14 October 1974 English Edition European Communities EUROPEAN PARLIAMENT Working Documents 1974-1975 DOCUMENT 285/74 Report drawn up on behalf of the Committee on Development and Cooperation on the proposals and communications from the Commission of the European Communities to the Council (Doc. 201 /74) concerning the grant of generalized tariff preferences for 1975 on semi-manufactured products falling within Chapters 1-24 of the Common Customs Tariff and manufactured and semi-manufactured products falling within Chapters 25-99 of the Common Customs Tariff originating in developing countries Rapporteur: Mr Gabriel KASPEREIT PE 38.03!/fin.
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14 October 1974
English Edition
European Communities
EUROPEAN PARLIAMENT
Working Documents 1974-1975
DOCUMENT 285/74
Report
drawn up on behalf of the Committee on Development and Cooperation
on the proposals and communications from the Commission of the European
Communities to the Council (Doc. 201 /74) concerning the grant of generalized
tariff preferences for 1975 on semi-manufactured products falling within
Chapters 1-24 of the Common Customs Tariff and manufactured and
semi-manufactured products falling within Chapters 25-99 of the Common
Customs Tariff originating in developing countries
Rapporteur: Mr Gabriel KASPEREIT
PE 38.03!/fin.
By letter of 9 July 1974 the President of the Council of the European
Communities requested the European Parli&ment, pursuant to Article 43 of the
EEC Treaty, to deliver an opinion on the proposals and communications from
the Commission of the European Con~unities to the Council concerning the grant
of generalized tariff preferences for 1975 on semi-manufactured produce.s
falling within Chapters 1-24 of the Common Customs Tariff and manufactured
and semi-manufactured products falling within Chapters 25-99 of the Common
CUstoms Tariff originating in developing countries.
At the plenary sitting of the European Parliament on 12 July 1974 the
President referred these proposals and communications to the Committee on
Development and Cooperation as the committee responsible and the Committee
on Agriculture and the Committee on External Economic Relations for their
opinions.
The Committee on Development and Cooperation appointed Mr Kaspereit
rapporteur on 12 September 1974. It considered these proposals and
communications at its meetings of 12 September and 1 October 1974.
At its meeting of 1 October 1974 the committee unanimously adopted the
motion for a resolution and the explanatory statement.
The following were present: Mr Sandri, acting chairman; Mr Kaspereit,
(deputizing for Mr Bourdelles), Mr Cipolla# Mr De Keersmaeker, Mr Ligios
and Mrs Orth.
- 27 - PE 38. 031/fin.
The Committee on Agriculture was asked to draw up an opinion for the
Committee on Development and Cooperation, the committee responsible, on the
proposals and Communications from the Commission of the European Communities
to the Council concerning the grant of generalized tariff preferences for
1975 on semi-manufactured products falling within Chapters l-24 of the CCT
and manufactured and semi-manufactured products falling within Chapters
25-99 originating in developing countries (Doc. 201/74).
1. It should, first, be noted that the Community introduced the system of
generalized tariff preferences on l July 1971, since when it has been
extended annually.
The European Parliament, which on several occasions has expressed its
approval of the system as promoting the development of trade with developing
countries, was first consulted by the Council only on the practical proposals
for 19741
.
In fact the obligation to consult the European Parliament has been
acknowledged with respect to the proposal concerning the preferential
arrangements for certain products falling within Chapters l-24 of the Common
customs Tariff, since it refers to processed products and its legal basis
is Article 43 of the EEC Treaty.
It should also be recalled that in December 1973 the European Parliament
was consulted on the proposal for a regulation opening, allocating and
providing for the administration of a Community tariff quota for unmanufactured
tobacco of the type 'flue-cured Virginia' originating in developing countries2
Finally, Parliament was consulted on the proposal for a regulation to
extend the list of products falling within Chapters l-24 of the Common Customs
Tariff in respect of which the scheme of generalized preferences in favour
of developing countries is applicable under Regulation (EEC) No. 3506/73 of
the Council of 18 December 1973 and delivered its opinion3
at the sitting of
12 July 1974.
1 See the DEWULF Report (Doc. 272/73 of 12 December 1973) and the annexed. opinion from the Committee on Agriculture submitted by Lord St. OSWALD.
2 See the de KONING Report (Doc. 318/73 of 16 January 1974) and the annexed opinion from the Committee on Agriculture submitted by Miss LULLING.
3 See the report by Mr Knud NIELSEN (Doc. 172/74 of 8 July 1974) and the annexed opinion from the Committee on Agriculture submitted by Mr John HILL.
- 28 - PE 38.031/fin.
