Committee Reports > List of Committees > Joint > 1979 > Committee on the Secondary Legislation of the European Communities > Report No. 61 - European Communities' Generalised Tariff Preferences Scheme for 1980

REPORT

Introduction

1. The Generalised Tariff Preferences Scheme of the European Economic Community is designed to help developing countries by granting tariff preferences on imports into the Community of certain finished and semi-finished products originating in those countries. In its thirty-third report (Prl. 7616) of 6th December, 1978, which dealt with the provisions of the scheme for 1979, the Joint Committee gave a broad outline of the features of the scheme.

2. The scheme was introduced in 1971 and was intended to last for ten years. It is intended however to extend the scheme for a second period which will open with the 1981 preferences. The Commission has indicated that the proposals for 1980 follow the pattern of previous schemes and do not anticipate the new guidelines which will be established for the second period and which the Joint Committee has been informed will be published before the end of 1979. Discussions on new guidelines should therefore begin during the Irish Presidency of the Council.

3. The Commission’s proposals for 1980 which were in the form of the ten draft EEC Regulations and the two draft ECSC Decisions that are listed in the Appendix to this report were examined by the Joint Committee’s Sub-Committee on Economic, Commercial and Financial Affairs under the Chairmanship of Senator Noel Mulcahy. The Joint Committee is indebted to Senator Mulcahy and his Sub-Committee for their work. The Sub-Committee discussed the proposals with Mr. John Kenna of the Confederation of Irish Industry and representatives of the Departments of Agriculture and Industry, Commerce and Energy.

4. The Commission’s proposals [COM (79) 348] have been accepted by the Council and the appropriate Regulations and Decisions were adopted on 10th December, 1979.

1980 Scheme

5. As far as processed agricultural products are concerned, no new products are being included in the scheme but minor adjustments are being made to improve access to the Community market for certain agricultural products, already included in the scheme. These include dried bananas, pineapples and palm oil. These changes may result in some benefit accruing to the Irish consumer. As far as Irish producers are concerned the Joint Committee is advised that the effect of the scheme has been minimal as the products covered are mainly tropical and Mediterranean in character. Some misgivings had been expressed by the Irish tobacco industry to a modification proposed in the tariff arrangement for Virginia type tobacco but the Joint Committee understands that the arrangement finally agreed on is acceptable to the industry.

6. The main change in the 1980 scheme for industrial products concerns textiles. The system for preferential imports of textiles is being recast consequent upon the re-organisation of the Multifibre Agreement and the conclusion of bilateral agreements, which involve, inter alia, voluntary restraints on exports to the EEC, with most of the Community’s suppliers of textiles, with the object of bringing the management of the GSP and these arrangements into harmony. This change had been proposed by the Commission for 1979 but was deferred as there was insufficient time in which to consider it last year.

7. As has been the normal practice all the ceilings have been recalculated to bring into account a more recent reference year i.e. 1977. However, because of the economic situation in several industrial sectors, either no increase or an increase of only 5% is being allowed for 1980 while for a number of other products the full effect of the recalculation cannot be applied.

Beneficiary Countries

8. The major change for 1980 as far as the beneficiary countries are concerned is the inclusion of the People’s Republic of China for all products covered by the scheme with the exception of sensitive industrial products. China apparently raised the question of its inclusion and the Commission has indicated that its inclusion was determined on its own merits. The Commission’s conclusion is that China must be considered as a developing country having regard to basic economic factors such as its gross national product, economic structure, which is based on agriculture and energy production, etc.

Views of the Joint Committee

9. Ireland had been committed to the principle of according special tariff treatment to products of developing countries even before she joined the Community. Now that the present scheme is coming to an end the Joint Committee is pleased to note that the Commission intends to propose guidelines for a new scheme to operate from 1981. In recent years the Joint Committee and its predecessor has had to examine critically some of the concessions granted because of the economic difficulties of competing home industries. Overall, however, it has to concede that as far as Ireland is concerned the GSP is a modest instrument of aid for underprivileged countries. The Committee has been informed that to-date GSP products represent but 0.4% of our total imports.

10. The Joint Committee trusts that the Commission guidelines for a new GSP scheme will seek to ensure that it is the least developed countries which obtain the most benefit. It has been suggested to the Joint Committee that China is not a developing country at least by comparison with some of the other beneficiaries and that its inclusion in the scheme was made solely for political reasons. The Committee is not in a position to form a judgement on this point and it has no firm evidence that China’s inclusion will be detrimental to this country. Concern was expressed to the Committee about the possible effects of the imports of chipboard from China on an industry already in difficulties here. The Committee is advised, however, that China has no known capacity for chipboard production for export but no doubt the possibility exists. It has also been informed that only 2% of Chinese exports will qualify for preference in 1980 and that sensitive industrial products are excluded altogether.

11. The Joint Committee understands that there is a prospect of a trade agreement being concluded between the Community and Yugoslavia which is already a beneficiary under the GSP. Some concern has been expressed to the Committee that such an agreement in conjunction with the operation of the GSP could generate increased competition for Irish Industry. The Committee trusts that the agreement will be examined in draft form from this point of view. Yugoslavia has a 2,000 mua balance of payments deficit with the Community and 20% of its invisible earnings are derived from emigrants’ remittances from within the Community. No doubt there are also political considerations for ensuring stable commercial relations with that country. It has a common frontier with Italy and is en route to Greece which joins the Community in 1981.

12. Trading relations between the Community and the rest of the world are governed not only by the GSP and the Lomé Convention which are intended to aid under-developed countries but also by many bi-lateral and multi-national agreements. It has been represented to the Joint Committee that it is very difficult for businessmen to follow the inter-relationship and the ramifications of all these arrangements and, in particular, that Irish industrialists may have advantageous sources of raw materials available to them of which they are not aware. The Joint Committee suggests that the Departments concerned initiate consultations with the Confederation of Irish Industry to see how best this problem might be tackled. No doubt the Commission could also be asked to help.

Acknowledgement

13. The Joint Committee wishes to thank the Confederation of Irish Industry for its invaluable help in examining the proposals.

(Signed) ALEXIS FITZGERALD,

Chairman of the Joint Committee.

19th December, 1979.