COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 23.07.1997 
COM(97) 402 final 
COMMUNICATION FROM THE COMMISSION 
ON THE MANAGEMENT 
OF PREFERENTIAL TARIFF ARRANGEMENTS 

COMMISSION COMMUNICATION ON THE MANAGEMENT OF PREFERENTIAL TARIFF 
ARRANGEMENTS 
(summary) 
The importance of preferential tariff arrangements 
As the leading entity in world trade, the Community puts this economic advantage to use 
in its external policies of which preferential tariff arrangements are one of the main 
implementing instruments. 
These arrangements have been gathering more momentum in successive stages 
(association of the Western-European countries, development-aid, pre-accession strategy 
for the CEECs, Mediterranean policy, increasing trade with Asian countries), and now 
involve very significant volumes of trade. From being the exception, they have, in many 
cases, become the rule, and they play an important part in the Community's external 
policies and in dealings by traders. 
A global set of problems 
Even if the discrepancies in applying the arrangements are essentially customs problems, 
the Commission considers that they should be seen in a wider political context. 
The requirement for clarifying the conditions for applying the arrangements implies taking 
their objectives into account : furthering the development of the beneficiary countries 
(particularly, in the light of the Singapore Conference), promoting cooperation between 
partner-countries, preparing the integration of candidates for accession. 
Political advantage for the Community as a whole 
The European Parliament is greatly concerned by two essential characteristics of this 
problem : the fight against fraud, and the Community's external policy on development. 
Due to the discovery of these discrepancies, the Council decided, on 28 May 1996, to 
request the Commission to initiate, in particular, a study of the conditions for the recovery 
of the customs duties which are due. 
To be effective, the study requested should reconcile two non-conflicting aims : 
- the simplification of formalities in trade 
- the fight against the fraudulent use of the arrangements, so that the tariff preferences are 
granted only to the designated beneficiaries. 
Strengthening of the preferential arrangements through analysis of their discrepancies 
The actual Communication should be composed of two parts : firstly, a detailed analysis 
of the discrepancies; secondly, as a result of this analysis, proposals aiming at reforming 
the conditions of application. 
<*- 3 
The players in preferential tariff arrangements 
The players in preferential tariff arrangements are often reponsible for such a situation, but 
they are also a victim of it. 
- Community traders : they use these arrangements to their benefit, but they are also the 
first to be affected by the discrepancies, especially the importers who are liable for the 
customs debt. In this respect, there exists a legal precedent which weighs the importers 
down with the burden of "commercial risk" whenever they use the arrangements; 
- Customs authorities of the Member States : they are the main ones reponsible for the 
application of the arrangements, in that they are called upon to detect fraud and violations, 
and to recover unpaid duties; 
- Authorities in the beneficiary countries : they are reponsible for issuing certificates of 
origin; 
- Producers and exporters in third countries : it is they who have to ask for the issue of 
certificates of origin from the authorities in third countries. 
The answers to be provided 
For the provision of the answers, it will be necessary, amongst other things : 
- to settle previous cases on the basis of the regulations existing at the time that the facts 
were established, in conformity with the legal precedent setting out that faith in the 
certificate of origin is not normally protected, but constitutes a "normal commercial risk"; 
- to restore confidence in the arrangements, particularly by making sure that the Member 
States, first and foremost responsible in the application of them, attain this in an uniform 
and harmonized manner; 
- to make all of the players in the arrangements aware of their responsibilities, in their 
common interest, so that they assume their obligations on this question and to put them in 
a position to do so; 
- to legislate, whenever it becomes necessary. 
Table of Contents 
1. Introduction 
1. Preferential tariff arrangements : the Community at the heart of the largest set of 
preferential trade agreements and arrangements 
1.2 Numerous discrepancies in implementing preferential tariff arrangements 
1.3 The purpose of this Communication 
2. Preferential arrangements: raison d'être* form and impact 
2.1 Political, historical and geographical justification 
2.2 Major political and economic impact 
2.3 Preferential tariff arrangements : two legal forms 
3. Functioning of the preferential tariff arrangements 
3. / Types of trade covered 
3.2 Preferential rules of origin 
3.2.1 The purpose of preferential rules of origin 
3.2.2 Basic mechanisms 
4. The players in preferential tariff arrangements 
4.1 Economic players 
4.1.1 Traders outside of the Community 
4.1.2 Community importers 
4.1.3 Good faith on the part of the importer, and commercial risk 
4.2 Authorities in beneficiary countries 
4.3 Authorities in the Member States 
5. Discrepancies in the application of preferential tariff arrangements 
5.1 Types of irregularity or fraud in preferential origin 
5.2 Products concerned 
5.3 Responsibilities of the traders and of the authorities in case of discrepancies. 
5.3.1 Traders outside of the Community 
5.3.2 Traders inside of the Community 
5.3.3 Authorities of the beneficiary countries 
5.3.4 Authorities of the Member States 
5.4 The importers ' grounds for complaint 
5.5 Discrepancies in the particular context of developing countries 
6. Consequences of difficulties in applying preferential tariff arrangements 
6.1 Consequences on Community policies 
6.1.1 Consequences for manufacturers 
6.1.2 Consequences for importers 
6.2 Economic consequences for third countries 
6.3 Consequences for the Member States and the Commission 
7. The future of preferential tariff arrangements 
7. / Preparation for enlargement, and its impact on preferential tariff arrangements 
7.2 Reduced tariff advantages for certain products 
7.3 Appropriateness of the rules of origin in the new context of world trade 
8. Options for the Commission 
9. Actions necessary for remedying the discrepancies in preferential tariff 
arrangements 
9 1 Actions under development 
9.1.1 Modernization of the preferential rules of origin 
9.1.2 Attributing the management of preferential tariff arrangements to the customs 
administrations of the beneficiary countries 
9.1.3 Raising the awareness of the beneficiary countries 
9.1.4 Controlling the practical application of preferential arrangements in the Community 
9.2 The mechanisms : state of play and loopholes 
9.2.1 Existing mechanisms 
9.2.2 Loopholes and missing provisions 
9.3 Actions to he taken 
0.3.1 Promotion of a more rigorous application of the existing provisions 
9.3.2 Lessening the impact of loopholes by means of appropriate provisions 
9.3.3 Strengthening the provisions with supplementary measures 
9.3.4 Preparing for the future 
Annexes 
I (a) List of agreements and other preferential tariff arrangements (1.7.1997) 
(b) List of customs unions to which the Community is party 
(c) Internal measures 
II Detected fraud 
1. Introduction 
In compliance with the provisions of Article 152 of the Treaty, the Council requested 
the Commission (Decision No 96/C 170/01 of 28 May 1996, on post-clearance 
recovery of customs debt1) to carry out a study with a view to finding an overall 
solution to various problems which have arisen in the application of preferential 
customs arrangements, especially the problems of recovery; in part, the problems of 
recovery stem from irregularities, committed by the authorities of the beneficiary 
countries, which Community traders cannot reasonably detect. 
While satisfying the Council's request, the Commission, already aware of the 
necessity, considers that other aspects in the application of preferential tariff 
arrangements should also be examined, wherever there are numerous 
discrepancies. Solutions to be provided for these discrepancies should be sought, 
while bearing in mind the Community's commitments on the issue of development-
aid, the necessity for cementing economic relations with its partners, compliance with 
customs regulations, and respect for the legitimate interests of traders and those of 
the Community budget. 
/. 1 Preferential tariff arrangements : the Community at the heart of the largest set of 
preferential trade agreements and arrangements 
The Community is unquestionably the most-accessible market in the world, and it is 
largely through the openness of its trade policy that it has been able to carve itself a 
major political role on the world-stage. 
The Community has contracted agreements with, or granted tariff preferences to, 
almost two hundred countries and territories. In fact, every country in the world, 
with the exception of the United States, Japan and a few others, benefits from 
preferential tariff arrangements with the Community (cf. Annex I). Product-
coverage, as well as the preferential margin relative to the MFN-duties ('most-
favoured nation" clause), varies from one system to another. Current estimates show 
that about half of the goods coming into the Community do so within the scope of 
one of these systems. 
Correspondingly, the customs unions, to which the Community is party, also fall 
within this set of problems. 
1.2 Numerous discrepancies in implementing preferential tariff arrangements 
"' The Commission is regularly informed, by its own departments for investigation 
and/or control, by the Court of Auditors or by the Member States, of discrepancies 
in the preferential tariff arrangements. For some time now, the Commission has been 
working with the Member States to monitor the situation and to identify the 
problems which arise in applying the arrangements. It has emerged that these 
discrepancies result from the way in which the various participants (authorities and 
traders, in the beneficiary countries and in the Community) apply or do not apply the 
arrangements, as well as from a certain lack of legislation. 
1 OJ No C 170 of 14.6.1996, p. 1. 
As will be seen later, the commercial advantage, obtained by the misuse of the 
preferential system (in particular, through non-observance of the rulesof origin), is at 
the very root of the problem of these discrepancies. Besides the negative effect on 
the tariff (granting preferential customs duties unduly), this unfair advantage has a 
perverse effect on commercial policy, including those aspects which are the most 
sensitive for the Community's economy (circumvention of anti-dumping measures 
and of-quantitative quotas). 
Investigations, carried out by the Community in the beneficiary countries, have 
shown that the suspicions of fraud are well-founded, with the irregularities detected 
often representing 70 - 100 % of the imports which are checked. The table in Annex 
II gives an overall picture of the damage caused by such behaviour. 
Such fraud is politically and economically intolerable and threatens the pursuit of 
the aims of these arrangements, the competitiveness and the survival of Community 
industry, and fair trade. Furthermore, it undermines the legitimate confidence which 
traders should have in the arrangements; it also creates a considerable loss for the 
Community's own resources. 
Given the scale of the problem, the Commission decided to carry out a general 
overview, the findings of which are the subject of this communication. 
1.3 The purpose of this Communication 
This Communication, therefore, sets out to analyse the discrepancies which have 
occurred in the application of these arrangements, in relation to the objectives which 
they are supposed to attain. 
