Proposal for Council Decision amending Council Decision 89/688/EEC of 22 December 1989 concerning the dock dues in the French overseas departments
Date: 2002-08-23
Institutions: European Commission
Subjects: French overseas department and region, import tax, local tax, tax system

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23.8.2002
COM(2002) 473 final

2002/0209 (CNS)

Proposal for

COUNCIL DECISION

amending Council Decision 89/688/EEC of 22 December 1989 concerning the dock dues
in the French overseas departments

(presented by the Commission)

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EXPLANATORY MEMORANDUM

Article 2(3) of Council Decision 89/688/EEC of 22 December 1989 concerning the
dock dues in the French overseas departments1 states that partial or total exemptions
from the charge may be authorised for local production activities for a period of not
more than ten years from the date of introduction of the system. This period expires
on 31 December 2002 as the system was introduced on 1 January 1993 under Law
No 92-676 of 17 July 19922
transposing Council Decision 89/688/EEC of
22 December 1989 into French law.

Article 299(2) of the Treaty establishing the European Community which came into
force on 1 May 1999 replaces Article 227(2) on which the 1989 Council Decision
was based. This forms the legal framework for the European Union's outermost
regions under which measures can be taken to offset their permanent handicaps. On
14 March 2000 the Commission adopted a report on measures to implement
Article 299(2) of the EC Treaty for the outermost regions.3 The report states that
Article 299(2) authorises special tax measures to help the outermost regions provided
the requests submitted are justified by the disadvantages these regions suffer. Future
tax measures for such regions have to be assessed on the basis of detailed requests
from the Member States in question.

On 24 November 1999 the Commission also presented a report to the Council under
Article 3 of Council Decision 89/688/EEC,4 in which it assesses the Community
system of dock fees since its introduction. It concludes that the four French overseas
departments are in a much more fragile economic and social situation compared with
the rest of the European Union by virtue of being outermost
regions. The
Commission underlines the importance of dock dues and exemptions for local
production. It concludes that dock dues provide local authorities with a way of
helping threatened sectors survive in an unfavourable economic environment and
with resources to support the economic and social development of each region, as an
adjunct to Community policies, and to maintain a certain level of education and
health. However, in the same report the Commission draws attention to the criteria
laid down by the European Court of Justice for exemptions from dock dues which
must be necessary, proportionate and precisely determined.

On 12 March 2002 France sent a detailed request to the European Commission to
extend the system of dock dues for ten years.

Having examined this request the Commission considers that the exact nature of the
exemptions which will apply when the current system comes to an end needs to be
defined so that the Commission can assess whether they are proportionate and
necessary, and determine whether the condition laid down by Article 299(2) of the
EC Treaty is satisfied. This requires that measures adopted under this system must
not undermine the integrity or coherence of the Community legal order including the
internal market and common policies. Additional information must be provided by

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OJ L 399, 30.12.1989, p. 46.
French Offical Journal, 19.7.2002, p. 9697.
COM(2000) 147 final.
COM(1999) 621 final.

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the French authorities and assessed by the Commission before a long-term system
can be introduced.

However it is essential that continuity is maintained in the special tax arrangements
in the overseas departments where there is still a huge structural deficit in structural
development. The factors and phenomena exacerbating this situation and their
combined effect have a serious impact on these departments' economic and social
development. This lack of development is demonstrated by average GDP levels
which are still less than 50% of the Community average and sustained rates of
unemployment in a population which is largely very young which are among the
highest
the continuing
existence of these handicaps recognised by Article 299(2) of the EC Treaty is still a
serious obstacle to their development and justifies the maintenance of measures to
help offset these handicaps.

in the European Union. These indicators confirm that

Local production must be maintained and developed to offset these handicaps. The
remoteness of these regions from their external suppliers and markets creates
additional costs for local producers. The fragility of the economic fabric of these
regions is also exacerbated by the very small size of their markets and businesses and
the lack of diversification in production. Output is also less than the average output
of other French departments owing to the lack of industrial equipment and labour
skills. These departments' regional environment is another factor in the weakness of
their business competitiveness owing to their geographical position in the developing
regions. They are poor but are highly competitive in terms of production costs and
relatively closed to imports.

Exemptions from dock dues are a means of supporting local production. They must
therefore be continued, as underlined in the Commission's report of 14 March 2000,
the European Parliament resolution of 25 October 20005 and more recently by
paragraph 59 of the conclusions of the Seville European Council on 22 and 23 June
this year.

is therefore concluded that

It
the effects of Article 2(3) of Council Decision
89/688/EEC authorising exemptions from dock duties for local production activities
in the French overseas departmentss should be temporarily extended from
1 January 2003 for a short period of one year. It should be noted that the provisions
of this decision apply do not affect the application of Articles 87 and 88 of the EC
Treaty.

