Proposal for a Council Regulation (EC) applying the special incentive arrangements concerning labour rights and environmental protection provided for in Articles 7 and 8 of Council Regulations (EC) No 3281/94 and (EC) No 1256/96 applying the scheme of generalized tariff preferences in respect of certain industrial and agricultural products originating in developing countries (97/C 360/07) (Text with EEA relevance) COM(97) 534 final - 97/0293(CNS)

(Submitted by the Commission on 30 October 1997)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 3281/94 of 19 December 1994 applying a four-year scheme of generalized tariff preferences (1995 to 1998) in respect of certain industrial products originating in developing countries (1), and in particular Articles 7 and 8 thereof,

Having regard to Council Regulation (EC) No 1256/96 of 20 June 1996 applying multiannual schemes of generalized tariff preferences from 1 July 1996 to 30 June 1999 in respect of certain agricultural products originating in developing countries (2), and in particular Articles 7 and 8 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 Articles 7 and 8 of Regulations (EC) No 3281/94 and (EC) No 1256/96 provide that, as from 1 January 1998, special incentive arrangements in the form of additional preferences may be granted to developing countries covered by the above-mentioned Regulations; whereas to this end, the Council has undertaken a review on the basis of Commission reports on the results of works within the International Labour Organization (ILO), the World Trade Organization (WTO), the Organization for Economic Cooperation and development (OECD) and the International Tropical Timber Organization (ITTO) on the link between trade and labour rights and between trade and the environment;

Whereas this review suggests that in the light of the international debate on social and environmental clauses we would be justified in introducing positive, development-oriented incentives rewarding compliance with international social and environmental standards;

Whereas the special incentive arrangements provided for in Articles 7 and 8 of Regulations (EC) No 3281/94 and (EC) No 1256/96 meet this objective;

Whereas the special incentive arrangements should be applied to countries which are beneficiaries of the scheme of generalized tariff preferences at 1 January 1998; whereas this should also be the case in sectors where they may be subject to the graduation mechanism; whereas, however, this should not be the case for sectors subject to the arrangements provided for in Article 5 (1) of Regulations (EC) No 3281/94 and (EC) No 1256/96 as they are excluded for reasons of competitive capacity irrespective of the level of development of the country concerned;

Whereas, within the meaning of Article 7 (1) of Regulations (EC) No 3281/94 and (EC) No 1256/96, the incentives concerning labour rights may be granted only to countries which request them in writing and provide proof that they apply legislation incorporating the substance of the standards laid down in International Labour Organization (ILO) Conventions No 87 and No 98 concerning the application of the principles of the right to organize and to bargain collectively and ILO Convention No 138 concerning the minimum age for admission to employment;

Whereas the special incentive arrangements concerning labour rights should primarily be confined to production sectors that have actually taken steps to comply with the ILO Conventions in question; whereas provision must therefore be made for the special arrangements to apply to certain sectors but not to others;

Whereas within the meaning of Article 8 (1) of Regulations (EC) No 3281/94 and (EC) No 1256/96, the special incentive arrangements concerning environmental protection may be granted only to countries that request them and provide proof that they apply legislation incorporating the substance of the standards of the International Tropical Timber Organization (ITTO);

Whereas requests for the special social and environmental incentive arrangements must be subject to a publication procedure enabling interested persons to make known their views; whereas the decision on whether to grant special arrangements must be taken after the Commission has examined the requests closely and the Generalized Preferences Committee has delivered a favourable opinion;

Whereas operation of the incentive arrangements concerning labour rights is contingent on certification by the authorities of the beneficiary countries of product conformity with the above-mentioned standards and the application of administrative cooperation procedures similar to those used to verify the origin of goods;

Whereas for the purposes of certification and administration cooperation procedures, recourse should be had to the relevant provisions of Commission Regulation (EEC) No 2454/93 of 2 July 1993, laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 of 12 October 1993 establishing the Community Customs Code (3), as last amended by Regulation (EC) No 12/97 of 18 January 1997 (4);

Whereas the additional preferential margin must be attractive if the arrangements are to be fully effective as an incentive; whereas this objective could be met by doubling the basic preferential margin for products of Annex I to Regulation (EC) No 3281/94, fixing the offer for products of Annex I to Regulation (EC) No 1256/96 at about 66 % of the preferential margin for industrial products, and setting the margin at 25 % of the Common Customs Tariff duty for products of Annex I included in Annex II to Regulations (EC) No 3281/94 and (EC) No 1256/96;

