EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

Council Regulation No 2018/1977 opening and providing for the management of autonomous Union tariff quotas (ATQs) for certain fishery products for the period 2019-2020 was adopted on 14 December 2018.

The objective of the Regulation is to ensure the competitiveness of the Union processing industry and avoid jeopardising Union production of fishery products by guaranteeing an adequate supply of fishery products to the industry. To this end, the Regulation reduces or suspends import duties for a number of fishery products within tariff quotas of an appropriate volume. It also defines which processing operations (‘qualifying operations’) allow the use of the tariff quotas and which do not.

2.RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES

Following the adoption of Council Regulation No 2018/1977, some EU processors and a Member State informed the Commission that since CN code 1604 32 00 (caviar substitute) had been deleted from the ATQ 09.2750 set out in the previous Council Regulation (No 2015/2265), processors could no longer import processed hard fish roes falling under that specific CN code as they had done under the previous regime. In the current ATQ regulation (2019-2020), CN code 1604 32 00 (caviar substitute) was replaced by CN code 0305 20 00 (livers, roes and milt of fish, dried, smoked, salted or in brine) to better reflect the product description (hard fish roes, washed, cleaned of adherent organs and simply salted or in brine, for manufacture of caviar substitutes).

The deletion of the CN code 1604 32 00 resulted in an increase in duty from 0% to 20% for these products, since they can no longer benefit from the ATQ regime. This resulted in significant losses due to the amounts concerned and the existence of ongoing long-term contracts. Since the Commission proposal had retained CN code 1604 32 00 and the new Regulation, which came into force on 1 January 2019, was adopted only on 14 December 2018, the companies argue that this change was unpredictable and did not provide them with sufficient time to adapt since the contracts with their suppliers run over long periods.

An in-depth analysis has confirmed a significant drop in the imports concerned due to the change of code (only 400 tonnes of the 1 500 tonnes of the ATQ has been used, compared to 958 tonnes in 2018).

On the other hand, the objective of the ATQs is to create added value and employment. In this perspective, thawing, repacking and pasteurising cannot be considered as ‘processing’ that would create significant added value. It is in this context that CN code 1604 32 00 (caviar substitute) was replaced by CN code 0305 20 00 (livers, roes and milt of fish, dried, smoked, salted or in brine).

In discussions on the 2019-2020 ATQ regulation with regards to hard fish roes, the Customs Code Committee adopted new Explanatory Notes to the Combined Nomenclature (CNEN) for subheading 0305 20 00, clarifying the scope of that subheading by providing further definitions. The new CNENs explain that salted fish roes that are unsuitable for immediate consumption as caviar or caviar substitutes in the state as presented without further processing but are intended for the manufacture of caviar substitutes are classified under this subheading.

It can therefore be concluded that the replacement of CN code 1604 32 00 by CN code 0305 20 00 in the new ATQ Regulation (2019-2020) is in line with the objectives of the ATQs. However, the late adoption of the Regulation with a CN code for the same ATQ 09.2750 that differed from that mentioned in the Commission proposal and in the previous legislation, and the lack of clear understanding by industry of the difference between the two CN codes (reinforced by the fact that they fall under the same order number), had a significant negative impact on the fish roe industry in the EU. Trade flows should not abruptly be discontinued due to this change of CN code.

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis