Proposal for a COUNCIL DECISION establishing the position to be taken on behalf of the European Union within the General Council of the World Trade Organization on the United States' request for a WTO waiver to extend the system of preferential treatment granted to the Former Trust Territory of the Pacific Islands
Date: 2016-06-24
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: Federated States of Micronesia, Marshall Islands, Northern Mariana Islands, Palau, United States, World Trade Organisation, import, originating product, tariff exemption

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   EUROPEAN COMMISSION  Brussels, 24.6.2016  COM(2016) 412 final 2016/0191 (NLE)   Proposal for a COUNCIL DECISION establishing the position to be taken on behalf of the European Union within the General Council of the World Trade Organization on the United States' request for a WTO waiver to extend the system of preferential treatment granted to the Former Trust Territory of the Pacific Islands  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives 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  the  United  States' 
request for a renewal of its WTO waiver and thus allow the European Union to support this 
waiver request.  

The  granting  of  the  US'  request  for  a  renewal  of  the  WTO  waiver  would  allow  the  US  to 
continue providing preferential treatment to eligible products of the Former Trust Territory of 
the Pacific Islands (Republic of the Marshall Islands, the Federated States of Micronesia, the 
Commonwealth of the Northern Mariana Islands, and the Republic of Palau) imported into the 
customs territory of the United States until 31 December 2026.  

• 

Consistency with existing policy provisions in the policy area 

N.a.  

• 

N.a. 

2. 

• 

Consistency with other Union policies 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

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 the United 
States to accord preferential treatment to eligible products of the Former Trust Territory of the 
Pacific  Islands  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. 

Subsidiarity (for non-exclusive competence)  

Proportionality 

Choice of the instrument 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS  

EVALUATIONS, 

EX-POST 

OF 

STAKEHOLDER 

BUDGETARY IMPLICATIONS 

• 

N.a. 

• 

N.a. 

• 

N.a. 

3. 

N.a. 

4. 

N.a. 

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5. 

OTHER ELEMENTS 

The  Commission  will  be  authorised  to  take  a  position  on  behalf  of  the  European  Union  to 
support  the  United  States’  request  for  a  WTO  waiver  to  the  extent  necessary  to  permit  the 
United  States  to  provide  preferential  treatment  to  eligible  products  of  the  Former  Trust 
Territory of the Pacific Islands until 31 December 2026.  

The United States is seeking an extension of its waiver (WT/L/694 of 1 August 2007) from 
paragraph 1 of Article I of GATT 1994 in order to continue to accord historical preferences to 
the former Trust Territory of the Pacific Islands consistent with its international obligations.  

According  to  the  United  States,  the  system  of  preferential  entry  for  the  exports  of  these 
islands  into  the  market  of  the  United  States  is  justified  by  both  historical  and  economic 
reasons. 

The Unites States assumed the obligations to ensure the security and economic development 
of  the  former  TTPI  states  under  a  Trusteeship  Agreement  with  the  UN  Security  Council  in 
1947. 

On  the  basis  of  the  Trusteeship  Agreement,  the  US  has  created  a  long-standing  historical 
connection with the former TTPI and, from an economic point of view, over the longer term, 
the  primary  purpose  of  the  system  has  been  to  promote  the  expansion  of  trade  and  the 
economic development of the beneficiaries in a manner consistent with the objectives of the 
GATT and with the trade, financial and development needs of the beneficiary countries. The 
United States, in its request, notes also that this purpose has become all the more important as 
each of the former Trusteeship areas have become self-governing entities. 

The  waiver  request  would  be  the  third  extension  of  the  preferential  tariff-treatment.  On  8 
September 1948, the United States was granted a waiver of its obligations under paragraph 1 
of Article I of the GATT 1947 for an indefinite period., Pursuant to paragraph 1(b)(iii) of the 
GATT  1994  the  waiver  was  revised  and  incorporated  in  the  GATT  1994  with  a  two-year 
expiration  periods  when 
the  World  Trade 
Organization ("WTO Agreement") entered into force on 1 January 1995. Recognizing that, as 
provided for in paragraph 2 of the Understanding in Respect of Waivers of Obligations under 
the  General  Agreement  on  Tariffs  and  Trade  1994,  unless  extended,  the  waiver  of  8 
September 1948 would have expired on 31 December 1996, it was extended on 14 October 
1996.  It  was  extended  a  second  time  on  1  August  2007,  covering  the  period  until  31 
December 2016. 

the  Marrakesh  Agreement  Establishing 

For  the  European  Union,  the  waiver  request  does  not  pose  economic  concerns  since  the 
preferential treatment is not  expected to  adversely  impact the EU trade with  the beneficiary 
countries.  

In  light  of  these  considerations,  the  European Union  should  join  the  emerging  consensus  in 
favour of the waiver request in the WTO General Council.  

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2016/0191 (NLE) 

Proposal for a 

COUNCIL DECISION 

establishing the position to be taken on behalf of the European Union within the General 
Council of the World Trade Organization on the United States' request for a WTO 
waiver to extend the system of preferential treatment granted to the Former Trust 
Territory of the Pacific Islands 

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) 

(5) 

Paragraphs 3 and 4 of Article IX of the Marrakesh Agreement establishing the World 
Trade  Organization  ('WTO  Agreement')  set  out  the  procedures  for  waiving  an 
obligation imposed  on  a Member by the  WTO  Agreement  or  any of the Multilateral 
Trade Agreements.  

The United States was granted a waiver of obligations under paragraph 1 of Article I 
of the General Agreement on Tariffs and Trade 1994 (‘GATT 1994’), which was most 
recently extended on 1 August 2007 covering the period through 31 December 2016. 

Pursuant  to  paragraph  3  of  Article  IX  of  the  WTO  Agreement,  the  United  States 
submitted a request to waive until 31 December 2026 its obligations under paragraph 1 
of Article I of the GATT 1994 to the extent necessary to permit the United States to 
continue  providing  preferential  treatment  to  eligible  products  of  the  Former  Trust 
Territory of the Pacific Islands (Republic of the Marshall Islands, the Federated States 
of Micronesia, the Commonwealth of the Northern Mariana Islands, and the Republic 
of Palau) imported into the customs territory of the United States. 

The  granting  of  the  United  States  request  for  a  WTO  waiver  would  not  affect 
negatively  either  the  economy  of  the  European  Union  or  the  trade  relations  with  the 
beneficiaries of the waiver.  

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

HAS ADOPTED THIS DECISION:  

Article 1 

The position to be taken on behalf of the European Union within the General Council of the 
World Trade Organization shall be to support the United States' request to waive obligations 
under paragraph 1 of Article I of the General Agreement on Tariffs and Trade 1994 until 31 
December 2026 in accordance with the terms of the United States' waiver request. 

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This position shall be expressed by the Commission.  

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

Done at Brussels, 

Article 2 

For the Council 
The President 

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