# EUR-Lex - 52012PC0293 - EN

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# 52012PC0293

**Proposal for a COUNCIL DECISION establishing the position to be taken by the European Union within the General Council of the World Trade Organization on the Philippines' request for a WTO waiver to extend the special treatment for rice /* COM/2012/0293 final - 2012/0154 (NLE) */**

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EXPLANATORY MEMORANDUM

1.           OBJECTIVE OF THE PROPOSAL

The objective of this proposal is to
establish the position to be taken by the European Union within the General
Council of the World Trade Organization (WTO) on the Philippines’ request for a WTO waiver to extend the special treatment for rice from
1 July 2012 until 30 June 2017 and thus allow the European
Union to support this waiver request. The request is likely to be on the agenda
of the WTO General Council meeting scheduled for July 2012.

2.           LEGAL BASIS OF THE PROPOSAL

Article 218(9) of the Treaty on the Functioning
of the European Union (TFEU) provides that when a decision having legal effect
needs to be taken in a body set up by an international agreement, the Council,
on a proposal from the Commission or the High Representative of the Union for
Foreign Affairs and Security Policy, shall adopt a decision establishing the
position to be adopted on the Union’s behalf. The granting of a waiver to allow
the Philippines to extend the special treatment for rice from 1 July 2012 until
30 June 2017 falls under this provision as the decision is taken in a body set
up by an international agreement (the WTO General Council or Ministerial
Conference) affecting the rights and obligations of the EU.

3.           SCOPE OF THE PROPOSAL

The Commission will be authorised to take a
position on behalf of the EU to support the Philippines’ request for a WTO waiver
to extend the special treatment for rice from 1 July 2012 until 30 June 2017.

On 20 March 2012 the Philippines presented
a waiver request in the WTO from its obligations under Articles 4.2 and
paragraphs 8, 10 of Annex 5 of the Agreement on Agriculture and from the
Philippines’ commitment under the “Extension Agreement” in order to allow the
Philippines to continue special treatment for rice, with an increase in market
access as specified in paragraph 3 and Annex A of the draft Waiver decision
from 1 July 2012 – 30 June 2017. This request was preceded by a notification
made on 22 November 2011 to the Committee on Agriculture, whereby the
Philippines initiated the negotiations with WTO Members that have “substantial
interest” in rice (under the HS chapter 10.06) in order to extend its special
treatment for rice. Such Members were asked to communicate their intention to participate
in the negotiations until 21 January 2012 (60 days after the notification).

The Philippines mention as justification
for the waiver that it is addressing a non-trade concern related to food
security, stressing that special treatment will allow the Philippines to
prepare its farmers for liberalisation by use of support programmes for farmers
to improve competitiveness.

The requested waiver is limited in scope to allow the Philippines to continue the
special treatment for rice (classified under the Chapter 10.06 of the HS) from 1 July 2012 until 30 June 2017. Pursuant to the waiver request,
during this period the Philippines shall provide a minimum market access (MMA)
for rice, to be increased annually each year (to be specified in the annex to
the waiver based on the results of ongoing negotiations with interested
Members). Also the annual and final reduction of in-quota tariff of rice shall be
agreed with these Members as of 1 July 2012, providing country – specific
quotas for these countries.

The requested waiver would be the second
extension of the special treatment, currently valid until 30 June 2012. The
Philippines were initially provided with special treatment for rice upon the entry
into force of the WTO Agreement in 1995, with an implementation period of 10
years (pursuant to paragraph 1 and 1(d) of Annex 5 of the Agreement on
Agriculture, and as reflected in the Philippines’ Goods Schedule LXXV, Part I,
Section I B (on tariff quotas for agricultural products)). The first extension
of the special treatment was made during 2004 - 2007 by modifying its schedule
LXXV (pursuant to section B of Annex 5 of the Agreement on Agriculture) after
concluding negotiations with Members (3 countries received country specific
quotas: Australia, China and Thailand). On 8 February 2007, a final, certified
copy of the PHL modified schedule LXXV (WT/LeT/562) was distributed to Members.

For the EU (rice industry), the waiver
request does not pose economic concerns since the EU’s export of rice to the
Philippines is less than 10 tonnes per year (according to COMEXT), without
significant variation. As there was no reason to expect an increase, the EU had
not expressed interest to enter into negotiations with the Philippines as a
Member with “substantial interest”.

The Philippines’ current MMA is 350.000
metric tonnes (MT), with an in-quota rate of 40%. Besides its MMA, the
Philippines import an additional 2 million MT, of which Vietnam (74%), Thailand
(19%) and Pakistan (7%) are the main suppliers (source: Global Trade Atlas
(GTA), year 2010).

The EU is a net rice importer, covering
some 40% of its needs from imports. The consumption is increasing (slowly).
Whilst the production is rather stable, the EU imports will also increase. EU exports
are around 100-120 000 tonnes per year (the last two years were a bit higher
due to record production) without any
potential for tendency-like increase. The EU exports are mainly
shipped to nearby locations (mainly to Turkey). It hardly exports any rice
to Asia and especially not to Southern Asia, which are the major rice
producing regions of the world.

The Philippines aims to finalise the
negotiations with interested members and adopt the waiver latest at the General
Council meeting in July 2012.

2012/0154 (NLE)

Proposal for a

COUNCIL DECISION

establishing the position to be taken by
the European Union within the General Council of the World Trade Organization
on the Philippines' request for a WTO waiver to extend the special treatment
for rice

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the
Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 207(4), in
conjunction with Article 218(9) thereof,

Having regard to the proposal from the European
Commission,

Whereas:

(1)       Pursuant to paragraph 1
and 1(d) of Annex 5 of the Agreement on Agriculture, and as reflected in the
Philippines’ Goods Schedule LXXV, Part I, Section I B (on tariff quotas for
agricultural products) the Philippines were provided with special treatment for
rice upon the entry into force of the WTO Agreement, with an implementation
period of 10 years.

(2)       Pursuant to paragraph 8 of
Annex 5 of the Agreement on Agriculture, the Philippines extended the special
treatment for rice from 01 July 2005 to 30 June 2012 by modifying its Schedule
LXXV, certified by the WTO Secretariat on 8 February 2007.

(3)       Pursuant to paragraph 5.1
of the Certification of Modifications and Rectifications to Schedule LXXV, any
continuation of special treatment after 30 June 2012 for rice was set to be
contingent on the outcome of the Doha Development Agenda (DDA) negotiations,
providing an alternative special mechanism. However, the DDA negotiations have
not yet been concluded.

(4)       The Philippines notified
the Committee on Agriculture of the WTO on 22 November 2011 about its
intentions to enter into negotiations with Members that have substantial
interests in the products concerned for continuation of the special treatment
on rice.

(5)       Article IX paragraphs 3
and 4 of the Marrakesh Agreement establishing the World Trade Organization (WTO
Agreement) set out the procedures for the granting of waivers concerning the
Multilateral Trade Agreements in Annex 1A or 1B or 1C to the WTO Agreement and
their annexes.

(6)       On 20 March 2012 the
Philippines requested a waiver in the WTO from its obligations under Articles
4.2 and Section B of Annex 5 of the Agreement on Agriculture in order to provide
special treatment for rice from 1 July 2012 – 30 June 2017 in accordance with
the Philippines' waiver request.

(7)       The EU is a net importer of
rice. The granting of this waiver would thus be of minimal economic and trade
importance to the Union.

(8)       It is appropriate,
therefore, to establish the position to be taken by the Union within the WTO
General Council to support this waiver request,

HAS ADOPTED THIS DECISION:

Article 1

The position to be
taken by the European Union within the General Council of the World Trade
Organization is to support the Philippines’ waiver request to extend the
special treatment for rice from 1 July 2012 until 30 June 2017 in accordance
with the terms of the waiver request.

This position
shall be expressed by the Commission.

Article 2

This Decision shall enter into force on the day of its
adoption.

Done at Brussels,

For
the Council

The
President