18.12.1999 Official Journal of the European Communities L 326[3 COUNCIL REGULATION (EC) No 2674/1999 of 13 December 1999 amending Regulation (EEC) No 1911/91 on the application of the provisions of Community law to the Canary Islands THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to the Act of Accession of Spain and Portugal, and in particular the first subparagraph of Article 25(4) thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Parliament ('), Having regard to the opinion of the Economic and Social Committee (%), Whereas: 1) by virtue of Article 25 of the 1985 Act of Accession, the Treaties and the acts of the Institutions of the Communi- ties apply to the Canary Islands, subject to the deroga- tions set out in that Article and in Protocol 2 to that Act; on account of their geographical situation, the Canary Islands are faced with special difficulties due in particular to their remoteness, their island status, their volcanic terrain unpropitious to the development of agricultural and industrial production and their lack of natural resources; the Council has adopted a number of meas- ures to integrate the Canary Islands more fully into the Community and the customs union in particular; in this context, existing indirect taxation arrangements intended in particular to compensate for the region's island status and geographical isolation needed gradual reform and modernisation in accordance with Community legislation; to that end and among other measures adopted, Regulation (EEC) No 1911/91 (%) allowed a new tax on production and imports (the ‘arbi- trio sobre la produccién y sobre las importaciones’ (APIM)) to be applied in the Canary Islands until 31 December 2000; this temporary tax is intended to enable local production to adjust to the requirements of the single market through a system of exemptions; certain total or partial exemptions from the tax are accordingly granted in respect of locally produced goods, according to economic needs and on condition that such exemptions contribute to the promotion of local activities without being liable to affect trading conditions to an extent contrary to the common interest; (') Opinion delivered on 19 November 1999 (not yet published in the Official Journal). () O] C 329, 17.11.1999, p. 27. () O] L 171, 29.6.1991, (EEC) No 28492 (O] L 31, 7.2.1992, p. 6). p. 1. Regulation as amended by Regulation () pursuant to Article 5(6) of Regulation (EEC) No 1911/ 91, the Commission has examined the impact of the measures taken in the context of the APIM on the economy of the Canary Islands and the prospects for integration of the region into the Community's customs territory; that examination has found that the impact of eliminating the APIM is broadly positive as regards prices and negative as far as output and employment are concerned; the negative impact on output and employment never- theless varies greatly according to the sector concerned; although the time that has elapsed has allowed most sectors to adjust, this is not the case for certain products in sensitive sectors; the Commission has, at the request of the Spanish authorities, studied the most vulnerable sectors and identified the sensitive products, and has concluded that such vulnerability could in some cases lead to the virtual disappearance of the sector concerned; after consultation with the Spanish authorities, it has become clear that the phasing-out of the tax should be suspended until 30 June 2000 in the case of certain sensitive products, in order to facilitate their adjustment to market conditions before the tax disappears; this suspension does not call into question the objectives of introducing the Common Customs Tariff and elimi- nating the APIM, but is confined solely to mitigating the effects of the economic adjustments which are necessary in order to arrive at abolition of the tax; Regulation (EEC) No 1911/91 should therefore be amended accordingly; The APIM will disappear on 31 December 2000; before that date, the Commission will nevertheless examine with the Spanish authorities the impact of suspending the phasing-out of the tax on the economic sectors concerned, and more particularly on the products covered by this Regulation; in the light of the conclu- sions of that examination, the Commission will, if neces- sary, present to the Council a proposal concerning the measures to be taken under the Treaty to avoid jeopar- dising the existence of certain local production activities that are particularly vulnerable, whilst still ultimately achieving the objective of eliminating the tax, HAS ADOPTED THIS REGULATION: Article 1 Regulation (EEC) No 1911/91 is hereby amended as follows: