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Whereas, by virtue of Article 25 of the Act of Accession, the Treaties and the acts of the institutions of the European Communities apply to the Canary Islands, subject to the derogations set out in that Article, in Article 155 and in Protocol 2 to the said Act; Whereas these arrangements exclude the Canary Islands in particular from the Community's customs territory and from application of the common commercial policy, the common agricultural policy and the common fisheries policy; whereas experience has however shown that the development of the Canary Islands would be better served by their full integration into the common policies and the process of completing the internal market; whereas the arrangements laid down in the Act of Accession should therefore be amended and the Canary Islands integrated into the Community's customs territory;

Whereas, pursuant to the first subparagraph of Article 25 (4) of the Act of Accession, the Council, at Spain's request, acting on a proposal from the Commission and after consulting the European Parliament, may decide unanimously to include the Canary Islands in the customs territory of the Community and to define the appropriate measures aimed at extending to the Canary Islands the provisions of Community law in force; whereas Spain made such a request on 7 March 1990 pursuant to the aforementioned Article; Whereas integration of the Canary Islands into all Community policies requires a gradual process over an appropriate transitional period, without prejudice to any special measures designed to take account of the specific constraints deriving from the remoteness of the Canary Islands, their island location and their historical economic and tax arrangements; whereas such measures will have to be the subject of a special programme of options specific to the remote and insular nature of the Canary Islands, to be adopted pursuant to this Regulation;

Whereas application of the common agricultural policy to the Canary Islands will make possible the free movement of products on the conditions applicable to mainland Spain (end of the transitional period: 31 December 1995) with the exception of the supplementary trade mechanisms as regards the supplying of the Canary Islands; whereas, in this framework, the free movement of products between the Canary Islands and the rest of Spain will be ensured; whereas full application of the common agricultural policy is subject to the entry into force of specific supply arrangements; whereas the application of this policy will have to be accompanied in addition by specific measures relating to the agricultural production of the Canary Islands; whereas it is therefore necessary to maintain the provisions of the Act of Accession relating to the application of the common agricultural policy to the Canary Islands until the entry into force of such supply arrangements with the exception of those governing the access of agricultural products originating in the Canary Islands to the other parts of the Community; whereas the provisions of Protocol 2 relating to bananas must remain in force;

Whereas it is necessary to apply the common fisheries policy to the Canary Islands on the entry into force of this Regulation on the conditions applicable to mainland Spain (end of the transitional period: 31 December 1995), subject to specific measures to be determined under existing legislation; Whereas historical recognition of the Canaries' island status has been reflected in successive special economic and tax arrangements designed to compensate for the disadvantages deriving from the archipelago's geographical isolation;

Whereas, in this context, the strengthening of the Canary Islands' integration into the Community is not incompatible with the maintenance of indirect taxation specific to these islands, especially the exclusion of the Canary Islands from the territorial field of application of the common VAT system pursuant to Article 26 in conjunction with Annex I, V, 2 to the Act of Accession, amending Article 3 (2) of the Sixth Directive 77/388/EEC () and the continuing exclusion of the Canary Islands from the territorial field of application of the Directives concerning manufactured tobacco pursuant to Article 26 in conjunction with Annex I, V, 3 and 4 to the Act of Accession; Whereas the Community takes favourable note of the aims of the reform initiated by Spain in respect of the tax aspects of the economic and tax arrangements for the Canary Islands; whereas this reform provides for the gradual introduction of up-to-date indirect taxation as an instrument of economic and social development and the financing of local budgets, creating the conditions for total integration into the Community at the end of a transitional period not exceeding 10 years;

Whereas, until 31 December 2000 at the latest, in two five-year stages as part of a dynamic process in conjunction with the gradual entry of the Canary Islands into the customs union, it is desirable to authorize a number of total or partial exemptions for local products from application of the new so-called ‘arbitrio sur la production et sur les importations (APIM)’ (tax on production and imports) tax, provided that these exemptions contribute to promotion of local activities; whereas, however, application of this charge should be suspended for products coming under the common agricultural policy until the application of that policy, it being understood that, when these products are imported from non-member countries, the provisions in force in the Canary Islands in respect of trade with such countries shall be maintained until the same date; Whereas the dismantling of this charge will have to be accompanied by the gradual adoption of the common customs tariff as from the entry into force of this Regulation and for the same transitional period, so as to ensure the complete integration of the Canary Islands into the customs union by 31 December 2000;

Whereas, however, as regards products coming under the common agricultural policy, application of the Common Customs Tariff and other import duties is dependent on the entry into force of the specific measures to supply the Canary Islands with essential agricultural products; whereas at all events the gradual application of the Common Customs Tariff to the Canary Islands may be accompanied, where appropriate, by specific tariff measures or derogations from the common commercial policy for certain sensitive products; whereas such measures may also be taken in respect of the arrangements applicable to free zones;

Whereas the charge known as the ‘arbitrio insular — tarifa especial’ applicable to products supplied by other parts of the Community on the terms set out in Article 6 (3) of Protocol 2 shall not be extended beyond 31 December 1992 except as applied on a case-by-case basis, until 31 December 2000 at the latest, to be decided upon by the Council; whereas the levying of this charge on products imported into the Canary Islands from nonCommunity countries will have to be phased out from 1 January 1996 so that it is completely eliminated by 31 December 2000, without prejudice to obligations under existing arrangements; Whereas provision should be made for the possibility of applying safeguard measures until 31 December 1999 at the latest, HAS ADOPTED THIS REGULATION: