CELEX: 51994PC0328(01)
Language: en
Date: 1994-07-27
Title: Amended proposal for a COUNCIL REGULATION (EC) amending Council Regulation (EEC) No 636/82 establishing economic outward arrangements applicable to certain textiles and clothing products reimported into the Community after working or processing in certain third countries (PECOS)

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                          COM(94) 328 final
                                                                          Brussels, 27.07.1994
                                                                          94/0178 (ACC)
                                                                          94/0179 (ACC)
                                             Amended proposal for a
                                        COUNCIL REGULATION (EC)
                                amending Council Regulation (EEC) No 636/82               94/0178 (ACC)
                           establishing economic outward arrangements applicable
                            to certain textilesand clothing products reimported into
                                the Community after working or processing in
                                         certain third countries (PECOS)
                                                         and
                                amending Council Regulation (EEC) No 636/82               94/0179 (ACC)
                            establishing economic outward arrangements applicable
                            to certain textilesand clothing products reimported into
                                the Community after working or processing in
                                               certain third countries
                 (presented by the Commission pursuant to Article 189a(2) of the EC Treaty)
^r/fe"#'>ipw3'
 ---pagebreak---                             EXPLANATORY MEMORANDUM
At the General Affairs Council of 13-14 June 1994 the Presidency concluded that work
should continue at a technical level on the proposal to amend Council Regulation No.
636/82 harmonising the operation of the Community's regime for economic outward
processing traffic (OPT) in the textiles sector (COM(93) 259 of 13 July 1993) with a
view to a decision being taken at the next General Affairs Council.
The Commission will continue to work with the present and future Presidencies in order
to reach a solution on the complete range of issues, including the implementation of the
decision of the European Council at its meeting in Copenhagen on 21-22 June 1993
extending duty free treatement of OPT with the Central and Eastern European Countries
(CEECs) - Bulgaria, the Czech Republic, Hungary, Poland, Romania and the Slovak
Republic. The main outstanding issues in the overall proposal aimed at completing the
single market in textiles, relate to (a) the link between the amount of OPT which can be
applied for and the level of Community production/employment of the applicant, (b) the
protection of the right of operators who have benefitted from OPT in the past and (c) the
14% derogation for the use of non-Community origin fabrics.
The present proposal to amend Council Regulation No. 636/82 amends the Commission
proposal (COM(93) 259) by splitting it into two parts. It is meant to ensure that the
Council can at least adopt, without further delay, that part of the overall proposal which
deals with the concession to the CEECs (Point 17 of COM(93) 259)) as a separate
Regulation in the event that it does not reach agreement on the overall OPT proposal at
its next meeting. This enables OPT operations to be done in the CEECs in products which
are not under any quantitative restriction and consequently it allows these products duty-
free access to the Community under the terms of Article 2(3) of the Protocols Nos. 1 on
Textiles and Clothing Products to the Europe /Interim Agreements.
The adoption of the present proposal would honour the European Council decision to
make this concession with effect from 1 January 1994.
At the same time the text of the original proposal is amended through the deletion of Point
17.
