RECOMMENDATION No 1-64 of 15 January 1964 to the Governments of the Member States concerning an increase in the protective duty on iron and steel products at the external frontiers of the Community

THE HIGH AUTHORITY,

Having regard to Articles 2 to 5, 8, 14, 57, 71, 74, 81, 86 of, and Annex I to, the Treaty;

Having regard to the Agreement of 19 November 1957 made between the Representatives of the Governments of the Member States meeting in the Council of Ministers on harmonisation of customs duties on steel applied at the external frontiers of the Community;

Having regard to the Agreement of 21 December 1954 concerning the relations between the United Kingdom of Great Britain and Northern Ireland and the European Coal and Steel Community, and to the Agreement of 25 November 1957 between the same High Contracting Parties concerning commercial relations;

Having regard to the provisions of the General Agreement on Tariffs and Trade (GATT);

Whereas the situation on the common market in steel has for some months shown a growing imbalance between supply and demand ; whereas increased production capacity both in Community countries and in the other steel-producing countries of the world has intensified competition on the world market ; whereas this has led not only to a fall in exports of steel from the Community, but also, and in particular, to a constant rise in imports of iron and steel products from third countries into the Community, creating an over-supply of iron and steel products on the common market;

Whereas imports of iron and steel products (steel, cast iron and pig iron) into the Community and the Community's internal production have, during the years 1960 to 1963, developed as follows: >PIC FILE= "T0019373">

Whereas these tables show that, in particular over the past year in the case of steel and over the past two years in the case of pig iron and cast iron, there has been a relative increase in the tonnage imported into the Community from third countries, while internal Community production of crude steel and pig iron and cast iron has remained at the same level;

Whereas these increased tonnages, a result of the world surplus, have been imported at the low prices applied by marginal producers ; whereas the combined effect of the relative increase in imports and the low prices applied is to exert constant and increasing pressure on the prices applied within the Community by its iron and steel undertakings, which in order to meet this competition have been obliged, in respect of a large part of their production, to align their prices as provided for in Article 60 of the Treaty and to market their products at the low prices applied by marginal producers;

Whereas consequently such imports taken as a whole have caused serious injury to production within the common market of like or directly competing products ; whereas this injury consists in particular in a severe reduction in revenue, which has led to a cutback in the investment projects necessary for the expansion and improvement of production capacity and seriously endangers the stability of employment in certain regions of the Community ; whereas these damaging consequences constitute obstacles to the pursuit of the aims laid down in Article 3 (c), (d), (e) and (g) and are as a whole liable to hinder the normal functioning of the common market;

Whereas, in order to remedy this situation, the High Authority has already taken measures as regards the internal market ; whereas it has in particular improved and amplified the rules implementing Article 60 ; whereas these measures alone are not sufficient to deal with the present situation in the common market ; whereas before the High Authority can consider intervening directly in regard to the production of Community undertakings it must, in accordance with the rules as to intervention laid down in the Treaty, in particular in Articles 5 and 57 thereof, give preference to indirect measures, which include not only measures concerning price but also measures in the field of commercial policy, in particular those provided for in Article 74 of the Treaty;

Whereas the customs rules now in force for Community iron and steel products are based on a level of harmonised duties fixed by the Governments of the Member States by an Agreement made at the end of the transitional period ; whereas this harmonised level is well below that of other major steel-producing countries, whose undertakings are in direct competition with Community undertakings, both within the common market and on external markets;

Whereas within this system of harmonised customs protection the Italian duties are at a level which if applied by the other countries of the Community would considerably reduce for those countries also the damaging consequences of imports from third countries ; whereas the Governments of the Member States have not been able to agree unanimously to fix their minimum rates of duty at the level of present Italian duties ; whereas the High Authority, acting in exercise of its general responsibility under Article 8 of the Treaty for the attainment of the objectives set out in the Treaty, considers it necessary to recommend to those Governments that they effect an appropriate increase in their external protective duties;

Whereas, moreover, such an increase is not at variance with the statements made by the Governments of the Member States and the High Authority when, on 10 November 1952, the Contracting Parties to the GATT granted a waiver under Article XXV;

Whereas the action which the High Authority finds itself obliged to take to deal with the situation described above is not such as to hinder constructive participation by the Community in the general tariff negotiations within GATT;

