AGREEMENT

between the European Economic Community and the Hungarian People's Republic on trade and commercial and economic cooperation

THE EUROPEAN ECONOMIC COMMUNITY,

hereinafter called 'the Community', of the one part, and

THE HUNGARIAN PEOPLE's REPUBLIC,

hereinafter called 'Hungary', of the other part,

CONSIDERING the traditional trade and economic links between the Community and Hungary,

TAKING INTO ACCOUNT the favourable implications for trade and economic relations between the Contracting Parties of their respective economic situations and policies,

DESIROUS of creating favourable conditions for the harmonious development and diversification of trade and the promotion of commercial and economic cooperation on the basis of equality, non-discrimination, mutual benefit and reciprocity,

HAVING REGARD to the particular importance of foreign trade for each of the Contracting Parties and for their economic and social development,

HAVING REGARD to the importance of giving full effect to the Final Act of the Conference on security and cooperation in Europe and the Concluding Document of the Madrid meeting,

REAFFIRMING the international commitments of the Contracting Parties, in particular those arising from the General Agreement on Tariffs and Trade, including the Protocol for accession of Hungary thereto,

RECALLING Hungary's membership of the International Monetary Fund and the World Bank,

BELIEVING that the time is opportune to give further impetus to the trading and economic relationship between the Community and Hungary,

RECOGNIZING that the Community and Hungary desire to establish extensive contractual links with each other which will complement and extend the relations already existing between them,

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

THE EUROPEAN ECONOMIC COMMUNITY:

Théodoros PANGALOS

Deputy Minister for Foreign Affairs,

President-in-Office of the Council of the European Communties

Willy DE CLERCQ

Member of the Commission of the European Communities

THE HUNGARIAN PEOPLE's REPUBLIC:

József MARJAI

Deputy Prime Minister, Minister for Trade

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

HAVE AGREED AS FOLLOWS:

TITLE I

Commercial cooperation

Article 1

The Contracting Parties reaffirm their commitment to accord each other most-favoured nation treatment in accordance with the General Agreement on Tariffs and Trade (GATT) and the Protocol for accession of Hungary thereto.

Article 2

1. This Agreement shall apply to trade in all products originating in the Community or in Hungary with the exception of the products covered by the Treaty establishing the European Coal and Steel Community.

2. Unless otherwise specified in this Agreement, trade and other commercial cooperation between the Contracting Parties shall be conducted in accordance with their respective regulations.

Article 3

1. This Agreement shall not affect the provisions of the existing Agreements concerning trade in textile products between the Community and Hungary, nor of any such agreements subsequently concluded.

Furthermore, in the event that the Community invokes paragraph 24 of the Protocol extending the Arrangement regarding International Trade in Textiles of 31 July 1986, the provisions of the said Arrangement shall apply to the products in question.

Not later than six months before the expiry of the Agreements concerning trade in textile products referred to above, the Contracting Parties shall consult each other with a view to determining the arrangements to be applied to trade in textile products after the expiry of the said Agreements.

2. This Agreement shall not affect specific agreements or arrangements covering agricultural products in force between the Contracting Parties, or any successor agreements or arrangements.

Article 4

1. Each Contracting Party will accord the highest degree of liberalization which they generally apply to third countries to imports of the other's products taking into account all the provisions of GATT and of the Protocol for accession of Hungary thereto.

2. To this end the Community undertakes to abolish the quantitative restrictions referred to in Article 4 (a) of the

Protocol for accession of Hungary to the GATT in accordance with the Provisions set out in the Protocol to this Agreement.

Article 5

The Contracting Parties undertake to examine the possibility of increasing their mutual trade by the abolition, reduction or other modification of tariffs in conformity with their obligations under the GATT.

Article 6

Taking into account the importance of their trade in agricultural products and the implications of multilateral negotiations in the GATT framework, the Contracting Parties shall examine in the joint committee referred to in Title III of this Agreement, the possibility of granting each other reciprocal concessions on a product-by-product basis in the field of trade in agricultural products on the basis of Article 1.

Article 7

1. The Contracting Parties shall consult each other if any product is being imported in trade between the Community and Hungary in such increased quantities or under such conditions as to cause or threaten serious injury to domestic producers of like or directly competitive products.

