COUNCIL REGULATION (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 113 thereof,

Having regard to the proposal from the Commission (1),

(1) Whereas, in accordance with its offer made within the context of the United Nations Conference on Trade and Development (Unctad), the European Community opened generalised tariff preferences, commencing in 1971, in respect of certain agricultural and industrial products from developing countries; whereas the initial 10-year period of application of the system of preferences ended on 31 December 1980; whereas a second 10-year period ended on 31 December 1990; whereas the scheme was kept in being, unchanged, until 31 December 1994 when the Community made a new 10-year offer (1995-2004);

(2) Whereas the positive role played by the system in the past in improving access for the developing countries to the markets of preference-giving countries is accepted and justifies its continued existence for a time, in step with other priority measures, including the multilateral liberalisation of trade;

(3) Whereas in a communication to the Council dated 1 June 1994 the Commission set out its recommendations for guidelines for a further 10-year period of application of its scheme of generalised preferences for the period 1995-2004;

(4) Whereas these ten-year guidelines were confirmed in 1995 by the adoption of the first scheme for the 10-year period, opened by Council Regulation (EC) No 3281/94 of 19 December 1994 applying a four-year scheme of generalised tariff preferences (1995-1998) in respect of certain industrial products originating in developing countries (2) and Council Regulation (EC) No 1256/96 of 20 June 1996 applying multiannual schemes of generalised tariff preferences from 1 July 1996 to 30 June 1999 in respect of certain agricultural products originating in developing countries (3);

(5) Whereas the Treaty on European Union has lent a fresh impetus to Community development policy as an aspect of the Union's external policy, by setting a priority objective to the sustainable economic and social development of the developing countries and their smooth and gradual integration into the world economy;

(6) Whereas the Community scheme of generalised preferences should therefore continue in its development-oriented approach, focusing in priority on the countries which have most need of it, i. e. the poorest countries; whereas the scheme should be complementary to World Trade Organisation (WTO) instruments and should foster the integration of developing countries into the world economy and the multilateral trading system; whereas the giving of preferences should accordingly be seen as a transitional measure, to be used as needed and phased out when the need is considered no longer to exist;

(7) Whereas the Community scheme of generalised tariff preferences must continue to aim at a level of liberalisation at which the impact of the preferential margin on the potential volume of preferential trade is neutral overall compared with the previous schemes, without prejudice to special incentive arrangements;

(8) Whereas the Community scheme of generalised tariff preferences must also take account of certain sectors or products which are sensitive for Community industry and agriculture; whereas sensitive sectors should continue to be protected against import surges by beans of a dual mechanism involving a modulation of preferential tariff margins coupled with an emergency safeguard clause;

(9) Whereas in order to improve access to the Community market and increase the actual take-up preferences by moderately developed or less-developed countries, the system of graduation should continue in being;

(10) Whereas sector/country graduation combines a development criterion, expressed as a development index reflecting a country's per capita income and the level of its manufactured exports as compared with those of the Community, with a measurement of relative specialisation expressed as a specialisation index based on the ratio of the beneficiary country's share of total Community imports in general to its share of total Community imports in a given sector; whereas combined application of these two criteria should make it possible to adjust the crude results of the specialisation index, in terms of the sectors to be excluded, in line with the level of development;

(11) Whereas the Community may review the results of the graduation mechanism before the end of 1999 in the light of changes in the world trade and investment climate;

(12) Whereas the sector/country graduation system should also continue to apply to beneficiary countries whose exports of products covered by the generalised system of preferences (GSP) in a given sector exceeded 25 % of all beneficiaries' exports of those products in that sector in the statistical reference year of the previous scheme, irrespective of their level of development;

(13) Whereas countries whose exports to the Community of products covered by the GSP in a given sector did not exceed 2 % of all beneficiary countries' exports to the Community in that sector in the statistical reference year of the previous scheme should remain exempt from the graduation system;

(14) Whereas countries and territories whose per capita income is higher than that of a Member State of the Community and whose development index is higher than 1 should continue to be excluded from the scheme;

(15) Whereas at the Singapore ministerial conference in December 1996 the WTO member countries pledged to carry out an action plan to improve access to their markets for products originating in the least-developed countries;

(16) Whereas, on the basis of a Commission communication of 16 April 1997 and the Council conclusions of 2 June 1997, Council Regulation (EC) No 602/98 (4) granted least-developed countries not party to the Lomé Convention preferences equivalent to those enjoyed by signatories;

(17) Whereas countries undertaking effective programmes to combat drug production and trafficking should remain entitled to the more favourable treatment granted them under the previous scheme; whereas the countries concerned will therefore continue to enjoy duty-free access for industrial and agricultural products provided they continue their efforts to combat drugs; whereas the above treatment should be extended to industrial products from the Central American Common Market countries and Panama;

(18) Whereas Council Regulation (EC) No 1154/98 (5) implemented the special incentive arrangements concerning labour rights and environmental protection provided for in Articles 7 and 8 of Regulations (EC) No 3281/94 and (EC) No 1256/96;

(19) Whereas the special incentive arrangements should be available to countries which are beneficiaries of the general scheme, even in sectors where they may be subject to the graduation mechanism but not in those subject to the clause in Article 5(1) of Regulation (EC) No 3281/94 and (EC) No 1256/96, as these are excluded for reasons of competitive capacity irrespective of the level of development of the country concerned;

(20) Whereas the incentives for labour rights may be granted only to countries which request them in writing and provide proof that they apply legislation incorporating the substance of the standards laid down in ILO Conventions No 87 and No 98 concerning the application of the principles of the right to organise and to bargain collectively and ILO convention No 138 concerning the minimum age for admission to employment;

(21) Whereas the incentives for labour rights should be confined to countries, or in certain cases, to production sectors that have actually taken steps to comply with the ILO Conventions in question; whereas provision must therefore be made for the incentives to apply to certain sectors but not to others;

(22) Whereas the incentives for environmental protection may be granted only to countries that request them and provide proof that they apply legislation incorporating the substance of the standards of the International Tropical Timber Organisation;

(23) Whereas requests for application of the social and environmental incentives must be subject to a publication procedure enabling interested parties to make their views known; whereas the decision on whether to grant this treatment must be taken after the Commission has examined the requests closely and the Generalised Preferences Committee has delivered a favourable opinion;

