PROPOSAL FOR A COUNCIL REGULATION ( EEC ) DEROGATING FROM THE DEFINITION OF THE CONCEPT OF " ORIGINATING PRODUCTS " TO TAKE ACCOUNT OF THE SPECIAL SITUATION OF THE NETHERLANDS' ANTILLES WITH REGARD TO CIGARETTES OF CN CODE 2402 20 00
Date: 1990-03-30
Institutions: European Commission
Subjects: Netherlands Antilles, application of the law, originating product, tobacco industry

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(90) 105 final 

Brussels, 30  March 1990 

Proposal for a 

COUNCIL REGULATION (EEC) 

derogating from the definition of the concept of 

'originating products" to take account of the special situation of the 

Netherlands' Antilles with regard to cigarettes 

of CN code 2402 20 00 

(presented by the Commission) 

EXPLANATORY  NOTE 

Irtroductior 

The' Government  of  tne  Netnerlards,  or  behalf  of  the  Government  of  the 

Netherlands*  Antilles,  has  suomitted  a  request  for  a  derogation  from  the 

rules  of  origin  for  cigarettes  applicable  to  trade  between  the  associated 

overseas  countries  and  territories  (O.C.T.)  and  the  European  Economic 

Community. 

If  the  derogation  is  granted,  tnus  allowing  the  cigarettes  manufactured  in 

the  Netnerlands'  Antilles  to  oenefit  from  tne  preferential  tariff  treatment 

granted  oy  tne  Community  to  O.C.T  originating  products  (1), it  would  make 

possible  important  industrial  investments  necessary  to  start  the  production 

of these cigarettes. 

Nature of the problem 

Under  tne  current  rules,  cigarettes  can  oenefit  from  tne  preferential 

treatment if 70* or more  in weight  of  tne  tobacco  used  is originating  in  the 

O.C.T,  ACPs  or  in  the  Community  and  its  processing  is  only  carried  out  in 

these territories  , any otner  oeing  excluded. 

The  Netnerlands  Antilles  do  intend  to  use  tobacco  of  ACP  origin  up  to  at 

least  tne percentage  required  oy  the  origin  rule  (70  % ),  but  for  technical 

and  financial  reasons  a  first  phase  of  processing  nas  to  be  carried  out  in 

Brazil,  wnich  would  normally  cause  the  final  product  to  lose  originating 

status. 

(1) Council Decision  8ô/2«33/££C of  30 June  1936. 

OJ  No. L  175, 01.07.19do. 

2 

-  2 

-

Legal aspects 

Tne  rei^uest  is  oased  on  article  26  oi  Annex  II  to  Council  Decision  3o/26 3, 

due to expire on  2d  r'eoruary  1990. 

Tne successor  provisions  expected  to  come  into  force  on  1 ilarcn  1990,  taking 

intb  account  tne  outcome  of  the  negotiation  for  tne  renewal  of  the  Lomé 

Convention, specify  tnat  a derogation  shall  oe  granted  if  it would not  cause 

serious injury  to an  economic  sector  of  tne  Community.  In  the present  case, 

tne quantities  involved exclude any risx of tnis Kind. 

Additional criteria  for granting a derogation wnich are particularly  relevant 

in  this  case  are  tne  geographical  situation  of  the  territory  concerned  and 

the 

effect of tne normal  rules on possiole investments. 

For  tne  complete  supporting  information  submitted 

by  tne  Netherlands' 

Government  in  accordance  with  Article  2d(1) see Annex  A to  tnis  Explanatory 

Note. 

Temporary nature of tne derogation 

Tne  derogation  is  requested  for  five  years,  after  wnicn  period  additional 

investments  ana  diversification  are  expected  to  have  enaole-i  a  permanent 

solution  to the prooiem to oe found. 

Community trade in the sector  concerned 

See Anrex  o to tnis explanatory Note fcr statistical  information. 

Conclusion 

Tne  Commission  proposes  to  tne  Council  to  grant  tne  requested  derogation  oy 

adopting  tne attacned draft  Regulation. 

3 

AMNÉJ  fl. 

s y b j e ct 

Request  for  dérogation  fro» the  rules  of  origin 
(arc.  28 annex  II, Council  Decision  on CTO,  30.6.86) 

finished  product;  cigarettes  of  a  standard  or  custom-made  blend,' filter 

tipped,  83 or  100 mas  length. 

company : 

COMPANHXA  SUDAN  DI PRODUT08 OS TABACO 
Bus  28 de  Scteabro  no.  823 
Caixà  Postal  63 
Santa  Crut  do Sul 
BRAZIL 

reason  for  non-
compliance  vith 
rules  of  origin 

for  financial  and  technical  reaaons  part  of  the 
production  process  (preparation  of  tobacco)  takes 
place  in Brazil. 

nature  and 
origin  of 
used  materials 

prepared  tobacco  from  Brazil  (of which  701 of  ACP-
origina  30*  of  Brazilian  origin), 
packing  materials  from  ACP/KEC  origin. 

manufacturing-
procès : 

producing  and  packing  of  cigarettes 

value  added: 

270 I 

number  of 
employes: 

20  to 40  (if  working  in  two  ahifta) 

eatimated 
export  value 
to EC: 

OS  $ 3 million  1st  year 
US  $ 7 million  2nd  year 
US  $  10 million  3rd  year 

other  possible 
supplies  of  raw 
materials; 

period  of 
derogation 

for  further 
information: 

(Origin  of  raw  materials  does  not  conflict  vith  rules 
of  origin) 

five  years:  within  this  period  it  should  be  possible 
to make  e well-founded  decision  on  further  investment 
in  the  N.A.  in order  to manufacture  a product  that 
complies  with  the  rules' of  origin. 

Nrs.  M.  Grubben 
Ministry  of  Economic  Affairs 
Division  External  EEC  Affaira 
P.O.  Box  20101 
2500 EC THE  HAGUE 
Phone  31.70.796260 
FAX 
Telex  31099  ECZA  NL 

3 1 . 7 0 . 7 9 7 3 92 

4 

AN.sEX  S 

Statistical information 

Imports into tne Community of cigarettes (C.tf. code 2402 20 00) in 1988: 

- 

including intra-Community trade: 157 554 million pieces 

from extra-Community sources: 38 604 million pieces 

The proposed  derogation  would  cover  a  quantity  corresponding  to  0.15%  and 

0.62% respectively of these amounts. 

(Source: Eurostat) 

S~ 

fîN'A/ÉX  L 

REPORT 

from  tne  Origin  Committee 

to tne Council 

(estaolisned  in  conformity  witn  Article  2d  (7},  of  Annex  II  to  Council 

Decision  86/283/c£C of  30 June  1986 (1). 

Subject: 

Request  for  derogation  from  the  origin  rules  entered  by  the 

Netnerlands for certain  cigarettes manufactured  in the  Netherlands' 

Antilles 

1.  The  Origin  Committee  discussed  tne  request  referred  to aoove  at  its  180th 

and  1d7th meetings, whicn  took place  in  Brussels  from  23 to  26 January  and 

from 23 to 27 October  19d^  respectively. 

2.  At  tne  180tn  meeting  tne  Commission  and  Memoer  States'  representatives 

indicated  tnat  additional  information  to  tnat  contained  in  the  request 

suomitted  oy  tne  Dutcn  government  was  necessary  to  permit  them  to  carry 

out an evaluation  of tne request  itself. 

The relevant  information  was suosequently  received  oy  tne  Commission  on  13 

Septemoer  1:>d9 and made availaole  to the Origin  Committee  delegates. 

4.  At  tne  187th  meeting  the  3ritish,  Danish,  German  and  Dutch  delegations 

stated tnat  tney were  in favour of  granting  the  requested  derogation.  The 

otner  delegations  were opposed,  except  Luxembourg wnich was aosent. 

Tne Chairman 

J. rtATTrilàS 

(1) OJ No. L  175,  1.7.193c,  z>. 47. 

£ 

COUNCIL REGULATION  (EEC) No. 

