INTERIM AGREEMENT on trade and trade-related matters between the European Economic Community and the European Coal and Steel Community, of the one part, and the Republic of Hungary, of the other part

The EUROPEAN ECONOMIC COMMUNITY and the EUROPEAN COAL AND STEEL COMMUNITY, hereinafter referred to as 'the Community`,

of the one part,

and the Government of the REPUBLIC OF HUNGARY, hereinafter referred to as 'Hungary`,

of the other part,

Whereas the European Agreement establishing an association between the European Communities and their Member States and the Republic of Hungary was signed in Brussels on 16 December 1991;

Whereas the aim of the European Agreement is to provide an appropriate framework for political dialogue; it is to establish a gradual free trade area between the Community and Hungary covering substantially all trade between them; it is to govern commercial and economic relations between the Parties and includes provisions relating to financial cooperation and assistance and the promotion of cooperation in cultural matters;

Whereas the European Agreement is intended to strengthen and widen the relations established previously, notably by the Agreement on trade and commercial and economic cooperation between the European Economic Community and Hungary signed on 26 September 1988 and the Protocol on trade and commercial and economic cooperation between the European Coal and Steel Community and Hungary signed on 31 October 1991;

Whereas it is necessary to ensure the development of trade relations between the implementation of the agreements on trade and commercial and economic cooperation and that of the European Agreement;

Whereas to this end it is necessary to implement as speedily as possible, by means of an Interim Agreement, provisions of the European Agreement on trade and trade related matters;

Whereas it is necessary to ensure that pending the entry into force of the European Agreement and the establishment of the Association Council, the Joint Committee set up by the Agreement on trade and commercial and economic cooperation can exercise the powers assigned by the European Agreement to the Association Council which are necessary in order to implement the Interim Agreement,

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

THE EUROPEAN ECONOMIC COMMUNITY:

Hans van den BROEK,

Minister for Foreign Affairs of the Kingdom of the Netherlands, President-in-Office of the Council of the European Communities;

Frans ANDRIESSEN,

Vice-President of the Commission of the European Communities;

THE EUROPEAN COAL AND STEEL COMMUNITY:

Frans ANDRIESSEN,

Vice-President of the Commission of the European Communities;

THE GOVERNMENT OF THE REPUBLIC OF HUNGARY:

Béla KADAR,

Minister for Foreign Economic Relations of the Republic of Hungary;

Who, having exchanged their full powers, formed in good and due form,

HAVE AGREED AS FOLLOWS:

TITLE I

FREE MOVEMENT OF GOODS

Article 1 (EA 7)

1. The Community and Hungary shall gradually establish a free-trade area in a transitional period lasting a maximum of 10 years starting from the entry into force of this Agreement (hereinafter called 'the Agreement`) in accordance with the provisions of the present agreement and in conformity with those of the General Agreement on Tariffs and Trade.

2. The combined nomenclature of goods shall be applied to the classification of goods for imports into the Community. The Hungarian customs tariffs shall be applied to the classification of goods for imports into Hungary.

3. Subject to specific provisions in Chapters II and III, for each product the basic duty to which the successive reductions set out in this Agreement are to be applied shall be that actually applied erga omnes on the day preceding the date of entry into force of the Agreement.

4. If, after entry into force of the 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 Hungary shall communicate to each other their respective basic duties.

Chapter I

Industrial products

Article 2 (EA 8)

1. The provisions of this Chapter shall apply to products originating in the Community and in Hungary listed in Chapters 25 to 97 of the combined nomenclature and of the Hungarian Customs Tariff with the exception of the products listed in Annex I.

2. The provisions of Articles 3 to 7 included do not apply to products mentioned in Articles 9 and 10.

Article 3 (EA 9)

1. Customs duties on imports applicable in the Community to products originating in Hungary other than those listed in Annexes IIa, IIb and III shall be abolished on the entry into force of the Agreement.

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

- on the date of entry into force of this Agreement each duty shall be reduced to 50 % of the basic duty,

- one year after the date of entry into force of this Agreement the remaining duties shall be eliminated.

Customs duties on imports applicable in the Community to products originating in Hungary listed in Annex IIb shall be progressively reduced, from the date of entry into force of this Agreement, by annual reductions of 20 % of the basic duty, so as to arrive at a total abolition by the end of the fourth year after the date of entry into force of the Agreement.

3. The products of Hungarian origin listed in Annex III shall benefit from a suspension of customs duties on imports within the limits of annual Community tariff quotas or ceilings increasing progressively in accordance with the conditions defined in that Annex.

At the same time, customs duties on imports applicable to import quantities in excess of the quotas or ceilings provided for above shall be progressively abolished so as to arrive at a complete abolition of customs duties on imports of the products concerned at the end of the fifth year at the latest.

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

Article 4 (EA 10)

1. Customs duties on imports applicable in Hungary to products originating in the Community which are listed in Annex IV shall be reduced progressively:

- upon entry into force of the Agreement - to two-thirds of the basic duty,

- on 1 January 1993 - to one-third of the basic duty,

- on 1 January 1994 - to zero.

2. Customs duties on imports applicable in Hungary to products originating in the Community not listed in Annexes IV and V shall be reduced progressively:

- on 1 January 1995 - to two-thirds of the basic duty,

- on 1 January 1996 - to one-third of the basic duty,

- on 1 January 1997 - to zero.

3. Customs duties on imports applicable in Hungary to products originating in the Community which are listed in Annex V shall be reduced progressively:

- on 1 January 1995 - to 90 % of the basic duty,

- on 1 January 1996 - to 75 % of the basic duty,

- on 1 January 1997 - to 60 % of the basic duty,

- on 1 January 1998 - to 45 % of the basic duty,

- on 1 January 1999 - to 30 % of the basic duty,

- on 1 January 2000 - to 15 % of the basic duty,

- on 1 January 2001 - to 0 % of the basic duty.

4. Quantitative restrictions on imports into Hungary and measures having an equivalent effect thereto of products originating in the Community as listed in Annex VIa shall be progressively abolished between 1 January 1995 and 31 December 2000 according to the timetable provided in that Annex. All other quantitative restrictions and measures having an equivalent effect thereto shall be abolished upon entry into force of the Agreement.

The Joint Committee referred to in Article 36 (hereinafter referred to as 'the Joint Committee`) shall periodically review the progress achieved in dismantling quantitative restrictions.

From the date of entry into force of the Agreement Hungary shall open import ceilings for products originating in the Community listed in Annex VIb and on the conditions contained therein.

Article 5 (EA 11)

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

Article 6 (EA 12)

The Community shall abolish in its imports from Hungary charges having an effect equivalent to customs duties on imports upon the entry into force of the Agreement.

Hungary shall abolish on its imports from the Community charges having an effect equivalent to customs duties on imports in accordance with the following timetable:

>TABLE>

Article 7 (EA 13)

1. The Community and Hungary shall progressively abolish between them at the latest by the end of the fifth year after entry into force of the Agreement any customs duties on exports and charges having equivalent effect as well as quantitative restrictions on exports and any measures having equivalent effect except those that might be required for the administration of international obligations.

Article 8 (EA 14)

Each party declares its readiness to reduce its customs duties in trade with the other party more rapidly than is provided for in Articles 3 and 4 if its general economic situation and the situation of the economic sector concerned so permit.

The Joint Committee may make recommendations to this effect.

Article 9 (EA 15)

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

Article 10 (EA 16)

Protocol 2 lays down the arrangements applicable to products covered by the Treaty establishing the European Coal and Steel Community.

Article 11 (EA 17)

1. The provisions of the present Chapter do not preclude the retention by the Community of an agricultural component in the duties applicable to products listed in Annex VII in respect of products originating in Hungary.

2. The provisions of the present Chapter do not preclude the introduction of an agricultural component by Hungary in the duties applicable to the products listed in Annex VII in respect of products originating in the Community.

Chapter II

Agriculture

Article 12 (EA 18)

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

2. The term 'agricultural products` means the products listed in Chapters 1 to 24 of the combined nomenclature and of the Hungarian Customs Tariff and the products listed in Annex I, but excluding fishery products as defined by Regulation (EEC) No 3687/91.

Article 13 (EA 19)

Protocol 3 lays down the trade arrangements for processed agricultural products which are listed in such protocol.

Article 14 (EA 20)

1. The Community shall abolish at the date of entry into force of the Agreement the quantitative restrictions on imports of agricultural products originating in Hungary maintained by virtue of Council Regulation (EEC) No 3420/83 in the form existing on the date of signature hereof.

2. The agricultural products originating in Hungary listed in Annex VIIIa or Annex VIIIb shall benefit, upon the date of entry into force of this Agreement, from the reduction of levies within the limit of Community quotas or from the reduction of customs duties upon the conditions provided in the same Annex.

3. Agricultural products listed in Annex IXa originating in the Community shall be imported into Hungary free of quantitative restrictions. Agricultural products originating in the Community listed in Annex IXb shall be free from quantitative restrictions up to the quantities set out in that Annex.

4. The Community and Hungary shall grant each other the concessions referred to in Annexes Xa, Xb and Xc and XIa, XIb, XIc and XId, on a harmonious and reciprocal basis, in accordance with the conditions laid down therein.

5. 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 and of the rules of the agricultural policy of Hungary and of the consequences of the multilateral trade negotiations under the General Agreement on Tariffs and Trade, the Community and Hungary shall examine on a regular basis in the Joint Committee, product by product and on an orderly and reciprocal basis, the possibilities of granting each other further concessions.

Article 15 (EA 21)

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 in 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 solution, the Party concerned may take the measures it deems necessary.

Chapter III

Fisheries

Article 16 (EA 22)

The provisions of this chapter shall apply to fishery products originating in the Community and in Hungary, which are covered by Regulation (EEC) No 3687/91 on the common organization of the market in the sector of fishery products.

Article 17 (EA 23)

The provisions of Article 14 (5) shall apply mutatis mutandis to fishery.

Chapter IV

Common provisions

Article 18 (EA 24)

The provisions of this Chapter shall apply to trade in all products except where otherwise provided herein or in Protocols 1, 2 or 3.

Article 19 (EA 25)

1. No new customs duties on imports or exports or charges having equivalent effect shall be introduced, nor shall those already applied be increased, in the trade between the Community and Hungary from the date of entry into force of the Agreement.

2. No new quantitative restriction on imports or exports or measure having equivalent effect shall be introduced nor shall those existing be made more restrictive in the trade between the Community and Hungary from the date of entry into force of the Agreement.

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

Article 20 (EA 26)

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 (EA 27)

1. This Agreement shall not preclude the maintenance or establishment of customs unions, free-trade areas or arrangements for frontier trade except insofar 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 policy 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 Hungary stated in this Agreement.

Article 22 (EA 28)

Exceptional measures of limited duration which derogate from the provisions of Article 4 and Article 19 (1) may be taken by Hungary 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 Hungary 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 five years unless a longer duration is authorized by the Joint Committee. They shall cease to apply at the latest at the expiration 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.

Hungary 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 Hungary 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 (EA 29)

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 (EA 30)

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

Article 25 (EA 31)

Where compliance with the provisions of Articles 7 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 (EA 32)

The Member States and Hungary shall progressively adjust any State monopolies of a commercial character so as to ensure that, by the end of the fifth 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 Hungary. The Joint Committee will be informed about the measures adopted to implement this objective.

Article 27 (EA 33)

1. In the event of the Community or Hungary 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 Hungary, 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 the 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. When no end has been put to the dumping or 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 Hungary 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 (EA 34)

Protocol 4 lays down rules of origin, for the application of tariff preferences foreseen in this Agreement.

Article 29 (EA 35)

The 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 (EA 36)

Protocol 5 lays down the specific provisions to apply to trade between Hungary of the one part and Spain and Portugal of the other part.

TITLE II

PAYMENTS, COMPETITION AND OTHER ECONOMIC PROVISIONS

Article 31 (EA 59)

The Parties undertake 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 the present Agreement.

Article 32 (EA 62)

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

(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 Hungary 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 Economic Community.

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

4. (a) For the purposes of applying the provisions of paragraph 1 (iii), the Parties recognize that during the first five years after the entry into force of the Agreement, any public aid granted by Hungary shall be assessed taking into account the fact that Hungary 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 Economic Community. The Joint Committee shall, taking into account the economic situation of Hungary, 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 I:

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

- any practices contrary to paragraph 1 (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 Economic Community and in particular of those established in Council Regulation No 26/1962.

6. If the Community or Hungary 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 interest 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 (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.

8. This Article shall not apply to the products covered by the Treaty establishing the European Coal and Steel Community which are the subject of Protocol 2.

Article 33 (EA 63)

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 of the Community or Hungary is in serious balance of payments difficulties, or under imminent threat thereof, the Community or Hungary, 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 Hungary, as the case may be, shall inform the other Party forthwith.

Article 34 (EA 64)

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 third year following the date of entry into force of the Agreement, the principles of the Treaty establishing the European Economic Community, notably Article 90, and the principles of the concluding document of the April 1990 Bonn meeting of the Conference on Security and Cooperation in Europe, notably entrepreneurs' freedom of decision, are upheld.

Article 35

1. Hungary shall continue to improve the protection of intellectual, industrial and commercial property rights in order to provide, by the end of the fifth year from the entry into force of the Agreement, a level of protection similar to that provided in the Community by Community Acts, in particular the ones referred to in Annex XIII, including comparable means of enforcing such rights.

2. Mutual assistance between administrative authorities in customs matters of the Parties shall take place in accordance with the provisions of Protocol No 6.

TITLE III

INSTITUTIONAL, GENERAL AND FINAL PROVISIONS

Article 36 (EA 104)

The Joint Committee set up by the Agreement on Trade and Commercial and Economic Cooperation signed between the European Economic Community and Hungary on 26 September 1988 shall perform the duties assigned to it by this Agreement until the Association Council provided for in Article 104 of the Europe Agreement is established.

Article 37 (EA 106)

The Joint Committee shall, for the purposes of attaining the objectives of the 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 agreement between the two Parties.

Article 38 (EA 108)

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 of this Article, 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 39 (EA 113)

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 Community and Hungary to defend their individual rights and their property rights, including those concerning intellectual, industrial and commercial property.

Article 40 (EA 114)

Nothing in the Agreement shall prevent a 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, munitions or war materials or to research, development or production indispensable for defence 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.

Article 41 (EA 115)

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

- the arrangements applied by Hungary 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 Hungary shall not give rise to any discrimination between Hungarian nationals or its companies or firms.

2. The provisions of paragraph 1 shall not prevent the Parties from applying foreign exchange laws and regulations that provide different treatment for residents and non-residents within the meaning of these laws and regulations.

Article 42 (EA 116)

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

Article 43 (EA 117)

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

2. If either Party considers that the other Party has failed to fulfil an obligation under the Agreement, it may take appropriate measures. Before so doing, 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 the 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 44 (EA 119)

Protocols 1, 2, 3, 4, 5, 6 and 7 and Annexes I to XI and XIII shall form an integral part of this Agreement.

Article 45

1. This Agreement shall be applicable until the entry into force of the Europe Agreement signed on 16 December 1991 and at the latest until 31 December 1992.

2. 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 46 (EA 121)

This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing the European Economic 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 Hungary.

