AGREEMENT on free trade and trade-related matters between the European Community, the European Atomic Energy Community and the European Coal and Steel Community, of the one part, and the Republic of Latvia, of the other part

THE EUROPEAN COMMUNITY, THE EUROPEAN ATOMIC ENERGY COMMUNITY AND THE EUROPEAN COAL AND STEEL COMMUNITY,

hereinafter referred to as 'the Community', of the one part,

and the REPUBLIC OF LATVIA,

hereinafter referred to as 'Latvia'; of the other part,

WHEREAS the Parties recall the historical links between them and the common values they share; whereas they wish to reinforce these links, to establish close and lasting relations on a basis of reciprocity allowing Latvia to participate in the process of European integration, in reinforcing and further developing the relations previously established, in particular via the trade and cooperation agreement;

WHEREAS this Agreement contributes to the attainment of the objective of association;

WHEREAS the Parties are committed to the intensification of political and economic liberties which constitute the basis of the new trade agreement and to the necessary transition of Latvia to a new economic and political system which respects - in accordance inter alia with the undertakings made within the context of the Conference on Security and Cooperation in Europe (CSCE) - the rule of law and human rights, including the rights of persons belonging to minorities, a multiparty system with free and democratic elections and liberalization aimed at setting up a market economy;

WHEREAS the Parties share the understanding that Latvia has made considerable and successful reform efforts in the political and economic fields and that these efforts will be pursued;

WHEREAS the Parties are committed to the implementation of commitments made in the framework of the CSCE, in particular those set out in the Helsinki Final Act, the concluding documents of the Madrid, Vienna and Copenhagen meetings, those of the Charter of Paris for a New Europe, the conclusions of the CSCE's Bonn Conference, the CSCE Helsinki document 1992, the European Energy Charter; as well as the principles of the European Convention on Human Rights;

WHEREAS trade is important for the creation of a system of stability in Europe on the basis of cooperation, of which one of the pillars is the European Community;

WHEREAS there is a need to continue, with the Community's help, Latvia's political and economic reform;

WHEREAS the Community wishes to contribute to the implementation of the reforms and to assist Latvia in facing the economic and social consequences of structural adjustment;

WHEREAS full implementation of the agreement is linked to the implementation of a coherent programme of economic and political reform by Latvia;

WHEREAS the Parties recognize the need for regional cooperation among the Baltic States, taking into account that closer integration between the European Union (EU) and the Baltic States, and the Baltic States among themselves should proceed in parallel;

WHEREAS the Parties are committed to liberalize trade based on GATT principles;

WHEREAS the Parties expect that this Agreement will create a new climate for economic relations between them and above all for the development of trade and trade-related matters and investment, which are essential to economic restructuring and the renewal of technology;

WHEREAS it is important that political dialogue between the Parties should be enhanced;

WHEREAS the Parties recognize the fact that Latvia's ultimate objective is to become a member of the EU and that the step towards association through this Agreement, in the view of the Parties, will help Latvia to achieve this objective;

HAVE DECIDED to conclude this Agreement and to this end have designated as their plenipotentiaries,

THE EUROPEAN COMMUNITY and THE EUROPEAN ATOMIC ENERGY COMMUNITY:

Klaus Kinkel,

Federal Minister for Foreign Affairs and Deputy Federal Chancellor of the Federal Republic of Germany, President-in-Office of the Council of the European Union,

Sir Leon BRITTAN,

Member of the Commission of the European Communities,

THE EUROPEAN COAL AND STEEL COMMUNITY:

Sir Leon BRITTAN,

Member of the Commission of the European Communities,

THE REPUBLIC OF LATVIA:

Valdis BIRKAVS,

Prime Minister and Minister for Foreign Affairs,

WHO, having exchanged their full powers, found in good and due form,

HAVE AGREED AS FOLLOWS:

TITLE I GENERAL PRINCIPLES

Article 1

1. Respect for democratic principles and human rights, established by the Helsinki Final Act and in the Charter of Paris for a New Europe, as well as the principles of market economy, inspire the domestic and external policies of the Parties and constitute essential elements of this Agreement.

2. The Parties consider that it is essential for the prosperity and stability of the region that the Baltic States should maintain and develop cooperation among themselves and will make every effort to enhance this process.

3. The Parties regard the implementation of this Agreement as a decisive step towards the early conclusion of a Europe Agreement between Latvia and the European Community.

TITLE II FREE MOVEMENT OF GOODS

Article 2

1. The Community and Latvia shall gradually establish a free trade area in a transitional period lasting a maximum of four years starting from the entry into force of this Agreement, in accordance with the provisions of this Agreement and in conformity with those of the General Agreement on Tariffs and Trade (GATT).

2. The combined nomenclature of goods based on the Harmonized System shall be applied to the classification of goods in trade between the two Parties.

3. For each product the basic duty to which the successive reductions set out in this Agreement are to be applied shall be that set out in Annexes II to IV and X, or that actually applied erga omnes on 1 January 1995, whichever is the lower.

4. If, after the entry into force of this Agreement, any tariff reduction is applied on an erga omnes basis, in particular, reductions resulting from the tariff agreement concluded as a result of the GATT Uruguay Round, such reduced duties shall replace the basic duties referred to in paragraph 3 as from the date when such reductions are applied.

5. The Community and Latvia shall communicate to each other their respective basic duties.

CHAPTER I Industrial products

Article 3

1. The provisions of this chapter shall apply to products originating in the Community and in Latvia listed in Chapters 25 to 97 of the combined nomenclature with the exception of the products listed in Annex I.

2. The provisions of Articles 4 to 8 inclusive do not apply to products mentioned in Article 10.

3. Trade between the Parties in items covered by the Treaty establishing the European Atomic Energy Community will be conducted in accordance with the provisions of that Treaty.

Article 4

1. Customs duties on imports applicable in the Community to products originating in Latvia shall be abolished on the entry into force of this Agreement.

2. Quantitative restrictions on imports to the Community and measures having an equivalent effect shall be abolished on the date of entry into force of this Agreement with regard to products originating in Latvia.

Article 5

1. Customs duties on imports applicable in Latvia to products originating in the Community other than those listed in Annexes II and III shall be abolished on the date of entry into force of this Agreement.

2. Customs duties on imports applicable in Latvia to products originating in the Community which are listed in Annex II shall be progressively reduced in accordance with the following timetable:

- one year after the entry into force of this Agreement, each duty shall be reduced to 50 % of the basic duty,

- two years after the entry into force of this Agreement, the remaining duties shall be eliminated.

3. Customs duties on imports applicable in Latvia to products originating in the Community which are listed in Annex III shall be progressively reduced in accordance with the following timetable:

- two years after the entry into force of this Agreement, each duty shall be reduced to 50 % of the basic duty,

- four years after the entry into force of this Agreement, the remaining duties shall be eliminated.

4. Quantitative restrictions on imports into Latvia of products originating in the Community and measures having an equivalent effect shall be abolished upon entry into force of this Agreement.

Article 6

The provisions concerning the abolition of customs duties on imports shall also apply to customs duties of a fiscal nature.

Article 7

The Community and Latvia shall abolish upon entry into force of this Agreement in trade between themselves, any charges having an effect equivalent to customs duties on imports.

Article 8

1. Customs duties on exports and charges having equivalent effect shall be abolished between the Community and Latvia upon entry into force of this Agreement, with the exception of those listed in Annex IV, which shall be abolished by Latvia at the latest by the end of the fourth year after the entry into force of this Agreement.

2. Quantitative restrictions on exports to Latvia and any measures having equivalent effect shall be abolished by the Community upon entry into force of this Agreement.

3. Quantitative restrictions on exports to the Community and any measures having equivalent effect shall be abolished by Latvia upon entry into force of this Agreement.

Article 9

Each Party declares its readiness to reduce its customs duties in trade with the other Party more rapidly than is provided for in Articles 4 and 5 if its general economic situation and the situation of the economic sector concerned so permit.

The Joint Committee referred to in Article 37 (hereinafter referred to as 'the Joint Committee') may make recommendations to this effect.

Article 10

1. The textile products of Latvian origin listed in Annex V to this Agreement shall benefit from a suspension of customs duties on imports into the Community, under the conditions set out in that Annex. The Annex may be revised by decision of the Joint Committee, in accordance with the procedures set out in Article 38.

2. Protocol 1 lays down the other arrangements applicable to the textile products referred to therein.

Article 11

1. The provisions of this chapter do not preclude the retention by the Community of an agricultural component in the duties applicable to products listed in Annex VI in respect of products originating in Latvia.

2. The provisions of this chapter do not preclude the introduction of an agricultural component by Latvia in the duties applicable to the products listed in Annex VI in respect of products originating in the Community.

CHAPTER II Agriculture

Article 12

1. The provisions of this chapter shall apply to agricultural products originating in the Community and in Latvia.

2. The term 'agricultural products' means the products listed in Chapters 1 to 24 of the combined nomenclature and the products listed in Annex I, but excluding fishery products as defined by Article 16 (2).

Article 13

Protocol 2 lays down the trade arrangements for processed agricultural products which are listed therein.

Article 14

1. As from the date of entry into force of this Agreement no quantitative restrictions shall apply to imports into the Community of agricultural products originating in Latvia nor to imports into Latvia of agricultural products originating in the Community.

2. The Community and Latvia shall grant each other the concessions referred to in Annexes VII to XI in accordance with the conditions laid down therein.

3. The concessions referred to in paragraph 2 may be subject to revision by agreement between the Parties within three years after entry into force of this Agreement and on the basis of the principles and procedures set out in paragraph 4.

4. Taking account of the volume of trade in agricultural products between them, of their particular sensitivity, of the rules of the common agricultural policy of the Community, of the rules of the agricultural policy in Latvia, of the role of agriculture in Latvia's economy, of the production and export potential of its traditional branches and markets, the Community and Latvia shall examine in the Joint Committee, product by product and on an orderly and reciprocal basis, the possibilities of granting each other further concessions.

Article 15

Notwithstanding other provisions of this Agreement, and in particular Article 24, if, given the particular sensitivity of the agricultural markets, imports of products originating in one Party, which are the subject of concessions granted pursuant to Article 14, cause serious disturbance to the markets in the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such a solution, the Party concerned may take the measures it deems necessary.

CHAPTER III Fisheries

Article 16

1. The provisions of this chapter shall apply to fishery products originating in the Community and in Latvia.

2. The term 'fishery products' means the products listed in Chapter 3 of the combined nomenclature and product groups covered by the combined nomenclature codes 0511 91 10, 0511 91 90, 1604, 1605, 1902 20 10 and 2301 20 00.

Article 17

1. The Community and Latvia shall grant each other the concessions referred to in Annexes XII and XIII in accordance with the conditions laid down therein.

2. The provisions of Articles 14 (4) and 15 shall apply mutatis mutandis to fishery products.

CHAPTER IV Common provisions

Article 18

The provisions of this Title shall apply to trade in all products originating in both Parties except where otherwise provided herein or in Protocols 1 and 2.

Article 19

1. In trade between the Community and Latvia from the date of entry into force of this Agreement:

- no new customs duties on imports or exports or charges having equivalent effect shall be introduced, nor shall those already applied be increased,

- no new quantitative restrictions on imports or exports or measures having equivalent effect shall be introduced nor shall those existing be made more restrictive.

2. Without prejudice to the concessions granted pursuant to Article 14, the provisions of paragraph 1 of this Article shall not restrict in any way the pursuance of the respective agricultural and fisheries policies of Latvia and the Community or the taking of any measures under such policies.

Article 20

1. The two Parties shall refrain from any measure or practice of an internal fiscal nature establishing, whether directly or indirectly, discrimination between the products of one Party and like products originating in the territory of the other Party.

2. Products exported to the territory of one of the two Parties may not benefit from repayment of internal taxation in excess of the amount of direct or indirect taxation imposed on them.

Article 21

1. This Agreement shall not preclude the maintenance or establishment of customs unions, free trade areas or arrangements for frontier trade except in so far as they alter the trade arrangements provided for in this Agreement.

2. Consultations between the Parties shall take place within the Joint Committee concerning agreements establishing such customs unions or free trade areas and, where requested, on other major issues related to their respective trade policies with third countries. In particular in the event of a third country acceding to the Community, such consultations shall take place so as to ensure that account can be taken of the mutual interests of the Community and Latvia stated in this Agreement.

Article 22

Exceptional measures of limited duration which derogate from the provisions of Article 5 and Article 19 (1), first indent, may be taken by Latvia in the form of increased customs duties.

These measures may only concern infant industries, or certain sectors undergoing restructuring or facing serious difficulties, particularly where these difficulties produce important social problems.

Customs duties on imports applicable in Latvia to products originating in the Community introduced by these measures may not exceed 25 % ad valorem and shall maintain an element of preference for products originating in the Community.

The total value of imports of the products which are subject to these measures may not exceed 15 % of total imports of industrial products from the Community as defined in Chapter I during the last year for which statistics are available.

These measures shall be applied for a period not exceeding three years unless a longer duration is authorized by the Joint Committee. They shall cease to apply at the latest on expiry of the transitional period.

No such measures can be introduced in respect of a product if more than three years have elapsed since the elimination of all duties and quantitative restrictions or charges or measures having an equivalent effect concerning that product.

Latvia shall inform the Joint Committee of any exceptional measures it intends to take and, at the request of the Community, consultations shall be held in the Joint Committee on such measures and the sectors to which they apply before they are applied. When taking such measures Latvia shall provide the Joint Committee with a schedule for the elimination of the customs duties introduced under this Article. This schedule shall provide for a phasing out of these duties starting at the latest two years after their introduction at equal annual rates. The Joint Committee may decide on a different schedule.

Article 23

If one of the Parties finds that dumping is taking place in trade with the other Party within the meaning of Article VI of the General Agreement on Tariffs and Trade, it may take appropriate measures against this practice in accordance with the Agreement relating to the application of Article VI of the General Agreement on Tariffs and Trade, with related internal legislation and with the conditions and procedures laid down in Article 27.

Article 24

Where any product is being imported in such increased quantities and under such conditions as to cause or threaten to cause:

- serious injury to domestic producers of like or directly competitive products in the territory of one of the Parties, or

- serious disturbances in any sector of the economy or difficulties which could bring about serious deterioration in the economic situation of a region,

the Community or Latvia, whichever is concerned, may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 27.

Article 25

Where compliance with the provisions of Article 8 and 19 leads to:

(i) re-export towards a third country against which the exporting Party maintains, for the product concerned, quantitative export restrictions, export duties or measures having equivalent effect; or

(ii) a serious shortage, or threat thereof, of a product essential to the exporting Party;

and where the situations referred to above give rise, or are likely to give rise to major difficulties for the exporting Party, that Party may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 27. The measures shall be non-discriminatory and be eliminated when conditions no longer justify their maintenance.

Article 26

The Member States of the European Union (hereinafter referred to as 'the Member States') and Latvia shall progressively adjust any State monopolies of a commercial character so as to ensure that, by the end of the fourth year following the entry into force of this Agreement, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States and of Latvia. The Joint Committee will be informed about the measures adopted to implement this objective.

Article 27

1. In the event of the Community or Latvia subjecting imports of products liable to give rise to the difficulties referred to in Article 24 to an administrative procedure having as its purpose the rapid provision of information on the trend of trade flows, it shall inform the other Party.

2. In the cases specified in Articles 23, 24 and 25, before taking the measures provided for therein or, in cases to which paragraph 3 (d) applies, as soon as possible, the Community or Latvia, as the case may be, shall supply the Joint Committee with all relevant information with a view to seeking a solution acceptable to the two Parties.

In the selection of measures, priority must be given to those which least disturb the functioning of this Agreement.

The safeguard measures shall be notified immediately to the Joint Committee and shall be the subject of periodic consultations within that body, particularly with a view to establishing a timetable for their abolition as soon as circumstances permit.

