CELEX: 51974PC0558
Language: en
Date: 1974-04-25 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION on the negotiation of an agreement on a draft annex to the international Convention for the simplification and harmonisation of customs procedures on the procedure for the duty-free replacement of goods (submitted to the Council by the Commission)

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COM (74) 558
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                         COM(74) 558 final
                                         Brussels , 25 April 1974
                               RECOMMENDATION
                                   FOR A
                               COUNCIL DECISION
                on the negotiation of an agreement on a draft
                annex to the international Convention for the
                  simplification and harmonisation of customs
                procedures on the procedure for the duty-free
                             replacement of goods
                ( submitted to the Council lay the Commission)
   COM(74) 558 final
 ---pagebreak---                                     Recommendation
                                       for a
                                  Council Decision
                    on the negotiation cf an agreement on
                    a draft Annex to the international
                    Convention for the simplification and
                    harmonisation of customs procedures on
                    the duty-free replacement of goods .
EXPLANATORY NOTE
1 . Introduction
                                                                         1
    1.1 The Customs Cooperation Council ( C.C.C. ) has prepared a draft international
        Convention for the simplification and harmonisation of customs procedures .
        With regard to the Community , this Convention has been made the subject
        of a Recommendation for a Council Decision ( doc . COM ( 73 ) 46o final of
        28 March 1973 , R/977/73 ( COMER 1^6 ) of 12 April 1973 , COM ( 73 ) 1.24o final
        of 25 July 19731 T 72/74 ( COMER) (ECO ) (JUR ) of 13 February 1974 and
        T/115/74 ( COMER ) (ECO ) (JUR) of 5 March 1974).
        The Convention opens the possibility , from the time of its signature ,
        of specifying the annea or the annexes which the contracting parties
        may undertake to apply (Article 11 ( 4 ) of the Convention ).
        Further , for the purposes of voting when required at the C.C.C. , each
        annex is taken as constituting a separate convention ( Article 7 °f
        the Convention ).
    1.2 The Permanent Technical Committee of the C.C.C. has decided to write
        into its programme of future work the draft annex on the procedure for
        exportation with entitlement to fresh supplies of rav/ materials (doc .
        2o.l69 of the C.C.C. dated 6 December 1973 ) •
        The Secretariat of the C.C.C. has invited Member States as well as
        non-Members and international organisations concerned , to submit any
        observations and suggestions which they may have on this draft .
 ---pagebreak---       1.3 Ike Commission examined this draft with representatives of Member States
          at a meeting of the ad hoc Group of the Committee on Inward Processing
          with a view to arriving at a common stand , which was , conveyed to the
          Secretariat of the Customs Cooperation Council ( c.f . letter No 1223
          of 28 January 1974) within the time limit laid down .
      1.4     working Group of the C.C.C. has examined the said draft annex . The
          revised text of the draft was adopted at the Permanent Technical Committee 's
          83rd/84th sessions ( c.f . doc . 2o.4oo of C.C.C. dated 1 March 1974).
          This draft Annex on the duty-free replacement of goods is annexed to
          this explanatory note . It is now ready for negotiation at the proper
          level in the C.C.C. .
2 . Pie main features of the draft Annex
     The draft Annex is based on the following points :
     2.1 In most countries , national legislation contains provisions under which
          goods used to make products for export are not required to bear duties
          and taxes .
     2.2.1116 drawback procedure ( l ) and temporary admission for processing ( 2 )
          allow a refund of , or conditional relief from , import duties and taxes
          to be granted in respect of foreign goods used to obtain exported products .
          Ih the case of the procedure ftr duty-free replacement of goods , the technique
          employed that of exemption from import duties and taxes . This exemption
          is granted for goods equivalent in quality and quantity to those which
          were in free circulation and were processed into products exported from
          the Customs territory .
     2.3 Application of this procedure may be made subject to the condition that the
          importation of goods equivalent to those incorporated in the products
          previously exported is regarded by the competent authorities as bene­
          ficial to the national economy .
     2.4 Products manufactured from goods admitted free of import duties and
          taxes under this procedure may be put on the home market .     .
( 1 ) doc . COM(73 ) 46o final of 28 March 1973 ? R 977/73 ( COMER I56 ) of 12 April 1973
( 2 ) doc . COM( 73 ) 830 final of 3° May 1973
 ---pagebreak---                                          - 3 -
 3 » ^P-gTlQ-^r^Cormnity action in thr? negotiation of the drafts
      3.1 The maxn characteristics cf this draft give it perforce a bsaring on a
           Customs procedure which rarjcs among the principal instruments of
           commercial policy . Consequently, when this procedure is the subject
           of an international agreenant , it becomes both a tariff and commercial
           agreement which is part of the common commercial policy, by virtue of
           Article 113 of the ESC Treaty. The nature of Articles 113 and 114 of the
           EEC Treaty is such that only the Community has the competence to negotiate
           and conclude these agreements .
     3.2 Article 113 paragraph 3 of "the EEC Treaty provides that if agreements
           on which it has a bearing need to be negotiated with third countries ,
           the Commission shall submit its recommendations to the Council which
           shall authorise the opening of the necessary negotiations .
     3.3 Ihc negotiation of the draft Annex on the duty-fiee replacement of goods
           is not acceptable to the Community . Firstly the customs procedure laid
          down in this draft goes beyond the scope of the Community 's inward
          process procedure (c.f. Council Directivl^f 4 March 19^9 on the
          harmonisation of provisions laid down by laty regulation or administrative
           action in respect of inward processing ( 69/73 /EEC ). Indeed the procedure
           ignores three principles which the Commission considers necessary viz ,
          - exported goods should be produced by the holder of the authorisation !
          - the re-importation of goods by the authorised person }
          - authorisation should be limited to well-founded need .
           Thus its scope by no means corresponds to that of prior exportation in
          the Council Directive referred to above .
           In addition there is in practice a risk that the absence of a link between
          the person (natural or legal ) who on the one hand exports and who processes
          the necessary raw materials into products for exportation and , on the
           other hand between the exporter of the compensating products and the
           importer of the duty-free goods would lead to a sort of "bank" of foreign
          goods able to profit from this duty-free procedure .
                                                                 ./.
( l ) O.J. TTo L 38 of 8 March 19&9t P° 1
 ---pagebreak---                                           - 4 -
          The introduction "de facto" of such a batik would moan a kind of " cleaning1,'
          of general   counter-balancing, between exportations and importations
          the principle consequence of which would be that because of the latitude
          the procedure could provide , tariff protection would be unjustifiably
          weakened- to an inassessable degree . This consideration is of major importance
          in industrialised countries .
          It is accordingly necessary to register a general reserve in respect
          of the Annex for negotiation .
4 . Conclusion
    The Commission recommends that the Council , by virtue of Article 113 of
    the EEC Treaty, should , having regard to Directive (EEC ) No 69/73 » authorise
    it to negotiate the draft annex to the international Convention for the
    simplification and harmonisabion of Customs procedures in respect of the
    procedure for the duty-free replacement of goods .
5 » Timetable Ar.nex ( c.f . doc . SEC ( 73 ) 4766 of lo December 1973 )
    If Title of the Proposal :
         Recommendation for a Council Decision on the negotiation of an Agreement
         on a draft Annex to the international Convention for the simplification
         and harmonisation of customs procedures on the duty-free replacement
         of goods .
    II . Is there to be a timetable?
         Yes
   III . What is the time-table?
         Date considered suitable by the Commission ;
         The Customs Cooperation Council has already started worlt .
   IV . Date reemired for :
         A. Opinion of the European Parliament ;                      none
         B. Opinion of the Economic and Social Committee :            none
         C. Council Decision :  before lo June 1974 ( C.C.C. meeting from lots 14
                                June 1974 )
 ---pagebreak---                                 Rcconmendat i on
                                   for a
                               Council Decision
                on the negotiation of an agreement on a draft
                annex to the international Convention for the
                simplification and harmonisaiion of customs
                procedures on the procedure for the duty-free
                            replacement of goods .
 TOE COUNCIL DP THE EUROPEAN COKrjNITIES ,
Having regard to the Treaty establishing the European Economic Community,
 and in particular Article 113 thereof !
Having regard to the Recommendation of the Commission ?
