Committee Reports > List of Committees > Joint > 1976 > Committee on the Secondary Legislation of the European Communities > Report No. 43 - Generalised Tariff Preferences Scheme for 1977

REPORT

1. Introduction

The Generalised Tariff Preference Scheme of the European Economic Community is designed to help developing countries by granting tariff preferences on imports into the Community of certain semi-manufactured and manufactured products originating in those countries. The scheme is reviewed annually the object being to improve progressively the preferences being extended to the beneficiaries.

In its sixteenth report of 10th December, 1975, which dealt with provisions of the scheme for 1976, the Joint Committee gave a broad outline of the recurring features of the scheme. In this report it is concerned mainly with the particular proposals put forward for 1977 though it also has some comments to offer on general aspects of the scheme.

The Commission’s proposals for 1977 are in the form of eleven draft EEC Regulations and two draft ECSC Decisions and these are listed in Appendix I to this report.

2. Proposals for 1977

The Commission sees its proposals for 1977 as being drawn up against a more relaxed background than was the case last year. It points out that an “economic recovery has begun and can be expected to spread throughout the Community”. Briefly the proposals for 1977 involve the following:—

Agricultural products:—The inclusion is proposed of 46 new items with improvements in preferential rates relating to 70 others.

Industrial products:—Ceilings and quotas are to be based on the 1974 trade figures but with a limit of 50 per cent increase on the levels applicable in 1976, the average increase being 43 per cent. However, in the case of textiles the increase is to be limited to 5 per cent and in the case of footwear and certain steel products quotas and ceilings are to be maintained at the 1976 levels.

3. General Effect on Ireland

The Joint Committee has taken advice on the possible effect of the proposals on Irish production for both the home and export markets. As far as exports are concerned there is no evidence that GSP products have tended in the past to weaken the competitive position of Irish exporters in other EEC countries and it is not expected that the proposals for 1977, if adopted, would alter that position. It is not expected either, speaking generally, that the adoption of the proposals would have any significant adverse effect on production for the home market. However, there are particularly vulnerable sectors of the Irish economy to which the Joint Committee wishes to make special reference.

4. Textiles

The 1977 proposals envisage a new regime being introduced to govern textile imports from GSP countries which is designed to take account of the sensitivity of the sector in the Community as a whole.

It is proposed in 1977 to rationalise the scope and coverage of the scheme for textiles by removing the current distinction as between different textile products and extending the list of beneficiaries. However, it is also proposed to introduce an element of differentiation as between the treatment to be accorded to competitive beneficiaries and that accorded to less competitive beneficiaries. To achieve this latter objective it is intended to limit the most competitive countries’ right to preferential treatment on certain textile products by allocating to them a restricted proportion of the overall Community quota. The balance of the quota in each case would be available to the less competitive countries thus preserving in effect the non-discriminatory nature of the Community’s scheme. An overall increase over 1976 of 5 per cent is proposed.

The Confederation of Irish Industry has suggested to the Joint Committee that because of the fact that the clothing industry is so sensitive to competition from third world countries, a provision should be made which would relate quotas to changes in the market so that if the market turned downwards, quotas could be lowered. At the same time a limit to the permitted penetration fixed as a percentage of home consumption would ensure that disruptive imports did not exceed a reasonable and acceptable percentage of the market. In cases where such penetration already exceeded this amount there should be an annual percentage reduction to compensate. The Confederation would also welcome more restrictive arrangements for countries that are considered more advanced and more competitive.

It has been represented to the Joint Committee on the other hand that variable quotas would hardly be acceptable to the Commission because the element of uncertainty would create difficulties for exporters in the beneficiary countries. The Joint Committee, nevertheless, is of the opinion that the difficult position in which the clothing industry in this country finds itself makes it imperative that Ireland should insist on being able to claim relief if, during 1977, the proposals adopted bring about a further deterioration in the position of the industry on the home market.

5. Footwear

The Confederation has reminded the Joint Committee that the footwear industry is also particularly sensitive to imports from third world countries. At present, a task force study is being carried out and the industry is in the process of restructuring. Although imports from GSP countries represent only about 1 to 2 per cent of total imports, the Joint Committee welcomes the proposed freeze on shoes at the 1976 quota level and it agrees with the Confederation that it is essential that no reductions of tariffs take place in 1977.

6. Sports Equipment

The Confederation has also pointed out that the importation of sports equipment from GSP countries is of concern to Irish manufacturers. Because of the serious effect of any reduction in tariffs to Irish manufacturers the Confederation has urged that none should be agreed to.

For the purpose of the GSP scheme sports equipment is rated in the semi-sensitive category which comprises products that could affect Community production if a certain limit were exceeded. Consequently, in the scheme a ceiling is fixed for the whole Community in excess of which tariff free imports are not permitted. The ceiling proposed for 1977 represents an increase of 50 per cent over that applicable in 1976 but it is subject to a condition that imports from any one beneficiary country may not exceed 50 per cent of the Community ceiling.

As the Joint Committee understands the position, the danger to Irish industry is not based on past experience but depends on how much of the imports permitted under the increased Community ceiling will be diverted to Ireland next year. The Joint Committee is informed that the matter is being actively pursued by the Department of Industry and Commerce and in particular, that the Department is pressing for a reduction in the amount of imports permitted from any one country.

