CELEX: 51988PC0730
Language: en
Date: 1988-11-30
Title: Draft JOINT DECISION OF THE COUNCIL AND THE COMMISSION establishing a Programme of options specific to the remote and insular nature of the French overseas departments (POSEIDOM)#Proposal for a COUNCIL DECISION concerning the dock dues arrangements in the French-overseas departments#(presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (88) 730
Vol. 1988/0241
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
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Verschlusssachen als herabgestuft angesehen.
 ---pagebreak---     COMMISSION OF THE EUROPEAN COMMUNITIES
                                                       COM(88 ) 730 final
                                                       Brussels , 30 November 1988
                                                       Provisional version
                                          Draf t
                   JOINT DECISION OF THE COUNCIL AND THE COMMISSION
      establishing a Programme of options specific to the remote and insular
                nature of the French overseas departments ( POSEIDOM )
!                                     Proposai for a
I                                    COUNCIL DECISION
                                     COUNCIL DECISION
!           .                        .
     concerning
     concerning the
                 the dock
                      dock dues
                           dues arrangements
                                 arrangements in
                                               in the French
                                                   ththe           >overseas departments
                                                         French-overseas
|                                                         t>
 :                                               |           /v      .A       ]
                                          -M V v                            y
  I
 j
                             ( presented by the Commission )
 ---pagebreak---                                       - 1 -
                                     CONTENTS
 DRAFT JOINT DECISION OF THE COUNCIL
AND THE COMMISSION ESTABLISHING
 "P O S E I D O M "                                                  3
 EXPLANATORY__MEMQ_RANDUM                                           4
SITUATION OF THE OVERSEAS DEPARTMENTS                                4
PART OF EUROPE                                                       4
LOCATED IN TROPICAL DEVELOPING REGIONS                               5
   - Economic and legal context
       (a)   Caribbean ( Guadeloupe , French Guiana , Martinique )   5
       (b)   Indian Océan ( Réunion )                                6
   -  Spécifie constraints
       (a)   Distance                                                6
       (b)   Insularity                                              6
       (c)   Small size                                              6
       (d)   Difficult terrain and climate                           6
       ( e ) Agricultural concentration                              7
   -  Competition from neighbouring developing countries             7
THE TWO OBJECTIVES OF A FRAMEWORK FOR OPERATIONS CONCERNING
THE OVERSEAS DEPARTMENTS                                             7
1.   A large market                                                 8
2.   Taking account of regional realities                           8
THE COMMUNITY MUST DRAW THE CONCLUSIONS FROM THESE
TWIN OBJECTIVES                                                     8
THE BASIC CHOICES                                                   8
      An entirely European approach                                 8
   - An entirely regional approach                                  9
   - A realistic approach                                           9
LEGAL BASIS FOR OPERATIONS CONCERNING THE OVERSEAS DEPARTMENTS     10
   - Article 227(2 ), second subparagraph                          10
   - Article 227(2 ), second subparagraph and Article 8c           10
      Combined use of the different legal possibilities            11
ACTION PROGRAMME                                                   12
THREE KEY PRINCIPLES                                               12
   - Complementarity                                               ^2
   - Partnership                                                   ^2
   - Programming                                                   ^
 ---pagebreak---                                    - 2 -
HARMONIZATION , MAINTENANCE OR ADAPTATION OF MEASURES SPECIFIC
TO THE OVERSEAS DEPARTMENTS UP TO 1993                            13
     Community measures                                           13
     National measures                                            14
     Dock dues                                                    15
NEW MEASURES TO OVERCOME ECONOMIC DI SADVANTAGE                   16
     Community efforts within a coherent programme                16
     Improved adaptation and coordination of Community activities 17
     within the same geographical region
     .  More suitable use of Community resources
     .  Regional trade cooperation
  -  Compensation for exceptional geographical situation          19
CONCLUSIONS REGARDING OTHER REGIONS OF THE COMMUNITY AND THE
ACP STATES NEAR THE OVERSEAS DEPARTMENTS                          20
ANNEXES                                                           22
DRAFT JOINT DEC
                                                                  31
PROPOSAL          FORA      COUNCIL       DECISION
CONCERNING            THE    DOCK     DUES      ARRANGEMENTS
IN THE FRENCH OVERSEAS DEPARTMENTS                                40
 ---pagebreak---                                  - 3 -
                                 Draft
           JOINT DECISION OF THE COUNCIL AND THE COMMISSION
establishing a Programme of options specific to the remote and insular
         nature of the French overseas departments ( POSEIDOM)
 ---pagebreak---                              EXPLANATORY MEMORANDUM
                                 to    the draft
               Joint Decision of the Council and the Commission
             of the European Communities establishing a Programme
             of Options Specific to the Remote and Insular Nature
                       of the French Overseas Departments
                                    " POSEIDOM "
SITUATION OF THE OVERSEAS DEPARTMENTS
1 . The Community includes a wide range of regions and territories situated
outside the continent of Europe , which are generally distant and small in
area , scattered over the world as a consequence of the history of the Member
States . Some of the regions concerned are integral parts of Member States .
Of these , the French overseas departments are the only ones to which all
the provisions of the EEC Treaty apply ( the Treaty applies to the Azores and
Madeira subject to transitional derogations laid down f° r Portugal in the Treaty of
Accession ;  the Canary Islands , Ceuta and Melilla are covered by special
arrangements within the Community under the Treaty of Accession ).
2 . Numbering four ( Guadeloupe , French Guiana , Martinique and Reunion ), the
overseas departments have 1 300 000 inhabitants , i.e. only 0.4% of the
Community total .
3 . Their economic , social and cultural life has a dual context : they are an
integral part of a Member State and therefore of the Community , and at the
same time they are surrounded , in the Caribbean and Indian Oceans , by various
countries with which they have links of varying closeness and with which the
Community has established a variety of relationships , some of which include
specific obligations .
PART 0F EUROPE
4 . Under French law , the overseas departments are entirely assimilated to
the metropolitan departments ( Article 73 of the Constitution of 1946 and
Article 72 of the Constitution of 1958 ).
5.  They are an integral part of the Community pursuant to Article 227(2 ) of
the Treaty , which must be interpreted in the light of the judgment of the
Court of Justice in Case 148 / 77 Hansen according to which the provisions of
the Treaty and of secondary legislation apply automatically to the overseas
departments , though subsequent specific measures to meet these regions'
needs are still possible .
 ---pagebreak---                                           5
6.Therefore over the years individual provisions have been adopted which
depart from the general rules of secondary legislation in areas such as the
common agricultural policy , fisheries policy , commercial policy , state aids
or tax harmonization .
7 . Economic , social and cultural life in the overseas departments is
essentially turned towards mainland France , in terms of both trade flows in
either direction and the major transfers of public funds carried out
through the national budget .     The application of national legislation results ,
moreover , in the overseas departments being unattractive for investors because
of the high social security and wage costs which they have to meet . Despite
belonging to Europe , then , per capita GDP in these departments is well below
75% of the Community average ( see Annexes 1 and 2 ), placing them in the list
of less-developed regions in the context of the reform of the structural Funds .
LOCATED IN TROPICAL DEVELOPING REGIONS
8 . The geographical position of the four overseas departments makes their
economic environment clearly different from that of the rest of the Community .
Economic and legal context
9 . They are surrounded by developing countries whose standards of living
vary widely ( see Annex 3 ).
10 . Although some of these countries have a higher per capita GNP than those
of the overseas departments , the majority , and in particular some small
islands which are their immediate neighbours , are considerably poorer ; the
Community makes special efforts to help them under the EDF , and France has
decided to double in 1988 its bilateral aid to the poorest countries in the
eastern Caribbean .
11 .  In addition , the legal status of these countries varies greatly as
regards Community law :
(a)   Caribbean ( Guadeloupe , French Guiana , Martinique )
      5 OCT ( Netherlands Antilles , Anguilla , Aruba , British Virgin Islands ,
      Cayman Islands, Montserrat , Turks and Caicos Islands );
      13 ACP States ( Antigua and Barbuda , Bahamas , Barbados , Belize ,
      Dominica , Grenada , Guyana , Jamaica , Saint Christoper and Nevis ,
      Saint Lucia , Saint Vincent and the Grenadines , Suriname , Trinidad
      and Tobago );
      Haiti and the Dominican Republic ( it should be noted that these two
      countries recently asked to be signatories to future Lome Conventions /
      the Central American   countries and the members of the Andean Pact .
 ---pagebreak---                                         - 6 -
(b)    Indian Océan ( Réunion )
       1 OCT ( Mayotte );
       4 ACP States ( Comoros , Madagascar , Mauritius and Seychelles ).
12 . History has given all these neighbours common origins , cultures and
economies but differing languages , customs , investment patterns and trade
f lows .
13 . There are therefore few links between neighbouring countries within the
same region , despite intermittent efforts which have been overcome by
centrifugal forces .
14 . At the same time , the Community 's activities in these geopolitically
vital regions are full of variations . Several Community policies are being
carried on with very little coordination between them : internal policy in
the overseas departments , operations under the Lome Convention for the ACP
States and the Decision on the association of the OCT , and measures under
budget heading 930 for the Latin American developing countries .
 Spécifie constraints
15 . Like most of the surrounding countries and territories , the overseas
departments are handicapped by five factors whose persistent , combined
impact has serious adverse effects on their economic and social life .
(a)    Distance - 7 000 km in the case of Guadeloupe , French Guiana and
      Martinique and 10 000 km in the case of Reunion - is a handicap for
      any normal economic relations by comparison with the other regions of
      the Community . The consequences of this constraint are economic ( trade
       flows , equipment and maintenance and completion times ) and socio-cultural
       ( education and circulation of information , and so on ).
(b)    Insularity is a problem in Guadeloupe , Martinique and Reunion , while
       French Guiana 's isolated position allows it hardly any greater contact
      with the South American continent .
(c)    Small size and lack of natural resources and industry lead to the
       fragility which is inevitable in small economies . The cost of
       covering investment is therefore relatively high , requiring state or
       Community aid .
(d)   Difficult terrain and climate add to this fragility : the three
       islands are largely mountainous , with cultivated land averaging only
      27% of their surface . In addition , climatic conditions are often
 ---pagebreak---                                            7
        unfavourable for stable production : there are frequently severe
        weather upheavals such as cyclones , and prolonged droughts or highly
         irregular rainfall .
  ( e ) Agricultural concentration on a few products , a legacy of the plantation
        economy of previous centuries , leaves the countries concerned highly
        dependent on outside markets and vulnerable to the impact of the weather
        on these products .
 It may be recalled that many ACP States , in particular those located in the
 same regions , suffer from the same constraints and that the Community has
 allowed for this .    For example :
    (i)   the negotiations for successive Lome Conventions have led to ten
          specific measures to " support island ACP States in their efforts to
          overcome the specific natural and geographical difficulties and
          obstacles .... hampering their development ."
 ( ii )   the risks arising from agricultural concentration on a few products
          have been allowed for under the Lome Convention by implementing a system
          for stabilizing export earnings ( Stabex ).
Competition from developing countries
16 .    The overseas departments are faced with competition from developing
countries producing products similar to theirs , generally at lower cost
and also with the benefit of the opening-up of the markets of the major
Western countries which has been achieved by international negotiations
over the last few years .
17 . The accession of their neighbours to the successive Lome Conventions
places the overseas departments in an even more difficult position given
the Community 's decisions since the signing of the EEC Treaty . The opening-up
of the Community market to imports from the ACP States and the OCT free of
customs duties and charges having equivalent effect has a doubly adverse impact
on the overseas departments : as they form an integral part of the Community ,
their own market is in principle open to these imports , which also compete
with them on the rest of the market .
18 . However , the signatories to the third Lome Convention agreed in Annex XIV
to the Convention that the Community had the right to amend , in the light
of the economic development requirements of the French overseas departments ,
the arrangements governing access to the latter 's markets for agricultural
products originating in the States .
THE TWO OBJECTIVES OF A FRAMEWORK FOR OPERATIONS CONCERNING THE OVERSEAS
DEPARTMENTS
19 . Any measures to help the overseas departments must be based on a
realistic assessemnt of the two dimensions referred to above .      The aim of
promoting " throughout the Community a harmonious development of economic
activities , a continuous and balanced expansion , an increase in stability ,
 ---pagebreak---                                       - 8 -
an accelerated raising of the standard of living” , laid down in Article 2
of the Treaty , and the aims of the Single Act require where the overseas
departments are concerned that the following two specific objectives be
attained :
A large market , following two basic principles
- Harmonization of the rules in force in the overseas departments with
     those applying in the Community as a whole ;
-    bringing the economic and social level of these regions up to the
     Community average .
Taking account of regional realities
-    Allowing for natural conditions peculiar to these regions which set them
     apart from the rest of the Community ;
-    consolidating areas of political stability in the mutual interest of all
     the parties involved in the regions concerned , whether developed or
     developing ;
     increasing cooperation within areas which include developing neighbour
     countries ;
-    coordinating the various Community internal and external policies , in
     particular with regard to the possible repercussions of measures in
     the overseas departments on their ACP neighbours .
THE COMMUNITY MUST DRAW THE CONCLUSIONS FROM THESE TWIN OBJECTIVES
20 .   In view of the facts described above , various options were available .
THE BASIC CHOICES
21 . Measures in the overseas departments might follow any of the three
following basic options :
An entirely European approach
22 .   This would mean the full application of all common policies without
making any allowance for special regional factors , though these have long
been recognized by both the national and Community authorities .
23 . Alhtough this approach would include assistance towards catching up ,
as with the other poor regions of the Community , it would make no allowance
for the many regional constraints which characterize the overseas departments .
 ---pagebreak---                                        - 9 -
 An entirely regional approach
 24 . This option involves applying the same development policies to the
 overseas departments as to the developing countries around them . Logically ,
 it would mean switching the overseas departments from the internal structural
 Funds to the EDF , with its      specific      advantages      for developing
 countries ( which was the position from 1958 to 1975 ). In the final analysis
 it would mean not only removing the overseas departments from the customs
territory of the Community , but also ceasing to apply common policies in
them ( which is in fact the situation in the OCT ).
25 . This formula is clearly incompatible with the Treaty , and would also be
politically unacceptable and contrary to the democratically expressed wishes
of the population concerned .
A realistic approach
26 . To allow both for the Community dimension and for the regional situation ,
common policies should continue to be applied in the overseas departments ,
accompanied in some cases by specific arrangements which take account of local
realities without in any way calling into question the overseas departments'
legal and political integration in the Community .
27 .  This formula reconciles the application of the Treaty ( which implies
preparation for 31 December 1992 , backed up by measures to help the less
developed regions cope with 1992 ) with due allowance for the regional
environment ( implying specific measures in certain fields and the vital
need for coordination of the Community 's various activities ).
28 .  It is based on two complementary methods :
(a)    The greatest possible economic integration of the overseas departments ,
      by means of structural compensation
      The designation , in the context of the reform of the structural Funds ,
      of the overseas departments as " less developed regions " qualifying for
      an increased concentration of regional development funds should lead
      to a substantial increase in Community assistance for these departments .
      This increased effort will help compensate for their specific handicaps ,
      and will accompany the elimination of the derogations which they still
      enjoy .
(b)   The pragmatic adaptation of certain common policies by means of
      specific , individual arrangements
      This method would allow for the geographical situation and the
      economic environment which typify the overseas deaprtments ; possible
      examples of this type of approach would include a solution to the
      problem of products which the overseas departments might sometimes be
      able to obtain more cheaply on the markets of nearby developing
      countries rather than buying Community goods from a long way off
      ( similar provisions already exist for the ACP States under the third
      Lome Convention ).
 ---pagebreak---                                               10
29 . The Community authorities will have in each case to decide whether to
choose one of these two methods or combine them , and in the Latter case
decide on the balance .   The criteria for this decision must be based on a
political and economic calculation of the possible cost of structural aid or
the loss resulting from the specific substitution arrangements as regards
the overseas departments' contribution to the Community budget .
LEGAL BASIS FOR OPERATIONS CONCERNING THE OVERSEAS DEPARTMENTS
Article 227(2 ), second subparagraph
30 . As regards the legal basis for operations to counteract the specific
handicaps of the overseas departments ( seepoints8 to 18 of this document ),
Article 227(2 ), second subparagraph , remains a valid legal basis for the
adoption of derogations from particular provisions of the Treaty which do not
themselves contain provision for derogations ( for example Article 95 ).
31 . In the general implementation of Community policies specific measures to
help the overseas departments can be adopted on the basis of the normal
provisions of the Treaty ( such as Article 43 ), and using Article 227(2 ).
32 . It should be remembered that this option of adopting specific measures
based directly on the Treaty is not linked to a time limit and therefore
remains valid for as long as there is an objective need to take such measures
for " the economic and social development of these areas ".    The Court of Justice
recently confirmed the correctness of this approach ( Judgment 58 / 86 of
26 March 1987 ) .
33 . In addition , Article 227(2 ) not only provides for the possibility of
derogation , but calls on the Community institutions to make use of this
possibility to assist economic and social development .
Article 227(2 ), second subparagraph , and Article 8c
34 .  Article 8c of the EEC Treaty ( see Article 15 of the Single European Act ),
whose scope, includes the overseas departments , must be seen in the tight of the
Sbove , leaving aside the question of whether Article 8c can apply to a region of* a
 Member State . In any case it provides no basis for new additional derogations .
Applied to the overseas territories , it contains a specific invitation to the
institutions to allow , during the period of establishment of the internal
market , for the differences in development of these departments . Specific
derogations introduced for this purpose " must be of a temporary nature "
( Article 8c , second paragraph ).
35 .  However , this provision cannot be interpreted as an obstacle to longer-term
( or even permanent ) derogations in . cases where fundamental differences
remain in the overseas departments after 31 December 1992 . There is therefore
no legal obstacle to the implementation of the specific arrangements referred
to in point 28(b ) above . Because the special needs of the overseas
departments do not stem solely from their lower level of development , but
also from their quite specific geographical situation and climate , Article 227(2 )
 ---pagebreak---                                            11
opens up the possibility of having derogations from the general rules which
are more far-reaching and lasting than those which can be accepted for other
under-developed regions of the Community .
36 . In any event , then , Article 227 will take priority over Article 8c , with
the proviso that every effort must be made to avoid the continuance after
1992 of derogations which impede the completion of the internal market .
Specific arrangements must remain local and " cause the least possible disturbance
to the functioning of the common market ".
37 . There must therefore be careful examination of which specific arrangements
can and must continue beyond 1992 : a dérogation with économie effects limited
to the territory of the overseas departments , and not directly affecting the
functioning of the common market , would be preferable to derogations which
did have such an impact . If a derogation of this type is liable to affect
trade between the Member States in the continent of Europe itself ( for example ,
a derogation from the tax system of metropolitan France for products originating
in the overseas departments ), its elimination by 31 December 1992 is
indispensable , and its abolition should if necessary be offset by positive
measures . In this context particular attention should be paid to dock dues .
Combined use of the different legal possibilities
38 .     In view of the above , it seems appropriate that the Programme for the
overseas departments should :
    (i)    commit the Community institutions politically and legally ;
  ( ii )   take into account the fact that the operations covered by the Programme
           fall in some cases within the jurisdiction of the Council and in others
           under that of the Commission ;
( iii ) constitute a response and a policy statement ( including timetable )
           addressed to the national and regional authorities concerned .
39 . Hence , a draft Joint Decision of the Council and the Commission is
proposed . It introduces an action programme, based on Article 227(2 ) of the
Treaty and is an entirely new solution which :
    ( i ) is best suited to the need to underline the joint responsibility
           of the two institutions , in view of their prerogatives arising
           from the Treaty ;
  ( ii ) avoids the complicated and clumsy wording which other solutions
           would have entailed ;
( iii ) above all , has the advantage of conferring on this act a consistent
           image of joint political determination on the part of the Community
           bodies in the face of the special problems encountered by people
           living in such remote areas .
40 . This Decision gives the main guidelines for Community action in respect
of the overseas departments under several common policies and also lists the
specific measures to be taken , with timetables , in the form of subsequent
acts by the competent institution, based on the relevant articles in the ireaty
 ---pagebreak---                                         - 12 -
 In the interests of consistency , it also refers to the measures which have
 already been taken , mentioning where appropriate any necessary modifications .
 ACTION PROGRAMME
 41 . The Commission proposes that an action programme named POSEIDOM ( Programme
of Options Specific to the Remote and Insular Nature of the Overseas Departments )
 be set up to cover the French overseas departments . It will be a multiannual
programme , divided into one or more phases .
42 . POSEIDOM constitutes a political response to the questions raised by
the inhabitants of the regions concerned and the fears evoked by their elected
 representatives with respect to the special constraints of the overseas
departments ( see points 15 to 18 above ). The completion of the internal
market is often felt as threatening an increase in constraints , in view of
their geographical situation or the special arrangements traditionally enjoyed
by their inhabitants , whereas it can , and indeed should , be understood as a
harbinger of scope for development , provided it is part of a coherent action
programme .
43 .     POSEIDOM will be based on the following three key principles :
    (i)    complementarity ,
  ( ii )   partnership ,
( iii )    programming .
THREE KEY PRINCIPLES
Complementarity
44 . Community measures , whether legislative provisions or financial
commitments, wi l l complement those taken by the French government and the
regional and departmental authorities . From now on this complementarity will
take the following form : requests for financing from the EIB and other
financial instruments for regional operations will initially be included in
a multiannual development programme presented by the relevant regional and
national authorities . The Commission will set out its response to this plan
in a " Community support framework ". The framework will lay down the priority
areas of development for the Community , the types of operation and also the
overall financial package planned for the region .
Partnership
45 . Partnership will mean systematic consultation between the Commission , the
national authorities , and , with the latter 's agreement , the regional ,
departmental or local authorities and also the local chambers of commerce and
business and Labour organizations . It will cover the preparation , financing ,
monitoring and evaluation of operations , both financial and legislative .
46 .     Partnership is a fundamental approach which allows the active involvement
of local leaders and provides an opportunity for them to exercise control over
their own development .
 ---pagebreak---                                        13
Programming
47 . Schemes financed by the structural Funds , the EIB and other Community
financial instruments which complement the efforts of the French government
and the authorities of the overseas departments , and also Community legislative
provisions should , through programming , be incorporated in the overseas
departments' development plans and dovetail with their objectives and
priorities .
48 . Programming , through the constant dialogue that it will entail with the
French government and the overseas departments , will thus ensure that optimum
use is made of Community resources . Under the action programme they will be
allocated first and foremost to the sector or sectors considered most suitable
for a concentration of Community resources .
HARMONIZATION , MAINTENANCE OR ADAPTATION OF MEASURES SPECIFIC TO THE OVERSEAS
DEPARTMENTS UP TO 1993
49 . There are numerous regulations which are specific to the overseas
departments since both the national authorities and the Community recognize
their special situation and features .
50 . These specific regulations , both national and Community , should be
systematically listed in detail on a sector -by - sector basis .
51 . On the basis of this list , a distinction should be drawn between those
measures which will need to be harmonized for the purposes of the large market
and those which will be maintained or adapted to comply with the special
nature of the overseas departments .
Community measures   ( see Annex 4 )
52 . Various measures specific to the overseas departments have already been
adopted . These concern contributions from the structural Funds and the
allocation of certain types of aid or derogations from the common market
organization arrangements . These measures should be maintained in the action
programme , and even broadened in scope .
53 . Various directives have been , or will be , put forward with a view to
the single market and when they are being drawn up or adopted it will be
necessary to examine them to see whether their implementation - which in
theory is uniform - should take account of the special nature of the overseas
departments .
54 . Common organization of markets or import arrangements should be adapted
to the agricultural products specific to the overseas departments and provision
should be made for ad hoc solutions ( aid for production , processing , marketing
and so on ). Obviously , these adaptations will have to comply with the
conditions governing competition between firms located in the overseas
departments and those in other regions of the Community . Likewise , the
adaptations must in no way upset regional cohesion and accordingly the
obligation to consult the ACP States in the cases set out in Article 130 of
the third Lome Convention must be met .                     ‘ ,
                                                                               ;  !
             : ' .1
 ---pagebreak---                                        14 -
55 . In this connection , special attention must be paid to bananas , which
are of prime importance to the overseas departments and the ACP States .
Since there is no common organization of the banana market or common import
arrangements for this product , the Commission is working on the proposals
which it is to present to the Council for Community measures relating to
this sector in time for freedom of movement for bananas to be ensured by
31 December 1992 . Pursuant to Article 39 of the Treaty , these measures
will ensure a fair standard of living for producers in these departments ,
taking account of the vital importance of this product in the economies of
the regions in question , whether this means the interests of Community
producers or the interests of non-member producer countries to which the
Community has given specific undertakings .
56 .    Attention should also be paid in this connection to questions
concerning rum . With three new developments on the horizon (new Community
definition , withdrawal of the allocation among Member States of the quota
granted to ACP States and abolition of the tax exemptions currently applied
by France), the overseas departments will lose a number of advantages
regarding   disposal of their rum production . Hence , this product should be
discussed   at Community level , taking into account the interests of
Community   producers and those of non-member countries to which the
Community   has given specific undertakings .
     National measures (see Annex 5 ).
57 . It is essential to draw up a systematic list of the numerous national
measures specific to the overseas departments so as to decide what should
be harmonized before 31 December 1992 and what , on the other hand , could be
maintained or adapted .
58 .   On this basis the Commission should decide what national aids could be
maintained or adapted and , where necessary , put forward the appropriate
recommendations to the Council . Hie products involved are sugar cane and
cane sugar produced in Guadeloupe , Martinique and Reunion and the
authorizations for national aid provided for in Article 46 of Regulation
(EEC ) No 1785/ 81 should be extended beyond 'the 1988/ 89 marketing year and
at least until the last year of application of the current quota
arrangements , that is 1990/91 . Hence , as it has done since the entry into
foroe of the sugar market arrangements , the Community would confirm , in a
sector of importance to the economy and employment in the overseas
departments , the implementation of options specific to their particular
case .
59 . For example , a list should be drawn up of the development subsidies ,
the special credit systems and favourable tax treatment for overseas
departments . In this context the taxation of traditional rum in particular
has attracted attention because it has a major impact on the economy and
employment in the overseas departments and because of measures already
adopted by the Council , which has authorized France to apply on a
diminishing scale until 31 December 1992 a reduced rate of the revenue duty
imposed on the consumption of " traditional " rum produced in the overseas
departments (Decision 88/ 245/ EBC of 19 April 1988 ).   In doing so , the
Council stated that " the Commission is currently preparing an action
 ---pagebreak---                                       - 15 -
 programme for the French overseas departments , (comprising specifio measures
 for the adaptation of Community polioies aM new action designed to eaee
 the economio recovery of these regions ".
 60 .      The very special case of dock dues now needs to be examined more
 closely, particularly because of the procedures already under way in this
 connection .
      ThecaSÊ! o£ dock dues
61 .      Dock dues are import duties applied upon the entry of goods to the
islands , from whatever source (French , Community or mn-Coirammity) , the
products affected and the rates chargeable being established by egbh of the
Regional Councils of the overseas departments . They serve a threefold
purpose :
 (i)      politically , they represent a prime area of decentralised decision¬
          making and taxation that are independent of national legislation
          and not subject to any state control ; this has resulted in a long¬
          standing tradition of local autonomy and democracy ;
(ii )     financially , they represent a source of budget revenue for the
          regional authorities and an essential instrument of oammunal
          development ;
(iii )    economically , they constitute a factor for support aid promotion of
          local industries , which have to contend with the real difficulties
          of remoteness and insularity .
62 .      Starting from the premiss that the existence of dock dues in their
present form clearly runs counter to the principle of freedom of movement
(Article 9 et seq . of the Treaty), the Commission proposes a reform of this
measure , bearing in mind that this is an extremely sensitive subject ,
particularly if one considers the three objectives set out above . In line
with the principle of an across-the-board tax , its proposal is aimed at
clarifying the nature of the technical solutions likely to ensure the
general application of the irdireot taxation to local production , without
losing sight of the specific constraints on that production resulting from
their special situation :
(a)       The rate of tax could be graduated by category of product , notably
          in order to apply a reduced rate for necessities . With a view to
          facilitating subsequent developments , moreover , the rate bands
          should as far as possible be linked to the criteria adopted for
          classifying products subject to VAT , as part of the approximation
          of indirect taxation .
(b)       One important aspect of the proposed tax arrangements is the
          encouragement , to a strictly limited extent supervised by the
          Commission , of local industrial activities . In order to achieve
          this aim , the Commission considered that :
     (i ) the solution involving making some imported products dearer by
          taxing them more should be ruled out because , apart from the
          Inflationary effect , it has the twofold drawback of
          - setting up in the sectors concerned an internal barrier within
            Community customs territory against products from the Community ,
            and
 ---pagebreak---                                        - 16 -
           - being open to criticism by non-Community countries , especially
             the ACP States , in respect of products imported from such, non-
             Comniunity countries ;
     (li ) in order to attain the specially declared aim of Article 227(2) of
           the Treaty , namely to take oare that the economio and social
           development of the CD is made possible , the local products
           concerned could :
           - be granted partial or total exemption , subject to authorization
             by the Commission , during an initial ten-year period ,
           - receive support after the end of that period under the regional
             aid arrangements , in conformity with Articles 92 to 94 of the
             Treaty .
     (c) The budgetary autonomy of the various local authorities would also
           be respected by allocating to them the new tax replacing the dock
           dues , as a means of promoting the growth of local democracy .
63 . As regards the timetable , it is proposed that the new machinery should
be established by 31 December 1992 . While recognizing that a certain
amount of time will be needed for the work involved at national and local
level , the Commission considers that this date constitutes the latest
possible deadline and that it would even be preferable for the new system
to be applied before then .
NEW MEASURES TO
64 . Despite major national transfers and substantial Community
contributions already made , it must be recognized that both national and
Community structural measures or the adaptations to certain common policies
have often been merely sporadic or inadequately coordinated .
65 . In keeping with the proposals put forward by the Commission with a
view to "Making a success of the Single Act " , as approved by the European
Council , it should now be possible to carry out the systarauio integration
of national and Community measures .       This would increase the effectiveness
of operations because funding could be concentrated on priority areas such
as the overseas departments .       Schemes will have 'to take account of
regional realities and the permanent constraints which have been described
above as characteristic of the overseas departments .
66 .   Pursuant to Council Regulation (EEC ) No 2052/ 83 following up the
European Council 's conclusions concerning reform of the structural Funds
(doubling of resources and new type of operations ),
 (i )      the CD have been included in the group of less-developed regions
           referred to in Article 12 of Council Regulation ( EEC) No 2052/88 ,
           for which special efforts are to be made ; these will take the
           general form of a doubling between 1987 and 1992 of the resources
           to be allocated from the structural Funds to the less-developed
           regions ;
(ii )      the new method proposed in the reform - based on the joint use cf
           the three Funds for regional operations , complementarity with
           national measures in partnership with the
 ---pagebreak---                                           17 -
multiannual programming - should result in Community measures to assist
the overseas departments being implemented in a consistent and coordinated
framework .
67 .     The resources allocated to the overseas departments through the
structural Funds will be combined with the resources earmarked to cover
the possible financial effects of the adaptations necessary for harmonization ,
such as those referred to in points 49 to 61 above , and to cover the
cost of the Community 's share of the new measures referred to below in
points 69 to 83 .
68 . Because of the permanent constraints specific to the overseas
departments , it is possible that some of the measures from this programme
will continue to apply after 31 December 1992 by virtue of Article 227(2 )
of the Treaty , and may require additional funds .
69 . In addition to this new impetus , priority could be given in the
context of existing budget resources - notably in connection with new
and renewable sources of energy - to programmes of interest from the
standpoint of the regions concerned .
Improved adaptation and coordination of Community activities within the
same geographical region
70 . The following measures will ensure improved coordination of Community
efforts within the two geographical regions in question ( see point 14 above ).
More suitable use of Community resources
71 .     The Commission considers that any scheme to assist the overseas
departments should , through contributions from the ERDF , the ESF , the
EAGGF Guidance Fund and structural measures in the fisheries sector and
the EIB cover :
( a ) quantitative aspects , thanks to substantial additional Community
       resources in accordance with the guidelines adopted for the reform
       of the structural Funds ;
( b ) qualitative aspects of Community solidarity , which can be achieved by :
       ( i ) differentiation in the level of funding on the terms laid down
             by Article 13 of Regulation ( EEC ) No 2052 / 88;
     ( ii ) assistance from the structural Funds for regional projects or
             programmes common to the OD, OCT and ACP States in the same geographical
             area , which the Commission will ensure in the context of its
             management powers regarding the structural Funds and in accordance
             with the Funds' eligibility rules .
 ---pagebreak---                                       18 -
72 . It should also be pointed out that the scope of the funds applicable
to the ACP States has evolved in an opposite direction from that of
the funds for the overseas departments . Spheres of Community cooperation
with the ACP States and the OCT have been considerably enlarged since 1958
as a result of Community efforts to show greater solidarity with the developing
world .
73 .  By contrast , spheres of cooperation with the overseas departments have
decreased because until development policy was extended in 1975 to cover
the countries referred to in Protocol 22 to the Act of Accession of the
United Kingdom, the overseas departments qualified for funding from the
EDF and came under its scope . It was because of the political decision
to extend cooperation to those countries that the overseas departments
became eligible under the structural Funds ( other than the ESF , for which
they had been eligible since 1973 ) but from then on they no longer came
under the very wide and multidisciplinary scope of the EDF itself .
74 . This widening would ensure balanced regional cooperation which thus
far has not been fully realized because there are not the same instruments
available for the overseas departments as there are for the ACP countries
and the OCT in the same region .
Régional trade coopération
75 . Annex VII to the third Lome Convention provides for greater regional
cooperation among ACP States , OCT and overseas departments in the same
region . Accordingly , provision was made for trade agreements to include
specific measures in favour of products from the overseas departments .
So far Annex VII has not yet been implemented . It is however , important
to point out that all the parties concerned have expressed the political
will to contribute to the establishment of this type of regional cooperation .
76 . Furthermore , as already indicated above ( see points 16 to 18 and
28b ), the arrangements for access to the markets of the overseas departments
for regional agricultural products originating in the ACP States can be
adapted according to the economic development requirements of the overseas
departments .
77 . As regards other products originating in the ACP countries ( except rum
and bananas ), the only possibility at present is recourse to the general
safeguard clause .
78 . The Commission considers that , where appropriate , these various
types of trade measures - both positive and negative - must be incorporated
in coordinated operations which could , for example , take the form of
regional trade agreements .
 ---pagebreak---                                            19 -
 Compensation for the exceptional geographical situation
79 . The geographical situation of the overseas departments as compared
with the main Community territory constitutes a serious constraint
which is specific to the overseas departments in their trade with the
rest of the Community .
80 . Community measures must be taken to ensure fair application of the
principle of Community preference with regard to imports originating in
non-member countries which supply similar products at lower prices .
81 .     For supplying overseas departments w ith inputs meant for livestock
production , two possibilities were considered :
         ( i ) financial assistance to facilitate the supplying of overseas
               departments with fodder grain from the Community ;
       ( ii ) exemption from levies on products originating in non-Community
               countries .
The solution proposed involves abolishing the levy for grain intended
for livestock production , so as to reduce the cost of supplying the 0D .
This is made possible by the fact that the overseas departments have no
local production of fodder grain to protect ; in order to avoid deflections
of trade resulting in products being re-exported to the rest of the
Community , the exemption from the levy should be confined to local
market requirements . This measure will take particular account of
relations with developing countries .
82 . As regards certain agricultural products from the 0D ( fruit , vegetables
and flowers ), a product - by -product analysis will have to be carried out
by the Commission to enable it to propose the necessary measures , which
will have to be adopted on the basis of objective criteria to be established ,
such as production costs in the overseas departments and marketing costs
taking destination into account .
         ( i ) In the case of tropical products ( other than bananas , which are
               dealt  with elsewhere ) with outlets on local markets , in nearby
               tourist areas or in the rest of the Community , assistance could
               be provided for the development of production ;
     ( ii ) with regard to the development of other products , the possibility
               of adopting measures would be linked to the concept of effective
               economic contribution to the development of the 0D, and also to
               the real danger of potential injury to production elsewhere in the
               Community ;
     ( iii ) consideration could also be given to promoting trade links
               between neighbouring 0D , OCT and ACP countries , notably through
               assistance from the structural Funds .
 ---pagebreak---                                           20 -
83 . Careful thought should also be given to the particular risks in
the overseas departments because of the frequent cyclones which hit
these areas and Community funding provided to pay for the damage which
cannot be covered by emergency aid alone . The Commission will arrange
for expedited procedures for committing contributions from the structural
Funds in such cases , in accordance with the Funds' eligibility rules .
CONCLUSIONS REGARDING OTHER REGIONS OF THE COMMUNITY AND THE ACP STATES
NEAR THE OVERSEAS DEPARTMENTS
84 .      The P0SEID0M action programme proposed by the Commission is the first
fundamental discussion of the position of the overseas departments :       it
proposes the deliberate choice , based on the ideas contained in " Making
a success of the Single Act ", of a realistic approach allowing both for
these departments' regional characteristics and for the fact that they are
part of the Community . This approach would be based on legal means of
solving their special problems which are not amenable to a uniform
application of Community law , and on more sustained involvement of the
Community Funds , made possible by the new approach resulting from the
reform of the structural Funds .
85 . Hence , P0SEID0M can constitute a political response by the Community
in the face of the very specific constraints of these regions , by compensating
for those constraints in strict proportion to their effects in the
application of common policies and backing up the efforts of the 0D to
improve their economy by means of a multidisciplinary and consistent
approach aimed at stimulating local development .
86 . In its work , the Commission was aware that it could not neglect two
considerations of a more general nature relating to other Community regions
and to the geopolitical environment of the overseas departments themselves .
( a ) It thus became apparent that the approach adopted towards the overseas
        departments could also be used , under certain conditions , to resolve
        the particular problems of other regions ( i.e. the Canary Islands ,
        Ceuta and Melilla , the Azores and Madeira ) with special features
        differing markedly from those of the rest of the Community .
        This approach , based on an accurate picture of regional realities ,
        could include the following three components :
        ( i ) a specific arrangement which would avoid , if possible , the
              disappearance of local tax systems by appropriate adjustments to
              make them compatible with the rules of the Treaty ;
      ( ii ) a specific arrangement for the supply of inputs for livestock
              production and possibly of basic foodstuffs ;
    ( iii ) help for the development of certain specific tropical products
              from regions subject to special constraints .
 ---pagebreak---                                           - 21
(b) It also became clear that any measures to help the overseas departments would have an
    effect on the developing countries around them. Although the more highly developed overseas
    departments might provide more dynamic markets for their neighbours and bring more investment
    to them, it is to be expected that the Community (which has already made a start ) and the
    Mentier States most directly concerned will have to increase their development cooperation
    with the poorest of the neighbouring countries in order to boost economic cohesion within
    the same geographical area, a factor which promotes political stability .
 ---pagebreak---                                                     22
                                                                                           ANNEX 1
                                       OD :   Basic statistics
I                                  I                -I                                                         1
I                                  ( Guadeloupe |French Guiana           Martinique              Réunion       (
I                                                                                                              r
¡Population ( 1986 )               I 330 000          I     84 000          328 000              551.000       I
| Surface area                     |1 779 km2         | 91  000 km2      1 100 km2            2 512 km2        |
I                                  I                  I                                                        I
                                   I                  I
¡Employment                        I                  I                                                        I
                                                                                                                I
¡Unsatisfied demand for employment 1 25 625C85 ) | 4 207 ( '85 )         30 861 ( '85 )       47 740 ( ' 85 ) I
( Unemployment rate                I 25% ( '85 ) I 21%(est.'85 )               25% ( '85 )       29% ( '85 ) I
|% Youth unemployment              I 60% ( '85 ) I 54%          ( ' 82 )      61% ( '85 )        57% ( '85 ) I
I                                  I                   I                                                        I
IGDP                               I      ECU         I      ECU                ECU                ECU           I
lõBFper capita                     I 3 8Û6C83 ) I 2 525 ( '79 )           4 505 ( '83 )         3 864 ( ' 83 ) I
 |average GOP per capita in mother                                                                               I
( country                           1 10 619 ( * 83 ) I   7 815 ( '79 ) 10 619 ( '83 )        10 619 ( ' 83 ) I
 (GDP index, Community of 12 = 100 1        44         i     41                    52              44            I
 I                                                                                                               I
 ( Breakdown of employment          !                  1                                                         I
 ¡Primary sector                    1 15% ( '82 )      |    14% ( '80 )    11,8% ( '80 )         17% ( ' 80 ) I
 (Secondary sector                  ( 20,1% ( ' 82 )   I    18% ( '80 )   18,7% C80 )            18% ( '80 ) I
 ¡Tertiary sector                   ¡64,9% ( '82 )     I    68% ( '80 )   69,5% ( '80 )          65% ( '80 ) I
 I                                  I                  I                                                          I
 ( Breakdown of GDP                 I                  (                                                          !
 (Primary sector                    I 9,7% ( '80 ) I          nd             6,7% ( ' 80 )      6,5% ( ' 78 ) !
 (Secondary sector                  1 10 % C80 )|             nd           1 1 , 1 % ( ' 80 )  15,5% ( '78 ) I
  |Tertiary sector                  1 64,9% ( ' 80 ) i        nd           82,2%('8Q )         78 %('78 ) (
 I                                  1                   1                                                         I
 ---pagebreak---                                    - 23 -
                                                              ANNEX 2
          Situation of the CD. compared with the other o       ilty, regions
                               Q3P per oaplta ( 1983)
                   Cln ECU at current prloes end. exchange rates)
                                           (In deoreasing order
 Groningen                                 22   587      259
 Hamburg                                   19   956      229
 Bremen                                    15   620      179
 Ile de France                             15   510      178
 Darmstadt                                 15   352      176
 EUR 12                                      8  729      ion
 Cantabria                                   4  992        67
 Sicilia                                     4  988        57
 Campania                                   4   928        56
 Basilicata                                 4   822        55
 Asturias                                   4   687        54
 Spain                                      4   568        52
 Castilla Leon                              4   568        52
 Martinique                                 4   505        52
 Calabria                                   4   447       51
 Cora . Valenciana                          4   427       51
 Nisia                                      4   370       50
 Murcia                                     4   200       48
 Canarias                                   4   008       46
 Gallola                                    3  973        46
 Greeoe                                     3  968        45
 Macedonia                                  3  923        45
 Pelop . he Dit.Sterea                      3  915        45
 Réunion                                    3  864        44
 Thessalia                                  3  835        44
Guadeloupe                                  3  806        44
Castilla Mancha                             3  694        42
Anatolikl Makednnia                         3  668        42
Andalucía                                   3  538        41
Kriti                                       3  420        39
Ceuta y Meli Ha                             3  376        39
Ipiros                                      3  204       37
Lisboa e Vale do Tejo                       3  139        36
Egeou                                      3   131       36
Thrakl                                     2   971       34
Extremadura                                2   768       32
Portugal                                   2   387       27
Algarve (Faro)                             2   131       24
Alentejo                                   2   042       23
Norte                                      1   983       23
Centro                                     1   904       22
NB .      The GDP data for the CD are calculated by INSEE with a lengthy
          delay , and the latest figures relate to :
           1984 for Réunion
           1983 for Guadeloupe and Martinique
           1979 for French Guiana (FF 15 119 per capita oompared with the
          national average of FF 45 669)
          It is impossible , therefore , to make more recent comparisons with
          the other Community regions ; the comparisons for 1983 are
          technically accurate .
Eouroe : Statistical Office of the European Communities .
 ---pagebreak---                                                                                                                  ANNEX 3.1
                                 Comparative Table of the components of the Caribbean region
I OD , OCT , ACP , Other   Status / EEC 1 Popul at i on (Surf ace    | GNP -5      1    GNp4-   I Official development assistance , 5 mio $
                                        1 1 UÜ0 hab . 1 ^ rea2 km2   | mio $       1 per capital              I       EEC contribution      I
I                                       I               I            I             1 t          I Net total   ¡multilateral ( bilateral      I
I Guade loupe                  OD       I       318     j      1 780 I    1 660    1    5 210   I        165  I         17    1       148    I
I French Guiana      I         OD       I        80 j        91 000 j         210  j    3 230   I         90 j          14   I         76    I
( Martinique                   OD       I       315 j          1 100 j     1 520   j    4 820   I        293 j          25   j        269    I
. Ancju'i l la                OCT UK    I          7    I         91 I           - i    1 000   I          -  I                              I
1 Aruba                       OCT NL    I        65     j                        - j          –
                                                                                                I          –  j          –    j              I
( Netherlands Antilles        OCT  NL   I       190     j        960 I    1 610    I    6 110   I         65  I          2    I        62   I
¡British Virgin Islands       OCT UK    I         12    I        151 j          77 j    4 276   I                                            I
1 Cayman                      OCT UK    I         12    j        260 j                        –
                                                                                                I          .  j          _   I
                                                                                                                                            I
1 Montserrat                  OCT UK    I        12     j        100 i          37 I    3 127   I          •  I          .   I
                                                                                                                                            (
1 Turks-Cai cos               OCT UK    I          6    I        430 j                        -
                                                                                                I          6  I          -   j           5  I
1 Ant igua-Eiarbuda             ACP     I        80     I        440 I        160  I    2 030   I          3  I          -   I           -
                                                                                                                                            I
1 Bahamas                       ACP     I       230     j    13 940 j     1 670    I    7 150   I          1 i           –   I           _
                                                                                                                                            I
1 Barbados                      ACP     I       250     I        430 I    1 180    I    4 680   I          8 j           1   I           1  I
i Belize                        ACP     I       170 j        22 960 j         1 80 j    1 130   I         22 i                           6  I
1 Domini ca                     ACP              CO j            750 I          90 j    1 160   I         17  I          4   i           3  I
1 Grenada                       ACP     I       110 i            340 j          90 I      970   I         35 j           2   I           2  I
1 Guyana                        ACP     I       790 j       214 970 j         460  j      57U   I         27  I          2   I           -
                                                                                                                                            I
1 Jamaica                       ACP     I     2 340 j        10 990 j     2 090    j      940   I        169  ¡          3   I         14   I
| St . Christopher-Nevi s       ACP     I         50    I        360 j          70 j    1 520   I          4  j                          -
                                                                                                                                            I
¡St Lucia                       ACP     I       130     j        620 j        160  j    1 210   I          7 j           –   I           2  I
 ¡St Vincent-Grenadines         ACP     I       100     i        340 j        100  j      C40   I          6  I          –   j           1  I
 1 Suri name                    ACP     I       370     j   163 270 j     1 01 c   i    2 570   I          6  ¡          1   i           3  I
 1 Trinidad-Tobago              ACP     I     1 mo      i      5 130 j    7 140    j    6 010   I          7  j          4   I           1  I
 1 Cuba                       Other     I    10 090     I   110 860  1           - I          –
                                                                                                I         1c  I                          1  I
 j Hait i                     Other      i    5 2 70 j       27 750 j      1 900   I      350   I        153  j          4   I         31   I
 1 Dominican Republic         Other     !     6 240 * j      48 730 j     5 050 j         810   I        222  j                        10   I
 1                                      I                            1             I            I             I              I              I
   Source ; chronos DG VIII edition 24.11.1987 ; year 1985 , see explanatory notes to each column on following page
 ---pagebreak---                                                                                                                                      Annex 3.2
                                                Comparative table of the components of the Indian Ocean
                                                                                                 «
                                  I               I               i              I                                                                       I
 I OD , OCT , ACP                 Istatus / EEC   I Popul at ion I Surface       ! GNP3     I      4      ^                                   5
                                                                                               GNP        lOfficial development assistance . mio    $    I
                                  I               1 1 COO hab . 1 | area ¿ km ¿  I mio   $ I per capi ta | Net total    I      EEC contribution         I
                                                  1               1              I              $         i             Imulti lateral Ibi lateral       I
                                  I               1               Γ              I                       I              I                I              I
 I Réunion                        I     0D        1       530     1      2 510   I  1 890  I    3 580     I       383   I         31     I      352     I
                                  I               1               I              I                       I              !               I               I
                                  I               1               I              I                       I            Ί- I                              I
 I Mayotte                        I    OCT        1        ó7     I          373 I     nd  I    1 322    I         21   I          1    I        20     I
                                  I               1               !              I                       I              I               I               I
                       I          I               1               I              I                       I             I               I               I
 I Comoros                        I      ACP      1       440     I      2 170   !    110  I       280   I         48  I           6   I         15    I
 I hadaoasca r                    I      ACP      1     9 980     I    587 040   I 2 510   I       250   I             I          18
                                                                                                                  182                  I         65   I
 [ Mauritius                      I      ACP      1       990     I      1 . 860 I 1.110   I    1 070    I         29  I           2   I         14   I
  jSeychelles                     I      ACP      1        70     I          280 I    140  I    2 429    I             I           8
                                                                                                                   22                  I          8
                                  I               1               I              I                       I             I               I              I
Sources :    1 ..United
                   ... . ..Nations
                             . .
             2FAO
               GNP    at market prices adjusted for exchange rates , World Bank , except CDB for Anguilla , British Virgin Islands
               and Montserrat .
             4
               World Bank , except prefecture for Mayotte (1 075 ECU X 1.23 )
             5DAC (OECD )
 Comments on ( 3 ) and ( 4): as regards the OD , the size of the official state transfers they receive , which include individual
 welfare transfers , raise the GNP figures by comparison with those of the independent countries which do not receive such
 transfers..
 ---pagebreak---                                               - 26 -
                                                                              Annex 4.1
 Current situation regarding Community measures specific to the OP ( the list
 is not exhaustive )
 A.   Aid from the structural Funds
      1.     For the same reasons as other regions of the Community , the OD
            qualify for more favourable treatment , as follows :
                   ( i ) under the ESF the OD are considered top priority regions
                          ( increased rates of contribution );
                ( ii ) under the ERDF , projects with a 55% Community contribution
                          are more readily accepted than in metropolitan France ;
             ( iii ) different structural policy provisions in the fisheries
                          sector are applied to the OD , giving them a more favourable
                          rate of contribution than normal :
                          ( a ) Regulation ( EEC ) No 355 / 77 on common measures to
                                improve the conditions under which agricultural and
                                fisheries products are processed and marketed ;
         '                ( b ) Régulation ( EEC ) No 4028 / 86 on Community measures to
                                improve and adapt structures in the fisheries and
                                aquaculture sector .
     2.     Several measures have been adopted specifically for the OD :
                  ( i ) Directive 81 / 527 / EEC on the development of agriculture in
                         the French OD , valid for five years and extended and
                         reinforced by Directive 87 / 522 / EEC for a further two years ;
               ( ii ) Regulation ( EEC ) No 797 / 85 , which derogates from the rule
                         of a 25% rate of reimbursement by the EAGGF Guidance Fund ,
                         allows for a 50% rate in the case of compensatory allowance
                         for the OD ;
            ( iii ) an Integrated Development Operation is current ly-under way
                         on the island of Reunion for the period from 1987 to 1991 .
