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Article 265

During the first stage the Portuguese Republic shall apply the following disciplines :

1 . A price discipline :

( a ) Where Portuguese prices , expressed in ECU , are less than or equal to the common prices :

- without prejudice to price harmonization in the milk and milk products sector referred to in Article 309 ( d ) , annual increases in prices may not exceed , in value , the increase in common prices ,

- however :

( aa ) in the event that Portuguese prices are lower than the common prices and where , in accordance with the aid discipline referred to in ( c ) , the abolition of certain aids - either granted directly to products at primary production level , or granted to the means of production - leads to a reduction in income for Portuguese producers , an increase supplementary to that referred to in the first indent , limited to the impact , on the producers' income , of the abolished aids , may be applied ;

( bb ) with regard to products falling within heading No 22.05 of the Common Customs Tariff , for which institutional prices are fixed , the annual increase in Portuguese prices may reach , without exceeding it , the level of the instalment resulting from a price alignment made over 10 years .

In no event may Portuguese prices exceed the level of common prices .

For the purposes of applying the price discipline defined in this paragraph ( a ) , the level of Portuguese prices to be taken into account in the first marketing year following accession shall be the level of Portuguese prices fixed for the 1985/86 marketing year , converted into ECU at the rate valid at the start of that marketing year for the products in question .

( b ) Should the length of the first stage not be reduced in accordance with Article 260 ( 2 ) , and where Portuguese prices are less than common prices , the Portuguese Republic shall , during the fifth year of the first stage , at the start of the marketing year of the product in question , make a price alignment move towards the level of common prices applicable for the same year , following detailed rules to be determined .

To that end , the Portuguese prices to be aligned shall be the prices expressed in ECU , at the level reached on 31 December 1989 , in accordance with the rules of the price discipline referred to in paragraph ( a ) .

( c ) Where the level reached by Portuguese prices for the 1985/86 marketing year , expressed in ECU by means of the conversion rate which was valid at the start of the marketing year of the product concerned , is higher than the level of the common prices , the level of the Portuguese prices may not be increased in relation to its previous level .

Furthermore , if the Portuguese prices , expressed in ECU , fixed under the previous national arrangements for the 1985/86 marketing year , lead to the variation existing for the 1984/85 marketing year between the Portuguese prices and the common prices being exceeded , the Portuguese Republic shall fix its prices for subsequent marketing years in such a way that this variation is totally absorbed during the first seven marketing years following accession .

Furthermore , Portugal shall adjust its prices to the extent necessary to avoid an increase in the variation between its prices and the common prices .

( d ) The Commission shall ensure the observance of the rules referred to above . Any price movement overrun which may arise therefrom shall not be taken into consideration when determining the price level to be adopted as the starting level for moves towards price alignment during the second phase referred to in Article 285 .

2 . An aid discipline :

Under this discipline , and without prejudice to Article 248 , the Portuguese Republic shall be authorized to maintain its national aid during the first stage .

However , during that period , the Portuguese Republic shall ensure that a certain dismantling of national aid , which does not comply with Community law , takes place and that the Community aid plan is progressively introduced in the organization of its domestic market without the level of that aid exceeding the common level .

3 . A production discipline :

Under this discipline the Portuguese Republic shall take the necessary measures to avoid a situation whereby , in sectors for which Community regulations establish production discipline rules :

- any production increases occurring in its territory during the first stage lead to a worsening of the overall Community production situation ,

- the adoption of the " acquis communautaire " from the start of the second phase is made more difficult .