Proposal for a Council Regulation (EC) applying the special incentive arrangements concerning labour rights and environmental protection provided for in Articles 7 and 8 of Council Regulations (EC) Nos 3281/94 and 1256/96 applying the scheme of generalized tariff preferences in respect of certain industrial and agricultural products originating in developing countries
Date: 1997-10-29
Institutions: European Commission
Subjects: agricultural product, developing countries, generalised preferences, industrial product, international standard

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.10.1997 
COM(97) 534  final 

97/ U293 (CNS) 

Proposal for a 

COUNCIL REGULATION  (EC) 

applying the special incentive arrangements concerning labour rights and 
environmental  protection provided for in Articles 7 and 8 of Council 
Regulations (EC) Nos 3281/94 and  1256/96 applying the scheme of 
generalised  tariff  preferences  in respect of certain industrial  and 
agricultural  products originating in developing  countries 

(presented by the Commission) 

Explanatory  memorandum 

This proposal  introducing  special  social  and environmental  incentive clauses under 
the  GSP  is based  on  Articles 7 and  8 of  Council  Regulations  (EC) Nos 3281/94 of 
19 December  1994  and  1256/96  of  20 June  1996.  Under  these  clauses  additional 
preferences  will  be  granted  on  request  to  beneficiary  countries  providing  they  can 
prove  that  they  have  adopted  and  actually  apply  the  international  standards  on 
labour  rights  and  environmental  protection  drawn  up  by  the  International  Labour 
Organisation  (ILO) and the International  Tropical Timber Organisation  (ITTO). 

The  proposal  has  been  drafted  on  the  basis  of  the  two  reports  presented  by  the 
Commission  to the  Council  under  Articles  7(2)  and  8(2)  of  the  above  Regulations 
reviewing  the  work  of  the  relevant  international  forums  on  the  link  between  trade 
and labour rights and between  trade and the environment.  Discussions  within  these 
organisations  and  within  the  World  Trade  Organisation  (WTO)  suggest  we  are 
justified  in  considering  a  system  of  positive,  development-oriented  incentives 
rewarding  compliance  with  international  social  and  environmental  standards  rather 
than  the  punitive  approach  based  on  trade  sanctions,  which  was  rejected  by  the 
international  community  at the Singapore Ministerial  Conference. 

For  a  real  improvement  in  the  social  and  environmental  policies  of  beneficiary 
countries,  the  Commission  feels  that  the  extra  advantages  accorded  to  exporters 
under  the  arrangements  have  to  be  attractive  and  therefore 
the  additional 
preferential  margins  substantial.  This  proposal  pursues  that  objective  by  providing 
the  conditions  relating  to  the  effective 
for  beneficiary  countries  satisfying 
application  of  the  requisite  social  and  environmental  standards  to  be  offered, 
through  the  special  incentive  arrangements,  a  preferential  margin  double  that 
currently  available  for  industrial  products  and  increased  by  two  thirds  for 
agricultural  products. 

The  Commission  considers  that  this  additional  offer  combines  a  considerable 
advantage for businesses, which will thereby be encouraged  to align their  production 
operations  on  the  requisite  standards,  with  due  respect  for  the  sensitivity  of  the 
Community  market  in each of the sectors covered. 

The Commission  proposes to take the efforts  to encourage  social  and  environmental 
progress  in  the  beneficiary  countries  further  still  by  also  according  a  preferential 
margin  of  25% of  the  Common  Customs  Tariff  duty  to  countries  graduating  from 
the  basic  arrangements.  Such  an  approach  is  wholly  consistent  with  the  basic 
principles  of  the  GSP  scheme  adopted  by  the  Council  in  1994,  which,  let  it  be 
emphasised,  draws  a  clear  distinction  between  two  GSP  objectives:  the  first 
objective  is  the  traditional  one  of  fostering  basic  economic  development  in  the 
developing  world;  the  second,  which  is  more  innovative  and  amounts  to  a  sort  of 
second  generation  GSP,  is to  improve  the  social  and  environmental  quality  of  that 
development.  These two complementary  or successive objectives  are served by two 
distinct  systems,  one  of them  - the  basic  system  - based  on  considerations  of  trade 
policy  (modulation)  and  economic  development  (graduation)  and  the  other  -  the 
special incentive arrangements - on social or environmental  criteria. 

It would therefore  make sense for the two  systems to operate independently  of each 
other,  and  in  particular  for  the  social  or  environmental  incentive  to  apply  even  to 
sectors  that  have  graduated  from  the  basic  system.  It  is not  a matter  of  permitting 
countries  affected  by  sectoral  graduation  to  re-enter  the GSP  scheme but  simply  of 
applying  the  GSP's  new  objectives  fairly  to  countries  that,  notwithstanding  their 
basic level of development  in the sectors concerned,  still have some ground to  cover 
in social and environmental terms. 

However,  achieving  these  objectives  requires  the  special  incentive  arrangements  to 
function  effectively  and  produce  real  change  on  the  ground.  The  methods  for 
monitoring their application  have to be designed to maximise  effectiveness. 

