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COMMISSION RECOMMENDATION

of 3 July 1987

to the French Republic concerning the adjustment of the State monopoly of a commercial character in potassic fertilizers vis-à-vis the new Member States

(Only the French text is authentic)

(87/388/EEC)

1. By letter dated 1 April 1986, the French Government informed the Commission that, in the case of potassic fertilizers, it was still applying its import monopoly within the meaning of Article 37 (1) of the EEC Treaty vis-à-vis the new Member States.

Under Article 11 of the Law of 23 January 1937, incorporated into Article 183 of the Mining Code (Decree No 56-368 of 16 August 1956), the Société commerciale des Potasses d'Alsace, which subsequently by Decree No 67-796 of 20 September 1967 became the Société commerciale des Potasses et de l'Azote (SCPA), was awarded a monopoly on the importation of potassic fertilizers.

Initially, the Société commerciale des Potasses d'Alsace enjoyed a monopoly on the importation of all salts, combinations or mixtures containing potassium; however, this right was restricted by Decree No 61-1330 of 4 December 1961, which withdraw from the monopoly potassic products used solely for industrial purposes and listed those which remained subject to the monopoly.

By letter dated 18 July 1986, the French Government specified the products to which the import monopoly applied; the products are listed below against their respective CCT headings:

1.2 // // // CCT heading No // Product // // // // // 28.39 B II // Potassium nitrate // 28.39 B VI // Double nitrate of sodium and potassium // 28.40 B II // Potassium phosphate for use as fertilizer // 28.42 A VII // Potassium carbonate, except refined potassium carbonate of 70/80 grade of vegetable or animal origin or suint potassium where such products are not mixed with other products and are intended for the soap, glass or worsted yarn industries // 31.04 ex A // Crude natural potassium salts // // Potassium chloride containing not more than 40 % by weight of K2O // // Potassium chloride containing more than 40 %, but not more than 62 % by weight of K2O // // Potassium chloride containing more than 62 % by weight of K2O // // Potassium sulphate containing not more than 52 % by weight of K2O // // Magnesium sylphate-potassium sulphate containing not more than 30 % by weight of K2O // 31.04 B // Potassic fertilizers mixed together // 31.05 A I // Fertilizers containing the three fertilizing substances: nitrogen, phosphorus and potassium // 31.05 A III // Fertilizers containing the two fertilizing substances: nitrogen and potassium // 31.05 A IV // Other fertilizers containing potassium // //

Although under French legislation the French State has a monopoly on the importation and marketing of potassic fertilizers originating in or coming from third countries, the legislation does not apply where such products come from other Member States of the Community. In such cases, the rules have been brought into line with Article 37 of the EEC Treaty.

2. The first subparagraph of Articles 48 (1) and 208 (1) of the Act of Accession provides that Spain and Portugal shall, from 1 January 1986, progressively adjust their State monopolies of a commercial character within the meaning of Article 37 (1) of the EEC Treaty so as to ensure that by 31 December 1991, in the case of Spain, and 31 December 1992, in the case of Portugal, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States.

The second subparagraph of Article 48 (1) and 208 (1) stipulates that the other Member States shall have obligations in relation to Spain and Portugal equivalent to those laid down in the first subparagraph for the two new Member States.

The third subparagraph of Articles 48 (1) and 208 (1) provides that the Commission shall make recommendations to the relevant Member States of the Community of Ten as to the manner in which and the timetable according to which the adjustment provided for in those Articles must be carried out.

3. Potassic fertilizers are not subject to any monopoly of a commercial character in the new Member States. With regard to the French monopoly, France has not yet taken any steps to liberalize imports of potassic fertilizers from the new Member States.

4. Trade in potassic fertilizers between France and the new Member States during the five years prior to accession was fairly negligible, as the statistics provided by the French Government on 18 July 1986 show. The only such products imported into France from the new Member States were straight fertilizers (CCT heading No 31.04 ex A) from Spain. Over the period in question, the amounts imported averaged 45 242 tonnes of K2O. In the period 1983 to 1985, the average rose to 67 260 tonnes of K2O. This latter amount, which relates to only two straight potassium products, represented only 4 % of French production of straight potassic fertilizers.

From this, it may be seen that, during the period under consideration, there were virtually no imports into France of other potassic fertilizers (straight, compound or complex) from Spain and no imports from Portugal.

5. The Commission considers that, in carrying out the adjustment provided for in Articles 48 and 208 of the Act of Accession, the restrictions on imports of the relevant potassic fertilizers from Spain and Portugal must be gradually removed by immediately opening quotas and increasing them annually so as to ensure that the French monopoly is completely dismantled by 31 December 1991, in the case of Spain, and 31 December 1992 in the case of Portugal.

In view of the very low level of trade in potassic fertilizers as a whole between France and the two new Member States, the Commission believes that the initial level of the quota to be opened by France for such products can be set at a percentage of national production of potassic fertilizers (straight, compound and complex) in the country holding the monopoly.

