OPINION OF ADVOCATE GENERAL

delivered on 3 May 2005 (1)

The States of Jersey and Jersey Potato Export Marketing Board

(Reference for a preliminary ruling from the Royal Court of Jersey)

(Protocol No 3 on the Channel Islands and the Isle of Man – Regulation (EEC) No 706/73 – Free movement of goods – Common agricultural policy – Jersey potatoes – Rules concerning their marketing in the United Kingdom – Applicability of Articles 23 EC, 25 EC and 29 EC – Situations wholly internal to a Member State)

1.Does Community law preclude rules specific to Jersey (2) which make the marketing in the United Kingdom of potatoes produced on that island subject to the completion of various formalities?

2.That is, in essence, the question submitted by the Royal Court of Jersey in the present case, in which the Court of Justice is asked to examine the particular status of that island vis-à-vis the European Community resulting from the accession of the United Kingdom.

3.Following on from the judgment of 16 July 1998 in Pereira Roque, (3) concerning Jersey’s situation with regard to freedom of movement for persons, it is now necessary to determine whether the EC Treaty rules on the free movement of goods are applicable to that island for the marketing of agricultural products such as potatoes and, if so, under what conditions. In view of the special status of Jersey vis-à-vis the United Kingdom of Great Britain and Northern Ireland, this case makes it necessary, more specifically, for the Court to re-examine the question of the applicability of the Treaty rules on the free movement of goods to situations which are wholly internal to a Member State.

I – Legal background

A – The Community rules concerning the situation of Jersey vis-à-vis the Community

4.A number of provisions of Community law, both primary and secondary, relate to the Channel Islands and the Isle of Man (4) as regards the applicability of the Community rules to their territory.

5.Thus, whilst Article 299(4) EC provides that ‘[t]he provisions of this Treaty shall apply to the European territories for whose external relations a Member State is responsible’, Article 299(6)(c) states that ‘this Treaty shall apply to the Channel Islands and the Isle of Man only to the extent necessary to ensure the implementation of the arrangements for those islands set out in the Treaty concerning the accession of new Member States to the European Economic Community … signed on 22 January 1972’.

6.The rules laid down for those islands by the Accession Treaty in question are set out in Protocol No 3 on the Channel Islands and the Isle of Man, which is annexed to the Act of Accession to the European Communities of the Kingdom of Denmark, Ireland, the Kingdom of Norway and the United Kingdom of Great Britain and Northern Ireland. (5)

7.Article 1(1) of that protocol states that ‘[t]he Community rules on customs matters and quantitative restrictions, in particular those of the Act of Accession, shall apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom. In particular, customs duties and charges having equivalent effect between those territories and the Community as originally constituted and between those territories and the new Member States shall be progressively reduced in accordance with the timetable laid down in Articles 32 and 36 of the Act of Accession’.

8.The first subparagraph of Article 1(2) of Protocol No 3 states that ‘[i]n respect of agricultural products and products processed therefrom which are the subject of a special trade regime, the levies and other import measures laid down in Community rules and applicable by the United Kingdom shall be applied to third countries’. The next subparagraph adds that ‘[s]uch provisions of Community rules, in particular those of the Act of Accession, as are necessary to allow free movement and observance of normal conditions of competition in trade in these products shall also be applicable’.

9.The last subparagraph of Article 1(2) of that protocol provides that ‘[t]he Council, acting by a qualified majority on a proposal from the Commission, shall determine the conditions under which the provisions referred to in the preceding subparagraphs shall be applicable to these territories [the Channel Islands and the Isle of Man]’. It was on that basis and for that purpose that Council Regulation (EEC) No 706/73 of 12 March 1973 concerning Community arrangements applicable to the Channel Islands and the Isle of Man for trade in agricultural products was adopted. (6)

10.Thus, Article 1(1) of that regulation provides that ‘Community rules applicable to the United Kingdom for trade in agricultural products covered by Annex II to the Treaty establishing the European Economic Community [(7)], and in goods covered by Regulation No 170/67/EEC [(8)] and Regulation (EEC) No 1059/69, [(9)] shall apply to the islands, with the exception of rules on refunds and on compensatory amounts granted on exports by the United Kingdom’.

11.Article 1(2) of Regulation No 706/73 states that ‘[f]or the purpose of applying the rules referred to in paragraph 1, the United Kingdom and the islands shall be treated as a single Member State’.

12.Article 3 of the same regulation, as amended by Regulation (EEC) No 1174/86, (10) adds that ‘the Community provisions in the following fields: … plant health legislation, marketing of seeds and seedlings, food legislation, quality and marketing standards, shall apply under the same conditions as in the United Kingdom to the products referred to in Article 1 imported into the islands or exported from the islands to the Community’.

B – The local rules specific to Jersey

13.On 18 December 2001, the States of Jersey (Jersey’s legislature) (11) adopted the Jersey Potato Export Marketing Scheme Act 2001 (‘the 2001 Act’). (12)

14.The contested rules were described as having been adopted in order to respond to farmers’ complaints concerning their low profit margins on the cultivation of a variety of potatoes known as ‘Jersey Royal’, which is the main outdoor crop on the island. (13) The responsibility for that situation falls upon the bodies charged with the marketing of Jersey potatoes, in so far as their commercial policy is adopted in a not very transparent manner and on the basis of considerations essentially dictated by the competitive relationships between them, that is to say conditions which are largely outside the control of the farmers. (14) It was against that background that the contested rules were adopted with a view to promoting transparency and fairness of commercial transactions.

15.The aim pursued was to set up special rules for the ‘export’ of Jersey potatoes to neighbouring islands and to the United Kingdom where, as just stated, almost all the production is disposed of. According to Article 2 of the contested rules, which defines their geographical scope, the term ‘export’ means ‘the sending for sale of potatoes outside of the Island whether directly or via some other place to a destination in the United Kingdom, the Bailiwick of Guernsey or the Isle of Man for consumption there’.

16.The contested rules lay down a dual obligation and non-compliance constitutes a criminal offence.

17.More specifically, they impose on producers of Jersey potatoes who wish to ‘export’ their products the obligation to register with the Jersey Potato Export Marketing Board (the body set up by the 2001 Act in order to manage the scheme in question) (15) and to conclude a marketing agreement with it. (16)

18.The obligation to conclude a marketing agreement with the Board applies also to marketing organisations that wish to ‘export’ Jersey potatoes that they have received from the producers. (17)

19.Failure to comply with such obligations gives rise to criminal penalties. If any person sells or offers to sell or invites an offer to buy Jersey potatoes in contravention of the contested rules, he commits an offence for which the maximum penalty is a fine of GBP 200 or imprisonment for up to six months or both.

20.Moreover, under the contested rules, where a producer of Jersey potatoes breaches the terms of the marketing agreement concluded with the Board, the Board may impose a penalty and, in the event of any further offence, inform the competent authorities of the States, with the result that he may be deregistered by the Board and thereby prevented from entering into a new marketing agreement.

21.In addition to those penalising powers, the Board may, under the contested rules, require each producer registered with it to contribute to a fund to cover its main costs, (18) even where the producer is not a party to a marketing agreement.

II – The main proceedings

22.The new scheme set up by the contested rules to govern the ‘export’ of Jersey potatoes to the neighbouring islands and the United Kingdom should, in principle, have entered into force on 1 March 2002.

23.However, its entry into force was suspended by the Royal Court of Jersey in judicial review proceedings concerning the legality of the contested rules under, in particular, Community law.

24.Those proceedings were brought against the States and against the Board by one of the four marketing organisations engaged in the ‘export’ of Jersey potatoes to the United Kingdom (Jersey Produce Marketing Organisation Ltd). (19) In support of that action, another marketing organisation intervened, which with JPMO accounts for about 80% of such ‘exports’(Top Produce Ltd), (20) as did the latter’s parent company, which handles and exports between 12 and 15% of the production of Jersey potatoes (Fairview Farm Ltd). (21)

25.Some months after the suspension of the entry into force of the new rules, the States and the Board applied for the suspension measure to be lifted as from 1 October 2002 (after the peak of the potato season). Their application was rejected by the Royal Court of Jersey, with the result that those rules remain suspended.

III – The questions referred to the Court of Justice

26. At the same time as it suspended the entry into force of the new rules, the Royal Court of Jersey decided to stay its proceedings concerning the legality of the contested rules and to seek a preliminary ruling from the Court of Justice on the following questions:

1.(1) Is a statutory scheme such as that which regulates the export of potatoes from Jersey to the United Kingdom to be considered as a measure having an effect equivalent to quantitative restrictions on exports, contrary to Article 29 EC, by reason of the fact that potatoes sent directly from Jersey to the United Kingdom may travel via another Member State but without leaving the carrying vessel?

2.(2) Is a statutory scheme such as that regulating the export of potatoes from Jersey to the United Kingdom to be considered incompatible with Articles 23 EC, 25 EC and 28 EC and 29 EC in so far as it may affect trade between that island and the United Kingdom (together with Guernsey and the Isle of Man) or may entail the imposition of charges arising in connection with such trade?

