Language of document : ECLI:EU:C:1998:547

JUDGMENT OF THE COURT (Sixth Chamber)

19 November 1998 (1)

(Actions for annulment — Common commercial policy — Regulation (EC) No519/94 — Import quotas for certain toys from the People's Republic of China)

In Case C-150/94,

United Kingdom of Great Britain and Northern Ireland, represented by John E.Collins, Assistant Treasury Solicitor, acting as Agent, and by Christopher Vajda,Barrister, with an address for service at the British Embassy, 14 BoulevardRoosevelt,

applicant,

supported by

Federal Republic of Germany, represented by Ernst Röder, Ministerialrat in theFederal Ministry of Economic Affairs, and Gereon Thiele, Assessor in the sameMinistry, acting as Agents, D-53107 Bonn,

intervener,

v

Council of the European Union, represented by Bjarne Hoff-Nielsen, LegalAdviser, and Guus Houttuin, of its Legal Service, acting as Agents, with an addressfor service in Luxembourg at the office of Alessandro Morbilli, Manager of the

Legal Directorate, European Investment Bank, 100 Boulevard Konrad Adenauer,Kirchberg,

defendant,

supported by

Kingdom of Spain, represented by Alberto Navarro González, Director-Generalfor Community Legal and Institutional Coordination, and Gloria Calvo Díaz,Abogado del Estado, of the State Legal Service, acting as Agents, with an addressfor service in Luxembourg at the Spanish Embassy, 4-6 Boulevard EmmanuelServais,

and by

Commission of the European Communities, represented by Eric L. White andPatrick Hetsch, of its Legal Service, acting as Agents, with an address for servicein Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service,Wagner Centre, Kirchberg,

interveners,

APPLICATION for annulment of Article 1(2) of Council Regulation (EC) No519/94 of 7 March 1994 on common rules for imports from certain third countriesand repealing Regulations (EEC) Nos 1765/82, 1766/82 and 3420/83 (OJ 1994 L 67,p. 89), in so far as it applies to toys falling within HS/CN Codes 9503 41, 9503 49and 9503 90,

THE COURT (Sixth Chamber),

composed of: P.J.G. Kapteyn, President of the Chamber, G.F. Mancini(Rapporteur) and J.L. Murray, Judges,

Advocate General: P. Léger,


Registrar: H. von Holstein, Deputy Registrar,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 20 June 1996,

after hearing the Opinion of the Advocate General at the sitting on 26 September1996,

gives the following

Judgment

1.
    By application lodged at the Court Registry on 6 June 1994, the United Kingdomof Great Britain and Northern Ireland brought an action under the first paragraphof Article 173 of the EC Treaty for annulment of Article 1(2) of CouncilRegulation (EC) No 519/94 of 7 March 1994 on common rules for imports fromcertain third countries and repealing Regulations (EEC) Nos 1765/82, 1766/82 and3420/83 (OJ 1994 L 67, p. 89, 'the contested regulation‘), in so far as it applies totoys falling within HS/CN Codes 9503 41, 9503 49 and 9503 90.

The situation before the contested regulation was adopted

2.
    Before the entry into force of the contested regulation, imports of productsoriginating in State-trading countries were governed by several Council regulations.With regard, in particular, to imports from the People's Republic of China('China‘), the Council had adopted Regulation (EEC) No 1766/82 of 30 June 1982on common rules for imports from the People's Republic of China (OJ 1982 L 195,p. 21), which applied to imports which were not subject to any quantitativerestrictions, and Regulation (EEC) No 3420/83 of 14 November 1983 on importarrangements for products originating in State-trading countries, not liberalised atCommunity level (OJ 1983 L 346, p. 6), which applied inter alia to imports fromChina which did not fall within the scope of Regulation No 1766/82.

3.
    Under Article 2(1) of Regulation No 3420/83, the putting into free circulation ofthe products listed in Annex III to that regulation was subject to quantitativerestrictions in one or more Member States as indicated in that annex. Article 3provided that before 1 December of each year the Council was to lay down, inaccordance with Article 113 of the EEC Treaty, the import quotas to be openedby the Member States in respect of the various State-trading countries for thoseproducts. Article 3(2) provided that if no such decision was adopted, the existingimport quotas were to be extended on a provisional basis for the following year.

4.
    Under Articles 7 to 10 of Regulation No 3420/83, any amendment to the importarrangements provided for in accordance with the regulation which a Member Stateconsidered necessary could be subject to a Community prior consultation procedureleading to a decision by the Commission or, where a Member State raised anobjection, by the Council.

5.
    In addition, Article 4(1) of Regulation No 3420/83 provided that a Member Statecould exceed the amount of the quotas or open import facilities where no quotahad been laid down. Under Article 4(2), when a Member State which was alonein maintaining a quantitative restriction on imports proposed to abolish or suspendthat restriction, it was to inform the other Member States and the Commission,which was to adopt the proposed measure within 10 working days, without initiatingthe procedure provided for by Articles 7 to 10 of the regulation.

