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COM(75)17
Vol.1975/0006

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:**Υ~ίϊ,ΓΙ"Γτ.ϊ>ΤΠ·τίΓ«1ηΤΡ!Τ!«ΪΏΓ&ρυΑΜ <ΠΟΜΜΤΤΚΓ7ΓΠ3ςWj?JLil-D ^jU'inSi UANi11JLD3
COM(75)17 final
Brussels ,3February 1975
THEFUTURE DEVELOPMENT OfTHEEUROPEAN COMMUNITY 'SGENERALISED
TARIFF PREFERENCES
(Communication bytheCommission totheCouncil)
C0K(V5)17final

j
ITHEFUTURE DEVEIOFKEHT OFTHEEUROPEAN COMUBTTY 'SGEMERAJjISED
TARTFF PREFEREN'CES
TheEuropean Community hasnowapplieditsgeneralised preferences for
nearlyfouryearsandyearbyyearhasprogressively improved themandwidened
theirscope.Thereisthusasufficient degreeofexperience oftheoperation
ofthesystemandoftheeffects ,ithashadtomakeworthwhilesomegeneral
reflection onitsfutureandonthewayinwhichitsfuturedevelopment should
bedirected .Suchreflection isallthemorsopportune inthelightofthe
veryradicalchangeswhichhavetakenplaceontheinternational economic
sceneduringthelasttwoyears.
TheCommjssionherewith submitstotheCouncilitsownreflections on
thissubjectwhichhavetakenintoaccounttheopinions expressed bythe
Hurcpeaii Padiament andtheEconomic andSocialCommittee .TheCommission con­
sidersthatthisdocument couldusefully bedebatedintheCouncilatan
earlydate.
1.Generalised preferences :aninrtruTent fordevelopment cooperation fully
integrated ino^hercommonpolicies.
Theestablishment ofgeneralised tariffpreferences istobeseenasone
part ,oftheeffort ;beingdeployed toadapttheeconomicrelations betweenthe
industrialised .-countries and.the,developing ,countries progressively insuch
a-way--.asto'provide amoreequitable balancein.them ,andtobring.,about ,a
situation moreinconformity -withcontemporary needs.TheEuropean Community
hasplayedaleadingroleinthisfield..Andwhereas somecountries ,both
developed anddeveloping ,haveconsidered thegeneralised preferences as.no
morethanlimitedmeasuresof.tradepolicy,theCommunity hasalwaystakenthe
viewthattheyareaninstrument fordevelopment cooperation .
Istheinstrument aneffective onein,the.longer -:term .?.
Thereare,ontheexternalside,twobroadconstraints onthegeneralised
preferences achieving fulleffectiveness .Inthefirstplacethegeneralised
preferences .willnotreallyachievetheirobjectives unlessanintensified
emphasisisgiventoeffortsintheotherandcomplementary fieldsofcoopera­
tion.
•A

Thusthereneedtobemeasurestoassisttradepromotion ,toencourage .the
diversification ofdeveloping economies ,.to.assistregional economicinte­
grationandtostimulate investment inthedeveloping countries ,particularly
inthepoorest amongthem.
Inthesecondplaceitwillneedtobeappreciated onbothsides
thatapolicyofcooperation whichprovides advantages tothebeneficiary
countries impliesaswellbothrightsandobligations .Juridically the
preferences remainautonomous andtheybearnorequirement forreciprocity .
Buttheymustbefittedintoaninternational framev.rorkwhichpermits the
beneficiaiyoomtries tousethepreferences tothefullwhilerespecting
acertainnumberofeconomic andtradingdisciplines .Foritisveryclear
thatthebenefits ofthesetariffpreferences tothedeveloping countries
dependstoagreatextentonthecontinuing expansion andprosperity of
theeconomies oftheindustrialised countries andthatprosperity likethe
prosperity ofthedeveloping countries themselves ,canonlybeassured
withinaworldeconomic andtradingpatterngoverned byinternational dis­
ciplines andobligations .Thegeneralised preference schemewillneedtherefore
.tobe.developed onabasisofincreasing economic interdependence .
MoreoverwithintheCommunityitselfthelong"term"'effectiveness
ofthegeneralised preferences requires abetterintegration ofcommon
policies.Ifthesystemistobecomefullyeffective ,operational li:iks
mustbedeveloped withindustrial r:,socialandregionalpolicies,inorder
tooffsetthepossiblenegative impactofpreferences onthelevelofeconomic
"• •.- ........ .*У /:..5•"activity andemployment incertainvulnerable sector?andregions.
. _ '" ':'" ti
2.Thelongtemprospects
Whentheschemewasoriginally conceivedithadthreeobjectives :
toincrease theexportearningsofthedeveloping countries ,topromotetheir
d&dustrialisationandtoaccelerate theirratesofeconomic growth.
Bij198O,whichmarkstheeudoftheinitialtenyearperiodforwhich
thegeneralised preferences wereenviraged,itisevidentthatthesystemwill
nothavefullyachieved ,theseobjectives .Afurtherperiodofoperation
beyond19&0willtherefore benecessary .

During this second phase ,after 1980 ,thedonor countries will need to
achieve themost important oftheadaptations ,required ,viz :theharraonisation
/
ofthedifferent 'schemes applied byindividual donor countries .Clearly ,it
isnowthat wemust begin tothink about such harnjoni sationandthen lose
notime inpursuing it.Atpresent ,while there isadegree ofconcerted
approach among thedonors ,there areconsiderable divergences between the '
measures applied .This greatly reduces theuseofthesystem tothebaneficiaries
apart from asmall minority whoareeconomically andadministratively better
organised andwhothus benefit disproportionately .Only an'adequately •-
harmonised system will permit agenuine sharing oftheburdens which isim­
portant ifthesystem ofgeneralised preferences istocontinue anddevelop .
Perhaps themost important aspect onwhich harmonisation will be
required isthelist ofbeneficiary countries 'This isanextremely sensitive
political issue .But ,asindividual countries nowconsidered tobedeveloping
gain economic strength andcompetitivity ,itwill also acquire increasing
economic significance .This implies working with theother donor countries
toestablish certain objective economic criteria asabasis forthe
evolution ofthe .list ofbeneficiary countries .
Then there isalso aneed toharmonise between thedonors themargins
ofpreference granted ,,theproduct coverage ,safeguard mechanisms andorigin
ruies.' •;v
Uptill nowthedevelopment ofthedifferent schemes operated by
thedonors hasonthewhole been convergent andifthis process .canbe
,continued during thenext fewyears theprospects foralarge degree ofharmoni­
sation during thesecond phase after 1980 will begreatly improved .Inthis
respect thescheme tobeintroduced bytheUnited States forthefirst time
during 1975 will beanimportant ,element .,Jnaddition ,ifasignificant further
liberalisation ofworld trade isachieved intileMultilateral Trade Negotiation "?,
this will also facilitate this process inthe1980 's.

-4--
3.'"heprospects upto1980
r■-v-•<••' • . .<•.•.
Beforeexamining thevarious _possible ,wa;rsofdeveloping the
Community'sgeneralised preferences intheperiod1975-1980 andthe
specific problems whichneedtobedealtwith,it,isimportant torecall
thescaleoftheCommunity'sschemep.sit&tandstoday.In1975 "the
preferences intheagricultural fieldwillcoverabout600m.u.a.ofim­
ports.Intheindustrial sectorthepossibilities willcoverabout
2,850m.u.a.ofimports,thatistosaz~a,littlemorethan10^ofthe
Community'simportsfromallthirdcountries onwhochdutyispaid.Up
tillnowactualutilisation ofthe-variousceilings andquotasinthe
varioussectorsofindustryhasbeenabout50f.Naturally theseglobalfigures
varywidelyfromsectortorector.Buttheydopresentapictureofa
schemewhichisstillrelatively limitedinitsapplication .
Qiithebasisoftheseobservations theevolution oftheCoramunitj' ;
schemewhouldbedirected alongthreemain .lines:increased utilisation ,
betteradministration andappropriate improvements :
(a)Itmustbeclearfromthefiguresgivenabovethat-ifthepresent
Community schemeweretobefully "usedthiswouldinitselfrepresent a
markedimprovement .Thereshouldtherefore beincreased effortsundertaken
inthefieldsofinformation andtradepromotion :thepublication ofin­
formation onthedevelopment intheuseofpreferences ,theeditingofa
handbook whichwouldneedtoberegularly brouhgtuptodate,theorgani­
sationofsetoirarsforthebenefitofprivatesectorusersofthepreferences
bothwithintheCommunity andinthebeneficiaryi-tountries ,.theef'tablirhfrent
'of-ailagencytoprovidedocumentation ,;information andadvice,certaintrade
promotion activities whichvotild"needtobeagreed -withthebeneficiary
countries .Iloreover supplementary measures shouldbetakentosimplifythe
schemeand1tostreamline thoseprocedures whcsecomplexity in,themselves -limit
itsfullUse.<■- ;:' '•''"=-,r•'-.
(b)Iftheschemeistobeeffectively administered *"acomplete and
preciseknowledge ofpreferential importsisrequire' 1..Thicicitsturn
necessitates activeandcontinuing cooperation betweenthenational ad~
ministrations ofthememberstatesandCommirsion officials ,particularly
wherestatistics areconcerned .
./•