Whereas the conclusion of an agreement on draft annex to the International
Convention for the simplification and harmonisation of customs procedures
on the procedure for the duty-free replacement of goods can efficiently
contribute to the development of internet ional trade , and in particular
international comm ercej
Whereas the aforesaid agreement has a bearing on the common customs legislation ,
in particular in the matter of the Common Customs Tariff ; whereas it is
necessary to have regard to the proper requirements of a Customs Urimj whereas
it is agreed that the Community shall participate in the negotiation of this
agreement ;
HAS DECIDED :
                                   Article 1
The Commission is authorised to conduct negotiations with the Customs Co-operation
Council in order to conclude an agreement on a draft annex to the international
Convention for the simplification and harmonisation of customs procedures on
the procedure for the duty-free replacement of goods .
The Commission shall conduct these negotiations in consultation with the
Special Committee , as provided for in Article 113 of the Treaty, which shall
assist the Commission in that task .
Done at Brussels                              For the Council
                                               The President
 ---pagebreak---               /           . ,      5^                       Annex
                  /    _   •••
                       E.8 - DRAFT ANNEX CONCERNING
                       THE DUTY-FREE REPLACEMENT OF GOODS
 INTRODUCTION
         In most countries',, national legislation contains provision
 under which goo'ds used to make products^for export are not
 required to bear duties and taxes .                      '
         '■     i  '
         The. drawback procedure and temporary admission for
 processing allow a refund of , or conditional relief from , import
 duties and taxes to be granted in respect of foreign goods used
 to obtain exported products .-                       '
            i '      •                                             . *•
         In' the case of the procedure of duty-free replacement of
 goods ,- the subject of the present Annex , the technique employed
 is to grar t exemption from import duties and taxes for goods
 equivalent to those which were in free circulation and were
processed jinto products exported from'the Customs territory.
    : However , application of this procedure may be made subject
to the condition that the importation of goods equivalent to .
those incorporated in the products previously exported is
regarded by the competent authorities as beneficial to the
national economy .               .           •               >■/..
        Products manufactured from goods admitted free of import
duties and taxes under this procedure may be put on the home            .
market . Should they be exported , the procedure of duty-free
replacement of goods could again become applicable .
 ---pagebreak---               ./                                            Annex
              I .
                          • I
  DEFINITIONS '
 ■ ■                  /
            j'oc the purposes of this Annex :
  ( a ) the term " procedure of duty-free replacement of goods " means
         th^e Customs procedure which permits the importation , free
                                          „ ï
         of import duties .ahd taxes , of goods identical in description
                        *                       "V*
         quality and technical characteristics with those which were
         inj free circulation and which were processed into products
         previously exported outright ;
  ( b ) the /term " import duties and taxes " means the Customs duties
         and / all other duties , taxes , fees or other charges which are
         collected on or in connexion with the importation of goods ,
         but not including fees and charges which are limited in
         amount to the approximate cost of services rendered ;
 ( c ) the term " person " means both natural and legal persons ,
         unless the context otherwise requires .
PRINCIPLE
1.     •          ; .                                             " Standard
           The procedure of duty-free replacement of goods shall be
governed by the provisions of this Annex .                   , -
FIELD OF APPLICATION
2.                                                     •   •        Standard
           National legislation shall specify the circumstances in
which the v procedure of duty-free replacement of goods may be
granted anck shall lay down the requirements which must be met .
 ---pagebreak---                                                               Annex
  Notes
          T!je c^-rcumstances in' which the procedure of duty-free
  replacement of goods is allowed may be set out in general terms
  and /or in detail .
      2 . pre granting of tJnis procedure)' may . be made subject to the
  condit^Lccn   that the importation of goods equivalent to those
  incorp'or
            rated jjniauthorities
  the cornepetent
                        the productsas beneficial
                                       previously exported is  regarded  by
                                                  to the national economy ,
      3.  T1- e benefit of the procedure may be reserved .to persons
 establis : hed in the Customs territory .
 3.                                                                 Standard
          A^: importation , goods equivalent to those which were in
 free circulation and which were incorporated in the products
 previously exported in order to obtain duty-free replacements
 shall be afforded total exemption from import duties and taxes .
 Such exemption shall not apply to any^import duties and /or taxes
 repaid or remitted on the exportation of the products .
