# EUR-Lex - 52005PC0398 - EN

Important legal notice

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# 52005PC0398

**Proposal for a Council Regulation concerning balancing mechanism applicable to imports from certain countries not members of the European Community /* COM/2005/0398 final */ **

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[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 29.8.2005

COM(2005) 398 final

Proposal for a

COUNCIL REGULATION

concerning balancing mechanism applicable to imports from certain countries not members of the European Community

(presented by the Commission)

EXPLANATORY MEMORANDUM

CONTEXT OF THE PROPOSAL |

110 | Grounds for and objectives of the proposal This proposal concerns a need that has arisen to address artificial pricing practices, such as dual pricing or export taxes, which confer an unfair competitive advantage to certain economic operators in third countries. These artificial pricing practices are predominantly found among non-WTO countries. |

120 | General context The competitive position of the Community industry is being adversely affected by imports benefiting from such pricing or other practices bestowed on these imports by governments or state-controlled enterprises. The benefit results from pricing or other practices where the domestic industry in the countries concerned is sourcing certain products at prices which are well below the export/world market prices, which they otherwise would have had to pay in the normal course of trade. Such products are often used or consumed for the production of downstream products which are subsequently exported to the Community or third country markets, thereby causing injury to the Community industry. The artificial cost advantage created through dual pricing practices applied by third countries is undermining the competitiveness of the EU industry in many ways. The imports of artificially low priced products from these countries are penetrating the EU market and have already captured a significant percentage of that market. Such dual pricing practices result in attractive investment conditions in the third countries concerned but they also succeed in distorting the level-playing field for investments in the highly globalised industrial sectors concerned. For the Community producers not to be placed at a competitive disadvantage and suffer injury there is an urgent need, in view of the critical situation faced by the Community producers in certain sectors, for an instrument to offer protection against imports into the Community that are benefiting, directly or indirectly, from such pricing or other practices. |

139 | Existing provisions in the area of the proposal There are no existing provisions in the area of the proposal. |

141 | Consistency with other policies and objectives of the Union Not applicable. |

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT |

Consultation of interested parties |

219 | The Commission informed the industry and the Member States in the relevant trade committees about the drafting process and adapted the draft proposal according to the comments and suggestions received. |

Collection and use of expertise |

229 | There was no need for external expertise. |

230 | Impact assessment The proposal for balancing mechanism does not foresee a general impact assessment. However, the proposal contains exhaustive list of conditions and criteria that have to be assessed before the imposition of balancing measures. |

LEGAL ELEMENTS OF THE PROPOSAL |

305 | Summary of the proposed action Objective: The balancing mechanism opens up a possibility for action against imports benefiting, directly or indirectly, from pricing or other practices (e.g. dual pricing, export taxes) of governments or state-controlled enterprises, which result in different price levels for input products depending on whether they are used or consumed domestically or exported and where such imports are causing or threatening to cause injury to the Community industry. Scope: The mechanism will be applied on imports originating in countries which (i) are not members of the World Trade Organisation (WTO); or (ii) while being members of the WTO, have a provision in their WTO accession protocol allowing for use of this mechanism. The mechanism shall not apply to imports from a non-WTO member where that country has a bilateral deal with the Community in the context of that country's WTO accession, which satisfactorily addresses the pricing practice and it is considered that that country is, in fact, progressively eliminating the trade distorting effects of the pricing practice within a maximum period of five years of the date of conclusion of that bilateral deal. Initiation threshold: The Community industry has a right to initiation of an investigation on the basis of a duly substantiated complaint. Additionally, the Commission can act ex-officio if there is sufficient evidence at hand. Investigation: The proposal provides for all main features of a trade in goods type of investigation but in a simplified manner in order to allow the surgical use of this instrument. The investigations carried out under the proposed balancing mechanism respect the due process requirements, such as: public notice of initiation, interested parties have right to be heard, confidential treatment of the provided information is ensured, interested parties can have access to information which is relevant to the presentation of their case, consultation with third country government, etc. Decision-making procedure: Member States will be consulted at every stage of the proceeding in a Committee under the advisory comitology procedure, in line with Council Decision 1999/468/EC of 28 June 1999. Balancing measures: Balancing measures in the form of duties, undertakings, or in other appropriate forms will be imposed on imports which, directly or indirectly, benefit from the pricing practice. The level of the measure will be calculated on the basis of: a) the pricing differential between the input product on domestic and export markets and b) the extent to which the input product has been used/consumed in the production of the product under consideration (downstream product). The level of a balancing measure shall not exceed the level of a benefit found. Provisional measures shall be imposed no earlier than 60 days from the initiation of the proceedings and may have a duration of six months. Measures may be reviewed if warranted. Similar to other trade defence instruments, there is no specification regarding levying of the balancing duties. Balancing measures shall not normally be imposed cumulatively with other trade defence measures. The mechanism will follow the general practice, i.e. duties will be levied by the Member States authorities and they will be remitted to the Community budget in line with existing provisions applied within the European Union on anti-dumping and countervailing duties. |