Such an analysis should cover the causes and the consequences of these 
discrepancies, for the Community, as well as for the beneficiary countries, the 
economic operators and the Community's own resources, in order to be able to 
propose appropriate solutions, with the following two-fold aim in mind: 
to make the arrangements more effective by reminding the various parties, 
involved in implementing them in the Community or in the beneficiary 
countries, of their responsibilities, without as such overburdening exclusively 
one or other of the parties with the responsibility for the discrepancies ; 
to guarantee compliance with the Community's commercial policy, thus 
ensuring its uniform application, and with the pursuit of the aim of supporting 
the development of its partners, notably the least-developed countries. 
2. Preferential arrangements: raison d'être, form and impact 
2.1 Political, historical and geographical justification 
Through these arrangements, the Community has been pursuing the aim of 
development-aid. The Lomé Convention and the arrangements for the Overseas 
Countries and Territories (OCT) were so negotiated. In the same way, under the 
aegis of the United Nations, the Community runs the largest scheme of generalized 
preferences (GSP) in the world, mainly benefiting the countries of Asia and Latin-
America. 
The Community has prepared for each new wave of accessions, since the early 
'Seventies, by negotiating agreements to phase in free trade with prospective 
Member States prior to full membership.This strategy was employed with the 
countries of the European Free Trade Association (EFTA) and, now, with the 
Central and Eastern-European Countries (CEEC). The agreements provide for 
preferential tariff arrangements to be granted to the relevant countries before they 
join the Community. 
The Community also maintains close economic links with its neighbours, such as 
Norway, Iceland (through the European Economic Area (EEA)), Switzerland 
(through EFT A), and the Mediterranean countries or those countries with which it 
has concluded a customs union (Andorra, San Marino and Turkey). 
2.2 Major political and economic impact 
Under these arrangements, goods, particularly manufactures, enter the Community 
free of customs duty or at a reduced rate of duty. 
In general terms, the arrangements are part of the Community's commercial policy 
and are a key component of its external policies. They are thus instrumental in 
forging special relationships with the Community's partners, such as third countries 
in the EEA. In fact, the resulting tariff preferences provide an incentive to the traders 
to get their supplies from partner-countries. In other respects, the arrangements are 
an instrument for development policy, aiming at the speedy sale, on the Community 
market, of products originating in the developing countries, and thus to encourage 
industrialisation, investment and the processing of raw materials. The final objective 
of these arrangements is to promote, gradually and harmoniously, long-lasting social 
and economic development in these countries. 
It should be noted that, in its Communication on improving market-access for the 
least-developed countries (COM 97/156 final, of 16 April 1997), the Commission 
presented its assessment and its goals in opening up the Community market to the 
least-developed countries so as to give them a foothold in the world economy. The 
Commission has also presented a 'Green Book" on relations between the European 
Union and the ACP countries at the dawning of the 21 st century, with the aim of 
strengthening political and economic links with these States. 
2.3 Preferential tariff arrangements : two legal forms 
In accordance with the provisions laid down by the bodies governing international 
trade, preferential tariff arrangements may take one of two legal forms, each of 
which has consequences for the way they operate. They are: 
contractual (agreement-based), i.e. negotiated accords, most of which are 
fully or partially reciprocal (EEA, EFTA, CEEC, Mediterranean Agreements, 
Lomé Convention, customs unions); 
- autonomous, i.e. non-negotiated and not reciprocal (OCT, GSP, some 
countries of former Yugoslavia). 
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3. Functioning of the preferential tariff arrangements 
3.1 Types of trade covered 
Trading with beneficiary countries is not necessarily carried out under these 
arrangements. 
The fact that a country is eligible for tariff preferences does not mean that all of its 
exports are carried out in the context of the Community's preferential arrangements. 
All of the preferential agreements and arrangements set economic and customs 
criteria (nomenclature, customs value and, most importantly, rules of origin) which 
the goods must first satisfy, in order to qualify for preferential treatment. Products 
which are not covered by the agreements or which fail the criteria must be charged 
the full common customs tariff (CCT) duty on entry into the Community. 
One significant point is that the arrangements are merely optional. 
3.2 Preferential rules of origin 
Of the criteria mentioned in item 3.1 above, the essential one is that known as 'rules 
of origin". Normally, these rules are enshrined in a protocol or separate instrument, 
most commonly annexed to to the agreements or arrangements concerned. 
3.2.1 The purpose of preferential rules of origin 
The aim of the preferential rules of origin is to allow only those products from 
partner-countries or from beneficiary countries to benefit from the preferences, 
without leading to a deflection of traffic which would prejudice trade with the 
Community. In accordance with these principles, the rules tend to favour an 
economic integration based on the reciprocal advantages to be gained in 
conventional relationships, and to contribute to the development of industry in 
the beneficiary countries by giving them the means of controlling the running 
of their own resources. To achieve these ends, the rules of origin, which vary 
little from one system to another, introduce standards for limiting the use of 
raw materials from non-beneficiary countries, and for maintaining most of the 
processing activity in the partner-countries or beneficiary countries. 
To meet the needs of economic integration, the rules of origin are 
complemented by provisions for 'cumulation", thereby allowing a beneficiary 
country to use goods originating in another beneficiary country and/or in the 
Community.The extent of the cumulation is adapted to the desired level of 
integration. 
3.2.2 Basic mechanisms 
By way of example, under the rules of origin in the Protocols, which have been 
in force since the start of the year, among the Community, the EFT A countries 
. and the CEECs1, preferential treatment is granted only to those goods, coming 
from these countries, which: 
i E.g., OJ N° L343 of 31.12.1996 on the Europe Agreement between the EC and the Czech Republic 
11 
have been wholly obtained in these countries or have undergone sufficient 
working there (the conditions are laid down, product-by-product, and appear 
in an annex to the protocols); 
- have been subject to the levying of customs duties (and on which such 
duties have not been reimbursed) in respect of any third-country components 
used in the manufacture of products deemed to have undergone sufficient 
working; 
- have been shipped directly to the Community; 
- are accompanied by a specific certificate proving that they satisfy the 
relevant conditions. 
Preferential treatment is also granted to: 
- goods produced using components from two partner-countries, e.g. the 
Community and Slovakia (bilateral cumulation); 
- goods produced using components from three or more partner-countries, 
e.g. the Community, Switzerland and Slovenia (diagonal cumulation); 
- goods produced using components from several member countries of a 
regional group, e.g. Vietnam, Indonesia and Singapore, all of which are 
members of ASEAN (regional cumulation); 
- goods obtained by successive transformations within the EEA (total 
cumulation). 
4. The players in preferential tariff arrangements 
4.1 Economic players 
Preferential treatment is on offer as an ease-of-access in trading with certain 
countries. It is not granted automatically and is dependent on the traders deciding 
what steps to take : the exporter who proposes or accepts to supply his client with a 
certificate leading to the preference, and the importer who may decide to submit it to 
the customs authorities at the time of importation. 
4.1.1 Traders outside of the Community 
After checking that the products satisfy the criteria to qualify for preferential 
treatment, the exporters are required to make a formal request to the 
competent authorities of the exporting country for the issue of a certificate of 
origin, while providing them with all of the relevant information. Given the 
financial advantage to be obtained, the provision or otherwise of a certificate 
of origin is included in the calculations when the contract is negotiated with the 
Community importer (or successive contracts when there is amiddleman, agent 
or distributor involved). 
Once issued, the certificate of origin is forwarded, by the exporter, to the 
importer, either directly or through a middleman. 
12 
4.1.2 Community importers 
From the negotiations described in item 4.1.1 above, it follows that, in 
practice, the importer knows if the goods will be sold to him with or without a 
certificate of origin, even before any request is submitted to the authorities in 
the exporting country. 
The importer is responsible for the accuracy of all of the details in the import 
declaration (type, origin, value, quantity, application for preferential treatment, 
etc.)and is therefore legally liable, in the eyes of the administrations of the 
Member States, for the consequences of any inexactitude in one or other of 
these references. 
4.1.3 Good faith on the part of the importer, and commercial risk 
For obvious commercial and technical reasons (organisation of after-sales 
service, health policy, etc.) the importer usually checks on the quality of the 
products, before signing the contract and while it is being carried out, which 
puts him in the position of knowing the pertinent facts as to the originating 
status of the products. Such information may be passive (received from the 
exporter) or active (when he insists that his supplier uses specific components 
or raw materials, or that he will obtain them for him). 
In this respect, the Commission points out that faith in the validity of a 
certificate of origin is not protected, this being a normal 'commercial risk" as 
given by the Court of Justice of the European Communities1. 
The plea of good faith can only be invoked by the importer in the event of an 
error made by the competent authorities in respect of origin certificates, that is 
'only if it was the competent authorities themselves which created the basis for 
the expectations' (Judgment of 14 May 1996 of the EC J, Joined Cases C-
153/94 and C-204/94 - "Faroe Seafood"). 
In this context, it is to be noted that instances of genuine '£ood faith", as 
regularly pleaded by importers in an attempt to avoid recovery of duties, are 
not common. In these particular cases, the concept of 'commercial risk' itself 
stands in the way of the importers being released from the obligations defined 
by the Community Customs Code, 
It is altogether possible, however, and is often the case, that the importers 
include protection-clauses in their contracts, so that their suppliers are liable 
for the financial consequences of any false declarations of origin, in the same 
way as they do for other elements in their transactions (quality, quantity, terms 
of delivery, etc.) 
4.2 Authorities in beneficiary countries 
Customs offices in the Member States are not always in a position to determine, at 
the time of importation, whether the goods are eligible for preferential treatment or 
not. Community agreements and regulations on preferential arrangements make the 
Case Van Gend & Loos NV; Joined Cases 98 and 230/83; Judgment of the ECJ of 13.11.1984 
13 
beneficiary countries responsible for issuing the certificates of origin, in the spirit of 
cooperation and trust. 
To this effect, it is up to the third countries to designate the authorities responsible 
for verifying, at the time of exportation, if the goods satisfy all of the conditions 
necessary for preferential treatment, prior to the issue of the certificates requested by 
the exporters. These authorities are obliged, also, to provide the Member States with 
the relevant information (within a prescribed time-limit) to allow the latter, in case of 
doubt at the time of importation or later, to make sure that the goods can effectively 
be granted preference. 
The conditions, for the assistance to be given by the beneficiary countries, are given, 
in all of the agreements on preferential arrangements, under the heading 'Methods of 
administrative cooperation". 
4.3 Authorities in the Member States 
The customs authorities in the Member States are reponsible for verifying and 
accepting import declarations, and for carrying out any controls which they deem 
necessary when goods are brought onto the customs territory of the Community. 
These authorities have the jurisdiction to exercise their independent powers, also, 
when imports are made under preferential tariff arrangements. Given the difficulty of 
verifying the origin of the goods at the point of entry, the authorities have the 
additional power of calling on the beneficiary countries for assistance, as pointed out 
in item 4.2. 
The authorities of the Member States may ask the authorities of the beneficiary 
countries to verify the authenticity and content of the certificates supposedly issued 
by them, and to communicate all the information necessary to make sure that the 
goods do indeed qualify for preferential treatment. 
In the event of random sampling or when there is 'reasonable doubt", the 
information requested must be communicated, therefore, within a strict time-limit. If 
the answer is not received within the time-limit, or if the answer is insufficient, then it 
cannot be confirmed that the goods qualify for preferential treatment. This results in 
a refusal by the Member States to grant preferential treatment, and in the consequent 
recovery of the customs duties due. 
If an investigation is to be carried out, the authorities of the Member States may give 
the importer the option of having the goods cleared, against the appropriate 
guarantees, if it is decided not to grant preferential treatment until the findings are 
obtained. Practically, and as intended by the scheme, this means that the guarantees 
to be taken should be at the level of the full duties due, as soon as there is reasonable 
doubt. 
The possibility which Member States have, of appealing for administrative 
cooperation, is therefore a decisive element in the process of verifying the proper 
application of these arrangements. Experience shows, however, that controls, carried 
out in this manner, become much more effective when preceded, accompanied or 
followed, as necessary, by verifications and investigations carried out by the Member 
States themselves, either on their own or co-ordinated at Community level. 
14 
Moreover, since the infringement of the preferential rules of origin is a natural 
consequence of some irregularity or fraud, the Member States are bound to inform 
the Commission of their suspicions or their findingson this question, seeing that this 
information is of interest to the Community, in accordance with the provisions of 
Regulation (EEC) No 1468/81, as amended, on mutual assistance between the the 
administrative authorities of the Member States and cooperation between the latter 
and the Commision to ensure the correct application of the law on customs and 
agricultural matters1. 
Finally, as recently confirmed by the European Court of Justice ('Faroe Seafood" 
Judgment, mentioned above), the Member State authorities may proceed with the 
recovery of duties when a Community fact-finding mission concludes that the 
disputed goods do not qualify for preferential treatment. 
Administrative cooperation is, therefore, a vital factor for the arrangements to 
function properly, but its effectiveness depends on the authorities of the beneficiary 
countries and of the Member States making use of its provisions to the full. 
5. Discrepancies in the application of preferential tariff arrangements 
Despite the existence of an instrument for administrative cooperation with partner-
countries, much improved upon and extended in re-negotiated agreements and in the 
introduction of the new GSP scheme, it must be admitted that the discrepancies are 
numerous and are becoming worse, with the result that goods which are not eligible 
are benefiting in correctly from preferential treatment. 
Preferential treatment can be obtained incorrectly by using the wrong tariff 
classification for the goods, or by giving a false indication of the customs value, or, 
as is becoming more common, by the traders concerned not abiding by the rules of 
origin. 
In the main, discrepancies are detected through inquiries or fact-finding missions, 
whether they are co-ordinated at Community level or carried out within the Member 
States (for example, textile products from Bangladesh); given their widespread 
nature, they can be identified by the the variety of problems created. 
Investigations are focused on imports of those products which are the most 
susceptible to fraud, and have shown that discrepancies are likely to appear under 
any of the arrangements and that there is not necessarily a direct correlation between 
the standard of administrative infrastructure and the type of fraud. 
5.1 Types of irregularity or fraud in preferential origin 
From analysis of the cases so far recorded, several types of irregularity or fraud can 
be identified, as described below. Needless to say, the irregularities or instances of 
fraud which are the most difficult to detect are those which are most rampant. 
• certificates which are irregular as to form (incomplete, not signed and/or not 
stamped by the official authorities), certificates which are authentic but which 
1 OJ No L144, 2.6.1981, as amended in OJ No L90, 2.4.1987. 
15 
have been issued in respect of a product which is not covered by the agreement 
or arrangements, false or falsified certificates. 
There is generally little difficulty in detecting such cases. 
certificates which are authentic but which have been issued for goods which 
have not been obtained in the beneficiary country. The detection of such 
irregularities, made possible through administrative cooperation, may require a 
delicate approach if there is complicity between the authorities, responsible for 
the issue or control of the certificates, and the fraudsters; 
certificates which are authentic but which have been issued for goods which 
have been obtained in the beneficiary country without respecting the rules of 
origin - these are, by far, the most common (for example, orange-juice from 
Israel). 
The implementation of administrative co-operation plays an important part in the 
detection of irregularities, but is no substitute for the investigation of 
traders'operations which should, in any case, be carried out by the Member States. 
5.2 Products concerned 
No category of products is untouched by such discrepancies, but investigations, in 
general reflection of the specialisation of the export-industries in those countries 
benefiting from arrangements, concentrate on the most-sensitive products, the ones 
which are the most attractive to traders for the purposes of fraud (for example, 
televisions from Turkey). 
The tables in Annex II contain instances of fraud and the effective levels of recovery. 
The extent of the problem, and the most-sensitive products, can be identified 
therefrom, as well as an assessment of the negative impact, on the proper functioning 
of these arrangements taken as a whole, resulting from not capitalizing on the results 
obtained. 
5.3 Responsibilities of the traders and of the authorities in case of discrepancies 
5.3.1 Traders outside of the Community 
The rules of origin are conceived in such a way as to give the traders every 
opportunity to know whether the products they manufacture are in accordance 
or not. Moreover, the traders usually manufacture a limited range of products, 
often subject to such rules, for the same market. Investigations show that it is 
not usual to find an importer who is really not aware of the rules of origin. 
Nevertheless, some problems have arisen concerning the interpretation of these 
rules, such as confusion among the various preferential arrangements. 
In providing Community importers with a certificate of origin for goods which 
• do not qualify, these traders give them with the means of eluding payment of 
the customs duties normally due. When they negotiate the sale of the goods, 
they are aware that the provision of a certificate of origin is a definite 
advantage to the importer. 
16 
In the majority of cases investigated, unscrupulous traders have obtained 
certificates of origin by simply concealing the real status of the products. 
During investigations, some traders have exerted pressure on the authorities in 
an attempt to delay or influence the issue. 
5.3.2 Traders inside of the Community 
Since they are responsible for the accuracy of the declarations they make to 
customs authorities, importers are presumed to know the rules of origin, in the 
same way that they should know the tariff nomenclature and other customs 
regulations. 
The fact that a certificate of origin is presented with the import declaration - a 
deliberate act on the part of the importer - makes the importer liable for any 
duties not paid at the time of importation, as has already been stated earlier by 
the Commission. 
In awareness of this, it is up to the importer to take the necessary precautions, 
in order to meet his responsibilities, especially at the time of negotiating the 
contract. Even before concluding a commercial contract, for example, the 
importer can also apply to customs authorities in the Community for an 
evaluation of the origin of his product, by means of the new 'binding origin 
information" procedure. Apart from the fact that this instrument gives him 
some guarantee for his commercial operation, it could also be an element of 
proof in determining his good faith in the case of a dispute at the time of 
clearance through customs1. 
Investigations show that a de facto solidarity can develop between traders in 
beneficiary countries, which have been subjected to an inquiry, and traders in 
the Community, in view of their common interest in protecting and maintaining 
trade relations in an environment made favourable by the possibility of 
preferential treatment. This solidarity is often practised jointly, especially to 
put pressure on the authorities in the beneficiary countries, in an attempt to 
avoid the foreseeable consequences of an inspection or to cancel its effects. 
5.3.3 Authorities of the beneficiary countries 
Investigations show that the most significant fraud detected over the past few 
years concerns goods imported from countries at very different stages of 
development (for example, fabric from the Maldives, shrimps from the Faroe 
Islands). It stems from a disregard for the provisions for administrative 
cooperation, and from frailties in the administrative structure. 
5.3.4 Authorities of the Member States 
Though aware that the provisions for administrative cooperation are enforced 
to very different extents by the beneficiary countries and that, therefore, 
recourse to them is very uncertain, the Member States too often persist in 
Regulations (EC) No 82/97 of 19.12.1996 (OJ No L 17, 21.1.1997, p.l) and No 12/97 of 18.12.1996 
(OJNoL9, 13.1.1997, p.l). 
17 
relying upon them, without coming to an operational decision on the question 
of investigation and recovery. 
The safeguard measures, which should come into operation when checks 
become necessary, especially in cases of reasonable doubt, are not 
implemented in the same way by all Member States. This favours the deflection 
of trade, complicates the issue of recovery of duties in the case of a positive 
result, and leads to the unequal treatment of traders. 
In spite of the Commission's attempts at co-ordination, the findings of 
Community fact-finding missions are not used to their full extent. This paves 
the way for dubious imports without involving any great risk for traders. 
Another problem arises when Member States claim that the certificates have 
not been invalidated by the third country, as a reason for not recovering duty 
after some irregularity has been found. Such grounds are provided for by the 
regulations, and are not, therefore, an acceptable excuse. Case law in the 
Community has constantly confirmed that the decisive criterion for recovery is 
ineligibility. 
By adopting such course of action, the Member States, artificially and without 
any legal justification, are transferring their own responsibility onto the 
authorities in the beneficiary countries. 
5.4 The importers ' grounds for complaint 
Community importers also complain often about these discrepancies which occur in 
the arrangements, especially since actions for recovery can come into operation two 
or three years after the importation has taken place. 
However, it has been found, in many instances of investigation, that importers are 
usually informed that their operations are being investigated, either in the initial 
stages by the Member State, or by the exporters when it is underway. In this context, 
they are aware of the results of the verification, even before the results have been 
communicated to the requesting authorities, but they do not always make the 
necessary arrangements to put their house in order, despite the time available before 
the procedures for recovery can come into being. In so doing, they contribute to the 
continuance of the negative effects of the discrepancies, to the detriment of those 
importers who abide by the rules, and of Community producers. 
