Proposal for a Council Regulation (EC) applying a multiannual scheme of generalized tariff preferences from 1 July 1996 to 30 June 1999 in respect of certain agricultural products originating in developing countries

(96/C 163/01)

COM(96) 87 final

(Submitted by the Commission on 8 March 1996)

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,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Economic and Social Committee,

Whereas, in accordance with its offer made within the context of the United Nations Conference on Trade and Development (Unctad), the European Community opened generalized tariff preferences commencing in 1971 in respect of certain agricultural products of Chapters 1 to 24 of the Common Customs Tariff from developing countries; whereas the initial 10-year period of application of such preferences ended on 31 December 1980 and a second 10-year period ended on 31 December 1990, tough the scheme has been kept in being, unchanged until now;

Whereas the positive role played by this 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 liberalization of trade;

Whereas in communications to the Council dated 6 July 1990 and 1 June 1994 the Commission set out its recommendations for a further 10 year period of application of its system of generalized preferences;

Whereas the Treaty on European Union has lent a fresh impetus to Community development policy as an aspect of the Union's foreign policy, with priority given to the sustainable economic and social development of the developing countries and their smooth and gradual integration into the world economy;

Whereas the Community scheme of generalized preferences should accordingly become more development-oriented, focusing on the countries which have most need of it, i. e. the poorest countries; whereas the scheme should be complementary to 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;

Whereas the new offer aims at a level of liberalization which, compared with the existing scheme, is neutral in terms of the preferential margin's overall impact on the potential volume of preferential trade, without prejudice to special incentive arrangements;

Whereas the new offer must also take account of certain sectors or products which are sensitive for Community agriculture; whereas sensitive sectors should be protected against import surges solely by means of a dual mechanism for modulating preferential tariff margins and, in the case of emergencies, a safeguard clause;

Whereas in order to improve access to the Community market and increase the actual take-up of preferences by moderately-developed or less-developed countries, a system of graduation should be used to transfer preferential margins from more-advanced countries to less-developed ones;

Whereas graduation should be applied sensibly, by country and sector;

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 agricultural specialization expressed as a specialization 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 specialization index, in terms of the sectors to be excluded, in line with the level of development;

Whereas the sector/country graduation system should also apply to beneficiary countries whose exports of products covered by the GSP in a given sector exceed 25 % of all beneficiaries' exports of those products in that sector, irrespective of their level of development;

Whereas the graduation mechanism does not apply to countries whose exports to the Community of products covered by the GSP in a given sector do not exceed 2 % of beneficiary countries' exports to the Community in that sector;

Whereas the statistical reference year for applying graduation criteria will be 1994 in so far as data is available at the time the Commission proposal is drawn up;

Whereas it seems equitable for the most advanced beneficiary countries to be excluded from entitlement under this Regulation as from 1 January 1998 on the basis of clearly defined, objective criteria for which the Commission will make appropriate proposals before 1 January 1997;

Whereas countries undertaking effective programmes to combat drug production and trafficking should, however, remain entitled to the more favourable arrangements granted them under the previous scheme; whereas the countries concerned will therefore continue to enjoy duty-free access provided they continue their efforts to combat drugs;

Whereas provision should also be made for special types of assistance additional to the general preferential scheme aimed at supporting the introduction of progressive social or environmental policies in certain moderately-advanced developing countries;

Whereas beneficiary countries which so desire and which do not yet have the means of meeting the costs should be encouraged to introduce effective policies for the protection of workers' rights, with particular regard to the right to organize and the prohibition of child labour; whereas special arrangements should therefore be established for products manufactured in conditions conforming to standards laid down by the International Labour Organization (ILO) in countries whose legislation contains rules of similar scope and substance which are actually applied;

Whereas beneficiary countries should also been encouraged to undertake effective environmental protection policies by means of incentives for products and production methods internationally approved as consistent with the objectives set out in international conventions on the environment and in Agenda 21; whereas to that end special incentive arrangements should initially be introduced for products complying with international standards;

