COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Council Decision concerning the dock dues in the French outermost regions and amending Decision No 940/2014/EU
Date: 2021-03-03
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: French overseas department and region, coronavirus disease, derogation from EU law, epidemic, import tax, local tax, originating product, peripheral region, tax exemption, tax relief

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.3.2021  SWD(2021) 44 final  COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a Council Decision concerning the dock dues in the French outermost regions and amending Decision No 940/2014/EU {COM(2021) 95 final}  
 
 
Contents 

1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................................................... 4 

Introduction: Outermost regions ........................................................................ 4 
1.1. 
1.2.  Specific measure for certain French outermost regions .................................... 4 

2. 

PROBLEM DEFINITION .................................................................................................................... 6 

2.1.  Problem 1: Fragile economic growth ................................................................ 6 
2.2.  Problem 2: Additional costs for local industries ............................................. 11 
2.3.  Problem 3: Certain shortcomings of the current regime ................................. 14 
2.4.  Problem 4: Constraints to the development of regional trade ......................... 17 
2.5.  How will the problems evolve? ....................................................................... 20 

3.  WHY SHOULD THE EU ACT? ........................................................................................................ 21 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ............................................................................... 22 

4.1.  General objectives ........................................................................................... 22 
4.2.  Specific objectives ........................................................................................... 22 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .................................................................... 22 

5.1.  What is the baseline from which options are assessed? .................................. 22 
5.2.  Description of the policy options .................................................................... 23 
5.3.  Options discarded at an early stage ................................................................. 25 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ........................................................... 26 

6.1.  Methodology .................................................................................................... 26 
6.2.  Baseline ........................................................................................................... 26 
6.3.  Option 1 - Termination of the outermost region specific support ................... 30 
6.4.  Option  2  –  Revision  of  criteria  for  the  identification  of  eligible 

products and updates ....................................................................................... 33 
6.5.  Option 3 – Revision of the maximum permitted differential .......................... 38 
6.6.  Option  4  –  Raising  the  turnover  threshold  of  dock  dues  from 

EUR 300 000 to EUR 550 000 ........................................................................ 39 
6.7.  Option 5 – Revised monitoring arrangements ................................................. 41 

7.  HOW DO THE OPTIONS COMPARE? ............................................................................................ 43 

7.1.  Effectiveness .................................................................................................... 43 
7.2.  Efficiency ........................................................................................................ 44 
7.3.  Coherence ........................................................................................................ 45 

8. 

PREFERRED OPTION ...................................................................................................................... 46 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .................................. 47 

ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 48 

ANNEX 2: STAKEHOLDER CONSULTATION ....................................................................................... 49 

ANNEX 3: ANALYTICAL METHODS ..................................................................................................... 58 

ANNEX 4: EVALUATION ......................................................................................................................... 61 

EN 

  EN 

 
 
 
1. 
2. 
3. 
4. 
5. 

Coherence ........................................................................................................ 61 
Relevance ........................................................................................................ 65 
Effectiveness .................................................................................................... 66 
EU added value ................................................................................................ 69 
Efficiency ........................................................................................................ 71 

ANNEX 5: FURTHER INFORMATION ON DOCK DUES TAX ............................................................. 82 

2 

 
 
 
Glossary 

Term or acronym 

Meaning or definition 

CN 

EMFF 

EPA 

ESA 

EU 

GDP 

GRP 

IEDOM 

INSEE 

ISSG 

ORs 

POSEI 

SMEs 

TFEU 

VAT 

WTO 

Combined Nomenclature 

European Maritime and Fisheries Fund 

Economic Partnership Agreement 

Eastern and Southern Africa. Six countries of the ESA region 
(Comoros, Madagascar, Mauritius, the Seychelles, Zambia and 
Zimbabwe) concluded an interim Economic Partnership Agreement 
with the EU at the end of 2007 

European Union 

Gross domestic product 

Gross regional product 

Institut d’émission des départements d’outre-mer 

Institut national de la statistique et des études économiques 

Interservice Steering Group 

Outermost regions 

Programme of options specifically relating to remoteness and 
insularity 

Small and medium-sized enterprises 

Treaty on the Functioning of the European Union 

Value added tax 

World Trade Organization 

3 

 
 
 
 
 
 
 
 
 
 
 
 
1.  INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

1.1. Introduction: Outermost regions 

Several  regions  of  the  European  Union,  known  as  the  outermost  regions  (ORs),  are 
located  in  areas  that  are  remote  from  Europe.  These  are  the  French  regions  of 
Guadeloupe, French Guiana, Réunion, Martinique, Mayotte and Saint-Martin; the Azores 
and Madeira, which belong to Portugal; and the Spanish Canary  Islands. These regions 
are an integral part of the EU and therefore need to comply with EU legislation. At the 
same time, and unlike the rest of the EU territory, they face permanent constraints related 
to  their  characteristics,  in  particular  to  remoteness,  insularity,  small  size,  difficult 
topography and climate, and economic dependence on a limited number of products.  

Figure 1: Geographical distribution of EU outermost regions 

Source: https://ec.europa.eu/regional_policy/en/policy/themes/outermost-regions 

The special situation of these regions is recognised under Article 349 of the Treaty on the 
Functioning of the EU (TFEU). This article allows for specific measures to be taken for 
these regions as it acknowledges that the permanent and combined constraints affect their 
economic  and  social  situation  and  severely  restrain  their  development.  It  permits  such 
measures provided that they do not undermine the integrity and the coherence of the EU 
legal order, including the internal market and common policies. Such measures concern 
various policies, including taxation, support to create jobs, boosting competitiveness and 
preserving the environment. 

1.2. Specific measure for certain French outermost regions  

This report concerns the existing indirect tax called dock dues (‘octroi de mer’), one of 
the oldest forms of French taxation, and the oldest in the French outermost regions. This 
tax  is  in  force  in  the  French  outermost  regions  of  Martinique,  Guadeloupe,  French 
Guiana, Réunion  and Mayotte.  The tax is  not  applicable in  Saint-Martin  due to  its free 
port  status.  The  tax  applies  to  imports  of  products,  irrespective  of  their  origin,  and  to 

4 

 
 
supplies  of  goods  for  consideration  by  persons  engaged  in  production  activities1.  In 
principle, it applies equally to locally produced products and to imported products. 

The  rates  of  dock  dues  are  established  by  the  regional  councils  (in  Guadeloupe  and 
Réunion), the single territorial collectivities (in French Guiana and Martinique) and the 
Departmental  Council  (in  Mayotte).  These  competent  authorities  are  established 
independently for each French outermost region. 

Revenue  from  dock  dues  is  allocated,  on  the  one  hand,  to  the  budgets  of  the  territorial 
collectivities  (communes,  departments,  regions  and  communities  inside  each  concerned 
outermost  region)  and,  on  the  other  hand  (and  under  certain  conditions),  to  a  regional 
fund for development and employment. It has become an essential financial resource for 
these territories, to which the tax yield is almost entirely allocated. Detailed information 
on dock dues is provided in Annex 5. 

Council  Decision  No  940/2014/EU  of  17 December 20142  authorises  France  to  apply, 
until  31 December 2020,  exemptions  or  reductions  to  dock  dues  in  respect  of  certain 
locally  produced  products.  The  Annex  to  the  Decision  contains  the  list  of  products  to 
which the tax exemptions or reductions may be applied. Depending on the product, the 
difference  between  the  taxation  of  products  manufactured  locally  and  that  of  other 
products may not exceed 10, 20 or 30 percentage points. 

The  objectives  of  the  existing  Council  Decision  are  to  promote  the  socio-economic 
development of these outermost regions and to compensate for the higher production cost 
of  local  production  in  these  French  outermost  regions.  This  decision  allows  France  to 
offset  the  competitive  disadvantages  faced  by  the  producers  in  these  regions,  without 
undermining  the  integrity  and  coherence  of  the  EU  legal  order,  including  the  internal 
market and common policies.  

As the regime is  due to  expire on 31 December 2020, a decision regarding its future is 
urgently  needed.  As  French  outermost  regions  have  been  significantly  impacted  by  the 
ongoing COVID-19 pandemic, the French authorities were unable to  finalise the list  of 
products to which total exemptions or reductions of dock dues should apply and therefore 
requested  an  extension  to  the  date  of  application  of  the  existing  Council  Decision  to 
30 June 2021. 

Since there is a substantial risk of a legal vacuum and impact on producers in the French 
outermost regions if no proposal is adopted before 31 December 2020, the Commission 
proposed to extend the current Decision by a further 6 months. Thus, Council Decision 
(EU)  1793/2020/EU  of  16 November 20203  extended  the  duration  of  Council  Decision 
No 940/2014/EU for a further 6 months until 30 June 2021. 

1  ‘Production  activities’  means  the  manufacture,  alteration  or  renovation  of  movable  tangible  property. 
Services, therefore, are outside the scope of this tax. 
2  Council  Decision  No  940/2014/EU  of  17  December  2014  concerning  the  dock  dues  in  the  French 
outermost  regions  and  repealing  Decision  Council  2004/162/EC  of  10  February  2004,  OJ  L  367, 
23.12.2014, pp. 1–5. 
3 Council Decision (EU) 2020/1793 of 16 November 2020 amending the period of application of Decision 
No 940/2014/EU concerning the dock dues in the French outermost regions, OJ L 402, 1.12.2020, pp. 21–

5 

 
                                                           
 
The  objective  of  this  staff  working  document  is  to  evaluate  the  current  regime  and 
analyse possible future options to take effect upon the expiry of the current measure in 
June  2021.  This  report  is  based  on  an  external  study  by  Economisti  Associati4  (‘the 
study’) commissioned by the European Commission. 

2.  PROBLEM DEFINITION 

The constraints noted in Article 349 TFEU result in several problems for local producers 
in  the  French  ORs.  The  problems  differ  between  the  various  outermost  regions  and 
averaging  the  impact  masks  the  often  significant  differences  between  them.  The 
following problem tree outlines the problems, the drivers and their consequences.  

Figure 2. Problem tree 

2.1. Problem 1: Fragile economic growth 

The  economies  of  these  remote  regions  are  significantly  below  the  level  of  gross 
domestic product (GDP) per capita of mainland France. Across the ORs, GDP per capita 
in  terms  of  purchasing  power  standards  (PPS)  is  below  the  GDP  per  capita  PPS  in 
France.  Unemployment,  including  youth  unemployment,  in  all  regions  is  worryingly 
higher  than  in  mainland  France  and  above  the  EU  average.  Moreover,  long-term 
exclusion from the labour market is also a characteristic of these regions. 

According  to  the  Institut  national  de  la  statistique  et  des  études  économiques  (INSEE), 
approximately 30% and 39% of the population of Réunion and Martinique respectively 
lived below the poverty line in 20165. In Mayotte, this rate rises to 82%6 and one third of 

22 
4 Study on specific tax regimes for outermost regions belonging to France and Spain, Economisti Associati 
et al, 2020. 
5 No data for Guadeloupe or French Guiana, INSEE. 
6 INSEE 2011. 

6 

 
 
 
 
                                                                                                                                                                            
the population did not have access to running water. Table 1 below provides a summary 
of the key socio-economic indicators for each region and France. 

Table 1: Key socio-economic data (20187) and unemployment data (20178) 

Guadeloupe  Martinique  Réunion 

French 
Guiana 

Mayotte 

France 

Total GDP (EUR million)  10 250  

9 508 

 20 331  

4 499 

2 661 

2 353 090 

GDP  per  capita  (EUR) 
PPS 

GDP  per  capita  PPS 
compared  to  all  France 
average 

21 900 

23 300 

21 200 

14 400 

9 000 

31 500 

69.5% 

74.0% 

67.3% 

45.7% 

28.6% 

100% 

Average 
growth rate [2014-189] 

annual  GDP 

3.0% 

0.3% 

3.3%  

1.9% 

3.2% 

2.0% 

Unemployment rate10 

Young  people  neither  in 
in 
employment 
education  and 
training 
(NEET rate11) 

nor 

Human 
Index 201012 

Development 

23.1% 

20.7% 

17.7% 

24.0% 

19.1% 

35.0% 

8.8% 

19.9% 

27.8% 

33.1% 

Not 
available 

11.1% 

0.822 

0.813 

0.775 

0.739 

0.637 

0.883 

Import (EUR million) 

2 939 

2 159 

5 051 

1 530 

Export (EUR million) 

280 

211 

324 

213 

572 

11 

Number of tourists 

1 166 000 

1 047 000 

574 000 

202 000 

61 800 

Source: IEDOM, Eurostat, INSEE. 

Those problems lead to strong social unrest that can paralyse these territories for weeks 
or even months at a time, for example the general strikes in French Guiana in 201713 and 
in Mayotte14 and Réunion15 in 2018. 

7 Eurostat 2018. 
8 IEDOM: Annual Report 2018. 
9 CAGR, based on IEDOM: Annual Reports 2018.  
10 IEDOM: Annual Reports 2018. INSEE Employment Surveys 2014-2018. 
11 Eurostat 2018. 
12 Agence Française de développement,  document de  travail n° 129, ‘Quel niveau de développement des 
départements et collectivités d’outre-mer ? Une approche par l’indice de développement humain.’ 
13  Laurence  Marot,  https://www.lemonde.fr/societe/article/2017/04/22/en-guyane-un-accord-a-3-milliards-
d-euros_5115527_3224.html, lemonde.fr, 21 avril 2017. 
14 
territoire_2653188.html, sur francevinfo.fr, 12 mars 2018. 
15 
paralysee_1693134, liberation.fr, 28 novembre 2018. 

https://www.liberation.fr/france/2018/11/20/gilets-jaunes-couvre-feu-partiel-a-la-reunion-l-ile-est-

https://www.francetvinfo.fr/monde/a-mayotte-on-peut-parler-de-paralysie-totale-du-

7 

 
 
 
 
 
 
 
 
 
 
                                                           
What are the drivers of the fragile economic growth? 

  Dependence on a few products and on the public sector  

The  French  outermost  regions  share  most  of  the  features  of  small  economies.  In 
particular,  like  most  small  economies,  the  range  of  production  is  concentrated  on  a 
relatively narrow range of products with little diversification, meaning that the economy 
is highly exposed to sectoral or asymmetric shocks.  

The  economies  of  the  French  outermost  regions  are  dominated  by  the  non-commercial 
service  sector.  This  sector  covers  activities  of  public  administration,  health,  education 
and  social  work,  and  typically  accounts  for  between  80-85%  of  the  total  value  added. 
Public services  are a major component of this  sector, which  contributes from 33.2% in 
Martinique  to  54.8%  in  Mayotte16  to  the  outermost  regions’  economy,  as  compared  to 
22.4% in mainland France17.  

Tourism  is  one  of  the  engines  of  these  economies.  The  tourism  sector  represents  in 
Martinique and Guadeloupe on average 10% of their GDP and several tens of thousands 
of direct and indirect jobs (nearly 14 000 jobs in Réunion18). The tourist industry in these 
territories generates directly about 5% of employment and indirectly about 10% (11.5% 
in Guadeloupe19). 

The  remaining  industries  pale  in  comparison  to  the  service  and  tourism  sectors.  The 
secondary sectors20 represent between 10% (Mayotte) and 16% (French Guiana) of value 
added, with industrial and manufacturing activities ranging from 3% to 9% of the total. 
Finally, agriculture and fisheries, although the smallest sector in the outermost regions in 
terms  of  added  value,  contribute  more  than  double  to  the  outermost  regions’  economy 
compared to the EU average: 3.8% of these regions’ added growth  against 1.6% at EU 
level21.  Even  with  the  gross  value  added  of  agriculture  and  fisheries  being  relatively 
small,  they  are  important  for  the  regional  cultural  identity,  for  the  preservation  of  the 
landscape and tourism as well as for their employment intensity22. Overall, the outermost 
regions  have  less  developed  industry  (7.5%  of  value  added  compared  to  14.3%  on  the 
French mainland)  and a  significantly  greater reliance on public sector services  than the 
French mainland. 

  Persistent economic constraints  

Significant  public  support  from  France  and  the  EU  has  helped  develop  infrastructure, 
provide  services  for  the  population,  create  jobs,  invest  in  education  and  skills  and 
increase  businesses’  competitiveness.  It  also  has  helped  enhance  and  diversify 

16 IEDOM: Annual Report on Martinique and Mayotte, 2018 (2015 data). 
17 INSEE 2018. 
18 IEDOM: Annual Reports 2018. 
19 IEDOM: Annual Reports 2018. 
20  The  secondary  sector  covers  all  activities  involving  the  processing  of  raw  materials  (manufacturing, 
construction industries). 
21 SWD(2017) 349 final. 
22 For example, 4% of the working population in Guadeloupe and Martinique work in the primary sector. 

8 

 
 
 
 
                                                           
agricultural  activities,  preserve 
the  environment  and  address  climate  change. 
Nevertheless,  economic  constraints  remain  linked  to  the  permanent  challenges  these 
regions  face,  linked  to  their  size,  remoteness  and  insularity  (insularity  is  not  a 
characteristic  of  French  Guiana).  The  evolution  of  the  political,  economic  and  social 
situation in the outermost regions in recent years – rising unemployment rates, especially 
alarming  among  young  people,  and,  for  some  outermost  regions,  growing  irregular 
migration and social crises – is a cause for concern23. 

Local  industries  faces  substantial  international  competition,  in  particular  due  to  the 
practice  of  importing  production  surpluses  and  low-margin  products  from  the  EU  and 
especially  mainland  France.  Rather  than  storing  certain  food  products  (including  milk, 
poultry, pork and beef) or selling them on the EU market  at  very low prices, some EU 
operators prefer to sell them in the outermost regions, where they are marketed at prices 
lower  than  those  charged  in  mainland  EU,  even  though  they  bear  specific  costs,  in 
particular transport costs24. These products compete unfairly with local producers. These 
imports of discounted products destabilise the local market and make it very challenging 
to create import-substituting production for most goods25. 

Furthermore,  amendments  to  EU  import  regimes  have  significant  impacts.  The  EU  has 
concluded  numerous  trade  agreements  with  third  countries,  particularly  over  the  past 
decade. These agreements are most often asymmetrical in favour of third countries, to the 
detriment  of  agricultural  and  agri-food  production  in  the  French  outermost  regions26. 
This is reflected in the large trade deficit common to all the French outermost regions27. 
The trade deficit is mainly due to the elevated imports, which represent between 24% and 
31% of GDP. 

Figure  3.  Exports,  imports  (including  from  ‘mainland’  EU)    and  trade  balance  as  a 
percentage of GDP in 2017 

23 https://ec.europa.eu/regional_policy/sources/policy/themes/outermost-
regions/pdf/rup_2017/com_rup_partner_en.pdf  
24 https://www.senat.fr/enseance/2016-2017/288/Amdt_5.html 
25 POSEI France, rapport Annuel d’Exécution – année 2017. 
26 For example, since the late 1990s, rum producers in the Caribbean community and Dominican Republic 
(CARIFORUM)  have 
into  Europe: 
https://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154237.pdf.  
27 For example, agriculture and agri-food production represent more than 70% of the exports in Martinique. 

exported  under  duty-free 

and  quota-free 

conditions 

9 

 
                                                           
Exports, imports and trade balance as a percentage of GDP in 2017 

40,00

30,00

20,00

10,00

0,00

-10,00

-20,00

-30,00

-40,00

Reunion

Guadeloupe

French Guiana

Martinique

Mayotte

exports / GDP

imports / GDP

trade balance/GDP

1,75

27,30

-25,6

3,08

32,30

-29,2

5,07

36,43

-31,4

2,45

25,10

-22,7

0,48

24,87

-24,4

Source: the study. 

The demographic situation is highly variable and diverse for each region, and is a factor 
in  the  persistent  economic  challenges  they  face  as  a  whole.  Guadeloupe’s  population 
growth  is  low  at  0.2%  and  the  region  is  getting  older.  Martinique’s  population  has, 
despite  immigration,  declined,  with  large  numbers  migrating  to  mainland  France28.  In 
Mayotte and French Guiana, the population has grown significantly, with approximately 
40% of the population aged 20 years or less in French Guiana and 44% of the population 
aged  15  years  or  less  in  Mayotte29.  While  this  is  mainly  due  to  positive  demographic 
growth,  these  regions  also  experience  significant  irregular  immigration.  In  French 
Guiana,  35%  of  the  population  does  not  have  French  nationality.  Moreover,  French 
Guiana  is  struggling  to  control  significant  migratory  flows  from  Suriname,  Brazil  and 
Haiti.  Similarly,  20  000  migrants  from  the  Comoros  Islands  (about  one  tenth  of  the 
island’s  population)  arrive  in  Mayotte  every  year.  The  population  of  Réunion  is  also 
growing due to natural increases, with 34% of its population younger than 20 years old, 
while its population over 60 is also increasing. 

The persistent constraints facing these outermost regions also stem from external factors. 
The outermost regions are located in areas where countries have significant differences in 
their level of development. The outermost regions are directly exposed to the social and 
economic conditions, including low labour costs, that prevail in those countries30.  

Education is another significant factor affecting their development. Guadeloupe, Réunion 
and Martinique all have high rates of early school dropout, while the condition of French 
Guiana’s 
the  establishment  of  an  effective 
educational  system31.  Illiteracy  is  a  significant  problem,  one  that  contributes  to  the 
economic challenges. In 2018, 7% of the population in mainland France between the age 

infrastructure  significantly  hampers 

28 http://www.euroconsulting.be/wp-content/uploads/2017/01/fullrep_en1.pdf 
29 INSEE 2017. 
30 http://www.euroconsulting.be/wp-content/uploads/2017/01/fullrep_en1.pdf 
31 Obsolete, non-existent,  or poorly  maintained infrastructure exposes  the area  to frequent  medical crises 
and 
system: 
http://www.egmontinstitute.be/content/uploads/2018/04/Outermost-Regions-PLS-v2.pdf 

educational 

effective 

prevents 

creation 

the 

an 

of 

10 

 
 
 
                                                           
of  16  and  65  years  were  illiterate.  In  comparison,  14%  of  the  same  age  profile  were 
illiterate  in  Martinique,  with  the  figure  rising  to  22.6%  in  Réunion32.  This  creates  a 
mismatch between the skills and competencies sought by employers and those offered by 
job  seekers.  The  distance  between  where  the  jobs  are  located  and  where  people  live 
creates a further mismatch, as transport difficulties are particularly prevalent, limiting the 
possibility for job seekers to commute to possible job locations33. 

2.2. Problem 2: Additional costs for local industries 

The  rationale  of  the  dock  dues  regime  is  to  support  local  products  by  reducing  the 
competitiveness gap, caused by additional production costs, between local products and 
products sourced from elsewhere.  

The latest assessment was completed in 2016 and estimated total additional costs in the 
French  outermost  regions  to  be  EUR  4.51  billion,  of  which  EUR  1.76  billion34  was 
attributable  to  sectors  supported  by  dock  dues  (manufacturing  and  the  primary  sector). 
Furthermore,  additional  cost  assessments  (taking  the  form  of  ‘product  fiches35’)  have 
been carried out regularly at individual product level to justify the differential treatment 
and set appropriate tax rates.  

From the analysis of these ‘product fiches’, it emerged that the bulk of additional costs – 
approximately 83% on average – is generated by four cost factors, apparent in all French 
ORs:  the  additional  costs  of  inputs  (including  freight  costs);  oversized  equipment  (idle 
production  capacity);  lower  productivity  of  labour;  and  the  need  for  larger  stocks. 
However,  there  is  variability  in  the  assessments  that  seems  unrelated  to  regional 
specificities,  but  which  is  connected  instead  to  methodological  incongruences  and  the 
inevitable subjectivity of businesses’ own estimates.  

Despite  these  variations,  the  average  estimate  of  additional  costs  is  fairly  consistent 
across  the  regions,  amounting  on  average  to  27%  of  turnover.  The  only  exception  is 
Mayotte,  where  the  average  additional  costs  amount  to  approximately  44%  of  turnover 
due to the more severe constraints  and economic conditions of this region compared to 
the other regions. 

Table 2: Estimated additional costs as a percentage of turnover, by cost factor and by 
region  

Cost of 
inputs   Stocks 

Equip-
ment  Maint. 

Staff 
costs 

Fin. 
costs   Energy   Others 

Total 
partial 

Total 
general 

EUR 
million 

Martinique 

11.2% 

0.0% 

2.6% 

0.8% 

9.0% 

1.0% 

0.6% 

1.9%  27.1%  27.9% 

360.2 

32 INSEE, 2011. 
33 La lettre du Centre d’Economie et de Management de l’Océan Indien n°20, ‘La vie chère en Outre-Mer, 
un phénomène structurel ?’ – 2019. 
34 This figure is in the same order of magnitude of the latest dock dues evaluation (Technopolis, 2018, see 
table  2  below).  The  difference  might  be  because  the  value  of  production  of  economic  operators  falling 
below the EUR 300 000 turnover threshold is no longer computed since the 2014 reform of the dock dues 
regime. 
35  ‘Product  fiches’  detail,  at  product  level,  the  estimated  additional  costs  incurred  by  local  economic 
operators compared to their competitors based on the French mainland. 

11 

 
 
 
                                                           
Guadeloupe  9.5% 
French 
Guiana 

7.6% 

3.0% 

3.7% 

2.0% 

4.9% 

1.1% 

0.7% 

1.3%  26.2%  23.8% 

261.5 

12.3% 

5.3% 

4.4% 

0.0% 

0.5% 

0.0% 

6.9%  37.0%  28.7% 

155.5 

Mayotte 

9.7% 

3.7% 

8.8% 

1.4%  23.2%  0.0% 

1.7% 

2.5%  50.9%  44.0% 

59.2 

Réunion 

9.6% 

2.5% 

6.3% 

1.4% 

3.7% 

0.6% 

1.3% 

2.1%  27.5%  24.1% 

613.4 

Overall 
Source:  The  study  (based  on  a  sample  of  1 233  additional  costs  point  estimates,  and  for  the  monetary 
estimates, value of local production as reported in the latest dock dues evaluation (Technopolis, 2018)) 

5.7%  4.7%  2.1%  6.5%  0.8% 

9.5% 

0.7% 

1.9%  31.8%  27.0%  1 449.8 

What are the drivers of additional costs for local industries?  

  Permanent constraints – remoteness, insularity, size, difficult topography and 

volatility of climate 

The  economies  of  the  French  outermost  regions  are  affected  by  their  remoteness  and 
distance to  the European continent  and France, their main supply market36. The French 
outermost  regions  are  spread  across  the  world  and  all  are  located  over  7 500 km  from 
Paris, with Réunion, the furthest, at almost 10 000 km from Paris.  

This  has  a  negative  impact  on  most  sectors  affecting  mobility  of  factors  (labour  and 
capital),  trade  and  in  general,  all  forms  of  integration  with  the  mainland  EU37. 
Remoteness  is  also  synonymous  with  low  spinoffs  in  terms  of  agglomeration 
economies38, which reduces the added value of economic operators and productivity per 
worker. Their remoteness also affects transport costs towards mainland Europe, with air 
and sea connections limited by the lack of critical mass and exposed to fluctuations in oil 
prices. It also creates a heavy dependence of productive activity on the maritime and air 
transport  sector.  Moreover,  the  limited  number  of  regular  trade  routes  to  the  outermost 
regions  results  in  sporadic  supplies  of  goods.  This  requires  additional  services  such  as 
storage,  packaging  and  distribution  of  goods,  and  onward  transportation  costs.  This 
results in additional costs for local industries. 

The outermost regions are also isolated due to their insularity or due to the topography of 
the  territory.  Apart  from  French  Guiana,  96%  of  which  is  covered  by  dense  Amazon 
rainforest,  the  outermost  regions  are  small  oceanic  islands.  Accessibility  issues  affect 
these  regions  not  only  in  their  trade  and  exchanges  with  the  EU,  but  also  within  their 
geographic areas and within the same archipelago39.  

Guadeloupe,  Martinique,  Mayotte  and  Réunion  have  a  small  surface  area,  which  is  of 
volcanic origin and affected by seismic activity40. This results in very diverse relief from 
steep  to  flat,  sometimes  within  the  same  region.  This  difficult  topography  explains  the 
high population density in coastal areas of the outermost regions and the limited supply 

36 Mainland France remains in 2018 the main supplier of the French outermost regions with 58% of 
imports in Reunion and Guadeloupe, 52% in French Guiana, 53% in Mayotte and 70% in Martinique. 
37 http://www.et2050.eu/TechNotes/ET2050_DiscNote16_OutermostRegions_v(27_02_12).pdf  
38 Specifically, the density of jobs, the availability of services to businesses and of a skilled labour force, 
the emergence and circulation of new ideas, modern and efficient infrastructures, and human capital. 
39 Guadeloupe is an archipelago, with six of its islands inhabited. 
40  Réunion 
la  Fournaise,  one  of 
to  Piton  de 
https://en.reunion.fr/discover/the-volcanic-side/what-can-you-do-at-the-volcano 

the  world’s  most  active  volcanoes, 

is  home 

12 

 
 
 
 
                                                           
of suitable land. It  results in higher prices for such land, which also negatively impacts 
industry costs.  

The climate of these regions varies from tropical (e.g. Guadeloupe, Martinique, Mayotte 
and  Réunion)  to  equatorial  (French  Guiana).  The  tropical  climate  results  in  higher 
numbers of pests, which affect  crop  yields41 and impacts  the costs of raw  materials  for 
local economic operators. The climate also poses  a high natural and environmental risk 
for crops. 

