EUROPEAN COMMISSION Brussels, 15.11.2018 COM(2018) 746 final 2018/0386(NLE) Proposal for a COUNCIL REGULATION amending Regulation (EU) No 1388/2013 opening and providing for the management of autonomous tariff quotas of the Union for certain agricultural and industrial products



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL •Reasons for and objectives of the proposal Autonomous tariff quotas are needed for certain products when, in the Union, production is insufficient to meet the needs of the user industry. Union tariff quotas should be opened at zero or reduced duty rates for appropriate volumes, without disturbing the markets for such products. On 17 December 2013, the Council of the European Union adopted Regulation (EU) No 1388/2013 opening and providing for the management of autonomous tariff quotas of the Union for certain agricultural and industrial products so that the Union demand for the products in question could be met under the most favourable conditions. The Regulation is updated every six months to accommodate the needs of Union industry. The Commission, assisted by the Economic Tariff Questions Group, has reviewed all requests from the Member States for autonomous tariff quotas duties. Following this review, the Commission considers that the opening of autonomous tariff quotas is justified for some new products, currently not listed in the Annex to Council Regulation (EU) No 1388/2013. In relation to some other products the wording of the description needs to be changed, new TARIC codes should be assigned, an end date needs to be added, or an increase of the initial quota volume became necessary. Products for which a tariff quota is no longer in the Union's economic interest should be withdrawn. For reasons of clarity it is advisable to publish a consolidated version of the Annex to Council Regulation (EU) No 1388/2013, which will fully replace the previous Annex. •Consistency with existing policy provisions in the policy area This proposal does not affect countries that have a preferential trading agreement with the Union nor - candidate countries or potential candidates for preferential agreements with the Union (e.g. Generalised System of Preferences; the African, Caribbean and Pacific group trade regime; Free Trade Agreements). •Consistency with other Union policies The proposal is in line with Union policies on agriculture, trade, enterprise, development, environment, and external relations. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis The legal basis of this proposal is Article 31 of the Treaty on the Functioning of the European Union (TFEU). •Subsidiarity (for non-exclusive competence) The proposal falls under the Union's exclusive competence. The subsidiarity principle therefore does not apply. •Proportionality The proposal complies with the principle of proportionality. The measures envisaged are in line with the principles for simplifying procedures for operators engaged in foreign trade, as stated in the Commission communication concerning autonomous tariff suspensions and quotas. This Regulation does not go beyond what is necessary to achieve the objectives pursued in accordance with Article 5(4) of the Treaty on European Union (TEU).

•Choice of the instrument By virtue of Article 31 of the Treaty on the Functioning of the European Union (TFEU), "Common Customs Tariff duties shall be fixed by the Council on a proposal from the Commission". Therefore, a regulation is the appropriate instrument. 3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Ex-post evaluations/fitness checks of existing legislation The autonomous tariff quotas scheme was part of an evaluation study carried out in 2013 on autonomous tariff suspensions. This is because the two measures are similar, except that tariff quotas limit import volumes. The evaluation concluded that the core rationale for the scheme remains valid. The cost savings for Union businesses importing goods under the scheme can be significant. In turn, depending on the product, company and sector, these savings can have wider benefits, such as boosting competitiveness, making production methods more efficient, and creating or keeping jobs in the Union. Details of the savings of this regulation can be found in the attached legislative financial statement. •Stakeholder consultations The Economic Tariff Questions Group, which consists of delegations from all Member States plus Turkey, assisted the Commission to assess this proposal. The group met three times before agreeing the changes in this proposal. It carefully assessed each request (new, or for an amendment). It particularly examined each case to ensure that it was not causing any harm to Union producers and was strengthening and consolidating the competitiveness of Union's production. The members of the Economic Tariff Questions Group carried out the assessment through discussions, and Member States consulted the concerned industries, associations, chambers of commerce and other stakeholders involved. All listed tariff quotas were the subject of agreements or compromises reached in the discussions held at the Economic Tariff Questions Group. No potentially serious risks with irreversible consequences were mentioned. •Impact assessment The proposed amendment is of a purely technical nature and concerns only the coverage of tariff quotas listed in the Annex to Regulation (EU) No 1388/2013. Therefore, no impact assessment was carried out for this proposal. •Fundamental rights The proposal has no consequences on fundamental rights. 4.BUDGETARY IMPLICATIONS This proposal has no financial impact on expenditure but has a financial impact on revenue. Uncollected customs duties total approximately EUR 44.7 million per year. The effect on the traditional own resources of the budget is EUR 35.8 million per year (i.e. 80 % of the total). The legislative financial statement sets out the budgetary implications of the proposal in greater detail. The loss of revenue in traditional own resources shall be compensated by Member States’ Gross National Income (GNI) based on resource contributions. 5.OTHER ELEMENTS •Implementation plans and monitoring, evaluation and reporting arrangements The measures proposed are managed within the framework of the Integrated Tariff of the European Union (TARIC) and applied by the Member States’ customs administrations.

