Legal Aspects of the Unification of the Two German States

III. The Unification of the Two German States Within the Legal Order of the EEC

A. The Application of EEC Law in the Former GDR

With the accession of the former GDR to the Basic Law of the Federal Republic the territory of the former GDR automatically became part of the EEC without any amendment of the Treaty of Rome.⁸⁰ The European Council has thus confirmed the legal integration of the GDR as an enlargement of the territory of an existing member state. The integration, therefore, became effective as soon as the unification had been legally established, subject to the necessary transitional arrangements.⁸¹

The immediate application of EEC law in the new German Länder follows from Article 227 EEC Treaty which provides that the EEC Treaty is applicable to the member states in their respective territories unless special provisions like Article 227 paragraph 2 apply. The principle of `moving frontiers', therefore, may be applied to supranational organisations like the EEC in the same way as to states.

A number of questions arise concerning the legal order of the EEC and the treaty relations of the EEC with third states. As to treaties falling into the exclusive competence of the EEC, the EEC is called upon to decide to what extent it is obliged to continue, cancel or adapt treaties of the former GDR in cooperation with the former contracting parties. General principles on succession of states to treaties - unclear as they may be - do not apply ipso facto to supranational organisations. The rules envisaged for succession to treaties by the organs of the EEC, therefore, gain a greater practical importance.

There is agreement within the Community that essential parts of the EEC legal order cannot be applied before the East German industrial and economic system has been brought up to the level of the other member states. The Unification Treaty between the two German states provides in principle for the application of EEC law while envisaging exceptional measures which ought to take into account the administrative and economic problems encountered in the territory of the former GDR. This provision does not in any way bind the EEC organs. It is up to the EEC to decide - basically by a majority ruling - about an interim regime by which the former GDR is to adjust to the economic structures in the Community.

The interim measures which the Council has taken concern almost all areas of industry, trade and agriculture. They are strictly limited in time and purpose. Only provisional measures on an interim basis have been suggested. Their purpose is the adaption of the GDR economic system to the Common Market. Provisional exemptions are admissible only to the extent that is absolutely necessary to achieve this purpose. This means that at the end of the interim regime, the EEC legal order will apply fully. Derogations from the treaty provisions or Community legislation will therefore only be possible in the framework of the general provisions of the EEC Treaty, which generally require a special authorization in a Community Regulation.

The new Länder are therefore obliged within their competence not only to respect the existing legal order of the Community, including the `acquis communautaire' but also to follow the aims and political obligations of the EEC Treaty as amended by the Single European Act and in particular Article 8A of the Treaty defining the aims of the Single Market to be achieved by the end of 1992. Although only the Federal Republic is a contracting party of the Treaty of Rome, it is clear that provinces, regions and Länder are also bound as being constitutional subdivisions of the Federal Republic. The Unification Treaty clarifies this situation by explicitly stating the duty of the new Länder to implement or apply those legal acts falling into their competence by legislative or administrative regulations.⁸²

B. The Interim Regime

The Commission suggested various phases for the adjustment of the GDR economy. Even before legal unification a number of measures had to be taken in order to promote the constitutional process in accordance with Community aims and prescriptions.

The Treaty of May 1990 establishing a monetary, economic, and social union between the two German states⁸³ guaranteed the equal application of all provisions of the Treaty to all EEC citizens and enterprises. Since July 1, 1990, the GDR has opened its market to all products from EEC countries on the basis of reciprocity and has treated the trade with third countries, with the exception of agricultural products, as foreign trade within the meaning of EEC law - notwithstanding specific treaty obligations with third countries. The Treaty also provided for an extension of individual economic rights, such as the guarantee of private property and the freedom of establishment, to the territory of the GDR.

A second stage of interim regulations has been reached after the unification. The largest part of Community law including the market freedoms are valid automatically on the territory of the former GDR since October 3, 1990. The rest is - according to a detailed schedule of the Commission - delayed for a period of months or will not be enforced for the time being. The provisions which are in principle applicable include the rules governing the free movement of goods, services and people, policies on financial aids, unfair competition and merger, agriculture, energy, and transport.

Due to the rapid progress of the constitutional unification process, it proved impossible to enact all interim Regulations as from the unification. The Commission was therefore authorized by the Council of Ministers to adopt provisional measures.⁸⁴ Accordingly, it may authorize the Federal Republic to maintain in force any regulation in the territory of the former GDR on a provisional basis. The limits for these exceptions are drawn by the proposals of the Commission for interim measures included in an Annex to the Regulation. In any case interim measures based on this special authorisation are only valid until the Council has enacted final Regulations on the subject.

The interim regime thereby enacted is based on a comprehensive set of proposals by the Commission.⁸⁵ Concerning the procedure within the EEC, it was agreed that the European Parliament should be given - regardless of the applicable treaty provisions in every single case - the opportunity to comment on the whole set of rules as well as on the individual proposals. In most cases the majority rule will be applicable. The Federal Republic has no right to veto any proposals although it is, of course, affected in a very particular way.

The provisional interim measures enacted by the Commission primarily concern agriculture and trade. The Federal Republic may maintain those rules concerning the production and distribution of agricultural and industrial products provided they are not exported or sold outside the territory of the former GDR. Other member states will have the right to take those products not being produced in conformity with EEC regulations out of the Market.

Market freedoms are, in principle, automatically applicable in the territory of the former GDR. This also applies to those EEC regulations providing for a recognition of diplomas and professional qualifications. Special provisions, however, determine qualifications in the legal profession, as long as there is no uniform regulation within the unified Germany. For the time being East German diplomas are not yet recognized as equivalent.

Special problems arise in the area of state aids. The Commission has taken the view that no interim Regulations are required. It is, however, doubtful whether the provisions of the EEC Treaty, devised for a `normal' situation, will prove flexible enough to cope with the difficulties of the East German economy and to facilitate the transition towards market economy. The Commission has, however, announced its intention to supervise the application of these provisions in a `constructive way', provided that equal chances are guaranteed in the whole Community and unjustified advantages for East German enterprises are avoided.⁸⁶

C. Treaties of the Former GDR

According to Article 113 of the EEC Treaty, trade policy including trade agreements with third states, liberalisation of foreign trade and protection measures fall within the exclusive competence of the EEC. Concerning the scope of international treaties of the EEC with third states or those international trade agreements binding for all member states which are part of the EEC foreign trade order, general principles on the supremacy of Community law, including international treaties, apply. In case of a conflict with treaty obligations undertaken by the GDR, Community law takes precedence.

The General Agreement on Tariffs and Trade (GATT) forms part of the binding EEC legal order though the EEC has never officially acceded to the GATT. Within the GATT an agreement apparently has been achieved that there is a necessity for a waiver making the continuance of GDR's treaty obligations with Eastern European states legally possible. This concerns primarily the admission of duty free products from certain Eastern European countries destined for consumption within the former GDR. Correspondingly, a waiver was granted by majority vote (US, Japan, and Hongkong voting against) for transitional EC trade measures related to the unification of Germany.⁸⁷

Concerning international trade arrangements, the EEC has accepted the position taken by the Federal Government that the continuance, adoption or termination of these treaties is to be negotiated with the contracting parties in every single case. The Commission, however, has also accepted the principle that the special treaty relations of the former GDR established within the COMECON deserve protection and should be developed by taking into account the economic structure of the EEC. This, in effect, will entail an extensive adaptation of some of these treaties to the changed economic and political circumstances. The Commission at the same time has emphasized its jurisdiction in the handling of the foreign trade policy of the EEC. It does not, however, exclude that the Federal Republic be given a special mandate to negotiate on behalf of the EEC the implications of some treaty relations of the former GDR.

80 Art. 237 of the EEC Treaty provides for a formal treaty in case of an accession of new member states to the Community. See Jacqué supra at 3-8.

81 European Council Doc/90/1 of 28 April 1990; see also Hailbronner, `Völkerrechtliche und staatsrechtliche Aspekte der deutschen Wiedervereinigung', Juristenzeitung (1990) 449, 454; Tomuschat, `An United Germany within the European Community', 27 CML Rev. (1990) 415; Rengeling, `Das vereinte Deutschland in der Europäischen Gemeinschaft: Grundlagen zur Geltung des Gemeinschaftsrechts', Deutsches Verwaltungsblatt (1990) 1307; Scherer, `EG und DDR: Auf dem Weg zur Integration', Betriebsberater 12/1990 (Supplement No. 16) 11; Grabitz and Bogdandy, `Deutsche Einheit und europäische Integration', NJW (1990) 1073.

82 Art. 10 para. 3 of the Unification Treaty.

83 II (1990) Bundesgesetzblatt 537; for a detailed analysis see Stern, Schmidt, Bleibtreu (eds), Staatsvertrag zur Währungs-, Wirtschafts- und Sozialunion (1990).

84 Art. 1 Regulation 2684/90 of 17 September 1990, Official Journal No. L 263/1 of 26 September 1990.

85 COM(90) 400 final of 31 August 1990, Vol. I and II; see also SEC (90) 2136 final of 7 November 1990; the proposals have been approved with minor modifications by the Council on 4 December 1990 (see OJ L 353/1-79 of 7 December 1990).

86 COM(90) 1138, final of 6 June 1990, p. 69.

87 77 GATT Newsletter (December 1990) 6.

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