5.5 Discrepancies in the particular context of developing countries 
Awareness of these discrepancies and the responsibilities of traders and authorities 
alike in the matter does not exonerate the Community from examining the underlying 
causes of such a situation, especially in so far as development policy is concerned. It 
has to be pointed out, in this respect, that the partner beneficiary countries do not 
find themselves on the same footing vis-à-vis Community rules. Many^ of them, 
especially those coming from the emerging economies in Asia, have certainly been 
able to avail themselves considerably of the advantages offered to them by the 
Community, and have been able, in accordance with the objectives of the rules of 
origin, to intensify their industrialisation-process by integrating their production-
network from top to bottom, with the aid of internal and external investment, 
18 
relieved, if needed, through regional cooperation. Nevertheless, there are other 
countries, especially the least-developed ones (LLDCs) and those having a similar 
level of development (sub-Saharan Africa, insular states), which have not been able 
to take full advantage of the substantial commercial benefits made available to them, 
because of their economic, institutional, administrative or financial structures which 
often do not allow them to start up an industrial process. Because of these 
weaknesses, some of these countries are trying to develop an industrial basis by 
concentrating an intensive labour-force on the activity of 'last working or 
processing", which does not always meet the requirements for the rules of origin. 
The Commission has recently examined this problem in its Communication on 
improving access to the Community market for LLDCs. 
Steps are necessary to confront this situation. On the one hand, it is certainly not 
conceivable that insistence on genuine controls and abidance by the rules should be 
forgone, since this would only lead to jeopardising the preferential arrangements, to 
the detriment of their ultimate aim of promoting development. On the other hand, 
however, it is just as inconceivable to let these countries, which are amongst the 
poorest in the world, fail to avail themselves of benefits vital to their survival. The 
Commission has already put forward concrete proposals, in the context of the 
abovementioned Communication, to improve the rules of origin by simplifying them 
and clarifying the conditions for applying them.. The same concerns are also taken 
into consideration in the definition of the necessary actions, discussed in item 9, for 
remedying the discrepancies of the preferential arrangements. 
6. Consequences of difficulties in applying preferential tariff arrangements 
6.1 Consequences on Community policies 
Political and economic relations with the countries concerned are affected by this 
situation. In particular these discrepancies have negative consequences on the 
commercial policy of the Community, thwarting its effectiveness and endangering the 
development and economic integration of the beneficiary countries which are 
precisely the raison d'être of the preferential tariff regimes. 
6.1.1 Consequences for manufacturers 
On the other hand, the industrial community is affected by the distortion of 
competition thus created and complains about the lack of firmness of the 
measures adopted and of their application. They emphasise the serious 
consequences, in terms of employment and the closing-down of firms in the 
Community. 
Thus, Community production faces competition which had not been 
anticipated. The imported goods benefit not only from entry into the 
Community at reduced duties, but also from the conditions specified for a 
particular concession not being applied (for example, allowing the use of 
components which are even cheaper than those actually produced in the 
beneficiary country). In this way, the price of such products on the Community 
market can be artificiallly lowered, and helps to force Community 
manufacturers of identical or similar products into bankruptcy. 
19 
Community industry is sometimes unwilling to accept certain concessions 
granted to third countries by the Community. Industry is quite justified in 
insisting that these concessions be limited to those products and countries for 
which they are intended and and which meet the conditions and basic 
requirements for the arrangements. This is all the more justified when fraud in 
preferential origin circumvents commercial measures such as quotas and anti­
dumping duties. 
Many manufacturers have protested at this situation, both to the Member 
States and to the Commission, and put a lot of faith in their capacity to react in 
such a way as to end this detrimental situation or, at least, to limit its negative 
effects. 
6.1.2 Consequences for importers > 
Those importers who use the regimes in the proper way are facing direct unfair 
competition from imports of products which do not qualify but which have 
been wrongly granted preferential treatment.The very economic survival of 
these importers could be seriously threatened, if such unfair competition is 
allowed to continue. It should not be forgotten that they play a central role in 
the implementation of preferential arrangements, arrangements which are still 
of vital importance to a number of developing countries. 
6.2 Economic consequences for third countries 
Given the objective of the rules of origin in relation to the preferential treatment of 
the goods, it has to be noted that operations which violate these rules do not give the 
exporting countries the real economic advantage intended by the arrangements, due 
to the fact that the value added there is non-existent or very low. This is particularly 
obvious when products are not manufactured in the country, but simply trans­
shipped there. Even if there is some industrial activity involving final processing or 
subcontracting, it is likely to be short-lived and the profit in terms of development is 
very low, seldom involving long-term investment, transfer of technology, or training 
of local staff 
However, for some LLDCs, it is true that an industrial activity giving little local 
added value often represents a godsend.The goods thus produced do not qualify for 
preference (other than in specific individual cases on the basis of an ad hoc decision 
for derogation: Communication on improved access to the Community market, 
mentioned above, paragraph 1.2, 'rules of origin'), and it is important that the 
Community makes full use of the stimulant effect of preferences in the establishment 
of a more complete industrial network in these countries. 
6.3 Consequences for the Member States and the Commission 
Due to the prevalence of laxity in the implementation of administrative cooperation 
and, hence, to its lack of credibility, customs departments have serious difficulties in 
making traders abide by these arrangements. 
However, on analysis, the proper application (for which the Member States alone are 
competent) of the provisions for administrative cooperation and of the conclusions of 
20 
Community fact-finding missions would be a positive contriburion towards rectifying 
the current situation and towards dissuading a number of unscrupulous traders. 
Responsible for co-ordinating the management of the arrangements and the activities 
of investigation and control, the Commission is too often forced to go beyond its 
competence and to intervene, on behalf of the Member States, with respect to the 
beneficiary countries. 
Given that its powers of action and control are somewhat limited, the Commission is 
often not able to prevent the negative effects, on commercial policy, on Community 
policies and on own resources, of these discrepancies which arise from the non-
observance of the arrangements by those participants directly involved. 
With regard to own resources, it should be noted that the revenue not collected as>a 
result of these discrepancies has to made up in another way; to some extent, this loss 
of revenue is balanced out and borne by the rest of the European taxpayers rather 
than by the importers who should normally have paid them. 
7. The future of preferential tariff arrangements 
7.1 Preparation for enlargement, and its impact on preferential tariff arrangements 
Pressure on these arrangements has increased in recent years, due to the necessary 
extension or reinforcement of preferential measures granted to countries applying for 
membership. 
Preparation for enlargement is a special opportunity to encourage these countries, 
both at the level of the traders and the authorities, to apply correctly the procedures 
for managing and controlling these preferences within a cooperation framework with 
the Union. The future will be better prepared for these countries, the sooner these 
procedures are put into use 
In so doing, by managing the arrangements, and by obtaining real means of appraisal 
to act or react according to the circumstances and in transparency, the Union will be 
able to determine the suitable conditions for a progressive transition ensuring these 
countries full participation in the Union. 
7.2 Reduced tariff advantages for certain products 
This reduction comes from the general lowering of CCT-duties, as a result of the 
conclusions of the Uruguay Round, the application of which comes to an end in 
2004. With this general reduction in tariff advantages, products will attract duty of 
less than two or three per cent, and application for the preferential arrangements will 
eventually be of little interest. Of course, the preferential arrangements will still be 
attractive for sensitive products with higher duties, such as agricultural and fishery 
products or textile products and shoes. 
This gives an indication of the need to adapt the rules of origin to the micT-term and 
long-term situations. However, for the time being, tariff reductions granted by the 
Community are still considerably attractive. It is therefore advisable to define the 
means which will enable these instruments to continue playing their rôle fully. 
21 
7.3 Appropriateness of the rules of origin in the new context of world trade 
It could be asked whether there is a link between the amount of discrepancies and the 
way that the preferential rules of origin are structured. In its Communication of 16 
April 97, the Commission gave an initial breakdown in this respect and proposed 
guidelines for improving the situation, notably by targeting the more coherent use of 
derogations and the simplification of these same rules. 
8. Options for the Commission 
On the problem of discrepancies, the option of expanding the concept of good faith, 
thereby sheltering unscrupulous traders and penalizing the traders who abide by the 
rules of the game, is clearly not acceptable. The Commission considers that the only 
possible option is to improve the way that the arrangements work, in the interests of 
all of the parties concerned. As for the past, that can be dealt with only under the 
legislation in force at the time. 
This option is fully in line with the declaration that the Commission put in the 
Minutes of the Council Session of 28 May 1996, an extract of which is given below : 
The Commission "... takes due note of the Council's request to carry out this study. 
It observes nevertheless that the thrust of the Council's request would lead to the 
substantial amendment of current regulations. 
The Commission draws attention to the role, under current law, of importers who, 
as pointed out by the Commission in its Work Programme (COM (96) 17) on the 
fight against irregularities and fraud, and in accordance with the decisions of the 
European Court of Justice, remain, in principle, legally and financially liable. 
However, it will examine this request in a constructive manner, and in the light of 
the recent decisions of the Court, while bearing in mind the criteria for the smooth 
operation of Community policies and giving priority to the strengthening of the 
coherence of the rules and of the current provisions, as well as the need to protect 
the financial interests of the Union." 
9. Actions necessary for remedying the discrepancies in preferential tariff 
arrangements 
Actions already taken by the Commission and by the Member States should help to 
rectify the situation, but will not be enough, and other actions will have to be 
contemplated. 
To a large extent, such actions should be based, in particular on the various 
programmes of work or action, for example in the customs field ('Customs 2000') 
aimed, amongst other things, at standardizing and clarifying the conditions for 
applying the common commercial policy and protecting the financial interests of the 
Community. 
22 
9.1 Actions under development 
9.1.1 Modernization of the preferential rules of origin 
At the Commission's instigation, the Community has, for a number of years, 
been overhauling, unifying and simplifying the preferential rules of origin. This 
is a result of the explosion in the number of conventional preferential 
agreements since the start of the decade, and of the need to make the rules 
more accessible and more transparent. 
Since 1 July 1997, the preferential rules of origin applied by the Community in 
dealings with Europe (EEA, EFT A, CEECs, i.e. more than thirty countries) 
are identical. The same text has been proposed to the twelve Mediterranean 
countries, and some of them are about to accept it. > 
This action of standardizing and improving the preferential rules of origin is 
based, inter alia, on simplification of the documentation (abolition of the 
EUR. 2 and APR.1, and general use of invoice declarations), on the use of 
largely-standardised wording (for example, for the basic definitions, such as 
'Wholly obtained'), or on the promotion of a new type of relation with traders 
(generalization of the concept of "approved exporters"). 
