Select Committee on European Scrutiny Forty-First Report


10. IMPORT DUTIES ON CERTAIN WEAPONS AND MILITARY EQUIPMENT


(23928)

OTNYR


Draft Council Regulation suspending import duties on certain weapons and military equipment.

Legal base:Article 26 EC; qualified majority voting
Department:HM Customs and Excise
Basis of consideration:EM of 1 November 2002
Previous Committee Report:None
To be discussed in Council:14-15 November 2002
Committee's assessment:Politically important
Committee's decision:Cleared



The document

  10.1  The draft Council Regulation concerns the importation of military goods into the Community and would provide for the suspension of import duties on certain weapons and military equipment and on related parts, components and sub-assemblies (listed by reference to the Customs Code at Annex 1 to the draft) when imported for use by the military forces of a Member State. It also applies to goods used for testing of items listed in Annex 1. Import duty would not be charged at the time of importation of the goods provided that they were accompanied by a certificate issued by the competent authority (for the UK the Ministry of Defence) of the Member State for whose military forces the goods are destined.

  10.2  Following discussion of a revised Presidency text of the proposal by the Working Party on Customs Union (Common Customs Tariff) a complete draft proposal is expected to go to the Council on 14-15 November 2002 for political agreement.

The Government's view

  10.3  The Chief Secretary to the Treasury (Mr Paul Boateng) tells us:

"The Government welcomes the Presidency compromise text. It would allow Member States to suspend customs duty on the importation of certain weapons and military equipment. The current proposal therefore potentially brings to an end the legal uncertainty in the Community about the suspension of such customs duties which had resulted in the Commission commencing infraction proceedings against 12 Member States, including the UK.

"In April 2002, the UK conceded the Commission's infraction case, having regard to the relative weakness of the legal case and the fact that interest would have been accruing on arrears. The UK settled payment of Own Resources in terms that reserved our right to reopen the issue in the future. The total amount paid was some £74.5m (£90.4m less the amount which Member States are allowed to retain in respect of collection costs). No request for interest has yet been made by the Commission. Should the Regulation resolve the legal position (particularly in relation to the other outstanding cases) the Commission will be asked to refund the previously paid funds.

"The Government will wish to ensure that scope of the Regulation fully accommodates current UK practice in relation to military importations and provides a stable regime for the future. The Government welcomes the fact that the new Regulation protects national security interests by requiring information to be provided to the Commission at a sufficiently high level (overall number of certificates issued, total value and gross weight) to prevent disagregation."

  10.4  The Minister tells us also that the amount of customs duties suspended, which would accrue to the Community Budget as Own Resources, depends on the level of military importations in any one year. The Ministry of Defence estimates that on average the duty relief is worth about £30m per year.

Conclusion

  10.5  It is important that imports to meet the UK's military requirements should not be subject to duty. We note with approval the Minister's expectation that this draft Regulation will not only solve the existing problem but allow recovery of the duty already paid. We are content to clear the document.


 
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Prepared 25 November 2002