This  is  why  particular  attention  should  first  be  given  to  checking  the  information 
provided  by  countries  requesting  the  arrangements  in  support  of  their  overall 
request  for  additional  preferences.  The  reliability  of  the  overall  procedure  will 
depend  on the  outcome  of this examination,  the  objectivity  and rigour  of which will 
be guaranteed,  in particular,  by the  Generalised  Preferences  Committee.  Countries 
submitting  requests  will  have  to  provide  the  Commission  with  detailed  information 

on  the  state  of  the  legislation  in  force,  the  means  for  its  enforcement,  the  results 
obtained,  the  difficulties  or  obstacles  remaining  and  the  means  employed  to 
overcome them.  The  Commission  could  call  on requesting  countries to  provide, by 
means  of  a  questionnaire,  any  further  information  required  for  the  appraisal  of  the 
request.  In the course of that appraisal the Commission will also reserve the right  to 
visit  the  country  in question  and  consult  any person  or  organisation  likely to  help it 
in  its  research,  e.g.  the  ILO,  the  ITTO,  specialist  NGOs,  national  trade  unions  or 
international  labour  federations 

When  considering  the  request,  the  Commission  may  also  decide  not  to  grant 
additional  preferences  to  certain  sectors  if it feels  that  the  measures  adopted  by the 
requesting  country  do  not  affect  all  production  sectors  or  do  not  affect  them 
sufficiently.  The requesting country must also guarantee, in return for  the  additional 
preferential  margin,  that  all exporters  and  producers  comply with  the  standards  and 
that  appropriate  monitoring  arrangements  have been  introduced.  This  undertaking, 
the  only  way  of  achieving  real  progress  on  the  ground,  at  business  level,  does, 
however,  require  strict  monitoring  and  cooperation  procedures  to  be  applied  to 
exporters.  The  Commission  does  not  consider  it  necessary  to  change  the  existing 
origin  verification  procedures  as  they  are  sufficiently  effective  provided  they  are 
strictly  applied.  Such  a monitoring  system,  based  on  confidence  in the  governments 
of beneficiary  countries  and  the establishment  of close cooperation  with  them,  must 
clearly  define  the responsibilities both  of the authorities in question  and  of business, 
and  the  risks  they  run  (suspension)  if they  fail  to  meet  them.  Such  an  approach  is 
consistent  with the recommendations made by the Commission  in its  communication 
to the Council  and the European  Parliament  on the management  of preferential  tariff 
arrangements (COM(97)402 final  of 23 July  1997). 

It  must  be  emphasised  that  the  outcome  of  the  first  stage  of  controls,  the 
examination  by  the  Commission  with  the  help  of  the  Generalised  Preferences 
Committee  of the beneficiary  countries'  documented  requests,  will be crucial  to  the 
effectiveness  of the ex-post  inspections planned  for the second  stage, which  consists 
of  the  usual  procedures  for  issuing  and  verifying  form  A  origin  certificates. 
It  is 
during  this  stage  that  the  quality  of  the  cooperation  to  be  established  with  the 
recipient  countries  for  on-the-spot  checks  on  whether  exporters  are  actually 
complying  with  standards will come into their  own.  The more rigorous  and  reliable 
the  ex-ante  checks,  the  more  credible  the  ex-post  inspections  will  be.  However, 
during the crucial  stage of setting up these monitoring  arrangements, the  beneficiary 
countries  are  going  to  need  effective  technical  assistance  to  develop  suitable 
administrative  and  technical  monitoring  infrastructures.  The  Commission  will 
require technical  assistance facilities to handle these needs. 

As regards  the  environmental  side, which  is confined  in practice  to tropical  forests, 
but  which  could,  at  a  later  stage,  be  extended  to  other  sectors,  it  is  still  proving 
difficult  to  identify  "internationally  recognised  standards"  which  could  be  used  for 
the  incentive  clause.  The  relevant  organisations  have  failed  to  make  sufficient 
progress  to  allow  a  monitoring  system  to  be  introduced  for  individual  exporters. 
Either  the  Commission  will  have  to  impose  its  own  interpretation  of  ITTO 
directives,  which  runs  counter  to  Article  8 of the  GSP  regulation,  or  it will  have  to 
recognise  the  differing  interpretations  of the beneficiary  countries,  which  would  be 
unmanageable.  The only option  is to  monitor  each  country's  compliance with  ITTO 
directives  or  the  efforts  they  have  made  in this  direction.  Such  an  approach  would 
focus  on  dialogue  and  progress  towards  achieving  standards  rather  than  prior 
compliance by individual businesses. 

For  highly  sensitive  products,  however,  the  Commission  feels  that  the  additional 
preferences  under  the  incentive  arrangements  should  not  exceed  40%  of  the  basic 
rate of dutv. 

Lastly,  the  Commission  proposes  that  the  social, and  environmental  impact  of  these 
arrangements  be  regularly  evaluated  along  with  their  economic  and  trade  impact, 
given  that  the  first  evaluation  will  have  to  be  carried  out  when  the  current  GSP 
schemes expire. 

Such  is the content  of the proposal.  The Council  is requested  to give its  opinion  on 
it  within  sufficient  time  for  advance  notice  to  be  given  to  business  before  it  comes 
into force. 

