Proposal for a COUNCIL DECISION establishing the position to be taken on behalf of the EU within the General Council of the WTO on Jordan's request for a WTO waiver relating to the transitional period for the elimination of its export subsidy program
Date: 2016-01-26
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: Jordan, World Trade Organisation, action programme, export aid, export subsidy, small and medium-sized enterprises, tax exemption, tax on income

EUROPEAN 
COMMISSION 

Brussels, 26.1.2016  
COM(2016) 22 final 

2016/0015 (NLE) 

Proposal for a 

COUNCIL DECISION 

establishing the position to be taken on behalf of the EU within the General Council of 
the WTO on Jordan's request for a WTO waiver relating to the transitional period for 
the elimination of its export subsidy program 

EN 

   EN 

 
 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The objective of this proposal is to establish the position to be taken by the European Union 
within the General Council of the World Trade Organization (WTO) on Jordan's request for a 
WTO waiver to extend until 31 December 2018 the transitional period under Article 27.2(b) 
of  the  Agreement  on  Subsidies  and  Countervailing  Measures  (SCM  Agrement)  for  the 
elimination of the Jordan Export Subsidy Program. In July 2007 the General Council already 
extended the phase-out period for this measure to 31 December 2015. Jordan has introduced 
its waiver request on the basis of Article IX.3 of the WTO Agreement.  

The  waiver  request  would  be  the  third  extension  of  the  transitional  period  to  phase  out  the 
subsidy scheme. The first extension was granted in 2001 which brought the transitional phase 
out period up to the end of 2007. This was extended a second time in July 2007 when Jordan, 
among others was granted a further extension for the elimination of export subsidy schemes 
until  31  December  2015.  While  that  decision  stated  that  no  requests  for  further  extensions 
could be made, the current circumstances in the region could not have been foreseen at that 
time. 

2. 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides that 
when  a  decision  having  legal  effect  needs  to  be  taken  in  a  body  set  up  by  an  international 
agreement, the Council, on a proposal from the Commission or the High Representative of the 
Union for Foreign Affairs and Security Policy, shall adopt a decision establishing the position 
to be adopted  on the European Union’s behalf. The granting of a waiver to allow Jordan to 
extend the transitional period for the elimination of the Jordan Export Subsidy Program until 
31 December 2018 falls under this provision as the decision is taken in a body set up by an 
international agreement (the WTO General Council or Ministerial Conference) affecting the 
rights and obligations of the European Union. 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS  

EVALUATIONS, 

EX-POST 

OF 

STAKEHOLDER 

BUDGETARY IMPLICATIONS 

3. 

N.a. 

4. 

N.a. 

5. 

OTHER ELEMENTS 

The Commission will be authorised to take a position on behalf of the EU to support Jordan’s 
request for a WTO waiver to extend the transitional period for the elimination of the Jordan 
Export Subsidy Program until 31 December 2018, to the extent necessary to permit Jordan to 
provide partial or total exemption from income tax of profits generated from certain exports 
from  1  January  2016  until  31  December  2018.  This  prolongation  will  provide  Jordan  the 
necessary time to design and implement an entirely new, WTO-consistent subsidies program 
to benefit the small- and medium-sized enterprises. 

Until  31  december  2018,  Jordan  will  continue  to  provide  benefits  under  the  program  to  the 
existing  SMEs  beneficiaries  while  trying  to  deal  with  the  economic,  financial  and  political 

EN 

2 

   EN 

difficulties and challenges arising from the ongoing regional volatility, the influx of refugees, 
the continuing impact of the global financial crisis as well as the accompanying crisis in the 
Eurozone. Jordan also considers that an extension would support its industry in the face of the 
significant  instability  in  the  region  which  has  negatively  affected  its  access  to  traditional 
markets in neighbouring countries as well as transit routes to international markets. Jordan, in 
its  request,  also  notes  that  the  reform  measures  taken  by  the  Government  and  infrastructure 
projects  including  the  development  of  alternative  gas  supplies  are  only  expected  to  start 
producing positive effects on the competitive situation of the Jordanian private sector at the 
earliest from 2018 onwards.  

