EUROPEAN COMMISSION

Brussels, 16.12.2015

COM(2015) 654 final

2015/0298(NLE)

Proposal for a

COUNCIL DECISION

concluding an Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China pursuant to Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the European Union

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

With the accession of the Republic of Croatia, the European Union enlarged its customs union. Consequently, the European Union was required under World Trade Organisation (WTO) rules (Article XXIV:6 of the GATT 1994) to enter into negotiations with WTO Members having negotiating rights related to the tariff schedule of Croatia in order to eventually agree on a compensatory adjustment. Such adjustment is due if the adoption of the EU’s external tariff regime results in an increase in tariff beyond the level for which the acceding country has bound itself at the WTO.

On 15 July 2013, the Council authorised the Commission to open negotiations under Article XXIV:6 of the GATT 1994. The Commission has negotiated with the Members of the WTO holding negotiating rights with respect to the withdrawal of specific concessions in relation to the withdrawal of the schedule of the Republic of Croatia in the course of its accession to the European Union.

Negotiations with the People's Republic of China resulted in a draft Agreement in the form of an Exchange of Letters that was initialled on 7 October 2015 in Brussels (the Agreement). Consequently, this proposal asks the Council to adopt a decision to conclude the Agreement in the form of an Exchange of Letters with People's Republic of China. In parallel, a separate proposal on the signature of this Agreement is also submitted.

•    Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

The proposal falls under exclusive competence of the Union, Article 3(1)(e) of the Treaty on the Functioning of the European Union. The subsidiarity principle therefore does not apply.

•Proportionality

The People's Republic of China was affected by the withdrawal of Croatia's concessions. The compensatory adjustments do not exceed China's rights in this respect. The proposal complies with the proportionality treatment.

•Choice of the instrument

A Decision of the Council to conclude the Agreement is required under Article 218(5) TFEU.

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Stakeholder consultations

4.BUDGETARY IMPLICATIONS

5.OTHER ELEMENTS

•Implementation plans and monitoring, evaluation and reporting arrangements

The results of the Agreement will have to be incorporated, for industrial goods, into Annex I of Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff by means of a Commission implementing regulation amending the Annex, on the basis of Article 9 of Regulation, to reduce the conventional rate of duty fixed in the Common Customs Tariff as follows:

–On tariff line 6404 19 90 (footwear with outer soles of rubbers or plastics - other) lower the current bound EU duty of 17 % to 16,9%

–On tariff line 8415 10 90 (window or wall air conditioning machines "split-system") lower the current bound EU duty of 2,7 % to 2,5%.

For the agriculture quota increases, the Commission will adopt an implementing Regulaltion to open and administer the following quotas, pursuant to Article 187(a) of the Single Common Market Organisation (CMO) Regulation (Regulation (EU) No 1308/2013):

–On tariff line 0703 20 00 add 2 150 tonnes to the allocation for People's Republic of China under the EU tariff rate quota for garlic, maintaining the present in-quota rate of 9.6%.

–Add 650 tonnes to the allocation for People's Republic of China under the EU tariff rate quota for mushroom of species agaricus, prepared, preserved or provisionally preserved; maintaining the present in-quota rates.

These implementation measures are being prepared in parallel to this proposal.

2015/0298 (NLE)

Proposal for a

COUNCIL DECISION

concluding an Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China pursuant to Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the European Union

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 207(4), first subparagraph, in conjunction with Article 218(6)(a)(v) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament 1 ,

Whereas:

(1)On 15 July 2013 the Council authorised the Commission to open negotiations with certain other Members of the World Trade Organization under Article XXIV:6 of the General Agreement on Tariffs and Trade (GATT) 1994, in the course of the accession to the European Union of the Republic of Croatia.

(2)Negotiations have been conducted by the Commission within the framework of the negotiating directives issued by the Council.

(3)These negotiations have been concluded and an Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China pursuant to Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the European Union was initialled on 7 October 2015.

(4)The Agreement was signed on behalf of the European Union on […], subject to the conclusion of the Agreement at a later date, in accordance with Council Decision […].

(5)The Agreement should be concluded,

HAS ADOPTED THIS DECISION:

Article 1

The Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China pursuant to Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the European Union, is hereby concluded.

The text of the Agreement is annexed to this Decision.

