Proposal for a Council Decision on the conclusion of an Agreement in the form of an Exchange of Letters between the European Community and the Republic of South Africa on trade in wines
Date: 2001-12-10
Institutions: European Commission
Subjects: South Africa, originating product, tariff quota, trade agreement (EU), wine

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 10.12.2001
COM(2001) 759 final

2001/0290 (ACC)

Proposal for a

COUNCIL DECISION

on the conclusion of an Agreement in the form of an Exchange of Letters between
the European Community and the Republic of South Africa on trade in wines

(presented by the Commission)

A.

1.

2.

3.

EXPLANATORY MEMORANDUM

BACKGROUND

Under the negotiating directives approved by the Council on 19 June 1995 and
25 March 1996 on the Trade, Development and Cooperation Agreement between the
Community and South Africa (hereinafter referred to as the TDC Agreement)1, the
to
Commission negotiated two sectoral agreements, on wines and on spirits,
reciprocally facilitate and promote trade in wines and spirits between the two Parties.
The Commission has been carrying on these negotiations since 1995 in close
collaboration with the Council, in accordance with Article 133 of the Treaty. These
Agreements are subject to a separate decision to be taken by the Council.

The conclusion of these agreements is foreseen in the Exchange of Letters in Annex
X to the TDC Agreement.

The Commission and South Africa concluded negotiations on 25 July 2001 in
Pretoria where representatives of the Commission and South Africa agreed ad
referendum on all important outstanding issues, in particular:

–

–

–

–

–

–

on phasing-out of conflictual trademarks along the lines of the compromise
negotiated in June 2000;

on 1 January 2000 as starting date for the Port/Sherry commitment;

to extend the scope of the Agreement on wines from South Africa which are
blends between South African wines and wines of other geographical origins
provided the percentage of the latter does not exceed 15 % and on the condition
of an appropriate labelling. These blends are excluded from the benefit of tariff
concessions;

on adjusting the volume of the duty free tariff quota for South African wines
imported in bottles by replacing the amount of the tariff quota with the baseline
quota of 35,3 million litres of wine, and by introducing a temporarily increased
tariff quota of 42,02 million of litres of bottled non-sparkling wine for the years
2002 through 2011.

on the use of the EUR 15 million set aside for restructuring the South African
Wine and Spirit industry on the basis of a mutually agreed programme;

on 1 January 2002 as date for entry into force of the Wine and Spirit
agreements.

4.

This tentative agreement therefore requires an amendment to Annex IV, list 6 and to
Annex X of the TDC Agreement in order to adjust the volume of the tariff quota for
wine. To this end, the Commission presents a proposal to the Council without delay
and simultaneously with the proposals for the Wine and Spirits Agreements in order
for the all of the points agreed on 25 July 2001 to enter into force on 1 January 2002.

1

OJ No L 311; 4.12.1999, p. 3

2

B.

5.

6.

C.

7.

CONTENT OF THE PROPOSAL

As part and parcel of the implementation of the Memorandum of Understanding the
proposal aims at adjusting the tariff quota for South African wine imported in bottles.
The proposal concerns an agreement in the form of an Exchange of Letters between
he European Community and the Republic of South Africa, amending Annexes IV
and X to the TDC Agreement.

The proposed Agreement in the form of an Exchange of Letters amends Annexes IV
and X to the TDC Agreement in that it adjusts the volume of the tariff quota for
South African wine imported in bottles. The volume will be raised by 5% from
1 January 2000 to a level of 336 000 hectolitres and by a further 5% from 1 January
2002 to a level of 353 000 hectolitres. In order to compensate for the fact that the
quota has not opened in 2000 and in 2001, the corresponding volume of 672 000
hectolitres of wine (two quota volumes of 336 000 hectolitres each for the two years
concerned) will be added to the baseline quota over a period of 10 years starting on
1 January 2002. Until 31 December 2011 the quota will thus be increased by 67 200
hectolitres annually reaching an amount of 420 200 hectolitres.

