EU & Human Rights

RAR (Agriculture)

[2003] EUECJ C28200Court of Justice of the European Union (including the General Court)2003

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(Sugar - Decision 91/315/EEC - Poseima Programme - Specific measures in favour of the Azores and Madeira - Regulation (EEC) No 1600/92 - Shipment to the rest of the Community of white sugar produced in the Azores from sugarbeet harvested there or from raw beet sugar imported exempt from levies and/or customs duties - Meaning of 'processing of products' - Meaning of 'traditional shipment to the rest of the Community')

REFERENCE to the Court under Article 234 EC by the Tribunal Judicial da Comarca de Ponta Delgada (Portugal) for a preliminary ruling in the proceedings pending before that court between Refinarias de A��car Reunidas SA (RAR)

on the interpretation of Council Regulation (EEC) No 1600/92 of 15 June 1992 concerning specific measures for the Azores and Madeira relating to certain agricultural products (OJ 1992 L 173, p. 1), THE COURT (Fifth Chamber),

composed of: M. Wathelet, President of the Chamber, C.W.A. Timmermans, D.A.O. Edward, P. Jann and S. von Bahr (Rapporteur), Judges, Advocate General: J. Mischo, Registrar: H.A. R�hl, Principal Administrator,

after considering the written observations submitted on behalf of: - Refinarias de A��car Reunidas SA (RAR), by P. Reis, advogado, - Sociedade de Ind�strias Agricolas A�oreanas SA (Sinaga), by M. Marques Mendes and R. Bastos, advogados, and by M.L. Duarte, professor of law, - the Portuguese Government, by L. Fernandes, acting as Agent, - the Commission of the European Communities, by A. Alves Vieira and G. Berscheid, acting as Agents, having regard to the Report for the Hearing,

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BAILII · Verbatim mirror

According to section 9.2 of the Poseima Programme:

'In the case of essential agricultural products for consumption or processing in the two regions, this Community action will, within the limits of market requirements of the Azores and Madeira and taking into account local production and traditional trade flows, and making sure that the proportion of Community supplies of the products concerned is maintained, consist in:

- [exempting] from levies and/or customs duties and the amounts specified in Article 240 of the Act of Accession products originating in third countries,

- permitting, on equivalent terms, without application of the amounts laid down in the aforementioned Article 240, the supply of Community products taken into intervention storage or available on the Community market.

The principles underlying the application of this system will be as follows:

- the quantities covered by this supply system will be determined annually in supply estimates,

- in order to ensure that these measures have an impact on the level of production costs and consumer prices, a mechanism will have to be set up to monitor this impact up to the end user stage,

- with respect to raw sugar supplies for the Azores, the system will be applicable until such time as local production of sugarbeet is sufficient to satisfy local market needs and as long as the total volume of sugar refined in the Azores does not exceed 10 000 tonnes,

- ...'

Title V of the Poseima Programme, which covers sections 13 to 16, sets out specific measures to support products of the Azores and Madeira.

According to the first indent of section 14.4 of the Poseima Programme, the measures to help support the local production of sugarbeet in the Azores may take the form of:

- flat-rate aid per hectare for the development of local production, subject to a limit on quantities corresponding to production of 10 000 tonnes of sugar;

- specific aid for the processing of locally grown beet into white sugar, with a view to stabilising supply costs.

Following the adoption of Decision 91/315, the Council adopted Regulation No 1600/92.

Under the 12th recital of the preamble to Regulation No 1600/92, the specific measures for the Azores must, in particular, help to improve the conditions in which sugarbeet is produced and the competitiveness of local sugar manufacturing, within the limit of determined quantities.

Title I of Regulation No 1600/92, entitled 'Specific supply arrangements', contains Articles 2 to 10 of that regulation.

Article 2 of Regulation No 1600/92 provides:

'For each marketing year, forecast supply balances shall be established for the agricultural products necessary for human consumption and processing listed in Annex I for the Azores and Annex II for Madeira. These balances may be revised during the year on the basis of trends in the regions' requirements. Separate forecasts may be made to assess the requirements of the processing and packaging industries regarding products for the local market or traditionally dispatched to the rest of the Community.'

Article 3 of Regulation No 1600/92 provides:

'1. Levies and/or customs duties shall not apply to direct import into the Azores and Madeira from third countries of products covered by the specific supply arrangements, within the limit of the quantities determined in the supply balances.

2. To ensure coverage of the requirements referred to in Article 2 in terms of quantity, price and quality, with a view to [ensuring] that the proportion of products supplied by the Community is preserved, supplies to these regions shall also be effected through the mobilisation of Community products held in intervention storage or available on the Community market, on terms equivalent, for the end user, to the advantage resulting from exemption from import duties on imports of products from third countries.

The terms of supply shall be fixed by reference to the costs of various sources of supply and the prices applied to exports to third countries.

3. The arrangements provided for in this article shall be implemented in such a way as to take account, without prejudice to paragraph 4, in particular, of:

- the specific requirements of the regions concerned and, in the case of products intended for processing, the specific quality requirements,

- traditional trade flows with the rest of the Community.

4. In the case of the supply of raw sugar to the Azores, requirements shall be assessed taking account of the development of local sugarbeet production. The quantities covered by the supply arrangements shall be determined in such a way that the total annual volume of sugar refined in the Azores does not exceed 10 000 tonnes.

Article 9 of Regulation (EEC) No 1785/81 shall not apply to the Azores with regard to raw sugar.'

Under Article 7 of Regulation No 1600/92:

'Application of the supply arrangements provided for in Articles 2 and 3 shall be subject to the advantage derived from exemption from the levy and/or customs duty or, in the case of supply from the rest of the Community, from the Community aid being actually passed on to the end user.'

Article 8 of Regulation No 1600/92 provides:

'The products covered by the specific supply arrangements provided for in this Title may not be re-exported to third countries or redispatched to the rest of the Community.

Where the products in question are processed in the Azores and Madeira, the aforesaid prohibition shall not apply to traditional exports or shipments to the rest of the Community.'

Under the sixth recital of the preamble to Regulation No 1600/92, the purpose of the prohibition on redispatching to other parts of the Community or re-exporting to third countries is to avoid any deflection of trade in respect of products covered by the specific supply arrangements.

Title II of Regulation No 1600/92 is entitled 'Measures to support products of the Azores and Madeira'. Section 3 of that title, which concerns measures to support products of the Azores, contains Articles 24 to 30 of that regulation.

Article 25 of Regulation No 1600/92 provides:

'1. Aid at a flat rate per hectare shall be granted for the development of sugarbeet production within the limit of an area corresponding to the production of 10 000 tonnes of white sugar per year.

The amount of the aid shall be ECU 500 per hectare sown and harvested.

2. Special aid shall be granted for the processing of sugarbeet harvested in the Azores into white sugar, within the limit of a total annual production of 10 000 tonnes of refined sugar.

The amount of the aid shall be ECU 10 per 100 kilograms of refined sugar. This amount may be adjusted in accordance with the procedure referred to in paragraph 3.

3. Detailed rules for the application of this article shall be adopted in accordance with the procedure laid down in Article 41 of Regulation (EEC) No 1785/81.'

The main proceedings

Sinaga runs a sugar refinery in the Autonomous Region of the Azores. It refines sugar from both sugarbeet harvested in the Azores and imported raw sugar. For that it receives both aid for the processing of sugarbeet harvested in the Azores into white sugar, under Article 25 of Regulation No 1600/92, and exemption from levies and/or customs duties on imported raw sugarbeet, under Article 3 of that regulation.

The sugar production plant and refinery in the Autonomous Region of the Azores in question, now known as Sinaga, has, since 1907, made sales of sugar outside the Azores in the quantities specified in a table set out in the order for reference.

RAR produces and sells white sugar in mainland Portugal. It sought an order from the Tribunal Judicial da Comarca de Ponta Delgada restraining Sinaga from marketing in mainland Portugal white sugar produced from raw sugarbeet which it has imported exempt from levies and/or customs duties under the Poseima Programme or which has benefited from aid for processing established by that programme. RAR considers that that sugar is intended exclusively for supply to, and consumption in, the Autonomous Region of the Azores.

The questions referred for a preliminary ruling

In doubt as to the correct interpretation of Articles 2, 3 and 8 of Regulation No 1600/92 and considering that the interpretation of those articles is necessary for the resolution of the dispute pending before it, the Tribunal Judicial da Comarca de Ponta Delgada decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:

'1. Does the second paragraph of Article 8 of Council Regulation (EEC) No 1600/92 of 15 June 1992 apply to:

(i) sugar processed from raw sugar (sugar properly speaking, whether it comes from locally-grown sugarbeet or imported raw sugar), or

(ii) only to sugar added to products which include it (such as cakes, soft drinks etc.)? (Essentially, what is meant by the expression products are processed contained in that provision?)

2. Are the sales [of sugar made since 1907 outside the Azores by the plant currently operated by Sinaga] referred to [in the table set out in the order for reference] covered by the concepts traditional trade flows, traditional exports and traditional . shipments to the rest of the Community, contained in the second indent of Article 3(3) and the second paragraph of Article 8 of the abovementioned regulation?

3. Irrespective of the answers to the preceding questions, does the legal framework in force from September 1998 to date allow Sinaga to sell in mainland Portugal sugar produced by it from sugarbeet harvested in the Azores and for the production of which it obtains Community aid under the Poseima programme?

4. Again irrespective of the answers to the preceding questions, does the legal framework in force from September 1998 to date allow Sinaga to sell inmainland Portugal sugar produced by it from imported raw sugar which is exempt from levies under the Poseima programme?'

The first question

By its first question, the referring court asks essentially whether the refining of raw beet sugar into white sugar constitutes the processing of a product, within the meaning of the second paragraph of Article 8 of Regulation No 1600/92.

The purpose of Article 8 of Regulation No 1600/92 is to set the conditions for the movement of goods imported exempt from levies and/or customs duties under the specific supply arrangements laid down by that regulation.

The concept of processing of a product, used in the second paragraph of Article 8 of Regulation No 1600/92, should be interpreted in the light of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1).

Article 24 of Regulation No 2913/92 provides that '[g]oods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture'.

It follows from that article that the processing of a product must represent at least an important stage of manufacture.

Such an interpretation of the concept of processing of a product appears to conform to the ordinary meaning of the terms used, which imply an important change in the product, and should be adopted in interpreting the same terms employed in the second paragraph of Article 8 of Regulation No 1600/92.

It should be noted that the refining of raw sugar into white sugar intended for the end consumer is an elaborate process at the end of which a product is obtained the objective qualities of which and the purposes for which it is used differ from those of the original product.

It should be added that the Community rules take account of the objective differences between raw and white sugar.

Thus, Article 1(2) of Council Regulation (EEC) No 1785/81 of 30 June 1981 on the common organisation of the markets in the sugar sector (OJ 1981 L 177, p. 4) sets out a different definition of white and raw sugar, and the regulation sets out rules which differ in part for the two types of sugar.

Moreover, raw sugar, cane sugar or beet sugar and white sugar fall within different subheadings of the combined nomenclature set out in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1).

It is thus established, first, that the refining of raw sugar into white sugar is an important stage of manufacture and, second, that the Community rules take account of the objective differences between raw and white sugar.

In those circumstances, the answer to the first question must be that the refining of raw beet sugar into white sugar must be considered to be the processing of a product within the meaning of the second paragraph of Article 8 of Regulation No 1600/92.

The second question

By its second question, the referring court asks whether shipments of sugar from the Azores to mainland Portugal and to Madeira between 1907 and 1992 and specified in the table set out in the order for reference must be regarded as 'traditional shipments to the rest of the Community' within the meaning of the second paragraph of Article 8 of Regulation No 1600/92.

Pursuant to Article 3(3) of Regulation No 1600/92, the specific supply arrangements are to be implemented in such a way as to take account of traditional trade flows with the Community.

Thus, the second paragraph of Article 8 of Regulation No 1600/92 provides that the prohibition on re-exporting to third countries or redispatching to other parts of the Community does not apply where the products having benefited from the specific supply arrangements are processed in the Azores, or to traditional exports or shipments to the rest of the Community.

As the Advocate General states at point 61 of his Opinion, if the Community legislature intended to take account of traditional trade flows it was not for the purpose of acknowledging historical rights but in order to prevent the introduction of the specific supply arrangements, intended for the benefit of the Azores, from resulting in the loss of markets on which their products were regularly sold.

It follows that the shipments of sugar must satisfy relatively strict conditions in order to be classified as traditional trade flows or traditional shipments. Those requirements refer as much to the magnitude of the shipments as to their frequency and the fact that they are ongoing. Sporadic and small-scale shipments made in the past cannot satisfy those requirements.

In order to determine whether shipments of sugar to mainland Portugal and to Madeira between 1907 and 1992 and referred to in the table set out in the order for referenceare traditional exports it must, therefore, be determined whether, at the time that the Poseima Programme was implemented by Regulation No 1600/92, with effect from 1 July 1992, those shipments were ongoing, regular and significant.

With regard to the assessment of the facts set out in the order for reference, it must be noted that in proceedings under Article 234 EC, which is based on a clear separation of functions between the national courts and the Court of Justice, any assessment of the facts in the case is a matter for the national court (see Case 36/79 Denkavit Futtermittel [1979] ECR 3439, paragraph 12, Case C-235/95 Dumon and Froment [1998] ECR I-4531, paragraph 25, and Joined Cases C-175/98 and C-177/98 Lirussi and Bizzaro [1999] ECR I-6881, paragraph 37).

The Court thus has no jurisdiction to give a ruling on the facts in an individual case or to apply the rules of Community law which it has interpreted to national measures or situations, since those questions are matters for the exclusive jurisdiction of the national court (see Case 13/68 Salgoil [1968] ECR 453, Case 51/74 Van der Hulst [1975] ECR 79, paragraph 12, and Case C-320/88 Shipping and Forwarding Enterprise Safe [1990] ECR I-285, paragraph 11, and Lirussi and Bizzaro, cited above, paragraph 38).

It should be added that, even if the referring court reaches the conclusion that the shipments made between 1907 and 1992 referred to in the table set out in the order for reference were traditional shipments, it will also have to be satisfied, where it considers subsequent shipments, that such shipments retain that same character of traditional shipments.

In those circumstances, the reply to the second question must be that shipments which, at the time of the entry into force of Regulation No 1600/92 on 1 July 1992, were ongoing, regular and significant are traditional shipments to the rest of the Community within the meaning of the second paragraph of Article 8 of Regulation No 1600/92. It is for the referring court to assess whether that was the case for the shipments of sugar from the Azores to mainland Portugal and to Madeira between 1907 and 1992 referred to in the table set out in the order for reference.

The third question

By its third question, the referring court wishes to know whether Community law precludes the shipment to mainland Portugal of white sugar produced in the Azores from sugarbeet harvested in the Azores and which receives Community aid under Article 25 of Regulation No 1600/92.

Article 8 of Regulation No 1600/92 prohibits the redispatching to the rest of the Community of products covered by the specific supply arrangements provided for in Title I of that regulation.

Sugar produced from sugarbeet harvested in the Azores is not a product covered by the specific supply arrangements provided for in Title I of Regulation No 1600/92.

Pursuant to Article 25 of that regulation, which falls within Title II thereof, relating to measures to support products of the Azores and Madeira, there are to be granted, first, aid at a flat rate per hectare for the development of sugarbeet production in the Azores and, second, special aid for the processing of sugarbeet harvested in the Azores into white sugar.

The grant of those aids is limited to a total annual production in the Azores of 10 000 tonnes of white sugar. On the other hand there is nothing in Regulation No 1600/92 which prohibits the shipment to the rest of the Community of sugar produced from sugarbeet harvested in the Azores.

In the absence of an express prohibition and in the light of the fundamental principle of the free movement of goods, it is apparent that there is no restriction on shipping sugar produced from sugarbeet harvested in the Azores to the rest of the Community.

RAR submits, however, that if shipping sugar produced from sugarbeet harvested in the Azores to the rest of the Community was not prohibited, the purpose of the Poseima Programme, the effects of which are supposed to be confined to the Azores, would be undermined. Referring in particular to section 9.2 of that programme and Article 3(4) of Regulation No 1600/92, RAR asserts that the local production of sugarbeet should be taken into account in assessing the supply needs of the Azores. In its view, if the needs of the market in the Azores were met by local production, the importation of raw sugar under the special arrangements laid down by that programme would no longer be justified and the programme should be ended.

The first point to note in that regard is that a joint declaration concerning the economic and social development of the autonomous regions of the Azores and Madeira, annexed to the Final Act of the Treaty concerning the accession of the Kingdom of Spain and the Portuguese Republic to the European Communities (OJ 1985 L 302, p. 466), called on the Community institutions to devote special attention to the policy of social and economic development for the Azores and Madeira pursued by the Portuguese Government and the authorities of those two autonomous regions, the object of which is to overcome the handicaps of those regions arising from their geographical situation, far away from mainland Europe, their physical geographical features, the serious deficiency of infrastructures and their economic backwardness.

It should also be noted that, pursuant to section 3.1 of the Poseima Programme, which sets out one of the general principles of that programme, that programme must help to attain the general aims of the Treaty by contributing to the achievement of the specific objectives of better integration of the Azores and Madeira into the Community, their full involvement in the dynamic of the internal market and assisting them to catch up economically and socially.

