EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

The Regional Convention on pan-Euro-Mediterranean preferential rules of origin[1] (hereafter 'the Convention') lays down provisions on the origin of goods traded under relevant Agreements concluded between the Contracting Parties. Both the EU and Montenegro signed the Convention on 15 June 2011.

The EU and Montenegro deposited their instruments of acceptance with the depositary of the Convention on 26 March 2012 and 2 July 2012, respectively. As a consequence, in application of its Article 10(3), the Convention entered into force in relation to the EU and Montenegro on 1 May 2012 and on 1 September 2012, respectively.

Article 6 of the Convention provides that each Contracting Party shall take appropriate measures to ensure that the Convention is effectively applied. To that effect, the Stabilisation and Association Council established by the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part[2], should adopt a Decision replacing Protocol 3 concerning the definition of the concept of 'originating products' and methods of administrative cooperation by a new Protocol which, with regard to the rules of origin, refers to the Convention. The position to be taken by the EU within the Stabilisation and Association Council should be established by the Council.

2. RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

EU Member States were consulted on the draft Council Decision in the Customs Code Committee's Origin Section of 13 May 2013. The Contracting Parties to the Convention were consulted at the meeting of the Pan-Euro-Med working group of 14 and 15 May 2013.

No recourse to external expertise has been necessary. Furthermore, it has not been necessary to conduct an impact assessment, since the proposed amendments are technical in nature and do not affect the substance of the protocol on rules of origin currently in effect.

3. LEGAL ELEMENTS OF THE PROPOSAL

The legal basis for the Council Decision is the first subparagraph of Article 207(4) in conjunction with Article 218(9) of the Treaty on the Functioning of the European Union.

The proposal falls under the exclusive competence of the Union. The principle of subsidiarity does therefore not apply.

Proposed instrument: Council Decision.

2014/0143 (NLE)

Proposal for a

COUNCIL DECISION

on the position to be taken by the European Union within the Stabilisation and Association Council established by the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part, as regards the replacement of Protocol 3 to that Agreement, concerning the definition of the concept of 'originating products' and methods of administrative cooperation, by a new Protocol which, as regards the rules of origin, refers to the Regional Convention on pan-Euro-Mediterranean rules of origin

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 207(4) in conjunction with Article 218(9) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) Protocol 3 to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part[3], hereafter 'the Agreement', concerns the definition of the concept of 'originating products' and methods of administrative cooperation, hereafter ‘Protocol 3’.

(2) The Regional Convention on pan-Euro-Mediterranean preferential rules of origin[4], hereafter 'the Convention', lays down provisions on the origin of goods traded under relevant Agreements concluded between the Contracting Parties. Montenegro and other participants to the Stabilisation and Association Process from the Western Balkans were invited to join the system of pan-European diagonal cumulation of origin in the Thessaloniki agenda, endorsed by the European Council of June 2003. They were invited to join the Convention by a decision of the Euro-Mediterranean Ministerial Conference of October 2007.

(3) The EU and Montenegro signed the Convention on 15 June 2011.

(4) The EU and Montenegro deposited their instruments of acceptance with the depositary of the Convention on 26 March 2012 and 2 July 2012, respectively. As a consequence, in application of its Article 10(3), the Convention entered into force in relation to the EU and Montenegro on 1 May 2012 and on 1 September 2012, respectively.

(5) Article 6 of the Convention provides that each Contracting Party shall take appropriate measures to ensure that the Convention is effectively applied. To that effect, the Stabilisation and Association Council established by the Agreement should adopt a Decision replacing Protocol 3 by a new Protocol which, with regard to the rules of origin, refers to the Convention.

(6) The European Union should therefore adopt the position set out in the attached draft Decision, within the Stabilisation and Association Council,

HAS ADOPTED THIS DECISION:

Article 1

The position to be adopted by the European Union within the Stabilisation and Association Council established by the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part, as regards the replacement of Protocol 3 to that Agreement, concerning the definition of the concept of 'originating products' and methods of administrative cooperation, by a new Protocol which, as regards the rules of origin, refers to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin, is set out in the attached draft Decision of the Stabilisation and Association Council.

Minor changes to the draft Decision may be agreed to by the representatives of the Union in the Stabilisation and Association Council without further decision of the Council.

Article 2

The Decision of the Stabilisation and Association Council shall be published in the Official Journal of the European Union.

Article 3

This Decision shall enter into force on the day of its adoption.

Done at Brussels,

For the Council

The President

[1] OJ L 54, 26.2.2013, p. 4.

[2] OJ L 108, 29.4.2010, p. 3.

[3] OJ L 108, 29.4.2010, p. 3.

[4] OJ L 54, 26.2.2013, p. 4.