-~5-
Noreover ,1oneshould "to'into-' thfepossibilities -forimproving ,thedecision -
making procedures ontheworking oftheCommunity scheme .Within the fraaiewcric .
ofthepolitical orientation laid down bytheCouncil ,theCommission might be
ri| ftos jl"adju3%ii_^..the technical aspects ofthescheme ,in .
accordance with aprocedure reminiscent of .that ofexisting committees (e.g. in
thefield of .customs regulations ).This .would beconsistent .with -theguidelines
recently agreed inParis bytheHeads ofGovernment .Ways andme&ns ofimplementing
this idea bystages could beworked outover thenext fewyears ,inparticular
once thescheme oftheUnited States comes into application andvhen 1thesystem
asawhole ,foralldonor countries ,hasgotproperly undar' way .
c)Thecontinuing improvement oftheCommunity scheme should ,intheCcn*»
mission 'sview ,bepossible solong assuch improvements arecarefully adapted
totheCommunity 'sreal economic possibilities andtothediversity ofdifferent
'sectors oftheeconomy *Asinthepast these improvements will have tobeprag­
matic andprogressive andthis pre-3upposes aspreading ofthe .preferential im-
•/trading
ports throughout theCommunity following normal patterns andalso aaeffective
solidarity ofthe .member states' whe'.i they came toj'-alge different economic 'situa­
tions .v''* ..V ■ •
Thebeneficiary countries areasking fortheinclusion ofprimary products ,
particularly agricultural ones ,;inthescheme ,although itisnewwidely recognized
that theproblem cfprimary products arises more andmore interns ofstabilisation
ofmarkets andsupplies .Theimminence oftheMultilateral -Trade Negotiations
andtheactions ofwork being undertaken invarious international forums makes it
inopportune fortheCommunity toabandon itsearlir general principle ofexcluding fC
primary products .Nevertheless itVPVilvJ be .^yoid anexces£.i 7-»elydonatio
attitude onthis point and'net torefuse minor cgndprudent changes tothelist
ofproducts excluded .Naturally iftheCommunity 'shope that theMultilateral Trade
Negotiations will provide theoccasion forachieving abetter organisation ofthe
world markets forprimary products were again tobedisappointed ,itwould beinevi­
tably benecessary -to'reconsider .?lhe who;l«j .queet-ion ofprimary products inxerms
oftrading condition 'soroffinancing oreven both .
Essentially therefore the'improvements intheCommunity scheme will have to
bemade .0:1those categories ofproducts which theCommunity 'soriginal ,offer to
Unctai should beincluded . :
TheCommission therefore considers that thefollowing arethemain
•/.

areas fortheimprovement and a/iaptation of .thescheme intheperiod
1975-80 . - ... .
(i)There must beincreased efforts tohelp thepoorest "beneficiaries ,
"byenlarging thecoverage ofprocessed agricultural product e,"byincreasing the
preferential margins onthece processed agricultural' proiucis already included
andbyrelaxation oftherut-off forindustrial product !?subject toceilings .
(ii).Particular attention 'ould bepaid toassisting theindustrial isaxion
programmes ofregional economic gi-oapings .
(iii)Inview ofthefact that generalised preferences inmany cases provide
themarket element ,onwhich projects forcooperation with developing countries
arebased ,appropriate ,adaptations tothe scheiae mayneed tobeintroduced .
Anysuch adaptations should take account ofthe Community' erupply requirement a.
i"'''(iv)Improvement sintheindustrial sector which mtm+preserve theunity
ofthetariff and thefree circulation ofgoods within theCommunity -will
have totake account ofthedesirability ofsharing thebenefits equitably ,
among thebeneficiaries .With regard tothis list point ,experience will de-<-
monstrate thestrengthen andweaknesses oftheinnovations made in1975
and .anynecessary adaptations totheiu vill then have tobeintroduced .
(v)Experience bhows that anuirber ofimprovements could bemade to •
"simplify thesystems applied tothevarious categories ofproducts inthe '
industrial sector :
;., :.■■ ■■S '.'J
,(l)Thequestion oftextiles requires separate mention because ofthespecial
sensitivity ofthis industrial sector /Thepolicy inthis field remains
broad lyconditional upon theresults ofthebilateral negotiations currently
taking place under tfcoArrangement regarding theinternatiord trade in
textiles .Itwill therefore only bepossible todecide onanewarremgement
•forgeneralised preferences fortextiles ,wnen inparticular theoutcome
ofthese negotiations areknown .Butitseems probable that anynew
4>arrangements fortextiles will bebased onthegeneral' characteristics
ofthepresent scheme .

(a)Thereisnoneedtomaintainfornon-sensitive products asytorn
ofceilingj whichispurelytheoretical sinceceilings arenotinfactcal­
culatedorobserved .Formalequality oftreatment forserai-sensitive and
non-sensitive products inekesnosense.Thenon-sensitive sectorcould "be
entirely exemptfromceilings ,subjectonlytosomeappropriate machinery
todealwithunforeseen situations . .
(b)Thesystemoftariffquotasisnolongernecessary .Allsensitive
andsemi-sonsitive products couldbesubjected toceilings /withthediffering '
degreeofpensitivity beingreflected indifferent measures forsurveillance
andadministration .
(c)Thepresent,highlycorplicated systemforcalculating ceilingscould
bemodified .Experience hasshownthatglobalmethodsofcalculation give,
similarresults.Itwouldbebettertohaveamoreflexible ,generalsystemof
calculation ,withperhapscertainexceptions wherethesearejustified bythe
existence ofrealproblems .
22January1S75.