6.
    Among the products covered by Annex III to Regulation No 3420/83 were toys, theimportation of which was subject to quantitative restrictions in Germany, Franceand Greece. Those restrictions were applied not only to toys originating in Chinabut also to toys from any State-trading country listed in Annex I to the regulation. Annex III was amended by Council Regulation (EEC) No 3784/85 of 20 December1985 amending, on account of the accession of Spain and Portugal, Annexes I andIII to Regulation (EEC) No 3420/83 on import arrangements for productsoriginating in State-trading countries, not liberalised at Community level (OJ 1985L 364, p. 1), in order to include, inter alia, the Spanish restrictions on imports oftoys.

7.
    Regulation No 3420/83 was last amended by Council Regulation (EEC) No 2456/92of 13 July 1992 fixing the import quotas to be opened by Member States in respectof State-trading countries in 1992 (OJ 1992 L 252, p. 1). Regulation No 2456/92fixed the quotas to be opened for 1992 and provided in Article 5 that the systemof automatic extension under Article 3(2) of Regulation No 3420/83 would not beapplicable for 1993, on account of the need to replace the existing arrangementswith a Community mechanism covering any restrictions remaining on 31 December1992 (fifth recital in the preamble). With regard to toys from China, Annex VIIIto Regulation No 2456/92 set quotas for Germany and Spain.

8.
    No new regulation setting import quotas was adopted for 1993. However, theCommission did authorise national measures, including quotas for the import oftoys into Spain from China.

The contested regulation

9.
    The contested regulation, applicable from 15 March 1994, repealed RegulationsNos 1766/82 and 3420/83. The first recital in the preamble to the regulation statesthat while 'the common commercial policy should be based on uniform principles‘,Regulations Nos 1766/82 and 3420/83 still allowed exceptions and derogationsenabling Member States to continue applying national measures to imports ofproducts originating in State-trading countries. According to the fourth recital inthe preamble, 'in order to achieve greater uniformity in the rules for imports, it isnecessary to eliminate the exceptions and derogations resulting from the remainingnational commercial policy measures, and in particular the quantitative restrictionsmaintained by Member States under Regulation (EEC) No 3420/83‘. The fifth and

sixth recitals state that the principle of liberalisation of imports must form thestarting point for such harmonisation, except for 'a limited number of productsoriginating in the People's Republic of China‘. As explained in the sixth recital,'owing to the sensitivity of certain sectors of Community industry‘, those productsshould be subject to quantitative quotas and surveillance measures applicable atCommunity level.

10.
    Article 1(2) of the contested regulation provides that imports into the Communityof the products referred to are to take place freely and so are not to be subject toany quantitative restrictions, without prejudice to any safeguard measures or theCommunity quotas referred to in Annex II. Article 1(3) provides that imports ofthe products referred to in Annex III are to be subject to Community surveillance. Annexes II and III apply exclusively to products from China.

11.
    Annex II sets quotas for certain categories of toys originating in China. Morespecifically, annual quotas of ECU 200 798 000, ECU 83 851 000 andECU 508 016 000 were fixed for toys falling within HS/CN Codes 9503 41 (stuffedtoys representing animals or non-human creatures), 9503 49 (other toysrepresenting animals or non-human creatures) and 9503 90 (certain miscellaneoustoys) respectively.

12.
    Other products which were previously subject to national restrictions, including interalia construction sets and toys, puzzles and playing cards, which fall within HS/CNCodes 9503 30, 9503 60 and 9504 40 respectively, are covered by Annex III to thecontested regulation and are therefore subject to Community surveillance.

13.
    In support of its application, the United Kingdom Government puts forward fivegrounds of annulment alleging: first, failure to give correct or adequate reasons forthe contested regulation; second, failure to carry out any appreciation of the factsor manifest error of appreciation; third, arbitrary nature of the contested quotas;fourth, breach of the principle of proportionality and, fifth, breach of the principleof equal treatment.

Failure to give correct or adequate reasons

14.
    In its first ground of annulment, the United Kingdom Government alleges that noadequate statement of reasons is given for Article 1(2) of the contested regulationin breach of the obligation under Article 190 of the EC Treaty.

15.
    The objectives of uniformity of the rules for imports and of liberalisation ofimports, set out in the fourth and fifth recitals in the preamble to the contestedregulation, should, it claims, have led to the abrogation of any national quantitativerestrictions still in existence. The sixth recital, however, introduces for the products

listed in Annex II, which include the toys at issue, an exception to the principle ofliberalisation for which, as such, the Council ought to have given specific reasons.

16.
    In fact, the latter merely referred to 'the sensitivity of certain sectors ofCommunity industry‘, without indicating the reasons for which the sectors inquestion were considered to be sensitive or why those sectors were sensitive onlyto imports originating in China and not from any other non-member country or whyit was necessary in that respect to replace a national restriction with a Community-wide restriction.

17.
    On that last point, the United Kingdom Government observes in particular that,when the contested regulation entered into force, the Kingdom of Spain was theonly Member State which imposed a restriction on the import of the toys at issue. That restriction was limited to direct imports into Spain and concerned less than2% of Community imports of those products. Accordingly, the Council ought tohave explained why it was necessary to replace a restrictive measure in oneMember State which had minimal effect at Community level with a restrictionwhich had, by contrast, a very significant impact at Community level. Furthermore,the Council cannot argue that the quotas in question are intended to protect theCommunity industry as a whole and not just the Spanish toy industry, since thecontested regulation gives no reasons in that regard, the Council has not producedany evidence to show that the Community industry required such protection and,moreover, it failed to carry out an investigation to determine whether that was thecase.

