Court of Justice 10-09-2002 ECLI:EU:C:2002:476

1. Arguments submitted

89. The claimants argue that the Community legislature does not have the power to establish harmonisation measures in the domain of public health. Article 152(1) EC provides that a high level of human health protection must be ensured in the definition and implementation of all Community policies and activities. Article 152 EC goes on to set out in greater detail what the Community, in conjunction with the Member States and complementary to their action, may do within the area of public health. Article 152(4)(c) excludes measures of harmonisation. The Luxembourg Government shares this view taken by the claimants.

90. According to the claimants, the legal basis provided by Article 95 EC may be used only for the purpose of improving the establishment and functioning of the internal market. In this context, they regard the objectives mentioned in Article 95 EC as constituting means for promoting trade, not for restricting it. They point out that Directive 98/43 was annulled notwithstanding the fact that the preamble to that directive mentions preoccupations in the area of public health. The claimants contend essentially that the present Directive is a disguised public-health measure inspired by the same thinking as the draft version of the framework convention on tobacco control drawn up by the World Health Organisation, which is referred to in the 13th recital in the preamble to the Directive.

91. Realisation of the internal market cannot, in the claimants' view, be used in any way whatever as an argument in favour of the requirements which the Directive imposes in respect of tar. Indeed, Directive 90/239 harmonised in full the rules governing maximum tar yields. No further barriers to trade are permissible and there is therefore no power to reduce maximum tar yields even further with a view to realising the internal market. To this the claimants add the following. Even if the Community legislature were empowered to fix new rules on tar yields on health grounds, such rules would at least have to be supported by new developments based on scientific data.

92. The claimants submit that there is also no power in regard to maximum yields of nicotine and carbon monoxide in view of the fact that no concrete threat of barriers to trade can result from unilateral measures taken by Member States. In this connection, the ninth recital in the preamble, which refers to differences in statutorily prescribed maximum nicotine yields, is factually incorrect.

93. This argument of the claimants concerning the power of the Community legislature to adopt, on the basis of Article 95 EC, harmonisation measures in connection with the protection of public health finds no support among the many other intervening parties in these proceedings. Those arguments have been contradicted in very large measure. This is the case with regard to both the arguments on competence in general and those which relate specifically to the Directive. There are, however, divergent views on the issue of what is the main objective of the Directive, and whether that main objective is the realisation of the internal market, the protection of public health, or, as the Irish Government submitted at the hearing, both of these together.

2. The case-law

94. In its judgment in Netherlands v European Parliament and Council (hereinafter: ‘the Biotechnology judgment’),⁽⁴⁶⁾ the Court construed broadly the possibility of using Article 95 EC as a legal basis in a case where a measure is designed not merely to remove obstacles to the internal market. I quote: ‘The legal basis on which an act must be adopted should be determined according to its main object... Whilst it is common ground, in that regard, that the aim of the Directive is to promote research and development in the field of genetic engineering in the European Community, the way in which it does so is to remove the legal obstacles within the single market that are brought about by differences in national legislation and case-law and are likely to impede and disrupt research and development activity in that field. Approximation of the legislation of the Member States is therefore not an incidental or subsidiary objective of the Directive but is its essential purpose. The fact that it also pursues an objective falling within Articles 130 and 130f of the Treaty⁽⁴⁷⁾ is not, therefore, such as to make it inappropriate to use Article 100a of the Treaty⁽⁴⁸⁾ as the legal basis of the Directive.’

95. In the case where the purpose of a measure is to protect public health, the power of the Community legislature to adopt rules under Article 95 EC is at least equally extensive. This power, however, is not unlimited, as is clear from the tobacco advertising judgment. Even if they do not have the removal of barriers to free movement as their objective, the measures must at any rate contribute significantly to their removal. Although these barriers may be in the future, it must never the less be probable that such barriers will arise.

96. In this connection, the Court appears to attach more importance to the content (subject-matter) of the measure that to the objective pursued by the legislature. To illustrate this point I refer to the placing in perspective of the distinction between objective and subject-matter which Advocate General Tesauro provided in his Opinion in the titanium dioxide case.⁽⁴⁹⁾ He considers the distinction to be ultimately one of only terminological significance. However, in determining the subject-matter the purpose served by a measure is also taken into consideration, while, on the other hand, the purpose served by a measure can be understood only by reference to its content and effects, simply in order to avoid the danger (and the blame) that the assessment is based on a subjective criterion (that is to say, the view of an institution regarding the objectives pursued by a measure).

3. General appraisal

97. Many of the observations submitted deal with the primary purpose of the Directive. Does that purpose relate to the single market or is the intention, rather, to safeguard public health? My view tends prima facie to the latter, certainly when one bears in mind the fact that the Directive forms part of a Community package of measures to combat tobacco consumption.⁽⁵⁰⁾ I find that less importance attaches in this connection to the fact that the recitals in the preamble refer extensively to the single market: those references are included precisely in order to justify the use of Article 95 EC and not so much in connection with the real purpose of the Directive. My submissions in what follows on the legal basis offered by Article 95 must therefore be considered in that light.

98. From the observations submitted to the Court in the course of these proceedings and from the case-law, I infer that the doubts which may arise as to the power of the Community legislature to adopt a directive such as the present are expressed essentially in the following question: does the requirement in Article 95 EC that a measure must have as its object the establishment and functioning of the internal market mean that the primary purpose of a measure must relate to the internal market? Or does the argument put forward by the United Kingdom Government, with reference to the tobacco advertising judgment, hold true, namely that Article 95 EC can also be relied on where the emphasis of a measure falls, not on the promotion of the internal market, but on the protection of public health?

99. In order to answer these questions I shall now examine in general the powers which Article 95 EC confers on the Community legislature.

100. The issue boils down to the following: if a (potential) barrier to trade arises, the Community must be in a position to act. Such action must, as I construe the biotechnology judgment,⁽⁵¹⁾ consist in the removal of those barriers. Article 95 EC creates the power to do so. No conclusive significance attaches in this connection to the issue whether the barrier to trade also constitutes the principal reason for action on the part of the Community legislature. The fact that there are specific powers under the Treaty for the Community legislature to act within defined areas of policy, as in the area of public health under Article 152 EC, also has no bearing on this finding.

101. This power, however, is not unlimited. Even in a case where it has been determined that a measure concerns a barrier to trade, a court may, in a specific case, assess whether the Community legislature has exercised the powers conferred on it in accordance with Community law. This assessment will in every case involve the question of the extent to which the measure is in fact intended to safeguard a public interest recognised by Community law. The court will accordingly examine whether the intervention of the legislature in a given case is genuinely appropriate for contributing to the removal of the barrier to trade. Possible misuse of the powers conferred by the Treaty may also be addressed, as can the other principles of law mentioned by the High Court in the questions which it has submitted. The principles of law are dealt with below in the present Opinion.⁽⁵²⁾

4. Appraisal of the essential aspects of the powers conferred

102. I shall now develop these premisses, beginning with the essential aspects of the powers conferred by Article 95 EC.

103. Article 95 EC does not contain any general power for the Community legislature to harmonise national provisions. It sets out only the power to adopt harmonisation measures having as their object the establishment of the internal market.⁽⁵³⁾ The internal market is established, as Article 3(1)(c) EC states, through the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital. To abolish those obstacles, the EC Treaty provides for two instruments which are complementary in their operation. If I confine myself to the free movement of goods, the first instrument consists of the prohibition in Articles 28 EC and 29 EC of quantitative restrictions on imports and exports and of measures having equivalent effect, including the exceptions thereto recognised in Article 30 EC and in the Court's case-law. The second instrument is the Community legislature's power under Article 95 EC to remove the obstacles which remain — or which are created — by virtue of the fact that the national legislature applies one of the derogations from the Article 28 EC and Article 29 EC prohibitions. National statutory measures to protect specific recognised public interests such as public health constitute a prime example of measures which generate barriers to trade.

104. According to the Court's case-law, the power of the Community legislature arises only once actual barriers have come about, or at least once future barriers are likely to be created.

105. With specific reference to the present case: a national measure which imposes restrictions on the composition or designation of tobacco products constitutes, as such, a quantitative restriction on exports within the meaning of Article 29 EC.

Article 30 EC, however, offers a ground for justification of such a national measure if that measure is intended to protect public health. According to the Court's case-law, the national measure must satisfy a number of ancillary conditions, inter alia with regard to proportionality. In the present case, where the intention is to counter smoking, such a national measure would be easily acceptable.

106. Proceeding on the assumption that a national measure such as that outlined in the preceding paragraph is justified by Article 30 EC, this will already mean that the barrier to trade exists. In order to set aside this barrier to trade, the Community legislature is entitled to adopt measures by which it takes over from the national legislature the protection of the matter of public interest (in casu, public health). In other words, the realisation of the internal market may mean that a particular public interest — such as here public health — is dealt with at the level of the European Union. In this the interest of the internal market is not yet the principal objective of a Community measure. The realisation of the internal market simply determines the level at which another public interest is safeguarded.

107. A power of this kind vested in the Community legislature is essential for integration within the EC context. I refer in this connection to Article 2 EU, in which the creation of an area without internal frontiers is described as being a principal objective of the European Union, as well as to Article 2 EC, pursuant to which the common market was established. In an area without internal frontiers, or in a common market, it is not appropriate that inter-State trade should be subject to restrictive conditions. Were the Community legislature unable to act in such a situation, a significant means by which to set aside those conditions would be lacking. I would even go so far as to say that the Treaty places an obligation on the Community legislature itself to take the measures necessary with regard to the establishment and functioning of the internal market.

108. As has already been stated, the purpose of the action is not important. In this connection the Community's power is comparable to that enjoyed by the federal authorities in the United States in regard to inter-State trade. As the US Supreme Court has ruled, ‘It makes no difference if the extraneous objective [in our case: public health] is the principal or dominant objective of the federal measure [in our case: the EC Directive] — so long as a legitimate objective [in our case: the internal market] is sufficiently served.’⁽⁵⁴⁾ I regard the power of the Community legislature as a functional power necessary for realising the internal market.