2. The document under consideration contains, in addition to an introductory
note, a total of seven proposals for regulations, some of which are based on
Article 113 of the EEC Treaty (commercial policy) and others on Article 113
and Article 43 of the EEC Treaty (agricultural policy).
In order to remain within its terms of reference, the Committee on
Agriculture felt it should concentrate its attention specifically on those
proposals which are based on Article 43 of the EEC Treaty. These are:
- proposal for a regulation establishing in respect of certain products
falling within Chapters 1-24 of the Common Customs Tariff a scheme of
generalized preferences in favour of d2veloping countries;
- proposal for a regulation opening, allocating and providing for the
administration of a tariff quota for cocoa butter and a tariff quota for
soluble coffee originating in developing countries;
- proposal for il reguli.ltion opening, allocilting and providing for the
administration of a Community tariff quota for preserved pineapples,
other than in slices, half-slices or spirals, originating in developing
countries;
- proposal for a regulation opening, allocating and providing for the
administra·tion of a Community tariff quota for unmanufactured tobacco
of the type 'flue-cured Virginia' originating in developing countries.
I. _Proposal for a regulation on products falling within Chap-ters 1-24 of
the Conm10n Customs Tariff
3. l>s noted above, the Committee on Agriculture has issued two opinions
on this subject1
and is a\vare that the problem affects the interest not only
of producer and consumer countries but also of Conmmnity farmers as suppliers
of basic products. The Conunittee on Agriculture also realizes that while the
granting of 2. preferential scheme would result in a negligible disadvantage
to Community producers of similar or competitive products (in view of the
nature of the products to >vhich the duty reduction or exemption is to be
applied and of the guarantees provided by the safety clause of Article 2),
its particular importance would lie in promoting and increasing exportS' from
developing countries.
On this last point, however, two observations were made in the previous
opinions
(a) t:he list of countries benefiting includes some which 'could be con
sidered to be more in a position to grant aid than as requiring special
assistance for development' 2
1 (a) Lorci St. OSWALD's opinion annexed to Doc. 272/73 (b) N.c LI·JGIJOR' s opinion annexed to Doc. 172/74
2 See Doc. 272/73 - paragraph 17 (a), p.35
·- 29 - PE 38. 031/fin.
(b) the principal beneficiaries of the scheme of concessions introdnced
are the most prosperous of the developing countries"
The Committee on Agriculture concluded froM this that j_f the less developed
countries are to be assisted in a practic;al way, they must be provided with
technical information and assistance necessary to enable them to take advantage 1
of the system of generalized preferences
4. These problems, which are briefly noted here, are discussed in the
Communica·tion which constitutes the first part of the Cormni.ssion' s document.
On the first problem, stemming from well-known subtle political considerations,
the document has nothing new to say, and on page 18 the Con®ission states that
'the list of beneficiary countries for 1975 will stay unchanged as r.egards both
numbers and classification'. However, as regar6.s the second pr.oblem - which
to some extent is a consequence of the first - the Commission envisages in its
Conununication improvements in the text of the propos,~d regulations and gives
notice of further measures and initia·tives to be taken in the future. Thus,
on pages 6-8 in the chapter 'Fair sharing of preferential advantages among
the beneficiary countries', and on pages 19-21 under the heading 'Readjustments',
the Commission explains the problems that have been encountered and the proposed
arrangements for the system of maximum amounts for .individual countries.
In addition, in the chapter on 'Supplementary measures' (pages 23-26) the
Commission describes the action it .intends to take in the field of information,
in the belief· that this will on the one hand stimulate private investment from
donor countries ln developing countries <Jnd, on the other, through better
awareness in the beneficiary countries, lead to improved use of the advantages
offered by the system.
Reference should finally be made to page 26, where the Con®ission recog
nizes the need for 'increased financial and technical aid from the developed
countries' as necessary complementary measures, without which the preferences
granted will not achieve their aim, that is the economic progress of countries
experiencing the greatest difficulties.
5. The proposal itself envisages
(a) raising the preferential margins from 20% to 40% and from 40% to 50%
for the majority of the products to which the existing system applies;
(b) the inclusion of additional products, notably honey, flowers, mackerel,
anchovies and certain varieties of tapioca. The inclusion of palm oil and
palm-kernel oil and pepper is to become effective only concomitantly with the
entry into force of the new association agreement, still being negotiated with
1 See Doc. 272/73 ·- paragraph 24, p. 36
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African, Caribbean and Pacific Ocean countries which are also interested in
exporting these products.
The new arrangements, including those applying to flue-cured virginia
tobacco and pineapples (which will be discussed below, as they arc the subject
of two separate proposals) should represent an increase of 156 million u.a.
relative to the value of exports covered by the existing scheme.
