WRITTEN QUESTION E-1670/96 by Elly Plooij-van Gorsel (ELDR) to the Commission (24 June 1996)

Subject: Import and export duties on diesel

European import and export duties on petroleum products are generally 6% for petrol and 3.5% for diesel and other fuels. Under European legislation, it is possible for these duties not be applied in certain circumstances. For example, developing countries benefit under the generalized system of preferences from exemption from duties within the limit of a Community ceiling.

1. Is it true that all oil-producing countries in the Middle East, and, since January 1993, Russia and the countries of the former Soviet Union, benefit from this system?

2. In this way, is the limit of the Community ceiling still being respected?

Since 1991, the levy of customs duties on diesel with a sulphur content of less than 0.2% from any country has been abolished. In addition, as from 1 October 1994, all diesel sold within the European Union must have a sulphur content of less than 0.2%. In practice, that means that the customs duties on all imported diesel have been abolished.

3. Is the Commission aware that this situation has resulted in serious competition for European refineries? They are experiencing great difficulty in making the investment required in plant for reducing the sulphur content of the diesel they manufacture.

4. Is it true that American refineries export their products to Europe without paying any duties, while European products exported to the US are taxed?

If so, why does the principle of reciprocity not come into play?

5. Does the Commission intend to change the 1990 rules governing import duties on diesel with a sulphur content of less than 0.2%? If not, why not?

Answer given by Mr Papoutsis on behalf of the Commission (31 July 1996)

1. & 2. The Community relies to a large extent - almost 75% - on oil imports (crude and petroleum products) from non-Community countries to satisfy its internal needs. Crude oil enters the Community with zero duty; the same applies to petroleum products intended for processing in a refinery or chemical transformation. As regards petroleum products intended for consumption (finished products), customs duties may or may not be applied according to the country of origin of the products. At present, the agreements in force between the Community and a large number of non-Community countries (Lomé Convention countries, Mediterranean countries, etc.), and the Community Generalized System of Preferences (GSP) provide for duty-free access without quantitative restrictions for finished petroleum products to the Community customs territory. The beneficiaries of the GSP include the countries of the Middle East and the former USSR. However, in application of the graduation mechanism provided for by Council Regulation (EC) No 3281/94 ((OJ L 348, 31.12.1994. )) for the products in question, Saudi Arabia and Libya ceased to enjoy the preferential entitlement on 1 January 1996 and Russia's preferential margin will be reduced by 50% from 1 January 1997 and it will cease to benefit under the GSP from 1 January 1998.

3. & 4. It is true that in early 1991 the 3.5% customs duty on Community imports, from any country of origin, of gas oil with a sulphur content not exceeding 0.2% by weight was suspended for an indefinite period. Very small quantities of gas oil imported from the United States have been recorded, but most imports originated in Russia. This suspension was decided in response to:

- political factors: aid to Russia, as a major supplier of gas oil to the Community, and the obligation not to discriminate on the basis of origin under the GATT rules (hence imports of gas oil from the United States are also exempt); on the other hand, imports of other petroleum products from the United States are subject to normal Common Customs Tariff (CCT) duties;

- environmental factors: incentive to import cleaner gas oil (with a sulphur content not exceeding 0.2% by weight); and

- technical factors: the Community is a net importer of gas oil, since its refineries are not in a position to produce the quantities necessary to satisfy internal demand.

5. Council Directive 93/12/EEC of 23 March 1993 ((OJ L 74, 27.3.1993. )) requires Member States to prohibit, from 1 October 1996, the marketing of diesel fuels in the Community with a sulphur content exceeding 0.05% by weight. For heating oil, on the other hand, the limit of 0.2%, in force since 1 October 1994, will continue to apply.

This development and considerations linked to the situation of the refining industry led the Commission to consider the possibility of withdrawing the current tariff suspension. However, recent discussions with Member States indicate that the great majority would not favour such a withdrawal.