 ---pagebreak---                                                 Amended proposal for a
                                           COUNCIL REGULATION (EC)
                                                                                                 9 4 / 0 j7 g ( A C C )
         amending Council Regulation (EEC) No 6 36/82 establishing economic outward
                      processing arrangements applicable to certain textiles and
                          clothing products reimported into the Community after
                             working or processing in certain third countries
                                                         (PECOS)
         i      THE COUNCIL OF THF. EUROPEAN UNION,
          Having regard to the Treaty establishing the European                                         Community,
          and in particular Article 113 thereof,
          Having regard to the proposal from nhe Commission,
          Whereas      the import arrangements            m    the Community          for the textile and
          clothing      sectors     as regards       certain      third     countries      contain         specific
          measures       applicable       to   products       resulting        from    outward          processing
          operations;
          Whereas Council Regulation             (EEC) No 636/82< 1 ), as amended by the Act of
          Accession       of    Spain   and Portugal         created      economic      outward         processing
          arrangements applicable to certain -.extile and clothing products reimported
          into the Community after working or processing in certain third countries;
  Whereas, in conformity with the decision of the European Council at its meeting in Copenhagen
  on 21-22 June 1993, and in view of Protocol No. 1 on Textiles and Clothing products to the
   Europe Agreements and the Interim Agreements concluded between the Community and the Czech
   Republic, the Slovak Republic, Poland, Hungary, Bulgaria and Romania, it is appropriate that the
   scope of the application of the Regulation be extended to certain liberalized categories of products
   originating in those countries from 1/1/94 /
HAS ADOPTED THIS REGULATION:
                                             Article 1
Regulation (EEC) No 636/82 is amended as follows
                                                       X
 ---pagebreak---             In Article 11 a third paragraph is added, as follows:
            "For   the  application    of    the  provisions      of  Article   2(3)  of
            Protocol   No 1 on Textiles and Clothing           Products   to the Europe
            Agreement and the Interim Agreements between the Community and
            the  Czech    Republic,   the     Slovak    Republic,     Hungary,   Poland,
            Romania and Bulgaria respectively, the products which are listed
            injAnnex     and which originate in those countries in accordance
            with Protocol No 4 on origin to the Europe Agreements with the
            Community, do not need to be subject to the arrangements or the
            specific   measures   referred     to  in  Article     1(3)  or  the  annual
            limits referred to in Article 2(2)(b).            Prior authorizations for
            those categories of products         shall be issued      by the competent
            authorities    after    notification      to     the   Commission    of  the
            quantities requested, and provided that all other conditions of
            this Regulation are fulfilled."
                                    Article X
This Regulation  shall enter    into force on       // /   /tqqç.
This Regulation shall be binding in its entirety and directly applicable in
all Member States.
 Done at Brussels,                                       For the Council
                                                         The President
                                          2>
 ---pagebreak---                                            Amended proposal for a
                                        CPULN.t IL REGULATION (EC)
          amending Council Regulation (EEC) no 616/B2 establishing economic outtrard
                    processing arrangements applicable t o certain t e x t i l e s and
                       clothing products reimported i n t o the Community after
                          working or processing in certain third countries               94/0179 (ACC)
           HE COUNCIL OF THE EUROPEAN UNION,
           Having regard to the Treaty establishing the European                      Community/
           and in particular Article 113 thereof,
           Having regard to the proposal from '.he Commission,
                                     ,*
           Whereas   the import    arrangements    ..n the Community      for the textile and
           clothing   sectors   as regards     certain    third   countries   contain      specific
           measures    applicable    to   products     resulting    frem \ outward    processing
           operations;
           Whereas Council Regulation      (EEC) NO 636/82^>, as amended by the Act of
           Accession    of  Spain   and   Portuga]    created   economic    outward   processing
           arrangements applicable to certain -.extile and clothing products reimported
           into the community after working or processing in certain third countries;
           Whereas the creation of the InternaL Market of 1993 entails an area without
            frontiers   in which   in particular      the tree    movement   of goods    will be
           ensured; Whereas this entails, inter alia,           the abolition of controls at
            internal frontiers and the elimination of disparities as regards import
            arrangements/ as well Be the opticn of reimporting compensating products
            into a Member State other than that in which the prior authorization was
            granted;
                                                  •V
            (l)   OJ Ho f, It,   70,3.19B7, p. 1
mÊS^SimeimmcmmimmmmmmmmmHmum»mmm\\ti 1
 ---pagebreak---                                               - ifof-
Whereas trade in textile and clothing products should be in line with the
functioning of the said          Internal Market/         in particular at       regard* the
application of the economic outward processing arrangements for textiles;
Whereas the earlier regional outward processing quotas have been replaced
aa  from 1 January/       1993 by a system of Community quotas not allocated
between Member States;
Whereas the competent authorities of Member States should continue to issue
prior    authorizations      to    applicants        wanting   to    make   use   of   outward
processing/     but  in doing       so should       communicate     to the Commission      the
quantities     requested    in   order     to    verify   whether     those quantities     are
available within the total limits established at Community level;
Whereas     quantities    should     be   allocated      by   maximum    tranches/    and  the
applications for a new tranche should only be possible when the previously
allocated tranche has been utilized by at least 50?.;
whereas    the criteria     and    conditions which         Member    state operators must
observe in order to qualify under these arrangements are not at present
applied uniformly throughout the Community;
Whereas, therefore/       the rules for          implementation     of these criteria and
conditions have      to be harmonized          in order      to allow access to outward
processing under conditions common to the whole Community/ especially in
respect of the definition "beneficiary"/ the term of "similar products"/
the priority for manufacturers maintaining an important production within
the Community and the derogation fr^xm the rule concerning the origin of the
product exported for outward processing;
Whereas the allocation of product quantities to each applicant should take
account not only of the quantities available under the import arrangements
established     with   regard    to     the   particular      product    and   third   country
CùtiOêtftëé/   but   also   of    the    bona     fide   status    of   the   beneficiary   as
manufacturer and the efforts of the manufacturer to maintain production and
employment     within    the    Community       of    articles    at    the  same    stage  of
manufacture, while at         the    same    time not      reducing    the quantities made
available to and used by legitimate past beneficiaries;
                                               •b
 ---pagebreak---                                            -l^d^
   Whereas in keeping with the objectives of this Regulation it is appropriate
   that the product quantities allocated to persons who have not manufactured
   similar products in the Community          for more than three yoatt     should be
   reviewed    at  the  end  of   each  ye-ir in    which  available  quantities    for
   newcomers do net prove sufficient;
   Whereas for the purpose of ensuring art efficient and impartial management
   of the system, the distribution of outward processing quantities which have
   not   been   set  aside   to   meet  th*»   applications   of  persons  with   past
   performance rights should be effected on a first-come/ first-served basis;
 Whereas it is necessary that the list of
                                                  products to which this Regulation
 applies should be in conformity with the present classification of textile
 products (categories) based on the combined Nomenclature;
 Whereas the present Regulation should not affect           reimportations into the
 community of products after their working or processing in third countries
 pursuant to prior authorizations issued before the date of its application;
ifhetêaa    an efficient Community administration of the outward processing
arrangements requires close cooperation between the Member states and the
Commission/
HAS ADOPTED Ttfïfl   RECUXATÏÔWJ
                                       Article 1
Regulation (EEC) tfo 636/82     is amended as follows:
I.      in Article 1(1), the words "50 to 62 of the Common Customs            Tariff-
        ate  replaced by the words "SO to 63 of the Combined Nomenclature".
                                         6
 ---pagebreak--- 2.  At the beginning of Article ){J> the following words are inserted!
    «without prejudice to the third paragraph of Article 11."
3.  in Article 1(4) the following subparagraphs ate           added ».
     "(6) 'competent   authority     means    the  authority     in a Member      state
          which  is competent    to   »pply the provisions         laid down in the
          present   Regulation,     in    particular     the    granting    of    prior
          authorizations.
      (d) 'similar products' are       lefined as products falling within the
          same category or within         the same group of categories as is
          listed in Annex 1, which may be modified in accordance with the
          procedure laid down in Article 12."
 4.  Article 2(2)(a) i* replaced bv the following text:
     "(a) that person must:
                prove to the competent         authority, when applying        for his
                first   prior    authorization       each    year,     that    he   has
                manufactured   in   the     preceding   year    products    which    are
                similar  to and at the same stage of manufacture                aa   the
                compensating products in respect of which the application
                for the arrangement is made;
                perform,   within      -.he   Community,     the    main    production
                processes on those products (cutting, sewing, assembling,
                or knitting> on his own account, either in his or her own
                factory, or alternatively, in respect of some but not all
                of  those  production      processes,    in a    factory of     another
                manufacturer    linked      to   him   by   a    joint   venture,     by
                subcontracting,     or    by    some   other     form   of   long-term
                cooperation eontracn;
                manufacture in the community those products for sale on the
                market."