2. The Contracting Party requesting the consultations will supply the other Party with all the information required for a detailed examination of the situation.

3. The consultations requested pursuant to paragraph 1 will be held with due regard for the fundamental aims of the Agreement and will be completed not later than 30 days from the date of notification of the request by the Party concerned, unless the Parties agree otherwise.

4. If, as a result of such consultations, it is agreed that the situation referred to in paragraph 1 exists, exports shall be limited or such other action taken, which may include action, if possible, with respect to the price at which the exports are sold, as will prevent or remedy the injury.

5. If, following action under paragraphs 1 to 4, agreement is not reached between the Contracting Parties, the Contracting Party which requested the consultation shall be free to restrict the imports of the products concerned to the extent and for such time as is necessary to prevent or remedy the injury. The other Contracting Party shall then be free to deviate from its obligations towards the first Party in respect of substantially equivalent trade.

6. In critical circumstances, where delay would cause damage difficult to repair, such preventive or remedial action may be taken provisionally without prior consultation, on the condition that consultation shall be effected immediately after taking such action.

7. In the selection of measures under this Article, the Contracting Parties should give priority to those which cause the least disturbance to the functioning of this Agreement.

8. Where necessary, the Contracting Parties may hold consultations to determine when the measures adopted pursuant to paragraphs 4, 5 and 6 shall cease to apply.

9. Either Contracting Party may refer any disagreement arising out of the adoption of safeguard measures pursuant to this Article to the Contracting Parties of the GATT in accordance with Article 5 of the Protocol for accession of Hungary to the GATT provided that the procedures in this Article have been fully implemented.

Article 8

The Contracting Parties will inform each other of any modification in their tariff or statistical nomenclature or any other decision concerning the classification of products covered by this Agreement.

Article 9

Within the limits of their respective powers, the Contracting Parties:

- shall encourage the adoption of arbitration for the settlement of disputes arising out of commercial and cooperation transactions concluded by firms, enterprises and economic organizations of the Community and those of Hungary,

- agree that when a dispute is submitted to arbitration, each party to the dispute may freely choose its own arbitrator, irrespective of his nationality, and that the presiding third arbitrator or the sole arbitrator may be a citizen of a third State,

- shall encourage recourse to the arbitration rules elaborated by the United Nations Commission on International Trade Law (Uncitral) and to arbitration by any centre of a State signatory to the Convention on Recognition and Enforcement of Foreign Arbitral Awards done at New York on 10 June 1958.

Article 10

1. The Contracting Parties shall make every effort to promote, expand and diversify their trade on the basis of

non-discrimination and reciprocity. In the spirit of this Article, the joint committee established under Title III of this Agreement will attach special importance to examining ways of encouraging the reciprocal and harmonious expansion of trade.

2. To this end the Contracting Parties agree to ensure the publication of comprehensive data on commercial and financial issues including production, consumption and foreign trade statistics, and information in accordance with Article X of GATT.

3. The Contracting Parties agree that counter-trade practices may create distortions in international trade and they should be regarded as temporary and exceptional.

For this reason they agree not to impose counter-trade requirements on companies established in the Community or in Hungary nor to compel them to engage in such trade practices.

Nevertheless, where firms or companies decide to resort to counter-trade operations, the Contracting Parties will encourage them to furnish all relevant information to facilitate the transaction.

4. In furtherance of the aims of this Article, the Contracting Parties agree that they shall maintain and improve favourable business regulations and facilities for each other's firms or companies on their respective markets, inter alia, as indicated in the Annex.

TITLE II

Economic cooperation

Article 11

1. In the light of their respective economic policies and objectives, the Contracting Parties shall foster economic cooperation on as broad a base as possible in all fields deemed to be in their mutual interest.

The objective of such cooperation shall be, inter alia:

- to reinforce and diversify economic links between the Contracting Parties,

- to contribute to the development of their respective economies and standards of living,

- to open up new sources of supply and new markets,

- to encourage cooperation between economic operators, with a view to promoting joint ventures, licensing agreements and other forms of industrial cooperation to develop their respective industries,

- to encourage scientific and technological progress.

