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
Date: 1997-11-05
Institutions: European Commission
Subjects: agricultural product, developing countries, generalised preferences, industrial product, originating product

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 
to 
30 June  1999  in  respect  of  certain  agricultural  products  originating  in  developing 
countries,3 and in particular Article 6 thereof, 

from  1  July  1996 

tariff  preferences 

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 
, 
5  OJNoC 
, 

,p. 
,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, 
the  most  advanced  beneficiary  ccontries  from  entitlement  to  generalised 
excluding 
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 
products eligible 
for GSP in  1997 

Estimated customs 
receipts lost in 
1997 

Average rate of 
use of GSP in 
1995 

South Korea"" "TToO 380 
Singapore  71 * 204 852 
"Hongkong"}  837~157 
3 142 389 
Tout! 

"~~ " 40 095 " 
J___  42 488 
" 30 434 
\  113 017 

" 

~""~ 
______ 

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 

Office  for Official  Publications of the European Communities 

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