Proposal for a COUNCIL REGULATION (EC) concerning the arrangements applicable to imports into the Community of products originating in Albania and amending Council Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 as regards Albania

EXPLANATORY MEMORANDUM

1. In accordance with the EU's Regional Approach, non-associated countries in south-eastern Europe who comply with the relevant conditionality are eligible for wide-ranging preferential trade concessions, on the basis of autonomous trade preferences (1) or, in the case of the former Yugoslav Republic of Macedonia, in the framework of the Co-operation Agreement with the Community (2). Albania, however, does not benefit from such preferential trade concessions even though the country complies with the relevant conditionality.

(1) Regulation (EC) No 70/97 (OJ L 16, 18.1.1997, p.1.) as last amended by Regulation (EC) No 2863/98 (OJ L 358, 31.12.1998, p.85.)

(2) OJ L 348, 18.12.1997, p.2.

Bilateral trade relations between the Community and Albania are governed by the Agreement on trade and commercial and economic co-operation in force since 1 December 1992 granting only MFN treatment (3). In addition to this, Albania is eligible for the multiannual scheme of generalised tariff preferences the Community (GSP), both for industrial and agricultural products. (4)

(3) OJ L 343, 25.11.1992, p.2.

(4) Regulation (EC) No 3281/94 (OJ L 348, 31.12.1994, p.1.) and Regulation (EC) No 1256/96 (OJ L 160, 29.6.1996, p.1). Regulations as last amended by Regulation (EC) No 2820/98 (OJ L 357, 30.12.1998, p.1.)

2. Trade relations between the Community and Albania are continuously marked by an enormous trade deficit of Albania, reaching a coverage (relationship exports/imports) of 376% in 1996 and 313% in 1997. Against this background, following a recommendation made by the Joint Committee under the bilateral agreement at the meeting of 23/24 March 1998, a Commission expert mission to Albania took place on 7/8 July 1998 on the application of the current trade regime (GSP) and possible enhancement of trade co-operation.

Important factors for a better use of the GSP were identified during that mission, namely the improvement of the functioning of the Albanian customs administration, to be addressed within the ongoing Community customs assistance mission in the country.

3. At the same time, one important conclusion was the need for an upgrading of the bilateral trade regime towards a preferential regime comparable with regional standards in order to promote the development of Albanian exports and economic co-operation between the Community and Albania in general. Autonomous trade preferences comparable to those applying to countries of former Yugoslavia are the most flexible and quick instrument to achieve such upgrading without entering into specific negotiations.

4. Both from a political and an economic point of view, such an upgrading of the bilateral trade regime is appropriate. The Commission, therefore, mentioned in its Communication on operational conclusions to the EU's Regional Approach concerning Albania its intention to examine such possibility and indicated that the presentation of a formal proposal would be required. (5) The General Affairs Council, in its conclusions of 9 November 1998, welcomed the Commission's intention to present in due time a proposal on the granting of trade preferences in line with regional standards. In the light of most recent developments in the region including the massive influx of Kosovar refugees in Albania, the granting of trade preferences would also constitute an additional contribution to the stabilisation of the Albanian economy.

(5) COM (1998) 618 final of 28.10.1998, Regional Approach to the countries of South-Eastern Europe: Compliance with the conditions in the Council Conclusions of 29 April 1997, Commission Communication on operational conclusions, Bosnia and Herzegovina, Croatia, Federal Republic of Yugoslavia, former Yugoslav Republic of Macedonia and Albania

5. The proposed arrangements are intended to supplement the provisions of the Agreement on trade and commercial and economic co-operation and of the GSP. These arrangements, comparable with autonomous trade preferences granted to countries formerly part of Yugoslavia, comprise exemption from duties and the abolition of quantitative restrictions for industrial products, except for certain products subject to tariff ceilings, and special concessions (exemption from duties, reduction of the agricultural components, tariff quotas) for various agricultural products. At the same time, these arrangements will take into account the specific situation of trade between the Community and Albania. In particular, in the light of experience achieved in the framework of an agreement on textile products between the Community and Albania in force between 1992 and 1997, specific tariff ceilings for textile products are foreseen. It is estimated that the proposed arrangements would permit Albania to achieve an exemption from customs duties and taxes having equivalent effect for at least 80% of its total exports to the Community.

These arrangements shall apply until 31 December 2001.

As the proposed arrangements entail a special treatment which is not currently granted to other WTO Members on a Most Favoured Nation (MFN) basis, the Community will present a request for a waiver in the WTO as it has done in the case of preferential trade arrangements with other countries in South-Eastern Europe and on the same basis, taking into account the present situation in the region.

At the same time, it is appropriate to limit the coverage of the GSP for Albania to agricultural products, in line with the regime applicable to other countries in the region.

6. The Commission invites the Council to adopt the proposed Regulation concerning the arrangements applicable to imports into the Community of products originating in Albania and amending Council Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 as regards Albania.

Proposal for a COUNCIL REGULATION (EC) concerning the arrangements applicable to imports into the Community of products originating in Albania and amending Council Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 as regards Albania

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to the proposal from the Commission,

1. Whereas relations between the European Union and non-associated countries in south-eastern Europe are governed by the EU's Regional Approach based on the conclusions of the Council of 29 April 1997 which contain a number of common principles and conditions, including for the granting of preferential trade concessions;

2. Whereas all countries formerly part of Yugoslavia covered by the EU's Regional Approach concerning the non-associated countries in south-eastern Europe who comply with relevant conditionality benefit from preferential trade concessions;

3. Whereas Albania is equally covered by the EU's Regional Approach and currently complies with the relevant conditionality in the framework of the EU's Regional Approach for the granting of autonomous trade preferences;

4. Whereas the Agreement between the European Economic Community and the Republic of Albania on trade and commercial and economic co-operation (6) does not foresee the granting of preferential trade concessions comparable with those applying as autonomous trade preferences to countries formerly part of Yugoslavia;

(6) OJ L 343, 25.11.1992, p.2.

5. Whereas the granting of autonomous trade preferences for Albania in addition to the GSP would permit to supplement the provisions of the said Agreement towards a trade regime comparable with regional standards without the opening of negotiations while taking into account the specific situation of trade between the European Community and Albania; whereas these autonomous trade preferences would be governed by the same basic rules as those which apply to countries which emerged from former Yugoslavia; whereas it is therefore appropriate to limit the coverage of the GSP for Albania to agricultural products once these autonomous trade preferences apply, in line with the regime applicable to these countries;

6. Whereas such trade preferences comprise exemption from duties and the abolition of quantitative restrictions for industrial products, except for certain products subject to tariff ceilings, and special concessions (exemption from duties, reduction of the agricultural components, tariff quotas) for various agricultural products;

7. Whereas it is appropriate, in the light of experience achieved in the framework of an agreement on textile products between the Community and Albania in force between 1992 and 1997, to foresee specific tariff ceilings for these products;

8. Whereas it is appropriate to foresee in the case of Albania specific concessions for fishery products;

9. Whereas for the purposes of certification and administrative co-operation procedures, the relevant provisions of Commission Regulation (EEC) No 2454/93 of 2 July 1993 (7) laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (8) should be applied;

(7) OJ L 253, 11.10.1993, p.1. Regulation as last amended by Commission Regulation (EC) No 502/1999 (OJ L 65, 12.03.1999, p.1.)

(8) OJ L 302, 19.10.1992, p.1. Regulation as last amended by Regulation (EC) No 82/97 of the European Parliament and of the Council (OJ L 17, 21.1.1997, p.1.)

10. Whereas Community monitoring may be achieved by means of an administrative procedure based on charging imports of the products in question against the tariff ceilings at Community level as and when those products are entered with the customs authorities for free circulation; whereas this administrative procedure must make provision for the possibility of reintroducing customs duties as soon as the ceilings are reached at Community level;

11. Whereas this administrative procedure requires close and particularly rapid co-operation between the Member States and the Commission, which must in particular be able to follow the progress of quantities charged against the ceilings;

12. Whereas the decision for the opening of tariff quotas should be taken by the Community in the execution of its international obligations; whereas, to ensure the efficiency of a common administration of these quotas, there is no obstacle to authorising the Member States to draw from the quota-volumes the necessary quantities corresponding to actual imports; whereas, however, this method of administration requires close co-operation between the Member States and the Commission and the latter must in particular be able to monitor the rate at which the quotas are used up and inform the Member States;

13. Whereas it is necessary, in particular, to ensure for all Community importers equal and uninterrupted access to the said tariff quotas and to ensure uninterrupted application of the rates laid down for the quotas to all imports of the products concerned into all Member States until the quotas have been used up;

