Proposal for a Council Regulation (EC) re-introducing a 12 % rate of duty to be applied by the Community on certain products falling within CN heading 5607
Date: 1997-06-17
Institutions: European Commission
Subjects: Brazil, CCT duties, GATT, tariff preference, textile fibre

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

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Brussels,  17.06 1997 
COM(97) 301  final 

97/0167  (ACC) 

Proposal  for a 

COUNCIL REGULATION (EC) 

re-introducing  a  12% rate  of  duty  to  be  applied  by  the 

Community on certain products falling within CN heading 5607. 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

1. 

In January  1989 the Brazilian  authorities  imposed  an  export  tax  on  sisal  fibres  at  13% of 
the fob price. Brazilian exporters of processed sisal products were exempt from the tax. 

Given  the  risk  of  injury  to  the  EC  processing  industry  the  Community  entered  into 
consultations  with  Brazil  in  GATT  under  Article  XXII(l)  but  failed  to  reach  a  mutually 
satisfactory  solution.  To  encourage  Brazil  to  change  its  discriminatory  system,  the 
Community therefore  took action under Article XXVIII, suspending  its  12% bound rate on 
the following products: 

5607 

5607 21 00 
5607 29 
5607 29  10 
5607 29 90 

Twine, cordage, ropes  and cables, whether  or  not  plaited  or  braided  and 
whether  or  not  impregnated,  coated,  covered  or  sheathed  with  rubber  or 
plastics: 
- of  sisal: 
Binder or baler twine 
Other: 
Measuring more than  100 000 décitex (10 grammes per metre) 
Measuring  100 000 décitex (10 grammes per metre) or less 

The Community  opted  to suspend the bound rates rather than  change them permanently  as 
this allowed it to continue negotiating with Brazil for a mutually satisfactory  solution.. 

Concomitantly,  Council  Regulation  (EEC)  No  283/911  set  the  Community's  autonomous 
rate of duty for these products at 25%. 

2.  During  the  Uruguay  Round  negotiations  the  Community  offered  to  bind  duties  for  sisal 
fibres  at  12%.  An  exchange  of  letters  between  the  EC  and  Brazil  stipulated  that  this 
concession  would  apply  once  the  Brazilian  authorities  eliminated  export  taxes  on  the 
products, and for such time as no further  such taxes were imposed. 

The Community undertook to apply the  12% concession  as soon as the Brazilian  authorities 
could  confirm  that  the  export  taxes  applied  by  the  States  of  Paraiba  and  Bahia,  the  main 
producers and exporters of sisal fibre, had been definitively  eliminated. 

Brazil confirmed  by letter its approval of "Convenio ICMS 33/94" and adoption of Decrees 
Nos  16293/94  and  3237  making  sisal  fibre  exports  from  those  two  States  definitively 
exempt from  the export tax. 

However, these measures did not remove all tax discrimination  against sisal fibre exports. 

As Brazil  has  confirmed  by  letter,  only  by  supplementary  law  No  87/96  of  13  September 
1996 were exports of all  primary products  and semi-finished  industrial products, including 
sisal fibres, made exempt from  the ICMS in all States of Brazil. 

Council Regulation  (EEC) N° 283/91 of 4.2.91, OJ No L 35 of 7.2.91, p.l 

Conclusion 

The  Commission  believes  this  arrangement  constitutes  a  mutually  satisfactory  solution, 
taking  both  sides  back  to  the  situation  that  existed  before  1989.  It  recommends  that  the 
Council restore the  12% duty concession on the products concerned  forthwith. 

The  concession  remains  conditional  on  Brazil  refraining  from  any  future  action  to 
reintroduce export taxes or charges having equivalent effect  on sisal fibres. 

Proposal  for  a 

COUNCIL  REGULATION  (EC) 

re-introducing  a  12%  rate  of  duty  to  be  applied  by  the 
Community on certain products falling  within CN heading 5607. 

The Council of the European Union 

Having regard to the Treaty establishing the European Community and in particular Article  113. 

