CELEX: 51995PC0524
Language: en
Date: 1995-11-06
Title: Proposal for a COUNCIL REGULATION (EC) establishing favourable tariff treatment for imports of certain goods into the free zones of Madeira and the Azores by reason of their end use

COMMISSION OF THE EUROPEAN COMMUNITIES
                                        Brussels, 06.11.1995
                                        COM(95) 524 final
                      Proposal for a
           COUNCIL REGULATION (EC)
   establishing favourable tariff treatment for imports of
certain goods into the free zones of Madeira and the Azores
                  by reason of their end use
            (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                 EXPLANATORY MEMORANDUM
1   In a letter from its Permanent Representative's Office dated 7 February 1994, the Portuguese
   government requested a reduction in the customs duties levied on raw materials released for free
   circulation in Madeira for processing in the free zone.
   Among the arguments marshalled in support of its request, the Portuguese government underlined
   the economic and social situation of the archipelago: it believes that a diversification of production
   could help boost Madeira's industrial development.
2. By Decision 91/315/EEC of 26 June 1991, the Council set up a programme of options specific to
   Madeira and the Azores (POSEIMA). Two of this programme's measures are customs measures.
   The first, of general scope, provides that processing activities in the free zones of the outermost
   regions are not subject to the economic conditions attached to the inward processing procedure.
   The second is the temporary suspension of customs duties levied on capital goods for the free zones
   of Madeira and the Azores.
3. The Commission departments have studied Portugal's request in respect of the Azores as well as
   Madeira since the two archipelagos have similar social and economic features.
   They found that POSEIMA's objectives had not been fully achieved and that supplementary
   Community action would be desirable. Of these objectives, procurement of raw materials is one of
   the most important in that it is a prerequisite for any diversification and upgrading of local
   production. There arc many obstacles to supplies at present, one of them being the remoteness of
   the archipelagos.
    For these reasons Portugal's request should be acceded to, and a measure adopted to give
    favourable tariff treatment for the raw materials referred to above.
4.  The draft Regulation merely creates a general framework for according favourable tariff treatment.
    The actual rules arc those laid down by the Customs Code and its implementing provisions, in
    particular the provisions concerning release for free circulation of goods accorded favourable tariff
    treatment by reason of their end use.
    The draft Regulation also authorizes the Commission to examine requests presented by the
    Portuguese authorities and to establish lists of goods eligible for favourable tariff treatment and the
    tariff reductions applicable to the goods in question. Other implementing provisions will also be
    adopted by the Commission, which will be assisted by the Customs Code Committee, working
     according to its rules of procedures, and by the management committees.
     This is the purpose of the attached proposal.
     Attached: Proposal for a Council Regulation.
                                                                                                            L
 ---pagebreak---                                  Proposal for a Council Regulation (EC) No     /95
                                                         of
                              establishing favourable tariff treatment for imports of
                           certain goods into the free zones of Madeira and the Azores
                                             by reason of their end use
THE COUNCIL OF THE EUROPEAN UNION
Having regard to the Treaty establishing the European Community, and in particular Article 28 thereof,
Having regard to the proposal from the Commission1,
Whereas Council Decision 91/315/EEC set up a programme of options specific to Madeira and the Azores
(POSEIMA)2; whereas the programme recognizes in its preamble that the free zones of the Azores and
Madeira are essential for the development of the two archipelagos and to this end lays down specific
measures to stimulate activity there;
Whereas Declaration 26 on the outermost regions of the Community, annexed to the Treaty on European
Union, advocates specific measures for the economic and social development of those regions as long as
there is an objective need to take such measures;
Whereas the situation of the productive sectors in these archipelagos, as described in the Commission's
report on the implementation of POSEIMA in 1992-93, calls for additional customs measures;
Whereas the Portuguese government by a letter dated 7 February 1994 requested a reduction in customs
duties on raw materials for processing in the free zone of Madeira and subsequently released for free
circulation in the territory of the Community in the form of compensating products;
Whereas the free zones of Madeira and the Azores are a key component of the economic and social
development strategy of the two regions; whereas increasing activity in the free zones will have significant
 repercussions on the development of these archipelagos by diversifying production and creating jobs;
Whereas, in view of the economic and geographical similarities between Madeira and the Azores, measure
 should be proposed for the free zones of both archipelagos;
 Whereas Madeira and the Azores are among the least-developed regions of the Community, their per capita
 GNP being less than half the Community average and their trade balance in deep deficit because of, among
 other things, the scarcity of exportable products; whereas their products, for these reasons, encounter
 serious difficulties in reaching the Community market; whereas this handicap cannot be surmounted without
 diversifying and upgrading production;
  I
  2    Oil, TO, 2*.*-*99>. R I *
 ---pagebreak--- Whereas supplying the archipelagos with raw materials is likely to stimulate sustainable processing
activities and so satisfy requirements; whereas, in order to facilitate the marketing of the products of such
processing activities, provision should be made for favourable tariff treatment of imports into Madeira and
the Azores of raw materials for processing; whereas, however, to avoid injury to the Community producers
concerned, the granting of such tariff treatment should be subject to specific conditions, namely that
processing takes place in the free zones and that it constitutes a substantial processing of the goods;
Whereas, admission of the goods with entitlement to the said tariff treatment should be granted in
accordance with the Community provisions on end use; whereas, moreover, the Community rules on the
origin of goods arc appropriate for determining the amount of processing required; whereas they lay down
that goods may not be consumed or used in free zones;
Whereas favourable tariff treatment will be granted on a temporary basis linked to the economic lift-off of
 the free zones of Madeira and the Azores; whereas the relief should nevertheless be available over a period
 long enough to enable economic operators to plan their activities and make adequate investment; whereas
this objective could be achieved if the measure in question is applicable for a minimum often years,
 Whereas the granting of favourable tariff treatment should be considered product by product on the basis of
 requests made by the Portuguese authorities; whereas the Commission, assisted by the Committee referred
 to in Article 247 of Regulation (EEC) No 2913/92 of 12 October 19923, should examine these requests and
 ensure that favourable tariff treatment is not granted to the detriment of other sectors of activity in the
 archipelagos,
 HAS ADOPTED THIS REGULATION
                                                      Article 1
  1.   The customs duties applicable to goods released for free circulation in the free zones of Madeira and
       the Azores may be reduced by up to 100% on condition that:
             the goods arc to be processed at least to the extent required by Article 24 of Council Regulation
             (EEC) No 2913/92 and by Articles 35 to 46 of Commission Regulation (EEC) No 2454/93;4
             the processing is wholly carried out in the geographical confines of the free zones of Madeira and
             the Azores.
  2.    Excluded from the field of application of this ruling are the agricultural products in the sense of Article
        38 of the Treaty and the products not contained in Annex II obtained from agricultural products or
        those that incorporate such products. This exclusion does not include the products of the fishing sector
        except those which benefit from the Community system of compensation for surcharges generated for
        remoter regions as provided for in Council decision n° 91/315/CEE instituting the POSEIMA
        programme.
   3     OJ L 302, 19.10.1992, p. 1.
   4     OJL253, 11.10.1993, p. 1.
                                                                                                                    k
 ---pagebreak--- 3.   Goods shall be eligible for favourable tariff treatment in accordance with Articles 291 to 304 of
     Regulation (EEC) No 2454/93. However, the authorizations required for application of such tariff
     treatment shall be accorded only to persons established in the Community.
                                                    Article 2
The list of goods eligible under this Regulation and the reduced rates of the customs duties shall be
established by the Commission in accordance with the procedure provided for in Article 3(2), on the basis of
requests made by the Portuguese authorities.
The other implementing provisions for this Regulation shall be adopted by the same procedure.