Proposal  for 

Council Regulation (EC) No  .../97 

of...  1997 

applying the special incentive arrangements concerning labour rights and 
environmental protection provided for in Articles 7 and 8 of Council Regulations 
(EC) Nos 3281/94 and  1256/96 applying the scheme of generalised  tariff 
preferences  in respect  of certain industrial and agricultural products originating in 
developing  countries 

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,1  and  in 
particular Articles 7 and 8 thereof, 

Having  regard  to  Council  Regulation  (EC)  No  1256/96  of  20  June  1996  applying 
multiannual  schemes  of  generalised 
to 
30 June  1999  in  respect  of  certain  agricultural  products  originating  in  developing 
countries,2 and in particular Articles 7 and 8 thereof, 

tariff  preferences  from  1  July  1996 

Having regard to the proposal from  the Commission, 

Having regard to the opinion of the European  Parliament,3 

Having regard to the opinion of the Economic and Social Committee,4 

Whereas  Articles  7  and  8  of  Regulations  (EC)  Nos  3281/94  and  1256/96  provide 
that,  as  from  1  January  1998,  special  incentive  arrangements  in  the  form  of 

1  OJ NoL  348, 31.12.1994. p. 1. 
2  OJ NoL  160. 29.6.1996. p. 1. 
3  O J N oC 
.p. 
4  O J N oC 
.p. 

. 

additional  preferences  may  be  granted  to  developing  countries  covered  by  the 
abovementioned  Regulations;  whereas  to  this  end,  the  Council  has  undertaken  a 
review  on  the  basis  of  Commission  reports  on  the  results  of  work  within  the 
International Labour Organisation  (ILO), the World Trade Organisation  (WTO), the 
Organisation  for  Economic  Cooperation  and  Development  (OECD)  and  the 
International  Tropical  Timber  Organisation  (ITTO)  on  the  link  between  trade  and 
labour rights and between trade and the environment; 

Whereas  this  review  suggests  that  in the  light  of  the  international  debate  on  social 
and  environmental  clauses  we  would  be  justified 
introducing  positive, 
development-oriented  incentives rewarding  compliance with  international  social  and 
environmental  standards; 

in 

Whereas  the  special  incentive  arrangements  provided  for  in  Articles 7  and  8  of 
Regulations (EC) Nos 3281/94 and  1256/96 meet this objective; 

Whereas the special incentive arrangements  should be applied to countries which are 
beneficiaries  of  the  scheme  of  generalised  tariff  preferences  at  1  January  1998, 
whereas  this  should  also  be  the  case  in  sectors  where  they  may  be  subject  to  the 
graduation  mechanism;  whereas,  however,  this  should  not  be  the  case  for  sectors 
subject  to  the  arrangements  provided  for  in  Article  5(1)  of  Regulations  (EC)  Nos 
3281/94  and  1256/96  as  they  are  excluded  for  reasons  of  competitive  capacity 
irrespective of the level of development  of the country  concerned; 

Whereas,  under  Article 7(1)  of  Regulations  (EC)  Nos 3281/94  and  1256/96,  the 
incentives  concerning  labour  rights may be granted  only to  countries which  request 
them  in  writing  and  provide  proof  that  they  apply  legislation  incorporating  the 
substance  of  the  standards  laid  down  in  International  Labour  Organisation  (ILO) 
Conventions Nos 87 and  98 concerning the application  of the principles  of the right 
to  organise  and  to  bargain  collectively  and  ILO  Convention  No  138 concerning  the 
minimum age for  admission to  employment; 

Whereas  the  special  incentive  arrangements  concerning  labour  rights  should 
primarily be confined  to production  sectors that  have actually taken  steps to  comply 
with  the  ILO  Conventions  in  question;  whereas  provision  must  therefore  be  made 
for the special arrangements to apply to certain sectors but not to others; 

Whereas,  under  Article 8(1)  of  Regulations  (EC)  Nos 3281/94  and  1256/96,  the 
special incentive  arrangements  concerning  environmental  protection  may be  granted 
they  apply 
only 

them  and  provide  proof 

to  countries 

that  request 

that 

legislation  incorporating the substance of the standards  of the International  Tropical 
Timber Organisation  (ITTO); 

Whereas  requests  for  the  special  social  and  environmental  incentive  arrangements 
must  be  subject  to  a  publication  procedure  enabling  interested  persons  to  make 
known  their  views; whereas  the  decision  on  whether  to  grant  special  arrangements 
must  be  taken  after  the  Commission  has  examined  the  requests  closely  and  the 
Generalised  Preferences  Committee has delivered  a favourable  opinion; 

Whereas  operation  of  the  incentive  arrangements  concerning  labour  rights  is 
contingent  on certification  by the  authorities  of the beneficiary  countries  of  product 
conformity  with the abovementioned  standards  and the application  of  administrative 
cooperation  procedures  similar to those used to verify the origin of goods; 

the  purposes  of  certification  and  administration  cooperation 
Whereas  for 
procedures,  recourse  should  be  had  to  the  relevant  provisions  of  Commission 
Regulation  (EEC)  No 2454/93  of  2  July  19935  laying  down  provisions  for  the 
implementation  of  Council  Regulation  (EEC)  No  2913/92  of  12 October  1993 
establishing  the  Community  Customs  Code,6  as  last  amended  by  Regulation  (EC) 
No  12/97 of  18 January  1997;7 