310 | Legal basis Treaty establishing the European Community, and in particular Article 133. |

329 | Subsidiarity principle The proposal falls under the exclusive competence of the Community. The subsidiarity principle therefore does not apply. |

Proportionality principle The proposal complies with the proportionality principle for the following reason(s). |

331 | The form of action presented in the proposal for a balancing mechanism does not leave scope for national decision. |

332 | Indication of how financial and administrative burden falling upon the Community, national governments, regional and local authorities, economic operators and citizens is minimised and proportionate to the objective of the proposal is not applicable. |

Choice of instruments |

341 | Proposed instruments: Regulation. |

342 | Other means would not be adequate for the following reason(s). The proposed balancing mechanism is a framework legal act which will allow for the imposition of trade defence measures. The framework legal act requires a Council Regulation as the appropriate legal form. |

BUDGETARY IMPLICATION |

409 | The proposal has no implication for the Community budget. |

1. Proposal for a

COUNCIL REGULATION

concerning balancing mechanism applicable to imports from certain countries not members of the European Community

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to the proposal from the Commission[1],

Whereas:

(1) The competitive position of Community industry could be adversely affected by imports benefiting from pricing or other practices applied by governments or state controlled enterprises in third countries.

(2) Such benefit may result from pricing or other policies having an equivalent effect, such as export taxes, set or implemented by third country governments or state controlled enterprises leading to different price levels of goods depending on whether these goods are destined for export or for domestic consumption or use.

(3) For the Community producers not to be placed at a competitive disadvantage and suffer injury, there is a need for an instrument to offer protection against imports that are benefiting, directly or indirectly, from such pricing or other practices applied by a third country government or state controlled enterprise of a country which is not member of the World Trade Organisation, or a country which is a member of the WTO but where a provision in that member’s WTO accession protocol allows for the application of this regulation. The mechanism shall not apply to imports from a non-WTO member where that country has a bi-lateral deal with the Community in the context of that country’s WTO accession, which satisfactorily addresses the pricing practice and it is considered that that country is, in fact, progressively eliminating the trade distorting effects of the pricing practice within a maximum period of five years of the date of conclusion of that bi-lateral deal.

(4) It is necessary to define the balancing mechanism to be applied to imports benefiting from pricing or other similar policies. Such policies are considered to distort competition amongst economic operators concerned and need to be remedied in order to restore fair conditions of trade. The mechanism should be applied in a non-discriminatory way.

(5) It should be further made clear that the benefit shall be calculated on the basis of the different price levels for the input product, depending on whether such product is destined for export or for domestic consumption or use and taking into account, if appropriate, the extent to which the input product is consumed or used in the production of the product under consideration.

(6) It is essential to define the terms “input product” and “product under consideration”.

(7) It is furthermore desirable to lay down clear and detailed guidance as to the factors which may be relevant for the determination of whether the pricing or other practices applied by a third country government or state controlled enterprise have caused injury or are threatening to cause injury, attention should be given to the effect of other factors, and consideration should be given to all relevant and known factors and economic indicators which have a bearing on the state of the industry, and in particular prevailing market conditions in the Community.

(8) It is necessary to specify who may lodge a complaint and the information that such a complaint should contain; a complaint should be rejected where there is insufficient prima facie evidence regarding the pricing or other practice, injury and causality.

