COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 05.11.1997 
COM(97)533 final 
97/ 0299 (CNS) 
Proposal for a 
COUNCIL REGULATION (EC) 
applying Article 6 
of Council Regulations (EC) Nos 3281/94 and 1256/96 
on multiannual generalised tariff preferences schemes in respect of certain industrial 
and agricultural products originating in developing countries, excluding the most 
advanced beneficiary countries from entitlement to generalised tariff preferences 
(presented by the Commission) 

Explanatory Memorandum 
The proposal for withdrawing Hong Kong, Singapore and South Korea from the list of 
countries benefiting from generalised tariff preferences is based on Article 6 of 
Council Regulations (EC) Nos 3281/94 and 1256/96, under which the most advanced 
countries can be excluded as from 1 January 1998 on the basis of objective, clearly 
defined criteria. 
Under the proposal, beneficiary countries are to be excluded from the GSP if they 
have a per capita income exceeding 8 210 United States dollars,1 provided that their 
development index is greater than -1, in accordance with the formula and figures in 
Part 2 of Annex II to the above-mentioned Regulations (EC) Nos 3281/94 and 
1256/96. Hong Kong, Singapore and South Korea meet these criteria. 
This course of action is based on two main principles: on the one hand an objective, 
non-discriminatory approach and on the other an overall approach which embraces the 
implications of all the other measures taken or due to be taken under the GSP at 
1 January 1998. 
As regards the objectiveness of the approach, a per capita income threshold set at the 
lowest level for an EU Member State seemed to be the indicator which was the least 
controversial, the most objective and the most representative of the current state of 
affairs in the beneficiary countries. Nevertheless, since the objectives of the GSP 
include diversification of the beneficiary countries' exports, it was advisable to ensure 
that beneficiary countries which had not sufficiently developed their exports of 
manufactures, despite having substantial income from their exports of raw materials 
could continue to be encouraged by the GSP to seek more diversified industrial 
develooment. 
As for the overall approach, the moderate effects of the solution adopted suggest that 
the principle of neutrality of the GSP offer will be respected in that the exclusion of 
the three countries concerned can be offset by the specific concessions for the least 
developed countries (LLDCs) provided for in the Council conclusions of 2 June 
World Bank figures for 1995 
1997, which should enter into force on 1 January 1998. The withdrawal of the three 
countries will result in a relative increase in the preferential margin for non-excluded 
countries, though the beneficial effects will inevitably take some time to be felt. As 
part of this same overall approach, account must also be taken of the entry into force 
on 1 January 1998 of the new systems of incentives (social and environmental 
clauses), the positive effects of which must go beyond the offer level reflecting the 
principle of neutrality. 
However, the above benefits, particularly the long-term increase in preferences on 
offer to the least developed countries, must not be counteracted by any undesirable 
effects which exclusion may have on the advantages accruing to other countries under 
the regional cumulation mechanism. Provision must therefore be made for 
maintaining these advantages where they represent a long-held right by allowing 
excluded countries to continue supplying their regional group members with semi­
finished products or working materials. 
That is the purpose of this proposal, on which the Council is requested to give its 
opinion in time for the traders concerned to be informed far enough in advance of 
entry into force. 
Proposal for a 
Council Regulation (EC) No /97 
of... 1997 
applying Article 6 
of Council Regulations (EC) Nos 3281/94 and 1256/96 
on multiannual generalised tariff preferences schemes in respect of certain industrial 
and agricultural products originating in developing countries, excluding the most 
advanced beneficiary countries from entitlement to generalised tariff preferences 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EC) No 3281/94 of 19 December 1994 applying 
a four-year scheme of generalised tariff preferences (1995 to 1998) in respect of 
certain industrial products originating in developing countries,2 and in particular 
Article 6 thereof, 
Having regard to Council Regulation (EC) No 1256/96 of 20 June 1996 applying 
multiannual schemes of generalised tariff preferences from 1 July 1996 to 
30 June 1999 in respect of certain agricultural products originating in developing 
countries,3 and in particular Article 6 thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European Parliament,4 
Having regard to the opinion of the Economic and Social Committee,5 
Whereas it is laid down in Article 6 of the above-mentioned Regulations that the most 
advanced beneficiary countries shall be excluded from entitlement under those 
Regulations from 1 January 1988 on the basis of objective, clearly defined criteria; 
Whereas the reference threshold for excluding the most advanced countries should be 
a per capita income equal to the lowest in an EU Member State, adjusted by reference 
to the development index listed in Part 2 of Annex II to Council Regulations (EC) Nos 
