# CE2004088EN.01059401.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/594 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/594

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(2004/C 88 E/0607)

WRITTEN QUESTION E-0247/03

by Charles Tannock (PPE-DE) to the Commission

(5 February 2003)

Subject:   Potential abuse of the EU Association Agreement

Subject:

The new EU Association Agreement with Chile, to which the Parliament is soon likely to give its assent, is a wide-ranging and in many ways groundbreaking agreement with a non-candidate state which will be widely welcomed on both sides of the Atlantic.

The Commission has also indicated that in the opinion of the Commission, the agreement is fully compliant with World Trade Organisation (WTO) obligations.

Could the Commission indicate, however, what control mechanisms exist to ensure that tariff-free access is not abused by companies based in countries which are not parties to the agreement using the European Union as a conduit for tariff-free exports to Chile or using Chile as a conduit for tariff-free exports to the European Union?

Answer given by Mr Lamy on behalf of the Commission

(21 February 2003)

(21 February 2003)

The trade pillar of the Union-Chile Association Agreement is indeed one of the most innovative and ambitious agreement ever negotiated by the Community with a non-candidate country. The trade part of the agreement entered into force (on a provisional basis) on 1 February 2003.

As indicated by the Honourable Member, the Commission considers that such an agreement is compatible with the requirements of the WTO, in particular Article XXIV of the General Agreement on Tariffs and Trade (GATT) and Article V of the General Agreement on Trade in Services (GATS).

As in all agreements containing a free trade area in goods, in order to benefit from tariff preferences, a product when exported must be considered as originating either in the Community or in Chile. For this purpose, it must comply with the rules of origin established in a specific annex to the Agreement (Annex III and its appendices). In this respect, when the product exported is not ‘wholly obtained’ in one of the two Parties, goods imported from third countries must undergo sufficient working or processing in compliance with the specific origin rule set out for the final product to be exported (in practical terms this means that it is not possible to export a product from e.g. Brazil to Chile and re-export the same product to the Union under preferential treatment granted under the Union/Chile Agreement).

When goods are deemed to be originating, they must be accompanied at importation by ‘proofs of origin’ clearly defined in the Agreement. Additionally, the above-mentioned Annex III contains provisions on ‘administrative co-operation’, which provide for verification procedures of the originating status of the goods to be carried out in collaboration between the authorities of the two Parties (1).

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Furthermore, possible disputes on verification procedures may be referred in the first place to a specific Committee (Special Committee on Customs Co-operation and Rules of Origin).

Ultimately, the Association Agreement includes a general dispute settlement mechanism in case of infringements of the obligations under the agreement by either party. This system, which is comparable to the WTO dispute settlement mechanism, foresees the recourse to independent arbitrators, whose ruling is compulsory and backed up by trade sanctions.

It is also worth mentioning that the Association Agreement includes a clause (Article 82) on the enforcement of preferential treatment, which addresses the cases of fraud and/or the systematic lack of administrative cooperation related to, inter alia, origin. Under certain conditions and circumstances this may lead to temporary withdrawal of preferential benefits.

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(1)  Annex III, Article 31 paragraph 1: ‘Subsequent verifications of proofs of origin shall be carried out at random or whenever the customs authorities of the importing country have reasonable doubts as to the authenticity of such documents, the originating status of the products concerned or the fulfillment of the other requirements of this Annex’.

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