AGREEMENT between the European Economic Community and the People's Republic of China on trade in textile products

Initialled at Brussels on 9 December 1988

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and

THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA

of the other part,

DESIRING to promote, with a view to permanent cooperation and in conditions providing every security for trade, the orderly and equitable development of trade in textile products between the European Economic Community (hereinafter referred to as 'the Community') and the People's Republic of China (hereinafter referred to as 'China'),

RESOLVED to take the fullest possible account of the serious economic and social problems at present affecting the textile industry in both importing and exporting countries, and in particular, to eliminate real risks of market disruption on the market of the Community and real risks of disruption to the textile trade of China,

HAVING REGARD to the Arrangement regarding International Trade in Textiles (hereinafter referred to as 'the Geneva Arrangement'), and in particular Article 4 thereof, and to the conditions set out in the Protocol extending the Arrangement,

HAVING REGARD to the Trade and Economic Cooperation Agreement between the Community and China,

HAVE DECIDED to conclude this Agreement and to this end have designated as their Plenipotentiaries:

THE COUNCIL OF THE EUROPEAN COMMUNITIES:

THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA:

WHO HAVE AGREED AS FOLLOWS:

I. General provisions

Article 1

The Parties recognize and confirm that without prejudice to the rights and obligations under the Trade and Economic Cooperation Agreement between the Community and China the conduct of their mutual trade in textile products shall be governed by the provisions of this Agreement.

Article 2

1. Trade in textile products listed in Annex I and originating within the Contracting Parties shall be liberalized

for the duration of this Agreement under the conditions set out therein.

2. Trade in textile products listed in Annex II and originating within the Contracting Parties shall be covered by this Agreement solely for the purposes of application of the provisions making explicit reference to that Annex.

3. Subject to the provisions of this Agreement, the Community undertakes, in respect of the products listed in Annex I, to suspend the application of quantitative import restrictions currently in force and not to introduce new quantitative restrictions under Article 3 of the Geneva Arrangement.

4. Measures having equivalent effect to quantitative restrictions on the importation into the Community of the products listes in Annex I shall be prohibited.

II. Arrangements for exports to the Community

Article 3

1. China agrees to establish and maintain for each calendar year quantitative limits on its exports to the Community in accordance with Annex III. Such exports shall be subject to a double-checking system specified in Protocol A.

2. In administering the quantitative limits referred to in paragraph 1, China shall ensure that the Community textile industry shall benefit from utilization of the said limits.

More particularly, as regards categories 2, 3 and 37 China undertakes to reserve, as a priority, 50 % of the quantitative limits concerned for industry users during one hundred and fifteen days beginning on 1 January of each year. For this purpose, contracts made with the industry during the period in question shall be taken into consideration.

3. To facilitate the implementation of these provisions the Community shall provide the competent Chinese authorities, before the end of each year, with a list of interested manufacturers and processors and, if possible, of the quantity of products requested for each firm. To this end, the firms concerned are invited to make direct contact with the relevant Chinese bodies by 15 February of the following year, in order to make their purchasing intentions known.

Article 4

1. Imports into the Community of textile products covered by this Agreement shall not be subject to the quantitative limits established in Annex III, provided that they are declared to be for re-export outside the Community in the same state or after processing, within the framework of the administrative system of control which exists within the Community.

However, the release for home use of products imported under the conditions referred to above shall be subject to the production of an export licence ißüd by the Chinese authorities, and to proof of origin in accordance with the provisions of Protocol A.

2. Where the Community authorities ascertain that imports of textile products have been set off against a quantitative limit established under this Agreement, but that the products have subsequently been re-exported outside the Community, the authorities concerned shall inform the Chinese authorities within four weeks of the quantities involved and authorize imports of identical quantities of the same products, which shall not be set off against the quantitative limit established under this Agreement for the current or the following year.

3. Exports of cottage industry fabrics woven on hand- or foot-operated looms, garments or other made-up articles obtained manually from such fabrics and of traditional folklore handicraft products shall not be subject to quantitative limits, provided that these products meet the conditions laid down in Protocol B.

4. China and the Community recognize the special and differential character of re-imports of textile products into the Community after processing in China.

Provided that they are effected in accordance with the regulations on economic outward processing in force in the Community, these re-imports are not subject to the quantitative limits set out in Annex III when they are subject to the specific arrangements laid down in Protocol E.

Article 5

1. In any Agreement year advance use of a portion of the quantitative limit established for the following Agreement year is authorized for each category of products up to 5 % of the quantitative limit for the current Agreement year.

Amounts delivered in advance shall be deducted from the corresponding quantitative limits established for the following Agreement year.

2. Carry-over to the corresponding quantitative limit for the following Agreement year of the amounts not used during any Agreement year is authorized for each category of products up to 7 % of the quantitative limit for the current Agreement year.

3. Transfers in respect of categories in Group I shall not be made from any category except as follows:

- transfers between Categories 2 and 3 and from Category 1 to Categories 2 and 3 may be made up to 7 % of the quantitative limits for the category to which the transfer is made,

- transfers between Categories 4, 5, 6, 7, and 8 may be made up to 7 % of the quantitative limit for the category to which the transfer is made.

Transfers into any category in Groups II and III may be made from any category or categories in Groups I, II and III up to 7 % of the quantitative limit for the category to which the transfer is made.

4. The table of equivalence applicable to the transfers referred to above is given in Annex I to this Agreement.

5. The increase in any category of products resulting from the cumulative application of the provisions in paragraphs 1, 2 and 3 above during an Agreement year shall not exceed 17 %.

6. Prior notification shall be given by the authorities of China in the event of recourse to the provisions of paragraphs 1, 2 and 3 above.

Article 6

1. Exports of textile products not listed in Annex III to this Agreement may be made subject to quantitative limits by China on the conditions laid down in the following paragraphs.

2. Where the Community finds, under the system of administrative control set up, that the level of imports of products in a given category not listed in Annex III originating in China exceeds, in relation to the preceding years total imports into the Community from all sources of products in that category, the following rates:

- 5 % for categories of products in Group II,

- 10 % for categories of products in Group III,

it may request the opening of consultations in accordance with the procedure described in Article 16 of this Agreement, with a view to reaching agreement on an appropriate restraint level for the products in such category.

The Community shall authorize the importation of products of the said category shipped from China before the date on which the request for consultations was submitted.

3. Pending a mutually satisfactory solution, China undertakes to limit exports of the products in the category concerned to the Community or to the regions of the Community market specified by the Community for a provisional period of three months from the date on which the request for consultations is made. Such provisional limit shall be established at 25 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2, and gave rise to the request for consultation, or 25 % of the level resulting from the application of the formula set out in paragraph 2, whichever is the higher.