Whereas the only internationally recognized environmental standards at the moment are for tropical forests; whereas the special incentive arrangements concerning environmental protection will therefore apply solely to the products of tropical timber processing;

Whereas the international criteria for the preservation of tropical forests cannot be used to monitor logging operations; whereas at this stage it is preferable, for the purposes of the special incentive arrangements for the environment, to vet countries thoroughly in advance; whereas the additional preferential margins granted pursuant to such arrangements may be the same as those adopted in the social field;

Whereas, however, owing to the great sensitivity of the products referred to in Part 1 of Annex I to Regulations (EC) No 3281/94 and (EC) No 1256/96, the additional reduction in duty from which these products may benefit pursuant to the special incentive arrangements should be limited to 40 %;

Whereas the procedures for implementing the provisions of this Regulation are inspired by the measures set out in the Commission communication to the Council and Parliament on the management of preferential tariff arrangements (COM(97) 402 final, 23. 7. 1997), in particular with regard to identifying government authorities in the beneficiary countries, their assumption of responsibility, their training and the organization of surveys in these countries;

Whereas in the context of introducing new multiannual schemes of generalized tariff preferences to replace the schemes established within the meaning of Regulations (EC) No 3281/94 and (EC) No 1256/96, consideration should be given to the improvements to be made to the special incentive arrangements concerning environmental protection, including the possible extension of its scope,

HAS ADOPTED THIS REGULATION:

TITLE I SPECIAL INCENTIVE ARRANGEMENTS CONCERNING LABOUR RIGHTS

Article 1

The special incentive arrangements provided for in Article 7 of Regulations (EC) No 3281/94 and (EC) No 1256/94 shall be introduced according to the terms and conditions laid down in this Title.

Article 2

1. The preferential duty applying to the products referred to in Article 2 (1), (2) and (3) of Regulation (EC) No 3281/94 which comply with the conditions of this Title shall be reduced by an amount equal to:

- 15 % of the Common Customs Tariff duty applying to the product in question for the products listed in Part 1 of Annex I,

- 30 % of the Common Customs Tariff duty applying to the product in question for the products listed in Part 2 of Annex I,

- 35 % of the Common Customs Tariff duty applying to the product in question for the products listed in Part 3 of Annex I.

2. The preferential duty applying to the products referred to in Article 2 (1), (2) and (3) of Regulation (EC) No 1256/96 which comply with the conditions of this Title shall be reduced by an amount equal to 66 % of the preferential margin applying.

3. The duty applying to the products listed in Annex I and included in Part 1 of Annex II to Regulations (EC) No 3281/94 and (EC) No 1256/96 which comply with the conditions of this Title shall be reduced by an amount equal to 25 % of the Common Customs Tariff duty applying to the product in question.

4. The reduction in duty referred to in the previous paragraphs shall not be accorded:

- to the countries and sectors referred to in Article 5 (1) of Regulations (EC) No 3281/94 and 1256/96,

- to countries excluded from preferences pursuant to Article 6 of Regulations (EC) No 3281/94 and 1256/96.

Section 1 Procedure for granting the arrangements

Article 3

1. Article 2 shall apply to products originating in the beneficiary countries listed in Annex III to Regulations (EC) No 3281/94 and (EC) No 1256/96 on condition that the authorities of such countries have previously applied to the Commission in writing to take advantage of the special incentive scheme, giving details of:

- their domestic legislation incorporating the substance of the standards laid down in ILO Conventions No 87 and No 98 concerning application of the principles of the right to organize and to bargain collectively and Convention No 138 concerning the minimum age of admission to employment; the full text of such legislation must be attached, together with an official translation into one of the Community languages,

- the measures taken to implement and monitor these provisions effectively, any sectoral limits on their application, any breaches observed and a breakdown of such breaches by production sector,

- a commitment by the government of the country in question to take full responsibility for monitoring application of the special arrangements and the relevant administrative cooperation procedures.

2. The Commission shall publish a notice in the Official Journal of the European Communities, announcing that such a request has been made by a beneficiary country, stating that any useful information concerning the request may be sent to the Commission by any interested natural or legal person; it shall set the period during which interested persons may make known their views.

Article 4

1. The Commission shall examine the requests submitted by the beneficiary countries and, depending on the content, may put any further questions which it considers useful.

2. The Commission shall seek whatever information it considers necessary and may check this information where appropriate with the persons referred to in Article 3 (2) or any other natural or legal person.

3. In the beneficiary countries, and in cooperation with them, the Commission may carry out checks to verify all or part of the information gathered. The Commission shall request the authorities of the beneficiary country concerned to cooperate in this research. The Commission may be assisted in this task by the Member States.

Article 5

1. After consulting the Committee referred to in Article 17 of Regulation (EC) No 3281/94 and (EC) No 1256/96, the Commission shall decide:

- either to apply the special incentive arrangements to products originating in the requesting country on condition that the monitoring and administrative cooperation arrangements defined in the following Articles of this Title are observed,

- or, if it considers that the requesting country's legislation does not effectively incorporate all or some of the substance of ILO Conventions No 87, No 98 and No 138, not to apply the special incentive arrangements to that country or to apply them only to certain products originating there.

2. Commission decisions taken pursuant to paragraph 1 shall be adopted in accordance with the procedure laid down in Article 19 of Regulation (EC) No 3281/94 and Article 18 of Regulation (EC) No 1256/96.

3. Requesting countries shall be notified by the Commission of decisions taken pursuant to paragraph 1 and of the date on which they enter into force.

Section 2 Monitoring procedure and administrative cooperation methods

Article 6

1. Products referred to in Article 2 originating in countries which have been notified of a Commission Decision granting them entitlement to the special incentive arrangements shall be admitted pursuant to the arrangements provided for in Article 2 from the date of entry into force of that Decision on presentation of a statement by the relevant authorities of the beneficiary country certifying that the products in question have been manufactured under conditions conforming to the domestic legislation referred to in the first indent of Article 3 (1) and are therefore eligible for the special incentive arrangements concerning labour rights.

2. The statement referred to in paragraph 1 shall bear the following endorsement, as appropriate:

'ILO Conventions No 87, 98, 138 - Article 7 of Regulation (EC) No 3281/94`

'ILO Conventions No 87, 98, 138 - Article 7 of Regulation (EC) No 1256/96`

and shall be entered in box 4 of the certificate of origin form A or on the invoice declaration provided for in Article 90 of Regulation (EEC) No 2454/93. This statement shall be validated by a stamp of the relevant authorities of the beneficiary country, in accordance with the provisions of Article 93 referred to in Article 7 of this Regulation.

3. In the case of products listed in Part 1 of Annex II to Regulations (EC) No 3281/94 and (EC) No 1256/96 to which full graduation applies, the certificate of origin form A or the invoice declaration shall be valid solely in respect of the special incentive arrangements and not for any other preferential treatment.

Article 7

1. The provisions of Article 81 (3) to (6), Article 84 and Articles 93 to 95 of Regulation (EC) No 2454/94 shall apply mutatis mutandis to the statements referred to in Article 4.

2. The issuing authorities for the statements referred to in Article 4 may be different from those for certificates of origin form A.

TITLE II SPECIAL INCENTIVE ARRANGEMENTS CONCERNING ENVIRONMENTAL PROTECTION

Article 8

The special incentive arrangements referred to in Article 8 of Regulation (EC) No 3281/94 and (EC) No 1256/96 shall be introduced under the terms and conditions laid down in this Title.

Article 9

1. The preferential duty applying to the products listed in the Annex which comply with the conditions of this Title shall be reduced by an amount equal to:

- 15 % of the Common Customs Tariff duty applying to the product in question for the products of Part 1 of Annex I,

- 30 % of the Common Customs Tariff duty applying to the product in question for the products of Part 2 of Annex I,

- 35 % of the Common Customs Tariff duty applying to the product in question for the products of Part 3 of Annex I.

2. The duty applying to the products listed in Annex I and included in Part 1 of Annex II to Regulations (EC) No 3281/94 and (EC) No 1256/96 which comply with the conditions of this Title be equal to 30 % of the Common Customs Tariff duty applying to the product in question.

3. The reduction in duty referred to in paragraph 1 and Article 9 shall not apply:

- to the countries and sectors referred to in Article 5 (1) of Regulations (EC) No 3281/94 and (EC) No 1256/96,

- to countries excluded from preferences pursuant to Article 6 of Regulations (EC) No 3281/94 and 1256/96.

