Proposal for a COUNCIL REGULATION amending Regulation (EC) No 2037/2000 of the European Parliament and of the Council, as regards the base year for the allocation of quotas of hydrochlorofluorocarbons with respect to the Member States that acceded on 1 May 2004

(presented by the Commission)

EXPLANATORY MEMORANDUM

This proposal to amend the base date in Regulation (EC) No 2037/2000 for determining the allocation of quotas of hydrochlorofluorocarbons (HCFCs) to producers and importers in the EU-25 with respect only to the 10 new Member States that acceded on the 1 May 2004 is necessary for the reasons set out below.

Background

1999 is the base date in Regulation (EC) No 2037/2000 of the European Parliament and of the Council for the allocation of the placing on the market quota to importers for HCFCs. The application of this base date to the EU-15 resulted in a 4% share of the quota for placing on the market being allocated to importers of HCFCs in the EU-15 and, 96 % being allocated to EU producers for the years 2003-2009 (Commission Decision 2002/654/EC).

In 2004, the placing on the market quota for HCFCs for the EU-15 is 2003 ODP tonnes (Annex III of Regulation (EC) No 2037/2000) - 1922.88 ODP tonnes for EU producers and 80.12 ODP tonnes for importers.

In the Accession Treaty there is a technical adjustment of the quantity of HCFCs in Annex III (placing on the market quotas) of Regulation (EC) No 2037/2000 to take account of new Member States' entitlement to HCFCs. For 2004, the increase in the placing on the market quota for HCFCs is 206 ODP tonnes. Since the new Member States only acceded on the 1 May 2004, the effective HCFC quota is 137.33 ODP tonnes (8/12 of the annual quota). There was no request for a change in the base date in the accession negotiations.

From the 1 May 2004 it is necessary to adapt Commission Decision 2004/176/EC to take account of the new Member States import requirements of controlled substances and, inter alia, to allocate the HCFC placing in the market quota. It is also necessary to amend Commission Decision 2002/654/EC of 12 August 2002 determining a mechanism for the allocation of quotas to producers and importers for hydrochlorofluorocarbons for the years 2003 to 2009 under Regulation (EC) No 2037/2000.

Initial Allocation

The initial draft allocation of the HCFC placing on the market quota was made on the basis of the 1999 base date. On the basis of data supplied by the new Member States, for 2004 the percentage share of the additional quota that would be allocated to importers is 3.9% and 96.1% to producers in the EU-15 since there are no producers of HCFCs in the new Member States. The quota HCFC quota available for the EU-10 is 137.33 ODP tonnes (8/12 of the annual quota). At the Management Committee Meeting on the 6 May a significant number of new Member States, supported by some Member States in the EU-15 and with no opposition, called for a more recent base date for allocating HCFCs. A number of reasons were advanced, notably that it is best to take the most recent years for the base date in order to reflect commercial reality and for this reason the EU-15 had changed the base date in Regulation 2037/2000 in 2000.

Arguments for adopting a more recent base date (average 2002 and 2003)

* A large majority of the new Member States and EU-15 Member States are supportive of a revised base date.

* The EU-15 changed the base date in 2000 through an amendment of Regulation (EC) No 2037/2000 from 1996 to 1999 because it had taken 4 years for the Regulation to be approved and Member States had requested that the import data for base date should be the most recent.

* Changing the base date has no environmental consequences; it is a pure commercial matter since the total placing on the market quota remains unchanged.

* It will allow some commercial operators in the EU-10 in 2002/2003 that had not been in the market in 1999 to continue their business.

* There is a small shift in overall distribution of HCFC placing on the market quota in EU-25. The producers overall share of the HCFC quota would fall by 0.3% from 96.0% to 95.7% if the base date was changed from 1999 to an average of 2002 and 2003.

Results of new base date (average of 2002 and 2003)

Changing the base date from 1999 to an average of 2002 and 2003 would result in importers in the new Member States being allocated 10.35 ODP tonnes and producers being allocated 126.99 ODP tonnes compared to 5.44 ODP tonnes and 131.89 ODP tonnes respectively in 1999.

Proposal for a COUNCIL REGULATION amending Regulation (EC) No 2037/2000 of the European Parliament and of the Council, as regards the base year for the allocation of quotas of hydrochlorofluorocarbons with respect to the Member States that acceded on 1 May 2004

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to the Treaty of Accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, and in particular Article 57 (2) thereof,

Having regard to the proposal of the Commission [1],

[1] OJ L 244, 29.9.2000, p. 1 as last amended by Regulation (EC) No 1804/2003 (OJ L265, 16.10.2003, p. 1)

Whereas:

(1) Regulation (EC) No 2037/2000 of the European Parliament and of the Council of 29 June 2000 on substances that deplete the ozone layer [2] takes 1999 as the base year for allocating quotas of hydrochlorofluorocarbons (HCFCs). The HCFC market in the ten new Member States has changed considerably since 1999 with the arrival of new companies and changing market shares with respect HCFCS. The application of 1999 as the base date for the allocation of HCFCs in these new Member States would result in a large number of companies not receiving an import quota. This could be considered as being arbitrary and might also result in a breach of the principles of non-discrimination and legitimate expectations.

[2] OJ L 244, 29.9.2000, p. 1 as last amended by Regulation (EC) No 1804/2003 (OJ L265, 16.10.2003, p. 1)

(2) As a general rule, quotas should be based on the most recent and representative figures available in order to ensure that a number of importing companies in the new Member States are not excluded. It is therefore appropriate to choose the years for which the most recent data are available. In order to best reflect the commercial situation on the HCFC market in the ten new Member States the average market-share of 2002 and 2003 should therefore be laid down as basis for the companies from those Member States.

(3) Regulation (EC) No 2037/2000 should therefore be amended accordingly.

(4) This regulation should apply from the date of accession of the new Member States,

HAS ADOPTED THIS REGULATION:

Article 1

In Article 4(3)(i) of Regulation (EC) No 2037/2000 the following point i) is added: " (i) By way of derogation from point (h) each producer and importer in the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia shall ensure that the calculated level of hydrochlorofluorocarbons which it places on the market or uses for its own account shall not exceed, as a percentage of the calculated levels set out in points (b), (d), (e) and (f), the average of its percentage market share in 2002 and 2003.

Article 2

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

It shall apply with effect from 1 May 2004.

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

Done at Brussels,

For the Council

The President