Whereas the additional preferential  margin must be attractive if the arrangements  are 
to be fully  effective  as an incentive; whereas this objective  could be met by doubling 
the  basic  preferential  margin  for  products  of  Annex  I  to  Regulation  (EC)  No 
3281/94, fixing  the offer  for  products  of Annex I to Regulation  (EC) No  1256/96 at 
about  66%  of the  basic  preferential  margin  for  industrial  products,  and  setting  the 
margin  at  25%  of  the  Common  Customs  Tariff  duty  for  products  of  Annex  I 
included  in Annex II to Regulations (EC) Nos 3281/94 and  1256/96; 

Whereas the  only internationally  recognised  environmental  standards  at the  moment 
are  for  tropical  forests;  whereas  the  special  incentive  arrangements  concerning 
environmental  protection  will  therefore  apply  solely  to  the  products  of  tropical 
timber processing; 

Whereas  the  international  criteria  for  the  preservation  of tropical  forests  cannot  be 
used  to  monitor  logging  operations;  whereas  at  this  stage  it  is  preferable,  for  the 
purposes  of the  special incentive arrangements for the environment,  to vet  countries 

5  OJ NoL  253,  11.10.1993. p. 1. 
6  OJ NoL  302.  12.10.1992.  p.l. 
7  OJ NoL  9.  13.1.1997. p.l. 

thoroughly  in  advance;  whereas  the  additional  preferential  margins  granted  under 
such arrangements may be the same as those adopted  in the social field; 

Whereas,  however,  owing  to  the  great  sensitivity  of  the  products  referred  to  in 
Part  1 of  Annex  I  to  Regulations  (EC)  Nos 3281/94  and  1256/96,  the  additional 
reduction  in duty from  which these  products  may benefit  under the  special  incentive 
arrangements  should  be limited to 40%; 

Whereas  the  procedures  for  implementing  the  provisions  of  this  Regulation  are 
inspired  by the  measures  set  out  in the  Commission  communication  to  the  Council 
and  Parliament  on  the  management  of  preferential  tariff  arrangements  (COM  (97) 
402 final, 23.7.1997),  in particular  with regard to identifying  government  authorities 
in the beneficiary  countries, their  assumption  of responsibility,  their training  and  the 
organisation  of surveys in these countries; 

Whereas in the context  of introducing  new multiannual  schemes of generalised  tariff 
preferences  to replace the schemes established under Regulations (EC) Nos 3281/94 
and  1256/96,  consideration  should  be given to  the improvements  to  be made to  the 
special  incentive  arrangements  concerning  environmental  protection,  including  the 
possible extension  of its scope, 

HAS ADOPTED  THIS  REGULATION: 

TITLE I 

. 

Special incentive arrangements concerning labour rights 

Article 1 

The  special  incentive  arrangements  provided  for  in  Article  7  of  Regulations  (EC) 
Nos 3281/94 and  1256/96  shall be introduced  according to the terms and  conditions 
laid down in this Title. 

Article 2 

1. 
The preferential  duty applying to the products referred  to in Article 2(1),  (2) 
and  (3)  of  Regulation  (EC)  No 3281/94  which  comply  with  the  conditions  of  this 
Title shall be reduced by an amount  equal to: 

-  15% of the Common  Customs Tariff  duty applying to the product  in question  for 

the products listed in Part  1 of Annex I; 

-  30% of the Common  Customs Tariff  duty applying to the product  in question  for 

the products listed in Part  2 of Annex I; 

-  35% of the Common  Customs Tariff  duty applying to the product  in question  for 

the products listed in Part  3 of Annex I. 

The preferential  duty applying to the products referred  to in Article 2(1),  (2) 
2. 
and  (3)  of  Regulation  (EC)  No  1256/96  which  comply  with  the  conditions  of  this 
Title  shall  be  reduced  by  an  amount  equal  to  66%  of  the  preferential  margin 
applying. 

3. 
The duty applying to the products listed in Annex  I and included  in Part  1 of 
Annex  II  to  Regulations  (EC)  Nos 3281/94  and  1256/96  which  comply  with  the 
conditions  of this Title shall be reduced  by an amount  equal to 25% of the  Common 
Customs Tariff  duty applying to the product  in question. 

The  reduction  in  duty  referred  to  in  the  previous  paragraphs  shall  not  be 

4. 
accorded: 

to  the  countries  and  sectors  referred  to  in  Article 5(1)  of  Regulations  (EC) 
Nos 3281/94  and  1256/96; 

to  countries  excluded  from  preferences  under  Article 6  of  Regulations  (EC) 
Nos 3281/94  and  1256/96. 

Section  1: Procedure for granting the arrangements 

•Article 3 

1. 
Article 2 shall apply to products originating in the beneficiary  countries listed 
in  Annex III  to  Regulations  (EC)  Nos 3281/94  and  1256/96  on  condition  that  the 
authorities  of  such  countries  have  previously  applied  to  the  Commission  in  writing 
to take advantage of the special incentive scheme, giving details  of: 

10 

their  domestic  legislation  incorporating  the  substance  of  the  standards  laid 
down  in  ILO  Conventions  Nos 87  and  98  concerning  application  of  the 
principles  of  the  right  to  organise  and  to  bargain  collectively  and  Convention 
No  138 concerning the minimum  age of admission  to  employment;  the full  text 
of  such  legislation  must  be  attached,  together  with  an  official  translation  into 
one of the Community languages; 

the  measures  taken  to  implement  and  monitor  these  provisions  effectively,  any 
sectoral  limits  on their  application,  any breaches  observed  and  a breakdown  of 
such breaches by production  sector; 

a  commitment  by  the  government  of  the  country  in  question  to  take  full 
responsibility  for  monitoring  application  of  the  special  arrangements  and  the 
relevant  administrative cooperation  procedures. 

