COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(90) 105 final 
Brussels, 30 March 1990 
Proposal for a 
COUNCIL REGULATION (EEC) 
derogating from the definition of the concept of 
'originating products" to take account of the special situation of the 
Netherlands' Antilles with regard to cigarettes 
of CN code 2402 20 00 
(presented by the Commission) 
EXPLANATORY NOTE 
Irtroductior 
The' Government of tne Netnerlards, or behalf of the Government of the 
Netherlands* Antilles, has suomitted a request for a derogation from the 
rules of origin for cigarettes applicable to trade between the associated 
overseas countries and territories (O.C.T.) and the European Economic 
Community. 
If the derogation is granted, tnus allowing the cigarettes manufactured in 
the Netnerlands' Antilles to oenefit from tne preferential tariff treatment 
granted oy tne Community to O.C.T originating products (1), it would make 
possible important industrial investments necessary to start the production 
of these cigarettes. 
Nature of the problem 
Under tne current rules, cigarettes can oenefit from tne preferential 
treatment if 70* or more in weight of tne tobacco used is originating in the 
O.C.T, ACPs or in the Community and its processing is only carried out in 
these territories , any otner oeing excluded. 
The Netnerlands Antilles do intend to use tobacco of ACP origin up to at 
least tne percentage required oy the origin rule (70 %), but for technical 
and financial reasons a first phase of processing nas to be carried out in 
Brazil, wnich would normally cause the final product to lose originating 
status. 
(1) Council Decision 8ô/2«33/££C of 30 June 1936. 
OJ No. L 175, 01.07.19do. 
2 
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Legal aspects 
Tne rei^uest is oased on article 26 oi Annex II to Council Decision 3o/26 3, 
due to expire on 2d r'eoruary 1990. 
Tne successor provisions expected to come into force on 1 ilarcn 1990, taking 
intb account tne outcome of the negotiation for tne renewal of the Lomé 
Convention, specify tnat a derogation shall oe granted if it would not cause 
serious injury to an economic sector of tne Community. In the present case, 
tne quantities involved exclude any risx of tnis Kind. 
Additional criteria for granting a derogation wnich are particularly relevant 
in this case are tne geographical situation of the territory concerned and 
the effect of tne normal rules on possiole investments. 
For tne complete supporting information submitted by tne Netherlands' 
Government in accordance with Article 2d(1) see Annex A to tnis Explanatory 
Note. 
Temporary nature of tne derogation 
Tne derogation is requested for five years, after wnicn period additional 
investments ana diversification are expected to have enaole-i a permanent 
solution to the prooiem to oe found. 
Community trade in the sector concerned 
See Anrex o to tnis explanatory Note fcr statistical information. 
Conclusion 
Tne Commission proposes to tne Council to grant tne requested derogation oy 
adopting tne attacned draft Regulation. 
3 
AMNÉJ fl. 
sybject Request for dérogation fro» the rules of origin 
(arc. 28 annex II, Council Decision on CTO, 30.6.86) 
finished product; cigarettes of a standard or custom-made blend,' filter 
tipped, 83 or 100 mas length. 
company : 
reason for non-COMPANHXA SUDAN DI PRODUT08 OS TABACO 
Bus 28 de Scteabro no. 823 
Caixà Postal 63 
Santa Crut do Sul 
BRAZIL 
for financial and technical reaaons part of the 
compliance vith production process (preparation of tobacco) takes 
rules of origin place in Brazil. 
nature and 
origin of 
used materials prepared tobacco from Brazil (of which 701 of ACP-
origina 30* of Brazilian origin), 
packing materials from ACP/KEC origin. 
manufacturing-
procès : 
value added: 
number of 
employes: 
eatimated 
export value 
to EC: 
other possible 
supplies of raw 
materials; producing and packing of cigarettes 
270 I 
20 to 40 (if working in two ahifta) 
OS $ 3 million 1st year 
US $ 7 million 2nd year 
US $ 10 million 3rd year 
(Origin of raw materials does not conflict vith rules 
of origin) 
period of 
derogation 
for further 
information: five years: within this period it should be possible 
to make e well-founded decision on further investment 
in the N.A. in order to manufacture a product that 
complies with the rules' of origin. 
