Proposal for a COUNCIL DECISION on the conclusion of an Agreement in the form of an Exchange of Letters between the European Community and the Republic of South Africa on trade in wines

(presented by the Commission)

EXPLANATORY MEMORANDUM

A. Background

1. Under the negotiating directives approved by the Council on 19 June 1995 and 25 March 1996 on the Trade, Development and Cooperation Agreement between the Community and South Africa (hereinafter referred to as the TDC Agreement) [1], the Commission negotiated two sectoral agreements, on wines and on spirits, to reciprocally facilitate and promote trade in wines and spirits between the two Parties. The Commission has been carrying on these negotiations since 1995 in close collaboration with the Council, in accordance with Article 133 of the Treaty. These Agreements are subject to a separate decision to be taken by the Council.

[1] OJ No L 311; 4.12.1999, p. 3

2. The conclusion of these agreements is foreseen in the Exchange of Letters in Annex X to the TDC Agreement.

3. The Commission and South Africa concluded negotiations on 25 July 2001 in Pretoria where representatives of the Commission and South Africa agreed ad referendum on all important outstanding issues, in particular:

- on phasing-out of conflictual trademarks along the lines of the compromise negotiated in June 2000;

- on 1 January 2000 as starting date for the Port/Sherry commitment;

- to extend the scope of the Agreement on wines from South Africa which are blends between South African wines and wines of other geographical origins provided the percentage of the latter does not exceed 15 % and on the condition of an appropriate labelling. These blends are excluded from the benefit of tariff concessions;

- on adjusting the volume of the duty free tariff quota for South African wines imported in bottles by replacing the amount of the tariff quota with the baseline quota of 35,3 million litres of wine, and by introducing a temporarily increased tariff quota of 42,02 million of litres of bottled non-sparkling wine for the years 2002 through 2011.

- on the use of the EUR 15 million set aside for restructuring the South African Wine and Spirit industry on the basis of a mutually agreed programme;

- on 1 January 2002 as date for entry into force of the Wine and Spirit agreements.

4. This tentative agreement therefore requires an amendment to Annex IV, list 6 and to Annex X of the TDC Agreement in order to adjust the volume of the tariff quota for wine. To this end, the Commission presents a proposal to the Council without delay and simultaneously with the proposals for the Wine and Spirits Agreements in order for the all of the points agreed on 25 July 2001 to enter into force on 1 January 2002.

B. Content of the proposal

5. As part and parcel of the implementation of the Memorandum of Understanding the proposal aims at adjusting the tariff quota for South African wine imported in bottles. The proposal concerns an agreement in the form of an Exchange of Letters between he European Community and the Republic of South Africa, amending Annexes IV and X to the TDC Agreement.

6. The proposed Agreement in the form of an Exchange of Letters amends Annexes IV and X to the TDC Agreement in that it adjusts the volume of the tariff quota for South African wine imported in bottles. The volume will be raised by 5% from 1 January 2000 to a level of 336 000 hectolitres and by a further 5% from 1 January 2002 to a level of 353 000 hectolitres. In order to compensate for the fact that the quota has not opened in 2000 and in 2001, the corresponding volume of 672 000 hectolitres of wine (two quota volumes of 336 000 hectolitres each for the two years concerned) will be added to the baseline quota over a period of 10 years starting on 1 January 2002. Until 31 December 2011 the quota will thus be increased by 67 200 hectolitres annually reaching an amount of 420 200 hectolitres.

C. Conclusions

7. The Commission regards the overall results of the negotiations for the Wine and Spirits Agreements as acceptable to the Community. Consequently, it proposes that the Council adopt the Agreement in the form of an Exchange of Letters adjusting the tariff quota for South African wine imported in bottles.

2001/0290 (ACC)

Proposal for a COUNCIL DECISION on the conclusion of an Agreement in the form of an Exchange of Letters between the European Community and the Republic of South Africa on trade in wines

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 in conjunction with the first sentence of the first subparagraph of Article 300(2) thereof,

Having regard to the proposal of the Commission,

Whereas:

(1) The Council has decided by Decision 199/753/(EC) [2] that the Trade, Development and Cooperation Agreement between the European Community and the Republic of South Africa hereinafter referred to as "the Agreement", enters into force provisionally on 1 January 2000.

[2] OJ No L 311; 4.12.1999, p. 1

(2) Annex X of the Agreement contains an Exchange of Letters between the European Community and the Republic of South Africa, which provides for an annual duty-free tariff quota of 32 million litres of South African wine imported in bottles. This tariff quota is included in list 6 of Annex IV to the TDCA.

(3) The Commission, on behalf of the Community, has negotiated with the Republic of South Africa an agreement on trade in wines.