The  Commission  shall  publish  a  notice  in  the  Official  Journal  of  the 
2. 
European  Communities,  announcing  that  such  an  request  has  been  made  by  a 
beneficiary  country,  stating that  any  useful  information  concerning  the  request  may 
be  sent  to  the  Commission  by any  interested  natural  or legal  person;  it  shall  set  the 
period  during which interested  persons may make known their views. 

Article 4 

1. 
The  Commission  shall  examine  the  requests  submitted  by  the  beneficiary 
countries  and,  depending  on  the  content,  may  put  any  further  questions  which  it 
considers  useful. 

2. 
The Commission  shall  seek  whatever  information  it  considers  necessary  and 
may check this information  where appropriate with the persons referred  to in Article 
3(2) or any other natural or legal person. 

3. 
In the beneficiary  countries,  and  in  cooperation  with  them,  the  Commission 
may  carry  out  checks  to  verify  all  or  part  of  the  information  gathered.  The 

11 

Commission  shall  request  the  authorities  of  the  beneficiary  country  concerned  to 
cooperate  in  this  research.  The  Commission  may  be  assisted  in  this  task  by  the 
Member  States. 

Article 5 

After  consulting the Committee referred  to in Article  17 of Regulations  (EC) 

1. 
Nos 3281/94 and  1256/96, the Commission  shall decide: 

either  to  apply the  special  incentive  arrangements  to  products  originating  in 
the  requesting  country  on  condition  that  the  monitoring  and  administrative 
cooperation  arrangements  defined  in  the  following  Articles  of  this  Title  are 
observed; 

or,  if  it  considers  that  the  requesting  country's  legislation  does  not 
effectively  incorporate  all or  some of the  substance of ILO Conventions Nos 87, 98 
and  138, not to  apply the  special  incentive  arrangements to that  country  or to  apply 
them only to certain products originating there. 

Commission  decisions  taken  under  paragraph  1  shall  be  adopted 

in 
2. 
accordance  with  the  procedure  laid  down  in  Article  19  of  Regulation  (EC)  No 
3281/94 and Article  18 of Regulation  (EC) No  1256/96. 

Requesting  countries  shall be notified  by the  Commission  of decisions  taken 

3. 
pursuant  to paragraph  1 and of the date on which they enter into force. 

Section 2: Monitoring  procedure and administrative  cooperation  methods 

Article 6 

Products  referred  to  in  Article 2  originating  in  countries  which  have  been 
1. 
notified  of a Commission  decision  granting them  entitlement  to the  special  incentive 
arrangements  shall  be  admitted  under  the  arrangements  provided  for  in  Article 2 
from  the  date  of entry  into  force  of that  decision  on presentation  of  a  statement  by 
the  relevant  authorities  of  the  beneficiary  country  certifying  that  the  products  in 
question  have  been  manufactured  under  conditions  conforming  to  the  domestic 
legislation  referred  to  in the first indent  of Article 3(1)  and  are therefore  eligible  for 
the special incentive arrangements concerning labour rights. 

The  statement  referred 

2. 
endorsement,  as appropriate: 

to 

in  paragraph  1  shall  bear 

the 

following 

"ILO  Conventions  Nos  87,  98,  138  -  Article  7  of  Regulation  (EC)  No 

3281/94" 

"ILO  Conventions  Nos  87,  98,  138  -  Article  7  of  Regulation  (EC)  No 

1256/96" 

12 

and  shall be entered  in box No 4 of the certificate  of origin form  A or on the invoice 
declaration  provided  for  in Article 90  of the  abovementioned  Regulation  (EEC)  No 
2454/93.  This  statement  shall be validated  by a stamp  of the relevant  authorities  of 
the beneficiary  country,  in  accordance  with  the  provisions  of  Article  93  referred  to 
in Article 7 of this Regulation. 

3. 
In  the  case  of  products  listed'in  Part  1 of  Annex II  to  Regulations  (EC) 
Nos 3281/94  and  1256/96 to  which  full  graduation  applies,  the  certificate  of  origin 
form  A  or  the  invoice  declaration  shall  be  valid  solely  in  respect  of  the  special 
incentive arrangements and not for  any other preferential  treatment. 

Article 7 

1. 
The  provisions  of  Article 81(3)-(6),  Article 84  and  Articles 93  to  95  of 
Regulation  (EC) No 2454/94  shall apply mutatis mutandis to the statements  referred 
to in Article 4. 

The  issuing  authorities  for  the  statements  referred  to  in  Article 4  may  be 

2. 
different  from  those for  certificates  of orisin form A. 

TITLE II 

Special incentive arrangements concerning environmental  protection 

Article 8 

The  special  incentive  arrangements  referred  to  in  Article 8  of  Regulations  (EC) 
Nos 3281/94  and  1256/96  shall  be  introduced  under  the  terms  and  conditions  laid 
down in this Title. 

Article 9 

The  preferential  duty  applying  to  the  products  listed  in  the  Annex  which 

1. 
comply with the conditions of this Title shall be reduced  by an amount  equal to: 

-  15% of the Common  Customs Tariff  duty applying to the product  in question  for 

the products of Part  1 of Annex I, 

-  30% of the Common  Customs Tariff  duty applying to the product  in question  for 

the products of Part 2 of Annex I; 

-  35% of the Common  Customs Tariff  duty applying to the product  in question  for 

the products of Part  3 of Annex I. 

