Proposal for a COUNCIL DECISION to supply the Cooperation Council with all relevant information required for a thorough examination of the situation in respect of the import ban imposed by the Russian Federation on fresh eggs for human consumption originating in the European Community

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. In May 1996, Finland was informed by the Russian authorities, without explanation, that imports into Russia of fresh eggs for human consumption (CN 0407 00 30) were prohibited.

2. It was later explained that the ban was applicable to all third countries (erga omnes) and that it was based on human health protection considerations, in accordance with Article 19 of the Partnership and Cooperation Agreement (PCA). However, Russia has been unable to provide evidence of health risks, and imports into Russia of fresh eggs originating in the United States have increased substantially since the introduction of the ban.

3. Without evidence of human health problems, the ban constitutes a disguised restriction on trade between the Parties. As such, it violates the provisions of Article 15(2) of the Agreement, which stipulates that goods originating in the Community shall be imported into Russia free of quantitative restrictions.

4. Consultations on the Russian import ban on eggs originating in the Community have been held on several occasions on the basis of Article 102 of the PCA (e.g. during the first Cooperation Council on 27 January 1998, the first Cooperation Committee on 22 April 1998, technical consultations on 15 September 1998, second Cooperation Committee in December 1998, first Sub-committee on Agriculture 8-9 February 1999, third Cooperation Committee in October 1999 and at meetings of the trade and industry Sub-committee). The Commission has also transmitted aide-mémoires on the subject to the Russian authorities, without adequate response. Moreover, despite Russian agreement, in the framework of negotiations on the Memorandum of Understanding on free deliveries of food products from the Community to Russia, to advance formal consultations on the import ban on eggs to resolve the problem swiftly, no solution has yet been found.

5. Following the entry into force of the Russian import ban on eggs, the Community's operators have suffered substantial economic losses due to the fact that they no longer are able to export fresh eggs to Russia. In order to protect the Community's interest, the Commission proposes that measures be taken to sanction the Russian import ban on eggs.

6. The European Commission considers that the Russian Federation has failed to fulfil its PCA obligations with regard to trade in fresh eggs. Article 107.2 of the PCA provides that appropriate measures may be taken, in the event that either Party considers that the other Party has failed to fulfil an obligation under the Agreement. Before so doing, the Cooperation Council is to be supplied with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties. The letter in annex sets out the background to the issue, including the considerable efforts expended, without success, on attempts to find a solution by means of consultations. It sets out that, in the event that an acceptable solution is not found within one calendar month of the date of the letter, the Community will take appropriate, proportionate, measures in order to sanction the failure of the Russian Federation to fulfil its PCA obligations.

7. The Council is requested:

- to adopt the proposed Decision to supply the Cooperation Council with all relevant information required for a thorough examination of the situation in respect of the import ban imposed by Russia on fresh eggs for human consumption originating in the European Community, with a view to seeking a solution acceptable to the Parties;

- to sign the draft letter to the Chairman of the Cooperation Council in annex.

2000/0166 (ACC)

Proposal for a COUNCIL DECISION to supply the Cooperation Council with all relevant information required for a thorough examination of the situation in respect of the import ban imposed by the Russian Federation on fresh eggs for human consumption originating in the European Community

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to Council and Commission Decision 97/800/EC, ECSC, Euratom of 30 October 1997 on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and the Russian Federation, of the other part [1],

[1] OJ L 327, 28.11.1997, p. 1.

Having regard to the proposal from the Commission [2],

[2] OJ C

Whereas:

(1) The Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and the Russian Federation, of the other part [3] (hereinafter referred to as "the Agreement") lays down as one of the main objectives the promotion of trade and investment and harmonious economic relations between the Parties.

[3] OJ L 327, 28.11.1997, p. 3.

(2) This objective is seriously threatened by the import ban on eggs originating in the Community, introduced by the Russian Federation in May 1996.

(3) The import ban has been justified by the Russian Federation on the basis of the need to protect the health and life of humans, animals or plants, in accordance with Article 19 of the Agreement, which specifies that the Agreement does not preclude prohibitions or restrictions, inter alia, on imports, on those grounds. Article 19 states, however, that such prohibitions or restrictions are not to constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.

(4) The Russian authorities have provided no evidence that the import ban on eggs originating in the Community is justified by the need to protect the health and life of humans, animals or plants. The Russian import ban on eggs therefore constitutes a disguised restriction on trade between the Parties with a substantial negative economic impact on the Community. As such, it violates Article 15(2) of the Agreement, which stipulates that goods originating in the Community are to be imported into Russia free of quantitative restrictions.

(5) Consultations held between the Parties at the request of the Community on the basis of Article 102 of the Agreement to discuss the interpretation and implementation of the Agreement, and in particular Article 19 and Article 15(2) thereof, have not led to any adequate solution.

