Proposal for a COUNCIL REGULATION implementing Article 12 of Council Regulation (EC) No 2501/2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Sectoral graduation is a feature of the European Union's Scheme of Generalised Tariff Preferences. It is meant to target such preferences on those countries which need them most, by removing preferential treatment from sectors of countries which turn out to be able to face international competition without preferential market access.

2. Recital 15 of the Council Regulation (EC) No 2501/2001 of 10 December 2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004 [1] states that

[1] OJ L 346, 31.12.2001, p. 1

"During the first year of application of this Regulation, the sectors previously graduated should remain graduated."

3. Article 12 of the above regulation states that

"1. The tariff preferences referred to in Articles 7 and 10 shall be removed in respect of products originating in a beneficiary country, of a sector which has met, during three consecutive years, either of the following criteria:

(a) - the country's development index, as defined in Annex II, is higher than -2, and

- Community imports from that country of all products of the sector concerned and included in the arrangements enjoyed by that country exceed 25% of Community imports of the same products from all countries and territories listed in Annex I;

(b) - the country's development index, as defined in Annex II, is higher than -2 and

- the specialisation index of the sector concerned is higher than the threshold corresponding to that country's development index, as defined in Annex II, and

- Community imports from that country of all products of the sector concerned and included in the arrangements enjoyed by that country exceed 2% of Community imports of the same products from all countries and territories listed in Annex I.

2. Where a sector, in respect of which tariff preferences had been removed according to column D of Annex I or to a decision taken subsequently in accordance with this Article, has not met, during three consecutive years, either of the criteria set out in paragraph 1, the tariff preferences shall be re-established.

3. On the basis of the most recent data available on 1 September of each year, the Commission shall establish which sectors meet the conditions laid down in paragraphs 1 and 2.

4. The Commission shall publish a notice in the Official Journal of the European Communities, listing the sectors which meet the criteria set out in paragraph 1 in respect of the most recent year for which data are available.

5. Upon the entry into force of this Regulation, and before the end of each year, the Commission shall decide, in accordance with the procedure referred to in Article 38, to remove tariff preferences in respect of sectors which meet the condition set out in paragraph 1 and to re-establish tariff preferences for sectors which meet the condition set out in paragraph 2.

6. The first decision taken in accordance with paragraph 5 shall enter into force on 1 January 2003. Subsequently, decisions taken in accordance with paragraph 5 shall enter into force on 1 January of the second year following the one during which they were taken."

4. According to Article 12 (5), the Commission has to take a decision on graduation. The present draft regulation is meant to implement this provision.

5. The calculations referred to in Article 12 have to be carried out using the most recent and complete trade statistics available. These are, at present, those referring to the years 1997, 1998 and 1999.

6. According to the results of these calculations, 52 sectors, which were graduated in the past, should remain graduated. 22 sectors previously not graduated should be graduated in the future while 16 sectors which were graduated in the past, should be readmitted for GSP treatment. The updated situation is reflected in the annex of the draft Regulation.

7. According to Article 12 (5), the Commission's decision has to be taken in accordance with the procedure referred to in Article 38 of the GSP Regulation. Accordingly, Member States have been consulted in the framework of the Generalised Preferences Committee. They did not approve the Commission's proposal to update graduation in accordance with the results of the calculations. As the measures envisaged are not in accordance with the opinion of the Committee, the Commission shall, without delay, submit this draft Regulation to the Council.

2003/0016 (ACC)

Proposal for a COUNCIL REGULATION implementing Article 12 of Council Regulation (EC) No 2501/2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004

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 [2],

[2] OJ C , , p. .

Having regard to the opinion of the Committee referred to in article 37 of Council Regulation No 2501/2001, which was not in accordance with the proposed Commission Regulation submitted by the Commission with regard to the measures to be taken in application of the Article 12 above mentioned,

Whereas:

(1) The tariff preferences referred to in Articles 7 and 10 of Regulation (EC) No 2501/2001 should be removed in respect of products, originating in a beneficiary country, of a sector which has met, during three consecutive years, either of the criteria laid down in that Regulation.

(2) Tariff preferences which had been removed under previous schemes, should be re-established in respect of a sector that has not met, during three consecutive years, the criteria set out in that Regulation.

(3) The most recent and complete statistics available to establish which sectors meet the conditions laid down in Regulation (EC) No 2501/2001 are those for the years 1997 to 1999.

(4) The date of application of this Regulation should be set taking into account the necessity for economic operators to adapt to the new customs duties thus established.

(5) Annex I of Council Regulation (EC) No 2501/2001 should be replaced in order to reflect the removal or re-establishment of tariff preferences provided for in Articles 7 and 10.

HAS ADOPTED THIS REGULATION:

Article 1

(1) The tariff preferences provided for in Articles 7 and 10 of Council Regulation (EC) No 2501/2001 are hereby removed in respect of products originating in the beneficiary countries listed in Annex I to this regulation, of the sectors mentioned in that annex alongside each country concerned.

(2) The tariff preferences provided for in Articles 7 and 10 of Council Regulation (EC) No 2501/2001 are hereby re-established in respect of products originating in the beneficiary countries listed in Annex II to this regulation, of the sectors mentioned in that annex alongside each country concerned.

Article 2

(1) This Regulation shall enter into force from its date of publication . It shall apply from 1 April 2003 in respect of Article 1(1), and from 1 June 2003 in respect of Article 1(2).

(2) Annex I of Council Regulation (EC) No 2501/2001 shall be replaced by Annex III of this Regulation from 1 June 2003.

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

Done at Brussels,

For the Council

The President

[...]

ANNEX I

Sectors in respect of which tariff preferences shall be removed.

>TABLE POSITION>

ANNEX II

Sectors in respect of which tariff preferences shall be re-established.

>TABLE POSITION>

ANNEX III

' ANNEX I

Beneficiary countries and territories of the Community's scheme

of generalised tariff preferences

Column A: code according to the nomenclature of countries and territories for the external trade statistics of the Community

Column B: name of country

Column C: sectors not included in the general arrangements for the beneficiary country concerned (Article 7(7))

Column D: sectors in respect of which tariff preferences have been removed for the beneficiary country concerned (Article 7(8))

Column E: countries included in the special incentive arrangements for the protection of labour rights (Title III Section1)

Column F: sectors included in these arrangements for the beneficiary country concerned (Article 8(1) and (2))

Column G: countries included in the special incentive arrangements for the protection of the environment (Title III Section 2)

Column H: countries included in the special arrangements for least developed countries (Article 9)

Column I: countries included in the special arrangements to combat drug production and trafficking (Title IV)

>TABLE POSITION>

FINANCIAL STATEMENT //

DATE: 16.12.2002

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1. TITLE:

Proposal for a Council Regulation implementing Article 12 of Council Regulation (EC) No 2501/2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004

2. LEGAL BASIS:

Article 12 of Council Regulation (EC) No2501/2001

3. AIMS:

The purpose of the regulation is to implement Article 12 of Council Regulation (EC) No 2501/2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004

4. FINANCIAL IMPLICATIONS

Implementing a scheme of generalised preferences does not entail any expenditure to be entered in the Community budget. It may result in a loss or gain of customs revenue, depending on the number of sectors and the volume of trade which qualify for graduation and de-graduation.

Based on the figures of 2001, the graduation of 22 sectors would have resulted in a gain of customs revenue of approximately EUR 761 million and the degraduation of 16 sectors in a loss of customs revenue of approximately EUR 33 million, i.e. a net gain of EUR 728 million. As graduation enters into force on 1 April 2003, the gain would be correspondingly less.