ADMINISTRATIVE ARRANGEMENTS on trade in textile products between the European Community and Hong Kong

AGREED MINUTE

During consultations held between Hong Kong and the European Community, the two parties agreed that the relevant provisions of their bilateral Agreement on trade in textiles products, initialled on 2 October 1986, as last modified by the Exchange of Letters initialled on 25 November 1994, listed in Annex I to this Agreed Minute, shall form the basis of the administrative arrangements deemed necessary in relation to the implementation of the textiles and clothing restrictions between the European Community and Hong Kong. The list of such provisions is set out in Annex I to this Agreed Minute.

As a consequence, the administrative arrangements that have been agreed upon between the two parties pursuant to Article 2 (17), of the World Trade Organization (WTO) Agreement on Textiles and Clothing (ATC) in order to implement the textiles and clothing restraints between the European Community and Hong Kong are set out in Annex II to this Agreed Minute. The administrative arrangements in Annex II are drawn up on the basis of the provisions listed in Annex I to this Agreed Minute.

For Hong Kong

For the European Community

ANNEX I

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ANNEX II

Article 1

Classification system

The classification of the products covered by these administrative arrangements is based on the tariff and statistical nomenclature of the European Community (the Community) (hereinafter called the 'combined nomenclature`, or in abbreviated form 'CN`) and any amendments thereof.

Article 2

Determination of origin of covered products

The origin of the products covered by these administrative arrangements shall be determined in accordance with the rules in force in the Community and the procedures for control of the products set out in Protocol A.

If any amendment is made to the rules of origin, the Community shall, with the agreement of Hong Kong, take appropriate measures to avoid any possible consequent reduction of Hong Kong's ability to use the quantitative limits established under Article 2 of the Agreement on Textiles and Clothing (ATC).

The Community undertakes that any amendment made to the rules of origin shall continue to be based on criteria not requiring, in order to confer originating status, more extensive operations than those constituting a single complete process.

Article 3

Double-checking

Hong Kong agrees to restrain its exports to the Community of the products described in the notification of the Community to the Textiles Monitoring Body (TMB) under Article 2 (1) of the ATC to the limits set out therein as increased by the growth rates provided under Article 2 of the ATC and as may be modified by the flexibility provisions notified to the TMB under Article 2 (1) of the ATC, until such time as these products are integrated into GATT 1994 under paragraphs 6, 8 or 9 of Article 2 of the ATC. Exports of restrained textile products shall be subject to a double-checking system specified in Protocol A.

Article 4

Reimports after OPT

Hong Kong and the Community recognize the special and differential character of reimports of textile products into the Community after processing in Hong Kong. Such reimports may be provided for outside the quantitative limits established under Article 2 of the ATC provided that they are effected in accordance with the regulations on economic outward processing in force in the Community.

Article 5

Imports into Community for re-export after processing

1. Exports to the Community of textile products covered by these administrative arrangements shall not be subject to quantitative limits established under Article 2 of the ATC, provided that they are declared to be for re-export outside the Community in the same state or after processing, within the framework of the administrative system of control which exists within the Community. However, the release for home use within the Community of products imported under the conditions referred to above shall be subject to the production of an export licence issued by the Hong Kong authorities and to proof of origin, in accordance with the provisions of Protocol A.

2. Where the competent authorities in the Community have evidence that products exported from Hong Kong and set off by Hong Kong against a quantitative limit established under Article 2 of the ATC have been subsequently re-exported outside the Community, the authorities concerned shall notify Hong Kong of the quantities involved. On receipt of such notification, Hong Kong may authorize exports for the current or the following year of identical quantities of products, within the same category, which shall not be set off against the quantitative limits established under Article 2 of the ATC.

Article 6

Statistical verification of carry-over

Hong Kong shall provide the Community with export data showing the amounts of carry-over available in any given year. If substantial statistical differences exist between the export data from which the amount to be carried over is calculated and the Community's data the Community may, within the first 120 days of the following year, request consultations in accordance with the procedures referred to in Article 12 (1) of these administrative arrangements on the amounts involved. Any such request shall be accompanied by full particulars of the alleged statistical differences. Where such a request is made, the portions carried over shall not be used until the parties have completed consultations. If no such request is made within a 120-day period, the portion carried over shall be presumed to have been calculated correctly.