27. By those two questions, which it is appropriate to consider together, the national court seeks essentially to ascertain whether the Treaty rules on the free movement of goods must be interpreted as precluding a situation in which the marketing of agricultural products originating in Jersey (such as potatoes) bound for the United Kingdom, the Bailiwick of Guernsey or the Isle of Man is made subject to the completion of various formalities, such as the registration of growers with a local public organisation, the conclusion of marketing agreements between that organisation and the operators concerned (a requirement enforced by pecuniary penalties) and possible contributions by growers to a fund set up to finance the operation of that organisation.

IV – Analysis

28.In order to answer that question, it is necessary first to consider whether the Community rules on the free movement of goods are applicable to Jersey for the marketing of agricultural products such as potatoes.

29.Only if that question is answered in the affirmative will it be necessary to consider whether such rules, in particular those set out in Articles 23 EC, 25 EC and 29 EC, are capable of applying to the situations covered by the contested rules, that is to say to trade in goods between Jersey and the United Kingdom or between Jersey and the other Channel Islands and the Isle of Man, having regard to the particular status of those islands vis-à-vis the United Kingdom.

30.Only if that is the case will it be necessary to consider whether those Treaty provisions on the free movement of goods actually preclude the contested rules.

A – The applicability to Jersey of the Treaty rules on the free movement of goods as regards the marketing of agricultural products such as potatoes

31.By virtue of a rule commonly accepted in public international law, (22)

the geographical scope of the Treaty covers, in principle, the territory of the Member States of the Community that are bound by the Treaty. It follows that, in order to determine whether the Treaty is applicable to a given geographical area, it is first necessary to ascertain whether that area forms part of the territory of one of the Member States, as defined by the domestic law of the latter.

However, that preliminary exercise is not decisive since the territorial scope of the Treaty does not coincide exactly with the extent of the territory of each Member State as defined by its domestic law. That follows from a number of Treaty provisions, in particular Article 299(4) EC, according to which, it will be remembered, ‘[t]he provisions of this Treaty shall apply to the European territories for whose external relations a Member State is responsible’.

The situation of Jersey falls precisely within that case. In the same way as the other Channel Islands and the Isle of Man, it does not form part of United Kingdom territory. (23) It follows that, at the internal level, Jersey enjoys considerable autonomy from the United Kingdom from both the legislative and the administrative and judicial points of view. (24) On the other hand, at international level, it is very dependent on the United Kingdom in so far as the latter assumes responsibility for its external relations. (25) Thus, when it was envisaged that the United Kingdom would accede to the Community, it was feared by some that, under Article 299(4) EC, the Treaty might be applicable in its entirety to the European territory making up Jersey and to that of the other Channel Islands or the Isle of Man. (26)

Accordingly, it was decided to adopt a specific regime for the benefit of those islands to take account of the special relationship which they had long had with the United Kingdom. (27)

A specific provision was introduced to that effect by the Act on the conditions of accession and adjustments to the Treaties. (28) Article 299(6)(c) EC (which derived from the Act) states that, by way of derogation from paragraph 4 of that article, ‘this Treaty shall apply to the Channel Islands and the Isle of Man only to the extent necessary to ensure the implementation of the arrangements for those islands set out in the Treaty concerning the accession of new Member States to the European Economic Community … signed on 22 January 1972’.

In other words, the Treaty rules do not apply fully to those islands, including Jersey, but apply only in part, within the limits laid down by the specific regime created for them.

The guiding principles of that specific regime are set out in Protocol No 3, which was annexed to the Act on the conditions of accession. According to them, although the Treaty rules on the free movement of persons and the freedom to provide services are not applicable to Jersey, (29) that is not the case as far as the Community rules on the free movement of goods are concerned.

It will be remembered that Article 1(1) of Protocol No 3 provides that ‘[t]he Community rules on customs matters and quantitative restrictions, in particular those of the Act of Accession, shall apply to the Channel Islands … under the same conditions as they apply to the United Kingdom’ and that ‘[i]n particular, customs duties and charges having equivalent effect between those territories and the Community … shall be progressively reduced in accordance with the timetable laid down in Articles 32 and 36 of the Act of Accession.’

It follows from those provisions that the totality of the rules on the free movement of goods, as set out in Title I of Part Three of the Treaty and in secondary law measures, are applicable to Jersey. That is the case, in particular, so far as concerns the rules laid down in Articles 23 EC and 25 EC (30) (concerning customs import and export duties and charges having equivalent effect) and Articles 28 EC and 29 EC (concerning quantitative restrictions on imports and exports and measures having equivalent effect).

In line with those general provisions concerning the applicability of the Community rules on the free movement of goods (of whatever type), Protocol No 3 contains provisions specifically governing certain goods, namely agricultural products and products obtained from the processing of them.

As I have already indicated, the first subparagraph of Article 1(2) of that protocol states that ‘[i]n respect of agricultural products and products processed therefrom which are the subject of a special trade regime, the levies and other import measures laid down in Community rules and applicable by the United Kingdom shall be applied to third countries’.

The second subparagraph of Article 1(2) of the same protocol adds that ‘[s]uch provisions of Community rules, in particular those of the Act of Accession, as are necessary to allow free movement and observance of normal conditions of competition in trade in these products shall also be applicable’.

In my view, that second subparagraph of Article 1(2) of Protocol No 3 is applicable to agricultural products such as potatoes, and therefore the Community rules on the free movement of goods apply to Jersey for the marketing of potatoes produced within its territory.

Contrary to JPMO’s contention, the fact that potatoes are not the subject of a common organisation of the market is of little importance. (31)

Admittedly, the second subparagraph of Article 1(2) of Protocol No 3 indicates that the relevant Community rules, in particular those designed to ensure the free movement of goods, apply to trade in the products mentioned in the previous subparagraph. The latter refers to ‘products and products processed therefrom which are the subject of a special trade regime’. (32)

Thus, the wording of those provisions might give the impression that, for agricultural products, the application to Jersey of the Community rules on the free movement of goods is subject to the condition that those agricultural products (like products obtained from their processing) are subject to a special trade regime. (33)

However, according to JPMO, the expression ‘special trade regime’ covers a regime such as a common market organisation, with the result that agricultural products which, like potatoes, are not covered by such a measure do not fall within the scope of the Community rules on the free movement of goods. It follows that the marketing of Jersey potatoes is not subject to the rules on the free movement of goods.

I do not accept that restrictive interpretation of the second subparagraph of Article 1(2) of Protocol No 3, for the reasons set out below.

First, it is important to bear in mind that another interpretation of those provisions could be contended for on the same basis of a combined reading of those provisions and those of the first subparagraph of Article 1(2) of that protocol. The first subparagraph of that article concerns trade in products between the islands concerned and non-member countries, whilst the second subparagraph concerns rather, it would appear, trade in products within the Community. However, what applies to the first type of trade does not necessarily apply to the second.

In fact, the use in the first subparagraph of Article 1(2) of Protocol No 3 of the expression ‘special trade regime’ could merely be intended to emphasise that that article concerns trade – with third countries – in certain products in the agricultural sector for which specific mechanisms have been set up, such as levies or other import measures, for example customs duties (the amount of which is generally fixed in accordance with the Common Customs Tariff). The reference to the existence of a special trade regime thus fits easily within the framework of the provisions contained in the first subparagraph of Article 1(2) of the protocol since, specifically, those provisions are designed to extend to the islands in question the application of the Community rules concerning levies and other import measures.

On the other hand, it seems difficult to perceive any link between the existence of a ‘special trade regime’, in the sense of a specific regime for trade with third countries, and the purpose of the second subparagraph of Article 1(2) of Protocol No 3, since that article is designed first and foremost to govern trade in products within the Community.

I infer from this that the second subparagraph of Article 1(2) of Protocol No 3, by referring to the products mentioned in the first subparagraph of that provision, can be construed as simply referring to agricultural products and products processed from them, whether or not they are covered by a ‘special trade regime’ in the sense of a specific regime for trade with third countries.

Thus, contrary to JPMO’s contention, in my view that article of Protocol No 3 does not appear to mean that the application to Jersey of the Community rules on the free movement of goods is to be subject, in the case of agricultural products such as potatoes, to the condition that those products be covered by a common market organisation.

That conclusion is reinforced by a reading of Regulation No 706/73, which was adopted on the basis of the third subparagraph of Article 1(2) of Protocol No 3 in order to clarify the conditions for implementation, within the islands concerned, of the Community rules applicable to those territories under the preceding subparagraphs.

It will be remembered that Article 1(1) of that regulation provides that ‘Community rules applicable to the United Kingdom for trade in agricultural products covered by Annex II to the Treaty establishing the European Economic Community and in goods covered by Regulation No 170/67/EEC and Regulation (EEC) No 1059/69, shall apply to the islands, with the exception of rules on refunds and on compensatory amounts granted on exports by the United Kingdom’.

That article concerns both trade in those products or goods inside the Community and trade between the Community and third countries.

There is nothing in the wording of Article 1(1) of Regulation No 706/73 to give the impression that agricultural products, such as potatoes, might escape the application (within the territory of the islands concerned) of the Community rules on the free movement of goods on the ground that those products are not covered by a common market organisation. In that connection, the drafting of that regulation is much more satisfactory than that of Protocol No 3, the ambiguity of certain provisions of which certainly justifies the clarifications that have been made to it.

As the Commission rightly emphasises, the only condition laid down by Article 1(1) of Regulation No 706/73 for the application to agricultural products of the Community rules on the free movement of goods is that those products should be covered by Annex II to the EEC Treaty (now Annex I EC). (34)

It should be remembered that potatoes meet that condition. (35) It follows that the EC Treaty rules on the free movement of goods fall to be applied to Jersey with regard to the marketing of potatoes produced there.

In that connection, it is of scant importance that a large part of the common agricultural policy is not applicable to Jersey, (36) notwithstanding the link traditionally made between, on the one hand, the operation and development of the common market in agricultural products and, on the other, the establishment of a common agricultural policy. (37)

Jersey’s special situation under the common agricultural policy derives from the very terms of Protocol No 3 and Regulation No 706/73, from which it is also apparent, as we have just seen, that the Community rules on the free movement of goods are applicable to that territory for the purpose of governing trade in potatoes produced there.

To remove such trade from the purview of the Treaty rules on the free movement of goods merely because Jersey does not come fully within the scope of the common agricultural policy would therefore be tantamount to depriving of their useful effect certain provisions of Protocol No 3 and of Regulation No 706/73 and thus to disregarding both the general scheme of those measures and the will of the Community legislature.

From this I conclude that the Treaty provisions on the free movement of goods are applicable to Jersey and to the marketing of potatoes produced within its territory.

That principle having been established, it is now appropriate to consider whether those provisions are capable of applying to the specific situations governed by the contested rules.

B – The applicability of the Treaty provisions on the free movement of goods to the situations covered by the contested rules

Before examining the specific question whether the Treaty provisions on the free movement of goods are applicable to the situations covered by the contested rules, I shall make a number of preliminary observations concerning, first, the status of the Channel Islands and the Isle of Man vis-à-vis the United Kingdom for the implementation of the Community provisions on the free movement of agricultural products and, second, the specific situations which must be regarded as being covered by the contested rules.

Preliminary observations

As I have just indicated, I consider it to be clear from a combined reading of the second subparagraph of Article 2(1) of Protocol No 3 and of Article 1(1) of Regulation No 706/73 that the Treaty rules on the free movement of goods are applicable to Jersey for the purpose of governing the marketing of potatoes produced within its territory.

It will be remembered that Article 1(2) of that regulation states that ‘[f]or the purpose of applying the rules referred to in paragraph 1, the United Kingdom and the islands shall be treated as a single Member State’.

It follows that, for application of the Treaty rules on the free movement of goods in relation to agricultural products such as potatoes, Jersey must be regarded as forming an integral part of the United Kingdom. The same applies to the other Channel Islands and the Isle of Man. For application of the Community rules in this field, the relationship between those islands and the United Kingdom cannot therefore be placed on the same footing as that existing between a non-member country and a Member State or between two Member States. (38)

69.In those circumstances, the question may be asked whether the situations covered by the contested rules, for the marketing of Jersey potatoes, should not be regarded as situations wholly internal to a single Member State, namely the United Kingdom.

70.As I have already stated, the contested rules establish a special regime for the ‘export’ of Jersey potatoes to the United Kingdom (the destination of almost all Jersey potatoes). It will also be remembered that, according to Article 2 thereof, the term ‘export’ means ‘the sending for sale of potatoes outside of the island whether directly or via some other place to a destination in the United Kingdom, the Bailiwick of Guernsey or the Isle of Man for consumption there’.

71.It is common ground that, under that Article 2, the contested rules are applicable where potatoes are sent by ferry from Jersey to the United Kingdom either directly or via the port of another Member State (such as the French port of Caen) without being removed from the ferry. The same applies to those sent, directly or otherwise, from Jersey to the islands of the Bailiwick of Guernsey or the Isle of Man.

72.Otherwise than in those cases, the parties to the main proceedings have contended for widely differing interpretations of the territorial scope of the contested rules. (39) In those circumstances, it is settled case-law that, by virtue of the division of functions between the Court of Justice and the national courts, which governs the preliminary-ruling procedure, it is for the national courts alone, and not the Court of Justice, to interpret national law. (40)

73.In accordance with the interpretation of Article 2 of the contested rules adopted by the referring court, I shall assume therefore that those rules are not applicable to cases where potatoes are first sent to France for processing (such as washing, packaging or bagging) and then forwarded to the United Kingdom to be sold and consumed there. (41)

74.Although the referring court did not express specific views on such a case, I shall also assume that the contested rules likewise do not apply where potatoes are sold to an operator established in France or in another Member State and are then resold by the latter (as they are, or after processing) for consumption in the United Kingdom.

75.In fact, the national court accepted the interpretation put forward by the States according to which the expression ‘whether directly or via some other place’ relates only to the sea route used for sending the potatoes outside the island. (42) It inferred, as I have just indicated, that the contested rules do not fall to be applied where potatoes are sent to France for processing there, then forwarded to the United Kingdom for sale and consumption. I assume that the same applies in a case where potatoes are sold to an operator established in France or in another Member State and are then resold by the latter (as they are, or after processing) with a view to their being consumed in the United Kingdom, since such an operation, in the same way as the one mentioned earlier, falls outside the limited context defined, according to the national court, by the expression in question, namely a simple operation of carriage of goods.

76.The territorial scope of the contested rules having thus been defined, it is now appropriate to determine whether certain Treaty provisions on the free movement of goods are capable of applying to operations involved in the marketing of potatoes that are covered by the contested rules.

77.My analysis will relate both to Articles 23 EC and 25 EC and to Article 29 EC. Although Article 28 EC is also mentioned by the national court, I shall not consider it since, because the contested rules apply only to the sending of potatoes outside Jersey and not to their entry into that territory, it is not relevant in any event.

2.The applicability of Articles 23 EC, 25 EC and 29 EC to the situations covered by the contested rules

78.As a preliminary point, I should point out that the question of the applicability of Articles 23 EC and 25 EC to the situations covered by the contested rules should arise only in relation to a possible contribution to the Board and not in respect of pecuniary penalties intended to enforce compliance with the obligations imposed by the marketing regime at issue, since penalties of that kind are more in the nature of measures having an effect equivalent to quantitative restrictions within the meaning of Article 29 EC.

79.As regards possible contributions to the Board, there is little information before the Court concerning that aspect of the contested rules. Subject to the examination which is the responsibility of the national court on this point, I shall assume, as the Commission states, that the amount of the contribution at issue is calculated by reference either to the quantity of potatoes dispatched in the previous year by the grower concerned (to the United Kingdom, the Bailiwick of Guernsey or the Isle of Man) or to the area allocated by that grower to potatoes during the same period. (43)

80.That is the background to the question of the applicability of Articles 23 EC, 25 EC and 29 EC to the situations covered by the contested rules. I shall consider this question on the basis of the wording of Articles 23 EC, 25 EC, 28 EC and 29 EC and will then consider the development of the case-law of the Court in this area so as to identify the trends and scope thereof, as well as its limits, in relation to the situations covered by the contested rules.

(a)The wording of Articles 23 EC, 25 EC, 28 EC and 29 EC and the treatment thereof in the traditional case-law of the Court regarding the territorial scope of the Treaty rules on the free movement of goods

81.From a reading of Articles 23 EC, 25 EC, 28 EC and 29 EC, which follow on from Article 3(1)(a) EC, it appears clear that the only obstacles (tariff or non-tariff) to the free movement of goods that are prohibited by those articles are those relating to trade between Member States and not those concerning trade between different parts of one and the same Member State. (44)

82.That clear inference has been referred to frequently by the Court in relation to national rules having a double impact on the marketing of goods, both in trade with other Member States and in trade within a Member State that has adopted rules of that kind. (45)

83.In relation to such rules, which have been held to be contrary to Article 28 EC or Article 29 EC, the Court has taken care to draw a distinction between trade between Member States (which falls within the scope of the Treaty rules on the free movement of goods) and trade within the Member State concerned (which is not covered by those Treaty rules). (46)

84.It follows from that case-law that, to determine whether a national measure falls within the scope of Article 28 EC or 29 EC, it is necessary to consider whether the measure in question is liable to affect trade between Member States. Thus, if such a measure affects only trade within one and the same Member State, and not trade between Member States, it is not caught by the Treaty rules in Articles 28 EC and 29 EC.

85.That case-law has been transposed to similar circumstances where local rules that applied to only part of the territory of a Member State affected trade in goods between that part of the national territory and the other Member States and also trade between that part of the national territory and the other parts of the territory of the same Member State. (48)

86.Thus, for Article 28 EC or 29 EC to be applicable, the goods in question must move from the territory of a Member State (or part of it) to the territory of another Member State (or part of it); in other words, goods brought into the territory of a Member State or part of it must come from another Member State (or part of the latter) and those of national or local origin must be bound for another Member State (or part of it). Where products originating in a Member State merely pass from one region to another in that Member State, the basic condition for the application of Article 28 EC or 29 EC is lacking, so that neither of those articles is applicable. That fundamental condition relates to the crossing of a frontier from one Member State to another, that is to say the crossing of a frontier that I shall describe as ‘inter-State’, wherever located, be it on the border of a national territory or of a part thereof. (49)

87.The Court’s concern to confine the application of the Treaty rules on the free movement of goods, such as those contained in Article 28 EC, to the context of trade between Member States has also been expressed when it has considered a number of national rules subjecting products of national origin (which had not been involved in trade between Member States) to a less favourable marketing regime than that applied to products imported from other Member States. (50) Those national rules raise particular difficulties since they gave rise to ‘reverse discrimination’.