B.   Sectoral operations
     1.    Products covered by common market organization arrangements
           -1-
                 ( i ) Sugar :      Community aid is provided for the transport of OD
                         sugar to the mainland regions of the Community , for its
                         storage and for it to be refined there at prices similar
                         to those for ACP sugar ( to compensate for the fact that
                         the Community sugar storage levy system is not applied to
                         ACP sugar );
              ( ii ) Pineapples ( Martinique ):         This product receives Processing
                         aid ;
           ( iii ) Aubergines :          They are protected by a reference price which
                         takes account of production costs in the regions concerned ;
 ---pagebreak---                                                     - 27 -
                                                                          Annex 4.2
                 Cereais
                 Ceeal_s . The 00 are given ' total or partial relief from
                    e levy on rice and maize from thehe ACP        ACP or
                                                                        or the
                                                                           the OCT.
                                                                                OCT . The
                                                                                        The
                hi    ! \                      for Reunion   can
                                                             can
                be extended to include other exporting countries-   in
                                                                    in  certain
                                                                        certain  circumstar
                                                                                 circumstances
         ( v ) Ci t rus fruit :
                           –fr^1t
                             ~T^-': I This cornes
                                              comes under
                                                     unde r a System
                which so far has not been used by the 00
                                                              system of Processing
                                                                     00-#
                                                                            processing aids
       (VI ) toSoyathe: 00Community
                               ;
                                         rules on soya contain a specific reference
     (vii ) Beef and veal : The 00 are exempt from the import levy on
               b*ef and veal originating in the ACP and the OCT .
   (viii ) Iippical Products : Onangoes, avocados, Litchis and décorative plants
               and    T   nuppci      Al+k /t.^k   _    _i . . _ ,          . .
               0?oan    - 0Wt - S) ‘ ALthough these products are subject to common market
               organization arrangements , they are not covered by regulations
               governing the market .
        2.     Products not covered by common market organization arrangements
                   ( i ) Rum : At present there is no specific Community provision
                          on rum . However , a proposal for a Regulation transmitted
                          to the Council on 25 November 1986 provides a Community
                          definition of rum;
                 ( ii ) Bananas :      There are no Community measures in this sector ;
       3.     Sectoral measures regarding fisheries
              The common fisheries policy applies fully to the 0D .
              As regards the management and conservation of fish stocks , certain
              measures specific to the 0D have been taken, such as the annual
              Regulation laying down the size of catches by " third country "
              vessels in the department of French Guiana or the negotiating
              directives for fisheries agreements to assistv fishermen from the
              four 0D .
              The common market organization arrangements do not include any
              measures specific to the 0D ; above all there are no market
              stabilization measures for species from the 00 .
C.    Taxation
      The 0D are excluded from the scope of the common VAT system which means
      that specific provisions can be applied in the OD regarding the base
      (exemption ) or calculation ( rates , deductions ) or even non-application
      of the tax ( French Guiana and the northern islands of Guadeloupe ).
 ---pagebreak---                                                              ANNEX A. 3
                      Financial commitments by the Community
                           for the overseas departments
  Funds or measures                   Period            Amounts ( million ECU )
EDF                                  1959-1977                       72.0
ESF                                  1978-1987                     390.2
ERDF                                 1975-1987                     A31.A
EAGGF - Guidance
- Direct action                      1978-1987                        7.0
   ( Reg . 355 / 77 )
- Indirect action                    1976-1987                      68.5
Structural policy                    1980-1986                        6.0
Fisheries                            1980-1987                      12 . A
Energy demonstration                     -                            A.O
Pineapples                           1982-1986                      58.0
All measures                                                     1 0A9.5
 ---pagebreak---                                 - 29 -
                                                               ANNEX 5.1
       CURRENT SITUATION REGARDING NATIONAL MEASURES SPECIFIC TO THE OP
                            ( the list is not exhaustive )
    Favourable tax treatment for the overseas departments
    Ci )       Reduced rate of income tax for taxpayers in the OD ( General
               Tax Code ( GTC ) Article 197(1 )).
    Ci i )     Fiscal aid for the economic development of the OD : temporary
               exemption from corporation tax ( Article 208 quater of the
               GTC ).                                          -
    ( iii )    Deduction for investments made by undertakings in the OD-OCT
   ( iv )
               ( GTC Article 238 bi_s ( MA and MC )).
               Tax reduction for national persons who invest in property
               overseas ( GTC Article 199 undecies ).
   (v)         Tax benefit for certain investments made in the OD by
               individuals , excluding property investments .
   ( vi )      Long-term fiscal arrangements in the OD ( GTC , Article 1655 bis ) :
               special fiscal arrangements for a maximum period of 25 years ,
               for certain categories of companies .
   ( vi i )   Reduced rate of taxation on the profits generated by
              undertakings in the OD for certain sectors ( tourism , construction
               industry , new forms of energy ) ( GTC , Article 217 bi s ) .
   ( vi i i ) Reduced rate for the payroll tax in the OD ( GTC ,
              Articles 231-2 brs and 231-5 ).
  ( ix )      Special VAT system in the OD ( GTC , Articles 294-1 , 296 and
              296 bis ) .
  (x)         Non-application of the TIPP ( internal tax on petroleum products ).
              Special consumption tax has been established ( Customs Code ,
              Articles 266 and 267 ).
  ( xi )      Tax arrangements for tobacco in force in the OD ( Customs Code ,
              Article 268 ).
  (xi i )     Exemptions from the business tax specific to the OD ( Programme
              Law No 86-1283 of 31 December 1986 ): setting-up of free zones
              ( Article 5 ) in ports or aeroports where newly-established
              undertakings are exempt from the business tax ( Article 8 ).
( xi i i )    Fiscal and economic arrangements for rum produced in the OD :
              . marketing quotas ( GTC , Article 362 )
  ( xi v )
              . preferential tax arrangements ( GTC , Article 403 ).
              Dock dues .
  Spécial crédit System
 Any bank operating in France is free to provide credit in the overseas
 departments .        The banking system in the overseas departments operates
 on the basis of national regulations .
 Access to a special system of agreements for refinancing medium-term and
 short-term financial aid is, however , open to establishments with
 headquarters or branches in the overseas departments , because they are
 part of the IED0M circuit ( Issuing Institute for the Overseas Departments ).
 ---pagebreak---                            - 30 -
                                                            ANNEX 5.2
3. 0D development subsidies
   (i)      Equipment premium for firms which invest in the 0D ( by
            setting up or expanding activities in the following sectors :
            industry , fisheries , aquaculture , horticulture , new forms of
            energy , tourism , packaging of agricultural or fisheries
            products of local origin ).
   ( ii )   Employment premium and tax and social charges relief for
            firms which set up or expand activities in the 0D in these
            sectors , as well as in the hotel industry .
   ( iii )  Production aid for :
            (a)  sugar cane and sugar ;
            (b)  bananas in the Antilles ( production aid and health
                 protection );
            (c)  tobacco , vanilla , geraniums .
   Market gardens , fruit and vegetable farms and also livestock and crop
   farms ( particularly bananas ) receive subsidies from the 0DEAD0M
   ( Office for the development of the agricultural economy of the
   overseas departments ).
4. Joint agricultural organization specific to the Reunion
   Recognition of the ARIBEV ( Reunion 's Joint Association for cattle ,
   beef and milk ) as the joint agricultural organization for the
   stock-farming / meat sector and the milk sector ( Law No 75600 of
   10 July 1975 by Interdepartmental Decrees published in the French
   Official Journal on 30 July 1979 and 11 September 1983 .
                                                \
 ---pagebreak---                                              - 31
                                             Draft
                                       Joint Decision
               of the Council and the Commission of the European Communities
       setting up a Programme of options specific to the remote and insular nature
                                of the overseas departments
                                         ( POSEIDOM )
THE COUNCIL AND THE COMMISSION OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community , and in
particular Article 227(2 ) thereof ,
                                                             1
Having regard to the Opinion of the European Parliament ,
                                                                         2
Having regard to the Opinion of the Economic and Social Committee ,
 Whereas the French overseas departments , hereinafter referred to as the "OD ", suffer
from a serious structural lack of development aggravated by a number of constraints
 ( remoteness , isolation, small size, difficult terrain and climate, and economic
dependence on a small number of products ) whose unchanging nature and combined
impact have serious adverse effects on their economic and social development ;
whereas these constraints differentiate sharply the social and economic context
of the OD from that of the other Community regions ;
Whereas Article 227(2 ) of the Treaty stipulates that " the institutions of the
Community will , within the framework of the procedures provided for in this Treaty ,
 ... take care that the economic and social development of these areas is made
possible ";
Whereas the Community authorities have repeatedly shown their solidarity with the
OD, whether through assistance from Community funds or by taking their specific
nature into account in applying Community rules ; whereas Parliament stated in its
resolution of 11 May 1987 on the regional problems of the OD3 that it was convinced
" that the serious situation which exists in the French overseas departments
justifies and makes it imperative to pursue economic and social development in
various sectors"and called on the Community authorities to implement a broad range
of highly diverse operations ;
                                                           \
1
2
3EP 14201 , doc . A2-250/86 .