(9) It is desirable to lay down the procedure to be followed in the investigation for imposition of balancing measures.

(10) It is necessary to lay down the manner in which interested parties should be given notice of the information which the investigating authorities require; interested parties should have ample opportunity to present all relevant evidence and to defend their interests.

(11) It is also necessary to set out the rules and procedures to be followed during the investigation, in particular the rules whereby interested parties are to make themselves known, present their views and submit information within specified time limits, if such views and information are to be taken into account; whilst respecting commercial confidentiality, it is necessary to allow interested parties to access all information pertaining to the investigation which is relevant to the presentation of their case; it is necessary to provide that, where parties do not cooperate satisfactorily, other information may be used to establish findings and that such information may be less favourable to the parties than if they had cooperated.

(12) It is necessary to lay down the conditions under which provisional measures may be imposed; such measures may in all cases be imposed by the Commission only for a six-month period.

(13) An investigation or proceeding should be terminated whenever there is no need to impose measures; a proceeding should not be terminated unless the termination decision is accompanied by a statement of the reasons therefore.

(14) The level of balancing measures should not exceed the level of benefit found if measures are imposed on imports of the product under consideration which benefit from the pricing practice due to injury caused by such imports.

(15) Preference should be given to duties when it comes to the imposition of balancing measures; where duties prove not to be appropriate, other balancing measures, such as quantitative restrictions, may be considered.

(16) Balancing measures and anti-dumping and/or countervailing measures shall not be cumulatively imposed on imports of a product unless it is found that the dumping and/or subsidisation cannot be attributed to the effect of the pricing or other practice.

(17) It is necessary to specify procedures for the acceptance of undertakings eliminating or offsetting the benefit resulting from pricing or other practice and the injury caused instead of the imposition of provisional or definitive measures; it is also appropriate to lay down the consequences of breach or withdrawal of undertakings.

(18) It is necessary to provide for review of the measures imposed in cases where sufficient evidence is submitted of changed circumstances or situations where the remedial effects of the balancing measures are undermined. In the latter case, it may be appropriate to extend measures in force to imports of the product under consideration from other countries.

(19) In accordance with Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission[2], measures for the implementation of this Regulation should be adopted by use of the advisory procedure provided for in Article 3 of that Decision.

(20) It is necessary to ensure that any balancing measures taken under this Regulation are in full accordance with the Community interest; the assessment of the Community interest involves the identification of any compelling reasons which would lead to the clear conclusion that the taking of measures would not be in the overall interest of the Community. Such compelling reasons could, for example, include cases where the disadvantage to consumers or other interested parties would be clearly disproportionate to any advantages given to the Community industry by the imposition of measures.

(21) For the purpose of Articles 217(1) and 218(2) of the Community Customs Code[3], provisional and definitive balancing measures shall be treated respectively as provisional and definitive anti-dumping or countervailing duties.

(22) The form and level of balancing measures and their enforcement should be set out in detail in a Regulation imposing these measures,

HAS ADOPTED THIS REGULATION:

Article 1

Principles

1. Balancing measures may be imposed on products declared for release for free circulation in the Community originating in a third country, for the purpose of offsetting a benefit resulting from pricing practices, or other practices having an equivalent effect, of that same third country government or a state-controlled enterprise within its territory, which result in different price levels for input products depending on whether such input products are destined for export or for domestic consumption or use and where injury is thereby caused to the Community industry by exports of the product under consideration to the Community market.

2. Balancing measures may be imposed on imports originating in:

a) countries not members of the World Trade Organisation, or

b) a member of the WTO where a provision in that member’s WTO accession protocol allows for the application of this regulation.

3. This Regulation shall not apply to imports from a non-WTO member where that country has a bilateral deal with the Community in the context of that country’s WTO accession, which satisfactorily addresses the pricing practice and it is considered that that country is, in fact, progressively eliminating the trade distorting effects of the pricing practice within a maximum period of five years of the date of conclusion of that bilateral deal.

