Reading the International Fruit Company Saga More than 50 Years Later: At the Intersection of the ‘Common’ Market, Agricultural Policy and Commercial Policy

Table of Contents: 1. Introduction. – 2. The legal and historical context of the International Fruit Company saga at the Community and international level. – 3. The International Fruit Company saga. – 3.1. The procedural history of the cases. – 3.2. The broad interpretation of the notion of measures having equivalent effect to quantitative restrictions in the common market. – 3.3. The impossibility of relying on GATT rules to assess the validity of EEC law. – 4. Tracing the evolution of the relation between EU trade policy, CAP objectives and integration in the common/internal market. – 4.1. The interactions between the CAP and the CCP in the International Fruit Company saga. – 4.2. The effects of the International Fruit Company saga on the level of liberalisation to be achieved in the common market and in trade with third countries. – 4.3. The role played by the objectives behind the construction of the internal market in determining different levels of liberalisation of cross-border exchanges. – 5. Navigating the permanent tensions in trade liberalisation of agricultural products. – 6. Concluding remarks.

Abstract: This paper analyses three historical cases of the Court of Justice that form part of what is referred to here as the International Fruit Company saga, namely joined cases 41-47/70 (IFC I), 51-54/71 (IFC II) and 21-24/72 (IFC III). In IFC II, the Court conceptualised the notion of quantitative restrictions and measures having equivalent effect in the common market, whereas IFC III dealt with the possibility of reviewing the legality of EEC acts in light of GATT rules. This paper argues that a combined reading of these cases in their historical context illustrates other consequences they produced in the development of EEC/EU law. First, the judgments clarified the relationship between the objectives of different EEC/EU policy areas, especially the Common Agricultural Policy and the Common Commercial Policy. Second, they contributed to determining that different levels of liberalisation of cross-border exchanges were to be achieved in intra- and extra-Community exchanges, while later case-law elaborated the rationale for this differentiation. Lastly, by connecting the saga with current developments, this paper posits that the reading of EU competences and trade policy objectives outlined in the International Fruit Company saga continues to be relevant. Indeed, it allows for the adoption of measures that, in different ways, seek to reconcile trade liberalisation with concerns about the protection of EU agricultural production.

Keywords: trade liberalisation – European integration – Court of Justice of the European Union – internal market – Common Commercial Policy – Common Agricultural Policy.

1.   Introduction

Liberalising trade in agricultural products imported into the European Union (EU) from third countries has long been, and continues to be, a contested issue in EU policies. The challenge is to achieve a harmonious reconciliation between the interconnection of national economies in the internal market, the overarching objectives of the Common Agricultural Policy (CAP) – especially ensuring adequate revenues for agricultural producers – and the Common Commercial Policy’s (CCP) goal of gradually eliminating restrictions on international trade.

This paper analyses how the Court of Justice construed the relationship among these three policy areas in some judgments at the beginning of the 1970s and how that continues to influence developments nowadays. In particular, the analysis focuses on what is termed here the ‘International Fruit Company saga’, comprising joined cases 41-47/70 (hereafter IFC I),[1] 51-54/71 (hereafter IFCII)[2] and 21-24/72 (hereafter IFC III).[3] IFC I, an action for annulment against some Commission’s decisions, has not received much attention. By contrast, legal scholarship has emphasised the significance of IFC II in the conceptualisation of the notion of measures having equivalent effect to quantitative restriction, a crucial element in the construction of the internal market.[4] IFC III, another preliminary reference procedure raised in the same proceedings, clarified important issues on the relationship between Community law and international law.[5] These rulings have usually been considered in isolation, as shown by the fact that EU legal scholarship has discussed the specific relevance of these judgments for either internal market law or EU external relations. This paper seeks to overcome this limitation by offering a combined analysis of IFC II and IFC III. In addition, it contextualises them in light of a number of subsequent developments, including later case-law and recent EU actions, such as the adoption of CAP measures and the Regulation on Deforestation-free Products, as well as the negotiation of the EU-Mercosur Agreement. These latter illustrate how the EU nowadays reconciles different interests relevant in governing trade in agricultural products with third countries. In this respect, the present study is relevant not only because it proposes a new reading of these judgments, focusing on underexplored aspects emerging from a combined analysis of these cases, but also since it highlights connections between those rulings and recent developments.

This paper argues that the International Fruit Company saga implicitly clarified the objectives to be pursued in the policy areas at stake in those cases – the common market, the CCP and the CAP – and the relationship between them. In particular, the judgment indirectly suggested that liberalisation of international trade in the CCP does not necessarily entail negative repercussions on CAP objectives, by implicitly confirming that liberalisation in trade with third countries can be less intense than that sought in cross-border exchanges among the MSs. Subsequent case-law has continued to follow the lead offered by these judgments, enabling the EU to reconcile trade liberalisation with CAP objectives in a particularly sensitive area such as imports of agricultural products, as testified by several recently adopted measures. 

This paper aligns with scholarship exploring the historical evolution of EU law and especially the role played by the Court of Justice case-law in furthering European integration.[6] The study relies on a legal doctrinal methodology and provides a reconstruction of the cases’ historical context. Moreover, subsequent case-law, more recent legislative developments and contemporary EU law scholarship are also considered.

