# EUR-Lex - 52011PC0599 - EN

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# 52011PC0599

**Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL Implementing the bilateral safeguard clause and the stabilisation mechanism for bananas of the Agreement establishing an Association between the European Union and its Member States on the one hand, and Central America on the other /* COM/2011/0599 final - 2011/0263 (COD) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

Grounds for and objectives of the
proposal

This proposal concerns the incorporation in
the European Union law of the safeguard clause and the Stabilisation Mechanism foreseen
in the Association Agreement with Central America.

General context

On 23 April 2007 the Council authorised the
Commission to open negotiations with certain countries of Central America,
which resulted in a Association Agreement with Central America. The Agreement
was initialled on 22 March 2011.

The agreement includes a bilateral
safeguard clause that provides for the possibility to re-instate the MFN
customs duty rate when, as a result of a trade liberalisation, imports take
place in such increased quantities and under such conditions as to cause (or
threaten to cause) serious injury to the Union Industry producing the like or
directly competitive product.

Furthermore, the agreement also
incorporates a Stabilisation Mechanism for Bananas according to which, until 1
January 2020, preferential customs duties can be suspended when a certain
annual import volume is reached.

In order for these measures to be
operational, the safeguard clause and the Stabilisation Mechanism should be
incorporated in European Union law, and the procedural aspects of their
application as well as the rights of interested parties need to be specified.

2.           RESULTS OF CONSULTATIONS WITH THE
INTERESTED PARTIES AND IMPACT ASSESSMENTS

This proposal for an implementing
Regulation is directly derived from the text of the Agreement negotiated with
Central America. Consequently, no separate consultation with interested parties
nor any impact assessment is necessary. It is largely based on existing
implementing regulations.

3.           LEGAL ELEMENTS OF THE PROPOSAL

Summary of the proposed action

The attached proposal for a Regulation of
the European Parliament and of the Council constitutes the legal instrument for
the implementation of the safeguard clause and the Stabilisation Mechanism of
the EU- Central America Association Agreement.

Legal basis

Article 207(2) of the Treaty on the
Functioning of the European Union.

2011/0263 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

Implementing the bilateral safeguard
clause and the stabilisation mechanism for bananas of the Agreement
establishing an Association between the European Union and its Member States on
the one hand, and Central America on the other

THE
EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to
the Treaty on the Functioning of the European Union, and in particular
Article 207(2) thereof,

Having regard to
the proposal from the European Commission,

After transmission
of the draft legislative act to the national parliaments,

Acting in
accordance with the ordinary legislative procedure[1],

Whereas:

(1)
On 23 April 2007 the Council authorised the
Commission to open negotiations with certain countries
of Central America ("Central America") for an Agreement establishing an Association between the European Union
and its Member States on the one hand, and Central America on the other ("the Agreement") on behalf of the Union and its
Member States.

(2)
Those negotiations have been concluded and the
Agreement was initialled on 22 March 2011 and, in accordance with Council
Decision No .../2011/EU of ...[2] the Agreement was signed
on behalf of the European Union on ..., subject to its conclusion at a later
date. On (...), the Agreement obtained the consent of the European Parliament.
Thereafter, the Council adopted Council Decision No.../2011 of ... [3]on
the conclusion of the Agreement.

(3)
It is necessary to lay down the procedures for
applying certain provisions of the Agreement which concern the bilateral safeguard
clause and for applying the Stabilisation Mechanism for Bananas that has been
agreed with Central America

(4)
The terms "serious injury",
"threat of serious injury" and "transition period" as
referred to in Articles 104 and 105 of the Agreement should be defined.

(5)
Safeguard measures should be considered only if
the product in question is imported into the Union in such increased
quantities, in absolute terms or relative to Union production, and under such
conditions as to cause, or threaten to cause, serious injury to Union producers
of like or directly competitive products as laid down in Article 104 of the
Agreement.

(6)
Safeguard measures should take one of the forms
referred to in Article 104(2) of the Agreement.

(7)
The tasks of carrying out investigations and, if
necessary, imposing safeguard measures should be carried out in the most
transparent manner possible.

(8)
There should be detailed provisions on the
initiation of proceedings. The Commission should receive information including
available evidence from the Member States of any trends in imports which
might call for the application of safeguard measures.

(9)
If there is sufficient prima facie evidence to
justify the initiation of a proceeding the Commission should publish a
notice as provided for in Article 111(3) of the Agreement in the Official
Journal of the European Union.

(10)
There should be detailed provisions on the
initiation of investigations, access to and inspections by interested parties of
the information gathered, hearings for the parties involved and the
opportunities for those parties to submit their views as provided for in
Article 111(3) of the Agreement.

(11)
The Commission should notify Central America in
writing of the initiation of an investigation and notify the results of the
investigations to the Association Committee as provided for in Article 116 of
the Agreement.

(12)
It is also necessary, pursuant to 112 of the
Agreement, to set time limits for the initiation of investigations and for
determinations as to whether or not measures are appropriate, with a view to
ensuring that such determinations are made quickly, in order to increase legal
certainty for the economic operators concerned.

(13)
An investigation should precede the application
of any safeguard measure, subject to the Commission being allowed to apply
provisional measures in critical circumstances as referred to in Article 106 of
the Agreement.

(14)
Safeguard measures should be applied only to the
extent, and for such time, as may be necessary to prevent serious injury and to
facilitate adjustment. The maximum duration of safeguard measures should be
determined and specific provisions regarding extension and review of such
measures should be laid down, as referred to in Article 105 of
the Agreement.

(15)
The implementation of the bilateral safeguard
clause of the Agreement requires uniform conditions for the adoption of
provisional and definitive safeguard measures, for the imposition of prior
surveillance measures, for the termination of an investigation without measures
and for suspending temporarily the preferential customs duty established under
the Stabilisation Mechanism for Bananas that has been agreed with Central
America. Those measures should be adopted by the Commission in accordance with
Regulation (EU) No 182/2011 of the European Parliament and of the Council
of 16 February 2011 laying down the rules and general principles
concerning mechanisms for control by Member States of the Commission's exercise
of implementing powers[4].

(16)
It is appropriate that the advisory procedure be
used for the adoption of surveillance and provisional measures given the
effects of those measures and their sequential logic in relation to the
adoption of definitive safeguard measures. Where a delay in the imposition of
measures would cause damage which would be difficult to repair it is necessary
to allow the Commission to adopt immediately applicable
provisional measures.

(17)
This Regulation should apply only to products
originating in the Union or in Central America,

HAVE ADOPTED THIS REGULATION:

Chapter I - Safeguard provision

Article 1
Definitions

For the purposes
of this Regulation:

(a)
"products" means goods originating in
the Union or in a Central American country. A product subject to an
investigation may cover one or several tariff lines or a sub-segment thereof
depending on the specific market circumstances, or any product segmentation
commonly applied in the Union industry;

(b)
"interested parties" means parties
affected by the imports of the product in question;

(c)
"Union industry" means the Union
producers as a whole of the like or directly competitive products, operating
within the territory of the Union, or those Union producers whose collective
output of the like or directly competitive products constitutes a major
proportion of the total Union production of those products. In cases where the
like or directly competitive product is only one of several products that are
made by the producers constituting the Union industry, the industry shall be
defined as the specific operations that are involved in the production of the
like or directly competitive product;

(d)
"serious injury" means a significant
overall impairment in the position of Union producers;

(e)
"threat of serious injury" means
serious injury that is clearly imminent. A determination of the existence of a
threat of serious injury shall be based on verifiable facts and not merely on
allegation, conjecture or remote possibility. Forecasts, estimations and
analyses made on the basis of factors referred to in Article 4(5), should,
inter alia, be taken into account in order to determine the existence of a
threat of serious injury;

(f)
"transition period" means 10 years
from the date of application of the Agreement for any product for which the
Tariff Elimination Schedule provides for a tariff elimination period of less
than 10 years. For the products for which the Tariff Elimination Schedule
provides for a tariff elimination period of 10 or more years, "transition
period" means the tariff elimination period for the product set out in
that Schedule, plus 3 years.

(g)
"Central American country" means
Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua or Panamá.

