2004/162/EC: Council Decision of 10 February 2004 concerning the dock dues in the French overseas departments and extending the period of validity of Decision 89/688/EEC
Date: 2004-02-10
Institutions: Council of the European Union
Subjects: French overseas department and region, local tax, tax exemption, tax system

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COUNCIL DECISION

of 10 February 2004

concerning the dock dues in the French overseas departments and extending the period of validity
of Decision 89/688/EEC

(2004/162/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 299(2) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas:

(1)

(2)

Pursuant to Article 299(2) of the Treaty, the provisions
of the Treaty apply to the outermost regions and hence
the French overseas departments, taking account of their
structural
social and economic situation, which is
compounded by their remoteness, insularity, small size,
difficult topography and climate, economic dependence
on a few products, the permanence and combination of
which severely restrain their development. This Treaty
provision dovetails with measures adopted previously in
in particular the French
aid of the outermost regions,
overseas departments (DOMs), in Council Decision 89/
687/EEC of 22 December 1989 establishing
a
programme of options specific to the remote and insular
departments
nature
(Poseidom) (2).

overseas

French

the

of

Article 2(3) of Council Decision 89/688/EEC of 22
December 1989 concerning the dock dues in the French
overseas departments (3) states that in the light of the
specific constraints on the overseas departments, partial
or total exemptions from dock dues may be authorised
for local production activities for a period of not more
than 10 years from the date of the introduction of the
charge. This period should have
expired on 31
December 2002 as the system was introduced on 1
January 1993.

(3)

to Article 3 of Decision 89/688/EEC,

Pursuant
the
Commission had to submit a report on the implementa-
the arrangements in order to ascertain the
tion of

(1) Opinion of 15 January 2004 (not yet published in the Official

Journal).

(2) OJ L 399, 30.12.1989, p. 39.
(3) OJ L 399, 30.12.1989, p. 46. Decision as amended by Decision

2002/973/EC (OJ L 337, 31.12.2002, p. 83).

to the Council on 24 November 1999,

impact of the measures adopted and decide whether to
maintain the possibility of exemptions. In the report that
it sent
the
Commission concludes that the four DOMs are in a
situation
much more
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 in terms of the social and economic develop-
ment of these regions.

economic and social

fragile

(4)

(5)

(6)

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

to the
On 12 March 2002 France sent a request
Commission to extend exemptions from dock dues for
10 years. The request did not specify which goods were
to be exempted under the future system or the rate
differentials between local products and imports or the
grounds for these exemptions and rate differentials with
regard to the handicaps of the DOMs. In these circum-
stances, in order to avoid a legal vacuum being created
by the lack of a complete request, the period of applica-
tion of Decision 89/688/EEC was extended by one year
under Decision 2002/973/EC (4).

On 14 April 2003 France sent a further request to the
Commission, in response to the above requirements. In
this request, the French authorities asked for the Council
Decision to apply for a period of 15 years, subject to a
three-yearly review of the need to adjust the scheme.
France sought to apply a scheme of differential taxation
of dock dues enabling goods from outside the DOMs to
be taxed more heavily that products from the DOMs in
question. The differential of 10 percentage points would
apply mainly to basic products and those for which a
balance has been achieved between local and external
production. The 20-point differential would cover
products requiring substantial investment which had an
impact on the cost price of goods manufactured locally
for a limited market. The 30-point differential would
apply mainly to products manufactured by large-scale
enterprises and to products which are extremely vulner-
able to imports from the DOMs' neighbouring countries.

(4) OJ L 337, 13.12.2002, p. 83.

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in Guyana and
The 50-point differential would apply,
Réunion, to alcohol, in particular to rum. The French
request sought additional measures such as permission
not to require payment of dock dues on products manu-
factured locally by enterprises with an annual turnover
of less than EUR 550 000, permission to apply a 15 %
reduction in the taxable amount
to dock dues for
products manufactured locally, and permission for local
authorities to take emergency measures to amend the list
of products covered by a tax differential in respect of
dock dues.

(12)

The combination of these handicaps means, in financial
terms, that the cost price of goods produced locally is
increased, so that without specific measures they could
not compete with those produced elsewhere without
such handicaps, even taking into account the cost of
transporting such goods to the DOMs. If local products
cannot compete it will become impossible to sustain
local production, with harmful consequences in terms of
employment for the inhabitants of the DOMs.

(7)

(8)

The Commission has assessed this request in the light of
the scale of the handicaps affecting industrial production
activities in the DOMs. The main handicaps found to
affect the DOMs are the result of the factors listed in
Article 299(2) of the Treaty: remoteness, insularity, small
size, difficult topography and climate, economic depen-
dence on a few products. From time to time these areas
are also affected by natural phenomena such as cyclones,
volcanic eruptions and earthquakes.

The remoteness of these regions considerably hinders
the free movement of people, goods and services. The
dependence on air and sea transport is compounded by
the fact that these modes of transport are not fully liber-
alised and, as they are less efficient and more costly than
they have a
trans-European networks,
road,
knock-on effect on production costs.

rail or

(9)

Higher production costs are not only due to isolation
but also to raw material and energy dependence, the
obligation to build up stocks and difficulties affecting the
supply of production equipment.

(10)

The small size of the market and the low level of export
activity because of the low purchasing power of the
countries in the region, and the obligation to maintain
diversified but small production lines in order to meet
the requirements of a small market restrict the opportu-
nities for economies of scale. ‘Exporting’ products made
in the DOMs to metropolitan France or
the other
Member States is difficult because transport costs force
up the cost of these products and hence their competi-
tiveness. The weakness of the local market also leads to
overstocking, which again affects firms' competitiveness.

(11)

The need to bring in specialised maintenance teams that
have been properly trained and are capable of inter-
vening swiftly and the virtual impossibility of subcon-
tracting, also raise firms' costs and affect their competi-
tiveness.

(13)

Products from the DOMs face the additional handicap of
having European cost prices which make it hard for
their local products, especially agricultural products, to
compete with those produced in neighbouring countries
where labour costs are very much lower.

(14)

The French request has been considered in the light of
the principle of proportionality in order to ensure that,
overall, the tax differentials which the French authorities
would like to apply will not significantly exceed the
scale of the handicaps faced by local products, in terms
of cost price, compared with external products.

(15)

In the light of these considerations, the Commission
therefore proposes to authorise the implementation of a
tax applicable to a list of products for which tax exemp-
tions or reductions can be envisaged for local products
from the DOMs. The effect of this differentiated taxation
is to restore the competitiveness of local production and
so to enable employment-generating activities to be
maintained in the DOMs. A separate list of products for
each DOM must be drawn up because the local products
from each DOM are different.

(16) However, it is necessary to meet a combination of the
requirements of Article 299(2) and Article 90 of the
Treaty and also to ensure the coherence with Com-
munity law and the internal market. This means only
taking measures that are strictly necessary and propor-
in the light of the
tionate to the objectives pursued,
handicaps of the DOMs' remoteness. The scope of the
Community framework therefore consists of a list of
sensitive products whose local production costs have
been demonstrated to be significantly higher than the
production costs of similar products from elsewhere.
The level of taxation must, however, be modulated so
that the sole purpose of the tax differential in dock dues
is to offset the handicaps and not to turn this tax into a
protectionist weapon that undermines the operating
principles of the internal market.

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(17)

Similarly, coherence with Community law means ruling
out a tax differential
for agricultural products which
benefit from aid under Articles 2 and 3 of Council Regu-
lation (EC) No 1452/2001 of 28 June 2001, introducing
specific measures for certain agricultural products for
the French overseas departments (Poseidom) (1), and in
particular the specific supply arrangements.

(18)

The products which could be entitled to tax exemptions
or reductions in favour of
local production can be
divided into three categories, according to the size of the
tax differential that it is proposed to authorise: 10, 20 or
30 percentage points.

(19) However, it should be possible to exempt local produ-
cers with an annual turnover of less than EUR 550 000
from payment of the tax. For this purpose, where the
products they manufacture are subject only to a tax
reduction, it should be possible to exceed the maximum
differentials authorised. This provision should not,
however, result in an increase of more than five percen-
tage points in the ceilings set.

(20)

(21)

(22)

For the sake of consistency, the planned exemption from
dock dues on locally manufactured products not listed in
the Annex for firms with an annual turnover of less than
EUR 550 000, should be such that the tax differential
for such products depends on whether or not such
products are locally manufactured. As in the previous
case, this tax difference should not exceed five percen-
tage points.

The objectives of supporting the social and economic
development of the DOMs, already provided for in Deci-
sion 89/688/EEC, are confirmed by the requirements
regarding the purpose of the tax. It is a legal obligation
that the revenues from this tax are to be incorporated in
the resources of the DOMs' economic and tax regime
and allocated to an economic and social development
strategy involving aid for promoting local activities.

