES UNILATERALLY, BUT COMMUNITY MEASURES WHICH, BEARING IN MIND THE EXCEPTIONAL CIRCUMSTANCES OF THE TIME, ARE PERMISSIBLE WITHIN THE FRAMEWORK OF THE COMMON AGRICULTURAL POLICY .
30 THE COUNCIL DID NOT CONTRAVENE ARTICLE 19 OF REGULATION NO 804/68 IN ADOPTING THEM . EXAMINATION OF THE FIRST QUESTION, THEREFORE, HAS NOT REVEALED ANY ELEMENTS CAPABLE OF AFFECTING THE VALIDITY OF THE REGULATION IN DISPUTE . II - QUESTION TWO
31 THE SECOND QUESTION ASKS WHETHER THE DEFENDANT IN THE MAIN ACTION WAS STILL ENTITLED, ON THE PROPER APPLICATION OF COMMUNITY LAW, TO IMPOSE, ON 24 MARCH 1972, THE DATE OF THE APPLICATION FOR CUSTOMS CLEARANCE, A COUNTERVAILING CHARGE ON TRADE WITH THIRD COUNTRIES . THE POINT RAISED BY THIS QUESTION IS WHETHER OR NOT THE CONDITIONS IMPOSED BY ARTICLE 8 OF REGULATION NO 974/71 FOR ITS CEASING TO BE APPLICABLE HAD BEEN MET ON THAT DATE BY REASON OF THE FACT THAT, AFTER THE WASHINGTON AGREEMENT OF 18 DECEMBER 1971, MEMBER STATES HAD DECIDED NOT TO FLOAT THEIR CURRENCIES, WHILE ACCEPTING A MARGIN OF FLUCTUATION FOR EXCHANGE AROUND A RATE, KNOWN AS A CENTRAL RATE, GREATER THAN THAT PERMITTED BY THE BRETTON WOODS AGREEMENTS .
32 ARTICLE 8 OF REGULATION NO 974/71 PROVIDES THAT IT SHALL CEASE TO BE APPLICABLE AS SOON AS ALL THE MEMBER STATES CONCERNED AGAIN APPLY THE INTERNATIONAL RULES ON MARGINS OF EXCHANGE-RATE FLUCTUATION AROUND OFFICIAL PARITY . THIS PROVISION ENVISAGES THE ABOLITION OF COMPENSATORY AMOUNTS AS SOON AS ALL THE MEMBER STATES HAVE DECIDED TO OBSERVE AGAIN THE ORIGINAL PARITIES, OR NEW PARITIES DECLARED TO THE I . M . F .
33 THE AGREEMENT OF 18 DECEMBER 1971 DID NOT MEET THOSE REQUIREMENTS . FAR FROM RESTORING FIXED PARITIES, THE COUNTRIES CONCERNED MERELY AGREED THAT THEY WOULD MAINTAIN, AS FAR AS POSSIBLE, CENTRAL RATES, WHICH WERE SUBJECT TO ALTERATION; THE AGREEMENT ALSO ALLOWED MARGINS OF FLUCTUATION AROUND THESE RATES OF 2.25 PER CENT ABOVE AND BELOW, SOMETIMES EQUALLING THE VERY FLUCTUATIONS WHICH HAD PROMPTED THE INTRODUCTION OF COMPENSATORY AMOUNTS . MOREOVER, EVEN AFTER THE AGREEMENT MENTIONED, THE TREND TOWARDS THE REVALUATION OF CERTAIN CURRENCIES IN THE COMMUNITY CONTINUED WITHIN THE SCOPE OF THE WIDENED MARGINS OF FLUCTUATION; AT THE TIME OF THE DISPUTED IMPORTS, THE DIFFERENCE BETWEEN THE DM AND ITS OLD OFFICIAL PARITY HAD REACHED 13 PER CENT, WHERE IT REMAINED UNTIL THE DEVALUATION OF THE DOLLAR ON 8 MAY 1972 . FINALLY, THE FACT THAT IT WAS CERTAIN THAT THE MEMBER STATES CONCERNED WOULD NOT GO BACK TO THE OLD PARITIES AGAINST THE DOLLAR WAS NOT RELEVANT, SINCE THE INTERNATIONAL RULES MENTIONED IN ARTICLE 8 DO NOT PROVIDE FOR ONE SET PARITY BUT FOR A SYSTEM OF FIXED PARITIES . III - QUESTION THREE
34 THE THIRD QUESTION ASKS WHETHER ARTICLE 2 ( 2 ) OF REGULATION NO 974/71 FORMS A SUFFICIENTLY PRECISE BASIS OF ASSESSMENT FOR COMPENSATORY AMOUNTS AND WHETHER THE RATE OF 45.50 DM CHARGED UNDER REGULATION NO 548/72 OF THE COMMISSION ON THE IMPORTS IN ISSUE RESULTS FROM THE APPLICATION OF THE PRINCIPLES CONTAINED IN THAT ARTICLE .
35 UNDER ARTICLE 2 ( 2 ) OF REGULATION NO 974/71, COMPENSATORY AMOUNTS FOR PRODUCTS WHOSE PRICE DEPENDS ON THAT OF PRODUCTS COVERED BY INTERVENTION ARRANGEMENTS SHALL BE EQUAL TO " THE INCIDENCE ", ON THE PRICES OF THE PRODUCT CONCERNED, OF THE APPLICATION OF THE COMPENSATORY AMOUNT TO THE PRICES OF THE PRODUCT SUBJECT TO INTERVENTION . THE PLAINTIFF IN THE MAIN ACTION CONTENDS THAT THIS EXPLANATION OF THE PRINCIPLES FOR CALCULATING COMPENSATORY AMOUNTS IS TOO VAGUE AND INFRINGES ONE OF THE GENERAL RULES OF LAW, THAT LAWS AUTHORIZING THE COLLECTION OF TAXATION MUST BE SUFFICIENTLY SPECIFIC .