Having regard to the proposal from the Commission, 

Whereas the import duty on processed products of sisal or other textile fibres of the genus Agave 
falling  within  CN headings  5607 21.00, 5607 29.10 and  5607 29.90 was reduced  and bound  at 
12% by the Community in the context of the Tokyo Round of Multilateral Trade Negotiations. 

Whereas  the  bound  rate  of  12% on  these  products  was  subsequently  withdrawn  in  accordance 
with  the  provisions  of  GATT  Article  XXVIII  and  replaced  by  an  autonomous  rate  of  25% in 
Council Regulation (EEC) 283/91. 

Whereas,  in  the  context  of  the  Uruguay  Round  of  Multilateral  Trade  Negotiations,  the 
Community  undertook  to  reintroduce  the  12% duty  rate  once  Brazil  had  definitely  eliminated 
the  tax  applied  on  exports  of  sisal  fibres  by  the  States  of  Paraiba  and  Bahia;  whereas  the 
Community  made  this  undertaking  on  condition  that  no  new  export  taxes  or  taxes  having  an 
equivalent effect  are applied to exports of these products by Brazil. 

Whereas Brazil has confirmed  that exports of  sisal  fibres  are exempted  from  ICMS taxes  in all 
Brazilian  States  under  Complementary  Law  87/96  of  13  September  1996:  whereas,  as  a 
consequence  it  is  now  appropriate  to  reintroduce  the  12%  duty  rate  and  to  repeal  Council 
Regulation  (EEC)  283/91  in  order  to  take  account  of  the  above:  whereas  the  condition 
mentioned above remains valid. 

HAS ADOPTED THIS REGULATION 

Article 1 

Annex I to Council Regulation (EEC) No. 2658/87 is modified  as follows: 

CN 
Code 

1 

5607 

Rate of Duty 

Supplementary 
unit 

conventional 
(%) 

4 

5 

Description 

2 

autonomous 

(%) 

3 

Twine, cordage, ropes and cables, 
whether or not plaited  or braided 
and  whether  or  not  impregnated, 
coated,  covered  or  sheathed  with 
rubber or plastics : 

5607 10 00 

-  Unchanged 

Unchanged 

Unchanged 

-  Of sisal or other textile fibres of 
the genus Agave 

5607 21 00 

- - Binder or baler twine. 

5607 29 

- - Other : 

5607 2910 

-  -  -  Measuring  more  than  100 
000 decitex (10 g/m) 

5607 29 90 

-  -  -Measuring  100  000  decitex 
(10 g/m) or less 

16 

16 

16 

12 

12 

12 

-

Council Regulation (EEC) No. 283/91 is hereby repealed. 

ArtMe I 

Article 3 

The  present  regulation  shall  enter  into  force  the  day  following  that  of  its  publication  in  the 
Official  Journal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels 

1997 

For the Council 
The President 

FINANCIAL  STATEMENT 

Section I. 

Financial  Implications 

1.  Proposal for a Council Regulation reintroducing a 12% duty rate for certain sisal products. 

2.  Budget heading: 

(loss of revenue: not known) 

3.  Legal basis: 

Article 113 

4.  Description 

The proposed regulation is a consequence of an undertaking made by the Community  in the 
Uruguay  Round  to  restore  the  original  12% duty  once  Brazil  had  eliminated  their  export 
taxes on sisal fibres which had caused the Community to increase the duty on sisal products 
to 25%. 

5.  Type of revenue: 

Loss of revenue for duties paid on third country imports. 

6.  Change in level of revenue: 

The  reduction  of  the  existing  25% duty  to  12% will  result  in  a  duty  loss  of  around  0.2 
MECU. 

ISSN 0254-1475 

COM(97) 301 final 

DOCUMENTS 

EN 

11  10  03 

Catalogue  number  :  CB-CO-97-289-EN-C 

ISBN 92-78-21432-9 

Office  for  Official  Publications of the European  Communities 

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