13 

2. 
The duty applying to the products listed in Annex  I and included in Part  1 of 
Annex  II  to  Regulations  (EC)  Nos 3281/94  and  1256/96  which  comply  with  the 
conditions  of this  Title  shall  be  equal  to  30% of the  Common  Customs  Tariff  duty 
applying to the product  in question. 

The  reduction  in  duty  referred  to  in  paragraph  1  and  Article  9  shall  not 

3 
apply: 

to  the  countries  and  sectors  referred  to  in  Article 5(1)  of  Regulations  (EC) 
Nos 3281/94 and  1256/96; 

to  countries  excluded  from  preferences  under  Article 6  of  Regulations  (EC) 
Nos 3281/94 and  1256/96. 

Section  1 : Procedure for granting the arrangements 

Article 10 

1. 
Article 9 shall apply to products originating in the beneficiary  countries listed 
in  Annex III  to  Regulations  (EC)  Nos 3281/94  and  1256/96  on  condition  that  the 
authorities  of  such  countries  have  previously  applied  to  the  Commission  in  writing 
to take advantage of the special incentive scheme, giving details  of: 

their  domestic  legislation  incorporating  the  substance  of  the  ITTO  standards; 
the  full  text  of  such  legislation  must  be  attached,  together  with  an  authentic 
translation  into one of the Community languages; 

the measures taken to implement these provisions. 

2. 
The  Commission  shall  publish  a  notice  in  the  Official  Journal  of  the 
European  Communities,  announcing  that  such  a  request  has  been  made  by  a 
beneficiary  country,  stating  that  any  useful  information  concerning  the  request  may 
be  sent  to  the  Commission  by any  interested  natural  or  legal  person;  it  shall  set  the 
period  during which interested  persons may make known their views. 

Article 11 

The  Commission  shall  examine  the  requests  submitted  by  the  beneficiary 
1. 
countries  and,  depending  on  the  content,  may  put  any  further  questions  which  it 
considers  useful. 

The  Commission  shall  seek  whatever  information  it  considers  necessary  and 
2. 
may  check  this  information  where  appropriate  with  the  persons  referred  to  in 
Article 3(2) or any other natural  or legal person. 

14 

3. 
In the beneficiary  countries,  and  in  cooperation  with  them,  the  Commission 
may  carry  out  checks  to  verify  all  or  part  of  the  information  gathered.  The 
Commission  shall  offer  the  authorities  of  the  beneficiary  country  concerned  every 
opportunity  to  cooperate  in this research.  The  Commission  may be  assisted  in this 
task by the Member  States. 

Article 12 

After  consulting the Committee referred  to in Article  17. of Regulations  (EC) 

1. 
Nos 3281/94  and  1256/96, the Commission  shall decide: 

either to  apply the  special  incentive  arrangements to  products  originating  in the 
requesting  country; 

or,  if it  considers  that  the  requesting  country's  legislation  does  not  effectively 
incorporate  the  substance  of  the  ITTO  standards,  not  to  apply  the  special 
incentive arrangements to that  country. 

2. 
Commission  decisions  taken  under  paragraph  1  shall  be  adopted  in 
accordance  with  the  procedure  laid  down  in  Article  19  of  Regulation  (EC)  No 
3281/94  and Article  18 of Regulation (EC) No  1256/96. 

Requesting  countries  shall be notified  by the  Commission  of  decisions  taken 

3. 
pursuant  to paragraph 2 and 3 and of the date on which they enter into force. 

Section  2: Monitoring  procedure and administrative  cooperation  methods 

Article 13 

1. 
Certificates  of origin form  A issued  for  products  referred  to  in .Article 9 and 
the invoice declarations  provided  for  in Article 90 of Regulation  (EEC) No  2454/93 
shall bear the following  endorsement,  as appropriate: 

"'environmental clause - .Article 8 of Regulation  (EC) No 3218/94" 

"environmental  clause - .Article 8 of Regulation  (EC) No  1256/96" 

In  the  case  of  products  listed  in  Part  1 to  Annex II  to  Regulations  (EC) 
2. 
Nos 3281/94  and  1256/96  to  which  full  graduation  applies,  the  certificate  of  origin 
form  A  or  the  invoice  declaration  shall  be  valid  solely  in  respect  of  the  special 
incentive arrangements  and not for  any other preferential  treatment. 

15 

TITLE III 

Suspension  procedure, general and final provisions 

Article 14 

to 

Without  prejudice 

the  second  subparagraph  of  Article  94(2)  of 
1. 
Commission  Regulation  (EEC)  No  2454/93,  entitlement  to  the  special  incentive 
arrangements provided for  in Articles 7 and  8 of Regulations (EC) Nos 3281/94 and 
1256/96,  may be  totally  or  partially  suspended  if there  is  sufficient  evidence  that  a 
beneficiary  country  has not  fulfilled  its  obligations within  the  meaning  of  Articles 3 
and  10 of this Regulation.  This total  or partial  suspension  shall be without  prejudice 
to  the  possible  application  of  Article  9  of  Regulations  (EC)  Nos 3281/94  and 
1256/96. 

