WORLD TRADE
ORGANIZATIONWT/REG102/R/B/1
G/L/370
28 April 2000
(00-1733)
Original:  French
ASSOCIATION AGREEMENT BETWEEN THE
EUROPEAN COMMUNITY AND MALTA
Biennial Report on the Operation of the Agreement
Communication from the Parties
The report below presents the information rece ived from the Permanent Delegation of the
European Commission, dated 21 March 2000.  It is organized in accordance with the standard format
(WT/REG/W/6).
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I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and dates of signature, ratification and entry into force
Relations between Malta and the European Union are governed by the Agreement
establishing an Association between the Europ ean Economic Community (EEC) and Malta, which
entered into force on 1 April 1971.
2. Type of agreement
The Association Agreement provides for the creation of a customs union in two five-year
stages, involving the total elimination of barriers to trade between the two parties and the adoption ofthe common customs tariff, by Malta.
The first stage has been extended on a regular basis since 1977, first by agreement between
the European Community (EC) and Malta and, since December 1991, automatically on an annual
basis without notification. As the first stage has not been completed, the second has not been initiated.Consequently, the Agreement has not yet had the intended effect of opening up the Maltese economy
to European competition and  aligning the country's legislation, practices and level of competitiveness
with those of the Community.
4. Trade data
Imports into the EU from Malta amounted to € 763 million in 1998, while exports to Malta
totalled € 2 billion.  Three quarters of Malta's foreign trade is conducted with the EU.
The relevant statistics on the development of foreign trade are provided in annex.WT/REG102/R/B/1
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II. TRADE PROVISIONS
1. Import restrictions, and
2. Export restrictions
The Association Agreement provides for the dism antling of tariffs by the two parties during
the first stage (free-trade area).
Industrial products originating in Malta ma y be imported into the Community without
quantitative restrictions or measures having an equivalent effect and with exemption from customs
duties or charges having an equivalent effect.  The reverse is not generally true.  Indeed, in 1989Malta introduced import taxes, theoretically as a temporary measure, following the dismantling of its
import licensing regime.  The Maltese authorities decided on the progressive abolition of import taxes
over the period October 1999 to January 2003.
The transitional measures provided for in th e additional protocols signed in 1987 following
the accession of Spain and Portugal to the European Communities and relating to imports into those
two countries of industrial and agricultural products from Malta have now expired.
3. Rules of origin
4. Standards
5. Safeguards6. Anti-dumping and countervailing measures, and7. Subsidies and State aid
The Association Agreement does not contain provisions relating to standards or State aid.
With regard to trade defence instruments and rules of origin, the provisions of the Agreement remain
unchanged.
8. Sector-specific provisions
Annex I, Article 2 of the Association Agreement provides for tariff quotas in respect of
certain products (category 6) in the textiles sector.  Complete trade liberalization in this sector is
foreseen in the framework of the EU's Mediterranean policy.
The provisions of the Agreement concerning agriculture remain unchanged.
III. GENERAL PROVISIONS OF THE AGREEMENT
5. Institutional framework
The institutions established by the Association Agreement, including the Association Council,
are functioning smoothly;  the most r ecent meeting took place in April 1998.WT/REG102/R/B/1
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IV. OTHER
Financial aspects
Malta has benefited from a total contribution of € 93.5 million (including EIB loans and
venture capital) under three successive financial protocols, spread over the years 1978 to 1993.  All
these funds have been committed.  A fourth financial protocol worth € 45 million came into force on
1 January 1996.  It consists of € 30 million in EIB loans, €13 million in grants and €2 million in
venture capital.
The fourth financial protocol expired on 31 October 1998.  At the request of the Maltese
authorities, the Council agreed to extend the commitment period of the protocol until31 December 1999.
Pre-accession
In July 1990, Malta filed an application with the Council for Community membership.The Commission's Opinion, submitted to the Council in June 1993, stated that "the adoption
of the acquis communautaire, especially on trade, economic, financial and competition issues depends
on a thoroughgoing overhaul of the Maltese econom y's regulatory and operational systems".  The
Opinion also stated that "the problems posed by such an overhaul are far from insurmountable, but …the government's undertaking to adopt the acquis communautaire in its entirety must be backed up by
the adoption of an overall structural reform programme.  Once these priority reforms are implemented
and the global reform programme has been adopted, accession negotiations could get under way".
This position was confirmed in the updated version of the  Commission's Opinion on Malta's
application for membership, adopted in February 1999.
Services and intellectual property
These aspects are not covered by the Association Agreement.  No specific agreement has
since been signed in these areas.WT/REG102/R/B/1
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Page 4ANNEX1
EU Imports from the World and Malta 1980-1988
(Millions of ECU)
S I T C : 0 123 456 789 T O T A L
1980 (EU 9)
World 23,908 1,929 27,501 85,384 1,579 11,374 37,648 37,853 22,176 20,502 269,853
Malta 3 7 5 5 0 1 39 20 159 14 252
1984 (EU 10)
World 33,643 2,810 36,139 107,594 2,803 19,968 48,969 71,432 34,537 24,205 382,100
Malta 3 0 5 7 0 3 46 61 183 28 338
1988 (EU 12)
World 32,221 2,152 35,752 47,393 1,499 25,067 59,078 106,689 49,968 27,937 387,757
Malta 5 1 5 0 0 5 44 131 172 27 390
1992 (EU 12)
World 34,580 3,215 32,218 65,183 1,748 33,888 69,355 146,277 76,771 23,900 487,135
Malta 7 0 2 5 0 13 51 549 200 27 855
1996 (EU 15)
World 41,305 3,599 34,829 75,910 2,423 44,328 75,479 189,056 93,962 20,131 581,065
Malta 6 1 8 55 0 18 48 356 273 32 797
1997 (EU 15)
World 44,248 4,072 40,131 85,155 2,554 51,485 87,685 229,346 108,779 17,690 672,413
Malta 8 1 4 2 0 10 56 317 279 6 701
1998 (EU 15)
World 45,198 4,458 39,370 64,843 2,891 55,290 94,672 264,153 116,092 22,676 709,643
Malta 8 1 4 10 0 10 55 350 298 10 763
                                                     
1 Source for all tables:  Eurostat (COMEXT).WT/REG102/R/B/1
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Page 5Table 2 - EU Exports to the World and Malta 1980-1988
(Millions of ECU)
S I T C : 0 123 456 789 T O T A L
1980 (EU 9)
World 13,662 3,422 4,327 10,071 717 23,228 46, 455 84,154 21,333 13,716 221,084
Malta 53 13 4 63 2 36 152 88 43 29 483
1984 (EU 10)
World 21,120 5,784 7,319 18,087 1,343 38,465 65,412 129,088 39,835 24,806 351,259
Malta 54 16 6 120 3 45 186 157 67 41 695
1988 (EU 12)
World 19,588 6,205 7,602 8,232 1,158 44,449 65, 673 141,249 48,507 20,256 362,917
Malta 71 17 8 37 3 66 202 312 88 40 843
1992 (EU 12)
World 24,887 8,778 8,068 10,552 1,491 54,200 71,091 180,838 59,247 16,939 436,091
Malta 111 17 10 85 4 97 234 809 154 36 1,556
1996 (EU 15)
World 30,646 10,339 11,414 15,431 1,998 79,14 4 102,957 283,081 79,287 12,695 627,011
Malta 125 18 16 310 5 118 234 818 195 25 1,870
1997 (EU 15)
World 33,504 12,374 13,084 17,109 2,575 93,04 6 114,927 331,113 88,686 13,717 721,109
Malta 150 26 18 273 5 134 250 894 213 11 1,999
1998 (EU 15)
World 31,772 12,005 11,554 13,833 2,831 95,88 5 112,815 343,435 89,424 16,869 730,423
Malta 145 24 17 213 6 130 256 932 206 28 1,970WT/REG102/R/B/1
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Page 6Table 3 - EU Trade with Malta by HS Section
(Millions of ECU)
EXPORTS IMPORTS
SECTION 1988 1992 1996 1997 1998 SECTION 1988 1992 1996 1997 1998
TOTAL 843 1,556 1,870 1,999 1,970 TOTAL 390 855 797 701 763
I 1 94 23 7 4 1 3 7 I 0 4 3 4 4
II 23 22 28 34 29 II 5 2 7 3 3
III 3 5 6 6 7 III 0 0 0 * 0
IV 48 68 87 112 111 IV 2 2 1 1 1
V 41 90 321 285 228 V 0 5 55 2 10
VI 47 69 87 102 105 VI 5 17 16 10 9
VII 36 52 62 68 70 VII 18 21 34 39 33
VIII 15 18 20 20 20 VIII 4 6 10 9 8
IX 7 9 11 11 12 IX 0 1 0 0 0
X 23 34 51 51 52 X 4 3 21 18 27
XI 102 -103 110 122 120 XI 127 128 149 148 155
XII 5 9 13 13 13 XII 16 20 26 25 28
XIII 19 31 29 31 32 XIII 1 0 1 1 3
XIV 5 36 28 31 41 XIV 2 1 2 1 2
XV 62 74 68 71 75 XV 20 18 12 17 16
XVI 249 651 646 667 707 XVI 103 537 328 273 285
XVII 64 162 176 234 228 XVII 28 12 28 44 65
XVIII 20 30 30 39 33 XVIII 13 26 39 38 43
XIX 1 1 2 1 1 XIX * * 0 0 *
XX 14 21 30 31 28 XX 16 24 33 43 43
XXI 17 7 7 5 7 XXI 4 4 6 6 9WT/REG102/R/B/1
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Page 7Table 4- EU Trade with the World by HS Section
(Millions of ECU)
EXPORTS IMPORTS
SECTION 1988 1992 1996 1997 1998 SECTION 1988 1992 1996 1997 1998
TOTAL 362,917 436,091 627,011 721,109 730,423 TOTAL 387,757 487,135 581,065 672,413 709,643
I 7,060 8,001 9,980 10,897 10,062 I 8, 349 10,300 10,897 12,227 13,296
II 6,372 8,511 8,819 9,757 9,145 II 17,55 5 17,353 23,130 25,437 24,992
III 1,341 1,673 2,286 2,977 3,156 III 1,542 1,781 2,250 2,390 2,693
IV 13,817 19,194 24,510 27,744 27,279 I V 13,638 15,595 18,511 19,019 19,518
V 9,723 12,152 17,487 19,630 16,711 V 55,920 73,081 84,793 95,737 75,508
VI 37,393 46,951 68,968 81,772 85,215 V I 22,179 29,303 39,774 46,234 49,432
VII 15,521 16,914 23,128 27,148 27,504 V II 10,125 13,862 17,132 19,323 21,043
VIII 4,119 4,084 7,159 7,375 6,435 VIII 6,121 5,701 7,590 8,498 8,224
IX 1,771 2,035 4,045 4,927 5,182 IX 9, 615 10,926 9,118 10,973 11,434
X 7,937 10,271 18,033 19,764 19,803 X 17,605 19,227 11,110 11,996 12,571
XI 20,244 25,208 31,611 34,724 35,221 X I 28,639 39,478 47,467 55,248 57,903
XII 3,440 4,526 5,922 6,313 6,043 XII 3,325 5,451 7,029 8,308 8,274
XIII 7,153 8,120 11,257 12,916 12, 894 XIII 2,593 3,883 4,386 5,090 5,648
XIV 13,026 12,425 16,992 19,285 17,990 X IV 17,526 15,037 21,620 23,890 26,981
XV 30,826 30,864 42,214 46,944 45,623 X V 26,101 29,345 33,661 40,312 44,472
XVI 93,666 120,842 193,730 226,482 234,539 XVI 81,389 106,397 146,298 173,122 195,378
XVII 46,674 59,351 89,086 104,705 110,049 XVII 25,240 40,386 42,797 56,275 68,476
XVIII 14,107 17,067 23,982 28,129 29,109 XVIII 14,869 19,652 24,343 27,814 29,926
XIX 402 388 1,097 1,326 1,656 XIX 118 194 466 603 510
XX 7,819 9,378 13,350 15,177 15,242 XX 6 ,655 12,072 14,394 17,529 19,046
XXI 8,204 5,727 13,354 13,115 11,565 XXI 5,733 5,511 14,298 12,387 14,318
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