(24) Whereas operation of the incentive arrangements for labour rights is contingent on certification by the authorities of the beneficiary countries of product conformity with the abovementioned standards and on the application of administrative cooperation procedures similar to those used to verify the origin of goods;

(25) Whereas for the purposes of certification and administrative cooperation procedures, the relevant provisions of Council Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the community Customs Code (6) should be applied; whereas, however, special procedures should be provided in order to safeguard the legitimate interests of importers using the special incentive arrangements;

(26) Whereas if the incentives are to be fully effective the additional preferential margin must be attractive; whereas the margins specified in Regulation (EC) No 1154/98 should accordingly continue to apply;

(27) Whereas the international criteria for the preservation of tropical forests cannot for the time being be used to monitor logging operations; whereas at this stage it is preferable for the purposes of the environmental incentives to vet countries thoroughly in advance, without prejudice to subsequent use of ex post verification as soon as conditions permit; whereas the additional preferential margins available should be the same as those adopted in the social field;

(28) Whereas, however, owing to the great sensitivity of the products referred to in Part 1 of Annex I to this Regulation, the further reduction in duty which may be applied to these products under the special incentive arrangements should be limited to 40 %;

(29) Whereas in certain circumstances it may be appropriate to withdraw temporarily all or part of a country's entitlement under the special incentive arrangements for instance where beneficiary states fail to honour their commitments;

(30) Whereas in certain circumstances it may be appropriate to withdraw temporarily some or all of a country's preferential entitlement; whereas such circumstances include any form of forced labour, exports of goods made by prison labour, inadequate controls on the export or transit of drugs or on money laundering, legislation discriminating against the Community, failure to apply the administrative cooperation methods necessary for the scheme to function properly, failure to comply with obligations entered into in the Uruguay Round to meet agreed market-access objectives, or failure to comply with certain international conventions concerning the conservation and management of fishery resources;

(31) Whereas temporary withdrawal of entitlement must be the culmination of a procedure which gives all interested parties an opportunity to state their views;

(32) Whereas the Community must be able to act swiftly against third countries when its financial interests are damaged as a result of fraud, serious and repeated irregularities or a manifest lack of administrative cooperation in such countries; whereas having notified the Member States and the operators concerned of its reasonable doubts, the Commission should be able to suspend certain preferences provisionally on the basis of sufficient evidence;

(33) Whereas at the end of that procedure the decision on temporary withdrawal as defined above should be taken in the context of overall relations with the beneficiary country concerned; whereas the Community interest may in some cases be better served by having the Council discuss that context, which is likely to include aspects unrelated to trade; whereas the power to decide on the withdrawal of some or all of a country's preferential entitlement should therefore lie with the Council;

(34) Whereas the temporary withdrawal of all tariff preferences in respect of industrial and agricultural products originating in Myanmar should remain in force in accordance with the conditions laid down in Regulation (EC) No 552/97 (7), on account of the use of forced labour there;

(35) Whereas it would be illogical to accord preferences in respect of products subject to anti-dumping or anti-subsidy measures unless such measures reflected the impact of the preferential arrangements;

(36) Whereas the preferential rates of duty to be applied under this Regulation should normally be calculated on the basis of the conventional rate of duty in the Common Customs Tariff for the products concerned; whereas they should, however, be calculated from the autonomous rate of duty where no conventional rate is given for the products concerned or where the autonomous rate is lower than the conventional rate; whereas it is unnecessary to include in the coverage of this Regulation products for which the Common Customs Tariff duty is free; whereas the calculation must in no case be based on duties applied under conventional or autonomous tariff quotas;

(37) Whereas the same methods of calculation should apply to ad valorem rates of duty as well as to the treatment of minimum and maximum duties provided in the Common Customs Tariff; whereas this reduction of duties does not, as a general rule, affect the collection of specific duties added to ad valorem duties;

(38) Whereas the current scheme for agricultural products as set out in Regulation (EC) No 1256/96 should be applied until its due expiry date, that is to say 30 June 1999,

HAS ADOPTED THIS REGULATION:

Article 1

1. The Community scheme of generalised tariff preferences, comprising general arrangements and special incentive arrangements, shall be renewed for the period from 1 July 1999 to 31 December 2001, to apply in accordance with the conditions and arrangements laid down in this Regulation.

2. This Regulation shall apply to products falling within Chapters 1 to 97 of the Common Customs Tariff, excluding Chapter 93, which are listed in Annex I. It shall only apply to the products listed in Annex VII on the conditions laid down in Articles 6 and 7.

3. Access to the arrangements referred to in paragraph 1 shall be restricted to the countries and territories listed in Annex III.

4. Countries or territories which meet the following criteria shall be removed from the list of beneficiary countries or territories in Annex III:

- a per capita gross national product exceeding USD 8 210 for 1995, according to the most recent World Bank figures,

- a development index, calculated in accordance with the formula and figures given in Part 2 of Annex II, greater than 1.

These criteria shall apply cumulatively.

5. In order to be admitted under one of the referential arrangements established by this Regulation, products must comply with a definition of origin adopted in accordance with the procedure laid down in Article 249 of Regulation (EEC) No 2913/92.

6. The removal of a country or territory from the list of countries and territories entitled to generalised preferences by virtue of paragraph 5 shall not affect the possibility of using products originating in that country under the regional cumulation mechanism applicable to all regional groupings referred to in Article 72(3) of Commission Regulation (EEC) No 2454/93, provided that the country has been a member of the regional grouping since the multiannual system of preferences applicable to the product concerned in 1995 entered into force and is not considered to be the country of origin of the final product within the meaning of Article 72(a) of Regulation (EEC) No 2454/93.

TITLE I GENERAL ARRANGEMENTS

Section 1 Modulation mechanism

Article 2

1. The preferential duty applying to products listed in Part 1 of Annex I shall be 85 % of the Common Customs Tariff duty applicable to the product concerned, without prejudice to the provisions of Title II.

2. The preferential duty applying to products listed in Part 2 of Annex I shall be 70 % of the Common Customs Tariff duty applicable to the product concerned, without prejudice to the provisions of Title II.

3. The preferential duty applying to products listed in Part 3 of Annex I shall be 35 % of the Common Customs Tariff duty applicable to the product concerned, without prejudice to the provisions of Title II.

