Proposal for a COUNCIL DECISION amending Council Decision No 189/2014/EU authorising France to apply a reduced rate of certain indirect taxes on ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion and repealing Decision No 2007/659/EC
Date: 2017-06-09
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: France, French Guiana, Guadeloupe, Martinique, Réunion, derogation from EU law, excise duty, originating product, spirits, tax relief

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.6.2017  COM(2017) 297 final 2017/0127 (CNS)   Proposal for a COUNCIL DECISION amending Council Decision No 189/2014/EU authorising France to apply a reduced rate of certain indirect taxes on ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion and repealing Decision No 2007/659/EC  
 
EXPLANATORY MEMORANDUM 

Traditional  rum  from  France’s  outermost  regions  has  been  subject  to  special  excise  duty 
arrangements  on  the  French  mainland  market  since  1923.  This  reflects  a  long-term  fiscal 
State  aid  strategy  based  on  the  observation  that,  occasional  years  of  particularly  strong 
growth notwithstanding, the global rum market is expanding steadily (by around 3.2 %), and 
on  aligning  the  eligible  quantities  with  this  growth  rate  to  ensure  the  long-term 
competitiveness  of  the  cane-sugar-rum  sector  in  France’s  outermost  regions.  Since  the 
creation of the internal market and the harmonisation of excise duty in Europe, these special 
excise  duty  arrangements  have  been  extended  with  EU  approval.  The  current  system 
permitting  this  extension  was  introduced  by  Council  Decision  No  2002/166/EC  of 
18 February  2002  authorising  France  to  extend  the  application  of  a  reduced  rate  of  excise 
duty on ‘traditional’ rum produced in its overseas departments1 to take into account the sugar 
common  market  organisation  review  in  2001  and  the  dismantling  in  2003  of  the  customs 
protection for spirits. Decision No 2002/166/EC also noted that the Community and national 
measures taken to improve the competitiveness of the cane-sugar-rum sector in the overseas 
departments still did not in themselves make it possible to reach the level of competitiveness 
which would enable France to adapt the taxation of traditional rum produced in its overseas 
departments.  

Decision  No  2002/166/EC  limited  the  reduced  rate  of  excise  duty  to  an  annual  quota  of 
90 000 hl  of  pure  alcohol,  corresponding  to  traditional  trade  flows  recorded  in  the  last  few 
years before the Decision was adopted, without taking a growth rate into account. The authors 
of Decision No 2002/166/EC felt that, in order to create a climate of legal certainty for traders 
in the cane-sugar-rum sector and given the time it takes to amortise equipment and buildings, 
an  annual  fixed  quota  of  90 000 hl  applicable  for  seven  years,  from  1 January 2003  until 
31 December 2009, would suffice. 

has 

fact, 

already 

the  Council 

amended  Decision  No 2002/166/EC, 

In 
by 
Decision No 2007/659/EC2  of  9 October  2007;  this  Decision  retroactively  introduced  an 
annual  quota  of  108 000 hl  of  pure  alcohol,  applicable  from  1 January 2007  until 
31 December 2012. Decision No 2007/659/EC also noted (in recital 9) that only the market in 
mainland  France,  where  rum  from  the  overseas  departments  qualifies  for  special  tax 
arrangements  that  partially  compensate  its  high  cost  price,  has  enabled  the  overseas 
departments’ rum industry to survive. 

Council  Decision  No  896/2011/EU3  of  19  December  2011  amended  Decision  No 
2007/659/EC by shortening the period of application of the annual quota of 108 000 hl by two 
years, until 31 December 2010, and introducing an annual quota of 120 000 hl of pure alcohol 
for the period from 1 January 2011 until 31 December 2013.  