88.Faced with such difficulties, the Court emphasised that the object of Article 28 EC ‘is to eliminate obstacles to the importation of goods and not to ensure that goods of national origin always enjoy the same treatment as imported or reimported goods’. (51) It concluded that a ‘difference in treatment between goods which is not capable of restricting imports or of prejudicing the marketing of imported or reimported goods does not fall within the prohibition contained in [that] article’. (52)

89.It follows from all those developments in the case-law that Articles 28 EC and 29 EC are not applicable to trade in goods in situations that are entirely internal to a Member State. In view of that case-law, it might have been expected that the position would be the same as regards the application of Articles 23 EC and 25 EC since, as we have seen, those articles, like Articles 28 EC and 29 EC, are concerned with relations between Member States.

90.However, the Court has decided otherwise. That is clear from the judgments in Lancry and Others, in Simitzi (53) and in Carbonati Apuani. (54) Those judgments depart significantly from the traditional case-law of the Court regarding the territorial scope of the Treaty rules on the free movement of goods. Before examining the scope and the limits of this new trend in the case-law in response to situations of the kind covered by the contested rules, it is appropriate to trace its various stages.

(b)The development of the case-law of the Court concerning the territorial application of Articles 23 EC and 25 EC

91.In line with its judgment in Legros and Others, (55) the Court held in Lancry and Others that the so-called ‘dock dues’ imposed by the French rules constituted a charge having an effect equivalent to an import customs duty within the meaning of Article 25 EC.

92.That charge was levied in the French overseas departments on goods brought into that part of French territory, regardless of their origin, so that it applied both to products originating in other Member States and to products originating in other parts of the same Member State.

93.In Legros and Others, the Court confined itself to saying that ‘[a] charge levied at a regional frontier by reason of the introduction of products into a region of a Member State constitutes an obstacle to the free movement of goods which is at least as serious as a charge levied at the national frontier by reason of the introduction of the products into the whole territory of a Member State’. (56) In that regard, it simply indicated that ‘[t]he effect of such a regional levy on the unity of the Community customs territory is not altered by the fact that it is also charged on goods from the other parts of the territory of the Member State in question’. (57) Those statements are fully in line with the case-law outlined above. (58)

94.However, those considerations were subsequently expanded upon, in paragraph 29 of the judgment in Lancry and Others, in a direction differing greatly from that previously followed. The Court stated that ‘the very principle of a customs union covers all trade in goods … [and] it requires the free movement of goods generally, as opposed to inter‑State trade alone, to be ensured within the union’. It made it clear that ‘[a]lthough Article[s] [23 EC and 25 EC make] … express reference only to trade between Member States, that is because it was assumed that there were no charges exhibiting the features of a customs duty in existence within the Member States’. From this, the Court concluded that ‘[s]ince the absence of such charges is an essential precondition for the attainment of a customs union covering all trade in goods, it follows that they are likewise prohibited by [Articles 23 EC and 25 EC]’.

95.In the same judgment, the Court added to that main argument two further arguments.

that the dock dues at issue constituted a charge having an effect equivalent to an import customs duty ‘not only in so far as it is levied on goods entering that region from other Member States, but also in so far as it is levied on goods entering that region from another part of the same State’. (61)

99.That case-law concerning the import of goods was transposed, in <i>Simitzi </i> and then in <i>Carbonati Apuani</i> to the export of goods.

100.<i>Simitzi </i> was concerned with a municipal tax levied on goods brought into the Dodecanese (regardless of their origin) or dispatched from that part of Greek territory (regardless of their destination). In accordance with <i>Lancry and Others</i>, the Court held that that charge constituted a charge having an effect equivalent to customs duties on imports and on exports, in particular because it was levied by a Member State on goods brought into a region of its territory only from other regions of the same State and on goods dispatched from only one region to other regions of the same State. (62)

101.The abovementioned <i>Carbonati Apuani </i> case concerned a municipal tax levied on marble extracted within the territory of that municipality (Carrara) by reason of its being transported outside that part of Italian territory. The Court held that such a charge constituted a charge having an effect equivalent to a customs duty on exports within the meaning of Article 23 EC, despite the fact that it was also levied on goods whose final destination was within the Member State concerned. (63) It repeated, and expanded upon, two of the arguments set out in <i>Lancry and Others </i> concerning, first, the requirements of the customs union and, second, the fact that the measure in question did not apply to a situation wholly internal to a Member State.

102.As regards the first argument, which remains the principal argument, the Court expounded it by emphasising the need to interpret Article 23 EC et seq. in the light of Article 14(2) EC, which defines the internal market as ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured’. Since those provisions draw no distinction between inter-State and intra-State frontiers, it concluded, in line with Lancry and Others, that ‘the absence of charges – whether between States or within a State – exhibiting the features of a customs duty is a precondition essential to the realisation of a customs union in which the free movement of goods is ensured’. (64)

103.As regards the second argument, the Court held that the charge in question applied to all Carrara marble taken outside the territorial limits of that municipality, without drawing a distinction between marble whose final destination was within Italy and marble bound for other Member States. From this it concluded that the charge, by its nature and terms, impinged upon trade between Member States.

104.Those aspects of the case-law having been outlined, it is now necessary to examine their scope and limits in relation to the situations covered by the contested rules.

(c) The scope and limits of <i>Lancry and Others</i>, <i>Simitzi </i> and<i> Carbonati Apuani</i>

105.From a reading of the judgments in <i>Lancry and Others</i>, <i>Simitzi </i> and <i>Carbonati Apuani</i>, it seems undisputed that Articles 23 EC and 25 EC are applicable to situations of the kind covered by the rules at issue in the main proceedings. According to that case-law, a charge is liable to be caught by the prohibition laid down in those articles if it is levied by reason of the crossing of a frontier, whether it be an inter-State frontier (in the context of trade between Member States) or an intra-State frontier (in the context of trade within one and the same Member State). (65) Thus, if it is assumed that any contribution to the Board is levied by reason of the sending of potatoes outside Jersey (to the United Kingdom, the Bailiwick of Guernsey or the Isle of Man), that measure would be liable to constitute a charge having an effect equivalent to a customs duty on exports.

106.That being the case, it is important to bear in mind that there is no clear certainty that that case-law should be transposed to the situations covered by the contested rules. In my view, two of the three arguments on which the Court relied in <i>Lancry and Others </i> are irrelevant to the present case and must therefore be rejected. As regards the remaining argument, it seems to me to be particularly fragile. That, it is hoped, will become clear from an examination of each of those arguments, so as to take full measure of them and thereby avoid any error of perspective or any ‘optical illusion’(66) in the application of Community law.

107.In the first place, it must be pointed out that, in contrast to the position in <i>Lancry and Others</i>, <i>Simitzi </i> and <i>Carbonati Apuani</i>, the contested rules in this case apply to situations that must be regarded as being confined in every respect within a single Member State.

108.Those rules govern only trade in potatoes between, on the one hand, Jersey, and, on the other, the United Kingdom, the islands of the Bailiwick of Guernsey and the Isle of Man. It will be remembered that, for application of the Treaty rules on the free movement of goods, as far as agricultural products such as potatoes are concerned, the United Kingdom and all its islands must be regarded as a single Member State.

109.In that regard, it is of little importance whether, in trade governed by the contested rules, the potatoes are sent <i>directly</i> to the United Kingdom (or to the Bailiwick of Guernsey or the Isle of Man) or <i>indirectly</i> via a port of another Member State (without those goods undergoing in that State any operation involving processing or sale). In my view, the possibility of straightforward transit of the goods through another Member State is not capable of conferring on the commercial operation the status of trade between Member States within the meaning of Articles 23 EC and 25 EC. In other words, that possible extraneous factor is not sufficient for the situations governed by the contested rules to be classified otherwise than as wholly internal to one and the same Member State, namely the United Kingdom.

110.Since the rules at issue govern only trade in potatoes within the United Kingdom, and not trade with other Member States, it would be at the very least surprising if the view were taken that the Treaty rules on the free movement of goods were applicable to the present case. In any event, such an effect, even partial, on intra-Community trade cannot be invoked in support of the contention that Articles 23 EC and 25 EC are applicable. Even though that argument was accepted by the Court in the abovementioned judgments (<i>Lancry and Others</i>, paragraph 30, and <i>Carbonati Apuani</i>, paragraph 26), it certainly has no place in the present proceedings.

111.In that connection, it must be emphasised that the present case does not raise difficulties of the kind which may have arisen in those earlier cases as a result of the existence of ‘reverse discrimination’.

112.It will be remembered that reverse discrimination arises, in particular, where products originating in a Member State are subjected (by virtue of national rules), in trade within that Member State alone, to a less favourable regime than that applied to products imported from or exported to other Member States (under the Treaty rules on the free movement of goods). As we have seen, the Court applied the principle that the Treaty rules on the free movement of goods are not available for the resolution of problems linked to the existence of reverse discrimination in so far as the latter affects purely internal situations which, by their very nature, are excluded from the scope of Community law. (67)

113.In <i>Lancry and Others</i>, paragraph 30, the Court clearly departed from that settled case-law, in that it emphasised that it would be inconsistent to classify the dock dues as a charge having an effect equivalent to a customs duty on imports within the meaning of Articles 23 EC and 25 EC where that measure affected goods coming from other Member States and to reject that classification where the charge was levied on goods coming from another part of the Member State concerned. That analysis, it seems, reflects the concern of the Court to avoid contributing to the emergence of reverse discrimination, in that, following the delivery of its judgment (if the latter had established a difference of classification of that kind), domestic products would have been subject to less favourable treatment than products imported from other Member States. The Court followed that line of reasoning and held that dock dues constituted a charge having an effect equivalent to a customs duty on imports even where that measure was applied to goods brought into part of the territory of a Member State from another part of that same Member State. That argument does not seem to have been taken up in the judgment in <i>Carbonati Apuani</i>, even though the latter refers to the judgment of 5 December 2000 in <i>Guimont</i>. (68)

114.In the present case, there is no need for the Court to rely on such considerations.

115.Although Jersey potatoes are subject, as regards their marketing in the United Kingdom and the island territories associated with it (the Bailiwick of Guernsey and the Isle of Man), to a less favourable regime than that applied to potatoes exported to other Member States, that difference of treatment derives only from the contested rules in that, under Article 2 thereof, the marketing regime for which it provides applies only to trade between different territories forming part of the same Member State, and not to trade with other Member States. The sale of Jersey potatoes to Member States other than the United Kingdom therefore escapes, in itself, the restrictive regime imposed by the contested rules, without there being any need for the Court to give a judgment to that effect on the basis of the rules concerning the free movement of goods. Thus, there is no possibility that, by the judgment it is to deliver, the Court would contribute to the emergence of reverse discrimination which already exists solely because of the contested rules.

116.Since Community law has no bearing on that discriminatory situation, there is no reason for the Court to involve itself and therefore to extend the scope of Articles 23 EC and 25 EC to situations that are wholly internal to a Member State, such as the situations involved in the main proceedings, on the ground that it would be inconsistent to subject the latter to treatment different from that applicable to situations displaying a connection with the export of goods to other Member States. Although it is permissible to ask what particular logic underlies the contested rules, it is not for Community law or for the Court to remedy the resultant discriminatory situation. Only the local legislative or judicial authorities are competent to provide a remedy by adopting such measures as they consider appropriate, for example by taking action regarding the contested rules.

117.So far as concerns the argument that it would be very difficult in practice, or indeed impossible, to identify the origin or the destination of the goods and on that basis to limit the application of Articles 23 EC and 25 EC to the context of trade between Member States, to the exclusion of trade within a Member State, that too seems irrelevant in the circumstances of the present case. Whilst it may be particularly difficult to distinguish between certain products according to their origin or their destination where the national rules at issue are applicable to them without distinction (doubtless because of those practical difficulties), I find it difficult to see why the same approach should be adopted when it is specifically provided that the rules in question, such as those in this case, apply only to products that originate in a territory which is treated as forming part of the territory of a Member State and are intended to be sold and consumed in other parts of that same Member State. In the present case, it is therefore appropriate to set aside that argument (expounded in paragraph 31 of the judgment in <i>Lancry and Others</i>), especially since it was not taken up in the judgment in <i>Carbonati Apuani</i>.

118.As regards the remaining argument (relating to the requirements of the customs union and the internal market), which continues to be the main argument, it is not in my view sufficient to justify the application of Articles 23 EC and 25 EC to situations such as those covered by the contested rules, which are wholly internal to a Member State.

119.It is true, as Advocate General Tesauro observed in his Opinion in<i> Lancry and Others</i>, that it might seem paradoxical that, in a single market, obstacles to trade between two Member States (for example, the Portuguese Republic and the Kingdom of Denmark) should be prohibited whilst obstacles to trade within one and the same Member State (for example, trade between Naples and Capri) should be left out of account. (69) At first sight, the process of integration of the Member States of the Community, which informs the development of European construction, is hard to reconcile with the adoption within Member States of measures which tend to split up or fragment this or that national territory, inside which the free movement of goods is not guaranteed.

120.In those circumstances, whatever the extent of that phenomenon, the fact nevertheless remains that, in my view, the Treaty rules on the free movement of goods, including those laid down in Articles 23 EC and 25 EC, cannot be used in order to prevent it.

121.The reasoning of the Court in favour of the contrary view seems to me to be unconvincing and, to say the least, fragile.

122.In the first place, I find it difficult to go along with the idea, on which the Court placed emphasis in the abovementioned judgments in <i>Lancry and the Others</i>, paragraph 29, and <i>Carbonati Apuani</i>, paragraph 22, that the very principle of a customs union, as provided for in Article 23 EC, requires the free movement of goods generally to be ensured not only in trade between States but also, more widely, throughout the territory of the customs union.

123.As Advocate General Poiares Maduro emphasised in his Opinion in <i>Carbonati Apuani</i>, (70) ‘Article 23 EC was merely an expression of the desire of the founding States of the Community to limit the use which its Member States would henceforth make of their competence in customs matters’, whether in the context of their mutual relationships or in the context of their relations with non-member countries, in view of the adoption of a common customs tariff.

124.That will is reflected, as far as the domestic aspect of the customs union is concerned, by the prohibition of customs duties and charges having equivalent effect on imports into and exports from the Community. As the Court made clear at a relatively early stage, ‘[t]he justification for this prohibition is based on the fact that any pecuniary charge – however small – imposed on goods by reason of <i>the fact that they cross a frontier </i> constitutes an obstacle to the movement of such goods’. (71) By employing the words ‘cross a frontier’, the Court was referring to nothing other than the crossing of inter-State frontiers, whether they are on the border of a national territory or of a part of such territory.

125. Customs activities fall, by definition, within that framework, so that the limitation of the competence of the Member States laid down by Article 23 EC in that area, for the purpose of establishing a customs union, is necessarily defined exclusively by reference to the crossing of an inter-State frontier. I would add that that analysis is the only one that is consonant with the wording of Articles 3(1)(a) EC, 23 EC and 25 EC. That analysis is also the only one compatible with the numerous developments in the case-law which, as we have seen, have limited the application of the rules on the free movement of goods to trade between Member States, to the exclusion of trade within one and the same Member State.

126. In my view, the developments in the judgment in <i>Carbonati Apuani </i> concerning the wording of Article 14(2) EC are not such as to compensate for the fragility of the reasoning followed by the Court since <i>Lancry and Others </i> regarding the requirements of the customs union.

127. It should be borne in mind that that article, which was inserted in the Treaty by the Single European Act, defines the <i>internal market </i> as ‘an area without <i>internal frontiers </i> in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty’. (72)

128. It is true that, at first sight, that wording may give the impression that the establishment of the internal market imposes requirements additional to those which underlay the setting‑up of the common market, in so far as the creation of an internal market implies making headway with the process of integration of the Member States into the Community. (73)

129. However, by defining the internal market as ‘an area without internal frontiers’, the authors of the Single European Act did not intend to call in question the framework that had been clearly laid down by the EEC Treaty for application of the rules on the free movement of goods, persons, services and capital, which had already been highlighted by the case-law of the Court. (74)

130. It is important to emphasise that Article 14(2) EC expressly refers, for the purpose of giving effect to the fundamental freedoms upheld by the Treaty, to the provisions of the latter. That clarification, which was added during the negotiations leading to the Single Act, reflects a concern not to extend the scope of the Treaty rules on freedom of movement, with regard not only to persons but also to goods, services and capital. (75)

131. As we have seen, in the case of free movement of goods, the wording of Article 3(1)(a) EC and of Articles 23 EC, 25 EC, 28 EC and 29 EC relates only to trade in goods between Member States, and not to trade in goods within one and the same Member State. From this, I conclude that Article 14(2) EC is not capable of extending the territorial application of Articles 23 EC and 25 EC so as to include trade that is purely internal to a Member State.

132. That conclusion is supported by a reading of Article 3(1)(c) EC. That article provides that ‘the activities of the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein … an <i>internal market </i> characterised by the abolition, <i>as between Member States</i>, of obstacles to the free movement of goods, persons, services and capital’. (76)

133. That definition of the internal market, which predates the Single Act, was not amended by the latter in order to conform with the definition that it inserted in the Treaty. The concept of an ‘internal market’ within the meaning of Article 14(2) EC cannot therefore be radically different from that contained in Article 3(1)(c) EC.

134. It follows that the expression ‘area without internal frontiers’ in Article 14(2) EC means nothing more than an area within which obstacles to trade, between Member States, are prohibited. Thus, the term ‘internal frontiers’ must be taken to mean inter-State frontiers (in the context of trade between Member States, within the Community), (77) to the exclusion of intra-State frontiers (in the context of trade within one and the same Member State) and in contrast to external frontiers (in the context of trade between Member States and non-member countries). (78)

135. By defining the internal market as an ‘area without internal frontiers’, the authors of the Single Act sought first and foremost to give European construction a new boost, so that the contribution made by that expression is more political than legal. That is the inference to be drawn from a reading of the White Paper on the completion of the internal market drawn up by the Commission in preparation for the European Council of Milan of 28 and 29 June 1985, which had a decisive impact throughout the negotiations on the Single Act. (79)

136. That document contained a very large number of measures designed to relaunch the process of European integration by doing away with ‘frontiers’ of all kinds, whether ‘physical’, ‘technical’ or ‘fiscal’.

137. In the case of physical frontiers, the intention was to eliminate, for goods and persons, controls at so-called ‘internal’ frontiers, that is to say at customs posts at the frontiers between Member States. (80) There is nothing in the abovementioned White Paper to give the impression that the establishment of the internal market would also require the elimination of any tariff obstacles to the free movement of goods within each Member State.

138. As regards the other types of obstacle to intra-Community trade, described as ‘technical and fiscal frontiers’, the plan was to reduce them significantly by means of a wide-ranging programme of harmonisation or approximation of national laws, the full implementation of which by the deadline of 31 December 1992 was to be facilitated, except in certain areas, by simplification of the procedure for adoption of the Community measures concerned. It was against that background that the Single Act inserted in the EEC Treaty Article 100a (now, after amendment, Article 95 EC) in order to achieve, as is made clear in paragraph 1 of that article, the establishment and functioning of the internal market, in accordance with the objectives listed in Article 8a of the EEC Treaty (now, after amendment, Article 14 EC).

139. Although the Single Act established a close link between, on the one hand, the attainment of the internal market and, on the other, the adoption of measures for the harmonisation or approximation of national legislation, it does not follow that the establishment of the internal market, within the meaning of Article 14(2) EC, implies that the Treaty rules on the free movement of goods became applicable to situations wholly internal to a Member State.

140. Although the Court has held that ‘recourse to Article 100a of the Treaty as legal basis does not presuppose the existence of an actual link with free movement <i>between Member States</i> in every situation referred to by the measure founded on that basis’, (81) so that such a measure is capable of applying to situations wholly internal to a Member State, the position cannot be the same as regards the application of Treaty rules such as those contained in Articles 23 EC and 25 EC. Whilst the Treaty rules on the free movement of goods, persons, services and capital contribute significantly to the integration of the Member States of the Community, measures for the harmonisation or approximation of national laws make an even greater contribution, so that their adoption generally constitutes a decisive stage in the process of European integration.

141. It follows, in my view, from all the foregoing that it is essential not to transpose the case-law embodied in <i>Lancry and Others</i>,<i> Simitzi </i> and <i>Carbonati Apuani </i> to the situations covered by the contested rules and thereby exclude the application of Articles 23 EC and 25 EC to such situations, which, it should be remembered, are wholly internal to one and the same Member State.

142. The same conclusion necessarily follows regarding Article 29 EC. Contrary to the Commission’s contention, (82) in my view the case-law embodied in <i>Lancry and Others </i> and <i>Simitzi </i> cannot be transposed to the area of non-tariff obstacles to trade in goods. Such a transposition would rely on arguments just as inadequate as those which prompted the Court to allow the application of Articles 23 EC and 25 EC to situations wholly internal to a Member State.

143. Admittedly, paragraph 23 of the judgment in <i>Carbonati Apuani</i> (83) might give the impression that the Court conceded by implication that all the Treaty rules on the free movement of goods can be applied to situations that are wholly internal to a Member State. (84)

144. However, it is not at all certain that such a general inference should be drawn. In my view, the judgment in <i>Carbonati Apuani </i> does no more than confirm the abovementioned case-law represented by <i>Legros</i>, <i>Lancry and Others </i> and <i>Simitzi</i>, with regard only to tariff obstacles to trade. I find it hard to believe that, by that judgment, the Court intended to call in question its traditional case-law on non-tariff obstacles to trade, that is to say in a field entirely different from that involved in that case. The possibility of according to that judgment wider scope than is appropriate to the facts of that case seems particularly difficult to countenance since the ultimate result could be that all the Treaty rules on free movement (whether of goods, persons, services or capital) would be applicable to national provisions relating solely to situations that are wholly internal to a Member State. It is extremely probable that, by that judgment, the Court did not intend to make such a far-reaching change in the trend of its case-law. (85)

145. I conclude from this that neither Articles 23 EC and 25 EC nor Article 29 EC fall to be applied to the situations covered by the contested rules.

146. Consequently, the answer to be given to the questions submitted is that, although the Treaty rules on the free movement of goods are applicable to Jersey regarding intra-Community trade in agricultural products such as potatoes, neither Articles 23 EC and 25 EC nor Article 29 EC are capable of applying to situations, such as those at issue in the main proceedings, which relate solely to commercial dealing in those products between, on the one hand, Jersey and, on the other, the United Kingdom, the Bailiwick of Guernsey or the Isle of Man, since those territories must be regarded as forming part of one and the same Member State.

V – <b>Conclusion </b>

147. In view of the foregoing considerations, I suggest that the Court reply as follows to the questions referred to it by the Royal Court of Jersey:

Although the EC Treaty rules on the free movement of goods are applicable to Jersey regarding intra-Community trade in agricultural products such as potatoes, neither Articles 23 EC and 25 EC nor Article 29 EC are capable of applying to situations, such as those at issue in the main proceedings, which relate solely to commercial dealing in those products between, on the one hand, Jersey and, on the other, the United Kingdom, the Bailiwick of Guernsey or the Isle of Man, since those territories must be regarded as forming part of one and the same Member State.

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1 – Original language: French.

2 – Jersey is situated in the bay of Mont ‘Saint’ Michel, 22 km from the French coast and 161 km from the English coast. It has an area of 161 km² and 96 000 inhabitants. The island forms part of the Bailiwick of Jersey, which also includes the uninhabited islands of Minquiers and Écréhous. The Bailiwick of Jersey constitutes one of the two bailiwicks of the Channel Islands which, as their name indicates, belonged in the past to the Duchy of Normandy. The other bailiwick is that of Guernsey. It comprises the island of the same name and the islands of Alderney, Sark and Herm. Jersey is the largest island in the archipelago of the Channel Islands.

3 – C-171/96 [1998] ECR I-4607.

4 – Unlike the Channel Islands, the Isle of Man is closer to the United Kingdom than to France. Situated in the Irish Sea, it is more or less equidistant from England, Wales, Scotland, Northern Ireland and Ireland.

5 – OJ 1972 L 73, p. 164 (hereinafter ‘Protocol No 3’).

6 – OJ 1973 L 68, p. 1.

7 – Annex II to the EEC Treaty (now Annex I EC) refers among other things to edible tubers. That term includes potatoes, so that the latter are an agricultural product covered by Regulation No 706/73.

8 – Council Regulation of 27 June 1967 on the common trade regime for ovalbumin and lactalbumin and repealing Regulation No 48/67/EEC (JO 1967 130, p. 2596 [not available in English]).

9 – Council Regulation of 28 May 1969 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products (OJ English Special Edition 1969, Series I, 1969(I), p. 240).

10 – Council Regulation of 21 April 1986 (OJ 1986 L 107, p. 1).

11 – Hereinafter ‘the States’.

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12 – Hereinafter ‘the contested rules’.

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13 – According to paragraph 6 of the order for reference, the annual production of this variety of potatoes (hereinafter ‘Jersey potatoes’) is around 35 000 to 40 000 tonnes. About 80 farmers are involved. Almost all production is sold in the United Kingdom. According to the Commission of the European Communities, such production accounts for 68% of Jersey’s agricultural turnover.

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14 – See paragraphs 7 and 8 of the order for reference.

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15 – Hereinafter ‘the Board’.

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16 – An agreement of that kind should, it appears, relate to various matters such as definition of the areas devoted to cultivating potatoes for ‘export’, quality and husbandry standards to be attained and the identity of the persons authorised by the Board to whom producers may sell potatoes grown by them (see paragraph 18 of the written observations of the applicant in the main proceedings).

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17 – Such agreements must, it appears, set out various details specifying, among other things, the identity of growers approved by the Board, from whom the marketing organisation may buy or receive potatoes, the quality standards to be attained, the procedures for the export or other handling of potatoes that are surplus to actual or estimated market requirements, details of any advertising or promotional duties to be carried out by the Board or the marketing organisation, and a series of details intended to ensure the transparency of commercial transactions (the costs of the services invoiced by that organisation, prices invoiced to buyers, transfer to the producers of the price paid by the buyers, the existence of factors liable to induce the organisation to deal on any basis other than the market price, performance bonuses or penalties applicable to the organisation concerned) (see paragraph 25 of the written observations of the applicant in the main proceedings and paragraph 9(c) of the respondents’ observations).

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18 – The costs which the Board may incur may derive from various activities entrusted to it by the contested rules, such as marketing, processing, handling or transport of potatoes and encouragement for or the conduct of research and training relating to their production and marketing. For an account of the various activities of the Office, see paragraph 27 of the written observations of the applicant in the main proceedings.