2. 
The  withdrawal  or  suspension  decision  referred  to  in  paragraph  1 shall  be 
adopted  by the  Commission  in  accordance  with  the  procedure  laid  down  in  Article 
19 of Regulation  (EC) No 3281 and Article  18 of Regulation (EC) No  1256/96. 

Article 15 

For  the  highly  sensitive  products  referred  to  in  Part  1 of  Annex I  to  Regulations 
(EC) Nos 3281/94  and  1256/96 the reduction  in duty resulting  from  the  application 
of this Regulation  shall not exceed 40%. 

This Regulation  shall enter into force on  1  January  1998. 

Article 16 

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

Done at Brussels, 

For the Council 
The President 

Ak 

Annex 

List of products referred  to in Article 78 

CN Code 
(1) 

4407  24  10 

•4407 24 30 
4407  24 50 

4407  25  10 

4407 25 31 
4407 25 39 
4407 25 50 

4407 26 10 

4407 26 31 
4407 26 39 
4407 26 50 

Description  of goods 
(2) 
Wood  sawn  or  chipped  lengthwise,  sliced  or  peeled,  whether  or  not  planed,  sanded  or 
finger-jointed,  of a thickness exceeding 6 mm: 
— Of tropical  wood  specified  in subheading  note  1 to this  chapter: 
-- Virola. mahogany {Smeteni  spp.).  imbuia and balsa: • 
— Finger-jointed  whether  or not planed or sanded 
— Other: 
—  Planed 
—  Sanded 
— Dark  red meranti. light  red meranti  and meranti bakau: 
— Finger-jointed,  whether or not planed or sanded 
— Other: 
—  Planed: 

Blocks, strips and friezes  for parquet or wood block flooring,  not assembled 

-—  Other 
-—  Sanded 
— White lauan. white meranti, white seraya, yellow meranti and alan: 
— Finger-jointed,  whether  or not planed or sanded 
— Other: 
—  Planed: 

Blocks, strips and friezes  for parquet or wood block flooring, not  assembled 

-—  Other 
—  Sanded 
— Other: 
—  Keruing.  ramin.  kapur.  teak, jongkong.  merbau. jelutong,  kempas,  okoumé,  obéché, 
sapelli.  sipo.  acajou  d'Afrique,  makoré.  iroko,  tiama,  mansonia.  ilomba,  dibétou, 
limba. azobé. palissandre de Rio. palissandre de Para and palissandre  de Rose: 

4407 29 10 

-— Finger-jointed, whether  or not planed or sanded 
—  Other: 

4407 29 20 

4407 29 31 
4407 29 39 
4407 29 50 

4407 29 70 

Planed: 
Palissandre de Rio. palissandre de Para and palissandre  de Rose 
Other: 
Blocks,  strips and friezes  for parquet  or wood block  flooring,  not assembled 
Other 
Sanded 

— Other: 
—  Finger-jointed,  whether or not planed or sanded 
—  Other: 

Subject  to the rules  for  interpreting  the  Combined  Nomenclature, the wording  of the description  of the 
products is to be  considered  as having  no more than  an indicative  value, the preferential  scheme  being 
determined,  within  the  context  ol" this Annex,  by the  coverage  of the  CN  codes.  Where  ex  CN  codes 
are  indicated,  the  preferential  scheme  is  to  be  determined  by  application  of  the  CN  code  and 
corresponding  description  taken  together. 

17 

CN Code 
(D 

4407 29 83  j-—Planed 

Description  of goods 
(2) 

(1) 
4407 29 85 

Sanded 

(2) 

4408 31 

Veneer  sheets  and  sheets  for  pl\~vvood  (whether  or  not  spliced)  and  other  wood  sawn 
lengthwise,  sliced  or  peeled,  whether  or  not  planed,  sanded  or  finger-jointed,  of  a 
thickness  not exceeding 6 mm: 

Of tropical  wood specified  in subheading note  1 to this chapter: 

~  Dark  red meranti  and meranti  bakau 
-  Other: ' 
-  White lauan. sipo, limba, okoumé, obéché, acajou  d'Afrique,  sapelli. virola,  mahogany 
(Swie tenia spp.).  palissandre de Rio, palissandre de Para and palissandre  de Rose : 

4408 39 11 

4408 39 21 
4408 39 25 

-  Finger-jointed,  whether or not planed or sanded 
-  Other: 
Planed 
Sanded 

-—Other: 

4408 39 31 
4408 39 35 

Of a thickness not exceeding  1 mm 
Of a thickness exceeding  1 mm 

4408 39 51 

4408 39 61 
4408 39 65 

-  Other: 
-— Finger-jointed, whether  or not planed or sanded 
-  Other: 
Planed 
Sanded 

—-  Other: 

Other: 
Of a thickness not exceeding  1 mm: 

4408 39 81 

Makoré.  iroko.  tiama,  mansonia.  ilomba.  dibélou.  azobé,  white  meranti,  white 
seraya.  yellow  meranti.  alan.  keruing  ramin.  kapur.  teak,  jongkong.  merbau. 
jelutong. kempas. imbuia and balsa 

4408 39 89 

Other 

Of a thickness exceeding  1 mm: 