18.
    In any event, according to the United Kingdom Government, the introduction ofthe contested quotas is not a transitional measure inherent in the completion of thecommon commercial policy, but an exception to the general principle of liberalisingimports.

19.
    Nor did the Council give any reasons, the United Kingdom Government claims, foropting to introduce quotas at Community level rather than resorting to a regionalsafeguard measure the adoption of which is, moreover, expressly provided for inArticle 17 of the contested regulation. Furthermore, it did not explain how thecontested quotas were calculated. Given that the Council had decided on a majorchange of policy, it was essential for it to give proper reasons to justify its decision.

20.
    Finally, the applicant maintains that the explanation provided by the Council in itsdefence, based on the growth of Chinese imports, is insufficient to justify theintroduction of contested quotas in the absence of any examination of the effectsof those imports on the Community toy industry. Furthermore, since thatexplanation was provided in the course of an action based inter alia on lack ofreasoning, it cannot remedy the defective reasoning vitiating the contested act. Inits defence, the Council also sought to explain why it was necessary to reduce theimports authorised for 1994 to the 1991 level; that attempt was to no avail,however, since the contested regulation is silent on that point too.

21.
    The German Government endorses the arguments of the United KingdomGovernment in all essential respects, adding that the Council failed to give reasonsfor the contested regulation with regard to the principle of proportionality laiddown in the third paragraph of Article 3b of the EC Treaty. That provisionimposes on Community institutions a special duty to state reasons and requiresthem in particular to take into account the interests of the Member States.

22.
    The Council, supported by the Spanish Government and the Commission, maintainsthat the first six recitals in the preamble to the contested regulation do not merelydescribe the general situation and the general objectives of the regulation, inparticular that of replacing, as a necessary complement to the completion of theinternal market, all the former rules applicable to imports, whether liberalised ornot, with a single common system. It contends that those recitals also explain thereason why the quota was fixed at Community level, namely 'the sensitivity ofcertain sectors of Community industry‘. In addition, the third recital specificallyexplains why a solution had to be sought at Community level.

23.
    The Council adds that, contrary to the argument of the United KingdomGovernment, the disputed quotas do not constitute an exception to the principleof trade liberalisation, but form an integral part of the system introduced by thecontested regulation. The general principle established by the latter is not that of liberalisation of trade but rather that of uniformity in the rules for imports. Itfollows that, in contrast to the view taken by the applicant, there is no need to giveseparate reasons for those quotas.

24.
    With regard to the German Government's argument as to the lack of reasons withrespect to the principle of proportionality embodied in Article 3b of the Treaty, theCouncil states that the intervener, although claiming merely to make supplementaryobservations on the grounds of annulment put forward by the applicant, has in factintroduced a new ground of annulment, contrary to Article 37(4) of the EC Statuteof the Court of Justice. In its view, the plea in question should consequently berejected as inadmissible. In any event, the Council points out that Article 3b of theTreaty does not require the acts of the Community institutions to provide specificreasons with respect to the principle of proportionality.

25.
    Before the various complaints made by the United Kingdom Government and bythe German Government, which has intervened in its support, are examined, itshould be noted that, as the Council has correctly observed, since its judgment of13 March 1968 in Case 5/67 Beus v Hauptzollamt München [1968] ECR 83, theCourt has consistently held that the scope of the obligation to provide reasonsdepends on the nature of the measure in question and that, in the case of measuresof general application, the statement of reasons may be confined to indicating thegeneral situation which led to its adoption, on the one hand, and the generalobjectives which it is intended to achieve, on the other.

26.
    Furthermore, the Court has repeatedly held that if the contested measure clearlydiscloses the essential objective pursued by the institution, it would be excessive torequire a specific statement of reasons for the various technical choices made (see,inter alia, Case 250/84 Eridania and Others v Cassa Conguaglio Zucchero [1986]ECR 117, paragraph 38).

27.
    In the present case, the Council first describes the general situation and theobjectives it proposed to attain, explaining that completion of the commoncommercial policy as it pertains to rules for imports was a necessary complementto the completion of the internal market (third recital in the preamble to theregulation).

28.
    It then explained that, in order to attain those objectives, it was necessary toeliminate the exceptions and derogations resulting from the remaining nationalcommercial policy measures (fourth recital), and that liberalisation of imports hadto form the starting point for the Community rules (fifth recital).

29.
    Finally, the Council took particular account of the objectives pursued by theintroduction of the contested quotas, stating that the quotas were necessary owingto the sensitivity of certain sectors of Community industry (sixth recital).

30.
    It must be stated that, taken as a whole, that statement of reasons contains a cleardescription of the factual situation and of the objectives pursued which, havingregard to the circumstances of this case, would seem to be sufficient.

31.
    That finding is not undermined by the arguments put forward by the UnitedKingdom Government.

32.
    First, as the act was of general application, the Council was not bound to set outin the statement of reasons for the contested regulation the information which ittook into account when concluding that certain sectors of Community industry weresensitive to imports from China. In particular, it did not have to describe thedevelopment of the imports concerned or supply an economic analysis of thesectors of Community industry affected by those imports.

33.
    Second, given that the act was intended to abolish national restrictions andexceptions in order to complete the common commercial policy, the Council wasnot required to explain why some restrictions were imposed at Community level. In fact, it is where exceptional circumstances require the imposition of restrictivemeasures confined to one or more regions of the Community, thereby derogatingfrom the uniform nature of the common commercial policy, that the Council isrequired to provide specific reasons.

34.
    Third, although the introduction of the contested quotas constitutes an exceptionto the liberalisation of imports which, according to the fifth recital in the preambleto the regulation, must form the starting point for the Community rules, it should

be noted that the abolition of all quantitative restrictions for imports from non-member countries is not a rule of law which the Council is required in principle toobserve, but the result of a decision made by that institution in the exercise of itsdiscretion. Besides, the Council explained the reasons which led it to set quotas forcertain specific products.

35.
    Fourth, since the Council had indicated the objectives to be pursued, it did notneed to justify the technical choices made, including that concerning the contestedquotas. It is therefore irrelevant in this respect that it was only in the proceedingsbefore the Court that the Council explained that it was necessary to reduce theimports authorised for 1994 to the 1991 level.

36.
    With regard to the German Government's arguments concerning the lack ofspecific reasons pertaining to the principle of proportionality, the first point to noteis that, contrary to the view taken by the Council, those arguments do notcontravene Article 37(4) of the EC Statute of the Court of Justice. That provisiondoes not prevent an intervener from using arguments other than those used by theparty it supports, provided the intervener seeks to support that party's submissionsor seeks the rejection of the opposing party's submissions (Case 30/59 DeGezamenlijke Steenkolenmijnen v High Authority [1961] ECR 1). In this case, theargument in question concerns the ground of annulment alleging lack of reasoning,put forward by the applicant government, and is meant to support the form oforder sought by the latter. It must therefore be examined by the Court.

37.
    The German Government's argument is not, however, well founded. While theprinciple of proportionality, as set forth in the third paragraph of Article 3b of theEC Treaty, constitutes a general principle of the Community legal system, anexpress reference to that principle in the preamble cannot be required (see, withregard to the principle of subsidiarity, laid down in the second paragraph of Article3b, Case C-233/94 Germany v Parliament and Council [1997] ECR I-2405,paragraph 28).

38.
    In any event, by stating in the sixth recital in the preamble to the contestedregulation that quantitative quotas had to be imposed 'for a limited number ofproducts originating in the People's Republic of China‘, owing to the sensitivity ofcertain sectors of Community industry, the Council explained that such measureswere taken only where they proved necessary in order to attain the objectivespursued, in accordance with the principle of proportionality.

39.
    For those reasons, the ground of annulment alleging breach of the obligation tostate reasons has no factual basis and must therefore be rejected.

Failure to carry out any appreciation of the facts or manifest error of appreciation

40.
    In its second ground of annulment, the United Kingdom Government alleges thatwhen adopting Article 1 of the contested regulation, the Council failed to make aproper assessment of the relevant facts or else made a manifest error in itsassessment such as to render that provision unlawful.

41.
    It points out in this regard that before the contested regulation was adopted theonly restriction applied to the toys at issue was the Spanish quota, and maintainsthat the disputed quotas introduced restrictions applicable in all the MemberStates, which reduced the level of Community trade by almost 50% for some of thetoys at issue. The Council is, admittedly, entitled to make such a dramatic changeif the circumstances should warrant it. However, in this case, the fact is that it didnot have sufficient information to enable it to assess the relevant facts correctly.

42.
    Such an assessment, it submits, would have had to take into account factors suchas:

—    the position and state of the toy industry in Spain and in the other MemberStates;

—    the balance of interests between the various sectors of the Community toyindustry, consumers, retailers and distributors;

—    the effects of the measures adopted and of other measures that might havebeen contemplated, such as national safeguard measures;

—    the balancing of the Community's interest in free trade againstprotectionism.

43.
    The United Kingdom Government claims that, instead of taking all those factorsinto consideration, the Council merely examined the growth in Chinese exportswithout investigating its effects on the Community industry. It failed to assess thepotential damage caused to the Community industry and neglected to examine thesize, structure, production, production capacity and profitability of the sectorconcerned. In its view, the Council has produced no evidence, other than thegrowth of Chinese exports, to show that the Community toy industry stood in needof the protection afforded by the contested quotas. Nor has the Councildemonstrated that it had available to it any facts relevant to its assessment of theChinese industry's export potential or of the effects of the import restrictions thenin existence.

44.
    The lack of any proper assessment of the facts is all the more surprising, theUnited Kingdom Government submits, since, under Article 5 et seq. of thecontested regulation, a case-by-case investigation must be carried out before anyrestriction is imposed on imports. In addition, such an inquiry was necessary in thecircumstances given that over 98% of the imports in issue were liberalised beforethe contested regulation was adopted. Even in the absence of an express provision,

the institutions were bound by the fundamental principles of Community law tocarry out a thorough assessment of the relevant facts before imposing restrictionson a trade that had previously been liberalised.