In  Council  Decision  No  896/2011/EU  of  19  December  2011  (recital  5),  the  Council 

1 

2 

3 

Council Decision No 2002/166/EC of 18 February 2002 authorising France to extend the application of 
a  reduced  rate  of  excise  duty  on  ‘traditional’  rum  produced  in  its  overseas  departments,  OJ  L  [55], 
[26.02.2002], p. [33]. 
Council  Decision  No  2007/659/EC  of  9 October 2007  authorising  France  to  apply  a  reduced  rate  of 
excise  duty  on  ‘traditional’  rum  produced  in  its  overseas  departments  and  repealing  Decision 
2002/166/EC, OJ L [270], [13.10.2007], p. [12]. 
Council  Decision  No  896/2011/EU  of  19  December  2011  amending  Decision  No 2007/659/EC  as 
regards  its  period  of  application  and  the  annual  quota  benefiting  from  a  reduced  rate  of  excise  duty, 
OJ L [345], [29.12.2011], p. [18]. 

EN 

2 

   EN 

 
 
 
                                                 
considered  that  the  quota  eligible  for  a  rate  of  excise  duty  lower  than  the  full  rate  should 
allow an annual growth rate of 3.2 % and 4.3 % for years of strong growth. It goes without 
saying that this Decision did not imply any future legal obligation on the part of the Council 
and the Commission. However, it is  very clear  that these growth  rates have,  for more than 
25 years, been the most stable economic factors and those closest to the economic reality: 

‘...since  the  competitiveness  of  traditional  rum  from  the  overseas  departments  needs  to  be 
supported  on  the  market  in  mainland  France  in  order  to  safeguard  the  activity  of  their 
sugar-cane-rum  sector,  the  quantities  of  traditional  rum  originating  in  the  overseas 
departments eligible for a reduced rate of excise duty when released for consumption on that 
market should be reviewed. The 108 000 hectolitre annual quota established by Decision No 
2007/659/EC should be, therefore, increased to 120 000 hectolitres, including the quota for 
2011 in order to ensure continuity, taking into account the increase forecasted for that year. 
This increase would cover annual growth of 4.3 %, i.e. a little more than the 3.2 % increase 
witnessed in 2007-10’. 

Council  Decision  No 189/2014/EU4  repeals  and  replaces  Decision  No  896/2011/EU, 
capping  the  annual  quota  at  120 000  hectolitres  of  pure  alcohol  (hap)  for  the  period  from 
1 January 2010  until  31 December 2020.  The  quota  set  by  Decision  No 189/2014/EU  does 
not fully reflect the growth rates referred to in Decision No 896/2011/EU. Moreover, setting 
the quota at an annual level of 120 000 hap for a lengthy period of ten years increased the 
discrepancy  between  the  growth  rates  projected  by  the  Council  in  2011  and  the  quotas 
available. 

Year 

Projected 
growth rate 

End  of  year 
requirement 
according  to 
the projected 
rate (hap) 

Available 
quota (hap) 

EC/EU 
Decision 

2002 

0 % 

90 000 

2002/166 

2003 

3.2 % 

92 880 

90 000 

2002/166 

2004 

3.2 % 

95 852 

90 000 

2002/166 

2005 

3.2 % 

98 919 

90 000 

2002/166 

2006 

3.2 % 

102 084 

90 000 

2002/166 

2007 

3.2 % 

105 351 

90 000 

2002/166 

108 000 

2007/659 

108 000 

2011/896 

2008 

3.2 % 

108 722 

90 000 

2002/166 

4 

Council Decision No 189/2014/EU of 20 February 2014 authorising France to apply a reduced rate of 
certain  indirect  taxes  on  ‘traditional’  rum  produced  in  Guadeloupe,  French  Guiana,  Martinique  and 
Réunion and repealing Decision No 2007/659/EC OJ L [59], [28.2.2014], p. [1]. 

EN 

3 

   EN 

 
 
                                                 
108 000 

2007/659 

108 000 

2011/896 

2009 

3.2 % 

112 201 

90 000 

2002/166 

108 000 

2007/659 

108 000 

2011/896 

2010 

3.2 % 

117 025 

108 000 

2007/659 

108 000 

2011/896 

2011 

4.3 % 

122 057 

108 000 

2007/659 

120 000 

2011/896 

2012 

4.3 % 

127 306 

108 000 

2007/659 

120 000 

2011/896 

120 000 

189/2014 

2013 

4.3 % 

131 379 

120 000 

2011/896 

120 000 

189/2014 

2014 

3.2 % 

135 583 

120 000 

189/2014 

2015 

3.2 % 

139 922 

120 000 

189/2014 

2016 

3.2 % 

144 400 

120 000 

189/2014 

2017 

3.2 % 

149 020 

120 000 

189/2014 

2018 

3.2 % 

153 789 

120 000 

189/2014 

2019 

3.2 % 

158 710 

120 000 

189/2014 

2020 

3.2 % 

163 789 

120 000 

189/2014 

As a result, producers of traditional rum have been unable to benefit from sufficient access to 
the French mainland market. The projected growth rates permitted a quota of 144 400 hap at 
the  end  of  2016,  yet  the  quota  was  limited  to  120 000  hap.  For  this  reason,  the  retroactive 
increase of the quota for 2016 to 144 400 hap is an adjustment measure aimed at aligning the 
quota with growth rates already projected by the Council. 

The urgency of the increase is clear: the quota of 120 000 hap for 2016 was used before the 
end of 2016 and, without a retroactive increase with effect from 1 January 2016, producers 
will  suffer  significant  -  and  likely  irreparable  -  harm.  Relations  between  traditional  rum 
producers and retailers in France are governed by annual contracts that include commitments 
on  volumes  delivered,  purchase  prices,  and  discounts  and  promotions.  The  expiry  of  the 
quota brings about a subsequent increase in taxation for quantities that exceed it, yet at the 

EN 

4 

   EN 

start of the year when the contracts are signed, producers cannot foresee either the likelihood 
that the quota will be exceeded or to what extent. Given that the purchase price is set at the 
start of the year on the basis of a lower rate of taxation, the tax increase created by the quota 
being exceeded before the end of the year is a risk that rum producers have to face. This risk 
became  a  reality  in  2016.  Without  a  retroactive  increase  in  the  quota,  rum  producers  will 
suffer substantial losses for the quantities exceeding it. 

Furthermore,  not  increasing  the  quota  would  weaken  rum  producers  in  France’s  outermost 
regions in terms of their commercial strategies for 2017: with a lack of visibility concerning 
the expiry date of the quota for 2017, they would have to abandon the idea of offering their 
rum during the promotional season at the end of the year. 

The  urgency  of  the  increase  is  accentuated  by  the  economic  climate,  in  which  exports  of 
traditional  rum  to  the  EU  from  Guadeloupe,  French  Guiana,  Martinique  and  Réunion  have 
fallen.  Between  2005  and  2011,  exports  of  traditional  rum  to  the  EU  from  these  regions 
increased  from  155 559  to  205 482  hap.  Since  2012,  they  have  fallen  dramatically:  after 
dropping to 189 928 hap that year, they rose slightly in 2013 (190 382 hap), before falling in 
2014 (179 755 hap) and increasing slightly again in 2015 (180 482 hap).  

This substantial decrease was mainly caused by the fall in exports of traditional rum to the 
EU  from  Réunion,  which  is  the  largest  producer  of  traditional  rum  among  these  outermost 
regions.  Between  2005  and  2011,  exports  of  traditional  rum  from  Réunion  increased  from 
60 092 hap to 87 314 hap. They began to fall sharply in 2012, dropping to 69 491 that year 
before  rising  slightly  in  2013  (74 702  hap),  only  to  then  fall  to  63 240  hap  in  2014  and 
58 890 hap in 2015.  