(6) According to Article 107(2) of the Agreement, appropriate measures may be taken in the event that either Party considers that the other Party has failed to fulfil its obligations under the Agreement. The Community considers that the Russian Federation, by restricting seriously Community exports of fresh eggs, has failed to fulfil its obligations under the Agreement. Appropriate measures may therefore be taken.

(7) However, under Article 107(2), except in cases of special urgency, the Cooperation Council should be supplied with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties before appropriate measures are taken. The failure of the Russian Federation to fulfil its obligations under the Agreement with regard to trade in eggs does not constitute a case of special urgency, as defined by the Joint Declaration in relation to Article 107 and the Joint Declaration in relation to Article 107(2) annexed to the Final Act of the Agreement,

HAS DECIDED AS FOLLOWS:

Sole Article

The Community shall supply the Cooperation Council with all relevant information required for a thorough examination of the situation in regard to the failure by the Russian Federation to fulfil its obligations under the Agreement on Partnership and Cooperation establishing a partnership between the European Communities and their Member States, of the one part, and the Russian Federation, of the other part, in respect of trade in fresh eggs for human consumption, by means of the letter from the Community to the Chairman of the Cooperation Council which is set out in the Annex.

Done at Brussels,

For the Council

The President

ANNEX

Draft letter from the European Community to the Chairman of the Cooperation Council with the Russian Federation

Sir,

Subject: Failure of the Russian Federation to fulfil its obligations under the Partnership and Cooperation Agreement in regard to trade in fresh eggs for human consumption

The Agreement on Partnership and Cooperation establishing a partnership between the European Communities and their Member States, of the one part, and the Russian Federation, of the other part (PCA) [4], lays down as one of its objectives the promotion of trade and investment and harmonious economic relations between the Parties. This objective is threatened by the Russian import ban on eggs originating in the European Community, introduced in May 1996.

[4] OJ L 327, 28.11.1997, p. 1.

The import ban has been justified by the Russian Federation on the basis of the need to protect the health and life of humans, animals or plants, in accordance with Article 19 of the PCA, which specifies that the PCA does not preclude prohibitions or restrictions, inter alia, on imports, on those grounds. Article 19 states, however, that such prohibitions or restrictions shall not constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.

The Russian authorities have provided no evidence that the import ban on eggs originating in the European Community is justified by the need to protect the health and life of humans, animals or plants. The Russian import ban on eggs is therefore considered to constitute a disguised restriction on trade between the Parties. As such, it violates Article 15(2) of the PCA, which stipulates that goods originating in the European Community are to be imported into Russia free of quantitative restrictions.

As a consequence of the measure taken by the Russian Federation, the European Community's exports of fresh eggs have been seriously restricted, with a substantial negative economic impact on the European Community.

The European Community has on several occasions raised its concerns with the Russian authorities in an attempt to find a solution, including at meetings of the Cooperation Council and Committee and at meetings of the Sub-committees dealing with trade and industry and with agriculture. In addition, consultations have been held between the Parties at the request of the Community on the basis of Article 102 of the PCA to discuss the interpretation and implementation of the PCA, and in particular Article 19 and Article 15(2) thereof. Unfortunately, these consultations have not led to any adequate solution.

The European Community considers that the Russian Federation has failed to fulfil its obligations under the PCA in respect of trade in fresh eggs. Article 107(2) of the PCA provides that appropriate measures may be taken, in the event that either Party considers that the other Party has failed to fulfil its obligations under the PCA. Before so doing, however, except in cases of special urgency, the Cooperation Council is to be supplied with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties. The failure of the Russian Federation to fulfil its obligations under the PCA with regard to trade in eggs does not constitute a case of special urgency, as defined by two Joint Declarations annexed to the Final Act of the PCA.

The European Community hereby seeks to supply information to the Cooperation Council with a view to seeking a solution acceptable to the Parties, in accordance with Article 107(2) of the PCA.

The European Community therefore invites the Russian Federation to remove forthwith the ban on imports into the Russian Federation of fresh eggs for human consumption originating in the Community, which is in breach of the PCA, or to provide convincing scientific evidence that the ban is justified on health grounds.

The European Community further takes this opportunity to inform the Cooperation Council of its intention, in the event that an acceptable solution, in the form of elimination of the import ban in breach of the PCA or provision by the Russian authorities of convincing scientific evidence that the ban is justified on health grounds, is not forthcoming within one calendar month of the date of this letter, to take appropriate and proportionate measures in order to respond to the failure of the Russian Federation to fulfil its obligations under the PCA.

I would be grateful if you could transmit this letter to members of the Cooperation Council as foreseen under Article 7 of the Rules of Procedure.

Yours faithfully,

For the Council of the European Union For the European Commission

The President The Commissioner for External Relations