The remainder of this paper is organised as follows. Section 2 outlines the saga’s legal and historical context, focusing on the rules governing imports of agricultural products at the beginning of the 1970s and their rationale. Section 3 offers a brief overview of the procedural history of the cases and the main points raised by the judgments. Section 4 reviews the evolving relationship between the CAP, the CCP and the internal market, considering the International Fruit Company saga and later developments. Section 5 discusses the relevance of the considerations regarding the objectives and relationships of these different policy areas for current developments affecting agricultural imports.

2.   The legal and historical context of the International Fruit Company saga 

At the time of the cases, i.e. in 1970, overproduction was a structural problem for certain agricultural products in the Community. This had already been highlighted, for example, in the so-called Mansholt Plan. Drafted in 1968 by the Dutch Commissioner for Agriculture Sicco Mansholt, the Plan constituted the Commission’s first attempt to tackle issues negatively affecting the European agricultural sector.[7] This problem was due to European production increasing more than consumption, a tendency exacerbated further by CAP measures introduced to support farmers’ income.[8] In fact, the possible emergence of this problem had been anticipated in 1958 at the Stresa Conference, convened under Article 43 EEC Treaty to discuss the establishment of a CAP.[9] In addition, in such a situation, imports from third countries would have increased the supply of apples within the Community even further, thereby lowering their prices. Such price fluctuations would have undermined the CAP’s objectives, one of which was to keep the prices of agricultural products stable.

Considering these factors, the Community has always displayed a general tendency to protect its agricultural production. On the one hand, agricultural products were subject to the provisions on the free movement of goods within the common market. The most notable consequence was – and still is – that quantitative restrictions and measures having equivalent effect could not be imposed to imports from other MSs.[10] Furthermore, the Treaty of Rome established the foundations for the launch of the CAP. Its objectives were set out in Article 39 EEC Treaty. First, the CAP aimed to increase the productivity of the agricultural sector, stabilise markets and ensure an adequate supply of food. At the same time, it attempted to improve farmers’ living conditions and remuneration, while keeping agricultural products affordable for consumers. To achieve these goals, the Community has always intervened by providing economic support to farmers and adopting the so-called common organisations of the market, consisting of common rules on the production and marketing of specific agricultural products.[11] The legislation enacted to establish such common organisations of the market regulated the prices of agricultural products, among other things. Indeed, the Community attached utmost importance to the price at which agricultural goods were sold, as this was closely related to CAP’s objective to maintain stable prices. 

On the other hand, the part of the Treaty of Rome dedicated to the CCP did not envisage any specific rules for agricultural products. While their export to third countries was encouraged, acting based on the powers conferred upon it in the CAP, the Commission introduced a series of measures allowing both the MSs and the EEC to limit imports of agricultural goods from outside the Community if they were likely to disrupt production within the common market. In fact, such a protective stance towards imports from abroad had emerged even before the establishment of the EEC.[12] Indeed, these measures allowing limitations to imports from third countries gave concrete meaning to the principle of community preference governing the CAP.[13] This principle meant that producers established in the Community had to be given preferential treatment, so that imported goods would not damage domestic ones.[14] The development of this principle was in line with the MSs’ protectionist attitude in the field of agriculture, reflecting a more general tendency that, as we shall see, was evident at the international level. 

The adoption of Regulation no. 23 in 1962, establishing a common organisation of the market for fruit and vegetables, gave concrete expression to the above objectives and principles.[15] This act allowed MSs to suspend imports from third countries or impose countervailing duties if imported products were disrupting the development of the common market.[16] Furthermore, it granted the Council the competence to establish a coordinated framework for trade in fruits and vegetables with countries outside the Community.[17] Council Regulation 2513/69, which set out these rules, provided for a general exemption from customs duties and restrictive measures for fruits and vegetables imported from third countries.[18] However, if serious disturbances compromised the CAP’s objectives, appropriate measures could be taken at the Community level to solve the problem.[19] It was precisely for this reason that Commission Regulations 459/70, 565/70 and 686/70 were adopted. These acts established that companies wishing to import apples from third countries had to apply for a license from the relevant national authority, which would then forward the application to the Commission for a decision. 

The historical context of the International Fruit Company saga would not be complete without a brief account of the legal and factual situation of international trade in agricultural products at that time. The main legal instrument relevant in that regard was the General Agreement on Tariffs and Trade (GATT) of 1947. It is sufficient to note here that Article XI of the GATT prohibited quantitative restrictions such as quotas and similar measures. Therefore, the prohibition of quantitative restrictions was required within both the EEC legal order and the GATT framework. However, the ultimate goals of the two legal frameworks differed. The Community’s goal was to create a customs union to give full effect to the common market. At the GATT level, nothing equivalent to a common market was pursued. Instead, the aim was limited to the progressive liberalisation of trade between different customs territories. With regard to trade in agricultural products, GATT did not establish a specific regime. Therefore, its rules, including the prohibition of quotas, should also apply to this type of trade. The only exception GATT introduced for agricultural products was contained in Article XI(2)(c)(ii), which exempted these goods from the prohibition if measures restricting trade were ‘necessary to enforce governmental measures’ aimed at addressing a temporary surplus in the domestic market. In other words, restrictions on international trade were considered acceptable only when they reflected domestic measures adopted to address a temporary situation of overproduction. Nonetheless, the situation in practice was different to what was expected, as during the first decades of GATT, its contracting parties, including EEC MSs, adopted a large number of protectionist measures, which impeded the full liberalisation of agricultural trade.[20] It was only in the 1994 Uruguay Round that a specific agreement concerning agricultural goods was concluded within the framework of the World Trade Organisation (WTO).

3.   The International Fruit Company saga

3.1.  The procedural history of the cases

It was against this background that International Fruit Company and three other undertakings based in the Netherlands applied to the competent Dutch authority, namely the Produktschap voor Groenten en Fruit, for a licence to import apples from South America. As required by Community law, that authority referred the request to the Commission, which issued a series of decisions denying licences to the four undertakings on 2 July 1970. The four companies contested the Commission decision in several ways.

First, on 30 June 1970, they brought a claim against the Produktschap voor Groenten en Fruit before the College van Beroep voor het Bedrijfsleven, an administrative court of last instance in the Netherlands. The decision could be contested before a national court on the basis of the undisputed understanding that the rejection of the licence request was grounded on national provisions as well as on EEC law. In particular, the four companies requested that the College van Beroep voor het Bedrijfsleven annul the decision denying their import licences and direct the Produktschap voor Groenten en Fruit to adopt a new decision and to pay damages to compensate them for the harm suffered.

Second, on 5 August 1970, the four companies contested the Commission’s refusal before the Court of Justice of the European Communities. The Court dismissed the applicants’ action on the merits in the judgment delivered on 13 May 1971, which was the first of the trilogy. After that ruling, in ongoing proceedings at the national level, the College van Beroep voor het Bedrijfslevenraised two subsequent sets of questions to the Court of Justice pursuant to Article 177 EEC Treaty, now Article 267 Treaty on the Functioning of the European Union (TFEU). The first preliminary ruling was requested on 30 July 1971. After receiving the answer from the Court in December 1971, the Dutch court submitted a second set of questions on 5 May 1972.

In the annulment procedure, namely IFC I, International Fruit Company and the other undertakings argued that the Commission decisions rejecting their licensing requests, as well as Commission Regulations 459/70, 565/70 and 686/70 constituting the legal bases of the decisions, were contrary to EEC law.[21] Suffice it to mention here that the Court of Justice found their applications to be unfounded.

The first preliminary ruling, IFC II, concerned the compatibility of certain provisions of Dutch law with EEC law. The Netherlands had enacted three decrees in 1963 and 1968 to establish a licensing system for importing certain agricultural goods, including apples, from any other country. More specifically, the 1963 decree prohibited the import of certain goods unless the importing company had obtained a licence to do so. The following decrees, having a lower status in the internal hierarchy of sources, did not abolish the licensing system but granted exemptions for certain goods. In particular, the first decree adopted in 1968 exempted agricultural goods imported from other MSs[22] and apples from third countries from the licensing obligation. Moreover, the second 1968 decree required the Produktschap voor Groenten en Fruit to follow EEC law rules, including those concerning trade in fruit and vegetables with third countries, when deciding to grant licences.

All in all, this created a situation where various products were exempted from the obligation to obtain a licence to be imported into the Netherlands, and in all other cases licences were always issued, creating a so-called toute licence accordée system. Accordingly, although an exemption existed at the national level, the import licence requested by International Fruit Company and the other undertakings was denied because domestic law required Produktschap voor Groenten en Fruit to apply EEC law. In the present case, that meant that the Dutch authority had to align with the Commission’s decisions and thus reject the applications for import licences. The applicants argued that Dutch law was in breach of Articles 30, 31, 32 and 34 EEC Treaty, and Article 1 of Regulation 2513/69. All these provisions prohibited quantitative restrictions and measures having equivalent effect from being imposed respectively in intra-Community trade and on imports of fruit and vegetables from third countries. In the framework of the proceedings before the national court, in essence, the Dutch judge asked the Court of Justice whether the applicants’ argument had to be accepted.

The last case brought before the Court of Justice, namely IFC III, constituted a preliminary request concerning the validity of certain provisions of Community law. The contested measures were Commission Regulations 459/70, 565/70 and 686/70 establishing the licensing system applicable to apples in 1970, whose validity had already been questioned by the applicants in the annulment procedure. The question submitted to the Court of Justice concerned the compatibility between these acts and Article XI GATT. As mentioned earlier, the latter provides for the elimination of quantitative restrictions in the form of quotas, licences or other measures on imports and exports from and to GATT contracting parties. In fact, the applicants had already argued that the Commission Regulations breached GATT rules both in the annulment procedure and in the context of the first preliminary ruling.[23] However, this claim had not been addressed by the Court nor by the other intervening parties in the previous judgments. Only Advocate General Roemer briefly considered it in its Opinion on the annulment procedure, but gave a strict interpretation of Article 173 EEC Treaty, conferring on the Court of Justice competence to assess the legitimacy of secondary legislation enacted by the Commission or by the Council. In particular, he suggested that the claim be dismissed since he deemed the Court of Justice not competent to assess the validity of EEC legislation based on international law.[24]

3.2.  The broad interpretation of the notion of measures having equivalent effect to quantitative restrictions in the common market

As stated above, IFC II was significant since it provided important clarifications regarding the scope of the notions of quantitative restrictions and measures having equivalent effect, which were mentioned in several provisions of EEC law.[25] In this respect, the ruling established that ‘a national provision which requires, even purely as a formality, import or export licences or any other similar procedure’ could not be considered compatible with the provisions of the Treaty of Rome concerning the free movement of goods in the common market, namely Articles 30 and 34(1) EEC Treaty – now Articles 34 and 35 TFEU.[26] However, a licensing system such as that adopted in the Netherlands would have been admissible with reference to trade in agricultural products imported from third countries. 

The judgment had three main implications in the development of the common market, which are crucial to understanding the extent to which the Court broadened the scope of application of the Treaty’s provisions on the free movement of goods.[27] As will be discussed later, this contrasts with the protective effects that the International Fruit Company saga produces on international trade. 

The first implication is closely connected with the specific moment in time when the facts giving rise to the case took place – i.e. 1970. That was only a few years after the end of the transitional period, which the Treaty of Rome established as the time during which the full development of the common market was to be completed. The transitional period ended on 1 July 1968. For the purposes of this paper, the most significant consequence of this event was that certain rules allowing broader discretion on the part of the MSs no longer applied. For the moment, suffice it to mention that during the transitional period, MSs could not introduce new quantitative restrictions and measures having equivalent effect,[28] but the level of liberalisation of trade that had to be ensured was that envisaged by the Organisation for European Economic Co-operation.[29] Since this latter legal framework did not prohibit automatic licensing systems, a toute licence accordée system would also have been compatible with EEC law during the transitional period.[30] On the contrary, the Court’s ruling explicitly stated that such a regime was no longer allowed after the transitional period. Hence, that judgment was a turning point, marking an unambiguous difference in the rules applying before and after the end of the transitional period.

Second, the case was noteworthy because it confirmed previous efforts by the European Commission. In the 1960s, the Commission provided guidance on the interpretation of the notion of measures having equivalent effect to quantitative restrictions.[31] The submission presented on behalf of the Commission by Ms Wilma Donà-Viscardini in the proceedings at stake clearly reflected the work done up to that moment. In this regard, it is interesting to note that, even if the case did not involve intra-Community trade as the Dutch legislation exempted agricultural products from other MSs from the obligation to obtain an import licence, the Court implicitly confirmed that the Commission’s interpretation of the notion of measures having equivalent effect to quantitative restrictions was correct.[32]

As the judgment’s last consequence, the short obiter dictum that the Court included in IFC II about the compatibility of the Dutch licensing system with the Community provisions on the common market set the stage for further developments. This sharply curtailed the Member States’ opportunities to enact measures, including those that were mere formalities, having the effect of limiting the free movement of goods. Such an extensive definition of the notion of measures having equivalent effect to quantitative restrictions was instrumental in giving full effectiveness to the provisions on the free movement of goods in the common market.[33]On these bases, the Commission took advantage of the passage discussed here in its submission on the Dassonville case, mentioning it to demonstrate that national provisions making imports dependent upon the presentation of a certificate of origin were in breach of EEC provisions on the free movement of goods.[34] As is well known, not only did the Court accept this argument, but it also explicitly embraced the definition of measures having equivalent effect that the Commission had formulated in the 1960s and presented in the IFC II proceedings.[35]

It should nevertheless be noted that the broad interpretation of the prohibition provided for in Articles 30 and 34 EEC Treaty was and still is without prejudice to the ability of the MSs to justify measures restricting intra-Community exchanges for reasons of ‘public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property’ as enshrined in Article 36 EEC Treaty – now Article 36 TFEU. Overriding reasons in the general interest beyond those mentioned in that provision can also justify the adoption of indistinctly applicable measures limiting exchanges among the MSs. In fact, in IFC II, the Commission mentioned in its submission that the Netherlands could justify the licensing system at stake on the grounds envisaged in Article 36 EEC Treaty[36], even if the judgment did not develop that argument. It can be assumed that the Court did not find it necessary to delve into that point, as the Dutch licensing system did not concern intra-Community trade.

3.3.  The impossibility of relying on GATT rules to assess the validity of EEC law

IFC III is relevant as it contributes to untangling the relationship among EEC and international instruments regulating trade between the EEC and third countries in agricultural products. The main question posed by the Dutch court was whether the Regulations and the Decisions enacted by the Commission that denied the importing license to International Fruit Company and the other undertakings violated Article XI GATT, prohibiting quantitative restrictions to trade. The answer given by the Court of Justice is well known and can only be briefly recalled here. In essence, the Court claimed it had the power to review the legality of EEC acts against international law if two conditions were satisfied: first, the relevant international law provisions had to bind the Community and, second, such provisions had direct effect.[37] The evaluation the Court made concerning whether these two criteria were fulfilled in the case of Article XI GATT constitutes the most relevant point in the present analysis. The objective here is not to discuss whether the Court’s argumentation was correct. Rather, the more modest aim of this section is to emphasise the practical implications of the reasoning of the Court, as they contribute to elaborate reflections on the relation between different policy objectives of the Community.  

