EU trade distortions: Overseas countries and territories

Preferential treatment causes trade distortions, but the Treaty establishing the European Community (TEC) foresees remedies should the level of duties applied by an overseas associated country or territory (OCT) to goods from a third country cause deflections of trade (as they are politely called) to the detriment of an EU member state.

According to Article 185 TEC the member state in question can ask the Commission to propose a remedy:

Article 185 TEC

If the level of the duties applicable to goods from a third country on entry into a country or territory is liable, when the provisions of Article 184(1) have been applied, to cause deflections of trade to the detriment of any Member State, the latter may request the Commission to propose to the other Member States the measures needed to remedy the situation.


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TFEU consolidated


No explicit amendment concerned Article 185 TEC, so here is the corresponding provision of the Lisbon Treaty, Article 201 of the Treaty on the Functioning of the European Union (TFEU), published OJEU 9.5.2008 C 115/138:

(PART FOUR
ASSOCIATION OF THE OVERSEAS COUNTRIES AND TERRITORIES)


Article 201 TFEU
(ex Article 185 TEC)

If the level of the duties applicable to goods from a third country on entry into a country or territory is liable, when the provisions of Article 200(1) have been applied, to cause deflections of trade to the detriment of any Member State, the latter may request the Commission to propose to the other Member States the measures needed to remedy the situation.


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Practical value

The provision has little practical value, because these issues have been regulated through the rules of origin set out in the Overseas Association Decision 2001/822/EC, as amended and extended until 31 December 2013.


In addition to these, the reader might profit from the discussion on rules of origin in Annex IV of the Commission Staff Working Paper accompanying the Green Paper Future relations between the EU and the Overseas Countries and Territories, Brussels, 25.6.2008 SEC(2008) 2067 (page 33 to 34):

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2008:2067:FIN:EN:PDF



Ralf Grahn