CELEX: 51981PC0061
Language: en
Date: 1981-03-17
Title: PROPOSAL FOR A COUNCIL REGULATION (EEC) establishing economic outward processing arrangements applicable to certain textile and clothing products reimported into the Community after working or processing in certain third countries (presented by the Commission to the Council)

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COM (81) 61
Vol. 1981/0018
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 ---pagebreak---   COMMISSION OF THE EUROPEAN COMMUNITIES
                                              COM ( 81 ) 61 final
                                              Brussels , 17th March 1981
                      PROPOSAL FOR A COUNCIL REGULATION ( EEC )
          establishing economic outward processing arrangements applicable
          to certain textile and clothing products reimported into the Com­
          munity after working or processing in certain third countries
                  ( presented by the Commission to the Council )
                               \       -        /
COM ( 81 ) 61 final
 ---pagebreak---                                 EXPLANATORY NOTE
     Outward processing , i.e. the temporary exportation of materials ( in this case •
      from the Community ) for processing in a third country , is a type of trade
     which continues to grow in importance , not least in the textile and clothing
     sector .
   - According to the statistical data available at present ( in respect of
     1979 ) the relative importance of textile outward processing in relation
     to total imports of textile products and clothing may be calculated as
     follows :               '                             '
MFA products        Total imp . 1979       OPT imports 1979   % imp . OPT/ Total imp .
                       ( tonnes ) ■             ( tonnes )
Group I               835.527                  13,206                  1.6
Group II              280,116 .                26, 048                 9.3
Group III             404 / 705                    676               - 0.2 ; ,
Group IV               75,133                  10,981                14.6
Group V             ' 101,766                      664                 0.7
Total               1 697 247                . 51 575                  3.1
     The significance of these figures should be viewed in the light of the
     following corrective factors :
     -   the incidence of outward processing traffic varies considerably from one
         geographical zone to another . At present it is concentrated essentially
         on the State-trading countries zone and the Mediterranean zone although
         not insignificant flows exist and continue to appear vis-a-vis certain
         Asian suppliers ;                                      '
     - OPT also varies considerably from one product to another . For exanple ,
         in the Benelux , OPT in suits and coordinate suits ( Categories 16 and
         75 ) represents 50% of total imports and 39% of production .- In Germany .
         OPT in the same products represents 27% of imports and 14% of production
         ( around the same proportion exists for Category 16 ( dresses )). In
         France , OPT in suits and coordinate suits represents 39.6% of imports
         and 5.3% of production .
 ---pagebreak---   The Community has admitted the principle that products imported after outward
  processing should be treated differently from other imports . Council Directive
  76/119/EEC of 18 December 1975 harmonizes provisions laid down by law, regulation
  or administrative action in respect of outward processing ( 1 ). This directive ,
  which confines itself to the tariff aspect of the matter , provides for total or
  partial relief from import duties provided that certain conditions are fulfilled .
  It is clear that insofar as the objective of rules for outward processing trade
  is to enable a special treatment to be granted to this kind of trade within
  the framework of commercial policy the conditions applied must be necessarily
  different .
  The present proposal seeks therefore to establish common rules for outward
 processing of textile and clothing products , which may be used whenever the
 Community decides to apply special commercial policy measures to imports
 resulting from outward processing . Such measures have already been adopted
  with respect to the preferential countries of the - Mediterranean basin
   ( including Portugal ) as well as in the arrangements applied to certain
  state-trading countries .
    However , outward processing traffic will also constitute an important
    part of future import regimes which will be agreed or decided upon
    vis-a-vis other third countries particularly following the renegotiation
    of MFA bilateral Agreements .
  If a more favourable treatment is to be granted to certain imports when they
  result from outward processing it is a necessary corollary that the benefit
  of the arrangements must accrue to Community industry , which bears the burden
. of imports . The benefit derived from the arrangements by Community producers
   ( 1 ) CJ No . L 24 of 30.1.1976 , p. 58
 ---pagebreak---                                     - 3 -
  who manufacture part of their output in third countries where costs are lower
  is that they may reduce their average costs and thus become more competitive .
  However , the benefit of such arrangements must be accompanied by a certain
 number of conditions .
  in this regard . Article 2 of the proposal lays down certain fundamental prin­
  ciples . First , the arrangements established by the regulation are granted
  only to persons who make , in the Community , products at the same stage of
  manufacture as those for which an authorization for outward processing is
  sought . Secondly , in order to ensure that outward processing operations do
  not lead to an actual transfer of production , the added value resulting*
  from the manufacture by any single operator of outward processed products
  in all third countries is limited to a fixed proportion ( which may not
  exceed 30% ) of the added value resulting from his or her output of similar
  articles in the Community . The envisaged figure of 30% represents not so
  much an unalterable proposal as a basis for discussion which is capable of
  evolving to take account , on the one hand , of the state of affairs already
  existing and , on the other „ of decisions to be taken in future on the frame­
  work of commercial policy .
