Proposal for a Council Regulation (EC) applying a multiannual scheme of generalised tariff preferences for the period 1 January 1999 to 31 December 2001 (98/C 362/01) COM(1998) 521 final - 98/0280(ACC)

(Submitted by the Commission on 17 September 1998)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 113 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, in accordance with its offer made within the context of the United Nations Conference on Trade and Development (Unctad), the European Community opened generalised tariff preferences commencing in 1971 in respect of certain agricultural and industrial products from developing countries; whereas the initial 10-year period of application of the system of preferences ended on 31 December 1980 and a second 10-year period ended on 31 December 1990, though the scheme was kept in being unchanged until 31 December 1994 when the Community made a new 10-year offer (1995-2004);

Whereas the positive role played by this system in the past in improving access for the developing countries to the markets of preference-giving countries is accepted and justifies its continued existence for a time, in step with other priority measures, including the multilateral liberalisation of trade;

Whereas in a communication to the Council dated 1 June 1994 (1) the Commission set out its recommendations for a further 10-year period of application of its scheme of generalised preferences for the period 1995-2004;

Whereas these guidelines were confirmed in 1995 by the adoption of the first scheme for the 10-year period, governed by Council Regulation (EC) No 3281/94 of 19 December 1994 applying a four-year scheme of generalised tariff preferences (1995-1998) in respect of certain industrial products originating in developing countries (2) and Council Regulation (EC) No 1256/96 of 20 June 1996 applying a multiannual scheme of generalised tariff preferences from 1 July 1996 to 30 June 1999 in respect of certain agricultural products originating in developing countries (3);

Whereas the Treaty on European Union has lent a fresh impetus to Community development policy as an aspect of the Union's foreign policy, with priority given to the sustainable economic and social development of the developing countries and their smooth and gradual integration into the world economy;

Whereas the Community scheme of generalised preferences should therefore continue in its development-oriented approach, focusing on the countries which have most need of it, i.e. the poorest countries; whereas the scheme should be complementary to World Trade Organisation (WTO) instruments and should foster the integration of developing countries into the world economy and the multilateral trading system; whereas the giving of preferences should accordingly be seen as a transitional measure, to be used as needed and phased out when the need is considered no longer to exist;

Whereas the Community scheme of generalised tariff preferences must continue to aim at a level of liberalisation at which the impact of the preferential margin on the potential volume of preferential trade is neutral overall compared with the previous schemes, without prejudice to special arrangements;

Whereas the Community scheme of generalised tariff preferences must also take account of certain sectors or products which are sensitive for Community industry and agriculture; whereas sensitive sectors should continue to be protected against import surges by means of a dual mechanism involving a modulation of preferential tariff margins coupled with an emergency safeguard clause;

Whereas in order to improve access to the Community market and increase the actual take-up of preferences by moderately-developed or less-developed countries, the system of graduation should continue in being;

Whereas sector/country graduation combines a development criterion, expressed as a development index reflecting a country's per capita income and the level of its manufactured exports as compared with those of the Community, with a measurement of relative specialisation expressed as a specialisation index based on the ratio of the beneficiary country's share of total Community imports in general to its share of total Community imports in a given sector; whereas combined application of these two criteria should make it possible to adjust the crude results of the specialisation index, in terms of the sectors to be excluded, in line with the level of development;

Whereas the Community may review the results of the graduation mechanism before the end of 1999 in the light of changes in the world trade and investment climate;

Whereas the sector/country graduation system should also continue to apply to beneficiary countries whose exports of products covered by the generalised system of preferences (GSP) in a given sector exceeded 25 % of all beneficiaries' exports of those products in that sector in the statistical reference year of the previous scheme, irrespective of their level of development;

Whereas countries whose exports to the Community of products covered by the GSP in a given sector did not exceed 2 % of all beneficiary countries' exports to the Community in that sector in the statistical reference year of the previous scheme should remain exempt from the graduation system;

Whereas countries and territories whose per capita income is higher than that of a Member State of the Community and whose development index is higher than -1 should continue to be excluded from the scheme;

Whereas at the Singapore ministerial conference in December 1996 the WTO member countries pledged to carry out an action plan to improve access to their markets for products originating in the least-developed countries;

Whereas, on the basis of a Commission communication of 16 April 1997 and the Council conclusions of 2 June 1997, Council Regulation (EC) No 602/98 (4) granted least-developed countries not party to the Lomé Convention preferences equivalent to those enjoyed by signatories;

Whereas countries undertaking effective programmes to combat drug production and trafficking should remain entitled to the more favourable treatment granted them under the previous scheme; whereas the countries concerned will therefore continue to enjoy duty-free access for industrial and agricultural products provided they continue their efforts to combat drugs; whereas the above treatment should be extended to industrial products from the Central American Common Market countries and Panama;

Whereas the continuation of this special treatment after 31 December 1999 should, however, be conditional upon compliance with the social and environmental standards governing eligibility for the labour right and environmental protection incentives; whereas in the event of failure to comply with these standards and related procedures, the margin of the special drugs preference should be reduced by an amount proportional to the advantage offered under the incentive arrangements;

Whereas beneficiary countries willing to do so but as yet unable to meet the costs may be encouraged to introduce effective policies for the protection of workers' rights, with particular regard to the right to organise and the prohibition of child labour; whereas more favourable treatment should therefore also be available for products manufactured in conditions conforming to standards laid down by the International Labour Organisation (ILO) in countries whose legislation contains rules of similar scope and substance which are actually applied;

Whereas beneficiary countries may also be encouraged to undertake effective environmental protection policies by means of incentives for products and production methods internationally approved as consistent with the objectives set out in international conventions on the environment and in Agenda 21; whereas to that end more favourable treatment may initially be made available for tropical wood products from forests which are sustainably managed in conformity with International Tropical Timber Organisation (ITTO) standards;