Nrs. M. Grubben 
Ministry of Economic Affairs 
Division External EEC Affaira 
P.O. Box 20101 
2500 EC THE HAGUE 
Phone 31.70.796260 
FAX 31.70.797392 
Telex 31099 ECZA NL 
4 
AN.sEX S 
Statistical information 
Imports into tne Community of cigarettes (C.tf. code 2402 20 00) in 1988: 
- including intra-Community trade: 157 554 million pieces 
from extra-Community sources: 38 604 million pieces 
The proposed derogation would cover a quantity corresponding to 0.15% and 
0.62% respectively of these amounts. 
(Source: Eurostat) 
S~ 
fîN'A/ÉX L 
REPORT 
from tne Origin Committee 
to tne Council 
(estaolisned in conformity witn Article 2d (7}, of Annex II to Council 
Decision 86/283/c£C of 30 June 1986 (1). 
Subject: Request for derogation from the origin rules entered by the 
Netnerlands for certain cigarettes manufactured in the Netherlands' 
Antilles 
1. The Origin Committee discussed tne request referred to aoove at its 180th 
and 1d7th meetings, whicn took place in Brussels from 23 to 26 January and 
from 23 to 27 October 19d^ respectively. 
2. At tne 180tn meeting tne Commission and Memoer States' representatives 
indicated tnat additional information to tnat contained in the request 
suomitted oy tne Dutcn government was necessary to permit them to carry 
out an evaluation of tne request itself. 
The relevant information was suosequently received oy tne Commission on 13 
Septemoer 1:>d9 and made availaole to the Origin Committee delegates. 
4. At tne 187th meeting the 3ritish, Danish, German and Dutch delegations 
stated tnat tney were in favour of granting the requested derogation. The 
otner delegations were opposed, except Luxembourg wnich was aosent. 
Tne Chairman 
J. rtATTrilàS 
(1) OJ No. L 175, 1.7.193c, z>. 47. 
£ 
COUNCIL REGULATION (EEC) No. /90 
of 1990 
derogating from the definition of the concept of 
•originating products" to take account of the special situation of the 
Netherlands' Antilles with regard to cigarettes 
of CN code 2402 20 00 
THE COUNCIL OF TriE EJROPEAN COiMdWITIES, 
Having regard to tne Treaty estaolishing tne European Economic Community, and 
in particular Article 113 thereof, 
Having regard to Council Decision dô/283/EEC of 30 June 1936 on the 
association of tne overseas countries and territories, hereinafter referred 
to as U.C.T., with the European Economic Community (1); 
Having regard to tne proposal from the Commission, 
Whereas Article 28 of Annex II to tne said Council Decision, concerning the 
definition of the concept of "originating products" and methods of 
administrative cooperation provides that derogations from the rules of origin 
may oe adopted oy the Council where the development of existing industries or 
the creation of new industries in a country or territory justifies them; 
Wnereas tne Dutcn Government has requested, on benalf of the Netherlands' 
Antilles, a derogation from tne rules of origin for cigarettes manufactured 
there, which for a temporary period could not satisfy the rules of origin 
laid down in the aoove-mentioned Annex II; 
(1) OJ No. L 175, 01.07.1986, p. 1. 
h 
Wnereas the saia Article 28 sets out tne conditions which must oe fulfilled 
in order for a derogation to be granted; whereas the derogation is not likely 
to cause serious injury to an estaDlished Community industry; 
Whereas tne content of ACP originating raw materials would confer originating 
status to the final product, except for one processing operation being 
carried out in a third country for technical, financial and geographical 
reasons; 
Whereas a derogation is indispensaole for the realization of an important 
investment programme and to enaDle the company concerned to investigate 
diversification possibilities in tne near future; whereas the relevant 
conditions of Article 28 are therefore respected in the present case; 
HAS ADOPTED THIS REGULATION: 
Article 1 
By way of derogation from tne provisions of Annex II to the Decision 
86/283/EEC, cigarettes of NC heading 2402 20 00 snail be considered as 
originating in the Netherlands' Antilles when they are manufactured there, 
subject to the conditions set out in this Regulation. 
Article 2 
1. Tne derogation provided for in Article 1 snail relate to an annual global 
quantity of 240 million cigarettes, exported from the Netherlands Antilles 
during the period from 1 January 1990 to 31 December 1994 and ootained 
from tobacco processed in Brazil. 
2. The derogation is granted subject to the condition that on an annual basis 
at least 70 *> in weight of the tobacco is originating in the ACP States, 
in the O.C.T. or in the Community. 
y 
- 3 -
3. For tne purpose of implementing paragrapns 1 and 2, a proof of origin 
snail oe suomitted on import into Brazil oy means of a movement 
certificate EUR.1 issued oy the competent autnorities of the exporting 
state for toDacco intended to oe processed in Brazil prior to its further 
manufacture in tne Netherlands' Antilles. 