The consequences of natural events such as floods, droughts, cyclones and tsunamis can 
be dramatic as due to the terrain most of the social and economic life is concentrated in 
the  coastal  areas,  which  are  particularly  exposed  to  extreme  weather  conditions42. 
Cyclones  Beijisa  and  Beguitta  hit  Réunion  in  2013  and  2018  respectively,  while 
hurricane Maria affected Guadeloupe and Martinique in 2017; the hurricane is estimated 
to  have  cost  EUR 100  million  in  Guadeloupe43  due  to  the  structural  damage  caused  by 
high  winds  and  excessive  rainfall.  Managing  these  risks  (by  complying  with  anti-
cyclonic  and  environmental  standards  and  higher  insurance  costs)  negatively  impacts 
industry costs. 

Furthermore,  the  high  exposure  of  maritime  freight  to  climate  risks  can  result  in 
disruptions in the supply chain, leading local economic operators to overstock products 
essential  for  production  and  to  over-equip  machine  parts  in  the  event  of  equipment 
breakdowns.  

  Small scale of production  

The  French  outermost  regions  have  small  local  markets,  as  a  consequence  of  their 
structural  and  geographic  features.  Local  demand  is  weak  because  of  both  the  small 
population and the limited purchasing power, which is on average lower than in the EU 
(see Table 1 above for details).  

Moreover, the vast majority of local economic operators in the French outermost regions 
are SMEs. More specifically, 95% of them are micro-enterprises with an average number 
of employees of 2.1 units per economic operator. 

This substantial number of SMEs is a significant obstacle in terms of development: 

o  The  small  size  of  SMEs,  with  a  consequent  lack  of  financial  and  human 
resources, is a strong barrier to entering new markets. SMEs are more affected by 
larger 
regulations,  standards, 
companies.  For  example,  in  the  sector  of  business  services,  costs  incurred  by 
SMEs when complying with administrative formalities can reach EUR 10 00044. 

labels  and  administrative  formalities 

than 

41 http://www.euroconsulting.be/wp-content/uploads/2017/01/fullrep_en1.pdf  
42 https://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/rup_growth/rup_growth_sum_en.pdf  
43  https://la1ere.francetvinfo.fr/ouragan-maria-moins-100-millions-euros-degats-guadeloupe-bruno-maire-
514807.html 
44 Ecorys, Administrative formalities and costs involved in accessing markets cross-border for provisions 
of accountancy, engineering and architecture services, 2017. 

13 

 
 
                                                           
o  Limited  innovation  in  many  enterprises,  especially  in  more  traditional  sectors 
such  as  manufacturing,  makes  SME  products  less  competitive  in  external 
markets. 

o  In comparison to large enterprises, SMEs perform worse in terms of turnover and 

value added45. 

In  this  context,  it  is  difficult  to  increase  production,  operate  large-scale  operations  and 
develop  substantial  internal  markets.  Local  producers  have  limited  capacities  both  to 
produce and to consume: they cannot achieve economies of scale, which are necessary to 
cover  high  transport  costs  or  to  compete  against  international  competitors.  The  smaller 
scale  production,  together  with  difficult  terrain,  result  in  the  underutilisation  of 
machinery designed for higher volumes of production, which has a significant impact on 
the competitiveness of local producers. Moreover, the tropical climate and roughness of 
the  terrain  cause  all  machinery  used  to  depreciate  quicker.  Waste  management  is  a 
further  factor  affecting  producers.  There  is  limited  landfill  capacity  and  a  lack  of 
economies  of  scale  for  waste  collection,  treatment  and/or  recycling  processes,  in 
particular at the specific waste stream level (e.g. for organic waste). This can result in the 
need  to  export  unusable  waste  at  additional  cost  to  be  dealt  with  on  the  French 
mainland46. 

As  a  result,  many  industrial  sectors  such  as  heavy  industry  are  not  represented  in  the 
French outermost regions. The range of production is concentrated on a relatively narrow 
range of products, meaning that the economy is highly exposed to sectoral or asymmetric 
shocks. 

2.3. Problem 3: Certain shortcomings of the current regime 

One  of  the  recurrent  criticisms  raised  by  economic  operators  (both  importers  and  local 
producers)  against  this  special  tax  regime  is  the  lack  of  transparency  in  the  policy 
process,  leading  to  the  application  of  tax  differentials  to  certain  categories  of  products, 
and to the quantification of such differential. In the current system, the French authorities 
and the EU authorities review, and approve or reject, individual product dossiers ‘one by 
one’  (currently  amounting  to  some  1 130  dossiers),  largely  on  the  basis  of  petitioners’ 
data. 

inputs  and  reimbursements) 

Overall,  the  total  administrative  cost  of  dock  dues  for  economic  operators  (including 
exemptions  on 
to  be  approximately 
EUR 600 000 per year. At a broader level, some current policy arrangements appear to be 
overly  complex  or  rigid,  possibly  causing  unnecessary  burdens  for  EU  and  national 
authorities.  

is  estimated 

45  EU  policy  framework  on  SMEs:  state  of  play  and  challenges,  European  Commission,  2019 
https://cor.europa.eu/en/engage/studies/Documents/EU-SMEs/EU-policy-SMEs.pdf.  
46 
regions/pdf/green_circ_econ_report_en.pdf 

https://ec.europa.eu/regional_policy/sources/policy/themes/outermost-

14 

 
 
                                                           
One  such  aspect  is  the  impossibility  to  revise  the  list  of  products47  and  the  tax 
differentials  extended  to  specific  products  without  a  legal  amendment  of  the  Council 
Decision.  This  hampers  smooth  adaptation  of  the  regime  to  the  evolving  market  and 
sectoral  needs  in  the  outermost  regions  and  imposing  an  administrative  burden  on  the 
authorities and the stakeholders involved. 

Finally,  the  current  monitoring  requirements  involve  significant  efforts  by  competent 
authorities, but the lack of a proper, harmonised monitoring framework and the less than 
optimal timing of the monitoring reports affect their informative value and utility for the 
policy process. 

What is affecting the smooth functioning of the regime?  

  Unclear legislation (lack of transparency) 

The  criteria  used  to  identify  eligible  products  are  formulated  in  generic  terms  and  are 
included only in the recitals of the current Decision, fuelling the perception of a lack of 
transparency and of an excess of subjectivity in the decision-making process at all levels.  

The  Council  Decision  mentions  three  eligibility  criteria:  (1)  the  existence  of  local 
production; (2) the existence of significant import that could jeopardise local production; 
and (3) the existence of additional costs affecting the competitiveness of local products. 
Stakeholders noted that these criteria leave ample room for interpretation as regards the 
level of market share requested and the risk of ‘jeopardising local production48’. 

  Complex list of products referring to CN classification (4–10 digits) (lack of 

flexibility)  

The eligible products for reduction of, or exemption from, the tax are fixed for a seven-
year period and are listed in  the Annex to  the Decision in  three ‘lists’ characterised by 
different 
tax  differential’  using  Combined 
Nomenclature codes (hereinafter ‘CN codes49’). In some cases, the product is listed using 
8–10 digit CN codes, which are very specific (see table below). In the Council Decision, 
the supported products are grouped.  

the  ‘maximum  permitted 

levels  of 

% applicable 
30 

Table  3:  Example  of  products  which  benefit  from  the  regime  related  to  the 
manufacture of food products and beverages in Martinique 
CN codes 
0403 10 
0706 10 00 10 
0710 

Yogurt 
Carrots 
Vegetables  (uncooked  or  cooked  by  steaming  or 
boiling in water), frozen 
Manioc, arrowroot, salep, Jerusalem artichokes, sweet 
potatoes and similar roots and tubers with high starch 

0714 

10 

Description 

20 

47 The list of products is in the Annex to Council Decision No 940/2014/EU 
48 See the study. 
49  CN  codes  are  a  tool  for  classifying  goods.  CN  codes  can  be  divided  into  4,  6  and 8  digits.  A  TARIC 
classification contains 10 digits. 4-digit CN codes are used for products of a  kind,  whereas each specific 
product has an 8-digit CN code.  

15 

 
 
 
 
                                                           
2204 21 

1101 00 15 

30 

30 

or  inulin  content,  fresh,  chilled,  frozen  or  dried, 
whether  or  not  sliced  or  in  the  form  of  pellets;  sago 
pith 
Other  wine;  grape  must  with  fermentation  prevented 
or arrested by the addition of alcohol 
Wheat flour of common wheat and spelt 

Any  adjustment  to  the  lists  requires  a  legal  amendment  of  the  Council  Decision.  This 
applies both to the inclusion of certain product categories on the lists and their  removal 
from them, and to the moving of certain product categories from one list to another. The 
process must follow the special legislative procedure under Article 349 TFEU, involving 
a significant investment of time and resources by the national and EU administrations.  

The use of customs classification codes to identify local production in need of support is 
to  facilitate  the  application  of  the  tax  to  imported  goods  and,  where  relevant,  to 
equivalent locally produced goods. However, the customs classification is not fit for the 
design,  analysis  and  monitoring  of  sectoral  development  policies,  which  are  instead 
typically  defined  on  the  basis  of  the  economic  activities  classification  (i.e.  the  NACE 
statistical classification).  

This leads to disparities and fragmentations in the tax treatment of the outputs of similar 
production  processes  carried  out  by  the  same  entities  but  classified  differently  for 
customs  purposes.  Such  disparities  might  prevent  operators  from  engaging  in  the 
production of new products that fall in the same segment of their existing production but 
have a different and not supported CN code. Inversely, certain CN categories encompass 
a wide range of different products, of which only one or few are locally produced, while 
the tax remains applicable to the entire category.  

Furthermore, the legislation for CN codes is amended periodically and as a result specific 
products that were included originally in the Decision may unintentionally ‘fall’ off the 
list. Due to the use of 8–10 digit CN and TARIC codes respectively, new emerging local 
production  activities  that  were  not  in  place  when  the  Decision  was  adopted  are  not 
covered. Changes in the level of compensation extended to certain industries to cope with 
changed conditions of competition (e.g. to  cope with aggressive importation) cannot be 
addressed and removal of products no longer produced locally is not possible.   

 

Inefficiencies of the monitoring and impact evaluation system 

Council  Decision  No  940/2014/EU  contains  specific  provisions  requiring  France  to 
submit a report to the Commission on the implementation of the dock dues regime and its 
impacts  on  local  economic  activities.  This  ‘mid-term’  report  is  the  basis  of  the 
Commission’s report to the Council. The monitoring and evaluation arrangements of the 
regime  are  very  burdensome  both  for  the  economic  actors  and  the  administrations. 
Considering  the  number  of  products  at  stake  and  the  level  of  details  required  in  the 
‘product  fiches’,  the  efforts  deployed  to  implement  these  arrangements  have  been 

16 

 
 
 
 
significant. Furthermore, due to various limitations and constraints the results should be 
taken with caution50.  

Moreover,  the  monitoring  and  evaluation  arrangements  are  not  always  in  line  with  the 
information  needs  as  concerns  timeliness,  quantification  and  scope.  The  information 
provided  did  not  give  a  complete  picture  of  the  economic  and  social  impact  on  local 
production in the French outermost regions of the dock dues regime.  

Overall,  a  picture  emerges  where  approximations,  uncertainties  and  theoretical 
assumptions are abundant.  In most cases, these  cannot  be removed or substantial  effort 
would  be  required  just  to  obtain  marginal  improvements  in  the  reliability  of  the 
assessment. 

2.4. Problem 4: Constraints to the development of regional trade 

The  development  of  trade  in  the  geographical  areas  of  these  regions  is  constrained  by 
various  factors  such  as  transport  costs,  language  barriers,  import  tariffs,  different 
consumer  preferences  and  compliance  with  EU  legislation  raising  complaints  from 
CARIFORUM51 and Eastern and Southern African countries.  

Despite  the  EU  trade  agreements  with  neighbouring  countries  of  the  French  outermost 
regions, (e.g. the Cotonou agreement52 with the African, Caribbean and Pacific Group of 
States),  trade  between  the  French  outermost  regions  and  regional  partners  remains 
limited. In the 2011-2018 period, French outermost regions imports from CARIFORUM 
followed a reverse U-shaped curve, from EUR 39.9 million in 2011 to EUR 45.5 million 
in 2018, but exceeded EUR 70 million in the 2012-2014 period. The import share from 
CARIFORUM is approximately 1% of the total, with some fluctuations over time (from 
an average 1.1% in 2011-2014, to 1.0% in 2016-2018). This amount is comparable to the 
overall intra-regional import pattern (2.7%).  

In  the  2011-2018  period,  imports  from  the  Eastern  and  Southern  African  countries 
concerned  amounted  to  EUR 60  million  per  year  on  average,  with  an  increase  of 
approximately  EUR 20  million  between  in  2016-2018  as  compared  with  2011-2014.  In 
relative  terms,  this  corresponds  to  a  marginal  increase  of  0.2  percentage  points  in  the 
share  of  imports  from  Eastern  and  Southern  Africa,  from  1.1%  to  1.3%.  The  import 
distribution  is  very  skewed,  with  Mauritius  accounting  for  nearly  70%  of  the  total, 
followed by Madagascar (29%). The other countries jointly account for only 1% of the 
total.  Thus,  the  importance  of  trade  flows  with  French  outermost  regions  varies 
significantly across Eastern and Southern African countries. 

50  For  instance,  the  logic  behind  the  comparison  between  the  production  costs  of  ‘like  products’  in  the 
outermost  regions  and  in  the  mainland  appears  weak.  This  is  because  the  structure  of  markets  and 
competition in outermost regions and in the mainland is radically different (see the study). 
51 CARIFORUM is a subgroup of the Organisation of African, Caribbean and Pacific States and serves as a 
base  for  economic  dialogue  with  the  European  Union.  It  was  established  in  1992.  Its  membership 
comprises the 15 Caribbean Community states. 
52 https://eur-lex.europa.eu/legal-content/en/TXT/?uri=LEGISSUM:r12101 

17 

 
 
                                                           
Moreover, the foreign trade coverage ratio (i.e. the ratio between the value of exports and 
that of imports) between French outermost regions and their regional neighbours is small 
or very small, due to significant imbalances in trade flows. 

Table  4  –  External  trade  of  French  outermost  regions,  total  and  regional  (in  EUR 
million) 

Guadeloupe 

Martinique 

French 
Guiana 

Réunion 

Mayotte 

2013 
263 

2018 
280 

2013 
402 

2018 
365 

2013 
245 

2018 
213 

2013 
296 

2018 
324 

2013 
12 

2018 
11 

0 

2 

8 

1 

9 

2 

0 

5 

4 

6 

10 

37 

68 

47 

3.1 

3.4 

2.9% 

0.8% 

3.2% 

1.0% 

1.5% 

2.7%  27.8% 

0.9%  15.9%  11.4%  28.6%  29.2% 

0.4% 
1.4%  0.0% 
2 731  2 939  2 730  2 718  1 545  1 530  4 426  5 051 

Total export 
ACP Caribbean 
partners* / Indian 
Ocean region*** 
% of total exports  
Non-ACP Caribbean 
partners** 
 % of total exports 
Total import 
ACP Caribbean 
partners / Indian 
Ocean region 
% of total imports  
Non-ACP Caribbean 
partners / Africa 
% of total imports 
Source: The study. 
Notes:  (*)  ACP  Caribbean  partners  include  Antigua  and  Barbuda,  Bahamas,  Barbados,  Belize,  Cuba, 
Dominica,  Dominican  Republic,  Grenada,  Guyana,  Haiti,  Jamaica,  Saint  Lucia,  Saint  Kitts  and  Nevis,  St. 
Vincent  and  the  Grenadines,  Suriname,  Trinidad  and  Tobago;  (**)  Non-ACP  Caribbean  partners  include 
the British and Dutch Overseas Territories and Countries of Anguilla, Aruba, British Virgin Islands, Cayman 
Islands,  Montserrat,  Turks  and  Caicos  Islands,  Netherlands  Antilles;  (***)  Indian  Ocean  region  includes 
Comoros, Madagascar, Mauritius and the Seychelles, as well as French ORs (Réunion and Mayotte). 

0.9%  5.5%  5.7% 

1.2%  3.8% 

1.2%  1.2% 

1.6%  1.0% 

1.6%  2.4% 

1.7% 

2.6% 

5.1% 

2.1% 

2.0% 

2.9% 

2.7% 

0.0% 

26.2 

32.5 

168 

133 

138 

479 

572 

52 

37 

47 

15 

80 

62 

78 

55 

43 

18 

47 

44 

19 

What are the drivers of the constraints to the development of regional trade?  

 

International competition  

Many  neighbouring  African,  Caribbean  and  Pacific  countries  are  unable  to  compete 
against cheaper products coming from the EU, US and Asia. For example, between 2009 
and  2018,  Caribbean  countries’  exports  to  EU  partners  remained  rather  stable  (+1.4%) 
whereas their imports from the EU increased by almost 34%. This resulted in a growing 
negative trade balance53. 

  Compliance with EU legislation  

Production  costs  and  as  a  result  prices  in  the  French  outermost  regions  are  often 
significantly higher than those in their neighbouring countries. There are several reasons 
for this, including the fact that wages and social protection costs in the French outermost 
regions are significantly higher due to French legislation54. According to INSEE, in 2015 
the average annual net salary income of a worker in the French outermost regions ranged 

53 Eurostat Comext. 
54 Rules governing different employment contracts, minimum wage, leave, professional equality and strikes 
are set out in the Code du travail. Social security rules are set out in the Code de la sécurité sociale. 

18 

 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
between EUR 15 200 and 16 600 (Mayotte excluded), which is a multiple of the amount 
paid in the non-EU neighbouring countries55.  

Secondly,  compliance  with  European  social,  safety56  and  environment  protection57 
standards makes production activities in the ORs more expensive than in other countries. 
In  many  cases,  manufacturing  activities  are  generally  subject  to  an  authorisation 
procedure  for  environmental  protection  reasons58,  which  reviews  the  environmental 
dangers  of  the  installation  prior  to  authorisation.  For  example,  producers  of  aluminium 
doors  and  windows  in  Guadeloupe  and  Martinique  must  comply  with  the  EU’s 
Construction  Products  Regulation  (Regulation  (EU)  No  305/2011),  which  entails  high 
compliance costs. 

Stakeholders  also  note  that  national  rules  implementing  the  Union  Customs  Code  are 
scattered  across  different  documents,  and  application  of  the  rules  is  vested  with  the 
national customs authorities, which can cause practical difficulties for African, Caribbean 
and  Pacific  countries  and  traders  when  they  want  to  export  goods  to  the  EU  and 
especially  to  French  outermost  regions.  In  particular,  CARIFORUM  countries  express 
concerns regarding numerous and often changing technical EU regulations and sanitary 
and phytosanitary measures.  

  Customs duties and non-tariff barriers 

Despite the Economic Partnership Agreement (EPA) in force, customs tariffs and import 
restrictions have remained on a number of products imported into the Caribbean region 
and  Eastern  and  Southern  African  countries.  Furthermore,  several  CARIFORUM 
countries  have  not  implemented  their  tariff  commitments,  and  they  maintain  export 
duties and quantitative restrictions. These commitments are among the basic elements of 
the agreement, and the failure to implement these neutralises its impact in the countries 
concerned  and  limits  the  benefits  for  exporters  and  importers  in  the  French  outermost 
regions.  CARIFORUM  countries  also  have  significant  transparency  deficits  regarding 
their tariffs. These barriers make it de facto impossible or very expensive to export there. 

There  are  also  several  other  barriers  that  could  discourage  regional  trade:  (1)  language 
barriers, cultural  differences and, hence, different consumer preferences;  (2) inadequate 
maritime  logistics  in  the  region  and  high  shipping  costs  due  to  the  limited  volume  of 
trade, which translate into relatively high costs for regional exports; and (3) fluctuations 
of the exchange rate. 

  Dock dues 

The  dock  dues  regime  is  explicitly  aimed  at  mitigating  the  dependency  of  French 
outermost regions on external imports and the risk that local production and local jobs in 

55 https://ilostat.ilo.org/topics/wages/  
56 Directive (EU) 2015/2193 of the European Parliament and of the Council of 25 November 2015 on the 
limitation of emissions of certain pollutants into the air from medium combustion plants. 
57  See  also  Directive  2014/52/EU  of  the  European  Parliament  and  of  the  Council  of  16  April  2014 
amending Directive 2011/92/EU on the assessment of the effects of certain public and private projects on 
the environment. 
58 Article L 511-1 et seq. of the French Environmental code: https://www.georisques.gouv.fr/node/7605.  

19 

 
 
 
                                                           
these vulnerable remote regions of the EU could be jeopardised by free trade with third 
countries,  including  from  regional  neighbouring  countries.  For  this  reason,  this  special 
regime has been repeatedly criticised by CARIFORUM countries and by certain Eastern 
and  Southern  African  countries  (notably  Mauritius)  for  constraining  regional  trade  and 
for  being  in  contradiction  with  the  free  trade  principles  underpinning  the  Economic 
Partnership  Agreement  with  the  EU.  These  stakeholders  claim  that  the  reduced  rates 
applicable  to  products  produced  in  the  French  outermost  regions  limits  the  growth  of 
trade despite the close geographic proximity and similar cultural features. 

Increasing regional trade is a major challenge for both the French outermost regions and 
their  neighbouring  countries.  The  constraints  facing  these  regions  in  developing  and 
improving  local  trade  are  due  to  several  factors,  including  increased  competition  and 
their  obligation  to  comply  with  EU  legislation  –  which  creates  a  competitive 
disadvantage  for  the  outermost  regions  vis-à-vis  their  neighbours.  No  policy  option 
within the context of an amendment or termination of the dock dues regime will reduce 
the  effects  of  globalisation  or  EU  legislation  compliance  costs.  Furthermore,  from  the 
perspective of international  trade rules it would  be extremely problematic to  justify the 
application  of  differentiated  dock  dues  treatment  (including  quota  systems)  to  selected 
neighbouring countries and this may also spark WTO disputes. 

2.5. How will the problems evolve? 

In the 2017 Communication ‘A stronger and renewed strategic partnership with the EU’s 
Outermost Regions59’, the Commission noted that despite progress made over the years, 
these  regions  continue  to  face  serious  and  permanent  constraints.  Furthermore, 
globalisation  and  climate  change  are  amplifying  these  constraints.  Diversification 
opportunities are limited due to the few resources at the disposal of these regions and the 
geographical  and  natural  characteristics  specific  to  their  location  and  remoteness. 
Consequently,  the  economies  of  the  outermost  regions  are  fragile  and  any  sustainable 
economic growth or desirable structural changes insecure. Economic crises are bound to 
affect  the  economies  of  the  outermost  regions  to  a  greater  extent  than  the  mainland 
Europe – as demonstrated by the COVID-19 crisis – and recovery is slower. 

The  Communication  stresses  the  need  to  build  on  the  assets  of  the  outermost  regions, 
identifying new sectors of growth to enable growth and job creation. While this approach 
is important to address the numerous threats and challenges for the outermost regions, the 
regions’  traditional  activities  are  also  vital  to  their  development  as  any  sustainable 
structural change to the economies of the outermost regions will take time to materialise.  

The costs faced by producers in the regions are higher in the outermost regions than in  
mainland  France  and  are  attributable  to  the  factors  identified  in  Article  349  TFEU. 
Overall,  the  dock  dues  regime  has  increased  production  levels  and,  as  such,  supported 
employment in the regions.  

59 COM(2017) 623 final. 

20 

 
 
 
                                                           
As  many  of  the  underlying  drivers  such  as  remoteness,  insularity  or  climate,  are  of 
permanent nature, they will always act to the disadvantage of those regions. There are no 
grounds to consider that they would diminish significantly in the near future as they are 
inherent to small insular and remote economies in general. On the contrary, with global 
trade growing increasingly competitive, the market share of local products has declined 
in  recent  years  and  the  ‘gap’  faced  by  the  outermost  regions  might  become  even  more 
difficult to bridge over time. Numerous cases were reported of imported goods sold at a 
price  (tax  included)  lower  than  the  production  cost  of  the  same  good  locally  made. 
Hence, the dock dues regime is generally viewed by enterprises as a tool to help mitigate 
the unequal competitiveness of local production rather than as a development tool. 

Transport  infrastructures  have  been  steadily  built  and  in  recent  decades  the  outermost 
regions  have  experienced  a  mildly  positive  trend  in  the  maritime  and  air  transport  of 
freight.  However, accessibility issues will always affect  the trade  and  exchanges of the 
outermost regions with the EU and within their geographic areas alike. 

What we can reasonably conclude from the nature of the costs is that they can fluctuate 
but will never disappear altogether. 

3.  WHY SHOULD THE EU ACT? 

On the basis of Article 349 TFEU, the Council can adopt specific measures in favour of 
the  EU  outermost  regions  to  adjust  the  application  of  the  Treaties  to  those  regions, 
including  the  common  policies,  because  of  the  permanent  constraints  which  affect  the 
economic and social conditions of these regions. In its judgment of 15 December 201560, 
the European Court of Justice clarifies the scope of the application of Article 349 TFEU 
on  the  basis  of  which  the  Council  is  entitled  to  adopt  specific  measures  for  the  EU 
outermost regions. 

The EU has been building a strong partnership with the outermost regions over the years. 
In 2004, the Commission presented its first strategy for the regions61, which was renewed 
in  2008,62  in  201263,  when  the  strategy  was  aligned  with  Europe  2020  goals  of 
sustainable  growth,  social  development  and  creation  of  jobs,  and  in  2017,  when  the 
Commission  strengthened  and  renewed  its  strategic  partnership  with  these  regions. 
Access to the EU single market is vital for the continued development of the outermost 
regions, as underlined in the 2017 Commission Communication ‘A stronger and renewed 
strategic partnership with the EU’s outermost region64’. 

Maximising the potential  of each outermost  region can only benefit both  the outermost 
regions and the EU as a whole.  

60 Joined Cases C-132/14 to C-136/14. 
61 COM(2004) 343 final, 26.5.2004. 
62 COM(2008) 642 final, 17.10.2008. 
63 COM(2012) 287 final, 20.6. 2012. 
64 COM(2017) 623 final. 

21 

 
 
 
                                                           
4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

4.1. General objectives 

The  situation  of  the  outermost  regions  is  recognised  in  Article  349  TFEU,  which 
envisages  specific  measures  for  these  regions  to  take  account  of  their  structural,  social 
and  economic  situation.  Measures  adopted  must  mitigate  the  constraints  faced  by  the 
regions  and  promote  regional  development  without  undermining  the  integrity  and  the 
coherence of the EU legal order, including the internal market and common policies. 

4.2. Specific objectives 

The specific objectives of Council Decision No 940/2014/EU are: 

  ensure  optimal/sufficient  support  to  the  local  industry  in  the  French  outermost 

regions, making it more competitive;  

  stimulate economic activity and competitiveness in the French outermost regions; 
  ensure  coherence,  proportionality,  simplification  and  flexibility  of  the  support 
instrument so as to preserve the integrity and the coherence of the EU legal order 
while  providing  for  economic  and  legal  certainty  for  the  local  industry  in  the 
French outermost regions; 

  safeguard undistorted competition in the internal market and international trade; 
  generate a positive social and economic effect, relevant for the outermost regions’ 

regional development, competitiveness and tax revenues. 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1. What is the baseline from which options are assessed? 

For the purposes of this staff working document, there is a difference between ‘no action’ 
and  the  ‘status  quo’.  Given  that  Council  Decision  No  940/2014/EU  authorising  tax 
differential  in  dock  dues  expires  on  30 June 2021,  a  ‘no  action’  scenario  would  imply 
that the current system of tax differentials expires on 30 June 2021 with no other regime 
put in place. This is, however, not considered to be a realistic baseline scenario due to the 
structural and permanent nature of the constraints faced by the outermost regions and the 
long-term existence and recent extensions of the regime. 

As such, we assess the non-renewal of the regime as a ‘new policy option’, whereas the 
baseline option for this regime is defined as a ‘business as usual’ scenario, in which the 
derogation  is  renewed  for  a  further  7  years,  without  any  significant  modification.  The 
baseline  assumes  that  the  same  maximum  tax  differential  in  dock  dues  continues  after 
June  2021  for  the  locally  manufactured  products  listed  in  the  Annex  to  the  current 
Decision. The updating of product lists will continue to require a legal amendment of the 
Decision.  

The  baseline  also  reflects  the  fact  that  there  is  no  legal  contradiction  between  the 
Economic  Partnership  Agreement  (EPA)  agreed  by  the  EU  with  CARIFORUM  or 
Eastern  and  Southern  African  countries,  as  the  EPA  explicitly  includes  a  provision 

22 

 
 
safeguarding  the  maintenance  of  dock  dues  in  the  French  outermost  regions  with  no 
requirement to revise the current dock dues policy. 

5.2. Description of the policy options 

Option 1 – Termination of the outermost regions specific support 

Under  this  policy  option,  the  special  regime  for  dock  dues  for  the  French  outermost 
regions  would  not  be  renewed  and  would  therefore  expire  on  30 June 2021.  The  tax 
differential in dock dues would disappear and all products, regardless of origin, would be 
subject to the same rate of dock dues.  

This option would mean no further specific relief would be provided after 30 June 2021 
to  the  local  producers  in  the  French  outermost  regions  to  mitigate  the  additional  costs 
they face.  

Option 2 – Revision of criteria for the identification of eligible products and 
updates 

The selection of the specific products benefiting from reduced dock dues is based on the 
criteria listed in Recital 5 of the current Decision. These criteria are the existence of: (1) 
local production; (2) significant imports which could jeopardise local production; and (3) 
additional  costs  affecting  the  competitiveness  of  local  products.  The  specific  eligible 
products supported by the dock dues regime are then listed in the Annex to the Decision 
based on a coding ranging from CN4 to TARIC10.  

Two  policy  options  revising  the  identification  of  specific  products  are  possible.  The 
proposed  changes  are  independent  of  each  other,  although  some  interconnections  are 
evident. 

Option 2A: identification of eligible product at a higher classification level 

The  proposed  option  envisages  a  shift  in  the  method  used  to  identify  the  products 
supported through the dock dues regime, namely from the current approach where each 
specific product is explicitly identified in the Decision (based on a coding ranging from 
CN4  to  TARIC10)  to  a  system  where  the  Decision  indicates  only  the  eligible  product 
categories (CN4), while specific products (CN8 or higher) would be included by national 
authorities in their legal and administrative frameworks. 

This option would allow amendments to the specific products within a product category 
without the need for an amendment of the Decision at EU level.   

Option 2B: adoption of verifiable eligibility criteria 

This option proposes to adopt clearer and verifiable criteria for the selection of products 
benefiting from dock dues support in the legal text of the Decision. The current criteria of 
‘existence of a significant production’ would be replaced by setting a minimum market 
share threshold of 5%,  while the  criteria of ‘existence of  a significant imports possibly 
jeopardising  local  production’  would  be  replaced  by  setting  an  upper  market  share 

23 

 
 
 
threshold  for  imports  of  10%.  Possible  derogations  for  special  and  duly  justified  cases 
would be possible. 

Option 3 – Revision of the maximum permitted tax differential 

Currently,  the  products  supported  through  the  dock  dues  regime  are  grouped  in  three 
distinct ‘lists’ in the Annex to the Decision, each having a different ‘maximum permitted 
differential65’. The ‘maximum permitted differential’ currently ranges from 10% (list A) 
to 20% (list B) and to 30% (list C). This ‘maximum permitted differential’ represents the 
upper ceiling and the competent authorities must ensure that the rate for specific products 
is equal to or less than the additional costs associated with the production of that product 
in the outermost regions.  

Two policy options are available to increase the flexibility for the competent authorities 
in  this  regard.  In  both  cases,  the  regime  would  be  renewed  with  a  reduced  number  of 
lists,  either  one  or  two.  While  the  option  of  one  list  with  one  maximum  permitted 
differential  could  potentially  increase  the  flexibility  for  the  competent  authorities,  it 
could result in additional burdens and costs. For this reason, the option of one list with 
one maximum permitted differential will be discarded and this option will instead focus 
on  renewing  the  regime  with  two  distinct  lists  in  the  Annex  to  the  Decision.  The  two 
different maximum permitted differentials would be 20% and 30%. 

Option 4 – Raising the turnover threshold of the dock dues from EUR 300 000 
to EUR 550 000 

Local  economic operators with  an annual  turnover from  relevant  production activities66 
not  exceeding  EUR 300 000  fall  outside  the  scope  of  the  dock  dues  regime.  This 
provision was introduced in 2014 and replaced the previous regime for small economic 
operators,  which  allowed  the  French  authorities  to  apply  a  tax  differential  of  5%  to 
products  not  listed  in  the  Decision  or  increase  by  5%  the  tax  differentials  applied  to 
products, for local producers with a turnover not exceeding EUR 550 000 per year.  

The French authorities support this option, which will increase the turnover threshold to 
EUR  550 000.  This  means  that  eligible  economic  operators  will  not  be  subject  to  dock 
dues and will have no dock dues reporting obligations. 

Option 5 – Revised monitoring arrangements 

The  proposed  revision  has  the  parallel  objectives  of:  (1)  reducing  the  burden  of  the 
unnecessary  frequent  re-assessment  and  renewal  of  the  policy;  and  (2)  enhancing  the 
utility and effectiveness of monitoring and evaluation activities. As regards monitoring, 

65 The ‘maximum permitted differential’ is expressed as the difference, in percentage points, between the 
rate applied to products of external origin and the rate applied to local products.  
66 The ‘relevant’ turnover is the turnover which is derived from the production of goods subject to the dock 
dues  regime,  including  products  not  benefitting  from  tax  differentials  and  excluding  other  types  of 
activities (e.g. the supply of services). This specification is currently not laid down in the Council Decision 
but is included in national legislation. 

24 

 
 
 
                                                           
the proposed revision consists of adopting a standardised structure for reporting based on 
a  harmonised  set  of  indicators  common  to  all  EU  outermost  regions  benefiting  from  a 
special tax regime, and deemed sufficient to properly assess the impact of the regime.  

As part of this option, it is proposed that the assessment of additional costs borne by local 
economic operators should be undertaken at CN4-level product categories, instead of the 
current mix of CN4, CN6, CN8 or TARIC10 codes. 

Additionally, the timing of submission of the monitoring report could be moved back to 
the fifth year after the adoption of the policy, in order to ensure: (a) a greater availability 
of  monitoring  data;  and  (b)  a  closer  alignment  with  the  needs  of  the  policy  renewal 
process. The current monitoring system can be made more effective and informative by 
moving the timing of the mid-term report to Y+5 (where ‘Y’ stands for the first year of 
application  of  the  Council  Decision).  In  practice,  for  the  period  2021-2027,  the  report 
would  have  to  be  submitted  by  the  end  of  2025  and  spanning  ideally  the  period  2019-
2024. 

5.3. Options discarded at an early stage 

Direct support to local production and market access 

Under this alternative, the existing regime would be replaced with another EU measure to 
the same, or similar, effect. This approach can be further specified considering two main 
aspects: (a) the fiscal or non-fiscal nature of the replacement measure; and (b) the type of 
funding envisaged. In fact, the current dock dues regime is a fiscal measure entailing no 
expenditure of EU funds. Replacing it with a different kind of measure is not a suitable 
option for two main reasons:  

-  Replacing the current regime with a non-fiscal equivalent measure would de facto 
entail either extending the support through one of the existing EU schemes for the 
outermost regions, or creating a new scheme. This would mean finding additional 
EU resources for this purpose at a time when a number of EU funds and budgets 
are being reduced, and would also involve increasing the allocations and possibly 
creating ad hoc lines for the compensation of local production costs (to ensure the 
equivalence  of  the  effects  with  the  current  regimes).  This  would  have 
implications  for  EU-level  policy  design, 
the  specific 
programming  and  implementation  of  the  aid.  Responsibility  for  this  change 
would fall outside of the remit of the DG TAXUD at the Commission and would 
involve  other  line  departments.  This  option  would  add  unnecessary  costs  and 
complexity to the regime, and would not be very feasible   

the  budget,  and 

-  Currently, the budget for the dock dues regime (in terms of foregone tax revenue) 
is estimated by the French authorities at EUR 475 million per year67. At present, 
the measure is implemented at no cost for the EU budget as it consists of ‘non-
collected’  taxes.  Replacing  it  with  an  expenditure  scheme  of  equivalent  impact 

67  As  reported  in  Commission  Decision  C(2017)1661  final  of  15.3.2017  in  State  aid  case  SA.46899 
(2016/N) – France Taxe octroi de mer. 

25 

 
 
                                                           
would therefore require additional monetary transfers of up to EUR 3.3 billion for 
the next EU programming period (2021-2027). This approach would evidently be 
very cost-inefficient.   

Based on the above considerations, this option is discarded.  

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

6.1. Methodology 

The impacts of the policy options have been assessed mainly on the basis of a study by 
the external contractor, Economisti Associati. The study was based on a combination of 
primary research, i.e. on (1) data gathered from all relevant stakeholders and independent 
research to triangulate findings; (2) a review of the existing literature and data; and (3) an 
economic and policy analysis.  

For the quantitative estimates, the impacts are measured as the deviation of the variable 
assessed from the baseline, at the conventional date of 2027. This is sufficiently distant to 
allow  short-term  effects  to  play  out,  with  the  exception  of  the  emerging  effects  of 
COVID-19. Full details on the methodology are provided in Annex 3. 

Effects of the COVID-19 pandemic on the projections underlying the assessment 

The baseline scenario and the impacts from the various options have been assessed on the 
basis of the study carried out in late 2019-early 2020. As such, the effects of the COVID-
19  pandemic  are  not  taken  into  account.  While  in  the  first  case  the  projected  baseline 
may  not  be  affected  to  a  large  extent,  in  the  second  case,  the  baseline  scenario  may 
overstate  growth.  The  impacts  of  the  options,  however,  are  calculated  on  the  basis  of 
long-term elasticities and should, as a result, be less affected than the baseline. 

6.2. Baseline 

In this context, the ‘no change’ scenario consists in renewing the special regime without 
any  significant  modification.  In  this  sense,  this  scenario  corresponds  to  the  baseline 
situation.  

The dock dues regime compensates only a portion of the estimated additional costs. On 
average,  tax  differentials  address  about  half  of  additional  costs,  both  in  nominal  terms 
and  in  monetary  terms,  i.e.  measured  in  relation  to  the  total  tax  charged  on  imports  in 
EUR.  With  some  exceptions,  the  tax  differentials  applied  are  fairly  proportional  to  the 
additional costs declared for specific products. 

The results of the quantitative data analysis of the study suggest that in the absence of the 
dock  dues  support,  the  local  production  sectors’  performance  would  have  been 
significantly  worse.  About  37%  of  the  value  of  dock  dues-supported  products  (approx. 
EUR  850  million)  was  theoretically  enabled  by  the  tax  differential  mechanism,  with 
positive repercussions also on: (1) employment – where there has a positive increase of 
between 3% and 9% in the dock dues sectors since 2014 (against a decline between 2% 
and  18%  in  the  non-dock  dues  industries);  and  (2)  the  number  of  active  enterprises, 
which has grown by approx. 1.7% in the same period (against an overall decline of 2.8%) 

26 

 
(see Table 5 below). On the other hand, there is no evidence of benefits for the total value 
of investments or for the diversification of production. 

Table 5 – Number of active firms in the manufacturing and mining sectors in French 
outermost regions (Mayotte excluded)  

2014 

2015 

2016 

2017 

2018* 

Number of active firms (with at least one employee) 

Total manufacturing and mining  

Dock dues industries  

2 471 

1 912 

2 448 

1 947 

Dock dues industries (in %) 
Firm size and employment in dock dues industries   

77% 

80% 

2 844 

2 265 

80% 

2 455 

1 987 

81% 

2 401 

1 945 

81% 

% of micro firms 

% of small firms 

% of medium-sized firms  

% of large firms 

74.7% 

74.6% 

77.3% 

73.7% 

71.6% 

23.0% 

23.0% 

20.8% 

23.8% 

25.8% 

2.1% 

0.2% 

2.3% 

0.2% 

1.8% 

0.1% 

2.3% 

0.3% 

2.3% 

0.3% 

Source: The study (base on INSEE data). 
Notes: * 2018 data are provisional.  

Finally,  the  dock  dues  regime  shows  an  overall  positive  balance  between  costs  and 
benefits, with the estimated value of local production enabled by the special regime being 
approximately 2.5 times greater than its ‘cost’ in terms of foregone tax revenue. 

Overall,  the  impact  of  the  dock  dues  is  seen  in  very  different  ways  depending  on  the 
respondents  to  the  survey  of  the  study.  Local  producers  are  inevitably  much  keener  to 
regard  the  importance  of  the  dock  dues  as  critical,  while  other  respondents  are  much 
more sceptical. In particular, as summarised in Figure 4:  

respondents  active 

  over three quarters of local producers maintained that the dock dues had a major 
impact  in  boosting  local  production  activities  and  supporting  the  creation  and 
maintenance  of  employment  in  the  French  outermost  regions.  This  share 
significantly  declines  among 
than 
manufacturing,  but  still  almost  one  third  of  these  firms  saw  these  impacts  as 
moderate or major; 
respondents’  feedback  is  only  marginally  less  positive  on  the  scheme’s 
contribution  to  reducing  the  local  economy’s  reliance  on  imports  and  to 
increasing  investments  in  local  production  activities.  Over  70%  of  the  local 
producers  assessed  the  impacts  in  these  two  areas  as  ‘major’,  while  more  than 
30% of non-producers considered these impacts as minor, non-existent. 

in  sectors  other 

 

Figure 4 – Business perception of dock dues impacts on economic performance  

27 

 
 
 
     
 
A)  Dock  dues  impact  on  boosting  local 
production activities (% of respondents)  

B)  Dock  dues  impact  on  investments  in 
local  production  activities 
(%  of 
respondents) 

C) Dock dues contribution to the creation 
and  maintenance  of 
(%  of 
respondents) 

jobs 

D)  Dock  dues  support  to  reduce  local 
economy’s  reliance  on  imports  (%  of 
respondents) 

Source: Business survey of the study. 

Additional indications on the extent to which  dock dues contributed to promoting local 
economic  activities  can  be  discerned  by  comparing  the  tax  impact  on  price 
competitiveness  with  the  firms’  recent  economic  performance.  As  shown  by  Figure  5 
below, the strength of the dock dues’ impact on price competitiveness has a positive link 
with other aspects of the firms’ performance. This seems to be especially true in the case 
of production: a ‘very positive’ tax impact in terms of price competitiveness is associated 
with over two thirds of firms reporting a positive past trend. On the contrary, over 70% 
of the firms indicating a small price competitiveness impact recorded a steady or negative 
past  performance.  In  the  case  of  employment  and  market  share,  a  similarly  positive, 
albeit less strong, relationship is detected. As for profitability, such a link is only detected 
in  the  case  of  firms  experiencing  a  ‘very  positive’  price-competitiveness  impact,  while 
the majority of firms mentioning a positive impact recorded a negative performance.  

Figure 5 – Dock dues price-competitiveness impact and business performance 

28 

 
 
 
 
 
 
Source: Business survey of the study. 

On  the  influence  of  dock  dues  on  prices  and  the  cost  of  living  in  French  outermost 
regions, the study confirms the existence of significant price differences between French 
outermost  regions  and  the  French  mainland,  with  gaps  ranging  between  7%  and  12%, 
chiefly for food products, telecommunications, alcohol and tobacco products. According 
to the relevant literature, this gap is due to a combination of structural factors and fiscal 
policies, including dock dues. 

However,  only  a  minor  share  of  the  estimated  dock  dues’  impact  on  household 
expenditure  in  French  outermost  regions  can  be  attributed  to  dock  dues-supported 
products.  Rough  estimates  suggest  that  the  additional  tax  levied  on  products  subject  to 
tax  differentials  does  not  exceed  1.5%  of  final  consumption  in  those  regions  (but 
approximately 4% if only manufactured goods are considered). 

Table  6  –  Incidence  of  the  dock  dues  on  final  consumption,  by  tax  component  and 
region 

Total dock dues as % of final 
consumption  
manufactured goods  
External dock dues as % of final 
consumption  
manufactured goods 
Revenues from products subject to 
tax differentials, as % of final 
consumption  
manufactured goods 

Source: the study.   

French 
Guiana 

4.6% 

17.0% 

4.3% 

16.8% 

1.3% 

5.0% 

Guadeloupe  Martinique 

Réunion 

3.7% 

12.9% 

3.6% 

12.7% 

0.7% 

2.7% 

3.6% 

13.7% 

3.4% 

13.3% 

1.4% 

5.3% 

2.5% 

9.8% 

2.5% 

9.5% 

0.8% 

3.2% 

29 

 
 
 
 
 
 
6.3. Option 1 - Termination of the outermost region specific support 

The  ‘do  nothing’  scenario  entails  not  renewing  the  current  EU  Decision  for  dock  dues 
after it expires on 30 June 2021 and not replacing it with other EU support mechanisms. 
This  would  lead  to  the  removal  of  the  tax  differential  system  based  on  the  origin  of 
products,  although  not  necessarily  to  the  withdrawal  of  the  dock  dues  as  a  ‘budgetary’ 
measure. 

The estimated impact of the measure is globally positive, so simply withdrawing it would 
predictably not lead to an improvement of the current situation, but rather to a worsening 
of it. 

First  and  foremost,  removing  the  dock  dues  tax  differentials  would  severely  affect  the 
competitiveness  of  local  economic  operators  engaged  in  production  activities  – 
manufacturing activities above all, followed by enterprises in the agriculture and fisheries 
sectors. The overwhelming majority of the affected economic operators would be SMEs, 
and the most severe impact would be borne by economic operators with a turnover lower 
than  EUR  300 000  (approximately  3 500  in  number),  who  benefit  the  most  from  the 
current regime, by not paying the dock dues tax. It is estimated that the dock dues special 
regime compensates some 49% of local producers’ additional costs (EUR 1.45 billion, or 
27%  of  the  value  of  local  production),  which  corresponds  to  some  13%  of  the  sales 
values of dock dues products. This means local producers would need to absorb roughly 
EUR 1.45 billion of additional costs or increase their prices by 13% on average in order 
to remain competitive. Some local producers might be able to reduce their trade margins, 
but others – approximately 76% according to survey results – would no longer be able to 
compete and might eventually cease activities.  

On  the  other  hand,  an  increase  in  the  prices  of  local  products  would  evidently  have 
repercussions  on  sales  and  the  market  share  of  local  products,  the  magnitude  of  which 
depends  on  the  characteristics  of  the  demand  for  each  specific  product  affected. 
Assuming – for analytical purposes – that the demand for local products would go down 
by  an  equivalent  13%,  the  average  market  share  of  local  dock  dues  products  would 
decline  by  5.5  percentage  points,  corresponding  to  approximately  EUR  297  million. 
Summing  up,  the  impacts  on  local  production  activities  of  a  removal  of  dock  dues 
support would involve:  

a)  a decline in sales for the majority of local economic operators and in profitability 
for  those  able  to  absorb  the  additional  costs,  which  would  no  longer  be 
compensated for by the dock dues regime; 

b)  a  reduced  contribution  of  the  industrial  sector  to  the  local  outermost  regions’ 

economy, and enhanced dependence on the tertiary sector; 

c)  a  parallel  decrease  in  the  number  of  industrial  enterprises,  in  the  level  of 

mobilised investment, and in employment in productive sectors;  

d)  an  increased  dependence  on  external  supply,  as  local  production  would  be 

substituted by imported goods.  

The above estimates are summarised in Table 7 below: 

30 

 
Table  7  –  Hypothetical  impacts  of  the  ‘do  nothing’  scenario  in  French  outermost 
regions 

Additional costs (EUR) 
Additional costs (as a % of turnover) 
Dock dues total compensation (EUR) 
Dock dues relative compensation (as a % of additional costs)  
Impact of removal of dock dues compensation (in %) 
Market share theoretically lost if additional costs are not 
absorbed (in % points) 
Corresponding impact on local production sales (in EUR) 
Source: The study. 

TOT 

1.450 million 
27% 
710 million 
49% 
13% 
5.5% 

297 million 

The  budgetary  effects  of  this  policy  change  are  unpredictable  as  they  depend  on  the 
actual  policies  deployed  by  competent  authorities  in  response  to  the  ‘do  nothing’ 
scenario.  In  essence,  if  the  removal  of  differentiated  rates  were  to  translate  into  an 
increase in internal rates to the same level of external dock dues rates, the collected tax 
revenues  would  clearly  increase  –  and  precisely  by  the  current  amount  of  the  tax  not 
collected because of exemptions (assuming demand is stable). Conversely, if the external 
rates  are  lowered  to  the  level  of  the  internal  dock  dues  rate,  a  significant  loss  of  tax 
revenue is expected, in the order of EUR 446 million i.e. 90% of the tax currently levied 
on the import of dock dues-supported products, approximately one third of the total dock 
dues  receipts.  The  first  approach  is  unrealistic,  as  it  would  lead  to  an  increase  in  price 
levels  that  consumers  would  not  be  likely  to  accept.  On  the  other  hand,  the  second 
approach would deprive regional administrations of a significant share of their budget. In 
this  scenario,  the  most  efficient  solution  would  be  a  ‘halfway’  solution  i.e.  (1) 
simultaneously  decreasing  external  rates  and  increasing  internal  rates  until  the  point  of 
equilibrium that would offset any budgetary impact is reached; or (2) replacing the dock 
dues with another tax measure to the same effect.  

For  the  same  reasons,  the  ‘do  nothing’  scenario’s  impact  on  price  levels  is  difficult  to 
predict, as it depends on the approach chosen by competent authorities to level internal 
and  external  dock  dues  rates.  In  the  more  realistic  scenario  where  tax  rates  would  be 
adjusted  to  equal  the  current  burden,  no  aggregate  effects  would  in  principle  be 
registered.  However,  considering  the  oligopolistic  features  of  the  outermost  regions’ 
markets,  the  actual  change  in  price  levels  would  largely  depend  on  the  evolution  of 
competition:  if  local  producers  remain  able  to  compete  on  the  market,  a  generalised 
reduction  in  price  levels  can  be  expected,  but  if  local  production  disappears  due  to  the 
removal of dock dues, it can be expected that after an initial decrease prices would go up 
in the medium term due to reduced competition. 

The  results  of  regional  trade  data  analysis  highlight  that  the  dock  dues  regime  has  a 
moderate impact on the value of French outermost regions’ imports from CARIFORUM 
and  Eastern  and  Southern  African  countries.  In  fact,  the  expected  increase  of  imports 
from  CARIFORUM  and  Eastern  and  Southern  African  countries  as  a  result  of 
terminating  the  regime  would  be  small  (approximately  EUR  2.2  million/year  overall) 
compared to the benefits for other exporting countries and the possible damage for local 
production activities (up to nearly EUR 300 million):  

31 

 
 
 
  CARIFORUM  (currently  3.7%  on  average),  may  boost  imports  by  3.3%,  i.e. 
some EUR 1.5 million/year (based on current import value of EUR 45.5 million).  
  Eastern  and  Southern  African  countries  (currently  1.0%  on  average)  may  boost 
imports  by  0.9%,  i.e.  some  EUR  0.7  million/year  (based  on  the  current  import 
value of EUR 79 million).    

Above all, as shown in tables 8 and 9, a hypothetical complete removal of the dock dues 
differentials would benefit primarily exporters from the EU and third countries other than 
CARIFORUM and Eastern and Southern African countries. 

Table  8  –  Simulation  of  the  effects  of  removing  tax  differentials  from  a  sample  of 
products (CARIFORUM) 

Imports 
from 
CARIFORUM 
(2018) 

Imports from 
all other 
origins 
(2018) 

Baseline 

Removal  of 
dock  dues 
differentials  

EUR 10.2 
million 

+ EUR 1.0 
million 

  Source: the study. 

EUR 113.7 
million 

+ EUR 11.3 
million 

Average dock 
dues 
differential 
applied to the 
product panel 

Coefficient of 
variation of 
imports 
associated with 
dock dues 
differentials  

10.3% 

-0.917 

Theoretical 
increase in 
imports from 
removal of 
dock dues 
differentials 
+9.9% 

0% 

Table 9 – Simulation of the effects of removing dock dues differentials from a sample 
of products (Mauritius) 

Imports 
from ESA 
(2018) 

Imports 
from all 
other 
origins 
(2018) 

Average dock 
dues 
differential 
applied to the 
product panel 

Coefficient of 
variation of 
imports associated 
with dock dues 
differentials  

Baseline 

Removal of 
dock dues 
differentials  

EUR 12.7 
million 

EUR 128.6 
million 

+ EUR 1.1 
million 

+ EUR 11.4 
million 

  Source: the study. 

9.3% 

0% 

-0.917 

Theoretical 
increase in 
imports from 
removal of dock 
dues 
differentials 
+8.9% 

Terminating  the  regime  would  have  limited  effects  on  the  regulatory  burden  for 
economic  operators.  The  implementation  arrangements  are  straightforward  and  do  not 
impose particularly complex or burdensome procedures on stakeholders. However, SMEs 
(with a turnover of less than EUR 300 000) who are out of the scope of dock dues would 
be brought back into the scope of the tax, with a resulting increase in regulatory burden. 
This  option  would  impact  approximately  3 500  economic  operators.  These  economic 
operators  would  have  to  submit  quarterly  tax  declarations  and  undergo  all  the 
administrative activities connected to dock dues (identification of appropriate CN codes, 
calculation of the tax, management of deductions on inputs, preparation of declarations, 
etc.)  The  annual  cost  of  these  activities  had  been  estimated  at  approximatively 

32 

 
 
 
 
 
 
 
 
 
EUR 1 081 per economic operator, so the potential aggregated savings would amount to 
approximately EUR 3 783 50068. 

Table 10 – Summary and rating of the expected impacts of option 1 
Impact area 

Subject 

Impact 

Rating  & 
magnitude  

Governance & 
good 
administration 
Operating costs/ 
competitiveness of 
business 

Functioning of the 
market and 
competition 

Macroeconomic 
impacts  

Regulatory costs & 
savings for public 
authorities 

Regulatory costs 
for economic 
operators  

None expected 

Severe reduction of 
competitiveness of local 
products vis-à-vis imports 
Major changes in the 
market structure 
(increased import) and 
reduced competition  
Worsening of trade 
balance, and possible 
negative effects on 
employment, investments.  

None expected 

All economic 
operators 

All economic 
operators 

MS authorities 

Increase in regulatory 
costs for SMEs with 
turnover less than 
EUR 300 000 

SMEs 

0 

-2 

-2 

-1 

0 

-1 

Budgetary effects 

Unpredictable, but 
potentially significant 
depending on OR 
decisions  

MS authorities 

-2/+2 

Notes 

Effects on consumer 
prices would depend 
on the policy 
adopted 

Neutral for 
economic operators 
with turnover in 
excess of 
EUR 300 000 

From (+2) if 
internal rates are 
increased to the 
external rates to (-2) 
if  external rates are 
decreased in line 
with internal rates  

Trade flows and 
international 
relation 

Removal of trade disputes 
with EPA neighbouring 
countries and small 
increase in trade from 
these countries  

EU authorities 
CARIFORUM 
and Eastern and 
Southern African 
countries 

+1 

Legend:  Rating  scale:  +2  major positive  impact;  +1  minor positive  impact;  0  neutral  impact;  -1  minor 
negative impact; -2 major negative impact. 

6.4. Option 2 – Revision of criteria for the identification of eligible products and 

updates 

-  Option  2A:  identification  of  beneficiary  product  at  a  higher  classification 

level 

This  option  proposes  that  beneficiary  product  categories  (CN4)  are  identified  in  the 
Decision and that the individual products (based on CN codes from 4 to 10) are included 
in the legal and administrative frameworks of the competent authorities in the outermost 
regions. 

68 Projet De Loi modifiant la loi n° 2004-639 du 2 juillet 2004 relative à l’octroi de mer, ÉTUDE 
D’IMPACT, 23 mars 2015. 

33 

 
 
 
 
 
 
 
 
 
 
 
 
                                                           
One of the most tangible impact of this proposed option is the reduction of the regulatory 
burden  for  the  French  authorities  and  the  Commission.  This  option  could  address  the 
inflexibility of the regime by allowing amendments to specific products within the CN4 
authorised categories, without the need for a legal amendment of the Council Decision. 
However,  had  the  proposed  option  been  in  place,  a  legal  amendment  would  still  have 
been necessary for 39% of the products (28 products that belong to an entirely new CN4 
category)  added  in  2019,  as  they  would  have  not  been  included  in  authorised  CN4 
categories. 

Some reduction of the economic operators’ regulatory burden is also envisaged, but on a 
smaller  scale.  These  benefits  would  not  concern  the  justification  required  of  new 
products, but they would concern more timely resolution of any issue deriving from the 
periodic revision of the HS/CN customs classification. For a rough understanding of the 
magnitude  of  benefits,  it  should  be  considered  that  half  of  the  enterprises  surveyed 
reported a change of CN code for at least one of the dock dues products in their portfolio, 
and for nearly 20% of respondents the time spent on identifying the correct coding is a 
source of ‘major burden’. 

For  the  products  concerned,  the  advantage  of  greater  flexibility  is  clear  and  direct: 
timelier  adoption  of  the  special  regime,  and  therefore  an  enhanced  impact  on 
competitiveness  and,  possibly,  growth.  More  specifically,  compared  to  the  current 
situation, new products could have access to different rates of dock dues before the next 
policy renewal (up to 7 years). Assuming local enterprises would schedule the launch of 
new  production  activities  taking  into  consideration  the  entry  in  force  of  the  special 
regime,  the  proposed  option  might  reduce  the  time  to  market  of  new  products  by  2-3 
years on average.  

The general functioning of the market would also benefit, in principle, from more timely 
and  flexible  updates  of  product  lists.  More  specifically,  facilitating  the  development  of 
new production activities would contribute to diversification of the local economy; where 
this  translates  into  greater  market  competition,  an  improvement  in  consumer  welfare  is 
assumed.  

However,  the  impact  on  the  functioning  of  the  market  would  be  very  modest  since  the 
support will be limited to products which belong to a eligible product categories (CN4), 
and  thus  to  the  supported  sectors.  The  proposed  option  would  regard  only  a  small 
fraction  of  the  supported  products  and  with  low-magnitude  effects  even  if  it  can 
occasionally lead to non-negligible sectoral impact. 

Moreover, based on the results of the retrospective evaluation, this option seems unlikely 
to  lead  to  tangible    macro-impacts,  such  as  on  the  growth  of  industrial  value  added  or 
employment. 

This  option  could  result  in  an  increase  in  legal  uncertainty  for  all  stakeholders.  The 
specific individual products (CN8 products) will not be listed in the Annex to the Council 
Decision.  Instead, individual  products  will be authorised by the local  authorities  within 
the  permitted  product  categories  (CN4)  by  applying  the  market  share  criterion  and  if 
necessary the cases of derogation. However, official data on the local production (from 

34 

 
the  customs)  are  not  always  available  causing  difficulties  in  determining  with  full 
accuracy  the  market  share  and  decisions  are  open  to  interpretation  especially  regarding 
the  case  of  derogation.  Thus,  the  legal  certainty  of  the  eligibility  of  a  product  (CN8 
product) would be reduced. This is in complete contrast to the current regime, where the 
beneficiary products are listed individually in the Annex to the Council Decision and the 
market share criterion is only assessed during the preparation of the list.  

This  will  have  an  impact  on  the  supported  sectors.  In  case  of  non-compliance  with  the 
market share criterion, the products would be no longer covered by the Council Decision, 
therefore  also  raising  an  issue  concerning  their  compliance  with  any  future  State  aid 
decision that would have to be adopted on the scheme for the future69. Tax differentials 
in these cases would be illegal, and potentially incompatible aid and could be recovered 
from the beneficiaries. This issue is considered critical by the French authorities. 