The drop in shipments of traditional rum from these outermost regions to mainland Europe 
was  mainly  due  to  the  fact  that  they  had  lost  market  share  for  light  rum  in  Germany  to 
producers  from  third  countries.  In  2008,  sales  of  light  rum  from  these  outermost  regions 
reached 46 065 hap. In 2014 and 2015, they came to just 22 885 and 17 091 hap respectively. 

At this point, it cannot be ruled out that the discrepancy between the quotas corresponding to 
the  growth  rates  projected  by  the  Commission  and  the  Council  and  the  quotas  actually 
authorised may have had an impact on these trends. This analysis will be conducted as part 
of the forthcoming review of Decision No 189/2014/EU.  

It  should  also  be  noted  that  consumption  in  France  of  rum  from  third  countries,  including 
ACP  rum  (Africa,  the  Caribbean  and  the  Pacific),  has  increased  far  more  than  that  of  rum 
from Guadeloupe, French Guiana, Martinique and Réunion. Total consumption in France of 
rum  from  third  countries  amounted  to  20 733  hap  in  2013,  before  rising  to  22 679  hap  in 
2014  and  26 147  hap  in  2015.  Traditional  rum  produced  in  these  outermost  regions  and 
released for consumption in France also increased during this period to a lesser extent, rising 
from 115 438 hap in 2013, to 119 066 hap in 2014 and 120 000 hap in 2015. 

An independent economic analysis carried out by the Commission and finalised in July 2016 
concluded  that  French  imports  of  traditional  rum  from  Guadeloupe,  French  Guiana, 
Martinique and Réunion represented only a small proportion of total alcohol consumption in 
France (between 1 and 2 %) and that, for this reason, the presence of a reduced rate for rum 
was  not  likely  to  create  distortions  of  competition  on  the  French  rum  market.  Under  these 
conditions,  it  is  even  less  likely  that  these  imports  will  affect  the  functioning  of  the  single 
market.  

EN 

5 

   EN 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

On  22 September 2016,  the  French  authorities  asked  the  Commission  to  present  a  draft 
technical  adaptation  to  Council  Decision No 189/2014/EU  of  20 February 2014,  increasing 
the  annual  quota  from  120 000  to  144 000  hap.  The  request  was  accompanied  by  a  report 
justifying the adaptation requested. 

• 

Consistency with existing policy provisions in the policy area 

This  initiative is  consistent with  the priorities determined by the policy directives set out  in 
Article 349 of the Lisbon Treaty, which acknowledges that the structural social and economic 
situation  of  France’s  outermost  regions  including  Guadeloupe,  French  Guiana,  Martinique 
and Réunion  is  compounded  by  their  remoteness,  insularity, small  size, difficult topography 
and  climate,  economic  dependence  on  a  few  products,  the  permanence  and  combination  of 
which  severely  restrain  their  development.  Accordingly,  Article 349  states  that  the  Council, 
on a proposal from the Commission and after consulting the European Parliament, shall adopt 
specific  measures  aimed,  in  particular,  at  laying  down  the  conditions  of  application  of  the 
Treaties  to  those  regions,  including  common  policies.  The  aim  of  the  quota  increase  is  to 
create and safeguard jobs, economic growth and investment in the sugar-cane and rum sector. 
This  increase  strengthens  the  single  market  and  makes  it  more  accessible  to  economic 
operators established in the regions referred to above by offsetting the disadvantages caused 
by their geographical and economic situation. 

As  well  as  adjusting  the  quota,  for  the  future  management  and  justification  of  quotas,  the 
Commission will need to draw on the analyses provided by France by 31 July 2017 as part of 
the mid-term review scheduled under Decision No 189/2014/EU of 20 February 2014. 

• 

Consistency with other Union policies 

Under  Article  349(3)  of  the  Treaty  on  the  Functioning  of  the  European  Union  (the  Lisbon 
Treaty),  the  Council  adopts  measures  taking  into  account  the  special  characteristics  and 
constraints of the outermost regions without undermining the integrity and the coherence of 
the  Union  legal  order,  including  the  internal  market  and  common  policies.  Decision 
No 189/2014/EU  and  the  parameters  on  which  is  it  based  were  deemed  consistent  with  the 
EU’s other policies. The increase in the quota is a retroactive and limited adaptation bringing 
it up to a level consistent with the annual growth rates already envisaged by the Council. The 
other  parameters  of  Decision  No 189/2014/EU  are  unchanged.  Under  these  conditions,  the 
increase in the annual quota from 120 000 hap to 144 000 hap will have no impact at all on 
the consistency of Decision No 89/2014/EU with the EU’s other policies. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 349 of the Lisbon Treaty (Treaty on the Functioning of the European Union – TFEU). 

 • 

Subsidiarity (for non-exclusive competence) 

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. 

EN 

6 

   EN 

The proposal for a Council Decision therefore complies with the subsidiarity principle. 

• 

Proportionality 

Under  the  principle  of  proportionality,  the  content  and  form  of  Union  action  should  not 
exceed what is  necessary to  achieve the objectives of the Treaties. The quota  of 144 000 hl 
corresponds to the projected growth rate and the quantity arising from the application of this 
rate  for  the  end  of  2016.  Within  the  legal  framework  of  Decision  No 89/2014/EU,  the  only 
way of achieving the quota increase with effect from 1 January 2016, in order to bring it up to 
the  level  matching  the  growth  rate  of  3.2 %,  is  to  modify  the  existing  Decision  with 
retroactive  effect.  Therefore,  neither  the  content  nor  the  form  of  the  action  exceed  what  is 
necessary to achieve the objectives of Article 349 TFEU. 

• 

Choice of the instrument 

See ‘Proportionality’. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

1. It follows from the first subparagraph of Article 349 TFEU, as interpreted by the Court of 
Justice  in  Joined  Cases  C-132/14  to  C-136/14,  that  the  ‘specific  measures’  it  refers  to  are 
adopted ‘taking into account’ the ‘structural social and economic situation’ of the outermost 
regions, which is ‘compounded’ by a number of factors ‘the permanence and combination of 
which  severely  restrain  their  development’.  The  first  subparagraph  of  Article  349  therefore 
presents these factors as elements that compound the structural social and economic situation 
of  the  outermost  regions  which  the  Council  must  take  into  account,  pursuant  to  the  third 
subparagraph of Article 349 TFEU, when adopting specific measures (Judgment of the Court 
(Grand Chamber) of 15 December 2015 in Joined Cases C-132/14 to C-136/14, paragraphs 67 
and 68). As indicated by the Court above and for the reasons set out below, the Commission 
believes that an urgent retroactive increase in the quota eligible for a reduced rate of excise 
duty, from 120 000 hap to 144 000 hap, is the only appropriate measure: 

- producers of traditional rum have been unable to benefit from sufficient access to the French 
mainland market. The projected growth rates corresponded to a quota  of 144 400 hap at the 
end of 2016. For this reason, a retroactive increase to the quota for 2016 to 144 000 hap is a 
simple  adjustment  aimed  at  bringing  the  quota  up  to  the  level  already  envisaged  by  the 
Commission and the Council. 

- the economic framework has already been specified and determined by the Commission and 
the Council;  

- a rapid, retroactive increase is necessary to avoid immediate and likely irreparable harm for 
producers; 

-  Eurostat  figures  show  a  clear  fall  in  exports  to  the  European  Union  of  traditional  rum 
produced in these outermost regions;  

- the figures show that market share for traditional rum in other EU countries has been lost to 
producers in third countries; 

EN 

7 

   EN 

- imports of rum from other third countries released for consumption in mainland France have 
shown far more growth; 

the other parameters of Decision No 189/2014/EU remained unchanged. 

