Proposal for a Council Regulation amending Council Regulation (EC) No 2820/98 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 so as to extend duty-free access without any quantitative restrictions to products originating in the least-developed countries
Date: 2000-10-05
Institutions: European Commission
Subjects: customs duties, generalised preferences, least-developed country, originating product, trade policy

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 5.10.2000
COM(2000) 561 final

2000/0239 (ACC)

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 2820/98 applying a multiannual scheme of
generalised tariff preferences for the period 1 July 1999 to 31 December 2001 so as to
extend duty-free access without any quantitative restrictions to products originating in
the least-developed countries

(presented by the Commission)

EXPLANATORY MEMORANDUM

This proposal is a result of the Community's (recently renewed) undertakings for the least-
developed countries (LLDCs), and seeks to translate those undertakings into action.

The action plan adopted by the World Trade Organisation (WTO) at its 1996 ministerial
conference in Singapore is aimed at improving the access of the LLDCs to the markets of the
industrialised countries. In particular, it recommends that the latter give duty-free access, on
an autonomous basis, to products originating in LLDCs.

Following up the action plan, the Council decided in its conclusions of 2 June 1997 that the
Community should initially implement the Singapore conclusions by granting LLDCs not
party to the Lomé Convention preferences equivalent to those enjoyed by Lomé Convention
signatories and, in the medium term, duty-free access for essentially all LLDC products. In
1998, in accordance with that undertaking, the Community granted LLDCs not party to the
Lomé Convention preferences equivalent to those enjoyed by signatories, through Regulation
(EC) No 602/98.

Similar undertakings have also been reaffirmed for Lomé Convention countries. The
Partnership Agreement between the African, Caribbean and Pacific States and the European
Community and its Member States, signed at Cotonou (Benin) on 23 June 2000 further states
that, by the year 2000, the Community will start a process which, by the end of the WTO
multilateral trade negotiations and at the latest by 2005, will allow duty-free access for
essentially all products from all LLDCs, building on the level of the existing trade provisions
of the fourth ACP-EC Convention, and which will simplify and review the rules of origin,
including cumulation provisions, that apply to their exports.

The Community has campaigned actively on the multilateral front for undertakings in the
LLDCs' favour. In that connection, at the November 1999 WTO Ministerial Conference in
Seattle, the Community and Japan jointly declared their intention to open their markets to
essentially all LLDC products. Later,
the Community's continued efforts brought an
undertaking from the other Quad countries (the US and Canada) to the same effect. Canada
has just launched an initiative similar to that of the Community. Just recently, this objective
was reaffirmed within the G8, which consists of the world's eight major industrialised
countries, plus Russia.

The Commission therefore feels that we now need to unilaterally set down in law this series
of undertakings. However, the Commission further believes that the Community can go
beyond its undertakings by granting all products (except arms and munitions) from all LLDCs
duty-free access without quantitative restrictions immediately. It should be emphasised that
over 99% of Community trade with the LLDCs already carries zero import duty, either under
the Lomé Convention or under the Generalised System of Preferences (GSP). This is the case
for EUR 8 113 million out of EUR 8 136 million of trade. Where import protection still
exists, it often involves products in which LLDC trade with the Community is very low, or
nonexistent. This absence of trade is undoubtedly partly due to Community protection, and
eliminating the latter would encourage the development of trade in the products in question.

Such an initiative will send a strong and credible political signal to all our partners. Since the
Community is by far the world’s biggest importer of LLDC products (accounting for a total of
56% of developed-country imports), this proposal will also set an example for other WTO
members, particularly those with an industrialised economy. By reinforcing the current trend,

2

it will boost output of and trade in goods which still have little (or no) significance for the
LLDCs, and therefore provides a longer-term objective. It will show developing countries in
general, and the LLDCs in particular, that after Seattle the Community is continuing to take
the initiative on trade liberalisation, and will testify to its genuine efforts to take on board the
needs and concerns expressed by these countries regarding a new round of multilateral trade
negotiations.

Since it involves taking action on an autonomous basis in the context of tariff preferences at
multilateral level, the Commission is presenting this proposal as an amendment to Council
Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of
generalised tariff preferences for the period 1 July 1999 to 31 December 2001. The alternative
would have been to propose a tariff scheme for the LLDCs separate from the GSP and to
extend its application beyond 31 December 2001. However, this would have been a departure
from the concept of a single Community generalised system of preferences which, in any
case, has to be reviewed before the end of 2001 in order to decide what amendments are
required for the last phase of the ten-year scheme up to 2004. When that review takes place,
the new arrangements for the LLDCs laid down in this proposed regulation should therefore
be incorporated.

this amendment would entail

The main objective of this proposal is to amend Article 6 of the above-mentioned Regulation
concerning the special support arrangements for the least-developed countries. However,
logically,
the amendment of other articles. Therefore, a
reference to the new Article 6 must be included in Article 1(2) of the Regulation concerning
the scope of the scheme's application. Furthermore, technical amendments must be made to
Article 7 and Annex VII of the Regulation to define more exactly the scope of the special
support arrangements for the fight against drugs following the amendments in favour of the
least-developed countries. Finally, technical amendments are also necessary in Article 29(4)
of the Regulation so as not to restrict the benefits to the least-developed countries to ad
valorem duties alone.

The Commission is aware that such an opening increases the risk of fraud and failure to
adhere to the rules of origin, so it is proposing to put in place stronger safeguard measures,
similar to those which the Council adopted in connection with the exceptional trade measures
for the countries and territories of the Western Balkans. The proposal amends Article 22 of
the basic Regulation on the GSP and provides for tariff concessions to be temporarily
suspended in cases of fraud, failure to adhere to the rules of origin and/or huge increases in
imports into the Community beyond the usual output or export capacity of the countries
concerned.

It was felt that there was no point in going any further than this - for example, by altering the
rules-of-origin arrangements. This was because the arrangements already contain all the
instruments needed to enforce the rules and prevent distortions of trade, and because a
tightening of the rules of origin for countries eligible for the GSP (all of them developing
countries) cannot be justified on the grounds that the poorest of those countries have free
access to the Community market. In addition, establishing rules of origin to apply specifically
to the LLDCs would go against Community moves of recent years to simplify and harmonise
the various rules of origin in force.

The intention is, however, also to allow least-developed countries belonging to the ACP
group to benefit from regional cumulation on the basis of the regional organisations formed in
negotiations for the economic partnership agreements with the Community. Although there
are short-term difficulties involved in giving the ACP LLDCs the same regional-cumulation

3

opportunities already given to non-ACP LLDCs, the view is that in the longer term there
could be no justification for discriminating between LLDCs. Furthermore, these cumulation
opportunities would be consistent with Community policy in this field.

The Commission is also aware that the proposed liberalisation, which targets only some third
countries, has consequences for a number of agricultural products covered by arrangements
for the common organisation of the market which are currently being revised or are due to be
revised (e.g. bananas, rice and sugar). It is therefore suggested that free access for these be
phased in over three years.

Granting free access to their products is not the only important measure to be taken to help
these countries. The circumstances in which they find themselves must be such as to allow
them to exploit the opportunities presented by the liberalisation of trade. Another important
objective is to bolster production capacity so as to enable them to produce and process a
greater number of quality goods for export. Maintaining technical and financial assistance to
developing countries at a level sufficient to help them improve and diversify their export
capacity must continue to be a priority of Community policy.

In the light of the above considerations, the Commission is proposing to the Council that this
proposal for a Regulation be adopted.

4

2000/0239 (ACC)

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 2820/98 applying a multiannual scheme of
generalised tariff preferences for the period 1 July 1999 to 31 December 2001 so as to
extend duty-free access without any quantitative restrictions to products originating in
the least-developed countries

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article
133 thereof,

Having regard to the proposal from the Commission1,

Whereas:

(1) Whereas Article 6 of Council Regulation (EC) No 2820/98 of 21 December 1998
applying a multiannual scheme of generalised tariff preferences for the period 1 July
1999 to 31 December 2001 provides for more favourable tariff treatment for the least-
developed countries.

(2)

(3)

(4)

(5)

(6)

The Community's multiannual scheme of generalised tariff preferences has to be
reviewed before the end of 2001 in order to decide what amendments are required for
the last phase of the ten-year period of the scheme up to 2004.

At
the Singapore ministerial conference in December 1996 the WTO member
countries pledged to carry out an action plan to improve access to their markets for
products originating in the least-developed countries.

On 2 June 1997 the Council, on the basis of a Commission communication of 16 April
1997, adopted conclusions calling for the Singapore conclusions to be implemented by
granting least-developed countries not party to the Lomé Convention preferences
equivalent to those enjoyed by signatories and, in the medium term, duty-free access
for essentially all LLDC products.

Council Regulation (EC) No 602/98 granted LLDCs not party to the Lomé Convention
preferences equivalent to those enjoyed by signatories to the Convention.

Article 37(9) of the Partnership Agreement between the African, Caribbean and
Pacific States and the European Community and its Member States, signed at Cotonou
(Benin) on 23 June 2000 and put into early application by Decision No 1/2000 of the
ACP-EC Council of Ministers, states that, by the year 2000, the Community will start
a process which, by the end of multilateral trade negotiations and at the latest 2005,

1

OJ C [...], [........], p. [...].

5

(7)

(8)

(9)

(10)

will allow duty-free access for essentially all products from all LLDCs, building on the
level of the existing trade provisions of the fourth ACP-EC Convention.

In the light of the real risk of the least-developed countries becoming increasingly
marginalised in the world economy, the European Community must go even further
than these undertakings and grant all LLDC products, except arms and munitions,
duty-free access without quantitative restrictions immediately.

In the light of the fact that the arrangements for the common organisation of the
markets in sugar, rice and bananas are currently being revised or are due to be revised,
the Regulations regarding these reforms will have to take account of duty-free access
for the LLDCs from the outset when they establish new general import arrangements.
Provision should be made for free access for these products to be phased in over three
years beginning on 1 January 2001.

Technical amendments are needed to more closely define the scope of the provisions
on the special drug prevention support measures in the light of the changes relating to
the LLDCs.

It is necessary to add to the reasons for the possible provisional suspension of
preferences, allowing the Commission to react swiftly when the Community’s
financial interests are at stake, massive increases in imports of products originating in
the LLDCs in relation to their usual levels of production and export capacity,

HAS ADOPTED THIS REGULATION:

Article 1

1.

Article 1(2) of Council Regulation (EC) No 2820/98 is amended as follows:

"Without prejudice to Article 6, this Regulation shall apply to the products falling
within Chapters 1 to 97 of the Common Customs Tariff, excluding Chapter 93,
which are listed in Annex I. It shall apply only to the products listed in Annex VII on
the conditions laid down in Article 7."

2.

Article 6 of Council Regulation (EC) No 2820/98 is amended as follows:

"Common customs tariff duties shall be suspended in their entirety on all products of
Chapters 1 to 97 of the Common Customs Tariff, excluding Chapter 93, originating
in the least-developed countries listed in Annex IV. However, duties applying to
codes 0803 00 19, 1006 and 1701 shall be phased out over a period of three years
from 1 January 2001. This shall be achieved by reducing Common Customs Tariff
duties on these products by 20% on 1 January 2001, by 50% on 1 January 2002 and
by 80% on 1 January 2003, culminating in full elimination on 1 January 2004.".

3.

Article 7 of Council Regulation (EC) No 2820/98 is amended as follows:

"For the countries listed in Annex V, Common Customs Tariff duties shall be
suspended in their entirety on the industrial products listed in Annex I falling within
Chapters 25 to 97 of the Common Customs Tariff, excluding Chapter 93, and on the
agricultural products listed in Annex VII, without prejudice to the procedure
described in Article 31(3)."

6

4.

Article 22(1)(d) of Council Regulation (EC) No 2820/98 is amended as follows:

“(d) fraud or failure to provide administrative cooperation as required for the
verification of certificates of origin form A, or massive increases in imports into the
Community of products originating in the countries listed in Annex IV in relation to
their usual levels of production and export capacity.”

5.