Notes
     1 » The! exemption from import duties and taxes may be granted
in respect of raw materials and semi-manufactured products as
well as td> parts equivalent to those incorporated , without further
manufacture , in the products exported .               ^ •
     2 . Goods such as catalysts and accelerators or retarders of
chemical reactions which , on being used to obtain products for
exportation with entitlement to duty-free replacement of goods ,
disappear entirely or partially during such use without actually
 ---pagebreak---                                                           Annex
 being contained in the products for export , may be treated as goods
 used to obtain the said products and granted the same exemplion
 from import duties and taxes • However , this exemption does not
 normally / extend to mere aids to manufacture such as lubricants .
            /
 4.                                               Recommended Practvce
                           *            y
         Thje benefit of the procedure of duty-free replacement of
         Th
 goods should not be withheld solely on the grounds that the
 products are exported to a specific country .
 5.                                                             Standard
        National legislation shall specify the categories of
persons who may receive an authorization for the duty-free
 replacement of goods .
 Note
       The holder of an authorization for the duty-free replacement
of goods may be the exporter , the manufacturer or the owner of
the exported products .
              I                                 y
6. '   •                                                    • • Standard
       The benefit of the procedure of duty-free replacement of
goods shall be granted where it is possible to determine the
presence of the goods in the exported products .
Note             .   . ■                                           ' 1 ■
       In order to determine the presence of the goods in the
exported products the Customs authorities may carry out controls
          V
during the manufacturing process or may have recourse to the
records kept by the manufacturer of the exported products .
 ---pagebreak---                                                                  Annex
  EXPORTATION OF PRODUCTS WITH ENTITLEMENT TO DUTY-FREE REPIACEMENT
  OF GOODS
  ( a ) i2£'i)5Hii££_P£i2£_i2 the exportation of the products
   '•                    •                                         Standard
                         ■ •   .            y
        j
              National legislation shall specify the circumstances in
  whicji prior authority L2 required for application .of the procedure
  of duty-free replacement of goods and the authorities empowered to
  grant such authority .                                       *
  8»        /                                         Recommended Practice
          | Persons who carry on large-scale and continuous operations
 involving the procedure of duty-free replacement of goods should
 be granted a general authority covering such operations .
 9.                                                                Standard
            Τη e  description , quality , technical characteristics and
 quantity! of the various goods which were in free circulation and
 were contained in the products exported with entitlement to duty-
 free replacement of goods shall be determined by the competent
 authorities on the basis of the actual conditions under which
those products were obtained .
10 .                                               .  Recommended Prnctice
           In determining the quantities of the various goods contained
in the products for exportation with entitlement to duty-free
replacement of goods , the competent authorities Should make
allowance for losses and irrecoverable waste deriving from the
manufactunng process .
                \
 ---pagebreak---                                                                                     Annex
 11 .              /                                        Recommeridsd PrjC t i co?
            I Where products to be exported with entitlement to duty-free
 replacement of goods have reasonably constant characteristics and
 are obtained under clearly defined technical conditions , the
 competent authorities should establish standard quantity scales
         I                   <"<          *
 for ithe various goods contained in th^- exported products .
        1,
        i :
 ( b ) ; Declaration for exportation with enti tlement_to duty-free
       ! replacement of goods
 12 .                                                                                   Standard
              National legislation shall specify . the conditions under
which products for exportation with entitlement to duty-free
replacement of goods shall be produced at the competent Customs
offict and a Goods declaration ( outwards ) shall be lodged .
Note            !
              National legislation may provide that the Goods declaration
relating ! to the exportation of the products must contain the
                                  ........           Ir . ■           -i
particulars necessary to enable the Customs to determine the
                                                     .         ι              ι·
quantities of the various goods for which exemption from import
                                                       • il        <  ■    ■". 1,          .. J"
duties and taxes will be claimed .
13 .                                                        Kecommended Practice
              Whore the competent authorities have not been able to give
a ruling on an application to replace goods cluty-frcie , the
declarant should be authcyjrized to export the products concerned
without delay provided that the conditions prescribed are met
and without prejudice to the final decision.' 'i l "                                          ' 1 •.
                  V
                                                         |h '        J " -l I !                ' • '
                                                         I ) i   .      ' i       M
 ---pagebreak---                                                                   Annex
    14 .                                                 Recommended Practice
              The national forms used for the exportation of products
   with entitlement to duty-free replacement of goods should be
   harmon       zed with the Goods declaration ( outwards ).
         Verif ica t ion^of^ pjjoducts^exportfed with entitlement to
         ^ldiyr£££S_£2Pl2E2!I!ent_2f goods
   15 .                                                 Recommended Practice
             At the request of the declarant , and for reasons which
                                                    V
   they deem valid , the Customs authorities should , so far as
   possible , allow products for exportation with entitlement to
   duty-free replacement of goods to be verified on private
         . '  !
   premise s     , the expenses entailed by such verification being borne
  by the declarant .
   ( d ) Au thori zed_des tinat ions of products exported with entitlement
                          replacement of goods
   16 .                                               • Recommended Practice
             Provision should be made to permit products for exportation
  with entitlement to duty-free replacement of goods to be placed
  in free ports or free zones .
  17 .                                                  Recomiftended Prncfcicë
             Provision should be made to permit products for exportation
. with entitlement to duty-free replacement of goods to be placed
  in a Customs warehouse with a view to subsequent exportation .
 ---pagebreak---                                                                     Annex
  ( e ) Certification of exportation with entitlement to duty-free
        replacement of goods
 18 .                                                                  Standard
          i ._//       .    . ^
             Where products have been exported with' entitlement to duty-
 free replacement ofgo/pds , the Customs authorities shall issue to
        !
 the declarant a document establishing his entitlement to import ,
 without |payment of import duties and taxes , goods equivalent to
 those wl^iich were in free circulation and which were contained
 in the products in question .
 Note
            The document issued to the declarant may consist of a copy ,
 duly certified by the Customs , of the declaration for exportation
with entitlement to duty-free replacement of goods , or may be
made out on an appropriate form .
 IMPORTATION OF GOODS
 19 .                        »
                                                                       Standard
                                                                          ' ■ ■ ■ i >
            National legislation shall specify the conditions under whit
goods which may be admitted free of import duties and t c"ixes under
the duty-free replacement of goods procedure shall be produced at
the competent Customs office and a Goods declaration shall be
lodged .
Note
            National legislation may provide that the Goods declaration
must contain the particulars necessary for authorizing exemption
from import duties and taxes and that the document ( s ) issued by
the . Customs authorities must be produced in support of that
                                                  .   I ; I , . I ;
declaration i
 ---pagebreak---                                                             Am i ex
 20 .                                                             Standard
         The competent authorities shall 1 . fix with due regard to the
 commercial   circumstances the time limit for the importation of
 goods which may be admitted free of import duties and taxes .
 21 .                   ^              '                          Standard
         Provision
         P
           i
                   shall be made to permit goods which may be admitted
 free ofj import duties and taxes to be imported through a Customs
 office other than that through which the products were exported .
 22 .                                                              Standard
         Provision shall be made to permit goods which may be admitted
 free of import duties and taxes to be imported in one or more
 consignments .
 23                                                                Standard
       ; Provision shall be made to permit goods covered by several
 documents establishing entitlement to import replacement goods
 duty-free to be . imported in one consignment .
                                                         :         Standard
         Provision shall be made to permit goods which may be
 admitted free of import duties and taxes to be imported from a
•country other than that to which the products were exported .
                 r
 25                                                 Rccommendcd Pract.i.ce
         provision should be made to permit goods which may be
 admit tevd free of import duties and taxes to be imported by a
 person other than the exporter of the products , subject to
 compliance with the conditions laid down by the Customs
 authorities .
 ---pagebreak---                                                             Annex
 26 .            /                             Recojr. nicncìod Practice
      / At the request of the declarant , and for reasons deemed to
be v^lid , the Customs authorities should , as far as possible ,
allow goods which may be admitted free of import duties and
taxes to be verified on private premises , the expenses entailed
             !         λ             >
by such verification being borne by th.e declarant .
27 .                                                            Standard
        National legislation shall specify the Customs treatment
applicable when products which have been exported under the
procedure for duty-free replacement of goods are re-imported .
           !
         I
         !
INFORMATION CONCERNING THE PROCEDURE OF DUTY-FREE        REPLACEMENT
OF GOODS
28 .           I                                                Standard
        The Customs authorities shall ensure that all relevant
information regarding the procedure of duty-free replacement
of goods is readily available to any person interested .
                          C? •