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19 – Hereinafter ‘JPMO’.

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20 – Hereinafter ‘TOP’.

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21 – Hereinafter ‘Fairview’.

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22 – The Vienna Convention on the Law of Treaties of 23 May 1969 (which codifies practices widely followed and generally accepted as part of the heritage of customary international law) makes it clear, in Article 29, that ‘[u]nless a different intention appears from the Treaty or is otherwise established, a Treaty is binding upon each party in respect of its entire territory’ (United Nations Treaty Series, Vol. 788, p. 354).

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23 – See Royal Commission on the Constitution 1969-73 (Report), Vol. I, University of London Library, Senate House, London, 1973, point 1347 (cited in point 3 of the Opinion of Advocate General La Pergola in Pereira Roque, and in point 4 of the Opinion of Advocate General Jacobs concerning the Isle of Man in Barr and Montrose Holdings (Case C-355/89 [1991] ECR I-3479)).

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24 – In that connection, see the views of Advocate General La Pergola in his Opinion in Pereira Roque, footnote 7, and, by analogy, those of Advocate General Jacobs concerning the Isle of Man in his Opinion in Barr and Montrose Holdings, points 4 to 8.

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25 – In Pereira Roque (paragraph 11), the Court emphasised that it was clear from the order for reference that ‘Jersey is a semi-autonomous dependency of the British Crown, which is represented in Jersey by the Lieutenant Governor’ and that the ‘United Kingdom Government, on behalf of the Crown, is responsible for defence and international relations’.

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26 – See Horner, S.A., ‘The Isle of Man and the Channel Islands – A Study of Their Status under Constitutional, International and European Law’, European University Institute Working Papers, No 98, San Domenico, 1984, pp. 70, 71 and 96 to 102. See also, regarding the Isle of Man, point 9 of the Opinion of Advocate General Jacobs in Barr and Montrose Holdings.

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27 – It is generally accepted that the specific regime reserved both for the Channel Islands and for the Isle of Man is accounted for by their original constitutional relationships with the United Kingdom, by their close economic links to that Member State and by their geographical situation and small size. See Dewost, J.-L. et al., Le droit de la Communauté économique européenne – Dispositions générales et finales, Vol. 15, Université de Bruxelles, 1987, p. 490.

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28 – See Article 26(3), which added a paragraph 5 to Article 227 of the EEC Treaty (now, after amendment, Article 299(6) EC) (OJ 1972 L 73, p. 14; hereinafter ‘the Act on the conditions of accession’).

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29 – See Article 2 of Protocol No 3, as interpreted by the Court in the abovementioned judgments in Barr and Montrose Holdings, paragraph 16 and Pereira Roque, paragraphs 34 and 47.

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30 – Moreover, Council Regulation (EEC) No 2151/84 of 23 July 1984 on the customs territory of the Community (OJ 1984 L 197, p. 1) makes it clear in Article 1(1) that the Channel Islands form part of the customs territory of the Community. That clarification confirms the fact that, under Protocol No 3, those islands are required to comply with Articles 23 EC and 25 EC.

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31 – The potato sector constitutes one of the few agricultural sectors which are not yet covered by a common market organisation. A proposal for a regulation to that effect was presented on 25 November 1992 (OJ 1992 C 333, p. 19). However, it was never adopted. In that connection, see the Commission’s answers to Parliamentary questions Nos 1827/97 (OJ 1998 C 21, p. 101) and P-849/03 (OJ 2003 C 192 E, p. 221).

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32 – Emphasis added.

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33 – This impression comes across more clearly from the German and Dutch versions of the first sentence of Article 1(2) of Protocol No 3 than from the other language versions of the same provisions. In the German and Dutch versions, the phrase ‘products and products processed therefrom’ and the phrase ‘which are the subject of a special trade regime’ are separated by a comma, so that the latter phrase relates, it appears, both to agricultural products and to products processed from them, and not solely to products processed from them. In the German version, those provisions start as follows: ‘Bei Landwirtschaftlichen Erzeugnissen und Landwirtschaftlichen Verarbeitungserzeugnissen, die unter eine besondere Handelsregelung fallen …’. In Dutch, the wording used is ‘Voor landbouwprodukten en voor door verwerking daarvan verkregen produkten, waarvoor een speziale regeling van het handelsverkeer bestaat … .’

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34 – In the case of agricultural goods not covered by that annex, they are subject to the Community rules on the free movement of goods only if they are covered by Regulations Nos 170/67 or 1059/69.

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35 – See footnote 7.

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36 – It is clear from the first subparagraph of Article 1(2) of Protocol No 3, and from Article 1(1) of Regulation No 706/73, that levies and other import measures are the only mechanisms of the external part of the common agricultural policy that are applicable to Jersey, to the exclusion of the other mechanisms such as refunds or export compensatory amounts. As regards the ‘central core’ of the common agricultural policy, comprising the regulation of prices and structural policy, that too seems not to apply to that island. See, to that effect, Dewost, J.-L. et al, op. cit., p. 490.

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37 – Article 32(4) EC lays down the principle that ‘[t]he operation and development of the common market for agricultural products must be accompanied by the establishment of a common agricultural policy’. It follows that the implementation of the rules on the free movement of goods is generally linked with the application of measures adopted in the context of the common agricultural policy. That being the case, that link is not absolute. Indeed, in its judgment in Case 231/78 Commission v United Kingdom [1979] ECR 1447, paragraph 14, the Court held that ‘the continuance of alleged deficiencies in the establishment of the common agricultural policy [namely the lack of a common market organisation for potatoes] cannot, therefore, [after the end of the transitional period] prevent the application of the rules laid down for the establishment of the common market, and in particular the application of the rule prohibiting quantitative restrictions’. See also, to that effect, Case 232/78 Commission v France [1979] ECR 2729, paragraph 8, and Case 288/83 Commission v Ireland [1985] ECR 1761, paragraph 23.

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38 – In Pereira Roque, concerning the situation in Jersey regarding the free movement of persons, the Court took care to indicate in paragraph 42 that ‘relations between the Channel Islands and the United Kingdom [cannot] be regarded as similar to those between two Member States because of other aspects of the status of those islands [in particular in the sphere of the free movement of goods]’.

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39 – According to JPMO, it is clear from the expression ‘whether directly or via some other place’ that the contested rules are also applicable to cases where potatoes are sent from Jersey to France for processing there and are then forwarded to the United Kingdom to be sold and consumed there. That interpretation is contested by the States. According to them, the expression in question relates only to the route followed to send potatoes outside the island. That expression was introduced in order to avoid any discrimination between goods sent directly by ferry to the United Kingdom (directly from the port of St Helier in Jersey to Portsmouth in the United Kingdom) and those sent to that Member State via ports in other Member States, particularly France (from St Helier to Portsmouth via the French port of Caen). In response to a written question put to them by the Court, the States maintained that the contested rules are not applicable either where potatoes are sold to an operator established in France or in another Member State and then sold by the latter, without processing, for consumption in the United Kingdom.

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40 – See, in particular, Case 296/84 Sinatra [1986] ECR 1047, paragraph 11, and Case C‑341/94 Allain [1996] ECR I-4631, paragraph 11.

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41 – See paragraph 33 of the order for reference, which adopts the interpretation contended by the States.

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42 – See paragraph 33 of the order for reference in conjunction with paragraph 31 thereof.

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43 – In the event of the amount of the contribution at issue being calculated by reference to the quantity of potatoes dispatched, that contribution would display a direct link with the crossing of a territorial limit classified by some as an ‘intra-State frontier’(that is to say, in the context of trade within one and the same Member State), so that the question of the applicability of Articles 23 EC and 25 EC would certainly arise. In the event that the basis of calculation was the cultivated area, the existence of a link between the contribution at issue and the crossing of any frontier would not be so clear, unless it were considered, as contended by the Commission, that such a link derives from the purpose of the contribution, which is to offset the main costs of the Board, even though those costs do not necessarily relate to trade in potatoes with the United Kingdom (see footnote 18). In that connection, see Case C-130/93 Lamaire [1994] ECR I-3215 concerning a compulsory annual levy on potatoes exported from Belgium, intended to finance the activities of a body responsible for promoting the development of internal and external outlets for agricultural, horticultural and fisheries products. The amount of that levy was calculated by reference to the weight of potatoes exported, so that it was incontestable that that measure affected goods by reason of their crossing an inter-State frontier (in the context of trade between Member States).

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44 –

Article 3(1)(a) EC provides that the activities of the Community shall include ‘the prohibition, as between Member States, of customs duties and quantitative restrictions on the import and export of goods, and of all other measures having equivalent effect’. Article 23(1) EC adds that the customs union on which the Community is based ‘shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect’. Echoing those provisions, Article 25 EC indicates that ‘[c]ustoms duties on imports and exports and charges having equivalent effect shall be prohibited between Member States’. To the same effect, Article 28 EC lays down the principle that ‘[q]uantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States’. That reference to relations between the Member States is to be found in identical terms in Article 29 EC with regard to quantitative restrictions on exports and measures having equivalent effect (emphasis added).