45.
    The applicant also argues that, since the starting point of the contested regulationwas, in accordance with the objective laid down in Article 110 of the EC Treaty,the liberalisation of imports, the disputed quotas introducing restrictions atCommunity level should be regarded as exceptions to the principle of liberalisationand thus be interpreted strictly. That cannot be invalidated by the considerationthat those quotas form an integral part of the contested regulation. Drawing ananalogy between the new trading arrangements introduced by the latter and thesystem of freedom of movement for goods within the Community, the UnitedKingdom Government points out that Article 36 of the EC Treaty also forms anintegral part of the rules on the free movement of goods within the Community,even though it constitutes an exception to the fundamental principle enshrined inArticle 30 and must therefore be interpreted strictly.

46.
    Finally, the applicant maintains, the new restrictions on the trade in toys betweenthe Community and China are so far-reaching and have such a marked effect onthe level of trade that they are quasi-penal in nature and should be subjected toparticularly close scrutiny.

47.
    The German Government endorses the arguments set out by the United KingdomGovernment concerning the ground of annulment alleging an error of assessment, adding that the Council omitted to take into consideration Article 110 of the Treatywhich is intended to contribute to the progressive abolition of restrictions oninternational trade. Although that provision does not prohibit the Communityfrom enacting any measure liable to affect trade with non-member countries, sucha measure must still be required and be legally justified by Community law. In thepresent case, the Council has not specified the provisions capable of justifying thequota.

48.
    The Council, supported by the Spanish Government and the Commission, observesthat the contested regulation covers all sectors of the economy and replaces allprevious rules for both liberalised and non-liberalised imports with a singleCommunity system. When it introduced the disputed quotas, the Council wasobliged to reconcile the conflicting interests of different sectors of the Communitytoy industry and to make complex political decisions.

49.
    In accordance with the case-law of the Court, where complex economic situationsare to be evaluated, the Community institutions enjoy a wide margin of discretion,particularly where they are acting within the framework of Article 113 of theTreaty. Consequently, the lawfulness of a common commercial policy measure canbe challenged on account of an error of assessment only if that measure appearsmanifestly inappropriate in relation to the objective pursued. In particular, where

the Council is called upon to evaluate the future effects of the provisions it enacts,which cannot be foreseen with any degree of certainty, that assessment is open tocriticism only if it appears manifestly incorrect in the light of the informationavailable to it at the time of the adoption of the provisions in question. Moreover,the Council's discretion in assessing a complex economic situation also extends, toa certain extent, to the establishment of the basic facts.

50.
    The Council points out that, in this instance, the fact that national restrictions werealready in existence is just one of the matters which it had to take intoconsideration when adopting the contested regulation. It took into account thelevel of imports from China, their effects on the Community industry, the Chineseindustry's export potential and price levels, as well as the import restrictions thenin existence at Community or national level. The comparison drawn by theapplicant between the effects of the Spanish restrictions existing before thecontested regulation was adopted and the effects of that regulation is based on amisinterpretation. The disputed quotas, far from constituting an extension of the national restrictions, are intended to protect the Community industry as a whole.

51.
    The Council contends that, since the German Government's argument concerningArticle 110 of the Treaty was not put forward by the United Kingdom Governmentand was unsupported by any evidence, it must be rejected. In any event, thatprovision cannot prevent the Council from introducing quotas applying to tradewith non-member countries on the basis of Article 113 of the Treaty.

52.
    Finally, the Council considers that neither the applicant nor the intervener hasestablished that the defendant had insufficient data, that it had acted in the absenceof any information, that its assessment of the facts was manifestly incorrect or thatit had misused its powers.

53.
    First of all, as the Council and the parties intervening in support of the form oforder sought by it have observed, the Court has consistently held that theCommunity institutions enjoy a margin of discretion in their choice of the meansneeded to achieve the common commercial policy (Case 245/81 Edeka Zentrale vGermany [1982] ECR 2745, paragraph 27; Case 52/81 Faust v Commission [1982]ECR 3745, paragraph 27; Case 256/84 Koyo Seiko v Council [1987] ECR 1899,paragraph 20; Case 258/84 Nippon Seiko v Council [1987] ECR 1923, paragraph 34,and Case 260/84 Minebea v Council [1987] ECR 1975, paragraph 28).

54.
    In a situation of that kind, which involves an appraisal of complex economicsituations, judicial review must be limited to verifying whether the relevantprocedural rules have been complied with, whether the facts on which thecontested choice is based have been accurately stated, and whether there has beena manifest error in the appraisal of those facts or a misuse of powers (see, interalia, Case C-156/87 Gestetner Holdings v Council and Commission [1990] ECR I-781, paragraph 63). That is a fortiori the case where, as in this instance, the actconcerned is of general application.

55.
    In addition, the Court has considered that the discretion which the Council haswhen assessing a complex economic situation can be exercised not only in relationto the nature and scope of the provisions which are to be adopted but also, to acertain extent, to the findings as to the basic facts, especially in the sense that theCouncil is free to base its assessment, if necessary, on findings of a general nature(Case 166/78 Italy v Council [1979] ECR 2575, paragraph 14). While the Councilis required to take into consideration all the facts available to it, it cannot berequired to examine in detail all the economic sectors concerned before it adoptsan act of general application.

56.
    Moreover, it is not possible to claim, as the United Kingdom Government does,that the contested measures are quasi-penal in nature and should therefore be thesubject of particularly close scrutiny. Suffice it to note, in this regard, that theimposition of import quotas is unrelated to any conduct specifically attributable toparticular individuals, its purpose is in no way penal and it is not of a retributivenature.

57.
    In the light of the arguments put forward by the United Kingdom Government andthe German Government, intervening in its support, it must be stated, as regardsthe alleged failure to assess the facts, that, in the first place, it is not disputed thatthe Council took into consideration the substantial share of the Community marketheld by imports originating in China and the significant increase in those imports.

58.
    Second, contrary to the view taken by the United Kingdom Government, theCouncil was not bound to make a separate assessment of the state of the sectorsconcerned in the various Member States, since its decision had to be based on theinterests of the Community as a whole and not on those of the individual MemberStates.

59.
    Third, it is clear from the case-law referred to in paragraph 55 above that, since theregulation applied to all Community imports from certain non-member countries,the Council was under no obligation, when adopting it, to undertake an in-depthanalysis of the various aspects of the economic sectors concerned in theCommunity, or in particular of the interests of the various operators in theCommunity toy industry.

60.
    It follows that the Council's adoption of the contested measures was based on anadequate appraisal of the relevant information.

61.
    In addition, with a view to ascertaining whether, in the circumstances of the case,the Council overstepped the bounds of its discretion or exercised it in a manifestlyincorrect manner, it must be stated first of all that the applicant's argument restson incorrect premisses.

62.
    It is true that, before the contested regulation was adopted, the rules on importsof the products at issue were principally the result of decisions taken by theindividual Member States. However, when adopting new uniform rules atCommunity level, the Council was required to take account not of the specialinterests of the various Member States, but of the general interest of theCommunity as a whole.

63.
    In particular, the decisions taken in the past by individual Member States were notbinding on the Council in the exercise of its discretion; had it been otherwise, therole to be played by that institution in carrying out the tasks entrusted to theCommunity under Article 4 of the EC Treaty would have been disregarded.

64.
    It follows that the Council was entitled, when making a fresh assessment of thesituation in terms of the interests of the Community, to take decisions differentfrom those made by the Member States and that no error of assessment can beinferred from the fact that the new rules depart significantly from the previousrules.

65.
    Second, as the Advocate General has shown at points 132 to 139 of his Opinion,in introducing the contested quotas the Council was not required to establish thatthe Community toy industry had already suffered damage as a result of importsoriginating in China. On the contrary, the Council was entitled to consider thatsuch disturbances had to be prevented and to base its evaluation on the mere riskof disturbance, which could correctly be deduced from the increase in imports oftoys originating in China.

66.
    Third, it is necessary to examine the arguments relating to Article 110 of theTreaty, which have been put forward not only by the intervener, the GermanGovernment, but also by the applicant.

67.
    According to settled case-law, that provision cannot be interpreted as prohibitingthe Community from enacting any measure liable to affect trade with non-membercountries (Case 112/80 Dürbeck v Hauptzollamt Frankfurt am Main-Flughafen [1981]ECR 1095, paragraph 44, and Case 245/81 Edeka Zentrale v Germany, cited above,paragraph 24). As is clear from the actual wording of the provision, its objectiveof contributing to the progressive abolition of restrictions on international tradecannot compel the institutions to liberalise imports from non-member countrieswhere to do so would be contrary to the interests of the Community. The Councilwas entitled, therefore, to consider that the actual circumstances warranted theimposition of quotas on the products at issue.

68.
    Fourth, the Council's discretion was in no way limited by the fact that it had itselfdecided that the starting point for the new rules was to be the liberalisation ofimports. In that connection, the analogy drawn by the United KingdomGovernment between Articles 30 and 36 of the Treaty, on the one hand, and theliberalisation of imports and the exceptions thereto, on the other, is irrelevant. As

explained in paragraph 34 above, and by contrast with the principle of freemovement of goods within the Community, the abolition of all quantitativerestrictions on imports from non-member countries is not a rule of law which theCouncil was required in principle to observe, but is the result of a choice made bythat institution in the exercise of its discretion.

69.
    Fifth and last, in so far as the second ground of annulment relied upon by theUnited Kingdom Government is based on the complaint that, before adopting thedisputed measures, the Council failed to carry out an investigation of the kindwhich the contested regulation provides for where safeguard or surveillancemeasures are imposed, it overlaps with the ground alleging breach of the principleof equal treatment that is to be considered below.

70.
    It follows that, subject to that last reservation, the ground alleging failure to carryout any appreciation of the facts or manifest error of appreciation cannot beupheld.

Arbitrary nature of the contested quotas

71.
    In its third ground of annulment, the United Kingdom Government maintains thatin the absence of an adequate statement of reasons and a proper assessment of thefacts, the quotas established by the contested regulation are arbitrary, having regardto the magnitude of their restrictive effects on imports.

