Proposal for a COUNCIL REGULATION concerning the arrangements applicable to imports into the Community of products originating in the Republics of Bosnia and Herzegovina and Croatia and to imports of wine originating in the former Yugoslav Republic of Macedonia and the Republic of Slovenia

(Text with EEA relevance)

(presented by the Commission)

EXPLANATORY MEMORANDUM

After the denunciation of the 1980 Cooperation Agreement between the European Economic Community and the Socialist Republic of Yougoslavia in 1991 the Council decided that preferential trade arrangements contained in that agreement shall continue to apply on an autonomous basis to all countries which emerged from former Yugoslavia with the exception of the Federal Republic of Yugoslavia. [1] Currently, the autonomous trade arrangements continue to apply to Bosnia and Herzegovina and to Croatia with which no bilateral agreements have yet entered into force.

[1] Temporarily inclusion of the Federal Republic of Yugoslavia in 1997 (9.5.97-31.12.97).

These trade arrangements essentially comprise exemption from customs duties and the abolition of quantitative restrictions for industrial products (except for some products subject to tariff ceilings) and special concessions for various agricultural products. Furthermore, in the absence of a special wine agreement to be concluded with Slovenia and the former Yugoslav Republic of Macedonia, autonomous and transitional concessions for imports of wines originating in these countries are equally granted.

Council Regulation (EC) No 70/97, as last amended by Regulation (EC) No 2863/98, concerning the arrangements applicable to imports into the Community of products originating in the Republics of Bosnia and Herzegovina and Croatia and to imports of wine originating in the former Yugoslav Republic of Macedonia and the Republic of Slovenia, expires on 31 December 1999.

In the context of the Stabilisation and Association process for countries of South-Eastern Europe, the Commission already indicated its intention to split in future the existing system of autonomous trade preferences into separate trade preferences for the countries concerned in order to ensure a transparent and equitable share of these preferences between these countries, and to prepare possible future negotiations for bilateral agreements. [2] In addition, the Council, in its conclusions of 13 September 1999 had invited the Commission to examine further improvement.The aim of the attached proposal for a Council Regulation (EC) is:

[2] Commission Communication to the Council and European Parliament on the Stabilisation and Association process for countries of South-Eastern Europe, Bosnia and Herzegovina, Croatia, Federal Republic of Yugoslavia, former Yugoslav Republic of Macedonia and Albania, COM(1999) 235 final of 26.5.99.

- the renewal of these trade arrangements for a two-years period until 31 December 2001;

- the technical adjustments necessary following the amendments to the Combined Nomenclature and to other relevant EC legislation;

- the inclusion of a temporary suspension clause in order to safeguard the Community's financial interests in cases of fraud or failure to provide administrative cooperation as required for the verification of evidence of origin by the countries concerned;

- the annual increase by 5% of the amounts of the tariff ceilings for industrial products;

- the split of the global trade preferences into country specific ones - with the exception of the concessions for wine - for the countries currently eligible to preferences under the Regulation while taking into account existing trade flows and earmarking the corresponding volume for the future potential use by the Federal Republic of Yugoslavia once conditions are met for its inclusion into this Regulation;

- the abolition of six tariff ceilings for industrial products and an additional increase of the volumes for 16 of the remaining 32 tariff ceilings.

As Council Regulation (EC) No 70/97 has been amended several times, it seems desirable to make the above mentioned changes in a single new regulation.

The Commission suggests the attached proposal for a Council Regulation (EC) for adoption to the Council.

1999/0270 (ACC)

Proposal for a

COUNCIL REGULATION

concerning the arrangements applicable to imports into the Community of products originating in the Republics of Bosnia and Herzegovina and Croatia and to imports of wine originating in the former Yugoslav Republic of Macedonia and the Republic of Slovenia

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,

Having regard to the proposal from the Commission,

Whereas:

(1) Council Regulation (EC) No 70/97 [3] concerning the arrangements applicable to imports into the Community of products originating in the Republics of Bosnia and Herzegovina and Croatia and to imports of wine originating in the former Yugoslav Republic of Macedonia and the Republic of Slovenia expires on 31 December 1999;

[3] OJ L 16, 18.1.1997. Regulation as last amended by Regulation (EC) No 2863/98 (OJ L 358, 31.12.1998, p. 85.)

