Case Law: Case C-149/96, Portuguese Republic v. Council of the European Union (Eur.Ct.J. November 23, 1999), 1999 E.C.R. 1-8395

7 Colum. J. Eur. L. 280 (2001)

Dries Van Eeckhoutte. K.U. Leuven.

  1. Facts

International trade in textile products has, since 1974, largely been regulated by the Multifibre Arrangement (“MFA”), a pragmatic arrangement between developing (i.e. exporting) countries, on the one hand, and developed(i.e. importing) countries on the other, which contravened many of the fundamental tenets of the GATT system. Indeed, the MFA was simply an instrument of trade restriction which was forced upon textile-exporting developing countries who had to adhere to it lest more stringent unilateral restrictions be imposed by their developed country partners. To the extent that it was “voluntarily” accepted by those developing countries, it falls in the category of what are called “Voluntary Export Restraint Agreements” (“VER’s”).

During the negotiations of the Uruguay Round, the parties to the GATT agreed to incorporate the regulation of trade on textiles and clothing within the GATT system. This was done by virtue of the Agreement on Textiles and Clothing (“ATC”) included in Annex I A to the agreement establishing the World Trade Organization (“WTO agreements”).

The ATC holds quite a special position within the WTO agreements as it is self- extinguishing. During a period of ten years, the quantitative restrictions agreed upon by means of bilateral agreements under the MFA will be phased out gradually. By the end of this ten-year period the sector of textiles and clothing should be fully integrated within GATT 1994.

After the signing of the WTO agreements, the European Community signed two Memoranda of Understanding, one with Pakistan and another with India on arrangements in the area of market access for textile products. On February 26, 1996  the Council adopted these Memoranda of Understanding by qualified majority voting. The Kingdom of Spain, the Hellenic Republic and the Portuguese Republic voted against.

It was against this Council Decision of February 26, 1996 (hereafter “challenged decision”) that the Portuguese Republic (hereafter “Portugal”) introduced an application for annulment before the European Court of Justice. In support of its application, Portugal relied, inter alia, on the breach of certain rules and fundamental principles of the WTO.