Like option 1 (termination), the budgetary effects of this option are unpredictable as they 
depend  on  the  final  specific  products  subject  to  this  regime,  the  respective  value  of 
imports  of  these  products  and  the  tax  differentials  applied.  Past  trends  suggest  that  the 
competent  authorities  would  increase  the  external  rates  for  the  specific  products  rather 
than decrease the internal rates and as a result the more likely impact is an increase in tax 
receipts.   

Assuming  that  the  eligible  product  categories  remain  broadly  in  line  with  the  current 
authorised products, no regional trade impacts are envisaged.  

Table 11 – Summary and rating of expected impacts of option 2A 

Impact area 

Impact 

Subject 

Rating  & 
magnitude  

Notes 

Governance and 
good 
administration  

Operating costs/ 
competitiveness of 
business 

Functioning of the 
market and 
competition 

Macroeconomic 
impacts 

Regulatory costs 
and savings for 
public authorities 

Improved alignment with 
needs, through enhanced 
subsidiarity in the policy 
update process but possible 
increase in disputes 
regarding individual 
products 
Increased legal uncertainty 
Improved support for 
emerging production 
activities, reducing time to 
market by approx. 2-3 years  
Small improvement in the 
functioning of the market 
thanks to the possibility of 
quicker reaction to evolving 
conditions   
Positive impact, connected 
to the support in emerging 
sectors   
Reduced burden for the 
legal amendment of the 
Decision regarding product 
lists (61%) (+1) 
Developing new 

EU / MS 
authorities 

Beneficiary 
economic 
operators 

All economic 
operators 

-2 

+1 

+1 

Initially a negative 
impact in the absence of 
appropriate 
arrangements by the 
authorities to ensure legal 
certainty  

Assuming the frequency 
of changes remains low  

All economic 
operators 

0/+1 

possible benefits (+1) 
only in emerging sectors 

EU / MS 
authorities 

+1/-1 

69 The current State aid decision approved the docks due differentials until 31 December 2020. 

35 

 
 
 
 
                                                           
arrangements to ensure 
legal certainty (-1) 

Increased burden linked to 
classification 
uncertainties/code changes 
Increase in legal 
uncertainty and associated 
costs 

Regulatory costs 
and savings for 
economic operators 

All economic 
operators 

-2 

Budgetary effects 

Unpredictable;  they 
depend on the policies 
chosen by MS authorities 

MS 
authorities 

+1/-1 

Supported individual 
products are not listed in 
the Council Decision and 
non-compliance with the 
eligibility criteria could 
lead to non-compliance 
with any future State aid 
decision and potentially 
to the recovery of the aid 

Trade flows and 
international 
relation 
Legend:  Rating  scale:  +2  major positive  impact;  +1  minor positive  impact;  0  neutral  impact;  -1  minor 
negative impact; -2 major negative impact. 

None expected 

0 

-  Option 2B: adoption of verifiable eligibility criteria 

This option proposes to adopt the existing criteria for the selection of products benefiting 
from dock dues support in the legal text of the Decision in line with the current criteria, 
which  take  into  consideration  inter  alia  the  market  share  of  the  product.  This  criterion 
may be waived for products in a residual or largely dominant position on the local market 
by providing a proper justification for support. This option would respond to the demand 
for greater clarity and objectivity expressed by most opponents of dock dues. 

Concerning the impact on the competitiveness of local economic operators, the proposed 
option is  in  principle neutral,  as it does not  propose to  modify the  current  scope of the 
special regime or the tax treatment of any particular products. The option would not have 
any  different  or  additional  effects  from  the  baseline  in  this  respect  (outlined  in  Section 
6.2 above).  

However, including the criteria in the legal text improves legal certainty and makes the 
justification of support more transparent and verifiable. This could lead to an improved 
assessment  of  the  real  needs  of  producers  and  a  timelier  detection  and  resolution  of 
possible  incongruences  in  the  product  lists.  The  ensuing  benefits  of  removing  products 
which  do  not  meet  the  eligibility  criteria  from  the  list  would  again  regard  the  general 
proper  functioning  of  the  market,  but  the  impact  on  the  competitiveness  of  local 
enterprises would be negligible, since the market share of the excluded products would 
be  either  not  significant  or  so  large  that  arguably  no  support  for  competitiveness  is 
required70. Products that do not meet the criteria, but still legitimately require the support 
of  the  octroi  de  mer  regime  could  be  granted  from  a  derogation  from  the  market  share 
criteria with adequate justification. 

From a budgetary perspective, no impact is envisaged under this option.  

70 It is important to recall that under the proposed option, a derogation from compliance with the prescribed 
market  share  window  can  still  be  obtained,  if  duly  justified,  so  products  falling  above  or  below  the 
established thresholds would not be automatically excluded.    

36 

 
 
 
 
 
 
 
                                                           
The  adoption  of  well-calibrated  and  verifiable  criteria  would  be  beneficial  for  all 
stakeholders, as follows:  

  Competent authorities. The proposed inclusion of the existing criteria in the legal text 
would  help  competent  authorities  cope  with  potential  increased  pressure  from 
implementation 
stakeholders,  which  might  accompany 
flexibility outlined in option 2A.  

the  proposed  greater 

  Economic operators. The adoption of objectively verifiable criteria would respond to 
the  need  for  transparency  and  accountability  which  emerged  from  field  work 
interviews with stakeholders from both productive sectors (i.e. the beneficiaries of the 
regime)  and  trade  sectors  (i.e.  the  ‘taxpayers’).  In  this  sense,  this  option  would 
improve  implementation  of  the  policy,  preventing/removing  the  application  of  the 
special  regime  to  products  that  do  not  arguably  meet  the  required  conditions,  and 
ultimately  contributing  to  eliminating  competition  distortions  and  to  the  proper 
functioning  of  the  market.  This  could  also  have  a  minor  positive  impact  on  trade 
relations with neighbouring countries as transparency improves.  

The  proposed  option  could  result  in  some  additional  regulatory  burdens  for  competent 
authorities, as follows:  

  The adoption of the necessary administrative framework and/or rules of procedure to 
enact the reform, i.e. the fixing of market share thresholds, the procedure for market 
share assessment, the method and criteria for special cases. This would be a one-off 
burden at the time of the adoption of the revised approach and then again for periodic 
revisions.  

  The verification of compliance with criteria any time a request for support for a new 
product is received – although this can be considered negligible in terms of additional 
burden  since  the  handling  of  new  requests  already  involves  administrative  work  in 
the current system. 

  The drafting of proper dossiers to justify ‘special cases’, i.e. production that does not 
meet the prescribed thresholds for market share but nonetheless deserves a special tax 
treatment  for  other  reasons,  which  competent  authorities  must  duly  clarify  and 
document.  Also  in  this  case,  the  additional  burden  is  presumably  limited  as 
competent  authorities  must  already  justify  in  the  current  regime  the  introduction  of 
new  products  in  the  lists  and,  at  any  rate,  this  effort  would  be  largely  offset  by  the 
reduced administrative burden made possible by the greater flexibility. 

Table 12 – Summary and rating of expected impacts of option 2B 
Impact area 

Subject 

Impact 

Rating  and 
magnitude  

Notes 

Governance and 
good administration 

Operating costs/ 
competitiveness of 
business 
Functioning of the 
market and 

Enhanced transparency 
in the selection of 
supported products  
Neutrality of effects on 
the current state of play 
should be ensured  
Reduced complaints and 
disputes over unjustified 

EU / MS 
authorities 

Beneficiary 
economic 
operators 
All 
economic 

+1 

0 

+1 

37 

 
 
 
 
 
competition 

Macroeconomics 
impacts 

Regulatory costs and 
savings for public 
authorities  

Regulatory costs and 
savings for economic 
operators 

Budgetary effects 

disparities of treatment 
and unduly distortion 

operators 

None expected 

Increased one-off 
burden, related to the 
required ad hoc 
justification for special 
cases 
Enhanced legal certainty 
Enhanced transparency 
and greater legal certainty 

Neutral, by design (it does 
not enable changes which 
are already possible under 
the current system) 

MS 
authorities 

+1 

0 

MS 
authorities 

-1/0 

Trade flows and 
international 
relations 
Legend:  rating  scale:  +2  major  positive  impact;  +1  minor  positive  impact;  0  neutral  impact;  -1  minor 
negative impact; -2 major negative impact. 

None expected 

0 

6.5. Option 3 – Revision of the maximum permitted differential 

This  option  revises  the  existing  regime  by  grouping  the  supported  products  into  two 
distinct lists in  the Annex to  the Decision, rather than the  current  system of three lists. 
The  two  different  maximum  permitted  differentials  would  be  20%  and  30%;  however, 
the  competent  authorities  would  have  to  continue  to  ensure  that  the  rate  for  specific 
products  is  equal  or  less  than  the  additional  costs  associated  with  the  production. 
Therefore the budgetary impact of the proposed option would be neutral ‘by design’: the 
option does not include the objective of increasing tax differentials or of modifying the 
intensity  of  aid,  but  rather  is  intended  to  allow  revisions  to  accurately  reflect  the 
additional costs up to the ceiling of the list – where needed – without a legal amendment 
of  the  Decision.  In  this  sense,  the  amount  of  tax  levied  would  not  be  affected  and  the 
budgetary and trade impacts are neutral. In fact, this option regards essentially procedural 
aspects,  meaning  that  its  fundamental  impacts  fall  in  the  category  of  governance  and 
good administration, and addresses the inflexibilities of the regime. This option reduces 
some of the regulatory burden for competent authorities. 

For  the  competitiveness  of  individual  local  production,  the  proposed  option  could  be 
beneficial as it would enable timelier modification of the differential applied, i.e. without 
the restriction of periodic renewal or interim legal amendments. However, this concerns a 
limited number of products (i.e. those products currently on list A (10%) would now be 
included  on  a  list  with  a  maximum  permitted  differential  of  20%)  and  an  improved 
timeliness of 2-3 years compared to the present situation. Products on list B (30%) would 
be  unaffected  by  this  option.  So,  from  a  general  market  perspective  and  in  aggregate 
terms  (including  macroeconomic  aspects),  the  expected  impacts  would  be  barely 
noticeable. 

This option allows for more flexible management of the differential rates applied by the 
competent authorities, without creating legal uncertainty.  

Table 13 – Summary and rating of expected impacts of option 3 

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
Impact area 

Impact 

Subject 

Rating  and 
magnitude  

Notes 

Greater magnitude 
(+1) for the few 
specific products 
concerned 

No impact for 
products on list B 
(30%) 

Governance and 
good administration  

Operating costs/ 
competitiveness of 
economic operators 

Functioning of the 
market and 
competition 

Macroeconomics 
impacts 

Regulatory costs and 
savings for public 
authorities 

Improved alignment with 
changes in additional 
costs, with limited risk of 
increased pressure as 
differential rates must 
reflect additional costs 
More timely revision of 
support for specific 
products requiring higher 
differentials  
Improved functioning of 
the market due to the 
possibility to react quicker 
to evolving conditions for 
products on list A (20%) 

None expected 

Reduced burden as 
revisions within the 
maximum ceiling are 
possible without a legal 
amendment  
Neutral impact if 
additional costs exceed the 
maximum ceiling as legal 
amendment still necessary 

EU / MS 
authorities 

+1 

Beneficiary 
economic 
operators 

All 
economic 
operators 

0/+1 

+1 

0 

MS 
authorities 

0/+1 

Regulatory costs & 
savings for economic 
operators 

None expected 

Budgetary effects 

Neutral, by design (it does 
not enable changes which 
are already possible under 
the current system)  

MS 
authorities 

0 

0 

Trade flows and 
international 
relations 
Legend:  rating  scale:  +2  major  positive  impact;  +1  minor  positive  impact;  0  neutral  impact;  -1  minor 
negative impact; -2 major negative impact. 

None expected 

0 

6.6. Option 4 – Raising the turnover threshold of dock dues from EUR 300 000 

to EUR 550 000 

This option consists of increasing the turnover threshold for the exclusion of small firms 
from  the  application  of  the  dock  dues  from  the  current  threshold  of  EUR  300 000  to 
EUR 550 000.  The  main  rationale  behind  this  option  is  to  extend  the  benefits  of  the 
exclusion  to  a  greater  number  of  small  economic  operators.  Such  benefits  are  of  two 
main kinds: (1) reduction of the regulatory burden connected to the tax; and (2) reduction 
of the tax burden for SMEs: 

• 
Reduction of burden. Economic operators falling outside the scope of dock dues 
are not  required to submit quarterly tax declarations and undergo  all the  administrative 
activities connected to dock dues. The annual cost of these activities had been estimated 
at  EUR 1 081  per  economic  operator,  and  the  number  of  economic  operators  possibly 
concerned by the reform is estimated to be between approximately 180 and 220, so the 
potential aggregated savings would amount to between approximately EUR 194 000 and  

39 

 
 
 
 
 
 
 
 
 
 
 
 
EUR 240 00071.  The  reduction  in  the  number  of  firms  that  fall  within  the  scope  of  the 
policy would also decrease the workload for the competent tax administrations. Based on 
the parameters estimated in  the  French impact  assessment  of 2015, total  savings of the 
proposed  option  would  be  EUR 300  per  firm/year  totalling  approximately  EUR 66 000 
(all French outermost regions under the dock dues regime included).   

• 
Reduction  of  the  tax  charge.  Tax  savings  for  concerned  economic  operators 
would  amount  to  the  internal  dock  dues  rate  currently  applied  on  the  delivery  of  local 
products,  so  the  amount  of  savings  would  be  greater  in  regions  that  apply  a  relatively 
high  internal  rate  (such  as  French  Guiana)  and  negligible  where  the  internal  dock  dues 
rate  is  generally  nil  (e.g.  Réunion).  Based  on  the  most  recent  estimates72  provided  by 
French  authorities,  the  reduction  of  tax  charges  would  amount  to  approximately 
EUR 1.22 million – i.e. some EUR 5 500 per beneficiary economic operator. This figure 
also represents the estimated increase in foregone tax revenues that can be expected. This 
relatively  small  amount  results  from  the  fact  that  these  economic  operators  already 
benefit  from  a  tax  reduction  or  exemption  on  the  products  they  sell  and  cannot  benefit 
from tax deductions for imported inputs (‘exonérations des intrants73’).  

These  benefits  increase  competitiveness  of  SMEs  that  face  proportionally  higher  tax 
compliance costs than larger enterprises74, as previously described in Section 2.2.  

This  option  has  little  impact  on  competition.  Most  concerned  enterprises  compete  only 
marginally, if at all, with imported products. Indeed, 45% of the tax revenues and almost 
30% of the enterprises concerned are concentrated in the electricity and bakery sectors75. 
Electricity, which is produced mainly by small photovoltaic units, cannot be imported. It 
is the same for fresh bread and pastry goods that only compete with frozen goods. 

In  addition  to  the  monetary  savings  described  above,  the  increase  in  the  turnover 
threshold  might  also  encourage  economic  operators  currently  outside  of  the  dock  dues 
regime to grow. As anecdotally reported by stakeholders during field interviews, certain 
operators  currently  restrain  their  activities  in  order  to  remain  under  the  EUR 300 000 
ceiling so that they can benefit from the simplified regime. How widespread and strong 
this constraint is cannot be verified precisely. The study estimated that possibly 6% of the 
economic  operators  currently  under  the  EUR 300 000  threshold76  would  move  to  the 
upper category.  

Nevertheless,  the  exclusion  of  economic  operators  from  the  dock  dues’  scope  of 
application  means  a  significant  loss  of  monitoring  data,  specifically  on  the  value  and 
volume of production, on the number of economic operators engaged in the production of 
dock dues goods and – ultimately – on the extent of the foregone revenue and the cost of 

71 Projet De Loi modifiant la loi n° 2004-639 du 2 juillet 2004 relative à l’octroi de mer, ÉTUDE 
D’IMPACT, 23 mars 2015. 
72 These estimates are based on the 2019 production figures provided by the French customs authorities. 
73 See Annex 5 for further details. 
74 European Commission Study on Tax Compliance Costs for SMEs, 2018: French enterprises record 
higher total enterprise tax compliance costs than their peers (EUR 7 998 for micro-sized enterprises). 
75 The balance of economic operators are in more than 60 different sectors, with 1 to 2 operators per sector.  
76 According to the French impact assessment of 2015 there were 3 456 firms under the EUR 300 000 
threshold. 

40 

 
                                                           
the measure. There are 1 042 enterprises currently submitting dock dues tax declarations 
(2018), while for some 3 500 economic operators engaged in the production of dock dues 
goods  no  data  have  been  collected  since  2014,  affecting  the  robustness  of  the  market 
share data for the products. Raising the current threshold to EUR 550 000 would reduce 
the number of monitored firms by between 17% and 21%. However, it will not affect the 
quality of the product fiche used to calculate the additional costs since they derive from 
empirical information provided by the concerned local economic operators regardless of 
their turnover77. 

Table 14 – Summary and rating of expected impacts of option 4 
Impact area 

Subject 

Impact 

Rating 
and 
magnitude  

Governance and good 
administration 

Operating costs/ 
competitiveness of 
economic operators 
Functioning of the market 
and competition 
Macroeconomic impacts 

Regulatory costs and 
savings for public 
authorities 

Regulatory costs and 
savings for economic 
operators 

Budgetary impact  

Trade flows and 
international relations 

Expanded data gaps, 
for the monitoring of 
implementation and 
impact  
Increased differential 
– de facto – for the 
concerned SMEs 

None expected 

Enhanced impact for 
concerned economic 
operators 

Reduced burden, as 
number of economic 
operators within the 
scope of dock dues is 
reduced 
Reduced burden for 
tax declarations for 
the concerned 
economic operators  
Marginal increase in 
the foregone 
revenues, but of 
limited magnitude 
None expected 

EU/ MS 
authorities 

Beneficiary 
firms 

SMEs with 
turnover of 
less than 
EUR 500 000 

MS 
authorities 

Beneficiary 
firms 

MS 
authorities 

-1 

+1 

0 

+1 

+1 

+1 

0 

0 

Notes 

More relevant in 
OR with non-zero 
internal rates 

The estimated 
number of 
beneficiaries is 
limited 

The estimated 
number of 
beneficiaries is 
limited 
Mitigated by a 
restricted access to 
deductions and 
reimbursements  

Legend:  rating  scale:  +2  major  positive  impact;  +1  minor  positive  impact;  0  neutral  impact;  -1 
minor negative impact; -2 major negative impact. 

6.7. Option 5 – Revised monitoring arrangements 

The  heterogeneous  content  of  the  interim  implementation  report  submitted  by  the 
national  competent  authorities  to  the  Commission  creates  difficulties  for  data  analysis. 
For this reason, option 5 proposes to harmonise the structure and the indicators provided 
in  those  reports  in  order  to:  (a)  enhance  their  consistency  over  time;  (b)  make 
comparisons  across  regions  possible  and  reliable;  and  (c)  prevent  and  address  the 

77 The preparation of product fiches is a participatory process, which involves the concerned industries as 
the main providers of data and estimates for the calculation of additional costs. The fiches are drawn up 
and validated by the competent authorities in France. 

41 

 
 
 
 
 
 
 
 
                                                           
information  ‘gaps’  characterising  some  of  the  past  reports.  All  these  outcomes  would 
contribute  to  a  better  design  and  administration  of  the  policy,  providing  the  competent 
EU and French authorities with more robust evidence of the effects of the special regime 
on  the  local  socio-economic  structure  (including  in  the  medium/long  run).  This  would 
include dimensions poorly investigated so far due to insufficient data, such as the impacts 
on market structure, on trade flows, on price levels and other macroeconomic indicators. 
To  ensure  compliance,  the  harmonised  structure  and  the  indicators  for  the  mid-term 
report should be annexed to the Council Decision.  

The benefits of the improved arrangements would go beyond institutional oversight. The 
mainstreaming of more robust and comprehensive impact evidence into the policy design 
can  eventually  improve  its  efficiency  and  help  competent  authorities  correct  possible 
distortions in the market, thus responding to concerns raised by various stakeholders and 
preventing  the  emergence  of  disputes.  The  ‘knowledge’  areas  that  might  particularly 
benefit from the proposed overhaul of the system include: (a) the specific impact of the 
dock dues regime on sectoral  value added  (and  employment);  (b) the impact  of the tax 
differentials on price levels; and (c) the assessment of the intensity of the aid, taking into 
account the other support measures. 

The costs of this proposed option are those imposed on the competent authorities for the 
collection  and  processing  of  data  and  the  preparation  and  transmission  of  the  revised 
mid-term  report.  However,  as  monitoring  obligations  already  exist  in  the  current 
framework,  the  actual  burden  would  be  limited  to  the  additional  information 
requirements  introduced  with  the  revision.  More  specifically,  the  additional  burden 
would consist of two activities:  

  one-time  familiarisation  with  the  harmonised  structure  and  the  indicators 

 

requested; 
recurrent collection and processing of data which are not currently included in the 
periodic monitoring reports.  

To  minimise  the  additional  burden,  the  proposed  indicators  have  been  selected 
considering  the  information  already  collected  and  reported  by  French  authorities,  or 
easily available, such as customs data. Modifications are introduced only where deemed 
important.  

No  additional  burden  for  enterprises  is  expected.  All  the  indicators  listed  derive  from 
information  collected  by  public  authorities  or  statistical  data.  Some  data  do  require  the 
consultation of enterprises (e.g. the estimation of additional production costs), but this is 
information that is being collected anyway and not an obligation introduced by the policy 
option.       

Estimating  the  additional  costs  at  the  level  of  CN4  product  categories  will  reduce  the 
number of separated additional costs assessments (product fiches) to be conducted, and 
ensure less administrative burden for competent authorities and private sector alike (i.e. 
beneficiaries of the special regime who are supposed to provide the necessary evidence 
for costs assessment). Based on the current situation, the number of products subject to 

42 

 
an  assessment  of  additional  costs  would  decrease  by  35%  (by  44%  in  French  Guiana), 
cutting the current administrative burden accordingly. 

The impact of the shift to CN4-level estimates in terms of degree of precision would be 
limited  when  compared  to  the  current  situation.  Considering  that  CN4  categories  are 
closer  to  the  sector/branch  structure  of  manufacturing  and  production  activity,  it  is 
reasonable to assume that: (1) the difference within an individual category is typically of 
small magnitude; and (2) at any rate, the current degree of approximation with CN8-level 
estimates would not actually ensure higher precision. 

 Table 15 – Summary and rating of expected impacts of option 5 
Impact area 

Subject 

Impact 

Rating  and 
magnitude  

Notes 

Assuming the 
results of the 
analysis are fed 
back into 
policy design  

The burden 
varies across 
ORs 

More informative 
monitoring, and better stock-
taking of impacts also in 
comparative terms  
Reduced burden related to 
the provision of data for 
product fiches  
Improved policy design and 
implementation, preventing 
market distortions, and the 
risk of overcompensation  

Increased burden, for filling 
information gaps and 
drawing up a small number 
of new indicators  
Increased burden, for 
familiarisation and drawing 
up new indicators, but 
reduced burden of 
processing product fiches  

None expected 

Governance and 
good administration  

Operating costs/ 
competitiveness of 
economic operators 

Functioning of the 
market and 
competition 

Macroeconomic 
impacts  

Regulatory costs and 
savings for public 
authorities  

Regulatory costs & 
savings for economic 
operators 

Budgetary effects 

EU/MS 
authorities 

+2 

Beneficiaries 

+1 

All economic 
operators 

+1 

EU authorities 

-1 

MS 
authorities 

+1 

0 

0 

Neutral, by design (it does 
not enable changes which are 
already possible under the 
current system) 

MS 
authorities 

Trade flows and 
international 
relations 
Legend:  rating  scale:  +2  major  positive  impact;  +1  minor  positive  impact;  0  neutral  impact;  -1  minor 
negative impact; -2 major negative impact. 

None expected 

0 

7.  HOW DO THE OPTIONS COMPARE? 

For the purposes of this analytical report, all options have been assessed on whether they 
have  a  positive,  negative  or  neutral  effect  relative  to  the  baseline  for  effectiveness, 
efficiency and coherence. 

7.1. Effectiveness 

Overall,  the  policy  aims  to  enhance  the  competitiveness  of  local  industries  and 
production  activities  mitigating  the  constraints  caused  by  the  outermost  status  of  the 

43 

 
 
 
 
 
 
 
 
 
 
 
regions  concerned.  The  proposed  option  3  (two  different  maximum  permitted  tax 
differentials)  aiming  to  facilitate  the  updating  of  the  special  regime  to  evolving  needs 
could prove beneficial in this respect. Option 4 (the SME threshold) could help SMEs to 
develop  further  and  increase  their  turnover  to  EUR 550 000.  The  impact  of  option  2A 
(CN4)  would  be  more  mixed  as  the  increased  legal  uncertainty  would  mitigate  the 
increased flexibility for the beneficiaries. Conversely, termination of the policy (option 1) 
would have, by definition, severe adverse effects on local producers’ competitiveness.  

The proposed policy revisions (options 2A, 2B, 3, 4 and 5) are also expected to improve 
the  functioning  of  the  market,  mitigating  the  risk  of  undue  distortions  of  competition, 
which is the second overall objective of the policy. This result would be achieved by a 
series  of  specific  measures  concerning:  (1)  the  selection  of  eligible  products;  (2)  the 
application of tax differentials in line with needs; (3) the prevention of overcompensation 
risks; (4) and the effective monitoring of the regime. Individually, all proposed measures 
would  have  moderate  effects,  but  altogether  they  might  respond  effectively  to  various 
concerns raised by trade and service sectors over the fairness and proportionality of the 
regime.  Also  in  this  case,  the  effects  of  discontinuing  the  regime  (option  1)  would  be 
markedly negative: various local producers would no longer be able to compete, and the 
market would become even more oligopolistic, with adverse effects also for consumers.  

Ultimately,  the  policy  aims  to  contribute  to  the  social  and  economic  development  of 
those  outermost  regions.  The  proposed  revisions  of  the  current  system  would  have 
limited  effect  in  this  area,  first  and  foremost  because  they  do  not  intend  to  modify  the 
current  scope  and  intensity  of  the  support  made  available  through  the  regime.  The 
improvements  described  above  might  have  beneficial  effects  in  few  specific  product 
areas  e.g.  improving  the  alignment  with  needs  or  redressing  existing  distortions,  but  at 
the macroeconomic level these effects would hardly be noticeable. Instead, the negative 
impacts  of  discontinuation  would  probably  be  visible  on  the  industrial  value-added 
indicators and, potentially, on investments and employment. 

7.2. Efficiency  

The policy options examined do not envisage changes that might affect the amount of tax 
revenues collected and, therefore, the budget of the regional administrations concerned. 
The  only  exception  is  the  possible  increase  in  the  turnover  threshold  for  exclusion  of 
small firms  from  the application of the tax (option 4). However, here the magnitude of 
the  revenue  loss  would  be  marginal.  Otherwise,  the  budgetary  effects  of  the  proposed 
options  would  be  either  neutral  by  design,  or  ambivalent  and  unpredictable  since  they 
would depend on policy decisions made at the local level.  

In  terms  of  regulatory  burden  for  EU  and  French  authorities,  the  specific  measures 
proposed  for  the  revision  of  the  policy  are  expected  to  have  differentiated  effects. 
Compared  to  the  baseline  situation,  the  impact  of  options  3  and  4  would  contribute  to 
reducing  the  current  burden  –  especially  because  of  the  simplification  and  the  greater 
flexibility  introduced  in  the  system.  However,  certain  aspects  such  as  the  enacting  of 
eligibility  criteria  for  products  (option  2B)  could  involve  an  increase  in  the  efforts 
required. Additionally, certain aspects of option 5 (on the improvement of the monitoring 

44 

 
  
system)  require  additional  efforts,  especially  in  the  initial  phase.  At  any  rate,  the 
additional burden anticipated would remain limited and largely offset by the benefits of 
the  proposed  revisions.  Option  2A  could  result  in  greater  legal  uncertainty  and  an 
increase in associated legal costs, reducing the overall efficiency of this option.  

The regulatory burden imposed on enterprises would likely decrease – albeit moderately 
–  under  options  2B,  3,  4  and  5.  In  particular,  moving  from  specific  products  (CN8)  to 
broader categories (CN4) in terms of additional cost assessment (option 5) would make 
assessment  less  complex  and  would  reduce  the  efforts  required  when  justifying  the 
application of tax differentials. 

7.3.  Coherence 

In determining whether the proposed options are consistent with EU policy, the primary 
reference  is  the  impact  on  governance  and  good  administration.  This  includes  –  where 
relevant – consistency between the parallel State aid policy on dock dues and its possible 
evolution.  As  most  of  the  proposed  revisions  explicitly  address  policy  governance  and 
implementation  arrangements,  generalised  improvement  can  be  expected  under  this 
scenario.  This  is  especially  true  with  options  2B,  3  and  5,  which  would  enhance 
subsidiarity  in  policy  implementation,  while  reinforcing  monitoring  and  making  rules 
and conditions clearer, more transparent and easily verifiable. Although option 2A would 
also enhance subsidiarity, this would possibly increase legal uncertainty and the number 
of  disputes  regarding  individual  products.  Increasing  the  SME  threshold  would  reduce 
the number of economic operators within the scope of dock dues; this would impact the 
availability of data.  

Only the discontinuation scenario would have any impact on regional relations in that it 
would  eliminate  the  root  cause  of  complaints  expressed  by  CARIFORUM  and  Eastern 
and Southern African countries regarding the claimed incompatibility of dock dues with 
the trade  agreements stipulated with  the EU.  The removal of the dock dues as a whole 
would  not  significantly  change  the  intra-regional  trade  exchange,  but  this  contentious 
point  would  certainly  be  removed  from  the  EU-CARIFORUM  agenda.  However, 
discontinuing support for the French outermost regions in taxation  – without creating a 
new instrument/budget to address the constraints of these regions – would not be in line 
with the intent of the Commission Communication of 2017 and of Article 349 TFEU.   