(2) These arrangements will eventually have to be replaced by provisions contained in future bilateral agreements and specific wine agreements to be negotiated with the countries in question; in the meantime the arrangements granted by Regulation (EC) No 70/97 should be maintained; the amounts of the tariff ceilings for industrial products should be increased annually by 5 % as provided for in Article 4(1) of Regulation (EC) No 70/97; Council Regulation (EC) No 70/97 has been amended several times and taking into account the modifications to the Combined Nomenclature and to the Taric subdivisions and other technical adjustments, it seems appropriate to renew the autonomous trade preferences within a complete new Regulation; it is unnecessary to include in the coverage of this Regulation products for which the Common Customs Tariff duty is free;

(3) In accordance with the EU' Regional Approach, based on the conclusions of the Council of 29 April 1997, the development of bilateral relations between the European Union and the successor republics of the former Yugoslavia, other than Slovenia, is subject to certain conditions; the renewal of autonomous trade preferences is linked to respect for fundamental principles of democracy and human rights and to the readiness of the countries concerned to allow the development of economic relations between themselves; it is, therefore, appropriate to monitor the compliance by Bosnia and Herzegovina, Croatia and the Federal Republic of Yugoslavia with these conditions;

(4) Bosnia and Herzegovina and Croatia continue to fulfil the relevant conditions; it is therefore appropriate to continue the inclusion of these countries in the regime of autonomous trade preferences;

(5) At the time of the extension of the autonomous trade preferences to the Federal Republic of Yugoslavia on 29 April 1997, the Council issued a Declaration setting out its expectations in terms of democratisation, in particular the full and speedy implementation of the 'Gonzalez' recommendations; it also noted that in the absence of progress towards meeting these criteria, the decision granting autonomous trade preferences would be reviewed; no significant progress has been made with regard to the relevant conditions and in the light of events in Kosovo and in the region, it is still not appropriate to include the Federal Republic of Yugoslavia in the autonomous trade regime, without prejudice to the possibility of including the Federal Republic of Yugoslavia at a later stage should conditions so permit;

(6) These preferential concessions comprise exemption from customs duties and the abolition of quantitative restrictions for industrial products, except for certain products subject to tariff ceilings, and special concessions for various agricultural products;

(7) The arrangements applicable to imports of textile products originating in Bosnia and Herzegovina and Croatia are governed by the provisions of Council Regulation (EC) No 517/94 [4];

[4] OJ L 67, 10.3.1994, p.1. Regulation as last amended by Commission Regulation (EC) No 1457/97 (OJ L 199, 26.7.1997, p. 6).

(8) For the purposes of certification of origin and administrative cooperation procedures, the relevant provisions of Commission Regulation (EEC) No 2454/93 of 2 July 1993 [5] laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code [6] should be applied;

[5] OJ L 253, 11.10.1993, p.1. Regulation as last amended by Commission Regulation (EC) No 1662/99 (OJ L 197, 29.07.1999, p.25).

[6] OJ L 302, 19.10.1992, p.1. Regulation as last amended by Regulation (EC) No 955/99 of the European Parliament and of the Council (OJ L 119, 7.5.1999, p. 1.)

(9) Community monitoring may be achieved by means of an administrative procedure based on charging imports of the products in question against the tariff ceilings at Community level as and when those products are entered with the customs authorities for free circulation; this administrative procedure must make provision for the possibility of reintroducing customs duties as soon as the ceilings are reached at Community level;

(10) This administrative procedure requires close and particularly rapid co-operation between the Member States and the Commission, which must in particular be able to follow the progress of quantities charged against the ceilings;

(11) The decision for the opening of tariff quotas should be taken by the Community in the execution of its international obligations; to ensure the efficiency of a common administration of these quotas, there is no obstacle to authorising the Member States to draw from the quota-volumes the necessary quantities corresponding to actual imports; however, this method of administration requires close co-operation between the Member States and the Commission and the latter must in particular be able to monitor the rate at which the quotas are used up and inform the Member States;

