PROTOCOL 2 on products excluded from the scope of the Agreement in accordance with Article 8(3)(a)

The following products falling within HS, Chapters 25 to 97, are excluded from the scope of the Agreement:

>TABLE>

PROTOCOL 3 concerning products referred to in Article 8(3)(b) of the Agreement

CHAPTER I GENERAL PROVISION

Article 1

Application of the EEA provisions

Subject to the provisions of this Protocol and unless otherwise specified in the Agreement, the provisions of the Agreement shall apply to products listed in Tables I and II.

CHAPTER II PRICE COMPENSATION ARRANGEMENTS

Article 2

General principle of price compensation

1. In order to take account of differences in the cost of the agricultural raw materials used in the manufacture of the products specified in Table I, the Agreement does not preclude the application of price compensation measures to these products; that is the levying of variable components upon import and the granting of refunds upon export.

2. If a Contracting Party applies internal measures which reduce the price of raw materials to processing industries, these measures shall be taken into account in the calculation of price compensation amounts.

Article 3

New calculation system

1. Subject to the conditions and specific provisions set out in Articles 4 to 9, the price compensation shall be calculated on the basis of the amounts of raw materials actually used in the manufacture of the product and on the basis of jointly confirmed reference prices.

2. Unless otherwise provided in Article 1 of Appendix 1, the Contracting Parties shall not levy customs duties or other fixed amounts on imported goods which are subject to the system referred to in paragraph 1.

3. The list of raw materials for which each Contracting Party may apply price compensation is established in Appendix 2. The procedure for the amendment of the list is established in Appendix 3.

Article 4

Declaration of raw materials

1. Whenever, in connection with the importation, a declaration of raw materials used in the production process is submitted to the authorities of the importing State, these authorities shall, unless they have reasonable doubt as to the accuracy of the information in the declaration, calculate the variable component in proportion to the net weight of the product presented for clearance and the amounts of raw materials indicated in the declaration.

2. Rules concerning the declarations to be used and procedures for their submission are established in Appendix 4.

Article 5

Verification of declarations

1. The Contracting Parties shall assist each other in verifying the accuracy of the declarations.

2. The details of the verification procedure of the declarations are established in Appendix 5.

Article 6

Reference prices

1. Contracting Parties shall notify to the EEA Joint Committee the prices of raw materials for which price compensation measures are applied. The prices which are notified shall reflect the actual price situation in the territory of the Contracting Party. They shall be the prices normally paid at the wholesale or the manufacturing stage by processing industries. If an agricultural raw material is available to the processing industry, or to a part of it, at a price lower than the one otherwise ruling on the domestic market, the notification shall be adjusted accordingly.

2. The EEA Joint Committee shall on the basis of the notifications periodically confirm the reference prices to be used in the calculation of price compensation amounts.

3. Details of the reference prices to be used, the notification system and the procedures for the confirmation of the reference prices are established in Appendix 6.

Article 7

Coefficients

1. When converting amounts of raw materials concerned into quantities of raw materials for which there is a reference price confirmed, the Contracting Parties shall use agreed coefficients.

2. A list of the coefficients to be applied is provided for in Appendix 7.

Article 8

Difference between the reference prices

For each of the raw materials concerned, the price compensation amount shall not exceed the difference between the domestic reference price and the lowest of the reference prices in any of the Contracting Parties.

Article 9

Limit to price compensation amounts

A Contracting Party shall not levy on a product coming from another Contracting Party variable price compensation components higher than the customs duty or fixed amount which it applied on 1 January 1992 to the product concerned when coming from the Contracting Party in question. This limit also applies when the customs duty or fixed amount was administered through a tariff quota, but not in cases where, in addition to the customs duty or fixed amount, the product concerned was subject to a price compensation measure on 1 January 1992.

CHAPTER III OTHER PROVISIONS

Article 10

Non-application of Chapter II to Table II products

1. The provisions of Chapter II shall not apply to products listed in Table II. In particular, with respect to these products, the Contracting Parties may not levy customs duties on imports or charges having equivalent effect, including variable components, or grant refunds upon export.

2. As regards the products referred to in paragraph 1, special arrangements concerning customs duties on imports and other fixed amounts are set out in Article 2 of Appendix 1.

Article 11

Application of Protocol No 2

In so far as trade between an EFTA State and the Community in a product covered by the respective Table of Protocol No 2 of the Free Trade Agreement is concerned and without prejudice to the provision of Article 6 of Appendix 1 to this Protocol, the provisions of the Protocol No 2 and Protocol No 3 of the respective Free Trade Agreement as well as all other relevant provisions of the Free Trade Agreement shall apply:

- if the product is listed in Table I but the conditions for the application of the system set out in Articles 3 to 9 are not fulfilled, or

- if the product falls within HS Chapters 1 to 24 but is not listed in Table I or II, or

- if the product is listed in Protocol 2 of this Agreement.

Article 12

Transparency

1. The Contracting Parties shall make available to the EEA Joint Committee as soon as possible and at the latest two weeks after their entry into force, full details of any price compensation measures applied on the basis of the system set out in Articles 3 to 9. Any Contracting Party may request an examination of such measures in the light of the foregoing provisions within the EEA Joint Committee.

2. In case a Contracting Party applies, autonomously or on contractual basis, to products not listed in Table I or to products listed in that Table but coming from third countries, a system similar to that set out in Articles 3 to 9, it shall inform the EEA Joint Committee.

3. The Contracting Parties shall also inform the EEA Joint Committee of internal measures which reduce the price of raw materials to processing industries.

4. Any Contracting Party may request a discussion in the EEA Joint Committee on the systems and measures referred to in paragraphs 2 and 3.

Article 13

Country-specific arrangements

Articles 4 to 6 of Appendix 1 contain specific arrangements concerning Austria, Finland, Iceland and Norway.

Article 14

Reviews

The Contracting Parties shall review at two-yearly intervals the development of their trade in processed agricultural products. A first review shall be held before the end of 1993. In the light of these reviews the Contracting Parties will decide on a possible extension of the product coverage of the Protocol as well as on a possible abolition of the remaining customs duties and other charges referred to in Articles 1 and 2 of Appendix 1.

APPENDIX 1

Article 1

1. The Contracting Parties may, in addition to variable price compensation components, apply customs duties or other fixed amounts not exceeding 10% on the following products:

>TABLE>

2. The Contracting Parties shall abolish progressively in accordance with the following timetable customs duties and other fixed amounts on the products listed below:

(a) on 1 January 1993 each duty shall be reduced to five-sixths of the basic duty;

(b) five further reductions of one-sixth each shall be made on 1 January 1994, 1 January 1995, 1 January 1996, 1 January 1997 and 1 January 1998.

>TABLE>

15.17

Margarine; edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this Chapter, other than edible fats or oils or their fractions of heading No 15.16:

>TABLE>

21.06

Food preparations not elsewhere specified or included:

ex 21.06

- Other than flavoured or coloured sugar syrups:

- - Containing more than 15% by weight of milkfat

3. The Contracting Parties shall reduce progressively in accordance with the following timetable customs duties and other fixed amounts on the product indicated below:

(a) on 1 January 1993 each duty shall be reduced to 90% of the basic duty;

(b) four further reductions of 10% each shall be made on 1 January 1994, 1 January 1995, 1 January 1996 and 1 January 1997.

>TABLE>

Article 2

1. The Contracting Parties shall abolish progressively in accordance with the following timetable customs duties on imports and other fixed amounts on the products listed below:

(a) on 1 January 1993 each duty shall be reduced to five-sixths of the basic duty;

(b) five further reductions of one-sixth each shall be made on 1 January 1994, 1 January 1995, 1 January 1996, 1 January 1997 and 1 January 1998.

>TABLE>

2. The Contracting Parties shall reduce progressively in accordance with the following timetable customs duties on imports and other fixed amounts on the product indicated below:

(a) on 1 January 1993 each duty shall be reduced to 90% of the basic duty;

(b) four further reductions of 10% each shall be made on 1 January 1994, 1 January 1995, 1 January 1996 and 1 January 1997.

>TABLE>

Article 3

1. The basic duties to which the successive reductions provided for in Articles 1 and 2 are to be applied shall, for each product, be the duties actually applied by a Contracting Party on 1 January 1992 to products coming from the other Contracting Parties. If, after 1 January 1992, any tariff reductions resulting from the multilateral trade negotiations of the Uruguay Round become applicable, such reduced duties shall be used as the basic duties.

2. The reduced duties shall be applied by rounding down to the first decimal place by deleting the second decimal.

Article 4

1. With regard to Finland, the provisions of Article 9 of the Protocol shall not apply to the products falling within HS heading Nos 15.17 and 20.07.

2. With regard to Norway, the provisions of Article 9 of the Protocol shall not apply to the products falling within HS heading Nos 20.07, 20.08 and 21.04.

Article 5

1. With regard to Iceland, the provisions of the Protocol shall not apply to the following products:

>TABLE>

This temporary arrangement shall be taken up for a review by the Contracting Parties before the end of 1998.

2. With regard to Iceland the limitation, foreseen in Article 9 of the Protocol, of price compensation amounts levied on imports shall not apply to Iceland for products falling within HS heading Nos 04.03, 15.17, 18.06, 19.01, 19.02, 19.05, 20.07, 21.03 and 21.04.

However, the amounts of import charges levied at the border shall not in any case exceed the level applied by Iceland in 1991 to imports coming from any Contracting Party.

Article 6

1. With regard to Austria, Article 16 of the Agreement shall be applicable to products falling within HS heading No 22.08 at the latest from 1 January 1996. The licensing system applied by Austria to these products shall, however, be liberalized and licences granted automatically from 1 January 1993.

Austria shall progressively eliminate during the period 1 January 1993 to 1 January 1996, in accordance with the following timetable, the customs duties levied at the border on spirituous beverages and undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol., falling within HS heading No 22.08:

(a) on 1 January 1993 the customs duty actually applied on 1 January 1991 shall be reduced by 15%,

(b) a further reduction of 15% shall be made on 1 January 1994,

(c) a further reduction of 30% shall be made on 1 January 1995, and

(d) a final reduction of 40% shall be made on 1 January 1996.

The reduced duties shall be applied by rounding down to the first decimal place by deleting the second decimal.

Notwithstanding the above, Austria will, taking into account the tariff concessions granted to the European Community in the trade arrangement for certain agricultural products originating in the Community, abolish as from 1 January 1993 import duties on the following products:

>TABLE>

2. As regards other duties and taxes imposed on spirituous beverages falling within HS heading No 22.08 Austria will comply with the provisions of Article 14 of the Agreement.

3. (a) Austria shall apply the provisions of the Agreement to the following products at the latest from 1 January 1997:

>TABLE>

3809

Finishing agents, dye carriers to accelerate the dyeing or fixing of dyestuffs and other products and preparations (for example, dressings and mordants), of a kind used in the textile, paper, leather or like industries, not elsewhere specified or included:

>TABLE>

3823

Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included:

>TABLE>

(b) As long as Austria does not apply the provisions of the Agreement for the above-listed products, the provisions of the Free Trade Agreement between the EEC and Austria concerning bilateral trade in this sector, including the rules of origin of Protocol No 3 and all other relevant provisions, shall continue to be applicable. Under the same conditions, for trade between Austria and the other EFTA States in the above-listed products, Article 21 of, and Annex B to the EFTA Convention as well as all other relevant provisions shall continue to be applicable.