Whereas the special incentive arrangements take the form of an additional preferential margin, the degree and the arrangements for the implementation of which will be decided by the Council in 1997 on the basis of a proposal from the Commission and the outcome of discussions in international forums on the relationship between trade and workers' rights and between trade and the environment;

Whereas special circumstances may call for the temporary withdrawal of some or all of a country's advantages under the scheme; 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 and on money laundering, discrimination against the Community in a beneficiary's legislation or failure to apply the administrative cooperation methods necessary for the scheme to function properly; whereas this should also apply to any failure to comply with obligations entered into in the Uruguay Round to meet agreed market-access objectives;

Whereas temporary withdrawal of entitlement must be preceded by a procedure enabling all interested parties to make their views heard;

Whereas at the end of such a procedure the decision on any such temporary withdrawal 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 Council should therefore retain the power to decide on the withdrawal of all or part of a country's entitlement under the scheme;

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;

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 of the Common Customs Tariff for the products concerned; whereas they should however be calculated on the basis of 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 the same methods of calculation should apply to ad valorem 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 affect the collection of charges laid down under the common agricultural policy such as agricultural specific duties added to ad valorem duties or import charges which are not customs duties within the meaning of Article 20 (3) (c) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (1)

HAS ADOPTED THIS REGULATION:

Article 1

1. A Community scheme of generalized tariff preferences, comprising general arrangements and special incentive arrangements, is hereby established for the period from 1 July 1996 to 30 June 1999, 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 24 of the Common Customs Tariff listed in Annex I and, on the conditions laid down in Article 3, to the products listed in Annex VI.

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

4. In order to be admitted under one of the preferential 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 (EEC) No 2913/92.

TITLE I General arrangements

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 Articles 7 and 8 of this Regulation.

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 Articles 7 and 8 of this Regulation.

3. The preferential duty applicable 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 Articles 7 and 8 of this Regulation.

3. Common Customs Tariff duties shall be suspended in their entirety on products listed in Part 4 of Annex 1.

Article 3

1. Common Customs Tariff duties on the products listed in Annex VI shall be suspended in their entirety for the least developed countries listed in Annex IV.

2. Without prejudice to the procedure described in Article 18 (3) of Council Regulation (EC) No 3281/94 (1), duties shall also be suspended in their entirety on products listed in annex VI and not marked with an asterisk from the countries listed in Annex V.

Article 4

1. A graduation mechanism shall be set up.

2. The graduation mechanism shall be applicable to the countries and sectors listed in Part 1 of Annex II which meet the criteria laid down in Part 2 of Annex II.

3. Without prejudice to Articles 5 and 8, the preferential margin obtained by applying Article 2 to imports of products originating in the countries and falling within the sectors referred to in paragraph 2 shall be reduced:

- by 50 % on 1 July 1996,

- by 100 % on 1 January 1999.

Article 5

1. The graduation mechanism shall also apply to countries whose exports to the Community of products covered by the scheme in a given sector exceed 25 % of beneficiary countries' exports to the Community in that sector. The preferential margin for those countries and sectors obtained by applying Article 2 shall be abolished as from 1 July 1996.

2. The graduation mechanism shall not apply to countries whose exports to the Community of products covered by the scheme in a given sector do not exceed 2 % of beneficiary countries' exports to the Community in that sector.

Article 6

The most advanced beneficiary countries shall be excluded from entitlement under this Regulation as from 1 January 1998 on the basis of objective, clearly defined criteria for which the Commission shall submit appropriate proposals before 1 January 1997.

TITLE II Special incentive arrangements

Article 7

1. As from 1 January 1998 special incentive arrangements in the form of additional preferences may be granted to beneficiary countries covered by the scheme which request such arrangements in writing and provide proof that they have adopted and actually apply domestic legal provisions incorporating the substance of the standards laid down in International Labour Organization Conventions No 87 and No 98 concerning the application of the principles of the right to organize and to bargain collectively and Convention No 138 concerning the minimum age for admission to employment.