2 OJ No L 348, 31.12.1994, p. 1. 
3 OJ No LI 60, 29.6.1996, p. 1. 
4 OJNoC , ,p. 
5 OJNoC , ,p. 
A 
3281/94 and 1256/96 in order to allow for the fact that some countries need to develop 
their exports of manufactures; 
Whereas this approach is objective and clear in that it includes the indicator which is 
the least controversial and the most representative of the current state of affairs in the 
beneficiary countries, whiie at the same making it possible to maintain one of the 
objectives of the GSP, namely diversification of the beneficiary countries' exports; 
Whereas excluding some countries from the general system of preferences must not 
have the effect of depriving other members of the same regional grouping of the 
possibility, established in the past under the regional cumulation mechanism, of using 
products originating in the excluded countries in their own manufacture; whereas 
terminating this facility would run counter to the objective of the Article 6 provision 
of the Regulations referred to above, namely to redistribute the benefits of the system 
to less developed countries, 
HAS ADOPTED THIS REGULATION: 
Article 1 
The criteria referred to in Article 6 of Council Regulations (EC) Nos 3281/94 and 
1256/96 are as follows: 
- a per capita gross national product exceeding 8 210 United States dollars for 1995 in 
accordance with the most recent World Bank figures; 
- a development index, calculated in accordance with the formula and figures given in 
Part 2 of Annex H to Council Regulations (EC) Nos 3281/94 and 1256/96, greater 
than-1. 
These criteria shall be applicable cumulatively. 
Article 2 
The withdrawal of one country or territory from the list of countries and territories 
benefiting from generalised preferences by virtue of the criteria set out in Article 1 
shall not affect the possibility of using products originating in that country under the 
regional cumulation mechanism applicable to all regional groupings referred in Article 
72(3) of Commission Regulation (EC) No 2454/93, as amended by Commission 
Regulations (EC) Nos 3254/94 and 12/97, provided that the country has been a 
member of the regional grouping since the multiannual system of preferences 
applicable to the product concerned entered into force and is not considered to be the 
country of origin of the final product within the meaning of Article 72(a) of the 
abovementioned Regulation (EC) No 2454/93. 
Ç 
Article 3 
Under the criteria listed in Article 1, the following territory and countries shall be 
withdrawn from the list of countries and territories benefiting from the generalised 
preferences set out in Annex EI to Council Regulations (EC) Nos 3281/94 and 
1256/96: 
Kong Kong 
Singapore 
South Korea. 
Article 4 
This Regulation shall enter into force on 1 January 1998. 
This Regulation shall be binding in its entirety and directly applicable in all Member 
States. 
Done at Brussels, 
For the Council, 
The President 
Financial statement 
Title 
Draft Proposal for a Regulation applying Article 5 of Council Regulations (EC) Nos 
3281/94 and Î 256/96 on multiannual generalised tariff preferences schemes in respect 
of certain industrial and agricultural products originating in developing countries, 
excluding the most advanced beneficiary ccontries from entitlement to generalised 
tariff preferences 
Legal basig 
Article 113 of the Treaty. 
Praroose 
To exclude the most advanced countries from the GSP on the basis of objective, 
clearly defined criteria. 
Estimated customs revenise 
Taking the preferences on offer, calculated on the basis of total imports of products 
eligible to benefit from the GSP and originating in Hong Kong, South Korea and 
Singapore in 1995, and the average for each of these countries under the scheme (for 
all products taken as a whole), the total increase in customs receipts resulting from the 
exclusion of these countries from the GSP mav be estimated at ECU 40.3 million. 
1995 imports of Estimated customs 
products eligible receipts lost in 
for GSP in 1997 1997 
South Korea"" "TToO 380 "~~ " 40 095 " ~""~ 
Singapore 71 * 204 852 J___ 42 488 ______ 
"Hongkong"} 837~157 " 30 434 
Tout! 3 142 389 " \ 113 017 ' Average rate of 
use of GSP in 
1995 
62.40% 
27.80% 
11.40% ('000 ECU) 
Estimate of 
customs receipts 
again to be 
received (based on 
duty applicable in 
1997) 
11 812 
3.469 
40 300 -J 
I 
T 

ISSN 0254-1475 
COM(97) 533 final 
DOCUMENTS 
EN 11 03 10 02 
Catalogue number : CB-CO-97-578-EN-C 
ISBN 92-78-26725-2 
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