4. Common Customs Tariff duties shall be suspended in their entirety on products listed in Part 4 of Annex I.

Section 2 Graduation mechanism

Article 3

1. Loss of entitlement to the advantages referred to in Article 2 under the graduation mechanism established by the previous scheme shall continue to apply to the countries and sectors listed in Part 1 of Annex II which meet the criteria laid down in Part 2 of Annex II.

2. Products coming under the ECSC Treaty shall remain excluded from the preferential arrangements in the case of countries which were not entitled to them under the previous scheme.

Article 4

1. Loss of entitlement to the advantages referred to in Article 2 under the graduation mechanism shall also continue to apply to the countries listed in Part 1 of Annex II whose exports to the Community of products covered by this scheme in a given sector exceeded 25 % of all beneficiary countries' exports to the Community in that sector in the statistical reference year of the previous scheme.

2. Countries whose exports to the Community of products covered by the scheme in a given sector did not exceed 2 % of all beneficiary countries' exports to the Community in that sector in the statistical reference year of the previous scheme shall continue to be exempt from the graduation mechanism.

Article 5

The Commission shall present a report to the Committee referred to in Article 31 on the application of Articles 3 and 4 by 31 December 1999 and submit appropriate proposals to the Council at the latest by 31 December 2000.

Section 3 Special support arrangements for the least-developed countries

Article 6

For the least-developed countries listed in annex IV, Common Customs Tariff duties shall be suspended in their entirety in respect of the products listed in Annex I and reduced according to the modulation mechanism provided for in Article 2 in respect of the products listed in Annex VII.

Section 4 Special arrangements supporting measures to combat drugs

Article 7

For the countries listed in Annex V, Common Customs Tariff duties shall be suspended in their entirety on the industrial products listed in Annex I falling within Chapters 25 to 97 of the Common Customs Tariff, excluding Chapter 93, and on the agricultural products listed in Annex VII, except for those marked with an asterisk and without prejudice to the procedure described in Article 31(3).

TITLE II SPECIAL INCENTIVE ARRANGEMENTS

Section 1 Common provisions

Article 8

The special incentive arrangements concerning labour rights and environmental protection introduced by the previous scheme are hereby renewed according to the terms and conditions laid down in this Title.

Article 9

The provisions of this Title relating to the special incentive arrangements for the protection of the environment shall apply only to the products originating in the tropical forest listed in Annex VIII.

Article 10

1. The preferential duty applying to agricultural products of Chapters 1 to 24 of the Common Customs Tariff listed in Annex I which comply with the conditions of this Title shall be reduced by an amount equal to:

- 10 % of the Common Customs Tariff duty applicable to the products in Part 1,

- 20 % of the Common Customs Tariff duty applicable to the products in Part 2,

- 35 % of the Common Customs Tariff duty applicable to the products in Part 3,

2. The preferential duty applying to industrial products of Chapters 25 to 97 of the Common Customs Tariff, excluding Chapter 93, which are listed in Annex I and which comply with the conditions of this Title shall be reduced by an amount equal to:

- 15 % of the Common Customs Tariff duty applicable to the products in Part 1,

- 25 % of the Common Customs Tariff duty applicable to the products in Part 2,

- 35 % of the Common Customs Tariff duty applicable to the products in Part 3,

3 (a) The duty applying to agricultural products of Chapters 1 to 24 of the Common Customs Tariff referred to in Article 3(1) which comply with the conditions of this Title shall be reduced by an amount equal to 15 % of the Common Customs Tariff duty applicable to the product in question;

(b) The duty applying to industrial products of Chapters 25 to 97, excluding Chapter 93, referred to in Article 3(1) which comply with the conditions of this Title shall be reduced by an amount equal to 25 % of the Common Customs Tariff duty applicable to the product in question.

4. The reduction in duty referred to in paragraphs 1, 2 and 3 shall not be accorded to the countries and sectors referred to in Article 4(1).

5. The application of the special incentive arrangements shall not result in treatment more favourable than that applied under Article 7 for the products listed in Annex VII.

Section 2 Procedure for granting the special incentive arrangements concerning labour rights

Article 11

1. Without prejudice to the following Articles, the reductions specified in Article 10 shall apply to products originating in the beneficiary countries listed in Annex III on condition that the authorities of those countries have applied to the Commission in writing to take advantage of the special arrangements for their originating products, giving details of:

- their domestic legislation incorporating the substance of the standards laid down in ILO Conventions No 87 and No 98 concerning application of the principles of the right to organise and to bargain collectively and Convention No 138 concerning the minimum age of admission to employment; the full text of such legislation must be attached, together with an official translation into one of the Community languages,

- the measures taken to apply and monitor these provisions effectively, any sectoral restrictions on their application, any breaches observed and a breakdown of such breaches by production sector,

- a commitment by the government of the country in question to take full responsibility for monitoring application of the special arrangements and the relevant administrative cooperation procedures.

2. The Commission shall publish a notice in the Official Journal of the European Communities, announcing that such a request has been made by a beneficiary country and stating that any relevant information concerning the request may be sent to the Commission by any interested natural or legal person; it shall specify the period within which interested parties may make known their views.

Article 12

1. The Commission shall examine the requests submitted by the beneficiary countries and, depending on the content, may put any further questions which it considers relevant.

2. The Commission shall seek whatever information it considers necessary and may check this information where appropriate with the persons referred to in Article 11(2) or any other natural or legal person.

3. The Commission may carry out checks in requesting beneficiary countries, and in cooperation with them, to verify all or part of the information gathered. The Commission shall invite the authorities of such beneficiary countries to cooperate in these investigations. The Commission may be assisted in this task by the Member States.

4. The Commission shall complete the examination of a request within a year of the date of receipt. It may extend this deadline if necessary informing the Committee referred to in Article 31.

5. The Commission shall submit the finding of its examination of the Committee referred to in Article 31.

Article 13

1. The Commission shall decide, in accordance with the procedure laid down in Article 32, either to grant the special incentive arrangements to products originating in the requesting country on condition that the monitoring and administrative cooperation arrangements defined in the following Articles of this Title are observed or, if it considers that the requesting country's legislative, implementing and monitoring provisions do not ensure effective application of ILO Conventions No 87, No 98 and No 138, not to grant them.