Article 29(4) of Council Regulation (EC) No 2820/90 is amended as follows:

"Save as otherwise provided in the Annexes, with respect to products falling within
Chapters 1 to 24, wherever customs duties comprise an ad valorem duty plus one or
more specific duties, the preferential reduction is limited to the ad valorem duty.
However, the exemption from customs duties provided for in Article 6 shall also
apply to the specific duties. Where the customs duties comprise an ad valorem duty
with a minimum and a maximum duty, the preferential reduction also applies to that
minimum and maximum duty. Where they comprise more than one specific duty, the
preferential reduction applies to all of these."

6.

Annex VII to Council Regulation (EC) No 2820/98 is amended as indicated in the
Annex to this Regulation.

This Regulation shall enter into force on the third day following its publication in the Official
Journal of the European Communities. It shall apply from .......

Article 2

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

Done at Brussels, .......

For the Council
The President

7

ANNEX

ANNEX VII (1)

Non-sensitive products

CN code

Description

Live horses, other than pure-bred breeding animals:

0101 19 90

— Other horses

0104 20 10

Live goats, pure-bred breeding animals(1)

0106 00 10

Live domestic rabbits

0106 00 20

Live pigeons

0205 00

Meat of horses, asses, mules or hinnies, fresh, chilled or frozen

Edible offal, fresh, chilled or frozen:

0206 80 91

— of horses, asses, mules or hinnies

0206 90 91

0208

Other meat and edible meat offal, fresh, chilled or frozen, except products of
0208 90 50

CHAPTER 3(2) FISH AND CRUSTACEANS, MOLLUSCS AND OTHER AQUATIC

VERTEBRATES

8

0407 00 90

Birds' eggs, in shell, fresh, preserved or cooked, other than poultry eggs

0409 00 00

Natural honey

0410 00 00

Edible products of animal origin, not elsewhere specified or included

CHAPTER 5

OTHER PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SPECIFIED
OR INCLUDED

CHAPTER 6(3) LIVE TREES AND OTHER PLANTS; BULBS, ROOTS, AND THE LIKE;

CUT FLOWERS AND ORNAMENTAL FOLIAGE

0701

Potatoes, fresh or chilled

0706 90 30

Horseradish (Cochleariaarmoracia), fresh or chilled

0708

Leguminous vegetables, shelled or unshelled, fresh or chilled

Other vegetables, fresh or chilled:

ex 0709 20 00 — Asparagus, from 1 October to 31 January

0709 30 00

— Aubergines (egg-plants)

0709 40 00

— Celery, other than celeriac

0709 51 30

— Chanterelles

0709 60 10

— Sweet peppers

0709 60 99

— Other

0709 90 70

— Courgettes

0709 90 90

— Other

ex 0710

Vegetables (uncooked or cooked by steaming or boiling in water), frozen,
except products of 0710 80 10

0711

Vegetables provisionally preserved (for example, by sulphur dioxide gas, in
brine, in sulphur water or in other preservative solutions), but unsuitable in
that state for immediate consumption, except products of 0711 20 10 and
0711 20 90

9

Dried vegetables, whole, cut, sliced, broken or in powder, but not further
prepared:

0712 20 00

— Onions

0712 30 00

— Mushrooms and truffles

0712 90 05

— Potatoes, whether or not cut or sliced, but not further prepared

0712 90 30

— Tomatoes

0712 90 50

— Carrots

ex 0712 90 90 — Other, excluding olives

0713

Dried leguminous vegetables, shelled, whether or not skinned or split

0803 00 90

Bananas, including plantains, dried

0804 10 00

Dates, pineapples, avocados, guavas, mangoes and mangosteens, fresh or
dried

0804 30 00

0804 40

Citrus fruit, fresh or dried:

ex 0805 20

— Mandarins (including tangerines and satsumas); clementines, wilkings
and similar citrus hybrids, from 15 May to 15 September

0805 30 90

— Limes (Citrusaurantifolia)

0805 40

Grapefruit

0805 90 00

— Other

Melons (including watermelons) and papaws (papayas), fresh:

0807 11 00

— Watermelons

0807 19 00

— Other melons

10

0809 20 05

Sour cherries (Prunuscerasus), fresh

0809 40 90

Sloes

Other fruit, fresh:

