Mr President, the Commission has presented a proposed regulation intended to amend another Community regulation, Regulation (EEC) 1911/91, which established a special legal status for the Canary Islands. Regulation (EEC) 1911/91 is in turn a regulation which amends the statute established for these islands by the Act of Accession of Spain and Portugal to the European Community in 1985. The Act of Accession of Spain and Portugal to the European Community – in article 25 and in Protocol 2 annexed to that Act – provided the Canary Islands with a special status which was designed to reflect the fact that those islands were not integrated into the Common agricultural policy and, furthermore, because it was not subject to the Community Customs Union, the Community customs rules, nor Value Added Tax. In this way, the Act of Accession intended to maintain as far as possible the special status which the Canary Islands had had within the Spanish State since their incorporation into the Kingdom of Castile in the 15th Century. It was a region which was not subject to the ordinary tax regime nor, therefore, the customs rules, owing to its great distance from Peninsular Spain. The Act of Accession of 1985 contained a future development clause – section 4 of article 25 – which was aimed at preventing the Canary Islands, as a result of European Union development, from being excluded from European construction. I would say that public opinion in the Canary Islands was, on the one hand, in favour of maintaining this special status but, on the other hand, had no desire whatsoever to remain outside the sphere of European construction. When the Single Act was adopted in 1986, it became necessary to amend that special status and this was done by means of Regulation (EEC) 1911/91. That amendment establishes three or four very important changes: firstly, the Canary Islands were incorporated into the Common agricultural policy and the Common fisheries policy; secondly, they were incorporated into the Community Customs Union, and are therefore subject to ordinary customs duties; and thirdly, it removed the special tax rules which they had, specifically the island taxes – the so-called special licence tax arrangements – which were designed to protect local industry. Regulation (EEC) 1911/91 has led to the progressive dismantling of the Canary Islands’ special tax rules and their incorporation into the Community’s common rules. But this has caused difficulties, because the problem with the Canary Islands, as with the other outermost regions – the Azores, Madeira and the French overseas departments – is that they are a long way from European territory, divided into small island areas, with very small markets, with enormous transport problems and, furthermore, with problems due, for example, to over-population, very irregular rain patterns and poor soil, which hinder the development of normal activities. This explains why, in the past, the Canary Islands always enjoyed a special status within Spain. The dismantling of the Canary Islands’ special tax status, in terms of customs duties, would threaten to dismantle a series of small local industries – food, tobacco and small commercial industries – which would disappear if we were to remove that small degree of protection provided by their special taxes, specifically the tax on production and imports. The Commission has been thorough and has taken account of this, and has therefore begun a negotiation of an adaptation of the tax on production and imports, in order that that tax may not disappear. There has also been another issue: the Treaty of Maastricht of 1992 included a declaration recognising the special status of the outermost regions – the Canary Islands, the Azores, Madeira and the French overseas departments – and section 2 of article 299 of the EC Treaty, after its amendment by means of the Treaty of Amsterdam of 1997, provides for special status for the outermost regions. The Treaty of Amsterdam is now in force. In accordance with the thinking behind the new status for the outermost regions – which was also confirmed by the Cologne European Council which asked the Commission to present measures for the outermost regions before 31 December – at the moment the incorporation of these regions into the European Union does not necessarily require tax and customs harmonisation, but rather allows differentiated treatment, for example the maintenance of the port charges in the French overseas departments and the special rules for the Azores and Madeira. Although the Commission’s proposed regulation began to be negotiated before the entry into force of the Treaty of Amsterdam, in the Committee on Legal Affairs – which in general approves the proposed regulation, since it is aimed at delaying the removal of the Canary Islands’ taxes and therefore plays a protective role – we believe that, after the entry into force of article 299.2, rather than a simple easing of the limits of the special treatment, we need to paralyse the removal of this special treatment because it is possible that, in the measures which the Commission must propose for the outermost regions in accordance with the said article 299.9, which provides for special measures in the field of fiscal policy, the Commission may allow a limited reinstatement so that the relevant small local industries do not suffer. As I said before, Mr President, the Committee on Legal Affairs unanimously approved the regulations, but proposes a series of amendments intended to indicate that article 299.2, which is already in force, establishes an additional basis for the Commission’s proposed regulation. We are not trying to oppose the Commission’s regulation, which establishes an additional basis. That additional basis would justify a measure which one could describe as containing and detaining the removal of customs duties. As a consequence of that reference to article 299.2 and the thinking which I am explaining at the moment, the Committee on Legal Affairs has proposed a series of amendments to the annexes of the regulation to halt the removal of customs duties in any of the areas where they are currently in force. It is a question of maintaining the current protectionist structure of the taxes until the Commission presents its new proposals in the field of tax policy. As the Commissioner knows, next week in Brussels a partnership meeting will take place in which the Commission will discuss the proposals with the governments of France, Spain and Portugal, the governments of the Autonomous Regions and the MEPs from those regions. Therefore, it would seem appropriate that the Commission approve and express its agreement with Parliament’s proposals – the proposals of the Committee on Legal Affairs – which are very reasonable and are in accordance with the Commission’s thinking but reinforce it by referring to the new article 299.2, which will provide for and allow the development of a special status. It does not make much sense now to totally remove the system when in a few months it is possible that the Commission will have to propose its reinstatement. This is the thinking, this is the problem, and I hope that Parliament will follow the recommendations of the Committee on Legal Affairs, approve the regulation and also approve the 19 amendments which the said Committee has proposed. IN THE CHAIR: MR L. MARINHOVice-President

Political group: PSE