/90 

of 

1990 

derogating  from the definition of the concept  of 

•originating products" to take account of the special situation of  the 

Netherlands' Antilles with regard to  cigarettes 

of CN code  2402 20 00 

THE COUNCIL OF TriE EJROPEAN COiMdWITIES, 

Having regard to tne Treaty  estaolishing tne  European  Economic  Community,  and 

in particular Article  113 thereof, 

Having  regard  to  Council  Decision  dô/283/EEC  of  30  June  1936  on  the 

association  of  tne  overseas  countries  and  territories,  hereinafter  referred 

to as U.C.T., with the European  Economic Community (1); 

Having regard to tne proposal  from the Commission, 

Whereas  Article  28  of  Annex  II  to  tne  said  Council  Decision,  concerning  the 

definition  of  the  concept  of  "originating  products"  and  methods  of 

administrative  cooperation provides  that  derogations  from  the  rules of  origin 

may oe adopted oy the Council where the development  of existing  industries  or 

the creation of  new industries  in a country  or  territory  justifies  them; 

Wnereas  tne  Dutcn  Government  has  requested,  on  benalf  of  the  Netherlands' 

Antilles,  a  derogation  from  tne  rules  of  origin  for  cigarettes  manufactured 

there,  which  for  a  temporary  period  could  not  satisfy  the  rules  of  origin 

laid down in the aoove-mentioned Annex II; 

(1)  OJ No. L  175, 01.07.1986, p.  1. 

h 

Wnereas  the saia Article  28  sets  out  tne  conditions  which  must  oe  fulfilled 

in order  for a derogation  to be granted; whereas  the derogation  is not  likely 

to cause serious  injury  to an estaDlished  Community  industry; 

Whereas tne content of ACP originating  raw materials  would  confer  originating 

status  to  the  final  product,  except  for  one  processing  operation  being 

carried  out  in  a  third  country  for  technical,  financial  and  geographical 

reasons; 

Whereas  a  derogation  is  indispensaole  for  the  realization  of  an  important 

investment  programme  and  to  enaDle  the  company  concerned  to  investigate 

diversification  possibilities  in  tne  near  future;  whereas  the  relevant 

conditions of  Article 28 are therefore respected  in the present case; 

HAS ADOPTED THIS  REGULATION: 

Article 1 

By  way  of  derogation  from  tne  provisions  of  Annex  II  to  the  Decision 

86/283/EEC,  cigarettes  of  NC  heading  2402  20  00  snail  be  considered  as 

originating  in  the  Netherlands'  Antilles  when  they  are  manufactured  there, 

subject  to the conditions  set out in this  Regulation. 

Article 2 

1. Tne  derogation  provided  for  in Article  1 snail  relate  to an  annual  global 

quantity  of  240 million  cigarettes, exported  from the  Netherlands  Antilles 

during  the  period  from  1 January  1990  to  31  December  1994  and  ootained 

from tobacco processed  in Brazil. 

2. The derogation  is granted  subject  to the condition  that on an  annual  basis 

at  least  70  *> in weight  of  the  tobacco  is  originating  in  the  ACP  States, 

in the O.C.T. or in the Community. 

y 

-  3 -

3.  For  tne  purpose  of  implementing  paragrapns  1  and  2,  a  proof  of  origin 

snail  oe  suomitted  on  import  into  Brazil  oy  means  of  a  movement 

certificate  EUR.1  issued  oy  the  competent  autnorities  of  the  exporting 

state  for  toDacco  intended  to oe processed  in  Brazil  prior  to its  further 

manufacture  in tne Netherlands' Antilles. 

4. For  eacn  subsequent  re-export  of  processed  tooacco  from  Brazil  to  the 

Netherlands'  Antilles  the  exporter  shall  draw  up  a  declaration  on  the 

invoice in accordance with tne layout  in tne Annex to tnis  Regulation. 

The  declaration  shall  oe  authenticated  oy  the  "Carteira  de  Comercio 

Exterior  do  Banco  do Brésil  S.A."  subject  to  tne  conditions  laid  down  in 

paragrapns  2 and  3 of tnis Article. 

This  declaration  snail  oe  submitted  to  tne autnorities  in  the  Netherlands 

Antilles wnicn are competent  for issuing movement  certificates  EUR.1. 