0810 20

Raspberries, blackberries, mulberries and loganberries

0810 30

Black-, white- or redcurrants and gooseberries

— Fruits of the genus Vaccinium:

0810 40 30

— — Fruit of the species Vacciniummyrtillus

the species Vaccinium macrocarpon and Vaccinium

0810 40 50

— — Fruit of
corymbosum

0810 40 90

— — Other

0810 50

— Kiwifruit

0810 90 85

— — Other

0811

0812

Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen,
whether or not containing added sugar or other sweetening matter

Fruit and nuts, provisionally preserved (for example, by sulphur dioxide gas,
in brine, in sulphur water or in other preservative solutions), but unsuitable
in that state for immediate consumption

Fruit, dried, other than that of heading Nos 0801 to 0806:

0813 10 00

— Apricots

0813 20 00

— Prunes

0813 30 00

— Apples

— Other fruit:

0813 40 10

— — Peaches, including nectarines

0813 40 30

— — Pears

0813 40 50

— Papaws (papayas)

0813 40 95

— — Other

11

Mixtures of nuts or dried fruits of this chapter:

0813 50 12

— Fruit salads of dried fruit, other than that of heading Nos 0801 to 0806

0813 50 15

0813 50 19

ex 0813 50 31 — Mixtures exclusively of coconut, Brazil nuts, cashew nuts, areca (or

betel) nuts or colanuts

ex 0813 50 91 — Mixtures of dried guavas, mangoes and mangosteens, papaws,
tamarind, cashew apples, jackfruit, lychees or sapodillo plums

0901 12 00

Coffee, not roasted, decaffeinated

0901 21 00

Coffee, roasted

0901 22 00

0901 90 90

Coffee substitutes containing coffee

0904 20 10

Sweet peppers, dried, neither crushed nor ground

0910 40 13

Thyme, other than wild thyme (Thymus serpyllum), neither crushed nor
ground

0910 40 19

Thyme, crushed or ground

0910 40 90

Bay leaves

0910 91 90

Mixtures of spices, crushed or ground

0910 99 99

Other spices, crushed or ground

ex 1008 90 90 Quinoa

1105

Flour, meal, powder, flakes, granules and pellets of potatoes

Flour, meal and powder:

1106 10 00

— Of the dried leguminous vegetables of heading No 0713

12

1106 30

— Of the products of Chapter 8

ex CHAPTER
12

OIL SEEDS AND OLEAGINOUS FRUITS; MISCELLANEOUS GRAINS,
SEEDS AND FRUIT; INDUSTRIAL AND MEDICINAL PLANTS; STRAW
AND FODDER excluding sugar beet and sugar cane falling within
subheadings 1212 91 and 1212 92

CHAPTER 13 GUMS, RESINS AND OTHER VEGETABLE SAPS AND EXTRACTS

Lard stearin, lard oil, oleostearin, oleo-oil and tallow oil, not emulsified or
mixed or otherwise prepared, excluding lard stearin and oleostearin for
industrial uses

1503 00 19

1503 00 90

1504

1505

1507

1508

1511

1512

1513

1514

1515

1516

Fats and oils and their fractions, of fish or marine mammals, whether or not
refined, but not chemically modified, excluding products of ex 1504 30 10
(whale oil or sperm oil)

Wool grease and fatty substances derived therefrom (including lanolin)

Soya-bean oil and its fractions, whether or not refined, but not chemically
modified

Ground-nut oil and its fractions, whether or not refined, but not chemically
modified

Palm oil and its fraction, whether or not refined, but not chemically modified

Sunflower-seed, safflower or cotton-seed oil and fractions thereof, whether
or not refined, but not chemically modified

Coconut (copra), palm kernel or babassu oil and fractions thereof, whether
or not refined, but not chemically modified

Rape, colza or mustard oil and fractions thereof, whether or not refined, but
not chemically modified

Other fixed vegetable fats and oils (including jojoba oil) and their fractions,
whether or not refined, but not chemically modified

Animal or vegetable fats and oils and their fractions, partly or wholly
hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not

13

1517

1518

refined, but not further prepared

Margarine; edible mixtures or preparations of animal or vegetable fats or oils
or of fractions of different fats or oils of this chapter, other than edible fats
and oils or their fractions of heading No 1516

Animal or vegetable fats and oils and their fractions, boiled, oxidised,
dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert
gas or otherwise chemically modified, excluding those of heading No 1516;
inedible mixtures or preparations of animal or vegetable fats or oils or of
fractions of different fats or oils of this chapter, not elsewhere specified or
included

1521 90 99

Beeswax and other insect waxes, whether or not refined or coloured, other
than raw

Degras; residues resulting from the treatment of fatty substances or animal
or vegetable waxes:

1522 00 10

— Degras

1522 00 91

— Oil foots and dregs; soapstocks

Other prepared or preserved meat, meat offal or blood:

1602 20 11

1602 20 19

1602 41 90

1602 42 90

1602 49 90

1602 50 31

1602 50 39

1602 50 80

1602 90 31

1602 90 41

1602 90 69

1602 90 72

1602 90 74

14

1602 90 76

1602 90 78

1602 90 98

1603 00 10

Extracts and juices of meat, fish or crustaceans, molluscs or other aquatic
invertebrates, in immediate packings of a net content of less than 20 kg

1604 (4)

1605

Prepared or preserved fish; caviar and caviar substitutes prepared from fish
eggs

Crustaceans, molluscs or other aquatic invertebrates, prepared or
preserved

1702 50 00

Chemically pure fructose

1702 90 10

Chemically pure maltose

1704 (5)

Sugar confectionery (including white chocolate), not containing cocoa

CHAPTER 18 COCOA AND COCOA PREPARATIONS

CHAPTER 19 PREPARATIONS OF CEREALS,

FLOUR, STARCH OR MILK,

PASTRYCOOKS' PRODUCTS

CHAPTER 20 PREPARATIONS OF VEGETABLES, FRUIT, NUTS OR OTHER PARTS

OF PLANTS

ex CHAPTER
21

MISCELLANEOUS EDIBLE PREPARATIONS, excluding sugar syrups
falling within subheadings 2106 90 30, 2106 90 51, 2106 90 55 and 2106 90
59

ex CHAPTER
22

BEVERAGES, SPIRITS AND VINEGAR, excluding products falling within
subheadings 2204 10 11 to 2204 30 10, 2206 00 10, 2208 40, 2208 90 11
and 2208 90 19

15

Bran, sharps and other residues, whether or not in the form of pellets
derived from the sifting, milling or other working of cereals or of leguminous
plants:

2302 50 00

— Of leguminous plants

Preparations of a kind used in animal feeding:

2309 10 90

— Dog or cat food put up for retail sale, other than containing starch,
glucose, glucose syrup, maltodextrine or maltodextrine syrup falling within
subheadings 1702 30 51 to 1702 30 99, 1702 40 90, 1702 90 50 and 2106
90 55 or milk products

— Other

2309 90 91

— — Beet-pulp with added molasses

2309 90 93

— — Premixtures

2309 90 95

— — Other

2309 90 97

CHAPTER 24 TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES

2818 30 00

Aluminium hydroxide

ex 2844 30 51 Crude cermets, waste and scrap of uranium depleted in U 235

35029070

Other albumins

(1) Entry under this subheading is subject to conditions laid down in the
relevant Community provisions.

(2) The duty is 3.6% for shrimps of CN code 0306 13.

16

(3) For cut flowers of CN code 0603, the conditions laid down by Article
28(1) are deemed to be fulfilled when the quantities put into free circulation
with preferential benefit in any year exceed the volume of imports from one
of those countries into the Community corresponding to the figure half-way
between the highest and the average quantity for the last four years for
which statistics are available.

(4) For prepared and preserved tuna of CN codes 1604 14 11, 1604 14 18,
1604 14 90, 1604 19 39 and 1604 20 70, the examination of the conditions
laid down by Article 28(1) shall be carried out for a particular country when
the quantities put into free circulation with preferential benefit, originating in
its exports to the
that country, exceed the average annual quantity of
Community of the products concerned over the last three years.