Whereas Council Regulation (EC) No 1154/98 (5) implemented the special incentive arrangements concerning labour rights and environmental protection provided for in Articles 7 and 8 of Regulations (EC) No 3281/94 and (EC) No 1256/96;

Whereas the special incentive arrangements should be available to countries which are beneficiaries of the general scheme, even in sectors where they may be subject to the graduation mechanism but not in those subject to the clause in Article 5(1) of Regulations (EC) No 3281/94 and (EC) No 1256/96, as these are excluded for reasons of competitive capacity irrespective of the level of development of the country concerned;

Whereas the incentives for 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 ILO Conventions Nos 87 and 98 concerning the application of the principles of the right to organise and to bargain collectively and ILO Convention No 138 concerning the minimum age for admission to employment;

Whereas the incentives for labour rights should be confined to countries, or in certain cases, to production sectors that have actually taken steps to comply with the ILO Conventions in question; whereas provision must therefore be made for the incentives to apply to certain sectors but not to others;

Whereas the incentives for 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 Organisation;

Whereas requests for application of the social and environmental incentives must be subject to a publication procedure enabling interested parties to make their views known; whereas the decision on whether to grant this treatment must be taken after the Commission has examined the requests closely and the Generalised Preferences Committee has delivered a favourable opinion;

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

Whereas, for the purposes of certification and administrative cooperation procedures, 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 1992 establishing the Community Customs Code (6) should be applied; whereas, however, special procedures should be provided in order to safeguard the legitimate interests of importers using the special incentive arrangements;

Whereas if the incentives are to be fully effective the additional preferential margin must be attractive; whereas the margins specified in Council Regulation (EC) No 1154/98 should accordingly continue to apply;

Whereas the international criteria for the preservation of tropical forests cannot for the time being be used to monitor logging operations; whereas at this stage it is preferable for the purposes of the environmental incentives to vet countries thoroughly in advance, without prejudice to subsequent use of ex post verification as soon as conditions permit; whereas the additional preferential margins available should 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 this Regulation, the further reduction in duty which may be applied to these products under the special incentive arrangements should be limited to 40 %;

Whereas in certain circumstances it may be appropriate to withdraw temporarily all or part of a country's entitlement under the special incentive arrangements, for instance where beneficiary states fail to honour their commitments;

Whereas in certain circumstances it may be appropriate to withdraw temporarily some or all of a country's preferential entitlement; whereas such circumstances include any form of forced labour, exports of goods made by prison labour, inadequate controls on the export or transit of drugs or on money laundering, legislation discriminating against the Community, failure to apply the administrative cooperation methods necessary for the scheme to function properly, failure to comply with obligations entered into in the Uruguay Round to meet agreed market-access objectives, or failure to comply with certain international conventions concerning the conservation and management of fishery resources;

Whereas temporary withdrawal of entitlement must be the culmination of a procedure which gives all interested parties an opportunity to state their views;

Whereas the Community must be able to act swiftly against third countries when its financial interests are damaged as a result of fraud, serious and repeated irregularities or a manifest lack of administrative cooperation in such countries; 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;

Whereas at the end of that procedure the decision on temporary withdrawal as defined above should be taken in the context of overall relations with the beneficiary country concerned; whereas the Community interest may in some cases be better served by having the Council discuss that context, which is likely to include aspects unrelated to trade; whereas the power to decide on the withdrawal of some or all of a country's preferential entitlement should therefore lie with the Council;

Whereas the temporary withdrawal of all tariff preferences in respect of industrial and agricultural products originating in Myanmar should remain in force in accordance with the conditions laid down in Council Regulation (EC) No 552/97 (7) on account of the use of forced labour there;

Whereas it would be illogical to accord preferences in respect of products subject to anti-dumping or anti-subsidy measures unless such measures reflected the impact of the preferential arrangements;

Whereas the preferential rates of duty to be applied under this Regulation should normally be calculated on the basis of the conventional rate of duty in the Common Customs Tariff for the products concerned; whereas they should, however, be calculated from the autonomous rate of duty where no conventional rate is given for the products concerned or where the autonomous rate is lower than the conventional rate;

Whereas the same methods of calculation should apply to ad valorem rates of duty as well as to the treatment of minimum and maximum duties provided in the Common Custom Tariff; whereas this reduction of duties does not affect the collection of charges laid down under the common agricultural policy such as agricultural specific duties added to ad valorem duties or import charges which are not customs duties within the meaning of Article 20(3)(c) of Council Regulation (EEC) No 2913/92 (8); whereas the calculation must in no case be based on duties applied under conventional or autonomous tariff quotas;

Whereas the current scheme for agricultural products as set out in Regulation (EC) No 1256/96 should be applied until its due expiry date, i.e. 30 June 1999,

HAS ADOPTED THIS REGULATION:

Article 1

1. The Community scheme of generalised tariff preferences, comprising general arrangements and special incentive arrangements, is hereby renewed for the period from 1 January 1999 to 31 December 2001, to apply in accordance with the conditions and arrangements laid down in this Regulation.

2. This Regulation shall apply to products falling within Chapters 1 to 97 of the Common Customs Tariff, excluding Chapter 93, which are listed in Annex I and, on the conditions laid down in Articles 6 and 7, to the products listed in Annex VII.

3. Access to the arrangements referred to in paragraph 1 shall be restricted to the countries and territories listed in Annex III.

4. Entitlement to the preferences granted by this Regulation shall remain temporarily withdrawn in respect of products originating in Myanmar on the conditions laid down in Council Regulation (EC) No 552/97.

5. Countries or territories which meet the following criteria shall be removed from the list of beneficiary countries or territories in Annex III:

- a per capita gross national product exceeding USD 8 210 for 1995, according to the most recent World Bank figures,

- a development index, calculated in accordance with the formula and figures given in Part 2 of Annex II, greater than -1.