Article 47 (EA 122)

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

Article 48

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

This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other that the procedures referred to in the first paragraph have been completed.

Upon entry into force of this Agreement, Articles 1 and 2 paragraph 2, to 10 of the Agreement between the European Economic Community and the Republic of Hungary on trade and economic and commercial cooperation signed in Brussels on 26 September 1988 and the corresponding provisions of the Protocol between the European Coal and Steel Community and the Republic of Hungary signed in Brussels on 31 October 1991 shall be suspended.

Article 49

1. In the event that this Agreement enters into force after 1 January but before 30 June 1992 for the purposes of Titles I and II of this Agreement and Protocols 1, 2, 3, 4, 5, 6 and 7 hereto, the terms 'date of entry into force of the Agreement` shall mean:

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

- 1 January 1992 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, the provisions of Protocol 7 shall apply.

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 dieciséis de diciembre de mil novecientos noventa y uno.

Udfaerdiget i Bruxelles, den sekstende december nitten hundrede og enoghalvfems.

Geschehen zu Bruessel am sechzehnten Dezember neunzehnhunderteinundneunzig.

¸ãéíaa óôéò ÂñõîÝëëaaò, óôéò aeÝêá Ýîé AEaaêaaìâñssïõ ÷ssëéá aaííéáêueóéá aaíaaíÞíôá Ýíá.

Done at Brussels on the sixteenth day of December in the year one thousand nine hundred and ninety-one.

Fait à Bruxelles, le seize décembre mil neuf cent quatre-vingt-onze.

Fatto a Bruxelles, addì sedici dicembre millenovecentonovantuno.

Gedaan te Brussel, de zestiende december negentienhonderd eenennegentig.

Feito em Bruxelas, em dezasseis de Dezembro de mil novecentos e noventa e um.

Készuelt Bruesszelben az ezerkilencszázkilencvenegyedik év december hó tizenhatodik napján.

Por el Consejo y la Comisión de las Comunidades Europeas

For Raadet og Kommissionen for De Europaeiske Faellesskaber

Fuer den Rat und die Kommission der Europaeischen Gemeinschaften

Ãéá ôï Óõìâïýëéï êáé ôçí AAðéôñïðÞ ôùí AAõñùðáúêþí ÊïéíïôÞôùí

For the Council and the Commission of the European Communities

Pour le Conseil et la Commission des Communautés européennes

Per il Consiglio e la Commissione delle Comunità europee

Voor de Raad en de Commissie van de Europese Gemeenschappen

Pelo Conselho e pela Comissão das Comunidades Europeias

Az Európai Koezoességek Tanácsa és Bizottsága nevében

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Por el Gobierno de la República de Hungría

For Regeringen for Republikken Ungarn

Fuer die Regierung der Republik Ungarn

Ãéá ôçí êõâÝñíçóç ôçò AEçìïêñáôssáò ôçò Ïõããáñssáò

For the Government of the Republic of Hungary

Pour le gouvernement de la république de Hongrie

Per il governo della Repubblica ungherese

Voor de Regering van de Republiek Hongarije

Pelo Governo da República da Hungria

A Magyar Koeztársaság Kormánya nevében

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ANNEX I

List of products referred to in Articles 2 and 12 of the Agreement

>TABLE POSITION>

ANNEX II a

List of products referred to in Article 3 (2) first subparagraph

CN code 1991

2501 00 31

2501 00 51

2501 00 91

2501 00 99

2503 90 00

2511 20 00

2513 19 00

2513 29 00

2516 12 10

2516 22 10

2516 90 10

2518 20 00

2518 30 00

2526 20 00

2530 40 00

2804 61 00

2804 69 00

2805 11 00

2805 19 00

2805 21 00

2805 22 00

2805 30 10

2805 30 90

2805 40 10

2818 20 00

2818 30 00

ex 2844 30 11 Raw cermets, waste or scrap

2844 30 19

ex 2844 30 51 Raw cermets, waste or scrap

3201 20 00

3201 30 00

3201 90 10

ex 3201 90 90 Other extracts of vegetable origin

4104 10 91

4105 11 91

4105 11 99

4105 12 10

4105 12 90

4105 19 10

4105 19 90

4106 11 90

4106 12 00

4106 19 00

4107 10 10

4107 29 10

4107 90 10

4403 10 10

7202 19 00

7202 30 00

7202 41 10

7202 41 90

7202 49 10

7202 49 50

7202 49 90

7202 50 00

7202 70 00

7202 80 00

7202 91 00

7202 92 00

7202 93 00

7202 99 30

7202 99 80

7602 00 19

7801

7901

7903

8101 10 00

8101 91 10

8101 91 90

8102 10 00

8102 91 10

8102 91 90

8103 10 10

8103 10 90

8104 11 00

8104 19 00

8107 10 00

8108 10 10

8108 10 90

8109 10 10

8109 10 90

8110 00 11

8110 00 19

8111 00 11

8111 00 19

8112 20 31

8112 20 39

8112 30 10

8112 40 11

8112 40 19

8112 91 10

8112 91 31

8112 91 39

8112 91 90

8113 00 10

ANNEX II b

List of products referred to in Article 3 (2) second subparagraph

CN code 1991

7202 21 10

7202 21 90

7202 29 00

7601

ANNEX III (5)

List of products referred to in Article 3 (3)

>TABLE>

Annex to Annex III

Extracts from headings

>TABLE>

ANNEX IV

List of products referred to in Article 4 (1)

>TABLE>

>TABLE POSITION>

ANNEX V

List of products referred to in Article 4 (3)

>TABLE>

>TABLE>

>TABLE>

>TABLE>

ANNEX VI a

List of products subject to import licensing

>TABLE>

In relation to the list of products subject to import licences contained in the present Annex:

1. starting on 1 January 1995 and up to 31 December 1997, Hungary shall eliminate quantitative restrictions on imports originating in the Community of products still subject to such restrictions at 31 December 1994, up to an amount of 40 % of such imports into Hungary from the Community on the basis of last available annual statistics;

2. starting on 1 January 1998 and up to 31 December 2000 at the latest, Hungary shall eliminate all remaining quantitative restrictions;

3. following technical discussions between Parties, Hungary will, as soon as possible, and at the latest by the end of 1992, convert into harmonized system codes (HS) the product listed in the present Annex. Trade figures relating to 1993 and following years shall be based on HS codes and afterwards on the combined nomenclature once adopted;

4. for the year 1993, at the request of the Community, Hungary shall open quantitative ceilings for specific products imported from the Community still subject to import licences for which no such ceilings have been fixed in Annex VI b. Such quantities or amounts shall be annually increased by 10 %, reviewed in the Association Council and adjusted in case of a significant increase of internal consumption in Hungary in order to improve the market access conditions for the Community.

ANNEX VI b

1. Hungary shall open the following ceilings for products originating in the Community in 1992 (not covering OTP):

- passenger cars (870321-870333 of the Hungarian customs nomenclature)

50 000 pieces

- detergents and other household chemicals (1)

US$ 8 000 000

- furniture (1)

US$ 30 000 000

- footwear (1)

US$ 25 000 000

- pharmaceuticals (1) (2)

US$ 40 000 000

- jewellery, precious metal objects (1)

US$ 7 000 000

- miscellaneous (1)

US$ 50 000 000

2. These quantities or amounts shall be increased by 10 % annually until the quantitative restrictions regarding the products concerned are eliminated. However the rate of increase for passenger cars will be 7 %.

3. These quantities or amounts shall be reviewed in the Association Council in 1993 and annually afterwards and adjusted in case of a significant increase of internal consumption in Hungary in order to improve the market access conditions for the Community.

Annex to Annex VI b

Passenger cars

>TABLE>

>TABLE>

>TABLE>

>TABLE POSITION>

(1) Products falling within these categories are specified in the Annex. Those specifications shall be expressed in HS code at the latest by 31 December 1992.

(2) After technical discussions with the Community, Hungary may open subceilings.

ANNEX VII

Goods referred to in Article 11

1. Goods for which the Community retains an agricultural component in the duties

>TABLE>

2. Goods for which Hungary may introduce an agricultural component in the duties

>TABLE>

ANNEX VIII a

List of products referred to in Article 14 (2) (1)

The products in this Annex shall be subject to a levy reduction of 50 %

>TABLE>

>

ANNEX VIII b

List of products refered to in Article 14 (2) (1)

>TABLE>

Annex to Annex VIII b

Minimum import price arrangement for certain soft fruit for processing

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

0810 20 10 Raspberries

0810 30 10 Blackcurrants

0810 30 30 Redcurrants

0810 30 90 Other berries

0811 10 90 Strawberries

ex 0811 20 19 Raspberries

0811 20 31 Raspberries

0811 20 39 Blackcurrants

0811 20 51 Red currants.

The minimum import prices are fixed by the Community in consultation with Hungary, 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. In 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 Hungary.

ANNEX IX a

Agricultural products with liberalized treatment (no import licence required, no quantitative restriction) in case of Community-origin

>TABLE>

ANNEX IX b

Products originating in the Community for which Hungary shall issue import licences automatically up to the quantities indicated

>TABLE>

ANNEX X a

Arrangements for imports of live bovine animals into the Community

1. In case the number of animals fixed in the framework of the balance sheet arrangements foreseen in Regulation (EEC) No 805/68 are lower than a reference quantity, a global tariff quota equal to the difference between that reference quantity and the number of animals fixed under the balance sheet arrangements will be opened to imports from Hungary, Poland and Czechoslovakia. The reference quantity shall be:

- 217 800 in 1992,

- 237 600 in 1993,

- 257 400 in 1994,

- 277 200 in 1995,

- 297 000 in 1996.

The reduced levy applicable to animals under this quota will be fixed at 25 % of the full amount of levy.

This arrangement shall apply to live bovine animals for fattening or for slaughter with a live weight of not less than 160 kg and not more than 300 kg.

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, notwithstandig any other rights given under the Agreement.

In this context, imported of live bovine animals not covered by the arrangements mentioned in paragraph 1 shall be limited to young calves with a live weight of not more than 80 kg. Such imports shall be subject to a management regime in order to ensure regular supply over the year in question.

ANNEX X b

List of products referred to in Article 14 (4) (1)

The quantities imported under the CN code referred to in this Annex with the exception of CN codes 0104 and 0204 will be subject to levy and duty reduction of 20 % in the first year, 40 % in the second year, 60 % in the successive years

>TABLE>

ANNEX X c

List of products refered to in Article 14 (4) (1)

>TABLE>

ANNEX XI a

The quantities imported under the tariff headings of the Hungarian Customs Tariffs referred to in this Annex will be subject to reduction of the applicable duty of 10 % in the first year, 20 % in the second year, 30 % in succesive years

>TABLE>

ANNEX XI b

The quantities imported under the tariff headings of the Hungarian Customs Tariff referred to in this Annex will be subject to reduction of the applicable duty of 15 % in the first year 30 % in the second year, 45 % in succesive years

>TABLE>

ANNEX XI c

Reduced duties applied by Hungary up to the limits indicated to products originating in the Community

>TABLE>

>TABLE>

>TABLE>

ANNEX XI d

The global quota for the import of consumer goods originating in the Community applied by Hungary to products in Annex XI c

>TABLE>

ANNEX XIII (1)

Community Acts referred to in Article 35 (1)

- first Council Directive (89/104/EEC) of 21 December 1988 to approximate the laws of the Member States relating to trade marks,

- Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products,

- Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs.

(1) The Interim Agreement does not contain an Annex XII.