2.  The  aim  of  this  measure  is  to  adjust  to  the  limited  economic  implications  that  do  not 
currently  justify  the  costs  incurred  by  an  ‘impact  assessment’.  In  the  case  in  question, 
increasing the quota with retroactive effect from 1 January 2016 is the only option to ensure 
that ‘traditional rum’ from these outermost regions remains competitive on the EU market.  

Moreover, an independent economic analysis5 carried out by the Commission and finalised in 
July  2016  with  the  aim  of  assessing  whether  Directive  92/83/EEC  was  still  fit  for  purpose 
concluded  that  French  imports  of  traditional  rum  from  Guadeloupe,  French  Guiana, 
Martinique and Réunion represented only a small proportion of total alcohol consumption in 
France (between 1 and 2 %) and that, for this reason, the presence of a reduced rate for rum 
was  not  likely  to  create  distortions  of  competition  on  the  French  rum  market.  Under  these 
conditions,  it  is  even  less  likely  that  these  imports  will  affect  the  functioning  of  the  single 
market. 

These  conclusions  were  published  and  all  stakeholders  were  consulted.  Although  the  study 
did not specifically target an increase in the quota of traditional rum from Guadeloupe, French 
Guiana,  Martinique  and  Réunion  eligible  for  a  reduced  rate  in  mainland  France,  the 
Commission nonetheless notes that none of the 750-plus contributions received and verified 
as  part  of  the  consultation  put  forward  arguments  or  any  other  information  justifying 
additional analyses6.  

• 

Stakeholder consultations 

See paragraph above. 

As  well  as  immediately  adjusting  the  quota,  the  Commission  will  need  to  draw  on  the 
analyses  provided  by  France  by  31 July 2017  as  part  of  the  mid-term  review  planned  by 
Decision No 189/2014/EU of 20 February 2014. This review will involve further consultation 
with all stakeholders. 

• 

Collection and use of expertise 

See above, ‘Ex-post evaluations/fitness checks of existing legislation’. 

• 

Regulatory fitness and simplification 

Not applicable. 

5 
https://circabc.europa.eu/sd/a/3e197d56-02d3-4efd-b056-

Page 28 of the report and Annex 7, pages 17 to 20 

5b7d53b8e196/Evaluation%20of%20Council%20Directive%2092-83-
EEC%20on%20the%20harmonisation%20of%20the%20structures%20of%20excise%20duties%20on%
20alcohol%20and%20alcoholic%20beverages.pdf 

6 

https://circabc.europa.eu/sd/a/c1011602-0d01-4d97-9ce1-56a23fa57929/Appendix%209a%20-
%20Open%20public%20consultation%20summary%20report.pdf 

EN 

8 

   EN 

                                                 
 
 
• 

Fundamental rights 

Not applicable. 

4. 

BUDGETARY IMPLICATIONS 

There are no budgetary implications. 

EN 

9 

   EN 

2017/0127 (CNS) 

Proposal for a 

COUNCIL DECISION 

amending Council Decision No 189/2014/EU authorising France to apply a reduced rate 
of certain indirect taxes on ‘traditional’ rum produced in Guadeloupe, French Guiana, 
Martinique and Réunion and repealing Decision No 2007/659/EC 

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 Parliament7,  
Having regard to the opinion of the European Economic and Social Committee8,  
Having regard to the opinion of the Committee of the Regions9,  

Acting in accordance with a special legislative procedure,  

Whereas: 

(1) 

(2) 

(3) 

7 
8 
9 
10 

11 

Pursuant  to  Article 1  of  Council  Decision No 189/2014/EU10,  France  was  authorised 
to  extend  the  application  on  the  French  mainland,  to  ‘traditional’  rum  produced  in 
Guadeloupe, French Guiana, Martinique and Réunion, of a rate of excise duty lower 
than the full rate for alcohol set by Article 3 of Council Directive 92/84/EEC11 and to 
apply a rate of the levy known in  French as ‘cotisation sur les boissons alcooliques’ 
(VSS)  lower  than  the  full  rate  applicable  under  French  national  legislation  to 
‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion. 