2. Where the special arrangements cannot be applied in accordance with the procedure laid down in paragraph 1, the Commission may decide in accordance with the procedure laid down in Article 32 that the special arrangements be granted to some sectors if, after the examination provided for in Article 12, it considers that ILO Conventions No 87, No 98 and No 138 are effectively applied only in those sectors.

3. Applicant countries shall be notified by the Commission of decisions taken pursuant to paragraphs 1 and 2 and of the date on which they enter into force.

4. In particular, if the Commission decides not to grant the special incentive arrangements to a country or to exclude some sectors, it shall explain the reasons for its decision to the applicant country if that country so requests. Such dialogue shall be conducted in close coordination with the committee referred to in Article 31.

Section 3 Monitoring procedure and administrative cooperation methods for the special incentive arrangements concerning labour rights

Article 14

1. Products referred to in Article 10 originating in countries which have been notified of a decision granting them entitlement to the special incentive arrangements shall be admitted under the arrangements provided for in Article 10 from the date of entry into force of that decision on presentation of a statement by the beneficiary country's competent authorities, duly identified during appraisal of the request, certifying that the products in question and their components have been manufactured in that country, or in a country entitled to regional cumulation within the meaning of Article 72 of Regulation (EEC) No 2454/93, under conditions complying with the domestic legislation referred to in the first indent of Article 11(1) and are therefore eligible for the special incentive arrangements.

2. The statement referred to in paragraph 1 shall take the following form, as appropriate:

'ILO Conventions No 87, No 98, No 138 - Title II of Regulation (EC) No 2820/98`,

and shall be entered in box 4 of the certificate of origin form A or on the invoice declaration provided for in Article 90 of Regulation (EEC) No 2454/93. This statement shall be validated by a stamp of the beneficiary country authority referred to in paragraph 1, in accordance with the provisions of Article 93 of Regulation (EEC) No 2454/93.

3. In the case of the products referred to in Article 3, the certificate of origin form A or the invoice declaration shall be valid solely in respect of the special incentive arrangements and not for any other preferential treatment.

Article 15

1. The provisions of Article 81(3) to (6), Article 84 and Articles 93 to 95 of Regulation (EEC) No 2454/93 shall apply mutatis mutandis to the statements referred to in Article 14.

2. The issuing authorities for the statements referred to in Article 14 may be different from those for certificates of origin form A.

3. Having regard to Article 94(5) of Regulation (EEC) No 2454/93, the Commission, in cooperation with the Committee referred to in Article 31, shall draw up a non-exhaustive list of criteria specifying cases of reasonable doubt which may arise for these incentives, at the latest by the time a request for special preferences is granted. The Commission shall publish this list in the Official Journal of the European Communities.

4. (a) The customs authorities in the Community shall inform the Commission, which shall immediately publish a notification in the Official Journal of the European Communities:

- that reasonable doubt exists about the entitlement to the special incentives, making clear the products, producers and exporters to which it applies, when a second communication is sent under Article 94(5) of Commission Regulation (EEC) No 2454/93 which relates to the benefits granted in this Regulation, or

- that a particular product from particular producers and exporters is not entitled to the special incentives, when it has been so established using the procedure in Article 94 of Regulation (EEC) No 2454/93.

(b) The part of any customs debt which corresponds to the benefits granted under this Title shall be considered not to be incurred unless it is incurred after the date of publication of the notification referred to in subparagraph (a) and the debt concerns a product, producer and exporter specially mentioned therein, or unless the conditions justifying the application of the second sentence of Article 221(3) of Regulation (EEC) No 2913/92 exist.

Section 4 Procedure for granting the special incentive arrangements concerning environmental protection

Article 16

1. Without prejudice to the following Articles, the reductions specified in Article 10 shall apply to products originating in the beneficiary countries listed in Annex III on condition that the authorities of those countries have applied to the Commission in writing to take advantage of the special incentive scheme for their originating products, giving details of:

- their domestic legislation incorporating the substance of the ITTO standards; the full text of such legislation must be attached, together with an authentic translation into one of the Community languages,

- the measures taken to implement that legislation,

- their commitment to maintain that legislation and the implementing measures.

2. The Commission shall publish a notice in the Official Journal of the European Communities announcing that such a request has been made by a beneficiary country and stating that any relevant information concerning the request may be sent to the Commission by any interested natural or legal person; it shall specify the period within which interested parties may make known their views.

Article 17

1. The Commission shall examine the requests submitted by the beneficiary countries and, depending on the content, may put any further questions which it considers relevant.

2. The Commission shall seek whatever information it considers necessary and may check this information where appropriate with the persons referred to in Article 16(2) or any other natural or legal person.

3. The Commission may carry out checks in requesting beneficiary countries, and in cooperation with them, to verify all or part of the information gathered. The Commission shall invite the authorities of such beneficiary countries to cooperate in these investigations. The Commission may be assisted in this task by the Member States.

4. The Commission shall complete the examination of a request within a year of the date of receipt. It may extend this deadline if necessary, informing the Committee referred to in Article 31.

5. The Commission shall submit the findings of its examination to the Committee referred to in Article 31.

Article 18

1. The Commission shall decide in accordance with the procedure laid down in Article 32:

- either to grant the special incentive arrangements to products originating in the requesting country,

- or, if it considers that the requesting country's legislation is not sufficient to ensure effective application of the substance of the ITTO standards, not to grant the special incentive arrangements to that country.

2. Requesting countries shall be notified by the Commission of decisions taken pursuant to paragraph 1 and of the date on which they enter into force.

3. In particular, if the Commission decides not to grant the special incentive arrangements to a country, it shall explain the reasons for its decision to the applicant country. Such dialogue shall be conducted in close coordination with the Committee referred to in Article 31.

Section 5 Monitoring procedure and administrative cooperation methods for the special incentive arrangements concerning environmental protection

Article 19

1. Certificates of origin form A issued for products referred to in Article 10 and the invoice declarations provided for in Article 90 of Regulation (EEC) No 2454/93 shall bear the following endorsement, as appropriate:

'Environmental clause - Title II of Regulation (EC) No 2820/98`.

2. In the case of the products referred to in Article 3, the certificate of origin form A or the invoice declaration shall be valid solely in respect of the special incentive arrangements and not for any other preferential treatment.

Section 6 Other provisions common to the special incentive arrangements

Article 20

1. Without prejudice to the second subparagraph of Article 94(2) of Regulation (EEC) No 2454/93, all or part of a country's entitlement to the special incentive arrangements may be temporarily withdrawn if there is sufficient evidence that that country has not fulfilled its obligations within the meaning of Articles 11 and 16. Such total or partial withdrawal shall be without prejudice to the possible application of Article 22.