These criteria shall apply cumulatively.

6. In order to be admitted under one of the preferential arrangements established by this Regulation, products must comply with a definition of origin adopted in accordance with the procedure laid down in Article 249 of Regulation (EEC) No 2913/92.

7. The removal of a country or territory from the list of countries and territories entitled to generalised preferences by virtue of paragraph 5 shall no affect the possibility of using products originating in that country under the regional cumulation mechanism applicable to all regional groupings referred to in Article 72(3) of Regulation (EEC) No 2454/93, provided that the country has been a member of the regional grouping since the multiannual system of preferences applicable to the product concerned in 1995 entered into force and is not considered to be the country of origin of the final product within the meaning of Article 72(a) of that Regulation.

TITLE I GENERAL ARRANGEMENTS

SECTION 1 Modulation mechanism

Article 2

1. The preferential duty applying to products listed in Part 1 of Annex I shall be 85 % of the Common Customs Tariff duty applicable to the product concerned, without prejudice to the provisions of Title II.

2. The preferential duty applying to products listed in Part 2 of Annex I shall be 70 % of the Common Customs Tariff duty applicable to the product concerned, without prejudice to the provisions of Title II.

3. The preferential duty applicable to products listed in Part 3 of Annex I shall be 35 % of the Common Customs Tariff duty applicable to the product concerned, without prejudice to the provisions of Title II.

4. Common Customs Tariff duties shall be suspended in their entirety on products listed in Part 4 of Annex 1.

SECTION 2 Graduation mechanism

Article 3

1. Loss of entitlement to the advantages referred to in Article 2 under the graduation mechanism established by the previous scheme shall continue to apply to the countries and sectors listed in Part 1 of Annex II which meet the criteria laid down in Part 2 of Annex II.

2. Products coming under the ECSC Treaty shall remain excluded from the preferential arrangements in the case of countries which were not entitled to them under the previous scheme.

Article 4

1. Loss of entitlement to the advantages referred to in Article 2 under the graduation mechanism shall also continue to apply to the countries listed in Part 2 of Annex II whose exports to the Community of products covered by this scheme in a given sector exceeded 25 % of all beneficiary countries' exports to the Community in that sector in the statistical reference year of the previous scheme.

2. Countries whose exports to the Community of products covered by the scheme in a given sector did not exceed 2 % of all beneficiary countries' exports to the Community in that sector in the statistical reference year of the previous scheme shall continue to be exempt from the graduation mechanism.

Article 5

The Commission shall present a report to the Committee referred to in Article 32 of this Regulation on the application of Articles 3 and 4 by 31 December 1999 and, if necessary, submit appropriate proposals to the Council.

SECTION 3 Special support arrangements for the least developed countries

Article 6

For the least developed countries listed in Annex IV, Common Custom Tariff duties shall be suspended in their entirety in respect of the products listed in Annex I and reduced according to the modulation mechanism provided for in Article 2 in respect of the products listed in Annex VII.

SECTION 4 Special arrangements supporting measures to combat drugs

Article 7

For the countries listed in Annex V, Common Customs Tariff duties shall be suspended in their entirety on the industrial products listed in Annex I falling within Chapters 25 to 97 of the Common Customs Tariff, excluding Chapter 93, and on the agricultural products listed in Part 4 of Annex VII, except for those marked with an asterisk, under the conditions specified in Article 11 and without prejudice to the procedure described in Article 32(3).

TITLE II SPECIAL INCENTIVE ARRANGEMENTS

SECTION 1 Common provisions

Article 8

The special incentive arrangements concerning labour rights and environmental protection introduced by the previous scheme are hereby renewed according to the terms and conditions laid down in this Title.

Article 9

The provisions of this Title relating to the special incentive arrangements for the protection of the environment shall apply only to the products listed in Annex VIII.

Article 10

1. The preferential duty applying to agricultural products of Chapters 1 to 24 of the Common Customs Tariff listed in Annex I which comply with the conditions of this Title shall be reduced by an amount equal to:

- 10 % of the Common Customs Tariff duty applicable to the products in Part 1,

- 20 % of the Common Customs Tariff duty applicable to the products in Part 2,

- 35 % of the Common Customs Tariff duty applicable to the products in Part 3.

2. The preferential duty applying to industrial products of Chapters 25 to 97 of the Common Customs Tariff, excluding Chapter 93, which are listed in Annex I and which comply with the conditions of this Title shall be reduced by a amount equal to:

- 15 % of the Common Customs Tariff duty applicable to the products in Part 1,

- 25 % of the Common Customs Tariff duty applicable to the products in Part 2,

- 35 % of the Common Customs Tariff duty applicable to the products in Part 3.

3 (a) The duty applying to agricultural products of Chapters 1 to 24 of the Common Customs Tariff referred to in Article 3(1) which comply with the conditions of this Title shall be reduced by an amount equal to 15 % of the Common Customs Tariff duty applicable to the products in question.

(b) The duty applying to industrial products of Chapters 2 to 97, excluding Chapter 93, referred to in Article 3(1) which comply with the conditions of this Title shall be reduced by an amount equal to 25 % of the Common Customs Tariff duty applicable 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 4(1).

5. The application of the special incentive arrangements shall not result in treatment more favourable than that applied under Article 7 for the products listed in Annex VII.

Article 11

1. The continuation after 31 December 1999 of the special treatment provided for in Article 7 for the benefit of the countries listed in Annex V shall be conditional upon their compliance with the procedures laid down in Sections 2, 3, 4 and 5 of this Title governing the granting and monitoring of the special incentive arrangements.

2. Each country listed in Annex V shall notify the Commission in writing of its intention to submit by 30 June 1999 a request for application of the special arrangements as provided for in Articles 12 and 17 of this Regulation. Such notification shall be sent to the Commission by 31 March 1999 at the latest. Where no notification is received within the specified time limit or a beneficiary country explicitly waives its right to apply for the incentive arrangements, paragraph 3 below shall take immediate effect.

