RESTRICTED
WORLD TRADE G/STR/N/1/EEC/Add.1
23January 1996
ORGANIZATION(96-0209)
Original: French
STATE TRADING
Notification Pursuant toArticle XVII:4(a) oftheGATT 1994 andParagraph 1
oftheUnderstanding ontheInterpretation ofArticle XVII
EUROPEAN COMMUNITIES
Thefollowing communication, dated 19December 1995, hasbeenreceived fromthePermanent
Delegation oftheEuropean Commission.
_____________
Further tomyletter of9November 1995, andpursuant totheprovisions ofArticle XVII:4(a)
oftheGATT 1994andparagraph 1oftheUnderstanding ontheInterpretation ofArticle XVII, Ihave
thehonour toattach afullnotification concerning statetrading enterprises andState monopolies in
France.G/STR/N/1/EEC/Add.1
Page2
NOTIFICATION OFSTATE TRADING ENTERPRISES AND
STATE MONOPOLIES TOWTO
I. State trading enterprises
Customs tariff No. Product description Enterprises thathave
exclusive orspecial privileges
27-05 bis Lighting gas,producer gas,
water gasandsimilar gasesGAZ DEFRANCE
23ruePhilibert Delorme
Paris 17
27-17 Electrical energy ELECTRICITE DEFRANCE
2rueLouis Murat
Paris
1. Reason andpurpose forintroducing andmaintaining statetrading enterprises
1.1 Electricity
Thedecision tocreate EDF asa"state trading enterprise" wastaken when thesector was
nationalized afterthewar. Thestructure specified intheLawof8April 1949 allows EDF tocarry
outthetaskentrusted toit,namely, theobligation tosupply electricity oncompetitive terms inthe
whole ofFrance, guaranteeing equal treatment forconsumers andrespecting therequirements of
availability ofsupplies andenvironmental conservation. Thisorganization oftheFrench electricity
system isnotprompted byanydesire toprotect thedomestic market noranydiscriminatory practice
vis-à-vis foreign operators.
1.2 Gas
Thetasks entrusted toGDF aresimilar tothose ofEDF: supplying gasinFrance while at
thesametimerespecting anumber ofobligations asapublic service andmaking anactive contribution
towards theimplementation ofenergy, environmental andplanning policies.
GDF'srolenevertheless differs from thatofEDF and,because thewhole ofFrance cannot
besupplied withGDF gas,itcarries outitstaskbyensuring continuous supply, equality oftreatment
andthelowest possible costs fortheCommunity.
2. Description ofthefunctioning ofthestatetrading enterprises
2.1 Electricity
- Under the1946 Law, EDF hasamonopoly intheimport andexport ofelectricity;
- Thevolume ofelectricity imports orexports isnotfixed. EDFimports electricity to
theextent necessary tofulfilitsroleofguaranteeing availability ofsupplies atthelowest
cost. Itexports theelectricity thatremains available aftermeeting domestic demand
inconformity withitsobligation tosupply electricity;
- Theprices fixed inagreements toimport andexport electricity aretheresult oftrade
negotiations among operators;G/STR/N/1/EEC/Add.1
Page3
- Theagreements negotiated bytheenterprise areshort-term, medium-term orlong-term
trade agreements. TheGovernment doesnotenter intoanycontractual obligations.
2.2 Gas
- LikeEDF, the1946Lawgives GDF themonopoly toexport andimport natural gas;
- Imports ofnatural gasaredetermined inthecontext oftrade agreements aimed at
ensuring reliable supplies inthelongtermaswellascompetitive prices incomparison
withother forms ofenergy. Theroleofexports ismodest, buttheyobeythesame
principles;
- Theprices fixed inagreements toimport andexport natural gasaretheresult oftrade
negotiations among operators;
- Import agreements areinfactlong-term agreements. They aresubject toapproval
bytheMinister forIndustry pursuant totheOrder of17October 1987 (regime for
thetransport ofnatural gas), whoensures thattheavailability ofsupplies inFrance
isguaranteed inthelongterm. These agreements donotcontain anyclauses binding
theState intheform oftrade transactions.
3. Statistical information
3.1 Electricity
Replies (a),(b),(c)
Domestic
production
TWhExports
volume
TWhExports
value
GFImports
volume
TWhImports
value
GF
1992 441.4 54.8 12.4 2.8 0.5
1993 450.6 64.9 14.2 3.2 0.2
1994 454.0 66.1 15.2 3.0 0.6
3.2 Gas
Replies (a),(b),(c)
Domestic production
TWhExports volume
TWhImports volume
TWh
1992 34.8 11.9 355.9
1993 35.8 6.5 333.5
1994 35.9 8.2 347.2G/STR/N/1/EEC/Add.1
Page4
4. Reason fornottrading abroad
Notapplicable.
5. Additional information
None.
II. State monopolies
HSTariff Code Type ofproduct Enterprise concerned Observations
31.04 Mineral orchemical
potassium fertilizersEntreprise Minière et
Chimique
62rueJeanne d'Arc
75641 Paris Cedex 13State monopoly
delegated tothe
Entreprise Minière et
Chimique fordirect
imports from third
countries intothe
European Economic
Area
31.05 Mineral orchemical
potassium fertilizers
containing twoormore
ofthefollowing
fertilizing elements:
nitrogen, phosphorus,
potassium
1. Reason andpurpose forintroducing andmaintaining statetrading enterprises
Thepotassium mines inAlsace formed partoftheGerman assets confiscated in1919andwere
attributed totheFrench State under instruments adopted in1924, following which theLawof
23January 1937established ontheonehandtheMines Domaniales dePotasse d'Alsace (MDPA) and,
ontheother, theComptoir devente (trading agency).
The1937 Lawlaiddown thefollowing principles:
- Theworking ofpotassium saltmines thathadnotbeenthesubject ofaconcession before
1937 isreserved totheState;
- Thepotassium mines areState property;
- Apublic enterprise called the"Mines Domaniales dePotasse d'Alsace" wascreated;
- Thepotassium mines areworked onbehalf oftheStatebytheStatecompany MDPA.
These arrangements were reaffirmed in1955-1956 when the1937 Lawwasincorporated in
theMining Code, established byLawNo.55-720 of26May 1955 andDecree No.56-838 of
16August 1956, "Establishing theMining Code".G/STR/N/1/EEC/Add.1
Page5
Decree No.67-796 of20September 1967 (Official Journal oftheFrench Republic of
22September 1967) "OntheMerging oftheMines Domaniales dePotasse d'Alsace andtheOffice
national industriel del'azote" laiddown thefollowing principles:
- "The Mines Domaniales dePotasse d'Alsace arereplaced byasingle Stateenterprise
ofanindustrial andcommercial nature, carrying outthesame activities, called theEntreprise Minière
etChimique (EMC), under thesupervision oftheMinister forIndustry" (Article 1).
Thecombinationoftheseprovisionsmeantthatthelegalmonopolyovertheworkingofpotassium
mines (potassium andrelated salts) inFrance wastransferred from theState totheEMC andtothe
newcompany, asubsidiary oftheEMC, namely MDPA S.A.
Thisorganization oftheFrench potassium production system isnotprompted byanydesire
toprotect thedomestic market noranydiscriminatory practices vis-à-vis foreign operators.
2. Description ofthefunctioning ofthestatetrading enterprise
TheroleoftheEntreprise Minière etChimique istocarry outdirectly orthrough oneofits
subsidiaries alloperations concerning interaliathedistribution andmarketing ofpotassium, fertilizers
andother chemical products. Itsupervises andcontrols theactivities oftheSociéte Commerciale des
Potasses d'Alsace asitssubsidiary, anddecides upon sales plans, theprogramme ofactivities and
investment, andforecasts ofrevenue andexpenditure.
Theexclusive righttotradeinpotassium saltsisconferred byalegislative provision established
byalawcodified intheMining Code. Theregulatory power hasamended bydecree theactual
modalities ofimplementation ofitsprovision.
These amendments aredesigned tobring theCode intolinewiththeTreaty ofRome andconcern
theholder ofthemonopoly andcustoms procedures, withtreatment thatvaries according totheproduct
concerned, itsorigin orsource.
2.1 Holder ofthemonopoly
Thefunctions ofthetrading agency provided forinArticle 183oftheMining Code were
conferred ontheEMC under Article 3ofthe1967Decree, which states thatEMC mayexercise these
functions directly orthrough asubsidiary commercial company.
ADecree of23March 1973modified thismonopoly "inrespect ofsome compound andcomplex
potassium fertilizers".
From 1967to1980, theEMC inpractice delegated theexercise ofthemonopoly totheSCPA.
Since 1980, exercise ofthemonopoly, andinparticular thedecision whether ornottoauthorize
aparticular import ofpotassium products requested byathird party, hasbeentheresponsibility of
theBoard ofDirectors oftheEMC (after theGovernment Commissioner hasgiven hisopinion), which
gives theSCPA global authorization foritsownimport programmes.
2.2 Successive amendments tothecustoms regulations
ADecree of6February 1974"concerning modification ofthepotassium monopoly inrespect
ofsimple potassium fertilizers" allowed these tobeimported bythird parties, subject tothesame
restrictions, conditions andprocedures ascompound andcomplex potassium fertilizers.G/STR/N/1/EEC/Add.1
Page6
AnOrder of22August 1974retains therequirement toobtain prior agreement fortheimport
ofcompound potassium fertilizers -andconsequently approval -solely forfertilizers released forfree
circulation (therefore originating from countries outside theEC).
AnOrder of28November 1974exempted frompriorapproval import declarations forsimple
potassium saltsoriginating inmember countries oftheEC.
AnOrder of25November 1986 abolished theprior import declaration forcompound and
complex potassium fertilizers fromother member countries oftheEEC(i.e.produced orreleased for
freecirculation inoneofthose States).
AnOrder of29January 1987abolished thepriorimport declaration forsimple potassium salts
infreecirculation inother member States oftheEEC.
Following these changes, potassium products, whether simple potassium saltsorcompound
orcomplex potassium fertilizers, freely enter France from oneoftheother States oftheEuropean
Community iftheyoriginate thereoriftheirorigin orsource isathirdcountry buttheyhavepreviously
beencleared bycustoms andlawfully imported, inother words released forfreecirculation within
thecustoms territory oftheEuropean Community.
3. Statistical information
K2O(potassium)
(tonnes)1992 1993 1994
Domestic production
31-04
31-05
(3105-20, 3105-60, 3105-90 together)1,141,000
931,000890,000
823,000870,000
835,000
Imports intoFrance
31-04 Total
BySCPA
Other thanSCPA
31-04
Other thanSCPA757,000
380,000
377,000
147,000582,000
228,000
354,000
123,000820,000
270,000
559,000
151,000
Exports outside France
31-04
31-05 Other thanSCPA113,000
98,000202,000
52,000195,000
60,700
4. Reasons fornottrading abroad intheproducts concerned
Notapplicable.G/STR/N/1/EEC/Add.1
Page7
5. Additional information
Aregulatory textmodifying themonopoly ontradeinpotassium given totheEntreprise Minière
etChimique fortransactions withmember countries oftheEuropean Union andparties totheagreement
ontheEuropean Economic Areawillveryshortly beadopted bytheFrench authorities. Inconformity
withtheprovisions ofArticle 37oftheTreaty ofRome, thisamendment willabolish exercise ofthe
trade monopoly inproducts originating either inamember State oftheEuropean Union oraState
party totheagreement ontheEuropean Economic Area.