14. Whereas, for the sake of rationalisation and simplification, it is appropriate to provide that the Commission may, having consulted the Customs Code Committee, and without prejudice to the specific procedures provided for in Article 6 of this Regulation, make any necessary changes and technical amendments necessary to this Regulation;

15. Whereas the Community must be able to act swiftly against Albania when its financial interests are damaged as a result of fraud, serious and repeated irregularities or a manifest lack of administrative co-operation in Albania; whereas having notified the Member States and the operators concerned of its reasonable doubts, the Commission should be able to suspend certain preferences provisionally on the basis of sufficient evidence;

16. Whereas the import arrangements are renewed on the basis of the conditions established by the Council in relation to the development of the relations between the Community and Albania, including the regional approach; whereas it is appropriate, therefore, to limit the duration of these arrangements until 31 December 2001;

HAS ADOPTED THIS REGULATION:

Article 1

1. Subject to the special provisions laid down in Articles 2 to 5, products originating in Albania, other than those listed in Annex II to the Treaty establishing the European Community and in Annex A to this Regulation, shall be admitted for import into the Community without quantitative restrictions or measures having equivalent effect and with exemption from customs duties and charges having equivalent effect.

2. Entitlement to the preferential arrangements laid down in this Regulation, shall be subject to compliance with a definition of origin adopted in accordance with the procedure laid down in Article 249 of Council Regulation (EEC) No 2913/92.

3. Pending the adoption and entry into force of the definition of origin referred to in paragraph 2, entitlement to the preferential arrangements laid down in this Regulation shall be subject to compliance with the definition of the concept of originating products for which provision is made in Part I, Title IV, Chapter 2, Section 2 of Commission Regulation (EEC) No 2454/93.

Article 2

Processed agricultural products

The import duties, namely the customs duties and agricultural components, applicable on import into the Community of the products listed in Annex B shall be those indicated for each product in the said Annex.

Article 3

Industrial products and textile products - tariff ceilings

1. From 1 January to 31 December each year, imports into the Community of certain products originating in Albania and listed in Annex C, shall benefit from an exemption from customs duties in accordance with the annual tariff ceilings specified in that Annex.

The description of the products referred to in the first subparagraph, their combined nomenclature codes and the corresponding ceilings are set out in the said Annex. The amounts of the ceilings shall be increased annually by 5% of the volume of the previous year.

2. Annex C part II foresees specific provisions containing separate tariff ceilings for direct imports and for reimportations of textile products following an outward-processing operation, in accordance with Regulation (EC) No 3036/94 (9).

(9) OJ L 322, 15.12.1994, p. 1.

3. The tariff ceilings referred to in this Article shall be subject to a Community surveillance managed by the Commission, in close co-operation with the Member States, in accordance with Article 308d of Regulation (EEC) No 2454/93.

4. Quantities shall be charged against the ceilings as and when declarations for release for free circulation are lodged with customs authorities with an evidence of origin issued in accordance with the provisions of Article 1 (2) and (3). Goods may be charged against a ceiling only if the evidence of origin is presented before the date on which customs duties are reintroduced.

5. As soon as a tariff ceiling is reached, the Commission may adopt a Regulation re-establishing, until the end of the calendar year, the customs duties applicable to third countries in respect of imports of the products concerned.

Article 4

Agricultural products

Imports into the Community of products originating in Albania and listed in Annex D, shall benefit from an exemption from customs duties in accordance with the tariff concessions listed in that Annex.

Article 5

Agricultural products including fisheries - tariff quotas

1. The customs duties applicable to imports into the Community of the products originating in Albania and listed in Annex E, shall be suspended during the periods, at the levels and within the limits of the Community tariff quotas indicated for each one.

2. The tariff quotas referred to in this Article shall be administered by the Commission in accordance with Articles 308a to 308c of Regulation (EEC) No 2454/93.

3. Each Member State shall ensure that importers of the products in question have equal and uninterrupted access to the tariff quotas for as long as the balance of the relevant quota volume so permits.

General provisions

Article 6

For the first calendar year of application, the volumes of tariff quotas and tariff ceilings listed in Annexes C and E, shall be calculated as a pro rata of the basic volumes, taking into account the part of the period elapsed before the date of application of this Regulation.