3. Where the procedures for granting the incentive arrangements reveal that a country listed in Annex V fails to meet some or all of the conditions for the incentive arrangements or where such a country fails to comply with the procedures for granting or monitoring them, the additional margin offered to that country under the Article 7 arrangements shall be reduced by:

- 15 % of the Common Customs Tariff duty for agricultural products of Chapters 1 to 24 of the Common Customs Tariff,

- 25 % of the Common Customs Tariff duty for industrial products of Chapters 25 to 97 of the Common Customs Tariff, excluding Chapter 93.

The decision shall be taken in accordance with the procedure provided for in Article 33.

SECTION 2 Procedure for granting the special incentive arrangements concerning labour rights

Article 12

1. Without prejudice to the following Articles, the reductions specified in Article 10 shall apply to products originating in the beneficiary countries listed in Annex III on condition that the authorities of those countries have applied to the Commission in writing to take advantage of the special arrangements for their originating products, giving detail of:

- their domestic legislation incorporating the substance of the standards laid down in ILO Conventions Nos 87 and 98 concerning application of the principles of the right to organise 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 apply and monitor these provisions effectively, any sectoral restrictions 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 and stating that any relevant information concerning the request may be sent to the Commission by any interested natural or legal person; it shall specify the period within which interested parties may make known their views.

Article 13

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 relevant.

2. The Commission shall seek whatever information it considers necessary and may check this information where appropriate with the persons referred to in Article 12(2) or any other natural or legal person.

3. The Commission may carry out checks in requesting beneficiary countries, and in cooperation with them, to verify all or part of the information gathered. The Commission shall invite the authorities of such beneficiary countries to cooperate in these investigations. The Commission may be assisted in this task by the Member States.

4. The Commission shall complete the examination of a request within a year of the date of receipt. It may extend this deadline if necessary, informing the Committee referred to in Article 32.

5. The Commission shall submit the findings of its examination to the Committee referred to in Article 32.

Article 14

1. The Commission shall decide, in accordance with the procedure laid down in Article 33, either to grant 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 legislative, implementing and monitoring provisions do not ensure effective application of ILO Conventions Nos 87, 98 and 138, not to grant them.

2. Where the special arrangements cannot be applied in accordance with the procedure laid down in paragraph 1, the Commission may decide in accordance with the procedure laid down in Article 33 that the special arrangements be granted to some sectors if, after the examination provided for in Article 13, it considers that ILO Conventions Nos 87, 98 and 138 are effectively applied only in those sectors.

3. Applicant countries shall be notified by the Commission of decisions taken pursuant to paragraphs 1 and 2 and of the date on which they enter into force.

4. In particular, if the Commission decides not to grant the special incentive arrangements to a country or to exclude some sectors, it shall explain the reasons for its decision to the applicant country if that country so requests. Such dialogue shall be conducted in close coordination with the committee referred to in Article 32.

SECTION 3 Monitoring procedure and administrative cooperation methods for the special incentive arrangements concerning labour rights

Article 15

1. Products referred to in Article 10 originating in countries which have been notified of a decision granting them entitlement to the special incentive arrangements shall be admitted under the arrangements provided for in Article 10 from the date of entry into force of that decision on presentation of a statement by the beneficiary country's competent authorities, duly identified during appraisal of the request, certifying that the products in question and their components have been manufactured in that country, or in a country entitled to regional cumulation within the meaning of Article 72 of Regulation (EEC) No 2454/93, under conditions complying with the domestic legislation referred to in the first indent of Article 12(1) and are therefore eligible for the special incentive arrangements.

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

'ILO Conventions Nos 87, 98, 138 - Title II of Regulation (EEC) No 0000/98`

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 beneficiary country authority referred to in paragraph 1, in accordance with the provisions of Article 93 of Regulation (EEC) No 2454/93.

3. In the case of the products referred to in Article 3, 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 16

1. The provisions of Article 81(3) to (6), Article 84 and Articles 93 to 95 of Regulation (EEC) No 2454/93 shall apply mutatis mutandis to the statements referred to in Article 15.

2. The issuing authorities for the statements referred to in Article 15 may be different from those for certificates of origin form A.

3. Having regard to Article 94(5) of Regulation (EEC) 2454/93, the Commission, in cooperation with the Committee referred to in Article 32, shall draw up a non-exhaustive list of criteria specifying cases of reasonable doubt which may arise for these incentives, at the latest by the time a request for special preferences is granted. The Commission shall publish this list in the Official Journal of the European Communities.

4. (a) The customs authorities in the Community shall inform the Commission, which shall immediately publish a notification in the Official Journal of the European Communities:

- that reasonable doubt exists about the entitlement to the special incentives, making clear the products, producers and exporters to which it applies, when a second communication is sent under Article 94(5) of Commission Regulation (EEC) No 2454/93 which relates to the benefits granted in this Regulation, or

- that a particular product from particular producers and exporters is not entitled to the special incentives, when it has been so established using the procedure in Article 94 of Regulation (EEC) No 2454/93.

(b) The part of any customs debt which corresponds to the benefits granted under this Title shall be considered not to be incurred unless it is incurred after the date of publication of the notification referred to in subparagraph (a) and the debt concerns a product, producer and exporter specially mentioned therein, or unless the conditions justifying the application of the second sentence of Article 221(3) of Regulation (EEC) No 2913/92 exist.

SECTION 4 Procedure for granting the special incentive arrangements concerning environmental protection

Article 17

1. Without prejudice to the following Articles, the reductions specified in Article 10 shall apply to products originating in the beneficiary countries listed in Annex III on condition that the authorities of those countries have applied to the Commission in writing to take advantage of the special incentive scheme for their originating products, 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 that legislation,

- their commitment to maintain that legislation and the implementing measures.