Article 2

Definitions

For the purposes of this Regulation:

a) the term "injury" shall be taken to mean material injury to the Community industry or threat of material injury, to the Community industry, determined in accordance with Article 5;

b) the term "Community industry" shall be interpreted as referring to Community producers of the like product;

c) the term “input product” shall be taken to mean the product that is alleged to be subject, directly or indirectly, to pricing or other practices which are under investigation pursuant this Regulation;

d) the term "product under consideration" shall be interpreted to mean the imported product where the input product has been, directly or indirectly, used or consumed in the production process of that product;

e) the term "like product" shall be interpreted to mean a product which is identical, that is to say, alike in all respects, to the product under consideration, or in the absence of such a product, another product which although not alike in all respects, has characteristics closely resembling those of the product under consideration;

f) the term “government” is defined as a government or any public body within the territory of the third country concerned;

g) an enterprise shall be deemed to be “state controlled” if the government or any other public body within the territory of a third country concerned owns, directly or indirectly, more than 50 per cent of the equity interest in it, or has the power to name a majority of its directors or otherwise legally control or direct its actions.

Article 3

Pricing practices

A benefit from pricing practices or other practices having an equivalent effect implemented by a third country government or a state-controlled enterprise shall be deemed to exist if s uch practices result in different price levels of products depending on whether such products are destined for export or for domestic consumption or use.

Article 4

Calculation of the balancing amount of the measure

1. The benefit shall be calculated on the basis of the different price levels for the input product depending on whether such product is destined for export or for domestic consumption or use and taking into account, if appropriate, the extent to which the input product is, directly or indirectly, consumed or used in the production of the product under consideration. Due account shall be taken of the fact that the price levels of the input product may be set by reference to products other than those destined for export or domestic consumption or use. Due account shall also be taken of differences which affect comparability between the input product destined for export and that destined for domestic consumption or use. Allowance for such differences shall be made in each case, on its merits, for factors which are claimed and demonstrated to affect the comparability of prices, quality, availability, transportation and other conditions of purchase and sale.

2. The determination of the benefit may be made on the basis of generally available information for the industry concerned, including statistics concerning prices of the input product and the product under consideration, and guidelines and standards pertaining to the extent of the consumption or use of the input product in the product under consideration.

3. For the products listed in the Annex to this Regulation the determination of the benefit shall be made on the basis of the methodology set out in the Annex, with due account being taken, in accordance with paragraph 1, of differences which affect the comparability between the input product destined for export and that destined for domestic consumption or use. The Annex shall be amended as appropriate in accordance with the procedure laid down in Article 13(2).

Article 5

Determination of injury

1. The determination of injury shall be based on positive evidence and shall involve an objective examination of:

a) the volume and prices of imports of the product under consideration into the Community market and their effect on the Community industry prices for the like product;

and

b) the consequent impact of the respective imports on the Community industry as indicated by trends in a number of economic indicators such as sales volumes, utilisation of capacity, market share, profits and losses, return on capital, investment and employment.

No one or more of these factors can necessarily give decisive guidance.

2. It shall be demonstrated, from all the relevant evidence presented in relation to paragraph 1, that the product under consideration is causing injury within the meaning of this Regulation.

3. Known factors other than the imports of the product under consideration which are injuring the Community industry at the same time shall also be examined to ensure the injury caused by these other factors is not attributed to the product under consideration.

4. A determination of threat of injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstance which would create a situation in which the pricing practices would cause injury must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, consideration should be given to, inter alia , such factors as:

a) the nature of the pricing or other practices in question and the trade effects likely to arise therefrom;

b) a significant rate of increase of imports of the product under consideration into the Community market indicating the likelihood of substantially increased imports;

c) sufficient freely disposable capacity of the exporter of the product under consideration or an imminent and substantial increase in such capacity indicating the likelihood of substantially increased exports to the Community market, account being taken of the availability of other export markets to absorb any additional exports;

d) whether imports are entering the Community market at prices that would, to a significant degree, depress prices or prevent price increases which otherwise would have occurred, and would probably increase demand for further imports; and

e) inventories of the product being investigated.

No one of the factors listed above by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further exports by the country or countries engaging in pricing or other practices of the product under consideration to the Community market are imminent and that, unless protective action is taken, material injury will occur.