Table 16 – Summary of estimated impacts for each of the options considered 

Option theme 

Effective 

Efficient 

Coherent 

Baseline: The derogation is renewed with no further 
policy changes 

Option 1: Policy termination 

Option 2A: Identification of beneficiary product at a 
higher classification level 

0 

-- 

+ 

0 

- 

- 

0 

0 

- 

45 

 
 
Option theme 

Effective 

Efficient 

Coherent 

Option 2B: Adoption of verifiable eligibility criteria 

Option 3: Revision of the maximum permitted 
differential 

Option 4: Raising the turnover threshold of the dock 
dues from EUR 300 000 to EUR 550 000  

Option 5: Revised monitoring arrangements 

+ 

+ 

+ 

+ 

+/0 

++ 

++ 

0 

+ 

0 

- 

++ 

Legend: ++ positive effect expected; + moderate positive effect expected; 0 no effect or neutral impact expected; - 
moderate negative effect expected; -- negative effect expected; (all relative to baseline) 
Source: Analysis of the study. 

8.  PREFERRED OPTION 

Option 2B+3+4+5, which revises the current regime, is the preferred option. This would 
renew the special rules beyond June 2021 with the following changes: 

a)  the adoption of verifiable eligibility criteria;  
b)  the revision of the maximum permitted differential;  
c)  the increase of the turnover threshold for exclusion from the scope of the tax; 
d)  the revision of monitoring arrangements.  

These  amendments  to  the  current  regime  will  make  the  dock  dues  regime  more 
transparent  and flexible, while maintaining high levels of legal certainty. These options 
will  enable  the  French  authorities  to  amend  the  regime  efficiently  and  effectively  at 
Member State level in line with the set criteria.  

These options, implemented together, are expected to have a greater positive impact than 
the baseline. In comparison, option 1 is ineffective and inefficient in comparison to the 
baseline: this is because terminating the regime would mean that its objectives would not 
be  achieved  and  could  lead  to  economic  and  social  instability  in  the  French  outermost 
regions, with potentially significant consequences. Most stakeholders were also opposed 
to the termination of the regime.  

Option  2A has been discarded as the French authorities consider that  it would increase 
the legal uncertainty of the regime, which is a critical concern for them. 

Finally, options 2B and 5 would be more consistent with other EU policy, whereas option 
1 would not be consistent with EU policy for the outermost regions. 

46 

 
 
 
9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

Monitoring the implementation and functioning of the derogation will fall to the French 
authorities and the Commission, as has been the case to date.  

In  accordance  with  Article  3  of  the  current  Decision,  the  French  authorities  were 
requested to submit a report halfway through the life of the Decision to the Commission. 
This  report  was  to  enable  the  Commission  to  assess  whether  the  reasons  justifying  the 
derogation still existed.  

It is important that the French authorities continue preparing a monitoring report as they 
are best placed to gather the precise information from the impacted stakeholders. France 
will  be  asked  to  submit  a  monitoring  report  by  30 September 2025  for  the  period  from 
2019  to  202478.  This  monitoring  report  will  include  any  relevant  information  on  the 
additional  costs  involved  in  the  local  production,  economic  distortions  and  market 
impacts.  This  report  will  contain  the  information  needed  to  evaluate  effectiveness, 
efficiency, consistency with other EU policies, continued relevance and EU added value 
of the new legislation. The monitoring report should also  seek to  collect  input from  all 
relevant  stakeholders  as  regards  the  level  and  evolution  of  their  additional  production 
costs, compliance costs and any instances of market distortions. 

To make sure that the information collected by the French authorities and analysed in the 
report  contains  the  data  the  Commission  needs  to  take  an  informed  decision  on  the 
scheme’s future validity and viability, the Commission will draw up specific guidelines 
on the required information. Such guidelines will be, to the extent possible, common to 
other similar schemes for the EU’s outermost regions, governed by similar legislation. 

This will enable the Commission to assess whether the reasons justifying the derogation 
still  exist,  whether  the  fiscal  advantage  granted  by  France  is  still  proportionate  and 
whether  it  is  possible  to  envisage  alternative  measures  to  a  tax  derogation  system  that 
would  also  be  sufficient  to  support  competitive  industries,  taking  into  account  their 
international  dimension  as  well  as  the  special  status  granted  to  the  outermost  regions 
under Article 349 TFEU. 

78 The report should include 2019 data so that a baseline is established and so that the Commission is able 
to review the impact of the derogation covering the post-June 2021 period. The report should contain the 
most up-to-date data up to and including 2024, where possible.  

47 

 
 
                                                           
ANNEX 1: PROCEDURAL INFORMATION 

1.  Lead DG, Decide Planning/CWP references 

The lead Commission service for this file is the Directorate-General for Taxation and the 
Customs Union (DG TAXUD). 

This initiative got the following political agreements: 

o  Agenda Planning and roadmap: Proposal for a Council Decision replacing 
Council Decision  No 940/2014/EU of 17 December 2014 concerning the 
dock dues in the French outermost regions of Guadeloupe, French Guiana, 
Martinique, Réunion and Mayotte (PLAN/2019/5286). 

Due  to  its  limited  impacts,  the  file  was  not  included  in  the  Commission  Work 
Programme. 

2.  Organisation and timing 

The  following  DGs  were  invited  to  the  interservice  steering  group  (ISSG):  AGRI, 
BUDG, CLIMA, COMP, DEVCO EMPL, ENV, GROW, HOME, JRC, MOVE, REGIO, 
SANTE, SG, SJ, TRADE, MARE.  

A consortium led by  Economisti Associati  (‘the  Consultant’) undertook the assignment 
entitled  ‘Study  on  specific  tax  regimes  for  outermost  regions  belonging  to  France  and 
Spain’ (‘the study’). 

The  study  established  the  basis  for  what  is  known  as  a  ‘back-to-back  exercise’,  with 
evaluation  and  a  forward-looking  assessment  carried  out  simultaneously  in  accordance 
with the better regulation guidelines. 

The  objectives  of  the  study  were  to  analyse  whether  the  fiscal  advantages  granted  by 
some  ORs  (the  Canary  Islands  in  Spain  and  the  French  ORs  of  Guadeloupe,  French 
Guiana,  Martinique,  Réunion  and  Mayotte)  were  fit  for  purpose,  and  the  scale  of  the 
issues or weaknesses encountered in their application. 

The study also assessed a range of policy options that could effectively address the socio-
economic constraints that the outermost regions face, and described their possible impact 
on stakeholders.  

48 

 
 
 
 
 
 
 
ANNEX 2: STAKEHOLDER CONSULTATION  

1.  Overview of consultation activities  

The  stakeholder  consultation  strategy  was  developed  to  ensure  a  wide  and  balanced 
coverage of the different entities involved in, subject to, or concerned by the design and 
implementation of the special tax regime. This was done by means of tailored tools and 
questionnaires.  The  perspectives  and  positions  on  dock  dues  were  expected  to  vary 
significantly  (a)  between  groups  of  stakeholders  (policy  makers,  tax  and  customs 
administrations, enterprises, professionals, etc.), (b) geographically, between ‘mainland’ 
or outermost regions residents, and (c) for private-sector stakeholders, between the local 
producers  benefiting  from  the  regime  (enterprises  that  are  instead  subject  to  direct  tax 
charges,  such  as  importers),  and  enterprises  that  are  indirectly  affected  (e.g.  local 
manufacturers  using  production  inputs  falling  inside  or  outside  the  tax  differential 
regime).  

To comprehensively address all different perspectives and positions, the stakeholder 
consultation consisted of two main lines of work set out below.  

  Targeted  interview  programme  involving  field  visits.  In-depth  interviews  were 
conducted with selected stakeholders, including EU institutions,  French government 
authorities at national and local level, and economic operators and trade organisations 
representing  both  the  local  productive  sectors  (i.e.  the  beneficiaries  of  the  special 
regime) and trade and service sectors that are directly or indirectly affected. A total of 
80  stakeholders  were  interviewed,  of  which  55  in  three  French  ORs  (Réunion, 
Guadeloupe and Martinique). 

  Focused  online  survey  of  economic  operators  active  in  the  French  ORs.  A  web-
based survey of the economic operators located in the five French ORs  was carried 
out  in  November 26-December 23 2019.  The  survey  allowed  firms’  views  to  be 
collected  on  the  key  features  of  the  dock  dues,  i.e.  positive  impacts,  side  effects, 
changes  needed,  etc.  It  also  allowed  structured  information  to  be  gathered  on  the 
conduct and performance of local businesses which, to varying degrees, are affected 
by  the  special  tax  regime.  The  survey  questionnaire  was  available  in  English  and 
French, and customised to reflect the different effects of and views on the special tax 
regime based on the different groups of local businesses involved. These were local 
producers, and  importers and distributors. A total of 196 valid replies were received 
from  all five regions.  The table below  provides  a summary of the responses to  the 
survey by size of firm, origin and respondent economic activity.  

Table A2.1 – Response summary to the business survey  

Firm size 

Number of 
respondents 

Self-employed individual firms 
with no employees 
1-9 employees  
(micro enterprise) 
10-49 employees  
(small enterprise) 
More than 50 employees  

28 

74 

70 

21 

Region  

Martinique 

Réunion 

Guadeloupe 

French Guiana 

Number of 
respondents 

71 

70 

34 

19 

49 

 
 
 
 
 
 
 
(medium-large enterprise) 
No answer 
Total 

3 
196 

Main economic activity 
Productive activities 
Of which liable for dock dues  
Non-productive activities 
Of which traders/importers 
Total 

Mayotte 
Total 

2 
196 

Number of respondents 
77 
71 
119 
59 
196 

Altogether, the consultation allowed us to gather three main kinds of information:  

(1) factual information on the legal  and administrative arrangements  for the  special tax 

regime in the ORs concerned; 

(2) evidence of the performance of the tax regime, including the benefits delivered, the 
contribution  to  local  development,  and  any  possible  issue  or  unintended  effect 
registered;  

(3) stakeholders’  expectations  and  views  of  possible  policy  scenarios  for  the  future  – 
including  the  revision  of  the  current  regime  –  and  their  forecasts  concerning  the 
effects of different possible EU actions.  

2.  Overall stakeholders’ assessment of the dock dues regime  

  ON THE COHERENCE AND RELEVANCE OF THE REGIME  

The  results  of  the  study  indicate  that  the  scope  of  the  dock  dues  regime  is  fairly 
comprehensive,  satisfactorily  addressing  the  needs  of  the  economic  operators  concerned. 
This was confirmed by the majority of the key stakeholders consulted. Nonetheless, both 
local authorities and private-sector representatives reported some gaps in the scope of the 
dock dues, in particular as regards primary agriculture, fisheries and agri-food products. In 
addition,  about  half  the  local  producers  involved  in  the  survey  maintained  that  some 
products should be added to the dock dues list. In this regard, one of the problem lamented 
by stakeholders was the system’s slowness to respond to the emerging needs of the local 
economy and to correct errors and omissions, when relevant. The lack of flexibility is due 
to  the  fact  that  the  list  of  products  with  a  differentiated  tax  rate  is  laid  down  in  the 
Council Decision, and so any revision – e.g. the inclusion of new emerging production or 
the  modification  of  the  extent  of  the  tax  support  –  requires  a  burdensome  legal 
amendment process or postponement until the next renewal of the policy.  

Another,  less  severe,  issue  with  reference  to  the  scope  of  the  dock  dues  was  typically 
voiced by traders’ representatives and concerns the identification of supported products 
through  reference  to  CN  categories.  In  some  cases,  these  include  items  which  are  not 
produced locally, or which are produced in limited quantities. The results of the business 
survey confirm the existence of this issue, suggesting however that it does not represent a 
major concern: fewer than one quarter of the respondents (22%) able to reply reported the 
existence of products with negligible production in the French ORs that should be removed 
from the dock dues list. 

50 

 
 
 
 
 
 
 
 
Overall, the process for establishing the list of products benefiting from fiscal advantages 
is described as participatory by both local authorities and  representatives of the relevant 
private-sector associations. Still, the criteria adopted by competent authorities to select the 
products eligible for the support and to determine the level of support are not well-known 
outside  the  manufacturing  sector.  While  most  local  producers  (56%)  reported  familiarity 
with the criteria  for the inclusion of certain products in the dock dues lists, only 17% of  
firms active in other sectors stated the same. As for the methods used to establish the tax 
differential  applicable  to  dock  dues  products,  respondents  are  even  less  knowledgeable: 
86%  of  the  non-producer  firms  and  57%  of  the  local  producers  declared  that  they  had 
little/no information about these methods.  

Table A2.2 – Stakeholders’ knowledge of the criteria underlying dock dues 
implementation  

Share of respondents with at least partial knowledge of the 
criteria for inclusion of certain products in the dock dues lists 
Share of respondents with at least partial knowledge of the 
methods used to establish the tax differential applicable to dock 
dues products 
Source: Business Survey.  

Total 

Non- 
producers 

Producers 

32% 

17% 

56% 

26% 

14% 

43% 

  IMPACT OF THE DOCK DUES ON PRICE COMPETITIVENESS 

The importance of the dock dues regime in redressing the price competitiveness of local 
products  was  widely  acknowledged  by  representatives  of  the  relevant  private-sector 
associations  and  manufacturing  firms  encountered  during  fieldwork,  even  though  the 
price gap between locally produced goods and imported ones is not fully closed.  

In  the  same  vein,  local  producers  involved  in  the  survey  attributed  great  importance  to 
the  dock  dues  in  shaping  the  conditions  for  competition:  over  three  quarters  of  the 
relevant  respondents  describe  the  tax  as  ‘essential’,  adding  that  without  the  dock  dues 
they  could  not  compete.  Almost  60%  of  importers  also  maintained  that  the  dock  dues  
‘significantly’  affect  the  competitiveness  of  their  imported  products  with  dock  dues 
differential rates. 

51 

 
 
 
 
 
 
 
Table A2.3 – Stakeholders’ assessment of dock dues impact on price competitiveness 
% of 
importers  

% of local 
producers  

77% 

Essential, without dock dues we 
could not compete with imported 
goods 
Moderate, dock dues help us be 
competitive but there are other 
factors 
Neutral, dock dues do not 
influence our competitiveness  
Negative, dock dues are actually 
damaging our competitiveness 
Source: Business Survey (excluding ‘don’t know’ answers). 

10% 

8% 

5% 

Significant, dock dues make our main 
imported product much less 
competitive 
Moderate, dock dues do affect 
competitiveness but there are other 
factors at play 
Limited, dock dues are only a minor 
factor in the dynamic of price  

59% 

21% 

21% 

  PERCEIVED ADVANTAGES OF THE DOCK DUES REGIME 

The business survey investigated respondents’ views on the potential positive impacts of 
the  dock  dues  regime  on  the  local  economy  in  general  and  on  production  activities 
specifically. Views largely differed between enterprises engaged in production activities 
and  businesses  operating  in  all  other  sectors:  the  former  are  inevitably  much  keener  to 
describe dock dues as critically important, while the latter are much more sceptical. More 
specifically:  

 

  over 80% of local producers maintained that the dock dues had a moderate/major 
impact  in  boosting  local  production  activities  and  supporting  the  creation  and 
maintenance  of  employment  in  the  French  ORs.  This  share  is  significantly  lower 
among  respondents  active  in  other  sectors,  but  the  percentage  of  firms  assessing 
these impacts as moderate or major is still significant (almost a third); 
the opinions of the local producers concerning the impact of the dock dues in terms 
of reducing the local economy’s reliance on imports and increasing investments in 
local production activities are only marginally less positive. In addition, a relevant 
share of non-producers held similar views in this regard; 
the effects of the dock dues on the  expansion of the range of products available 
locally  and  the  promotion  of  R&D  and  innovation  in  local  industry  were  those 
aspects  assessed  as  being  least  positive.  This  was  largely  due  to  the  fact  that  a 
lower  share  of  local  producers  (although  still  above  70%)  considered  them  to 
have major or moderate importance. 

 

Table A2.4 below illustrates the share of respondents assessing the positive impacts of 
the dock dues regime as ‘moderate’ or ‘major’. 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
Table A2.4 – Stakeholders’ perception of the positive impacts of the dock dues  

Positive impact 

Boosting local production activities  
Encouraging the diversification of local production activities 
Reducing the local economy’s reliance on imports 
Contribution to the creation and maintenance of jobs 
Fostering investments in local production activities  
Expanding the range of products available in the local market 
Fostering research and development and innovation in the local 
industry 
Source: Business Survey (excluding ‘don’t know’ answers). 

Producers 

Total 

% of respondents assessing impact 
as moderate or major 
Non- 
producers 
31% 
36% 
32% 
31% 
39% 
34% 

53% 
53% 
52% 
53% 
57% 
49% 

82% 
79% 
77% 
83% 
80% 
73% 

46% 

30% 

71% 

  PERCEIVED ADVERSE EFFECTS OF THE DOCK DUES REGIME 

The  business  survey  also  investigated  respondents’  views  on  the  potential  negative 
effects  of  the  dock  dues  regime  on  the  local  economy,  market  competition,  regional 
trade,  local  consumption,  and  prices.  As  shown  in  Table  A2.5  below,  in  this  case  too, 
views  largely  differed  between  enterprises  engaged  in  production  activities  and 
businesses operating in  all other sectors, but in the opposite direction. In particular, the 
table illustrates the share of respondents within each group assessing negative impacts as 
‘moderate’ or ‘major’. The salient results can be summarised as follows: 

 

 

the majority of non-producer firms, ranging between 66% and 94%, assessed all 
the  negative  impacts  as  significant.  Conversely,  only  a  minority  of  local 
producers (typically between a quarter and a third) provided a similar assessment 
of the different impacts of the dock dues;  
the  ranking  order  of  the  two  groups  of  respondents  was  very  similar,  with 
inflation  effects  exerted  by  the  tax  directly  (on  imported  consumer  goods)  and 
indirectly  (by  raising  the  overall  costs  of  local  production  and  service  activities 
which  import  raw  materials  and  supplies)  enjoying  the  highest  degree  of 
consensus from both groups; 

  conversely,  the  potentially  negative  effects  of  the  tax  on  the  efficiency  of  local 
producers, which may be discouraged to make efforts to boost productivity, and the 
fact that the fiscal advantages granted by the dock dues together with other aids to 
local  production  may  cause  an  excessive  distortion  of  competition,  were 
considered as the least important by both groups;  
finally,  a  broadly  similar  share  of  respondents  (about  30%  of  non-producers  and 
80%  of  local  producers)  deemed  that  the  dock  dues  tend  to  draw  resources 
towards  existing  ‘supported’  sectors,  hampering  the  development  of  new  ones, 
and  negatively  affect  trade  between  the  French  ORs  and  neighbouring  countries, 
including  the  members  of  CARIFORUM  and  the  Eastern  and  Southern  African 
community.  

 

53 

 
 
 
 
 
 
Table A2.5 – Stakeholders’ perception of the negative impacts of the dock dues  

Negative impact 

Because of dock dues support, local firms are not encouraged to 
boost efficiency and productivity 
The dock dues drive most investments and human resources to the 
‘supported’ sectors, thus hampering the emergence of new activities 
in ‘non-supported’ sectors 
The dock dues influence demand, switching consumption from more 
taxed products to less/no taxed substitute products  
The addition of dock dues and other aids to local production 
produces an excessive distortion of competition 
Despite the exemptions, the dock dues affect the costs of imported 
raw materials and supplies, thus raising the overall costs of local 
production and service activities (such as tourism, etc.)  
The dock dues translate into higher prices for consumers 
The dock dues hamper trade with neighbouring countries (e.g. 
members of CARIFORUM or the Eastern and Southern African 
community) 
Source: Business Survey (excluding ‘don’t know’ answers). 

% of respondents assessing as 
impact moderate or major 

Total 

Non- 
producers 

Producers 

48% 

66% 

23% 

56% 

76% 

27% 

53% 

69% 

47% 

68% 

71% 

89% 

72% 

94% 

62% 

84% 

31% 

18% 

43% 

36% 

30% 

  PERCEIVED EFFICIENCY OF THE DOCK DUES REGIME  

The  dock  dues  regime  does  not  create  major  problems  in  terms  of  implementation  or 
major  administrative  burdens  on  competent  authorities.  In  the  same  vein,  public 
authorities  generally  agree  that  the  tax  enforcement  burden  arising  from  activities 
concerning products with dock dues differentials  can be considered acceptable and fully 
justified  by  the  benefits  produced.  On  the  other  hand,  more  broadly,  the  process  of 
revising the list and extending exemptions to specific products by legal amendment of the 
Council  Decision  is  regarded  as  overly  complex.  The  revision  process  requires  the 
involvement of several stakeholders at national (central and local) and EU level, and can 
last up to 3 years, thus causing unnecessary burdens to EU and national authorities.  

Likewise, the administrative and compliance costs of the dock dues regime are considered 
rather  limited  by  private-sector  representatives.  The  majority  of  the  local  producers 
involved  in  the  survey  assessed  compliance  with  dock  dues-related  obligations  as  not 
particularly  burdensome.  In  this  context,  the  most  burdensome  task  is  considered  the 
identification  of  the  applicable  customs  codes  and  the  corresponding  dock  dues  rates, 
sometimes  uncertain  and  potentially  a  cause  of  disputes  and  disparity  of  treatment.  In 
particular, this task was assessed as a major burden by about a fifth of the local producers 
and a quarter of the direct importers.  

The  negative  assessment  concerning  the  customs  classification  of  imported  raw 
materials/supplies  subject  to  the  dock  dues  was  confirmed  by  the  feedback  provided  by 
direct importers, with over 60% of the importing firms reporting at least one change in the 
customs code and/or definition of the raw materials/supplies usually imported and almost 
70%  reporting  difficulties,  in  most  cases  recurring,  in  appropriately  identifying  the 
applicable customs code and corresponding dock dues rate. 

54 

 
 
 
3.  Stakeholder views on future policy scenarios  

  ATTITUDE TOWARDS THE RENEWAL OF THE DOCK DUES REGIME 

Consultation with the local authorities gave a clear picture of the future of the current tax 
regime. The dock dues are considered important both for the public budget of the French 
ORs  and  to  support  local  production  activities,  and  renewal  of  the  regime  enjoys  a 
widespread consensus. However, the consulted regional authorities highlighted the need 
for greater flexibility and a less cumbersome procedure to update the supported products 
list and the tax differentials applied.   

The views of the private sector with  regard to the renewal of the dock dues regime are 
strongly  polarised,  depending  on  the  business  activity  and  the  different  effects  of  the 
dock  dues  on  this  activity.  As  expected,  respondents  engaged  in  production  activities 
typically benefiting from tax differentials largely supported renewal of the policy (86%). 
In addition, a majority of them (59%) deemed that no changes are needed to the current 
mechanism. Similar patterns can be found across the different regions. 

Conversely, a majority (58%) of businesses operating in other sectors (i.e. not production 
activities) would prefer the current  policy to  be  discontinued.  In particular, most of the 
respondents would like the policy to be replaced with different forms of support for local 
production activities. For example, some respondents  would prefer the dock dues to  be 
replaced  with  a  more  equitable  taxation,  such  as  a  ‘regional  VAT’  with  differentiated 
rates. Interestingly, however, a non-negligible share of the businesses operating in sectors 
other than production nonetheless favour a renewal of the policy.  

The above results substantiate a point frequently made during field interviews: the dock 
dues regime is not problematic in itself, and can actually benefit local economies in many 
respects, but a number of design and implementation issues need to be resolved to reduce 
the distortive effects of the regime. 

Table A2.6 – Stakeholders’ attitude toward the renewal of the dock dues regime 
% of respondents 

Scenarios 

Renew the Decision without major changes 
Renew the Decision, introducing some revisions 
Not renew the Decision, and introduce alternative support 
mechanisms 
Not renew the Decision 
Source: Business Survey.  

Total 

34% 
27% 

30% 

10% 

Non-
producers 
17% 
26% 

44% 

14% 

Producers 

59% 
27% 

10% 

4% 

  STAKEHOLDER VIEWS ON POSSIBLE POLICY REVISIONS  

Revisions to the current policy and its implementation arrangements were discussed with 
different  stakeholders.  The  business  survey  also  investigated  the  respondents’  positions 
on the possible areas for improvement. Table A.7 below shows the share of respondents 

55 

 
 
 
  
 
 
 
fully  or  partly  agreeing  with  a  set  of  proposed  areas  for  revision  of  the  policy, 
distinguishing between enterprises engaged in production activities and all other sectors. 
The salient results can be summarised as follows:  

  with  only  a  couple  of  exceptions,  most  of  the  proposed  revisions  were  assessed 
positively by a majority of the respondents, irrespective of the sector of activity. The 
ranking order of the shares in two groups of respondents is similar, with improvement 
of the monitoring system on the whole, and price levels specifically, encountering the 
highest degree of support in both groups; 
local producers are more interested in improving the flexibility of the system, making 
modifications of the tax-supported product lists and the tax differentials applied more 
frequent and easier. In this regard, several enterprises specified that this flexibility is 
needed  to  better  meet  evolving  needs,  but  should  not  translate  into  too  frequent 
changes  of  the  rates  by  local  authorities,  which  would  undermine  the  stability  and  
predictability of the markets;    

 

  conversely, non-producers expressed a more favourable view compared to producers 
of  the  possibility  of  adopting  measures  to  mitigate  obstacles  to  trade  with  regional 
neighbours caused by the dock dues. On this point, various stakeholders highlighted 
the  need  to  consider  other  obstacles  to  trade  with  neighbouring  countries,  and  not 
only those created by the dock dues;  

  views on the turnover threshold for the applicability of the dock dues, currently set at 
EUR 300 000 annually, varied somewhat. A majority of respondents in both groups 
would  be  in  favour  of  increasing  the  threshold,  but  a  non-negligible  share  of  non-
producers would support a reduction; 

  both  groups  substantially  agree  on  the  need  for  more  transparent  and  clear  criteria 
both  for  selecting  the  supported  products  and  for  establishing  the  applicable  rates. 
From  the  perspective  of  non-producers,  improved  and  transparent  criteria  should 
ensure  that  products  for  which  no  local  production  exists  are  excluded  from  the 
special regime.  

56 

 
 
Table A2.7 – Stakeholders’ attitude toward proposed revisions of the dock dues regime 
% of respondents agreeing with 

Proposed Revisions 

It should be possible to amend the list of products with 
differentiated dock dues rates more frequently and easily 
It should be possible to modify the permitted differential between 
external and internal dock dues rates more frequently and easily 
The criteria for updating the list of products with differentiated dock 
dues rates should be clearly and precisely laid down in EU policy    
The criteria for modifying the differentiated dock dues rates should 
be clearly and precisely laid down in EU policy    
The dock dues monitoring system should be improved, with the 
regular collection of market data on local production, import, 
employment, etc.  
The price levels of products imported and locally produced subject 
to dock dues should be periodically monitored 
The current dock dues exemption threshold for local producers – i.e. 
EUR 300 000 of annual turnover – should be raised, to lower the 
number of enterprises subject to the dock dues  
The current dock dues exemption threshold for local producers – i.e. 
EUR 300 000 of annual turnover – should be lowered, to increase 
the number of enterprises subject to the dock dues 
Measures to mitigate dock dues-related obstacles to trade with 
neighbouring countries should be devised 
Dock dues exemptions on the import of production inputs should be 
extended  
Source: Business Survey.  

Total 

Non-
producers 

Producers 

69% 

61% 

67% 

61% 

65% 

62% 

63% 

61% 

81% 

75% 

70% 

68% 

80% 

83% 

75% 

77% 

76% 

78% 

60% 

60% 

61% 

25% 

35% 

9% 

62% 

70% 

60% 

58% 

49% 

64% 

Additional  suggestions were occasionally made  by stakeholders: (a) to  better invest the 
tax revenues collected in the development of local production activities; (b) to harmonise 
the  tax  base  between  external  and  internal  dock  dues,  as  the  former  currently  include 
freight  costs  and  the  other  production  taxes  paid  on  the  mainland  (e.g.  the 
éco-contribution payable on certain production); and (c) to address the tax circumvention 
problem caused by e-commerce.     

57 

 
 
 
 
 
 
 
 
ANNEX 3: ANALYTICAL METHODS 

1.  Datasets 

The  study  required  a  robust  foundation  of  quantitative  data  and  statistics,  and  several 
datasets  have  been  collected  and  gathered  from  a  variety  of  sources.  Publicly  available 
data specifically regarding the ORs and the sectors benefiting from special regimes were 
limited, so to a large extent the raw data used in the study have been provided directly by 
the competent authorities (i.e. customs and tax administrations, statistical institutes, local 
governments etc.) and by the Commission.  

Despite efforts, several  data gaps and inconsistencies remained, inevitably affecting the 
significance of the quantitative analysis. Such limitations concerned, in particular: (a) the 
limited availability of local production data (at the level of disaggregation required); (b) 
the data gaps on actual dock dues rates (particularly internal rates before 2015); (c) the 
difficult  matching  between  product  data  based  on  customs  classification and  on  NACE 
classification;  (d)  the  limited  availability  of  monitoring  data  on  the  other  aid  measures 
implemented  in  the  ORs;  and  (e)  the  unavailability  of  cost-price  data.  The  data  gaps 
concerned  primarily  the  early  period  of  implementation  of  the  special  regime,  while  in 
recent  years the amount and the quality of the data collected at local level have largely 
improved.  