2. The withdrawal decision referred to in paragraph 1 shall be adopted in accordance with the procedure laid down in Article 32.

Article 21

For the highly sensitive products referred to in Part 1 of Annex I, the reduction in duty resulting from the application of Article 10 may not exceed 40 %.

TITLE III REINTRODUCTION OF COMMON CUSTOMS TARIFF DUTIES AND RELATED PROCEDURES

Section 1 Temporary withdrawal clause

Article 22

1. The arrangements provided for by this Regulation may at any time be temporarily withdrawn in whole or in part, in the following circumstances:

(a) practice of any form of slavery or forced labour as defined in the Geneva Conventions of 25 September 1926 and 7 September 1956 and International Labour Organisation Conventions No 29 and No 105;

(b) export of goods made by prison labour;

(c) manifest shortcomings in customs controls on export or transit of drugs (illicit substances or precursors), or failure to comply with international conventions on money laundering;

(d) fraud or failure to provide administrative cooperation as required for the verification of certificates of origin form A;

(e) in manifest cases of unfair trading practices on the part of a beneficiary country. The withdrawal shall be in full compliance with the WTO rules;

(f) manifest cases of infringement of the objectives of international conventions such as NAFO, NEAFC, ICCAT and NASCO concerning the conservation and management of fishery resources.

2. Temporary withdrawal shall not be automatic, but shall follow the procedural requirements laid down in the following Articles, including Article 26(3).

Article 23

1. The circumstances referred to in Article 22(1) which might make it necessary to resort to temporary withdrawal of preferences may, as regards subparagraphs (d) and (f), be identified by the Commission and, as regards subparagraphs (a) to (f) be brought to the Commission's attention by a Member State, or by any natural or legal person, or association not endowed with legal personality, which can show an interest in such withdrawal. The Commission shall communicate the information immediately to all Member States.

2. Consultations may be initiated either at the request of a Member State or at the Commission's request. They shall take place within eight working days of receipt by the Commission of the information referred to in paragraph 1 and in any event before adoption of any Community measures withdrawing preferences.

3. The consultations shall take place in the Committee referred to in Article 31, which shall be convened by its chairman, who shall communicate all pertinent information to the Member States as soon as possible.

4. The consultations shall be concerned inter alia with analysis of the circumstances referred to in Article 22 and the measures to be taken.

Article 24

1. Where the Commission finds that there is sufficient evidence to establish that a beneficiary country meets the conditions laid down in Article 22(1)(d), it may take action against that country to suspend in whole or in part the arrangements provided for in this Regulation for a period of three months, renewable once only, provided that is has first:

- informed the Committee referred to in Article 31 of its intentions,

- called on the Member States to take such precautionary measures as are necessary in order to safeguard the Community's financial interests,

- published a notice in the Official Journal of the European Communities stating that there are grounds for reasonable doubts about the application of the preferential arrangements by the beneficiary country concerned which may call into question its right to continue enjoying the benefits granted by this Regulation.

2. A Member State may refer the Commission's decision to the Council within 10 days. The Council, acting by qualified majority, may adopt a different decision within 30 days.

3. On conclusion of the period of suspension, the Commission shall decide either to:

- terminate the provisional suspension measure following consultation of the Committee referred to in Article 31, or

- initiate the consultations referred to in Article 23(2) with a view to temporary withdrawal of the preferences provided for in Article 22(2). Pending the outcome of such consultations and of any investigation initiated pursuant to Article 25, the Commission may decide to extend the suspension measure in accordance with the procedure provided for in Article 32.

Article 25

1. Where the Commission finds, following the consultations referred to in Article 23, that there is sufficient evidence to justify initiation of an investigation, it shall:

(a) announce the initiation of an investigation in the Official Journal of the European Communities and notify the country concerned thereof; such announcement shall give a summary of the information received and state that all relevant information is to be communicated to the Commission, specifying the period within which interested parties may make known their views in writing;

(b) commence the investigation, lasting up to one year, in cooperation with the Member States and in consultation with the Committee referred to in Article 31. The duration of the investigation may be extended if need be under the same procedure.

2. The Commission shall seek all information it deems to be necessary and shall, where it considers this appropriate, after consulting the Committee referred to in Article 31, verify the information with economic operators and the competent authorities of the beneficiary country concerned. For this purpose the Commission may dispatch its own experts to establish on the spot the truth of the allegations made by the persons referred to in Article 23(1). The Commission shall provide the competent authorities of the beneficiary country concerned with every opportunity to cooperate as necessary in the conduct of these enquiries.

3. The Commission may also be assisted by officials of the Member State on whose territory verification might be sought, if the said Member State so requests.

4. The Commission may hear the interested parties. It shall so hear them if they have, within the period prescribed in the notice published in the Official Journal of the European Communities, made a written request for a hearing showing that they are likely to be affected by the result of the investigation and that there are particular reasons why they should be heard orally.

5. Where information requested by the Commission is not provided within a reasonable period or the investigation is significantly impeded, findings may be made on the basis of the facts available.

Article 26

1. When the investigation is complete, the Commission shall report the findings to the Committee referred to in Article 31.

2. If the Commission considers temporary withdrawal of preference to be unnecessary, it shall, after consulting the Committee referred to in Article 31, publish a notice in the Official Journal of the European Communities, announcing the termination of the investigation and setting out its main conclusions.

3. If the Commission considers temporary withdrawal of preference to be necessary, it shall submit an appropriate proposal to the Council, which shall decide within 30 days on it by a qualified majority.

Section 2 Anti-dumping clause

Article 27

Preferences shall normally be granted to products which are subject to anti-dumping or anti-subsidy measures under Regulation (EC) No 384/96 (8) and (EC) No 2026/97 (9) as amended, unless it can be shown that those measures were based on injury caused and on prices which did not reflect the preferential tariff arrangements granted to the country concerned. To that end, the Commission shall publish in the Official Journal of the European Communities a list of products and countries to which preference is not granted.

Section 3 Safeguard clause

Article 28

1. Where a product originating in one of the countries or territories listed in Annex III is imported on terms which cause or threaten to cause serious difficulties to a Community producer of like or directly competing products, Common Customs Tariff duties on that product may be reintroduced at any time at the request of a Member State or on the Commission's own initiative.