Section 1 Procedure for granting the arrangements

Article 10

1. Article 9 shall apply to products originating in the beneficiary countries listed in Annex III to Regulations (EC) No 3281/94 and (EC) No 1256/96 on condition that the authorities of such countries have previously applied to the Commission in writing to take advantage of the special incentive scheme, giving details of:

- their domestic legislation incorporating the substance of the ITTO standards; the full text of such legislation must be attached, together with an authentic translation into one of the Community languages,

- the measures taken to implement these provisions.

2. The Commission shall publish a notice in the Official Journal of the European Communities, announcing that such a request has been made by a beneficiary country, stating that any useful information concerning the request may be sent to the Commission by any interested natural or legal person; it shall set the period during which interested persons may make known their views.

Article 11

1. The Commission shall examine the requests submitted by the beneficiary countries and, depending on the content, may put any further questions which it considers useful.

2. The Commission shall seek whatever information it considers necessary and may check this information where appropriate with the persons referred to in Article 10 (2) or any other natural or legal person.

3. In the beneficiary countries, and in cooperation with them, the Commission may carry out checks to verify all or part of the information gathered. The Commission shall offer the authorities of the beneficiary country concerned every opportunity to cooperate in this research. The Commission may be assisted in this task by the Member States.

Article 12

1. After consulting the Committee referred to in Article 17 of Regulations (EC) No 3281/94 and (EC) No 1256/96, the Commission shall decide:

- either to apply the special incentive arrangements to products originating in the requesting country,

- or, if it considers that the requesting country's legislation does not effectively incorporate the substance of the ITTO standards; not to apply the special incentive arrangements to that country.

2. Commission decisions taken pursuant to paragraph 1 shall be adopted in accordance with the procedure laid down in Article 19 of Regulation (EC) No 3281/94 and Article 18 of Regulation (EC) No 1256/96.

3. Requesting countries shall be notified by the Commission of decisions taken pursuant to paragraph 2 and 3 and of the date on which they enter into force.

Section 2 Monitoring procedure and administrative cooperation methods

Article 13

1. Certificates of origin form A issued for products referred to in Article 9 and the invoice declarations provided for in Article 90 of Regulation (EEC) No 2454/93 shall bear the following endorsement, as appropriate:

'environmental clause - Article 8 of Regulation (EC) No 3281/94`

'environmental clause - Article 8 of Regulation (EC) No 1256/96`.

2. In the case of products listed in Part 1 to Annex II to Regulations (EC) No 3281/94 and (EC) No 1256/96 to which full graduation applies, the certificate of origin form A or the invoice declaration shall be valid solely in respect of the special incentive arrangements and not for any other preferential treatment.

TITLE III SUSPENSION PROCEDURE, GENERAL AND FINAL PROVISIONS

Article 14

1. Without prejudice to the second subparagraph of Article 94 (2) of Commission Regulation (EEC) No 2454/93, entitlement to the special incentive arrangements provided for in Articles 7 and 8 of Regulations (EC) No 3281/94 and (EC) No 1256/96, may be totally or partially suspended if there is sufficient evidence that a beneficiary country has not fulfilled its obligations within the meaning of Articles 3 and 10 of this Regulation. This total or partial suspension shall be without prejudice to the possible application of Article 9 of Regulations (EC) No 3281/94 and (EC) No 1256/96.

2. The withdrawal or suspension decision referred to in paragraph 1 shall be adopted by the Commission in accordance with the procedure laid down in Article 19 of Regulation (EC) No 3281/94 and Article 18 of Regulation (EC) No 1256/96.

Article 15

For the highly sensitive products referred to in Part 1 of Annex I to Regulations (EC) No 3281/94 and (EC) No 1256/96 the reduction in duty resulting from the application of this Regulation shall not exceed 40 %.

Article 16

This Regulation shall enter into force on 1 January 1998.

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

(1) OJ L 348, 31. 12. 1994, p. 1.

(2) OJ L 160, 29. 6. 1996, p. 1.

(3) OJ L 253, 11. 10. 1993, p. 1.

(4) OJ L 9, 13. 1. 1997, p. 1.

ANNEX

LIST OF PRODUCTS REFERRED TO IN ARTICLE 7 (1)

>TABLE>

(1) Subject to the rules for interpreting the Combined Nomenclature, the wording of 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.