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45See, in particular, Case 152/78 Commission v France [1980] ECR 2299); Joined Cases 314/81 to 316/81 and 83/82 Waterkeyn and Others [1982] ECR 4337, concerning French rules limiting the advertising of alcoholic beverages, whether produced in France or imported from other Member States; Case 286/81 Oosthoek’s Uitgeversmaatschappij [1982] ECR 4575, concerning Netherlands rules limiting the use of certain types of sales promotion for encyclopaedias, whether produced and marketed in the Netherlands, produced in that Member State and exported to other Member States or produced in other Member States and imported into the Netherlands; Case 407/85 3 Glocken and Kritzinger [1988] ECR 4233, concerning Italian rules prohibiting the sale of pasta made from a mixture of common wheat or a mixture of common wheat and durum wheat, whether produced in Italy or imported from other Member States; and Case 298/87 Smanor [1988] ECR 4489, concerning French rules prohibiting the marketing of certain products under the description ‘deep-frozen yoghurt’, whether manufactured in that Member State or imported from another.

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46See, in particular, Waterkeyn and Other, paragraphs 11 and 12, Oosthoek’s Uitgeversmaatschappij, paragraph 9, 3 Glocken and Kritzinger, paragraphs 11, 25 and 28 and Smanor, paragraphs 7 and 8.

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47See Case 152/78 Commission v France, paragraphs 11 to 14.

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48See, in particular, Joined Cases C-1/90 and C-176/90 Aragonesa de Publicidad Exterior and Publivía [1991] ECR I‑4151, paragraphs 11 and 24, concerning rules of the Autonomous Community of Catalonia prohibiting, in that part of Spanish territory, advertising of their beverages with a specified alcohol content, whether produced in other parts of national territory or imported from other Member States; Joined Cases C-277/91, C-318/91 and C-319/91 Ligur Carni and Others [1993] ECR I‑6621, paragraphs 36 to 38, concerning rules in the region of Liguria subjecting the introduction of fresh meat (regardless of its origin) into that part of Italian territory to health checks in the municipality of transit or of destination of the goods and at the same time requiring the operators concerned to pay a levy; and Case C-67/97 Bluhme [1998] ECR I-8033, paragraphs 19, 20 and 22, concerning Danish rules prohibiting the keeping of certain species of bees (regardless of their origin) on the island of Læsø and the neighbouring islands forming part of Danish territory.

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49See, to that effect, in line with that case-law, paragraphs 19 and 27 of the Opinion of Advocate General Tesauro in Joined Cases C-363/93, C-407/93 to C-411/9 Lancry and Others [1994] ECR I-3957). In his view, ‘it is immaterial, for the purposes of ascertaining whether or not it is compatible with Article 9 et seq. of the Treaty [now, after amendment, Article 23 EC et seq.], that a charge is applied to imported products at the time when they enter the territory of a region which is not on the borders of the State, rather than when they cross the frontier’. He emphasised that ‘the goods in question must move from one Member State to another’ and that it ‘is irrelevant, for example, whether Scotch whisky crosses the French frontier at Calais (because it has been shipped by sea) or at Lyon (because it has been sent by air): in both cases, for these purposes, the point is the crossing of a Member State’s frontier’. Similarly, Advocate General Tesauro stated that ‘the French overseas departments, whether they are islands (Réunion, Martinique, Guadeloupe) or not (Guyane), are “frontiers” only where the products concerned come from another Member State; they are not “frontiers” where the products come from and originate in another region of France’.

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50See Case 355/85 Cognet [1986] ECR 3231 concerning French rules laying down a fixed price for retail sales of books, except those that had crossed an intra-Community frontier during distribution, where, having been published and printed in France, they were exported to another Member State and reimported into France; Joined Cases 80/85 and 159/85 Edah [1986] ECR 3359, concerning Netherlands rules fixing a retail price for bread, by virtue of which the sale price of bread imported from other Member States could be lower than that prescribed for bread of domestic production; and Case 98/86 Mathot [1987] ECR 809 concerning Belgian rules requiring certain wording to be placed on the packaging of butter, except in the case of butter imported from other Member States.

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51Cognet, paragraph 10. See, to the same effect, Edah, paragraph 18, and Mathot, paragraph 7.

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52Ibid.

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53Joined Cases C-485/93 and C-486/93 [1995] ECR I-2655.

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54C-72/03 [2004] ECR I-0000.

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55C-163/90 [1992] ECR I-4625.

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56Paragraph 16.

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57Paragraph 17.

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58See, to that effect, the Opinion of Advocate General Tesauro in Lancry and Others, points 19 and 20.

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59Paragraph 30.

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60See paragraph 31.

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61See paragraph 32.

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62See paragraph 27.

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63See paragraph 35.

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64Carbonati Apuani, paragraph 24.

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65I refer to the judgments in Lancry and Others, paragraphs 29 and 32, Simitzi, paragraph 27, and Carbonati Apuani, paragraph 24.

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66The term used by Advocate General Tesauro in his Opinion in Lancry and Others, point 27.

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67See, in particular, Cognet, paragraphs 10 to 12, Edah, paragraph 23 and Mathot, paragraph 12. See also, to that effect, Case 86/78 Peureux [1979] ECR 897, paragraph 38. See, to the same effect, points 78 and 79 of my Opinion in Case C‑294/01 Granarolo [2003] ECR I-0000.

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68Paragraph 26 of the judgment in Carbonati Apuani refers to paragraphs 21 to 23 of the judgment in Case C-44/98 Guimont [2000] ECR I‑10663). Whilst it is true that those passages of Guimont, like the judgment in Lancry and Others, reflect the Court’s concern to take account of such difficulties as may arise from the existence of reverse discrimination, the Court drew inferences which I find hardly comparable. In Guimont, the Court departed from its traditional case-law regarding the admissibility of preliminary questions, by agreeing to answer a question relating to the interpretation of Article 30 of the EC Treaty (now, after amendment, Article 28 EC) – even though the main proceedings displayed no link with the import of goods – only in the case where the national law of the referring court required the conferral on a national producer of the same rights as those which a producer of another Member State would derive from Community law in the same situation, in order to ensure that the domestic producer did not suffer reverse discrimination. Although the Court agreed to consider whether the national rules constituted a measure having an effect equivalent to a quantitative restriction on imports within the meaning of Article 30 of the Treaty, it took care to indicate that it was doing so only to the extent to which those rules (which applied indistinctly to domestic and imported products) were applied to imported products (see paragraphs 24, 25 and 35). By that clarification, the Court excluded the applicability of Article 30 of the Treaty to a situation that was wholly internal to a Member State. From that point of view, the judgment in Guimont does not go so far as Lancry and Others, so it would appear that the convergence of those cases is limited.

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69See point 28.

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70See point 46.

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71See Joined Cases 2/69 and 3/69 Sociaal Fonds voor de Diamantarbeiders [1969] ECR 211, paragraph 14, emphasis added.

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72Emphasis added.

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73That view of the ‘internal market’, as an extension of the common market, is echoed to some extent in the case-law of the Court. In its judgment in Case 15/81 Schul Douane Expéditeur [1982] ECR 1409, paragraph 33, it emphasised that ‘[t]he concept of a common market as defined by the Court in a consistent line of decisions involves the elimination of all obstacles to intra‑Community trade in order to merge the national markets into a single market bringing about conditions as close as possible to those of a genuine internal market’.

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74See, in particular, with regard to the free movement of goods, Case 152/78 Commission v France, Waterkeyn and Others, and also Oosthoek’s Uitgeversmaatschappij.

79 – COM(85) 310 final.

80 – See, in that connection, paragraphs 24 to 31 of that White Paper, and also Vaulont, N., ‘La suppression des frontières intérieures et la réglementation douanière communautaire’, Revue du marché unique européen, Éditions Juglar, Paris, 1994, p. 51 et seq.

81 – See Joined Cases C-465/00, C-138/01 and C-139/01 Österreichischer Rundfunk and Others [2003] ECR I‑4989, paragraph 41, and Case C-101/01 Lindqvist [2003] ECR I-0000, paragraph 40. See also, to that effect, Case C-281/02 Owusu [2005] ECR I‑0000, paragraph 34, and my Opinion in that case (points 197 to 204).

82 – See paragraphs 19 and 20 of its written observations.

83 – It will be remembered that the Court emphasised in that judgment that ‘Article 14(2) EC defines the internal market as “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured”, without drawing any distinction between inter‑State frontiers and frontiers within a State’.

84 – See, to that effect, the comments on the judgment in Carbonati Apuani by Rigaux, A., Revue mensuelle du JurisClasseur – Europe, November 2004, p. 13 et seq.

85 – As regards the free movement of persons and services, see, in particular, Joined Cases 35/82 and 36/82 Morson and Jhanjan [1982] ECR 3723, paragraphs 15 to 17; Case C-332/90 Steen [1992] ECR I-341, paragraph 9; Case C-17/94 Gervais and Others [1995] ECR I-4353, paragraph 24; Case C-134/95 USSL n° 47 di Biella [1997] ECR I-195, paragraph 19; Case C-108/98 RI.SAN [1999] ECR I-5219, paragraph 23; and Case C-97/98 Jägerskiöld [1999] ECR I -7319, paragraph 42.