2. In order to achieve these objectives, the Contracting Parties shall make efforts to encourage and promote economic cooperation in particular in the following sectors:

- industry,

- mining,

- agriculture, including agro-industries,

- scientific research in designated sectors in which the Contracting Parties are or may be engaged,

- energy, including the development of new sources of energy,

- transport,

- tourism,

- environmental protection and the management of natural resources.

3. To give effect to the objectives of economic cooperation and within the limits of their respective powers, the Contracting Parties shall encourage the adoption of measures aimed at creating favourable conditions for economic and industrial cooperation including:

- the facilitation of exchanges of commercial and economic information on all matters which would assist the development of trade and economic cooperation,

- the development of a favourable climate for investment, joint ventures and licensing arrangements notably by the extension by the Member States of the Community and Hungary of arrangements for investment promotion and protection, in particular for the transfer of profits and repatriation of invested capital, on the basis of the principles of non-discrimination and reciprocity,

- exchanges and contacts between persons and delegations representing commercial or other relevant organizations,

- the organization of seminars, fairs, business weeks or exhibitions,

- activities involving the provision of technical expertise in appropriate areas,

- the promotion of exchange of information and contacts on scientific subjects of mutual interest in accordance with each other's laws and policies.

Article 12

Without prejudice to the relevant provisions of the Treaties establishing the European Communities, the present Agreement and any action taken thereunder shall in no way

affect the powers of the Member States of the Community to undertake bilateral activities with Hungary in the field of economic cooperation, and to conclude, where appropriate, new economic cooperation agreements with Hungary.

TITLE III

Joint Committee

Article 13

1. (a) A joint committee shall be set up, comprising representatives of the Community, on the one hand, and representatives of Hungary on the other;

(b) the joint committee shall formulate recommendations by mutual agreement between the Contracting Parties;

(c) the joint committee shall, as necessary, adopt its own rules of procedure and programme of work;

(d) the joint committee shall meet once a year in Brussels and Budapest alternately. Special meetings may be convened by mutual agreement, at the request of either Contracting Party. The office of chairman of the joint committee shall be held alternately by each of the Contracting Parties. Wherever possible, the agenda for meetings of the joint committee will be agreed beforehand;

(e) the joint committee may set up specialized sub-committees to assist it in the performance of its tasks.

2. (a) The joint committee shall ensure the proper functioning of this Agreement and shall devise and recommend practical measures for achieving its objectives, keeping in view the economic and social policies of the Contracting Parties;

(b) the joint committee shall endeavour to find ways of encouraging the development of trade and commercial and economic cooperation between the Contracting Parties. In particular, it shall:

- examine the various aspects of trade between the Parties, notably the overall pattern, rate of growth, structure and diversification, the trade balance and the various forms of trade and trade promotion,

- make recommendations on any trade or economic cooperation problem of mutual concern,

- seek appropriate means of avoiding possible difficulties in the fields of trade and

cooperation and encourage various forms of commercial and economic cooperation in areas of mutual interest,

- consider measures likely to develop and diversify trade and economic cooperation, notably by improving import opportunities in the Community and in Hungary,

- exchange information on macro-economic plans and forecasts for the economies of the two Parties which have an impact on trade and cooperation and, by extension, on the scope for developing complementarity between their respective economies and also on proposed economic development programmes,

- seek methods of arranging and encouraging exchange of information and contacts in matters relating to cooperation in the economic field between the Contracting Parties on a mutually advantageous basis, and work towards the creation of favourable conditions for such cooperation,

- examine favourably ways of improving conditions for the development of direct contacts between firms established in the Community and those established in Hungary,

- formulate and submit to the authorities of both Contracting Parties recommendations for solving any problems that arise, where appropriate by means of the conclusion of arrangements or agreements.

TITLE IV

General and final provisions

Article 14

1. This Agreement shall not affect or impair the rights and obligations of the Parties under the GATT and the Protocol for accession of Hungary to the GATT.

2. Subject to the provisions concerning economic cooperation in Article 11, the provisions of this Agreement shall be substituted for provisions of Agreements concluded between Member States of the Community and Hungary to the extent to which the latter provisions are either incompatible with, or identical to, the former.