Comments on the articles

Article 1

This extends for a short period of one year the period laid down by Council Decision
89/688/EEC during which exemptions from dock dues may be authorised for local
producers in the French overseas territories.

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OJ C 197, 12.7.2001, p.197.

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Article 2

This provision sets the date from which the decision becomes applicable. This is
1 January 2003 to ensure continuity is maintained.

Article 3

This provision identifies the party to whom the decision is addressed.

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2002/0209 (CNS)

Proposal for

COUNCIL DECISION

amending Council Decision 89/688/EEC of 22 December 1989 concerning the dock dues
in the French overseas departments

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Economic Community, and in
particular the second subparagraph of Article 299(2),

Having regard to the proposal from the Commission6,

Having regard to the opinion of the European Parliament7,

Whereas:

(1)

(2)

(3)

Article 2(3) of Council Decision 89/688/EEC of 22 December 1989 concerning the
dock dues in the French overseas departments states that in the light of the special
constraints on the French overseas departments partial or total exemptions from the
charge may be authorised for local production activities for a period of not more than
ten years from the date of introduction of the system of charges. This period expires on
31 December 2002 having been introduced on 1 January 1993 under the French Law
of 17 July 1992.

Article 3 of the Decision requires the Commission to submit a report on the
implementation of the arrangements in order to ascertain the impact of the measures
taken and whether exemptions should be maintained. In the report it presented to the
Council on 24 November 19998, the Commission concludes that
the four French
overseas departments are in a much more fragile economic and social situation than
the rest of the Community because of their outlying geographical position and
underlines the importance of the dock dues and exemptions from this charge for local
production for these regions' social and economic development.

According to the Commission report of 14 March 2000 on measures to implement
Article 299(2) of the Treaty9, this Article which replaced Article 227 under the
Amsterdam Treaty must be implemented in partnership with the Member States
concerned on the basis of detailed requests from them.

(4)

On 12 March 2002 France sent a detailed request to the Commission to extend
exemptions from dock dues for a period of ten years.

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OJ C …, …, p. …
OJ C …, …, p. …
COM(1999) 621 final.
COM(2000) 147 final.

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(5)

(6)

(7)

(8)

(9)

(10)

The Commission has examined this request and considers that further details of the
content of the exemptions which will apply when the current arrangements come to an
end are required. Additional information must be provided by the French authorities
and evaluated by the Commission before long-term arrangements can be drawn up.

However it is essential to maintain continuity in the special tax arrangements for the
overseas departments.

in the French overseas departments'
There is still a serious structural deficit
development. The factors and phenomena exacerbating this situation and their
combined effect have a serious impact on these departments' economic and social
development. This is demonstrated by average GDP levels which are still less than
50% of the Community average and sustained rates of unemployment in a population
which is largely very young which are among the highest in the Community. These
indicators confirm that the continuing existence of these handicaps recognised by
Article 299(2) of the Treaty is a serious obstacle to their development and justifies
maintenance of measures to help offset these handicaps.

Local production must be maintained and developed to offset these handicaps. The
remoteness and isolation of these regions from external suppliers and markets
increases costs for local producers. The weakness of the economy is also exacerbated
by the very small size of markets and businesses and the lack of diversification in
production. Output is less than the average output in other French departments because
of the lack of industrial equipment and skilled labour. These departments' regional
environment is another factor in the lack of business competitiveness owing to their
geographical position in developing regions. They are poor but highly competitive in
terms of production costs and relatively closed to imports.

Exemptions from dock dues are a way of supporting local production and must
therefore be continued.

For the reasons set out above Decision 89/688/EEC should be extended for a short
period.

(11) Decision 89/688/EEC is therefore amended to this effect.

(12)

This Decision shall not affect the application of Articles 87 and 88 of the Treaty,

HAS ADOPTED THIS DECISION:

The expression "for a period of not more than ten years" in Article 2(3) of Decision
89/688/EEC is replaced by "for a period not exceeding eleven years".

Article 1

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This Decision shall apply from 1 January 2003.

Article 2

Article 3

This Decision is addressed to the French Republic.

Done at Brussels,

For the Council
President

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FINANCIAL STATEMENT

BUDGET HEADING:

DATE: 2002
APPROPRIATIONS:

TITLE OF MEASURE:
Proposal for Council Decision amending Council Decision 89/688/EEC of 22 December 1989
concerning the dock dues in the French overseas departments
LEGAL BASIS:
Article 299(2) of the EC Treaty
OBJECTIVES:
To extend the period under which exemptions from dock dues are authorised
FINANCIAL IMPACT:
No financial impact

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