Article 2
Principles

1.
A safeguard measure may be imposed in accordance
with this Regulation where a product originating in a Central American country is,
as a result of the reduction or the elimination of the customs duties on that
product, being imported into the Union in such increased quantities, in
absolute terms or relative to Union production, and under such conditions as to
cause or threaten to cause serious injury to the Union industry producing a
like or directly competitive product.

2.
Safeguard measures may take one of the following
forms:

(a)
a suspension of further reduction of the rate of
customs duty on the product concerned provided for in the Schedule of the EU
Party set out in Annex I (Elimination of Customs Duties) to the Agreement;

(b)
an increase in the rate of customs duty on the
product concerned to a level which does not exceed the lesser of:

–
the most-favoured-nation ("MFN")
applied rate of customs duty on the product in effect at the time the measure
is taken; or

–
the MFN applied rate of customs duty on the
product in effect on the day immediately preceding the date of entry into force
of the Agreement.

3.
None of the above measures shall be applied
within the limits of the preferential duty free tariff quotas granted by this
Agreement.

Article 3
Initiation of proceedings

1.
An investigation shall be initiated upon request
by a Member State, by any legal person or any association not having legal
personality, acting on behalf of the Union industry, or on the Commission's own
initiative if it is apparent to the Commission that there is sufficient prima
facie evidence, as determined on the basis of factors referred to in
Article 4(5), to justify such initiation.

2.
The request to initiate an investigation shall
contain evidence that the conditions for imposing the safeguard measure set out
in Article 2(1) are met. The request shall generally contain the following
information: the rate and amount of the increase in imports of the product
concerned in absolute and relative terms, the share of the domestic market
taken by increased imports and changes in the level of sales, production,
productivity, capacity utilisation, profits and losses, and employment.

3.
An investigation may also be initiated in the
event that there is a surge of imports concentrated in one or several Member
States, provided that there is sufficient prima facie evidence that the
conditions for initiation are met, as determined on the basis of factors
referred to in Article 4(5).

4.
A Member State shall inform the Commission if
trends in imports from a Central American country appear to call for safeguard
measures. That information shall include the evidence available as determined
on the basis of factors referred to in Article 4(5). The Commission shall pass
that information on to all Member States.

5.
Where it is apparent that there is sufficient
prima facie evidence as determined on the basis of factors referred to in
Article 4(5) to justify the initiation of a proceeding the Commission
shall publish a notice in the Official Journal of the European Union.
Initiation shall take place within one month of the request or information
received pursuant to paragraph 1.

6.
The notice referred to in paragraph 5 shall:

(a)
give a summary of the information received, and
require that all relevant information be communicated to the Commission;

(b)
state the period within which interested parties
may make known their views in writing and submit information, if such views and
information are to be taken into account during the investigation;

(c)
state the period within which interested parties
may apply to be heard orally by the Commission in accordance with Article 4(9).

Article 4
The investigation

1.
Following the initiation of the proceeding, the
Commission shall commence an investigation. The period as set out in paragraph
3 shall start on the day the decision to initiate the investigation is
published in the Official Journal of the European Union.

2.
The Commission may request Member States to
supply information and Member States shall take whatever steps are
necessary in order to give effect to any such request. If that information is
of general interest and is not confidential within the meaning of Article 11,
it shall be added to the non-confidential files as provided for in paragraph 8.

3.
The investigation shall, whenever possible, be
concluded within six months of its initiation. That time limit may be extended
by a further period of three months in exceptional circumstances such as the
involvement of an unusually high number of parties, or complex market
situations. The Commission shall notify all interested parties of any such
extension and explain the reasons which have led to this extension.

4.
The Commission shall seek all information it
considers necessary to make a determination with regard to the conditions set
out in Article 2(1), and, where it considers it appropriate, endeavour to
verify that information.

5.
In the investigation the Commission shall
evaluate all relevant factors of an objective and quantifiable nature having a
bearing on the situation of the Union industry, in particular, the rate and
amount of the increase in imports of the product concerned in absolute and
relative terms, the share of the domestic market taken by increased imports and
changes in the level of sales, production, productivity, capacity utilisation,
profits and losses, and employment. This list is not exhaustive and other
relevant factors may also be taken into consideration by the Commission for its
determination of the existence of serious injury or threat of serious injury,
such as stocks, prices, return on capital employed, cash flow, and other
factors which are causing or may have caused serious injury, or threaten to
cause serious injury to the Union industry.