Whereas the Circumstances set out above justify recourse to protective measures as provided for in Article 74 (3) of the Treaty ; whereas this Recommendation should be inspired by the following considerations: 1. The increase in external protective duty which is the aim of this Recommendation is not by its very nature such as can be merely recommended in principle ; it requires rather, if the uniformity and co-ordination necessary for its implementation in the six Member States is to be ensured, that a minimum level should be fixed. The choice of suitable means to achieve this aim, whether by raising customs duties or by the introduction of some other kind of charge on imports, is left to the Governments of the Member States;

However, in view of the fact that protection at the Community's external frontiers at present takes the form of a system of harmonised customs duties, which system is readily intelligible in itself, the High Authority, without formally so recommending, is of the opinion that an increase in these protective duties would be particularly apt to achieve the speed, effectiveness and uniformity which this Recommendation requires;

2. This Recommendation must relate to all the headings in the Tariff Nomenclature, since not only do the circumstances justifying the introduction of higher external protective duties affect all the products concerned, but also the level of protective duty for each product must continue to take account of the interdependence of the various iron and steel products in question. However, differences in circumstances may arise which might justify certain relaxations. This eventuality must therefore be provided for;

3. Even though the difficulties experienced at present in the steel market do not affect all parts of the Community equally, the High Authority must consider the common market as a whole;

4. The recommendation concerning an increase in protective duty at the external frontiers of the Community is addressed to the Government of the Italian Republic only in so far as it may be necessary to require the latter to maintain as minimum rates the Italian rates in force on 1 January 1964;

5. This Recommendation must respect the bindings for certain tariff headings which have been agreed upon by certain Member States within GATT. These headings will therefore show different rates of protective duty at the external frontiers of the Community. It is therefore necessary, in order to prevent any deflection of trade or economic difficulties in one or more Member States, to recommend that the Governments, where this concerns them, seek appropriate solutions in co-operation with the High Authority;

6. In order to remedy difficulties arising in special cases, for example where considerations of commercial policy or of customs procedure are involved, a special procedure should be provided for whereby derogations from the recommended minimum rates of protective duty may be made;

7. In order to deter speculation of any kind pending effective implementation of this Recommendation it is necessary to request the Governments to take such provisional measures as may be appropriate;

8. The increase in protective duty at the external frontiers consequential upon this Recommendation should be regarded as a temporary measure intended to remedy present difficulties;

HAS MADE THE FOLLOWING RECOMMENDATION:

Article 1

The Governments of the Member States are recommended to introduce, with effect from 15 February 1964, the legislative or administrative measures required to adopt or maintain, as the minimum external protective duty on iron and steel products imported into their respective customs territories, a duty in respect of each tariff heading in the Common Customs Nomenclature of the Community corresponding to the lowest rate applicable on 1 January 1964 in the Italian Republic. The rates applicable are shown in the table annexed to this Recommendation.

Article 2

1. The Recommendation shall not apply where, in respect of specific tariff headings of individual Member States, it would entail disregard of bound tariff concessions granted to Contracting Parties to the GATT.

2. Where, pursuant to the preceding paragraph, protective rates differing from those recommended in Article 1 remain applicable, the Governments concerned are recommended, in co-operation with the High Authority, to adopt provisions with a view to preventing deflection of trade within the common market or the occurrence of economic difficulties in one or Member States.

Article 3

In special cases, such as where commercial policy or customs procedure so requires, the High Authority shall, after consulting the Governments of the Member States, be empowered to authorise derogation from obligations arising under Article 1.

Article 4

Pending practical implementation of the obligations under this Recommendation the Governments of the Member States are requested to take such provisional measures as may be appropriate.

Article 5

Iron and steel products within the meaning of this Recommendation are those listed in Annex I to the Treaty under Code Nos 4200 to 4500.

Article 6

1. This Recommendation shall be notified to the Governments of the Member States and published in the Official Journal of the European Communities.

It shall enter into force as regards each Government by virtue of its notification.

2. The High Authority shall amend or repeal this Recommendation if it finds that the circumstances on which it was based have changed fundamentally or no longer exist.

This Recommendation was considered and adopted by the High Authority at its meeting on 15 January 1964.

For the High Authority

The President

Dino DEL BO

ANNEX Minimum duties applied by the Italian Republic on 1 January 1964 to steel products of the European Coal and Steel Community

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