36 THE TERM " INCIDENCE " IN ARTICLE 2 PUTS THE COMMISSION UNDER A DUTY TO CONSIDER THE REPERCUSSION, ON THE PRICES OF THE PRODUCT NOT SUSPECT TO INTERVENTION, OF THE APPLICATION OF COMPENSATORY AMOUNTS TO THE INGREDIENTS COMMON TO IT AND TO THE PRODUCT SUBJECT TO INTERVENTION ON WHICH IT DEPENDS .
37 ARTICLE 5 OF REGULATION NO 804/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE COMMON ORGANIZATION OF THE MARKET IN MILK AND MILK PRODUCTS PROVIDES FOR THE ANNUAL FIXING OF AN INTERVENTION PRICE FOR BUTTER AND FOR SKIMMED-MILK POWDER . SINCE THERE IS NO INTERVENTION PRICE FOR FRESH MILK, THE PRICE OF OTHER MILK PRODUCTS, INCLUDING CHEESE, MUST THEREFORE DEPEND ON THE PRICE OF BUTTER AND OF SKIMMED-MILK POWDER . FOR THIS REASON, IN APPLYING ARTICLE 2 ( 2 ) OF REGULATION NO 974/71 TO CHEESE, THE COMMISSION FIRST CALCULATED THE INCIDENCE OF THE COMPENSATORY AMOUNTS, APPLIED TO THE PRICE OF BUTTER AND SKIMMED-MILK POWDER, ON FAT AND SKIMMED MILK, WHICH ARE TWO OF THE INGREDIENTS OF THOSE PRODUCTS . ONCE IT HAD THUS MEASURED THE EFFECT OF THE COUNTERVAILING CHARGE ON THE UNIT PRICE OF FAT AND SKIMMED MILK, THE COMMISSION WAS ABLE TO CARRY OVER THAT EFFECT AND APPLY IT TO THE FRESH MILK FROM WHICH CHEESE IS MADE . THIS DEDUCTIVE METHOD REQUIRES ONLY A LIMITED MARGIN OF DISCRETION ON THE PART OF THE COMMISSION, AS IS SHOWN BY THE CALCULATIONS IT SUBMITTED WHICH ARRIVE AT THE FIGURE OF 45.50 DM .
38 THE PLAINTIFF IN THE MAIN ACTION ALSO COMPLAINS THAT NO COMPENSATORY AMOUNT COULD BE CHARGED ON THE PRODUCT IN DISPUTE BECAUSE, CONTRARY TO THE REQUIREMENT IN ARTICLE 1 ( 2 ) ( B ) OF REGULATION NO 974/71, THE PRICE OF CHEESE DOES NOT DEPEND ON THE PRICE OF A PRODUCT SUBJECT TO INTERVENTION, BUT IS TO A GREAT EXTENT DETERMINED BY THE MARKET .
39 THE PRICES FOR CHEESE, ON THE ONE HAND, AND FOR BUTTER AND SKIMMED-MILK POWDER ON THE OTHER HAND, ARE LINKED, NOTABLY AS REGARDS THRESHOLD PRICES, BY REGULATIONS OF THE COUNCIL NOS 804/68 OF 27 JUNE 1968 AND 823/68 OF 28 JUNE 1968 DETERMINING THE GROUPS OF PRODUCTS AND THE SPECIAL PROVISIONS FOR CALCULATING LEVIES ON MILK AND MILK PRODUCTS . THE FACT THAT IN REGULATION NO 804/68 THE FREE-AT-FRONTIER PRICES FOR CHEESE ARE FIXED ON THE BASIS OF THE MOST FAVOURABLE BUYING CONDITIONS ON THE INTERNATIONAL MARKET, DOES NOT PRECLUDE THE COUNCIL FROM BEING ENTITLED, IN CALCULATING COMPENSATORY AMOUNTS, TO SELECT A LESS COMPLEX METHOD, BEARING IN MIND THE TEMPORARY NATURE OF THE SYSTEM .
40 FINALLY, THE PLAINTIFF IN THE MAIN ACTION CLAIMS THAT TO CHARGE COMPENSATORY AMOUNTS ON IMPORTS OF CHEESE OF SHEEP' S MILK FROM BULGARIA CONTRAVENES THE LAST SENTENCE OF ARTICLE 1 OF REGULATION NO 974/71, SINCE THE FLOATING OF THE GERMAN AND DUTCH CURRENCIES DID NOT GIVE RISE TO ANY DISTURBANCES IN THE CHEESE TRADE .
41 THE NECESSARILY GENERAL AND FLAT-RATE NATURE OF THE COMPENSATORY AMOUNTS SYSTEM AND THE NEED TO ADAPT QUICKLY TO CONSTANT FLUCTUATIONS IN CURRENCY JUSTIFY THE COMMISSION' S HAVING CONSIDERED DISTURBANCES ONLY IN RELATION TO GROUPS OF PRODUCTS, IRRESPECTIVE OF ORIGIN . A DISTINCTION BASED ON ORIGIN WOULD IN ANY CASE HAVE CREATED A RISK OF TRADE DEFLECTION .
42 HENCE, EXAMINATION OF QUESTION 3 HAS NOT REVEALED ANY ELEMENTS CAPABLE OF AFFECTING THE VALIDITY OF REGULATIONS NOS 974/71 AND 548/72 OF THE COMMISSION .