It is apparent from section 3.1 of the Poseima Programme that its objective is not to partition the market in the Azores for agricultural products or to create insurmountable obstacles to trade between the Azores and the rest of the Community, but to contribute to their full involvement in the dynamic of the internal market whilst granting certain benefits to those islands.

Accordingly, the possibility of exporting sugar produced from sugarbeet harvested in the Azores appears to comply with the objectives of the Poseima Programme.

With regard to section 9.2 of the Poseima Programme and Article 3(4) of Regulation No 1600/92, relied on by RAR, the fact that the production of sugar from sugarbeet harvested in the Azores is taken into account in assessing the supply requirements of those islands does not mean that that sugar must necessarily be sold on the local market. By contrast, local sugar production is taken into account in fixing the quantity of imported sugar which may benefit from the specific supply arrangements, since the total annual volume of sugar refined in the Azores cannot exceed 10 000 tonnes. There is, therefore, no prohibition under those provisions on the shipment of sugar produced from sugarbeet harvested in the Azores.

In the light of the foregoing, the answer to the third question must be that Community law does not preclude the shipment to mainland Portugal of white sugar produced in the Azores from sugarbeet harvested in the Azores and which receives the Community aid provided for in Article 25 of Regulation No 1600/92 up to a limit of 10 000 tonnes of production per year.

The fourth question

By its fourth question, the referring court asks whether Community law precludes the shipment to mainland Portugal of white sugar produced in the Azores from raw beet sugar imported under the specific supply arrangements provided for by Title I of Regulation No 1600/92.

Under the first paragraph of Article 8 of Regulation No 1600/92 the redispatching to the rest of the Community and the re-exporting to third countries of sugar covered by the specific supply arrangements are prohibited.

As is apparent from the sixth recital of the preamble to Regulation No 1600/92, the purpose of those prohibitions on redispatching to other parts of the Community or re-exporting to third countries is to avoid any deflection of trade in respect of products covered by the specific supply arrangements.

Pursuant to the second paragraph of Article 8 of Regulation No 1600/92, that prohibition does not, however, apply, where those products are processed in the Azores, to traditional shipments to the rest of the Community.

It follows that the reply to the first question must be that the refining of raw beet sugar into white sugar constitutes the processing of a product within the meaning of the second paragraph of Article 8 of Regulation No 1600/92.

In those circumstances, the reply to the fourth question must be that Community law does not preclude the shipment to mainland Portugal of white sugar produced in the Azores from raw beet sugar imported under the specific supply arrangements provided for under Title I of Regulation No 1600/92, provided that it corresponds to traditional shipments within the meaning of the second paragraph of Article 8 of that regulation.

Costs

69. The costs incurred by the Portuguese Government and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Tribunal Judicial da Comarca de Ponta Delgada by order of 11 July 2000, hereby rules:

1. The refining of raw beet sugar into white sugar must be considered to be the processing of a product within the meaning of the second paragraph of Article 8 of Council Regulation (EEC) No 1600/92 of 15 June 1992 concerning specific measures for the Azores and Madeira relating to certain agricultural products.

2. Shipments which, at the time of the entry into force of Regulation No 1600/92 on 1 July 1992, were ongoing, regular and significant are traditional shipments to the rest of the Community within the meaning of the second paragraph of Article 8 of Regulation No 1600/92. It is for the referring court to assess whether that was the case for the shipments of sugar from the Azores to mainland Portugal and to Madeira between 1907 and 1992 referred to in the table set out in the order for reference.

3. Community law does not preclude the shipment to mainland Portugal of white sugar produced in the Azores from sugarbeet harvested in the Azores and which receives the Community aid provided for in Article 25 of Regulation No 1600/92 up to a limit of 10 000 tonnes of production per year.

4. Community law does not preclude the shipment to mainland Portugal of white sugar produced in the Azores from raw beet sugar imported under the specific supply arrangements provided for under Title I of Regulation No 1600/92, provided that it corresponds to traditional shipments within the meaning of the second paragraph of Article 8 of that regulation.

Wathelet

Timmermans Edward

Jannvon Bahr

Delivered in open court in Luxembourg on 15 May 2003.

R. Grass M. Wathelet

Registrar President of the Fifth Chamber

1: Language of the case: Portuguese.

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