Proposal for a COUNCIL REGULATION amending Council Regulation (EC) No 2007/2000 by extending to the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia the exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process and amending Regulation (EC) No 2820/98

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. The exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process adopted by the Council on 18 September 2000 (Council Regulation (EC) 2007/2000 of 18 September 2000) [1] introduced a very high degree of duty-free access to the EC market (around 95%) for Albania, Bosnia and Herzegovina, Croatia and Kosovo as defined by UNSC Resolution 1244 of 10 June 1999, granted limited concessions for Montenegrin aluminium products originating in the FRY and continued the granting of wine concessions in form of a global tariff quota which equally applies to the former Yugoslav Republic of Macedonia and Slovenia pending the conclusion of wine agreements with these countries. These improved preferences are linked to specific conditions to be respected by the beneficiaries (economic reforms, regional cooperation, standstill clause) and contain specific anti-fraud provisions underpinned by a strengthened temporary suspension clause.

[1] OJ L 240, 23.09.2000, p.1.

2. In the light of recent developments in the Federal Republic of Yugoslavia (FRY), the General Affairs Council of 9 October 2000 asked the Commission to submit a proposal on extending to the FRY the benefit of these exceptional trade measures.

The full extension to the FRY of these autonomous trade preferences will overrule the limited concessions (tariff quotas) for Montenegrin aluminium products originating in the FRY contained in Council Regulation (EC) 2007/2000. It is, therefore, proposed to repeal these quotas. On the other hand, Kosovo, as defined by UNSC Resolution 1244 of 10 June 1999, is subject to international civil administration by the United Nations Mission in Kosovo (UNMIK) which has established a separate customs administration. Therefore, it is proposed to maintain Kosovo as a separate beneficiary for the autonomous trade preferences.

3. Recital (11) of Council Regulation (EC) 2007/2000 already indicated that the equivalent of improved autonomous trade preferences under this Regulation would be granted to the former Yugoslav Republic of Macedonia, currently linked to the European Community by a Cooperation Agreement (with trade preferences at a less preferential level), pending completion of the negotiations on a Stabilisation and Association Agreement with the European Community and its Member States. The former Yugoslav Republic of Macedonia already benefits from concessions for wine under Regulation (EC) 2007/2000. In order to achieve the objective of granting improved trade preferences, it would have been necessary to either amend the existing Cooperation Agreement or to suspend its trade and trade-related provisions and apply the autonomous trade preferences on an interim basis.

Given that the former option would have entailed lengthy procedures resulting in discrimination of the former Yugoslav Republic of Macedonia relative to the other countries covered by the Regulation, the option of suspending the trade provisions of the existing Cooperation Agreement by means of an exchange of letters between the European Community and the former Yugoslav Republic of Macedonia, based on a Council Decision and extending the autonomous trade preferences has been chosen. This extension is of course of provisional nature until the entry into force of a Stabilisation and Association Agreement or of an Interim Agreement on trade and trade-related matters related to the Stabilisation and Association Agreement with this country.

4. The aim of the attached proposal for a Council Regulation (EC) amending Council Regulation (EC) No 2007/2000 is:

* to extend the autonomous trade preferences contained in Council Regulation 2007/2000 to the FRY while repealing the tariff quotas for aluminium products and keeping Kosovo as defined by UNSC Resolution of 10 June 1999 as a separate beneficiary;

* to extend provisionally the autonomous trade preferences to the former Yugoslav Republic of Macedonia;

* to adjust the tariff quotas for certain fishery products in the light of the extension of the autonomous trade regime to both countries;

* to remove the former Yugoslav Republic of Macedonia from the GSP.

5. For both countries the granting of these trade preferences is linked to their readiness to engage in effective economic reforms and in regional cooperation with the other countries concerned by the EU Stabilisation and Association process. In practice, the implementation of the trade preferences for the FRY will equally require full cooperation between all relevant authorities within the FRY (between the Republics of Serbia and Montenegro) and between the FRY and UNMIK, because of the latter's specific responsabilities for Kosovo.

6. The aim of the attached proposal for a Council Decision (EC) is:

* to approve the suspension of the trade and trade-related provisions of the Cooperation Agreement between the European Community and the former Yugoslav Republic of Macedonia by means of an exchange of letters;

* to authorize the President of the Council to designate the person empowered to sign the letter in order to bind the Community.

7. The Commission proposes the attached proposals for a Council Regulation (EC) amending Council Regulation (EC) No 2007/2000 by extending to the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia the exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process and amending Regulation (EC) No 2820/98 and for a Council Decision concerning the suspension of the trade and trade-related provisions of the Cooperation Agreement between the European Community and the former Yugoslav Republic of Macedonia signed on 29 April 1997 for adoption to the Council.

2000/0284 (ACC)

Proposal for a COUNCIL REGULATION amending Council Regulation (EC) No 2007/2000 by extending to the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia the exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process and amending Regulation (EC) No 2820/98

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,

Whereas:

(1) Council Regulation (EC) No 2007/2000 of 18 September 2000 introducing exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process, amending Regulation (EC) No 2820/98, and repealing Regulations (EC) Nos 1763/1999 and 6/2000 [2], does not apply to imports into the Community of products originating in the former Yugoslav Republic of Macedonia with the exception of wine imports and does not apply to all imports from the Federal Republic of Yugoslavia.

