Explanatory Memorandum to COM(2020)135 - Introducing exceptional trade measures for countries and territories participating in or linked to the EU's Stabilisation and Association process - Main contents
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| dossier | COM(2020)135 - Introducing exceptional trade measures for countries and territories participating in or linked to the EU's Stabilisation ... |
|---|---|
| source | COM(2020)135  |
| date | 03-04-2020 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The proposed autonomous trade measures (ATMs) are one of the instruments to implement the EU’s policy towards the Western Balkans as defined within the Stabilisation and Association process launched by the European Commission in May 1999. At its meeting in Lisbon on 23 and 24 March 2000, the European Council concluded that Stabilisation and Association Agreements with Western Balkan parties should be preceded by asymmetrical trade liberalisation. Asymmetrical trade liberalisation has been provided for by means of Council Regulation (EC) No 1215/2009 introducing exceptional trade measures for countries and territories participating in or linked to the Stabilisation and Association process, with a validity period until 31 December 2020.
Stabilisation and Association Agreements have now been concluded between the Union and all concerned Western Balkan parties; the last one with Kosovo 1* entered into force on 1 April 2016.
Having regard to differences in the scope of the tariff liberalisation under the contractual regimes which have been developed between the Union and all participants to the Stabilisation and Association process and the preferences granted under Regulation (EC) No 1215/2009, it is suggested to prolong the duration of Regulation (EC) No 1215/2009 until 31 December 2025.
• Consistency with existing policy provisions in the policy area
The proposal is consistent with the continued support of the EU towards the region’s gradual economic integration into the EU and the individual accession processes.
Even though most of the trade preferences initially granted to the Western Balkans through the autonomous trade regime have now been integrated in their respective Stabilisation and Association Agreement with the Union, the limited preferences granted through this Regulation still provide a valuable support to the regional economy. These preferences allow for the suspension of the specific duties normally applied to fruits and vegetables and for the inclusion of a global wine quota available after exhaustion of the countries’ respective national wine quotas.
The ATMs system contributed to the expansion of the total trade between the EU and the Western Balkans which exceeded EUR 54 billion in 2018. The EU is the leading trade partner accounting for over 72% of the region's total trade.
• Consistency with other Union policies
This proposal is fully in line with the Sofia Declaration of 17 May 2018 where the EU committed to strengthening and intensifying its engagement at all levels to support the region’s political, economic and social transformation. It is also consistent with the political guidelines of the new Commission, which has reaffirmed the European perspective of the Western Balkans and its important role in the continued reform process across the region. The European Union aims to promote peace, stability and economic development in the region and open up the prospect of EU integration.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legal basis for the proposal is Article 207(2) of the Treaty on the Functioning of the European Union.
• Subsidiarity (for non-exclusive competence)
Not applicable.
• Proportionality
The proposed measures have shown to have had a positive impact on the beneficiary countries by contributing to their economic development notably through the establishment of strong partnerships between EU businesses and the local producers in the Western Balkan region. The proposal to extend the measures for an additional five years is therefore considered the most suitable measure to ensure the sustained economic development of the Western Balkan partners, while avoiding a very long and complex process of amending each individual bilateral trade agreement as part of the Stabilisation and Association Agreements.
• Choice of the instrument
Autonomous trade measures allow the European Union -under exceptional circumstances- to grant very specific and targeted preferences, which would otherwise not be granted in the context of a free trade agreement, as they would create precedents not in the interest of the Union.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
No formal ex-post evaluation has been carried out given the very limited scope of the measures.
• Stakeholder consultations
No formal stakeholders consultations have taken place but there is a unanimous and repeated interest for the continuation of the measures among the beneficiary parties while no objections have been raised by European economic operators through the various communication platforms set up by the Commission services for the EU industry.
• Collection and use of expertise
Not applicable.
• Impact assessment
The better regulation toolbox explicitly exempts prolongation of existing protocols with third countries from impact assessments.
The proposed measures have been in place for nearly twenty years, but are now much reduced as most of the preferences were gradually integrated in the individual Stabilisation and Association Agreements between the EU and the beneficiaries. While the estimated impact is considered minimal in terms of duties foregone by the EU -about EUR 23.5 million for the combined six beneficiaries, based on import value in 2018- the prolongation of the measures is considered the best guarantee of the EU’s commitment to the trade integration of the Western Balkans. It would also contribute to ensuring the stability of market access conditions for economic operators both in the region and in the EU.
Based on the Commission’s assessment following field visits in the region, the measures have been shown to benefit a large number of small agricultural producers and many of these local producers have established strong partnerships with businesses in the EU. Should Regulation 1215/2009 not be extended by 31 December 2020, the Western Balkans will be temporarily deprived of this liberalised market access for key agricultural products (fruits and vegetables) which are critically important for this sensitive region.
The EU should by all means avoid a repetition of the situation of 2010 when the extension could not be voted in time thereby creating serious disturbances in the agricultural markets of the Western Balkans. Retroactive application for recovery of customs duties should not be an alternative as it is complicated/takes a lot of red tape and months before operators are reimbursed. Disturbance in the legal framework would not only create immediate economic damage but would also send a signal of unstable and insecure business environment.
• Regulatory fitness and simplification
As the proposed measures have already been in place for almost 20 years, the beneficiaries are very well informed and know how to comply with the conditionalities foreseen in the Regulation. In addition, the proposed Regulation also removes the paragraphs that have become obsolete bringing it up to date and removing obsolete provisions.
• Fundamental rights
Article 2.1(d) of Regulation (EC) No 1215/2009 makes the entitlement to benefit from the preferences subject to the abstention of the beneficiaries from engaging in serious and systematic violations of human rights, including core labour rights, of fundamental principles of democracy and of the rule of law.
4. BUDGETARY IMPLICATIONS
The proposed Regulation does not incur additional costs in the EU budget. For the years 2020 to 2025 there will be no additional tariff revenue foregone in respect of products produced by the current beneficiaries. Hypothetical revenue that could have been collected from additional new imports is not considered as a loss of tariff revenue.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
In the context of the sub-committee meetings taking place under the umbrella of the Stabilisation and Association Agreements, monitoring and reporting on the use of bilateral preferences is regularly on the agenda of bilateral discussions with the Western Balkan partners.
• Explanatory documents (for directives)
Not applicable.
• Detailed explanation of the specific provisions of the proposal
A change of denomination of two beneficiaries to reflect the latest agreed terminology, namely by replacing “the former Yugoslav Republic of Macedonia” by “North Macedonia” and replacing “the customs territory of Kosovo” by “Kosovo*”, as used in the Stabilisation and Association Agreement with the EU. On that basis, all references to “countries” or “countries and territories” are replaced by “parties”.
An update of Article 3 following the amendments introduced in Commission Delegated Regulation (EU) 2017/1464 of 2 June 2017: since the unilateral preferences to Kosovo were included in the EU-Kosovo Stabilisation and Association Agreement, which entered into force on 1 April 2016, the autonomous trade preferences do no longer concern any fishery or beef trade concessions. For the purpose of clarity, it is therefore proposed to remove any references to these two categories of products.
An extension of the application of the Regulation until 31 December 2025.