2018/0386 (NLE) Proposal for a COUNCIL REGULATION amending Regulation (EU) No 1388/2013 opening and providing for the management of autonomous tariff quotas of the Union for certain agricultural and industrial products THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 31 thereof, Having regard to the proposal from the European Commission, Whereas: (1)In order to ensure a sufficient and uninterrupted supply of certain agricultural and industrial products which are produced in insufficient quantities in the Union and thereby avoid any disturbances on the market for those products, autonomous tariff quotas were opened by Council Regulation (EU) No 1388/2013. Within those tariff quotas, products can be imported into the Union at reduced or zero duty rates. (2)As it is in the Union's interest to ensure an adequate supply of certain agricultural, chemical, and industrial products and having regard to the fact that identical, equivalent or substitute products are not produced in sufficient quantities within the Union, it is necessary to open six new tariff quotas with order numbers 09.2600, 09.2617, 09.2720, 09.2738, 09.2740, and 09.2742 at zero duty rates for appropriate quantities of those products. It is further in the Union's interest to open the tariff quotas with order numbers 09.2740 and 09.2742 only for the purposes of using the products concerned for the manufacture of specific goods produced in the Union. The application of those quotas should therefore be made conditional on the specific use of the products in accordance with Article 254 of Regulation (EU) No 952/2013 of the European Parliament and the of Council. (3)In the case of tariff quotas bearing order numbers 09.2684, 09.2686, 09.2723, and 09.2864, the quota volumes should be increased, as an increase is in the interest of the Union. (4)For the tariff quota with order number 09.2850, the classification in the Combined Nomenclature (CN) of the products covered by those quotas should be adapted. (5)The classification in the CN of the products formerly covered by the quota with order number 09.2844 was clarified. For the sake of clarity and legal certainty, this quota with order number 09.2844 should be replaced by a quota with a new order number 09.2820, indicating the applicable CN code. (6)In the case of tariff quotas with order numbers 09.2684, 09.2728, 09.2730, 09.2734, and 09.2736, the quota period should be extended as the tariff quotas were opened for a period of six months only and it is still in the Union's interest to maintain those tariff quotas. (7)As the scope of the tariff quotas with order numbers 09.2620, 09.2668, 09.2736, 09.2850 and 09.2908 has become inadequate to fulfil the needs of the economic operators in the Union, the description of the products covered by those quotas should be amended. It is in the Union's interest to maintain the tariff quotas with order numbers 09.2668, and 09.2850 only for the purposes of incorporation of the products concerned into specific goods produced in the Union. The application of those quotas should therefore be made conditional on the specific use of the products in accordance with Article 254 of Regulation (EU) No 952/2013. (8)As it is no longer in the Union’s interest to maintain the tariff quotas with order numbers 09.2695, 09.2726, 09.2732, 09.2818, 09.2836, 09.2838 and 09.2886 they should be closed. (9)Taking into account the amendments to be made and for the sake of clarity, the Annex to Regulation (EU) No 1388/2013 should be replaced. (10)Regulation (EU) No 1388/2013 should therefore be amended accordingly. (11)In order to avoid any interruption of the application of the tariff quota scheme and to comply with the guidelines set out in the Communication from the Commission concerning autonomous tariff suspensions and quotas, the changes provided for in this Regulation regarding the tariff quotas for the products concerned have to apply from 1 January 2019. The Regulation should therefore enter into force as a matter of urgency, HAS ADOPTED THIS REGULATION:

Article 1 The Annex to Regulation (EU) No 1388/2013 is replaced by the text in the Annex to this Regulation. Article 2 This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. It shall apply from 1 January 2019. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, For the Council The President LEGISLATIVE FINANCIAL STATEMENT 1. NAME OF THE PROPOSAL: Council Regulation amending Regulation (EU) No 1388/2013 opening and providing for the management of autonomous tariff quotas of the Union for certain agricultural and industrial products 2. BUDGET LINES Chapter and Article:

Chapter 1 2 and Article 1 2 0 – Customs duties and other duties referred to in point (a) of Article 2(1) of Decision 2014/335/EU, Euratom; Amount budgeted for the year 2019 (21 471 164 786 EUR) 3. FINANCIAL IMPACT ◻ Proposal has no financial implications X Proposal has no financial impact on expenditure but has a financial impact on revenue. The effect is as follows: (EUR million to one decimal place) Budget line Revenue 12 month period, starting [Year: 2019] Article 120 Impact on own resources 01/01/2019 - 35,8