No C 67/8 Official Journal of the European Communities 15. 3. 91 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Regulation (EEC) on the application of the provisions of Community 
law to the Canary Islands 
(91/C 67/13) 
COM(90) 686 final 
(Submitted by the Commission on 20 December 1990) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, 
Having regard to the Act of Accession of Spain and 
Portugal, and in particular the first subparagraph of 
Article 25 (4) 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 by virtue of Article 25 of the Act of Accession, 
the Treaties and the acts of the institutions of the 
European Communities apply to the Canary Islands 
subject to the derogations set out in that Article, in 
Article 155 and in Protocol 2 annexed to the Act of 
Accession; 
Whereas these arrangements exclude the Canary Islands 
from the Community's customs territory and from 
application of the common commercial policy, the 
common agricultural policy and the common fisheries 
policy; whereas experience has, however, shown that the 
development of the Canary Islands would be better 
served by their full integration into the common policies 
and the process of completing the internal market; 
whereas the arrangements laid down in the Act of 
Accession should now be amended and the Canary 
Islands integrated into the Community's customs 
territory; 
Whereas, pursuant to the first subparagraph of Article 25 
(4) of the Act of Accession, the Council, at Spain's 
request, acting on a proposal from the Commission and after obtaining the opinion of the European Parliament, 
may decide unanimously to include the Canary Islands in 
the customs territory of the Community and to define 
the appropriate measures aimed at extending to the 
Canary Islands the provisions of Community law in 
force; whereas Spain made such a request on 7 March 
1990 pursuant to the aforementioned Article; 
Whereas integration of the Canary Islands into all 
Community policies requires a gradual process over an 
appropriate transitional period, without prejudice to any 
special measures designed to take account of the specific 
contraints deriving from the remoteness of the Canary 
Islands, their island location and their historical 
economic and tax arrangements; whereas such measures 
will have to be the subject of a special programme of 
options specific to the remote and insular nature of the 
Canary Islands, to be adopted under this Regulation; 
Whereas application of the common agricultural policy 
to the Canary Islands will make possible the free 
movement of products on the conditions applicable to 
mainland Spain (end of the transitional period: 31 
December 1995) with the exception of the supplementary 
trade mechanisms as regards the supplying of the Canary 
Islands; whereas, in this framework, the free movement 
of products between the Canary Islands and the rest of 
Spain will be ensured; whereas full application of the 
common agricultural policy is subject to the entry into 
force of specific supply arrangements; whereas the 
application of this policy will have to be accompanied in 
addition by specific measures relating to the agricultural 
production of the Canary Islands; whereas it is therefore 
necessary to maintain the provisions of the Act of 
Accession relating to the application of the common 
agricultural policy to the Canary Islands until the entry 
into force of such supply arrangements with the 
exception of those governing the access of agricultural 
products originating in the Canary Islands to the other 
parts of the Community; whereas the provisions of 
Protocol 2 relating to bananas must remain in force; 
whereas they will have to be adjusted later, once the 
Council has adopted common measures for bananas; 
15. 3. 91 Official Journal of the European Communities No C 67/9 
Whereas it is necessary to apply the common fisheries 
policy to the Canary Islands on the entry into force of 
the present Regulation on the conditions applicable to 
mainland Spain (end of the transitional period: 31 
December 1995), subject to specific measures to be 
determined under existing legislation; 
Whereas historical recognition of the Canaries' island 
status has been reflected in successive special economic 
and tax arrangements designed to compensate for the 
disadvantages deriving from the archipelago's 
geographical isolation; 
Whereas in this context the strengthening of the Canary 
Islands' integration into the Community is not incom­
patible with the maintenance of indirect taxation specific 
to these islands, especially the exclusion of the Canary 
Islands from the territorial field of application of the 
common VAT system pursuant to Article 26 in 
conjunction with Annex I.V.2 of the Act of Accession, 
amending Article 3 (2) of the Sixth VAT Directive, 
Council Directive 77/388/EEC (') and the continuing 
exclusion of the Canary Islands from the territorial field 
of application of the Directives concerning manufactured 
tobacco pursuant to Article 26 in conjunction with 
Annex I.V.3 and 4 to the Act of Accession; 
Whereas the Community takes favourable note of the 
aims of the reform initiated by Spain in respect of the tax 
aspects of the economic and tax arrangements for the 
Canary Islands; whereas this reform provides for the 
gradual introduction of up-to-date indirect taxation as 
an instrument of economic and social development and 
the financing of local budgets, creating the conditions 
for total integration into the Community at the end of a 
transitional period not exceeding 10 years; 