Article 6

Initiation

1. An investigation under this Regulation shall be initiated upon a written complaint on behalf of the Community industry by any natural or legal person or any association, or on the Commission’s own initiative, where there is sufficient prima facie evidence of the existence of pricing or other practices within the meaning of this Regulation, injury and a causal link between the imports and the alleged injury.

2. When it is apparent that there is sufficient prima facie evidence to justify initiating of a proceeding, the Commission shall, acting in accordance with the procedure laid down in Article 13(2), initiate the proceeding within 45 days of the lodging of the complaint and shall publish a notice in the Official Journal of the European Union. Where insufficient evidence has been presented, the Commission shall, acting in accordance with the procedure laid down in Article 13(2), inform the complainant within 45 days of the date on which the complaint has been lodged with the Commission.

3. The notice of initiation of the proceedings shall announce the initiation of an investigation, indicate the scope of the investigation, the product under consideration, the third countries whose governments allegedly implement the pricing practices, the nature of the practice and the period within which interested parties may make themselves known, present their views in writing and submit information, if such views are to be taken into account during the investigation. The notice shall also state the period within which interested parties may apply to be heard by the Commission.

4. The Commission shall inform the interested parties, notably, the exporters and importers of the product under consideration, the government of the country of origin, the complainants and other Community producers of the initiation of the proceedings.

5. The Commission may, at any time before initiating and during a proceeding, invite the government of the country of origin concerned to take part in consultations with the aim of clarifying the situation as to the matters referred to in paragraph 2 and arriving at a mutually agreed solution.

Article 7

Investigation

1. Following the initiation of the proceeding, the Commission shall commence an investigation which shall cover both the pricing or other practices and injury. This investigation shall normally be concluded within six months, but not later than twelve months, of the date of the initiation of the investigation.

2. The interested parties which have made themselves known in accordance with time limits set forth in the notice of initiation, shall be heard if they have made a timely request for a hearing showing that they are an interested party likely to be affected by the result of the proceeding and that there are particular reasons why they should be heard.

3. In cases in which an interested party refuses access to, or otherwise does not provide, necessary information within the appropriate time limits, or significantly impedes the investigation, provisional or final findings, affirmative or negative, may be made on the basis of facts available. Where it is found that any interested party has supplied false or misleading information, the information shall be disregarded and use may be made of the facts available.

4. Any information which is by nature confidential or which is provided on a confidential basis by parties to an investigation shall, if good cause is shown, be treated as such by the authorities. Interested parties providing confidential information shall be required to furnish non-confidential summaries thereof. Those summaries shall be in sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence and to allow interested parties access to all information pertaining to the investigation which is relevant to the presentation of their case. Information received pursuant to this Regulation shall be used only for the purpose for which it was requested. This provision shall not preclude the use of information received in the context of one investigation for the purpose of initiating other investigations within the same proceeding in relation to the product under consideration.

Article 8

Provisional measures

1. Provisional measures may be imposed on imports of the product under consideration if a provisional affirmative determination has been made that the product under consideration benefits from pricing or other practices and consequent injury to the Community industry has occurred and the Community interest calls for intervention to prevent such injury. Those measures shall be imposed in accordance with the procedure laid down in Article 13(2).

2. Provisional measures shall be secured by a guarantee and the release of the product under consideration originating in the country engaged in the pricing or other practices for free circulation in the Community shall be conditional upon the provision of such guarantee.

3. The provisional measures shall be imposed no earlier than 60 days from the initiation of the proceedings. Those measures shall be imposed for a maximum period of six months.

Article 9

Termination without measures

1. Where the complaint is withdrawn, the proceeding may be terminated by the Commission unless such termination would not be in the Community interest.

2. Where balancing measures are unnecessary, the proceeding shall be terminated in accordance with the procedure laid down in Article 13(2). Any decision to terminate a proceeding shall be accompanied by a statement of the reasons therefor.

Article 10

Definitive measures

1. Where the facts as finally established show the existence of pricing or other practices and injury caused by imports of the product under consideration into the Community market, and the Community interest calls for intervention in accordance with Article 14, a definitive measure shall be imposed on the product under consideration in accordance with the procedure laid down in Article 13(2).