4. For eacn subsequent re-export of processed tooacco from Brazil to the 
Netherlands' Antilles the exporter shall draw up a declaration on the 
invoice in accordance with tne layout in tne Annex to tnis Regulation. 
The declaration shall oe authenticated oy the "Carteira de Comercio 
Exterior do Banco do Brésil S.A." subject to tne conditions laid down in 
paragrapns 2 and 3 of tnis Article. 
This declaration snail oe submitted to tne autnorities in the Netherlands 
Antilles wnicn are competent for issuing movement certificates EUR.1. 
Article 3 
1. The competent autnorities of the Netherlands' Antilles shall carry out 
quantitative checxs on exports as referred to in Article 2 ( 1 ) and shall 
forward to the Commission every three montns a statement of the 
quantities in respect of wnicn movement certificates EJR.1 have oeen 
issued on tne oasis of this Regulation. 
2. Not later tnan tnree montns after the end of eacn year of application of 
tne derogation, they shall also forward to the Commission a statement of 
the quantities of tooacco imported, with the references to the EUR. 1 
certificates presented in Brazil and to the declarations referred to 
respectively in Article 2 (3) and 2 (4). 
Article 4 
1. Tnis Regulation shall enter into force on the date of its publication in 
the Official Journal of the European Communities. 
A 
2. It snail apply only where the government of the Netherlands' Antilles and 
the "Carteira de Comercio Exterior do Banco do Brésil S.A." nave 
undertaken to comply with the terms of this Regulation and to provide the 
administrative cooperation oetween themselves and with the Community in 
order to ensure the correct issue and verification of the relevant 
documentation. 
3. Notwithstanding Article 2, tnis Regulation shall cease to apply at the 
latest on the date of expiry of Decision 86/283/EEC or of any equivalent 
trade provisions which may replace that Decision. 
This Regulation shall be binding in its entirety and directly applicable in 
all Memoer States. 
Done at Brussels, 
For tne Council 
The President 
yio 
ANNEX 
DECLARATION ti£FEtiR£û TO IN ARTICLc 2(4) 
I, tne undersigned, exporter of tne tobacco covered by this invoice (1), 
declare tnat tnis tobacco was processed in Brazil in conformity with the 
provisions of Article 2{2) and 2(3) of Council Regulation (EEC) No. /90 
of 1990. 
I undertaxe to maKe availaole to tne competent autnorities, if required, 
evidence in support of tnis declaration. 
(2) (3) 
(4) 
ENDORSEMENT Bi THE CARTEIRA JE COrlERCIO EXTERIOR DO àk.lZj DO BR£SIL S.A, 
Declaration certified 
(2) 
(4) (:>) 
(1) If a document otner than tne invoice or an annex to the invoice is used, 
tne name of the document snail oe mentioned instead of the word 
"invoice". 
(2) Place and date. 
(3) Name and function in tne company. 
(4) Signature. 
(5) Stamp. 
cS<A 
FIGMB FIHANCIERS 
Il n'est pas possible d'établir un lien direct entre l'ootroi 
d'une dérogation et une perte de recettes. Si la dérogation 
n'est pas acoordée, il n'est pas possible de déterminer à 
l'avance auprès de quels fournisseurs (préférentiels ou non) le 
marohé oommunautaire s'approvisionnera. 
Toutefois, à titre indicatif» il peut être mentionné que le taux 
des droits de douane applicable aux produits en question 
originaires de pays tiers est de 90 % en valeur. 
M, 
Etat d'imact aur loa PME 
La présente proposition concerne une dérogation aux régies d'origine 
applicables aux Pays et Territoires d'Outre-Mer pour les produits du tabac 
exportés vers la Communauté et importés en franchise de droits de douane. 
La dérogation serait applicable pendant cinq ans et limitée à une quantité 
susceptible de ne causer aucune perturbation dans le Marché Commun. 
Cette proposition n'aurait donc aucun effet perceptible sur l'emploi et la 
compétitivité dans la Communauté. 
/O 

ISSN 0254-1475 
COM (90) 105 final 
DOCUMENTS 
EN il 02 
Catalogue number : CB-CO-90-135-EN-C 
ISBN 92-77-59027-0 
Office for Official Publications of the European Communities 
L-2985 Luxembourg