The types of data collected for the study are summarised in the table below: 

Table A3.1 –Type of data collected 
1.1.1  Analytical areas 
1.1.3 
1.1.4 

Policy implementation 

1.1.5  Additional costs 
1.1.6 
1.1.7  Trade 

and  market 

impacts 

1.1.8 
1.1.9  Macroeconomic impacts 
1.1.10 

Input-output data at ORs and mainland level 

1.1.2  Datasets  
  Data on permitted dock dues differentials 
  Data on actual dock dues differentials 
  Data on fiscal revenues 
 
  Micro-data from regional level estimates/product ‘fiches’ 
  Data on imports, by product/origin 
  Data on local production, by product/sector 
  Other ‘control’ data for gravity modelling (distance etc.) 
  Macroeconomic data on employment  
  Macroeconomic data on industrial added value 
  Data on price levels 

2.  Quantitative data methods 

The  raw  data  collected  were  gathered  in  a  comprehensive  database  and  assessed  using 
quantitative  methodologies  in  order  to  determine  the  impacts  of  special  tax  regimes  on 
competitiveness, market, trade flows and tax revenues (including foregone revenues). As 
discussed  above,  the  datasets  presented  issues  of  completeness  and/or  consistency  that 
affected  the  robustness  of  the  results.  In  such  circumstances,  the  study  findings  were 
integrated and supplemented with the qualitative evidence collected from the stakeholder 
consultation. 

58 

 
 
 
 
 
 
 
 
 
 
 
 
 
A  summary  of  the  approach  adopted  for  the  quantitative  analysis  is  provided  below, 
while a detailed technical description of the methods and models used, as well as the full 
results, are provided in subsequent sections. 

Review of policy implementation. The analysis focused on tax revenues from  collected 
dock dues, broken down by external (on imports) and internal (on local production) tax 
receipts,  as  well  as  on  the  estimation  of  the  ‘foregone’  dock  dues  revenue  (i.e.  tax  not 
collected due to exemptions/reductions). 

  The  ‘collected  revenues’  data  were  provided  for  most  products/years  by  customs 
authorities  or  other  competent  authorities.  When  not  available,  the  revenues  were 
estimated by applying the relevant tax rate to the tax base, i.e. the value of imports or 
local production. 

  For  the  ‘foregone  dock  dues  revenue’,  the  official  estimates  were  triangulated  by 
calculating the amount of exemptions at product level (multiplying the value of local 
production by the corresponding tax differential applied) and aggregating the results.  

Analysis  of  additional  costs  and  competitiveness.  Additional  costs  provided  at  micro 
level  (i.e.  in  product  fiches  or  reports)  were  first  triangulated  using  input/output  tables 
available  for  the  ORs79.  The  matching  disclosed  disparities  in  both  the  total  additional 
costs  for  a  given  sector  but  also  in  the  distribution  of  the  cost  factors  (i.e.  transports, 
labour, energy, etc.). The compiled and systematised micro-data were then used to assess 
how  much  of  these  costs  were  compensated  by  dock  dues  differential  rates  (with 
reference to the value of ‘foregone revenues’). This analysis was done at product level as 
well as at aggregated level. 

Analysis  of  trade  and  market  impact.  Using  two  separate  models,  imports  and  local 
production were modelled as a function of the actual dock dues differential rates and of 
the  internal  dock  dues  rates.  The  main  difficulty  consisted  in  the  comparability  of  the 
value of local production and imports for different products. To overcome this difficulty, 
three measures were adopted: (i) using the logarithm of variables so that impact of dock 
dues  differential  was  expressed  in  percentage  terms,  (ii)  aggregating  the  products 
(dependent variable) at the 4-digit CN level, and (iii) applying individual fixed effects for 
each 4-digit CN level product. 

  The impact on trade is estimated based on gravity modelling of imports of products 
(CN4  level)  between  ORs  and  other  countries  (including  mainland).  In  addition  to 
dock  dues  rates,  other  variables  including  economic  weight  and  distance  of  the 
trading partners are used as explanatory variables to predict trade flows. 

79  In  input-output  tables,  payments  made  by  a  sector  to  other  sectors  (for  example  agricultural  products, 
energy, water, transportation) and to production factors (for example labour, capital, land) are valued for a 
given year, in effect providing its cost structure. The resulting estimates of additional costs for each sector 
can  therefore  be  compared  with  estimated  additional  costs  based  on  micro-level  data  used  in  the  French 
ORs. 

59 

 
 
 
 
 
 
                                                           
  The  impact  on  local  production  was  estimated  based  on  data  panel  modelling.  To 
overcome the data gaps, only products (CN4 level) for which comprehensive data on 
local production were available were considered. 

Analysis  of  macroeconomic  impacts.  The  impact  on  added  value  and  employment  of 
dock  dues  differential  rates  were  estimated  by  extrapolation  of  the  impact  on  local 
production. For each economic branch, ratios  of added value over local  production and 
employment over local production are estimated using data from economic accounts. The 
impact  on  added  value  and  employment  are  then  derived  from  the  impact  on  local 
production,  assuming  that  these  ratios  are  constant.  Finally,  to  estimate  the  impact  of 
dock  dues  on  retail  prices,  it  was  assumed  that  the  tax  paid  was  fully  passed  on  to 
consumers.  Then,  the  tax  receipts  –  increased  by  retailer  margins  –  were  related  to 
household expenditure to derive an index of the maximum additional price borne by final 
consumers.  The  results  were  triangulated  with  the  official  price  index  statistics  in  the 
ORs compiled by national statistical institutes as well as with other literature sources.  

60 

 
 
 
 
 
 
ANNEX 4: EVALUATION 

The scope of the evaluation is a retrospective assessment of the derogation during 2014-
2019. The evaluation assesses the performance of the Council decision against the basic 
evaluation criteria of relevance, effectiveness, efficiency, coherence and EU added value, 
in  line  with  the  better  regulation  guidelines.  The  evaluation  is  based  on  the  external 
‘back-to-back’ study with an evaluation and forward-looking assessment of the Decision 
carried out simultaneously in accordance with better regulation guidelines. 

1.  Coherence 

The dock dues special regime is part of the overall EU strategic approach for ORs, and its 
coherence is mainly ensured by the substantial alignment of its objectives with the broad 
EU  strategic  framework.  In  particular,  the  dock  dues  regime  addresses  two  interrelated 
objectives  of  the  2017  Communication  on  a  stronger  and  renewed  strategic  partnership 
with the EU outermost regions: 

 

 

‘Building on the ORs’ assets’ is the first objective of the 2017 Communication. The 
dock dues system fosters this objective by promoting and sustaining local production 
activities,  which,  in  turn,  helps  attract  investment,  building  capacity  and  skills  and 
reducing dependence on the mainland.  
‘Enabling growth and job creation’ remains a central objective of the strategy. The 
Communication  aimed  to  promote  the  diversification  of  local  economies  and,  in 
particular, foster activities with high value added and job creation potential.  

The third aspect of the EU Communication consists of scaling up ORs’ cooperation with 
their neighbourhood, through policy dialogue, territorial cooperation programmes, trade 
agreements, etc. The dock dues regime is not contributing to this goal; on regional trade, 
it may in fact constitute an obstacle to greater integration. This is an inevitable effect due 
to  the  nature  of  the  scheme  and  to  its  underlying  rationale.  The  claimed  obstacles  to 
regional trade form the basis of formal complaints formulated by EU trade partners.   

EU policy for the ORs includes a number of other measures for ORs financed partially 
under  the  European  structural  and  investment  funds  (ESIF)  and/or  through  a  series  of 
specific regional State aid measures. The study notes that various other measures address 
the same targets as the dock dues regime. At a general level, these measures are coherent 
with  the  objective  of  dock  dues,  that  of  strengthening  the  competitiveness  of  local 
producers  in  the  manufacturing  sector  as  well  as  agriculture  and  fisheries.  Various 
measures also aim to reduce the labour-related costs of firms based in the French ORs. At 
enterprise  level,  administrative  procedures  are  in  place  to  avoid  the  risk  of  cumulation 
leading to an excess of compensation, while at macro level it has been verified that the 
sum of dock dues and of the other compensation schemes does not exceed the estimated 
additional  costs  caused  by  structural  constraints  (some  40-45%  of  the  estimated 
additional costs are compensated overall). Overlap is minimised and overcompensation, 
if any, is limited. 

61 

 
 
 
 
 
Most  of  these  schemes  are  part  of  the  EU’s  general  strategic  approach  towards  the  EU 
ORs. Progress towards implementing this strategic approach is monitored regularly. This 
process allows coordination at a general level.    

Conversely,  there  is  limited  operational-level  coordination  or  mechanisms  to  ensure 
coherence  in  the  implementation  of  the  different  schemes,  maximising  synergies  and 
preventing duplication of efforts or, possibly, mutually conflicting interventions. 

The  dock  dues  regime  constitutes  an  evident  derogation  from  EU  policy  on  internal 
markets and competition, whose legal basis is firmly anchored in Article 349 TFEU. The 
differentiated rates regime constitutes regional State aid and is, therefore, subject to the 
relevant EU legislation and controls. The dock dues State aid policy contains the explicit 
request to ensure continuous and accurate monitoring and quantification of the additional  
costs covered by the scheme to avoid the risk of overcompensation. 

The  compatibility  of  dock  dues  from  a  State  aid  perspective  has  been  verified  and 
showed that the differential applied remains below the estimated additional costs. 

As  concerns  external  trade,  the  EU  general  approach  for  ORs  pursues  two  main 
objectives: (a) strengthening the integration of ORs in their regional neighbourhood, and 
(b)  taking  into  account  the  OR’s  interest  in  trade  agreements  negotiated  by  the  EU  to 
avoid adverse effects on the local economy.  

In the case of dock dues, these two objectives are difficult to reconcile, and the regime 
has  been  criticised  repeatedly  by  CARIFORUM  countries  and  by  certain  Eastern  and 
Southern African (ESA) countries, which claimed that dock dues are contrary to the spirit 
of the Economic Partnership Agreement (EPA) these countries have signed with the EU. 
Beyond legal considerations – the dock dues are formally recognised and accepted by the 
EPA – and economic motives supporting the existence and maintenance of the dock dues 
in  the  ORs,  the  results  of  regional  trade  data  analysis  highlight  that  dock  dues 
differentials  have  moderate  impact  on  the  value  of  French  ORs’  imports  from 
CARIFORUM and ESA countries and that a hypothetical complete removal of the dock 
dues  would  benefit  primarily  exporters  from  the  EU  and  third  countries  other  than 
CARIFORUM and ESA. 

  The  trade  flows  from  CARIFORUM  countries  to  the  relevant  French  ORs 
(Martinique,  Guadeloupe,  and  French  Guiana)  did  not  substantially  differ  from 
the  export  trends  from  CARIFORUM  to  the  EU.  The  import  share  from 
CARIFORUM  is  approximately  1%  of  the  total,  which  is  comparable  to  intra-
CARIFORUM trade (approx. 2.7%80). 

CARIFORUM  laid  down  a  list  of  48  products  that  its  member  countries  would  be 
interested in exporting to French ORs and for which the dock dues regime is considered 
an  obstacle.  The  incidence  of  dock  dues  differentials  on  the  import  value  of  these 
products is roughly 10%, i.e. around EUR 7.8 million for the overall 2011-2018 period 

80 The study analysed the intra-regional import value for the eight main CARIFORUM economies, based 
on UN Comtrade data, and compared it with the total imports in these countries. The results indicate that 
the share of CARIFORUM imports originating in the CARIFORUM region amounts to 2.7% of the total. 

62 

 
 
                                                           
(based on 2018 rates). However, this estimate may be inflated as it does not consider the 
exemptions  for  production  inputs  that  can  be  laid  down  by  each  OR  (exonérations  des 
intrants). 

The  study  assessed  the  general  impact  of  the  dock  dues  on  imports  by  carrying  out  a 
simulation of the effects of removing dock dues differentials from the listed products, as 
demanded by CARIFORUM. The removal of dock dues differentials may lead to a 9.9% 
increase  in  the  imports  of  listed  products.  In  monetary  terms,  imports  from 
CARIFORUM would increase by approximately EUR 1 million/year, while imports from 
other  countries 
increase  by  an  estimated 
the  mainland)  would 
EUR 11.3 million.  In  other  words,  in  the  absence  of  evidence  of  differentiated  effects 
across  regions,  CARIFORUM  would  benefit  from  less  than  a  tenth  of  the  export 
opportunities  created  by  the  removal  of  the  dock  dues  differential  from  the  listed 
products.  Compared  to  the  current  levels,  the  growth  in  CARIFORUM  total  exports  to 
French ORs would amount to a small +1.7%. 

(including 

Table A4.1  – Simulation of the effects of removing dock dues differentials from the 
panel of products in CARIFORUM’s list 

Imports 
from 
CARIFORUM 
(2018) 

Imports 
from all 
other 
origins 
(2018) 

Average dock 
dues 
differential 
applied to the 
product panel 

Coefficient of 
variation of 
imports associated 
with dock dues 
differentials  

Baseline 

EUR 10.2 
million 

EUR 113.7 
million 

10.3% 

-0.917 

Removal  of 
dock  dues 
differentials  
Source: the study 

+ EUR 1.0 
million 

+ EUR 11.3 
million 

0% 

Theoretical 
increase in 
imports from 
removal of 
dock dues 
differentials 

+9.9% 

These results do not cover the effects on local production in the ORs, but considering that 
it currently amounts to EUR 6.7 million – primarily cement, rum, water and, to a lesser 
extent,  flour  –  an  increase  in  imports  worth  EUR  12.3  million  may  re-size  internal 
production activities significantly.  

However,  the  increase  of  imports  from  CARIFORUM  in  the  French  ORs  could  not  be 
compensated  by  new  opportunities  offered  by  a  reduction  of  trade  barriers  on 
CARIFORUM’s  side,  as  part  of  EPA  implementation.  Based  on  the  analysis  of 
CARIFORUM’s Market Access Offer, there are some 339 goods internally produced in 
at least one French OR for which an analysis of trade conditions is worthwhile. Potential 
benefits  would  concern  only  15%  of  the  products  considered  (around  50).  For  these 
products, the average tariff reduction envisaged is 6.6%. In other words, no change in the 
current  situation  is  envisaged  under  the  Market  Access  Offer  for  the  majority  of  the 
products of potential interest for French ORs. 

  Some  of  the  considerations  concerning  bilateral  trade  and  EPA  in  the 
CARIFORUM region apply also to trade with the five signatories of the interim 
EPA  with  the  EU in  the  ESA  region,  namely  Comoros,  Madagascar,  Mauritius, 
the  Seychelles  and  Zimbabwe.  The  total  imports  in  the  French  ORs  considered 
amounted  to  more  than  EUR  5.6  billion  in  2016-2018.  The  import  share  from 

63 

 
 
 
 
 
these countries is approximately 1.3% of the total, which is comparable to intra-
CARIFORUM trade (about 3%)81. 

Mauritius  laid  down  a  list  of  46  products  for  which  a  request  for  removal  of  the  dock 
dues  was  made.  The  incidence  of  dock  dues  differentials  on  the  import  value  of  these 
products  is  roughly 9.3%, i.e. some EUR 6.9 million for the overall 2011-2018 period. 
However,  this  estimate  may  be  inflated  as  it  does  not  consider  the  exemptions  for 
production inputs that can be laid down by each OR (exonérations des intrants). 

The  study  assessed  the  general  impact  of  the  dock  dues  on  imports  by  carrying  out  a 
simulation of the effects of removing dock dues differentials from the listed products, as 
demanded by Mauritius. The removal of the dock dues differentials may lead to a 8.9% 
increase in the imports of listed products.  In monetary terms, imports from ESA would 
increase by some EUR 1.1 million a year, while imports from other countries (including 
the mainland) would increase by an estimated EUR 11.4 million. In other words, in the 
absence of evidence of differentiated effects across regions, ESA countries would benefit 
from  a  tenth  of  the  export  opportunities  created  by  the  removal  of  the  dock  dues 
differential from the listed products. Compared to the current levels , the growth in ESA 
total exports to French ORs would amount to a small +1.5%. 

1.1.15  Coeffic

1.1.12  Imp
orts 
from 
ESA 
(201
8) 

Table A4.2  – Simulation of the effects of removing dock dues differentials from the 
panel of products in the list submitted by Mauritius 
1.1.14  Aver
1.1.11 
age 
dock 
dues 
diffe
renti
al 
appli
ed  to 
the 
prod
uct 
pane
l 

1.1.13  Imp
orts 
from 
all 
othe
r 
origi
ns 
(201
8) 

ient  of 
variati
on  of 
import
s 
associa
ted 
with 
dock 
dues 
differe
ntials  

ical 
increas
e 
in 
imports 
from 
remova
l 
of 
dock 
dues 
differe
ntials 

1.1.16  Theoret

1.1.17  Basel

ine 

1.1.18  EUR 
12.7 
millio
n 

1.1.19  EUR 
128.6 
millio
n 

1.1.20  9.3% 

1.1.21 

-0.917 

1.1.23  Rem
oval 
of 
dock 
dues 
differ
entia
ls  
Source: the study 

1.1.24  + 

EUR 
1.1 
millio
n 

1.1.25  + 

EUR 
11.4 
millio
n 

1.1.26  0% 

1.1.27 

1.1.22  +8.9% 

1.1.28 

The  results  of  the  model  do  not  cover  the  effects  on  local  production  in  the  ORs,  but 
considering  that  it  possibly  amounts  to  EUR  58.9  million  in  2016  –  of  which  94% 
referring  to  Réunion  –  an  increase  in  imports  worth  EUR  12.5  million  may  have  a 

81 For a benchmarking of this figure, the intra-regional imports value for the four main trade partners of 
French ORs was examined: Mauritius, Comoros, Madagascar and the Seychelles, based on UN Comtrade 
data, and compared it with total imports in these countries. The data show that, overall, internal trade 
within the four ESA countries amounts to around 3.0% of their total imports. 

64 

 
 
 
 
 
                                                           
tangible impact on internal production activities (some 20% of internal production might 
be possibly substituted). 

2.  Relevance 

The study  also  evaluates  whether the criteria used to select the product for reductions or 
exemptions  to  dock  dues  are  still  relevant  compared  to  the  general  needs  of  all 
stakeholders. 

The study found that: 

• 

• 

• 

• 

for  the  majority  of  the  dock  dues  products,  local  production  accounted  for  a 
minority  share  of  the  market.  In  all  ORs,  the  median  value  of  the  market  share 
distribution fell in the 32%-37% range, except French Guiana, where it is 21%;   
local products with less than 20% of market share accounted for some 40% of the 
dock dues lists, on average, while local products with less than 5% of the market 
account for around 20% (slightly higher in French Guiana and lower in Mayotte); 
less  than  20%  of  products  in  the  dock  dues  lists  held  more  than  80%  of  the 
respective markets; for some 6.5% of them, the market share exceeded 95%; 
for nearly half of  products examined (44%), market share  was in the range 20%-
80%. 

The  above  data  indicate  that  there  are  cases  where  the  market  share  criteria  may  not  be 
sufficient  to  justify  the  inclusion  of  certain  products  in  the  dock  dues  list,  since  local 
production  is  either  marginal  or  local  producers  are  in  a  largely  dominant  position.  The 
strategic  value  of  certain  production  may  certainly  justify  derogating  from  the  ‘market 
share’  criterion,  but  the  absence  of  explicit  and  transparent  rules  has  seemingly  fuelled 
distrust among certain economic operators on how the special regime is implemented. 

The results of the stakeholder consultation found that the scope of the dock dues regime is 
fairly  comprehensive,  and  satisfactorily  addresses  the  needs  of  the  economic  operators 
concerned. However, it suggests that there are some  gaps in the scope  of  the dock dues, 
with half of the local producers involved in the survey maintaining that there are products 
that  should  be  added  to  the  dock  dues  list.  This  is  due  to  the  lack  of  flexibility  in  the 
revision process of the lists, which makes it difficult to give a timely response to emerging 
needs in the local economy and – where relevant – to correct errors and omissions. 

However, the main reported issue regards the application of tax differentials to products for 
which  it  is  claimed  that  there  is  no  ‘equivalent’  local  production.  The  issue  is  generally 
connected  to  certain  CN  categories  that  include  heterogeneous  products  of  which  only 
some are produced locally. 

Furthermore, local producers with an annual turnover below EUR 300 000 fall outside the 
scope  of  the  dock  dues,  and  no  reporting  is  required.  Before  2014,  all  the  firms  were  in 

65 

 
 
 
 
 
 
 
scope of the regime, but firms with a turnover below EUR 550 000 were exempted82. This 
reform was criticised as it mainly affected small firms and artisans poorly equipped to deal 
with the ensuing increase in administrative charges.  

3.  Effectiveness 

The effectiveness of the dock dues regime was evaluated by assessing the extent to which 
the regime supported industry.  

The dock dues regime aims to reduce the competitiveness gap between local products and 
imports from ‘mainland’ France or the EU which is caused by additional production costs.  

Quantitative assessments of such additional costs are carried out periodically83. However, 
the  exercise  remains  subject  to  intrinsic  methodological  limitations84  and  thus  estimates 
have to be made with due caution.  

The  latest  assessment  was  completed  in  2016  and  estimated  the  total  additional  costs  in 
French  ORs  at  EUR  4.51  billion,  of  which  EUR  1.76  billion  was  attributable  to  sectors 
supported  by  dock  dues  (manufacturing  and  the  primary  sector).  Furthermore,  additional 
cost assessments have been regularly carried out at product level to justify the differential 
treatment  and  establish  the  appropriate  tax  rates.  From  the  analysis  of  these  ‘product 
fiches’,  it  emerges  that  bulk  of  the  additional  costs  (approximately  83%  on  average)  is 
generated by four cost factors, registered in all French ORs:  

  additional  costs  of  input  (including  freight  costs  and  higher  prices  due  to  limited 

bargaining power);  

  diseconomies of scale affecting both the depreciation and idle production capacity 

of equipment and reduced productivity of labour;  
the need for larger stocks, requiring extra storage capacity  
increasing financial costs.  

 
 

Overall, despite the variability described, the average estimate of additional costs is fairly 
consistent  across  regions,  amounting  on  average  to  27%  of  the  enterprise  turnover.  The 
only  exception  is  represented  by  Mayotte,  where  the  average  additional  costs  amount  to 
approximately 44%. 

82 There was, however, an administrative obligation for exempted firms to nonetheless fill in and submit tax 
declarations. 
83  The  methodology  developed  in  the  study  prepared  for  the  European  Commission,  ‘Etude  sur 
l’identification  et  l’estimation  des  effets  quantifiables  des  handicaps  spécifiques  propres  aux  regions 
ultrapériphériques  ainsi  que  des  mesures  applicables  pour  réduire  ces  handicaps’,  Louis  Lengrand  & 
Associés and Université Libre de Bruxelles, January 2006, has remained the main reference for other studies. 
84  Additional  costs  are  defined  in  relative  terms,  i.e.  with  respect  to  the  production  costs  on  mainland. 
However,  the  structure  of  market  and  competition  in  French  ORs  and  in  mainland  France  are  radically 
different,  as  is  the  production  structure.  A  large  player  in  the  ORs  would  be  considered  small  on  the 
mainland,  and  while  in  the  ORs  industries  are  required  to  adopt  multi-product  strategies  to  serve  their 
market, mainland enterprises increasingly move toward extreme specialisation. In this sense, it is not clear 
which comparators should be selected and under which conditions, to ensure the validity of the comparison 
exercise. 

66 

 
 
 
                                                           
However,  there  is  variability  in  the  assessments  that  seems  unrelated  to  regional 
specificities  but  rather  is  connected  to  methodological  incongruences  and  the  inevitable 
subjectivity of business’ own estimates. The validity of ‘product fiches’ for policy purposes 
should not be overestimated, therefore. 

The tax differential typically compensates only a portion of the estimated additional costs, 
i.e. around half, with limited differences across ORs, as seen in Figure A4.1 below. 

Figure A4.1 – Average compensation of additional costs by region 

Source: the present study. 
Notes: the year of the additional cost estimation and of the dock dues differential applied do not always coincide.  

The extent of the compensation roughly corresponds to the amount of tax revenue collected 
on  the  dock  dues-supported  products.  Thus,  the  analysis  largely  confirms  the  above 
estimates, showing that the overall extent of the compensation of additional costs would 
amount to around 49% on average.  

Finally, we have examined the correlation that might exist between the tax differentials and 
the estimated additional costs to verify whether the extent of the support is proportionate to 
need. As Table A4.1 shows, such correlation is moderate in all French ORs (approximately 
0.45-0.55)  except  Martinique,  where  no  correlation  can  be  found.  The  coefficient  is 
stronger when the correlation is made with the maximum permitted differentials.  

Table  A4.3  -  Correlation  between  additional  costs  and  tax  differentials  applied  to  dock  dues 
products in French ORs  
1.2 
1.8  Correlation  Coefficient  - 
dues 

1.3  GUF  1.4  GLP  1.5  MTQ  1.6  MYT  1.7  REU 

1.10  0.47 

1.12  0.51 

1.9  0.41 

1.11  0.02 

1.13  0.53 

dock 

actual 
differential 

1.14  Correlation  Coefficient  - 
dues 

dock 

permitted 
differential 
Source: the study. 
Notes: based on a sample of 544 products for which sufficient data were available.  

1.16  0.55 

1.17  0.11 

1.15  0.58 

1.18  0.75 

1.19  0.58 

67 

 
 
 
 
 
 
 
 
 
With  some  exceptions,  the  tax  differentials  applied  were  fairly  proportionate  to  the 
additional costs declared for specific products. 

Impact of dock dues on price competitiveness  

The results of the quantitative data analysis suggest that in the absence of  the dock dues 
support, performance of the local production sectors would have been significantly worse. 
About 42% of the value of dock dues-supported products (around EUR 975 million) was 
theoretically enabled by the tax differential mechanism. This had positive repercussions on 
employment, which registered an increase of 3-9% in the dock dues sectors from 2014, in 
contrast  to  a  decline  in  the  non-dock  dues  industries,  and  on  the  number  of  active 
enterprises,  which  grew  by  approximately  1.7%  in  the  same  period,  in  contrast  to  an 
overall decline of 3%.  

Those  findings  are  confirmed  by  the  stakeholder  consultation,  which  highlighted  the 
importance of the dock dues for their competitiveness  among local economic operators, 
even though the price gap between their products and imported ones is not fully closed. 

However,  the  value  of  imports  of  products  subject  to  the  dock  dues  differential  regime 
increased by approximately 16% between 2014 and 2018, while in the same period local 
production grew by less than 8%85. The market share of local products has declined over 
time.  The  same  trend  is  registered  in  all  ORs,  but  possibly  less  marked  in  Martinique 
because  of  comparatively  more  stagnant  import  levels.  Based  on  the  available  data,  the 
average market share of dock dues-supported local products declined from 49% to 36% in 
2018, but figures should be taken with some caution because of discontinuities in the data 
series available. The results of the survey are substantially consistent with the above trends. 

There is no evidence of benefits in the total value of investments and the diversification of 
production.  In  efficiency  terms,  the  performance  of  the  special  regime  is  fairly  positive 
with  a  1:2.5  ratio  between  the  ‘cost’  of  the  measure  (the  foregone  tax  revenue)  and  the 
additional local production it possibly enables. 

The aggregated value of local production activities in French ORs has been growing at a 
moderate pace in the period examined in this study. Between 2006 and 2014, the value of 
production  (at  current prices) registered  an  annual  average  growth  ranging from  1.7% in 
the Antilles to 3.9% in French Guiana.  

  The  aggregated  turnover  of  the  manufacturing  sector  –  that  is  the  sector  mostly 
supported by the dock dues regime – generally registered lower growth rates than the 
overall  OR  economy.  The  global  financial  crisis  caused  a  drop  in  the  value  of  local 
production and, with few exceptions, by 2014 it had not yet returned to the pre-crisis 
levels. This is especially  the case with  agri-food industries, while the other industrial 
branches registered a faster recovery, particularly in Guadeloupe. 

85 Based on the trends registered in French Guiana, Martinique and Guadeloupe on a sample of products for 
which time series were available.  

68 

 
 
 
 
 
 
                                                           
  The primary sector was lightly hit by the effects of the global crisis, but its performance 
varies significantly across ORs: agricultural activities performed better than the average 
in  Martinique  and  French  Guiana  due  to  the  growth  of  the  banana  and  forestry 
branches.  Fisheries  and  aquaculture  registered  good  growth  rates  in  Réunion  and 
Guadeloupe. All these activities have been supported by dock dues, but also by other 
aid schemes, so only part of this impact can be attributed to dock dues. 

  The  other  sectors  examined,  i.e.  trade,  construction  and  accommodation  and  food 
activities  generally  performed  worse  than  the  overall  OR  economy,  with  the  notable 
exception of construction in French Guiana and accommodation and food in Réunion. 
These sectors are not supported by dock dues – on the contrary, they can be affected by 
them – but the  analysis  of trends  show that,  after the  drop in 2009 due to  the  global 
crisis,  their  growth  index  evolved  similarly  or  more  positively  than  manufacturing 
activities supported by dock dues.       

4.  EU added value 

The benefits for the local economy 

The baseline assumption made by the majority of local producers consulted is that without 
dock dues it would not be possible to maintain industrial activities in French ORs able to 
compete with external products. 

The dock dues regime is mainly viewed as a tool for preventing and mitigating the decline 
and disappearance of local industry rather than a development tool.  

The quantitative model suggests that an increase in the tax differential of one percentage 
point is correlated with an increase of 3.28% in production value.  

If the above estimate is applied to the overall value of production of the goods concerned, 
the ‘virtual’ effects of dock dues can be  associated with some 37% of the  value of local 
production of the supported goods, i.e. approximately EUR 850 million86. The monetary 
magnitude of impacts evidently varies with the intensity of aid (i.e. the tax differential). So, 
for instance, the impact on the primary sector is much higher in French Guiana, where the 
average differential for this sector is 26%, as compared to Réunion, where it is only 5%. 