Article 2

The President of the Council shall designate the person empowered to proceed, on behalf of the European Union, to the notification provided for in the Agreement, in order to express the consent of the European Union to be bound by the Agreement.

Article 3

This Decision shall enter into force on the day of its adoption. It shall be published in the Official Journal of the European Union.

The date of entry into force of the Agreement shall be published in the Official Journal of the European Union.

Done at Brussels,

(1) OJ C […], […], p. […].

EUROPEAN COMMISSION

Brussels, 16.12.2015

COM(2015) 654 final

ANNEX

to the

Proposal for a Council Decision

concluding an Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China pursuant to Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the European Union

AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS

Between the European Union and the People's Republic of China pursuant to Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the European Union

A. Letter from the European Union

[…], […]

Sir/Madam,

Following negotiations under Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT) relating to the modification of the Schedule of the Republic of Croatia in the course of its accession to the European Union, I have the honour to propose the following:

The European Union shall incorporate in its schedule, for the customs territory of the EU 28, the concessions contained in the schedule of the EU 27 with the following modifications:

On tariff line 0703 20 00 add 2 150 tonnes to the allocation for People's Republic of China under the EU tariff rate quota for garlic, maintaining the present in-quota rate of 9.6%.

Add 650 tonnes (drained net weight) to the allocation for People's Republic of China under the EU tariff rate quota for mushroom of species agaricus, prepared, preserved or provisionally preserved:

tariff item number 0711 51 00, out of quota rate 9.6 + 191 €/100 kg/net eda, in-quota rate 12%;

tariff item number 2003 10 20, out of quota rate 18.4 + 191 €/100kg/net eda, in-quota rate 23%;

tariff item number 2003 10 30, out of quota rate 18.4 + 222 €/100kg/net eda, in-quota rate 23%.

On tariff line 6404 19 90 (footwear with outer soles of rubbers or plastics - other) lower the current bound EU duty of 17 % to 16,9%

On tariff line 8415 10 90 (window or wall air conditioning machines "split-system") lower the current bound EU duty of 2,7 % to 2,5%.

The European Union and the People's Republic of China shall notify each other of the completion of their internal procedures for the entry into force of the agreement. The agreement shall enter into force 14 days after the date of receipt of the latest notification.

I should be obliged if you would confirm that your Government is in agreement with the content of this letter. Should this be the case, this letter and your confirmation shall together constitute an Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China.

Please accept, Sir/Madam, the assurance of my highest consideration.

For the European Union

B. Letter from People's Republic of China

[…], […]

Sir/Madam,

I have the honour to acknowledge the receipt of your letter of […] which reads as follows:

"Following negotiations under Article XXIV:6 and Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT) relating to the modification of the Schedule of the Republic of Croatia in the course of its accession to the European Union, I have the honour to propose the following:

The European Union shall incorporate in its schedule, for the customs territory of the EU 28, the concessions contained in the schedule of the EU 27 with the following modifications:

On tariff line 0703 20 00 add 2 150 tonnes to the allocation for People's Republic of China under the EU tariff rate quota for garlic, maintaining the present in-quota rate of 9.6%.

Add 650 tonnes (drained net weight) to the allocation for People's Republic of China under the EU tariff rate quota for mushroom of species agaricus, prepared, preserved or provisionally preserved:

tariff item number 0711 51 00, out of quota rate 9.6 + 191 €/100 kg/net eda, in-quota rate 12%;

tariff item number 2003 10 20, out of quota rate 18.4 + 191 €/100kg/net eda, in-quota rate 23%;

tariff item number 2003 10 30, out of quota rate 18.4 + 222 €/100kg/net eda, in-quota rate 23%.

On tariff line 6404 19 90 (footwear with outer soles of rubbers or plastics - other) lower the current bound EU duty of 17 % to 16,9%

On tariff line 8415 10 90 (window or wall air conditioning machines "split-system") lower the current bound EU duty of 2,7 % to 2,5%

The European Union and the People's Republic of China shall notify each other of the completion of their internal procedures for the entry into force of the agreement. The agreement shall enter into force 14 days after the date of receipt of the latest notification.

I should be obliged if you would confirm that your Government is in agreement with the content of this letter. Should this be the case, this letter and your confirmation shall together constitute an Agreement in the form of an Exchange of Letters between the European Union and the People's Republic of China."

I hereby have the honour to express my Government's agreement with the above letter.

On behalf of the People's Republic of China