According to Article 3 of the above Decision, the reduced rates of excise duty and of 
VSS  applicable  to  ‘traditional’  rum  shall  be  confined  to  an annual  quota  of  120  000 
hectolitres of pure alcohol (‘hap’). 

On 22 September 2016, the French authorities asked the Commission to present a draft 
technical  adaptation  increasing  the  annual  quota  from  120 000  to  144 000  hap.  The 
request  was  accompanied  by  a  report  containing  all  information  justifying  the 
adaptation  requested.  Producers  of  traditional  rum  were  unable  to  benefit  from 
sufficient  access to  the French mainland market in  2016. The projected growth  rates 

OJ C , , p. . 
Council Decision No 189/2014/EU of 20 February 2014 authorising France to apply a reduced rate of 
certain  indirect  taxes  on  ‘traditional’  rum  produced  in  Guadeloupe,  French  Guiana,  Martinique  and 
Réunion and repealing Decision No 2007/659/EC (OJ L 59, 28.2.2914, p. 1). 
Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duty on 
alcohol and alcoholic beverages (OJ L 316, 31.10.1992, p. 29). 

EN 

10 

   EN 

                                                 
 
 
(4) 

(5) 

required a quota of 144 400 hap and this volume was reached at the end of 2016. The 
annual  quota  of  120 000  hap  should  therefore  be  increased  to  144  000  hap.  The 
measures  authorised  by  Council  Decision  No 189/2014/EU  will  be  analysed  and  a 
more in-depth review of the system as a whole will take place. This analysis will take 
into account France’s report referred to in Article 4 of Decision No 189/2014/EU. 

The  quota  of  120 000  hap  for  2016  was  used  before  the  end  of  2016;  without  a 
retroactive increase with effect from 1 January 2016, producers will suffer significant 
–  and  likely  irreparable  –  harm.  Relations  between  traditional  rum  producers  and 
retailers  in  France  are  governed  by  annual  contracts  that  include  commitments  on 
volumes delivered, purchase prices, and discounts and promotions. The expiry of the 
quota  brought  about  a  subsequent  and  unforeseen  increase  in  taxation  for  quantities 
outside it, yet at the start  of the year,  when the contracts  were  signed, the  producers 
could  not  foresee  either  the  likelihood  that  the  quota  would  be  exceeded  or  to  what 
extent.  Without  a  retroactive  increase  in  the  quota,  rum  producers  will  suffer 
substantial  losses  for  the  quantities  outside  it.  The  retroactive  increase  in  the  quota 
with effect from 1 January 2016 must therefore be authorised. 

The  other  parameters  of  Decision No 189/2014/EU  remained  unchanged  and  an 
independent  economic  analysis  carried  out  by  the  Commission  and  finalised  in 
July 2016 confirmed that French imports of traditional rum from Guadeloupe, French 
Guiana,  Martinique  and  Réunion  represented  only  a  small  portion  of  total  alcohol 
consumption in France. For this reason, a reduced rate is unlikely to create distortions 
of competition on the French rum market, let alone on the single market. 

(6) 

This Decision is without prejudice to the possible application of Articles 107 and 108 
TFEU. 

(7) 

Decision No 189/2014/EU should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION: 

Article 1 

1. In Article 3 of Decision No 189/2014/EU, paragraph 1 is replaced by the following:  

‘1. The reduced rates of excise duty and of VSS referred to in Article 1 and applicable to the 
rum referred to in Article 2 shall be confined to an annual quota of 120 000 hectolitres of pure 
alcohol  for  the  period  until  31 December 2015.  For  the  period  between  1 January  2016  and 
31 December 2020, they shall be confined to an annual quota of 144 000 hectolitres of pure 
alcohol’. 

Article 2 

This Decision shall enter into force on the day following that of its publication in the Official 
Journal of the European Union. 

Done at Brussels, 

For the Council 
The President 

EN 

11 

   EN