2. The level of balancing measures imposed to offset the benefit from pricing or other practices as foreseen in paragraph 1 of this Article shall not exceed the level of the benefit found and shall preferably take the form of duties.

3. Where a provisional balancing duty has been applied and where the definitive balancing duty is higher than the provisional duty, the difference shall not be collected. If the definitive balancing duty is lower than the provisional duty, the provisional duty shall be recalculated. Where a final determination is negative, the provisional duty shall not be confirmed.

4. A balancing measure shall remain in force only as long as, and to the extent that it is necessary, to counteract the pricing or other practices which are causing injury.

Article 11

Undertakings

1. Investigations may be terminated without the imposition of provisional or definitive measures upon receipt of satisfactory voluntary undertakings under which:

a) the third country government that implements the pricing or other practices agrees to eliminate or limit the practice or take other measures concerning its effects; or

b) any exporter undertakes to revise its prices or to cease exports to the Community market as long as such exports benefit, directly or indirectly, from pricing or other practices so that the injurious effects of the pricing or other practices are eliminated.

2. Undertakings shall be accepted in accordance with the procedure laid down in Article 13(2).

3. In case of breach or withdrawal of undertakings by any party, a balancing measure shall be imposed in accordance with Article 10, on the basis of the facts available within the context of the investigation which led to the undertaking.

Article 12

Reviews

1. The need for the continued imposition of measures in their initial form may be reviewed, where warranted, on the initiative of the Commission or upon the request of a Member State, or upon a request by any exporter, importer or by the Community producers or the government of the country of origin provided that a period of at least one year has elapsed since the imposition of the definitive measure.

2. Reviews shall be initiated by the Commission acting in accordance with the procedure laid down in Article 13(2). The relevant provisions of Articles 6 and 7 shall apply to reviews under paragraph 1.

3. Reviews shall assess the continued existence of pricing or other practices and/or injury caused thereby together with a determination as to whether the Community interest calls for continued intervention. Reviews may also assess situations where the remedial effects of a balancing measure are being undermined by circumvention of the measure in force, or in cases when the balancing measures have led to no or insufficient movement in resale or subsequent selling prices in the Community market.

4. Where warranted by reviews, balancing measures shall be repealed, amended, extended or maintained, as appropriate in accordance with the procedure laid down in Article 13(2).

Article 13

Committee

1. The Commission shall be assisted by the Advisory Committee instituted by Article 25 of Council Regulation (EC) No 2026/97[4].

2. Where reference is made to this paragraph, the advisory procedure laid down in Article 3 of Decision 1999/468/EC shall apply, in compliance with Article 7(3) thereof.

Article 14

Community interest

A determination under Articles 8(1), 9(2), 10(1) and 10(3) as to whether the Community interest calls for intervention or whether measures are repealed, amended or maintained in accordance with Article 12(4) should be based on an appraisal of all the various interests taken as a whole. Measures may not be applied where it can be clearly concluded that this is not in the Community interest.

Article 15

General provisions

1. Provisional or definitive balancing measures shall be imposed by Regulation, and enforced by Member States in the form, at the level specified and according to the other criteria laid down in the Regulation imposing such measures. If measures other than duties are imposed, the Regulation shall define the precise form of the measures in accordance with the provisions of this Regulation.

2. Special provisions, in particular with regard to the common definition of the concept of origin, as contained in Council Regulation (EEC) No 2913/92[5] may be adopted pursuant to this Regulation.

3. For the purpose of Articles 217(1) and 218(2) of Council Regulation (EEC) No 2913/92[6], provisional and definitive balancing measures shall be treated respectively as provisional and definitive anti-dumping or countervailing duties.

4. Regulations imposing provisional or definitive balancing measures, and Regulations or Decisions accepting undertakings or terminating investigations or proceedings, shall be published in the Official Journal of the European Union .

5. No product shall be subject to balancing measures and to anti-dumping and/or countervailing measures for the purpose of dealing with one and the same situation arising from pricing or other practices within the meaning of Article 3 and dumping and/or subsidisation.