                                             1-
 ---pagebreak---                                       &f
   In Article 2(2)(b) the second part of the sentence is replaced by the
    following textJ
   "... operations within       the quantities allocated     by the competent
   authorities of the Member St*te where the application is made, and
   subject to the conditions laid dovn in Article 3."
   In Article 2(2) (c) the last sentence of the first subparagraph is
   replaced by the following texr, :
    "Such derogations may not be granted in respect of        more than 14* of
   the total value of the goods'*> in respect of         which the benefit of
   the arrangement was granted :o the beneficiary during the previous
   year.   In exceptional and economically justified cases the competent
   authorities, on the basis of a decision taken in accordance         with the
   procedure laid down in Artie je J 2,      may agree  to a higher percentage
   of derogation.
    (*)  'Total Value of the good»" means:
                in the cane of the goods imported beforehand, their value
                for customs purposes an Ho/ined by Pegulation (EEC)
                 2913/92 (OJ No. 1302, 19.10.1992, PI)
                in all other cases, the ex-factory price."
7. In Article 2(3), the second sentence of         the fourth subparagraph is
   deleted.
8. .Article 3 i3 replaced by the -'oilowing text:
                                  "Article 3
    1.   The    Council   shall  establish   at  Community  level   the  annual
         quantities of compensating products whose reimportation may be
         authorized under the specific import arrangements ref»rr*»d to in
         Article 1(3).
     2.  The Competent authorities shall distribute the annual quantities
         tatêtreà    to in paragraph (1) above amongst the beneficiaries as
         âotined    in Article 2.
                                       g
 ---pagebreak---                                             Atr -
   3. Without prejudice to Article 2(3) or                     paragraph       (5> below, this
      distribution       shall be such as to ensure                  that the objective           of
      maintaining      the     industrial        activity of       the beneficiary          in the
      Community,      as    laid     dowr, in Article          2(2)(a),      is   respected       as
      regards     both    the nature of           the products         and   their   quantities
      expressed in physical units or added value.
   4. The     annual     quantities          of    compensating          products     shall       be
      distributed       among       the    beneficiaries         on     the   basis   of      their
      demands presented in conformity with Article 4(2).
      The    allocation      wi L1     b« effected        by   maximum      amounts    for     each
      category      and     for     e*ch     third     country       concerned.      if     a    new
      application       is submitte'i, additional              amounts      for each         category
      and    for   each    third cour try concerned              may be allocated           by the
      competent authorities to a particular beneficiary only when the
      previously       authorized         amount     for    that      beneficiary      has      been
      actually utilized by at .east 50'*.
   5. Each legitimate benefici-iry shall be entitled to an amount equal
      to the total quantity of compensating products for each category
      and    for each     third country concerned               for which       it carried out
      outward processing operations                  in conformity with the provisions
      of     the   Regulation,          during     one     of    the     two    calendar      years
       preceding the year of             ira application.           Beneficiaries mentioned
       in this paragraph become eligible for allocations                          in accordance
      with     paragraph      (6)    only when       they    have    fully used      their      past
       performance rights.
       In    addition,      a     legitimate       beneficiary        who    waives    his      past
       performance       rights       in   respect     of    a   specific      category      and/or
       country becomes eligible to apply for an equivalent quantity in
       another     category       and/or country,          in accordance vith          the     first
       subparagraph of paragraph (6)                (general rules for newcomers); the
       criteria generally to be applied in such cases shall be decided
       in accordance with the procedure laid down in Article                            \/.
74
1                                             <i
 ---pagebreak---                                                                      ttf -
                               6.      The competent authorities shall allocate on a first-come, first-
                                       served oasis the quantities of compensating products which have
                                       not been temporarily set aside to fulfil the application» made
                                       under paragraph (5).
                                       During the first nine months of each year              allocations shall be
                                       granted   to   those    manufacturers    who     can    prove    that    in  the
                                       preceding    year   they   maintained     a    production      value     in  the
                                       Community of at least SO», of their total turnover.
                                       During   the     remaining    three    months       of    each    year     those
                                       manufacturers who can \ro*/e        that    in the preceding year           they
                                       maintained,     in  the   Coînmunity,   a     significant      production     of
                                       similar products, in relation to the quantities requested,                   can
                                       participate in the distribution of the remaining quota.
                               7.      Where those** bene*iri8ri«>3 referred in paragraph             (S) do not use
                                       the total quantities to which they are             entitled, the remainder
                                       of such quantities, but in any case not more than 10. S# of each
                                       total   quantityO,       sha>l   be  added      to   the   following      year's
                                       quantities referred to J:I paragraph          ($).
                               9.      At  the  end    of   each  y*ar    in which      available     quantities of
                                       compensating products pjove to be insufficient to satisfy the
                                       applications made under        paragraph     (6)   consideration       shall be
                                       given in accordance with the procedure laid down in Article 12,
                                       to the extent to which, and the way in which, allocations to
                                       those persons who have not manufactured similar products for at
                                       least three years have to be reduced.
                               9.      Provisions relating to -he application of this Article shall be
                                       adopted    in    accordance    with   the     procedures       laid    down   in
                                       Article 12.
                                        (*> According to Article 4(2) of Annex XXIII of Council
                                             Regulation no 4i36/J.6,     which expired on 3 1 December 19?2."
                                                                       \c
WWWMBMWI »U> IIKMM.MWHI'iiw.'miuMi > i m m                                                  WWiWWJWWIWWWWlBBBBMW^^
 ---pagebreak---                                       fyy
9.  Article 4(1) is replaced by the following text:
    "1.     Application      of    the       arrangements      contained      in     this
            Regulation is subject to the issue of a prior authorization
            by the competent authorities.
            In order to ensure that the allocated prior authorizations
            do not exceed the -.otal annual quantities of compensating
            products     established       at    Community    level   the    competent
            authorities     shall    issue      prior   avithorizations     only     upon
            confirmation      by   the     Commission      that    there   are     still
            quantities available of the total Community quota                   for the
            category    and  the   - hird      country   concerned,    for   which     the
            quantities are requested by the persons concerned."
10. Article 4(2)is deleted.
11. Article Sfii is replaced by the following text:
    "4.     When     granting      prior        authorizations       the     competent
            authorities must be satisfied that the level of employment
            in   the   factory    or     factories     of   the   applicant      is   not
            significantly af fee ".ed.~
12. In Article 7, the first paragraph is deleted.
13. In Article       8, the word?       at    the o n d of  paragraph     (1) "by the
    Kember     State    that   issuer!     the    prior   authorization     for     those
    products" are deleted.
14. Article    8(2) is deleted.
15. in the first and second paragraphs of Article 7, the words "of
    the Member State concerned" aro              deleted.
                                          I)
 ---pagebreak---      l** la Article       n , th* *<*eortd paragraph i* r&p\*c*4 by ih+ following
      ^^T^cXi^^\p\t^,0                               12
                                                                      Ar,icles 154 ,o 159 of c
                                                          c t o b e r 199
                                                                                                     °--i
      Code of the C o m i n g l i J                     °                  ?- establishing the Customs
      standard e x c h a " V                    9
                                                   *  ,he
                                                           °  U , W a r d Pr CeSS, n
                                                                            °     ' 9 ^ " n g e m e n t s and
             '".I   Nu I   502, 19. 1 0 . 1 W 2 , f.. i \
/"^-       Th# *tt*<5h*d      App4T\6iy( 1 b*eom«* Ann** 1 t o thn R e g u l a t i o n .
 /#.'      Th# Arirt** 1* ttplactd              Y.y t h « a t t a c h e d   Appendix" 2 and becomes
           Xrtrt#y 2 t o t h * R e g u l a t i o n ; and fefez'enee* made in t h e R e g u l a t i o n
           t o t h # Anrtetf boaotn* r e f e r e n c e * t o Anne* 2.
                                                         11
 ---pagebreak---                                  Article 2
The  present  Regulation  shall  not  affect   the  r«impo»-tat. or 'nto  the
Community of products after working or proeessii-g in third countries on the
basis of prior authorizations i«sund before the entry into force of this
Regulation.
                                 Article 3
This Regulation shall enter into force on the seventh day following its
publication in the Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in
all Member States.
Done at Brussels/                                ror the Council
                                                 The President
                                     15
 ---pagebreak---                                        - 1* -
                                                               App«ndl* 1
                                      "ktmtx l
              Group* erf t*t*qtjtL«§ t*t*tt*d  to lft Artiftl* l(4)di
Similar product§ at the ««me «tage of manufacture are defined a* product*
fillip within th« §am« eatagary &r within th# «am« group af eat#gttri«« a*
lifted btldWf
lit group (outerwear;
categories 4, $/ «/ 7/ 8/ 14/ 1$/ 16/ 17/ 21/ 26/ 27/ 28/ 29/ 11, 74/ 75/
7«/ 77, 70/ 83.
2nd group <</nderwear>
GJtegOfief 4/ 13/ 18, 24/ 28/ 31/ 6'f/ 72/ 78/ $1,      86.
ltd group (other product*i
OiUqotitM   ib,  il, 69, 1tj, 11, IB,   M, 85/ 87.
 ---pagebreak---                                                                                                             Appendix 2
                                                                            •Awwex 2
                                    tiét of « « i m a m p*oce««ing level* referred to in Article                  2(2j(dj
                       compensating product* by e*tégorié*(l)                                  MaxiÊiua procé**ing l«*él
                       Cmtegotieg                                                              operation
                       •4/       5/ 6, 7/ §/ 1&/ 12/ 13/ 14/ 15/                               processing from woven or
                       lé/       17/ 18/ 21/ 24/ 26/ 27/ 28/ 29                                Knitted fabric*(2)
                       31/       éf, ««/ 10, 12, 11, 74/ 7$/ 76/ 77/
                       78/       83/ 85/ 86/ 87/ pre-
                       * (1)        categories refer to those listed in Annex 1 to Council Regulation (EEC) No. 768/88 (OJ nr. L 84
                                    of 23.3.1988) and of Regulation (EEC) No. 369/92 (OJ No. L 45 of 20.2.1992)                     l
                          (1)        «/owéVér/ thé opération wh*réi/y fully fashioned knitwear i« obtained
                                     from yarti m«y al*o eount a* a proce**ing operation within the meaning
                                     of thi* Regulation/ provided that thé temporary étfport* of y«rn
                                     authorized for thi* purpo** in «ny year do not exceed It by weight of
                                     thé total temporary exports authorized in the community in thé
                                     préviou* y*«r under specific arrangements of the type referred to in
                                     Article l(3j.
                                      The Connie a ion shall         ensure chat the limit of 71 aa foreseen above
                                     will not bé exceeded           at thé Community level.
                                      ter thi* ênd thé provi*ion* of Article i, paragraph                  1, subparagraph 2,
                                      «hall apply/-
                                                                                 l>>
ïi£5;\ •'*»<*'. Ti:•;•.. :.v5'.;-.:
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(94) 328 final
                                                      DOCUMENTS
EN                                                                         1103
                                 Catalogue number : CB-CO-94-344-EN-C
                                                             ISBN 92-77-71859-5
OfiBce for Official Publications of the European Communities
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