72.
    It is sufficient to note in this regard, as the Council and the Commission have done,that the arbitrary nature of the quotas in dispute is deduced by the UnitedKingdom Government from the Council's failure to state adequate reasons for thecontested regulation and its failure to carry out a proper assessment of the facts,which form the subject-matter of the first two grounds.

73.
    Since this ground overlaps with the first two grounds and they are not well founded,it must also be rejected.

Breach of the principle of proportionality

74.
    In its fourth ground of annulment, the United Kingdom Government, supported bythe German Government, considers that the contested regulation is contrary to theprinciple of proportionality. This principle requires that, where a measure is takento prohibit or restrict economic activity, it must be appropriate and necessary inorder to attain the objectives pursued, that where a choice must be made betweenseveral measures, recourse must be had to the least onerous, and finally, that thedisadvantages caused should not be disproportionate to the aims pursued. In thecase of the exercise of a discretionary power by legislative means, the measure

adopted should not be manifestly inappropriate having regard to the objectivespursued.

75.
    In the present case, the objective pursued is said to be the protection of theSpanish toy industry, since the only restrictive measure that was in existence whenthe contested regulation was adopted was that applied by the Kingdom of Spain.

76.
    According to the United Kingdom Government, the disputed quotas were notnecessary for the attainment of that objective and were not the least restrictivemeasure amongst those which the Council could have adopted. In that connection,the United Kingdom Government sets out a threefold argument.

77.
    First, it claims that it is inappropriate to substitute a Community quota for aregional quota, as such a step cannot be justified even by the aim of creatinggreater uniformity. Furthermore, the contested regulation does not state thatsafeguard measures can only be temporary or that they are confined solely tofuture threats to the Community industry. For its part, the German Governmentclaims that at the time when it adopted the contested regulation, the Council couldin any event have laid down measures which were both regional in scope and ofindefinite duration.

78.
    Second, the applicant claims that the level at which the quotas were set was suchas to cause imports of the products in question to fall by around 50% comparedwith the previous year, which is excessive having regard to the need of the Spanishindustry for protection.

79.
    Third, application of the restrictions at Community level is alleged to be contraryto the provisions of the contested regulation which call for case-by-caseinvestigation before the introduction of new surveillance or protection measures.

80.
    The Council, supported by the Spanish Government and the Commission, considersfor its part that it acted in accordance with the principle of proportionality bysetting itself the aim of ensuring that the rules applying to Community trade withnon-member countries should reflect the completion of the internal market, whilehaving regard to the sensitivity of Community industry in the relevant sector.

81.
    The Council notes, in particular, that, when faced with an alarming increase inimports originating in China of the toys concerned and in their share of theCommunity market that was likely to threaten the Community industry, it strove tofind a balance between adequate protection for that industry and maintaining anacceptable level of trade with China, by setting the quotas at the level of importsfor 1991.

82.
    According to the Council, the same degree of protection could not have beenachieved by having recourse to surveillance or safeguard measures at regional level,since the aim was to protect the interests of the Community toy industry and not

those of the industry of just one Member State. Furthermore, the regionalsafeguard measures provided for by Article 17 of the contested regulation are ofa purely temporary and exceptional nature, and their sole purpose is to counterfuture increases in imports harmful to the Community industry. Although thedisputed quotas are necessary for the transition from the old to the new importrules, they are not necessarily temporary, inasmuch as it is not possible to foreseetheir limitation in time.

83.
    Finally, even if less onerous or less restrictive means might have been envisaged forachieving the desired result, the Court cannot substitute its assessment for that ofthe Council as to the appropriateness or otherwise of the measures adopted by theCommunity legislature if the measures have not been shown to be manifestlyinappropriate for achieving the objective pursued (Case C-280/93 Germany vCouncil [1994] ECR I-4973).

84.
    The three limbs of the fourth ground of annulment put forward by the UnitedKingdom Government must be considered in turn.

85.
    As regards the first limb, the sixth recital in the preamble to the contestedregulation expressly states that in fixing the disputed quotas, the Council intendedto take into account the sensitivity of certain sectors of the Community industry asa whole and not the industry of one particular Member State.

86.
    Furthermore, and in any event, under the system set up by the contested regulationwhich is intended to establish uniform rules throughout the Community, measureslimited to one or more regions can be authorised, as stated in the tenth recital inthe preamble, only exceptionally and where no alternative exists and they must betemporary. The Council may not therefore be criticised for failing to choosemeasures which, in the light of the aims of the contested regulation, must so far aspossible be avoided and which, being temporary, would not have constituted aneffective response to the threat to the relevant sectors of the Community industry.

87.
    With regard to the second limb of the fourth ground, it should be pointed out thatin spheres such as this, in which the Community institutions have a broaddiscretion, the lawfulness of a measure can be affected only if the measure ismanifestly inappropriate having regard to the objective pursued. More specifically,where the Community legislature is obliged, in connection with the adoption ofrules, to assess their future effects, which cannot be accurately foreseen, itsassessment is open to criticism only if it appears manifestly incorrect in the light ofthe information available to it at the time of the adoption of those rules. TheCourt's review must be limited in that way in particular if the Council has toreconcile divergent interests and thus select options within the context of the policychoices which are its own responsibility (Germany v Council, cited above,paragraphs 90 and 91).

88.
    In those circumstances, the level of protection afforded by the quotas in issuecannot be considered to have gone beyond what was necessary in order to attainthe objectives pursued by the Council.

89.
    First, the Council was right to consider that, faced with the pressure exerted byimports of toys from China, mere surveillance measures would be insufficient toprotect the interests of the Community industry.

90.
    Second, by fixing the import quotas at the 1991 level, which was considerably higherthan that of the previous years, the Council sought to balance the need to protectthe Community industry with maintaining an acceptable level of trade with Chinain a manner that is not open to criticism by the Court.

91.
    Finally, while other means for achieving the desired result were indeed conceivable,the Court cannot substitute its assessment for that of the Council as to theappropriateness or otherwise of the measures adopted, if those measures have notbeen shown to be manifestly inappropriate for achieving the objective pursued(Germany v Council, cited above, paragraph 94). In this case, the United KingdomGovernment has failed to adduce any evidence that the disputed quotas were setat a manifestly inappropriate level.

92.
    The third limb in substance concerns the difference between the general scope ofthe disputed quotas and the investigation procedures laid down for the applicationof surveillance and safeguard measures. It will therefore be considered togetherwith the fifth ground of annulment.

93.
    It follows from the foregoing that, subject to the latter reservation, the groundalleging breach of the principle of proportionality cannot be upheld.

Breach of the principle of equal treatment

94.
    In its fifth and final ground of annulment, the United Kingdom Governmentmaintains that the contested regulation is contrary to the principle of equaltreatment in so far as it treats two categories of products differently. On the onehand, products which were already the subject of national restrictions are subjectto safeguard or surveillance measures, without any formal investigation procedureor any right for the interested parties to be heard. On the other hand, all the otherproducts covered by the contested regulation can be subject to such measures onlywhere a Community investigation has been carried out and interested third partieshave been given the right to a fair hearing.

95.
    According to the United Kingdom Government, that difference in treatment is notjustified since both cases involve the introduction of a new restriction. A hithertonational restriction applied at Community level cannot be treated as anything otherthan a new restriction. In addition, the products in question had been liberalised

de facto since at the time when the contested regulation entered into force the onlyrestriction in existence, that applied by the Kingdom of Spain, affected only 2% oftotal imports of those products into the Community. Breach of the principle ofequal treatment cannot therefore be excluded on the basis of a purely formaldistinction drawn between products already liberalised and those which were notliberalised at the time when the contested regulation was adopted.

96.
    The Council, the Spanish Government and the Commission dispute that allegation,arguing that the contested regulation simply treats different situations differently.

97.
    In that respect, it should be noted that the general principle of equality which isone of the fundamental principles of Community law precludes comparablesituations from being treated in a different manner unless the difference intreatment is objectively justified (see, in particular, Joined Cases C-267/88 to C-285/88 Wuidart and Others [1990] ECR I-435, paragraph 13).

98.
    In the present case, the Council has adopted new uniform rules at Community levelaimed at bringing the remaining national exceptions and derogations to an end. Asexplained when the second ground of annulment was under consideration, theCouncil was free to determine, in the interests of the Community, whether it wasnecessary to provide for restrictions on the importation of certain products, and itwas not bound by the decisions previously made by the various Member States.

99.
    By contrast, the surveillance and safeguard measures which may be introduced afterthe adoption of the contested regulation and on the basis of its provisions constitutea modification of the system established by the Council and may therefore besubject to such investigation procedures as it considers appropriate.

100.
    In any event, the detailed procedural rules laid down in the contested regulationin respect of future changes to the system established by it cannot be required toapply to the actual definition of that system by the Council. First, setting thedisputed quotas could not be made subject to detailed rules which had not yet beenlaid down. Second, that decision had already been evaluated by the Council whenit adopted the new rules.

101.
    It follows that the disputed quotas are not comparable to the surveillance orsafeguard measures subsequently to be adopted pursuant to the contestedregulation. Since they treat different situations differently, the provisions in issueare not contrary to the principle of equal treatment, with the result that this groundof annulment cannot be upheld.

102.
    Since the grounds of annulment put forward by the United Kingdom Governmentare not well founded, the application must be dismissed in its entirety.

Costs

103.
    Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs, if they have been applied for in the successful party'spleadings. Since the United Kingdom has been unsuccessful, it must be orderedto pay the costs, in accordance with the form of order sought by the Council. Under the first subparagraph of Article 69(4) of those Rules, the Member Statesand institutions which intervene in the proceedings are to bear their own costs. The Federal Republic of Germany, the Kingdom of Spain and the Commissionmust accordingly bear their own costs.

On those grounds,

THE COURT (Sixth Chamber)

hereby:

1.
    Dismisses the application;

2.
    Orders the United Kingdom of Great Britain and Northern Ireland to paythe costs;

3.
    Orders the Federal Republic of Germany, the Kingdom of Spain and theCommission of the European Communities to bear their own costs.

Kapteyn
Mancini
Murray

Delivered in open court in Luxembourg on 19 November 1998.

R. Grass

P.J.G. Kapteyn

Registrar

President of the Sixth Chamber


1: Language of the case: English.