Proposal for a COUNCIL DECISION amending the period of application of Council Decision 2004/162/EC concerning the dock dues in the French overseas departments
Date: 2014-03-20
Institutions: European Commission
Subjects: French overseas department and region, application of EU law, competitiveness, import tax, local tax, tax relief













EUR-Lex - 52014PC0181 - EN











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52014PC0181

Proposal for a COUNCIL DECISION amending the period of application of Council Decision 2004/162/EC concerning the dock dues in the French overseas departments /* COM/2014/0181 final - 2014/0101 (CNS) */









EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
The Treaty on the Functioning of the European
Union (TFEU) applies to the outermost regions of the Union. The French
outermost regions, however, are excluded from the territorial scope of the VAT
and excise duty directives.
The TFEU, in particular Article 110, does
not in principle authorise any difference in the French outermost regions
between the taxation of local products and the taxation of products from
metropolitan France, the other Member States or non‑member countries.
Article 349 of the TFEU (former Article 299(2) of the EC Treaty) provides,
however, for the possibility of introducing specific measures for those regions
because of the permanent handicaps which affect the economic and social conditions
of the outermost regions. Such measures concern various policies, including
taxation.
Council Decision 2004/162/EC of
10 February 2004 (as amended by Council Decisions 2008/439/EC
of 9 June 2008 and 448/2011/EU of 19 July 2011), adopted on
the basis of Article 299(2) of the EC Treaty, authorised France, until
1 July 2014, to apply exemptions or reductions to the ‘dock dues’ tax
for certain products produced in the French outermost regions (excluding Saint
Martin). The Annex to that Decision contains a list of the products to
which tax exemptions and reductions may be applied. The
difference between the taxation of locally manufactured products
and that of other products may not exceed 10, 20 or 30 percentage
points, depending on the product. 
Decision 2004/162/EC sets out the reasons
for adopting specific measures: remoteness, raw-material and energy dependence,
the obligation to build up larger stocks, the small size of the local market
combined with the low level of export activity, etc. The combination of these
handicaps increases production costs and therefore the cost price of goods
produced locally, so that without specific measures they would be less
competitive than those produced elsewhere, even taking into account the cost of
transporting such goods to the French overseas departments. This would make it
harder to maintain local production. The specific measures contained in
Decision 2004/162/EC were thus designed to strengthen local industry by making
it more competitive.
The French authorities believe that the
handicaps suffered by the French outermost regions persist and between
25 January and 7 June 2013 they sent several letters to the European
Commission requesting that a system of differentiated taxation similar to the
current system be maintained after 1 July 2014 until 31 December
2020. 
Analysing the lists of the products to which
the French authorities wish to apply differentiated taxation is a lengthy
process requiring verification, for each product, of the reasons for
differential taxation and the proportionality of the tax, so as to ensure that
such differential taxation does not undermine the integrity and the coherence
of the Union legal order, including the internal market and common policies.
This work has not been completed because of the
large number of products involved (several hundred) and the quantity of
information to be collected on the structure of the relevant product markets:
existence of local production, existence of substantial imports (including
those from metropolitan France and other Member States) that might jeopardise
the continuation of local production, the absence of any monopoly or
quasi-monopoly in local production, justification of the higher production
costs that handicap local products as compared with ‘imported’ products, and
checks to ensure that a differentiated tax would not be incompatible with other
policies of the Union.
Failure to adopt any proposal before
1 July 2014 might create a legal vacuum as it would rule out the
application of any differentiated taxation in the French outermost regions
after 1 July 2014, even in the case of products for which differentiated
taxation would prove justified in the end.
An additional period of six months is required
to complete the work under way and to give the Commission time to present a
balanced proposal that takes account of the various interests at stake.
2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
The relevant directorates-general of the
European Commission have been consulted on the text of this proposal.
The Commission has not used an impact
assessment.
3.           LEGAL ELEMENTS OF THE
PROPOSAL
 Summary of the proposed measures The proposal provides for a six-month extension of the validity of Council Decision 2004/162/EC of 10 February 2004 until 31 December 2014 instead of 1 July 2014. 
 Legal basis Article 349 TFEU. 
 Principle of subsidiarity Only the Council is authorised, on the basis of Article 349 TFEU, to adopt specific measures to adjust the application of the Treaties to the outermost regions, including the common policies, because of the permanent handicaps which affect the economic and social conditions of those regions. The proposal therefore complies with the principle of subsidiarity. 
 Principle of proportionality The proposal complies with the principle of proportionality for the reasons set out below. 
 The purpose of the proposal is to extend the existing system by six months to make it possible to complete the full analysis, product by product, of the request to authorise the application of differentiated taxation to offset the handicaps suffered by local products. || 
 No other extension will be authorised until this product-by-product analysis of the French authorities' request has been completed. 
 Choice of instrument 
 Proposed instrument: Council decision. 
 Other instruments would not have been appropriate for the following reasons: The text to be amended is itself a Council Decision, adopted on the same legal basis (Article 299(2) of the EC Treaty at the time). 
4.           BUDGETARY IMPACT
The proposal has no impact on the European
Union budget.
2014/0101 (CNS)
Proposal for a
COUNCIL DECISION
amending the period of application of
Council Decision 2004/162/EC concerning the dock dues in the French
overseas departments
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 349 thereof,
Having regard to the proposal from the
European Commission,
After transmission of the draft legislative
act to the national parliaments,
Having regard to the opinion of the
European Parliament[1],
Acting in accordance with a special
legislative procedure,
Whereas:
(1)       Council
Decision 2004/162/EC[2]
authorises France to apply exemptions or reductions to dock dues for products
produced locally in the French overseas departments and listed in the
Annex to the Decision. The difference between the taxation
of locally manufactured products and that of other products may not
exceed 10, 20 or 30 percentage points, depending on the
product. These exemptions or reductions constitute specific measures designed
to offset the specific constraints facing the outermost regions provided for in
Article 349 of the Treaty which increase production costs for local
companies and make it difficult for their products to compete with the same
products imported from metropolitan France and other Member States or non-member countries. The exemptions from or reductions in the dues applicable to
local products support the creation, maintenance and development of local
production. Decision 2004/162/EC applies until 1 July 2014.
(2)       France believes that the
handicaps suffered by the French outermost regions persist and has submitted a
request to the Commission that a system of differentiated taxation similar to
the current system be maintained after 1 July 2014 until 31 December
2020.
(3)       Analysing the lists of the
products to which France wishes to apply differentiated taxation is a lengthy
process requiring verification, for each product, of the reasons for differential
taxation and its proportionality, so as to ensure that such differentiated
taxation does not undermine the integrity and the coherence of the Union legal
order, including the internal market and common policies.
(4)       This work has not yet been
completed because of the large number of products involved and the quantity of
information to be collected, in particular the quantification of the higher
production costs that handicap local products and the structure of the product
markets concerned.
(5)       Failure to adopt any
proposal before 1 July 2014 might create a legal vacuum as it would
rule out application of any differentiated taxation in the French outermost
regions after 1 July 2014.
(6)       An additional period of
six months is required to make it possible to complete the work under way and
to give the Commission time to present a balanced proposal that takes account
of the various interests at stake.
(7)       Decision 2004/162/EC
should therefore be amended accordingly,
HAS ADOPTED THIS DECISION:
Article 1
In Article 1(1) of Decision 2004/162/EC the
date ‘1 July 2014’ is replaced by ‘31 December 2014’.
Article 2
This
Decision shall apply from 2 July 2014.
Article 3
This
Decision is addressed to the French Republic.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ C , , p. .
[2]               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
(OJ L 52, 21.2.2004, p. 64).