Impact on import substitution 

One  criterion  to  measure  the  impact  on  imports  is  the  extent  of  their  substitution  with 
locally manufactured products.  

The total value of imports in the French ORs registered mild growth in recent years, more 
marked  in  Réunion  and  Guadeloupe  while  slightly  lower  in  Martinique.  Despite  the 
differential tax regime, the import of products supported by dock dues has been growing at 
a  faster  pace  than  total  imports,  i.e.  3.7%  year-on-year  against  1.6%  (2014-2018).  This 

86 Based on 2016 production data. 

69 

 
 
 
 
 
 
 
 
 
 
                                                           
effect is registered in all ORs except Guadeloupe, where the growth rate has been the same. 
This suggests that, at aggregated level, the dock dues differentials are unlikely to disrupt 
the import flows of the products concerned. 

At product level, the impact may differ, but the market share of dock dues-supported local 
products vis-à-vis imports has fallen over time for the majority of products considered (i.e. 
62% of three ORs’ sample). Thus, the substitution of local products with imported ones 
was  more  frequent  than  the  opposite.  In  only  a  few  cases  was  the  import  market  share 
reduction significant (i.e. greater than 25%), but it mostly concerned products with limited 
market value.  

Overall, the results indicate that tax differentials do affect imports and, specifically, a one 
percentage point increase in the tax differential is associated with a 0.92% decrease in 
imports. However, the explanatory power of the model is fairly low, so other factors are at 
play.  Based  on  this  estimate,  in  the  hypothetical  scenario  of  removal  of  dock  dues 
differentials,  the  value  of  import  products  could  be  some  EUR  275  million  greater  than 
today.     

Integration in the EU and in the regional market  

The trade balance of all French ORs has slightly worsened over the past 5-6 years, mainly 
due to an increase in imports that is higher than  that for exports. All  regions are heavily 
dependent on trade with mainland France, whose contribution to total imports and exports 
increased in all regions, and especially in French Guiana. In 2018, imports from mainland 
France accounted for between 52% and 58% of total imports and between 32% and 49% of 
total exports of French ORs. At first look, therefore, it seems that the dock dues regime has 
not  represented  an  obstacle  to  the  commercial  exchanges  between  French  ORs  and 
mainland France.   

Conversely, commercial exchanges between French ORs and regional partners are rather 
limited  compared  to  those  with  the  EU,  but  some  significant  differences  characterise 
different  regional  areas.  In  absolute  terms,  the  inward  and  outward  trade  flows  of 
Guadeloupe  inside  the  Caribbean  region  increased  in  the  2013-2018  period.  In  the  same 
period  Martinique  registered  a  fall  in  both  imports  from  and  exports  to  the  Caribbean 
region.  In  relative  terms,  the  intra-regional  exchange  has  remained  limited  for  both  ORs 
and the trade deficit has remained substantial: in 2018 the export/import ratio amounted to 
0.23 for Martinique and 0.11 for Guadeloupe. As for French Guiana, the value of regional 
exports  massively  declined  in  the  past  years,  and  accounted  for  less  than  1%  in  the  past 
year.  This  is  essentially  due  to  the  fall  of  exports  to  Trinidad  and  Tobago  following  the 
slowdown  of  oil  exploration  activities  off  the  coast  of  Guiana.  Exports  of  Réunion  and 
Mayotte  with  partners  in  the  Indian  Ocean  region  represent  a  relevant  share  of  the  total. 
However, this value also includes intra-OR trade. Imports from regional partners account 
for  a  small  share  of  the  total,  given  the  prominence  of  imports  from  mainland,  but  in 
absolute  terms  they  largely  exceed  exports:  in  2018  the  export/import  ratio  –  excluding 
intra-OR exchanges – amounted to 0.69 for Réunion and 0.05 for Mayotte.  

Table A4.4 – External trade of French ORs, total and regional (in EUR million) 

70 

 
 
 
 
 
 
 
Guadeloupe 

Martinique 

French 
Guiana 

Réunion 

Mayotte 

2013 
263 

2018 
280 

2013 
402 

2018 
365 

2013 
245 

2018 
213 

2013 
296 

2018 
324 

2013 
12 

2018 
11 

2 

9 

6 

10 

68 

2 

47 

37 

3.4 

3.1 

0.8% 

3.2% 

1.5% 

2.7%  27.8% 

0.9%  15.9%  11.4%  28.6%  29.2% 

1 

8 

4 

5 

0 

0 

2.9% 

0.4% 
2 731  2 939  2 730  2 718  1 545  1 530  4 426  5 051 

1.4% 

1.0% 

0.0% 

0.0% 

479 

572 

78 

80 

55 

43 

37 

18 

52 

47 

26.2 

32.5 

2.9% 

2.7% 

2.0% 

1.6% 

2.4% 

1.2% 

1.2% 

0.9% 

5.5% 

5.7% 

138 

62 

47 

44 

15 

19 

168 

133 

Total export 
ACP Caribbean 
partners*/Indian 
Ocean region*** 
% of total exports  
Non-ACP 
Caribbean 
partners** 
 % of total exports 
Total import 
ACP Caribbean 
partners/Indian 
Ocean region 
% of total imports  
Non-ACP 
Caribbean 
partners/Africa 

1.2% 

1.0% 

2.1% 

5.1% 

1.7% 

3.8% 

1.6% 
Source: INSEE (and IEDOM annual reports for Mayotte) 
Note:  (*)  ACP  Caribbean  partners  include  Antigua  and  Barbuda,  Bahamas,  Barbados,  Belize,  Cuba, 
Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Lucia, Saint Kitts and Nevis, St. 
Vincent and the Grenadines, Suriname, Trinidad and Tobago; (**) Non-ACP Caribbean partners include 
the  British  and  Dutch  Overseas  Territories  and  Countries  of  Anguilla,  Aruba,  British  Virgin  Islands, 
Cayman Islands, Montserrat, Turks and Caicos Islands, Netherlands Antilles; (***) Indian Ocean region 
includes  Comoros,  Madagascar,  Mauritius  and  the  Seychelles,  as  well  as  the  French  ORs  (Réunion  and 
Mayotte).  

2.6% 

The results of the gravity model indicate that the dock dues special regime may constrain 
the import of certain products in French ORs and therefore can have an impact in reducing 
overall external trade. However, the magnitude of such effects seems limited, in particular:  

 

 

in  the  absence  of  dock  dues,  imports  from  the  French  mainland  would  increase  by 
approximately  2%  (EUR  189  million  overall),  ranging  from  1.7%  in  Guadeloupe  to 
3.8% in Martinique; 
imports from the rest of the EU would increase by a minimum of 0.2% in Mayotte, up 
to 0.5% in Martinique (EUR 47 million, excluding France); 

  as regards total imports from the CARIFORUM region by the three ORs in the region 
(Guadeloupe,  Martinique  and  French  Guiana)  an  overall  increase  of  approximately 
EUR 3.0 million can be expected; 
finally, total imports from ESA countries by Réunion and Mayotte would increase by 
around EUR 2.6 million. 

 

5.  Efficiency 

Administration and enforcement burden 

71 

 
  
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
The implementation arrangements for the dock dues regime are not particularly complex, 
mainly  consisting  of  a  few  administrative  activities  for  the  private  sector,  i.e.  filling  in 
quarterly  and  customs  declarations  and  requesting  a  tax  exemption  for  imported  inputs. 
Likewise,  competent  authorities  –  customs  and  regional  authorities  –  did  not  report  that 
procedures are particularly complex or burdensome. 

As regards the quantification of the administrative burden for local producers liable for the 
tax, estimates include all dock dues-related administrative activities, such as classification 
of the products and identification of the applicable rates, interacting with customs and tax 
authorities, and preparing quarterly declarations. Based on the survey replies, the staff time 
spent by these firms to deal with the management of the dock dues typically ranges from a 
few hours per year (i.e. about 1 working day per year) to one half or full working day per 
month (i.e. 6-10 working days per year). As a result, an average value of 4 working days 
per year can be estimated for a normally efficient firm. In 2018, the estimated annual cost 
amounted to about EUR 600 000.  

The tax enforcement burden for local authorities arising from activities related to the dock 
dues  special  regime  is  also  regarded  as  relatively  small.  For  instance,  in  the  case  of 
Guadeloupe, supervision and administration of the dock dues is entrusted to the Directorate 
of Indirect Taxation, which comprises six staff (one director, one head of department, two 
instructors  and  two  assistants).  About  85%  of  the  total  staff  working  time  in  this 
Directorate concerns the dock dues. Still, the majority of the working time is dedicated to 
handling  daily  requests  for  tax  exemption  on  production  inputs,  while  the  share  of  time 
specifically devoted to dealing with products with tax differentials is roughly estimated at 
about 15% of the total, primarily by the director and the head of department.  

The amendment of dock dues product lists  

In  the  past  years  the  lists  of  products  in  the  Annex  to  the  Council  Decision  had  to  be 
revised and updated to respond to the evolving conditions of local markets and competition 
and/or  to  address  incongruences  and  other  issues.  The  process  for  updating  the  lists, 
however,  is  far  from  straightforward,  as  any  revision  requires  a  legal  amendment  of  the 
Council  Decision.  This  applies  to  both  including/removing  certain  product  categories 
in/from  the  lists,  and  moving  certain  product  categories  from  one  list  to  another.  The 
process  has  to  follow  the  ordinary  procedure,  with  a  significant  investment  of  time  and 
resources by national and EU administrations.  

Overall, the revision process can last up to 3 years, and requires the involvement of several 
stakeholders. 

The monitoring arrangements  

EU policy requires that the benefits of the tax exemptions do not exceed what is necessary 
to compensate the additional costs faced by local production activities, and that the impact 
on  price  levels  and  the  effects  on  local  socio-economic  development  are  monitored.  A 
reporting  obligation  was  introduced  in  the  dock  dues  Decision  precisely  to  this  effect. 

72 

 
 
 
 
 
 
 
 
Accordingly,  in  2017,  the  French  authorities  entrusted  the  preparation  of  an  evaluation 
report on the implementation and impact of the dock dues to an external consultant, under 
the supervision of a steering committee. The process lasted about a year, during which the 
committee met approximately 4-5 times and about 10 additional technical meetings were 
held  in  parallel.  The  French  authorities  submitted  the  evaluation  report87  to  the 
Commission in February 2018.  

This report was followed by specific evaluation reports for each French OR, accompanied 
by requests to adapt the lists of products to which differentiated dock dues rates may apply. 
These  reports  broadly  follow  a  common  structure.  However,  the  quantity  and  quality  of 
information  provided  vary  across  regions.  From  a  geographical  point  of  view,  the  most 
significant  information  gaps  are  detected  in  the  case  of  Mayotte,  due  to  the  fact  that  the 
arrangements came into effect only recently, and also that for Mayotte the availability of 
statistical data is in general more limited. In terms of content, the lack of information on 
price levels for products that are subject to differentiated taxation represents the largest gap 
in information. 

The  regional  reports  are  essentially  monitoring  documents,  providing  a  more  or  less 
detailed analysis of the development of local production and imports for the sectors, sub-
sectors and/or product categories benefiting from a tax differential in 2014-2016. While the 
informative content of these reports is hardly in dispute, evaluations are extremely limited, 
and do not include any assessments of the extent to which the dock dues helped maintain or 
promote local production or of the impact of the tax on price levels.  

As  clearly  stated  in  the  Report  to  the  Council88,  there  have  been  improvements  overall 
but  the  utility  of  the  monitoring  system  is  still  far  from  optimal:  ‘The  information 
provided by the French authorities does not give a complete picture of the economic and 
social  impact  on local  production in  the French outermost regions  of the application of 
differentiated  dock  dues  taxation  to  local  products  as  compared  with  products  from 
elsewhere.  What  can,  however,  be  emphasised  are  the  very  clear  improvements  to  the 
quality  of  the  information  provided  and  to  the  way  in  which  implementation  of  the 
arrangements is followed up.’  

According to  the  French authorities, there is  indeed room to  deepen the  analysis of the 
impact of dock dues at both macro level (regional economy) and micro level (individual 
firm). However, they also stressed the severe challenges posed to this aim by the limited 
availability/reliability  of  statistical  data  as  well  as  by  tax  confidentiality  provisions, 
which restrict access to some relevant information.  

The budgetary impacts of dock dues 

The dock dues exemptions/reductions constitute a fiscal loss equal to the amount of tax not 
collected.  However,  one  of  the  main  rationales  of  the  dock  dues  lies  in  its  differentiated 

87  Technopolis,  Evaluation  de  l’octroi  de  mer,  Rapport  Final,  31.01.2018  (for  the  Ministry  of  the 
Overseas).  
88 COM(2018) 824 final. 

73 

 
 
 
 
 
  
 
                                                           
rates regime. If tax differentials were not permitted, the dock dues regime would have no 
reason to remain in place, as its budgetary effect could also be obtained by a regional VAT. 
Thus,  the  foregone  revenues  linked  to  dock  dues  exemptions  constitute  a  virtual  loss  of 
revenue for the regional authorities.  

The dock dues tax receipts have been steadily rising over time in all ORs (except Mayotte 
in  2018)  at  a  pace  that  in  2014-2018  ranged  from  2.2%  year-on-year  (Réunion)  to  3.7% 
(Guadeloupe). In all ORs the overwhelming majority of receipts are collected on imports, 
with the internal dock dues accounting for only between 2.5% (Réunion) and 5.5% (French 
Guiana) of the total. The regional component is comparatively higher in the Antilles ORs 
(between 26% and 29%) than in Mayotte or French Guiana (19%-20%).  

Overall, the dock dues tax receipts have a non-negligible impact on ORs’ public budget. In 
particular, in Mayotte and French Guiana, the total receipts account for approximately 4% 
of  the  regional  GDP,  in  Guadeloupe  and  Martinique  around  3%,  and  in  Réunion  about 
2.3%.   

The tax receipts data reported in Figure A 4.2 refer to the entire dock dues regime and not 
only the products subject to the differentiated rate regime. No official figures for this group 
of  products  are  available,  but  they  can  be  estimated  based  on  the  disaggregated  product 
level  data  on  import  and  local  production.  The  tax  receipts  collected  on  the  products 
benefiting  from  tax  differentials  account  overall  for  42%  of  total  dock  dues  revenues, 
ranging from 48% in Réunion to 19% in Mayotte. Receipts from the internal dock dues are 
generally  limited,  amounting  to  6%  of  the  total  receipts  from  supported  products.  In 
Réunion, where for most of the supported products the internal rate is zero, this component 
amounts to 1%, while in Martinique it represents a non-negligible share of 12%. 

Figure A4.2 – The trends and composition of dock dues tax receipts in French ORs 
  Trends  in  overall  dock  dues  receipts 

  Share  of  the  different  components  of 

(EUR million) 

dock dues receipts  

74 

 
 
 
 
  
 
 
 
 
 
 
Source: the study. 
Legend:  OdMR  =  regional  component  of  dock  dues;  Ext=external  (tax  on  imports);  Int=internal  (tax  on 
local production). 

Figure  A4.3  –  Dock  dues  tax  collected  on  products  in  the  Decision  list  (2018,  EUR 
million) 

Source: the study. 
Legend: OdM list = products listed in the Council Decision; Tot= receipts from all products; Ext=external 
dock dues; Int=internal dock dues. 

The amount of foregone revenue is difficult to calculate precisely. An accurate estimation 
would require data on the market value of locally produced goods delivered internally (i.e. 
not exported), for all the products subject to a differentiated regime.  

The different  foregone revenue estimates  that have been gathered are reported in  Table 
A4.5 below. As comparing figures clearly shows, estimate variability is significant, and 
depending  on  the  source,  a  rising  or  a  declining  trend  can  be  identified.  However,  in 
terms of scale, the various estimates appear compatible. 

Table  A4.5  –  The  available  estimates  on  the  dock  dues  foregone  revenue  in  French 
ORs 
Indicator  

REU  MYT 

Year 

MTQ 

GUF 

TOT 

GLP 

75 

 
 
 
 
 
 
 
 
   
Dock dues evaluation 
2018 
Regional monitoring 
reports 
State aid monitoring 

2016 

2016 

2014 

53.1 

62.7 

53.8 

90.3 

25.3 

120.4 

12.3 

301.4 

109.6 

102.1 

2017 
2014 
2018 
2016 

Study own estimation 

287.4 
375.8 
211.1 
343.7 
Source:  the  study,  Technopolis  2018,  dock  dues  regional  monitoring  reports  (2018),  DG  COMP  State  aid 
register.  
Note:  (*)  underestimated  figures  due  to  missing  information  on  the  value  of  local  production  where  the 
internal dock dues rate is zero.  

111.6 
109.4 

16.5* 
129.3 

12.5* 
29.2 

64.1 
63.0 

6.4* 
12.8 

The budgetary impact of foregone revenue has been assessed using two metrics:  

  The  first  metric  is  the  ratio  between  foregone  revenues  and  the  value  of  local 
production, which provides an indicator of the intensity of the measure.  In 2016, the 
overall ratio for the five French ORs accounted for 15%, ranging from as low as 12% 
in Réunion (up to 23% in Mayotte)       

  The second metric is the balance between tax collected and not collected. The results 
show  that  some  41%  of  the  total  ‘virtual’  tax  is  not  collected,  ranging  from  34%  in 
Guadeloupe to 52% in Martinique.  

Figure  A4.4  –  The  level  of  foregone  revenue  compared  to  local  production  value  and 
total tax  
Foregone  revenue/local  production  ratio 
(2016) 

Foregone 
(2018*) 

revenue/total 

virtual 

tax 

Source: the study. 
Note: (*) In Figure B the data for REU, GUF, MYT actually refer to 2016.   

The efficiency of dock dues 

How  well  the  budgetary  effects  of  the  dock  dues  regime  have  converted  into  benefits 
remains  very  complex  to  quantify,  due  to  the  reported  data  validity  limitations  and  the 
absence  of  a  clear  baseline  for  a  counterfactual  analysis.  Still,  results  of  the  analysis 
conducted in the previous section allow for the elaboration of a general conversion index 
for the dock dues special regime. The index is calculated as the ratio between the additional 

76 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
production virtually enabled by tax differentials and the cost of the special regime in terms 
of  foregone  tax  revenues.  As  shown  in  Table  4.24  below,  this  ratio  is  1:2.5,  that  is,  one 
euro of foregone revenue can be roughly associated with 2.5 euro of local production. 

Similarly, it is possible to estimate efficiency in terms of employment, by estimating the 
amount of foregone revenue associated with the number of jobs hypothetically enabled by 
dock dues differentials (i.e. based on the additional value added generated). As Table A4.6 
shows,  in  this  metric  the  efficiency  of  the  scheme  can  be  roughly  estimated  at  less  than 
EUR 80 000 per job89.  

Table A4.6 – Efficiency indexes of the dock dues regime  

Dock dues 
foregone 
revenues 

Production value 
associated with 
dock dues 

Associated 
jobs  

Monetary Ratio 
(conversion 
index) 

EUR per job 

EUR 344 million 

EUR 850 million 

4 304 

1:2.5 

79 925 

One of the possible ‘externalities’ of the dock dues regime concerns its repercussions on 
the retail price of consumer goods and, therefore, on the cost of living in the French ORs 
and  the  purchasing  power  of  residents.  According  to  survey  results,  the  perception  of  a 
moderate  or  major  impact  prevails  (72%)  among  respondents.  As  expected,  this  share 
further  increases  among  traders  and  service  businesses,  reaching  94%  of  relevant 
respondents. In contrast, the majority of local producers denied the existence of a similar 
inflationary  effect  or  assessed  it  as  minimal.  Still,  a  non-negligible  share  (36%)  believes 
that the dock dues translate into higher consumer prices. 

Notably,  stakeholder  perceptions  seldom  distinguish  between  the  impact  of  the  tax 
differential regime – which is the main subject of the EU policy – and the dock dues on 
the  whole,  i.e.  including  the  numerous  products  not  subject  to  tax  differentials.  Such  a 
distinction is particularly relevant in the regions – especially the Antillean ORs – where a 
positive tax is also applied on a vast range of locally manufactured goods.  

Secondly, in order to fully appreciate the impact of the special regime on final prices, it 
should be taken into account that the VAT applied in French ORs is much lower than in 
mainland France, so the inflationist effects of the dock dues are somewhat compensated 
by the lower VAT.    

The  French  statistical  institute  INSEE  carries  out  periodic  analysis  of  price  levels  in  the 
ORs  in  comparison  with  the  mainland.  The  assessment  is  based  on  the  price  of  similar 
baskets of goods, adjusted to reflect the different consumption patterns across ORs and vis-
à-vis the mainland. The results of INSEE price gap assessment are reported in Table A4.7 
and Figure A4.5 below. The specifics are set out below.  

89 There are no standard benchmarks for this metric, but for indicative purposes it is worth citing: (a) the 
CSES, ‘Study on measuring employment effects’, June 2006, which examined the impact of EU Structural 
Funds  on  employment,  estimating  the  cost  per  job  at  EUR  36 000  on  average;  (b)  the  more  recent 
evaluation  of  the  ERDF  and  Cohesion  Fund  (2014),  concluded  that  an  overall  investment  of  EUR  269.9 
billion led to the creation of about 1 million jobs, i.e. a ratio of EUR 270 000 per job (see SWD(2016) 318 
final) 

77 

 
 
 
 
 
 
                                                           
  The comparative review of price levels conducted by INSEE confirms the existence 
of notable price differences between French ORs and mainland France90. For ORs’ 
typical  product  basket,  local  prices  are  higher  by  3%-7%  (with  the  exception  of 
Mayotte,  where  prices  are  lower).  However,  if  related  to  the  mainland’s  product 
basket the gap soars to 10% in Réunion and 17% in the Antillean ORs. The gap has 
apparently  widened  over  time,  especially  in  the  Antillean  ORs  (but  data  are  not 
fully comparable due to methodological changes). 

  The  gap  is  primarily  caused  by  food  products,  which  are  about  30%  more 
expensive in the ORs than in the mainland. Notable differences are registered also 
for  communications  services  (+28%)  and  for  alcoholic  beverages  and  tobacco 
products, but with different patterns across ORs (very large gap in Mayotte, nearly 
no gap in French Guiana).  

  The comparison with previous estimates processed by INSEE, although based on a 
methodology  which  is  not  fully  comparable,  suggests  that  the  price  gap  has  not 
gone  down  over  time.  On  the  contrary,  it  may  have  grown,  especially  in  the 
Antillean ORs. 

  The  only  area  where  ORs’  prices  are  lower  than  on  the  mainland  is  transports 

(-2.4% on average).  

Table A4.7 – Estimated price level difference between ORs and the mainland (INSEE, 
data in %) 

Estimated gap based on mainland’s 
product basket* 

Estimated gap based 
on OR’s product 
basket**  

Average 
gap***  

2015 
12.3 
12.5 
11.6 

2010 
-2.9 
-2.2 

2015 
-7.1 
-7.5 

1992 
8.4 
10.0 

2010 
16.9 
14.8 

2015 
17.1 
17.0 

16.2 

19.6 

20.5 

15.6 
- 

Martinique 
Guadeloupe 
French 
Guiana 
Réunion 
Mayotte 
Source: INSEE spatial comparison survey on consumer price levels 
Notes:  (*)  variation  in  the  consumption  budget  of  a  mainland  household  that  would  live  in  the  OR  while 
maintaining its mainland consumption habits. (**) variation in the cost of the basket of consumption of an OR 
household if it bought its products at prices charged in the French mainland. (***) geometric average (based 
on Fisher price index). The methodology was refined over time, so estimates from different years are not dully 
comparable.  For  certain  items,  data  for  Mayotte  are  unavailable,  so  the  comparison  should  be  taken  with 
greater caution.  

12.4 
- 

10.6 
16.7 

-0.4 
- 

-3.6 
2.0 

7.1 
6.9 

-6.4 

-6.8 

90 INSEE Première N°1589, Avril 2016. 

78 

 
 
  
  
 
                                                           
Figure  A4.5  –  Price  level  difference  between  ORs  and  the  mainland,  by  main  items 
(INSEE, data in %, 2015) 

Source: INSEE spatial comparison survey on consumer price levels  
Notes: The figures displayed are the geometric average (Fisher price index) of the two estimation methods 
shown  in  Table  A4.5.  The  item  classification  for  Mayotte  partly  differs  from  the  classification  used  for  the 
other ORs.    

There is an intense debate in France on the  underlying causes of high consumer price 
levels in the ORs91. In his intervention to a recent conference on the cost of living in the 
ORs  organised  by  the  French  Ministry  of  the  Overseas92,  the  Director  of  CEMOI93, 
Professor  J.F.  Hoarau,  highlighted  the  essentially  structural  features  of  the  problem,  in 
particular94: 

 

 

the  lack  of  competitiveness  of  local  enterprises,  due  not  only  to  the  additional 
costs of operating in the ORs, but also to the limited room for productivity gain 
caused  by  the  regulatory  framework,  which  imposes  the  same  salaries  and 
conditions as on mainland; 
the  oligopolistic  structure  of  the  OR  markets,  which  inevitably  results  in  higher 
prices. 

In this context, the dock dues – beside their direct effect on price – may still exacerbate 
the  situation  as  they  encourage  rent-seeking  practices  among  local  players  in  dominant 
positions, and the possible alignment of the price of imported products with the level of 
more expensive local products.  

91  For  an  overview  of  the  debate  see:  Christian  Montet,  Florent  Venayre.  ‘La  loi  REOM  contre  la  vie  chère  en  outre-mer:  Une 
construction difficile entre concurrence et administration des prix.’ Revue Lamy de la Concurrence, Editions Lamy/Wolters Kluwer, 
2013, 35 (Avril-Juin), pp.131-140.  
92 Rencontre - Lutter contre la vie chère en outre-mer : Enjeux et perspectives, 12 December 2019. The conference involved, among 
others, the Observatoire des prix, des marges et des revenus (OPMR) of Réunion, as well as representatives from INSEE, IEDOM, AfD 
and Autorité de la Concurrence, and other relevant institutions. 
93 Centre d’Économie et de Management de l’Océan Indien (CEMOI, Université de La Réunion) 
94 Source: Jean-François Hoarau, ‘La vie chère en Outre-Mer, un phénomène structurel ?’, appeared on Outremer360, 6 January 2020.  

79 

 
 
 
 
 
 
                                                           
These  aspects  have  been  investigated  in  a  report  published  in  July  2019  by  the  French 
Competition Authority, which identified, among others, the following drivers95:  

  distributors’ trade margins in the ORs are generally higher than in the mainland, 
but the difference explains only part of the price gap. More significant impact is 
due  to  the  cumulation  of  margins  along  the  value  chain,  and  the  role  played  by 
importers and wholesalers in this respect; 

  on  average,  retail  trade  distribution  is  more  concentrated  than  in  the  mainland, 

 

 

 

 

with also greater barriers to entry for new players;  
the ‘bouclier qualité prix’ (quality/price protection) – i.e. the scheme in place to 
make  certain  basic  products  available  at  a  moderate  price  (through  agreements 
with value-chain players) is not effectively implemented;  
there is often vertical integration in the distribution chain, with large distributors 
also acting as importers/wholesalers, which may raise competition issues; 
freight  costs  are  limited  (less  than  5%  on  average)  but  rising,  and  may  have  a 
non-negligible impact on products with limited added value;  
local production faces competitiveness issues due to the structural constraints of 
local  markets  encourages 
the  small  size  of 
OR  markets.  Additionally, 
concentration (expect for fresh products).     

In this framework, dock dues are an additional driver of price levels. In this respect the 
report of the French Competition Authority states: 

‘Finally,  it  can  be  considered  that  to  the  extent  that  the  objective  of  dock  dues 
differentials  is  to  encourage  the  consumption  of  local  products  compared  to  that  of 
imported  products,  its  participation  in  the  cost  of  living  is  strengthened.  As  the  cost  of 
local  production  is  potentially  higher  than  that  of  substitutable  imported  products, 
including approach costs, the dock dues system has the effect of increasing the cost of a 
consumption basket by bringing the prices of imported products and local products closer 
together, rather than exempting the latter from competitive pressure. 

Overall,  dock  dues  are  likely  to  increase  the  prices  to  the  consumer.  It  weighs  on 
productivity gains in historic sectors, and on investment and employment in new sectors. 
More  generally,  it  slows,  by  its  weight  and  its  complexity,  the  adaptation  of  the  OR 
productive  system.  Finally,  for  its  importance  for  the  financial  resources  of  local 
authorities, it encourages them to seek increases in taxable imports rather than promote 
the development of local activity96’.  

The lack of detailed price data hampers a precise assessment of the extent of the impact 
of  dock  dues  on  price  levels97.  However,  analysis  of  tax  revenues  and  consumption 
expenditure  allowed  a  rough  estimation  of  the  magnitude  of  the  contribution  of  dock 

95

 French Competition Authority, Avis n° 19-A-12 du 4 juillet 2019 concernant le fonctionnement de la concurrence en Outre-Mer. 

96 Ibid., p. 24 (our translation). 
97 The issue was noted also by the French Competition Authority, which recommended strengthening the 
capacity of the local observatories of prices and margins with the means necessary to fully carry out their 
tasks. Ibid. p. 3. 

80 

 
 
 
 
 
 
                                                           
dues to the cost of living in French ORs. The analysis compares dock dues revenues to 
household consumption expenditure (see Annex C for the full analysis98). Assuming, for 
analytical  purpose,  that  the  tax  borne  by  producers  and  importers  is  fully  passed  on  to 
consumer  prices,  the  effect  of  dock  dues  on  consumer  expenditure  would  be  roughly 
equal to the amount of tax revenues increased by a retail mark-up that, along with INSEE 
estimates, can be set conventionally at 30%99. The main results are shown in Table A4.8.  

  The  impact  is  mainly  due  to  the  external  dock  dues,  while  the  tax  collected  on 
products  with  a  dock  dues  differentiated  rate  represents  one  third  of  the  total 
impact and does not exceed 1.5% of final consumption in any OR.  

  As expected, the impact of the dock dues is higher for manufactured goods, with 
the tax levied on products supported by dock dues amounting to between 2.7% (in 
Guadeloupe) and 5.3% (in Martinique) of the value of household consumption.  
  When these figures are compared with the INSEE estimates of price differentials 
with  the  mainland  (Table  A4.7)  it  appears  that  the  dock  dues  regime  (i.e. 
considering  only  products  subject  to  differentiated  tax  rates)  explains  less  than 
one tenth of the registered price gap.  

Table A4.8 – Effect of the dock dues on final consumption, by tax component and OR 

French 
Guiana 

Guadeloupe 

Martinique 

Réunion 

Total dock dues as % of final 
consumption  

4.6% 

3.7% 

3.6% 

manufactured goods  

17.0% 

12.9% 

13.7% 

External dock dues as % of 
final consumption  

4.3% 

3.6% 

3.4% 

manufactured goods 

16.8% 

12.7% 

13.3% 

2.5% 

9.8% 

2.5% 

9.5% 

Revenues from products 
subject to dock dues 
differentials, as % of final 
consumption  

manufactured goods 

Source: the study.   

1.3% 

0.7% 

1.4% 

0.8% 

5.0% 

2.7% 

5.3% 

3.2% 

To sum up, dock dues contribute to the cost of living in the ORs, as do other structural 
features of local  markets and competition.  However,  only a small share of this  impact 
relates to the tax differential regime permitted by EU policy, while the bulk is due to the 
rates applied to the import of products for which no differential treatment is envisaged. 

98 Data on tax collected at product level provided by customs refer to year 2018, while data on household 
final consumption by economic accounts refer to year 2014. Data were adjusted using the ratio of revenues 
collected in 2014 divided by revenues collected in 2018, to ensure consistency. 
99 The figure rounds up the INSEE estimated average sales margin (29.1%) for retail activities (vehicles not 
included). 

81 

 
 
 
 
 
 
 
                                                           
ANNEX 5: FURTHER INFORMATION ON DOCK DUES TAX 

  ORIGINS AND POLICY FRAMEWORK  

The  origin  of  the  Octroi  de  mer  (dock  dues)  dates  back  to  the  tax  levied  on  goods 
entering  French  colonies  since  the  17th  century.  In  the  course  of  the  19th  century,  an 
‘octroi aux portes de mer’ was adopted first by Martinique as a tool to finance the local 
public budget and subsequently by Guadeloupe, Réunion and, eventually, French Guiana. 
From  being  a  pure  instrument  of  fiscal  autonomy,  the  dock  dues  acquired  a  second 
growth-oriented objective in the 1970s, first in Martinique and then in the other ORs. In 
that period the tax rates started being modulated based on the estimated competitiveness 
gap  faced  by  local  production  vis-à-vis  imports,  and  were  therefore  used  as  a  tool  to 
promote the development of local industry and substitute imports.     

With the integration of French ORs into the European Community, compatibility of dock 
dues with the principle of free circulation of goods within the internal market became an 
issue. Council Decision 89/688, which entered into force in 1993, recognised the need to 
strike a balance between the importance of the dock dues in supporting local production 
and ensuring the self-reliance of ORs (in accordance with the then Article 227 (2) of the 
Treaty),  and  the  need  to  complete  the  internal  market.  The  reform  extended  the 
application of the dock  dues to  all products,  be  they imported or produced in  the  ORs, 
while at the same time allowing the competent French authorities to apply total or partial 
exemptions for local products. The Decision did not indicate which products or the level 
of  exemptions  permitted,  but  stated  that  ‘these  exemptions  must  contribute  to  the 
promotion  or  maintenance  of  an  economic  activity  in  the  French  overseas  departments 
and  be  in  line  with  the  economic  and  social  development  strategy  of  each  French 
overseas  department,  taking  account  of  its  Community  aid  framework,  while  not  being 
such  as  to  adversely  affect  the  terms  of  trade  to  an  extent  contrary  to  the  common 
interest’100.     

The  following  period  was  characterised  by  several  legal  disputes  brought  before  the 
Court  of  Justice  of  the  European  Union  concerning  the  compatibility  of  the  dock  dues 
regime and its de facto equivalence to a customs duty101. In its Order of 7 June 1998, the 
Court  eventually  concluded  that:  ‘Council  Decision  89/688/EEC  […]  precludes 
exemptions  of  a  general  or  systematic  order,  which  would  thus  amount  to  the 
reintroduction  of  a  charge  having  an  effect  equivalent  to  that  of  a  customs  duty.  That 
decision  does,  however,  authorise  exemptions  which  are  necessary,  proportionate  and 
precisely determined […]’102. 

This  jurisprudence informed the subsequent  revision of the special tax regime, adopted 
under  Council  Decision  162/2004/EC  and  renewed  under  Council  Decision  No 
940/2014/EU – amended in 2019 and in 2020 – which is currently in force until the end 
of June 2021. The reform consisted of the explicit identification and justification of the 
local products requiring tax exemption and the establishment of maximum thresholds for 
such  exemptions,  differentiated  by  product  and  consistent  with  current  actual  needs.  In 

100 COUNCIL DECISION of 22 December 1989 concerning dock dues in French overseas departments.  
101  See:  C-163/90  Administration  des  Douanes  et  Droits  Indirects  ν  Legros  and  Others;  (C-212/96) 
Chevassus-Marche  v  Conseil  Régional  de  La  Réunion;  Joined  Cases  (C-37/96)  and  (C-38/96)  Sodiprem 
and  Others  v  Direction  Générale  des  Douanes;  Société  Béton  Express  (C-405/96);  Société  Nouvelle  de 
Concassage (C-406/96); Société Bourbon Lumière (C-407/96); Société Ouest Concassage (C-408/96) et al. 
102 CJEU, order of 7. 7. 1998 — Joined cases C-405/96, C-406/96, C-407/96 and C-408/96.  

82 

 
 
 
 
 
 
                                                           
EU  law,  the  underlying  basis  for  the  Decision  remains  the  TFEU,  in  particular  Article 
349, which envisages the possibility of introducing special measures for ORs because of 
the existence of permanent constraints affecting their economic and social situation103.  

The dock dues special tax regime not only derogates from the EU internal market rules 
but  constitutes,  at  the  same  time,  a  form  of  regional  State  aid.  Since  its  establishment, 
therefore, it has required the adoption of specific authorisation under EU State aid policy. 
The  first  ‘no  objection’  was  adopted  in  2004  (N  107/04)  with  reference  to  the  then 
Council  Decision  2004/162/EC.  The  estimated  value  of  aid  was 
set  at 
EUR 165 million/year,  and  the  expiration  date  to  end  2016.  The  measure  was 
subsequently  prolonged  under  the  same  conditions.  The  State  aid  decision  currently  in 
force – SA 46899 (2016/N)104 – was adopted by the Commission in 2017 in relation to 
the renewed EU fiscal policy (Decision No 940/2014/EU), and is set to expire at the end 
of 2020. The scope was extended to Mayotte and the budget raised to EUR 475 million a 
year  (of  which  EUR  25  million  for  support  to  the  firms  exempted  from  the  dock  dues 
because  of  their  small  size).  Unlike  the  similar  AIEM  scheme  applied  in  the  Canary 
Islands,  France did  not  make use of the notification exemption  under the general  block 
exemption  regulation105  (GBER)  because  the  requirements  of  the  GBER  regime  on  the 
cumulation of aid (Article 15 GBER) were difficult to comply with, since French ORs’ 
enterprises benefited from several other support measures. 

At country level, the legal framework currently in force was adopted under the French loi 
n° 2015-762 (which replaced the previous loi n° 2004-639) and the implementing decree 
n° 2015-1077. The legitimacy of the current dock dues arrangements was also confirmed 
by a 2018 decision of the French Constitutional Court, in response to a question on the 
possible disparities in fiscal treatment caused by the exemptions106. 

  IMPLEMENTING ARRANGEMENTS 

The dock dues is an indirect tax that can be levied on two types of transaction, namely  
(a) imports of goods and (b) sales of locally produced goods. More specifically, the dock 
dues regime consists of the following components: 

  external  dock  dues  (‘Octroi  de  mer  externe’),  levied  on  imported  goods,  including 
products  from  other  French  ORs  (with  the  exception  of  merchandise  trade  between 
Guadeloupe  and  Martinique,  as  explained  below),  mainland  France,  EU  and  third 
countries;  
internal dock dues (‘Octroi de mer interne’), levied on local production; 

 
  regional dock dues (‘Octroi de mer regional’) – an extra rate that regional authorities 

can apply in addition to the standard (external and internal) dock dues.  

103 An Opinion issued in 2015 by the CJEU (for the joined cases C 132/14, C 133/14, C 134/14, C 135/14 
and C 136/14) clarified that Article 349 does not allow only derogating from the relevant provision of the 
Treaties,  but  can  be  retained  per  se  as  sufficient  legal  basis  for  establishing  specific  conditions  of 
application of the EU law in the ORs, including secondary legislation. 
104 C(2017)1661 final. Aide d'État SA.46899(2016/N)– France Taxe octroi de mer. 
105  Commission  Regulation  (EU)  No  651/2014  of  17  June  2014  declaring  certain  categories  of  aid 
compatible  with  the  internal  market  in  application  of  Articles  107  and  108  of  the  Treaty,  amended  by 
Commission Regulation (EU) 2017/1084 of 14 June 2017.  
106 Décision n° 2018-750/751 QPC du 7 décembre 2018, Société Long Horn International et autre [Régime 
juridique de l'octroi de mer]. 

83 

 
 
 
 
 
 
  
 
                                                           
The tax base and applicability of the dock dues  differ partly  across transaction type, as 
follows:  

- 

Imports. In the case of imports – including from the mainland and the EU – the 
external  dock  dues  are  levied  on  the  customs  value  of  goods,  comprising 
shipment and insurance costs, i.e. the cost, insurance, and freight (CIF) value. The 
tax  becomes  chargeable  upon  entry  of  the  product  into  the  region  or  when  it  is 
released  for  consumption,  in  the  case  of  goods  introduced  under  tax  suspension 
arrangements  or  other  special  customs  regimes/procedures  (e.g.  customs 
warehousing, free zone, inward processing, temporary admission, etc.). External 
dock dues must be paid at the time of the customs declaration.  

-  Local production. In the case of locally produced goods, the amount of internal 
dock dues is calculated on the producer selling price, net of value added tax and 
excise  duties,  and  becomes  chargeable  at  the  time  of  delivery.  Payment  of  the 
dock dues is due quarterly, based on the tax declarations filed by taxpayers with 
the 
territorially  competent  customs  office.  The  concept  of  ‘production’ 
encompasses  manufacturing,  processing  and  renovation  activities  as  well  as 
agriculture and mining operations. Since the end of 2016, in accordance with the 
loi n° 2016-1918, the act of processing requires a change in tariff heading (4-digit 
code)  to  trigger  the  application  of  dock  dues.  Since  2014,  local  economic 
operators  with  an  annual  turnover  from  relevant  production  activities  not 
exceeding EUR 300 000 fall outside of the field of application of the regime107.   

A  series  of  exemptions  are  laid  down  in  the  law,  including  mandatory  and  optional 
exemptions. The mandatory exemptions cover import under a franchise regime, export of 
local products (including external delivery to the mainland and the EU), and merchandise 
trade within the Marché Unique Antillais (MAU), as well as between MAU and French 
Guiana, which is subject to a specific regime aimed at avoiding double taxation. 

As regards optional exemptions, the most important one for imports is the exemption on 
inputs  (‘exonération  des  intrants’)  which  is  applied  to  some  raw  materials  or  capital 
goods  that  are  used  by  local  economic  activities.  Local  authorities  can  exempt  the 
imports  of  these  goods  from  the  payment  of  the  external  dock  dues  rate  (the  regional 
dock  dues  normally  remain  due)  through  specific  deliberations  that  specify  the  eligible 
sectors (by NAF activity code) and the tariff positions of the imported goods specifically 
targeted. The rationale for this exemption is to avoid hampering the competitiveness of 
local producers – which is the objective of the dock dues special regimes – by taxing the 
production inputs that they cannot procure locally. The access to this facility is subject to 
two  main  conditions:  (a)  the  exemption  is  applied  only  to  direct  imports  (including 
through a delegated agent), and (b) in the case of capital goods, they have to be retained 
for  at  least  3  years.  This  exemption  is  in  principle  available  also  to  small  enterprises 
falling  outside  of  the  scope  of  the  dock  dues  (i.e.  with  an  annual  turnover  lower  than 
EUR  300 000)  but  they  seldom  benefit  from  it,  as  they  rarely  procure  their  production 
inputs through direct importation.  

As regards local  production activities, the main optional  exemption  – which is  also  the 
main  subject  of  this  study  –  consists  of  reduced  dock  dues  rates  applied  to  certain 
categories of products falling in the scope of the Council Decision, as detailed in the next 
section. This exemption covers the vast majority of locally produced goods, but, overall, 

107  This  provision  replaced  a  similar  facilitation  for  small  firms  included  in  the  2004  Decision,  which 
allowed  competent  authorities  to  further  reduce  by  five  percentage  points  the  rates  applied  to  local 
companies having a relevant turnover below EUR 550 000.    

84 

 
 
 
 
 
                                                           
it concerns only a minor share of the scope of the dock dues. In fact, unlike the similar 
Canarian AIEM regime, the dock dues apply to virtually all product categories imported 
or produced in the French ORs, and the products subject to differentiated rates are only a 
small part of the full list.    

Another significant difference to the Canarian AIEM regime regards the deductibility of 
the dock dues, through a mechanism similar to VAT. In practice, a firm may compensate 
the dock dues due on final goods sold locally with the amount of the dock dues paid on 
the intermediate goods imported and/or purchased from a local supplier. The deduction is 
made  by  the  taxpayer  and  shown  in  the  quarterly  declaration.  If  the  amount  of  the  tax 
deductible exceeds the amount of tax due on sales, however, the excess is not refundable, 
and is carried over to the next declaration, with the exception being when the tax credit is 
generated  by  (a)  the  acquisition  of  capital  assets,  or  (b)  the  purchase  of  inputs  used  to 
produce goods locally, which are then exported; when the exceptions are met, the credit 
can be refunded.  

  TAX SCOPE AND RATES  

The dock dues rates (external, internal and regional) are fixed independently by each OR, 
through deliberations of the Regional, Territorial or Department Councils – depending on 
the specific institutional set-up (see Section 2.1). In accordance with national legislation, 
as  amended  in  2015108,  the  dock  dues  rates  have  to  be  set  with  reference  to  CN8 
classification or TARIC 10-digit codes (when so expressed in the dock dues Decision). In 
addition  to  the  maximum  thresholds  established  in  the  Council  Decision,  the 
deliberations  must  comply  with  certain  thresholds  established  in  the  law,  namely:  (a) 
90%  maximum  rate  for  alcoholic  products  and  manufactured  tobacco;  and  (b)  60%  for 
other products109. As for the regional dock dues, the law sets  the ceiling rate at  5% for 
French Guiana and 2.5% for the other French ORs. The rates can be periodically revised 
by the regional competent authorities to take into account the evolving financial needs of 
the  local  communities,  the  socio-economic  developments  of  the  region  as  well  as  the 
updates of the tariff and statistical nomenclature.  

Each region applies a different set of internal or external dock dues rate levels, ranging 
from  8  in  Mayotte  up  to  32  in  French  Guiana.  The  dock  dues  base  rate  –  i.e.  the  rate 
applied to the majority of positions – also varies significantly across regions, from 6.5% 
in Réunion to 9.5% in Guadeloupe and Martinique, 17.5% in French Guiana and 20% in 
Mayotte (see Table 2.2). The higher rates applied in French Guiana and Mayotte reflect 
the fact  that no VAT is  applied there, while in  the other three regions  a  standard VAT 
rate of 8.5% is levied (compared to the standard VAT rate of 20% in mainland France).  

Table A5.1 – Dock dues and VAT rates in French outermost regions (2019) 

Number of dock dues rate 
levels (external & internal)  
Dock dues base rate 
(excluding regional Dock dues) 
Overall dock dues base rate 
(including the 2.5% regional 
dock dues)  

French 
Guiana 

32 

15% 

Guadeloupe  Martinique 

Réunion  Mayotte 

13 

7% 

14 

7% 

17 

4% 

8 

17.5% 

17.5% 

9.5% 

9.5% 

6.5% 

20.0% 

108 See Article 12 of decree n° 2015-1077, modifying Article 27 of loi n° 2015-762.  
109 In the case of Mayotte, maximum rates can be increased by half and are thus capped at 135% and 90%, 
respectively.  

85 

 
 
 
 
 
 
 
 
                                                           
Standard VAT rate  
Source: the study   

N/A 

8.5% 

8.5% 

8.5% 

N/A 

EU  policy  permits  the  application  of  differentiated  tax  rates  based  on  the  internal  or 
external  origin  of  the  product,  under  the  following  conditions:  (a)  existence  of  local 
production, (b) existence of significant imports that could threaten local production, and 
(c) additional production costs for local products compared to imported products, caused 
by the structural handicaps affecting ORs. The products which comply with these criteria 
(the  ‘supported  products’)  have  been  included  in  positive  lists  in  the  Annex  to  the 
relevant  Council  Decision.  EU  policy  not  only  establishes  which  products  can  benefit 
from  the  differentiated  rates  regime,  but  also  the  maximum  permitted  tax  differential. 
This  is  expressed in  percentage points and represents  the upper threshold that the local 
competent  authorities  must  respect  when  setting  the  actual  tax  differential,  which  can 
also  be  lower  than  the  maximum  allowed.  It  should  be  noted  that  the  threshold  is 
expressed  in  terms  of  the  difference  between  the  external  and  internal  rates,  so  for 
example, a tax differential of 10% may stem from an external rate of 10% and an internal 
rate of 0%, but also from an external rate of 25% and an internal rate of 15%. In other 
words,  the  existence  of  a  tax  advantage  for  certain  local  products  does  not  impede  the 
levying of a (smaller) tax on their production.  

In the Council Decision, the supported products are grouped in three ‘lists’ characterised 
by different levels of the ‘maximum permitted tax differential’, as shown in Table A5.2 
below. The inclusion of a given product in the appropriate list is based on an estimation 
of  the  additional  local  production  costs  that  the  policy  intends  to  compensate.  Any 
revision of the lists in Annex to the Council Decision, i.e. to introduce a new product or 
to move a product from one list to another, requires a formal amendment of the Decision 
itself. 

As  the  table  shows,  the  composition  of  the  lists  varies  from  84  product  categories  in 
Mayotte  to  more  than  270  in  Martinique  and  Réunion.  Overall,  nearly  660  different 
product  categories  are  subject  to  tax  differentials  under  the  dock  dues  regime  in  the 
French  ORs.  The  local  products  that  most  frequently  register  high  tax  differentials 
include  food  commodities  like  rice,  wheat  flour,  coffee,  fruit  juice,  etc.  as  well  as 
alcohol,  alcoholic  beverages  and  intermediate  inputs  (sugar  cane,  grape  must  and  other 
fermented beverages).  

In  general,  full  exemptions  are  rarely  applied,  with  the  notable  exception  of  Réunion, 
where zero rates are set on almost all supported products (with the exception of alcoholic 
beverages and tobacco, for example). In Guadeloupe and Martinique, there are no cases 
of  full  exemptions:  the  regional  dock  dues  component  is  always  charged.  In  French 
Guiana, a minority of local products are fully exempted, while in the majority of cases a 
reduced regional rate of 1% is levied. Finally, in Mayotte, only a couple of products are 
fully exempt. For all other supported products, the regional dock dues are levied (at the 
base rate of 2.5%) and, in a dozen cases, a positive internal rate is also applied (typically, 
7.5%). 

Table  A5.2  also  reports  estimates  of  the  extent  of  dock  dues  tax  differentials  actually 
applied  in  French  ORs.  In  nominal  terms,  and  based  on  the  full  list  of  CN8  products 
concerned,  the  average  dock  dues  differential  applied  across  ORs  ranges  from  8%  in 
Réunion to 15% in Mayotte. For economic analysis, a more significant indicator of the 
actual extent of differential is the ratio between the total monetary value of tax reductions 
and the monetary value of the local production concerned. The results show that the dock 
dues  differentials  account  on  average  from  12%  (Réunion)  to  23%  (Mayotte)  of  local 

86 

 
 
 
 
 
 
production  value,  with  a  (weighted)  average  value  of  dock  dues  differentials  for  all 
French ORs of 15%. 

Table A5.2 – Dock dues tax differentials and the number of product categories 
concerned 

Number of products subject to special regime 

Guadeloupe  Martinique 

Réunion 

Mayotte 

French 
Guiana 
18 
163 
27 
208 

42 
101 
19 
162 

14% 

13% 

96 
152 
26 
274 

14% 

135 
98 
38 
271 

8% 

30 
38 
16 
84 

15% 

Max. tax 
differential 
permitted 
10% 
20% 
30% 

List A 
List B 
List C 

Total 
Nominal dock dues 
differential applied (simple 
average) 
Actual dock dues 
differential applied 
(weighed average) 

Source: the study  

16% 

18% 

18% 

12% 

23% 

 TAX REVENUE AND ALLOCATION  

The dock dues ‘taxpayer’ includes two main categories of operators:  

1.  importers, who are subject to the external dock dues (including the regional dock 

dues); and 

2.  local producers, with an annual turnover of production of at least EUR 300 000, 

who are subject to the internal dock dues.   

Based on information collected from French customs, in 2018 the total number of local 
producers subject to the internal dock dues in all French ORs was just above 1 000. It is 
important to highlight that this figure does not include the numerous local firms engaged 
in production activities but falling outside the scope of the tax because of their small size. 
Furthermore, about half of these 1 000 firms did not actually pay any dock dues, because 
of  the  exemptions.  As  shown  in  Table  A5.3  below,  the  share  of  local  firms  that  were 
actually  charged  varies  significantly  across  regions,  from  90%  in  Guadeloupe  and 
Mayotte to 7% in Réunion. This variance reflects the different arrangements adopted by 
regional  authorities,  with  Réunion  applying  positive  internal  dock  dues  to  less  than  10 
products, for example.  

The number of subjects liable to the payment of the external dock dues is much greater, 
exceeding 31 000 units in 2018. However, this figure concerns any recipients of imported 
goods  subject  to  the  dock  dues  taxation,  comprising  individuals/occasional  importers, 
and including all products, and not only those subject to the differential regime. In this 
sense, the figure is not comparable with the above number of firms subject to the internal 
dock  dues.  The  evidence  from  fieldwork  indicates  that  the  number  of  specialised 
importers  engaged  in  the  trade  of  products  subject  to  the  dock  dues  differential  is 
significantly lower. 

Table A5.3 – Number of subjects liable to the dock dues in the French ORs (2018) 

No of firms subject 
to internal dock 
dues 
No of firms that 
actually paid any 

French 
Guiana 

136 

65 

Guadeloupe  Martinique  Réunion  Mayotte  TOTAL 

215 

191 

298 

228 

354 

24 

39 

37 

1 042 

545 

87 

 
 
 
 
 
 
 
 
 
 
 
internal dock dues 
in % of the firms 
liable for tax 
payment  
No of firms subject 
to external dock 
dues  
Source: French Customs    

48% 

3 681 

89% 

77% 

7% 

95% 

52% 

6 612 

5 819 

13 076 

2 489 

31 677 

Between 2014 and 2018, the annual yield of the dock dues of all French ORs grew from 
EUR  1 140  million  to  EUR  1 270  million.  The  differences  in  total  tax  yield  across 
regions are largely due the different size of their economies, with Réunion accounting for 
about  one  third  of  the  total  dock  dues  receipts  and  Mayotte  for  only  8%.  The  regional 
dock  dues  account  for  about  25%  of  total  dock  dues  receipts,  on  average,  but  less  in 
French  Guiana  and  Mayotte,  where  the  standard  dock  dues  base  rate  is  comparatively 
higher than in the other regions. 

When the respective contribution of the internal and external dock dues component to the 
total tax yield is considered, it clearly emerges that the bulk of dock dues receipts comes 
from imports. As shown in Table A5.4 below, the internal dock dues receipts account for 
only  2%-4%  of  the  total  dock  dues  revenues,  except  in  French  Guiana,  where  they  are 
7%.  Figures  include  the  receipts  collected  on  both  products  with  tax  differentials  and 
those with no differential applied. The dock dues are also the main tax levied on imports, 
with  an  average  incidence  of  63.4%  of  total  duties  (higher  in  French  Guiana  and 
Mayotte, which do not apply VAT). 

Table  A5.4  –  Dock  dues  receipts,  by  OR  and  tax  component  (avg.  2015-2018,  EUR 
million) 

French 
Guiana 

Guadeloupe  Martinique  Réunion  Mayotte 

Total  

9.3 

11.0 

257.4 

157.8 

254.6 

External dock 
dues  
(regional dock 
dues included) 
Internal dock dues 
(regional dock 
dues included) 
Total dock dues  
External dock 
dues in % of total  
Internal Dock dues 
in % of total  
Incidence of dock dues on the total tax and duties levied on imports 
Dock dues 
VAT 
Others (tariff, excise 
duties etc.)  

70.9% 
- 

54.8% 
22.8% 

63.5% 
26.4% 

168.8 

266.4 

266.7 

29.1% 

22.4% 

10.1% 

93% 

97% 

96% 

11.7 

7% 

3% 

4% 

409.3 

89.9 

1 169.0 

9.3 

3.8 

45.1 

418.6 

93.7 

1 214.1 

98% 

96% 

96% 

2% 

4% 

4% 

52.0% 
29.1% 

18.9% 

75.8% 
- 

24.2% 

Average 
63.4% 
26.1% 

20.9% 

Source: the study. The data on incidence are drawn from Rapport Ferdi 2020.

110

The  dock  dues  receipts  are  divided  between  the  state,  the  municipalities  and  the 
regions/departments/collectivities, as follows: 

  some 1.5% (2.5% until 2017) is allocated to the State to cover the tax implementation 

and enforcement costs;  

110  Rapport  Ferdi  |  Geourjon  A-M.  Laporte  B.  ‘Impact  économique  de  l’octroi  de  mer  dans  les 
Départements d’Outre-mer français.’ March 2020. 

88 

 
 
 
 
 
  
 
 
                                                           
 

the remaining 98.5% is allocated to the municipalities’ operational budget in the form 
of  a  ‘dotation  globale  de  garantie’  (DGG).  Every  year,  the  value  of  this  DGG  is 
adjusted by customs in relation with the economic development registered (i.e. both 
the consumer price index and the national GDP); 

  any  possible  surplus,  after  the  DGG  allocations,  is  allocated  to  the  Fonds  Régional 
pour le Développement et l’Emploi (FRDE), which is a regional fund set up in each 
French OR in the early 90s. The FRDE resources are distributed as follows: (a) 80% 
to the municipalities’ investment budget, and (b) 20% to regions and departments; 
the  tax  yield  of  the  regional  dock  dues  component  follows  a  different  path  and  is 
directly and entirely allocated to regions and departments.  

 

As  a  result,  the  dock  dues  constitute  the  first  source  of  fiscal  revenue  for  OR 
municipalities.  According  to  the  figures  provided  by  the  Directorate  General  of  Local 
Authorities, in the past 3 years dock dues receipts represented between 36% (in Réunion) 
and 76% (in Mayotte) of ORs’ resources (see Table 2.6). The dock dues also account for 
a  smaller,  but  still  significant,  share  of  the  tax  revenues  of  regions  and  departments, 
ranging from 12% in Martinique and French Guiana to more than 40% in Guadeloupe.  

Table A5.5 – Dock dues share of fiscal revenues of local authorities 
2018 

2016 

2017 

Municipalities 

French Guiana 

41.5%  43.8% 

45.7% 

2016 

2017 
Regions/Departments / Collectivities 
French 
Guiana 
Guadeloupe 
  Martinique 
Réunion 
  Mayotte 

41.4% 
12.5% 
27.0% 
35.5% 

17.0% 

11.6% 

2018 

12.5% 

Guadeloupe 
Martinique 
Réunion 
Mayotte 
Source: ‘Rapport sur les finances des collectivités locales’  prepared by the Observatoire des finances et 
de la gestion publique locales (various years).   

42.3%  42.5% 
47.0%  47.2% 
36.2%  36.2% 
59.2%  61.8% 

40.0% 
11.8% 
23.4% 
22.9% 

43.5% 
47.1% 
36.1% 
76.5% 

40.7% 
15.5% 
24.6% 
26.0% 

The ‘foregone tax revenue’ (dépense fiscal) corresponds to the tax receipts not collected 
because of the exemptions in place on local production. The foregone tax revenue is, in 
this sense, an indicator of the global value of the support extended under the dock dues 
special regime. It is calculated on the basis of data from the customs authority as the gap 
between  the  internal  dock  dues  revenues  actually  collected  and  the  potential  revenues 
that would have been collected if tax differentials were not in place (assuming no change 
in  the  local  production  value).  According  to  the  dock  dues  evaluation  carried  out  in 
2018111, the aggregate foregone revenues amounted to approximately EUR 301.5 million 
(2016), of which 14% from the regional dock dues. This figure represents some 5.4% of 
the  total  value  of  the  local  production  of  French  ORs,  but,  in  comparative  terms,  the 
incidence of foregone revenue is higher in Martinique (7%) and Mayotte (9.2%) than in 
the other ORs (Table 2.7). The estimated foregone revenue for 2017 communicated to the 
Commission  under  the  State  aid  reporting  arrangement  amounts  to  EUR 287.4 million, 
but no breakdown by region is available. 

111 Technopolis et al., ‘Evaluation de l’octroi de mer’, 2018, for the Ministry of the Overseas. 

89