6.
Interested parties who have come forward
pursuant to Article 3(6)(b) and representatives of the Central American country
concerned may, upon written request, inspect all information made available to
the Commission in connection with the investigation other than internal
documents prepared by the Union authorities or those of the Member States,
provided that that information is relevant to the presentation of their case
and not confidential within the meaning of Article 11 and that it is used
by the Commission in the investigation. Interested parties who have come
forward may communicate their views on the information to the Commission. Those
views shall be taken into consideration where they are backed by sufficient
prima facie evidence.

7.
The Commission shall ensure that all data and
statistics which are used for the investigation are available, comprehensible,
transparent and verifiable.

8.
The Commission shall, as soon as the necessary
technical framework is in place, ensure password‑protected online access
to the non-confidential file ("online platform"), which it shall
manage and through which all information which is relevant and is not
confidential within the meaning of Article 11 shall be disseminated.
Interested parties to the investigation as well as Member States and the
European Parliament shall be granted access to this online platform.

9.
The Commission shall hear the interested
parties, in particular where they have made a written application within the
period laid down in the notice published in the Official Journal of the
European Union, showing that they are actually likely to be affected by the
outcome of the investigation and that there are special reasons for them to be
heard orally.

The Commission shall hear such parties on
further occasions if there are special reasons for them to be heard again.

10.
When information is not supplied within the time
limits set by the Commission, or the investigation is significantly impeded,
findings may be made on the basis of the facts available. Where the Commission
finds that any interested party or third party has supplied it with false or
misleading information, it shall disregard that information and may make use of
the facts available.

11.
The Commission shall notify the Central American
country concerned in writing of the initiation of an investigation.

Article 5
Prior surveillance measures

1.
Where the trend in imports of a product
originating in a Central American country is such that it could lead to one of
the situations referred to in Articles 2 and 3, imports of that product may be
subject to prior surveillance measures.

2.
Prior surveillance measures shall be adopted by
the Commission in accordance with the advisory procedure referred to in Article
12(2).

3.
Prior surveillance measures shall have a limited
period of validity. Unless otherwise provided, they shall cease to be valid at
the end of the second six-month period following the first six months after the
measures were introduced.

Article 6
Imposition of provisional safeguard measures

1.
Provisional safeguard measures shall be applied
in critical circumstances where a delay would cause damage which would be
difficult to repair, pursuant to a preliminary determination on the basis of
the factors referred to in Article 4(5) that there is sufficient prima
facie evidence that imports of a product originating in a Central American
country have increased as the result of the reduction or elimination of a
customs duty in accordance with the Tariff Elimination Schedule of the European
Union set out in Annex I (Elimination of Customs Duties) to the Agreement, and
such imports cause serious injury, or threat thereof, to the Union industry.

Provisional measures shall be adopted by the
Commission in accordance with the advisory procedure referred to in Article 12(2).
In cases of imperative grounds of urgency, including the case referred to in
paragraph 2, the Commission shall adopt immediately applicable provisional
safeguard measures in accordance with the procedure referred to in
Article 12(4).

2.
Where a Member State requests immediate
intervention by the Commission and where the conditions set out in paragraph 1
are met, the Commission shall take a decision within five working days of
receiving the request.

3.
Provisional measures shall be shall not apply
for more than 200 days.

4.
Should the provisional safeguard measures be
repealed because the investigation shows that the conditions set out in Article
2(1) are not met, any customs duty collected as a result of those provisional
measures shall be refunded automatically.

5.
The measures referred to in this Article shall
apply to every product which is put into free circulation after their entry
into force. However, such measures shall not prevent the release for free
circulation of products already on their way to the Union provided that the
destination of such products cannot be changed.

Article 7
Termination of investigation and proceeding without measures

1.
Where the facts as finally established show that
the conditions set out in Article 2(1) are not met, the Commission shall
adopt a decision terminating the investigation and proceeding in accordance
with the examination procedure referred to in Article 12(3).