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 and stating that any relevant information concerning the request may be sent to the Commission by any interested natural or legal person; it shall specify the period within which interested parties may make known their views.

Article 18

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 relevant.

2. The Commission shall seek whatever information it considers necessary and may check this information where appropriate with the persons referred to in Article 17(2) or any other natural or legal person.

3. The Commission may carry out checks in requesting beneficiary countries, and in cooperation with them, to verify all or part of the information gathered. The Commission shall invite the authorities of such beneficiary countries to cooperate in these investigations. The Commission may be assisted in this task by the Member States.

4. The Commission shall complete the examination of a request within a year of the date of receipt. It may extend this deadline if necessary, informing the Committee referred to in Article 32.

5. The Commission shall submit the findings of its examination to the Committee referred to in Article 32.

Article 19

1. The Commission shall decide in accordance with the procedure laid down in Article 33 of this Regulation:

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

- or, if it considers that the requesting country's legislation is not sufficient to ensure effective application of the substance of the ITTO standards, not to grant the special incentive arrangements to that country.

2. 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.

3. In particular, if the Commission decides not to grant the special incentive arrangements to a country, it shall explain the reasons for its decision to the applicant country. Such dialogue shall be conducted in close coordination with the Committee referred to in Article 32.

SECTION 5 Monitoring procedure and administrative cooperation methods for the special incentive arrangements concerning environmental protection

Article 20

1. Certificates of origin form A issued for products referred to in Article 10 and the invoice declarations provided for in Article 90 of Regulation (EEC) No 2454/93 shall bear the following endorsement, as appropriate:

'Environmental clause - Title II of Regulation (EC) No 0000/98`.

2. In the case of the products referred to in Article 3, 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.

SECTION 6 Other provisions common to the special incentive arrangements

Article 21

1. Without prejudice to the second subparagraph of Article 94(2) of Regulation (EEC) No 2454/93, all or part a country's entitlement to the special incentive arrangements may be temporarily withdrawn if there is sufficient evidence that that country has not fulfilled its obligations within the meaning of Articles 12 and 17. Such total or partial withdrawal shall be without prejudice to the possible application of Article 23.

2. The withdrawal decision referred to in paragraph 1 shall be adopted in accordance with the procedure laid down in Article 33.

Article 22

For the highly sensitive products referred to in Part 1 of Annex I to this Regulation, the reduction in duty resulting from the application of Article 10 may not exceed 40 %.

TITLE III REINTRODUCTION OF COMMON CUSTOMS TARIFF DUTIES AND RELATED PROCEDURES

SECTION 1 Temporary withdrawal clause

Article 23

1. The arrangements provided for by this Regulation may at any time be temporarily withdrawn in whole or in part, in the following circumstances:

(a) practice of any form of slavery or forced labour as defined in the Geneva Conventions of 25 September 1926 and 7 September 1956 and International Labour Organisation Conventions Nos 29 and 105;

(b) export of goods made by prison labour;

(c) manifest shortcomings in customs controls on export or transit of drugs (illicit substances or precursors), or failure to comply with international conventions on money laundering;

(d) fraud or failure to provide administrative cooperation as required for the verification of certificates of origin form A;

(e) manifest cases of unfair trading practices on the part of a beneficiary country, including discrimination against the Community and alleged failure to comply with obligations under the Uruguay Round to meet agreed market-access objectives, without prejudice to the facts as established by the competent WTO bodies;

(f) manifest cases of infringement of the objectives of international conventions such as: NAFO, NEAFC, ICCAT and NASCO concerning the conservation and management of fishery resources.

2. Temporary withdrawal shall not be automatic, but shall follow the procedural requirements laid down in the following Articles, including Article 27(3).

Article 24

1. The circumstances referred to in Article 23 which might make it necessary to resort to temporary withdrawal of preferences may either be identified by the Commission itself, or be brought to the Commission's attention by the Member States, or by any natural or legal person or association not endowed with legal personality which can show an interest in such withdrawal. The Commission shall communicate the information immediately to all Member States.

2. Consultations may be initiated either at the request of a Member State or at the Commission's request. They shall take place within eight working days of receipt by the Commission of the information referred to in paragraph 1 and in any event before adoption of any Community measures withdrawing preferences.

3. The consultations shall take place in the Committee referred to in Article 32, which shall be convened by its chairman, who shall communicate all pertinent information to the Member States as soon as possible.

4. The consultations shall be concerned inter alia with analysis of the circumstances referred to in Article 23 and the measures to be taken.

Article 25

1. Where the Commission finds that there is sufficient evidence to establish that a beneficiary country meets the conditions laid down in Article 23(1)(d), it may take action against that country to suspend in whole or in part the arrangements provided for in this Regulation for a period of three months, renewable once only, provided that it has first:

- notified the Committee referred to in Article 32 of its intentions,

- 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. 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 Article 32, or

- initiate the consultations referred to in Article 24(2) with a view to temporary withdrawal of the preferences provided for in Article 23(2). Pending the outcome of such consultations and of any investigation initiated pursuant to Article 26, the Commission may decide to extend the suspension measure in accordance with the procedure provided for in Article 33.

Article 26

1. Where the Commission finds, following the consultations referred to in Article 24, that there is sufficient evidence to justify initiation of an investigation, it shall:

(a) announce the initiation of an investigation in the Official Journal of the European Communities and notify the country concerned thereof; such announcement shall give a summary of the information received and state that all relevant information is to be communicated to the Commission, specifying the period within which interested parties may make known their views in writing;

(b) commence the investigation, lasting up to one year, in cooperation with the Member States and in consultation with the Committee referred to in Article 32. The duration of the investigation may be extended if need be under the same procedure.

2. The Commission shall seek all information it deems to be necessary and shall, where it considers this appropriate, after consulting the Committee referred to in Article 32, verify the information with economic operators and the competent authorities of the beneficiary country concerned. For this purpose the Commission may dispatch its own experts to establish on the spot the truth of the allegations made by the persons referred to in Article 24(1). The Commission shall provide the competent authorities of the beneficiary country concerned with every opportunity to cooperate as necessary in the conduct of these enquiries.

3. The Commission may also be assisted by official of the Member State on whose territory verification might be sought, if the said Member State so requests.

4. The Commission may hear the interested parties. It shall so hear them if they have, within the period prescribed in the notice published in the Official Journal of the European Communities, made a written request for a hearing showing that they are likely to be affected by the result of the investigation and that there are particular reasons why they should be heard orally.

5. Where information requested by the Commission is not provided within a reasonable period or the investigation is significantly impeded, findings may be made on the basis of the facts available.

Article 27

1. When the investigation is complete, the Commission shall report the findings to the Committee referred to in Article 32.

2. If the Commission considers temporary withdrawal of preference to be unnecessary, it shall, after consulting the Committee referred to in Article 32, publish a notice in the Official Journal of the European Communities, announcing the termination of the investigation and setting out its main conclusions.

3. If the Commission considers temporary withdrawal of preference to be necessary, it shall submit an appropriate proposal to the Council, which shall decide on it by a qualified majority.

SECTION 2 Anti-dumping clause

Article 28

Preferences shall normally be granted to products which are subject to anti-dumping or anti-subsidy measures under Council Regulation (EEC) No 2423/88 (9), as amended, unless it can be shown that those measures were based on injury caused and on prices which did not reflect the preferential tariff arrangements granted to the country concerned. To that end, the Commission shall publish in the Official Journal of the European Communities a list of products and countries to which preference is not granted.

SECTION 3 Safeguard clause

Article 29

1. Where a product originating in one of the countries or territories listed in Annex III is imported on terms which cause or threaten to cause serious difficulties to a Community producer of like or directly competing products, Common Customs Tariff duties on that product may be reintroduced at any time at the request of a Member State or on the Commission's own initiative.

2. The Commission shall announce the opening of an investigation in the Official Journal of the European Communities. The announcement shall provide a summary of the information received and state that any useful information should be communicated to the Commission; it shall specify the period within which interested parties may make their views known in writing.

3. In examining the possible existence of serious difficulties the Commission shall take account, inter alia, of the factors listed in Annex VI where the information is available.

4. The Commission shall take the decision within 30 working days of consulting the Committee referred to in Article 32. A Member State may refer the Commission's decision to the Council within 10 days. The Council, acting by a qualified majority, shall have 30 days within which to adopt a different decision.

5. The beneficiary countries concerned shall be informed of such measures before the said measures become effective.

6. Where exceptional circumstances requiring immediate action make either notification or examination impossible, the Commission may, after so informing the Member States, implement any preventive measure which is strictly necessary and which satisfies the conditions laid down in paragraph 1 to deal with the situation.

7. Nothing in this Article shall affect the application of safeguard clauses adopted as part of the common agricultural policy under Article 43 of the Treaty, or as part of the common commercial policy under Article 113 of the Treaty, or any other safeguard clauses which may be applied.

TITLE IV COMMON PROVISIONS

Article 30

1. Subject to paragraph 2, rates of preferential duty calculated in accordance with this Regulation shall be rounded down to the first decimal place.

2. Where the result of calculating the rate of preferential duty in application of paragraph 1 is one of the following, the preferential rate shall be considered a full exemption:

- 0,5 % or less in the case of ad valorem duties, or

- EUR 1 or less per unit in the case of specific duties.

3. Changes to Annexes I, II, VII and VIII made necessary by amendments to the Combined Nomenclature shall be adopted in accordance with the procedure laid down in Article 33.

Article 31

1. Within six weeks of the end of each quarter the Member States shall send the Statistical Office of the European Communities their statistical data on goods admitted for free circulation during that quarter under the tariff preferences provided for in this Regulation. The said data, supplied by reference to Combined Nomenclature codes and, where applicable, TARIC codes, shall show, by country of origin, values, quantities and any supplementary units required in accordance with the definitions in Council Regulations (EEC) No 1736/75 (10) and (EEC) No 3367/87 (11).

2. The Member States shall forward to the Commission, at its request, and by the 11th day of each months at the latest, details of the quantities of products admitted under these arrangements during the previous months. The Member States and the Commission shall cooperate closely to ensure that this provision is complied with.

Article 32

1. The Generalised Preferences Committee created by Article 17 of Regulation (EC) No 3281/94, hereinafter referred to as 'the Committee`, may examine any matter relating to the application of this Regulation which is raised by its chairman either on his own initiative or at the request of a Member State's representative.

2. On the basis of an annual report from the Commission, it shall examine the extent to which the principle of neutrality of the effects of this scheme has been observed and any steps being considered by the Commission, either in accordance with the procedure laid down in Article 33 or through a proposal submitted to the Council, to ensure proper observance thereof.

3. On the basis of an annual report from the Commission, it shall examine the effects of the special arrangements with regard to drugs, including the progress made by the countries listed in Annex V in the fight against drugs and, if progress is insufficient, any measures which the Commission is considering taking, in accordance with the procedure laid down in Article 7 and after consulting the country concerned, to suspend in whole or in part the application of Article 33.

4. On the basis of an annual report from the Commission, it shall also examine the effects of the special incentive arrangements, including the progress made by the beneficiary countries and the measures being considered to remedy reported shortcomings. Those measures shall be adopted in accordance with the procedures laid down in Article 33.

Article 33

1. The Commission representative shall submit to the Committee a draft of the measures to be taken. The Committee shall deliver its opinion on the 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 148(2) of the Treaty for the adoption of decisions that the Council is called on to take on a proposal from the Commission. During votes within the Committee, the votes of the representatives of the Member States shall be weighted as set out in the Article referred to above. The chairman shall not vote.

