COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(95) 25 final 
Brussels, 10.02.1995 
95/ 0021 (CNS) 
Proposal for a 
COUNCIL DECISION 
authorizing the French Republic to apply a reduced rate of the excise duty imposed on 
the consumption of "traditional" rum producted in 
its overseas departments 
(presented by the Commission) 

Explanatory Memorandum 
Background 
Article 2(b) of Protocol 6 to the Lomé Convention, on rum, specifies that the Community 
"shall establish the modalities for the projected abolition of the Community tariff quota" 
applicable to rum from ACP countries, taking into account the situation in the Community 
rum market and of the ACP states' exports. The Commission's report to the Council on 
that issue (SEC(94) 1572 final, 21 December 1994) proposed immediate abolition of the 
ACP tariff quota for light rum and staged abolition, by the year 2000, of the tariff quota 
for traditional rum. 
However, the production of traditional rum is of fundamental importance to the 
economies of the French overseas departments, and under Article 227(2) of the EC Treaty 
the Institutions of the Community must ensure that the economic and social development 
of the French overseas departments is made possible. 
Moreover, under the Declaration (n°26) annexed to the Treaty on European Union, and 
concerning the outermost regions of the Community, the Conference acknowledged that 
these regions suffer from major structural backwardness which severely restrains their 
economic and social development, and considered that it is possible to adopt "specific 
measures to assist them inasmuch and as long as there is an objective need to take such 
measures"; 
In the light of these elements, under point 8.3 of the POSEIDOM programme, the 
Commission reported to the Council (SEC(94) 1688 final, 21 December 1994) on the 
situation of the Community rum producers and the measures necessary to safeguard their 
vital interests. The report concluded that the effect of existing and additional measures 
to assist the sugarcane - sugar - rum sector will only be felt in the medium term and that, 
pending these effects, and in view of the consequences of the abolition of tariff quotas, 
taxation measures provide the only immediate means of maintaining a "commercial niche" 
for FOD rum at a level corresponding to the traditional trade recorded over recent years. 
The Commission therefore stated its intention of presenting a proposal for a Council 
Decision to give France the option of applying reduced rates to traditional rum produced 
in the FOD. 
Commentary on the proposed provisions. 
Article 1 authorises France to apply reduced rates of excise duty to "traditional" rum 
produced in the Overseas Departments. 
Article 2 specifies the meaning of "traditional" rum. 
Article 3 limits the quantity to which the reduced rate may be applied in metropolitan 
France to the quantities recorded in recent trade, limits the level to which the rate may 
be reduced, and limits the duration of the Decision. 
Article 4 is purely formal 
i\ 
COUNCIL DECISION 
of 
authorizing the French Republic to apply a reduced rate of the excise duty imposed on 
the consumption of 'traditional" ram produced in its overseas departments 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in 
particular Article 227(2) thereof, 
Having regard to the proposal from the Commission,1 
Having regard to the opinion of the European Parliament,2 
Whereas the French overseas departments form an integral part of the Community under 
Article 227(2) as interpreted by the case law of the Court of Justice, according to which 
the provisions of the Treaty and of secondary legislation apply in full to the said 
departments on the understanding that specific measures may nevertheless be taken to 
assist them insofar as there remains an objective need for such measures to secure the 
economic and social development of those regions; 
Whereas Declaration 26 on the outermost regions of the Community, annexed to the 
Treaty on European Union, confirms the principle of the adoption of specific measures 
for the economic and social development of those regions; 
Whereas point 8.3 of POSEIDOM (Council Decision 89/687/EEC of 22 December 1989)3 
requires the Commission to report on the situation of Community rum producers and on 
the implementation of measures to safeguard their essential interests; whereas the report 
in question (SEC(94) 1688 final) concludes that, in the new context of liberalization of 
imports and the drop in the quantity of rum from the French overseas departments 
marketed in recent years, Community producers must make a major effort to adjust in 
order to meet the new requirements and challenges of the Community market in rum; 
whereas the positive effects of existing and future measures on the competitiveness of the 
cane-sugar-rum sector will be felt only in the medium term; until then taxation provides 
the only effective and immediate means of maintaining a "commercial niche" for rum 
from the French overseas departments at a level corresponding to the traditional trade 
recorded in recent years; 
OJ No L 399, 30.12.1989. 
Whereas the Council decided on the basis of the Commission report on the situation and 
prospects of the rum market, with particular regard to rum originating in the ACP States 
(SEC(94) 1572 final), to abolish the tariff quota for imports of light rum originating in 
the ACP States as of 1 January 1996 but to maintain a tariff quota for imports of 
traditional rum originating in the ACP States set at 20 000 HP A/year, increasing by 
2 000 HPA for each subsequent year, until 1 January 2000, when it will be abolished. 
Whereas the French Republic should therefore be authorized to apply, by way of 
derogation from Article 95 of the Treaty, a reduced rate of the excise duty imposed on 
the consumption of "traditional" rum produced in its overseas departments; 
Whereas a time-limit must be set on this option in the expectation that existing and future 
measures to improve the competitiveness of the cane-sugar-rum sector in the French 
overseas departments will prove effective; whereas these are structural measures, 
however, and therefore cannot achieve their objectives until a sufficiently long period has 
elapsed; whereas on this basis the french authorities are prepared to consider, between 1 
January 2000 and 31 December 2002, a progressive adjustment to the reduced rate for 
traditional rum produced in their overseas departments. 
Whereas the quantity of rum originating in the French overseas departments to which this 
measure applies may not exceed a level corresponding to the traditional trade flows 
recorded in recent years, 
HAS ADOPTED THIS DECISION: 
Article 1 
By way of derogation from Article 95 of the Treaty, the French Republic is hereby 
authorised to apply to the consumption of "traditional" rum produced in its overseas 
departments, a rate of excise duty lower than the full rate of that duty applicable to ethyl 
alcohol falling within CN 2207 and 2208. 
Article 2 
The derogation provided for in Article 1 shall be confined to rum as defined in 
Article l(4)(a) of Regulation (EEC) No 1576/89,4 produced in the French overseas 
departments from sugar cane harvested at the place of manufacture, with a volatile 
element content, excluding ethyl and methyl alcohol, in excess of 225 grams per 
hectolitre and an alcoholic strength by volume in excess of 40%. 
Article 3 
1. In metropolitan France, the reduced excise duty applicable to the product referred 
to in Article 2 shall be applied to an annual quota of 90,000 HI of pure alcohol. 
OJNoL 160, 12.6.1989. 
2. The reduced rate may fall below the minimum rate of excise duty for ethyl 
alcohol laid down in Council Directive 92/84/EEC, but may not be set more than 
50% below the standard national rate of duty on ethyl alcohol. 
3, The Decision shall apply from 1 January 1996 until 31 December 2002. 
Article 4 
This Decision is addressed to the French Republic. 
Done at Brussels, 
For the Council 
The President 

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COM(95) 25 final 
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