109. Briefly, in order to reply to the question whether the EC is empowered to adopt a specific measure having as its object the establishment of the internal market, the Court must examine whether that measure is directly connected to a barrier to inter-State trade. On this point I refer to paragraph 84 et seq. of the tobacco advertising judgment.

110. The claimants in the main proceedings draw a link with the specific power which the EC has within the domain of public health. They note in particular that Article 152(4)(c) EC excludes harmonisation of national legislation. If harmonisation of legislation could none the less be effected on the basis of Article 95 EC, so they argue, this would involve circumvention of the provision laid down in Article 152(4)(c) EC.

111. This construction of Article 152 is wide of the mark. During the drafting of the Maastricht Treaty, through which the title on public health was incorporated in the EC Treaty, it was specifically intended that the Community legislature should be given power in areas where it was hitherto lacking. This related, in particular, to measures in the area of public health which are not directly connected to the functioning of the internal market.

112. The inclusion of this new power in the Treaty can, of course, never have the consequence of depriving the European Community of a prior existing legislative instrument by which public health could also be effectively protected. That consequence not only would be at variance with the Article 152 objective of conferring on (rather than depriving) the Community specific powers in the area of public health but would also adversely affect the principle set out in Article 152(1) EC that all Community policies must ensure a high level of human health protection.

113. Moreover, if it were not possible to use the power under Article 95 EC in order to harmonise standards in the area of public health, an important instrument in the realisation of the internal market would thereby be rendered ineffective. As I have already pointed out, it frequently turns out to be precisely the justified national measures of public-health protection that create barriers to trade.⁽⁵⁵⁾

114. Stated briefly, Article 152 complements the already existing EC Treaty powers such as Article 95. The exception in Article 152(4)(c) means simply that Article 152 EC cannot provide a legal basis for harmonisation, but it makes no reference to legal bases included elsewhere in the Treaty. Article 152(4)(c) does not limit, rattorte materiae, the power to harmonise national measures within the area of public health.⁽⁵⁶⁾

5. Appraisal of the exercise of the powers conferred

115. Under this point I address the exercise by the Community legislature of the powers conferred on it.

116. The following must be stated by way of preliminary comment. I have already mentioned that the EC Treaty imposes on the Community legislature the duty to adopt the measures necessary for the establishment and functioning of the internal market. In performing that duty the Community legislature enjoys the necessary margin of discretion. It determines for itself in which cases it considers it appropriate to adopt Community harmonisation measures. That evaluation includes the determination as to whether the instrument selected is the most effective for ensuring protection of a particular public interest and the determination as to the desired level of protection. The Court does not intervene in these legislative evaluations, examining rather whether the Community legislature has overstepped the bounds of its discretion.

117. The first limit concerns the effect which a measure is expected to have. According to the Court's case-law, a measure adopted pursuant to Article 95 EC must contribute practically to the establishment of the internal market.⁽⁵⁷⁾ With specific regard to the present case, the issue is whether a measure is likely to contribute to the abolition of existing or at least probable barriers to trade. I would point out that Directive 98/43 was annulled in the tobacco advertising judgment on the ground that not all of the provisions of that directive satisfied that criterion. The Court held that not all the provisions were concerned with inter-State trade. The position is different in the present case: apart from the product ban in issue here, all of the measures relate to inter-State trade in products.

118. The second limit is connected with the (principal) objective of the action pursued on the basis of Article 95 EC, in this case the protection of public health. By using

Article 95 EC the Community legislature has removed the protection of this matter of public interest from the powers of the national legislative bodies.⁽⁵⁸⁾ The removal of the protection of a matter of public interest which is also recognised by the EC Treaty, such as public health in the present case,⁽⁵⁹⁾ from the power of the national legislative bodies cannot, however, have the result that that interest is accorded a lower level of protection on the ground that the Community legislature has regard for market-related interests alone.

119. Essentially, the Community legislature is faced with the same evaluation as the national legislatures which it is replacing. That evaluation must lead to certain prior conditions being attached to the economic freedom of market participants, under which equal account is taken of the freedom of market participants and of the need to protect specific public interests.

120. In carrying out that evaluation the Community legislature enjoys a broad degree of latitude, at any rate where health protection is in issue. In this the Community legislature does not therefore differ from the national legislature which utilises the scope conferred on it by Article 30 EC. In this appraisal by the legislature, a multitude of aspects enter into play. The need for protective measures depends not only on the scientific understanding of specific health risks but also on the social and political evaluation of those risks. The same holds true with regard to the choice of measure. The Community legislature (and these are the only substantive minimum conditions which follow from the EC Treaty) must have regard for the precautionary principle and take as its base a high level of protection (Article 95(3) EC). It must in any event take account of scientific developments.

121. The third limit is constituted by the principles of law, in particular the principle of proportionality, which I shall discuss in section VII — A.

122. To summarise, then: the Community legislature derives its powers from the realisation of the internal market. Those powers can, none the less, be exercised with a view to protecting a matter of public interest, such as public health in the present case. The measures adopted must in fact be appropriate for abolishing existing or at least probable obstacles to free movement. In exercising its powers the Community legislature is faced with the same evaluation as the national legislature when it intends, for the protection of a matter of public interest, to impose prior conditions on the economic freedom of market participants.

6. Appraisal of the tightening of product norms that have already been harmonised

123. The claimants in the main proceedings dispute the power of the Community legislature to increase, pursuant to Article 95, the strictness of product norms that have already been harmonised. In their view, the existing product norms already guarantee market unity and making them even stricter has therefore nothing to do with the internal market. Considered in itself, the claimants' submission is not incorrect: there is indeed no further risk that legislation in the Member States will diverge. That said, the Court's case-law provides no support for their view. Nor can there be any such support in view of my foregoing explanation.

124. Following harmonisation, the protection of public health has become a task for the Community legislature. Indeed, national legislatures are no longer empowered to act in that regard. The Community legislature, however, can carry out this task properly only if it has the freedom to amend legislation so as to take account of changes in perceptions or circumstances. In short, the performance by the Community legislature of its tasks is not static but dynamic in character.

125. This dynamic character is also taken into consideration in the Treaty. Article 95(3) EC requires the institutions to take account of scientific developments.⁽⁶⁰⁾ Contrary to what the claimants contend, Article 95 does not require that there must be a new scientific development. Article 95 provides only that account must be taken of any scientific development. I have already referred to this in paragraph 120.

126. In more general terms, it is true that legislation is a dynamic activity. It is not solely the task of the legislature to draft legislation but also to amend that legislation to take account of changes in social circumstances. Should it fail to do so, the result will be overdue maintenance and the legislation will no longer meet the requirements which may be imposed on it.

127. In the proceedings before the Court, the option under which the Community legislature may act only once was referred to, in particular by the United Kingdom Government, as ‘fossilisation’. This term in itself demonstrates that what the claimants are arguing would have absurd consequences in practice.

7. The Directive specifically in issue in the present case

128. Judicial appraisal in the present case ought to be confined to the issue of whether the Community legislature could reasonably have reached the conclusion in question. I need not here examine the requirements imposed with regard to production.

129. First, I will mention the context of the Directive. Counteracting tobacco consumption is in many Member States a matter to which considerable political and policyrelated importance is attached. While a certain consensus appears — as one of the results of increased knowledge of the harm caused by smoking — to have emerged in the Member States in regard to imposing ever stricter rules on the use of tobacco, this still does not mean that there is also consensus on the specific manner of tackling this issue. This is equally apparent from the divergent views expressed by the Member States in these proceedings before the Court. Those views appear to indicate a great diversity, dependent on time and place. This creates a specific risk that national provisions may diverge, inter alia in regard to authorised yields of the harmful constituents of cigarettes.

130. A positive response in regard to the Community legislature's balancing of interests is thus also in my view evident. First, competence exists, and the measure relates to inter-State trade in products. Second, a public interest is being protected which is recognised by EC law; as the requirements relating to composition and designations of cigarettes are being made considerably more stringent, there can be no doubt as to the high level of protection. Third, it may be assumed that there were — or that there was at least a specific threat of — differences between the statutory and administrative provisions of the Member States. The seventh recital in the preamble states that several Member States had indicated that, if measures were not adopted at Community level, they would themselves adopt measures at national level.

131. The seventh recital otherwise merits particular attention. This recital appears to be based on a questionnaire completed by the Member States at the Commission's request. A perusal of the results of this questionnaire⁽⁶¹⁾ does not lead directly to the conviction that concrete plans for national legislation exist. None of the Member States indicates an intention to amend existing national legislation. That notwithstanding, I see no reason to cast doubt on the powers of the Community legislature under Article 95 EC. The situation is namely as follows:

• According to the questionnaire, a number of Member States — France, Italy, the Netherlands, the United Kingdom and Sweden — expressly support the desire to make the product rules governing tobacco products more stringent. In this connection, however, they give preference to regulation at European level.

• There is no doubt as to this attitude of the Member States. The priority being given to measures to counter the use of tobacco is as great as is the extent of the political and social importance attached to this issue.

If the Community legislature defaults in such a situation, it is entirely credible that Member States will choose the alternative which is for them the most attractive, namely tightening of the norms at national level. To this I would add one point linked to the possible consequences of an opposite view. Preference on the part of Member States for regulation at Community level — and thus renunciation of national measures in restraint of trade — would then result in the Community legislature not having any power precisely because of the absence of national measures in restraint of trade.

132. For the sake of completeness I would also point out that when the Directive was being drafted maximum nicotine yields were already laid down in national legislation in Belgium, Spain and Portugal. The claimants also refer to this, but submit in this connection that such national legislation has no practical effect given that the maximum yields laid down in that legislation cannot be exceeded because of the biochemical connection between the tar and nicotine yields. These existing statutory rules cannot therefore result in barriers to trade. I regard this view of the claimants — which has also not been challenged on factual grounds — as being plausible. The reasons given in the first two sentences of the ninth recital in the preamble would then also be unable to support the harmonisation measure. This defect, however, remains without effect in the present case given that there is a sufficient presumption of potential barriers to trade.