[2] OJ L 240, 23.09.2000, p. 1.

(2) The suspension, by means of an exchange of letters, of the trade and trade-related provisions of the Cooperation Agreement between the European Community and the former Yugoslav Republic of Macedonia signed on 29 April 1997 allows for autonomous trade preferences to be granted to this country provisionally until the entry into force of an Interim Agreement on trade and trade-related matters related to the Stabilisation and Association Agreement between the European Community and its Member States and the former Yugoslav Republic of Macedonia.

(3) The Federal Republic of Yugoslavia, in the light of recent developments in the country, complies with the basic conditions for the granting of autonomous trade preferences as set out in the Council Conclusions of 29 April 1997. The General Affairs Council of 9 October 2000 invited the Commission to submit proposals on extending to the FRY the benefit of the exceptional trade measures as provided by Regulation (EC) 2007/2000.

(4) Kosovo, as defined by the United Nations Security Council Resolution 1244 of 10 June 1999 is subject to international civil administration by the United Nations Mission in Kosovo (UNMIK) which has established a separate customs administration.

(5) It is, therefore, appropriate to extend fully the arrangements provided for in Regulation (EC) No 2007/2000 to the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia, including Kosovo as defined by UNSC Resolution 1244 of 10 June 1999.

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 2007/2000 is hereby amended as follows:

1. in Article 1 (1) 'originating in the Republics of Albania, Bosnia and Herzegovina and Croatia as well as Kosovo' shall be replaced by 'originating in the Republics of Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia including Kosovo as defined by UNSC Resolution 1244 of 10 June 1999';

2. in Article 1 (2) 'and the Former Yugoslav Republic of Macedonia' shall be deleted;

3. Article 1 (3) shall be repealed;

4. in Article 2 (2) 'Albania, Bosnia and Herzegovina and Croatia' to be replaced by 'Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia';

5. in Article 4 (1) 'in Albania, Bosnia and Herzegovina and Croatia' shall be replaced by 'in the countries and territories referred to in Article 1 (1)'

6. in Article 4(2),

(1) the amount of '10900' tonnes shall be replaced by '22525' tonnes;

(2) a point (c) '1650 tonnes (carcase weight) for 'baby-beef' products originating in the former Yugoslav Republic of Macedonia' and a point (d) '9975 tonnes (carcase weight) for 'baby-beef' products originating in the Federal Republic of Yugoslavia including Kosovo' shall be inserted;

(3) the third subparagraph shall be replaced by 'Imports into the Community of 'baby-beef' products defined in Annex II and originating in Albania shall not benefit from a tariff concession';

7. Article 5 shall be repealed;

8. in Article 7 the words 'and Article 5' shall be deleted;

9. in Article 13 'XM Former Yugoslav Republic of Macedonia (1)' shall be inserted after 'BA Bosnia and Herzegovina (1)'

10. in Article 16 (1) 'and goods originating in the former Yugoslav Republic of Macedonia which are put into free circulation in the Community before [the first day of the third month following the entry into force of this Regulation]' shall be inserted after '1 January 2001';

11. Annex I shall be replaced by a new Annex I as follows:

ANNEX I

Concerning the tariff quotas referred to in Article 4(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 these Annexes, 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.

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12. Annex III shall be repealed.

Article 2

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

It shall apply from the first day of the first month after its entry into force.

This Regulation shall cease to apply to products originating in the former Yugoslav Republic of Macedonia as from the day of entry into force of the Interim Agreement on trade and trade-related matters relating to the Stabilisation and Association Agreement between the European Community and its Member States and the former Yugoslav Republic of Macedonia or the Stabilisation and Association Agreement between the European Community and its Member States and the former Yugoslav Republic of Macedonia.

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

Done at Brussels,

For the Council

The President

FINANCIAL STATEMENT

1. Title of operation:

Proposal for a Council Regulation amending Regulation (EC) No 2007/2000 by extending to the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia the exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process and amending Regulation (EC) No 2820/98

2. Budget heading involved:

Chapter 12, Article 120.

3. Legal Basis:

Article 133 of the EC Treaty.

4. Objective:

* The full extension of the EC autonomous preferential trade arrangements to the Federal Republic of Yugoslavia;

* The provisional granting of these preferences to the former Yugoslav Republic of Macedonia until the entry into force of an Interim Agreement on trade and trade-related matters in the framework of a Stabilisation and Association Agreement with the EU;

5. Financial impact:

The existing Cooperation Agreement with FYROM already provides for duty-free access for at least 80% of all imports from this country. The abolishment of remaining tariff ceilings for certain industrial products and the improved access for agricultural products including processed agricultural products and fisheries may increase the rate of duty-free access to the Community up to 95%. A significant financial impact in terms of losses for the Community budget is, however, unlikely, mainly because in the past FYROM was unable to use fully the given preferences. Imports from FYROM represent 0,08% of total imports of the Community; imports from the FRY represent 0,07% of total imports of the Community. The additional losses to the Community budget may be roughly put at around 20MEURO.

6. Fight against fraud:

Provisions on the management of tariff quotas, specific conditions for entitlement to the preferential arrangements (Article 2) and a temporary suspension clause (Article 12) include the measures necessary for preventing and protecting against fraud and irregularities in the case of failure to provide administrative cooperation as required for the verification of evidence of origin or massive increase of exports into the Community above the level of normal production and export capacity of the countries and territories concerned.