The importance of updating the lists of products in the
Annex, made necessary by the possible emergence of
new production activities in the DOMs, of safeguarding
local production if it is threatened by certain commercial
practices, and, consequently, of the need to change the
amount of exemptions from or reductions in the dues
applicable mean that the Council itself must be able to
adopt the measures necessary for the application of this
Decision, particularly as such measures may have a
major budgetary impact for the recipients of dock dues
revenue. Furthermore, the need for action concerning

(1) OJ L 198, 21.7.2001, p. 11. Regulation as amended by Regulation

(EC) No 1782/2003 (OJ L 270, 21.10.2003, p. 1).

such measures to be taken as a matter of urgency justi-
fies the Council's adopting the relevant provisions in
accordance with an accelerated procedure, acting by
qualified majority on a Commission proposal.

(23)

France should notify the Commission of any arrange-
ment adopted in the light of this Decision.

(24)

(25)

The arrangements are set to last for 10 years. It will
nevertheless be necessary to evaluate the proposed
system at the end of a five-year period. The French
to the
authorities should therefore present a report
Commission by 31 July 2008 on the application of the
arrangements authorised, in order to assess the impact
of
contribution to
taken and their
promoting or maintaining local economic activities, in
the light of the handicaps affecting the DOMs. On this
basis, the lists of products and the authorised exemption
will be revised as necessary.

the measures

to enable the French authorities

To ensure continuity with the arrangements provided for
in Decisions 89/688/EEC and 2002/973/EC this Deci-
in
sion should apply from 1 January 2004. However,
order
to adopt a
national law in order to implement this Decision, it is
proposed that the provisions of the Decision concerning
the products entitled to a tax differential and the adop-
tion of the measures necessary for the implementation
of the Decision should take effect on 1 August 2004,
and to avoid any sort of legal vacuum, the application of
Decision 89/688/EEC should be extended until 31 July
2004,

HAS ADOPTED THIS DECISION:

Article 1

1.
By way of derogation from Articles 23, 25 and 90 of the
Treaty, the French authorities shall be authorised, until 1 July
2014, to apply exemptions or reductions to the dock dues tax
for the products listed in the Annex which are produced locally
in the French overseas departments of Guadeloupe, Guyana,
Martinique and Réunion.

These exemptions or reductions must be in keeping with the
economic and social development strategy of the DOMs, taking
account of
its Community framework, and contribute to
promoting local activities while not being such as to adversely
affect the terms of trade to an extent contrary to the common
interest.

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2. With reference to the rate of taxation applied to similar
products not originating in the DOMs, the application of the
exemptions or reductions referred to in paragraph 1 may not
result in differences of more than:

(a) 10 percentage points for the products listed in part A of

the Annex;

(b) 20 percentage points for the products listed in part B of

the Annex;

(c) 30 percentage points for the products listed in part C of

the Annex.

In order

3.
to allow the French authorities to exempt
products produced locally by a trader with a turnover of less
than EUR 550 000, the differentials provided for in paragraph
2 may be increased by a maximum of five percentage points.

4.
For products not listed in the Annex which are produced
locally by a trader referred to in paragraph 3, the French autho-
rities may nonetheless apply a difference in taxation in order to
exempt them. This shall not, however, exceed five percentage
points.

Article 2

The French authorities shall apply the same taxation arrange-
ments as
those applied to products produced locally to
products that have benefited from the specific supply arrange-
ments under Articles 2 and 3 of Regulation (EC) No 1452/
2001.

Article 3

The Council, acting by qualified majority on a proposal from
the Commission, shall adopt the measures necessary for the
application of this Decision with regard to the updating of the
lists of products in the Annex because of the emergence of new
production in the DOMs and the taking of urgent measures if
local production is threatened by certain commercial practices.

Article 4

France shall immediately notify the Commission of the taxation
arrangements referred to in Article 1.

The French authorities shall present to the Commission by 31
July 2008 a report on the application of the taxation arrange-
ments referred to in Article 1, in order to check the impact of
the measures taken and their contribution to the promotion or
maintenance of local economic activities,
in the light of the
handicaps affecting the outermost regions.

On the basis of this report, the Commission shall present a
report to the Council giving a full economic and social analysis,
and where appropriate a proposal for adapting the provisions
of this Decision.

Article 5

Articles 1 to 4 shall be applicable as from 1 August 2004.

Article 6 shall be applicable as from 1 January 2004.

Article 6

The period of validity of Decision 89/688/EEC is hereby
extended to 31 July 2004.

This Decision is addressed to the French Republic.

Article 7

Done at Brussels, 10 February 2004.