Article 7

Exchange of statistical information

1. Hong Kong undertakes to supply the Community with precise statistical information on all export licences issued by the Hong Kong authorities for all categories of textile products subject to the quantitative limits established under Article 2 of the ATC. Hong Kong shall set out in its periodical statistical reports the maximum export levels for each category subject to a quantitative limit established under Article 2 of the ATC and the rate of utilization of these levels.

2. The Community shall likewise transmit to the Hong Kong authorities precise statistical information on import documents issued by the Community authorities in respect of export licences issued by Hong Kong. This information shall, for all categories of products, be transmitted before the end of the second month following the quarter to which the statistics relate.

3. The information referred to in paragraph 1 shall, for all categories of products, be forwarded before the end of the month following the month to which the statistics relate.

4. The Community shall transmit to the Hong Kong authorities import statistics for products covered by Article 5 (1) of these administrative arrangements.

5. The information referred to in paragraph 4 shall, for all categories of products, be transmitted before the end of the third month following the quarter to which the statistics relate.

6. Should it be found on analysis of the information exchanged above that there are significant discrepancies between the returns for exports and those for imports, consultations may be initiated in accordance with the procedure specified in Article 12 of these administrative arrangements. Any such consultations shall be resolved on the basis of the agreed descriptions of the products set out in the notification under Article 2 (1) of the ATC.

Article 8

Amendments to classification

1. The authorities of Hong Kong shall be informed of any amendment to the combined nomenclature or any decision, made in accordance with the procedures in force in the Community, relating to the classification of products covered by these administrative arrangements. Any such amendment or any decision which results in a modification of the classification of products covered by these administrative arrangements shall not have the effect of reducing Hong Kong's ability to use the quantitative limits established under Article 2 of the ATC. The procedures for the application of this paragraph are set out in Protocol A.

2. In the case of divergent opinions between Hong Kong and the competent Community authorities at the point of entry into the Community on the classification of products subject to quantitative limits established under Article 2 of the ATC, consultations in accordance with Article 12 (1) of these administrative arrangements shall be held with a view to reaching agreement on the appropriate classification of the products concerned and to resolving any difficulties arising therefrom. For this purpose, the authorities of Hong Kong shall be informed by the competent authorities of the Community as soon as a case of divergent opinions on the classification of products arises. Pending agreement on the appropriate classification and in order to avoid disruption to trade, the products in question shall be imported on the basis of the classification indicated by the competent Community authorities at the point of entry, in conformity with the provisions of these administrative arrangements.

Article 9

Circumvention

1. Hong Kong and the Community agree to cooperate fully in preventing the circumvention of these administrative arrangements by transhipment, re-routing of whatever other means.

2. The Community and Hong Kong note the well established and close cooperation which exists between the two parties in preventing and dealing with problems relating to the contravention through circumvention of the provisions of previous Agreements between the Community and Hong Kong, and, in particular, the mutually satisfactory solutions which have been reached on equivalent debiting of the corresponding quantitative limits.

3. The two parties reaffirm their willingness to strengthen this cooperation in all its aspects having regard to the administrative and technical procedures in force in the Community and Hong Kong for the implementation of these administrative arrangements.

4. Hong Kong confirms that its export control system permits the prompt debiting of circumvented amounts to the appropriate quantitative limits established under Article 2 of the ATC and previous Agreements.

5. Where information available to the Community as a result of the investigation carried out in accordance with the procedures set out in Protocol A constitutes evidence that products of Hong Kong origin subject to quantitative limits established under Article 2 of the ATC have been transhipped, re-routed or otherwise imported into the Community in circumvention of these administrative arrangements, the Community may request the opening of consultations in accordance with the procedures described in Article 12 (1) of these administrative arrangements, with a view to reaching agreement on an equivalent adjustment of the corresponding quantitative limits.

6. Should the parties be unable in the course of the consultations to reach a satisfactory solution within the period specified in Article 12 (1) of these administrative arrangements, the Community shall have the right, where clear evidence of circumvention has been provided, to deduct from the quantitative limits amounts equivalent to the products of Hong Kong origin.

7. Deduction of the relevant quantitative limits shall, as a general rule, be implemented in the following manner:

- where the evidence provided clearly establishes that the provisions of these administrative arrangements have been circumvented, Hong Kong shall, at the request of the Community, debit the circumvented amounts to the appropriate quantitative limits for the year in which the circumvention took place or for subsequent years, the timing and apportioning of such debiting being decided in consultation with the Community, to ensure that, where appropriate, such debiting may be satisfactorily implemented.

8. Should the consultation period provided for in Article 12 (1) of these administrative arrangements be sufficient to complete the examination of the evidence adduced the parties may agree to extend that period.

Article 10

Regional concentration

1. The quantitative limits established under Article 2 of the ATC on imports into the Community of textile products of Hong Kong origin will not be broken down by the Community into regional shares.

2. Notwithstanding the above, for imperative technical or administrative reasons or to find a solution to economic problems resulting from regional concentration of imports, or in order to combat circumvention and fraud of the provisions of these administrative arrangements, the Community will establish for a limited period of time a specific management system in conformity with the principles of the internal market. Should the Community have recourse to this provision, the textile products covered by the corresponding export licences can only be put into free circulation in the region(s) of the Community indicated in those licences. Similarly, the products covered by the import licences can only be put into free circulation in the region(s) of the Community indicated in those licences. This provision was invoked by the Community as from 1 January 1993.

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

4. Hong Kong shall monitor its exports of products under restraint into the Community. Should a sudden and prejudicial change in traditional trade flows arise, the Community will be entitled to request consultations in order to find a satisfactory solution to those problems. Such consultations must be held within 15 working days of their being requested by the Community, and in accordance with Article 12 (1) of these administrative arrangements. Hong Kong, from the date of request for and pending the consultations, will not issue export licences that would further aggravate the problem.

5. However, if the parties are unable to reach a satisfactory solution during the consultations, Hong Kong will, if so requested by the Community, respect temporary export limits for one or more regions of the Community. In such a case, these limits shall not preclude the importation into the region(s) concerned of products which were shipped from Hong Kong on the basis of export licences obtained before the date of formal notification to Hong Kong by the Community about the introduction of the above limits. The Community shall inform Hong Kong of the technical and administrative measures that need to be introduced by both parties so that implementation is in conformity with principles of the internal market.

6. Hong Kong shall endeavour to ensure that exports of textile products subject to quantitative limits established under Article 2 of the ATC into the Community are spaced out as evenly as possible over the year due account being taken in particular of seasonal factors.

7. Hong Kong shall endeavour not to deprive certain regions of the Community which have traditionally had relatively small shares of Community quotas of imports of products serving as inputs for their processing industry. The Community and Hong Kong shall hold consultations, should the need arise, in order to avert any problems which might occur in this respect.

Article 11

Non-discrimination in allocation of export and import licences

Hong Kong and the Community undertake to refrain from discrimination in the allocation of export licences and import documents respectively.

Article 12

Consultations

1. Save where it is otherwise provided for in these administrative arrangements, the special consultation procedures referred to in these administrative arrangements shall be governed by the following rules:

- any request for consultations shall be notified in writing to the other party, together with a statement setting out the reasons and circumstances which, in the opinion of the requesting party, justify the submission of such a request,

- the Parties shall enter into consultations within 15 days, at the latest, of notification of the request, with a view to reaching agreement or a mutually acceptable conclusion within a further 15 days at the latest.

2. If necessary, at the request of either of the parties consultations shall be held on any problems arising from the application of these administrative arrangements. Any consultations held under this Article shall be approached by both parties in a spirit of cooperation and with a desire to reconcile the difference between them.

PROTOCOL A

TITLE I CLASSIFICATIONS

Article 1

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

The competent authorities of the Community undertake to inform Hong Kong of any decisions relating to the classification of products subject to these administrative arrangements within one month of their adoption at the latest. Such communication shall include:

(a) a description of the products concerned;

(b) the relevant category and the related tariff and statistical references;

(c) the reasons which have led to the decision.

3. Where a decision on classification results in a change of classification practice or a change of category of any product subject to these administrative arrangements, the competent authorities of the Community shall provide 30 days' notice, from the date of the Community's communication, before the decision is put into effect. Products shipped before the date of application of the decision shall remain subject to the earlier classification practice, provided that the goods in question are presented for importation into the Community within 60 days of that date.

4. Where a Community decision on classification resulting in a change of classification practice or a change of categorization of any product subject to these administrative arrangements affects a category subject to restraint, the Community undertakes to enter into consultations without delay in accordance with the procedures described in Article 12 (1) of these administrative arrangements with a view to agreeing necessary adjustments to the appropriate quantitative limits established under Article 2 of the ATC and mitigating any disruptive effects which might arise from such a Community decision.

TITLE II ORIGIN

Article 2

1. Products originating in Hong Kong for export to the Community in accordance with the arrangements established by these administrative arrangements shall be accompanied by a certificate of Hong Kong origin conforming to the model annexed to this Protocol.

2. The certificate of Hong Kong origin shall be issued by the competent governmental authorities of Hong Kong if the products in question can be considered products originating in that country within the meaning of the relevant rules in force in the Community.

3. Certificates of Hong Kong origin shall contain a full and detailed description of the goods. In particular, certificates of Hong Kong origin shall indicate:

- in respect of clothing, shipments where the articles in question are incomplete or unfinished,

- in respect of fabrics, including knitted or crocheted fabric, shipments where the products in question are dyed, printed or impregnated or coated;

- and in respect of products of category 39, shipments where the articles in question are embroidered.

4. The certificate of Hong Kong origin referred to in paragraph 1 shall not be required for import of goods covered by a certificate of origin Form A completed in accordance with the relevant Community rules in order to qualify for generalized tariff preferences.

Article 3

The discovery of slight discrepancies between the statements made in the certificate of origin and those made in the documents produced to the customs office for the purpose of carrying out the formalities for importing the product shall not ipso facto cast doubt on the statements in the certificate.

TITLE III DOUBLE-CHECKING SYSTEM FOR CATEGORIES OF PRODUCTS WITH QUANTITATIVE LIMITS

Section I Exportation

Article 4

The competent authorities of Hong Kong shall issue an export licence in respect of all consignments from Hong Kong of textile products subject to quantitative limits established under Article 2 of the ATC, up to the relevant quantitative limits as increased by the growth rates provided under Article 2 of the ATC and as may be modified by the flexibility provisions notified to the TMB under Article 2 (1), of the ATC, until such time as these products are integrated into GATT 1994 under paragraphs 6, 8 or 9 of Article 2 of the ATC.

Article 5

1. The export licence shall conform to the model annexed to this Protocol and it shall be valid for exports throughout the customs territory to which the Treaty establishing the European Community is applied.

2. Each export licence shall only cover one of the categories of products.

Article 6

The competent Community authorities must be notified forthwith of the withdrawal or alteration of any export licence already issued.

Article 7

1. Exports shall be set off against the quantitative limits established under Article 2 of the ATC for the year in which shipment of the goods has been effected, even if the export licence is issued after such shipment.

2. For the purpose of applying paragraph 1, shipment of the goods is considered to have taken place on the date of their loading on to the exporting aircraft, vehicle or vessel.

Article 8

The presentation of an export licence, in application of Article 10, shall be effected not later than 31 March of the year following that in which the goods covered by the export licence have been shipped.

Section II Importation

Article 9

Importation into the Community of textile products subject to quantitative limits established under Article 2 of the ATC shall be subject to the presentation of an import authorization or document.

Article 10

1. The competent Community authorities shall issue such import authorization or document automatically within five working days of the presentation by the importer of the original of the corresponding export licence. The import authorizations shall be valid for six months from the date of their issue for imports throughout the customs territory to which the Treaty establishing the European Community is applied.

2. The competent Community authorities shall cancel the already issued import authorization or document if the corresponding export licence has been withdrawn. However, if the competent Community authorities have not been notified of the withdrawal or cancellation of the export licence until after the products have been imported into the Community, the quantities involved shall be set off against the quantitative limit established under Article 2 of the ATC for the category and the quota year in question and Hong Kong shall be informed as soon as possible.

Article 11

1. If the competent Community authorities find that the total quantities covered by export licences issued by Hong Kong for a particular category in any given year exceed the quantitative limit established under Article 2 of the ATC for that category as increased by the growth rates provided under Article 2 of the ATC and as may be modified by the flexibility provisions notified to the TMB under Article 2 (1) of the ATC, until such time as these products are integrated into GATT 1994 under paragraphs 6, 8 or 9 of Article 2 of the ATC, the said authorities may suspend the further issue of import authorizations or documents. In this event, the competent Community authorities shall immediately inform the authorities of Hong Kong and the special consultation procedure set out in Article 12 (1) of these administrative arrangements shall be initiated forthwith.

2. Exports of restrained textile products of Hong Kong origin not covered by Hong Kong export licences issued in accordance with the provisions of this Protocol may be refused the issue of import authorizations or documents by the competent Community authorities. However, if the import of such products is allowed into the Community by the competent Community authorities, the quantities involved shall not be set off against the appropriate quantitative limits established under Article 2 of the ATC, without the express agreement of Hong Kong.

TITLE IV FORM AND PRODUCTION OF EXPORT CERTIFICATES AND CERTIFICATES OF ORIGIN, AND COMMON PROVISIONS

Article 12

1. The export licence and the certificate of origin of Hong Kong may comprise additional copies duly indicated as such. They shall be made out in English or French. If they are completed by hand, entries must be in ink and in printed script. These documents shall measure 210 × 297 mm. The paper used must be writing paper weighing not less than 25g/m². Only the original, clearly marked 'original` shall be accepted by the competent authorities of the Community as being valid for the purposes of export to the Community in accordance with the arrangements established by these administrative arrangements.

2. Each export licence and certificate of Hong Kong origin shall bear a serial number, whether or not printed, by which it can be identified. The number for the export licence shall be standardized and composed of the following elements:

- two letters identifying Hong Kong as follows: HK,

- two letters identifying the intended Member State of customs clearance as follows,

AT = Austria

BL = Benelux

DE = Germany

DK = Denmark

El = Greece

ES = Spain

FI = Finland

FR = France

GB = United Kingdom

IE = Ireland

IT = Italy

PT = Portugal

SE = Sweden,

- a one-digit number identifying quota year, corresponding to the last figure in the respective year, e.g. 7 for 1987,

- two spaces identifying the particular issuing office concerned in Hong Kong.

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

Article 13

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

Article 14

1. In the event of theft, loss or destruction of an export licence or a certificate of origin, the exporter may apply to the competent governmental authority which issued the document for a duplicate to be made out on the basis of the export documents in his possession. The duplicate of any such certificate or licence so issued shall bear the endorsement 'duplicata`.

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

TITLE V ADMINISTRATIVE COOPERATION

Article 15

The Community and Hong Kong shall cooperate closely to implement the provisions of these administrative arrangements. To this end, contracts and exchanges of views (including on technical matters) shall be facilitated by both parties, in particular to establish the authenticity and accuracy of documentation required under the provisions of these administrative arrangements.

Article 16

Hong Kong shall send to the European Commission the names and addresses of the governmental authorities competent for the issue and verification of export licences and certificates of origin together with specimens of the stamps used by these authorities. Hong Kong shall also notify the Commission of any change in this information.

Article 17

1. Verification of certificates of Hong Kong origin or export licences shall be carried out at random by the Hong Kong authorities.

