Agreement in the form of an Exchange of Letters

between the European Community and Ukraine concerning the extension and amendment of the Agreement between the European Economic Community and Ukraine on trade in textile products initialled on 5 May 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 15 October 1999

A. Letter from the Council of the European Union

Sir,

1. I have the honour to refer to the negotiations held on 3 and 4 July 2000 between our respective Delegations with a view to renewing the Agreement between the European Economic Community and Ukraine on trade in textile products including its annexes and agreed minutes ("the Agreement") initialled on 5 May 1993, as last amended and last extended by an agreement in the form of an Exchange of Letters initialled on 15 October 1999.

2. During these negotiations both Parties restated their long-term objective of enhancing textiles and clothing trade between their countries. For this purpose it was agreed to further liberalise trade in textiles and clothing products by modifying abovementioned Agreement in accordance with the provisions of this Letter.

3. The Parties agreed to amend the following provisions of the Agreement:

3.1. Annex II of the Agreement, that sets out the quantitative restrictions for exports from Ukraine to the European Community, shall be replaced by Appendix 1 to this Letter.

3.2. Upon confirmation by Ukraine to the Community that the provisions of Paragraph 4.2 of this Exchange of Letters have been implemented, Annex II of the Agreement shall be replaced by Appendix 2 to this Letter.

3.3. Upon confirmation by Ukraine to the Community that the provisions of Paragraph 4.3 of this Exchange of Letters have been implemented, Annex II of the Agreement shall from 1.1.2001 be replaced by Appendix 3 to this Letter and Annex III of the Agreement, listing products not subject to quantitative limits but under double-checking, shall be replaced by Appendix 4.

3.4. In Article 2(1) of the Agreement the following subparagraph shall be added:"At the latest six weeks before the end of every Agreement year the Commission and Ukraine shall hold consultations on the necessity of maintaining the categories listed in Annex III under double-checking, with a view to possible suspension of categories from double-checking".

3.5. The Annex to Protocol C of the Agreement, which sets out the quantitative restrictions for exports from Ukraine to the European Community after OPT operations in Ukraine, shall be replaced by Appendix 5 to this Letter.

3.6. The second and third sentence of Article 20(1) shall be replaced by the following text:"It shall be applicable until 31 December 2004"

4. The Parties agreed that the provisions of paragraph 4 of the Exchange of Letters initialled on 15 October 1999, concerning tariff rates applicable to imports into Ukraine of textile products (products covered by chapters 50 to 63 of the Harmonised System) originating in the Community, shall be replaced by the following:

"4.1. Tariffs applicable to imports into Ukraine of textile products originating in the Community shall not exceed the rates applied by Ukraine on 1 July 2000 as listed Appendix 6 to this Letter.

4.2. Before 15 October 2000, Ukraine shall lower its tariffs applicable to EC exports for all products covered by HS chapters 57 to rates that will not exceed 17 % and tariffs for products covered by HS chapters 61, 62 and 63 to rates that will not exceed 13 %.

4.3. From 1 January 2001, and in addition to the provisions of Paragraph 4.1, the tariff rates applied by Ukraine to exports of EC origin of products of HS chapters 50 to 56 and 58 to 63 shall not exceed the rates the EC has bound as Schedule CXL in the World Trade Organisation (WTO), as contained in Appendix 7. Accordingly, for any given year of the period 2001 to 2004, the tariff rates applied by Ukraine shall not exceed the rates the EU has bound for that year.

From 1 January 2001 the tariff rates applied by Ukraine to exports of EC origin of products of HS chapter 57 shall not exceed 12 %. From 1 January 2002 these rates shall not exceed 10 % and from 1 January 2003 the rates applied by Ukraine for products of chapter 57 shall not exceed the rates applied by the EC, as contained in Appendix 7. Accordingly, for any given year of the period 2003 to 2004, the tariff rates applied by Ukraine shall not exceed the rates the EU has bound for that year.

