Proposal for a COUNCIL REGULATION amending Regulation (EEC) No 1657/93 temporarily suspending the autonomous Common Customs Tariff duties on certain industrial products intended to equip the free zones of the Azores and Madeira

(presented by the Commission)

EXPLANATORY MEMORANDUM

The Commission, assisted by the Economic Tariff Problems Group, reviewed the requests for temporary suspension of autonomous Common Customs Tariff duties presented to it by the Member States, including certain requests amending existing suspensions.

The attached proposal concerns certain industrial products intended to equip the free zone of Madeira, for which a suspension was granted by Council Regulation (EEC) No 1657/93 (cf. OJ L 158, 30 June 1993, p. 1).

Following this examination, the Commission considers that the suspension of tariffs for these products is justified.

The period of validity of the proposed measure is eight years.

Proposal for a COUNCIL REGULATION amending Regulation (EEC) No 1657/93 temporarily suspending the autonomous Common Customs Tariff duties on certain industrial products intended to equip the free zones of the Azores and Madeira

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Economic Community, and in particular Article 26,

Having regard to the proposal of the Commission,

Whereas :

(1) Regulation (EEC) No 1657/93 [1] establishes, until 31 December 2000, a temporary suspension of autonomous Common Customs Tariffs for certain industrial products intended to equip the free zones of the Azores and Madeira.

[1] OJ L 158, 30 June 1993, p.1. Regulation last amended by Regulation (EC) No 3256/94 (OJ L 339, 29.12.1994, p.1).

(2) As provided for in Article 3 of the above Regulation, the Commission, after consulting the competent Portuguese authorities, examined the effects of the measures adopted on the development of the free zone of Caniçal (Madeira), which is at present the only free zone in the outermost regions of Portugal.

(3) Initially, these measures had a positive effect on the creation and establishment of new businesses and on the development of a number of industrial activities, especially in the textiles, plastics and glass sectors. More recently, economic conditions and infrastructure problems have led to a slow-down in the emergence of new industries and paralysed part of the processing sector. This situation should come to an end once the free-zone infrastructure and enlargement work presently being carried out is completed, and new innovative processing industries are established, alongside those which perform simpler recycling, packaging and storage tasks.

(4) For their part, the Portuguese authorities have expressed an interest in extending these measures for a period of time in no circumstances shorter than that which was previously granted, so as to encourage industrial investment in the Madeira free zone, and thus promote the region's socio-economic development.

(5) Upon detailed examination of the situation and the impact of the measures adopted, such an extension of the time-limit on these measures does indeed appear likely to give a further boost to the development of industrial activities in the free zone; the suspension of the autonomous Common Customs Tariffs for capital equipment should therefore be extended, as requested by the Portuguese authorities.

(6) Notwithstanding, in order to avoid directly affecting the functioning of the common market, a time limit must be set for this measure,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EEC) No 1657/93 is amended as follows:

In Article 1(1), with regard to the Madeira free zone, the date 31 December 2000 is replaced by the date 31 December 2008.

Article 2

In the course of the year 2008, after consulting the competent Portuguese authorities, the Commission will again examine the effects of the measures adopted on the development of the Madeira free zone and will, if required, make appropriate proposals.

Article 3

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

It shall apply from 1 January 2001.

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 (EEC) No 1657/93 temporarily suspending the autonomous Common Customs Tariff duties on certain industrial products intended to equip the free zones of the Azores and Madeira.

2. BUDGET HEADING(S) INVOLVED

Chapter 12, Article 120.

3. LEGAL BASIS

Article 26 of the EC Treaty.

4. DESCRIPTION OF OPERATION

Suspension of the CCT duties for the above products.

5. FINANCIAL IMPACT

The following table gives the quantities of the above products actually imported since the Regulation entered into force:

Year // Import volume in EUR

1993 // 29 733

1994 // 436 087

1995 // 383 290

1996 // 2 795 485

1997 // 3 538

1998 // 44 763

1999 // 73 363

Total // 3 766 261

Annual average // 538 037

With an average annual import volume of EUR 538 037 and an average custom tariff of 2.5% for the kinds of capital goods concerned (most of which are covered by Chapter 84 of the Combined Nomenclature), the loss of own resources can be estimated at EUR 13 500 a year and at EUR 108 000 for the total duration of the measure (eight years).

The shortfall in traditional own resources will have to be made up by the Member States topping up the GNP component.

6. FRAUD PREVENTION MEASURES

Checks on the end-use of the products covered by this Council Regulation will be carried out in accordance with Articles 291 to 304 of Commission Regulation (EEC) No 2454/93 laying down provisions for the implementation of the Community Customs Code.