6. Recognizing that developing countries are facing difficulties due to
increased raw-material and energy costs (this consideration does not, of course,
apply to countries which are producers of one or the other), the Commission
explains the reasons which induced it to extend the advantages of preference
arrangements to processed agricultural products. The Commission refers also
to the European Parliament's opinion (Resolution adopted in December 1973 on
the basis of the report from the Committee on Development and Cooperation
by Mr DEWULF, Doc. 272/73) which, in paragraph 6, calls for the improvement
and extension of the preference system to processed agricultural products1 .
. . 2 In a subsequent report from the Comm1ttee on Development and Cooperat1on
on the proposal to extend the list of products falling within Chapters 1-24
of the CCT, the need ·to improve the system of preferences for these products
is mentioned again in the two initial paragraphs of the resolution.
7. The Committee on Agriculture, which has in the past issued favourable
opinions to this effect, recognizes that, in the circumstances, there are
no comments to be made on the proposals under consideration. Nevertheless,
bearing in mind the specific problems of the sector with which it is concerned,
and unable to evaluate in advance the effect that imports of these products
might have on Community outputs, the committee must assume a reserved attitude,
in the fc~r that the Drrangements proposed might indireclly contribute to
weakening the position of Community farmers as suppliers of primary products.
This is particularly relevant in connection with further pressures that the
Community agricultural sector will suffer through raised production costs and
the consequent attempts that farmers will be bound to make to intensify
production (wherever possible) in order to counteract the fall in tneir incomes.
1
2
Paragraph 39 of Mr DEWULF's report draws attention to the omission from the preference scheme of products which it is now proposed to include: honey, edible products of animal origin, plants and floricultura-l products.
See the report by Mr Knud NIELSEN, Doc. 172/74 of 8 July 1974.
- 31 -PE 38.031/fin.
II. Proposal for a regulation on the quota for cocoa butter and soluble
coffee
8. No change is proposed in the current arrangements for these two products.
These consist in the opening of a Community t~riff quota of 21,600 tons at
a rate of duty of 8% for cocoa butter, and of 18,750 tons at a rate of duty
of 9% for soluble coffee.
In this case the tariff reduction is restricted within a quota because
of the need to safeguard the interests of associated countries which also
export the same products to the Con~unity.
9. On the met11od of administration there is a co=ent to be made which
applies equally to the two proposals on flue-cured Virginia tobacco and
pineapples. This concerns the fact that the en·tire quota is snared out among
three Member States, whereas normally the Community quota amounts are only
partly (approximately to the extent of 90%) distributed among the Member
States, while the remainder becomes a Community reserve to which those Member
States which have exhausted their originally allocated quota can have recourse.
The Commission deals with this problem in a general way on pages 14 to
16 of its Communication and underlines that, according to what was agreed by
the Council (at its meeting of 6 November 1973), the Community reserve would
be introduced as from 1975 with gradual increase of the reserve share, in
order to give the Member States a 'running-in period' after which it would be
possible to establish data on imports in the preceeding period as a basis. for
determining the distribution of the initial shares and the reserve.
However, for the products under consideration - for which quotas were
opened for the first time in 1974 by reference to specific circumstances,
some ot which were of a temporary nature - the Commission does not yet
propose to establish a Community reserve for 1975.
III. Proposal for a regulation on the quota for preserved pineapples
'10. This proposal is for the opening of a quota of 28,000 tons at a duty rate
of 15% for preserved pineapples in slices, half-slices or spirals and of
30,000 tons at a duty rate of 12% for preserved pineapples other than in
slices, half-slices or spirals.
In both cases it is proposed to collect a levy on the sugar content
where the latter exceeds 17% by weight.
On page 12 of its Communication the commission points out that, compared
with the arrangements for 1974, the proposal represents a new departure in
regard of the pineapple quota and involves an increase of 10,000 tons in the
quota for pineapples other than in slices. The document also states that
- 32 - PE 38.031/fin.
'following what has been agreed, this improvement remains conditional upon
the entry into force of the Regulation on the organization of the canned fruit
market which is at the moment under discussion within the Council and which
provides for support being given to the production of pineapples in overseas
territories1
. Should this organization of the market not come into force by
January l, 1975, the Regulation on canned pineapples other than sliced should
be extended for 1975 on the same conditions as in 1974'.
IV. Proposal for a regulation on the quota for flue-cured Virginia tobacco
11. The European Parliament was consulted last year on the proposal to open
this quota for 1974, and both in the report by Mr de KONING2
, submitted on
behalf of the Committee on External Economic Relations, the committee respon
sible, and in the opinion of the Committee on Agriculture submitted by
Miss LULLING (and annexed to the above-mentioned report), expressed itself
in favour of the proposed solution in view of the exceptional nature of the
situation which it was intended to meet.
To solve the problem of exports of this type of tobacco from South-East
Asian countries (India, Pakistan and Sri-Lanka) to the United Kingdom (the
traditional buyer) the Commission had proposed to grant these countries the
advantages of generalized tariff preferences within the limits of the quota,
as a provisional measure restricted to 1974.
The Committee on Agriculture had expressed reservations on this proposal,
being opposed to a derogation from the accepted principle that 'for reasons
connected with the Community's policies in the fields of agriculture and
association, further tariff concessions on primary produce should not be . 3
g~ven' Tariff preferences in fact apply to industrial manufactured and
semi-manufactured products and to processed agricultural products.
In the opinion referred to, the Committee on Agriculture, without wishing
'to ignore the interests of the producer countries, called on the Commission to
find other ways of ensuring future outlets for this product originating in
developing countries, and also to assess the possible effects of the application
of the proposed measures on Community output, so that they can be taken into
account within the framework of the organization of the market, by reference
to the amount of the premium refunds and the application of Article 13 of
1 This refers to assistance to Community manufacturers who undertake to p21y Ll
minimum price determined by the Council for fresh pineapples grown in the Community (Martinique).
The Committee on Agriculture had pronounced in favour of this proposal in the report by Mr LIOGIER (Doc. 358/73 of 13 February 1974).
2 see Doc. 318/73
3 See Commission's Communication to the Council on the implementation of the declaration of intent concerning the commercial relations with certain Asian countries (COM(73) 1801 final - para. 12, second sentence).
- 33 -PE 38.031/fin.
Regulation 727/70 (measures to prevent excessive quantities of given varieties
of tobacco grown in the Community having to be taken up by intervention
agencies).
In issuing its opinion last year, the Comm:•_t·tee on Agriculture was working
on the assumption ·that the proposed system in principle presented no risk of
disturbing the market for 1974, in view of the ~act that Community output of
similar tobacco (Virginia Bright) had in the past not exceeded 8,000 to 10,000
tons per annum.
12. I·t will be noted, however, that further concessions in the tobacco sector
were recently mude by the Community to GATT under the provisions of Article XIV,
paragraph 6 (concessions following the enlargement of the Community) .
Note should also be taken of the Commission's statement on page 10 of the
Communication under examination that 'the Community decided in the context
of the negotiations with the ACP countries to offer them duty-free entry'.
It is essential, therefore, to assess whether these tariff reductions,
acting together, might not affect future price levels on the Co~nunity market.
It would thus seem advisable for the Commission to provide information
on this, and give a preliminary explanation of its reasons for wishing to
extend into 1975 the system which the Council approved in 1974 'for a tran-1
sitional period of one year' While the Committee on Agriculture recognizes
the seriousness of the matter for the producer countries (India, Pakistan
and Sri-Lanka), it feels that the Commission should also indicate in which
direction it proposes to search for final solutions to this problem.
V. Concluding remarks
13. In the light of what has been said above, the following conclusions may
be drawn from a first examination of the proposals considered.
As in the past, the Committee on Agriculture is in principle in favour
of granting generalized preferences for 1975 to benefit developing countries.
l See Regulation (EEC) No. 166/74; second recital (OJ No. L 20, 24 January 1974).
- 34 - PE 38.031/fin.
The Committee on Agriculture is not, however, in a position to adduce a
more fully developed a.rgument in support of its favourable opinion, because
it has not received data on the effects of the application of the system in
previous years. Such general informa·tion as is available to it causes it,
on the contrary, to fear that in the long run the system under consideration
will not bring the expected benefits to the mas:·. disadvantaged countries.
Moreover, the committee fully appreciates that, as the Commission itself
points out, if support is to be given to these coun·tries, other practical l ways must be sought of promoting their economic development
l r: ~. As regards further concessions on processed and unprocessed agricultural
products, the Conunittec on Agriculture is of the opinion that ·these are
justified to the extent that they constitute an ·::!ffecti ve aid to the countries
concerned and do not restrict the market for directly or indirectly competi·tive
Community products. This consideration is particularly relevant to products
such as tobacco, which are grown in Community regions experiencing economic
and social difficulties.
Concerning the extension of the system for tobacco, the Committee on
Agriculture also wishes to repeat its reservations, expressed in last year's
opinion, as to the inclusion of primary products in the list of generalized
preferences.
1 A recent study by the UN shows that among countries benefiting from generalized preferences, 15 coun-tries in Africa, 8 in Asia and the Middle East and l in Latin America h:Jve a pei~ capit.a annual income of less than $200.