Whereas, until 31 December 2000 at the latest, in two 
five-year stages as part of a phased process in 
conjunction with the gradual entry of the Canary Islands 
into the customs union, it is desirable to authorize a 
number of total or partial exemptions for local products 
from application of the new tax on production and 
imports (APIM), provided that these exemptions 
contribute to promotion of local activities; whereas, 
however, application of this charge should be suspended 
for products coming under the common agricultural 
policy until the application of that policy, it being 
understood that, when these products are imported from 
non-member countries, the provisions in force in the 
Canary Islands in respect of trade with such countries 
shall be maintained until the same date; 
(') OJ No L 145, 13. 6. 1977, p. 1. Whereas the dismantling of this charge will have to be 
accompanied by the gradual adoption of the common 
customs tariff as from the entry into force of the present 
Regulation and for the same transitional period, so as to 
ensure the complete integration of the Canary Islands 
into the customs union by 31 December 2000; whereas, 
however, as regards products coming under the common 
agricultural policy, application of the common customs 
tariff and other import duties is dependent on the entry 
into force of the specific measures to supply the Canary 
Islands with essential agricultural products; whereas at 
all events the gradual application of the common 
customs tariff to the Canary Islands may be accom­
panied, where appropriate, by specific tariff measures or 
derogations from the common commercial policy for 
certain sensitive products; whereas such measures may 
also be taken in respect of the arrangements applicable to 
free zones; 
Whereas the charge known as the 'arbitrio insular — 
tarifa especial' applicable to products supplied by other 
parts of the Community on the terms set out in Article 6 
(3) of Protocol 2 shall not be extended beyond 
31 December 1992; whereas the levying of this charge 
on products imported into the Canary Islands from 
non-Communky countries will have to be phased out 
from 1 January 1996 so that it is completely eliminated 
by 31 December 2000, without prejudice to obligations 
under existing arrangements, 
HAS ADOPTED THIS REGULATION: 
Article 1 
The provisions of the Treaties and the acts of the 
institutions of the European Communities in respect of 
which the Act of Accession provided for derogations 
shall apply to the Canary Islands on the terms set out in 
this Regulation. 
Article 2 
1. On the entry into force of the specific 
arrangements referred to in paragraph 2, the common 
agricultural policy shall apply to the Canary Islands on 
the terms laid down for mainland Spain in the Act of 
Accession. However: 
the supplementary trade mechanisms provided for in 
the Act of Accession shall not apply to the entry into 
the Canary Islands of the products in question, 
No C 67/10 Official Journal of the European Communities 15. 3. 91 
— the rules in force for mainland Spain shall apply to 
products originating in the Canary Islands and sent 
to other parts of the Community upon entry into 
force of this Regulation. 
2. Application of the common agricultural policy shall 
be accompanied by specific supply arrangements. 
3. Application of the common agricultural policy shall 
take account of the special features of Canary Islands 
production. 
Article 3 
The common fisheries policy shall apply to the Canary 
Islands on the terms laid down for mainland Spain. 
Application of the common fisheries policy shall be 
accompanied by specific measures designed to take 
account, where necessary, of the special features of 
Canary Islands production. 
Article 4 
1. Pursuant to Article 26 in conjunction with Annex 
I.V.2 to the Act of Accession amending Article 3 (2) of 
the Sixth VAT Directive, the territory of the Canary 
Islands shall remain outside the field of application of 
the common VAT system. 
2. Pursuant to Article 26 in conjunction with Annex 
I.V.3 and 4 to the Act of Accession, Spain may refrain 
from applying the provisions of Council Directives 
72/464/EEC (*) and 79/32/EEC (2) to the Canary 
Islands. 
Article 5 
1. For a transitional period which shall not extend 
beyond 31 December 2000, the Spanish authorities are 
hereby authorized to impose a tax on production and 
imports (APIM) on all products entering or produced in 
the Canary Islands. However, application of this tax 
shall be suspended in respect of products coming under 
the common agricultural policy until the entry into force 
of the specific supply arrangements referred to in Article 
2(2). 
2. By 31 December 1995 the rates for the tax shall be 
set in conformity with paragraph 3. As from 1 January 
1996, these rates shall be reduced by 20 % each year so 
that the tax will disappear by the end of the period laid 
down in paragraph 1. 
O OJ No L 303, 31. 12. 1972, p. 1. 
(*) OJ No L 10, 16. 1. 1979, p. 8. 3. The rates applicable may vary depending on the 
category of product between 0,1 and 5 %; they may 
under no circumstances be increased by more than 15 °/o 
of the initial rate. This variation in rates must in no case 
be such as to give rise to discrimination against products 
of Community origin. 
4. During the transitional period referred to in 
paragraph 1, in view of the specific situation of the 
Canary Islands and the prospect of their full integration 
into the customs union, exemptions from the tax, partial 
or total depending on economic requirements, may be 
authorized for local products up to 31 December 1995. 
Such exemptions must form part of the strategy for the 
economic and social development of the Canary Islands, 
taking account of the Community support framework, 
and help to promote local activities, though they must 
not be such as to change trading conditions to an extent 
contrary to the common interest. 
5. The arrangements for exemptions adopted by the 
competent authorities pursuant to paragraphs shall be 
notified to the Commission, which shall have three 
months to assess their conformity with the aims defined 
in that paragraph. If the Commission has made no 
comment within that period, the arrangement shall be 
deemed to have been approved. 
6. During 1995, the Commission, after consulting the 
Spanish authorities, shall examine the impact of the 
measures taken on the economy of the Canary Islands 
and the prospects for their integration into the 
Community's customs territory. On the basis of this 
examination the Spanish authorities may be authorized, 
in accordance with the criteria in paragraph 4 and the 
procedure in paragraph 5, to maintain some of the 
exemptions in force, in whole or in part until 
31 December 2000 at the latest. 
Article 6 
1. For a transitional period, which shall not extend 
beyond 31 December 2000, the common customs tariff 
shall be progressively introduced in accordance with the 
following timetable: 
— up to 31 December 1992, the rates of duty applicable 
shall be equal to 30 % of the CCT rates; from 
1 January 1993 these rates shall be equal to 35 % of 
the CCT rates, and shall rise to 40 % from 1 January 
1994 and to 50 % from 1 January 1995, 
15. 3. 91 Official Journal of the European Communities No C 67/11 
— from 1 January 1996 onwards, these rates shall be 
increased by 10% per year so that the CCT shall 
apply in full to the Canary Islands at the end of the 
transitional period. 
2. However, application of the common customs tariff 
and other import duties applicable under the common 
agricultural policy shall be suspended until the entry into 
force of the specific supply arrangements referred to in 
Article 2 (2). 
3. Application of the CCT to the Canary Islands shall 
be without prejudice to any specific tariff measures or 
derogations from the common commercial policy in 
respect of certain sensitive products. Customs measures 
may also be taken in respect of the arrangements 
applicable to free zones. 
4. The charge known as the 'arbitrio insular — tarifa 
especial' of the Canary Islands shall be applied to 
products supplied by other parts of the Community on 
the terms laid down in Article 6 (3) of Protocol 2, 
though it may not be extended beyond 31 December 
1992. Without prejudice to obligations arising out of 
existing agreements, the levying of this charge on 
imported products originating in non-Community 
countries shall be phased out from 1 January 1996 so as 
to be completely eliminated by 31 December 2000. 
5. Where it is found that application of the first 
paragraph leads to a deflection of trade, the Commission 
may decide that the difference in import duties shall be 
levied on goods in free circulation in the Canary Islands 
when these are introduced into the other parts of the 
Community's customs territory. 
Article 7 
The common commercial policy shall apply to the 
Canary Islands on the terms laid down for Spain in the 
Act of Accession without prejudice to the specific 
measures referred to in Articles 2 (2), 6 (3) and 10 (3) of 
this Regulation. 
Article 8 
The Commission shall adopt appropriate measures to 
prevent any speculative movement or deflection of trade resulting from the amendment of the trade arrangements 
applicable to the Canary Islands. 
Article 9 
The Council, on a proposal from the Commission and 
after consulting the European Parliament and the 
Economic and Social Committee, shall adopt a 
programme of options specific to the remote and insular 
nature of the Canary Islands. This programme shall 
include the specific measures referred to in Articles 2 (2) 
and (3), 3 (1) and 6 (3). This multi-sector programme of 
operations comprising legislative measures and financial 
commitments relating to the application of the common 
policies to reflect constraints specific to the Canary 
Islands, shall be given effect before 31 December 1992 
by the adoption by the Council or the Commission, as 
the case may be, of the necessary legal acts, in 
accordance with the provisions of the Treaty. 
Article 10 
1. This Regulation shall enter into force on ... 1991. 
2. The provisions of the Act of Accession relating to 
the application of the common agricultural policy to the 
Canary Islands and the relevant Community regulations 
shall remain applicable until the entry into force of the 
measures referred to in Article 2 (2), or until 31 
December 1991, whichever is the earlier, with the 
exception of the provisions governing access of products 
originating in the Canary Islands to other parts of the 
Community. 
3. The provisions of Protocol 2 relating to bananas 
shall continue to apply. They shall be adjusted if the 
Council, before the date specified in Article 4 (2) (b) of 
Protocol 2, adopts common measures for bananas. 
This Regulation shall be binding in its entirety and 
directly applicable in all Member States.