Ukraine shall provide the Community with information confirming by 31 March 2001 that the rates described in the two preceding subparagraphs are not exceeded."

5. The Parties agreed to refrain from adopting any non-tariff measures that could hinder trade in textile and clothing products. An Agreed Minute on certification was agreed. It is contained in Appendix 8 of this Letter and forms an integral part of the Agreement.

6. The Parties agreed that the balance of this Agreement, forming a package of mutual concessions, depends on the full and faithful implementation of all Agreement terms.

At the latest four weeks before the beginning of every Agreement year, Ukraine shall notify to the Community the text of the measures which it has taken to fulfil its obligations concerning the implementation of the tariff reductions described in paragraph 4.

In the case of non-application by Ukraine of the tariff rates described in paragraph 4, the Community shall have the right to reinstate for the current agreement year the quota-regime applicable during the year 2000.

7. Should Ukraine become a Member of the WTO before the date of the expiry of the Agreement, the Agreement and its Annexes, as well as this Exchange of Letters and its Appendices shall be applied within the framework of the Agreements and rules of the WTO.

Any quotas maintained on the date of accession of Ukraine to the World Trade Organisation shall be notified to the Textiles Monitoring Body set up by the Agreement on Textiles and Clothing (ATC) in accordance with Article 2 of that Agreement, together with appropriate administrative arrangements, to be agreed prior to Ukraine's WTO accession and phased out in accordance with the ATC and Ukraine's protocol of accession.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the internal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally from 1 November 2000 on the conditions to be specified in an Exchange of Notes (see Appendix 9).

Please accept, Sir, the assurance of my highest consideration.

On behalf of the Council of the European Union

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Appendix 1

ANNEX II

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

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Appendix 2(1)

ANNEX II

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

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(1) Will apply upon implementation by Ukraine of the provisions of paragraph 4.2 of the present Exchange of Letters.

Appendix 3(1)

ANNEX II

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

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(1) Will apply upon implementation by Ukraine of the provisions of paragraph 4.3 of the present Exchange of Letters.

Appendix 4

Annex III

Products without quantitative limits subject to the double-checking system referred to in Article 2, paragraph 1, second subparagraph of the Agreement

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Appendix 5

Annex to Protocol C

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

OPT QUOTAS

Community quantitative limits

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Appendix 6

Maximum rates of duties applicable for imports into Ukraine of textile products from the European Community referred to in paragraph 4.1 of the present Exchange of Letters

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Appendix 7

Maximum rates of duties applicable for imports into Ukraine of textile products from the European Community referred to in paragraph 4.3 of the present Exchange of Letters

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Appendix 8

AGREED MINUTE ON CERTIFICATION

In the context of the Exchange of Letters amending the Agreement between the European Community and Ukraine on trade in textile and clothing products, initialled in Brussels on 2 October 2000, Ukraine declared that, in the area of certification requirements:

1. Ukraine will, in the third quarter of the year 2000, introduce to Parliament draft laws on the following issues: (a) a law providing for declaration of suppliers, or for conformity assessment by an independent body; (b) a law on standards, and (c) a law on accreditation. The purpose of those laws is to harmonise Ukrainian procedures on standards and conformity assessment with relevant Community legislation.

2. At present, and as far as textile and clothing products are concerned (i.e. chapters 50 to 63 of the Combined Nomenclature), only textile and clothing products for children (such as childrens' garments, or bed linen for children), falling under the following CN chapters, are subject to mandatory certification: 5208, 5209, 5210, 5211, 5212, 6107, 6108, 6109, 6111, 6112, 6115, 6207, 6208, 6209, 6211.

3. Ukraine will not introduce mandatory certification requirements for textile and clothing products other than those listed in paragraph 2 above, unless such new certification requirements are introduced by the European Community, in which case Ukraine would be entitled to adopt the same requirements.

4. For any products subject to, or to be subjected to, certification requirements, Ukraine will ensure that (a) the certification procedures - including any fees charged for assessing the conformity of products - which are applied to products originating in the European Community will be no less favourable than those accorded to suppliers of like products of national origin or originating in any other country; (b) conformity assessment procedures are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to trade between the European Community and Ukraine; (c) conformity assessment procedures are undertaken and completed as expeditiously as possible.

5. Ukraine will provide the European Commission with full information on all conformity assessment procedures which have been, or will be, adopted.

Ukraine also declared that certification of products listed in paragraph 2 is currently required for each individual consignment, and that it intended to modify this procedure so as to allow the issuing of one certificate covering a series of shipments of the same type of products during a defined period of time (such as 2 years in the case of the examination of production processes, or 3 years in the case of the attestation of production processes).

Ukraine and the European Community agreed to enter into urgent consultations should problems arise from the implementation of this Agreed Minute.

Appendix 9

EXCHANGE OF NOTES

The Directorate General for Trade of the European Commission presents its compliments to the Mission of Ukraine and has the honour to refer to the Agreement between the European Community and Ukraine on Trade in Textile Products initialled on 5 May 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 2 October 2000.

The Directorate General for Trade wishes to inform the Mission of Ukraine that, whilst awaiting the completion of the necessary procedures for the conclusion and coming into force of the Agreement in the form of an Exchange of Letters, the European Community is prepared to apply the provisions of this Agreement provisionally from 1 November 2000. This is on the understanding that either Party may at any time terminate this provisional application of the Agreement in the form of an Exchange of Letters provided that four months notice is given.

The Directorate General for Trade would be grateful if the Mission of Ukraine would confirm its agreement to the foregoing.

The Mission of Ukraine presents its compliments to the Directorate General for Trade of the European Commission and has the honour to refer to the Note of the Directorate General from 19 December 2000 regarding the Agreement on trade in textile products initialled on 5 May 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 2 October 2000.

The Mission of Ukraine wishes to confirm to the Directorate General for Trade that, whilst awaiting the completion of the necessary procedures for the conclusion and coming into force of the Agreement in the form of an Exchange of Letters, the Government of Ukraine is prepared to apply the provisions of this Agreement provisionally from 1 November 2000. This is on the understanding that either Party may at any time terminate this provisional application of the Agreement in the form of an Exchange of Letters provided that four months notice is given.

The Mission of Ukraine avails itself of this opportunity to renew to the Directorate General for Trade of the European Commission the assurance of its highest consideration.

B. Letter from the Government of Ukraine

Sir,

I have the honour to acknowledge receipt of your letter of today's date which reads as follows:

"1. I have the honour to refer to the negotiations held on 3 and 4 July 2000 between our respective Delegations with a view to renewing the Agreement between the European Economic Community and Ukraine on trade in textile products including its annexes and agreed minutes (the 'Agreement') initialled on 5 May 1993, as last amended and last extended by an agreement in the form of an Exchange of Letters initialled on 15 October 1999.

2. During these negotiations both Parties restated their long-term objective of enhancing textiles and clothing trade between their countries. For this purpose it was agreed to further liberalise trade in textiles and clothing products by modifying abovementioned Agreement in accordance with the provisions of this Letter.

3. The Parties agreed to amend the following provisions of the Agreement:

3.1. Annex II of the Agreement, that sets out the quantitative restrictions for exports from Ukraine to the European Community, shall be replaced by Appendix 1 to this Letter.

3.2. Upon confirmation by Ukraine to the Community that the provisions of Paragraph 4.2 of this Exchange of Letters have been implemented, Annex II of the Agreement shall be replaced by Appendix 2 to this Letter.

3.3. Upon confirmation by Ukraine to the Community that the provisions of Paragraph 4.3 of this Exchange of Letters have been implemented, Annex II of the Agreement shall from 1.1.2001 be replaced by Appendix 3 to this Letter and Annex III of the Agreement, listing products not subject to quantitative limits but under double-checking, shall be replaced by Appendix 4.