CONCLUSIONS

The Commission regards the overall results of the negotiations for the Wine and
Spirits Agreements as acceptable to the Community. Consequently, it proposes that
the Council adopt the Agreement in the form of an Exchange of Letters adjusting the
tariff quota for South African wine imported in bottles.

3

2001/0290 (ACC)

Proposal for a

COUNCIL DECISION

on the conclusion of an Agreement in the form of an Exchange of Letters between
the European Community and the Republic of South Africa on trade in wines

THE COUNCIL OF THE EUROPEAN UNION,

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

Having regard to the proposal of the Commission,

Whereas:

(1)

(2)

(3)

(4)

The Council has decided by Decision 199/753/(EC)2 that the Trade, Development and
Cooperation Agreement between the European Community and the Republic of South
Africa hereinafter referred to as “the Agreement”, enters into force provisionally on
1 January 2000.

Annex X of the Agreement contains an Exchange of Letters between the European
Community and the Republic of South Africa, which provides for an annual duty-free
tariff quota of 32 million litres of South African wine imported in bottles. This tariff
quota is included in list 6 of Annex IV to the TDCA.

The Commission, on behalf of the Community, has negotiated with the Republic of
South Africa an agreement on trade in wines.

The conclusions of these negotiations call for an adjustment of the tariff quota
mentioned in the TDC Agreement.

(5)

The Agreement in the form of an Exchange of Letters should therefore be approved.

HAS DECIDED AS FOLLOWS:

Article 1

The Agreement in the form of an Exchange of Letters between the European Community and
the Republic of South Africa in relation to trade in wines is hereby approved on behalf of the
Community.

The text of the Agreement in the form of an Exchange of Letters is attached to this Decision.

2

OJ No L 311; 4.12.1999, p. 1

4

The President of the Council is authorised to designate the person empowered to sign the
agreement in order to express the consent of the Community to be bound thereby.

Article 2

Article 3

This Decision shall be published in the Official Journal of the European Communities.

Done at Brussels,

For the Council
The President

5

ANNEX

- DRAFT

AGREEMENT

in the form of an Exchange of Letters between the European Community
and the Republic of South Africa on trade in wine

6

A. Letter from the Community

Sir,

I refer to the Agreement on the trade in Wine signed on ………… and to the Trade,
Development and Cooperation Agreement between the European Community and the
Republic of South Africa.

In accordance with the understanding reached "ad referendum" on 25 July last, concluding the
negotiations for the Wine and Spirits Agreements, the Trade, Development and Cooperation
Agreement between the European Community and the Republic of South Africa shall be
amended as follows:

1. -

The last section of list 6 of Annex IV to the Trade, Cooperation and Development
Agreement shall read as follows:

Wine of fresh grapes, including fortified wines

}Global wine 35,3 million l; duty free; agf 3%

2204 21 79 (11) (13)
2204 21 80 (11) (13)
2204 21 83 (11) (13)
2204 21 84 (11) (13)

(13)

For each of the years 2002 through 2011 a set volume of 6,72 million litres will be added to the
basic annual wine quota. The annual growth factor will apply from 2003 to the basic quota of
35,3 million litres only.

2. -

The wording of point 5 of the attachment to our Exchange of Letters of 11 October
1999 in relation to the Wines and Spirits Agreement (Annex X to the TDC
Agreement, shall be replaced with the following:

“From the entry into force of the Agreement, the European Community will provide
a duty free quota for bottled wines of 33,6 million litres; this amount will be adjusted
by 5% to a total of 35,3 million litres from 1 January 2002. However, in order to
compensate for the fact that the quota was not opened in 2000 and 2001, the
corresponding amount of 67,2 million litres will be added to the quota over a period
of ten years, raising the total annual volume to 42,02 million litres for the years 2002
through 2011.”

3. –

The above amendments will enter into force on 1 January 2002.

I should be obliged if you would acknowledge receipt of this letter and confirm that this letter
and your reply constitute an Agreement between the Republic of South Africa and the
Community.