4. Should the Parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 16, paragraph 2, the Community shall have the right to introduce a definitive quantitative limit at an annual level not lower than the level resulting from the application of the formula set out in paragraph 2, or 106 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2 and gave rise to the request for consultations, whichever is the higher.

The annual level so fixed shall be revised upwards after consultations in accordance with the procedure referred to in Article 16, with a view to fulfilling the conditions set out in paragraph 2, should the trend of total imports into the Community of the product in question make this necessary.

5. The limits introduced under paragraph 2 or paragraph 4 may in no case be lower than the level of imports of products in that category originating in China in 1988.

6. Quantitative limits may also be established by the Community on a regional basis in accordance with the provisions of Protocol C.

7. The annual growth rate for the quantitative limits introduced under this Article shall be determined in accordance with the provisions of Protocol D.

8. The provisions of this Article shall not apply where the percentages specified in paragraph 2 have been reached as a result of a fall in total imports into the Community, and not as a result of an increase in exports of products originating in China.

9. In the event of the provisions of paragraphs 2, 3 or 4 being applied, China undertakes to ißü export certificates for products covered by contracts concluded before the introduction of the quantitative limit, up to the volume of the quantitative limit fixed.

10. Up to the date of communication of the statistics referred to in Article 15 paragraph 6, the provisions of paragraph 2 of this Article shall apply on the basis of the annual statistics previously communicated by the Community.

11. The provisions of this Agreement which concern exports of products subject to the quantitative limits established in Annex III shall also apply to products for which quantitative limits are introduced under this Article.

Article 7

1. China and the Community agree to cooperate fully in preventing the circumvention of this Agreement by transhipment, re-routing or whatever other means.

2. Where information available to the Community as a result of the investigations carried out in accordance with the procedures set out in Protocol A constitutes evidence that products of Chinese origin subject to quantitative limits established under this Agreement have been transhipped, re-routed or otherwise imported into the Community in circumvention of this Agreement, the Community may request the opening of consultations in accordance with the procedures described in Article 16, with a view to reaching agreement on an equivalent adjustment of the corresponding quantitative limits established under this Agreements.

3. Pending the result of the consultations referred to in paragraph 2, China shall, as a precautionary measure, if so requested by the Community, make the necessary arrangements to ensure that adjustments of quantitative limits liable to be agreed following the consultations referred to in paragraph 2 may be carried out for the quota year in which the request to open consultations in accordance with paragraph 2 was made, or for the following year if the quota for the current year is exhausted, where clear evidence of circumvention is provided.

4. Should the parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 16 paragraph 2, the Community shall have the right, where clear evidence of circumvention has been provided, to deduct from the quantitative limits established under this Agreement amounts equivalent to the products of Chinese origin.

Article 8

1. China shall endeavour to ensure that exports of textile products covered by this Agreement are spaced out as evenly as possible over the year, dü account being taken in particular of seasonal factors.

2. Should there be an excessive concentration of imports of any products belonging to a category subject to quantitative limits under this Agreement, the Community may request consultations in accordance with the procedure specified in Article 16 with a view to remedying this situation.

Article 9

In the event of denunciation of this Agreement as provided for in Article 20 paragraph 3, the quantitative limits established in Annex III shall be reduced on a pro rata basis.

Article 10

1. Portions of the quantitative limits established in Annex III not used in one region of the Community may be reallocated to another region in accordance with the procedures in force in the Community.

The Community undertakes to examine with care and reply within four weeks to any request made for reallocation by China. In the event of agreement on such reallocation, the flexibility provisions set out in Article 5 shall continü to be applicable to the levels of the original allocation.

2. After 1 June of each year of application of the Agreement, China may transfer, subject to prior notification to the Community, the unused quantities of the regional quota-shares of a Community quantitative limit, set out in Annex III, to the quota-shares of the same limit of other regions of the Community provided that the regional quota-share from which the transfer is made is utilized by leß than 80 %, and up to the amount of the following percentages of the quota-share to which the transfer is made:

- 4 % in the first year of application of the Agreement,

- 8 % in the second year of application of the Agreement,

- 16 % in the third year of application of the Agreement.

The percentage in the fourth year of application of the Agreement shall be determined following consultations between the Parties.

3. Should it appear in any given region of the Community that additional supplies are required, the Community may, where measures taken pursuant to paragraph 2 are inadequate to cover those requirements, authorize the importation of amounts greater than those stipulated in Annex III.

Article 11

1. China undertakes to take such measures as are required to make possible the export of the minimum annual quantities laid down in Annex IV of the products listed in that Annex. The Parties will examine each year the possibilities of increasing these quantities in the light of the needs of Community industry and China's export possibilities.

2. In administering exports of the products referred to in paragraph 1, China undertakes to give favourable consideration, taking into account its export possibilities, to request from the Community textile industry with a view to meeting its needs.

For this purpose, the Community may submit to the Chinese authorities before the end of each year a list of interested manufacturers and processors and, if possible, the quantities of products requested by each of the firms in question.

3. The Contracting Parties are agreed that transactions in the products listed in Annex IV shall be carried out in accordance with Articles 8 and 9 of the Trade and Economic Cooperation Agreement taking account of market practice and normal trade flows.

III. Imports into China

Article 12

1. In return for the increased opportunities for the export of Chinese textile products to the Community, China shall encourage and facilitate the importation on its market of textile products originating in the Community listed in annexes I and II. To this end China will take such measures as are necessary to avoid exacerbating and if possible to reduce, during the period of application of the Agreement, the disequilibrium in its textile trade balance with the Community.

2. Where a need for additional supplies arises, and in particular a need leading to the diversification of imports of textile products into China, preference will be given to imports of products originating in the Community referred to in paragraph 1 and offered on terms meeting the conditions set out in Articles 8 and 9 of the Trade and Economic Cooperation Agreement.

Article 13

1. The two Parties agree to examine the trend of trade in textile products and garments each year, in the framework of the consultations provided for in Article 16 and on the basis of the statistics referred to in Article 15.

2. If the Community finds that the provisions of Article 12 paragraph 2 of this Agreement place it in an unfavourable position as compared with a third country, it may request

consultations with China in accordance with the procedure specified in Article 16 with a view to taking appropriate action consistent with the rights and obligations under the Trade and Economic Cooperation Agreement.

IV. Common provisions

Article 14

1. The classification of the products covered by this Agreement is based on the tariff and statistical nomenclature and on the Common Customs Tariff of the Community (hereinafter called the 'combined nomenclature', or in abbreviated form 'CN').

Any amendment to the combined nomenclature (CN) made in accordance with the procedures in force in the Community, concerning categories of products covered by this Agreement or any decision relating to the classification of goods shall not have the effect of reducing any quantitative limit introduced pursuant to this Agreement.

2. The origin of the products covered by this Agreement shall be determined in accordance with the rules in force in the Community.