 There is , furthermore , a provision reauiring that the goods temporarily
 exported roust normally be of Community origin . Finally , Article 2 limits
 the extent of the operations which may be performed outside the Community .
 Attention should also be drawn to Article 4 , paragraph 4 of which permits
 the authorities of the Member States to make authorization of the arrange­
 ments conditional on the maintenance of a particular level of employment
 by the applicant .
In return for the constraints which the proposed regulation imposes on
operators using outward processing arrangements , Article 7 provides that
once the arrangement has been duty authorized , operators have a guarantee
that they may import their products . This provision will end the situation
of uncertainty which at present exists for firms practising outward processing
within the framework of ordinary import quotas who cannot always know whether
it will be possible to re-import their products .
 ---pagebreak---                                     „ 4 -
During the debate which has taken place at Council level on the proposal
pit forward by the Commission in February 1979 for a regulation establishing
economic outward processing arrangements applicable to certain third countries
enjoying preferential treatment , a number of points of substance have been
admitted which take account of the special circumstances attaching to the
arrangements for voluntary restraint of exports- from these countries to the
Community , These specific elements roust be preserved .
To this end , the proposal regarding these countries must be kept , not least
of all because it remains extremely urgent to establish Community rules for
these countries , since the arrangements already in force provide for outward -
processing trade to be treated in a special way .
It should be noted , finally , that as this proposal is a regulating
framework destined to cover not only existing outward processing trade
flows but also new or developing trade flows , it does not specify in
detail in view of the diversity of possible situations , the particular
measures which will be necessary to apply the regime vis-a-vis certain
third countries so as to maintain existing trade flows .
However , Article 1(4 ) allows as its objective the insertion of such
particular measures in the present or future import regimes applicable
to these countries .   These particular measures should provide for :
-  " ad hoc " measures which will allow operators not fulfilling the
   conditions of the new regime ( in particular traders and those
   industrialists exceeding the 30% percentage ) to continue to benefit
   from OPT in respect of the quantities accorded to them within the
   framework of existing OPT , before the entry into force of the new
   regime ;
_  " ad hoc " measures to ensure that countries with which specific OPT
   measures do not exist at present , do not have their present possibilities
   for importing into the Community reduced as a result of introducing
   quotas reserved specifically for OPT .
 ---pagebreak---                                         proposai
                                      for a
                       COUNCIL REGULATION ( EEC )
establishing economic outward processing arrangements applicable to certain
textile and clothing products reimported into the Community after working or
processing in certain third countries
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community , and
in particular Article 113 thereof ,
Having regard to the proposal from the Commission ,
Whereas the arrangements for importations into the Community in the textile
and clothing sector from certain third countries include specific measures
  applicable to products resulting from outward processing operations ;
Whereas in the absence of Community rules setting out the conditions which
must be fulfilled by products intended to benefit from the said specific
measures , these conditions are at present governed by varying provisions
peculiar to certain Member States or even non-existant in other Member States ;
Whereas it is , in consequence , necessary to establish Community arrangements ,
uniformly applicable in all the Member States and replacing the existing
national arrangements ;
Whereas Council Directive 76/119/EEC on the harmonization of provisions laid
down by lav/, regulation or administrative action in respect of outward processing
( 1 ) provides for the granting , subject to certain conditions , of a more favour­
able tariff treatment to products reimported after processing outside the
Community ; whereas this Directive does not , however , establish rules for out­
ward processing trade from the point of view of commercial policy ;
 ( 1 ) COT No L 24 of 30.1.1976 , p. 58
 ---pagebreak---                                       - 2 -
   Whereas the policy' followed by the Community is intended in particular to
   enable the textile and clothing industry to adapt to the conditions of
   international competition ; whereas these outward processing arrangements
   roust fit in with efforts to increase the competitiveness of Community industry
   and must therefore not only be reserved to that industry but also be granted
   only to undertakings which make in the Community products at the sane stage
' of manufacture as those which are intended to be reimported after outward
 , processing ;                         ■ '_       •
   Whereas the added value of products reimported into the Community by each
   manufacturer should not exceed a maximum percentage , fixed at Community level ,
   of the added value resulting from his or her output of products at the same
   stage of processing in the Community;
   Whereas it must be provided that the goods temporarily exported under these
   arrangements must be of Community origin ;
    Whereas the benefit of this regime , which implies a guarantee that
   products may be reimported following outward processing operations ,
   must be accorded within the framework of specific measures of commercial
   policy reserved for outward processing traffic .
                  :                       i ....        .
    Whereas it is necessary to ensure the uniform application of the new arrange­
    ments and, to that end, to establish a Community procedure for their adminis­
    tration ;
    HAS ADOPTED THIS REGULATION :
 ---pagebreak--- Article 1
1 . This Regulation lays down the conditions governing trie implementation of
     economic outward processing arrangements for textile products and clothing
     listed in Chapters 50 to 62 of the Common Customs Tariff .
2.     Economic outward processing arrangements " ( hereinafter referred to as
     " the arrangements ") within the meaning of this Regulation meai.s the
    arrangements which allow the temporary exportation of goods outside the
    customs tarritory of the Community for subsequent reimportation as com­
    pensating products in the form of one of the textile or clothing products
    referred to in paragraph 1 after processing in a third country with
    respect to which specific measures of commercial policy have been adopted
    in respect of outward processing traffic .
 3.    For the purposes of this Regulation :
       (a)  " compensating products " means products resulting from the use of
            goods which have undergone the processing operations referred to
            in Article 2(2 ) ( d );
       (b)  "goods " means goods exported from the customs territory of the
            Community to undergo these processing operations .
 4.    This Regulation shall apply without prejudice to the special provisions
       laid down for the implementation of arrangements for importations from
       certain third countries , particularly to take account of the particular
       characteristics of existing trade flows with those countries .
 Article 2
 1.    The benefit of the arrangements provided for in this Regulation shall
       be accorded only to natural or legal persons established within the
       Community .
 ---pagebreak--- Any persons applying to benefit tinder the arrangements in accordance with
paragraph 1 must also fulfil the following conditions :
                                                                       I
( a ) that person must manufacture for his own account , in his or her factory ,
      situated in the Community , products at the same stage of manufacture
      as the compensating products in respect of which the application for
      the outward processing arrangements is made ;
(b )  that person may have manufactured by means of outward processing ,
      in all third countries , compensating products up to the level of
      a percentage of 30% of the annual added value represented by the same
      products or products at the same stage of manufacture which he or she
      makes in the Community .
      In determining the said annual added value , account may be taken of
      cases where he has the same products or products at the same stage of
      manufacture manufactured in the Community from materials he has himself
      supplied or from his own models .
      This percentage may be different for those applicants whose factory
      is situated in a Member State other than the one in which application
      is made .
(c)   The goods which that person exports temporarily for processing
      operations must be in free circulation within the meaning of Article
      9(2 ) of the Treaty and of Community origin within the meaning of the
      relevant Community rules ;      derogations from the provisions of this
      subparagraph may be granted by the Member States' authorities only
      in respect of goods Community production of which is insufficient .
      Such derogations may not be granted in respect of more than 10% of
      the total value of the goods in respect of which the benefit of the
      arrangements has been granted in the Member State concerned .
 ---pagebreak---                                       - 5 -
          The Member States shall communicate quarterly , within the Committee
          referred to in Article 12 , the main aspects of the derogations thus
          granted , viz . the nature , origin and quantities of the goods in
          question originating outside the Community .
          However , goods consisting of trimmings and accessories which do not
          fall within Chapters 50 to 62 of the CCT may be of non-Community
          origin .
    (d)   The processing operations to be carried out in third countries must
          not be more extensive than those stipulated for each product in the
          Annex . The processing operations to be carried out may , however ,
          be less extensive than those stipulated for each product in the
        • Annex .
article 3
1.  The competent authorities of the Member States into which the compensating
    products are to be reimported shall accord the benefit of the arrangements
    upon request to those persons                                             who
    meet the conditions laid down in this Regulation , by issuing a prior
    authorization to them .
2.  The applicant shall submit to the competent authorities the contract
    concluded with the undertaking responsible for carrying out the processing
    operations for his account in the third country , or any evidence considered
    by the said authorities to be equivalent thereto .
 ---pagebreak--- Article 4
1.  Prior authorization shall be granted only where it is possible for the
    conpetent authorities to identify temporarily exported goods in the
    reinported compensating products .
2.  Ihe conpetent authorities may refuse entitlement under the scheme to
    persons who do not provide all the necessary guarantees to enable them
    to exercise effective control over the provisions of Article 2 .
3.  The prior authorization shall lay down the conditions under which the
    outward processing operation is to take place ; these shall include :
    - the quantities of goods to be exported and of products to be
      *reimported , calculated by reference to the rate of yield fixed
      in the light of the technical data relating to the processing
      operation or operations to be carried out , if these have been
      established , or , if not , the data available in "the Community for
      operations of the same kind ;                                   \
    - the arrangements for identifying the temporarily exported goods
      in the compensating products
    - the time limit for reimportation depending upon the time necessary
      to carry out the outward processing operation or operations .
    Where circumstances so justify , the elements of the prior authorization
    referred to above may be fixed globally for the same applicant for one
    year .
4.  The conpetent authorities may make the granting of prior authorizations
    conditional upon the maintenance of a given level of employment in the
    applicant 's factory or factories .
 ---pagebreak---                                    - 7 -
5.  Where the compensating products differ substantially in kind or in purpose
    from the products customarily manufactured by the applicant in the Community ,
    the competent authorities may refuse to grant the prior authorization if
    they consider that the reimportation of these products might put seriously
    at risk the industrial activities of other manufacturers of the same products
    within the Community .
Article 5
The prior authorization issued by the competent authorities shall be submitted
to the customs office concerned at the time of temporary exportation for the
purposes of accomplishing the customs formalities .
Article 6
Member States shall provide the Commission with statistical information relating
to prior authorizations issued each month before the 10th of the follomng month .
If the Commission so requests , the Member States shall notify it of any refusal'
of prior authorization together with the reasons , relative to the conditions
in this Regulation , why such authorization was withheld .
Article 7
1.  Without prejudice to the following paragraphs , and provided the conditions
    laid down in the authorization are complied with and the other customs
    formalities normally required at the time of inportation are observed ,
    the reimportation of the compensating products may not be refused by the
    Member State that issued the prior authorization for those products .
2.  Such products may. not be reimported into a Member State other than that
    in which the prior authorization was issued .
 ---pagebreak---                                       - 8 -
3.   When the compensating products are reimported into the Community the person
     declaring them shall submit to the competent authorities , without prejudice to
any other Community regulations governing trade with the third country con­
     cerned, the prior authorization together with proof that the outward
     processing operation has in fact been performed in the third country
     stated in the prior authorization .
Article 8
The competent authorities of the Member State concerned shall decide whether
and in what circumstances they may :
- grant an extension of the time limit for reimportation originally fixed ;
- allow the products to be reimported in several consignments ; where this
   is done , a note shall be made , on the prior authorization as each consign­
   ment arrives .                                                        '
The competent authorities of the Member State concerned may also allow the
reimportation of the compensating products even if not all the outward
processing operations provided for in the prior authorization have been
carried out .
                                       Λ   ♦
Article 9
_____
When ownership of goods temporarily exported under the outward processing
arrangements is transferred, the competent authorities shall allow the
arrangements to continue provided that the transferee fulfils the conditions of
this regulation in respect of the operation in question.
Article 10
Member States shall communicate to the Commission statistical information
relating to all reimportations carried . out on their territory under these
arrangements .    The Commission shall communicate this information to the
Member States .
                                                                 • « •/ m • •
 ---pagebreak---                                       - 9 -
Article 11
The arrangements provided for in this Regulation shall replace all other
economic outward processing arrangements currently applied by the Member
States in respect of the products referred to in Article 1 of this Regulation .
           Council Directive 76/119/EEC ( 1 ) on the harmonization of provisions
laid down by law , regulation or administrative action in respect of outward
processing , as well as measures taken for its application , shall not be
affected .
Article 12
Ihe Committee for Customs Processing Arrangements established by Article 26
of Directive 69/73/EEC ( 2 ) may examine any matter concerning the implementation
of this Regulation raised by its Chairman either on his own initiative or at
the request of the representative of a Member State .
The provisions required for the implementation of this Regulation shall be
adopted in accordance with the procedure laid down in Article 28(2 ) and ( 3 )
of Directive 69/73/EEC .
Article 13
This Regulation shall enter into force on
This Regulation shall be binding in its entirety and directly applicable in
all Member States .
Done at Brussels ,                    For the Council
                                      The President
( 1 ) QJ No . L 24 of 30.1.1976 , p. 58
( 2 ) OJ No . L 58 of 8.3.1969 , p. 1
 ---pagebreak---                                                                        ANNEX
 List of     maximum processing levels referred to in Article 2(2 ) ( d ) .
COMPENSATING PRODUCTS BY CATEGORIES ^            MAXIMUM PROCESSING LEVEL
       Cateqories                                Operation
  4 , 5 , 6 , 7 , 8 , 10 , 11 , 12 , 13 , 14 A,. Processing from woven or knitted
14 B , 15 A, 15 B, 16 , 17 , 18 , 21 , 24 ,      fabrics .
 25 , 26 , 27 , 28 , 29 , 30 A, 30 B, 31 ,                         •
 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 ,
 78 , 79 , 80 , 81 , 82 , 83 , 85 , 86 , 87,
 91 .
 (1)     Categories refer to those listed in Annex I of Council Regulation
          ( EEC) No . 3059/78 of 21 December 1978 (OJ No L 365 of 2 7.12.1978 ) .