3. For the implementation of paragraph 2, the following provisions shall apply:

(a) As regards Article 24, the difficulties arising from the situation referred to in that Article shall be referred for examination to the Joint Committee, which may take any decision needed to put an end to such difficulties.

If the Joint Committee or the exporting Party has not taken a decision putting an end to the difficulties or no other satisfactory solution has been reached within 30 days of the matter being referred, the importing Party may adopt the appropriate measures to remedy the problem. These measures must not exceed the scope of what is necessary to remedy the difficulties which have arisen.

(b) As regards Article 23, the Joint Committee shall be informed of the dumping case as soon as the authorities of the importing Party have initiated an investigation. If no end has been put to the dumping or if no other satisfactory solution has been reached within 30 days of the matter being referred to the Joint Committee, the importing Party may adopt the appropriate measures.

(c) As regards Article 25, the difficulties arising from the situations referred to in that Article shall be referred for examination to the Joint Committee.

The Joint Committee may take any decision needed to put an end to the difficulties. If it has not taken such a decision within 30 days of the matter being referred to it, the exporting Party may apply appropriate measures on the exportation of the product concerned.

(d) Where exceptional circumstances requiring immediate action make prior information or examination, as the case may be, impossible, the Community or Latvia whichever is concerned may, in the situations specified in Articles 23, 24 and 25, apply forthwith the precautionary measures strictly necessary to deal with the situation.

Article 28

Protocol 3 lays down rules of origin for the application of the tariff preferences provided for in this Agreement as well as the methods of administrative cooperation therewith.

Article 29

This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures of artistic, historic or archaeological value or the protection of intellectual, industrial and commercial property or rules relating to gold and silver. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.

Article 30

Protocol 4 lays down the specific provisions to apply to trade between Latvia of the one part and Spain and Portugal of the other part, and it will be valid until 31 December 1995.

TITLE III PAYMENTS, COMPETITION AND OTHER ECONOMIC PROVISIONS

Article 31

The Parties untertake to authorize, in freely convertible currency, any payments on the current account of balance of payments to the extent that the transaction underlying the payments concerns movements of goods between the Parties which have been liberalized pursuant to this Agreement.

Article 32

1. The following are incompatible with the proper functioning of this Agreement, in so far as they may affect trade between the Community and Latvia:

(i) all agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition;

(ii) abuse by one or more undertakings of a dominant position in the territories of the Community or of Latvia as a whole or in a substantial part thereof;

(iii) any public aid, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods.

2. Any practices contrary to this Article shall be assessed on the basis of criteria arising from the application of the rules of Articles 85, 86 and 92 of the Treaty establishing the European Community or, for products covered by the ECSC Treaty, on the basis of corresponding rules of the ECSC Treaty including secondary legislation.

3. The Joint Committee shall, within three years of the entry into force of this Agreement, adopt by decision the necessary rules for the implementation of paragraphs 1 and 2.

Until these rules are adopted, the provisions of this Agreement on interpretation and application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade shall be applied as the rules for the implementation of paragraph 1 point (iii) and related parts of paragraph 2.

4. (a) For the purposes of applying the provisions of paragraph 1 point (iii), the Parties recognize that during the first five years after the entry into force of this Agreement, any public aid granted by Latvia shall be assessed taking into account the fact that Latvia shall be regarded as an area identical to those areas of the Community described in Article 92 (3) (a) of the Treaty establishing the European Community. The Joint Committee shall, taking into account the economic situation of Latvia, decide whether that period should be extended by further periods of five years.

(b) Each Party shall ensure transparency in the area of public aid, inter alia by reporting annually to the other Party on the total amount and the distribution of the aid given and by providing, upon request, information on aid schemes. Upon request by one Party, the other Party shall provide information on particular individual cases of public aid.

5. With regard to products referred to in Chapters II and III of Title II:

- the provision of paragraph 1 point (iii) does not apply,

- any practices contrary to paragraph 1 point (i) should be assessed according to the criteria established by the Community on the basis of Articles 42 and 43 of the Treaty establishing the European Community and in particular of those established in Council Regulation No 26.

6. If the Community or Latvia considers that a particular practice is incompatible with the terms of the first paragraph of this Article, and

- is not adequately dealt with under the implementing rules referred to in paragraph 3, or

- in the absence of such rules, and if such practice causes or threatens to cause serious prejudice to the interests of the other Party or material injury to its domestic industry, including its services industry,

it may take appropriate measures after consultation within the Joint Committee or after 30 working days following referral for such consultation.

In the case of practices incompatible with paragraph 1 point (iii) of this Article, such appropriate measures may, where the General Agreement on Tariffs and Trade applies thereto, only be adopted in conformity with the procedures and under the conditions laid down by the General Agreement on Tariffs and Trade and any other relevant instrument negotiated under its auspices which are applicable between the Parties.

7. Notwithstanding any provisions to the contrary adopted in conformity with paragraph 3, the Parties shall exchange information taking into account the limitations imposed by the requirements of professional and business secrecy.

Article 33

1. The Parties shall endeavour to avoid the imposition of restrictive measures including measures relating to imports for balance of payments purposes. In the event of their introduction, the Party having introduced the same shall present to the other Party as soon as possible, a time schedule for their removal.

2. Where one or more Member States or Latvia is in serious balance of payments difficulties, or under imminent threat thereof, the Community or Latvia, as the case may be, may, in accordance with the conditions established under the General Agreement on Tariffs and Trade, adopt restrictive measures, including measures relating to imports, which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The Community or Latvia, as the case may be, shall inform the other Party forthwith.

Article 34

With regard to public undertakings, and undertakings to which special or exclusive rights have been granted, the Joint Committee shall ensure that as from the fourth year following the date of entry into force of this Agreement, the principles of the Treaty establishing the European Community, notably Article 90, and the relevant CSCE principles, in particular entrepreneurs' freedom of decision, are upheld.

Article 35

1. The Parties commit themselves to developing customs cooperation in order to achieve the approximation of Latvia's customs system to that of the Community.

2. Cooperation shall include the following in particular:

- the exchange of information,

- the organization of seminars and placements,

- the introduction of the single administrative document and the interconnection between the transit system of the Community and that of Latvia,

- the simplification of the inspections and formalities in respect of the carriage of goods,

- exchange of information on the methods of investigation.

Technical assistance shall be provided where appropriate and required.

3. The Parties will provide mutual administrative assistance in accordance with the provisions of Protocol 5.

Article 36

1. The Parties recognize that an important condition for the establishment of free trade between Latvia and the Community and the further economic integration of the former into the Community is the approximation of Latvia's existing and future legislation to that of the Community. Latvia shall endeavour to ensure that its trade and trade-related legislation will be gradually made compatible with that of the Community.

2. The approximation of laws shall extend to trade-related matters, in particular dumping, rules on competition, customs legislation, statistics, technical rules and standards.

3. The Community shall provide Latvia with technical assistance for the implementation of these measures, which may include inter alia;

- the exchange of experts,

- the provision of early information especially on relevant legislation,

- organization of seminars,

- training activities,

- aid for the translation of legislation in the relevant sectors,

- aid for improving customs procedures and statistics,

- aid for trade-related legislation in the context of approximation of Latvia's legislation to European Union laws.

TITLE IV INSTITUTIONAL, GENERAL AND FINAL PROVISIONS

Article 37

The Joint Committee set up by the Agreement on Trade and Commercial and Economic Cooperation signed between the European Economic Community and Latvia on 11 May 1992 shall perform the duties assigned to it by this Agreement.

Article 38

The Joint Committee shall, for the purpose of attaining the objectives of this Agreement, have the power to take decisions in the cases provided for therein. The decisions taken shall be binding on the Parties which shall take the measures necessary to implement the decisions taken. The Joint Committee may also make appropriate recommendations.

It shall draw up its decisions and recommendations by consensus.

Article 39

1. Each of the two Parties may refer to the Joint Committee any dispute relating to the application or interpretation of this Agreement.

2. The Joint Committee may settle the dispute by means of a decision.

3. Each Party shall be bound to take the measures involved in carrying out the decision referred to in paragraph 2.

4. In the event of it not being possible to settle the dispute in accordance with paragraph 2, either Party may notify the other of the appointment of an arbitrator; the other Party must then appoint a second arbitrator within two months.

The Joint Committee shall appoint a third arbitrator.

The arbitrators' decisions shall be taken by majority vote.

Each Party to the dispute must take the steps required to implement the decision of the arbitrators.

Article 40

Within the scope of this Agreement, each Party undertakes to ensure that natural and legal persons of the other Party have access free of discrimination in relation to its own nationals to the competent courts and administrative organs of the Parties to defend their individual rights and their property rights, including those concerning intellectual, industrial and commercial property.

Article 41

Nothing in this Agreement shall prevent a Contracting Party from taking any measures:

(a) which it considers necessary to prevent the disclosure of information contrary to its essential security interests;

(b) which relate to the production of, or trade in, arms, ammunition or war materials or to research, development or production indispensable for defense purposes, provided that such measures do not impair the conditions of competition in respect of products not intended for specifically military purposes;

(c) which it considers essential to its own security in the event of serious internal disturbances affecting the maintenance of law and order, in time of war or serious international tension constituting threat of war or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security;

(d) which it considers necessary to respect its international obligations and commitments on the control of dual use industrial goods and technologies.

Article 42

In the fields covered by this Agreement and without prejudice to any special provisions contained therein:

- the arrangements applied by Latvia in respect of the Community shall not give rise to any discrimination between the Member States, their nationals, or their companies or firms,

- the arrangements applied by the Community in respect of Latvia shall not give rise to any discrimination between Latvian nationals or its companies or firms.

Article 43

Products originating in Latvia shall not enjoy more favourable treatment when imported into the Community than that applied by Member States among themselves.

Article 44

1. The Parties shall take any general or specific measures required to fulfil their obligations under this Agreement. They shall see to it that the objectives set out in this Agreement are attained.

2. If either Party considers that the other Party has failed to fulfil an obligation under this Agreement, it may take appropriate measures. Before so doing, except in cases of special urgency, it shall supply the Joint Committee with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties.

In the selection of measures, priority must be given to those which least disturb the functioning of this Agreement. These measures shall be notified immediately to the Joint Committee and shall be the subject of consultations within the Joint Committee if the other Party so requests.

Article 45

Protocols 1, 2, 3, 4, 5 and 6 and Annexes I to XIII shall form an integral part of this Agreement.

Article 46

This Agreement is concluded for an unlimited period.

Either Party may denounce this Agreement by notifying the other Party. This Agreement shall cease to apply six months after the date of such notification.

Article 47

This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing the European Community, the European Atomic Energy Community and the European Coal and Steel Community are applied and under the conditions laid down in those Treaties and, on the other hand, to the territory of the Republic of Latvia.

Article 48

The Secretariat-General of the Council of the European Union shall be the depository of this Agreement.

Article 49

This Agreement is drawn up in the Danish, Dutch, English, French, German, Greek, Italian, Portuguese, Spanish and Latvian languages, each of these texts being equally authentic.

Article 50

This Agreement will be approved by the Parties in accordance with their own procedures.

This Agreement shall enter into force on 1 January 1995.

Upon its entry into force, the Agreement between the European Economic Community and Latvia on trade and economic and commercial cooperation signed in Brussels on 11 May 1992 shall be modified as follows:

- Articles 3 and 5 to 12 inclusive as well as Article 13 (1) and (4) are rescinded,

- in Article 4 the words 'trade and other' are rescinded,

- in Article 13 (2) the words 'In furtherance of the aims of this Article and' are rescinded.

Article 51

1. In the event that this Agreement enters into force after 1 January but at the latest on 31 December 1995 for the purposes of Titles II and III of this Agreement and Protocols 1, 2, 3, 4, 5 and 6 hereto, the terms 'date of entry into force of this Agreement' shall mean:

- the date of entry into force in relation to obligations taking effect on that date,

and

- 1 January 1995 in relation to obligations taking effect after the date of entry into force by reference to the date of entry into force.

2. In the case of entry into force after 1 January 1995, the provisions of Protocol 6 shall apply.

Hecho en Bruselas, el dieciocho de julio de mil novecientos noventa y cuatro.

Udfærdiget i Bruxelles, den attende juli nitten hundrede og fireoghalvfems.

Geschehen zu Brüssel am achtzehnten Juli neunzehnhundertvierundneunzig.

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Done at Brussels on the eighteenth day of July in the year one thousand nine hundred and ninety-four.

Fait à Bruxelles, le dix-huit juillet mil neuf cent quatre-vingt-quatorze.

Fatto a Bruxelles, addì diciotto luglio millenovecentonovantaquattro.

Gedaan te Brussel, de achttiende juli negentienhonderd vierennegentig.

Feito em Bruxelas, em dezoito de Julho de mil novecentos e noventa e quatro.

osl Eegts Brisel Ee t Eukstos devi Kni simti devi Kndesmit ceturt Ea gada asto Knpadsmitaj Ea j Eulij Ea.

Por las Comunidades Europeas

For De Europæiske Fællesskaber

Für die Europäischen Gemeinschaften

Ãéá ôéò ÅõñùðáúêÝò Êïéíüôçôåò

For the European Communities

Pour les Communautés européennes

Per le Comunità europee

Voor de Europese Gemeenschappen

Pelas Comunidades Europeias

Eiropas kopienu v Eard Ea

XTB:SCHLAKT100 Por la República de Letonia

For Republikken Letland

Für die Republik Lettland

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For the Republic of Latvia

Pour la république de Lettonie

Per la Repubblica di Lettonia

Voor de Republiek Letland

Pela República da Letónia

Latvijas Republikas v Eard Ea

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ANNEX I

List of products referred to in Articles 3 and 12 of the Agreement

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ANNEX II

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ANNEX III

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ANNEX IV

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ANNEX V

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ANNEX VI

Goods referred to in Article 11 Goods for which the Community and Latvia retain an agricultural component in the duties

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ANNEX VII

List of products referred to in Article 14 (2)

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Annex to Annex VII

Minimum import price arrangement for certain soft fruit for processing

1. Minimum import prices are fixed for each marketing year for the following products:

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The minimum import prices are fixed by the Community in consultation with Latvia taking into consideration the price evolution, imported quantities and market development in the Community.

2. The minimum import prices shall be respected in accordance with the following criteria:

- during each three-month period of the marketing year the average unit value for each product listed in paragraph 1, imported into the Community, shall not be lower than the minimum import price for that product,

- during any period of two weeks the average unit value for each product listed in paragraph 1, imported in the Community shall not be lower than 90 % of the minimum import price for that product, in so far as the quantities imported during this period are not less than 4 % of the normal annual import.

3. I case of non-respect of one of these criteria the Community may introduce measures ensuring that the minimum import price is respected for each consignment of the product concerned imported from Latvia.

ANNEX VIII

Products referred to in Article 14 (2)

Arrangements for imports of live bovine animals, bovine meat, sheep- and goatmeat into the Community

1. Independently of the balance sheet arrangements foreseen in Regulation (EEC) No 805/68, a global tariff quota of 3 500 head of live bovine animals for fattening or for slaughter, with a live weight of not less than 160 kg and not more than 300 kg, falling within CN code 01 02, shall be opened to imports from Latvia, Lithuania and Estonia.

The reduced levy or specific duty rate applicable to animals under this quota shall be fixed at 25 % of the full amount of the levy or the specific duty rate.

2. In case forecasts show that imports into the Community may exceed 425 000 head for any given year, the Community may take safeguard measures in accordance with Regulation (EEC) No 805/68, notwithstanding any other rights given under the Agreement.

3. A global tariff quota of 1 500 tonnes of meat of bovine animals, fresh, chilled or frozen, falling within CN codes 02 01 and 02 02, shall be opened to imports from Latvia, Lithuania and Estonia.

The reduced duty rate and levy or specific duty rate applicable under this quota shall be fixed at 40 % of their full amount.

4. Within the framework of the autonomous import arrangements provided for in Regulation (EEC) No 3643/85, a global quota of 100 tonnes of meat of sheep or groats, fresh, chilled or frozen, falling wihtin CN code 02 04, shall be reserved for Latvia, Lithuania an Estonia.

ANNEX IX

Products referred to in Article 14 (2)

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ANNEX X

List of products referred to in Article 14 (2)

1. Imports into Latvia of the following products originating in the Community shall be subject to the duties set out below.

2. Tariffs adopted from 1995 to 2000 shall be reduced by equal annual amounts.

3. If a more favourable trade system is in force in Latvia, then this shall be applied to imports from the Community.

4. Imports into Latvia of those agricultural products originating in the Community other than those listed in this Annex, are free of duty or of any charges having equivalent effect.

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ANNEX XI

List of products referred to in Article 14 (2)

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ANNEX XII

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ANNEX XIII

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PROTOCOL 1 referred to in Article 10 (2) laying down other arrangements applicable to textile products

This Protocol consists of the Agreement between the European Economic Community and the Republic of Latvia on trade in textile products, initialled in Brussels on 15 June 1993, and annexed hereto.

AGREEMENT between the European Economic Community and the Republic of Latvia on trade in textile products

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and

THE GOVERNMENT OF THE REPUBLIC OF LATVIA

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 Republic of Latvia (hereinafter referred to as 'Latvia'),

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 Latvia,

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 REPUBLIC OF LATVIA,

WHO HAVE AGREED AS FOLLOWS:

Article 1

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. Subject to the provisions of this or any successive 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.

Quantitative import restrictions shall be reintroduced in case of denunciation or non-replacement of the present Agreement.

3. Measures having equivalent effect to quantitative restrictions on the importation into the Community of the products listed in Annex I shall be prohibited for the duration of this Agreement.

Article 2

1. Exports from Latvia to the Community of products listed in Annex I and originating in Latvia shall, at the time of entry into force of this Agreement, be free from quantitative limits. However, quantitative limits may subsequently be introduced under conditions specified in Article 5.

2. Should quantitative limits be introduced, exports of the textile products made subject to quantitative limits shall be subject to a double-checking system as specified in Protocol A.

3. As the time of entry into force of this Agreement, exports of products listed in Annex II not subject to quantitative limits shall be subject to the double-checking system referred to in paragraph 2.

4. Following consultations in accordance with the procedures set out in Article 15, exports of products in Annex I not subject to quantitative limits other than those listed in Annex II may be subject, subsequently to the entry into force of this Agreement, to the double-checking system referred to in paragraph 2 or to a prior surveillance system introduced by the Community.

Article 3

1. Imports into the Community of textile products covered by this Agreement shall not be subject to the quantitative limits established under this Agreement, 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 into the Community under the conditions referred to above shall be subject to the production of an export licence issued by the authorities of Latvia, 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 shall inform the Latvian 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, as appropriate.

3. The Community and Latvia recognize the special and differential character of reimports of textile products into the Community after processing in Latvia as a specific form of industrial and trade cooperation.

Should quantitative limits be establishhed pursuant to Article 5, provided that they are effected in accordance with the regulations on economic outward processing in force in the Community, these reimports shall not be subject to these quantitative limits if they are subject to the specific arrangements laid down in Protocol C.

Article 4

Should quantitative limits be introduced pursuant to Article 5, the following provisions shall apply:

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 4 % 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 to 4 % of the quantitative limit for the category to which the transfer is made.

Transfers into any category in Groups II, III, IV and V may be made from any category or categories in Groups I, II, III, IV and V up to 5 % 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 the following limits:

- 13 % for categories of products in Group I;

- 13,5 % for categories of products in Groups II, III, IV and V.

6. Prior notification shall be given by the Latvian authorities in the event of recourse to the provisions of paragraphs 1, 2 and 3 above, at least 15 days in advance.

Article 5

1. Exports of textile products listed in Annex I to this Agreement may be made subject to quantitative limits 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 listed in Annex I originating in Latvia exceeds, in relation to the preceding year's total imports into the Community from all sources of products in that category, the following rates:

- 0,4 % for categories of products in Group I,

- 2,4 % for categories of products in Group II,

- 8 % for categories of products in Groups III, IV and V,

it may request the opening of consultations in accordance with the procedure described in Article 15 of this Agreement, with a view to reaching agreement on an appropriate restraint level for the products in such category.

3. Pending a mutually satisfactory solution, Latvia undertakes, from the date of notification of the request for consultations, to suspend or limit at the level indicated by the Community exports of the category of products in question to the Community or to the region or regions of the Community market specified by the Community.

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

4. Should the Contracting Parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 15 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 15, 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 annual growth rate for the quantitative limits introduced pursuant to this Article shall be determined in accordance with the provisions of Protocol D.

6. 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 Latvia.

7. In the event of the provisions of paragraph 2, 3 or 4 being applied, Latvia undertakes to issue export licences for products covered by contracts concluded before the introduction of the quantitative limit, up to the volume of the quantitative limit fixed.

8. Up to the date of communication of the statistics referred to in Article 12 (6), the provisions of paragraph 2 of this Article shall apply on the basis of the annual statistics previously communicated by the Community.

Article 6

1. In view of ensuring the effective functioning of this Agreement, the Community and Latvia agree to cooperate fully in order to prevent, to investigate and to take any necessary legal and/or administrative action against circumvention by transhipment, rerouting, false declaration concerning the country or place of origin, falsification of documents, false declaration concerning fibre content, quantities description or classification of merchandise any by whatever other means. Accordingly, Latvia and the Community agree to establish the necessary legal provisions and administrative procedures permitting effective action to be taken against such circumvention, which shall include the adoption of legally binding corrective measures against exporters and/or importers involved.

2. Should the Community believe on the basis of information available that the present Agreement is being circumvented, the Community will consult with Latvia with a view to reaching a mutually satisfactory solution. These consultations will be held as early as possible and at the latest within 30 days from the date of request.

3. Pending the results of the consultation referred to in paragraph 2, Latvia shall, as a precautionary measure, if so requested by the Community, take all necessary measures to ensure that, where sufficient evidence of circumvention is provided, adjustments of quantitative limits established pursuant to Article 5 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.

4. Should the Parties be unable, in the course of the consultation referred to in paragraph 2 to reach a mutually satisfactory solution, the Community shall have the right:

(a) where there is sufficient evidence that products originating in Latvia have been imported in circumvention of the present Agreement, to set off the relevant quantities against the quantitative limits established pursuant to Article 5;

(b) where sufficient evidence shows that a false declaration concerning fibre content, quantities, description or classification of products originating in Latvia has occurred, to refuse to import the products in question;

(c) should it appear that the territory of Latvia is involved in transhipment or rerouting of products not originating in Latvia, to introduce quantitative limits against the same products originating in Latvia if they are not already subject to quantitative limits, or to take any other appropriate measures.

5. The Parties agree to establish a system of administrative cooperation to prevent and to address effectively all problems arising from circumvention in accordance with the provisions of Protocol A to this Agreement.

Artile 7

1. The quantitative limits established pursuant to this Agreement on imports into the Community of textile products of Latvian origin will not be broken down by the Community into regional shares.

2. The Parties shall cooperate in order to prevent sudden and prejudicial changes in traditional trade flows resulting in regional concentration of direct imports into the Community.

3. Latvia shall monitor its exports of products under restraint or surveillance into the Community. Should a sudden and prejudicial change in traditional trade flows arise, the Community will be entitled to request consultations in order to find a satisfactory solution to those problems. Such consultations must be held within 15 working days of their being requested by the Community.

4. Latvia shall endeavour to ensure that exports of textile products subject to quantitative limits into the Community are spaced out as evenly as possible over the year due account being taken in particular of seasonal factors.

Article 8

In the event of denunciation of this Agreement as provided for in Article 19 (3), the quantitative limits established pursuant to this Agreement shall be reduced on a pro rata temporis basis unless the Contracting Parties decide otherwise by common agreement.

Article 9

Latvia 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 originating in Latvia meet the conditions laid down in Protocol B.

Article 10

1. Should the Community consider that a texile product covered by this Agreement is being imported into the Community from Latvia at a price abnormally lower than the normal competitive level and is for this reason causing or threatening to cause serious injury to Community producers of like or directly competing products, it may request consultations pursuant to Article 15, and in that event the following specific provisions shall be applicable.

2. If following such consultations it is acknowledged by common accord that the situation described in paragraph 1 exists, Latvia shall take, within the limits of its powers, the necessary steps, notably as regards the price at which the product in question will be sold, to remedy the situation.

3. In order to determine whether the price of a textile product is abnormally lower than the normal competitive level, it may be compared with:

- the prices generally charged for like products sold under the ordinary conditions by other exporting countries on the market of the importing country,

- the prices of like national products at a comparable marketing stage on the market of the importing country,

- the lowest prices charged by a third country for the same product in the course of ordinary commercial dealings in the three months preceding the request for consultations, and not having led to the adoption of any measure by the Community.

4. Should the consultations referred to in paragraph 2 above fail to lead to an agreement within 30 days of the Community's request for consultations, the Community may, until these consultations have produced a mutually satisfactory solution, temporarily refuse consignments of the product in question at prices under the conditions referred to in paragraph 1.

5. In totally exceptional and critical circumstances, where consignments of products are being imported from Latvia into the Community at prices abnormally lower than the normal competitive level, such as to cause injury which it would be difficult to repair, the Community may temporarily suspend imports of the products concerned pending agreement on a solution in the course of consultations, which shall be opened immediately. The Contracting Parties shall do their utmost to reach a mutually acceptable solution within 10 working days' notice of the opening of such consultations.

6. Should the Community have recourse to the measures referred to in paragraphs 4 and 5, Latvia may at any time request the opening of consultations to examine the possibility of eliminating or modifying these measures where the causes which made them necessary no longer exist.

Article 11

1. The classification of the products covered by this Agreement is based on the tariff and statistical nomenclature of the Community (herinafter called the 'combined nomenclature', or in abbreviated form 'CN') and any amendments thereof.

Where any decision on classification results in a change of classification practice or a change of category of any product subject to this Agreement the affected products shall follow the trade regime applicable to the practice or category they fall into after such changes.

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 quantitative limits 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 amendement to these rules of origin shall be communicated to Latvia and shall not have the effect of reducing any quantitative limit established pursuant to this Agreement.

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

Article 12

1. Latvia shall supply the Commission with precise statistical information on all export licences issued for categories of textile products subject to the quantitative limits established pursuant to this Agreement, or to a double-checking system expressed in quantities and in terms of value and broken down by Member States of the Community, as well as on all certificates issued by the competent Latvian authorities for products referred to in Article 9 and subject to the provisions of Protocol B.

2. The Community shall likewise transmit to the Latvian authorities precise statistical information on import authorizations issued by the Community authorities and import statistics for products covered by the system referred to in Article 5 (2).

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

4. Upon request by the Community, Latvia shall supply import statistics for all products covered by Annex I.

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 15 of this Agreement.

6. For the purpose of applying the provisions of Article 5, the Community undertakes to provide the Latvian 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 13

1. Latvia shall create favourable conditions for imports of textile products originating in the Community listed in Annex I and, where appropriate inter alia, accord to them non-discriminatory treatment as regards the application of quantitative restrictions, and the granting of licences and the allocation of currency needed to pay for such imports. Latvia will also recommend to its importers to use the possibilities offered by the Community producers of textiles mentioned above while according the highest possible degree of liberalization to those imports taking into account the development of trade between the Contracting Parties.

2. Where a need for additional supplies arises and in particular a need leading to the diversification on imports of textile products in Latvia, Latvia shall accord non-discriminatory treatment to imports of textile products originating in the Community.

Article 14

1. The Contracting 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 15 and on the basis of the statistics referred to in Article 12.

2. If the Community finds that in the cases foreseen in Article 13 (2) of this Agreement it is placed in an unfavourable position as compared with a third country, it may request consultations with Latvia in accordance with the procedure specified in Article 15 with a view to taking appropriate action.

Article 15

1. Save where it is otherwise provided for in this Agreement, the consultation procedures referred to in this Agreement shall be governed by the following provisions:

- as far as possible consultations shall be held periodically. Specific additional consultations may also be held,

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

- where appropriate, 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 report setting out the circumstances which, in the opinion of the requesting Party, justify the submission of such a request,

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

- the period of one month referred to above for the purpose of reaching agreement or a mutually acceptable conclusion may be extended by common accord.

2. The Community may request consultations in accordance with paragraph 1 when it ascertains that during a particular year of application of the Agreement difficulties arise in the Community or one of its regions due to 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 established pursuant to this Agreement.

3. At the request of either of the Contracting Parties, consultations shall be held on any problems arising from the application of this Agreement. Any consultations held pursuant to this Article shall take place in a spirit of cooperation and with a desire to reconcile the differences between the Contracting Parties.

Article 16

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

Article 17

As regards intellectual property, at the request of either Contracting Party, consultations shall be held in accordance with the procedure laid down in Article 15 with a view to finding an equitable solution to problems relating to the protection of marks, designs or models of articles of apparel and textile products.

Article 18

This Agreement shall apply, on the one hand, to the territories in which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty and, on the other hand, to the territory of the Republic of Latvia.

Article 19

1. This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other of the completion of the procedures necessary for that purpose. It shall be applicable until 31 December 1997.

2. This Agreement shall apply with effect from 1 January 1993.

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

4. The Contracting Parties agree to enter into consultations not later than six months before the expiration of the present Agreement with a view to possibly concluding a new Agreement.

5. The Annexes, Protocols, Agreed Minutes and letters exchanged or attached to this Agreement, shall form an integral part thereof.

Article 20

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

For the Government

of the

Republic of Latvia

For the Council

of the European Communities

ANNEX I

PRODUCTS REFERRED TO IN ARTICLE 1

1. Without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within this Annex, by CN codes. Where there is an 'ex' symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

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 to cover garments up to and including commercial size 86.

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ANNEX II

294A1231(43).1

Products without quantitative limits subject to the double-checking system referred to in Article 2 (3) of the Agreement.

(The full product descriptions of the categories listed in this Annex are to be found in Annex I to the Agreement)

Category:

1

2

3

4

5

6

7

8

9

12

15

24

26

27

31

Protocol A

TITLE I CLASSIFICATION

Article 1

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

2. The competent authorities of the Community undertake to inform the competent authorities of Latvia of any decisions relating to the classification of products subject to the present 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 entry into effect 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 quantitative limits, the Contracting Parties agree to enter into consultation in accordance with the procedures described in Article 15 of the Agreement with a view to honouring the obligation under the second subparagraph of Article 11 (1) of the Agreement.

5. In case of divergent opinions between Latvia and the competent Community and Estonian 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 15 with a view to reaching agreement on definitive classification of the products concerned.

TITLE II ORIGIN

Article 2

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

2. The certificate of origin shall be certified by the competent Latvian organizations authorized under the Latvian legislation if the products in question can be considered products originating in that country within the meaning of the relevant Community rules.

3. However, the products in Groups III, IV and V 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 originate in Latvia within the meaning of the relevant Community rules.

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 3

The certificate of origin shall be issued only on application having been made in writing by the exporter or, under the exporter's responsibility, by his authorized representative. The competent Latvian organizations authorized under Latvian legislation shall ensure that the certificate of origin is properly completed and for this purpose they shall call for any necessary documentary evidence or carry out any check which they consider appropiate.

Article 4

Where different criteria for determining origin are laid down for products falling within the same category, the certificates or declarations of origin must contain a sufficiently detailed description of the goods so as to enable Latvian criterion to be determined, on the basis of which the certificate was issued 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 products shall not ipso facto cast doubt upon the statements in the certificate.

TITLE III DOUBLE-CHECKING SYSTEM

Section I Exportation

Article 6

The competent authorities of Latvia shall issue an export licence in respect of all consignments from Latvia of textile products subject to any definitive or provisional quantitative limits established pursuant to Article 5 of the Agreement, up to the relevant quantitative limits as may be modified by Articles 4, 6 and 8 of the Agreement, as well as of all consignments of textile products subject to a double-checking system without quantitative limits as provided for in Article 2 (3) and (4) of the Agreement.

Article 7

1. For products subject to quantitative limits under this Agreement the export licence shall conform to Model 1 annexed to this Protocol and it shall be valid for exports throughout the customs territory to which the Treaty establishing the European Economic Community applies. However, where the Community has made recourse to the provisions of Articles 5 and 7 of the Agreement in accordance with the provision of the Agreed Minute No 1, or to the Agreed Minute No 2, the textile products covered by the export licences can only be put into free circulation in the region(s) of the Community indicated in those licences.

2. Where quantitative limits have been introduced pursuant to this Agreement, each export licence must certify inter alia that the quantity of the product in question has been set off against the quantitative limit established for the category of the products concerned and shall only cover one category of products subject to quantitative limits. It may be used for one or more consignments of the products in question.

3. For products subject to a double-checking system without quantitative limits the export licence shall conform to Model 2 annexed to this Protocol. It shall only cover one category of products and may be used for one or more consignments of the products in question.

Article 8

The competent authorities of the Community must be informed immediately of the withdrawal or modification of any export licence already issued.

Article 9

1. Exports of textile products subject to quantitative limits pursuant to this Agreement shall be set off against the quantitative limits established for the year in which the shipment of the goods has been effected, even if the export licence is issued 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 onto the exporting aircraft, vehicle or vessel.

Article 10

The presentation of an export licence, in application of Article 12 hereafter, 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 or to a double-checking system pursuant to this Agreement shall be subject to the presentation of an import authorization.

Article 12

1. The competent authorities of the Community shall issue the import authorization referred to in Article 11 above, within five working days of the presentation by the importer of the original of the corresponding export licence.

2. The import authorizations concerning products subject to quantitative limits under this Agreement shall be valid for six months from the date of their issue for imports throughout the customs territory to which the Treaty establishing the European Economic Community is applied. However, where the Community has recourse to the provisions af Articles 5 and 7 of the Agreement in accordance with the provisions of the Agreed Minute No 1, or to the Agreed Minute No 2, the products covered by the import licences can only be put into free circulation in the region(s) of the Community indicated in those licences.

3. The import authorizations for products subject to a double-checking system without quantitative limits shall be valid for six months from the date of their issue for imports throughout the customs territory to which the Treaty establishing the European Economic Community is applicable.

4. The competent authorities of the Community shall cancel the import authorization already issued whenever the corresponding export licence has been withdrawn.

However, if the competent authorities of the Community are notified of the withdrawal or the cancellation of the export licence only after the importation of the products into the Community, the relevant quantities shall be set off against the quantitative limits established for the category and the quota year concerned.

Article 13

1. If the competent authorities of the Community find that the total quantities covered by export licences issued by the competent authorities of Latvia for a particular category in any year exceed the quantitative limit established in accordance with Article 5 of the Agreement for that category, as may be modified by Articles 4, 6 and 8 of the Agreement, the said authorities may suspend the further issue of import authorizations. In this event, the competent authorities of the Community shall immediately inform the authorities of Latvia and the special consultation procedure set out in Article 15 of the Agreement shall be initiated forthwith.

2. Exports of products of Latvian origin subject to quantitative limits or double-checking system and not covered by Latvian export licences issued in accordance with the provisions of this Protocol may be refused an import authorization by the competent Community authorities.

However, without prejudice to Article 6 of the Agreement if the import of such products is allowed into the Community by the competent authorities of the Community, the quantities involved shall not be set off against the appropiate quantitative limits established pursuant to this Agreement, without the express agreement of the competent authorities of Latvia.

TITLE IV FORM AND PRODUCTION OF EXPORT LICENCES AND CERTIFICATES OF ORIGIN, AND COMMON PROVISIONS CONCERNING EXPORTS TO THE COMMUNITY

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 printed script.

These documents shall measure 210 x 297 mm. The paper used shall be white writing paper, sized, not containing mechanical pulp, and weighing not less than 25 g/m². 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 'copies'. Only the original shall be accepted by the competent authorities of the Community as being valid for the purpose of export to the Community in accordance with the provisions of the 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 the exporting country as follows: LV,

- two letters identifying the intended Member State of customs clearance 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 the respective year, e.g. 4 for 1994,

- a two-digit number from 01 to 99, identitying the particular issuing office concerned in the exporting country,

- a five-digit number running consecutively from 00001 to 99999 allocated to the intended Member State of customs clearance.

Article 15

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

Article 16

1. In the event of a theft, loss or destruction of an export licence or a certificate of origin, the exporter may apply to the competent Latvian authorities which issued 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 issued shall bear the endorsement 'duplicata' or 'duplicate'.

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

TITLE V ADMINISTRATIVE COOPERATION

Article 17

The Community and Latvia shall cooperate closely in the implementation of the provisions of this Protocol. To this end, contacts and exchange of views, including on technical matters, shall be facilitated by both Parties.

Article 18

In order to ensure the correct application of this Protocol, the Community and Latvia offer mutual assistance for the checking of the authenticity and the accuracy of export licences and certificates of origin issued or of any declarations made within the terms of this Protocol.

Article 19

Latvia shall transmit to the Commission of the European Communities the names and addresses of the authorities competent to issue and verify the export licences and the certificates of origin, together with specimens of the stamps used by these authorities and specimen signatures of officials responsible for signing the export licences and the certificates of origin. Latvia shall also notify the Community 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 true origin of the products in question.

2. In such cases, the competent authorities in the Community shall return the certificate of origin or the export licence or a copy thereof to the competent Latvian authorities, giving, where appropriate, the reasons of form or substance which justify an enquiry. If the invoice has been submitted, such invoice or a copy thereof shall be attached to the certificate or to the licence or their copies. 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 above shall also apply to subsequent verifications of the declarations of origin provided for in Article 2 of this Protocol.

4. The results of the sebsequent verifications carried out in accordance with paragraphs 1 and 2 above 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, licence or declaration, applies to the goods actually exported and whether these goods are eligible for export under the arrangements established by the Agreement. The information shall also include, at the request of the Community, copies of all documentation necessary to fully determine the facts, and in particular, the true 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 2 (1) of this Protocol.

5. For the purpose of subsequent verification of certificates of origin, copies of the certificates as well as any export documents referring to them shall be kept for at least two years by the competent Latvian authorities.

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 competent authorities of the Community or of Latvia indicates or appears to indicate that the provisions of this Agreement are being circumvented or infringed, the two Contracting Parties shall cooperate closely and with the appropriate urgency in order to prevent any such circumvention or infringement.

2. To this end, the competent authorities of Latvia shall, on their own initiative or at the request of the Community, carry out appropriate inquiries, or arrange for such inquiries to be carried out, concerning operations which are, or appear to the Community to be, in circumvention or infringement of this Protocol. Latvia shall communicate the results of these inquiries to the Community, including any other pertinent information enabling the cause of the circumvention or infringement, including the true origin of the goods, to be determined.

3. By agreement between the Community and Latvia, officials designated by the Community may be present at the inquiries referred to in paragraph 2 above.

4. Pursuant to the cooperation referred to in parapraph 1 above, the competent authorities of the Community and Latvia shall exchange any information considered by either Contracting Party to be of use in preventing circumvention or infringement of the provisions of this Agreement. These exchanges may include information on the production of textile products in Latvia and on the trade in the type of products covered by this Agreement between Latvia and third countries, particularly where the Community has reasonable grounds to consider that the products in question may be in transit across the territory of Latvia prior to their importation into the Community. This information may include at the request of the Community, copies of all available relevant documentation.

5. Where sufficient evidence shows that the provisions of this Protocol have been circumvented or infringed, the competent authorities of Latvia and the Community may agree to take the measures set out in Article 6 (4) of the Agreement, and any other measures as are necessary to prevent a recurrence of such circumvention or infringement.

Annex to Protocol A, Article 2 (1)

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Annex to Protocol A, Article 7 (1): Model 1

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Annex to Protocol A, Article 7 (3): Model 2

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Protocol B referred to in Article 9

Cottage industry and folklore products originating in Latvia

1. The exemption provided for in Article 9 in respect of cottage industry products shall apply to the following types of products only:

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

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

(c) traditional folklore products of Latvia made by hand, in a list to be agreed between the Community and Latvia.

Exemption shall be granted in respect only of products covered by a certificate conforming to the specimen attached to this Protocol and issued by the competent authorities in Latvia. These certificates must indicate the reasons justifying their issuance; the competent authorities of the Community will accept them after having checked that the products concerned have fulfilled the conditions established in this Protocol. The certificates concerning the products envisaged in (c) above must bear a stamp 'FOLKLORE' marked clearly. In the case of a difference of opinion between the Parties concerning the nature of these products, consultations shall be held within one month in order to resolve these differences.

Should imports of any product covered by this Protocol reach proportions liable to cause problems within the Community, consultations with Latvia shall be initiated as soon as possible, with a view to resolving the situation by the adoption if necessary of a quantitative limit, in accordance with the procedure laid down in Article 15 of this Agreement.

2. The provisions of Titles IV and V of Protocol A shall apply mutatis mutandis to the products covered by paragraph 1 of this Protocol.

Annex to Protocol B

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Protocol C

Reimports into the Community, within the meaning of Article 3 (3) of this Agreement, of products listed in the Annex to this Protocol shall be subject to the provisions of this Agreement, unless the special provisions below provide otherwise:

1. Subject to paragraph 2, only reimports into the Community of products affected by the specific quantitative limits laid down in the Annex to this Protocol shall be considered reimports within the meaning of Article 3 (3) of the Agreement.

2. Reimports not covered by the Annex to this Protocol may be made subject to specific quantitative limits following consultations in accordance with the procedures set out in Article 15 of the Agreement, provided the products concerned are subject to quantitative limits pursuant to the Agreement, to a double-checking system or to surveillance measures.

3. Having regard to the interests of both Parties, the Community may at its discretion, or in response to a request pursuant to Article 15 of the Agreement:

(a) examine the possibility of transferring from one category to another, using in advance or carrying over from one year to the next, portions of specific quantitative limits;

(b) consider the possibility of increasing specific quantitative limits.

4. However, the Community may apply automatically the flexibility rules set out in paragraph 3 above within the following limits:

(a) transfers between categories may not exceed 20 % of the quantity for the category to which the transfer is made;

(b) carry-over of a specific quantitative limit from one year to the next may not exceed 10,5 % of the quantity set for the year of actual utilization;

(c) advance use of specific quantitative limits from one year to another may not exceed 7,5 % of the quantity set for the year of actual utilization.

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

6. The competent authorities in the Community shall debit the specific quantitative limits referred to in paragraph 1 at the time of issue of the prior authorization required by Council Regulation (EEC) No 636/82 which governs economic outward processing arrangements. A specific quantitative limit shall be debited for the year in which a prior authorization is issued.

7. A certificate of origin made out by the organizations authorized to do so under Latvian law shall be issued, in accordance with Protocol A to the Agreement, for all products covered by this Protocol. This certificate shall bear a reference to the prior authorization mentioned in paragraph 6 above as evidence that the processing operation it describes has been carried out in Lativia.

8. The Community shall provide Latvia with the names and addresses of, and specimens of the stamps used by, the competent authorities of the Community which issue the prior authorizations referred to in paragraph 6 above.

9. Without prejudice to the provisions of paragraphs 1 to 8 above, Latvia and the Community shall continue consultations with a view to seeking a mutually acceptable solution enabling both Contracting Parties to benefit from the Agreement's provisions on outward processing traffic and so ensure the effective development of trade in textile products between Latvia and the Community.

Annex to Protocol C

(The product descriptions of the categories listed in this Annex are to be found in Annex I of this Agreement)

OPT QUOTAS COMMUNITY QUANTITATIVE LIMITS

Category (pm)

Unit (pm)

1993 (pm)

1994 (pm)

1995 (pm)

1996 (pm)

1997 (pm)

Protocol D

The annual growth rate for the quantitative limits which may be introduced pursuant to Article 5 of the Agreement for the products covered by the Agreement shall be fixed by Agreement between the Parties in accordance with the consultation procedures established in Article 15 of the Agreement.

Agreed Minute No 1

In the context of the Agreement between the European Economic Community and the Republic of Latvia on trade in textile and clothing products, initialled at Brussels on 15 June 1993, the Parties agreed that Article 5 of the Agreement does not preclude the Community, if the conditions are fulfilled, from applying the safeguard measures for one or more of its regions in conformity with the principles of the internal market.

In such an event, Latvia shall be informed in advance of the relevant provisions of Protocol A to the Agreement to be applied, as appropriate.

For the Government of the Republic of Latvia

For the Council of the European Communities

Agreed Minute No 2

Notwithstanding Article 7 (1) of this Agreement, for imperative technical or administrative reasons or to find a solution to economic problems resulting from regional concentration of imports, or in order to combat circumvention and fraud of the provisions of this Agreement, the Community will establish for a limited period of time a specific management system in conformity with the principles of the Internal Market.

However, if the Parties are unable to reach a satisfactory solution during the consultations provided for in Article 7 (3), Latvia undertakes, if so requested by the Community, to respect temporary export limits for one or more regions of the Community. In such a case, these limits shall not preclude the importation into the region(s) concerned of products which were shipped from Latvia on the basis of export licences obtained before the date of formal notification to Latvia by the Community about the introduction of the above limits.

The Community shall inform Latvia of the technical and administrative measures, that need to be introduced by both Parties in order to implement the above paragraphs in conformity with the principles of the Internal Market.

For the Government of the Republic of Latvia

For the Council of the European Communities

Agreed Minute No 3

In the context of the Agreement between the European Economic Community and the Republic of Latvia on trade in textile and clothing products, initialled at Brussels on 15 June 1993, the Parties agreed that Latvia shall endeavour not to deprive certain regions of the Community which have traditionally had relatively small shares of Community quotas of imports of products serving as inputs for their processing industry.

The Community and Latvia further agreed to hold consultations, should the need arise, in order to avert any problems which might occur in this respect.

For the Government of the Republic of Latvia

For the Council of the European Communities

Agreed Minute No 4

In the context of the Agreement between the European Economic Community and the Republic of Latvia on trade in textile and clothing products, initialled at Brussels on 15 June 1993, Latvia agreed that, from the date of request for and pending the consultations referred to in Article 7 (3), it shall cooperate by not issuing export licences that would further aggravate the problems resulting from the regional concentration of direct imports into the Community.

For the Government of the Republic of Latvia

For the Council of the European Communities

Exchange of notes

The Directorate-General for External Relations of the Commission of the European Communities presents its compliments to the Minister of Foreign Affairs of the Republic of Latvia and has the honour to refer to the Agreement on textile products between Latvia and the Community initialled at Brussels on 15 June 1993.

The Directorate-General wishes to inform the Ministry 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 1993. This is on the understanding that either Party may at any time terminate this de facto application of the Agreement provided that 120 days' notice is given.

The Directorate-General for External Relations would be grateful if the Minister would confirm its Agreement to the foregoing.

The Directorate-General for External Relations avails itself of the opportunity to renew to the Ministry of Foreign Affairs of the Republic of Latvia the assurance of its highest consideration.

Exchange of notes

The Ministry of Foreign Affairs of the Republic of Latvia 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 Latvia and the Community initialled at Brussels on 15 June 1993.

The Ministry of Foreign Affairs of the Republic of Latvia wishes to confirm to 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 Republic of Latvia is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1993. This is on the understanding that either Party may at any time terminate