Article 7

1. The provisions necessary for the application of this Regulation, other than those provided for in Article 3(4), notably:

(a) amendments and technical adjustments necessary following amendments to the combined nomenclature and Taric codes,

(b) necessary adjustments following the conclusion of other agreements between the Community and Albania;

shall be adopted by the Commission, assisted by the Customs Code Committee, in accordance with the procedure set out in paragraph 2 of this Article.

2. The representative of the Commission shall submit to the Committee a draft of the measures to be taken. The Committee shall deliver its opinion on this draft within a time limit, which the Chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 205 (2) of the Treaty in the case of decisions which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States within the Committee shall be weighted in the manner set out in that Article. The Chairman shall not vote.

The Commission shall adopt measures which shall apply immediately. However, if these measures are not in accordance with the opinion of the Committee, they shall be communicated by the Commission to the Council forthwith. In that event:

(a) the Commission may defer application of the measures which it has decided for a period of not more than one month from the date of such communication;

(b) the Council, acting by a qualified majority, may take a different decision within the time limit referred to in point (a).

3. The Committee may examine any question concerning the application of tariff quotas and tariff ceilings, which is raised by its Chairman either at the latter's initiative or at the request of a Member State.

Article 8

Member States and the Commission shall co-operate closely to ensure that this Regulation is complied with.

Article 9

Temporary suspension clause

1. Where the Commission finds that there is sufficient evidence of fraud or failure to provide administrative co-operation as required for the verification of evidence of origin by Albania it may take measures to suspend in whole or in part the arrangements provided for in this Regulation for a period of three months, provided that it has first:

- informed the Committee referred to in Article 7;

- called on the Member States to take such precautionary measures as are necessary in order to safeguard the Community's financial interests;

- published a notice in the Official Journal of the European Communities stating that there are grounds for reasonable doubts about the application of the preferential arrangements by the beneficiary country concerned which may call into question its right to continue enjoying the benefits granted by this Regulation.

2. A Member State may refer the Commission's decision to the Council within 10 days. The Council, acting by a qualified majority, may take a different decision within 30 days.

3. On conclusion of the period of suspension, the Commission shall decide either to:

- terminate the provisional suspension measure following consultation of the Committee referred to in paragraph 1;

- decide to extend the suspension measure in accordance with the procedure provided for in paragraph 1.

Article 10

Council Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 (10) is hereby amended as follows:

(10) OJ L 357, 30.12.1998, p. 1.

In Annex III listing the beneficiary countries and territories enjoying generalised tariff preferences footnote 1 is inserted next to AL Albania.

Article 11

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

It shall apply with effect from the first day of the second month after its entering into force until 31 December 2001.

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

Done at Brussels,

For the Council

The President

ANNEXES

ANNEX A

concerning the excluded products referred to in Article 1 (1)

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.

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Annex B

concerning the tariff arrangements and rules applicable to certain goods resulting from the processing of agricultural products referred to in Article 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.

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Annex C

concerning the annual tariff ceilings referred to in article 3 (1)

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.

PART I (industrial products)

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PART II (textile products)

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ANNEX D

concerning the products referred to in Article 4

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.

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ANNEX E

concerning the tariff quotas referred to in Article 5

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.

PART I - Fishery products

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PART II - Agricultural products

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FINANCIAL STATEMENT

1. title of operation

Proposal for a Council Regulation (EC) concerning the arrangements applicable to imports into the Community of products originating in Albania and amending Council Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 as regards Albania.

2. budget heading involved

Chapter 12, Article 120

3. legal basis

Article 133 of the EC Treaty

4. description of operation

Establishment of autonomous preferential trade arrangements applicable to imports of products originating in Albania. The arrangements comprise partial exemption from customs duties and charges having equivalent effect, while certain products are subject to tariff quotas or tariff ceilings. Limitation of the GSP for Albania to agricultural products only.

5. financial impact

The preferential trade arrangements for which provision is made in the proposed Regulation will enable Albania to secure exemption from customs duties in the case of a very substantial proportion (roughly 80%) of its current exports to the European Community [?190 m (1997); ?94 m (1-6/1998)], which are subject to duty at a rate of 9% on average. This will entail losses for the Community budget which may be put at ?13 m.

6. fraud prevention measures

The provisions relating to management of the tariff quotas and tariff ceilings and the temporary suspension clause (Articles 10 to 14) lay down the necessary preventive and protective measures to combat fraud and irregularities.