First, the Court developed what Pierre Pescatore – scholar but also judge in IFC III – renamed as the doctrine of functional succession of the treaties.[38] Following this doctrine, the Court of Justice established that the GATT bound not only the MSs that were among its signatory parties, but also the Community. To support this position, the Court stressed that the MSs manifested their willingness to respect their GATT obligations even when drafting the Treaty of Rome, as Article 110 EEC Treaty demonstrated.[39]That provision set the objectives of the CCP, which include the development of international trade, the abolition of restrictions to extra-Community exchanges and the reduction of tariffs. These aims corresponded, in essence, to those of the GATT. Indeed, when the Treaty of Rome was drafted, international exchanges were already framed within the GATT, providing rules for the progressive liberalisation of trade. All in all, the first part of the judgment reinforced the EEC commitment to developing international trade. 

In the second part of the judgment, the Court maintained that, in light of ‘the spirit, the general scheme and the terms’ of the agreement, Article XI GATT did not confer rights that individuals could invoke. Hence, the second condition considered fundamental for the Court to assess the validity of EEC rules in light of international law provisions was not met. Consequently, private parties – or, for that matter, any other subject – were deprived of any possibility to request the Court of Justice to scrutinise the compatibility of EEC acts with GATT rules. As a result of the judgment, no form of judicial enforcement of GATT rules was available in the Community legal order. Still, if the EEC decided to adopt measures in contrast with its GATT obligations, this would have allowed other GATT members to adopt retaliations.[40] If considered in relation to the first argument of the Court, namely that the EEC must respect the GATT, the last part of the judgment severely limited the scope of such a claim. For this reason, some commentators have argued that the Court’s assessment of the GATT appeared to entail that such an agreement was not ‘a fully binding agreement’.[41]

4.   Tracing the evolution of the relation between EU trade policy, CAP objectives and integration in the common/internal market

4.1.  The interactions between the CAP and the CCP in the International Fruit Company saga 

Different policy areas can pursue similar or conflicting goals. As a case in point, the CAP and the CCP were and remain guided by specific aims that, under certain circumstances, could be perceived as opposing each other. Indeed, Article 110 of the Treaty of Rome established trade liberalisation as the objective of the EEC trade policy. However, liberalising trade in agricultural products would have resulted in cheaper imports from third countries, with the risk of undercutting the prices of internal production. That could have made it difficult to achieve a series of CAP objectives laid out in Article 38 EEC Treaty, especially ensuring stable prices for agricultural products and guaranteeing sufficient revenues to farmers. 

Nonetheless, in the International Fruit Company saga, the Court has contributed to finding ways to avoid clashes between the different objectives sought by the EEC/EU in these policy areas. Indeed, in that judgment, the Court found that MSs can implement an automatic licensing scheme for imports of agricultural products from third countries, since such a regime allowed them to monitor imports and, if necessary, adopt protective measures defined in Regulation 2513/69 when such imports created disturbances to the common market.[42] On the contrary, as the Commission noted in its submissions, the MSs were precluded from taking unilateral protective measures of this kind in relation to goods imported from other MSs. This was exactly the reason why they could not maintain such an automatic licensing system restricting the free movement of goods within the Community.[43]

In the same judgment, the Court strengthened synergies existing between the CAP and the CCP by examining EEC powers in these two fields. In particular, it stated that the Community could introduce quantitative restrictions and measures having equivalent effect to imports from third countries both when conducting its CCP under Article 113 EEC Treaty and, pursuant to Article 40(3) EEC Treaty, in the CAP framework when establishing a common organisation of the market for a specific agricultural product, whose rules might encompass mechanisms for stabilising imports and exports.[44]

The Court’s judgment leads to the conclusion that the Community’s competences in the CAP and the CCP established a legal framework that can reconcile the potentially conflicting objectives of the two policy areas by means of measures limiting imports from third countries.[45] Looking at the effects produced by the International Fruit Company saga, the Court’s approach – as will be discussed in greater detail below – did not promote liberalisation of trade in agricultural products at the international level. On the contrary, these judgments could be perceived as contributing to the crystallisation of a certain attitude towards trade in agricultural goods shared by many GATT signatories at the time of the proceedings. As mentioned earlier, several protective measures stood in the way of trade liberalisation in that period. Indeed, some legal scholars maintain that this political issue informed the Court’s ruling.[46]

4.2.  The effects of the International Fruit Company saga on the level of liberalisation to be achieved in the common market and in trade with third countries

This possibility to reconcile the objectives to be pursued in the CAP and in the CCP is borne out by another aspect of the International Fruit Company saga, namely the fact that the Community took different approaches to liberalising cross-border trade among MSs and trade with third countries. Indeed, the rulings suggested that the degree of liberalisation to be achieved in the common market was, and still is, not the same as that to be reached under the CCP. That reinforced the dichotomy between the internal and external dimensions of the Community’s liberalisation of cross-border exchanges. While they strengthened integration in the common market, the judgments suggested that the EEC could be less open to trade with third countries. As a consequence, measures restricting trade in agricultural goods with third countries were compatible with EEC law.

Two major reasons underpin this different liberalisation of intra- and extra-Community exchanges. First, the saga clarified that MSs could limit such exchanges to differing degrees. In the common market, they could no longer impose formal requirements on imports and exports from other MSs, whereas they could still monitor external trade. Indeed, in IFC II, an automatic licensing system was considered admissible in extra-Community but not in intra-Community exchanges. As examined above, the Court offered a broad interpretation of the prohibition of quantitative restrictions and measures having equivalent effect under Articles 30 and 34(1) EEC Treaty. This marked a break with the transitional period and sent a firm message to the MSs about the limits of their discretion in regulating intra-Community exchanges. At the same time, the Court stated that a different – and more lenient – treatment should be accorded for similar measures restricting trade between the EEC and third countries. As a result, the Court confirmed that two distinct sets of rules applied to intra- and extra-Community exchanges.

Second, the Court established different possibilities for judicial review of Community measures. As the Court denied the direct effect of GATT provisions in IFC III, EEC legislation became immune to judicial review based on the GATT framework. This is particularly striking if we consider that, as some commentators have noted, the applicants’ claim concerning the incompatibility between the Commission Regulations and the GATT was well-founded.[47] In fact, the real difference among the measures undertaken by the EEC in the common market and in the CCP does not concern their content,[48] but rather the different sources of law against which these acts can be scrutinised. In the former case, the Court could have monitored compliance between the EEC measures and the Treaty of Rome. Conversely, in the latter case, the Court would have been prevented from assessing whether they respected the EEC’s obligations under GATT. As the judgment confirmed, GATT was also part of the Community legal order. Moreover, this approach created differences in the effects a violation of the Treaty of Rome produced on national law and the consequences that a breach of GATT entailed on EEC acts. Indeed, while a prohibition of quantitative restrictions envisaged in the Treaty of Rome could be invoked to contest national legislation and request its disapplication, individuals could not rely on a similar provision enshrined in the GATT to contest EEC legislation. In turn, the legality of EEC legislation limiting international trade would not have been affected.[49] Some Authors have recently affirmed that establishing the direct effect of a certain provision is a political issue, as it has an impact on the powers and discretion of each EU institution. In turn, denying that GATT rules display such a characteristic protects the autonomy of the EU legal order and the discretion of its political institutions in charge of external relations.[50]  

Contrary to this protectionist reading of the saga, it should be borne in mind that the Court also underscored the EEC’s commitment to the liberalisation of international trade. This is clear, for instance, in IFC II, where the Court did not claim that any type of licensing regime would be admissible in extra-Community exchanges in agricultural goods, but only one where import licences are automatically issued. Also, IFC III established for the first time in unambiguous terms that the EEC was bound by GATT rules. The present paper does not deny that the International Fruit Company saga played a crucial role in establishing that the Community had to open trade with third countries, at least up to the level of liberalisation envisaged by the GATT regime.[51]However, in practice, the solution found by the Court limited the EEC’s duty to pursue the liberalisation of international trade by shielding its acts from legal scrutiny in light of GATT rules.[52]

When these considerations are coupled with the analysis conducted above of the broad interpretation of the prohibition of quantitative restrictions and measures having equivalent effect provided in IFC II, a clear divergence in the degree of trade liberalisation the EEC had to achieve in the common market and in international trade emerges. On the one hand, the Court conveyed the message that the common market’s goal was to ensure an absolute liberalisation of trade among the MSs. On the other hand, it confirmed that certain restrictions were admissible in trade with third countries and, even if the Community adopted measures contrary to its GATT obligations, grounds for contesting their validity were limited.

4.3. The role played by the objectives behind the construction of the internal market in determining different levels of liberalisation of cross-border exchanges

In judgments delivered after the International Fruit Company saga, it became clear that such different approaches to the liberalisation of cross-border exchanges were justified by the different objectives underlying integration in the common market and trade agreements with third countries. The considerations advanced in these cases highlighted the peculiarities of the EEC legal order vis-à-vis traditional trade agreements, thus contributing to clarifying the rationale for not recognising the direct effect of GATT rules. Furthermore, they contributed to cementing the dichotomy between the common/internal market and trade policy established in the saga. For the purposes of this paper, the fact that these successive judgments confirmed that the CCP’s aim was not to achieve complete liberalisation is relevant since it provided the firm ground for the EEC/EU to adopt measures that limit trade but contribute to achieving its CAP objectives.

The most significant cases in this respect are those where the Court was asked to decide whether the rules contained in free trade agreements signed by the Community containing provisions requiring that obstacles to trade be eliminated, mirroring those envisaged in the EEC Treaty, were to be interpreted differently from those provided in the framework of the common market. The Court’s answers in these cases differed according to the objectives underpinning the agreements at stake.[53]

In some circumstances, the Court stated that MSs were not obliged to extend the interpretation of the prohibition of quantitative restrictions and measures having equivalent effect that applied in the common market to trade with third countries.[54] In the Polydor judgment, the Court argued that certain restrictions on cross-border exchanges should be eliminated in the common market, whereas they were acceptable in trade with third countries that had signed an agreement with the Community.[55] This consideration stemmed from the fact that the ultimate objective of the EEC Treaty, namely aligning MSs economic policies to unite national markets in a single common market, differed from the goals envisaged by the agreements on the elimination of quantitative restrictions and measures having equivalent effect concluded between the Community and third countries.[56] In this respect, from the time the Treaty of Rome was adopted, establishing a common market was not considered to be the Community’s goal, but a means of promoting further integration of European States with a view to preventing future conflicts.[57] In other words, the aim of establishing a common market was driven by a higher political objective, which did not inform the Community’s decisions about entering into agreements with third countries.

The limited instances where the Court ruled that the provisions of an agreement were to be interpreted in the same way as those contained in EEC primary law confirm this conclusion. The most striking case in this respect is Bresciani, where the Court affirmed that the provision on the elimination of customs duties contained in the Yaoundé Convention had direct effect. This was clearly in contrast with the Court’s pronouncement regarding GATT provisions in IFC III.[58] The conclusion was grounded inter alia on the fact that the agreement signed between the Community and several African countries was an expression of the connections between some of the funding EEC members and certain overseas territories, and that the MSs assumed the same obligations towards these countries that they undertook towards each other.[59] The Court reached the same conclusion in Pabst, where it established the direct effect of a provision contained in the Association Agreement with Greece. Moreover, that judgment clarified that the provision prohibiting discriminatory taxation of imported goods fulfilled the same function as Article 95 EEC Treaty - now Article 110 TFEU -, since the Agreement was considered ‘part of a group of provisions the purpose of which was to prepare for the entry of Greece into the Community’.[60] In other words, the provisions of these agreements produced the same legal consequences as those contained in the Treaty of Rome because of the particular relationship between the EEC and these third countries, which was reflected in the agreements signed with them.

One of the main critiques levelled against this case-law is that the Court has not developed a clear approach to determining exactly when provisions contained in agreements signed between the EU and third countries should be interpreted in the same way as internal market rules.[61] Nonetheless, the CJEU has continued to cite the Polydor principle and, even in more recent cases, it has stated that the objective of the agreement at stake determined whether its provisions were to be interpreted in the same way as those contained in the Treaties.[62] In particular, in the 2025 judgment Swissgrid v ACER, the Court reiterated that the interpretation given to the provisions of EU law, including Article 28 TFEU, cannot be automatically applied to a provision contained in the free trade agreement signed between Switzerland and the EU prohibiting the imposition of new quantitative restrictions or measures having equivalent effect.[63]

In essence, prohibitions to limitations on cross-border exchanges pursued different aims in the common market and in the CCP, thus justifying the Court’s choice to assign a different meaning to them.[64] Only when the trade agreement shared the same integration objective of the common market was the Court ready to find a complete correspondence between similar provisions contained in different instruments. Consequently, different rules applied to exchanges in the common market and with third countries, leading to different degrees of liberalisation. 

5.   Navigating the permanent tensions in trade liberalisation of agricultural products

As noted in the introduction, the need to protect EU agricultural production and the desire to liberalise trade sit in a contentious relationship even today. Indeed, free trade in agricultural goods between the EU and third countries continues to raise concerns that the Member States’ products could be put at a competitive disadvantage.[65] In that respect, the threat is not only that imported products might be cheaper than European ones, as was the case in the 1970s. It is also feared that producers established in third countries who do not comply with the same standards applying in the EU, especially those concerning animal welfare and the use of pesticides, might be at an advantage. To account for these issues, imports of agricultural products from third countries to the EU continue to be subject to different restrictions, as long as they are admissible under international obligations on trade liberalisation assumed by the EU. In that regard, this paper posits that the Court’s conceptualisation of EU competences and objectives in different policy areas in the International Fruit Company saga contributed to paving the way for these developments.

The first point of continuity with the rulings which form the object of this analysis concerns the current legal framework defining EU competences in the CAP and in the CCP – i.e. Articles 39 and 207 TFEU – which provide opportunities for the EU to reconcile the objectives of these two different policy areas. Indeed, the framework has remained largely unaltered since the 1970s. Furthermore, a specific reading of the Treaty provisions defining the EU competences and objectives in the CCP, as developed in the case-law, helps avert clashes between these policy areas. In particular, the Court interpreted Article 110 EEC Treaty – now Article 206 TFEU – as meaning that it ‘cannot compel the institutions to liberalise imports from non-member countries where to do so would be contrary to the interests of the Community’.[66] This gives the EU leeway to adapt its CCP to its internal objectives, including those pursued in the CAP. Successive amendments to the treaties slightly modified the wording of this provision. The current formulation of Article 206 TFEU has been perceived as meaning that in the CCP, liberalisation of international trade is no longer an aspirational aim but a duty for the EU.[67] Still, this change in wording does not equate to an obligation to fully liberalise trade with third countries. Rather, it has been considered a duty of non-regression, prohibiting the EU from introducing new quantitative restrictions and measures having equivalent effect.[68]

A second element of connection between the International Fruit Company saga and more recent developments regards the relationship between the EU and the WTO. The entry into force of the WTO Agreement on Agriculture limited the discretion of EU institutions in the CAP. Nonetheless, the main changes concerned subsidies to EU agricultural production and not the possibility for the EU to adopt measures limiting imports from third countries.[69] As a consequence, the EU has decreased forms of support that create major distortions to international trade (so-called ‘amber boxes’ in WTO jargon) in favour of less distortive support measures (so-called ‘blue or green boxes’).[70] At the same time, the Court consistently continued to consider that judicial review of EU measures could not concern their compatibility with WTO rules, which replaced GATT.[71] In line with previous case-law, it ruled that private parties could not even invoke decisions of the Settlement Bodies established in the WTO framework to contest the legitimacy of EU acts.[72] It should also be stressed that, while the Court admitted that, in two limited circumstances, WTO rules could have direct effect, such exceptions were interpreted narrowly.[73] Finally, even though the Court sought to reconcile EU law and the WTO framework by requiring judges to interpret the latter consistently with the former,[74] it reiterated in a recent judgment that such an interpretation is not to be construed as a review of the legality of the EU acts in question.[75] These developments demonstrate that the main contentions raised in IFC III are still relevant, as possibilities to contest the legitimacy of EU acts in breach of such international obligations continue to be limited. 

The third commonality with the legal framework regulating imports of apples at the beginning of the 1970s stems from the fact that the EU has continued to adopt instruments that have some similarities with those applying at that time. In particular, the element these measures have in common is their limiting effect on trade between the EU and third countries, which aim at safeguarding other EU objectives and, more generally, protecting agricultural goods produced in the EU. The first example concerns the 2013 Regulation on the common organisation of the markets in agricultural products, adopted based on CAP powers. This act admits the possibility of requiring licences to import certain goods, provided that these measures respect EU international obligations.[76]Article 177(1) of the 2013 Regulation stresses that these measures can be adopted to stabilise the market and monitor trade. These are exactly the same objectives pursued by the measures contested in the International Fruit Company saga. At the same time, these limitations to trade can also be adopted nowadays to ensure respect for EU social, environmental and animal welfare standards, which are novel concerns and are currently safeguarded in EU primary law.[77]

 The second example demonstrating the attempt made by the EU to balance free trade and EU agricultural protection is the EU-Mercosur Agreement. Indeed, its text illustrates how the EU attempted to address the concerns raised by the EU agricultural sector, which are still slowing down the ratification process. Indeed, the Agreement not only requires that imports from Mercosur countries comply with EU sanitary and phytosanitary rules,[78] but also envisages the establishment of a framework to facilitate dialogue and cooperation on issues concerning the agri-food chain.[79] Moreover, while the Agreement prohibits the adoption of quantitative restrictions to trade,[80] the Commission has proposed a Regulation allowing the EU to retain the power to adopt safeguard measures modifying its preferential tariff regime when imports of agricultural products from Mercosur countries are likely to threaten its industry.[81] Finally, the text of the Agreement expressly mentions that private parties cannot invoke the rights it attributes to them.[82] The inclusion of such a provision, essentially denying the Agreement’s direct effect, exemplifies a recurring practice of EU institutions.[83]

The last example considered here is the recent Regulation on deforestation-free products, applicable to certain agricultural goods.[84] Despite being adopted for environmental purposes, as confirmed by its legal basis – that is Article 192(1) TFEU – this instrument has a clear relevance for trade since many of the products included in its scope are often imported into the EU. While the instrument does not introduce quotas or tariffs, it prevents such agricultural goods from entering the internal market if they do not satisfy the conditions set out in its Article 3. In addition, it establishes due diligence obligations for traders of such products to ensure that goods imported into the EU do not cause deforestation.[85] Suffice it to mention here that these rules make importing certain agricultural goods more cumbersome. For this reason, some scholars have argued that this Regulation demonstrates that the EU does not interpret its commitment to trade liberalisation enshrined in Article 206 TFEU as a blind and indiscriminate openness to trade, a stance allowing the EU to restrict trade if necessary to shape its trade policy in line with other internal objectives.[86]

All in all, this section confirms that the legal framework governing EU competences and objectives has developed in such a way as to ensure that the EU can moderate its openness to imports of agricultural products from third countries. It is undeniable that the Court has made some openings to account for EU international obligations in the field of trade and that recent instruments include provisions ensuring their respect. Nonetheless, the EU used the room for manoeuvre available to introduce various measures aimed at balancing trade liberalisation and the protection of EU agricultural production and displaying different degrees of similarity compared to the licensing regime at stake in the International Fruit Company saga.

6.   Concluding remarks

By reading the International Fruit Company saga in conjunction with later developments, this paper confirms that the significance of those judgments went beyond conceptualising the notion of measures having equivalent effect to quantitative restrictions and defining the relation between EEC and international law. In fact, these rulings can also be appreciated for having implicitly clarified how interactions between the CAP, the CCP and the internal market were to be structured. As confirmed in later rulings, the Court confirmed that the degree of liberalisation to be achieved in trade with third countries is not the same as that envisaged for the internal market. This approach to EU competences and results to be attained in the policy areas at stake made it possible to reconcile trade liberalisation with CAP or horizontal EU objectives, which often also constitute concerns expressed by the EU agricultural sector.

Old worries about price competition still inform recent developments about imports of agricultural products from third countries, while new concerns regarding sustainability and respect for EU standards have entered the debate. The analysis conducted here demonstrates that, by avoiding a complete liberalisation of imports of agricultural goods, the EU continues to tackle these potential threats through different means. The way the Court conceptualised EU trade competences and objectives in the International Fruit Company saga is still crucial in enabling the EU to introduce such measures. Although respect for EU international commitments has been highlighted, the possibility of reviewing the compatibility of these restrictions with the WTO remains limited.