 ---pagebreak---                              - 32 -
Whereas the special constraints on the OD make it necessary to step up
Community support in order to promote their economic and social development ;
whereas such support should be forthcoming immediately in order to facilitate
the integration of their economies in the 1993 internal market ;
Whereas the 00 form an integral part of the Community pursuant to Article 227(2 )
of the Treaty , as interpreted by the decisions of the Court of Justice , which has
ruled that the provisions of the Treaty and secondary legislation apply
automatically to the OD , it being understood that it is always possible to
adopt specific measures to assist them to the extent that and for as long
as there remains an objective need for such measures with a view to the
" economic and social development of these areas ";
Whereas , however , while forming an integral part of the Community , the 00
are located in developing regions which lie in tropical latitudes ; whereas
any operation concerning the 00 must therefore be based on a clear
understanding of this twofold dimension and be aimed both at the objective
of completing the internal market and at that of recognizing the regional
reality ; whereas the objective of completing the internal market should be
reflected in the maintenance , modification or abolition of rules in force
in the 0D in line with those which will become the norm in the Community
as a whole , with a view to enabling the departments to catch up with the
average Community level ;
Whereas attainment of these objectives will require the adjustment of
general Community rules in so far as they do not take sufficiently into
account the specific realities of the 0D ; whereas a coordinated approach
should therefore be adopted in the framework of a comprehensive programme
of operations ;
Whereas the Council and the Commission must act together in adopting such
a programme by virtue of their respective fields of competence ; whereas
implementation of the programme would require the adoption of legal acts ,
either by the Council or by the Commission as the case may be , some of
which could apply solely to the 0D while others would be of only incidental
concern to them in texts of general scope ;
Whereas in order to be effective such a programme must be carried out over a
period of years , which could extend in the case of certain components beyond
31 December 1992 , given the permanent constraints which are a particular
feature of the 0D ;
Whereas the economic effects of any special arrangements must remain strictly
limited to the territory of the 0D without affecting directly the
functioning of the common market ;
Whereas some of the tropical products originating in the 0D are not yet
covered by common measures , which means that the aims set out in Article 39
of the Treaty cannot be attained in respect of the producers concerned ;
whereas it will therefore be necessary to introduce "adjustments "
under certain common organization arrangements or to make provision for
ad hoc solutions ; whereas it will be necessary in particular to adopt common
measures for the banana market that take account of the economic and social
importance of this product in certain of the 0D ;
 ---pagebreak---                                - 33
  Whereas the exceptional geographical situation of the OD in relation to
  sources of supply for products used as inputs in certain food sectors ,
  which are essential for current consumption, entail costs that are a
  severe handicap for those sectors ; whereas more of their requirements
  in agricultural and food products should be met from local production,
 particularly in the case of livestock farming , where inputs account for a
  substantial proportion of the cost of the end product ; whereas this
 handicap should accordingly be mitigated by appropriate measures ;
 Whereas the OD are suppliers on the Community market in Europe of tropical
 products that are similar to and in competition with those produced in
 part at lower cost in neighbouring developing countries which enjoy
 preferential terms of access to the Community market , so that the principle
 of Community preference is difficult to apply in practice to products
 obtained from the OD ; whereas for the OD the neighbouring countries also
 represent a potential outlet for their tropical products , as the important
 tourist industry in the region is generally supplied with products from
 other sources at lower cost and greater regional cooperation could provide
 the OD with a means of making better use of this outlet ; whereas this
 handicap too should be mitigated by means of appropriate measures ;
 Whereas numerous national rules specific to the OD have been adopted , many
 of them being of long standing , in order to promote their economic and
 social development ; whereas the drive to complete the internal market
 requires that a decision be taken before 31 December 1992 on maintaining ,
 modifying or abolishing these rules in accordance with the general principles
 of the Treaty , while taking into account the special constraints affecting
 the regions concerned ;
Whereas in this context traditional rum is a product of prime economic
and social importance in the OD ; whereas Council Decision 88 / 245 / EEC of
19 April 1988^ authorized the French Republic , by way of derogation from
Article 95 of the Treaty , to maintain special tax arrangements on the French
 internal market until 31 December 1992 ; whereas between now and then it will
be necessary to study the implications of the new Community definition , the
abandonment of the allocation among Member States of the quota granted to
the ACP States , and the abolition of the special tax arrangements after
1 January 1993 , and to draw the appropriate conclusions ;
Whereas in this context also the OD have their own tax arrangements , particularly
in the form of dock dues , which encourage self-reliant management by local
authorities in their own development by providing them with own resources and
help support local production activities ; whereas completion of the internal
market will require that this system be adapted in order to make it compatible
with Community law while fostering its function as an effective instrument
for development in the regions concerned ;
1 0J L 106, 27.4.1988, p. 33 .
 ---pagebreak---                                        34
Whereas in the context of rationalizing the aims of the structural Funds ,
the Brussels European Council of 12 and 13 February 1988 laid down five
priority objectives , including promotion of the development and
structural adjustment of the less-developed regions ; whereas it explicitly
and definitively included the 00 io the list of regions covered by this
objective and stated that contributions to all the less-developed regions from the
structural Funds would be doubled in real terms between 1987 and 1992 ; whereas in
consequence assistance for the OD will be provided from the structural
 Funds , the European Investment Bank and the other financial instruments on
the basis of the corresponding Community support framework , in a coordinated
and concentrated manner that will be complementary to national and local             .
 initiatives , pursuant to Council Regulation ( EEC ) No 2052 / 88 of 24 June 1988 ;
Whereas the OD are surrounded by States and territories with which the
 Community maintains relations of a varied nature , which take the form of
 cooperation policies that are relatively uncoordinated and are conducted
 alongside each other ; whereas , however , the development of the different
 constituents of a given geographical area , each of which has similar
 constraints and characteristics , requires the implementation of regional
 projects common to the various constituents , irrespective of their status
 in relation to Community law , as this makes it possible to achieve economies
 of scale and strengthens regional cooperation among the partners concerned ;
 Whereas , furthermore , these neighbouring entities are traditionally faced
 with similar problems despite their differing legal status ; whereas regional
 cooperation that is geared to local realities involves more direct dialogue
 between the parties concerned ; whereas it is therefore appropriate to
 foster regional consultation procedures , in close cooperation with the
 Member States concerned in the case of regions or territories that are the
 responsibility of Member States ,
 HAVE DECIDED AS FOLLOWS :
                                            Article 1
 1 . . A multiannual action programme fo.r the French overseas departments ,
       known as " Poseidon " ( Programme of options specific to the remote and
       insular nature of the overseas departments ) is hereby established .
       It will deal with legislative measures and financial commitments .
 2.    Poseidom shall be based on the twofold principle that the OD form an
       integral part of the Community and that the regional reality ,
       characterized by the special features and constraints specific to the
       regions concerned as distinct from the Community as a whole , must be
       recognized .
 1 0J L 185, 15.7.1988 .
 ---pagebreak---                                      - 35 -
                                   Artlole 2
1.       implementation of Poseidam shall In principle be carried out from
         1 July 1989 to 31 Daoember 1992 , through the adoption either by
         the Council or by the Commission, as appropriate , of the neoessary
         legal acts .
2.       Given the permanent and specific constraints on the CD , certain
         measures under the programme may continue to apply after
         31 December 1992 so as to make possible the economic and social
         development of these areas .
Poseidon shall help attain the general alma of the Treaty and Annex VII to
the third Lcm6 Convention by contributing to the achievement of three
specific objectives :
(a)      making possible the realistic integration of the CD into the
         Community by establishing an appropriate framework for the
         application of common policies in those departments ;
(b)      helping the CD catch up economically , with a view to the completion
         of the internal market by 31 Deoember 1992 , through coordinated and
         concentrated action involving the structural Funds , the European
         Investment Bank and other Community instruments ; measures adopted
         by national or regional authorities must be integrated with such
         actions ;
(c)      promoting regional cooperation in the developing areas where the CD
         are situated , notably through the provision of appropriate
         instruments for participation in joint regional projects or
         programmes .
                                    TITLE I
                   APPLICATION OF COMMON POLICIES IN THE CD
                                   Axtj.cla._l
Community measures already adopted for the CD will be maintained , extended
or modified in accordance with this Decision in order to provide a better
response to the specific characteristics of the CD .
                                   Article 5
Directives or other measures to be adopted in connection with the internal
market , social matters , technological research and development and
environmental protection will have to take into account the special
character of the CD .
 1.      Agricultural products not covered by common measures will qualify
          for specific measures which may take the form of assistance for
          production, processing or marketing .
 ---pagebreak---                                       - 36 -
The Council or the Commission , as appropriate , will adopt the first measures
necessary to this end within one year of the entry into force of this Decision .
2 . The Council , acting on a proposal from the Commission , will adopt
Community measures concerning the banana market which take account of recent
production trends in the Member States and of the interests of the productive
areas of the Community , and also of the interests of countries in respect of
which the Community has given specific undertakings .
3 . In the case of rum , the Commission will examine the economic and social
implications of the new Community definition , the abandonment of the allocation
among Mefaber States of the quota granted to the ACP States , and also the
abolition of the special tax arrangements , taking into account the interests of
Community producers and producers in third countries in respect of which the
Community has given specific undertakings .
                                      Article 7
1 . Within six months of the entry into force of this Decision the Council or
the Commission , as appropriate , will adopt measures intended to compensate for
the exceptional geographical situation of the OD in relation to the continental
territory of the Community , taking into account the aims of regional cooperation .
2 . These measures will be aimed , first of all , at facilitating the supply to
the OD of inputs for local livestock farming . To that end , grain intended for
livestock production will be exempt from the levy applicable to products
originating in developing countries with the possibility of extending this
provision to include other third countries in cases of supply difficulties duly
recognized by the Commission , when imported direct into the OD , within the limits
of local market requirements and for the purposes of those requirements , and on
condition that the products concerned do not give rise to re-exports .
An arrangement of this kind could also be applied on identical terms in' respect
of products imported direct for human consumption , originating in the ACP States ;
it could be extended to cover other non-ACP developing country sources should
the products concerned not be available in neighbouring ACP States .
3 . In addition , there will be measures to assist the production of certain
agricultural products in the OD ( fruit , vegetables and flowers ), which will be
adopted on the basis of objective criteria to be established in the context of
a product -by -product analysis to be carried out by the Commission . These
measures may take the form of :
( a ) a Community contribution to the development of tropical products for which
      there are outlets on local markets , in neighbouring tourist areas , and
      also in the rest of the Community ;
( b ) assistance for other lines of production , taking into account the concept
      of an effective economic contribution to the development of the OD and also
      the danger of potential injury to production elsewhere in the Community .
 ---pagebreak---                                          Artide 8
   1.     National measures which have specific effects favouring the 00 will
          be listed systematically in order that a decision may be taken
          before 31 December 1992 on whether to maintain, modify or abolish
          them   in line with the general principles of the Treaty, while taking
          into account the special constraints on the 0D .
  2.     The Council shall authorize the French Republic to grant , under the
         production arrangements, national aid for sugar cane and cane sugar,
         as has been the practice since the entry into force of the common
         organization of the sugar market .
 3.    With regard to aid within the meaning of Article 92 of the EEC Treaty ,
       the Commission :
       ( a ) after compiling the list of measures referred to in paragraph 1 ,
              shall examine them in the light of that provision and shall adopt
             measures within the scope of its powers or , where appropriate ,
              shall propose to the Council any measures that prove necessary ,
             pursuant to Articles 92 to 94 of the EEC Treaty , taking into
              account the specific position of the 0D and the impact of the
              Community measures provided for in the Programme or adopted in
              implementation of it ;
       ( b ) shall continue , even after 31 December 1992 , to examine at regular
              intervals the aid given with a view to making any changes required
             by developments in the situation .
                                         Article 9
The system of charges applied in the 0D under the heading of dock dues will
be modified in accordance with Decision EEC /.../.. . .1
                                       TITLE II
                        ACTION INVOLVING THE STRUCTURAL FUNDS ,
            THE EUROPEAN INVESTMENT BANK AND OTHER FINANCIAL INSTRUMENTS
                                         Article 10
1.    The aims and procedures set out in Regulation ( EEC ) No 2052 / 88 will
      apply , as from the entry into force of the Regulation and on the terms
      laid down therein , to assistance to the OD from the structural Funds ,
      the European Investment Bank and other existing financial instruments
      with a view to promoting the development and structural adjustment of
      the OD .
T-
  Draft Council Decision annexed to this draft Joint Deci$ion ( due to enter
  into force on the same day ).
 ---pagebreak---                                         - 38 -
2.    Structural aid shall take account of the additional handicaps of
      remoteness and insularity borne by the OD .
3.    Pursuant to Article 8 of Regulation ( EEC ) No 2052 / 88 , the French
      authorities and the Commission shall ensure that measures to assist
      the OD that are covered by Community support frameworks are carried
      out primarily through the implementation of operational programmes .
4.    Within the scope of its powers and in accordance with the eligibility
      rules of the structural Funds , the Commission shall endeavour to speed
      up the grant of assistance in cases where aid from the Funds is needed
      to repair damage caused by natural disasters endemic to the tropical
      regions concerned , notably hurricanes , where such repair is not
      covered by emergency aid .
                                     TITLE III
                               REGIONAL COOPERATION
                                    Article 11
1.    Regional consultations between the different States , territories and
      departments in the two geographical areas where the OD are situated
      shall be encouraged , in conjunction with the authorities of the relevant
      Member State in the case of OD and territories , in the interests of
      better regional cooperation . Regional trade cooperation could take the
      form , in due course , of regional trade agreements .
2.    Within the framework of its management powers with regard to the
      structural Funds , and in accordance with the eligibility rules of the
      said Funds , the Commission will ensure that the OD receive assistance
      from the structural Funds in the context of regional projects or
      programmes common to OD , OCT and ACP States in the same geographical
      region , provided and to the extent that :
      - the joint regional projects or programmes referred to in this
        paragraph shall be those defined , as regards their aims , scope and
        procedural rules , in Article 101 to 113 of the third Lome Convention
        and in Article 54 to .66 of Council Decision 86/ 283/ EEC ;^
      - the procedural rules for financing the projects or programmes shall be
        those specific to each of the Community Funds concerned .
      The Commission will ensure coordination of the financing timetable and
      also of the subsequent implementation of the projects or programmes .
1 0J L 175 , 1.7.1986, pp . 1-110 .
 ---pagebreak---                                   TITLE IV
                              FINAL PROVISIONS
                                 Article 12
This Decision shall enter into force on 1 July 1989 .
                                 Article 13
This Decision shall be published in the Official Journal of the European
Communities .
Done at                                                    For the Council
                                                           For the Commission
 ---pagebreak---                    - AO -
                                ■fi
                              %
                Proposai for a
               COUNCIL DECISION
concerning the dock dues arrangements in the
         French overseas departments
 ---pagebreak---                                     - 41
                               Proposai for a
                              Counci l Decision
   concerning the dock dues arrangements in the French overseas departments
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
and in particular Article 227(2 ) thereof ,
                                                    1
Having regard to the proposal from the Commission ,
                                                         2
 Having regard to the Opinion of the European Parliament ,
 Having regard to the Opinion of the Economic and Social Committee^,
Whereas Article 227(2 ) of the Treaty stipulates that a number of provisions
of the Treaty shall apply to the French overseas departments ( OD ) as from
the entry into force of the Treaty ; whereas the conditions under which the
other provisions were to apply were to be determined within two years of
the entry into force of the Treaty by decisions of the Council , acting
unanimously on a proposal from the Commission ; whereas this Article has
been interpreted by the Court of Justice to mean that after the expiry of
the stipulated two years all the provisions of the Treaty and of secondary
legislation became applicable automatically in the OD , it being understood
however that there still remains the possibility of making subsequent
provision for specific measures in order to meet the needs of the territories
concerned ;
 1 0J C No
 2
 3
 ---pagebreak---                                   - 42 -
Whereas action to promote the economic and social development of the OD
in the past has been in the form of isolated measures ;    whereas , however ,
the Joint Decision of the Council and the Commission of .
established an action programme for the OD known as " Poseidom "; whereas
this programme contains a tax component which needs to be implemented ;
Whereas the Eleventh Council Directive 80/ 368/ EEC of 26 March 1980 on the^
harmonization of the laws of the Member States relating to turnover taxes
excluded the OD from the scope of the Sixth Directive 77 / 388 / EEC on the
common system of VAT ; whereas , however , each OD imposes a special charge
on all goods imported into its territory , known as dock dues ;
Whereas the dock dues , which originated in the 19th century , at present
constitute a means of support for local industries , which have to contend
with the problems of remoteness and insularity ; whereas they also constitute
a vital instrument of self-reliance and local democracy and provide resources
which contribute to the communal development of the OD ;
Whereas the dock dues system in its present form has features , however ,
which necessitate its reform as a means of integrating the OD fully into
the process of completing the internal market , while taking account of their
fragile economic structure ;
Whereas this system   should be converted , over a period of time that is
convenient for both   local and national authorities , into a system of internal
taxation applicable   to all products marketed in the OD ; whereas such a
system comes within   the scope of Article 95 etseq . of the Treaty ;
Whereas , however , for the purposes of maintaining and developing industrial
activities in the OD it would be advisable to authorize . the local authorities
to exempt local industries either totally or partially , according to economic
requirements , from the application of the new tax for a period not exceeding ,
in principle , ten years ;
Whereas , in order to ensure full compliance with the rules of the Treaty
and the necessary coordination with the general aims pursued by the Community ,
the exercise of powers by the local authorities in granting exemptions from
the tax should be subject to prior authorization by the Commission , which will
take decisions in accordance with a procedure which it shall determine , taking
into account the specific constraints of the OD , with a view to attaining the
aim stipulated in Article 227(2 ) of the Treaty that care be taken to make
possible the economic and social development of the regions concerned ;
1 0J L 90, 3.4.1980, p.  41 .
 ---pagebreak---                                    - 43 -
Whereas the exemption arrangements should be temporary and should normally
be terminated ten years after the reform of the system ; whereas at the
end of this time the tax arrangements should therefore be fully in line with
the principles of Article 95 of the Treaty , it being understood that support
measures with the same aims can still be adopted in the context of regional
aid and in compliance with the provisions of Articles 92 and 94 , taking into
account the arrangements for the application of VAT in the OD ; whereas the
Commission will present a report to the Council before the expiry of this
ten-year period , concerning the implementation of the arrangements and their
impact on the development of the OD , together with appropriate proposals ;
Whereas , pending the reform of the dock dues system , the French Republic
should be authorized to maintain the system in its present form until not
later than 31 December 1992 , subject to certain conditions ensuring that the
system has the least possible effect on the common market and is used
exclusively for the purpose of attaining the aim stipulated in Article 227(2 )
of the Treaty ,
HAS ADOPTED THIS DECISION :
                                    Article 1
The French authorities shall take the necessary measures to convert the dock
dues system at present in force in the OD , in accordance with the principles
set out in Articles 2 and 3 .
                                    Article 2
1.   By 31 December 1992 at the latest , the dock dues system shall be replaced
     by tax arrangements consisting of a special tax applicable to all
     products , whether imported into or produced in the OD .
2.   The revenue from the tax shall be put to use in such a way as to encourage
     as effectively as possible the economic and social development of each OD .
     The French authorities shall inform the Commission of the measures
     adopted in order to attain this objective .
3.   The relevant authorities of each OD shall establish a basic rate of tax .
     This rate may be adjusted for certain categories of products , with
     necessities in particular being taxed at a reduced rate .
4.   Where necessary for the promotion or maintenance of a given industrial
      activity ,
     - the French Republic may be authorized to exempt from the tax the local
        production activities concerned, either totally or partially according
        to economic requirements , for a period of not more than ten years from
        the date of introduction of the system ;
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       the French authorities shall present proposals for the abovementioned
       exemption to the Commission for its approval ; the Commission shall
       take a decision within two months in accordance with a procedure which
       it shall determine , taking into account the specific constraints on
       the OD , with a view to attaining the objective stipulated in
       Article 227(2 ) of the Treaty , without prejudice to supervision by the
       Commission pursuant to Articles 92 and 93 of the Treaty .
5.   The tax referred to in Article 1 and VAT as applied in the OD shall be
     considered jointly for the purposes of the process of approximating VAT
     rates with a view to the abolition of tax frontiers .
                                   Artide 3
Not later than one year before the expiry of the period provided for in
Article 2(4 ), the Commission will present to the Council a report on the
implementation of the arrangements referred to in Article 2 , in order to
ascertain the impact of the measures adopted on the economy of the OD .
The matters to be covered in the report will include the effect of the
arrangements on the economic and social development of the OD , the freedom
of movement of products within the Community , the trend of VAT rates , and
regional cooperation between the OD and their neighbours .
In the light of the report 's conclusions , the Commission will present to the
Council a proposal for terminating in principle the exemptions provided for
in Article 2(4 ), it being understood that support measures with the same aims
may be taken in the context of regional aid , in conformity with the provisions
of Articles 92 to 94 of the Treaty , taking into account the detailed
arrangements for applying VAT in the OD .
                                   Article 4
Pending implementation of the reform of the dock dues system in accordance
with the guidelines set out in Article 1 , the French Republic shall be
authorized to maintain the current dock dues arrangements until not later
than 31 December 1992 on condition that any extension of the list of products
subject to dock dues or any increase in the rates thereof shall be subject to
prior authorization by the Commission . The Commission shall also examine
with the relevant local authorities any changes that have taken place since
1 January 1980 .
                                   Article 5
This Decision is addressed to the French Republic .
Done at Brussels ,                                            For the Council