2 (a) The Commission shall adopt the measures envisaged if they are in accordance with the opinion of the Committee.

(b) If the measures envisaged are not in accordance with the opinion of the Committee, or if no opinion is delivered, the Commission shall without delay submit to the Council a proposal relating to the measures to be taken. The Council shall act by a qualified majority.

(c) If, within three months of referral to the Council, the Council has not acted, the proposed measures shall be adopted by the Commission.

TITLE V FINAL PROVISIONS

Article 34

1. The Commission shall adopt the necessary budget implementation measures to ensure appropriate technical assistance to beneficiary countries, in particular the least developed countries, to help them take advantage of the arrangements and improve their access to international trade in general, including through the use of computerised means.

2. The Commission shall also adopt the necessary budget implementation measures for the application of all provisions under Titles II and III of this Regulation.

Article 35

Regulation (EC) No 1256/96 is hereby repealed with the exception of Article 4(3) which shall continue to apply until 30 June 1999.

Article 36

1. This Regulation shall enter into force on 1 January 1999.

2. It shall apply from 1 January 1999 to 31 December 2001.

3. The period of validity of Article 17 of Regulation No 3281/94 is hereby extended until 31 December 2001.

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

(1) COM (94) 212 final.

(2) OJ L 348, 31.12.1994, p. 1.

(3) OJ L 160, 29.6.1996, p. 1.

(4) OJ L 80, 18.3.1998, p. 1.

(5) OJ L 160, 4.6.1998, p. 1.

(6) OJ L 253, 11.10.1993, p. 1.

(7) OJ L 85, 27.3.1997, p. 8.

(8) OJ L 302, 19.10.1992, p. 1.

(9) OJ L 209, 2.8.1988, p. 1.

(10) OJ L 183, 14.7.1975, p. 3.

(11) OJ L 321, 11.11.1987, p. 3.

ANNEX (1) (2)

PRODUCT SENSITIVITY CATEGORIES (3)

PART 1

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PART 2

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PART 3

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PART 4

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(1) Wherever customs duties comprise an ad valorem duty plus one or more specific duties, the preferential reduction is limited to the ad valorem duty. Where the customs duties comprise an ad valorem duty with a minimum and a maximum duty, the preferential reduction also applies to that minimum and maximum duty.

(2) Preferences are not to be granted in respect of products of Chapter 3 and CN codes 1604, 1605 and 1902 20 10, originating in Armenia, Azerbaijan, Belarus, Georgia, Greenland, Kazakhstan, Kyrgyzstan, Moldova, Uzbekistan, Russia, Tajikistan, Turkmenistan, Ukraine.

(3) 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.

ANNEX II

PART I

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PART 2 Identification of countries and sectors referred to in Article 3

I. Classification of beneficiary countries by development index

The development index represents each country's overall level of industrial development compared with that of the European Union. It is based on the following formula, which combines per capita income with the level of manufactured exports:

>NUM>{log[(Yi/POPi)/(Yue/POPue)]+log[Xi/Xue]}

>DEN>2

in which:

Y = the beneficiary country's income,

Yue = the European Union's income,

POPi = the beneficiary country's population,

POPue = the population of the European Union,

Xi = the value of the beneficiary country's manufactured exports,

Xue = the value of the European Union's manufactured exports.

Using this formula, an index of 0 means the beneficiary's level of industrial developments is equal to that of the European Union.

Figures for income and population are taken from World Bank statistics (World Development Report 1993) and those for manufactured exports from the Unctad Handbook of International Trade and Development Statistics (1992).

II. Classification of beneficiary countries by relative sectoral specialisation index

A beneficiary country's specialisation index is the ratio of that country's share of total Community imports in general to its share of total Community imports in a given sector.

III. Combining the development and specialisation indexes

The combination of these two indexes determines how Article 3 will be applied to each beneficiary country.

For countries with a development index greater than -1, Article 3 will apply when the specialisation index equals or exceeds 1.

For countries with a development index between -1 and -1,23, Article 3 will apply when the specialisation index equals or exceeds 1,5.

For countries with a development index between -1,23 and -1,70, Article 3 will apply when the specialisation index equals or exceeds 5.

For countries with a development index between -1,70 and -2, Article 3 will apply when the specialisation index equals or exceeds 7.

Article 3 will not apply to countries with a development index of less than -2.

ANNEX III

List of beneficiary countries and territories enjoying generalised tariff preferences (1*)