7. Other Industries

The Joint Committee has also been informed that concern has been expressed as to the possibility that if the Commission’s proposals are not somewhat modified, there may be some adverse effects on home production in respect of the following products—tyres, bovine cattle leather, travel goods, radio and TV sets, furniture and dolls. As in the case of sports equipment this concern is not apparently based on any detrimental effects of imports from GSP countries in the past but rather on the potential danger of the more liberal proposals for 1977. The Joint Committee is informed that the special position of these industries is being considered by the Department of Industry and Commerce. Obviously the effects of GSP imports on these industries during 1977 would need to be carefully monitored.

8. Shrimps and Prawns

Last year the Irish Fishermen’s Organisation expressed concern about the 1976 GSP provisions in regard to shrimps and prawns and, consequently, the Joint Committee has paid particular attention to the proposals for 1977 in respect of these products.

The Joint Committee has obtained from the Department of Agriculture and Fisheries particulars of Ireland’s total imports of these products in the years 1973, 1974 and 1975 together with a breakdown of imports from GSP beneficiary countries and the figures are set out in Appendix II to this report. It will be noted that while total imports rose in 1975, almost reaching the 1973 level, imports from the GSP beneficiaries fell. Imports of Norwegian lobster (Dublin Bay Prawns) in 1975 amounted to 385 kgs at a value of £1,145—the sources being Britain (£1,138) and China (£7).

Irish landings of Dublin Bay Prawns continued to fall in 1975. The catch amounted to 994 metric tons at a value of £237,188 as compared with 1,380 metric tons in 1974 at a value of £289,000. The quality has also deteriorated and this is possibly due to overfishing.

Prior to our accession to the Communities, Ireland did not operate protective measures on imports of shrimps and prawns and it seems to the Joint Committee that the point has not yet been reached when a case can be made out for objecting to the Commission proposals but the matter should continue to be kept under review.

9. Steel Products

Irish Steel Holdings Ltd. made representations to the Joint Committee in regard to the proposals relating to products which come under tariff headings 73.07 and 73.11 and are within the Company’s range of production. The proposals envisage duty-free imports of these products up to the limit of a ceiling for the whole Community. The Company would like to see national quotas set limiting the amount for each Member State. Otherwise, it fears that an undue proportion of these imports may be diverted to Ireland leaving it particularly vulnerable to imports of angles, shapes and sections.

The Joint Committee has been informed that there has been no GSP importation into Ireland of products classified at tariff headings 73.07 or 73.11 in 1974, 1975 or 1976 (to 31 May) and that in the circumstances it would be difficult to make out a case for a national quota for Ireland. Irish Steel Holdings Ltd. has accepted this position while reserving its right to raise the matter again next year in the light of its experience in the meantime.

10. Beneficiary Countries

In its sixteenth report on the 1976 proposals the Joint Committee expressed support for a Resolution of the European Parliament calling for a review of the criteria for deciding which countries should benefit from the GSP scheme with the object of according preferences only to countries which were “indisputably developing countries”. It notes that the Resolution adopted by the European Parliament on 14th October, 1976 “reiterates that the list of beneficiary countries should shortly be amended to ensure that only those countries deserving special treatment will receive it”. Moreover, it observes that the Union of Industries of the EEC (UNICE), pointing out that the system has mainly been of benefit to the most advanced developing countries, has called for the concessions to be reserved exclusively for countries which by objective economic criteria can be classified as developing countries.

The Joint Committee believes that Ireland should support those who are pressing for a review of the list of beneficiary countries. It fully supports any policy of aiding countries which are in a worse position than ourselves but it cannot accept that some countries which benefit under the GSP scheme come within that category and it is not persuaded that the scheme as it is operated at present benefits those countries which are most in need of assistance.

It may be that Ireland has a particular interest in ensuring that beneficiary countries are selected solely by reference to acceptable economic criteria. It can scarcely be contested that because of her underdeveloped economy Ireland has a far greater need of foreign investment than other Community countries without which there would be needed by Ireland from the EEC far greater regional, social and other subventions. It would be unfair if the advantages enjoyed under the generalised tariff preference scheme by the more developed of the beneficiary countries made it more difficult for Ireland to attract badly needed investment. The Joint Committee suggests that this aspect of the matter be examined by the appropriate authorities here.

11. Briefing of Industry

Last year the Joint Committee, having considered representations by the Confederation of Irish Industry, recommended that the Commission should be pressed to establish machinery for the better briefing of industry so that the effects of annual proposals could be more accurately assessed. It has since been informed that the establishment by the Commission of appropriate machinery for the briefing of industry is now in train. The Community has allocated funds for the establishment of a GSP documentation, information and advice agency and a Commission proposal in the matter is expected to be submitted to the Council shortly. In addition a handbook on the GSP is currently with the printers with a view to early publication. It is understood that it is proposed to up-date this handbook on an annual basis in future.

The Joint Committee welcomes these developments and trusts that there will be no delay in setting up the proposed agency.

12. Aid for Particular Sectors

In its sixteenth report the Joint Committee also raised the question of seeking Community aid for sectors of industry in appropriate circumstances. It has been informed by the Department of Industry and Commerce that the question of seeking special Community aid for sectors of the economy which may be adversely affected by the operation of the scheme is under continuing review but that there is no evidence to date of such a situation arising.

13. Acknowledgements

The Joint Committee wishes to express its appreciation of and thanks for the assistance it received from the Confederation of Irish Industry, Coras Tráchtála and Irish Steel Holdings Ltd. in its examination of these proposals.

(Signed) CHARLES J. HAUGHEY,

Chairman of the Joint Committee.

3rd November, 1976.