ANNEX

Draft DECISION OF THE EU-MONTENEGRO STABILISATION AND ASSOCIATION COUNCIL No […]

of […]

amending Protocol 3 to the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part, concerning the definition of the concept of 'originating products' and methods of administrative cooperation

The Stabilisation and Association Council,

Having regard to the Stabiliation and Association Agreement between the European Communities and their Member States, of the one part, and the Republic of Montenegro, of the other part, signed in Luxembourg on 15 October 2007[1], hereinafter referred to as 'the Agreement', and in particular its Article 44,

Having regard to Protocol 3 to the Agreement concerning the definition of the concept of 'originating products' and methods of administrative cooperation, hereinafter referred to as 'Protocol 3',

Whereas:

(1) Article 44 of the Agreement refers to Protocol 3 which lays down the rules of origin and provides for cumulation of origin between the EU, Montenegro, Turkey and any country or territory participating in the European Union's Stabilisation and Association Process.

(2) Article 39 of Protocol 3 provides that the Stabilisation and Association Council provided for in Article 119 of the Agreement may decide to amend the provisions of this protocol.

(3) The regional Convention on pan-Euro-Mediterranean preferential rules of origin[2], hereafter 'the Convention', aims at replacing the protocols on rules of origin currently in force among the countries of the pan-Euro-Mediterranean area with a single legal act. Montenegro and other participants to the Stabilisation and Association Process from the Western Balkans were invited to join the system of pan-European diagonal cumulation of origin in the Thessaloniki agenda, endorsed by the European Council of June 2003. They were invited to join the Convention by a decision of the Euro-Mediterranean Ministerial Conference of October 2007.

(4) The EU and Montenegro signed the Convention on 15 June 2011.

(5) The EU and Montenegro deposited their instruments of acceptance with the depositary of the Convention on 26 March 2012 and 2 July 2012, respectively. As a consequence, in application of its Article 10(3), the Convention entered into force in relation to the EU and Montenegro on 1 May 2012 and on 1 September 2012, respectively.

(6) Where the transition towards the Convention is not simultaneous for all Contracting Parties within the cumulation area, it should not lead to any less favourable situation than previously under the Protocol.

(7) Protocol 3 to the Agreement should therefore be amended so as to make reference to the Convention.

HAS DECIDED AS FOLLOWS:

Article 1

Protocol 3 to the Agreement, concerning the definition of the concept of 'originating products' and methods of administrative cooperation shall be replaced by the text set out in the Annex to this Decision.

Article 2

This Decision shall enter into force on the day of its adoption.

It shall apply from [1 September 2014].

Done at

For the Stabilisation and Association Council

The President

Annex

Protocol 3

concerning the definition of the concept of 'originating products' and methods of administrative cooperation

Article 1

Applicable rules of origin

For the purpose of implementing this Agreement, Appendix I and the relevant provisions of Appendix II to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin[3], hereafter 'the Convention' shall apply.

All references to the 'relevant agreement' in Appendix I and in the relevant provisions of Appendix II to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin shall be construed so as to mean this Agreement.

Article 2

Dispute settlement

Where disputes arise in relation to the verification procedures of Article 32 of Appendix I to the Convention which cannot be settled between the customs authorities requesting the verification and the customs authorities responsible for carrying out this verification, they shall be submitted to the Stabilisation and Association Council.

In all cases the settlement of disputes between the importer and the customs authorities of the importing country shall take place under the legislation of that country.

Article 3

Amendments to the Protocol

The Stabilisation and Association Council may decide to amend the provisions of this Protocol.

Article 4

Withdrawal from the Convention

1. Should either the EU or Montenegro give notice in writing to the depositary of the Convention of their intention to withdraw from the Convention according to its Article 9, the EU and Montenegro shall immediately enter into negotiations on rules of origin for the purpose of implementing this Agreement.

2. Until the entry into force of such newly negotiated rules of origin, the rules of origin contained in Appendix I and, where appropriate, the relevant provisions of Appendix II to the Convention, applicable at the moment of withdrawal, shall continue to apply to this Agreement. However, as of the moment of withdrawal, the rules of origin contained in Appendix I and, where appropriate, the relevant provisions of Appendix II to the Convention shall be construed so as to allow bilateral cumulation between the EU and Montenegro only.

Article 5

Transitional provisions – cumulation

1. Notwithstanding Article 3 of Appendix I to the Convention, the rules on cumulation provided for in Articles 3 and 4 of Protocol 3 to this Agreement, as adopted by the contracting parties on concluding the Agreement[4], shall continue to apply between the EU and Montenegro until the Convention has entered into application with relation to all Contracting Parties listed in these Articles 3 and 4.

2. Notwithstanding Articles 16(5) and 21(3) of Appendix I of the Convention, where cumulation involves only EFTA States, the Faroe Islands, the EU, Turkey and the participants in the Stabilisation and Association Process, the proof of origin may be a movement certificate EUR.1 or an origin declaration.

[1] OJ L 108, 29.4.2010, p. 3.

[2] OJ L 54, 26.2.2013, p. 4.

[3] OJ L 54, 26.2.2013, p. 4.

[4] OJ L 108, 29.4.2010, p. 3.