Proposal for a COUNCIL REGULATION suspending certain concessions set out in the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. In accordance with the Directives adopted by the Council on 27 June 1996, the Commission and the associated countries concerned have concluded negotiations on Additional Protocols to the Europe Agreements. The Additional Protocols adjust certain agricultural concessions provided for in the Europe Agreement to take account of the accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the European Union and the outcome of Uruguay Round negotiations, including improvements to the existing preferential arrangements. The Council approved the Additional Protocol on behalf of the Community by Council Decision of 18 May 1998 [1].

[1] OJ L 317 of 10.12.1999, p. 1.

2. Following a decision of 25 May 1999 of the Government of the Republic of Latvia and the subsequent approval on 27 May 1999 by the Parliament of the Republic of Latvia, provisional safeguard measures were introduced against import into Latvia of pigmeat (CN 0203) originating inter alia in the European Community. The provisional safeguard measures were extended by another two years as from 18 December 1999, following a decision on 7 December by the Latvian Government that was approved on 9 December by the Latvian Parliament.

3. By adopting the definitive safeguard measures without prior referral of the matter to the EU-Latvia Association Council, the Republic of Latvia has not acted in conformity with its obligations under Articles 33(2) and 33(3)(a) of the EU-Latvia Europe Agreement, which provide for the matter being referred to the EU-Latvia Association Council together with all relevant information with a view to seeking a solution within 30 days.

4. Only technical consultations have been held between the Parties (on 26 May 1999, 15 June 1999, 12 October 1999 and 23 November 1999), but Latvia did not provide all relevant information to the EU-Latvia Association Council prior to the adoption of the definitive safeguard measures.

5. The Republic of Latvia has, moreover, failed to establish that the conditions required in Article 30 of the EU-Latvia Europe Agreement for the adoption of safeguard measures are fulfilled in this case. In particular, Latvia has failed to prove that pigmeat originating in the Community has been imported into Latvia in such increased quantities and under such conditions as to cause serious injury to Latvian producers of like or directly competitive products.

6. Following the entry into force of the Latvian safeguard measures of pigmeat, the Community's operators suffer substantial economic losses due to the fact that they no longer are able to export any pigmeat to Latvia. In order to protect the Community's interests, the Commission proposes that measures should be taken in retaliation to the safeguard measures on pigmeat introduced by the Republic of Latvia. Consequently, this Regulation provides for a suspension of the agricultural concessions on butter, which the Community grants to the Republic of Latvia.

7. The Council is requested to adopt the proposed Regulation.

2000/0054 (ACC)

Proposal for a COUNCIL REGULATION suspending certain concessions set out in the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part

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 ....

Whereas:

(1) The Protocol adjusting trade aspects of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part, to take account of the accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the European Union and the outcome of Uruguay Round negotiations, including improvements to the existing preferential arrangements [3] which the Council decided to conclude on 18 May 1998, entered into force on 1 March 2000. The Europe Agreement provides for concessions in relation to agricultural products granted by the Community and Latvia to each other on a harmonious and reciprocal basis, as set out in Annex Va (Community concessions), Annex X and Annex XI (concessions by Latvia).

[3] OJ L 317 of 10.12.1999, p. 1.

(2) On 1 June 1999 the Republic of Latvia introduced provisional safeguard measures on pigmeat originating inter alia in the European Community without respecting its obligations for consultation as laid down in Articles 33(2) and 33(3)(a) of Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part [4].

[4] OJ L 26 of 2.2.1998, p. 3.

(3) As from 18 December 1999 the Republic of Latvia adopted definitive safeguard measures on pigmeat for a time period of two years.

(4) The Community considers that the Republic of Latvia has failed to establish that the conditions of Article 30 of the Europe Agreement with Latvia for the adoption of safeguard measures are fulfilled in this case. In particular, Latvia has failed to prove that pigmeat originating in the Community has been imported into Latvia in such increased quantities and under such conditions as to cause serious injury to Latvian producers of like or directly competitive products.

(5) As a consequence of the measures taken by the Republic of Latvia, the Community's exports to the Republic of Latvia of the products concerned have been seriously restricted.

(6) Under the Europe Agreement with Latvia this situation gives raise to the application of Article 123(2) thereof.

(7) It is appropriate to protect the Community's trade interests by suspending certain of the concessions set out in the Europe Agreement with Latvia which are equivalent to the effect in trade value of the Latvian safeguard measures on pigmeat on the Community's exports to Latvia.

(8) As required by Article 123(2) of the Europe Agreement with Latvia, in the selection of measures, priority must be given to those which least disturb the functioning of the Europe Agreement.

(9) Before taking these measures, the EU-Latvia Association Council was supplied with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties.

(10) Since the measures necessary for the implementation of this Regulation are management measures within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [5], they should be adopted by use of the management procedure provided for in Article 4 of that Decision.

[5] OJ L 184, of 17.7.1999, p. 23.

HAS ADOPTED THIS REGULATION:

Article 1

The following concessions set out in Annex V(a) of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part, are hereby suspended:

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Article 2

The Commission shall repeal the measures set out in Article 1, in accordance with the procedure laid down in Article 3(2), once the safeguard measures imposed by the Republic of Latvia on imports of pigmeat originating in the European Community have been abolished.

Article 3

1. The Commission shall be assisted by the Management Committee for Milk and Milk Products instituted by Article 41 of Council Regulation (EC) No 1255/1999 [6].

[6] OJ L 160 of 26.6.1999, p. 48.

2. Where reference is made to this paragraph, the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply, in compliance with Article 7(3) thereof.

3. The period provided for in Article 4(3) of Decision 1999/468/EC shall be one month.

Article 4

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

It shall apply to import licences issued after the date of the entry into force of this Regulation.

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

Done at Brussels,

For the Council

The President

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ANNEX SUSPENSION OF CONCESSIONS GRANTED TO THE REPUBLIC OF LATVIA

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The quantities used in the calculation relate to the preferential tariff quotas granted by the EC on imports of butter from Latvia as from 1 July 2000. On the basis of the EC imports of butter originating in Latvia during the past three years, it can be assumed that the tariff quotas would be fully used during this period.

If the suspension of the reduced duties were to put an end to exports of butter from Latvia to the EU, this measure would result in a loss of own resources equivalent to those anticipated to be collected in 2000.