2.
The Commission shall make public, with due
regard to the protection of confidential information within the meaning of
Article 11, a report setting forth its findings and reasoned conclusions
reached on all pertinent issues of fact and law.

Article 8
Imposition of definitive measures

1.
Where the facts as finally established show that
the conditions set out in Article 2(1) are met, the Commission shall refer
the matter to the Association Committee in accordance with Article 116 of the
Agreement. Where no recommendation has been made by the Association Committee
or no other satisfactory solution has been reached within 30 days of the
referral, the Commission may adopt a decision imposing definitive safeguard
measures in accordance with the examination procedure referred to in Article 12(3).

2.
The Commission shall make public, with due
regard to the protection of confidential information within the meaning of
Article 11, a report containing a summary of the material facts and
considerations relevant to the determination.

Article 9
Duration and review of safeguard measures

1.
A safeguard measure shall remain in force only
for such period of time as may be necessary to prevent or remedy the serious
injury and to facilitate adjustment. That period shall not exceed two years,
unless it is extended under paragraph 3.

2.
A safeguard measure shall remain in force,
pending the outcome of the review under paragraph 3, during any extension
period.

3.
The initial period of duration of a safeguard
measure may exceptionally be extended by up to two years provided it is
determined that the safeguard measure continues to be necessary to prevent or
remedy serious injury and that there is evidence that the Union industry is
adjusting.

4.
Any extension pursuant to paragraph 3 shall be preceded
by an investigation upon a request by a Member State, by any legal person or
any association not having legal personality, acting on behalf of the Union
industry, or on the Commission's own initiative if there is sufficient prima
facie evidence that the conditions laid down in paragraph 3 are met, on the
basis of factors referred to in Article 4(5).

5.
The initiation of an investigation shall be
published in accordance with Article 3(5) and 3(6). The investigation and any
decision regarding an extension pursuant to paragraph 3 shall be done in
accordance with the provisions of Article 4, 7 and 8.

6.
The total duration of a safeguard measure may
not exceed four years, including any provisional measure.

7.
A safeguard measure shall not be applied beyond
the expiry of the transition period, except with the consent of the Central
American country concerned.

8.
No safeguard measure shall be applied to the
import of a product that has previously been subject to such a measure, unless
a period of time equal to half of that during which the safeguard measure was
applied for the immediately preceding period has elapsed.

Article 10

Outermost
regions of the European Union

1.
Where any product originating in a Central
American country is being imported in such increased quantities and under such
conditions as to cause or threaten to cause serious deterioration in the
economic situation of one or several of the Union’s outermost region(s)
referred to in Article 349 of the Treaty on the Functioning of the European
Union, a safeguard measure may be imposed, in accordance with the provisions
set out in this chapter.

Article 11

Confidentiality

1.
Information received pursuant to this Regulation
shall be used only for the purpose for which it was requested.

2.
Neither information of a confidential nature nor
any information provided on a confidential basis received pursuant to this
Regulation shall be disclosed without specific permission from the supplier of
such information.

3.
Each request for confidentiality shall state the
reasons why the information is confidential. However, if the supplier of the
information wishes neither to make it public nor to authorise its disclosure in
general terms or in the form of a summary, and if it appears that the request
for confidentiality is unjustified, the information concerned may be disregarded.

4.
Information shall in any case be considered to
be confidential if its disclosure is likely to have a significantly adverse
effect upon the supplier or the source of such information.

5.
Paragraphs 1 to 4 shall not preclude reference
by the Union authorities to general information and in particular to reasons on
which decisions taken pursuant to this Regulation are based. Those authorities
shall, however, take into account the legitimate interest of natural and legal
persons concerned that their business secrets should not be divulged.

Article 12
Committee procedure

1.
The Commission shall be assisted by the
Committee established by Article 4(1) of Council Regulation (EC) No
260/2009 of 26 February 2009 on the common rules for imports[5].
That Committee shall be a Committee within the meaning of Regulation (EU) No 182/2011.