(4) The conclusions of these negotiations call for an adjustment of the tariff quota mentioned in the TDC Agreement.

(5) The Agreement in the form of an Exchange of Letters should therefore be approved.

HAS DECIDED AS FOLLOWS:

Article 1

The Agreement in the form of an Exchange of Letters between the European Community and the Republic of South Africa in relation to trade in wines is hereby approved on behalf of the Community.

The text of the Agreement in the form of an Exchange of Letters is attached to this Decision.

Article 2

The President of the Council is authorised to designate the person empowered to sign the agreement in order to express the consent of the Community to be bound thereby.

Article 3

This Decision shall be published in the Official Journal of the European Communities.

Done at Brussels,

For the Council

The President

ANNEX

- DRAFT AGREEMENT

in the form of an Exchange of Letters between the European Community and the Republic of South Africa on trade in wine

A. Letter from the Community

Sir,

I refer to the Agreement on the trade in Wine signed on ............ and to the Trade, Development and Cooperation Agreement between the European Community and the Republic of South Africa.

In accordance with the understanding reached "ad referendum" on 25 July last, concluding the negotiations for the Wine and Spirits Agreements, the Trade, Development and Cooperation Agreement between the European Community and the Republic of South Africa shall be amended as follows:

1. - The last section of list 6 of Annex IV to the Trade, Cooperation and Development Agreement shall read as follows:

Wine of fresh grapes, including fortified wines

2204 21 79 (11) (13) // }Global wine 35,3 million l; duty free; agf 3%

2204 21 80 (11) (13) //

2204 21 83 (11) (13) //

2204 21 84 (11) (13) //

(13) For each of the years 2002 through 2011 a set volume of 6,72 million litres will be added to the basic annual wine quota. The annual growth factor will apply from 2003 to the basic quota of 35,3 million litres only.

2. - The wording of point 5 of the attachment to our Exchange of Letters of 11 October 1999 in relation to the Wines and Spirits Agreement (Annex X to the TDC Agreement, shall be replaced with the following:

"From the entry into force of the Agreement, the European Community will provide a duty free quota for bottled wines of 33,6 million litres; this amount will be adjusted by 5% to a total of 35,3 million litres from 1 January 2002. However, in order to compensate for the fact that the quota was not opened in 2000 and 2001, the corresponding amount of 67,2 million litres will be added to the quota over a period of ten years, raising the total annual volume to 42,02 million litres for the years 2002 through 2011."

3. - The above amendments will enter into force on 1 January 2002.

I should be obliged if you would acknowledge receipt of this letter and confirm that this letter and your reply constitute an Agreement between the Republic of South Africa and the Community.

Please accept, Sir, the assurance of my highest consideration,

Brussels,

On behalf of the Council of the European Union

B. Letter from the Government of the Republic of South Africa

Sir,

I have the honour to acknowledge receipt of your letter of today, which reads as follows:

"I refer to the Agreement on the trade in Wine signed on ............ and to the Trade, Development and Cooperation Agreement between the European Community and the Republic of South Africa.

In accordance with the understanding reached "ad referendum" on 25 July last, concluding the negotiations for the Wine and Spirits Agreements, the Trade, Development and Cooperation Agreement between the European Community and the Republic of South Africa shall be amended as follows:

1. - The last section of list 6 of Annex IV to the Trade, Cooperation and Development Agreement shall read as follows:

Wine of fresh grapes, including fortified wines

2204 21 79 (11) (13) // }Global wine 35.3 million l; duty free; agf 3%

2204 21 80 (11) (13) //

2204 21 83 (11) (13) //

2204 21 84 (11) (13) //

(13) For each of the years 2002 through 2011 a set volume of 6,72 million litres will be added to the basic annual wine quota. The annual growth factor will apply from 2003 to basic quota of 35,3 million litres only.

2. - The wording of point 5 of the attachment to our Exchange of Letters of 11 October 1999 in relation to the Wines and Spirits Agreement (Annex X to the TDC Agreement, shall be replaced with the following:

"From the entry into force of the Agreement, the European Community will provide a duty free quota for bottled wines of 33,6 million litres; this amount will be adjusted by 5% to a total of 35,3 million litres from 1 January 2002. However, in order to compensate for the fact that the quota was not opened in 2000 and 2001, the corresponding amount of 67,2 million litres will be added to the quota over a period of ten years, raising the total annual volume to 42,02 million litres for the years 2002 through 2011."

3. - The above amendments will enter into force on 1 January 2002.

I should be obliged if you would acknowledge receipt of this letter and confirm that this letter and your reply constitute an Agreement between the Republic of South Africa and the Community."

I have the honour to confirm the agreement of my government with the foregoing.

Please accept, Sir, the assurance of my highest consideration,

For the government of the Republic of South Africa

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