Proposal for a Council Decision on the conclusion of an Agreement in the form of an exchange of letters between the European Community and New Zealand pursuant to Article XXVIII of GATT 1994 relating to the modification of the WTO tariff quota for New Zealand butter provided for in the EC Schedule CXL annexed to the GATT 1994
Date: 2007-11-27
Institutions: European Commission
Subjects: New Zealand, butter, import, originating product, tariff quota, trade agreement (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.11.2007 
COM(2007) 751 final 

2007/0263 (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 New Zealand pursuant to Article XXVIII of GATT 1994 
relating to the modification of the WTO tariff quota for New Zealand butter provided 
for in the EC Schedule CXL annexed to the GATT 1994 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

In its consultations with New Zealand on the new management system for imports, 
the Commission indicated that it would seek to introduce a reduction of the in-quota 
tariff rate and a modification of the butterfat specifications in the EC schedule CXL 
for  agricultural  products  and  negotiate  these  modifications  in  accordance  with 
paragraph  6  of  the  Understanding  on  the  Interpretation  of  Article XXVIII  of  the 
GATT 1994. 

On 14 May 2007, the Council authorised the Commission to notify the WTO that the 
European  Community  intended  to  modify  the  WTO  tariff  quota  for  New  Zealand 
butter for items 0405 10 11,  0405 10 19 and 0405 10 30 included in Schedule CXL 
of  the  European  Community  annexed  to  GATT.  Accordingly,  the  European 
Community  has  notified  the  WTO  on  3 August  2007  of  its  intention  to  modify  the 
WTO tariff quota for New Zealand butter in EC Schedule CXL. 

Negotiations  have  been  conducted  by  the  Commission  in  consultation  with  the 
Committee established by Article 133 of the Treaty and within the framework of the 
negotiating directives issued by the Council. 

The Commission has negotiated an agreement in the form of an exchange of letters 
with New Zealand.  

The exchange of letters was initialled by the Commission on …. November 2007. 

This proposal asks the Council to approve the agreement in the form of an exchange 
of  letters  between  the  European  Community  and  New  Zealand.  Once  the  Council 
adopts the present Decision, the Commission will notify the WTO of the necessary 
changes to the European Community’s Schedule CXL. 

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2007/0263 (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 New Zealand pursuant to Article XXVIII of GATT 1994 
relating to the modification of the WTO tariff quota for New Zealand butter provided 
for in the EC Schedule CXL annexed to the GATT 1994 

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 from the Commission, 

Whereas: 

(1) 

(2) 

(3) 

On 14 May 2007, the Council authorised the Commission to open negotiations under 
Article XXVIII  of  the  GATT 1994  with  a  view  to  modify  the  WTO  tariff  quota  for 
New  Zealand  butter.  Accordingly,  the  European  Community  notified  the  WTO  on 
3 August 2007 of its intention to modify the WTO tariff quota for New Zealand butter 
in the EC Schedule CXL. 

Negotiations  have  been  conducted  by  the  Commission  in  consultation  with  the 
Committee established by Article 133 of the Treaty and within the framework of the 
negotiating directives issued by the Council. 

The  Commission  has  successfully  negotiated  an  agreement  with  New  Zealand.  The 
agreement in the form of an exchange of letters between the European Community and 
New Zealand 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 
New Zealand pursuant to Article XXVIII of the GATT 1994 relating to the modification of 
the WTO tariff quota for New Zealand butter provided for in Schedule CXL annexed to the 
GATT 1994 is hereby approved on behalf of the Community. 

The text of the agreement is attached to this Decision. 

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The President of the Council is hereby authorised to designate the person empowered to sign 
the agreement in order to express the consent of the Community to be bound thereby1. 

Article 2 

Article 3 

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

Done at Brussels, 

For the Council 
The President 

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The date of entry into force of the agreement will be published in the Official Journal of the European 
Communities. 

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ANNEX 

AGREEMENT 

in the form of an exchange of letters between the European Community and New Zealand 
pursuant to Article XXVIII of the GATT 1994 relating to the modification of the WTO tariff 
quota for New Zealand butter provided for in EC Schedule CXL annexed to the GATT 1994 

Letter No 1 
Letter from the European Community 

Brussels, ……….. 

Sir, 

Following  negotiations  between  the  European  Community  (EC)  and  New  Zealand  under 
Article XXVIII of GATT 1994 for the modification of the WTO tariff quota for New Zealand 
butter provided for  in  EC  Schedule  CXL annexed to the General  Agreement  on Tariffs and 
Trade 1994 (GATT 1994), the EC agrees to the conclusions as outlined below. 

Final provisions for the WTO tariff quota for New Zealand butter 

The tariff quota shall apply to butter of New Zealand origin for the following tariff items: 

CN code 

Description 

ex 0405 10 11 
ex 0405 10 19 

Butter, at least six weeks old, of a fat content by weight of not less than 80% but less 
than  85%  manufactured  directly  from  milk  or  cream  without  the  use  of  stored 
materials, in a single, self-contained and uninterrupted process 

ex 0405 10 30  Butter, at least six weeks old, of a fat content by weight of not less than 80% but less 
than  85%,  manufactured  directly  from  milk  or  cream  without  the  use  of  stored 
materials,  in  a  single,  self-contained  and  uninterrupted  process  which  may  involve 
the  cream  passing  through  a  stage  where  the  butterfat  is  concentrated  and/or 
fractionated (the processes referred to as "Ammix" and "Spreadable") 

The in-quota tariff rate shall be €70/100 kg. 

The quota quantity shall be 74 693 tonnes. 

Qualification  for  the  quota  is  subject  to  conditions  laid  down  in  the  relevant  Community 
provisions. 

General 

The provisions of this Agreement shall be applicable from 1 January 2008. 

I would be grateful if you could confirm the agreement of your Government to the above. 

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

On behalf of the European Community 

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Letter No 2 
Letter from New Zealand 

Brussels, .……. 

Sir, 

I have the honour to acknowledge receipt of your letter of today’s date, worded as follows: 

"Following  negotiations  between  the  European  Community  (EC)  and  New  Zealand  under 
Article XXVIII of GATT 1994 for the modification of the WTO tariff quota for New Zealand 
butter provided  for in  EC  Schedule  CXL annexed to  the General  Agreement  on Tariffs and 
Trade 1994 (GATT 1994), the EC agrees to the conclusions as outlined below. 

Final provisions for the WTO tariff quota for New Zealand butter 

The tariff quota shall apply to butter of New Zealand origin for the following tariff items: 

CN code 

Description 

ex 0405 10 11 
ex 0405 10 19 

Butter, at least six weeks old, of a fat content by weight of not less than 80% but less 
than  85%  manufactured  directly  from  milk  or  cream  without  the  use  of  stored 
materials, in a single, self-contained and uninterrupted process 

ex 0405 10 30  Butter, at least six weeks old, of a fat content by weight of not less than 80% but less 
than  85%,  manufactured  directly  from  milk  or  cream  without  the  use  of  stored 
materials,  in  a  single,  self-contained  and  uninterrupted  process  which  may  involve 
the  cream  passing  through  a  stage  where  the  butterfat  is  concentrated  and/or 
fractionated (the processes referred to as "Ammix" and "Spreadable") 

The in-quota tariff rate shall be €70/100 kg. 

The quota quantity shall be 74 693 tonnes. 

Qualification  for  the  quota  is  subject  to  conditions  laid  down  in  the  relevant  Community 
provisions. 

General 

The provisions of this Agreement shall be applicable from 1 January 2008. 

I would be grateful if you could confirm the agreement of your Government to the above." 

New Zealand has the honour of confirming its agreement with the contents of this letter 

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

On behalf of New Zealand 

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5.0 

FINANCIAL STATEMENT 

BUDGET HEADING: 
05 02 12 – Milk and milk products 
Chapter 10 – Article 1000: Agricultural duties 

PDB 2008: 
€406.0 Mio 
€1 683.2 Mio 

TITLE: 
Proposal for a Council Decision on the conclusion of an Agreement in the form of an exchange of letters 
between the European Community and New Zealand pursuant to Article XXVIII of GATT 1994 relating 
to  the  modification  of  the  WTO  tariff  quota  for  New  Zealand  butter  provided  for  in  the  EC  Schedule 
CXL annexed to the GATT 1994 

LEGAL BASIS: 
Article 133 of the Treaty 

AIMS: 
To modify the WTO tariff quota for New Zealand butter by introducing a reduction of the in-quota tariff 
rate and a modification of the butterfat specifications in the EC Schedule CXL for agricultural products. 
FOLLOWING 
FINANCIAL IMPLICATIONS 
FINANCIAL 
YEAR  
(EUR million) 
– 

CURRENT 
FINANCIAL 
YEAR  
(EUR million) 
– 

(EUR million) 
– 

12 MONTH 
PERIOD 

CHARGED TO THE EC BUDGET 

EXPENDITURE 
– 
(REFUNDS/INTERVENTIONS) 
– 
– 

NATIONAL AUTHORITIES 
OTHER 

5.1  REVENUE 

OWN RESOURCES OF THE EC  

– 
(LEVIES/CUSTOMS DUTIES) 
– 

NATIONAL 

5.0.1  ESTIMATED EXPENDITURE 
5.1.1  ESTIMATED REVENUE 

5.2  METHOD OF CALCULATION: (1) 

–€11.2 Mio 
starting from 
2008 

– 

– 

– 

6.0  CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE 

RELEVANT CHAPTER OF THE CURRENT BUDGET? 

6.1  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? 

OBSERVATIONS: 
It could be estimated that the measure implies a loss of a net amount of approximately €11.2 Mio. 

– 

YES NO 

YES NO 
YES NO 
YES NO 

(1) 

Current situation: 77 402 t x €86.88/100 kg = €67.25 Mio 
Proposal Council decision: 74 693 t x €70.0/100 kg = €52.29 Mio 
Loss of income: €14.96 * 75% = €11.22 Mio (net amount after deduction of 25% collection costs). 

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