2. To that end the Council shall, in 1997, carry out a review based on a Commission report on the results of the studies carried out in international forums such as the ILO, WTO and OECD on the relationship between trade and workers' rights.

3. In the light of that review and on the basis of internationally accepted, objective and operational criteria, the Commission shall submit a proposal for a Council decision on the degree of the special incentive arrangements referred to in paragraph 1 and the arrangements for their implementation.

Article 8

1. As from 1 January 1998 special incentive arrangements in the form of additional preferences may be granted to beneficiary countries covered by the scheme which request such arrangements in writing and provide proof that they have adopted and actually apply domestic legal provisions incorporating the substance of international environmental standards for agriculture.

2. To that end the Council shall, in 1997, carry out a review based on a Commission report on the results of the studies carried out in international forums such as the WTO and OECD on the relationship between trade and the environment.

3. In the light of that review and on the basis of internationally accepted, objective and operational criteria, the Commission shall submit a proposal for a Council decision on the degree of the special incentive arrangements referred to in paragraph 1 and the arrangements for their implementation.

TITLE III Temporary withdrawal, in whole or in part, of the scheme of generalized preferences

Article 9

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

- practice of any form of forced labour as defined in the Geneva Conventions of 25 September 1926 and 7 September 1956 and International Labour Conventions No 29 and No 105,

- export of goods made by prison labour,

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

- fraud or failure to provide administrative cooperation where required for the verification of certificates of origin Form A,

- manifest cases of unfair trading practices on the part of a beneficiary country, including discrimination against the Community and failure to comply with obligations under the Uruguay Round to meet agreed market-access objectives,

- manifest cases prejudicial to the objectives of the international conventions relating to the conservation and management of fisheries resources.

2. Temporary withdrawal shall not be automatic, but shall follow the procedural requirements laid down in the following Articles, including Article 12 (3).

Article 10

1. The circumstances referred to in Article 9 which might make it necessary to resort to temporary withdrawal of preferences shall be brought to the Commission's attention by the member States, 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 17, 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 9 and the measures to be taken.

Article 11

1. Where the Commission finds, following the consultations, 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 inform the country concerned accordingly; that notice shall give a summary of the information received and state that all relevant information is to be communicated to the Commission, indicating 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 provided for in Article 17. 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 17, 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 sport, the truth of the allegations made by the person referred to in Article 10 (1). The Commission shall provide the competent authorities of the beneficiary country concerned with every opportunity to help, 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 12

1. When the investigation is complete the Commission shall report the findings to the Committee referred to in Article 17.

2. If the Commission considers temporary withdrawal of preference to be unnecessary, it shall publish in the Official Journal of the European Communities, after consulting the Committee, a notice terminating 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 on it by a qualified majority.

Article 13

Preferences shall normally be granted in respect of products which are subject to anti-dumping or anti-subsidy duties under Council Regulation (EEC) No 2423/88 as amended, unless it can be shown that the said duties were based on the injury caused and on prices which did not reflect the preferential tariff arrangements granted to the country concerned. The Commission shall publish a notice listing products and countries for which preferences shall not be granted in the Official Journal of the European Communities.

Article 14

1. Where a product originating in one of the countries 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 on the Official Journal of the European Communities. The notice shall provide a summary of the information received and state that any useful information should be communicated to the Commission; it shall specify the time limit 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 VII where the information is available.

4. The Commission shall take the decision to reintroduce the Common Customs Tariff duties within 30 working days of consulting the Committee set up by Article 17. 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 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 the preceding paragraphs shall affect the application of safeguard clauses adopted as part of the common agricultural policy under Article 43 of the EC 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 15

1. Subject to paragraph 2, rates of preferential duty calculated in accordance with this Regulation shall be rounded up or down to the first decimal place.

2. Where the application of paragraph 1 results in a rate of preferential duty of 0,5 % or less, the preferential rate shall be considered a full exemption.

3. Changes to Annexes I, II and VI made necessary by amendments to the combined nomenclature shall be adopted in accordance with the procedure laid down in Article 19 of Regulation (EC) No 3281/94.

Article 16

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 released 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 values, quantities and any supplementary units required in accordance with the definitions in Regulations (EEC) No 1736/75 (1) and (EEC) No 3367/87 (2), broken down by country of origin.

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

Article 17

1. The competences of the Committee referred to in Article 17 of Regulation (EC) No 3281/94 and defined in Articles 18 and 19 thereof shall be extended to this Regulation.

TITLE V Transitional provisions

Article 18

1. In derogation from Article 2, the benefit of the preferential arrangements applicable in the Community until 30 June 1996 may be accorded to goods released for free circulation in the Community before 15 September 1996, provided that:

- the goods concerned are covered by a purchase contract concluded in the period from 1 July 1995 to 30 June 1996, and

- it can be shown to the satisfaction of the customs authorities that those goods left the country of origin before 1 July 1996, and

- the benefit of those preferential arrangements has not been stopped either by Commission regulation or by reason of the exhaustion of a tariff quota.

2. The customs authorities may regard the second indent of paragraph 1 as having been satisfied if one of the following documents is submitted to them:

- in the case of transport by sea or inland waterway, the bill of lading showing that loading took place before that date,

- in the case of transport by rail, the consignment note accepted by the railways of the country of dispatch before that date,

- in the case of transport by road, the TIR (international road transport) carnet issued before that date by the customs office in the country of origin or any other appropriate document authenticated by the relevant customs authorities of the country of origin before that date,

- in the case of transport by air, the air waybill (consignment note) showing that the airline received the goods before that date.

Article 19

This Regulation shall enter into force on 1 July 1996.

It shall apply until 30 June 1999.

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

(1) OJ No L 302, 19. 10. 1992, p. 1.

(1) OJ No L 348, 31. 12. 1994, p. 7.

(1) OJ No L 183, 14. 7. 1975, p. 3.

(2) OJ No L 321, 11. 11. 1987, p. 3.

ANNEX I

Product sensitivity categories (1) (2)

PART 1

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PART 2

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PART 3

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PART 4

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ANNEX II

PART 1

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PART 2

Identification of countries and sectors referred to in Article 4

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 specialization index

A beneficiary country's specialization 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 proportion of the total Community imports.

III. Combining the development and specialization indexes

The combination of these two indexes determines how. Article 4 will be applied to each beneficiary country.

For countries with a development index greater than -1, Article 4 will apply when the specialization index equals or exceeds 1.

For countries with a development index between -1 and -1,23, Article 4 will apply when the specialization index equals or exceeds 1,5.

For countries with a development index between -1,23 and -1,70, Article 4 will apply when the specialization index equals or exceeds 5.

For countries with a development index between -1,70 and -2, Article 4 will apply when the specialization index equals or exceeds 7.

Article 4 will not apply to countries with a development index of less than -2.

ANNEX III

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

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(1) American Oceania includes: Guam, American Samoa (including Swain's Island) Midway Islands, Johnston and Sand Islands, Wake Islands, Baker Island, Howland, Jarvis, Kingman Reef and Palmyra.

ANNEX IV

List of least-developed developing countries

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ANNEX V

List of countries referred to in Article 3 (2)

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ANNEX VI (1)

List of products mentioned in Article 3 (2)

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.

Agricultural products qualifiying under the ordinary arrangements for exemption or total temporary suspension of the Common Customs Tariff are only token entries.

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ANNEX VII

Factors to be taken into consideration for the purposes of Article 14 (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 utilization

- Employment

- Trade

- Prices