Since, as stipulated in Articles 48 (1) and 208 (1) of the Act of Accession, the Member States of the Community of Ten must have equivalent obligations to those laid down for Spain and Portugal, the Commission considers it reasonable to base the adjustment of the French monopoly on the criteria applied to Spain, pursuant to Article 48 (3) of the Act of Accession and Annex V thereto, as regards the gradual adjustment of its monopoly in manufactured tobacco. It was decided in this respect that Spain's basic quota volumes must be at least equivalent to certain percentages (5 % or 6 % depending on the product) of Spain's total average production during the last three years prior to accession for which statistics were available.

In addition, there was to be a gradual annual increase of at least 20 % in the quotas at the beginning of each year, with the previous year's quota being automatically increased by 20 %.

6. According to the Commission's information, production of potassic fertilizers in France and in the two new Member States was as follows during the last three years for which statistics are available.

(in thousands of tonnes K2O)

1.2,5.6,9.10,13 // // // // // Production // France // Spain // Portugal // // // // // // // // // // // // // 1.2.3.4.5.6.7 .8.9.10.11.12.13 // // 1982 // 1983 // 1984 // 1985 // 1982 // 1983 // 1984 // 1985 // 1982 // 1983 // 1984 // 1985 // // // // // // // // // // // // // // Straight potassic fertilizers // 1 701 // 1 537 // 1 739 // 1 750 // 693,5 // 659,1 // 677,2 // 658,9 // - // - // - // - // // // // // // // // // // 1.2.3.4.5.6.7.8.9.10,13 // / / // // // // // // // // Consumption (for reference) // // // 1.2.3.4.5.6.7.8.9.10.11.12.13 // // // // // // // // // // // // // estimation // // // // // // // // // // 3,0 // 2,3 // 2,4 // 5,9 // // // // // // // // // // // // // // Compound and complex potassic fertilizers // 1 066 // 1 134 // 1 209 // - // 212,3 // 199,6 // 249,7 // 253,4 // 44,9 // 34,2 // 36,5 // estimation 31,5 // // // // // // // // // // // // //

7. The Commission considers that, in setting the volume of the initial quota which France has been required to open as from 1 January 1986 vis-à-vis the new Member States, account should be taken of the relative level of the production of straight potassic fertilizers and compound and complex potassic fertilizers in Spain and Portugal.

In view of the above, the quota should accordingly be set at 5,5 % of French production in the case of straight potassic fertilizers and 3,5 % in the case of compound and complex potassic fertilizers. The Commission considers that the quota should be allocated between Spain and Portugal on the basis of the production (or, failing that, consumption) of fertilizers in the two new Member States.

However, Portugal's share of the quota for straight potassic fertilizers cannot be calculated on the basis of the above argument, since there is no production of such products in Portugal.

The Commission believes it would not be fair for the whole of the relevant quota to be allocated to Spain on this account. It considers that the quotas for both groups of products could be allocated on the basis of the figures for compound and complex potassic fertilizers.

On average, Spain accounted for 85 % of the production of such fertilizers during the period 1982 to 1984 and Portugal for 15 %.

The Commission is therefore of the opinion that France should allocate 85 % of the quota to Spain and 15 % to Portugal.

So as to facilitate administration of the quota, the Commission considers that, even though the transition period for Portugal is one year longer than that for Spain, it is reasonable not to treat the two new Member States differently at least until 1991.

8. For these reasons and subject to the position the Commission may subsequently adopt in the light of the results of applying this Recommendation, the Commission hereby recommends to the French Republic, pursuant to the third subparagraph of Articles 48 (1) and 208 (1) of the Act of Accession:

(a) That it should open, for imports from Spain and Portugal of potassic fertilizers referred to in point 1 of this Recommendation:

- in respect of each type of straight potassic fertilizer and for the remaining period of 1987, a quota equal to not less than 6,6 % of national production in 1985, 85 % of the quota being allocated to Spain and 15 % to Portugal,

- in respect of each type of compound and complex potassic fertilizer and for the remaining period 1987, a quota equal to not less than 6,6 % of national production in 1985, 85 % of the quota being allocated to Spain and 15 % to Portugal,

- in respect of each type of compound and complex potassic fertilizer and for the remaining period of 1987, a quota amounting to not less than 4,2 % of national production in 1985, 85 % of the quota being similarly allocated to Spain and 15 % to Portugal,

- the 1987 quotas should be increased by at least 20 % in 1988,

- the previous year's quotas should be increased by at least 20 % in the years thereafter.

It is understood that, by 31 December 1991 in the case of Spain and 31 December 1992 in the case of Portugal, all quantitiative restrictions will have been removed.

The quotas should be administered in a transparent, objective and non-discriminatory manner. They should be opened for all operators without restriction, and the products imported under them should not be made subject to any exclusive marketing rights in France;

(b) That it should inform all interested parties, in particular by publishing a notice to importers in the Journal Officiel de la République of the possibilities available to them under the abovementioned quotas of obtaining supplies of potassic fertilizers referred to in point 1 of this Recommendation from Spain and Portugal.

Done at Brussels, 3 July 1987.

For the Commission

Peter SUTHERLAND

Member of the Commission