For the Council

The President

C. McCREEVY

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ANNEX

A. List of products referred to in Article 1(2)(a) according to the classification of the Common Customs Tariff
nomenclature (1)

1. De pa rtme nt of Gu adelou pe

0105, 0201, 0203, 0205, 0207, 0208, 0209, 0305 except 0305 10, 0403, 0405, 0406, 08 except 0807, 1106,
2001, 2005, 2103, 2104, 2209, 2302, 2505, 2710, 2711 12, 2711 13, 2712, 2804, 2806, 2811, 2814, 2836,
2851 00, 2907, 3204, 3205, 3206, 3207, 3211 00 00, 3212, 3213, 3214, 3215, 3808, 3809, 3925 except
3925 10 00, 3925 20 00, 3925 30 00 and 3925 90, 4012, 4407 10, 4409 except 4409 20, 4415 20, 4818 except
4818 10, 4818 20 and 4818 30, 4820, 7003, 7006 00, 7225, 7309 00, 7310, 7616 91 00, 7616 99, 8419 19 00,
8471, 8902 00 18 and 8903 99.

2. De pa rtme nt of Gu y a na

3824 50 and 6810 11.

3. De pa rtme nt of Ma r ti ni qu e

0105, 0201, 0203, 0205, 0207, 0208, 0209, 0305, 0403 except 0403 10, 0406, 0706 10 00, 0707, 0709 60,
0709 90, 0710, 0711, 08 except 0807, 1106, 1209, 1212, 1904, 2001, 2005, 2103, 2104, 2209, 2302,
2505 10 00, 2505 90 00, 2710, 2711 12, 2711 13, 2712, 2804, 2806, 2811, 2814, 2836, 2851 00, 2907, 3204,
3205, 3206, 3207, 3211 00 00, 3212, 3213, 3214, 3215, 3808 90, 3809 91, 3820 00 00, 4012, 4401, 4407,
4408, 4409, 4415 20, 4418 except 4418 10, 4418 20, 4418 30, 4418 50 and 4418 90, 4421 90, 4811, 4820,
6902, 6904 10 00, 7003, 7006 00, 7225, 7309 00, 7310, 7616 91 00, 7616 99, 8402 90 00, 8419 19 00, 8438,
8471 and 8903 99.

4. De pa rtme nt of R é un i on

0105, 0207, 0208, 0209, 0301, 0302, 0303, 0304, 0305, 0403, 0405, 0406, 0407, 0408, 0601, 0602, 0710,
0711, 08, 0904, 0905 00 00, 0910 91, 1106, 1212, 1604 14, 1604 19, 1604 20, 1701, 1702, 1902 except
1902 11 00, 1902 19, 1902 20, 1902 30 and 1902 40, 1904, 2001, 2005 except 2005 51, 2006, 2007, 2103,
2104, 2201, 2309, 2710, 2712, 3211 00 00, 3214, 3402, 3505, 3506, 3705 10 00, 3705 90 00, 3804 00, 3808,
3809, 3811 90, 3814 00, 3820, 3824, 39 except 3917, 3919, 3920, 3921 90 60, 3923, 3925 20 00 and
3925 30 00, 4009, 4010, 4016, 4407 10, 4409 except 4409 20, 4415 20, 4421, 4806 40 90, 4811, 4818 except
4818 10, 4820, 6306, 6809, 6811 90 00, 7009, 7312 90, 7314 except 7314 20, 7314 39 00, 7314 41 90,
7314 49 and 7314 50 00, 7606, 8310, 8418, 8421, 8471, 8537, 8706, 8707, 8708, 8902 00 18, 8903 99, 9001,
9021 29 00, 9405, 9406 except 9406 00 and 9506.

B. List of products referred to in Article 1(2)(b) according to the classification of the Common Customs Tariff
nomenclature (1)

1. De pa rtme nt of Gu adelou pe

0210, 0301, 0302, 0303, 0304, 0305 10, 0306, 0307, 0407, 0409 00 00, 0601, 0602, 0603, 0604, 0702, 0705,
0706 10 00, 0707 00, 0709 60, 0709 90, 0807, 1008 90 90, 1601, 1602, 1604 20, 1605, 1702, 1704, 1806,
1902, 1905, 2105 00, 2201 10, 2202 10 00, 2202 90, 2309, 2523 21 00, 2523 29 00, 2828 10 00, 2828 90 00,
3101 00 00, 3102, 3103, 3104, 3105, 3301, 3302, 3305, 3401, 3402, 3406 00, 3917, 3919, 3920, 3923, 3924,
3925 10 00, 3925 20 00, 3925 30 00, 3925 90, 3926 10 00, 3926 90, 4409 20, 4418, 4818 10, 4818 20,
4818 30, 4819, 4821, 4823, 4907 00 90, 4909 00, 4910 00 00, 4911 10, 6306, 6805, 6810, 6811 90 00, 7213,
7214, 7217, 7308, 7314, 7610 10 00, 7610 90 90, 9401, 9403, 9404 and 9406.

2. De pa rtme nt of Gu y a na

0303 79, 0306 13, 0403 10, 1006 20, 1006 30, 2009 80, 2202 10, 2309 90, 2505 10 00, 2517 10, 2523 21 00,
3208 20, 3209 10, 3917, 3923, 3925, 7308 90 and 7610 90.

3. De pa rtme nt of Ma r ti ni qu e

0210, 0302, 0303, 0304, 0306, 0307, 0403 10, 0405, 0407, 0409 00 00, 0601, 0602, 0603, 0604, 0702, 0705,
0807, 1008 90 90, 1102, 1601, 1602, 1604 20, 1605, 1702, 1704, 1806, 1902, 2105 00, 2106, 2201,
2202 10 00, 2202 90, 2309, 2523 21 00, 2523 29 00, 2828 10 00, 2828 90 00, 3101 00 00, 3102, 3103, 3104,
3105, 3301, 3302, 3305, 3401, 3402, 3406 00, 3808 except 3808 90, 3809 except 3809 91, 3820 except
3820 00 00, 3917, 3919, 3920, 3923, 3924, 3925, 3926, 4418 10, 4418 20, 4418 30, 4418 50 and 4418 90,
4818, 4819, 4821, 4823, 4907 00 90, 4909 00, 4910 00 00, 4911 10, 6103, 6104, 6105, 6107, 6203, 6204,
6205, 6207, 6208, 6306, 6805, 6810, 6811 90 00, 7213, 7214, 7217, 7308, 7314, 7610, 9401, 9403, 9404,
9405 60 and 9406.

(1) Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common
Customs Tariff (OJ L 256, 7.9.1987, p. 1). Regulation as last amended by Commission Regulation (EC) No 2344/2003 (OJ L 346,
31.12.2003, p. 38).

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4. De pa rtme nt of R é un i on

0306, 0307, 0409 00 00, 0603, 0604, 0709 60, 0901 21 00, 0901 22 00, 0910 10 00, 0910 30 00, 1507 90,
1508 90, 1510 00 90, 1512 19, 1515 29, 1516, 1601, 1602, 1605, 1704, 1806, 1901, 1902 11 00, 1902 19,
1902 20, 1902 30, 1902 40, 1905, 2005 51, 2008, 2105 00, 2106, 2828 10 00, 2828 90 00, 3208, 3209, 3210,
3212, 3301, 3305, 3401, 3917, 3919, 3920, 3921 90 60, 3923, 3925 20 00, 3925 30 00, 4012, 4418, 4818 10,
4819, 4821, 4823, 4907 00 90, 4909 00, 4910 00 00, 4911 10, 4911 91, 7308, 7309 00, 7310, 7314 20,
7314 39 00, 7314 41 90, 7314 49, 7314 50 00, 7326, 7608, 7610, 7616, 8419 19 00, 8528, 9401, 9403, 9404
and 9406 00.

C. List of products referred to in Article 1(2)(c) according to the classification of the Common Customs Tariff
nomenclature (1)

1. De pa rtme nt of Gu adelou pe

0901 11 00, 0901 12 00, 0901 21 00, 0901 22 00, 1006 30, 1006 40 00, 1101 00, 1517 10, 1701, 1901, 2006,
2007, 2009, 2106, 2203 00, 2208 40, 2517 10, 3208, 3209, 3210, 3705 10 00, 3705 90 00, 7009 91 00,
7009 92 00, 7015 10 00, 7113, 7114, 7115, 7117, 9001 40, 2208 70 (2) and 2208 90 (2).

2. De pa rtme nt of Gu y a na

2208 40, 4403 49 and 4407 29.

3. De pa rtme nt of Ma r ti ni qu e

0901 11 00, 0901 21 00, 0901 22 00, 1006 30, 1006 40 00, 1101 00, 1517 10, 1701, 1901, 1905, 2006, 2007,
2008, 2009, 2203 00, 2208 40, 2517 10, 3208, 3209, 3210, 7009, 7015 10 00, 7113, 7114, 7115, 7117,
9001 40, 2208 70 (2) and 2208 90 (2).

4. De pa rtme nt of R é un i on

2009, 2202 10 00, 2202 90, 2203 00, 2204 21, 2206 00, 2208 40, 2402 20, 2403, 7113, 7114, 7115, 7117,
8521, 2208 70 (2) and 2208 90 (2).

(1) Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common
Customs Tariff (OJ L 256, 7.9.1987, p. 1). Regulation as last amended by Commission Regulation (EC) No 2344/2003 (OJ L 346,
31.12.2003, p. 38).

(2) Only rum-based products under heading 2208 40.