According  to  Jordan,  the  prolongation  of  the  transitional  period  for  phasing-out  the  subsidy 
scheme  until  31  December  2018  should  not  prejudice  the  interests  of  other  Members  not 
benefiting from such treatment. Jordan has also indicated that it foresees no further requests 
for extensions beyond that date. 

The EU recognises the economic challenges caused by the extraordinary and unique regional 
political  environment  that  Jordan  continues  to  face,  including  the  significant  influx  of 
refugees from neighbouring countries and associated financial burden, the disruption of trade 
with regional partners such as Iraq and Syria and additional costs resulting from the disruption 
of traditional energy supplies from Egypt and of road transit routes across Syria to Turkey.  

For the EU, continuation of the export subsidy programme is unlikely to have any significant 
economic impact. Jordan's share of world trade is very small (0.04% in 2013). The bilateral 
trade  balance  between  the  EU  and  Jordan  is  overwhelmingly  in  the  EU's  favour  with  EU 
goods exports to Jordan accounting for 92% of the total €4.0 billion bilate ral trade in goods in 
2014. At the same time Jordanian products are not in significant competition with EU exports 
on third country markets. 

In  light  of  these  considerations,  the  EU  can  join  the  emerging  consensus  in  favour  of  the 
waiver request in the WTO General Council.  

EN 

3 

   EN 

2016/0015 (NLE) 

Proposal for a 

COUNCIL DECISION 

establishing the position to be taken on behalf of the EU within the General Council of 
the WTO on Jordan's request for a WTO waiver relating to the transitional period for 
the elimination of its export subsidy program 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular the 
first subparagraph of Article 207(4), in conjunction with Article 218(9) thereof, 

Having regard to the proposal from the European Commission,  

Whereas: 

(1) 

(2) 

(3) 

(4) 

Paragraphs 3 and 4 of Article IX of the Marrakesh Agreement establishing the World 
Trade  Organization  ('WTO  Agreement')  set  out  the  procedures  for  the  granting  of 
waivers concerning the Multilateral Trade Agreements in Annex 1A or 1B or 1C to the 
WTO Agreement and their annexes.  

On  27  July  2007  Jordan  was  granted  an  extension,  which  was  continued  until  31 
December 2013 with a phase-out period ending on 31 December 2015, in accordance 
with the procedures for continuation of extensions pursuant to Article 27.4 of the SCM 
Agreement  of  the  transition  period  under  Article  27.2(b)  of  the  SCM  Agreement  for 
certain developing countries, for the elimination of its export subsidy program which 
takes the form of partial or total exemption from income tax of profits generated from 
certain exports. 

Pursuant  to  paragraph  3  of  Article  IX  of  the  WTO  Agreement,  Jordan  submitted  a 
request for a waiver from its phase-out obligation set out in Article 27.4 of the SCM 
Agreement until 31 December 2018.  

The granting of this waiver would not affect negatively the economy or trade interests 
of the European Union while supporting Jordan in its efforts to address the economic 
challenges  it  faces  as  a  result  of  the  difficult  and  unstable  political  situation  in  its 
region.  

(5) 

It is appropriate, therefore, to establish the position to be taken on behalf of the Union 
within the WTO General Council to support the waiver request by Jordan, 

HAS ADOPTED THIS DECISION:  

Article 1 

The  position  to  be  taken  on  behalf  of  the  Union  within  the  General  Council  of  the  World 
Trade Organization shall be to support Jordan's waiver request relating to the extension of the 
transitional period for the elimination of its export subsidy program until 31 December 2018 
in accordance with the terms of the waiver request.  

This position shall be expressed by the Commission.  

EN 

4 

   EN 

This Decision shall enter into force on the day of its adoption.  

Done at Brussels, 

Article 2 

For the Council 
The President 

EN 

5 

   EN