A. INDEPENDENT COUNTRIES

070 Albania

072 Ukraine

073 Belarus

074 Moldova

075 Russia

076 Georgia

077 Armenia

078 Azerbaijan

079 Kazakhstan

080 Turkmenistan

081 Uzbekistan

082 Tajikistan

083 Kyrgyzstan

092 Croatia (2)

093 Bosnia and Herzegovina (3)

096 Former Yugoslav Republic of Macedonia (4)

204 Morocco

208 Algeria

212 Tunisia

216 Libya

220 Egypt

224 Sudan (5)

228 Mauritania (6)

232 Mali (7)

236 Burkina Faso (8)

240 Niger (9)

244 Chad (10)

247 Cape Verde (11)

248 Senegal

252 Gambia (12)

257 Guinea-Bissau (13)

260 Guinea (14)

264 Sierra Leone (15)

268 Liberia (16)

272 Côte d'Ivoire

276 Ghana

280 Togo (17)

284 Benin (18)

288 Nigeria

302 Cameroon

306 Central African Republic (19)

310 Equatorial Guinea (20)

311 São Tomé and Príncipe (21)

314 Gabon

318 Congo

322 Democratic Republic of Congo (22)

324 Rwanda (23)

328 Burundi (24)

330 Angola (25)

334 Ethiopia (26)

336 Eritrea (27)

338 Djibouti (28)

342 Somalia (29)

346 Kenya

350 Uganda (30)

352 Tanzania (31)

355 Seychelles and dependencies

366 Mozambique (32)

370 Madagascar (33)

373 Mauritius

375 Comoros (34)

378 Zambia (35)

382 Zimbabwe

386 Malawi (36)

388 South Africa

389 Namibia

391 Botswana

393 Swaziland

395 Lesotho (37)

412 Mexico

416 Guatemala (38)

421 Belize

424 Honduras (39)

428 El Salvador (40)

432 Nicaragua (41)

436 Costa Rica (42)

442 Panama (43)

448 Cuba

449 St Kitts and Nevis

452 Haiti (44)

453 Bahamas

456 Dominican Republic

459 Antigua and Barbuda

460 Dominica

464 Jamaica

465 St Lucia

467 St Vincent

469 Barbados

472 Trinidad and Tobago

473 Grenada

480 Colombia (45)

484 Venezuela (46)

488 Guyana

492 Suriname

500 Ecuador (47)

504 Peru (48)

508 Brazil

512 Chile

516 Bolivia (49)

520 Paraguay

524 Uruguay

528 Argentina

600 Cyprus

604 Lebenan

608 Syria

612 Iraq

616 Iran

628 Jordan

632 Saudi Arabia

636 Kuwait

640 Bahrain

644 Qatar

647 United Arab Emirates

649 Oman

653 Yemen (50)

660 Afghanistan (51)

662 Pakistan

664 India

666 Bangladesh (52)

667 Maldives (53)

669 Sri Lanka

672 Nepal (54)

675 Bhutan (55)

676 Myanmar (formerly Burma) (56)

680 Thailand

684 Laos (57)

690 Vietnam

696 Cambodia (58)

700 Indonesia

701 Malaysia

703 Brunei

708 Philippines

716 Mongolia

720 China

801 Papua New Guinea

803 Nauru

806 Solomon Islands (59)

807 Tuvalu (60)

812 Kiribati (61)

815 Fiji

816 Vanuatu (62)

817 Tonga

819 Western Samoa (63)

823 Federated States of Micronesia

824 Marshall Islands

825 Palau

B. COUNTRIES AND TERRITORIES dependent or administered or for whose external relations Member States of the Community or third countries are wholly or partly responsible

044 Gibraltar

329 St Helena and St Helena dependencies

357 British Indian Ocean Territories

377 Mayotte

406 Greenland

408 St Pierre and Miquelon

413 Bermuda

446 Anguilla

454 Turks and Caicos Islands

457 Virgin Islands of the United States

463 Cayman Islands

468 British Virgin Islands

470 Montserrat

474 Aruba

478 Netherlands Antilles

529 Falklands Islands

743 Macao

802 Australia Oceania (Christmas Island, Cocos (Keeling) Islands, Heard and McDonald Islands, Norfolk Island)

809 New Caledonia and dependencies

810 American Oceania (64)

811 Wallis and Futuna (65)

813 Pitcairn

814 New Zealand Oceania (Tokelau and Niue Islands, Cook Islands)

822 French Polynesia

890 Polar Regions (French Southern and Antarctic Territories, Australian Antarctic Territories, British Antarctic Territories, South Georgia and South Sandwich Islands)

Note: The above lists may be amended subsequently to take account of changes in the international status of countries or territories.

(1*) The code number preceding the name of each beneficiary country is that given in the 'Geonomenclature` (Regulation (EC) No 68/96 (OJ L 14, 19.1.1996, p. 6)).

(2) Preferences for these countries are limited to the agricultural products in Chapters 1 to 24 of the Combined Nomenclature listed in Annex I.

(3) This country is also included in Annex IV.

(4) This country is also included in Annex V.

(5) American Oceania includes: American Samoa, Guam, minor US outlying islands (Baker, Howland, Jarvis, Johnston, Kingman Reef, Midway, Palmyra and Wake) (OJ L 14, 19.1.1996, p. 6).

ANNEX IV

List of least-developed developing countries

224 Sudan

228 Mauritania

232 Mali

236 Burkina Faso

240 Niger

244 Chad

247 Cape Verde

252 Gambia

257 Guinea-Bissau

260 Guinea

264 Sierra Leone

268 Liberia

280 Togo

284 Benin

306 Central African Republic

310 Equatorial Guinea

311 São Tomé and Príncipe

322 Democratic Republic of Congo

324 Rwanda

328 Burundi

330 Angola

334 Ethiopia

336 Eritrea

338 Djibouti

342 Somalia

350 Uganda

352 Tanzania

366 Mozambique

370 Madagascar

375 Comoros

378 Zambia

386 Malawi

395 Lesotho

452 Haiti

653 Yemen

660 Afghanistan

666 Bangladesh

667 Maldives

672 Nepal

675 Bhutan

676 Myanmar (formerly Burma)

684 Laos

696 Cambodia (Kampuchea)

806 Salomon Islands

807 Tuvalu

812 Kiribati

816 Vanuatu

819 Western Samoa

ANNEX V

List of countries referred to in Article 7

Andean Group

480 Colombia

484 Venezuela

500 Ecuador

504 Peru

516 Bolivia

Central American Common Market

416 Guatemala

424 Honduras

428 El Salvador

432 Nicaragua

436 Costa Rica

442 Panama

ANNEX VI

Factors to be taken into consideration for the purposes of Article 29(3)

- Reduction in the market share of Community producers

- Reduction in their production

- Increase in their stocks

- Closure of their production capacity

- Bankruptcies

- Low profitability

- Low rate of capacity utilisation

- Employment

- Trade

- Prices

ANNEX VII

PRODUCT SENSITIVITY CATEGORIES (1*)

PART 1

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PART 2

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PART 3

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PART 4

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(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 together.

ANNEX VIII

LIST OF PRODUCTS REFERRED TO IN ARTICLE 9 (1)

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(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.