1. Arguments submitted

133. The central objection expressed in these proceedings⁽⁶²⁾ against the production ban, whereby (part of) the Directive is applicable to cigarettes destined for nonmember countries, is as follows: this prohibition does not in any way contribute to the removal of obstacles to the free movement of goods or provide a guarantee that the rules governing the internal market will not be circumvented. The Greek Government also refers in this connection to Article 14 EC. The German Government adds that a ban on production will, as a rule, be acceptable only if the product itself constitutes a danger. In the present case, however, the ban is in the interest of neither the internal market nor public health within the European Union.

134. Other intervening parties, in contrast, construe favourably the production ban in the light of what they consider to be the serious risk that cigarettes intended for nonmember countries may none the less come onto the market in the European Union, whether through illegal re-importation or because they never leave the European Union. In essence, the arguments presented to the Court have focused in large measure on expectations concerning the rise of illegal trade and the appropriateness of the production ban as a means of countering that trade.

135. If I abstract from the many and frequently inconsistent figures adduced in these proceedings and relating to both legal and illegal trade in cigarettes, the objections to the production ban boil down essentially to the following points:

• the measure is not appropriate, in view of the fact that by far the greater part of the cigarettes unlawfully smoked in the European Union come from nonmember countries;

• in so far as there is an illegal trade in cigarettes, this takes place solely in order to avoid high excise duties. Illegal trade has no connection with the composition or labelling of cigarettes;

• illegal trade can be combated by means of intensive monitoring.

136. Against these are ranged the arguments which support a production ban:

• the Council in particular has stated that, although the percentage of cigarettes which are the subject of illegal trade is small, this does not mean that the dimensions of the illegal trade are also small in absolute terms;

• the report of activities of OLAF⁽⁶³⁾ substantiates the serious nature of cigarette smuggling;

• an increase in vigilance by Member States is not an appropriate alternative within the open area of the European Union.

2. Approach

137. The question here for examination is whether the Community legislature is empowered in this case under Article 95 EC to adopt rules on the manufacture of cigarettes even where such manufacture takes place for the purpose of exporting cigarettes from the European Union. The subject of the measure thus concerns products which never enter the internal market commercially or are at least not intended to do so.

138. I shall adopt the following approach in answering this question. I shall first outline how the Community legislature has used Article 95 EC — and the similar Article 94 EC — in previous cases for the purpose of establishing rules for the production stage. This outline leads to an analysis of the powers which Article 95 EC has conferred on the Community legislature in regard to rules which do not directly concern inter-State trade. This analysis is necessary to enable me to determine that Article 95 confers broad, but certainly not unlimited, powers to effect harmonisation. In conclusion I shall determine whether the exercise of those powers by the Community legislature in the present case remains within the bounds conferred on it.

3. Articles 94 EC and 95 EC and requirements at the production stage: a brief outline

139. Requirements applying at the production stage of goods may be intended both to influence the characteristics of the products themselves and the circumstances under which they are manufactured, for example in connection with the environment or the workplace.

140. Actual production requirements which also apply at the production stage constitute an exception in Community legislation. Most of the legislation which is based on Article 95 EC relates only to the placing of products on the internal market and does not affect the production stage, even where health-sensitive products are concerned. By way of example I refer to the authorisation systems as they apply in the case of medicinal products, veterinary products and plant protection products.⁽⁶⁴⁾ The legislature evidently took the view that it was not necessary for these products that the authorisation systems be applied to production and thereby to those products intended for export from the European Union. Product requirements do, however, arise at the production stage. Thus, European foodstuffs legislation applies to all stages in the food production chain.⁽⁶⁵⁾ This broad scope of application follows from the fact that all stages of the production chain may ultimately have a bearing on the safety of the foodstuff itself.⁽⁶⁶⁾

141. I now turn to the requirements which apply to production. As the first, I shall mention the titanium dioxide directive.⁽⁶⁷⁾ This directive was adopted after the earlier titanium dioxide directive had been annulled by the Court on the ground that an incorrect legal basis had been chosen.⁽⁶⁸⁾ The Commission sets out as follows the reasons for its decision to base the proposal for a replacement directive on Article 95 EC: although the existing national rules were introduced with a view to protecting the environment, the harmonisation requirement follows from the need to eliminate distortions of competition.⁽⁶⁹⁾ The directive imposes, inter alia, rules on the production process, in particular the processing of waste.

142. Earlier environmental directives adopted prior to the Single European Act, in which, among other things, a specific environment title was incorporated in the Treaty, provide an insight into the possibilities of imposing requirements on the production process pursuant to Articles 94 EC and 95 EC.⁽⁷⁰⁾ In these the Community legislature has consistently taken the view that differences in national legislation in regard to, for instance, authorised discharges into water or the air may result in unequal conditions of competition and thereby directly affect the functioning of the common market. Article 94 EC was able to serve as a legal basis in this regard. On the other hand, it was, according to the legislature, necessary also to employ Article 308 EC for the reason that the EC Treaty did not make provision for powers in respect of environmental protection. The limit with which the Community legislature was here dealing was not entirely clear and was also not reasoned.

143. With regard to the working environment, Article 94 EC appeared to provide authority for a Community directive to protect employees against the risks of exposure to chemical, physical and biological agents.⁽⁷¹⁾ According to the legislature, this involves measures which directly affect the functioning of the common market.

144. Following the establishment of a specific environment title and the specific powers under Article 137 EC in the area of the working environment, the Community legislature now has less need of Articles 94 EC or 95 EC in order to be able to adopt provisions governing production. This, however, does not mean that there should no longer be any powers under Article 95 EC.⁽⁷²⁾

145. To summarise, then: it is primarily within the context of distortions of competition that the Community legislature has exercised its powers to adopt rules at the production stage. The Directive at issue in the present case involves product requirements which apply even before the products enter the commercial chain. It will be clear from this brief outline that the Directive marks a novel departure inasmuch as a production ban is introduced to prevent the regulation of the internal market from being undermined.

4. The powers of the Community legislature: the requirement that a distortion must be appreciable

146. Article 95 EC provides in the first place for the power to adopt measures having as their object the establishment of the internal market: measures may also be adopted under Article 95 which directly remove barriers to inter-State trade. Confining myself to product legislation, what is in issue is the harmonisation of national rules on trade in products on the internal market. Together with Articles 28 EC, 29 EC to 30 EC, this power of the Community legislature constitutes an elaboration of Article 3(1)(c) EC. I have already addressed this matter in more detail in paragraph 103 of the present Opinion. In order to abolish these barriers, the EC Treaty thus provides for two instruments which complement each other in their operation.

147. It is through the complementary application of Article 95 EC, on the one hand, and of Articles 28 EC to 30 EC, on the other, that an internal market is established. This, however, still does not provide any guarantee that the market thus established can also function as a common market. Additional harmonisation measures will frequently be needed for that end. The Community legislature has acknowledged this problem and has provided a second component to the competence under Article 95 EC: the power based on Article 95 EC extends rattorte materiae to harmonisation measures concerning, not the establishment, but the functioning of the internal market.⁽⁷³⁾ This is an elaboration of Article 3(h) of the EC Treaty providing as follows: the approximation of national laws to the extent required for the functioning of the internal market.

148. To this I would add the following. With the advancement of the establishment of the internal market, as evidenced by decreasing frequency of obstacles in the way of cross-border trade between Member States — attributable to, inter alia, the harmonisation of product legislation — the emphasis will be increasingly placed on the functioning of the internal market. Genuine market unity requires more than simply the abolition of obstacles at borders. I would point out in this connection that the Community has, pursuant to Article 95 EC, adopted a series of measures designed precisely to strengthen the functioning of the internal market. The directives cited in paragraphs 141, 142 and 143 provide good examples in this regard.

149. We are here in an area in which the power to adopt rules is in principle vested in the Member States. There is no general prohibitory provision comparable to Article 28 EC. In issue are measures which — were they to be adopted by the national legislature — would not impose quantitative restrictions on imports or exports. These are measures which regulate the conditions governing production and which are not requirements for the products on the common market itself. For these reasons the Community must have a qualified interest in order to be entitled to breach this competence of the Member States. Or, to use the words of the Court when dealing with distortions of competition: the operation of the market must be appreciably distorted.⁽⁷⁴⁾

150. This requirement that any distortion must be appreciable also means that Article 95 EC does not confer a general unlimited power to effect harmonisation. That would be the case if every — even a very minor — disruption to the functioning of the common market could lead to harmonisation. Briefly, as we are here in an area where Member States have an autonomous legislative power which is also not limited by any general prohibitory provision, the Community legislature can intervene only if there is an appreciable distortion. It is presumably also for this reason that the Community legislature included Article 308 EC as a joint basis for the environmental directives mentioned in paragraph 142 above.

151. This requirement of an appreciable distortion thus also forms a constitutive component of the Community legislature in so far as rules adopted on the basis of Article 95 EC for the production stage are concerned. The question now is as to when a case involves an appreciable distortion. Two forms of distortion may, in my opinion, be relevant here.

152. The first distortion relates to the risk that the rules which directly govern trade on the internal market might easily be undermined. The Community legislature will then be able to adopt supplementary rules for the production stage which are designed to obviate this effect. If the Community legislature is unable to adopt these rules, an internal market will still be established but will simply not be able to function effectively. In more specific terms, these will be rules which are designed to contribute to the effectiveness of the rules relating to trade on the internal market.

The implementation and enforcement of these rules may be adversely affected if a measure provides a possibility of evasion. This is the reason which the Community legislature in the present case adduces in the 11th recital in the preamble to the Directive.

153. The second distortion which may constitute the basis for rules at the production stage concerns an inequivalence in relations of competition. This situation will arise if the disparity between the conditions in the various Member States governing participation in the common market becomes too great as a result of the lack of concordance of national conditions imposed on the manufacture of particular goods. A harmonisation measure based on Article 95 EC can remove this disparity.

154. The titanium dioxide judgment is relevant in this regard. There the Court argued as follows: national provisions — motivated in that case by health and environmental considerations — may be a burden on the undertakings to which they apply.⁽⁷⁵⁾ If there is no harmonisation of national provisions there will be a danger of serious distortion of competition. A measure to harmonise national rules on the conditions governing production within a particular industrial sector which is intended to put an end to distortions of competition within that sector thus contributes to the realisation of the internal market and consequently falls within the scope of Article 95 EC. The titanium dioxide case involved legislation on the processing of waste. The Court recognised in this context that national rules applying equally to all market participants in a sector may distort competition.

5. The tobacco Directive

155. I now come to the question whether, in adopting the tobacco Directive, the Community legislature has removed an appreciable distortion of the functioning of the internal market.

156. In the proceedings before the Court, the Community legislature, in support of its contention that the Directive applies to the manufacture of cigarettes intended for export, stated that the regulation of the internal market is not undermined. It is clear from the manner in which the case has been dealt with before the Court that the legislature⁽⁷⁶⁾ is concerned about the illegal re-importation of cigarettes which do not meet the norms imposed by the Directive and also wishes to prevent cigarettes from being directly placed illegally on the market within the European Union. This relates therefore to the first form of distortion of the internal market, as I have described it in paragraph 152.

157. In my view, the Community legislature is authorised in such a situation to take action subject to the following conditions:

• The damage which circumvention may have on the effect of the measure must be serious. This requirement that the damage be serious is the manifestation in factual terms of the above requirement that the distortion must be appreciable.

• The damage can reasonably be avoided only if there is a guarantee that all Member States are acting in uniformity. In other words, if there is divergence of national implementing provisions and practices, or at least a real risk that national provisions will diverge, it will not be sufficiently certain that genuinely effective action can also be taken against circumvention.

• The lack of supplementary rules results in disproportionately heavy charges for implementation and enforcement.

158. Assessing the degree of seriousness of potential damage involves an analysis of the evaluation of the risk that an illegal market may be created. In my view, the following constitutes the determining factor. Cigarettes are a stimulant and have for that reason an element of excitement for smokers. This is certainly the case with young smokers, to whom the antismoking policy is in large measure addressed. In such a situation it is entirely reasonable to assume that an illegal market will be established in cigarettes that are banned within the European Union but which can be obtained outside it. The illegal nature may in itself mean that the product concerned will find a market. The assertion that at present illegal trade is engaged in solely for the purpose of evading excise duty is, in my view, not conclusive in this regard. The establishment of an illegal market requires in the first instance legislation that creates the illegality. Further, the more stringent the provisions, the greater the susceptibility to evasion will be. It is thus the present Directive that has first made the establishment of an illegal market possible — and therefore perhaps attractive.

159. The second condition relates to the need for Community action. A unilateral national ban on production for the purpose of countering illegal re-importation will not be effective in view of the fact that controls have to be carried out along the common market's external borders. Should differences arise in legislation as between Member States — and thus also differences in the controls carried out at the various external borders — the illegal flow of business will simply transfer to an external border where the ban in question does not apply. Action at Community level is for that reason necessary. However, even if the cigarettes do not leave the European Union a national measure cannot be effective on account of the establishment of an open internal market. Within that market, a Member State cannot take effective action against cigarettes being marketed (illegally) within its territory which have come from another Member State in which the production ban does not apply.

160. I shall now consider the third condition. Given that re-importation does take place illegally and that it is frequently individual travellers who re-import the products into the European Union, controls are not really practicable. The least that can be said is that such controls give rise to disproportionate burdens in regard to implementation. The position is no different with regard to illegal trade within the European Union.

161. On this point my conclusion is that the Community legislature has in this case removed an appreciable distortion in the functioning of the internal market. That said, I consider that the production ban may also possibly be based on another foundation. The real risk of an appreciable distortion of competition, which is the second type of disruption to the functioning of the internal market, can in my opinion form the basis for the EC provisions.

162. I am in no doubt that the provisions applying to the composition of cigarettes — and the expectations regarding the evolution of those provisions — exercise a significant influence on the investment decisions of tobacco product manufacturers who manufacture (also) for export to nonmember countries. Manufacturers will prefer to invest in countries which have the most flexible legislation. One of the factors taken into account in this regard is the fact that they will have to compete, in those nonmember countries, with manufacturers from outside the European Union which are also not subject to strict requirements as regards composition. In short, the expectation is that divergent national provisions could result in the transfer of investments within the European Union and for that reason lead to an appreciable distortion of the common market. The claimants' assertion that they may transfer their production as a result of the Directive confirms my view.

163. A unilateral national ban on production would thus be not merely ineffective but also scarcely conceivable. A Member State cannot unilaterally prohibit the manufacture of cigarettes in order to guarantee the enforceability of the ban on trade within the internal market. In such a case, the effect at least will be that a cigarette manufacturer will transfer production to a Member State in which no production ban is in force. A unilateral measure of this kind would thus have no effect whatever with regard to enforcement and would result solely in economic damage for the Member State concerned.

164. In this respect the Directive — through harmonisation of the product norms governing tobacco products manufactured in the European Union irrespective of destination — contributes to the prevention of serious disparities in the conditions governing market participation by manufacturers of tobacco products in the different Member States.

165. For the sake of completeness I would point out that the Directive requires to be distinguished in this regard from Directive 98/43. In the case of the latter directive, so the Court ruled, unequal conditions of competition as between Member States could not constitute a basis for a harmonising measure in view of the fact that this would eliminate competition throughout the Community or would at least extensively restrict it. In my view, this finding of the Court must be considered in the light of the specific context of Directive 98/43. That directive imposed a very extensive restriction on advertising for tobacco products and thereby preeminently deprived manufacturers of tobacco products of an instrument of competition. They had in any event, as a result of that directive, less opportunity to present their product to consumers. The Directive in the present case, in contrast, does not have any such particular effect on competition.

166. To recapitulate, then, Article 95 EC can form the legal basis for a measure which imposes conditions on the manufacture of tobacco products irrespective of the intended destination for which they were manufactured.

1. Arguments submitted

184. At the hearing before the Court, the Parliament and Council argued, as I have already mentioned, that the Directive is also intended to regulate exports. For that reason Article 133 EC was, in their opinion, correctly added as a legal basis. That view is supported by the Commission and several of the intervening Governments. Individual arguments were adduced in this connection which are material to the assessment:

• The United Kingdom Government argues that Article 133 EC is justified as a legal basis in view of the fact that Articles 3 and 7 of the Directive establish unambiguous principles of common commercial policy. Article 95 EC constitutes no more than a secondary legal basis for the manufacture of cigarettes intended for export to nonmember countries.

• The Netherlands Government refers to the 11th recital in the preamble to the Directive, which states that the export regime forms part of the common commercial policy. The fact that the Directive also seeks to attain (or does attain, although not intending to do so) objectives not relating to commercial policy has no bearing on this.⁽⁸⁸⁾

• In the Commission's view, the application of quality standards to the exportation of products must be regarded as a matter of commercial concern to the European Union as it prevents products of inferior quality being dumped on the world market. For that reason alone Article 133 EC can serve as a legal basis.

185. The main objections to the use of Article 133 EC are the following:

• According to the claimants, the Community's powers in the area of the common commercial policy have as their main objective to ensure that trade between the Member States and nonmember countries does not lead to distortions in intra-Community trade.

• The claimants point out that the purpose of the Directive is to protect health. For that reason the Directive cannot be based on Article 133 EC. Article 133 EC confers power to promote, not restrict, trade. The Greek Government sets out a similar argument.

• Following on from this, the German Government submits that measures based on Article 133 EC must have the objective of influencing currents of trade with nonmember countries. The liberalisation, and not the restriction, of trade must be to the fore. While restrictive measures are permitted on the basis of Article 133 EC, they must constitute a component of a measure designed to bring about liberalisation.

• Both the German and the Luxembourg Governments draw attention to the protection of public health in nonmember countries, which is a consequence of the Directive. The Directive thereby has extraterritorial effect, even though — in the absence of any international standard — it is a matter for the country of importation itself to establish health norms.

2. Article 133 EC and exports of products to nonmember countries: a brief outline

186. Community legislation concerning products for export and based on Article 133 EC is to be found in many areas and with a variety objectives. International agreements frequently form the basis of such legislation. By way of example I cite the legislation on sanctions⁽⁸⁹⁾ and regulations to counter the exportation of drugs and counterfeit goods.⁽⁹⁰⁾ On occasions such legislation is unilateral Community legislation, as is the case with the tobacco Directive. A recent example is provided by the framework regulation for legislation on foodstuffs,⁽⁹¹⁾ which is discussed below in paragraph 190.

187. For the rest, measures governing products intended for export also fall outside the scope of Article 133 EC. An example within the agricultural sector is provided by the Commission decision⁽⁹²⁾ in which, by means of emergency measures to combat BSE, a ban was introduced on exports of British cattle and beef. This measure also applied to exports to nonmember countries. This is remarkable given that the underlying Council regulations related only to internal trade. The justification for the measure lay in the risk of re-importation.⁽⁹³⁾

188. Three measures merit special attention in the examination of the present case.

189. The basic rules for the application of Article 133 EC to exports are laid down in Regulation (EEC) No 2603/69 of the Council of 20 December 1969 establishing common rules for exports.⁽⁹⁴⁾ The main rule in Article 1 states that exports may not in principle be subject to any quantitative restriction. Article 11 provides Member States with the possibility of adopting national restrictions on exports in order to safeguard one of the interests mentioned in Article 30 EC.

190. Article 133 EC forms the legal basis for Community product requirements relating to exports in the — broad — framework regulation on foodstuff legislation.⁽⁹⁵⁾ Central to this regulation is the protection of the health and safety of EC nationals and nationals of nonmember countries. Foodstuffs intended for export to a nonmember country and placed on the market in that country must satisfy the relevant provisions of foodstuffs legislation which apply to products intended for domestic consumption. Furthermore, they must not be injurious to health or, in the case of animal feedstuffs, unsafe.

191. It was precisely for the purpose of regulating exports that Council Directive 92/52/EEC of 18 June 1992 on infant formulae and follow-on formulae intended for export to third countries was adopted.⁽⁹⁶⁾ This directive, which is based on Article 133 EC, supplements earlier directives which contain (similar) product requirements for infant formulae and follow-on formulae intended for the internal market.⁽⁹⁷⁾ The purpose of this directive is to safeguard the health of infants in nonmember countries. The product requirements in question must be in accordance with the EC legislation applicable to the internal market or with the internationally applicable norms adopted within the framework of the Codex Alimentarius.⁽⁹⁸⁾

192. To summarise, then, rules are adopted on the basis of Article 133 EC and applied to products for export with a view to a variety of objectives. These certainly do not relate solely to commercial policy in the strict sense of promoting trade but also to measures which restrict exports of specific products by dint of other objectives of general concern.

3. Appraisal of the powers under Article 133 EC

193. The first question craving reply is whether Article 133 EC can serve as the legal basis for a measure that is primarily intended to protect public health. This question does not differ in its essentials from that relating to Article 95 EC. In other words, the question is whether Article 133 EC is also to be regarded as comprising a functional competence which the Community legislature requires in order to adopt measures having external effect.

194. According to the case-law, the competence of the Community legislature must be construed broadly. I refer back to Opinion 1/78 of the Court: ‘it is therefore not possible to lay down, for Article 113 of the EEC Treaty, an interpretation the effect of which would be to restrict the common commercial policy to the use of instruments intended to have an effect only on the traditional aspects of external trade’. The Court added that ‘the enumeration in Article 113 of the subjects covered by commercial policy... is conceived as a non-exhaustive enumeration’.⁽⁹⁹⁾ While it might have been thought that ‘at the time when the Treaty was drafted liberalisation of trade was the dominant idea’, other objectives, such as issues relating to development, have gradually assumed a role also.⁽¹⁰⁰⁾

195. This opinion of the Court makes it clear that Article 133 EC does not by itself suffice to promote trade between the European Union and nonmember countries.

Even where Article 133 EC is applied, other public interests may play a role, in regard to which the Community legislature may impose prior qualitative conditions on trade. The Court's case-law hereby confirms the broad construction placed on the concept of the common commercial policy, as evidenced in practice by Community legislation.

196. The power to confer a role on other important areas of public interest can also be derived from Regulation No 2603/69. That regulation authorises Member States to restrict exports in order to safeguard the areas of public interest mentioned in Article 30 EC. The existence of this power on the part of the Member States means in itself that the promotion of these interests may also be the subject of Community action. Indeed, unilateral action by Member States may interfere with the common commercial policy — an area in which the European Community enjoys exclusive competence. The Community legislature must therefore be able, in the interests of trade, to replace these unilateral national measures by Community action. On the other hand, such action by the Community also may not lead to a situation in which other public interests are afforded less protection. So far as the protection of public health is concerned, the obligation under Article 152(1) EC is significant, requiring as it does all Community activities to ensure a high level of protection. Here too the comparison with internal trade is evident. It is precisely because Article 30 EC gives rise to the possibility of barriers to trade that the Community must — on the basis of Article 95 EC — be able to act.

197. In brief, the competence of the European Community to act externally on the basis of Article 133 EC is in large measure similar to the competence of the Community legislature under Article 95 EC to act internally.⁽¹⁰¹⁾ What is here in issue is also a functional competence.

198. I should also point out in this connection that Article XX of the GATT Agreement provides for exceptions with a view to specific areas of public interest such as the protection of public health. That is also logical. The promotion of free trade implies that prior conditions may also be imposed on such trade. It is incorrect to confuse those prior conditions with barriers to trade, as the claimants appear to be doing.

199. The German and Luxembourg Governments raise for discussion the issue of the extraterritorial effect of the Directive, in that the requirements governing exports of cigarettes amount essentially to the protection of public health in non-member countries. I share those Governments' view that this protection — which in any event is primary — is a matter for the Governments of the countries of importation. The question, however, is whether this means that no further requirements may be imposed on exports.

200. This question is situated within the delicate area of extraterritorial protection measures. Significant differences exist in the views on the permissibility of measures of this kind, depending on the interpretation of what constitutes commercial policy. The Court has not so far set out its views in express terms on whether such measures are permissible. Nor does any clear picture emerge within the framework of the World Trade Organisation, at least not in regard to measures concerning exports.⁽¹⁰²⁾

201. My reply to this question is as follows. Requirements imposed on products intended for export may be divided into three categories. The first of these concerns those requirements arising under international agreements, while the second consists of unilateral Community requirements for the internal market which also apply to exports and the third category comprises requirements imposed exclusively on exports.

202. In my opinion, those requirements that belong to the first and second categories are in general permissible, in view of the broad construction placed on the concept of the common commercial policy in both the Court's case-law and legislative practice.

203. With regard to the first category: extraterritorial protection measures cannot in any case be criticised if they are based on international standards. Article 133 EC provides the instrument by which the Community can give effect to international agreements concerning trade. Standards of this kind form the basis of the export rules governing infant foods.

204. I come now to the second category of requirements, among which the requirements in the tobacco Directive may be included. The Community legislature may ban the exportation of inferior products that have also been refused access to the internal market. The reason for this is that it is important for the credibility of trade that inferior products are not placed on the market. With regard to the internal market, the Court has recognised this ground in its judgment in Alpine Investments.⁽¹⁰³⁾ It is in this connection immaterial whether the case relates to defective or dangerous products or — as in the present case — products that constitute a health risk. In this sense I agree with the Commission's argument referred to in paragraph 184 above. This ground forms the basis for the ban on exports of harmful foodstuffs.

205. In specific terms, my view means that the question whether extraterritorial protection measures are permissible requires only to be answered for unilateral measures taken by the European Community (or by a Member State) which relate exclusively to exports and not also to the internal market. Having regard to the content of the tobacco Directive, that question need not be addressed in the present case.

4. The limits of competence

206. In its opinion on the Cartagena Protocol,⁽¹⁰⁴⁾ the Court pointed out that a broad interpretation by the Community legislature cannot have the result of rendering the specific Treaty provisions concerning — in that case — environmental protection policy largely nugatory by virtue of the fact that Article 133 EC would be applicable as soon as it was established that Community action was liable to have repercussions on trade. This opinion of the Court is, moreover, relevant only in those cases in which a choice of legal basis is necessary in view of differences in procedures.⁽¹⁰⁵⁾ In those cases it is necessary to consider within what area a measure principally falls. Frequently, however, a cumulation of legal bases will be possible.

207. Opinion 2/00 dealt with the demarcation between the common commercial policy and the Community's powers with regard to special areas of public interest. A second line of demarcation also needs to be drawn, namely that between the common commercial policy (understood as meaning trade with nonmember countries) and the internal market.

208. According to the Court, the mere fact that a measure also concerns imports into the Community does not suffice to make Article 133 EC applicable.⁽¹⁰⁶⁾ The case in point involved uniform rules on trade in specified meat products. The only reason why imports were also affected was that the measure did not distinguish between products originating in nonmember countries and products originating in the European Union. That which applies to imports also applies, in my opinion, to exports. The mere fact that a product-related provision in force for the internal market applies to products that are manufactured for export to nonmember countries does not automatically mean that Article 133 EC may be used as a legal basis.

209. The regulation which governed imports of agricultural products into the EU in the wake of the Chernobyl disaster was, in contrast, quite capable of being based on Article 133 EC.⁽¹⁰⁷⁾ The Court based itself primarily on the purpose served by the regulation. The Community rules were intended to safeguard the health of consumers, maintain the unified nature of the market and prevent deflections of trade, without imposing unnecessary barriers on trade between the Community and nonmember countries.

210. In its opinion of 15 November 1994,⁽¹⁰⁸⁾ the Court was requested to rule on the competence of the EC to conclude the TRIPs Agreement.⁽¹⁰⁹⁾ The Court stated that intellectual property rights are not specifically linked to external trade, but are also not specifically linked to the internal market. Article 133 EC therefore did not constitute an appropriate legal basis in that case.

211. I shall now sum up. The demarcation of Article 133 EC has two dimensions. The first line of demarcation is broad: Article 133 EC can be used for the benefit of public interests other than the interest of international trade per se. Exercise of this competence, however, may not be at variance with special areas of competence that are recognised as vested in the Community institutions. The second demarcation line is narrower. If a measure is primarily intended to regulate internal trade, Article 133 EC will not be applicable, even though both imported and exported products are affected thereby.

212. That said, I consider the powers under Articles 95 EC and 133 EC to be comparable and complementary. Article 133 EC represents for the external market what Article 95 EC represents for the internal market. Article 133 EC can serve as a legal basis only for measures having a real connection with the external market and under which the consequences for external trade are more than merely ancillary.

5. Appraisal of the Directive

213. Taking as my basis the reasons put forward by the Parliament and the Council at the hearing — and thus ex post facto — I come to the view that Article 133 EC can serve as a legal basis for external effect. I consider the subject-matter of the measure to be conclusive in this regard. Specifically, the Community legislature intends by the ban on manufacture to impose real conditions on exports of cigarettes to nonmember countries.

214. This view rests on the following factors:

• Article 133 EC constitutes a functional competence which can be used to impose prior qualitative conditions on the exportation of products;

• the extraterritorial effect of the protective measures is justified by their content, namely that the ban applies only to exports of inferior quality cigarettes which are not permitted on the internal market;

• cumulation of the legal bases of Article 95 EC and Article 133 EC is in principle possible;

• the measure does in fact relate to the internal market. External effects are more than ancillary effects.

215. I would also confirm in this connection that the present Directive is comparable, so far as external effect is concerned, to other product legislation in which health protection for nationals of nonmember countries forms the subject of regulation. I have already cited the framework regulation on foodstuffs and the legislation on infant foods.⁽¹¹⁰⁾

216. That said, I consider that I am bound by the reasoning which the Community legislature has set out in the 11th recital in the preamble. According to settled case-law on Article 253 EC, the statement of reasons provided by the Community legislature must set out the reasoning clearly and unequivocally so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review.⁽¹¹¹⁾ Regard being had to this function of the duty to state reasons, it is insufficient if reasons are given subsequently when an issue happens to be raised before the Court. A statement of reasons may, it is true, be clarified by the Community legislature in proceedings before the Court; that, however, does not mean that an entirely new ground of justification can be submitted.

217. As already mentioned in paragraph 86, the 11th recital in the preamble states that the application to exports is to ensure that the internal market provisions are not undermined. In this the consequences which the Directive has for external trade are no more than ancillary effects. These effects follow from the measures relating to the internal market and for that reason alone Article 133 EC cannot serve as a legal basis.

218. The purpose of the measure is, according to the recital, not to impose restrictions on trade in cigarettes with nonmember countries. Nor can it be regarded as forming part of the common commercial policy. The fact that it does indeed have consequences for trade with nonmember countries has no bearing on this. I refer on this point to the formulation used by the Court in the biotechnology judgment.⁽¹¹²⁾ In brief: applicability to cigarettes intended for export is an ancillary or subordinate objective of the Directive and does not coincide with its raison d'être.

219. All of this leads me to the conclusion that Article 133 EC was incorrectly included as a legal basis for the Directive. Even the rules relating to exports could, and should, have been based on Article 95 EC.

1. General appraisal

225. Assessment of the principle of proportionality in the present case consists of a variety of elements. The primary element is as follows: the task of the Community legislature to offer adequate protection for matters of public interest is not disputed in regard to the protection of public health. In this the Community legislature is no different from national legislative bodies. As the Commission has also stated in these proceedings, the scope of judicial review is limited. Examination may be made only as to whether the Community legislature did or did not exceed the limits of its competence. The principle of proportionality constitutes one of those limits. I refer to paragraphs 120 and 121 of this Opinion.

226. In my Opinion in Hahn⁽¹¹³⁾ I referred to the Court's settled case-law which states that human health and life are foremost among the goods and interests protected in Article 30 EC. In the absence of exhaustive harmonisation, it is for the Member States to decide on the extent to which they wish to safeguard the protection of the health and life of individuals. Although they have a broad discretion in this regard, they must still take proper account of the requirements imposed by the free movement of goods. In particular, a national measure or commercial practice will not come under the derogation in Article 30 EC if public health can be accorded equally effective protection by measures having a less restrictive effect on intra-Community trade.

227. The particular nature of public health protection also finds expression in Article 152(1) EC, which provides that the requirements relating to public health protection are to form a constituent part of Community policy in other areas. The Court has stressed the importance of this provision, inter alia in connection with the common agricultural policy.⁽¹¹⁴⁾

228. In my Opinion in Hahn I discussed the precautionary principle. The precautionary principle and the principle of preventive action are set out in the EC Treaty Title dealing with the environment but are also recognised by the Court as being principles which can form the basis of measures to protect public health. The Court thus accepted these principles as the basis for legislative measures affording protection against BSE.⁽¹¹⁵⁾

229. In brief, the protection of public health is a matter of public interest which the legislature must be able to protect in full. The value of this public interest is so great that, in the legislature's assessment other matters of interest, such as the freedom of market participants, must be made subsidiary to it. This holds true both for national legislative bodies and for the Community legislature in so far as the latter has taken over public health protection from national legislative bodies.⁽¹¹⁶⁾

230. It is in this light that I also consider the operation of the principle of proportionality. This principle does not provide that two matters of interest have to be weighed one against the other but focuses only on the choice of measure which has been or is being adopted to protect public health. Is this measure appropriate and is any other — less intrusive — measure available which would provide equally good protection for public health? The Community Courts exercise a limited appraisal of these issues.

231. It is clear to me that the obligations which the present Directive imposes satisfy these criteria. Further, the provisions concerned strike me as being particularly well suited to contributing to the intended purpose of public health protection. In measures intended to restrict (the consequences of) smoking, the legislature seeks to achieve a balance between measures which, on the one hand, are substantial and which may in any event be expected to be effective and, on the other, take account of the fact that tobacco consumption also cannot be banned entirely, or at any rate that such a ban would give rise to an extensive illegal economy. The Community legislature appears in the present case to have succeeded in achieving that balance. I am unable to identify any less intrusive measure which would provide equally good protection for public health.

2. Appraisal in regard to applicability to exports

232. More particularly, the Court must examine the proportionality of having (Article 3 of) the Directive apply to cigarettes destined for export from the European Union. Above (paragraph 213 et seq.) I have found that this ban is primarily intended to counter the illicit trade in cigarettes within the European Union. The question now is whether this objective could equally well have been attained by measures less restrictive of trade. The claimants argue that the ban which Article 3 of the Directive imposes on the manufacture, and thus on the exportation, of cigarettes manufactured in the Community otherwise than in accordance with the maximum yields indicated is contrary to the principle of proportionality.

233. The proportionality of this measure is not a matter of established fact from the outset. There is a lack of symmetry between the substance and the effect of this measure, on the one hand, and, on the other, the objective which that measure seeks to attain. Indeed, we may assume that cigarettes are normally exported for the purpose of sale, and also end use, in nonmember countries and that it is there that the end use actually takes place in most cases. These exports are now subjected in their entirety to restraints intended to prevent an ancillary consequence, namely the illegal trade in those cigarettes within the European Union itself.

234. To begin, both the claimants and the German Government cast doubt on the appropriateness of the measure. They draw a comparison with the ban on exports of cattle from the United Kingdom in the context of BSE infection, which the Court upheld in its judgment in United Kingdom v Commission.⁽¹¹⁷⁾ They argue that the ban in that case was indeed appropriate to achieve the intended purpose as the source of the health risk which the legislation sought to counter was to be found in the United Kingdom, whereas in the present case the source is in large measure to be found outside the European Union. The Council comments as follows on this line of argument: the measure in issue in the BSE case also went considerably further than the tobacco Directive. In other words, as the tobacco Directive is not appropriate for doing away effectively and entirely with the health risk, the Community legislature confines itself here to a more limited measure.

235. The claimants and the German Government have, in my view, chosen an incorrect basis for their appraisal of the appropriateness of the measure. If the objective is to ban the illegal consumption of cigarettes which fail to meet Community requirements, that measure will not be appropriate in view of the fact that a large proportion of those cigarettes originate outside the European Union. However, the measure has a more limited objective, namely that of preventing the internal market rules from being undermined by cigarettes that are manufactured in the European Union but may not be marketed there and which none the less come on to that market. In the light of that limited objective it can be established that the measure is appropriate in nature.

236. The question whether, in that case, a less intrusive measure might not have been available is, in my view, more difficult to answer. On this point the Council's marginal remark is material. I am not entirely in agreement with that remark: the measure is not limited in its scope. As already stated, the measure results in a total ban on exports of cigarettes that fail to satisfy the requirements. On the other hand — and this is what I consider to be more important — the significance of the ban should also not be overestimated: a number of importing countries have themselves imposed similar — or even stricter — requirements on cigarettes, international norms covering cigarettes are at present being drafted and, furthermore, the fact that the European Union guarantees that no inferior cigarettes will be placed on the world market can also increase the confidence which consumers in nonmember countries vest in European cigarettes.

237. It is clear to me that a ban on production is required in order to attain the objective sought by the measure. I refer once again to the following points:⁽¹¹⁸⁾

• there is a plausible risk that an illegal market will develop, whether through re-importation or through the fact that products are brought directly on to the illegal market;

• action at Community level is required to counter this. Unilateral national measures are ineffective for purposes of control;

• unilateral national measures also lead to a significant distortion of the internal market.

238. I fail to see how any measure less drastic than a ban on production could offer the same protection. As less drastic measures, one might, for example, envisage obligations to separate production flows, possibly supplemented by more extensive provision of proof by manufacturers that cigarettes have indeed been exported. Whatever might be the effectiveness of such measures in themselves, they will never be able entirely to counteract the establishment of an illegal economy. Part of that illegal economy does indeed originate in re-importation. Assuming that, in the case of easily enforceable Community legislation, the situation is arrived at in which all — or nearly all — cigarettes intended for export are in fact exported, the attractiveness of illegal re-importation will simply increase.

3. Appraisal in regard to Article 7

239. The claimants in the main proceedings, Japan Tobacco and the Greek Government dispute the proportionality of Article 7 of the Directive, as explained in the 27th recital in the preamble. The arguments which they put forward amount to a submission, first, that the measure is not appropriate for the protection of health and, second, that there is a less onerous alternative.

240. The central argument relating to the appropriateness of Article 7 is that this article is at variance with Articles 3 and 5 of the Directive. It is essentially as follows: whereas Articles 3 and 5 contain measures that seek to ensure that smokers will choose lighter cigarettes, Article 7 has precisely the effect of impeding them in making that choice. Japan Tobacco submits in this connection that the indications which Article 7 prohibits — also referred to as ‘descriptors’ — serve a useful purpose: they provide consumers with information on the tar and nicotine yields of the tobacco product. It is precisely such information that consumers are deprived of by the fact that Article 7 prohibits the use of descriptors.

241. All of this has the result that this measure is not appropriate for protecting public health. These arguments are in particular rebutted by the submission that the indications which Article 7 prohibits do not contain objective information but rather mislead smokers by suggesting that a particular tobacco product is less harmful than other products.

242. Underlying this discussion is, inter alia, a controversy regarding the extent to which cigarettes with a lower tar yield are less harmful than those with a higher yield. The arguments presented and evidence adduced in the present proceedings cannot resolve this controversy. On the one hand, it strikes me as sufficiently obvious that a cigarette with a lower tar yield is per se less harmful than a cigarette that has a higher tar yield. This is also a starting point for the Community legislature. For that reason the maximum tar yield has been reduced in Article 3 of the Directive. The fifth recital in the preamble also stresses the connection between this reduction and carcinogenicity. On the other hand, the Commission, among others, has argued in these proceedings that cigarettes with a low tar yield none the less contain a high level of other harmful substances and will therefore still be harmful. Moreover, it is not implausible that a smoker will smoke more cigarettes if these have a lower tar yield. I quote from the 27th recital in the preamble: ‘Smoking behaviour and addiction, and not only the content of certain substances contained in the product before consumption, also determine the level of inhaled substances.’ In brief, there are grounds for doubting whether the fact that smokers switch from heavier to lighter cigarettes consistently represents a significant health advantage.

243. In this connection there is a second point of controversy: the effect which the measure is expected to have on public health. The views concerning expectations in this regard are divergent, as is evident from the submissions made by the various intervening parties to these proceedings. Nor does it surprise me that no uniform pattern of expectations emerges. The question here is one of the extent to which a consumer who smokes will adapt his behaviour as a result of the disappearance of indications such as ‘light’ and ‘mild’.

244. These two aspects of the controversy determine the context of this measure. In order to give a meaningful answer to the question of the appropriateness of a measure for the protection of public health, I shall now examine in more detail the content of the measure itself.

245. In the first place, the possibility of providing objective information on the composition of tobacco products is not restricted. Second — and this is a point which the French Government, among others, has raised — Article 7 of the Directive does not prohibit all presentations and designations of cigarettes capable of tempting consumers and gaining their trust, prohibiting as it does only those references which suggest that a particular tobacco product is less harmful than others. Alteris verbis, the ban applies to suggestive designations liable to confuse consumers. These descriptors are used to emphasise various characteristics of cigarettes, sometimes without any connection whatever with the tar yield of a cigarette. Thus, as the Netherlands Government pointed out at the hearing, ‘mild’ can also be used to indicate a taste sensation. I would mention a second potential cause of confusion: even ‘lighter’ cigarettes contain tar. Smokers may be misled inasmuch as they are given the erroneous impression that such cigarettes are innocuous, which is not the case, particularly as cigarettes contain other noxious substances that are not regulated by the Directive.

246. In brief, the provision in issue is one which bans a limited number of common designations which may cause confusion among consumers, particularly in regard to the harmfulness of the product. A provision of this kind strikes me as being, in the general sense, an appropriate means by which to protect public health.

247. This instrument is certainly appropriate given the serious doubt as to whether a change by consumers to cigarettes having a lower tar yield is beneficial in health terms. The Community legislature was able for those reasons to conclude that the use of descriptors should be banned, given that these implicitly encourage the smoking of cigarettes with lower tar yields.

248. However, even if I were to assume that cigarettes with a lower tar yield are less injurious to public health, the Community legislature could still reasonably have concluded that use of these descriptors must be countered. They are, after all, still euphemistic indicators intended to encourage use by consumers, even though it is common ground that cigarettes with a lower tar yield are also — albeit to a lesser degree — harmful to public health. Further, and this is more important, the use of these indicators is in no wise linked to objective data such as tar yield. In this respect also these descriptors differ from the notification of tar, nicotine and carbon monoxide yields which Article 5(1) of the Directive requires to be displayed on the packet. Whereas these yields simply provide objective information for consumers, the descriptors, as already mentioned, amount to euphemistic indications and are thereby not limited to providing objective information.

249. I have already touched above — as the second point of controversy — on the anticipated effect of Article 7 of the Directive. The effect, namely a change in smoking habits, is difficult to demonstrate. However, the Community legislature is also, in my view, not required to prove such an effect. The Community legislature enjoys a broad measure of discretion in choosing the instruments for protecting public health, in the exercise of which it is bound by the precautionary principle, and the measure, moreover, forms part of the Community policy of discouraging people from smoking. In addition, this policy of dissuasion would be thwarted if indicators were permitted which are liable precisely to encourage individuals to smoke.

250. In brief, I consider Article 7 to be appropriate for protecting public health. The next question is whether any other measure would protect public health just as well. The system in force in the Kingdom of Spain has been cited as such a measure in this case: under that system, the use of indicators such as ‘light’ and ‘ultralight’ are allowed only for cigarettes with specified low or, as the case may be, very low tar yields. The Greek Government, in particular, has argued that the use of the descriptors — as authorised under Spanish legislation — contributes precisely to providing direct and objective information to consumers without any serious adverse effect on the economic interests of manufacturers.

251. In my view, the Court need not examine in detail whether such a measure, which undeniably has a less obstructive impact on trade, provides equally good protection for public health. The Community legislature enjoys a freedom of appraisal in choosing the most appropriate instrument. The Court rules simply on whether the Community legislature could reasonably have come to the conclusion that the Spanish version does not provide equivalent protection for public health. This is in my view established in the light of what I have stated above regarding the euphemistic character of the descriptors. Even if the use of the descriptors were to be made objective by being linked to specific tar yields, they would still remain designations liable to encourage smoking.

4. Summary

252. The Directive satisfies the principle of proportionality. This holds true for all sections of the Directive.

1. Demarcation

253. The claimants argue that Articles 5 and 7 of the Directive are contrary to Article 295 EC, which provides that the Treaty may not prejudice the rules in Member States governing the system of property ownership. They further claim that these provisions of the Directive are at variance with the right to property, as laid down in, inter alia, the ECHR and/or Article 20 of the TRIPs Agreement.⁽¹¹⁹⁾

254. More specifically, the claimants regard Articles 5 and 7 as constituting a serious infringement of their intellectual property rights by reason of the dimensions of the health warnings on cigarette packaging. Their contention is that the Directive thereby makes the proper exercise of those rights impossible and reduces the goodwill that the trademarks have acquired. Japan Tobacco also states that, due to the prohibition in Article 7, cigarette manufacturers will no longer be able to exercise their rights under a number of registered trademarks. Japan Tobacco considers that Article 7 of the Directive prohibits it from exercising its intellectual property rights inasmuch as it is no longer able to use the brand ‘Mild Seven’ as a trademark within the Community.⁽¹²⁰⁾ It claims that it is thereby deprived of the economic advantage of the exclusive licences for that mark. At the hearing Japan Tobacco added that the rules under Article 7 will deprive it of one of its most important assets. The Greek Government shares the view that the ban infringes the intellectual property rights of cigarette manufacturers.

255. In what follows I shall examine the substantive aspects of the potential infringement of the right to (intellectual) property. Before doing so, I would state that two legal rules have been invoked that are not relevant to the present case. This relates to Article 295 EC and the TRIPs Agreement.

256. As far as Article 295 EC is concerned, the Governments of the United Kingdom, France and Belgium correctly point out that the provisions of the Directive bear no relation to the systems of property ownership in the Member States within the meaning of Article 295 EC. The Directive does no more than impose a restriction on the exercise of specified property rights by cigarette manufacturers. Article 295 EC cannot be invoked in order to set aside a restriction on the exercise of property rights which results from the application of Community provisions.⁽¹²¹⁾

257. In relation to the TRIPs Agreement, I will comment as follows. The Court has ruled on more than one occasion that, having regard to their nature and structure, the WTO agreements are not in principle among the rules in the light of which the Court may review the legality of measures adopted by the Community institutions.⁽¹²²⁾ While it recognises that there are individual exceptions to this principle — what it refers to as ‘particular obligations’ assumed in the context of the WTO — the Court held in its judgment in Dior⁽¹²³⁾ that the TRIPs Agreement is not such as to create rights upon which individuals may rely directly before the courts by virtue of Community law.

258. The Court did, however, recognise in the Dior judgment that the TRIPs Agreement may have some significance in proceedings before national courts.⁽¹²⁴⁾ In this connection I refer to the TRIPs Agreement itself. It is not contrary to that Agreement for a party to it to restrict the use of a trademark for imperative reasons of public interest. The assessment which, pursuant to the TRIPs Agreement, must consequently be carried out before the national courts adds nothing, however, to the assessment which must in any event be made pursuant to the EC Treaty. In brief, the TRIPs Agreement, precisely for those reasons, plays no role in assessing whether the interference with the right to property was lawful.

2. The right to property in Community law

259. The right to property is not a right recognised as such by the EC or EU Treaties. Article 17 of the Charter of Fundamental Rights⁽¹²⁵⁾ does, it is true, recognise the right to property (and the protection of intellectual property). With regard to the present legal position, however, I attach more importance to Article 6 EU. That article requires the European Union to respect fundamental rights, as guaranteed by, inter alia, the ECHR, as general principles of Community law. One of those fundamental rights is the right to property, as referred to in Article 1, First Protocol, of the ECHR.

260. The Court has also on several occasions expressly recognised the right to property in the Community legal order.⁽¹²⁶⁾ According to its settled case-law, the exercise of this right to property may be made subject to restrictions, provided that such restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute, with regard to the aim pursued, disproportionate and unreasonable interference undermining the very substance of that right.⁽¹²⁷⁾

261. There cannot in this case be any question but that the restrictions on the right to property have been introduced by virtue of a matter of public interest. In replying to the question whether this situation can be described as one of disproportionate and unreasonable interference, the following matters, in my view, are relevant. First of all it is necessary to determine whether interference, in view of its scope, is in itself legitimate. Next, if the interference is in itself legitimate, the question needs to be addressed as to whether the case none the less involves an infringement of the principle of legal certainty or, as the case may, the principle of legitimate expectations.

262. I shall begin by considering the scope of the interference. To what extent is the enjoyment of the property curtailed and the very substance of the right thereby undermined? Without going into this point in detail (I need not yet address the matter of the possible infringement of trademarks): the enjoyment is not curtailed in any particular way or undermined in its very substance. There is no curtailment of the enjoyment of the property of any cigarettemanufacturing unit. Even after the Directive has been implemented, it still remains possible for such a unit to be operated and for cigarettes to be manufactured there. Only the composition and the labelling of those cigarettes must be adapted. Nor is there any curtailment of the enjoyment of the property in the products themselves: as is frequently the case with product legislation, the party entitled must adapt the composition and labelling of its product and is given a transitional period for that purpose, enabling it to dispose of existing stocks. The new tobacco products which it is to manufacture and market must meet specified requirements as to composition and labelling. Those requirements have nothing to do with a restriction of the property right in products.

263. To state it briefly: regard being had to the objective, the measures referred to are nowhere close to constituting a disproportionate and unreasonable interference with the right to property. It is for that reason unnecessary to give any opinion on possible infringement of the principles of legal certainty or, as the case may, of legitimate expectations.

3. The right to intellectual property

264. I shall now concentrate this argument on the right to intellectual property, or more particularly trademark rights. Interference with the enjoyment of trademark rights, following on from the Directive's entry into force, may be substantial. As a result of Article 7 of the Directive, certain trademarks may, in their entirety, no longer be usable, while at the same time the dimensions of the health warnings under Article 5 may also have the result that the distinctiveness of the trademark on a cigarette packet is significantly reduced. Each of these reduces the possibility of recouping the investment made in building up the trademark and can thus result in significant loss.

265. It is also the case in regard to trademark rights that their exercise may be made subject to restrictions on grounds of general interest,⁽¹²⁸⁾ but the very substance of the rights themselves may not be undermined.

266. I fail to see how the obligations resulting from Article 5 can be regarded as undermining the very substance of the trademark right. The trademark can normally be displayed on the packaging. Only part of the packaging — which itself amounts to even less than 50% — must be reserved for the statements and warnings prescribed in Article 5. Furthermore, the essential substance of a trademark right does not consist in an entitlement as against the authorities to use a trademark unimpeded by provisions of public law. On the contrary, a trademark right is essentially a right enforceable against other individuals if they infringe the use made by the holder. It is only if normal usage is no longer possible as a result of provisions of public law that a situation can arise in which the substance of the right is affected by reason of those provisions.

267. The situation is more complicated with regard to the ban laid down in Article 7. Article 7, indeed, prohibits the use on tobacco products of certain trademarks, such as the Mild Seven trademark used by Japan Tobacco, or parts of trademarks, such as the word ‘light ’ when used as a component part of a trademark. In the case of the trademark Mild Seven, as Japan Tobacco also submits, the trademark cannot be adapted by dispensing with the additional word ‘mild ’. I would, however, point out⁽¹²⁹⁾ that it is precisely the word ‘mild’ forming part of the trademark Mild Seven that may be misleading for consumers. The reason for this is that, in the course of the present proceedings, it emerged that cigarettes with widely differing tar yields are marketed under the Mild Seven trademark.

268. I take the view that Article 7 is none the less not at variance with the right of (intellectual) property. In reaching this view I do not base myself on an assessment as to whether the very substance of the use of the trademark right is being undermined in this case, but rather reason on the basis of the trademark right itself. That right is not inviolable in se. Community legislation on trademark rights already provides for a number of individual grounds of invalidity.

269. In this case, particular significance attaches to Article 3(1)(g) of Directive 89/104 on trademarks.⁽¹³⁰⁾ Under that provision, trademarks which are of such a nature as to deceive the public are liable to be declared invalid. In the case of the Community trademark, provision is made for this possibility of invalidity under Article 51(1)(a), in conjunction with Article 7(1 )(g), of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trademark.⁽¹³¹⁾

270. Article 7 of the Directive, which, moreover, refers expressly to commercial trademarks, bans specific indications with a suggestive meaning. These, in short, are indications liable to mislead the public. Article 7 thereby does no more than prohibit the exercise of a trademark right in a situation in which that right is not in itself inviolable.

271. There cannot, in such a case, be any question of unlawful interference with the essential aspects of the right. Nor do I need to carry out any appraisal of the extent of the interference with regard to its potentially disproportionate or unreasonable nature.

272. To this I would add the following. Both of the above items of Community legislation on trademark rights provide for yet another ground of invalidity, namely conflict with public policy or accepted principles of morality. A trademark coming under the public-law ban on designations in Article 7 of the Directive for the protection of public health is, in my view, invalid as being contrary to public policy.

273. For the sake of completeness, I should also point out that I am not convinced that the scope of the interference is disproportionate or unreasonable. The Council refers in this connection to the judgment in Estée Lauder,⁽¹³²⁾ which involved a cosmetic product the title of which contained the word ‘lifting’. The Court in that case upheld national rules which prohibited the importation and marketing of that cosmetic product. As in Estéé Lauder, the present case also concerns the prohibition of the use of specific designations which have a particular import. The interference with the trademark right is merely an ancillary effect of a measure if the designation forms part of a trademark. This effect does not for that reason render the measure unlawful. According to established case-law, the end objective must also be taken into account. That objective provides justification in the present case for more extensive interference. In conclusion, I also attach importance to the fact that the present Directive provides, in respect of Article 7, for a transitional period which is to expire on 30 September 2003. This provides undertakings with the opportunity to invest in new trademarks.

74. Can one none the less speak — in the case of lawful interference as outlined above — of an infringement of the principle of legal certainty, and more particularly of the principle of legitimate expectations? An entrepreneur must generally be able to rely on the version of legislation in force when he takes a commercial decision. The principle of legitimate expectations, as I stated in my Opinion in the Silos case,⁽¹³³⁾ manifests itself in two forms of confidence which may require protection. First, this involves protection against interference with existing rights. This right, as I held in that Opinion, is not absolute. Second, the principle of legitimate expectations is connected to the protection of expectations that are justified.

275. If we apply the principle of legitimate expectations to the case at present before the Court, the following question will require a reply. To what extent may a cigarette manufacturer remain confident, in the context of its commercial decisions, that the legislation governing the composition and labelling of cigarettes will remain unchanged?

276. This question is almost rhetorical in tone. A manufacturer of no matter what product will always have to bear in mind the fact that the product norms to which it is subject will not remain unchanged indefinitely. Such — technical — norms, indeed, are by their very nature time- and place-specific. This is a fortiori the case with regard to the norms governing cigarettes. Scientific insights into the harmfulness of smoking and social views on smoking are undergoing rapid development. It is thus no more than logical that the establishment of standards should be subject to equally rapid change. The tobacco industry is aware of this like no other.

277. In relation to trademark rights also, there can be no question of infringement of the principles of legal certainty or legitimate expectations. In the first place, the Directive — and more particularly the Article 7 ban — was not totally unexpected. The principal measures contained in the Directive, including Article 7, had already been set out in the Commission's communication of 18 December 1996.⁽¹³⁴⁾ A prudent manufacturer would thus have been able to change its market strategy and select a mark to which less risk attached. Second, by choosing a mark which suggests that the product concerned is not harmful, the manufacturer was already assuming a certain risk, even if that manufacturer did not itself consciously create that suggestion. Indeed, under the protection which Community law affords to trademark rights, the right to use a trademark is not in itself inviolable if that trademark is liable to mislead the public. I have already dealt with this issue in paragraph 268 et seq.

278. By way of illustration I would also refer to the position of Japan Tobacco, which it seems would have been most unlikely to have been taken aback by Article 7 of the Directive. It was stated at the hearing, without being contradicted, that, when the Directive was adopted, the Mild Seven brand had only a very short time previously been introduced into the European Union, in any event well after the Commission's communication of 18 December 1996. Further, the brand was still at that time available in only one Member State. In such a situation, there can be no question whatever of an infringement of the principles of legal certainty or legitimate expectations.

1. The principle that reasons must be given

280. The arguments submitted regarding a possible breach of the duty to state reasons are of two types. The first type of argument relates to the factual and scientific basis underlying the Directive. I mention the claimants' submission that new legislation must be based on new developments, which in turn must be based on scientific data. The preamble to the Directive, however, does not make any reference to scientific data. The second type of argument concerns the reasons set out in the 11th recital in the preamble. The Greek Government points out, inter alia, that the reference to Article 133 EC does not indicate which aspect of the common commercial policy is being realised by the ban on export-geared production. In the opinion of the German Government, the recital fails to indicate why health protection within the Community would be affected by illegal re-importation of tobacco products manufactured in the Community.

281. Against this, it has been argued in particular that the Community legislature is not obligated to provide reasons for every individual choice. Nor is it required to refer to scientific data.

282. The principle that reasons must be given was raised earlier at an important point in this Opinion. It constituted for me the reason why Article 133 EC cannot serve as a legal basis for the Directive. Justice has thus been done to the Greek Government's argument.

283. Further, the statement of reasons in the 11th recital was more generally addressed in the discussion on the production ban (see VI — D). The reasoning — albeit summary — contained in the recital was able to support that production ban. Indeed, according to the Court's settled case-law not all data need be specified. I note in this connection that the recital does not allude to the risk of distortions of competition as a basis for the Directive. For that reason what I have stated in paragraph 161 et seq. is in the nature of a superfluous submission.

284. For the rest, the recital provides a detailed statement of the reasons which led to the adoption of the Directive. It is not necessary in this connection to refer to scientific data, certainly in so far as measures to counter smoking are involved. Relevant also in this connection is the fact that the legislature may take into account not only scientific data but also social opinion.

2. The principle of subsidiarity

285. The issue of subsidiarity may, in my view, be easily disposed of. Just as in the biotechnology judgment,⁽¹³⁵⁾ the Court can, without going into unduly detailed reasoning, confirm that the principle of subsidiarity has not been infringed. To begin with, the principle of subsidiarity is a dynamic concept which leaves the necessary scope to the appraisal of the European legislature, second, the need for Community intervention is thoroughly reasoned,⁽¹³⁶⁾ while finally the Directive complies with the guidelines enunciated in the subsidiarity protocol.⁽¹³⁷⁾ As I have concluded in this case that action by the Community legislature under Article 95 EC was necessary, no further significance attaches to the appraisal of subsidiarity. In connection with this Directive I wish in particular to refer to:

• paragraph 130 of this Opinion, in which I concluded that the measure has its basis in — at least the specific threat of — differences between the legislation of the Member States liable to give rise to barriers to trade;

• paragraphs 159 to 163 inclusive of this Opinion, in which I concluded that a national ban on production would be neither effective nor conceivable.

3. Misuse of powers

286. Finally, we come to the issue of misuse of powers. The Court's case-law states that a measure may constitute a misuse of powers only if it appears, on the basis of objective, relevant and consistent factors, to have been taken with the exclusive purpose, or at any rate the main purpose, of achieving an end other than that stated or of evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case.

287. If I apply that case-law to the present case, I must conclude that in a case such as that here, where the legal basis of a Community measure is under discussion, no separate significance need be attached to the principle that powers must not be misused. The Court can rule that the correct legal basis was chosen, whereby it will be settled that the Community legislature made proper use of the powers conferred on it. There could therefore be no question of misuse of powers. The Court can also rule that the correct legal basis was not chosen and for that reason annul the Directive. There would then also be no need for the Court to examine the question whether powers had been misused.