4408  39 91 

Makorc.  iroko.  tiama.  mansonia.  ilomba.  dibélou.  azobé.  white  meranti.  white 
seraya.  yellow  meranti.  alan.  keruing  ramin.  kapur.  teak,  jongkong.  merbau. 
jelutong. kempas. imbuia and balsa 

4408  39 99 

Other 

4412  13 

4412 22 

Plywood, veneered panels and similar  laminated  wood: 
- Plywood  consisting  solely of sheets of wood, each ply not exceeding 6 mm: 
-  With  at  least  one  outer  ply  of  tropical  wood  specified  in  subheading  note  1 to  this 

chapter 

- Other, with at  lest one outer ply of non-coniferous  wood: 
-  With at  least one ply of tropical wood specified  in subheading  note  1 to this  chapter 
- Other: 

18 

(1) 

4412 92 

-  With at least one ply of tropical  wood specified  in subheading note  1  to this  chapter 

(2) 

4414 00  10 

Wooden frames  for paintings, photographs, mirrors or similar  objects: 
- Of tropical  wood, as specified  in additional  note 2 to this chapter 

o: 

(2) 

Builders"  joinery  and  carpentry  of  wood,  including  cellular  wood  panels,  assembled 
parquet  panels,  shingles and  shakes: 
- Windows, frenchwindows  and their  frames: 
~  Of tropical  wood, as specified  in additional  note 2 to this chapter 
- Doors and their frames  and thresholds: 
-  Of tropical wood, as specified  in additional  note 2 to this chapter 

4418 10 10 

4418 20 10 

Wood  marquetn  and  inlaid  wood:  caskets  and  cases for jeweller}' or  cutler}-,  and  similar 
articles,  of wood:  statuettes  and  other  ornaments,  of wood;  wooden  articles  of  furniture 
not falling  in Chapter 94: 
- Statuettes and other ornaments, of wood: 
~  Of tropical  wood, as specified  in additional  note 2 to this chapter 
- Other: 
~  Wood marquetn- and inlaid wood: 
-  Of tropical wood, as specified  in additional  note 2 to this chapter 
~  Other: 
-  Of tropical wood, as specified  in additional  note 2 to this chapter 

4420 10 11 

4420 90 11 

4420 90 91 

ex 940150 00 
ex 9401 61 00 

Seats of cane or bamboo 
-  Other  scats,  upholstered,  with  wooden  frames,  of  tropical  wood,  as  specified  in 
subheading  note  1  to Chapter 44 

ex 9403 80 00 

- Furniture of cane or bamboo 

ex  9403 30 
ex  9403 40 
ex  9403 50 
ex  9403 60 
ex  9403 90 30 

Furniture of tropical  wood, as specified  in subheading  note  1  to Chapter 44: 
- Of a kind used in  offices 
- Of a kind used in the kitchen 
- Of a kind used in the bedroom 
- Other 
-  Parts  of  furniture  of  subheadings  9403  30.  9403 40.  9403  50.  9403 60  and  9403 80. of 
tropical  wood, as specified  in subheading note  1  to Chapter  44. bamboo or cane 

19 

FINANCIAL  STATEMENT 

Title of operation 

Draft  proposal  for  a  Regulation  applying  the  special  incentive  arrangements 
concerning  labour  rights  and  environmental  protection  provided  for  in  Articles  7 
and  8  of  Council  Regulations  (EC)  Nos 3281/94  and  '1256/96  applying  the 
scheme  of  generalised  tariff  preferences  in  respect  of  certain  industrial  and 
agricultural  products originating in developing countries. 

Legal basis 

Article  113 of the Treaty 

Objective  of the  operation 

Granting  additional  preferences  is  intended  to  encourage  developing  countries 
benefiting  from  the Community's  system  of tariff  preferences to  apply  progressive 
social  and environmental  policies and help them  do  so by promoting their  exports 
of products manufactured  according to the relevant international  standards. 

Estimate of customs revenue 

Assuming  a maximalist  scenario, i.e that  all the GSP beneficiary  countries  request 
entitlement  to  the  incentive  arrangements  and  are  granted  it,  on  the  basis  of  the 
GSP  offer  calculated  using the figure  for total  imports  of products  eligible for  the 
special  incentive  arrangements  concerning  labour  rights  and  environmental 
protection  in  1995  (ECU  56 894.5  million)  originating  in  the  GSP  beneficiary 
countries in  1998 and  average take-up  of the GSP  scheme in  1995 (60%), the  fall 
in  customs  revenue  as a result  of the  application  of these  incentive  arrangements 
is estimated  at ECU  787.8 million. 

However,  it  seems  highly  unlikely  that  all  the  beneficiary  countries  could  on  the 
face  of it  be  considered  eligible  for  the  special  arrangements.  The  Commission's 
examination  of the beneficiary  countries'  requests will most  probably  result  in the 
financial  impact  of  additional  preferences  being  slashed,  although  as things  stand 
it  is  not  possible  to  put  a  figure  on  it.  While  certain  countries  will  probably  be 
ruled  out  in their entirety,  others will require a more detailed  sectoral analysis. 

In  anv  case,  the  depreciation  in traditional  own  resources  will  be  financed  by  the 
Member  States via the GNP resource 

ISSN 0254-1475 

COM(97) 534  final 

DOCUMENTS 

EN 

11  03  10  02 

Catalogue  number  :  CB-C0-97-579-EN-C 

ISBN  92-78-26736-8 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg