Proposal for a Council Decision amending, for the purposes of updating its annex, Decision 2004/162/EC concerning dock dues
Date: 2008-04-16
Institutions: European Commission
Subjects: French Guiana, French overseas department and region, local tax, tax exemption, tax system

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.4.2008 
COM(2008) 191 final 

Proposal for a 

COUNCIL DECISION 

amending, for the purposes of updating its annex, Decision 2004/162/EC concerning 
dock dues  

(presented by the Commission) 

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1) CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

The  purpose  of  the  proposal  is  to  update  the  lists  of  products  eligible  for  full  or  partial 
exemption  from  dock  dues,  set  out  in  the  annex  to  Council  Decision  2004/162/EC  of  10 
February  2004  concerning  the  dock  dues  in  the  French  overseas  departments  and  extending 
the period of validity of Decision 89/688/EEC. 

•  General context 

The French authorities presented, on the basis of Article 3 of Decision 2004/162/EC, a request 
relating  almost  entirely  to  French  Guiana  and  seeking  to  add  products  to  the  list  of  those 
eligible  for  differential  taxation  under  the  system  of  dock  dues.  The  French  authorities 
submitted an additional request in July 2006. For each of the products in question, the French 
authorities' request was examined to see whether one of the situations described in the above-
mentioned Article 3 existed. 

•  Existing provisions in the area covered by the proposal 

Pursuant  to  Article 299(2)  of  the  EC  Treaty,  the  Treaty  applies  to  the  French  overseas 
departments,  the  Azores,  Madeira  and  the  Canary  Islands.  However,  taking  account  of  the 
structural  social  and  economic  situation  of  the  French  overseas  departments,  the  Azores, 
Madeira and the Canary Islands, 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  restrain  their  development,  the  Council,  acting  by  a 
qualified  majority  on  a  proposal  from  the  Commission  and  after  consulting  the  European 
Parliament,  adopts  specific  measures  aimed,  in  particular,  at  laying  down  the  conditions  of 
application  of  the  EC  Treaty  to  those  regions,  including  common  policies.  The  Council  is 
required, when adopting such measures, to take into account areas such as fiscal policy. 

Decision  2004/162/EC,  taken  on  the  basis  of  Article  299(2)  of  the  EC  Treaty,  authorises 
France,  in  the  French  overseas  departments,  to  apply  exemptions  or  reductions  to  the  tax 
known  as  "dock  dues"  for  certain  products  manufactured  locally  in  the  French  overseas 
departments. With reference to the rate of taxation applied to similar products not originating 
in the French overseas departments, the maximum permitted tax differential is, depending on 
the products and on the overseas department in question, 10, 20 or 30 percentage points. The 
products eligible for exemption or reduction in dock dues are listed in an annex to the Council 
Decision. Council Decision 2004/162/EC is to apply until 1 July 2014, with a mid-term report 
to  be  drawn  up  in  July 2008.  Article  3  of  that  Decision  states  that  the  Council,  acting  by  a 
qualified majority on a proposal from the Commission, shall adopt the measures necessary for 
the implementation of that Decision with regard to the updating of the lists of products in the 
Annex because of the emergence of new production in the French overseas departments and 
the  taking  of  urgent  measures  if  local  production  is  threatened  by  certain  commercial 
practices. 

•  Consistency with the other policies and objectives of the Union and compliance with 

the specific criteria set out in Article 3 of Decision 2004/162/EC 

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The measures provided for in Article 3 of Decision 2004/162/EC are based on Article 299(2) 
of  the  EC  Treaty.  They  must  therefore  take  account  of  the  special  characteristics  and 
constraints of the outermost regions without undermining the integrity and the coherence of 
the Community legal order, including the internal market and common policies. In addition, 
the above-mentioned Article 3 itself sets additional criteria specific to the procedure for which 
it  provides.  It  must  be  a  matter  of  updating  the  list  of  products  in  the  annex  because  of  the 
emergence  of  new  production  in  the  French  overseas  departments  or  of  taking  urgent 
measures if local production is threatened by certain commercial practices. 

All of these requirements were taken into account by a particularly thorough examination of 
the French authorities' request. Thus, whereas the French authorities' initial request related to 
around 130 products, the Commission considers that the updating of the list on the basis of 
Article 3 of Decision 2004/162/EC is justified in respect of only 19 products. 

The  Commission  does  not  therefore  propose,  under  the  guise  of  "updating"  the  lists  in  the 
annex to the decision, adding products in cases where local production already existed at the 
time  the  initial  request  that  gave  rise  to  Decision  2004/162/EC  was  submitted.  As  for  the 
second option under Article 3 of that Decision, this presupposes that "urgent measures" need 
to  be  taken  because  local  production  is  "threatened"  by  "certain  commercial  practices". 
Therefore, the Commission does not propose making use of this provision where an increase 
in  imports  is  due  to  reasons  other  than  commercial  practices,  such  as  reorganisation  of  the 
local market in French Guiana concerning the production or marketing of certain products, or 
for unspecified reasons. 

2) CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

The  French  authorities'  request  was  a  response  to  requests  from  the  economic  sectors 
concerned. In addition, representatives of the economic sectors  most affected  by  the French 
authorities' request were present in the various delegations at several meetings held between 
the French authorities and Commission officials. 

•  Collection and use of expertise 

No recourse to external expertise has been necessary. 

•  Impact assessment 

The aim of the proposal is to adopt an implementing measure for Decision 2004/162/EC. The 
only  matter  to  be  examined  thus  consists  of  determining,  for  each  product  involved  in  the 
French Government's request, whether the conditions set out in Article 3 of that decision are 
fulfilled for the purposes of updating the lists of products in the annex to that decision. 

Under the procedure set out in Article 3 of Decision 2004/162/EC, there is no option possible 
other than to update the list or to refrain from doing so. 

3) LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

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To  add,  for  French  Guiana,  19  products  to  the  lists  of  products  in  the  annex  to  Decision 
2004/162/EC,  to  which  France  would  then  be  authorised,  within  certain  limits,  to  apply 
exemptions or reductions to the tax known as "dock dues" for certain products manufactured 
locally in the French overseas departments. 

•  Legal basis 

Article 3 of Council Decision 2004/162/EC of 10 February 2004. 

•  Subsidiarity principle 

Only the Council is authorised to change, on the basis of Article 3 of Decision 2004/162/EC, 
the list of products covered by that act. 

The proposal therefore complies with the subsidiarity principle. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reasons. 

Its  purpose  is  to  update  Decision  2004/162/EC  by  adding  further  products  to  its  annex. 
However, only those products in respect of which such a change proved justified in the light 
of the criteria set out in Article 3 of said Decision are to be added. 

Similarly,  the  maximum  differential  proposed  for  each  product  affected  by  this  proposal  is 
limited  to  what  is  necessary  in  view  of  the  handicap  that  the  local  production  concerned 
suffers in each case. In this way, the tax burden on products imported into French overseas 
departments  will  not  exceed  what  is  necessary  to  restore  the  competitiveness  of  products 
manufactured locally vis-à-vis imported products. 

•  Choice of instruments 

Proposed instrument: Council Decision. 

Other means would not have been appropriate for the following reasons: 

The  only  instrument  provided  for  in  Article  3  of  Decision  2004/162/EC  is  a  decision  to  be 
adopted by the Council, which is what the Commission is proposing. 

4) BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

5) ADDITIONAL INFORMATION 

•  Detailed explanation of the proposal by chapter or by article 

Point  1  of  the  annex  to  the  proposed  decision  would  add,  in  respect  of  French  Guiana,  18 
products to part B of the annex to Decision 2004/162/EC, i.e. the list of products for which, 
compared with the rates of taxation applied to similar products not originating in the French 
overseas departments, the maximum permitted tax differential is 20 percentage points. 

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Point  2  of  the  annex  to  the  would  decision  proposes  to  add,  again  for  French  Guiana,  one 
product to part C of the annex to Decision 2004/162/EC, i.e. the list of  products for which, 
compared with the rates of taxation applied to similar products not originating in the French 
overseas departments, the maximum permitted tax differential rate is 30 percentage points. 

The products involved and the reasons that justify the updating of Decision 2004/162/EC are 
set out in recitals 4 et seq. of the proposal for a Council Decision. 

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Proposal for a 

COUNCIL DECISION 

amending, for the purposes of updating its annex, Decision 2004/162/EC concerning 
dock dues  

(Only the French text is authentic) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Decision  2004/162/EC  of  10  February  2004  concerning  the  dock 
dues  in  the  French  overseas  departments  and  extending  the  period  of  validity  of  Decision 
89/688/EEC1, and in particular Article 3 thereof, 

Having regard to the proposal from the Commission2, 

Whereas: 

(1) 

(2) 

(3) 

Decision  2004/162/EC  authorises  the  French  authorities  to  apply  exemptions  or 
reduction  to  dock  dues  for  products  manufactured  locally  in  the  French  overseas 
departments  and  listed  in  its  annex.  The  maximum  permitted  tax  differential  is, 
depending on the  products and on the overseas  department in question,  10, 20  or  30 
percentage points.  

Article 3 of that Decision provides for the updating of the lists of products in the annex 
thereto  because  of  the  emergence  of  new  production  in  the  French  overseas 
departments and of the taking of urgent measures if local production is threatened by 
certain commercial practices. 

The French authorities have submitted to the Commission a request for products to be 
added to the lists of products eligible for differential taxation. For each of the products 
involved,  the  French  authorities'  request  has  been  examined  in  the  light  of  the 
conditions set by the above-mentioned Article 3. Subsequent to their request dated 14 
March 2003, which gave rise to Decision 2004/162/EC, new production activities have 
emerged in French Guiana. It was not therefore possible to include these products in 
the  list  of  products  set  out  in  the  annex  to  Decision  2004/162/EC.  One  of  the  two 
alternative conditions set out in Article 3 of that Decision is therefore satisfied. 

(4) 

 The handicap suffered by these new products in comparison with imported products, 
because  of  the  increased  costs  of  producing  these  products  by  (often  very  small) 
businesses with production activities in French Guiana should therefore be examined. 
These increased costs are caused inter alia by the remoteness, the difficult climate and 

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OJ L 52, 21.2.2004, p. 64 
OJ C […], […], p. […]. 

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(5) 

(6) 

(7) 

the small scale of the local market. Remoteness brings about high transport costs and, 
due to delivery times, forces businesses to maintain bigger stocks of raw materials and 
spare parts to repair the machines used in manufacturing. Similarly, a consequence of 
the small scale of the local market is often that the means of production are on a larger 
scale  than  is  needed  for  the  quantities  produced.  The  French  authorities  have  put  a 
figure on the handicap suffered by each category of products manufactured locally on 
the basis of the factors relevant to each of them. 

In October 2003 a new business was set up and started production of yogurt and other 
dairy products such as curd cheese (heading 0403 including sub-headings 0403 10 and 
0403 90 according to the classification of the Common Customs Tariff nomenclature). 
However, only production of yogurt (heading 0403 10 according to the classification 
of the Common Customs Tariff nomenclature) was envisaged at the time of the initial 
request, which was prior to the beginning of production activity. It turns out that the 
activity  conducted  by  the  business  also  includes  products  under  heading  0403 90. 
According to the information submitted by the French authorities, the cost price of the 
products in question produced locally is more than 20% higher than that of the same 
products  imported  from  elsewhere.  In  order to  compensate  for  the  handicap  suffered 
by this new local production, heading 0403 90 should, in respect of French Guiana, be 
included  in  part  B  of  the  annex  to  Decision  2004/162/EC,  which  sets  out  the  list  of 
local products eligible for a tax differential of 20 percentage points in comparison to 
products not produced in French overseas departments. 

In  September  2005  a  business  started  a  coffee  roasting  activity.  Alongside  this,  an 
agricultural  activity  producing  raw  coffee  is  in  the  process  of  being  set  up.  This 
activity is to supply the raw material to the coffee roasting business. Eventually, these 
activities, taken as a whole, are expected to satisfy some of the demand for coffee in 
French Guiana. According to the information submitted by the French authorities, the 
cost  price  of  coffee  roasted  locally  is  more  than  20%  higher  than  that  of  imported 
roasted  coffee.  In  order  to  compensate  for  the  handicap  suffered  by  this  new  local 
production,  roasted  coffee  (heading  0901 21  according  to  the  classification  of  the 
Common  Customs  Tariff  nomenclature)  should,  in  respect  of  French  Guiana,  be 
included  in  part  B  of  the  annex  to  Decision  2004/162/EC,  which  sets  out  the  list  of 
local products eligible for a tax differential of 20 percentage points in comparison to 
products not produced in French overseas departments. 

 At the  beginning of 2006 a  business started an  activity manufacturing chocolate and 
cocoa-derived products (headings 1801, 1802, 1803, 1805 and 1806 according to the 
classification  of  the  Common  Customs  Tariff  nomenclature).  Alongside  this,  an 
agricultural  activity  producing  cocoa  is  in  the  process  of  being  set  up.  Eventually, 
these  activities,  taken  as  a  whole,  are  expected  to  satisfy  some  of  the  demand  for 
chocolate  in  French  Guiana.  According  to  the  information  submitted  by  the  French 
authorities, the cost price of chocolate and cocoa-derived products produced locally is 
more  than  20%  higher  than  that  of  the  same  products  imported  from  elsewhere.  In 
order to compensate for the handicap suffered by this new local production, headings 
1801, 1802, 1803, 1805 and 1806 should, in respect of French Guiana, be included in 
part B of the annex to Decision 2004/162/EC, which sets out the list of local products 
eligible  for  a  tax  differential  of  20  percentage  points  in  comparison  to  products  not 
produced in French overseas departments. 

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(8) 

(9) 

(10) 

In  September  2005  a  business  was  set  up  that  developed  an  activity  manufacturing 
cassava  chips,  banana  chips  and  roasted  peanuts  (headings  2008 11  and  2008 99 
according  to  the  classification  of  the  Common  Customs  Tariff  nomenclature). 
According to the information submitted by the French authorities, the cost price of the 
products in question produced locally is more than 20% higher than that of the same 
products  imported  from  elsewhere.  In  order to  compensate  for  the  handicap  suffered 
by  this  new  local  production,  headings  2008 11  and  2008 99  should,  in  respect  of 
French  Guiana,  be  included  in  part  B  of  the  annex  to  Decision  2004/162/EC,  which 
sets out the list of local products eligible for a tax differential of 20 percentage points 
in comparison to products not produced in French overseas departments. 

 A  beer  brewing  company,  set  up  in  2006,  started  producing  beer  in  2007  (heading 
2203  according  to  the  classification  of  the  Common  Customs  Tariff  nomenclature). 
According  to  the  information  submitted  by  the  French  authorities,  the  cost  price  of 
beer produced locally is more than 30% higher than that of imported beer. In order to 
compensate  for  the  handicap  suffered  by  this  new  local  production,  heading  2203 
should,  in  respect  of  French  Guiana,  be  included  in  part  C  of  the  annex  to  Decision 
2004/162/EC, which sets out the list of local products eligible for a tax differential of 
30  percentage  points  in  comparison  to  products  not  produced  in  French  overseas 
departments. 

 In  2005  a  Guianese  business  started  an  activity  involving  the  recovery  of  rice  husk 
residues for use in the manufacture of a product similar to peat (fuel, litter). This new 
activity  would  not  be  economically  viable  if  peat  produced  outside  French  Guiana 
(heading  2703  according  to  the  classification  of  the  Common  Customs  Tariff 
nomenclature)  could  not  be  subject  to  differential  taxation  in  French  Guiana. 
According  to  the  information  submitted  by  the  French  authorities,  although  this  is  a 
product  made  from  agricultural  waste,  the  processing  costs  are  such  that  it  cannot 
compete with peat imported into French Guiana, even if transport costs are taken into 
account. According to the French authorities, the production costs of this product are 
considerably higher than those for peat because of the very small size of the Guianese 
business  that  has  developed  it  (six  employees)  and  the  quasi-craft  industry  nature  of 
this activity, whereas peat is produced industrially in Europe and there is no local peat 
production  in  Guyana.  Even  taking  into  account  the  transport  costs  of  peat  imported 
from  Europe,  the  cost  price  of  the  product  made  from  rice  husks  remains  more  than 
20% higher than that of imported peat. Without special measures, the activity carried 
out by this Guianese business would not, therefore, be economically viable, hence the 
need to restore its competitiveness. In order to compensate for the handicap suffered 
by this new local production competing with peat, heading 2703 should, in respect of 
French  Guiana,  be  included  in  part  B  of  the  annex  to  Decision  2004/162/EC,  which 
sets out the list of local products eligible for a tax differential of 20 percentage points 
in comparison to products not produced in French overseas departments. Although it is 
limited to peat, this differential will make it possible to maintain the activity related to 
the  production  of  said  local  fuel,  which  will  be  taxed  at  the  rate  to  which  peat 
produced locally would be subject if such production existed. 

(11) 

In  2005  a  Guianese  business  started  production  of  foam  mattresses  and  polystyrene 
products  (headings  3921 11  and  9404 21  according  to  the  classification  of  the 
Common  Customs  Tariff  nomenclature).  According  to  the  information  submitted  by 
the  French  authorities,  the  cost  price  of  the  products  in  question  produced  locally  is 
more  than  20%  higher  than  that  of  the  same  products  imported  from  elsewhere.  In 

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(12) 

(13) 

order to compensate for the handicap suffered by this new local production, headings 
3921 11 and 9404 21 should, in respect of French Guiana, be included in part B of the 
annex to Decision 2004/162/EC, which sets out the list of local products eligible for a 
tax  differential  of  20  percentage  points  in  comparison  to  products  not  produced  in 
French overseas departments. 

In  2005,  a  Guianese  business  started  production  of  PVC  shower  cubicles  (heading 
3922 10 according to the classification of the Common Customs Tariff nomenclature). 
According  to  the  information  submitted  by  the  French  authorities,  the  cost  price  of 
shower  cubicles  produced  locally  is  more  than  20%  higher  than  that  of  the  same 
products  imported  from  elsewhere.  In  order to  compensate  for  the  handicap  suffered 
by this new local production, heading 3922 10 should, in respect of French Guiana, be 
included  in  part  B  of  the  annex  to  Decision  2004/162/EC,  which  sets  out  the  list  of 
local products eligible for a tax differential of 20 percentage points in comparison to 
products not produced in French overseas departments. 

In 2007 a Guianese business started production of zinc and copper gutters (headings 
7411, 7412, 7419 91, 7907 00 10 and 7907 00 90 according to the classification of the 
Common  Customs  Tariff  nomenclature).  According  to  the  information  submitted  by 
the French authorities, the price of the products in question produced locally is more 
than 20% higher than that of the same products imported from elsewhere. In order to 
compensate  for  the  handicap  suffered  by  this  new  local  production,  headings  7411, 
7412,  7419 91,  7907 00 10  and  7907 00 90  should,  in  respect  of  French  Guiana,  be 
included  in  part  B  of  the  annex  to  Decision  2004/162/EC,  which  sets  out  the  list  of 
local products eligible for a tax differential of 20 percentage points in comparison to 
products not produced in French overseas departments; 

HAS ADOPTED THIS DECISION: 

The  Annex  to  Decision  2004/162/EC  is  amended  in  accordance  with  the  Annex  to  this 
Decision.  

Article 1 

Article 2 

This Decision is addressed to the French Republic. 

Done at Brussels,  

For the Council 
The President 

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ANNEX  

The Annex to Decision 2004/162/EC is hereby amended as follows: 

1) In part B, point 2, the following products shall be inserted: 

"0403 90, 0901 21, 1801, 1802, 1803, 1805, 1806, 2008 11, 2008 99, 2703, 3921 11, 3922 10, 
7411, 7412, 7419 91, 7907 00 10, 7907 00 90 and 9404 21". 

2) In part C, point 2, the following product shall be inserted: 

"2203". 

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