delivered on 26 September 1985 (*1)

Mr President,

Members of the Court,

1.In compliance with an undertaking given in 1962 within the framework of the General Agreement on Tariffs and Trade (GATT) the Community opens each year a tariff quota for frozen beef and veal originating in nonmember countries. Since 1980 the quota has been fixed at 50000 tonnes. The quota for 1983 was opened and allocated by Council Regulation (EEC) No 3225/82 of 23 November 1982 (Official Journal L 340, p. 4). Imports are subject to a single Common Customs Tariff duty of 20% but are exempt from the levy fixed by the common market organization.

The aforesaid quota is apportioned between the Member States. According to Article 2 of the regulation, the quota share allocated in Italy in respect of 1983 was divided into two parts, one of 9658 tonnes and the other of 4757 tonnes.

Within the framework of that quota share and with regard to the criteria laid down by the Decreto Ministeriale [Ministerial Decree] of 22 April 1983 on the allocation of the GATT quota for 1983 (Gazzetta Ufficiale No 111 of 23 April 1983, p. 3115) two Italian undertakings imported a total of 41280 kg of boned or boneless beef and veal from Czechoslovakia.

Upon discovering that the meat was not to be used to satisfy the requirements of the Italian market but was to be re-exported immediately to the Federal Republic of Germany, the Italian customs authorities ordered its seizure. That step was subsequently confirmed by the Verona Public Prosecutor, who considered that the diversion of the goods to a different destination constituted a smuggling offence (Articles 287 and 293 of the consolidated text of the legislative provisions concerning customs matters of the Decreto del Presidente della Repubblica [Order of the President of the Republic] No 43 of 23 January 1973). T. Migliorini and T. Fischi, representatives of one of the two undertakings, brought an action before the Tribunale di Verona [District Court, Verona] for judicial review of that decision and the court revoked the seizure. The Public Prosecutor appealed to the Corte suprema di cassazione against that decision and ordered the goods to be seized once more, this time on the ground of an attempted aggravated fraud to the detriment of the Italian State and of the EEC (Article 640 (1) of the Italian Criminal Code). Since this allegation had not been raised before the Tribunale di Verona the two undertakings likewise appealed to the Corte suprema di cassazione against the second decision.

In its order referring the case to the Court of Justice the Corte suprema di cassazione states that the application of the aforementioned provisions of criminal law and the legality of the Decreto Ministeriale of 22 April 1983 depend upon the interpretation of Regulation No 3225/82.

It is necessary, according to the Italian court, to determine whether the reference to ‘the requirements of the Member States’ (second recital in the preamble to Regulation No 3225/82) relates exclusively to the requirements of domestic consumption or, more widely, to all economic uses, in particular, for export purposes; or, in the absence of any express prohibition of reexports, whether such a prohibition follows from the principle of a ‘fair allocation’ of the quota share between the Member States (same recital), which is intended to avoid situations of economic privilege or unequal access to the national import quota.

Consequently, the Corte suprema di cassazione referred the following question to the Court of Justice:

‘In so far as Regulation (EEC) No 3225/82 provided for the allocation of the tariff quota among the Member States according to their requirements determined on the basis of the criteria laid down therein, was it intended to refer to the use of the meat imported from a nonmember country for consumption and trade only within the importing country, without any possibility of re-exportation of the meat to another country in the Community?’

3. According to the Italian Government, the requirement of a fair allocation means that it is necessary to ensure a correlation between the needs of each Member State and the allocation by the Commission of a quota share intended to meet those needs. Any change in that relationship could lead to discrimination. In support of its analysis the Italian Government put forward three arguments.

Its first argument is based on the specific nature of the requirements of each Member State. The imported meat corresponds to the satisfaction of specific needs, that is to say to demand which is peculiar to the production and distribution network of the Member State concerned.

The second argument arises from Article 3 (1) of Regulation No 3225/82. According to the principle set out therein, all traders established in the territory of the Member State concerned are to have free access to the national quota share, which means that traders of other Member States may not, by way of re-exports, have such access.

The final argument is based on Article 44 (1) (a) of Commission Regulation (EEC) No 3183/80 of 3 December 1980 laying down common detailed rules for the application of the system of import and export licences and advance fixing certificates for agricultural products (Official Journal 1980, L 338, p. 2), which provides that the import licence applicable to a product imported by reference to a Community tariff quota ‘shall be valid only in the issuing Member State’. In other words, in order for the importer to benefit from the tariff quota he must deal with the authorities of the Member State issuing the import licence where he is established. In fact if re-exports were permitted it would result in an economic circuit which is both irrational and onerous and which would involve, for example, an importer established in Greece applying in Greece for an import licence in respect of meat originating in South America before he could re-export it to another Member State. Accordingly, the limitation on the validity of a licence set out in Article 44 (1) must be understood as excluding the practice followed in this case.