3.4. In Article 2(1) of the Agreement the following subparagraph shall be added:'At the latest six weeks before the end of every Agreement year the Commission and Ukraine shall hold consultations on the necessity of maintaining the categories listed in Annex III under double-checking, with a view to possible suspension of categories from double-checking'.

3.5. The Annex to Protocol C of the Agreement, which sets out the quantitative restrictions for exports from Ukraine to the European Community after OPT operations in Ukraine, shall be replaced by Appendix 5 to this Letter.

3.6. The second and third sentence of Article 20(1) shall be replaced by the following text:'It shall be applicable until 31 December 2004'

4. The Parties agreed that the provisions of paragraph 4 of the Exchange of Letters initialled on 15 October 1999, concerning tariff rates applicable to imports into Ukraine of textile products (products covered by chapters 50 to 63 of the Harmonised System) originating in the Community, shall be replaced by the following:

'4.1. Tariffs applicable to imports into Ukraine of textile products originating in the Community shall not exceed the rates applied by Ukraine on 1 July 2000 as listed Appendix 6 to this Letter.

4.2. Before 15 October 2000, Ukraine shall lower its tariffs applicable to EC exports for all products covered by HS chapters 57 to rates that will not exceed 17 % and tariffs for products covered by HS chapters 61, 62 and 63 to rates that will not exceed 13 %.

4.3. From 1 January 2001, and in addition to the provisions of Paragraph 4.1, the tariff rates applied by Ukraine to exports of EC origin of products of HS chapters 50 to 56 and 58 to 63 shall not exceed the rates the EC has bound as Schedule CXL in the World Trade Organisation (WTO), as contained in Appendix 7. Accordingly, for any given year of the period 2001 to 2004, the tariff rates applied by Ukraine shall not exceed the rates the EU has bound for that year.

From 1 January 2001 the tariff rates applied by Ukraine to exports of EC origin of products of HS chapter 57 shall not exceed 12 %. From 1 January 2002 these rates shall not exceed 10 % and from 1 January 2003 the rates applied by Ukraine for products of chapter 57 shall not exceed the rates applied by the EC, as contained in Appendix 7. Accordingly, for any given year of the period 2003 to 2004, the tariff rates applied by Ukraine shall not exceed the rates the EU has bound for that year.

Ukraine shall provide the Community with information confirming by 31 March 2001 that the rates described in the two preceding subparagraphs are not exceeded.'

5. The Parties agreed to refrain from adopting any non-tariff measures that could hinder trade in textile and clothing products. An Agreed Minute on certification was agreed. It is contained in Appendix 8 of this Letter and forms an integral part of the Agreement.

6. The Parties agreed that the balance of this Agreement, forming a package of mutual concessions, depends on the full and faithful implementation of all Agreement terms.

At the latest four weeks before the beginning of every Agreement year, Ukraine shall notify to the Community the text of the measures which it has taken to fulfil its obligations concerning the implementation of the tariff reductions described in paragraph 4.

In the case of non-application by Ukraine of the tariff rates described in paragraph 4, the Community shall have the right to reinstate for the current agreement year the quota-regime applicable during the year 2000.

7. Should Ukraine become a Member of the WTO before the date of the expiry of the Agreement, the Agreement and its Annexes, as well as this Exchange of Letters and its Appendices shall be applied within the framework of the Agreements and rules of the WTO.

Any quotas maintained on the date of accession of Ukraine to the World Trade Organisation shall be notified to the Textiles Monitoring Body set up by the Agreement on Textiles and Clothing (ATC) in accordance with Article 2 of that Agreement, together with appropriate administrative arrangements, to be agreed prior to Ukraine's WTO accession and phased out in accordance with the ATC and Ukraine's protocol of accession.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the internal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally from 1 November 2000 on the conditions to be specified in an Exchange of Notes (see Appendix 9).

Please accept, Sir, the assurance of my highest consideration."

I have the honour to confirm that my Government is in agreement with the content of your letter.

Please accept, Sir the assurance of my highest consideration.

For the Government of Ukraine

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