2. The Commission shall announce the opening of an investigation in the Official Journal of the European Communities. The announcement shall provide a summary of the information received and state that any useful information should be communicated to the Commission; it shall specify the period within which interested parties may make their views known in writing.

3. In examining the possible existence of serious difficulties the Commission shall take account, inter alia, of the factors listed in Annex VI where the information is available.

4. The Commission shall take the decision within 30 working days of consulting the Committee referred to in Article 31. A Member State may refer the Commission's decision to the Council within 10 days. The Council, acting by a qualified majority, shall have 30 days within which to adopt a different decision.

5. The beneficiary countries concerned shall be informed of such measures before the said measures become effective.

6. Where exceptional circumstances requiring immediate action make either notification or examination impossible, the Commission may, after so informing the Member States, implement any preventive measure which is strictly necessary and which satisfies the conditions laid down in paragraph 1 to deal with the situation.

7. Nothing in this Article shall affect the application of safeguard clauses adopted as part of the common agricultural policy under Article 43 of the Treaty, or as part of the common commercial policy under Article 113 of the Treaty, or any other safeguard clauses which may be applied.

TITLE IV COMMON PROVISIONS

Article 29

1. For the application of preferential duty, the expression 'Common Customs Tariff` shall be taken to mean the lowest rate of duty appearing in column 3 or column 4, taking into account the periods of application mentioned or referred to in that column, of the second part of Annex I of Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (10); a duty set up within the framework of a tariff quota shall not be reduced.

2. Subject to paragraph 3, the final rate of preferential duty calculated in accordance with this Regulation shall be rounded down to the first decimal place.

3. Where the result of calculating the rate of preferential duty in application of paragraph 2 is one of the following, the preferential rate shall be considered a full exemption:

- 1 % or less in the case of ad valorem duties, or

- EUR 0,5 or less per individual euro amount in the case of specific duties.

4. Save as otherwise provided in the Annexes, with respect to products falling within Chapters 1 to 24, wherever customs duties comprise an ad valorem duty plus one or more specific duties, the preferential reduction is limited to the ad valorem duty. Where the customs duties comprise an ad valorem duty with a minimum and a maximum duty, the preferential reduction also applies to that minimum and maximum duty. Where they comprise more than one specific duty, the preferential reduction applies to all of these.

5. Changes to Annexes I, II, VII and VIII made necessary by amendments to the Combined Nomenclature shall be adopted in accordance with the procedure laid down in Article 32(1) and (2).

Article 30

1. Within six weeks of the end of each quarter the Member States shall send the Statistical Office of the European Communities their statistical data on goods admitted for free circulation during that quarter under the tariff preferences provided for in this Regulation. The said data, supplied by reference to Combined Nomenclature codes and, where applicable, TARIC codes, shall show, by country of origin, values, quantities and any supplementary units required in accordance with the definitions in Council Regulation (EC) No 1172/95 (11) and Commission Regulation (EC) No 840/96 (12).

2. The Member States shall forward to the Commission, at its request, and by the 11th day of each month at the latest, details of the quantities of products admitted under these arrangements during the previous months. The Member States and the Commission shall cooperate closely to ensure that this provision is complied with.

Article 31

1. The Generalised Preferences Committee created by Article 17 of Council Regulation (EC) No 3281/94, hereinafter referred to as 'the Committee`, may examine any matter relating to the application of this Regulation which is raised by its chairman either on his own initiative or at the request of a Member State's representative.

2. On the basis of an annual report from the Commission, it shall examine the extent to which the principle of neutrality of the effects of this scheme has been observed and any steps being considered by the Commission, either in accordance with the procedure laid down in Article 32 or through a proposal submitted to the Council, to ensure proper observance thereof.

3. On the basis of an annual report from the Commission, it shall also examine the effects of the special arrangements with regard to drugs, including the progress made by the countries listed in Annex V in the fight against drugs and, if progress is insufficient, any measures which the Commission is considering taking, in accordance with the procedure laid down in Article 32 and after consulting the country concerned, to suspend in whole or in part the application of Article 7.

4. On the basis of an annual report from the Commission, it shall also examine the effects of the special incentive arrangements, including the progress made by the beneficiary countries and the measures being considered to remedy reported shortcomings. Those measures shall be adopted in accordance with the procedures laid down in Article 32.

Article 32

1. The Commission representative shall submit to the Committee a draft of the measures to be taken. The committee shall deliver its opinion on the draft within a time limit which the chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 148(2) of the Treaty for the adoption of decisions that the Council is called on to take on a proposal from the Commission. During votes within the Committee, the votes of the representatives of the Member States shall be weighted as set out in the Article referred to above. The chairman shall not vote.

2. (a) The Commission shall adopt the measures envisaged if they are in accordance with the opinion of the Committee.

(b) If the measures envisaged are not in accordance with the opinion of the Committee, or if no opinion is delivered, the Commission shall without delay submit to the Council a proposal relating to the measures to be taken. The Council shall act by a qualified majority.

(c) If, within three months of referral to the Council, the Council has not acted, the proposed measures shall be adopted by the Commission.

TITLE V FINAL PROVISIONS

Article 33

1. The Commission shall adopt the necessary budget implementation measures to ensure appropriate technical assistance to beneficiary countries, in particular the least-developed countries, to help them take advantage of the arrangements and improve their access to international trade in general, including through the use of computerised means.

2. The Commission shall also adopt the necessary budget implementation measures for the application of all provisions under Titles II and III of this Regulation.

Article 34

1. Applications made under Articles 3 or 11 of Regulation (EC) No 1154/98 shall be considered as applications made under Articles 11 and 16 respectively of this Regulation.

2. Regulation (EC) No 3281/94 shall be extended until 30 June 1999 and Annex I thereof replaced by those points of Annex I of this Regulation relating to Chapters 25 to 97 of the Combined Nomenclature. Annex V of Regulation (EC) No 3281/94 shall be replaced by Annex V hereto.

3. The period of validity of Article 17 of Regulation (EC) No 3281/94 shall be extended until the date of expiry of this Regulation.

4. Council Regulation (EC) No 552/97 of 24 March 1997 temporarily withdrawing access to generalised tariff preferences from the Union of Myanmar, which refers to Regulations (EC) No 3281/94 and (EC) No 1256/96 shall be considered to refer, mutatis mutandis, to this Regulation.

Article 35

1. This Regulation shall enter into force on 1 January 1999.

2. It shall apply from 1 July 1999 to 31 December 2001, except for Article 34(2) which shall apply from 1 January 1999.

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

Done at Brussels, 21 December 1998.

For the Council

The President

M. BARTENSTEIN

(1) OJ C 362, 24.11.1998, p. 1.

(2) OJ L 348, 31.12.1994, p. 1. Regulation as last amended by Regulation (EC) No 602/98 (OJ L 80, 18.3.1993, p. 1).

(3) OJ L 160, 29.6.1996, p. 1. Regulation as last amended by Regulation (EC) No 602/98 (OJ L 80, 18.3.1998, p. 1).

(4) OJ L 80, 18.3.1998, p. 1.

(5) OJ L 160, 4.6.1998, p. 1.

(6) OJ L 253, 11.10.1993, p. 1. Regulation as last amended by Regulation (EC) No 1427/97 (ET L 196, 24.7.1997, p. 31).

(7) OJ L 85, 27.3.1997, p. 8.

(8) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 905/98 (OJ L 128, 30.4.1998, p. 18).

(9) OJ L 288, 21.10.1997, p. 1.

(10) OJ L 256, 7.9.1987, p. 1. Regulation as last amended by Regulation (EC) No 2261/98 (OJ L 292, 30.10.1998, p. 1).

(11) OJ L 118, 25.5.1995, p. 10. Regulation as last amended by Regulation (EC) No 374/98 (OJ L 48, 19.2.1998, p. 6).

(12) OJ L 114, 8.5.1996, p. 7.

ANNEX (1) (2)

PRODUCT SENSITIVITY CATEGORIES (3)

PART 1

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PART 2

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PART 3

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PART 4

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(1) With respect to products falling within Chapters 1 to 24, wherever customs duties comprise an ad valorem duty plus one or more specific duties, the preferential reduction is limited to the ad valorem duty. Where the customs duties comprise an ad valorem duty with a minimum and a maximum duty, the preferential reduction also applies to that minimum and maximum duty. Where they comprise more than one specific duty, the preferential reduction applies to all of these.

(2) Preferences are not to be granted in respect of products of Chapter 3 and CN codes 1604, 1605 and 1902 20 10, originating in Armenia, Azerbaijan, Belarus, Georgia, Greenland, Kazakhstan, Kyrgyzstan, Moldova, Uzbekistan, Russia, Tajikistan, Turkmenistan, Ukraine.

(3) Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together. Products qualifying under the ordinary tariff arrangements for exemption or total temporary suspension of the Common Customs Tariff duties are included only for reasons of simplification.

ANNEX II

PART I

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PART 2 Identification of countries and sectors referred to in Article 3

I. Classification of beneficiary countries by development index

The development index represents each country's overall level of industrial development compared with that of the European Union. It is based on the following formula, which combines per capita income with the level of manufactured exports:

>NUM>{log[(Yi/POPi)/(Yue/POPue)]+log[Xi/Xue]}

>DEN>2

in which:

Y = the beneficiary country's income,

Yue = the European Union's income,

POPi = the beneficiary country's population,

POPue = the population of the European Union,

Xi = the value of the beneficiary country's manufactured exports,

Xue = the value of the European Union's manufactured exports.

Using this formula, an index of 0 means the beneficiary's level of industrial developments is equal to that of the European Union.

Figures for income and population are taken from World Bank statistics (World Development Report 1993) and those for manufactured exports from the Unctad Handbook of International Trade and Development Statistics (1992).

II. Classification of beneficiary countries by relative sectoral specialisation index

A beneficiary country's specialisation index is derived from the relationship between the proportion of imports in a determined sector coming from this country within the total amount of Community imports in this sector, on the one hand, and on the other hand, this country's share of the total Community imports.

III. Combining the development and specialisation indexes

The combination of these two indexes determines how Article 3 will be applied to each beneficiary country.

For countries with a development index greater than -1, Article 3 will apply when the specialisation index equals or exceeds 1.

For countries with a development index between -1 and -1,23, Article 3 will apply when the specialisation index equals or exceeds 1,5.

For countries with a development index between -1,23 and -1,70, Article 3 will apply when the specialisation index equals or exceeds 5.

For countries with a development index between -1,70 and -2, Article 3 will apply when the specialisation index equals or exceeds 7.

Article 3 will not apply to countries with a development index of less than -2.

ANNEX III

List of beneficiary countries and territories enjoying generalised tariff preferences (1*)

A. INDEPENDENT COUNTRIES

AL Albania

UA Ukraine

BY Belarus

MD Moldova

RU Russia

GE Georgia

AM Armenia

AZ Azerbaijan

KZ Kazakhstan

TM Turkmenistan

UZ Uzbekistan

TZ Tajikistan

KG Kyrgyzstan

HR Croatia (2)

BA Bosnia and Herzegovina (3)

XM Former Yugoslav Republic of Macedonia (4)

MA Morocco

DZ Algeria

TN Tunisia

LY Libya

EG Egypt

SD Sudan (5)

MR Mauritania (6)

ML Mali (7)

BF Burkina Faso (8)

NE Niger (9)

TD Chad (10)

CV Cape Verde (11)

SN Senegal

GM Gambia (12)

GW Guinea-Bissau (13)

GN Guinea (14)

SL Sierra Leone (15)

LR Liberia (16)

CI Côte d'Ivoire

GH Ghana

TG Togo (17)

BJ Benin (18)

NG Nigeria

CM Cameroon

CF Central African Republic (19)

CQ Equatorial Guinea (20)

ST São Tomé and Príncipe (21)

GA Gabon

CG Congo

CD Democratic Republic of Congo (22)

RW Rwanda (23)

BI Burundi (24)

AO Angola (25)

ET Ethiopia (26)

ER Eritrea (27)

DJ Djibouti (28)

SO Somalia (29)

KE Kenya

UG Uganda (30)

TZ Tanzania (31)

SC Seychelles and dependencies

MZ Mozambique (32)

MG Madagascar (33)

MU Mauritius

KM Comoros (34)

ZM Zambia (35)

ZW Zimbabwe

MW Malawi (36)