Any amendment to these rules of origin shall be communicated by China and shall not have the effect of reducing any quantitative limit established in Annex III.

The procedures for control of the origin of the products referred to above are laid down in Protocol A.

Article 15

1. China shall supply the Community with precise statistical information on all export licences ißüd for categories of textile products subject to the quantitative limits set out in Annex III, expressed in quantities and in terms of valü and broken down by Member State of the Community, as well as on all certificates ißüd by the Chinese authorities for products referred to in Article 4 paragraph 3 and subject to the provisions of Protocol B.

2. The Community shall likewise transmit to the Chinese authorities precise statistical information on import authorizations or documents ißüd by the Community authorities and import statistics for products covered by the system referred to in Article 6 paragraph 2.

3. The information referred to above shall, for all categories of products, be transmitted before the end of the second month following the quarter to which the statistics relate.

4. Upon request by the Community, China shall supply import statistics for all products covered by Annexes I and II.

5. Should it be found on analysis of the information exchanged that there are significant discrepancies between the returns for exports and those for imports, consultations may be initiated in accordance with the procedure specified in Article 16 of this Agreement.

6. For the purpose of applying the provisions of Article 6, the Community undertakes to provide the Chinese authorities before 15 April of each year with the preceding year's statistics on imports of all textile products covered by this Agreement, broken down by supplying country and Community Member State.

Article 16

1. A Textile Committee (hereinafter referred to as the 'Committee') made up of representatives of the Contracting Parties shall be set up, its members being appointed by the Joint Committee provided for in Article 15 of the Trade and Economic Cooperation Agreement.

The Committee shall deal with matters raised for consultation under the terms of this Agreement, in accordance with the procedure set out in paragraph 2 below, and with any problem arising from the application of the Agreement.

2. The consultation procedures referred to in this Agreement shall be governed by the following rules:

- any request for consultations shall be notified in writing to the other Party,

- the request for consultations shall be followed within a reasonable period (and in any case not later than 15 days following the notification) by a statement setting out the reasons and circumstances which, in the opinion of the requesting Party, justify the submission of such a request,

- the Parties shall enter into consultations within one month at the latest of notification of the request, with a view to reaching agreement on a mutually acceptable conclusion within one further month at the latest.

3. The Community may request consultations in accordance with paragraph 2 when it ascertains that during a particular year of application of the Agreement difficulties arise in the Community or one of its regions from a sharp and substantial increase, by comparison to the preceding year, in imports of a given category of Group I subject to the quantitative limits set out in Annex III.

Article 17

The two Contracting Parties undertake to promote the exchange of visits by persons, groups and delegations from busineß, trade and industry, to facilitate contracts in the industrial, commercial and technical fields connected with trade in textile products and garments and to assist in the organization of fairs and exhibitions of mutual interest.

Article 18

Pending the entry into force in China of national legislation on intellectual property, the two Parties, at the request of either of them, shall hold consultations in accordance with the procedure laid down in Article 16 for the purpose of finding an equitable solution in any dispute relating to the protection of marks, designs or models of articles of apparel and textile products.

V. Final provisions

Article 19

As regards the Community, this Agreement shall apply to the territories in which the Treaty establishing the European Economic Community is applied under the conditions laid down in that Treaty.

Article 20

1. This Agreement shall enter into force on the first day of the month following the date of its signature. It shall be applicable until 31 December 1992.

2. This Agreement shall apply with effect from 1 January 1989.

3. Either Party may at any time propose modifications to this Agreement or denounce it, provided that at least six months' notice is given. In that event, the Agreement shall come to an end on the expiry of the period of notice.

4. The Annexes and Protocols to this Agreement and the Agreed Minutes and letters joined thereto, shall form an integral part thereof.

Article 21

This Agreement shall be drawn up in two copies in the Danish, Dutch, English, French, German, Greek, Italian, Portugüse, Spanish and Chinese languages, each of these texts being equally authentic.

ANNEX I

LIST OF PRODUCTS REFERRED TO IN ARTICLE 1 (1)

1. When the constitutive material of the products of categories 1 to 114 is not specifically mentioned, these products are to be taken to be made exclusively of wool or of fine hair, of cotton or of man-made fibres.

2. Garments which are not recognizable as being garments for men or boys or as being garments for women or girls are classified with the latter.

3. Where the expression 'babies' garments' is used, this is meant also to cover girls' garments up to and including commercial size 86.

GROUP I A

>PLATZ FÜR EINE TABELLE>

GROUP I B

>PLATZ FÜR EINE TABELLE>

GROUP II A

>PLATZ FÜR EINE TABELLE>

GROUP II B

>PLATZ FÜR EINE TABELLE>

GROUP III A

>PLATZ FÜR EINE TABELLE>

GROUP III B

>PLATZ FÜR EINE TABELLE>

ANNEX II

referred to in Article 2 (2)

GROUP IV

>PLATZ FÜR EINE TABELLE>

GROUP V

>PLATZ FÜR EINE TABELLE>

ANNEX III

COMMUNITY AND REGIONAL QUANTITATIVE LIMITS

The allocation of Community limits among regions of the Community will be communicated to China in accordance with the rules in force in the Community.

The product descriptions together with the relevant CN codes are reproduced in Annex I.

Each quantitative limit established for Germany in this Annex, with the exception of Categories 18, 23, 26, 67, 73, 76 and 83, contains a sub-ceiling amounting to 19 % of the quantitative limit in question for use exclusively at the Berlin Fair.

Community limits

>PLATZ FÜR EINE TABELLE>

Regional Limits

>PLATZ FÜR EINE TABELLE>

ANNEX IV

referred to in Article 11 ASSURED PROVISION BY CHINA OF TEXTILE RAW MATERIALS

Minimum quantities which China undertakes to reserve for the Community each year:

Silk

Raw silk (CN code 5002 00 00): 3 000 tonnes

Waste silk (CN codes 5003 10 00 and 5003 90 00): (¹)

Fine animal hair

Angora (CN code 5102 10 10): 700 tonnes

Cashmere (CN code ex 5102 10 50): 500 tonnes

(¹) China will accord favorable consideration to Community economic operators, within the limits of availability.

PROTOCOL A

TITLE I

CLASSIFICATION

Article 1

1. The competent authorities of the Community undertake to inform China of any changes in the combined nomenclature (CN) before the date of their entry into effect in the Community.

2. The competent authorities of the Community undertake to inform China of any decisions relating to the classification of products subject to the Agreement within one month of their adoption at the latest. Such communication shall include:

(a) a description of the products concerned;

(b) the relevant category and the related CN codes;

(c) the reasons which have led to the decision.

3. Where a decision on classification results in a change of classification practice or a change of category of any product subject to the Agreement, the competent authorities of the Community shall provide 30 days' notice, from the date of the Community's communication, before the decision is put into effect. Products shipped before the date of application of the decision shall remain subject to the earlier classification practice, provided that the goods in question are presented for importation into the Community within 60 days of that date.

4. Where a Community decision on classification resulting in a change of classification practice or a change of categorization of any product subject to the Agreement affects a category subject to restraint, the two Parties agree to enter into consultations in accordance with the procedures described in Article 16 paragraph 1 of the Agreement with a view to honouring the obligation under the second subparagraph of Article 14 paragraph 1 of the Agreement and mitigating any disruptive effects which might arise from such a Community decision.

Article 2

In case of divergent opinions between China and the competent Community authorities at the point of entry into the Community on the classification of products covered by the present Agreement, classification shall provisionally be based on indications provided by the Community, pending consultations in accordance with Article 16 with a view to reaching agreement on definitive classification of the product concerned.

TITLE II

ORIGIN

Article 3

1. Products originating in China for export to the Community in accordance with the arrangements established by this Agreement shall be accompanied by a certificate of Chinese origin conforming to the model annexed to this Protocol.

2. The certificate of origin shall be ißüd by the competent governmental authorities of China if the products in question can be considered products originating in that country within the meaning of the relevant rules in force in the Community.

3. However, the products in Group III may be imported into the Community in accordance with the arrangements established by this Agreement on production of a declaration by the exporter on the invoice or other commercial document relating to the products to the effect that the products in question originated in China within the meaning of the relevant rules in force in the Community.

4. The certificate of origin referred to in paragraph 1 shall not be required for import of goods covered by a certificate of origin Form A or Form APR completed in accordance with the relevant Community rules in order to qualify for generalized tariff preferences.

Article 4

Where different criteria for determining origin are laid down for products falling within the same category, certificates or declarations of origin shall contain a sufficiently detailed description of the goods to enable the criterion to be determined on the basis of which the certificate was ißüd or the declaration drawn up.

Article 5

The discovery of slight discrepancies between the statements made in the certificate of origin and those made in the documents produced to the customs office for the purpose of carrying out the formalities for importing the product shall ipso facto cast doubt upon the statements in the certificate.

TITLE III

DOUBLE CHECKING SYSTEM FOR CATEGORIES OF

PRODUCTS WITH QUANTITATIVE LIMITS

Section I

Exportation

Article 6

The competent authorities of China shall ißü an export licence in respect of all consignments from China of textile products referred to in Annex III, up to the relevant quantitative limits as may be modified by Articles 5, 9 and 10 of the Agreement and of textile products subject to any definitive or provisional quantitative limits established as a result of the application of Article 6 of the Agreement.

Article 7

1. The export licence shall conform to the model annexed to this Protocol. It must certify inter alia that the quantity of the product in question has been set off against the quantitative limit prescribed for the category of the product in question.

2. Each export licence shall cover only one of the categories of products listed in Annex III of this Agreement. It may be used for one or more consignments of the products in question.

3. Where the conversion rate provided for in Annex III is applied the following note must be inserted in box 9 of the export licence: 'conversion rate for garments of a commercial size not exceeding 130 cm is to be applied'.

4. Where the provisions of Article 3 (2) and Annex III of the Agreement concerning quantities reserved for industry are applied, the following note must be inserted in box 9 of the export licence: 'quantitites reserved for industry'.

Article 8

The competent Community authorities must be notified forthwith of the withdrawal or alteration of any export licence already ißüd.

Article 9

1. Exports shall be set off against the quantitative limits established for the year in which shipment of the goods has been effected, even if the export licence is ißüd after such shipment.

2. For the purpose of applying paragraph 1, shipment of the goods is considered to have taken place on the date of their loading on to the exporting aircraft, vehicle or vessel.

Article 10

The presentation of an export licence, in application of Article 12, shall be effected not later than 31 March of the year following that in which the goods covered by the licence have been shipped.

Section II

Importation

Article 11

Importation into the Community of textile products subject to quantitative limits shall be subject to the presentation of an import authorization or document.

Article 12

1. The competent Community authorities shall ißü such import authorization or document automatically within five working days of the presentation by the importer of the original of the corresponding export licence.

The import authorization or document shall be valid for six months.

2. The competent Community authorities shall cancel the already ißüd import authorization or document if the corresponding export licence has been withdrawn.

However, if the competent Community authorities have not been notified of the withdrawal or cancellation of the export licence until after the products have been imported into the Community, the quantities involved shall be set off against the quantitative limit for the category and the quota year in question.

Article 13

1. If the competent Community authorities find that the total quantities covered by export licences ißüd by China for a particular category in any Agreement year exceed the quantitative limit established in Annex III for that category, as may be modified by Articles 5, 9 and 10 of the Agreement, or any definitive or provisional limit established under Article 6 of the Agreement, the said authorities may suspend the further ißü of import authorizations or documents. In this event, the competent Community authorities shall immediately inform the authorities of China and the special consultation procedure set out in Article 16 of the Agreement shall be initiated forthwith.

2. Exports of Chinese origin not covered by Chinese export licences ißüd in accordance with the provisions of this Protocol may be refused the ißü of import authorizations or documents by the competent Community authorities.

However, if the import of such products is allowed into the Community by the competent Community authorities, the quantities involved shall not be set off against the appropriate quantitative limits set out in Annex III or established as a result of the application of Article 6 of the Agreement, without the expreß agreement of China.

TITLE IV

FORM AND PRODUCTION OF EXPORT LICENCES AND CERTIFICATES OF ORIGIN, AND COMMON PROVISIONS

Article 14

1. The export licence and the certificate of origin may comprise additional copies duly indicated as such. They shall be made out in English or French. If they are completed by hand, entries must be in ink and in block capitals.

These documents shall measure 210×297 mm. The paper used must be white writing paper, sized, not containing mechanical pulp and weighing not leß than 25 g/m². Each part shall have a printed guilloche-pattern background making any falsification by mechanical or chemical means apparent to the eye.

If the documents have several copies only the top copy which is the original shall be printed with the guilloche-pattern background. This copy shall be clearly marked as 'original' and the other copies as 'copy'. Only the original shall be accepted by the competent authorities in the Community as being valid for the purposes of export to the Community in

accordance with the arrangements established by this Agreement.

2. Each document shall bear a standardized serial number, whether or not printed, by which it can be identified. This number shall be composed of the following elements:

-

two letters identifying China as follows: CN,

two letters identifying countries of destination as follows:

BL: Benelux

DE: Federal Republic of Germany

DK: Denmark

EL: Greece

ES: Spain

FR: France

GB: United Kingdom

IE: Ireland

IT: Italy

PT: Portugal

- a one-digit number identifying quota year, corresponding to the last figure in year, e.g. 9 for 1989,

- a two-digit number running consecutively from 01 to 99 identifying the issuing office,

- a five-digit number running consecutively from 00001 to 99999 allocated to the country of destination.

3. The competent authorities in China shall satisfy themselves that the goods exported correspond to the statements given in the export licence and certificate of origin.

Article 15

The export licence and certificate of origin may be ißüd after the shipment of the products to which they relate. In such cases they shall bear either the endorsement 'délivré a posteriori' or the endorsement 'Ißüd retrospectively'.

Article 16

1. In the event of theft, loß or destruction of an export licence or a certificate of origin, the exporter may apply to the competent governmental authority which ißüd the document for a duplicate to be made out on the basis of the export documents in his possession. The duplicate of any such certificate or licence so ißüd shall bear the endorsement 'duplicata'.

2. The duplicate must bear the date of the original export licence or certificate of origin.

TITLE V

ADMINISTRATIVE COOPERATION

Article 17

The Community and China shall cooperate closely to implement the provisions of this Agreement. To this end, contacts and exchanges of views (including on technical matters) shall be facilitated by both Parties.

Article 18

In order to ensure that the Agreement is properly applied, the Community and China assist each other in checking the authenticity and accuracy of export licences and certificates of origin isüd or declarations made under this Protocol.

Article 19

China shall send the Commission of the European Communities the names and addresses of the governmental authorities competent for the ißü and verification of export licences and certificates of origin together with specimens of the stamps used by these authorities. China shall also notify the Commission of any change in this information.

Article 20

1. Subsequent verification of certificates of origin or export licences shall be carried out at random, or whenever

the competent Community authorities have reasonable doubt as to the authenticity of the certificate or licence or as to the accuracy of the information regarding the products in question.

2. In such cases the competent authorities in the Community shall return the certificate of origin or export licence or a copy thereof to the competent governmental authority in China giving, where appropriate, the reasons of form or substance for an enquiry. If the invoice has been submitted, such invoice or a copy thereof shall be attached to the certificate or licence or its copy. The authorities shall also forward any information that has been obtained suggesting that the particulars given on the said certificate or licence are inaccurate.

3. The provisions of paragraph 1 shall be applicable to subsequent verifications of the declarations of origin referred to in Article 3 of this Protocol.

4. The results of the subsequent verifications carried out in accordance with paragraphs 1 and 2 shall be communicated to the competent authorities of the Community within three months at the latest. The information communicated shall indicate whether the disputed certificate or licence applied to the goods actually exported and whether these goods are eligible for export in accordance with the arrangements established by this Agreement. The information shall also include, at the request of the Community, copies of all documentation necessary to determine the facts fully and in particular the trü origin of the goods.

Should such verifications reveal systematic irregularities in the use of declarations of origin, the Community may subject imports of the products in question to the provisions of Article 3 paragraph 1 and 2 of this Protocol.

5. For the purpose of subsequent verification of certificates of origin, copies of the certification as well as any export documents referring to them shall be kept for at least a period of two years by the competent governmental authority in China.

6. Recourse to the random verification procedure specified in this Article must not constitute an obstacle to the release for home use of the products in question.

Article 21

1. Where the verification procedure referred to in Article 20 or where information available to the Community or to China indicates or appears to indicate that the provisions of this Agreement are being contravened, both parties shall cooperate closely and with appropriate urgency to prevent such contravention.

2. To this end China shall, on this own initiative or at the request of the Community, carry out appropriate enquiries or arrange for such enquiries to be carried out concerning operations which are or appear to the Community to be in contravention of this Agreement. China shall communicate the results of these enquiries to the Community together with any other pertinent information enabling the trü origin of the goods to be determined.

3. By agreement between the competent Community authorities and the competent Chinese authorities, officials designated by the Community may be present at the enquiries referred to above.

4. In pursuance of the cooperation referred to in paragraph 1, China and the Community shall exchange any information considered by either Party to be of use in preventing the provisions of the Agreement. These exchanges may include information on textile production in China and on trade in textile products of a kind covered by this Agreement between China and other countries, particulary where the Community has reasonable grounds to consider that the products in question may be in transit acroß the territory of China prior to their importation into the Community. This information shall include at the request of the Community copies of all relevant documentation.

5. Where it is established that the provisions of this Agreement have been contravened, China and the Comunity may agree to take such measures as are necessary to prevent a recurrence of such contravention.

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PROTOCOL B

1. The exemption provided for in Article 4 (3) of the Agreement in respect of the cottage industry products shall apply only to the following products:

(a) fabrics woven on hand- or foot-operated looms, being fabrics of a kind traditionally made in the cottage industry of China;

(b) garments or other textile articles of a kind traditionally made in the cottage industry of China obtained manually from the fabrics referred to above and sewn exclusively by hand without the aid of any machine;

(c) traditional folklore textile products of China made by hand in the cottage industry of China as defined in the list agreed between both Parties and annexed to this Protocol.

2. Exemption shall be granted only for products accompanied by a certificate ißüd by the competent Chinese authorities in accordance with the specimen annexed to this Protocol. Such certificates shall state the grounds on which exemption is based and shall be accepted by the competent Community authorities provided that they are satisfied that the products concerned conform to the conditions set out in this Protocol. Certificates covering the products referred to in paragraph (c) above shall bear a conspicuous stamp: 'FOLKLORE'. In case of divergent opinion between China and the competent Community authorities at the point of entry into the Community as to the nature of such products, consultations shall be held within one month with a view to resolving such divergences. Should imports of any of the above products reach such proportions as to cause difficulties to the Community, the two Parties shall open consultations forthwith in accordance with the procedure laid down in Article 16 of the Agreement with a view to finding a quantitative solution to the problem.

3. The provisions of Title IV and V of Protocol A shall apply 'mutatis mutandis' to the products referred to in paragraph 1 of this Protocol.

Annex to Protocol B

TRADITIONAL FOLKLORE TEXTILE PRODUCTS OBTAINED IN THE COTTAGE INDUSTRY OF CHINA ARE IDENTIFIED IN THE ANNEXED LIST

This list covers the following kinds of products (and other items as may be agreed upon by both parties from time to time):

A. Products of hand-made lace traditional of China

1. Crochet lace:

Simply by means of a crochet hook, different products are obtained (piano covers, scarves, tablecloths, bedspreads, doilies, shawls, traycloths, curtains, lace in the piece, bedcovers, sofa covers, cushion covers and insertions for these articles) with traditional designs of Shandong (Shantung), Shanghai and Shantou (Swatow).

2. Tsimou lace:

This is a traditional and a special characteristic craft produced in Tsimou county, Shandong (Shantung) province. Cotton or man-made fibre threads are worked by hand according to paper sketches of flora, vases, fishes, birds and other traditional Chinese designs, joined and sewn on to a piece of cotton or man-made fibre woven fabrics, thus producing articles such as traycloths, cushion covers, piano covers, tablecloths, bedspreads, doilies, shawls, lace in the piece, bed covers, sofa covers and insertions for these articles.