2.
Where reference is made to this paragraph,
Article 4 of Regulation (EU) No 182/2011 shall apply.

3.
Where reference is made to this paragraph,
Article 5 of Regulation (EU) No 182/2011 shall apply.

4.
Where reference is made to this paragraph,
Article 8 of Regulation (EU) No 182/2011, in conjunction with Article 4
thereof, shall apply.

Chapter II – Stabilisation Mechanism for bananas

Article 13

Stabilisation Mechanism for Bananas

1.
For bananas originating in Central America under
heading 0803.00.19 of the Combined Nomenclature (fresh Bananas, excluding
plantains) and listed under category "ST" in the Schedule of the EU
Party set out in Annex I (Elimination of Customs Duties) to the Agreement, a
stabilisation mechanism shall apply until 1 January 2020.

2.
A separate annual trigger import volume is set for
imports from Central American country for products mentioned in paragraph 1 as
indicated in the table in the Annex to this Regulation. The importation of the
products mentioned in paragraph 1 at the preferential customs duty rate shall,
in addition to the proof of origin established under Annex III (Definition of
the concept of "originating products" and methods of administrative
co-operation) of the Agreement with Central America, be subject to the
presentation of an export certificate issued by the competent authority of the
Republic of the Central American country from which the products are exported. Once the trigger volume is met during the corresponding calendar
year, the Commission may, in accordance with the examination procedure referred
to in Article 12(3), temporarily suspend the
preferential customs duty during that same year for a period of time not
exceeding three months, and not going beyond the end of the calendar year.

3.
In case the Commission decides to suspend the
preferential customs duty applicable, the Commission shall apply the lesser of
the base rate of customs duty or the MFN rate of duty that in application at
the time such action is taken.

4.
In case the Commission applies the actions
mentioned in paragraphs 2 and 3, it shall immediately enter into consultations
with the affected country to analyse and evaluate the situation on the basis of
factual available data.

5.
The measures mentioned in paragraphs 2 and 3 may
be applicable only during the period ending on 31 December 2019.

Chapter III - Final provisions

Article 14
Entry into force

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

It shall apply
from the date of application of the Agreement as provided for in Article 353 thereof.
A notice shall be published in the Official Journal of the European Union
specifying the date of application of the Agreement.

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

Done at Brussels,

For the European Parliament                       For
the Council

The President                                                 The
President

Annex

Table regarding trigger import volumes for the application of the
Stabilisation mechanism for bananas provided for in Appendix 3 of Annex I to the
Agreement.

Year || Trigger import volume, in tonnes

Costa Rica || Panama || Honduras || Guatemala || Nicaragua || El Salvador

Until 31 December 2010 || 1 025 000 || 375 000 || 50 000 || 50 000 || 10 000 || 2 000

1.1-31.12.2011 || 1 076 250 || 393 750 || 52 500 || 52 500 || 10 500 || 2 100

1.1-31.12.2012 || 1 127 500 || 412 500 || 55 000 || 55 000 || 11 000 || 2 200

1.1-31.12.2013 || 1 178 750 || 431 250 || 57 500 || 57 500 || 11 500 || 2 300

1.1-31.12.2014 || 1 230 000 || 450 000 || 60 000 || 60 000 || 12 000 || 2 400

1.1-31.12.2015 || 1 281 250 || 468 750 || 62 500 || 62 500 || 12 500 || 2 500

1.1-31.12.2016 || 1 332 500 || 487 500 || 65 000 || 65 000 || 13 000 || 2 600

1.1-31.12.2017 || 1 383 750 || 506 250 || 67 500 || 67 500 || 13 500 || 2 700

1.1-31.12.2018 || 1 435 000 || 525 000 || 70 000 || 70 000 || 14 000 || 2 800

1.1-31.12.2019 || 1 486 250 || 543 750 || 72 500 || 72 500 || 14 500 || 2 900

1.1.2020 and after || not applicable || not applicable || not applicable || not applicable || not applicable || not applicable

[1]               Position of the European Parliament of 17 February
2011 (not yet published in the Official Journal) and decision of the
Council of ....

[2]

[3]

[4]               OJ L
55, 28.2.2011, p. 13.

[5]               OJ L 84, 31.3.2009,
p. 1.