ZA South Africa

NA Namibia

BW Botswana

SZ Swaziland

LS Lesotho (37)

MX Mexico

GT Guatemala (38)

BZ Belize

HN Honduras (39)

SV El Salvador (40)

NI Nicaragua (41)

CR Costa Rica (42)

PA Panama (43)

CU Cuba

KN St Kitts and Nevis

HT Haiti (44)

BS Bahamas

DO Dominican Republic

AG Antigua and Barbuda

DM Dominica

JM Jamaica

LC St Lucia

VC St Vincent

BB Barbados

TT Trinidad and Tobago

GD Grenada

CO Colombia (45)

VE Venezuela (46)

GY Guyana

SR Suriname

EC Ecuador (47)

PE Peru (48)

BR Brazil

CL Chile

BO Bolivia (49)

PY Paraguay

UY Uruguay

AR Argentina

CY Cyprus

LB Lebanon

SY Syria

IQ Iraq

IR Iran

JO Jordan

SA Saudi Arabia

KW Kuwait

BH Bahrain

QA Qatar

AE United Arab Emirates

OM Oman

YE Yemen (50)

AF Afghanistan (51)

PK Pakistan

IN India

BD Bangladesh (52)

MV Maldives (53)

LK Sri Lanka

NP Nepal (54)

BT Bhutan (55)

MM Myanmar (formerly Burma) (56)

TH Thailand

LA Laos (57)

VN Vietnam

KH Cambodia (58)

ID Indonesia

MY Malaysia

BN Brunei

PH Philippines

MN Mongolia

CN China

PG Papua New Guinea

NR Nauru

SB Solomon Islands (59)

TV Tuvalu (60)

KI Kiribati (61)

FJ Fiji

VU Vanuatu (62)

TO Tonga

WS Samoa (63)

FM Federated States of Micronesia

MH Marshall Islands

PW Palau

B. COUNTRIES AND TERRITORIES dependent or administered or for whose external relations Member States of the Community or third countries are wholly or partly responsible

GI Gibraltar

SH St Helena and St Helena dependencies

IO British Indian Ocean Territories

YT Mayotte

GL Greenland

PM St Pierre and Miquelon

BM Bermuda

AI Anguilla

TC Turks and Caicos Islands

VI Virgin Islands of the United States

KY Cayman Islands

VG British Virgin Islands

MS Montserrat

AW Aruba

AN Netherlands Antilles

FK Falklands Islands

MO Macao

XO Australia Oceania (Christmas Island, Cocos (Keeling) Islands, Heard and McDonald Islands, Norfolk Island)

NC New Caledonia and dependencies

XA American Oceania (64)

WF Wallis and Futuna (65)

PN Pitcairn

XZ New Zealand Oceania (Tokelau and Niue Islands, Cook Islands)

PF French Polynesia

XR Polar Regions (French Southern and Antarctic Territories, Australian Antarctic Territories, British Antarctic Territories, South Georgia and South Sandwich Islands)

Note: The above lists may be amended subsequently to take account of changes in the international status of countries or territories.

(1*) The code preceding the name of each beneficiary country is that given in the 'Geonomenclature` (Regulation (EC) No 2645/98 (OJ L 335, 10.12.1998, p. 22).

(2) Preferences for these countries are limited to the agricultural products in Chapters 1 to 24 of the Combined Nomenclature listed in Annex I.

(3) This country is also included in Annex IV.

(4) This country is also included in Annex V.

(5) American Oceania includes: American Samoa, Guam, minor US outlying islands (Baker, Howland, Jarvis, Johnston, Kingman Reef, Midway, Palmyra and Wake) (OJ L 335, 10.12.1998, p. 22).

ANNEX IV

List of least-developed developing countries

SD Sudan

MR Mauritania

ML Mali

BF Burkina Faso

NE Niger

TD Chad

CV Cape Verde

GM Gambia

GW Guinea-Bissau

GN Guinea

SL Sierra Leone

LR Liberia

TG Togo

BJ Benin

CF Central African Republic

GQ Equatorial Guinea

ST São Tomé and Príncipe

CD Democratic Republic of Congo

RW Rwanda

BI Burundi

AO Angola

ET Ethiopia

ER Eritrea

DJ Djibouti

SO Somalia

UG Uganda

TZ Tanzania

MZ Mozambique

MG Madagascar

KM Comoros

ZM Zambia

MW Malawi

LS Lesotho

HT Haiti

YE Yemen

AF Afghanistan

BD Bangladesh

MV Maldives

NP Nepal

BT Bhutan

MM Myanmar (formerly Burma)

LA Laos

KH Cambodia

SB Solomon Islands

TV Tuvalu

KI Kiribati

VU Vanuatu

WS Samoa

ANNEX V

List of countries referred to in Article 7

Andean Group

CO Colombia

VE Venezuela

EC Ecuador

PE Peru

BO Bolivia

Central American Common Market

GT Guatemala

HN Honduras

SV El Salvador

NI Nicaragua

CR Costa Rica

PA Panama

ANNEX VI

Factors to be taken into consideration for the purposes of Article 29(3)

- Reduction in the market share of Community producers

- Reduction in their production

- Increase in their stocks

- Closure of their production capacity

- Bankruptcies

- Low profitability

- Low rate of capacity utilisation

- Employment

- Trade

- Prices

ANNEX VII (1) (2) (only concerns products eligible for the conditions provided in Articles 6 and 7)

PRODUCT SENSITIVITY CATEGORIES (3)

PART 1

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PART 2

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PART 3

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PART 4 (4)

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(1) Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description together.

(2) With respect to products falling within Chapters 1 to 24, wherever customs duties comprise an ad valorem duty plus one or more specific duties, the preferential reduction is limited to the ad valorem duty. Where the customs duties comprise an an valorem duty with a minimum and a maximum duty, the preferential reduction also applies to that minimum and maximum duty. Where they comprise more than one specific duty, the preferential reduction applies to all of these.

(3) For products of CN codes marked with the letter (a), the reduction applies both to the specific and ad valorem duties.

(4) For products of CN codes marked with an asterisk, originating in the countries listed in Annex V, the preferential duty is established in accordance with Article 2 and Annex I.

ANNEX VIII

LIST OF PRODUCTS REFERRED TO IN ARTICLE 9 (1)

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(1) Subject to the rules for interpreting the Combined Nomenclature, the wording of the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.