EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

Negotiations under Article XXVIII of GATT 1994 concluded on poultry in 2007 (OJ L138 30.5.2007) covered tariff lines on poultry meat under heading 0210 as well as one processed poultry line, 1602 32 19 in the EC Schedule CXL: cooked preparations containing more than 57% of poultry meat. Limiting the negotiations to the processed poultry line 1602 32 19 was considered to sufficiently prevent potential substitution effects. Subsequent import data, however, showed a dramatic import surge of processed poultry meat under tariff line 1602 32 30: preparations containing 25% or more but less than 57% by weight of poultry meat or offal. This indicated that exporters seemed to take advantage of a relative gap in the EU level of protection, substituting poultry preparations containing more than 57% of poultry meat with preparations containing less than 57%, under tariff line 1602 32 30. Comparable substitution effects were to be expected under other 1602 tariff lines in the future. In order to comprehensively address these substitution effects affecting the EU poultry industry, the Commission requested from the Council the authorisation to renegotiate the concessions on poultry meat under Chapter 16 of the CN.

On 25 May 2009 the Council authorised the Commission to open negotiations under Article XXVIII of the GATT 1994 (COM proposal 8615/09 WTO 72 AGRI 166) with a view to the renegotiation of concessions on poultry meat tariff lines under Chapter 16 of the CN.

On 16 June 2009 the communication of the EU's intention to modify the concessions on items 1602 20 10, 1602 32 11, 1602 32 30, 1602 32 90, 1602 39 21, 1602 39 29, 1602 39 40 and 1602 39 80 included in Schedule CXL of the European Communities was circulated to the other WTO Members.

Negotiations have been conducted by the Commission in consultation with the Trade Policy Committee and within the framework of the negotiating directives issued by the Council.

The Commission has negotiated with the Federal Republic of Brazil and with the Kingdom of Thailand holding each principal supplying interests and/or substantial interests in various of the tariff lines concerned.

The negotiations have resulted in Agreements in the form of exchanges of letters initialled with the Kingdom of Thailand on 22 November 2011 and with the Federal Republic of Brazil on 7 December 2011.

2.           BUDGETARY IMPLICATION

See Financial Fiche in Annex (please note that it is a copy of the one related to the proposal for the Council Decision on the conclusion of the agreements).

2012/0045 (NLE)

Proposal for a

COUNCIL DECISION

on the signing on behalf of the European Union of Agreements in form of exchanges of letters on the modification of concessions with respect to processed poultry meat between the European Union and the Federal Republic of Brazil, and between the European Union and the Kingdom of Thailand pursuant to Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 207(4), first paragraph and 218(5) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)       On 25 May 2009 the Council authorised the Commission to open negotiations under Article XXVIII of the GATT 1994 (COM proposal 8615/09 WTO 72 AGRI 166) with a view to the renegotiation of concessions on poultry meat tariff lines under Chapter 16 of the CN.

(2)       Those negotiations resulted in Agreements in the form of exchanges of letters initialled with the Kingdom of Thailand on 22 November 2011 and with the Federal Republic of Brazil on 7 December 2011.

HAS ADOPTED THIS DECISION:

Article 1

The President of the Council is hereby authorised to designate the person(s) empowered to sign the Agreements in the form of exchanges of letters on the modification of concessions with respect to processed poultry meat between the European Union and the Federal Republic of Brazil and between the European Union and the Kingdom of Thailand pursuant to Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994).

The text of the Agreements is annexed to this Decision.

Article 2

This Decision shall enter into force on the day following its adoption.

Done at Brussels,

                                                                       For the Council

                                                                       The President

ANNEX

AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS

Between the European Union and Brazil pursuant to Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions with respect to processed poultry meat provided for in the EU Schedule annexed to GATT 1994

A. Letter from the European Union

Place, date

Sir,

Following negotiations under Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994, relating to the modification of EU concessions with respect to processed poultry meat, I have the honour to propose the following:

1.           The European Union shall incorporate in its Schedule the following modifications:

The bound rate of duty for items 1602 3211, 1602 3230 and 1602 3290 shall be 2 765 €/tonne.