                                                    Article 3
 1.   The Commission shall be assisted by the Customs Code Committee set up under Article 247 of
      Regulation (EEC) No 2913/92.
2.    The representative of the Commission shall submit to the Committee a draft of the measure to be
      adopted. The Committee shall deliver its opinion on the draft within a time-limit which the chairman
      may lay down according to the urgency of the matter. In the case of decisions that the Council is
      required to adopt on a proposal from the Commission, the opinion shall be delivered by a majority of
      votes, in accordance with Article 148 (2) of the Treaty. The votes of representatives of the Member
      States on the Committee shall be weighted in the manner set out in that article. The chairman shall not
      vote.
      The Commission shall adopt measures which apply immediately. However, if these measures are not
      in accordance with the opinion of the Committee, they shall forthwith be communicated by the
      Commission to the Council. In that event the Commission shall defer application of the measures
      which it has adopted for three months from the date of notification.
      The Council, acting by a qualified majority, may take a different decision within the period laid down
      above.
 3.   The Committee may examine any matter concerning the implementation of this Regulation which is
       raised by its chairman on his own initiative or at the request of a Member State.
                                                     Article 4
  Goods released for free circulation with the tariff treatment provided for in this Regulation shall remain
  under customs surveillance in accordance with Article 82 of Refutation (EEC) No 2913/92.
                                                                                                              Ç"
 ---pagebreak---                                                       Article 5
The competent Portuguese authorities shall notify the Commission before 30 January each year of the
volume of imports admitted in the previous year with the tariff treatment provided for in this Regulation.
                                                      Article 6
Should the volume or price of imports admitted with the tariff treatment provided for in this Regulation be
such as to cause or threaten to cause injury to Community producers of like or directly competing products,
the relevant duties shall be reimposed in full or in part on the products in question, in accordance with the
procedure provided for in the second paragraph of Article 3. Such measures may also be taken where there
is serious injury or the threat of serious injury to a single region of the Community.
                                                      Article 7
The tariff treatment provided for in this Regulation shall be applicable until 31 December 2005.
After consultations with the competent Portuguese authorities, the Commission shall, in the course of the
 year 2000, study the effects of this measure on the economies of the two archipelagos. On the basis of its
 findings, it shall, if necessary, present suitable proposals to the Council for the remaining period.
                                                       Article 8
 This Regulation shall enter into force on the third day following that of its publication in the Official
 Journal of the European Communities.
          This Regulation shall be binding in its entirety and directly applicable in all Member States.
          Done at Brussels,
                                                                For the Council
                                                                The President
                                                                                                              c
 ---pagebreak---                                   FINANCIAL STATEMENT
I  Budget heading concerned: Chapter 12, Article 120
2. Legal basisArticle 28 of the Treaty
3. Title of the measure:     Proposal for a Council Regulation establishing favourable tariff treatment
   for imports of certain goods into the free zones of Madeira and the Azores by reason of their end
   use
4. Objective:        Ensure favourable conditions for the procurement of a number of raw materials for
   release for free circulation in the free zones of Madeira and the Azores for the purpose of
   processing them there
5. Method of calculation
   CN codes:         3921.90; 3923.21 ; 3926.20
                     4805.60; 4811.29; 4821.90
                     5208.31; 5209.31; 5209.39; 5407.52; 5408.31
                     9006.90; 9617.19
                                             s
                                                  •. • i •
    Duties to be levied: exempt
    CCT duties: various
6.  The 1993 data on inward processing operations in the Madeira free zone by enterprises working
    suggest an annual loss of revenue of ECU 42 415. Note that the arrangements provkie for the
    exemption of such goods from customs duties.
 ---pagebreak---  ---pagebreak---                                                                  ISSN 0254-1475
                                                           COM(95) 524 final
                                             DOCUMENTS
EN                                                                           02
                                     Catalogue number : CB-CO-95-568-EN-C
                                                             ISBN 92-77-95385-3
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