(5) The specific duty for products falling within CN codes 1704 10 91 and
1704 10 99 shall be limited to 16% of the customs value.

17

FINANCIAL STATEMENT

1.

TITLE OF OPERATION

Proposal for a Council Regulation (EC) amending Council Regulation (EC) No 2820/98
applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to
31 December 2001 so as to extend duty-free access without any quantitative restrictions to
products originating in the least-developed countries.

2.

LEGAL BASIS

Article 133 of the Treaty

3.

DESCRIPTION OF OPERATION

The aim of the proposed Regulation is to grant products from the least-developed countries,
other than arms and munitions, duty-free access without any quantitative restrictions.

4.

ESTIMATE OF CUSTOMS REVENUE - CLASSIFICATION OF
EXPENDITURE/REVENUE

On the basis of imports in 1998, the products on which the LLDCs are not yet granted duty-
free access without any quantitative restrictions, excluding arms, account for 677 eight-digit
tariff headings representing total imports of EUR 77 million out of an overall total of
EUR 8.191 billion. The estimated loss of customs revenue is EUR 7 118 727.

18

IMPACT ASSESSMENT FORM

THE IMPACT OF THE PROPOSAL ON BUSINESS, WITH SPECIAL REFERENCE
TO SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)

TITLE OF PROPOSAL

Proposal for a Council Regulation amending Council Regulation (EC) No 2820/98 applying a
multiannual scheme of generalised tariff preferences for
the period 1 July 1999 to
31 December 2001 so as to extend duty-free access without any quantitative restrictions to
products originating in the least-developed countries.

DOCUMENT REFERENCE NUMBER

THE PROPOSAL

1.

This proposed Regulation comes under the heading of the common commercial
policy. Its main aim is to extend duty-free access without any quantitative restrictions
to products originating in the least-developed countries.

IMPACT ON BUSINESS

2.

Regardless of their size, businesses will be mainly affected in the import sector as a
result of this proposal. By granting duty-free access to products originating in the
LLDCs, the main aim is to scrap import charges on these goods so as to make them
more competitive on the Community market. Community importers will therefore no
longer have to pay customs duties on the products they import from the LLDCs
which should encourage them to import more from these countries, which are the
poorest in the world, and thus contribute to their development.

The proposal does not concern a specific region of the Community.

Since the proposal is likely to result in increased trade, it should have a positive
impact on employment, investment, business creation and business competitiveness.

IMPACT ON TRADE

An evaluation of the Commission proposal has two different dimensions: the likely
immediate effects of the proposal on EU imports originating in the Least Developed
Countries (LLDCs) and its long-term, dynamic effects. In order to try and measure
the first dimension, the value of present imports is the most relevant data. However,
as concerns the second dimension, the present level of tariff protection is the crucial
one.

Indeed, the immediate effect of freeing the import of a product, which has to pay a
duty or is limited by a tariff quota until now, is the value of the present imports.
However, in eliminating duties for products where no imports are registered today,
i.e. because of very high tariffs imposed, the dynamic effects of the elimination of

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duties, i.e. the stimulation to produce and export a product until now not attractive
enough, are of paramount importance.

the Community imported goods

In 1998,
a value of
EUR 8 715 million (USD 8.7 billion). The total import value of the products covered
by the Commission proposal is about EUR 77.7 million. This modest amount is
mostly explained by the fact that the overwhelming part of EU imports from the
LLDC already enters duty-free.

from LLDCs

for

The main impact of the liberalisation will fall on imports presently partially
liberalised, since imports of products excluded up until now only represent EUR 1.6
million. This means that the total figure of EUR 77.7 million is to be considered as a
maximum benchmark since a good part of the imports receive already some tariff
reduction or are even free inside tariff quotas.

The vast majority of the tariff lines proposed for duty free status are of non-traded
products. If this absence of trade is compared with the present rate of protection for
the products affected the conclusion is that absence of imports is most probably due
to the high import protection, which will be eliminated following the proposal. This
points to the other aspect of the proposal: its dynamic, long-term effect on spurring
trade on new products for the LLDCs.

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