Re Imports of Cyprus Potatoes: E.C. Commission v. Ireland (Case 288/83)

Before the Court of Justice of the European Communities

ECJ

(Presiding, Lord Mackenzie Stuart C.J.; Bosco, Due and Kakouris PP.C.; Pescatore, Koopmans, Everling, Bahlmann and Galmot JJ.) M. Marco Darmon Advocate General.

11 June 1985

Application under Article 169 EEC.

Imports. Quantitative restrictions.

Article 30 EEC prohibits, in trade between member-States, all public bans on imports and all other restrictive measures in the form of import licences or other similar procedures. [20]

Constitutional law. Community law and national law.

The E.C. Commission cannot, even by approving expressly or by implication a measure adopted unilaterally by a member-State and whether or not there has been prior consultation, confer on such State the right to maintain in force provisions which are objectively contrary to Community law. [22]

Agriculture. Common organisation of markets. Inter-State trade.

Agricultural products (in casu potatoes) in respect of which a common organisation of the market has not been established are subject to the general rules of the Common Market with regard to import, export and movement within the Community. A member-State may not, therefore, rely on the special rules of Article 39 et seq. to derogate from those rules in respect of such a product. [23]

Imports. Free circulation.

Articles 9, 10 and 30 EECapply without distinction to products originating in the member-States and to those coming from non-member countries and put into 'free circulation' within the Community. Once the latter have been duly imported into the Community they are definitively and wholly assimilated to products originating in member-States. [24] Criel (Donckerwolcke) v. Procureur de la Republique (41/76) : [1976] E.C.R. 1921, [1977] 2 C.M.L.R. 535, reaffirmed.

Imports. Free circulation. Tariff quotas.

*153 Once goods forming part of a Community tariff or import quota (even if the quota is more particularly intended for the market of a particular member-State) have been duly imported into the relevant member-State, they are assimilated to the products which are in free circulation in that State. They must therefore be freely importable into the other member-States without hindrance, unless an express provision to the contrary has been adopted by a competent institution of the Community. [25]

Imports. Public policy.

The public policy exception in Article 36 EEC to the free movement of goods may not be relied on by a member-State to protect its economic interests. [28] Re Pork Products: EEC Commission v. Italy (7/61): [1961] E.C.R. 317, [1962] C.M.L.R. 39, and Duphar BV v. the State (Netherlands) (238/82): [1984] E.C.R. 523, [1985] 1 C.M.L.R. 256, reaffirmed. The Court held thatby requiring licences for the import of potatoes originating in non-member countries (in casu Cyprus) and which were in free circulation in another member-State (the United Kingdom) and by prohibiting such imports in the absence of a licence, Ireland was in breach of Article 30 EEC.

Representation

Richard Wainwright, Legal Adviser to the E.C. Commission, and Julian Currall, of the Legal Service of the E.C. Commission, for the applicant Commission. James O'Reilly, of the Irish Bar, with him in the written proceedings Louis J. Dockery, Chief State Solicitor, for the defendant Government.

The following cases were referred to by the Court in its judgment: 1. Criel (Donckerwolcke) v. Procureur de la Republique (41/76) , 15 December 1976: [1976] E.C.R. 1921, [1977] 2 C.M.L.R. 535. Gaz:41/76 2. Re the Export of Potatoes: E.C. Commission v. France (68/76), 16 March 1977: [1977] E.C.R. 515, [1977] 2 C.M.L.R. 161. Gaz:68/76 3. Re Import of Potatoes: E.C. Commission v. United Kingdom (231/78), 29 March 1979: [1979] E.C.R. 1447, [1979] 2 C.M.L.R. 427. Gaz:231/78 4. Re Restriction on Imports of Lamb: E.C. Commission v. France (232/78), 25 September 1979: [1979] E.C.R. 2729, [1980] 1 C.M.L.R. 418. Gaz:232/78 5. Charmasson v. Minister for Economic Affairs and Finance (48/74), 10 December 1974: [1974] E.C.R. 1383, [1975] 2 C.M.L.R. 208. Gaz:48/74 6. Re Quantitative Restrictions on Imports of Pork Products into Italy: EEC Commission v. Italian Government (7/61), *154 19 December 1961 : [1961] E.C.R. 317, [1962] C.M.L.R. 39. Gaz:7/61 7. Duphar BV v. the State of the Netherlands (Minister of Health and the Environment) (232/82), 7 February 1984: [1984] E.C.R. 523, [1985] 1 C.M.L.R. 256. Gaz:238/82

The following further case was referred to by the Advocate General: 8. C.J. Meijer BV v. Department of Trade (118/78), 29 March 1979: [1979] E.C.R. 1387, [1979] 2 C.M.L.R. 398. Gaz:118/78

TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE

Opinion of the Advocate General (M. Marco Darmon)

1

The action brought before the Court under Article 169 of the EEC Treaty by the Commission for a declaration that Ireland has failed to fulfil its obligations under the Treaty concerns the Community rules applicable to the circulation of new potatoes imported into the Community from Cyprus. Under an Association Agreement concluded in 1973 between the Republic of Cyprus and the European Community [FN1] the Republic of Cyprus benefited initially from annual tariff quotas, free of customs duties, in respect of imports of new potatoes into the United Kingdom, the annual tariff quota taking into account 'the traditional United Kingdom imports from Cyprus'. Later, potatoes originating in Cyprus and imported into the Community were admitted at reduced rates of duty under the Common Customs Tariff, by virtue of a supplementary Protocol laying down certain provisions relating to trade in agricultural products between the European Economic Community and the Republic of Cyprus. [FN2]

FN1 [1973] O.J. L133/2.

FN2 [1978] O.J. L172/3 and L172/11.

It appears from the documents in the case that until the entry into force on 1 March 1980 of the Community plant health system, the consequences of that Association Agreement had not been felt on the Irish potato market because of the national rules applicable in the matter until then. According to the Irish Government, large quantities of new potatoes were imported into Ireland from the summer of 1980 onwards. Since, according to the Irish Government, the national market has always been self-sufficient, if not slightly in *155 surplus, the effect of the imports was to destabilise prices and to pose a serious threat to the income of the country's small potato growers. It was in that context that an order of the Minister for Agriculture entitled the Potatoes (Regulation of Import) Order (hereinafter referred to as 'the Order') entered into force in Ireland on 6 March 1981 and established a system of licences for the importation of potatoes into Ireland. Articles 3 and 4 of the Order read as follows: 3. This Order applies to potatoes which are raw, unprocessed and are produced in any country or territory other than a country which is a member- State of the European Economic Community. 4. The importation of potatoes to which this Order applies is hereby prohibited unless (a) such potatoes are imported under and in accordance with a licence granted by the Minister for the purposes of this Order, and (b) such licence is at the time of importation delivered to the proper officer of Customs and Excise. Following a complaint received in April 1982 from an Irish importer who had been refused an import licence for new potatoes originating in Cyprus, the Commission decided to initiate the procedure laid down in Article 169 of the EEC Treaty on the ground that Ireland was applying that provision not merely to potatoes directly imported into Ireland from non-member countries but also to those which had been in free circulation in another member-State before being imported into Ireland. On 1 August 1983, it formulated a reasoned opinion requesting Ireland to abolish the requirement that a licence be obtained for the importation of potatoes in free circulation in another member-State. In the statement of the reasons for its opinion, it reminded the Irish Government that it should apply to the Commission for an authorisation under Article 115 of the EEC Treaty to exclude potatoes originating in non-member countries from Community treatment and that the Commission would then verify whether the conditions for the grant of the authorisation were fulfilled. By a letter in reply to the reasoned opinion, dated 25 October 1983, Ireland maintained its standpoint, namely that the sole purpose of the Order was to give effect in Ireland to the true intention of the Community provisions. It also applied for retroactive authorisation under Article 115 in respect of the matters complained of.

2

Although it is clear from the context outlined above that the Order was promulgated for the purpose of alleviating the harmful effects on the Irish market of imports of potatoes originating in Cyprus, it is however above all from the point of view of the principles of Community law that the case must be considered. *156 It is clear just from reading Articles 3 and 4 of the Irish Ministerial Order of 6 March 1981that only potatoes produced in the member-States of the European Economic Community are excluded from the requirement to obtain a licence. The Commission rightly argues that the Order could be applied to all potatoes produced in non-member countries. No distinction is made between products directly imported from a non-member country and those which have already been imported into another member-State of the Community and in respect of which any customs duties or charges having equivalent effect which are payable have been levied in that State. A common organisation of the market has not yet been established for potatoes, notwithstanding the work carried out towards that end since at least 1976 (see Written Question no. 1253/80 by Mr. Blaney to the Commission of the European Communities and the answer given by Mr. Gundelach on behalf of the Commission [FN3]). Consequently, in the absence of specific rules, potatoes are subject to the general rules of the Treaty regarding trade in goods. The Court has thus decided that ... Article 38(1) provides that the Common Market shall extend to agriculture and trade in agricultural products, while paragraph (2) states that, save as otherwise provided in Articles 39 to 46, the rules laid down for the establishment of the Common Market shall apply to agricultural products.

FN3 [1980] O.J. C335/15.

Accordingly, following the end of the transitional period, the provisions of Articles 39 to 46 cannot be relied upon in justification of a unilateral derogation from the requirements of Article 34 of the Treaty, even in respect of an agricultural product for which no common organisation of the market has yet been established. [FN4]

FN4 Judgment of 16 March 1977 in Case 68/76 E.C. Commission v. France [1977] E.C.R. 515, [1977] 2 C.M.L.R. 161 At Paras. [20]-[21], Emphasis Supplied.

Articles 9 and 10 of the Treaty are therefore applicable to this case. Article 9 deals with the abolition of obstacles of a customs nature to imports and exports between the various member-States of the Community, provides for the adoption of a common customs tariff for trade with non-member countries, and extends the application of Articles 12 to 17and 30 to 37 of the Treaty to products which are in free circulation in member-States. Article 10(1) gives the following definition of products in free circulation: 1. Products coming from a third country shall be considered to be in free circulation in a member-State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that member-State, and if they have not benefited from a total or partial drawback of such duties or charges.

*157 In its judgment in Case 41/76 (judgment of 15 December 1976, Donckerwolcke v. Procureur De La Republique, [FN5] the Court had occasion to refer expressly to that definition.

FN5 [1976] E.C.R. 1921, [1977] 2 C.M.L.R. 535 Particularly Paras. [14]-[18].

The customs duties and charges referred to in Article 10of the Treaty are either those contained in the Common Customs Tariff as regards relations with non- member countries having no special relationship with the Community, or those which are the result of an agreement reducing the rates provided for in the Common Customs Tariff, such as the Agreement concluded with Cyprus in 1973, as later supplemented (Agreement and Supplementary Protocol of 1978, cited above; Council Regulation 3746/81of 21 December 1981 laying down the arrangements applicable to trade with Cyprus beyond 31 December 1981; Council Regulation 671/82of 22 March 1982 opening, allocating and providing for the administration of a Community tariff quota for new potatoes ... originating in Cyprus (1982); Council Regulation 1226/83 of 16 May 1983 replacing the aforementioned Regulation 671/82). The Court has deduced from the total and definitive assimilation to products originating in the member-States of products which are in 'free circulation' that: The result of this assimilation is that the provisions of Article 30 concerning the elimination of quantitative restrictions and all measures having equivalent effect are applicable without distinction to products originating in the Community and to those which were put into free circulation in any one of the member-States, irrespective of the actual origin of these products. Measures having an effect equivalent to quantitative restrictions prohibited by the Treaty include all trading rules enacted by member-States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade. This provision precludes the application to intra-Community trade of a national provision which requires, even purely as a formality, import licences or any other similar procedure." (judgment in Case 41/76, Donckerwolcke [FN6]; see also judgments in Cases 48/74 Charmasson v. Minister For Economic Affairs And Finance [FN7]; 68/76 E.C. Commission v. France; 118/78 Meijer Bv v. Department Of Trade [FN8]; 231/78 E.C. Commission v. United Kingdom [FN9]; 232/78 E.C. Commission v. France [FN10]).

FN6 At paras. [18]-[20].

FN7 [1974] E.C.R. 1383, [1975] 2 C.M.L.R. 208.

FN8 [1979] E.C.R. 1387, [1979] 2 C.M.L.R. 398.

FN9 [1979] E.C.R. 1447, [1979] 2 C.M.L.R. 427.

FN10 [1979] E.C.R. 2729, [1980] 1 C.M.L.R. 418.

However, in Case 41/76, [FN11] cited above, the Court pointed out that:

The fact that at the expiry of the transitional period the Community commercial policy was not fully achieved is one of a number of circumstances calculated to maintain in being between the member-States differences in commercial policy capable of bringing about *158 deflections of trade or of causing economic difficulties in certain member-States,

FN11 At paras. [27] and [28].

and that Article 115 allows difficulties of this kind to be avoided ... The Court made it clear however that that Article gives the Commission the power to intervene inasmuch as it may authorise member-States to take protective measures particularly in the form of derogation from the principle of free circulation within the Community of products which originated in third countries and which were put into free circulation in one of the member-States. The Court took care to emphasise that as full responsibility in the matter of commercial policy was transferred to the Community by means of Article 113(1) measures of commercial policy of a national character are only permissible after the end of the transitional period by virtue of specific authorisation by the Community. [FN12]

FN12 Donckerwolcke (41/76) At Para. [32].

The Court thus clearly affirmed: that products in free circulation must be assimilated to products originating in the member-States; that the provisions of Article 30of the Treaty were consequently applicable to them; that, however, Article 115 of the Treaty allowed the harmful effects of that assimilation to be corrected; finally, that such a correction might only be made with the authorisation of the Community, which was a necessary condition for any national intervention measure. Consequently, it was only under Article 115, and, moreover, in accordance with the procedure laid down for the application of the provisions of that Article in the Commission Decision of 20 December 1979 'on surveillance and protective measures which member-States may be authorised to take in respect of imports of certain products originating in third countries and put into free circulation in another member-State', [FN13] that Ireland could seek to have limits placed on free circulation within the Community of new potatoes.

FN13 [1980] O.J. L16/14.

Let us apply those principles to this case. It must be stated that since there is no express exclusion, the Order also applies to new potatoes originating in a non- member country and in free circulation in another member-State. To that extent, and irrespective of the way in which it may have been applied, that provision, introduced unilaterally by Ireland without complying with the Community procedure laid down in Article 115, breaches the principle established by Article 30. *159 It is true, as the Irish Government contends and as the Commission confirms, that before it was promulgated the Order had been the subject of informal consultations with the Commission, which did not immediately raise any objection after the text was communicated to it on 15 July 1981. It is also true that in 1982 licences were refused in respect of 38,000 tonnes of potatoes originating in Cyprus and that it is consequently unlikely that all of that quantity had been in free circulation. That is not important. What is at issue here is the application of a principle prohibiting hindrances, even if only potential ones, to the free circulation within the Community of products lawfully imported into a member-State. The temporary silence of the Commission cannot have had the effect of depriving it of the right to exercise its powers or of conferring on Ireland a right which it was entitled to exercise only with Community authorisation.

3

Since this case concerns the application of a principle, I could end my observations on that subject at this point. None the less, I prefer not to leave without an answer Ireland's argument to the effect that it was entitled to promulgate the order in so far as the Republic of Cyprus had not respected the undertaking it gave to the Commission by letter of 18 March 1981, in which it stated that ... as regards the tariff reduction laid down in the Protocol between the Community and Cyprus for the importation of new potatoes originating in Cyprus, the Government of Cyprus undertakes to channel its exports to the Community to its traditional market, the United Kingdom. Such an undertaking, which mentions the member-State of primary destination, could not deprive the products concerned of their status as products admitted into 'free circulation'and consequently could not reduce the scope of the principles set out above. As a result, whatever may have been done on the basis of that undertaking, the scope of the Court's decision in the Donckerwolcke case remains undiminished.

4

It now remains to consider the submission that the Order was justified on grounds of public policy. Relying on the provisions of Article 36 of the EEC Treaty, the Irish Government contended that 'the provisions of Articles 30 to 34 do not preclude prohibitions or restrictions on imports which are justified on the grounds of public policy'. Protection of the *160 national market raised a problem of public policy both because of the serious adverse effects which could have resulted from the flooding of the market by imported potatoes and because of the unwillingness or inability of the Commission to promote a harmonious development of economic activities between member-States in accordance with the objectives of the Common Agricultural Policy (Article 39 of the Treaty) or, more generally, in conformity with the task of the European Economic Community (Article 2of the Treaty). According to the Irish Government, since the Commission had failed to take measures within the framework of the Association Agreement with Cyprus which would guarantee effective protection of the markets of each of the member- States, the Order was absolutely necessary for the attainment of the objectives specified in Article 39 of the Treaty. That submission must be rejected. As the Commission points out, citing the judgment of the Court in Case 7/61 EEC Commission v. Italy, [FN14] Article 36 ... is directed to eventualities of a non-economic kind which are not liable to prejudice the principles laid down by Articles 30 to 34, as the last sentence of the Article confirms.

FN14 [1961] E.C.R. 317, Especially at P. 329, [1962] C.M.L.R. 39 , Especially at P. 52.

That last sentence provides that 'such prohibitions or restrictions', based inter aliaon public policy, shall not ... constitute a means of arbitrary discrimination or a disguised restriction on trade between member-States. However, Ireland essentially intended to protect a large number of its farmers whose incomes largely depended on the sale of their own potato crops. It was thus clearly a case of protecting interests of an economic kind. In such circumstances, as is affirmed in the abovementioned decisions of the Court (see in particular the judgment in E.C. Commission v. France (Case 232/78)), [FN15] it is for the Community institutions to take action to harmonise the national markets or, as an alternative, to introduce the necessary corrective mechanisms. For that reason the Commission, under the terms of Article 115 of the Treaty may authorise 'member-States to take the necessary protective measures, the conditions and details of which it shall determine'.

FN15 At para. [8].

Faced with the threat, which may have been real, of a disturbance on the national potato market, it was for the Irish Government to apply to the Commission for an authorisation under Article 115. It failed to submit a request which complied with the established procedure and which was accompanied by the necessary supporting *161 evidence and contends that such a request would have been useless in the sense that the time required by such a procedure would have been too long to ward off an imminent danger. However, according to Article 3(6) of the aforementioned decision adopted for the purpose of implementing Article 115, the Commission must decide on the request of a member-State within five working days of its receipt. The fact that it could not to any useful purpose have submitted a request to the Commission for an authorisation to take the protective measures which it considered necessary cannot confer on Ireland the benefit of a sort of presumption that a necessity existed which justified the contested provision.

5

Consequently, I would conclude that the Court should: 1. Declare that, by requiring licences in respect of the importation of potatoes originating in non-member countries and in free circulation in another member- State, Ireland has failed to fulfil its obligations under Article 30 of the EEC Treaty; 2. Order Ireland to pay the costs.

JUDGMENT

[1] By application lodged at the Court Registry on 23 December 1983, the Commission of the European Communities brought an action before the Court under Article 169 of the EEC Treaty for a declaration that, by requiring licences in respect of the import of potatoes originating in third countries and in free circulation in another member-State and by prohibiting imports of such potatoes in the absence of such a licence, Ireland has failed to fulfil its obligations under Article 30 of the EEC Treaty.

Bakground to the dispute

[2] On 5 March 1981 Ireland brought into force an order regulating imports of potatoes, the Potatoes (Regulation of Import) Order 1981, according to which importation of potatoes 'produced in any country or territory other than a country which is a member-State of the European Economic Community' is prohibited unless such potatoes are imported under a licence granted by the Minister for Agriculture. [3] It appears from the documents before the Court that Ireland has been traditionally self-sufficient in potatoes and that because of plant-health requirements there were in fact no imports until the Community plant-health system came into operation on 1 May 1980. In the following period the Irish market was affected by the importation of large quantities of potatoes coming from the Community of which a significant part was represented by new *162 potatoes originating in Cyprus and imported into the United Kingdom under a tariff quota at a reduced rate of duty which had been granted to that country in the framework of agreements entered into with the Community. It was to deal with those difficulties that, on 5 March 1981, the Irish authorities, after oral consultation with the Commission, adopted the order at issue, a copy of which was later sent to the Commission. [4] Having received a complaint in April 1982 from an Irish trader who had been refused a licence for the importation of a quantity of potatoes originating in Cyprus and in free circulation in the United Kingdom, the Commission addressed a letter to the Irish Government on 2 June 1982 drawing its attention to the incompatibility of the Order with Community law inasmuch as its effect was to restrict the importation into Ireland of potatoes which were in free circulation in the Community. [5] By a letter dated 13 October 1982, the Commission invited Ireland, pursuant to Article 169 of the Treaty, to submit its observations. In its reply of 22 February 1983 the Irish Government defended the measure which had been adopted. Since the Commission did not accept that defence, it delivered, on 1 August 1983, the reasoned opinion provided for in Article 169. In that opinion, the Commission stated that it had no objection to the Irish measure in so far as it concerned direct imports from non-member countries but it considered it incompatible with the rules of Community law in so far as it applied to products originating in non-member countries but in free circulation in another member- State. In its reasoned opinion the Commission also stated that it was open to the Irish Government to apply to it for an authorisation under Article 115 of the EEC Treaty to exclude potatoes originating in a non-member country from Community treatment and that it would then be in a position to decide whether the conditions for the grant of such an authorisation were fulfilled. [6] In its reply to the reasoned opinion, dated 25 October 1983, Ireland once again defended the measure which had been adopted and applied to the Commission for retroactive authorisation under Article 115 in respect of the incidents complained of. The Commission did not grant that application and it brought the present action on 23 December 1983.

