Proposal for a COUNCIL REGULATION on the use of inward processing arrangements in the management of certain agricultural markets

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. The use of inward processing arrangements for agricultural products must help put the agri-food industries on permanently equitable terms of competition with non-Union countries and at the same time preserve the outlets for Community agricultural products.

2. Preservation of these outlets is, however, subject to compliance with the rules applying under the World Trade Organisation Agreement on Agriculture and calls for skilful management of the various export mechanisms available. This may involve taking rapid action to restrict temporarily or suspend inward processing should substantial use of the facility entail a significant fall in agricultural exports on which refunds can be granted within the GATT budget allocations.

3. Maintaining the agri-food industries' competitiveness against outside countries and fostering a favourable investment and employment climate call for a degree of flexibility in operating the inward processing system so as to guarantee visibility and security of supply to operators. It must therefore be possible to authorise rapid action enabling operators to switch smoothly, when economic factors dictate, from a Community to a non-Community supply source.

4. Rapid action, whether to suspend or restrict inward processing so that Community agricultural products can be exported without infringing the rules applying under the World Trade Organisation Agreement on Agriculture or to guarantee visibility and security of supply, is impossible under the present common market organisation provisions. Article 32 of Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products and the corresponding provisions of the other Council regulations on the common organisation of the markets provide only that the Council may in special cases prohibit the use of inward processing arrangements wholly or in part.

5. Much greater flexibility is therefore called for over inward processing. This involves authorising the adoption of management measures within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission.

Proposal for a COUNCIL REGULATION on the use of inward processing arrangements in the management of certain agricultural markets

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 37 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C ...

Having regard to the opinion of the European Parliament [2],

[2] OJ C ...

Whereas:

(1) The use of inward processing arrangements for agricultural products must help put the agri-food industries on permanently equitable terms of competition with non-Union countries and at the same time preserve the outlets for Community agricultural products.

(2) Article 32 of Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products [3] and the corresponding provisions of the other Council regulations on the common organisation of the markets provide that the Council, acting by a qualified majority on a proposal from the Commission, may in special cases prohibit the use of inward processing arrangements wholly or in part.

[3] OJ L 160, 26.6.1999, p. 48. Regulation last amended by Regulation (EC) No 1670/2000 (OJ L 193, 29.7.2000, p. 10).

(3) Preservation of the outlets for Community agricultural products is subject to the rules applicable under the World Trade Organisation Agreement on Agriculture and thus requires skilful management of the various export mechanisms available, including, if necessary, rapid action to temporarily restrict or suspend the inward processing arrangements.

(4) Maintaining the competitiveness of agri-food undertakings against those outside the Community and fostering a favourable investment and employment climate require a degree of flexibility in operating the inward processing system so as to guarantee visibility and security of supply. It must therefore be possible, under the rules applicable to agricultural products, for swift action to be taken enabling the operators concerned to switch smoothly, when economic factors dictate, from a Community to a non-Community supply source.

(5) Article 32 of Regulation (EC) No 1255/1999 and the corresponding provisions of the other Council regulations on the common organisation of the markets are not suited to the needs of flexible and efficient market management within the rules applicable under the World Trade Organisation Agreement on Agriculture.

(6) Since the measures necessary for implementing this Regulation are "management measures" within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [4], they should be adopted in accordance with the management procedure laid down in Article 4 of that Decision, Article 7(3) thereof applying,

[4] OJ L 184, 17.7.1999, p. 23.

HAS ADOPTED THIS REGULATION:

Article 1

For the products listed in Annex I to the Treaty the use of inward processing arrangements may be suspended or temporarily restricted in accordance with the procedure referred to in Article 3.

Article 2

To meet the need for a smooth changeover from periods during which refunds are granted on Community goods to those when they are no longer available on the same goods, measures facilitating the use of inward processing arrangements to obtain from products listed in Annex I to the Treaty other products listed therein may be adopted in accordance with the procedure referred to in Article 3.

Article 3

1. The Commission shall be assisted by the Management Committee for Milk and Milk Products established by Article 41 of Regulation (EC) No 1255/1999 and the corresponding management committees for the other Council regulations on the common organisation of the markets.

2. Where reference is made to this paragraph the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply and Article 7(3) of that Decision shall be complied with.

3. The period provided for in Article 4(3) of Decision 1999/468/EC shall be one month.

Article 4

This Regulation shall enter into force on the seventh day following its publication in the Official Journal of the European Communities.

It shall apply from ...

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

Done at Brussels,

For the Council

The President

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