2. The competent Community authorities may request subsequent verification of certificates of Hong Kong origin or export licences at random or whenever they have reasonable doubt as to the authenticity of such certificates or licences or as to the accuracy of the information regarding the products in question. In such cases the competent authorities in the Community shall return the certificate of Hong Kong origin or export licence, or a copy thereof to the Hong Kong authorities, giving, where appropriate, the reasons for an enquiry. If the invoice has been submitted, such invoice shall be attached to the certificate or licence or its copy. The authorities shall also forward any information that has been obtained suggesting that the particulars given on the said certificate or licence are inaccurate.

3. Should the results of the random verification referred to in paragraph 1 reveal serious contravention of the provisions of these administrative arrangements, the Hong Kong authorities shall notify the competent Community authorities of the results. Where the competent Community authorities have requested verification under paragraph 2, the results of such verification shall be communicated to the competent Community authorities within three months at the latest. The information communicated shall indicate whether the disputed certificate or licence applies to the goods actually exported and whether these goods are eligible for export in accordance with the arrangements established by these administrative arrangements. Where the competent Community authorities so request, the information communicated shall also include copies of such other available documentation as may facilitate the full determination of the facts and, in particular, the true origin of the goods.

4. For the purpose of subsequent verification of certificate of Hong Kong origin and export licences, copies of these, together with relevant supporting documentation required to be lodged with the Hong Kong authorities for the issue of such certificates or licences, shall be kept for a period of at least two years by the Hong Kong authorities.

Article 18

1. Where the verification procedure referred to in Article 17 or where information available to the Community or to Hong Kong indicates or appears to indicate that the provisions of these administrative arrangements are being contravened, both parties shall cooperate closely and with appropriate urgency to prevent such contravention.

2. To this end, Hong Kong shall, on its own initiative or at the request of the Community, carry out appropriate enquiries or arrange for such enquiries to be carried out concerning operations which are or appear to be in contravention of these administrative arrangements. Hong Kong shall communicate the results of these enquiries to the Community together with such other available information as may facilitate the determination of the true origin of the goods.

3. By agreement between the Community and Hong Kong, officials designated by the Community may be present at the enquiries referred to in paragraph 2.

4. In pursuance of the cooperation referred to in paragraph 1, Hong Kong and the Community shall exchange any information considered by either party to be of use in preventing the contravention of the provisions of these administrative arrangements. These exchanges may include information on textile production in Hong Kong and on trade in textile products of a kind covered by these administrative arrangements between Hong Kong and other countries, particularly where the Community has reasonable grounds to consider that the products in question may be in transit across the territory of Hong Kong prior to their importation into the Community. This information shall include at the request of the Community copies of all relevant documentation. Hong Kong will provide such information as is available and in accordance with Hong Kong law.

5. The Community shall, where appropriate at the request of Hong Kong, cooperate jointly with Hong Kong in cases of circumvention which affect Hong Kong, in conformity with procedures in force in the Community.

6. Where it is established to the satisfaction of both parties that the provisions of these administrative arrangements have been contravened, Hong Kong and the Community agree to take all reasonable measures to prevent a recurrence of such contravention.

Annex to Protocol A, Article 2

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Exporter (full name and address) CERTIFICATE No Consignee (if required)

CERTIFICATE OF HONG KONG ORIGIN Departure date (on or about) Factory No Vessel/flight/vehicle No Place of loading Port of discharge Final destination if on carriage HONG KONG GOVERNMENT TRADE DEPARTMENT Marks, Nos and Container No; No and kind of packages; description of goods Quantity or weight (in words and figures) Brand names or labels (if any) Destination country I HEREBY CERTIFY THAT THE GOODS DESCRIBED ABOVE ORIGINATE IN HONG KONG ORIGINAL-WHITE DUPLICATE-YELLOW TRIPLICATE-LIGHT BLUE COPYRIGHT RESERVED Signature for Director-General of Trade>END OF GRAPHIC>

Annex to Protocol A, Article 5

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