Article 15

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 Hungarian People's Republic.

Article 16

This Agreement shall enter into force on the first day of the month following the date on which the Contracting Parties have notified each other that the legal procedures necessary to this end have been completed. The Agreement shall be concluded for an initial period of 10 years. The Agreement shall be automatically renewed year by year provided that neither Contracting Party gives the other Party written notice of denunciation of the Agreement six months before it expires.

However, the two Contracting Parties may amend the Agreement by mutual consent in order to take account of new developments.

The Annex, the Protocol and the joint declaration attached to this Agreement shall form an integral part thereof.

Article 17

This Agreement shall be drawn up in duplicate in the Danish, Dutch, English, French, German, Greek, Italian, Portuguese, Spanish and Hungarian languages, each text being equally authentic.

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En fe de lo cual, los plenipotenciarios abajo firmantes suscriben el presente Acuerdo.

Til bekraeftelse heraf har undertegnede befuldmaegtigede underskrevet denne aftale.

Zu Urkund dessen haben die unterzeichneten Bevollmaechtigten ihre Unterschriften unter dieses Abkommen gesetzt.

AAéò ðssóôùóç ôùí áíùôÝñù, ïé õðïãaaãñáììÝíïé ðëçñaaîïýóéïé Ýèaaóáí ôéò õðïãñáoeÝò ôïõò óôçí ðáñïýóá óõìoeùíssá.

In witness whereof, the undersigned Plenipotentiaries have signed this Agreement.

En foi de quoi, les plénipotentiaires soussignés ont apposé leurs signatures au bas du présent accord.

In fede di che, i plenipotenziari sottoscritti hanno apposto le loro firme in calce al presente accordo.

Ten blijke waarvan de ondergetekende gevolmachtigden hun handtekening onder deze Overeenkomst hebben gesteld.

Em fé do que, os plenipotenciários abaixo assinados apuseram as suas assinaturas no final do presente acordo.

Fentiek hiteléuel, az arra meghatalmazottak aláirták a jelen Megállapodást.

Hecho en Bruselas, el veintiséis de septiembre de mil novecientos ochenta y ocho.

Udfaerdiget i Bruxelles, den seksogtyvende september nitten hundrede og otteogfirs.

Geschehen zu Bruessel am sechsundzwanzigsten September neunzehnhundertachtundachtzig.

éAAãéíaa óôéò ÂñõîÝëëaaò, óôéò aassêïóé Ýîé Óaaðôaaìâñssïõ ÷ssëéá aaííéáêueóéá ïãaeueíôá ïêôþ.

Done at Brussels on the twenty-sixth day of September in the year one thousand nine hundred and eighty-eight.

Fait à Bruxelles, le vingt-six septembre mil neuf cent quatre-vingt-huit.

Fatto a Bruxelles, addì ventisei settembre millenovecentottantotto.

Gedaan te Brussel, de zesentwintigste september negentienhonderdachtentachtig.

Feito em Bruxelas, em vinte e seis de Setembro de mil novecentos e oitenta e oito.

Kelt Bruesszelben, ezerkilenczáznyolcvannyolc szeptember hó huszonhatodikán.

Por el Consejo de las Comunidades Europeas

For Raadet for De Europaeiske Faellesskaber

Fuer den Rat der Europaeischen Gemeinschaften

Ãéá ôï Óõìâïýëéï ôùí AAõñùðáúêþí ÊïéíïôÞôùí

For the Council of the European Communities

Pour le Conseil des Communautés européennes

Per il Consiglio delle Comunità europee

Voor de Raad van de Europese Gemeenschappen

Pelo Conselho das Comunidades Europeias

Az Európai Koezoességek Tanácsa nevében

Por el Gobierno de la República Popular Húngara

For regeringen for Den Ungarske Folkerepublik

Fuer die Regierung der Ungarischen Volksrepublik

Ãéá ôçí êõâÝñíçóç ôçò ËáúêÞò AEçìïêñáôssáò ôçò Ïõããáñssáò

For the Government of the Hungarian People's Republic

Pour le gouvernement de la République populaire hongroise

Per il governo della Repubblica popolare ungherese

Voor de Regering van de Hongaarse Volksrepubliek

Pelo Governo da República Popular da Hungria

A Magyar Népkoeztársaság Kormánya nevében

ANNEX

Annex relating to Article 10 of the Agreement

The regulations and facilities referred to in Article 10 of the Agreement are, in Hungary, inter alia, the following:

- non-discriminatory application of Hungary's import licensing system in accordance with its international commitments,

- the non-discriminatory administration of Hungary's global quota for consumer goods and the provision of all necessary information relating thereto,

- non-discriminatory treatment by Hungary when awarding contracts for goods or services as a result of World Bank or other international competitive tenders,

- non-discriminatory procedure for the establishment of offices in Hungary, the renting of business premises, the import of necessary equipment and furniture for operating offices or branches, the recruitment, management and salary levels of staff for such offices and the movement of staff, access to communication facilities and to the publicity media (press, radio and television) and to retail distribution networks,

- the legal protection by Hungary of intellectual property rights for both products and processes in accordance with the international conventions to which Hungary is a signatory, namely, the Paris Convention for the Protection of Industrial Property, as revised at Stockholm on 14 July 1967 and the Universal Copyright Convention of 6 September 1952, as revised at Paris on 24 July 1971.

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PROTOCOL on the abolition of quantitative restrictions referred to in Article 4 of the Agreement

1. The Community undertakes to abolish, within one year of the entry into force of the Agreement, the quantitative restrictions on imports into the Community originating in Hungary of those products set out in Annex A to this Protocol.

2. The Community undertakes to abolish, on or before 31 December 1992, the quantitative restrictions on imports originating in Hungary of those products and into those regions of the Community set out in Annex B to this Protocol.

The list of products set out in Annex B may be modified by mutual consent after consultations in the joint committee referred to in Title III of the Agreement to take account of changes in market conditions or regulations relating thereto either in the Community or in Hungary.

3. For restrictions referred to in Article 4 (2) of the Agreement affecting those products for which no provisions have been made in Annexes A and B, the Contracting Parties shall examine before 30 June 1992 in the framework of the joint committee referred to in Title III of the Agreement, whether it can be agreed to make changes in existing import arrangements. The changes to be considered may include any of the following measures:

- liberalization,

- liberalization with surveillance of imports,

- adoption of appropriate measures by Hungary such as the issue of export licences or certificates to ensure that exports remain within specified levels,

- measures that may be required by the Community after 1992 to adapt existing import arrangement and taken in conformity with the Protocol for accession of Hungary to the GATT.

4. The Community undertakes to abolish, by 31 December 1995 at the latest, the restrictions referred to in Article 4

(2) of the Agreement affecting imports of products into the Community originating in Hungary.

5. For the products in respect of which quantitative restrictions are abolished pursuant to paragraphs 3 or 4, the following special conditions of application of the safeguard clause contained in Article 7 of the Agreement shall apply until 31 December 1998:

(a) if the increased level of imports for a given product, or the conditions under which it is imported, cause or threaten to cause material injury to Community producers of like or competitive products, the Community may request the opening of consultations in accordance with the procedure described in Article 7 (2) and (3) of the Agreement with a view to reaching agreement on the appropriate restraint level or other appropriate action for the product concerned;

(b) if, within 10 working days of the request by the Community for consultations, the Contracting Parties are unable to reach a satisfactory solution, the Community shall have the right to introduce and maintain during the initial period of validity of the Agreement a quantitative limit at an annual level not lower than the level already achieved in the normal course of trade before the consultation;

(c) Hungary shall then not resort to Article 7 (5) of

the Agreement nor otherwise have recourse to retaliation or seek compensation, notwithstanding the provisions of Article 14 (1) of the Agreement.

6. The Contracting Parties recognize that difficulties may arise after 1998 and agree to avoid possible market disruption. They will hold consultations before 30 June 1998 in the framework of the joint committee referred to in Title III of the Agreement.

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ANNEX A referred to in paragraph 1 of the Protocol

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ANNEX B referred to in paragraph 2 of the Protocol

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30. 11. 88

Official Journal of the European Communities

NOTES

Description of products partially under quantitative restrictions ( ) contained in Annex B

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