(12) It is necessary, in particular, to ensure for all Community importers equal and uninterrupted access to the said tariff quotas and to ensure uninterrupted application of the rates laid down for the quotas to all imports of the products concerned into all Member States until the quotas have been used up;

(13) In order to improve the efficiency and the rapidity of the management of tariff quotas and ceilings, communication between the Member States and the Commission should, as far as possible, pass by telematic link;

(14) For the sake of rationalisation and simplification, it is appropriate to provide that the Commission may, having consulted the Customs Code Committee, and without prejudice to the specific procedures provided for in Article 8 of this Regulation, make any necessary changes and technical amendments necessary to this Regulation;

(15) Since the measures necessary for the implementation of this Regulation are management measures within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [7], they should be adopted by use of the management procedure provided for in Article 4 of that Decision;

[7] OJ L 184, 17.7.1999, p. 23.

(16) The Community must be able to act swiftly against the countries benefitting from this Regulation when its financial interests are damaged as a result of fraud, serious and repeated irregularities or a manifest lack of administrative co-operation in countries covered by this Regulation; having notified the Member States and the operators concerned of its reasonable doubts concerning the origin of the goods, the Commission should be able to suspend certain preferences provisionally on the basis of sufficient evidence;

(17) It is appropriate to split the existing system of global trade preferences into separate trade preferences for each of the countries concerned in accordance with existing trade flows in order to ensure a transparent and equitable share of these preferences between these countries, and to prepare possible future negotiations for an agreement; the part of the former global trade preferences corresponding to the share of imports originating in the Federal Republic of Yugoslavia will remain earmarked for potential future use by this country once the conditions are met for eligibility for the regime of autonomous trade preferences under the present Regulation; as regards wine, the global preferences will be maintained in order to avoid interference in negotiations for a separate wine agreement which have already started with Slovenia and are envisaged with the former Yugoslav Republic of Macedonia;

(18) In accordance with Council conclusions of 13 September 1999, the regime of autonomous trade preferences has been improved, namely through simplification and the reduction of tariff ceilings applicable for industrial products. An additional increase of the volumes is offered for 16 of the remaining 32 tariff ceilings for industrial products;

(19) The import arrangements are renewed on the basis of the conditions established by the Council in relation to the development of the relations between the Community and the countries concerned, including the EU's Regional Approach and the Stabilisation and Association Process for the countries of South-Eastern Europe, endorsed by the conclusions of the Council of 21/22 July 1999; withdrawal of countries from or (re)inclusion of countries for these trade arrangements can be decided at any time, including on the basis of relevant reports on compliance with the policy on conditionality of 29 April 1997; it is, therefore, appropriate, to extend the duration of these arrangements until 31 December 2001.

HAS ADOPTED THIS REGULATION:

Article 1

1. Subject to the special provisions laid down in Articles 2 to 5, products originating in the Republics of Bosnia and Herzegovina and Croatia, other than those listed in Annex I to the Treaty establishing the European Community and in Annex A to this Regulation, shall be admitted for import into the Community without quantitative restrictions or measures having equivalent effect and with exemption from customs duties and charges having equivalent effect.

2. Wine imports originating in the Republic of Slovenia and the former Yugoslav Republic of Macedonia shall benefit from concessions provided for in Article 5.

3. Entitlement to benefit from the preferential arrangements introduced by this Regulation shall be subject to respect for the definition of the concept of originating products provided for in title IV, Chapter 2, section 2 of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code.

Article 2

Processed agricultural products

The import duties, namely the customs duties and agricultural components, applicable on import into the Community of the products listed in Annex B shall be those indicated for each product in the said Annex.

Article 3

Textile Products

1. The textile products originating in the countries referred to in Article 1(1) of this Regulation and indicated in Annex III B of Council Regulation (EC) No 517/94 shall be admitted for import into the Community with exemption from customs duties and charges having equivalent effect within the annual Community quantitative limits fixed in Regulation (EC) No 517/94.

2. Re-importations following an outward processing operation, in accordance with Regulation (EC) No 3036/94 [8], shall be admitted within the limits of the Community annual quantities set in Annex VI to Council Regulation (EC) No 517/94 for the countries referred to in Article 1(1) of this Regulation and shall also be exempt from customs duties.

[8] OJ L 322 ,15.12.1994, p. 1.

Article 4

Industrial products - tariff ceilings

1. From 1 January to 31 December each year, imports into the Community of certain products originating in the countries referred to in Article 1 (1) of this Regulation and listed in Annexes C, shall benefit from an exemption from customs duties in accordance with the annual tariff ceilings specified in these Annexes.

The description of the products referred to in the first subparagraph, their Combined Nomenclature codes, their Taric-subdivisions and the corresponding ceilings are set out in the said Annexes. The amounts of the ceilings shall be increased annually by 5% of the volume of the previous year.

2. The tariff ceilings referred to in this Article shall be subject to Community surveillance managed by the Commission, in close co-operation with the Member States, in accordance with Article 308d of Regulation (EEC) No 2454/93. Communication for that purpose between the Member States and the Commission happens, as far as possible, by telematic link.

3. Quantities shall be charged against the ceilings as and when declarations for release for free circulation are lodged with customs authorities with an evidence of origin issued in accordance with the provisions of Article 1 (3).

Goods may be charged against a ceiling only if the evidence of origin is presented before the date on which customs duties are reintroduced.

4. As soon as a tariff ceiling is reached, the Commission may adopt a Regulation re-introducing, until the end of the calendar year, the customs duties applicable to third countries in respect of imports of the products concerned.

Article 5

Agricultural products

1. Imports into the Community of products originating in the countries referred to in Article 1 (1) and listed in Annex D, shall benefit from the tariff concessions listed in that Annex.

2. The customs duties applicable to imports into the Community of the products listed in Annex E originating in the countries referred to in Article 1(1) and wine originating in the countries referred to in Article 1(1) and (2), shall be suspended during the periods, at the levels and within the limits of the Community tariff quotas indicated for each one in that Annex.

The tariff quotas referred to in paragraph 2 of this Article shall be administered by the Commission in accordance with Articles 308a to 308c of Regulation (EEC) No 2454/93. Communication for that purpose between the Member States and the Commission happens, as far as possible, by telematic link.

Each Member State shall ensure that importers of the products in question have equal and uninterrupted access to the tariff quotas for as long as the balance of the relevant quota volume so permits.

3. The customs duties applicable to imports into the Community of 'baby-beef' products defined in Annex F and originating in the republics referred to in Article 1(1), shall be 20 % of the ad valorem duty and 20 % of the specific duty as laid down in the Common Customs Tariff, within the limit of an annual tariff quota of 10.900 tonnes expressed in carcass weight.

The volume of the annual tariff quota of 10.900 tonnes shall be distributed among the beneficiary republics, as follows:

a) 1.500 tonnes (carcass weight) for 'baby-beef' products originating in Bosnia and Herzegovina,

b) 9.400 tonnes (carcass weight) for 'baby-beef' products originating in Croatia.

Any request for import within these quotas has to be accompanied by an authenticity certificate issued by the competent authorities of the exporting country and attesting that the goods are originating in the republic concerned and correspond to the definition in Annex F. This certificate shall be drawn up by the Commission according to the procedure provided for in Article 6.

General provisions

Article 6

The detailed rules for implementing the tariff quota for "baby-beef products shall be determined by the Commission according to the procedure provided for in Article 43 of Council Regulation (EC) No 1254/99 of 17 May 1999 [9] on the common organisation of the market in beef and veal.

[9] OJ L 160, 26.6.1999, p. 21.

Article 7

The provisions necessary for the application of this Regulation, other than those provided for in Article 4(4) and in Article 6, notably:

(a) amendments and technical adjustments necessary following amendments to the Combined Nomenclature codes and to the Taric-subdivisions,

(b) necessary adjustments following the conclusion of other agreements between the Community and the countries referred to in Article 1 (1) and (2) of this Regulation;

shall be adopted by the Commission in accordance with the procedure set out in Article 8.

Article 8

1. The Commission shall be assisted by the Customs Code Committee instituted by Article 247 of Regulation (EEC) No 2913/92.

2. Where reference is made to this paragraph, the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply, in compliance with Article 7 (3) thereof.

3. The period provided for in Article 4 (3) of Decision 1999/468/EC shall be one month.

Article 9

Member States and the Commission shall co-operate closely to ensure that this Regulation is complied with.

Article 10

Temporary suspension clause

1. Where the Commission finds that there is sufficient evidence of fraud or failure to provide administrative co-operation as required for the verification of evidence of origin by countries covered by this Regulation, it may take measures to suspend in whole or in part the arrangements provided for in this Regulation for a period of three months, provided that it has first:

- informed the Committee referred to in Article 8;

- called on the Member States to take such precautionary measures as are necessary in order to safeguard the Community's financial interests;

- published a notice in the Official Journal of the European Communities stating that there are grounds for reasonable doubts about the application of the preferential arrangements by the beneficiary country concerned which may call into question its right to continue enjoying the benefits granted by this Regulation.

2. A Member State may refer the Commission's decision to the Council within 10 days. The Council, acting by a qualified majority, may take a different decision within 30 days.

3. On conclusion of the period of suspension, the Commission shall decide either to:

- terminate the provisional suspension measure following consultation of the Committee referred to in paragraph 1; or

- extend the suspension measure in accordance with the procedure provided for in paragraph 1.

Article 11

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Communities.

It shall apply from 1 January 2000 to 31 December 2001.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

FINANCIAL STATEMENT

1. Title of operation:

Proposal for a Council Regulation (EC) concerning the arrangements applicable to imports into the Community of products originating in the Republics of Bosnia and Herzegovina and Croatia and to imports of wine originating in the former Yugoslav Republic of Macedonia and the Republic of Slovenia

2. Budget heading involved :

Chapter 12, Article 120.

3. Legal Basis :

Article 133 of the EC Treaty.

4. Objective:

The renewal for the period from 1 January 2000 to 31 December 2001 of the autonomous preferential trade regime applicable to imports into the Community of products originating in the Republics of Bosnia and Herzegovina and Croatia and to imports of wine originating in the former Yugoslav Republic of Macedonia and the Republic of Slovenia.

5. Financial impact:

This Regulation does in principle not entail any financial losses or gains, other than those foreseen for the application of the current trade arrangements under Regulation (EC) No 70/97, as last amended by Regulation (EC) No 2863/98. The split of the existing system of global preferences into country specific ones may, under certain conditons, entail a slide gain for the Community budget, in particular because the Federal Republic of Yugoslavia is not in a position to receive its share of the global preferences at current stage. On the other hand, the abolition of certain tariff ceilings for industrial products and an additional increase of the volumes for 16 of the 32 remaining tariff ceilings may result in slight losses. A significant financial impact is, however, unlikely, mainly because in the past the countries eligible for the trade arrangements were unable to use fully the given preferences (with the exception of some ceilings passed for industrial products) and this is not likely to change quickly.

6. Fight against fraud :

Provisions on the management of tariff quotas and tariff ceilings and a specific temporary suspension clause (Article 10) include the measures necessary for preventing and protecting against fraud and irregularities.

ANNEX A

concerning the excluded products referred to in Article 1 (1)

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

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Annex B

concerning the tariff arrangements and rules applicable to certain goods resulting from the processing of agricultural products referred to in Article 2

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

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Annexes C

concerning the annual tariff ceilings referred to in article 4

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of these Annexes, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

ANNEX C I 1

1 See Taric subdivisions in Annex C V.

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ANNEX C II

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ANNEX C III

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ANNEX C IV (1)

(1) See Taric subdivisions in Annex C V.

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ANNEX C V

Taric subdivisions

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ANNEX D

concerning unlimited concessions for agricultural products

referred to in Article 5 (1)

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

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ANNEX E

Concerning the tariff quotas referred to in Article 5 (2)

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

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TARIC SUBDIVISIONS TO ANNEX E

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ANNEX F

Definition of 'baby beef' products referred to in Article 5 (3)

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

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