Moreover, where it was possible, some of these new rules have also been 
incorporated into the ACP/OCT Conventions, as well as into the GSP. 
9.1.2 Attributing the management of the preferential tariff arrangements to the 
customs administrations of the beneficiary countries 
The main task of the administrations of the Member States in this matter lies in 
checking certificates of origin and their content, both at import and at export. 
It is not a question of checking every certificate, but to carry out checks on the 
basis of risk-analysis techniques. These administrations also have the task of 
issuing binding origin information, which has been part of the Community 
customs regulations since the beginning of 1997. 
Clearly, the workload of these administrations has increased as a result, but 
such is the price for the smooth operation of a system of preferential rules of 
origin. Just as the Community customs administrations take full responsibility 
for managing the rules of origin, so it seems essential that their counterparts in 
partner countries do the same, provided that these customs administrations 
really do have the necessary power and competence, and especially that they 
make real use of them, in particular with regard to controlling traders. This 
would allow full use of the knowledge of customs law, common to all customs 
administrations. In large part, the customs law is harmonized at international 
level (classification, value, etc.). Action in this direction is ready to be started. 
9.1.3 Raising the awareness of the beneficiary countries 
The first preferential arrangements go back to the 'Seventies. Since then, the 
Community has made great efforts to explain what the preferential origin rules 
mean, how they should be applied and why greater administrative cooperation 
is necessary. 
23 
These acts are intended in particular for the central authorities of the third 
countries concerned, and then proceed to training activities for the people 
responsible for managing and applying the origin rules in practice. During the 
last three years, about twenty such seminars were organized by the Community 
in various parts of the world. 
In addition, the Community has called on specialized organizations to help 
these countries gain a better grasp of the rules and differentiate between the 
Community rules and those that these same countries have also to apply with 
respect to other donor-countries of preferences. 
Moreover, although it is not their raison d'être, the Community fact-finding 
missions can also have indirect teaching effects, in the same way as information 
seminars organized in these countries, by helping the local adminstrations 
improve their knowledge as regards control. 
Lastly, since 1994, the Commission has organized regular meetings (ten or so) 
within the framework of the Customs Code Committee (Origin Section), open 
to EFTA/CEEC/Baltic countries, as well as to all of the Mediterranean 
countries. 
9.1.4 Controlling the practical application of preferential arrangements in the 
Community 
During recent years, several control-and-monitoring campaigns on origin have 
taken place in the Member States, particularly concerning preferential 
arrangements, in order to examine all of the aspects of the application of the 
preferential rules of origin, both on imports and on exports. 
These controls, carried out during the years 1992-1995, gave rise to the 
observation of various anomalies; the most serious being as follows: 
the rules of origin are not always interpreted uniformly by the 
Member States; 
the customs of some Member States are very decentralized; therefore, 
the overall examination of fraud is not always carried out centrally; 
the simplified procedures allow greater flexibility for the benefit of the 
companies, but at the same time limit the possibilities of control by the 
customs authorities; 
it is often difficult, within the intended deadline, to obtain satisfactory 
answers to retrospective controls of the evidence of the origin; this 
has created enormous difficulties for the collection of outstanding 
custom duties. 
These control measures are additional to other similar campaigns carried out 
by the Commission within the framework of the follow-up to the annual 
reports of the Court of Auditors. 
24 
9.2 The mechanisms : state of play and loopholes 
9.2.1 Existing mechanisms 
- The agreements all contain a protocol on mutual assistance in customs 
matters, applicable within the framework of prevention of and fight against 
fraud, as well as the rules of origin contained in those agreements. 
- Provision for intra-Community co-ordination and cooperation on customs 
matters (mutual assistance, circulation of information, etc.) is made by a 
horizontal measure (Regulations 1468/81 and 515/97) 
- In both autonomous arrangements (GSP, former Yugoslav Republics, etc.) 
and in the conventional agreements (Europe Agreements, EFTA, etc.), there Is 
a verification procedure for cases of reasonable doubt. If there is no reply 
within 10 months, or the reply is insufficient, the preferential treatment is 
refused. 
- In the framework of the GSP, when it appears that there has been an 
infringement of the rules, the Union has the possibility to carry out 
investigations in collaboration with the authorities of the beneficiary country. 
- With regard to the GSP, Regulations 3281/94 and 1256/96 (Article 9) 
provide for the possibility of withdrawing preferential treatment in cases of 
fraud or in the absence of administrative cooperation. 
- In conventional agreements, difficulties, between the customs 
administrations of the two parties, in the application of the verification 
procedures are raised at the Association Committee, without prejudice to 
national provisions applicable to infractions 
9.2.2 Loopholes and missing provisions 
- With regard to the Union's internal situtation, there is no legally-binding 
Community instrument to ensure that Member States do not apply different 
safeguard measures, in cases of reasonable doubt, with the resulting possibility 
of trade circumvention. 
- With regard to beneficiary countries, firstly in the framework of the GSP, use 
has never been made of the provisions contained in Article 9, in cases where 
there has been a lack of administrative cooperation, because they are onerous 
and their application is dependent on the Member States. Furthermore, there 
are no provisions to enable the rapid implementation, by the Commission, of 
intermediate and provisional measures which could be adapted to the scale and 
specific nature of the different situations encountered. 
- In the case of other preferential arrangements, again there are no legal 
provisions enabling the Commission or the Member States to adopt 
appropriate provisional mesures and there are also no provisions similar to 
those contained inArticle 9 of the GSP. 
25 
Therefore : 
- In the framework of conventional agreements, no provisions are foreseen in 
cases where the Association Committee is unable to resolve differences of 
opinion. 
- Likewise, in this conventional context, it is not always possible to confirm 
whether the provisions have been fully implemented in a partner country (as in 
the case of televisions from Turkey), or whether the third-country customs 
administrations really have the legal competence to check the originating status 
of products covered by certificates of origin which they have issued; there are 
even cases where they have claimed they were unable to carry out such 
controls (as in the case of orange-juice from Israel). 
9.3 Actions to be taken 
Restoring confidence in the preferential tariff arrangements involves all of the parties 
who use and manage these arrangements, whether inside the Union or in third 
countries, or whether administrations or traders. 
In the first instance, this step should be based on an initial reminder, to all of the 
players, of their responsibilities, rights and obligations, and on abidance by the 
existing provisions, so that the situation can be rectified and sanctions can be applied 
for any violations if these obligations are not met. However, the Union should obtain 
additional instruments necessary to compensate for the weaknesses iin the current 
system. 
The Council and the Commission should cooperate closely to define the priorities for 
such actions and to agree on the time-table for carrying them out. 
The following are, essentially, the actions to be taken : 
9.3.1 Promotion of a more rigorous application of the existing provisions : 
by applying the rules strictly and by not exceeding the required time-limits, in 
the event of lack of administrative cooperation, or by requiring the invalidation 
of certificates and by applying stronger sanctions against states which do not 
meet their general obligations; 
with regard to conventional agreements, by exploiting resolutely all means of 
dialogue and all existing mechanisms in order to convince the beneficiary 
countries to take all of the appropriate measures when discrepancies are 
observed in the application of these arrangements; 
by encouraging the Member States to make full use of the system for 
communicating to the Commission all the irregularities observed or suspected 
by the Member States; 
by making sure that the measures and controls set up by the contracting 
countries, to which they commit themselves at the time of the signature of an 
agreement, are effective; 
26 
by requiring, as far as possible, our partners to provide copies of their national 
legislation and, if necessary, by helping them to set it up, in order to make sure 
that they will be able to have the internal legal means of satisfying the 
obligations resulting from the agreements; 
9.3.2 Lessening the impact of loopholes by means of appropriate provisions : 
by improving Community texts, through an across-the-board measure, with the 
aim of standardizing actions taken by the Member States for the recovery of 
duty or for taking precautionary measures for duty, as a result of observations 
made, amongst other things, in the findings of a Community fact-finding 
mission ; 
by using systematically an early-warning system for importers whenever va 
justified doubt concerning origin is established, so that the plea of good faith 
cannot be invoked unduly; 
by providing for the possibility of monitoring actions in the beneficiary 
countries by introducing into the texts the possibility for the Community to 
carry out controls in these countries regarding the implementation of the origin 
rules provided for in the agreements; 
by obtaining horizontal legal powers, making it possible to take uniform and 
rapid action throughout the Community with respect to third countries not 
respecting their obligations, in particular by introducing the possibility of 
adopting provisional measures (for example: guarantee for duties, temporary 
withdrawal of preferences, temporary quantitative controls, etc.) at the 
initiative of either the Commission or the Member States, subject to 
confirmation at a later date by the Council; these provisions should to take 
account, according to the various preferential arrangements concerned, of the 
obligations resulting from the Community's international commitments; 
by imposing responsibility on the authorities of the GSP beneficiary countries 
by effective application of the provisions of Article 9 of the GSP Regulations 
(which can lead to the total or partial suspension of the arrangements) in the 
event of fraud or failure with regard to the rules for administrative 
cooperation; 
by introducing, into the text of the preferential arrangements, the possibility of 
providing, for example, for temporary restrictive measures or the withdrawal 
of some preferences. Such provision could, if need be, lead to the full 
withdrawal of the arrangements, in proportion to the size and seriousness of 
the case concerned, and in relation to the Community's international 
commitments. 
9.3.3 Strengthening the provisions with supplementary measures : 
by organizing, for the representatives of the beneficiary countries, information 
actions on administrative cooperation; 
27 
by adopting, for national administrations and operators, a training and 
information programme in the various third countries, as well as in the 
Member States of the Community; 
by the regular organisation of working meetings, within the framework of the 
Customs Code Committee enlarged to include groups of beneficiary countries 
and within the framework of the joint customs cooperation committees, with a 
view to examining the conditions for applying these arrangements, their future 
development and desirable improvements; 
by imposing responsibility on the traders and by personalizing their relations 
with the customs authorities; 
by including them in the distribution-list for the Explanatory Notes concerning 
preferential agreements and arrangements; 
by drawing up a handbook, specially for them, specific to the various 
arrangements (ACP / CEECs / GSP / Mediterranean); 
by making available to third countries and the general public useful 
information (legislation, handbooks, binding origin information issued in the 
Community) on modern computer media (diskettes, CD-ROM, Internet); 
by publishing a notice in the Official Journal of the European Communities, C-
series, encouraging traders to apply for binding origin information for the 
goods which they import, while drawing their attention to the risks arising 
from the acceptance of false certificates of origin. 