6. The provisions of this Regulation shall be applied without prejudice, and taking into account, as appropriate, any special rules agreed between the Communities and any third country or countries.

Article 16

This Regulation shall enter into force on the [...] day following that of its publication in the Official Journal of the European Union .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

ANNEX

Methodology for calculating the benefit as referred to in Article 4

Methodology for determination of benefit:

The formula below shall be applied, where:

W is the world market price per tonne for the input product during the last calendar year;

X is the world market price per tonne for the reference product by which the price of the input product is determined;

Y is the % discount applied on the world market price for the reference product as provided for in the legal framework of the third country concerned;

Z is the ratio of units of the input product consumed or used in producing one tonne of the product under consideration (see table below) e.g. 5 tonnes of input product used to produce 1 tonne of the product under consideration , then Z = 5.

Formula: [W-(X/100 x (100-Y))] x Z ( X x Y%) x Z = benefit per tonne

The above-mentioned formula shall be applied in calculating the balancing amount of the measure for the products listed in the table below.

Product under consideration | CN code | Ratio of units of the input product (Z) |

Propane | Butanes (mixed) | Light naphtha |

Ethylene | 2901 21 00 | 2.5 | 3.2 | 3.2 |

Propene (propylene) | 2901 22 00 | 6.3 | 5.3 | 1.0 |

Buta-1,3-diene | 2901 24 10 | - | 6.3 | 2.2 |

Cyclohexane | 2902 11 00 | - | - | 2.9 |

Benzene | 2902 20 00 | - | - | 3.1 |

p-Xylene | 2902 43 00 | 0.1 | 0.2 | 3.1 |

Styrene | 2902 50 00 | 0.7 | 1.0 | 1.0 |

Ethylbenzene | 2902 60 00 | 0.7 | 0.9 | 0.9 |

Derivatives containing only nitro or only nitroso groups | 2904 20 00 | - | - | 2.0 |

Ethylene glycol (ethanediol) | 2905 31 00 | 1.5 | 1.9 | 1.9 |

Propylene glycol (propane-1,2-diol) | 2905 32 00 | 3.9 | 3.3 | 0.6 |

Acyclic ethers and their halogenated, sulphonated, nitrated or nitrosated derivatives other than diethyl ether | 2909 19 00 | - | - | 2.0 |

2,2’-Oxydiethanol (diethylene glycol, digol) | 2909 41 00 | 1.8 | 2.3 | 2.3 |

Linear polyethylene having a specific gravity of less than 0,94 | 3901 10 10 | 2.5 | 3.3 | 3.3 |

Other polyethylene having a specific gravity of less than 0,94 | 3901 10 90 | 2.5 | 3.3 | 3.3 |

Polyethylene having a specific gravity of 0,94 or more | 3901 20 10 3901 20 90 | 2.6 | 3.4 | 3.4 |

Polypropylene, in primary forms | 3902 10 00 | 6.4 | 5.4 | 1.0 |

Polystyrene expansible | 3903 11 00 | 0.7 | 1.0 | 1.0 |

Polystyrene | 3903 19 00 | 0.7 | 1.0 | 1.0 |

Acrylonitrile-butadiene-styrene (ABS) copolymers, in primary forms | 3903 30 00 | - | 4.9 | 1.3 |

Styrene-acrylonitrile (SAN) copolymers, in primary forms | 3903 20 00 | 2.6 | 2.4 | 1.1 |

Poly(vinyl chloride), not mixed with any other substances, in primary forms | 3904 10 00 | 1.1 | 1.5 | 1.5 |

[1] OJ C , , p. .

[2] OJ L 184, 17.7.1999, p. 23.

[3] OJ L 302, 19.10.1992, p. 1. Regulation as last amended by the Act of Accession of 2003.

[4] OJ L 288, 21.10.1997, p.1. Regulation as last amended by Council Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, p.12).

[5] OJ L 302, 19.10.1992, p. 1. Regulation as last amended by the Act of Accession of 2003.

[6] OJ L 302, 19.10.1992, p. 1. Regulation as last amended by the Act of Accession of 2003.