Article 3 

1.  The  competent  autnorities  of  the  Netherlands'  Antilles  shall  carry  out 

quantitative  checxs on  exports  as  referred  to  in Article  2  ( 1 ) and  shall 

forward  to  the  Commission  every  three  montns  a  statement  of  the 

quantities  in  respect  of  wnicn  movement  certificates  EJR.1  have  oeen 

issued on tne oasis of this  Regulation. 

2.  Not  later  tnan  tnree montns  after  the  end  of  eacn  year of application of 

tne derogation, they  shall  also  forward  to  the  Commission  a statement  of 

the  quantities  of  tooacco  imported,  with  the  references  to  the  EUR. 1 

certificates  presented  in  Brazil  and  to  the  declarations  referred  to 

respectively  in Article  2 (3) and  2 (4). 

Article  4 

1.  Tnis  Regulation  shall  enter  into  force  on  the  date of  its publication  in 

the Official Journal of the European Communities. 

A 

2. It snail apply  only  where  the  government  of  the  Netherlands'  Antilles  and 

the  "Carteira  de  Comercio  Exterior  do  Banco  do  Brésil  S.A."  nave 

undertaken  to comply  with  the  terms  of  this  Regulation  and  to provide  the 

administrative  cooperation  oetween  themselves  and  with  the  Community  in 

order  to  ensure  the  correct  issue  and  verification  of  the  relevant 

documentation. 

3. Notwithstanding  Article  2,  tnis  Regulation  shall  cease  to  apply  at  the 

latest on  the  date of  expiry  of  Decision  86/283/EEC  or  of  any  equivalent 

trade provisions which may  replace  that Decision. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly  applicable  in 

all Memoer States. 

Done at Brussels, 

For  tne Council 

The  President 

yio 

DECLARATION  ti£FEtiR£û  TO IN ARTICLc  2(4) 

ANNEX 

I, tne undersigned, exporter  of tne tobacco covered  by  this  invoice (1), 
declare tnat tnis tobacco was processed  in Brazil  in conformity  with  the 
provisions of Article  2{2)  and  2(3) of  Council  Regulation  (EEC)  No.  /90 
of 

1990. 

I undertaxe to maKe availaole to tne competent  autnorities, if  required, 
evidence in support of tnis  declaration. 

(2) 

(3) 

(4) 

ENDORSEMENT  Bi  THE  CARTEIRA  JE  COrlERCIO  EXTERIOR  DO  àk.lZj 

DO  B R £ S IL  S . A, 

Declaration  certified 

(2) 

(4) 

(:>) 

(1)  If a document otner than tne invoice or an annex  to the  invoice  is used, 
tne  name  of  the  document  snail  oe  mentioned  instead  of  the  word 
"invoice". 

(2)  Place and date. 

(3)  Name and function  in tne company. 

(4)  Signature. 

(5)  Stamp. 

cS<A 

FIGMB FIHANCIERS 

Il n'est pas possible d'établir un lien direct entre l'ootroi 
d'une dérogation et une perte de recettes.  Si la dérogation 
n'est pas acoordée, il n'est pas possible de déterminer à 
l'avance auprès de quels fournisseurs  (préférentiels ou non) le 
marohé oommunautaire  s'approvisionnera. 

Toutefois, à titre indicatif»  il peut être mentionné que le taux 
des droits de douane applicable aux produits en question 
originaires de pays tiers est de 90 % en valeur. 

M, 

Etat d'imact  aur  loa PME 

La  présente  proposition  concerne  une  dérogation  aux  régies  d'origine 
applicables  aux  Pays  et  Territoires  d'Outre-Mer  pour  les produits  du  tabac 
exportés  vers  la Communauté  et  importés  en  franchise  de  droits de  douane. 

La  dérogation  serait  applicable  pendant  cinq  ans  et  limitée  à  une  quantité 
susceptible  de ne causer  aucune  perturbation  dans  le Marché  Commun. 

Cette  proposition  n'aurait  donc  aucun  effet  perceptible  sur  l'emploi  et  la 
compétitivité dans  la Communauté. 

/O 

ISSN 0254-1475 

COM (90) 105 final 

DOCUMENTS 

EN 

il  02 

Catalogue number : CB-CO-90-135-EN-C 

ISBN 92-77-59027-0 

Office for Official Publications of the European Communities 
L-2985 Luxembourg