Proposal for a Council Decision on a Community position within the Joint Committee on the introduction of Article 20a "Accounting segregation" in Protocol 3, concerning the definition of the concept 'of originating products' and methods of administrative cooperation, set out in the Agreement between the European Community, of the one part, and the Government of Denmark and the Home Government of the Faroe Islands, of the other part.
Date: 2001-11-07
Institutions: European Commission
Subjects: Denmark, Faroes, administrative cooperation, national accounts, originating product, stock, trade agreement

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 07.11.2001
COM(2001) 633 final

2001/0263 (ACC)

Proposal for a

COUNCIL DECISION

on a Community position within the Joint Committee on the introduction of Article 20a
“Accounting segregation” in Protocol 3, concerning the definition of the concept ‘of
originating products’ and methods of administrative cooperation, set out in the
Agreement between the European Community, of the one part, and the Government of
Denmark and the Home Government of the Faroe Islands, of the other part.

(presented by the Commission)

1.

2.

3.

4.

EXPLANATORY MEMORANDUM

Rules of origin are essential to the correct functioning of the agreements between the
Community and its trading partners. The European Community, of the one part, and
the Government of Denmark and the Home Government of the Faroe Islands, of the
other part, have signed a new Agreement on 6 December 1996. The said Agreement
has entered into force on 1 January 1997.

Protocol 3 concerning the definition of the concept of ‘originating products’ and
methods of administrative cooperation has been adopted together with the Agreement
and has also entered into force on 1 January 1997.

identical originating and non originating materials,

Although the provisions currently applicable do not clearly state so, it is a generally
accepted principle that
to be
incorporated in a product, should be segregated physically. However, considerable
cost or material difficulties in keeping separate stocks may arise, and it is therefore
proposed that under certain conditions customs authorities may authorise the use of
the so-called ‘accounting segregation’ method. The said authorisation may be issued
in response to a written request of the operator concerned and,
in addition, the
competent customs authorities may require for the fulfilment of any condition they
deem appropriate. Such authorities are also empowered to monitor the use made of the
authorisation, as well as to proceed to its possible withdrawal resulting from any
improper use.

Article 20a on “Accounting segregation” has been introduced on 1 January 2001 in the
‘origin Protocols’ annexed to the Agreements in force between the Community and its
Member States and the partner countries in central and eastern Europe, as well as
Slovenia, the Baltic states, the countries members of the EFTA and Turkey (only for
industrial products in the framework of the customs union).

Customs authorities in the Member States of the Community and in the Faroe Islands
have established and developed satisfactory administrative cooperation relations. The
experience acquired in the application of the new provisions with the above-
mentioned partner countries should therefore be extended in the context of the existing
trade relations set out in the Agreement between the Community and Denmark-Faroe
Islands.

is therefore asked to adopt

the annexed proposal for a decision
The Council
concerning the Community position within the EC/Denmark – Faroe Islands Joint
Committee on the insertion of Article 20a on “Accounting Segregation” in Protocol 3
to the Agreement.

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2001/0263 (ACC)

Proposal for a

COUNCIL DECISION

on a Community position within the Joint Committee on the introduction of Article 20a
“Accounting segregation” in Protocol 3, concerning the definition of the concept ‘of
originating products’ and methods of administrative cooperation, set out in the
Agreement between the European Community, of the one part, and the Government of
Denmark and the Home Government of the Faroe Islands, of the other part.

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article
133 in conjunction with Article 300(2), second subparagraph, thereof,

Having regard to the proposal from the Commission,

(1) Whereas Article 34, paragraph 1 of the Agreement between the European Community,
of the one part, and the Government of Denmark and the Home Government of the
Faroe Islands, of the other part, provides that the Joint Committee may amend the
provisions of the Protocols to the Agreement;

HAS DECIDED AS FOLLOWS:

Article 1

The position to be adopted by the Community within the Joint Committee
established by virtue of the Agreement signed on 6 December 19961, on the
introduction of Article 20a “Accounting segregation” in Protocol 3 on the definition
of the concept of ‘originating products’ and methods of administrative cooperation,
set out in the Agreement, is that defined in the attached draft decision of the Joint
Committee.

Done at Brussels,

1 OJ L 53 of 22.2.1997, p. 2

For the Council
The President

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AGREEMENT

between the European Community, of the one part, and the Government of Denmark and the
Home Government of the Faroe Islands, of the other part

DECISION No …/… of the JOINT COMMITTEE

of […]

on the introduction of Article 20a ‘Accounting segregation’ in Protocol 3, concerning the
definition of the concept ‘of originating products’ and methods of administrative
cooperation

THE JOINT COMMITTE,

Having regard to the Agreement between the European Community, of the one part, and the
Government of Denmark and the Home Government of the Faroe Islands, of the other part2,
hereinafter referred to as ‘the Agreement’;

Having regard in particular to Article 34, paragraph 1 of the Agreement,

Whereas:

(1)
The European Community, of the one part, and the Government of Denmark
and the Home Government of the Faroe Islands, of the other part, have signed an
Agreement on 6 December 1996 and whereas Protocol 3 concerning the definition of
the concept of ‘originating products’ and methods of administrative cooperation set
out in the Agreement has entered into force on 1 January 1997.

In the context of trade relations established on the basis of the Agreement, the

(2)
need to provide for a system of accounting segregation has arisen.

The ‘accounting segregation’ method may be authorised under certain
(3)
conditions, where considerable cost or material difficulties arise in keeping separate
stocks of identical and interchangeable originating and non-originating materials to be
incorporated into a product for exportation under preferential treatment.

The competent customs authorities may authorise the use of the ‘accounting
(4)
segregation’ method, subject
to the fulfilment of certain conditions and whereas
authorisations are subject to monitoring and they may be withdrawn in the case of
improper use by the competent customs authorities.

2 OJ L 53, 22.2.1997, p. 2

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HAS DECIDED AS FOLLOWS:

Article 1

Protocol 3 on the definition of the concept of ‘originating products’ and methods of
administrative cooperation set out in the Agreement, is hereby amended as follows:

1.

The following article shall be inserted after Article 20:

“Article 20a

Accounting segregation

1.

2.

3.

4.

5.

6.

Where considerable cost or material difficulties arise in keeping separate stocks of
originating and non-originating materials which are identical and interchangeable, the
customs authorities may, at the written request of those concerned, authorise the so-
called "accounting segregation" method to be used for managing such stocks.

This method must be able to ensure that the number of products obtained which could
be considered as "originating" is the same as that which would have been obtained if
there had been physical segregation of the stocks.

The customs authorities may grant such authorisation, subject
deemed appropriate.

to any conditions

This method is recorded and applied on the basis of the general accounting principles
applicable in the country where the product was manufactured.

The beneficiary of this facilitation may issue or apply for proofs of origin, as the case
may be, for the quantity of products which may be considered as originating. At the
request of the customs authorities, the beneficiary shall provide a statement of how the
quantities have been managed.

The customs authorities shall monitor the use made of the authorisation and may
withdraw it at any time whenever the beneficiary makes improper use of the
authorisation in any manner whatsoever or fails to fulfil any of the other conditions
laid down in this Protocol.’

Article 2

This Decision shall enter into force on the day of its adoption and it is applicable on 1 January
2002.

Done at Brussels,

For the Joint Committee
The President

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FINANCIAL STATEMENT

The proposed Joint Committee decision shall have no financial impact on the Community’s
budget, as it only provides for the introduction of an ‘accounting segregation method’, which
may be authorised when certain conditions are fulfilled, while the use of the authorisation is
subject
to monitoring, and where appropriate withdrawals, by the competent customs
authorities.

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