Report – Agreement between the EU and China relating to the modification of concessions in the schedule of the Republic of Croatia in the course of its accession to the EU – A8-0231/2016 – Committee on International Trade

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.

The Commission proposes to the Council that the Agreement in the form of an Exchange of Letters with the People’s Republic of China be signed on behalf of the Union. In parallel, a separate proposal on the conclusion of this Agreement is also being submitted to the Council.

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 Regulation 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.

Observations from the rapporteur

Your rapporteur welcomes the Agreement with the People’s Republic of China and believes the European Parliament should give its consent. The People’s Republic of China has the right to have its previous trading rights restored, following its slight erosion due to the enlargement of the EU customs union with Croatian EU accession.

Article XXIV: 4 GATT rightly underlines that …’the purpose of a customs union or of a free-trade area should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties with such territories’. This compensatory Agreement can therefore be seen as yet another sign of the EU’s attachment to the multilateral rules-based trading regime, with the WTO at its centre.

The Commission has rightly chosen (1) the increase of tariff rate quotas, and (2) lowering the current bound tariff rates as the instruments of compensation for Chinese products involved as the way of compensating losses.

The Committee on Foreign Affairs has delivered its opinion in the form of a letter, and is of the overall opinion that the proposal to conclude the Agreement should be given consent, as the Agreement includes proportionate modifications to the concessions and is consistent with earlier practice and WTO framework, and has taken note of the Commission reports stating that the relevant compensatory adjustments to China are proportionate and do not exceed China’s rights as affected by the withdrawal of Croatia’s concessions to China.

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