10 ORIGIN MARKING FOR PRODUCTS
IMPORTED FROM THIRD COUNTRIES
(27155)
5091/06
+ ADD1
COM(05) 661
| Draft Council Regulation on the indication of country of origin of certain products imported from third countries
|
| Legal base | Article 133EC; QMV
|
| Document originated | 16 December 2005
|
| Deposited in Parliament |
11 January 2006 |
| Department | Trade and Industry
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| Basis of consideration |
EM of 30 January 2006 |
| Previous Committee Report |
None |
| To be discussed in Council
| No date set |
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared; further information requested
|
Background
10.1 The Commission says that, following the concern expressed
by some Member States and industry sectors over the increasing
evidence of imported products carrying misleading origin marks,
it submitted to the Article 133 Committee of the Council in December
2003 a working document on a possible Community origin marking
scheme. In the light of that Committee's reactions, and consultations
with industry, trade unions, consumers and others, it has now
put forward this proposal for such a scheme.
The current document
10.2 In doing so, the Commission points out that the Community
has no specific legislation on the use of origin ("made in")
marking for industrial products, and that, although a recent Directive
aimed at harmonising in-market control of unfair commercial practices
addresses instances of a misleading use of origin indications,
it does not define the meaning of "made in", and nor
does it enable controls to be exercised by customs authorities.
It says that this puts the Community at a disadvantage vis-à-vis
those of its trading partners —
including notably Canada, China, Japan and the United States —
which have such a requirement, deprives Member States' producers
of origin-sensitive consumer goods of the benefits of producing
within the Community, and represents a missed opportunity to improve
consumer information.
10.3 It has accordingly proposed that imported industrial
products, excluding foodstuffs, should be subject to common rules
requiring the country of origin to be marked in an approved fashion,
though the Commission would have powers to specify more detailed
requirements. Initially, the arrangements would apply to certain
product areas specified in the Annex to the draft Regulation,
including leather goods, clothing, footwear, ceramics and glassware,
jewellery, furniture and household hardware. However, the Commission
would again be given powers subsequently to add or remove goods.
The Government's view
10.4 In his Explanatory Memorandum of 30 January
2006, the Minister for Trade at the Department of Trade and Industry
(Ian Pearson) says that the Commission has put this proposal forward
despite its consultations having shown that the majority of industry
federations and consumer organisations were consistently opposed
to it, on the grounds that no clear need for such a measure had
been demonstrated; that it was discriminatory as between third-countries,
and therefore legally doubtful under the rules of the World Trade
Organisation (WTO); that enforcement would involve additional
control by customs authorities at the point of import, and hence
hamper the free movement of goods across Community borders; and
that it would place extra costs on business and consumers. The
view had also been taken that other effective means already existed
for dealing with the alleged problem which the proposal sought
to address.
10.5 The Minister indicates that these reservations
are shared by the Government. Thus, as regards the necessity
for the measure, he says that, quite apart from the proposal running
counter to the Commission's stated aim of lessening and streamlining
regulations wherever possible, to the limited extent consumers
appear to value country of origin markings, their interests are
sufficiently safeguarded under the Unfair Commercial Practices
Directive.[16] Moreover,
there is nothing to stop either Community or overseas producers
from marking the origin of their goods voluntarily if this is
considered to be valuable to consumers, or likely to create a
price premium. On enforceability, he says that the proposal
runs counter to the current tendency for physical border controls
to be kept at a level which strikes an appropriate balance between
control and the free movement of legitimate trade, and could detract
from other efforts to address counterfeiting and piracy. He also
questions the Commission's assertion that the proposal can be
justified under WTO rules, and says that the Government will wish
to explore this point further when the negotiations commence,
bearing in mind also that its introduction immediately after the
WTO Ministerial meeting in Hong Kong will fuel perceptions among
developing countries of Community protectionism, and so jeopardise
efforts to secure progress in the non-agricultural market access
negotiations.
10.6 The Minister has also enclosed with his Explanatory
Memorandum a Regulatory Impact Assessment. This suggests that
the financial implications of the proposal are difficult to assess
at this stage since some of its more important aspects have yet
to be decided, but it points out that in 2004 the value of UK
imports in the areas directly affected was €19 billion,[17]
and that, if the Commission were to exercise its powers to extend
the scope of the proposal, the value of trade potentially affected
would rise to around €89 billion. He says that, in qualitative
terms, the proposal would impose costs both on goods not currently
marked, and on those where marking might need to be altered; that
some of these higher costs are likely to lead to distortions in
trade, and to be passed on to consumers; and that it will give
rise to additional administrative costs for customs authorities.
He also notes that the Commission's Sustainability Impact Assessment
puts the costs of origin marking at less than 1% of ex-works prices
(equivalent to around £130 million in the UK), but that,
although the rules of origin under the North American Free Trade
Agreement are complex and costly, these have been put at about
2% of total production costs, suggesting that the Commission's
estimate may understate the position.
Conclusion
10.7 Although a number of the Community's more
important trading partners appear to have some kind of origin
marking system in place, it would seem that, in putting forward
this proposal, the Commission has chosen to ignore the views put
to it by a wide range of interests, including those representing
consumers. In addition, the Government has made plain its own
reservations. In view of this, we are drawing the proposal to
the attention of the House, and, although we do not at present
see any need for it to be considered further, we think it right
to continue for the time being to hold it under scrutiny. We would
be glad if the Government could keep us informed of any further
developments, and in particular we would like it to alert us in
good time if there is any question of the proposal being adopted
in its present form.
16 Directive 2005/29/EC. OJ No. L.149, 11.6.2005, p.22. Back
17
The equivalent figure for the Community as a whole is put at €92
billion. Back
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