More generally, the Italian Government maintains that its interpretation is not incompatible with the principle of the free movement of goods. Once the meat is in free circulation it can be exported at any time. However, the exemption from payment of the levy is lost if the goods are not used to satisfy domestic requirements.

In the first place it was pointed out, on the basis of the Court's judgments in Cases 131/73 (Grosoli [1973] ECR 1555) and 35/79 (Grosoli Spv v Ministry of Foreign Trade [1980] ECR 177), that, with regard to the use of the goods, in the absence of any express prohibition in the regulation itself the Member States may not themselves prohibit the re-exportation of the imported beef and veal. According to those cases the concept of ‘persons concerned’ has a wider scope and includes exporters.

Secondly, the concept of the ‘requirements of the Member States’ determining their respective quota shares constitutes a technical criterion which permits a realistic allocation of its quota share to each Member State by reference to trade patterns during a given period. Consequently, a strict correlation between the quota share allocated to a Member State and the requirements of its domestic market cannot be inferred from the regulation in question.

Finally, the Commission, relying in particular on the Court's judgments in Joined Cases 80 and 81/77 (Ramel v Receveur des Douanes [1978] ECR 927) and 218/82 (Commission v Council [1983] ECR 4063), noted that a Community regulation could not expressly prohibit the re-exportation of meat without infringing the principle of the free movement of goods, which applies not only to Community products but also to goods which have been put into free circulation.

The Court has already had occasion to examine the rules relating to Community quotas opened in relation to frozen beef and veal. In the aforementioned cases that examination was concerned essentially with the extent of the administrative powers delegated to the Member States by successive regulations. Nevertheless, those judgments are instructive for the interpretation of the regulation at issue.

It follows from those judgments in particular that the destination of goods which are imported under exemption from payment of the levy cannot constitute a precondition for access on the part of the persons concerned to the quota share allocated to a Member State. The tariff quota is to be used in such a way as to ensure ‘equal and continuous access to the quota ... for all persons concerned’ until it is used up (second recital in the preamble to Regulation No 3225/82). Consequently, in the exercise of their delegated powers, Member States are required to ‘guarantee all persons concerned, established within their territories, free access to the quota shares allocated to them’ (Article 3 (1) of Regulation No 3225/82).

In that respect the Court has, in a series of cases, placed upon the term ‘persons concerned’ a broad construction, so as to include both processing undertakings (Case 131/73, Grosoli, cited above, and Case 124/79 Van Walsum v Produktschap voor Vee en Vlees [1980] ECR 813) and meat exporters (Joined Cases 213 to 215/81 Norddeutsches Vieh- und Fleischkontor v Bundesanstalt für landwirtschaftliche Marktordnung [1982] ECR 3583). Consequently, although it is for each Member State to define the criteria for access to its quota share on the part of traders (Case 35/79, Grosoli v Ministry of Foreign Trade, cited above), it would appear that the limits of its delegated powers of administration are exceeded if it restricts the benefit of the exemption from payment of the levy to traders who intend their goods to be used exclusively to satisfy the requirements of the domestic market and thereby prohibits reexportation.

Since it is a question of a Community tariff quota, the conditions relating to its use ‘are determined both by the international commitments undertaken by the Community and by the ... objectives of economic policy sought by the institutions’, so that ‘against this background only the institutions have the right to prescribe a use for the quota’ (Case 131/73, Grosoli, cited above, paragraphs 6 and 7, emphasis added). Consequently, the power of the Member States to reserve the quota for a given economic purpose ‘would require a declaration of intent on the part of the Community institutions’. It follows that ‘the failure to prescribe a use for a quota must therefore be interpreted as freedom for all concerned to have access to it’ (Case 131/73, Grosoli, cited above, paragraph 7). Such failure in successive regulations opening an annual tariff quota means that the Member States are prohibited from imposing any condition concerning the final use of the imported meat. Regulation No 3225/82 does not expressly lay down a specific economic use for the imported goods any more than did its predecessors.

That conclusion is not contradicted by the reference to the ‘requirements of the Member States’, on the basis of which their quota shares are calculated. The second recital in the preamble to the regulation provides that:

‘... in order to arrive at a fair allocation between the Member States and to represent as closely as possible the actual market trends in the product in question, the said allocation should be proportionate to the requirements of the Member States calculated with reference to statistical data on imports from third countries during a representative reference period and to the economic prospects for the quota year in question.’

The formula for apportioning the Community quota therefore consists of two economic factors, namely import patterns during a given period and prospects for the following year. By applying those criteria it is possible to ascertain objectively the ‘requirements’ of each Member State, that is to say the quantity of goods to be imported into each Member State from nonmember countries during the quota year in question. Accordingly, the concept of ‘requirements’ must be understood in a generic sense, encompassing all imports regardless of the use to which the imported goods are to be put and without taking account of the nature of those ‘requirements’ — whether consumption, processing or exportation.

In other words, since the requirements are assessed by means of a statistical assessment of the average annual volume of imports and not by reference to the utilization of the goods, the ultimate use of the beef and veal — satisfaction of nutritional or industrial needs, re-exportation in the original state or after processing — is irrelevant to the question of access to the national quota share. In fact, the only precondition placed on access to the quota on the part of a trader is, in view of the fact that the quantities allocated to each Member State are necessarily limited, that he must have an interest in acquiring a share in the quota at the time in question (Joined Cases 213 to 215/81, cited above, paragraph 27).

Consequently, the wording itself of Regulation No 3225/82 does not prohibit the persons concerned, either expressly or impliedly, from re-exporting frozen beef and veal imported within the framework of the Community tariff quota as part of the quota share of the Member State in which they are established. What is more, the principle of the free movement of goods, as was stated by the Commission and accepted by the Italian Government, forbids any such prohibition. As the Court stated in its judgment in Case 218/82 (Commission v Council, cited above):

‘while ... division of a global tariff quota into national quotas may, in certain circumstances, be compatible with the Treaty, that is subject to the express condition that it does not hinder the free movement of the goods forming part of the quota after they have been admitted to free circulation in the territory of one of the Member States’ (paragraph 13).

Finally, the principle of equal treatment guarantees that the persons concerned established in the territory of a Member State will have access to the quota share allocated to that State and the benefit of exemption from payment of the levy cannot be made to depend on the question of the ultimate use to which the goods are put. In view of the principle of the free movement of goods they are entitled to export the meat imported in those circumstances either to other Member States or to nonmember countries (Joined Cases 213 to 215/81, cited above, paragraph 29).

At the hearing that last point was no longer disputed by the Italian Government.

It maintained, however, that a person who imports meat with the intention, at the outset, of re-exporting it ought to lose the benefit of exemption from payment of the agricultural levy, since in such a case the imponed meat is not intended to satisfy the requirements of the domestic market. The only purpose of such transit of the goods through the Member State into which they are imported initially is to fulfil the conditions laid down in Article 44 (1) (a). Consequently, it is not possible to regard such transactions as imports within the meaning of Articles 3 (2) and 4 of Regulation No 3225/82.

That argument must be rejected. It introduces a condition for benefiting from exemption from payment of the levy which cannot be deduced from any of the provisions referred to by the Italian Government. The purpose of those provisions is to enable economic criteria to be applied in order to determine the division of the tariff quota on the basis of the most detailed knowledge possible of import patterns in each Member State. In addition, the interpretation proposed by the Italian Government calls in question the principle of the free movement of goods which have been put into free circulation.

Since this case concerns the importation, under a Community tariff quota negotiated within the framework of GATT, of a quantity of boned or boneless beef and veal as part of the quota share allocated to the Member State where the importer is established, the only conditions are those which arise from Article 10 of the EEC Treaty, according to which:

‘Products 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 ...’.

In other words, once the import licence has been issued by the authorities of the Member State and the import duties provided for by the relevant rules have been paid the imported beef and veal is in free circulation. Consequently, in accordance with Article 9 (2) of the EEC Treaty, the imported meat benefits, in the same manner as products originating in the Community, from the prohibition between Member States of all quantitative restrictions on exports and all measures having equivalent effect (Article 34 of the EEC Treaty).

A condition which, without prohibiting reexportation, requires actual importation on the basis of an assessment of the importer's intentions has a dissuasive effect which curtails re-exportation in practice. It therefore penalizes those traders who are legitimately seeking to take the greatest advantage of Community freedoms and benefits.

The foregoing considerations reveal the objective pursued by Regulation No 3225/82, namely to ensure observance of the Community's international undertakings, involving in this case the admission, under exemption from payment of the levy, of a predetermined quantity of beef and veal originating in nonmember countries. As is stated in the fourth recital in the preamble to the regulation, the quota thereby admitted is of a ‘Community nature’. The method by which that quota is apportioned between the Member States by means of national quota shares may neither repartition the Community nor have the effect of subjecting the products in question to a system which derogates from the ordinary provisions of Community law.

It is necessary, however, to make one final point. Free access to the quota share of each Member State is limited to persons concerned. The Court has stated that:

‘previous transactions are a good indication of a person's interest and should be taken into account both in order to maintain the previous patterns of trade and to prevent the acquisition of shares in the quota from deteriorating into mere financial speculation’ (Joined Cases 213 to 215/81, cited above, paragraph 28).

The Court pointed out that such a criterion is certainly not conclusive but that, when considered together with other relevant criteria, it enables the Member States and their courts and tribunals to prevent and to punish fraud.

Consequently, I propose that the following reply should be given to the question referred to the Court by the Corte suprema di cassazione:

The allocation, in proportion to the requirements of the Member States, of the Community tariff quota for frozen beef and veal, opened by Council Regulation No 3225/82 of 23 November 1982, does not impose on interested persons any obligation with regard to the use of the imported meat and, therefore, does not prevent them from re-exporting the meat to another Member State once it has been properly put into free circulation.

*1 Translated from the French.