For item 1602 3211 a tariff rate quota of 16 140 tonnes is opened, of which 15 800 tonnes shall be allocated to Brazil. The in-quota rate shall be 630€/tonne.

For item 1602 3230 a tariff rate quota of 79 705 tonnes is opened, of which 62 905 tonnes shall be allocated to Brazil. The in-quota rate shall be 10,9%.

For item 1602 3290 a tariff rate quota of 2 865 tonnes is opened, of which 295 tonnes shall be allocated to Brazil. The in-quota rate shall be 10,9%.

2.           Imports under the tariff rate quotas referred to in paragraph 1 shall take place on the basis of certificates of origin issued in a non-discriminatory way by the competent authorities in Brazil.

3.           Consultations may be held at any time with regard to any of the above matters at the request of either Party.

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 Brazil.

The European Union and Brazil shall notify each other the completion of their internal procedures for the entry into force of the agreement. The agreement shall enter into force 14 (fourteen) days after the date of the latest notification.

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

On behalf of the European Union

B. Letter from Brazil

Place, date

Sir,

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

"Following negotiations under Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT), relating to the modification of EU concessions with respect to processed poultry meat, I have the honour to propose the following:

1.         The European Union shall incorporate in its Schedule the following modifications:

The bound rate of duty for items 1602 3211, 1602 3230 and 1602 3290 shall be 2 765 €/tonne.

For item 1602 3211 a tariff rate quota of 16 140 tonnes is opened, of which 15 800 tonnes shall be allocated to Brazil. The in-quota rate shall be 630€/tonne.

For item 1602 3230 a tariff rate quota of 79 705 tonnes is opened, of which 62 905 tonnes shall be allocated to Brazil. The in-quota rate shall be 10,9%.

For item 1602 3290 a tariff rate quota of 2 865 tonnes is opened, of which 295 tonnes shall be allocated to Brazil. The in-quota rate shall be 10,9%.

2.           Imports under the tariff rate quotas referred to in paragraph 1 shall take place on the basis of certificates of origin issued in a non-discriminatory way by the competent authorities in Brazil.

3.           Consultations may be held at any time with regard to any of the above matters at the request of either Party.

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 Brazil.

The European Union and Brazil shall notify each other the completion of their internal procedures for the entry into force of the agreement. The agreement shall enter into force 14 (fourteen) days after the date of the latest notification."

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

On behalf of Brazil

AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS

Between the European Union and Thailand pursuant to Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994 relating to the modification of concessions with respect to processed poultry meat provided for in the EU Schedule annexed to GATT 1994

A. Letter from the European Union

Place, date

Sir,

Following negotiations under Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994, relating to the modification of EU concessions with respect to processed poultry meat, I have the honour to propose the following:

1.           The European Union shall incorporate in its Schedule the following modifications:

The bound rate of duty for items 1602 3230, 1602 3290 and 1602 39 shall be 2 765 €/tonne.

For item 1602 3230 a tariff rate quota of 79 705 tonnes is opened, of which 14 000 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3290 a tariff rate quota of 2 865 tonnes is opened, of which 2 100 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3921 a tariff rate quota of 10 tonnes allocated to Thailand is opened. The in-quota rate shall be 630€/tonne.

For item 1602 3929, a tariff rate quota of 13 720 tonnes is opened, of which 13 500 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3940 a tariff rate quota of 748 tonnes is opened, of which 600 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3980 a tariff rate quota of 725 tonnes is opened, of which 600 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

2.            Imports under the tariff rate quotas referred to in paragraph 1 shall take place on the basis of certificates of origin issued in a non-discriminatory way by the competent authorities in Thailand.

3.            Consultations may be held at any time with regard to any of the above matters at the request of either Party.

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 Thailand.

The European Union and Thailand shall notify each other the completion of their internal procedures for the entry into force of the agreement. The agreement shall enter into force 14 (fourteen) days after the date of the latest notification.