3. Gou-gou lace:

This is another traditional type of heavy-work hand-made lace typical of Shandong (Shantung), made of coarser cotton or man-made fibre threads, thus producing articles such as shawls, traycloths, cushion covers, curtains, piano covers, doilies, tablecloths, bedspreads, sofa covers, lace in the piece, bed covers and insertions for these articles.

4. Gingzhoufu lace:

This is a very fine type of lace made by hand in different traditional designs. It takes months, and sometimes years to make one set of this type of tablecloth and napkins. It is a typical product of Shandong (Shantung), producing articles such as lace in the piece, shawls, traycloths, cushion covers, piano covers, tablecloths, bedspreads, sofa covers, doilies, bed covers and insertions for these articles.

5. Rongcheng lace:

This is the finest and most elaborate kind of Chinese lace. It is made in the traditional way in Shandong (Shantung). Unlike Xiaoshan lace, the whole design is finished in one piece thus producing articles such as lace in the piece, shawls, traycloths, cushion covers, piano covers, doilies, tablecloths, bedspreads, sofa covers, scarves, bed covers and insertions for these articles.

6. Filite lace:

This is also called mesh-hole lace, made of strong cotton or man-made fibre threads, hand worked in the same manner as nets into different traditional designs, thus obtaining lace in the piece, sofa covers, doilies, gloves, cushion covers, piano covers, tablecloths, curtains, bed covers, traycloths, shawls, bedspreads and insertions for these articles. It is a typical product of Shantou (Swatow) and Fujian.

7. Tatting lace:

This is another kind of hand-made lace in the traditional designs made from high quality cotton or man-made fibre threads, simply obtained by means of a specially made tiny shuttle, thus producing lace in the piece, shawls, traycloths, cushion covers, piano covers, tablecloths, bedspreads and doilies, bed covers, sofa covers and insertions for these articles. It is typical of Shandong (Shantung) and Shantou (Swatow).

8. Batten lace:

This is another type of heavy lace made by hand from cotton or man-made fibre threads which are worked into strips of different shapes. These strips are then joined together according to a prepared sketch or inserted into cloth, thus producing lace in the piece, shawls, traycloths, cushion covers, tablecloths, bedspreads, doilies, bed covers, sofa covers, piano covers and insertions for these articles. The designs correspond to the traditional ones of Shandong (Shantung).

9. Bangchui lace:

Cotton or man-made fibre threads are hand worked according to a predetermined sketch by craftsmen making use of dozens of tiny spindles. For an elaborate design more than 100 spindles may be used. The final products in traditional designs are available in the form of lace in the piece, shawls, traycloths, cushion covers, piano covers, bed covers, tablecloths, bedspreads, doilies, sofa covers and insertions for these articles. It is a traditional and typical product of Shandong (Shantung).

10. Xiaoshan lace:

This is a kind of lace made with tens of thousands of fine cotton threads. It is first worked into small pieces according to patterns on a paper sketch, which is later discarded. By sewing together by hand these small pieces, lace in the piece, shawls, traycloths, cushion covers, tablecloths, doilies, bedspreads, sofa covers, piano covers, bed covers and insertions for these articles in traditional designs of Xiaoshan are obtained.

11. Wangkou lace:

The material used is cotton or man-made fibre threads. The lace is available in different numbers of holes per inch. Traditional designs are then braided through the mesh holes. Lace in the piece, doilies, shawls, traycloths, cushion covers, piano covers, tablecloths, bedspreads, net curtains, bed covers, sofa covers and insertions for these articles are so obtained traditionally in Shandong (Shantung).

12. Hand knitted lace (Needle point lace):

By means of a pair of knitting needles, lace in the piece, shawls, traycloths, curtains, sofa covers, cushion covers, piano covers, tablecloths, bed covers, bedspreads, doilies and insertions for these articles are obtained by hand in traditonal elaborate designs. It is a typical product of Shandong (Shantung), Shanghai, Tianjin (Tientsin) and Liaoning.

B. Products largely embroidered by hand in the following traditional techniques of China

1. Cut work and embroidery:

Traditional designs of Shanghai, Shantou (Swatow), Shandong (Shantung) are embroidered by hand on to cotton or man-made woven fabrics. After embroidery, some parts of the cloth are cut away by hand, so making traditional designs on cushion covers, bed sheets, scarves, sunblinds, handkerchiefs, tablecloths, bedspreads, doilies, pillowcases, shawls, traycloths, bed covers, sofa covers, curtains, güst towels, piano covers, aprons. This type of product also presents drawn work and stuffed embroidery.

2. Embroidery organdy:

Various kinds of hand embroidery in traditional Chinese designs and colours, typical of Beijing (Peking) and Shantou (Swatow) are carried out on fine translucent cotton woven fabrics, thus producing traycloths, sofa covers, cushion covers, piano covers, aprons, scarves, tablecloths, bed covers, curtains, bedsheets, pillowcases, shawls, bedspreads, güst towels, handkerchiefs, doilies.

3. Multi-coloured embroidery:

This is a typical kind of hand-embroidered work, specially distinguished for its elaborate traditional colour combination and designs. It is further matched with various kinds of drawn and punch work. This technique is typical of Shanghai, Beijing (Peking), Guangdong (Kwangtung), Tianjin (Tientsin), Fujian and Shandong (Shantung), producing traycloths, cushion covers, bedsheets, scarves, tablecloths, bed covers, curtains, pillowcases, shawls, bedspreads, güst towels, aprons, doilies, sofa covers, piano covers, handkerchiefs.

C. Products obtained by the traditional Chinese technique 'applique and embroidery'

This technique involves the previous cutting by hand of coloured cloth into traditional floral or geometrical designs which are then sewn by hand on to cotton or man-made woven fabrics. Large hand embroideries in traditional colours and designs are always included in this technique, producing traycloths, handkerchiefs, place mats, cushion covers, scarves, tablecloths, bedsheets, bed covers, shawls, bedspreads, sofa covers, piano covers, güst towels, aprons, pillowcases, doilies, curtains.

D. Products presenting important traditional Chinese designs obtained by hand by the 'croß stitch' technique

Croß stitches are made by hand on cotton or man-made woven fabrics with colour-fast threads without a pattern drawn on the fabric, simply by counting the numbers of weft and warp. This technique is typical of Zhejiang (Chekiang), Beijing (Peking) and Shantou (Swatow), producing bedsheets, doilies, cushion covers, handkerchiefs, scarves, tablecloths, bedspreads bed covers, shawls, sofa covers, piano covers, güst towels, aprons, pillowcases, doilies, curtains.

E. Hand-made needle point tapestry

These are among the famous and traditional hand-made products of China, typical of Shanghai and Shandong (Shantung). Double ply woollen yarns are worked by hand into cotton canvas by needle point stitches to form various traditional designs frequently of a pictorial character, such as landscapes, scenic historic sites, animals, etc.

F. Wax-dyeing products (Fabrics and made-up articles)

Wax-dyeing is a traditional method and also a cultural heritage of long standing in Guizhou and Sichuan provinces. With special instruments beeswax is used to draw traditional designs on cotton or man-made woven fabrics. After soaking in dye, the wax melts away and the drawings are revealed. These fabrics are used for producing curtains, doilies, scarves, sofa covers, tablecloths, bedspreads, bedsheets, and aprons.

G. Products made by hand painting

These products belong to the traditional art of China. Typical largely elaborated designs are hand painted on the pillowcases, bedsheets, shawls, scarves, tablecloths, place mats, curtains, bedspreads and sofa covers of various kinds of woven fabrics by artists. Every painting is different and completely done by hand.

H. Hand-knotted carpets and rugs

These are made from wool or other animal-hair yarn. Knots

most commonly used are Senna or Persian knots and Ghiordes or Turkish knots. Chinese hand-knotted carpets enjoy a long history. The traditional patterns used are common to China and occasionally to neighbouring regions of North and Central Asia and mainly consist of typical stylized flora, animals, popular daily necessities, Chinese characters and geometrical motifs.

I. Hand-hooked carpets and rugs

These carpets are made by the insertion by hand of textile yarns by means of hooks into a pre-existing woven fabric, thus producing loops or, if the hooks are combined with a cutting device, also operated by hand, to form cut pile.

J. Hand-woven carpets and rugs

These are carpets woven on a wooden or iron loom operated by hand with or without tuft piles. These carpets are essentially Chinese Kelem carpets and Tibetan rugs with traditional Chinese patterns.

K. Blouses and shirt-blouses

These are woven garments largely embroidered by hand with traditional Chinese designs and colours.

L. Pullovers and cardigans

These are knitted or crocheted neither elastic nor rubberized traditional Chinese textile garments. They are largely embroidered by hand with various unique Chinese floral designs and colours.

M. Bed blankets, bed covers, bedsheets, bedspreads, pillowcases, tablecloths, cushion covers, doilies, shawls, sofa covers, curtains, güst towels, piano covers, aprons, scarves, handkerchiefs, traycloths and embroidery on woven fabrics in the piece intended to be made up into these articles

These textile products are made of artificial silk or of a mixture of natural silk and rayon and are largely embroidered by hand with traditional Chinese designs and colours.

N. Open-work knitted or crocheted articles entirely made by hand

These are garments and other traditional textile products of China.

1. The garments consist of pullovers, cardigans, waistcoats, blouses, dresses, sets of pullover plus skirt.

2. The other articles consist of shawls, traycloths, curtains, sofa covers, cushion covers, piano covers, handbags,

scarves, tablecloths, bedspreads, doilies and gloves.

O. Patchwork cotton waistcoats and jackets

The patchwork cotton waistcoat is a kind of traditional decorative garment which spreads far and wide among the masses of Hunghe River Valley of China. It has the following characteristics:

(a) the outside is a piece of material made up of bits of cloth of various sizes, shapes and colours. The inside is of cotton or man-made fibre, padded by hand. The lining is one piece of grey cloth. The waistcoat is sleeveleß, completely open at the front and fastened by means of toggles.

(b) flowers, animals and insects and sometimes geometrical patterns are its main designs and all of these designs are patched by hand. Definition for jacket is the same as for the waistcoat except that it has long sleeves.

P. Handicraft 'tying and dyeing' fabrics

The fabrics are tied with threads as per the desired design and dyed; the threads are cut off after the fabrics have been dyed, and the pattern comes out. The main fabrics used are made of cotton and other vegetable fibre, man-made fibre and their blend.

Imports of products of category 97 made by hand are by analogy governed by the provisions set out for imports of products referred to in Protocol B, providing that they conform to the definition given below:

'Hand-knotted fishing nets, nettings, net shopping bags made directly of twine, cordage or rope.

Hand-knotted made-up fishing nets made of yarn, twine, cordage or rope.'

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List of traditional folklore textile products obtained in the cottage industry of China

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PROTOCOL C

Pursuant to Article 6 (6) of the Agreement, a quantitative limit may be fixed on a regional basis where imports of a given product into any region of the Community in relation to the amounts determined in accordance with paragraph 2 of the said Article 6 exceed the following regional percentage:

Germany // 25,5 %

Benelux // 9,5 %

France // 16,5 %

Italy // 13,5 %

Denmark // 2,7 %

Ireland // 0,8 %

United Kingdom // 21,0 %

Greece // 1,5 %

Spain // 7,5 %

Portugal // 1,5 %

PROTOCOL D

The annual growth rate for the quantitative limits introduced pursuant to Article 6 of the Agreement shall be determined as follows:

for products in categories falling within Groups II or III, the growth rate shall be fixed by agreement between the Parties in accordance with the consultation procedure established in Article 16 of the Agreement. Such growth rate may in no case be lower than the highest rate applied to corresponding products under bilateral agreements concluded under the Geneva Arrangement between the Community and other third countries having a level of trade equal to or comparable with that of China.

PROTOCOL E

Re-imports in the sense of Article 4 paragraph 4 of this Agreement into the Community of products listed in the Annex to this Protocol shall be subject to the provisions of the Agreement except as specifically provided for by the particular provisions set out below:

1. Only re-imports into the Community subject to the specific quantitative limits set out in the Annex to this Protocol, as may be modified by the application of paragraphs 2 and 3, shall be considered re-imports in the sense of Article 4 paragraph 4.

2. Re-imports not covered by the Annex to this Protocol may be submitted to specific quantitative limits following consultations in accordance with the procedures set out in Article 16 of the Agreement, provided the products concerned are subject to the quantitative limits established under Annex III to the Agreement.

3. The Community may, at its own discretion, and bearing in mind the interest of both Parties, or in the framework of a request set out in Article 16 of the Agreement:

(a) examine the possibilities of transfers between categories and advance use or carry-over of portions of specific quantitative limits from one year to another;

(b) consider the scope for reallocating portions of any specific quantitative limits not used in one region of the Community to another region.

4. However the Community may automatically carry out the flexibilities in the sense of paragraph 3 up to the following extent:

(a) transfer between categories up to 20 % of the share established for the category to which the transfer is made;

(b) carry-over of specific quantitative limits from one year to another up to 10,5 % of the share for the year of actual utilization;

(c) advance use of specific quantitative limits from one year to another up to 7,5 % of the share for the year of actual utilization.

5. The Community shall inform China of any measures taken pursuant to the preceding paragraphs.

6. Debiting against a specific quantitative limit referred to in paragraph 1 shall be carried out by the competent authorities of the Community at the time of issuing the prior authorization provided for by the Community regulation on economic outward processing, Regulation (EEC) N° 636/82. A specific quantitative limit shall be debited for the year in which a prior authorization is ißüd.

7. A certificate of origin shall be ißüd for all products covered by the present Protocol by China in accordance with the provisions of Protocol A of the Agreement, bearing a reference to the prior authorization referred to in paragraph 6 as evidence that the processing operation described in the prior authorization has been carried out in China.

8. The Community shall provide China with the names, addresses and the specimens of stamps used by the competent authorities of the Community for the ißü of the prior authorizations referred to in paragraph 6.

9. Notwithstanding the provisions of paragraphs 1 to 8 above, China and the Community will continü to consult together to seek a mutually acceptable means to enable both parties to take advantage of the OPT provisions in the Agreement with a view to effective development of trade in textiles between China and the Community.

Annex to Protocol E

OPT quantitative limits

(In this Annex the product descriptions used in Annex I are given in abbreviated form)

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Agreed Minute concerning Article 11

In the course of the negotiations on the bilateral Textile Agreement between the European Economic Community and the People's Republic of China initialled on 9 December 1988, the delegation of the Community drew attention to difficulties experienced by importers and industrialists in the Community wishing to import angora, cashmere and raw and waste silk from China, concerning the implementation of commercial contracts.

The Chinese authorities undertake to endeavour, in consultation with the organisations responsible for the export of these products, to find remedies to these problems, and to ensure that the quality of the products is improved in order to meet the standards required by European industry.

The two delegations agreed that, in the event of any difficulties in provision and delivery of these fibres, consultations may be held with a view to finding a mutually satisfactory solution.

Head of Delegation of the

People's Republic of China

Head of Delegation of the

European Economic Community

Agreed Minute concerning Annex IV

In the course of the negotiations on the bilateral Textile Agreement between the European Economic Community and the People's Republic of China initialled on 9 December 1988, the delegation of the Community emphasized the importance it attached to European industries' acceß to supplies of Chinese raw silk. These industries require improved acceß to a quantity based on figures corresponding to the actual trade flows in recent years.

The Chinese delegation noted this request and will endeavour to supply additional quantities of raw silk to the industries in question according to the availability of supply.

The two delegations have agreed that, should problems arise in connection with supplies of raw silk, consultations will be held in order to resolve these problems.

Head of Delegation of the

People's Republic of China

Head of Delegation of the

European Economic Community

Agreed Minute

1. In the course of the negotiations on the bilateral Textile Agreement between the European Economic Community and the People's Republic of China initialled on 9 December 1988, the European Economic Community delegation drew attention to the administrative and economic difficulties which had in previous years arisen dü to overshipments of products in certain categories in Annex III and for which licences have been ißüd.

2. The Chinese delegation confirmed that measures had been taken to ensure that the problems which had arisen in previous years would not be repeated under the Agreement initialled on

9 December 1988 and supplied details concerning the internal procedures which have been adopted. The Chinese delegation expressed confidence that the licensing system was now operating correctly.

3. The two sides agreed that should difficulties with overlicensing nevertheleß arise, the consultations referred to in Article 13, paragraph 1 of Protocol A shall be initiated without delay. In order to assist the Chinese authorities to initiate the internal procedures referred to in para-

graph 2 above, the competent authorities in the Community will supply data concerning exceß export licences presented.

Head of Delegation of the

People's Republic of China

Head of Delegation of the

European Economic Community

Agreed Minute

During the negotiations preceding the conclusion of the Textile Agreement on 9 December 1988, the delegation of the European Economic Community drew the attention of the Chinese delegation to the particular problems which have arisen in the Community markets dü to imports from China of products of category 33. The Chinese delegation was unable at this stage to agree the introduction of a Community limit for these products.

In consequence, the two delegations have agreed that China will accord special consideration to any specific problems raised by the Community in respect of this category, and enter promptly into consultations with a view to finding an appropriate solution.

Head of Delegation of the

People's Republic of China

Head of Delegation of the

European Economic Community

Agreed Minute

The People's Republic of China and the European Economic Community agree that carry-over from the quantitative limits for the year 1988 of amounts not used during the year 1988 is authorized up to 7 % of the corresponding quantitative limits for the year 1989. Anticipation of a portion of quantitative limits for the year 1989 is authorized up to 5 % for any quantitative limit for the year 1988.

Head of Delegation of the

People's Republic of China

Head of Delegation of the

European Economic Community

Dear Mr. Hofmann,

I confirm that the Chinese authorities will give every assistance to European industrialists who wish to visit China in order to benefit from the acceß to the raw materials referred to in Annex IV to the Textile Agreement between the European Economic Community and China initialled on 9 December 1988, and in the Agreed Minute concerning Annex IV.

LI GOUDONG

Dear Mr. Hofmann,

Concerning category 2 (cotton fabrics), the two Parties have agreed that an additional quantity of 1 230 tonnes for fabrics below 115 cm in width may be exported by the People's Republic of China to the European Economic Community on the understanding that for the purposes of taking advantage of this additional facility, China will not in fact export fabrics above 100 cm in width.

I hereby declare that this is the understanding of the Chinese government.

LI GUODONG

Dear Mr. Hofmann,

I have the honour to confirm that China is willing to ensure the normal development of exports to the Community in respect of fabrics for medical gauze (CN codes 5208 11 10 and 5208 21 10), taking into account existing currents of trade, as well as specific solutions agreed upon in Brussels.

LI GUODONG

Dear Mr. Li Guodong,

Your delegation expressed particular concern about certain problems resulting from regional breakdown of the agreed Community restraint levels.

In case of difficulties concerning this problem the Community would enter into consultations in a constructive spirit with a view to finding a mutually acceptable solution.

G. HOFMANN

Exchange of notes

The Mission of the People's Republic of China to the European Communities presents its compliments to the Directorate-General for External Relations of the Commission of the European Communities and has the honour to refer to the Agreement on textile products between the People's Republic of China and the Community initialled on 9 December 1988.

The Mission wishes to inform the Directorate-General that whilst awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Government of the People's Republic of China is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1989 if the Community is disposed to do likewise.

The Mission would be grateful if the Community would confirm its agreement to the foregoing.

The Mission of the People's Republic of China to the European Communities avails itself of this opportunity to renew to the Directorate-General for External Relations the assurance of its highest consideration.

Exchange of Notes

The Directorate-General for External Relations of the Commission of the European Communities presents its compliments to the Mission of the People's Republic of China to the European Communities and has the honour to refer to the Note of 20 December 1988 regarding the Agreement in textile products between the People's Republic of China and the Community initialled on 9 December 1988.

The Directorate-General wishes to confirm that whilst awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Community is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1989.

The Directorate-General for External Relations avails itself of this opportunity to renew to the Mission of the People's Republic of China to the European Communities the assurance of its highest consideration.