The arguments of the parties

[7] The arguments of the parties, as they appear from the documents relating to the procedure prior to the bringing of the action and from the pleadings in the action, may be summarised as follows. [8] The Commission considers that the Potatoes Order 1981 infringes Articles 9, 10 and 30 of the EEC Treaty inasmuch as it only exempts from the obligation to obtain an import licence *163 potatoes originating in other member-States and thereby restricts the importation of potatoes originating in non-member countries but in free circulation in those States in accordance with the provisions of Community law relating to tariffs and trade. The Commission refers in this connection to the judgment of 15 December 1976 (Case 41/76, Donckerwolcke v. Procureur de la Repulique [FN16]) in which the Court defined the scope of the concept of free circulation.

FN16 [1976] E.C.R. 1921, [1977] 2 C.M.L.R. 535.

[9] The Commission emphasises that the Irish Order is far from being purely formal because it expressly prohibits the importation of potatoes otherwise than under a licence, because it imposes substantial penalties for offences against it and because it applies permanently to all potatoes regardless of their origin. [10] Ireland advances the following arguments in defence of the contested measure: (a) The Commission was made aware of the proposal to adopt the measure in question, gave its 'informal'approval during an oral exchange of views and did not raise any objections when the contested order was notified to it on 15 April 1981; (b) The Commission has not proved that the Order was applied to potatoes which were properly in free circulation in a member-State. In reality, the potatoes were imported directly from a non-member country but routed through the territory of another member-State; (c) With regard to the substance of the problem, Ireland refers to the uncertainties inherent in the Donckerwolcke judgment with regard to the scope of the rules concerning free movement of goods originating in non-member countries. Since this case is concerned with an agricultural product, the special rules of Articles 39 to 46of the Treaty prevail over the general rules relating to free movement of goods with the result that the principles relating to free movement are not applicable; (d) In particular, Ireland draws attention to the restriction inherent in the tariff quota accorded to Cyprus for the importation of new potatoes at reduced rates of duty. That quota was intended to be used exclusively for importation into the United Kingdom. The Commission failed to take the necessary measures to prevent potatoes imported within the framework of that quota being re-exported to Ireland. No action was taken on the application for such measures under Article 115 which was made following delivery of the Commission's reasoned opinion. Ireland cannot therefore be criticised for having taken unilaterally the measures necessary to protect its markets. *164 (e) Finally, Ireland contends that the measure adopted is justified by Article 36, which allows member-States to introduce restrictions on imports which are justified on grounds of public policy. The importation of potatoes into Ireland would have had such disastrous consequences for the disposal of the Irish potato crop that protection of the domestic market became a matter of public policy, particularly since the consequences of that situation were likely to continue indefinitely. [11] For its part, the Commission denies that it ever approved the Irish measure, even informally. Prior consultations cannot take the place of consent. Moreover, it was not obliged to respond at once to the notice which was given to it of the contested measure. The Commission also emphasises that its application to the Court is concerned with the principle of the Potatoes Order 1981 and not with particular cases of importation. It does not therefore need to produce evidence concerning such importations. [12] With regard to the relationship between the rules governing free movement laid down in Articles 9 and 10 of the Treaty, on the one hand, and the provisions of Article 39 et seq. on the Common Agricultural Policy, on the other, the Commission draws attention to the fact that potatoes are not subject to a common organisation of the market and that they therefore come within the ambit of the general rules of the Treaty relating to the customs union and to the free movement of goods. It refers to the Court's established case law on that subject, particularly the judgments of 16 March 1977 (Case 68/76, E.C. Commission v. France [FN17]--potatoes), 29 March 1979 (Case 231/78, E.C. Commission v. United Kingdom [FN18]--potatoes) and 25 September 1979 (Case 232/78, E.C. Commission v. France [FN19]--mutton and lamb).

FN17 [1977] E.C.R. 515, [1977] 2 C.M.L.R. 161.

FN18 [1979] E.C.R. 1447, [1979] 2 C.M.L.R. 427.

FN19 [1979] E.C.R. 2729, [1980] 1 C.M.L.R. 418.

[13] With regard in particular to the importation of potatoes originating in Cyprus, the Commission maintains that they took place under Community quotas, negotiated by the Community and allocated by Council regulations (Regulation 3746/81 laying down the arrangements applicable to trade with Cyprus; Regulation 671/82opening, allocating and providing for the administration of a Community quota for potatoes originating in Cyprus: Regulation 1226/83 on the same subject). [14] With regard to the application of Article 115, the Commission points out that Ireland never submitted to it a request accompanied by all the information necessary to enable it to consider whether the conditions laid down in that Article had been fulfilled, having regard to Commission Decision 80/47 of 20 December 1979 on *165 surveillance and protective measures which member- States may be authorised to take in respect of imports of certain products originating in third countries and put into free circulation in another member- State. [FN20] In any event, the Commission considers that a derogation under Article 115 cannot be granted retroactively.

FN20 [1980] O.J. L16/14.

[15] Finally, the Commission considers that the exception of public policy contained in Article 36 of the Treaty may never be relied upon for the purpose of protecting the economic interests of a member-State.

The substance of the case

[16] The circumstances of the case require, in the first place, that the subject- matter and scope of the dispute be clearly defined. [17] The letter inviting Ireland to submit its observations and the reasoned opinion show that, subject to the requirements resulting from any commercial agreements concluded by the Community, the Commission did not raise any objection to the Potatoes Order 1981 so long as it was applied only to direct imports from non-member countries. Since the Commission has not indicated the reasons for its position on that point, that question, which has not been argued between the parties, must be reserved. [18] Ireland's arguments alleging that the order at issue was put into effect because of imports of new potatoes into the United Kingdom under a tariff quota accorded to Cyprus must also be placed in their proper perspective. Even if such imports were the cause of the measure at issue, it is none the less true that the Order itself is of a permanent and general nature inasmuch as it deals with imports of potatoes regardless of their origin other than those originating in the member-States, at all times of the year, and thus regardless of whether the potatoes in question are new potatoes or belong to another category. [19] It follows from the foregoing that the order at issue must be considered in terms of its principle, having regard to the requirements of Community law, but only with regard to potatoes originating in non-member countries and put into free circulation in the Community. The question of direct imports must therefore be reserved. It is within the framework thus defined that the Irish Government's submissions must be examined. [20] Under Article 30 of the Treaty 'quantitative restrictions on imports', that is to say all prohibitions of imports and all other restrictive measures in the form of import licences or other similar procedures, are, without prejudice to the exceptions laid down in the Treaty itself, to be prohibited between member- States. [21] Ireland none the less advances a series of arguments, outlined above, to justify the requirement under the order at issue *166 that an import licence be obtained for potatoes produced in any country or territory other than the member- States. [22] Ireland's argument based on prior consultations with the Commission and the Commission's failure to act in the initial period after notification of the Order cannot be accepted. Even if Ireland may have obtained the impression that its measure gave rise to no objection, the Commission cannot, even by approving expressly or by implication a measure adopted unilaterally by a member-State, confer on that State the right to maintain provisions which are objectively contrary to Community law. [23] With regard to the argument based on the uncertainty which is said to surround the scope of the provisions of the Treaty relating to free movement of products imported from non-member countries, it should be observed in the first place that according to a consistent line of decisions of the Court, beginning with the judgment of 10 December 1971 (Case 48/74, Charmasson v. Minister for Economic Affairs and Finance [FN21]) and confirmed by the judgments in the Potatoes (France ) case (68/76), the Potatoes (UK) case (231/78) and the Lamb (France) case (232/78) , cited above, agricultural products in respect of which a common organisation of the market has not been established are subject to the general rules of the Common Market with regard to importation, exportation and movement within the Community. A member-State may not therefore rely on the special rules of Article 39 et seq., the purpose of which is to define the basis of a common agricultural policy, in order to establish or to maintain on its territory provisions derogating from the principles of the Common Market in respect of a product not subject to a common organisation of the market.

FN21 [1971] E.C.R. 1383, [1975] 2 C.M.L.R. 208.

[24] In accordance with those principles, laid down in Articles 9, 10 and 30 of the Treaty, the measures intended to free intra-Community trade are applicable, as the Court pointed out in its judgment in Donckerwolcke, without distinction to products originating in the member-States and to those coming from non- member countries which have been put into 'free circulation' in the Community. Once the latter products have been duly imported into the Community in accordance with the provisions in force relating to tariffs and trade, they are, as the Court emphasised, 'definitively and wholly assimilated to products originating in member-States' . [FN22]

FN22 Donckerwolcke At Para. [17].

[25] Those considerations also apply to products imported into the Community under a Community quota even if that quota is more particularly intended for the market of a specific member-State either by virtue of an agreement or of a later allocation. *167 Once goods forming part of such a quota have been duly imported into the member-State of destination, they are assimilated to the products which are in free circulation in that State and it must therefore be possible for them to be imported without hindrance into the other member-States, except where an express provision to the contrary has been adopted by a competent institution of the Community. [26] With regard to the possible application of Article 115 of the Treaty to a situation of this kind, the Commission pointed out that it was not possible to consider that question because Ireland had not requested such an application at the appropriate time. Ireland's argument to the effect that the measure adopted is substantially equivalent to a derogation of the kind which might be granted under Article 115 must be rejected, particularly since a member-State may not act unilaterally in that respect. [27] It follows from the foregoing that Ireland was not entitled to adopt unilaterally a protective measure defined in terms which enable it to limit the importation of potatoes originating in non-member countries and in free circulation in the Community. It is of little importance whether that measure concerns products subject to the general rules laid down in the applicable provisions relating to tariffs and trade or products subject to special rules under an agreement, such as the tariff quota accorded to the Republic of Cyprus. The Irish measure thus constitutes, as such, a quantitative restriction prohibited by Article 30 of the Treaty. [28] Finally, Ireland may not rely, in support of the measure at issue, on the exception of public policy provided for in Article 36 of the Treaty. That provision, as the Court has consistently pointed out in its decisions, may not be relied on by a member-State to protect its economic interests (see judgment in Case 7/61 , EEC Commission v. Italy, [FN23] and most recently, judgment in Case 238/82, Duphar v. Netherlands [FN24]).

FN23 [1961] E.C.R. 317, [1962] C.M.L.R. 39.

FN24 [1984] E.C.R. 523, [1985] 1 C.M.L.R. 256, At Para. [23].

[29] It follows from the foregoing that the alleged breach of a Treaty obligation has been proved and that it must therefore be found that, by requiring licences in respect of the import of potatoes originating in non-member countries and in free circulation in another member-State and by prohibiting imports of such potatoes in the absence of such a licence, Ireland has failed to fulfil its obligations under Article 30 of the EEC Treaty.

Costs

[30] Article 69(2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs. Since Ireland has failed in its submissions, it must be ordered to pay the costs.

Order

*168 On those grounds, THE COURT hereby: 1. Declares that, by requiring licences in respect of the import of potatoes originating in non-member countries and in free circulation in another member- State and by prohibiting imports of such potatoes in the absence of such a licence, Ireland has failed to fulfil its obligations under Article 30 of the EEC Treaty. 2. Orders Ireland to pay the costs. (c) Sweet & Maxwell Limited

[1985] 3 C.M.L.R. 152

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