Please accept, Sir, the assurance of my highest consideration,

Brussels,

On behalf of the Council of the European Union

7

B. Letter from the Government of the Republic of South Africa

Sir,

I have the honour to acknowledge receipt of your letter of today, which reads as follows:

“I refer to the Agreement on the trade in Wine signed on ………… and to the Trade,
Development and Cooperation Agreement between the European Community and the
Republic of South Africa.

In accordance with the understanding reached "ad referendum" on 25 July last, concluding the
negotiations for the Wine and Spirits Agreements, the Trade, Development and Cooperation
Agreement between the European Community and the Republic of South Africa shall be
amended as follows:

1. -

The last section of list 6 of Annex IV to the Trade, Cooperation and Development
Agreement shall read as follows:

Wine of fresh grapes, including fortified wines

}Global wine 35.3 million l; duty free; agf 3%

2204 21 79 (11) (13)
2204 21 80 (11) (13)
2204 21 83 (11) (13)
2204 21 84 (11) (13)

(13)

For each of the years 2002 through 2011 a set volume of 6,72 million litres will be added to the
basic annual wine quota. The annual growth factor will apply from 2003 to basic quota of
35,3 million litres only.

2. -

The wording of point 5 of the attachment to our Exchange of Letters of 11 October
1999 in relation to the Wines and Spirits Agreement (Annex X to the TDC
Agreement, shall be replaced with the following:

“From the entry into force of the Agreement, the European Community will provide
a duty free quota for bottled wines of 33,6 million litres; this amount will be adjusted
by 5% to a total of 35,3 million litres from 1 January 2002. However, in order to
compensate for the fact that the quota was not opened in 2000 and 2001, the
corresponding amount of 67,2 million litres will be added to the quota over a period
of ten years, raising the total annual volume to 42,02 million litres for the years 2002
through 2011.”

3. –

The above amendments will enter into force on 1 January 2002.

I should be obliged if you would acknowledge receipt of this letter and confirm that this letter
and your reply constitute an Agreement between the Republic of South Africa and the
Community."

I have the honour to confirm the agreement of my government with the foregoing.

Please accept, Sir, the assurance of my highest consideration,

For the government of the Republic of South Africa

8

FINANCIAL STATEMENT

1.

2.

4.

BUDGET HEADING:
Chapter 10 – Agricultural duties

APPROPRIATIONS:
EUR 1 121,7 million

TITLE:
Council Decision on the conclusion of an Agreement in the form of an Exchange of Letters between the
European Community and the Republic of South Africa on trade in wine.

LEGAL BASIS:
Article 133 of the Treaty

AIMS:
To create favourable conditions for the harmonious development of trade and for the promotion of
mutual cooperation in the wine sector on the basis of equality, reciprocity and mutual benefit.

5.

FINANCIAL IMPLICATIONS

12 MONTH
PERIOD

(EUR million)

CURRENT
FINANCIAL
YEAR 2002
(EUR million)

FOLLOWING
FINANCIAL
YEAR 2003
(EUR million)

5.0

5.1

CHARGED TO THE EC BUDGET

EXPENDITURE
-
(REFUNDS/INTERVENTIONS)
-
-

NATIONAL AUTHORITIES
OTHER

REVENUE
-
(LEVIES/CUSTOMS DUTIES)

OWN RESOURCES OF THE EC

NATIONAL

5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE

5.2 METHOD OF CALCULATION:

-

-

-

-

-0,832

-0,842

2004

2005

2006

2007

-0,852

-0,863

-0,873

-0,883

[Weighted average of import duties on the four positions of bottled wine (EUR 13,698/hl), multiplied by
the increase of the duty free quota over the initial quota agreed upon in the Trade Development and
Cooperation Agreement between South Africa and the European Community and its Member States;
reduced by cost (of 25%) charged by the national customs for collecting the duty].

6.0

6.1

CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE
RELEVANT CHAPTER OF THE CURRENT BUDGET?

CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF
THE CURRENT BUDGET?

6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY?

6.3 WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS?

YES

YES

NO

NO

OBSERVATIONS:

This Decision has no direct financial impact on the Community budget.

9