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

On behalf of the European Union

B. Letter from Thailand

Place, date

Sir,

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

"Following negotiations under Article XXVIII of the General Agreement on Tariffs and Trade (GATT) 1994, relating to the modification of EU concessions with respect to processed poultry meat, I have the honour to propose the following:

1.           The European Union shall incorporate in its Schedule the following modifications:

The bound rate of duty for items 1602 3230, 1602 3290 and 1602 39 shall be 2 765 €/tonne.

For item 1602 3230 a tariff rate quota of 79 705 tonnes is opened, of which 14 000 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3290 a tariff rate quota of 2 865 tonnes is opened, of which 2 100 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3921 a tariff rate quota of 10 tonnes allocated to Thailand is opened. The in-quota rate shall be 630€/tonne.

For item 1602 3929, a tariff rate quota of 13 720 tonnes is opened, of which 13 500 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3940 a tariff rate quota of 748 tonnes is opened, of which 600 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

For item 1602 3980 a tariff rate quota of 725 tonnes is opened, of which 600 tonnes shall be allocated to Thailand. The in-quota rate shall be 10,9%.

2.           Imports under the tariff rate quotas referred to in paragraph 1 shall take place on the basis of certificates of origin issued in a non-discriminatory way by the competent authorities in Thailand.

3.           Consultations may be held at any time with regard to any of the above matters at the request of either Party.

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 Thailand.

The European Union and Thailand shall notify each other the completion of their internal procedures for the entry into force of the agreement. The agreement shall enter into force 14 (fourteen) days after the date of the latest notification."

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

On behalf of Thailand

FINANCIAL STATEMENT || Fichefin/11/ 1163256 DDG/GM/nh 6.146.2011.1

|| DATE: 06/10/2011

1. || BUDGET HEADING: Chapter 12 – Custom duties and other duties || APPROPRIATIONS: DB2012: 19 171.2 M€

2. || TITLE: Proposal for a Council Decision on the conclusion of Agreements in form of exchanges of letters on the modification of concessions with respect to processed poultry meat between the European Union and the Federal Republic of Brazil, and between the European Union and the Kingdom of Thailand pursuant to Article XXVIII of the general Agreement on Tariffs and Trade 1994 (GATT 1994).

3. || LEGAL BASIS: Treaty on the Functioning of the European Union, and in particular Articles 207 and 218.

4. || AIMS: To conclude the Agreements between EU – Brazil and Thailand, in order to address the substitution effects of imports affecting the EU poultry industry.

5. || FINANCIAL IMPLICATIONS || 12 MONTH PERIOD (EUR million) || CURRENT FINANCIAL YEAR 2011 (EUR million) || FOLLOWING FINANCIAL YEAR 2012 (EUR million)

5.0 || EXPENDITURE -               CHARGED TO THE EC BUDGET (REFUNDS/INTERVENTIONS) -               NATIONAL AUTHORITIES -               OTHER || - || - || -

5.1 || REVENUE -               OWN RESOURCES OF THE EC (LEVIES/CUSTOMS DUTIES) -               NATIONAL || - || - || - 1.4

|| || 2013 || 2014 || 2015

5.0.1 || ESTIMATED EXPENDITURE || || ||

5.1.1 || ESTIMATED REVENUE || - || - || -

5.2 || METHOD OF CALCULATION: -

6.0 || CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE CURRENT BUDGET? || YES NO

6.1 || CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET? || YES NO

6.2 || WILL A SUPPLEMENTARY BUDGET BE NECESSARY? || YES NO

6.3 || WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS? || YES NO

OBSERVATIONS: Following negotiations under Article XXVIII of GATT 1994, started mid-2009 with Brazil and Thailand, the measure concerns the conclusion of the Agreements between EU – Brazil and Thailand, in order to address the substitution effects of imports affecting the EU poultry industry. The financial impact of the Regulation of the European Parliament and of the Council, implementing these Agreements, is indicated in its specific Financial Statement*, and can be estimated of a reduction of own resources of an approximated net amount of EUR 1.4 million, after deduction of 25% of collection costs by Member States. * Financial Statement No 1163357/2011