9.3.4 Preparing for the future : 
by putting into effect the actions envisaged in the u Communication on the 
improvement of Community market-access for the least-developed countries''' 
and in particular, wherever justified, by enacting the derogations from the 
origin rules, as provided for by current regulations; 
by encouraging the setting up of regional-cooperation structures, in particular 
those allowing cooperation, including investment, between advanced and less 
advanced developing countries; by encouraging the use of regional cumulation 
within this framework; 
by preparing the Community reflection on world harmonization of GSP origin 
rules, announced by the UNCTAD as an action in the next few years; 
by simplifying the system of preferential rules of origin to take account of the 
future context of the world trade following the Uruguay Round; 
by considering, in accordance with the results of the above policy for 
encouraging regional cooperation, the future need for an exemption as 
generalised as possible for the least-developed countries and countries at a 
similar level of development. 
28 
Annex I 
(a) List of agreements and other preferential tariff armagements (1.7.1997) 
ORIGIN 
EEA 
94/1/EEC Council & Commission Decision of 13 December 1994 - Protocol 4 to 
(OJ LI, 03/01/94) the EEA Agreement on rules of origin 
EEA Decision Decision of the EEA Council No 1/95 of 10 March 1995 on the entry 
(OJ L86, 20/4/95) into force of the Agreement on the EEA for the Principality of 
Liechtenstein. 
EEA Decision Decision of the EEA Joint Committee No 71/96 of 22 November 1996 
(OJL21, 23/1/97) amending Protocol 4 to the EEA Agreement, on rules of origin. 
Norway ,t 
not yet published Decision 1/96 of the EEC-Norway Joint Committee of 20 December 
1996 amending Protocol 3 to the Agreement between the European 
Economic Community and the Kingdom of Norway concerning the 
definition of the concept of "originating products" and methods of 
administrative cooperation. 
Iceland 
not yet published Decision 1/96 of the EEC-Iceland Joint Committee of 19 December 
1996 amending Protocol 3 to the Agreement between the European 
Economic Community and the Republic of Iceland concerning the 
definition of the concept of "originating products" and methods of 
administrative cooperation 
Switzerland 
not yet published Decision 1/96 of the EEC-Switzerland Joint Committee of 19 December 
1996 amending Protocol 3 to the Agreement between the European 
Economic Community and the Swiss Confederation concerning the 
definition of the concept of "originating products" and methods of 
administrative cooperation. 
Poland 
not yet published Decision no 1/97 of the Association Council between the European 
Communities and their Member States, of the one part and Poland of 
the other part, of 30 June 1997 amending Protocol 4 to the Europe 
agreement establishing an association between the European 
Communities and their Member States, of the one part and Poland of 
the other part 
Hungary 
97/230/ECSC, EC, Euratom Decision no 3/96 of the Association Council between the European 
(OJ L92, 7/4/97) Communities and their Member States, of the one part and the Republic 
of Hungary of the other part, of 28 December 1996 amending Protocol 
4 to the Europe agreement establishing an association between the 
European Communities and their Member States, of the one part and 
the Republic of Hungary of the other part 
Czech Republic 
96/751/Euratom, ECSC, EC Decision no 3/96 of the Association Council between the European 
Communities and their Member States, of the one part and the Czech 
Republic of the other part, of 29 November 1996 amending Protocol 4 
(OJ L 343, 31/12/96) to the Europe agreement establishing an association between the 
European Communities and their Member States, of the one part and 
the Czech Republic of the other part 
29 
Slovak Republic 
(not yet published) Decision no 2/97 of the Association Council between the European 
Communities and their Member States, of the one part and the Slovak 
Republic of the other part, of 9 January 1997 amending Protocol 4 to 
the Europe agreement establishing an association between the 
European Communities and their Member States, of the one part and 
the Slovak Republic of the other part 
Romania 
97/127/ECSC, EC, Euratom Decision no 1/97 of the Association Council between the European 
(OJ L54, 24/2/97) Communities and their Member States, of the one part and Romania of 
the other part, of 31 January 1997 amending Protocol 4 to the Europe 
agreement establishing an association between the European 
Communities and their Member States, of the one part and Romania of 
the other part 
Bulgaria '*___ 
97/302/ESCS, EC, Euratom Decision no 1/97 of the Association Council between the European 
(OJ L134, 24.5.1997) Communities and their Member States, of the one part and the Republic 
of Bulgaria of the other part, of 6 May 1997 amending Protocol 4 to^he 
Europe agreement establishing an association between the European 
Communities and their Member States, of the one part and the Republic 
of Bulgaria of the other part. 
Latvia 
97/268/ECSC, EC, Euratom Decision no 1/97 of the Joint Committee between the European 
(OJ L 111,28.4.1997) Communities, of the one part and the Republic of Latvia of the other 
part, of 20 March 1997 amending Protocol 3 to the Agreement on free-
trade and trade-related matters between the European Community, the 
European Atomic Community and the European Coal and Steel 
Community, of the one part, and the Republic of Latvia of the other 
EÊË 
Lithuania 
97/309/ECSC, EC, Euratom Decision no 1/97 of the Joint Committee between the European 
(OJ L 136, 27.5.1997) Communities, of the one part and the Republic of Latvia of the other 
part, of 25 February 1997 amending Protocol 3 to the Agreement on 
free-trade and trade-related matters between the European Community, 
the European Atomic Community and the European Coal and Steel 
Community, of the one part, and the Republic of Lithuania of the other 
part 
Estonia 
97/267/ECSC, EC, Euratom Decision no 1/97 of the Joint Committee between the European 
(OJ L 111, 28.4.1997) Communities, of the one part and the Republic of Estonia of the other 
part, of 6 March 1997 amending Protocol 3 to the Agreement on free-
trade and trade-related matters between the European Community, the 
European Atomic Community and the European Coal and Steel 
Community, of the one part, and the Republic of Estonia of the other 
part 
Slovenia 
96/752/Euratom, ECSC, EC Council and Commission Decision of 25 November 1996 on the 
conclusion of the Interim Agreement on trade and trade-related matters 
(OJ L 344, 31/12/96) between the European Community, the European Coal and Steel 
Community and the European Atomic Energy Community, of the one 
part, and the Republic of Slovenia, of the other part 
Protocol 4 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation ~" 
Faroe Islands 
97/126/EC Council Decision of 6 December 1996 - Protocol 3 to the Agreement 
(OJ L 53, 22/2/97) with the Faroe Islands concerning the definition of the concept of 
"originating products" and methods of administrative cooperation. 
30 
Ceuta and Mellila 
88/1135/EEC 
(OJL 114,02/05/88) Council Regulation of 7 March 1988 concerning the definitions of the 
concept of originating product and methods of administrative 
cooperation between the EEC, Ceuta and Mellila. 
ACP 
90/0523/EEC 
(OJ L 290, 30/10/90) Council Decision of 8 October 1990 on the procedure concerning 
derogations from the origin rules set out in Protocol No 1 to the 4th 
ACP/EEC Convention. 
91/400/ECSC, EEC 
(OJ L 229, 17/08/91) Decision of the Council and the Commission of 25 February 1991 on 
the conclusion of the Fourth ACP-EEC Convention. 
93/514/EEC 
(OJ L 242, 28/09/93) Decision 2/93 of the ACP/EEC Customs Co-operation Committee 
derogating from the concept of "originating products" to take account 
of the special situation of Mauritius with regard to canned tuna. 
93/514/EEC 
(OJ L 242, 28/09/93) Decision 3/93 of the ACP/EEC Customs Co-operation Committee 
derogating from the concept of "originating products" to take account 
of the special situation of Senegal with regard to canned tuna. 
94/18/EC 
(OJ L 12, 15/01/94) Decision 4/93 of the ACP/EEC Customs Co-operation Committee 
derogating from the concept of "originating products" to take account 
of the special situation of the Seychelles with regard to canned tuna. 
94/386/EC 
(OJ L 176, 09/07/94) Decision 1/94 of the ACP/EEC Customs Co-operation Committee 
derogating from the concept of "originating products" to take account 
of the special situation of Fiji with regard to certain garments. 
94/946/EC 
(OJL 371, 31/12/94) Decision 2/94 of the ACP/EEC Customs Co-operation Committee 
modifying Decision No 4/93 derogating from the concept of 
"originating products" to take account of the special situation of the 
Seychelles with regard to canned tuna. 
96/557/EC 
(OJL 243, 24/09/1996) Decision 1/96 of the ACP/EEC Customs Co-operation Committee of 
02.09.1996 derogating from the concept of "originating products" to 
take account of the special situation of the Kingdom of Swaziland with 
regard to its manufacturing of yarn (HS Code 5402.52 and 5402 62). 
96/558/EEC 
(OJ L 243, 24/09/96) Decision 2/96 of the ACP/EEC Customs Co-operation Committee of 
02.09.1996 derogating from the concept of "originating products" to 
take account of the special situation of Fiji, Mauritius and Senegal 
regarding the production of canned tuna and tuna loins. 
OCT 
91/0482/EEC 
(OJL 263, 19/09/91) Council Decision of 25 July 1991 on the association of overseas 
countries and territories with the EEC. 
94/724/EC 
(OJL 288, 09/11/94) Commission Decision of 31 October 1994 derogating from the 
definition of the concept of "originating products" to take account of 
the special situation of Montserrat with regard to goods of CN 8536 90 
10. 
95/375/EC 
(OJ L 222, 20/9/95) Commission Decision of 8 September 1995 amending Decision 
94/724/EC derogating from the definition of the concept of 
"originating products" to take account of the special situation of 
Montserrat with regard to connections and contact elements for wire 
and cables falling within CN 8536 90 10. 
96/529/EC 
(OJ L 223, 04/09/1996) Commission Decision of 29 July 1996 derogating from the definition 
of the concept of "originating products" to take account of the special 
situation of Saint Pierre and Miquelon with regard to frozen fillets of 
cod of CN code 0304 20. 
Cyprus 
73/1246/EEC 
(OJL 133, 21/05/73) Council Decision of 14 May 1973 concerning the conclusion of an 
Agreement establishing an Association between EEC and the Republic 
of Cyprus. 
77/2907/EEC 
(OJ L 339, 28/12/77) Council Decision of 20 December 1977 on the conclusion of the 
Additional Protocol.to the Agreement establishing an association 
between the EEC and the Republic of Cyprus. 
31 
87/607/EEC Council Decision of 21 December 1987 on the conclusion of the 
Protocol laying down the conditions and procedures for the 
implementation of the second stage of the Agreement establishing an 
(OJ L 393, 31/12/87) Association between the EEC and the Republic of Cyprus and 
adapting certain provisions of the Agreement. 
88/4264/EEC Council Regulation of 13 December 1988 on the application of 
Decision 1/88 of the EEC/Cyprus Association Council amending, as a 
(OJ L 378, 31/12/88) result to the introduction of the HS, the protocol defining "originating 
products" and administrative co-operation. 
89/2428/EEC Council Regulation of 28 July 1989 on the application of Decision No 
1/89 of the EEC-Cyprus Association Council derogating from the 
provisions concerning the definition of the concept of "originating 
(OJ L 230, 08/08/89) products" laid down in the agreement establishing an association 
between the EEC and the Republic of Cyprus. 
90/3 203/EEC Council Regulation of 22 October 1990 on the application of Decision 
4/90 of the EEC/Cyprus Association Council again amending Articles 
6 and 17 of the Protocol concerning the definition of the concept of 
(OJ L 307, 07/11/90) "originating products" and methods of administrative co-operation. 
95/576/EC Council Decision No 1/95 of the EC-Cyprus Association Council of 22 
December 1995 derogating from the provisions concerning the 
definition of the concept of "originating products" laid down in the 
(OJ L 326, 30/12/95) agreement establishing an association between the EEC and the 
Republic of Cyprus. 
95/3056/EC Council Regulation of 30 October 1995 on the implementing methods 
for decision 1/95 of the EEC/Cyprus Association Council derogating 
(OJ L 326, 30/12/95) j from certain provisions laid down in the Association Agreement. 
Malta I 
76/939/EEC Council Regulation of 23 April 1976 concluding the Financial 
Protocol and the Protocol laying down certain provisions relating to 
(OJ L 111, 28/04/76) the Agreement establishing an association between the EEC and 
Malta. 
89/2229/EEC Council Regulation of 18 July 1989 on the application of the Decision 
No 1/89 of the EEC-Malta Association Council amending, as a result 
of the introduction of the HS, Protocol No 2 concerning the definition 
(OJ L 217, 27/07/89) of the concept of "originating products" and methods of administrative 
co-operation. 
90/2175/EEC Council Regulation of 23 July 1990 on the application of Decision 
2/90 of the EEC/Malta Association Council again amending Articles 6 
and 17 of the Protocol concerning the definition of the concept of 
(OJL 198, 28/07/90) "originating products" and methods of administrative co-operation. 
91/3451/EEC Council Regulation of 25 November 1991 implementing the joint 
(OJ L 327, 29/11///91) declaration attached to Decision 1/89 of the EEC/Malta Association 
Council. 
91/607/EEC Decision No 1/91 of the EEC-Malta Association Council of 25 
November 1991 amending Annex III of Protocol No 2 concerning the 
(OJ L 331, 03/12/91) definition of the concept of "originating products" and methods of 
[ administrative co-operation. 
Israel 
96/206/ECSC, EC Decision of the Council and the Commission of 22 December 1995 on 
the conclusion of an Interim Agreement on trade and trade-related 
matters between the European Community and the European Coal and 
OJ. L71, 20/03/96) Steel Community, of the one part and the State of Israel on the other 
part __ 
Protocol No 3 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
32 
Algeria 1 
78/2210/EEC Council Regulation of 26 September 1978 concerning the conclusion 
of the Cooperation Agreement between the European Economic 
(OJ L 263, 27/09/78) Community and the People' s Democratic Republic of Algeria 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
Egypt ; 
78/2213/CEE Council Regulation of 26 September 1978 on the conclusion of the 
Cooperation Agreement between the European Economic Community 
(OJ L 266, 27/09/78) and the Arab Republic of Egypt 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
89/3171/EEC Council Regulation of 16 October 1989 on the application of Decision 
No 1/89 of the EEC - Egypt Cooperation Council amending, as a 
consequence of the introduction of the harmonised system, Protocol ' 
No 2 concerning the definition of the concept of "originating 
(OJ. L310, 26/10/89) products" and methods of administrative cooperation 
(OJ L310, 26/10/89) Decision No 1/89 of the EEC - Egypt Cooperation Council, of 30 v 
August 1989, amending, as a consequence of the introduction of the 
harmonized system, Protocol No 2 concerning the definition of the 
concept of "originating products" and methods of administrative 
cooperation 
89/3172/EEC Council Regulation of 16 October 1989 on the application of Decision 
No 2/89 of the EEC - Egypt Cooperation Council amending, on 
account of the accession of Spain and Portugal to the European 
Communities, the Protocol concerning the definition of the concept of 
(OJL310, 26/10/89) "originating products " and methods of administrative cooperation 
Decision No 2/89 of the EEC - Egypt Cooperation Council, of 30 
August 1989, amending, on account of the accession of Spain and 
Portugal to the European Communities, the Protocol concerning the 
(OJ L310, 26/10/89) definition of the concept of "originating products" and methods of 
administrative cooperation 
Lebanon 
78/2214/EEC Council Regulation of 26 September 1978 concerning the conclusion 
of the Cooperation Agreement between the European Economic 
(OJ L267, 27/0978) Community and the Lebanese Republic 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
80/2742/EEC Council Regulation of 27 October 1980 on the application of 
EEC-Lebanon Cooperation Council Decision No 3/80 amending the 
Protocol on the definition of the concept of originating products and 
methods of administrative cooperation to the Cooperation Agreement 
(OJ. L286, 29/10/80) between the European Economic Community and the Lebanese 
Republic 
Decision 3/80 Decision No 3/80 of the EEC-Lebanon Cooperation Council amending 
the Protocol on the definition of the concept of originating products 
(OJ L286, 29/10/80) and methods of administrative cooperation to the Cooperation 
Agreement between the European Economic Community and the 
Lebanese Republic 
Morocco 
78/2211/EEC Council Regulation of 26 September 1978 concerning the conclusion 
of the Cooperation Agreement between the European Economic 
Community and the Kingdom of Morocco 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
(OJ L 264, 27/09/78) | 
33 
Syria 
78/2216/EEC Council Regulation of 26 September 1978 concerning the conclusion 
of the Cooperation Agreement between the European Economic 
Community and the Syrian Arab Republic 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
(OJ L269, 27/09/78) 
Tunisia 
78/2212/EEC Council Regulation of 26 September 1978 concerning the conclusion 
of the Cooperation Agreement between the European Economic 
Community and the Republic of Tunisia 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
(OJ L265, 2709/78) 
79/0561/EEC Council Regulation of 5 March 1979 on the application of 
EEC-Tunisia Cooperation Council Decision No 3/78 amending the 
Protocol on the definition of the concept of originating products and 
methods of administrative cooperation to the Cooperation Agreement 
(OJ. L80, 31/03/79) between the European Economic Community and the Republic of 
Tunisia 
OJ L80, 31.03.79 Decision No 3/78 of the EEC-Tunisia Cooperation Council amending 
the Protocol on the definition of the concept of originating products 
and methods of administrative cooperation to the Cooperation 
Agreement between the European Economic Community and the 
Republic of Tunisia 
89/3900/EEC Council Regulation of 4 December 1989 on the application of 
Decision No 2/89 of the EEC-Tunisia Cooperation Council amending, 
oil account of the accession of Spain and Portugal to the European 
Communities, the Protocol concerning the definition of the concept of 
(OJ. L375, 23/12/89) "originating products" and methods of administrative cooperation 
Decision No 2/89 of the EEC-Tunisia Cooperation Council amending, 
on account of the accession of Spain and Portugal to the European 
Communities, the Protocol concerning the definition of the concept of 
(OJ L 375, 23/12/89) "originating products" and methods of administrative cooperation 
Jordan 
78/2215/EEC Council Regulation of 26 September 1978 concerning the conclusion 
of the Cooperation Agreement between the European Economic 
(OJ L 268, 27/09/78) Community and the Hashemite Kingdom of Jordan 
Protocol No 2 concerning the definition of the concept of "originating 
products" and methods of administrative cooperation 
91/3579/EEC Council Regulation of 25 November 1991 on the application of 
Decision No 3/91 of the EEC-Jordan Cooperation Council amending, 
as a consequence of the introduction of the harmonized system, 
(OJ. L345, 14/12/91) Protocol 2 concerning the definition of the concept of originating 
products and methods of administrative cooperation 
Decision No 3/91 of the EEC-Jordan Cooperation Council amending, 
as a consequence of the introduction of the harmonized system, 
Protocol 2 concerning the definition of the concept of originating 
(OJ L 345, 14/12/91) products and methods of administrative cooperation 
9 'i H J80/EEC Council Regulation of 25 November 1991 on the application of 
Decision No 4/91 of the EEC-Jordan Cooperation Council amending, 
on account of the accession of Spain and Portugal to the European 
Communities, the Protocol concerning the definition of the~concept of 
(OJ. L345, 14/12/91) originating products and methods of administrative cooperation 
Decision No 4/91 of the EEC-Jordan Cooperation Council amending, 
on account of the accession of Spain and Portugal to the European 
Communities, the Protocol concerning the definition of the concept of 
(OJ. L345, 14/12/91) | originating products and methods of administrative cooperation 
34 
Palestine 
not yet published Council Decision concerning the conclusion of an interim Association 
Agreement on trade and cooperation between the EC and the Palestine 
Authority 
GSP 
93/2454/EEC 
(OJL 253, 11/10/93) 
Modified by: 
97/12/EC 
(OJL 9, 13/1/97) Commission Regulation of 2 July 1993 laying down provisions for the 
implementation of Council Regulation (EEC) No 2913/92 establishing 
the Community Customs Code (Articles 67 to 97 relating to the 
definition of the concept of "originating products" and methods of 
administrative cooperation applicable to the importation into the 
Community of products originating in the developing countries 
Bosnia-Herzegovina and 
Croatia; Federal Republic of 
Yugoslavia; Former Yugoslav 
Republic of Macedonia 
93/2454/EEC 
(OJL 253, 11/10/93) 
Modified by: 
97/12/EC 
(OJ L 9, 13/1/97) Commission Regulation of 2 July 1993 laying down provisions for the 
implementation of Council Regulation (EEC) No 2913/92 establishing 
the Community Customs Code (Articles 98 to 123 relating to the 
definition of the concept of "originating products" and methods of 
administrative cooperation applicable to the importation into the 
Community of products originating in the Republics of Bosnia-
Herzegovin and Croatia; Federativ Republic of Yugoslavia; Former 
Yugoslav Republic of Macedonia and Territories of the West Bank 
and the Gaza Strip 
35 
Annex I 
(b) List of customs unions to which the Community is party 
Turkey 
64/73 2/EEC Council Decision of 23 December 1963 concerning the conclusion of 
(OJ L 217, 29/12/64) an agreement establishing an Association between the EEC and Turkey 
Reg 2760/72 Council Decision of 23 November 1970 on the conclusion of the 
Additional Protocol to the Agreement establishing an association 
between the EEC and Turkey 
Decision No 4/72 of the Association Council on the definition of the 
(OJ L 59, 5/3/72) concept of "originating products" from Turkey for implementation of 
Chapter I of Annex No 6 of the Additional Protocol to the Ankara 
Agreement 
Decision No 1/75 of the Association Council amending Decision No * 
(OJ L 142, 4/6/75) 4/72 of the Association Council on the definition of the concept of 
"originating products" from Turkey for implementation of Chapter I of 
Annex No 6 of the Additional Protocol to the Ankara Agreement 
96/142/EEC Decision No 1/95 of the Association Council EC-Turkey on 
(OJ L 35, 13/2/96) implementing the final phase of the Customs Union 
96/488/EEC Decision No 1/96 of the EC-Turkey Customs Cooperation Committee of 
(OJ L 200, 9.8.1996) 20 May 1996 laying down detailed rules for the application of Decision 
No 1/95 of the EC-Turkey Association 
96/528/ECSC Commission Decision of 29 February 1996 on the conclusion of an 
Agreement between the European Coal and Steel Community and the 
Republic of Turkey on trade in products covered by the Treaty 
(OJ L 227, 07/09/96) establishing the European Coal and Steel Community 
Protocol 1 on rules of origin 
Andorra 
90/0680/EEC Council Decision of 26 November 1990 concerning the conclusion of 
(OJ L 374, 31/12/90) an agreement between the EEC and Andorra. 
Appendix concerning the definition of 'originating products ' and 
methods of administrative cooperation 
92/116/EEC [Decision no 7/91 of the Joint Committee of 31 December 1991 
(OJ L 43, 19/2/92) derogating from the definition of originating products to take account of 
the particular situation of the Principality of Andorra in the field of its 
production of certain agricultural goods 
91/3915/EEC Council Regulation of 19 December 1991 laying down rules for the 
application of Decision 7/91 of the EEC/Andorra Joint Committee to 
(OJL 372, 31/12/91) allow for derogation from origin rules in certain agricultural goods. 
95/502/EC Decision no 2/95 of the Joint Committee of 6 November 1995 
(OJ L 288, 1/12/95) derogating from the definition of originating products to take account of 
the special situation affecting cattle farming in the Principality of 
Andorra 
96/465/EC Decision no 3/96 of the Joint Committee modifying Decision no 7/91 of 
(OJ L 192, 2/8/96) the Joint Committee of 31 December 1991 derogating from the 
definition of originating products to take account of the particular 
situation of the Principality of Andorra in the field of its production of 
certain agricultural goods 
San Marino 
92/561/EEC Council Decision of 27 November 1992 concerning the conclusion of 
(OJ L 359, 9/12/92) an interim agreement on trade and customs union betweenjhe EEC 
and the republic of San Marino. 
36 
Annex I 
(c) Internal measures 
Internal measures 
83/3351/EEC Council Regulation of 14 November 1993 on the procedure to 
facilitate the issue of certificates EUR 1 and the making out of forms 
(OJ L 339, 05/12/83) EUR 2 under the provisions covering preferential trade between the 
EEC and certain countries. I 
91/1911 /EEC Council Regulation of 26 June 1991 concerning the application of 
(OJ L171, 29/06/91) | Community provisions to the Canary Islands. 
37 
ANNEX H 
1. Number of cases and financial impact 
The reports produced by the Commission on the fight against fraud and irregularities for 
the years 1995 and 1996 include numerous cases which illustrate this problem. A number 
of general aspects must however be mentioned : 
Cases of irregularity and fraud involving the preferential regimes have an impact on the 
Communities' traditional own resources. These cases are either dealt with by the Member 
States and must then be communicated to the Commission on the basis of Regulation no 
1552/89 or dealt with by the Commission in cooperation with the Member States (mutual 
assistance on the basis of Regulations nos 1468/81 and 515/97). Given that these 
irregularities offen involve several Member States and that the investigations regularly 
require on the spot inspections in a non member country, it is the cases which have a 
higher budgetary impact which are in general dealt with by the Commission in cooperation 
with the Member States. 
During the period 1989 to 1995, the Member States communicated 796 cases of 
irregularity affecting traditional own resources and involving the preferential regimes. The 
overall budgetary impact for these cases alone was ecu 111 million. 
For the year 1995, the Member States communicated to the Commission 322 cases of 
irregularity involving the preferential regimes. The overal budgetary impact of these cases 
was ecu 52.6 million. This corresponds to 18% of all the cases of irregularity 
communicated in the area of own resources (see graph I). (As communications in this area 
are made on a 6 monthly basis, the full figures for 1996 are not yet available). 
In 1996 the Commission handled, in cooperation with the Member States in the 
framework of mutual assistance, 39.1 cases involving the preferential regimes. For these 
cases alone the estimated global impact on traditional own resources (customs duties and 
anti-dumping duties) was ecu 220 million^. This amount corresponds to 49% of the 
estimated total number of cases of irregularity handled by the Commission in 1996 in the 
framework of mutual assistance (see graph II) and to 47% of the estimated total number 
of cases involving traditional own resources handled in 1996 by the Commission (see 
graph I). 
Of course, these figures only indicate cases of irregularity actually detected either by a 
Member State (and notified to the Commission), or by the Commission. It is therefore 
only the visible part of the iceberg. 
New cases or new investigations 
Almost half of this amount (104 Mecu) concerns duties which have been formally identified 
and are therefore recoverable. 
38 
•f 
This is all the more so since the Member States do not fully cbmply with their obligations 
which should provide a full picture of the situation regarcjjng detected cases of 
irregularity. However, the obligations for the Member States to inform the Commission 
on the position regarding recovery procedures in progress were strengthened with the 
most recent amendment of Regulation 1552/89 *. But, up to now, the Member States 
have not informed the Commission on a systematic basis if their recovery efforts have 
been successful. Experience and practice show however that the rate of recovery by 
Member States remains low and is only about 10%. 
2. Products concerned 
Cases of irregularity involving preferential regimes concern the following products : 
a) Cases communicated by the Member States in 1995 (see graph III) : 
v v Number of cases Budgetary impact 
agricultural products : 20 15% 
. fishery products 30 17% 
. electronic products : 97 32% 
. textile products : 94 24% 
. other industrial products : 81 12% 
100% 
b) Cases handeled by the Commission in 1996 in cooperation with the Member States 
(see paragraph 4) : 
. agricultural products : 2 8% 
. fishery products 8 26% 
. electronic products : 7 6% 
. textile products : 15 34% 
other industrial products : 7 2 6% 
Regulation no 1255/96. 
39 
Table -j 
TRADITIONAL OWN RESOURCES 
1993 r 1996 
IRREGULARITlEo FORMALLY 
COMMUNICATED (#) by 
MEMBER STATES INQUIRIES carried put by 
the COMMISSION together 
with MEMBER STATES 
NUMBER of CASES 
2,500 i 
2.000 
1.500 
•1.000 
5PÔ 
0 4 2.213 2J&6 2.500 -, 
2.000 A 
1.50Q 
1.000 A 
500 H 
1<& 120 Hi 
1993 1994 1995 1996 •H-
1993 1994 1995 1996 
AMOUNTS in MILLIONS of ECU 
500 -, 600 -i 
«00 \ 
300 \ 
200 A 
100 467 
1993 1994 1995 1996 1993 1994 1995 1996 
(<0 under Regulation (EEC) 1SS2/B9 : IncludingesUmalc (or the second haliyear 1S96. 
Ub 
ûrajih 2 
INQUIRIES CARRIED OUT BYTHE COMMISSION TOGETHER WITH MEMBER STATES 
IN 1996 
( IN THE CONTEXT OF MUTUAL ASSISTANCE) 
TOTAL estimated financial impact on Community budget : 
448 Million ECU ( Customs and Antidumping duties) 
OTHER SCHEMES 
34% TRANSIT 
17% 
PREFERENTIAL SCHEMES 
49% 
Graph 3 
PREFERENTIAL SCHEMES : 
cases communicated by Member States for 1995 
TOTAL FINANCIAL IMPACT ; 52,8 Million ECU 
ELECTRONIC PRODUCTS 
32* 
OTHER INDUSTRIAL PRODUCTS 
12% TEXTILE PRODUCTS 
24% 
AGRICULTURAL PRODUCTS 
«% 
RSKERY PRODUCTS 
!7% 
Graph 4 
PREFERENTIAL SCHEMES ; 
Inquiries carried out by the Commission together w'rfh Member States in 1996 
( m the context of Mutual Assistance ) 
TOTAL ESTIMATED FIN. IMPACT : 220 Million ECU 
FISHERY PRODUCTS 
2«tf 
AGRICULTURAL PRODUCTS OTHSl INDUSTRIAL PRODUCT? 
26%. 
ELECTRONIC PRODUCTS 
6* 
TEXTILE PROOUCTS' 
34%" 
•ST 
ISSN 0254-1475 
COM(97) 402 final 
DOCUMENTS 
EN 02 09 10 
Catalogue number : CB-CO-97-427-EN-C 
ISBN 92-78-23777-9 
Office for Official Publications of the European Communities 
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