PROTOCOL on financial and technical cooperation between the European Economic Community and the Arab Republic of Egypt

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and

THE PRESIDENT OF THE ARAB REPUBLIC OF EGYPT,

of the other part,

REAFFIRMING their resolve to implement, under the renewed Mediterranean policy of the Community, cooperation which will contribute to the economic and social development of Egypt and promote the strengthening of relations between the Community and Egypt,

ANXIOUS to pursue to this end the financial and technical cooperation provided for in the Cooperation Agreement between the European Economic Community and the Arab Republic of Egypt,

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

THE COUNCIL OF THE EUROPEAN COMMUNITIES:

Joseph WEYLAND,

Ambassador Extraordinary and Plenipotentiary,

Permanent Representative of Luxembourg,

Chairman of the Permanent Representatives Committee;

Juan PRAT,

Director-General responsible for North/South relations of the Commission of the European Communities;

THE ARAB REPUBLIC OF EGYPT:

Hussein ELKAMEL,

Ambassador Extraordinary and Plenipotentiary;

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

HAVE AGREED AS FOLLOWS:

Article 1

Within the framework of the financial and technical cooperation provided for in the Cooperation Agreement between the European Economic Community and the Arab Republic of Egypt, the Community shall participate, on the terms set out in this Protocol, in the financing of measures intended to contribute to the economic and social development of Egypt.

Article 2

1. For the purposes specified in Article 1 and for a period expiring on 31 October 1996, an aggregate amount of ECU 568 million may be committed as follows:

(a) ECU 310 million in the form of loans from the European Investment Bank, hereinafter referred to as 'the Bank`, made from its own resources;

(b) ECU 242 million from the Community's budgetary resources, in the form of grants;

(c) ECU 16 million from the Community's budgetary resources, in the form of contributions to risk capital formation.

2. The loans referred to in paragraph 1 (a), with the exception of those intended for financing the oil sector, shall carry a 2 % interest rate subsidy financed by means of the funds referred to in paragraph 1 (b).

3. The risk capital referred to in paragraph 1 (c) shall contribute to the co-operation objectives and operations defined in Article 3, in particular those indicated in the second indend of paragraph 2 of that Article.

It shall be used primarily to make equity capital or the like available to Egyptian private undertakings, public undertakings and undertakings with State participation, in particular those with which natural or legal persons who are nationals of a Community Member State are associated. It may be used under the same conditions to finance specific studies for the preparation and development of such undertakings' projects and to assist such undertakings in their starting-up period.

It shall be granted and administered by the Bank and may take the form of:

(a) subordinated loans, where repayment and payment of any interest will not be made until other bank claims have been settled;

(b) conditional loans, where repayment or duration will depend on the fulfilment of conditions specified at the time when the loan is granted;

(c) acquisition of temporary minority holdings on behalf of the Community in the capital of undertakings established in Egypt;

(d) finance for the acquisition of holdings, in the form of conditional loans granted to Egypt or, with the Egyptian Government's agreement, to Egyptian undertakings, either directly or through the intermediary of Egyptian financial institutions.

Article 3

1. The total amount fixed in Article 2 shall be used primarily for the financing or part-financing of cooperation projects or operations aimed at:

- developing and diversifying agricultural production so as to reduce Egypt's food dependence, and efforts to diversify agricultural production and exports with a view to increasing the complementarity of the different Mediterranean regions,

- strengthening the economic links between the Community and Egypt in their mutual interest by developing cooperation in the fields of industry, training and research, technology, commerce and other services,

- environmental protection.

Economic infrastructure and industrial development which are complementary to the above cooperation projects or operations may also be financed.

2. Of the eligible projects and operations, priority shall be given to those having the following aims:

- in the agricultural sector, developing the production of agricultural products in short supply, particularly food crops, inter alia in the framework of multiannual programmes and operations in the context of the national food strategy. For maximum effectiveness, concentration of resources in specific sectors shall be sought,

- in the industrial and service sectors, promotion of joint ventures between operators from the Community Member States and Egyptian operators, direct contacts, exchange of information, promotion of investment, contribution of private capital, and support for small and medium-sized enterprises, including craft busineses, in order to promote employment,

- in the field of science and technology, expansion of Egypt's training and research capability and establishment or development of links between Egyptian and European private and public training and research institutions,

- in the trade sector, diversification and promotion of exports and organization of contacts between Egyptian operators and operators from the Community Member States,

- in the environment sector, support for the definition and implementation of the policy to be followed by Egypt, particularly through the training of experts, technical assistance and a contribution to investments; in view of the impact of demographic growth, support can be provided, at Egypt's request, for the demographic policy and for family planning programmes,

- in the priority areas referred to above, practical training schemes linked to projects or operations in enterprises and research institutions.

3. The Community's financial contributions shall be used to cover internal and external costs necessarily incurred in carrying out approved projects or schemes (including costs in respect of studies, consulting engineers and technical assistance). In exceptional and duly justified cases they may be used degressively to cover current administrative, maintenance or operational expenditure incurred in the starting-up period of projects.

Article 4

1. A Community contribution of ECU 300 million shall be provided for in the form of grants for the Mediterranean countries for a period ending on 31 October 1996, in order to finance projects in support of the economic reforms undertaken as part of a structural adjustment programme.

The eligiblity of the Mediterranean countries concerned for this aid will be determined on the basis of the following criteria:

- the countries must carry out reform programmes approved by the Bretton Woods institutions, or implement programmes recognized as similar, in concert with those institutions, in line with the extent and effectiveness of the reforms at macro-economic level, although not necessarily financially backed by them,

- account will be taken of the following factors: the economic situation of the country, with particular reference to its level of indebtedness and debt service burden, balance of payments situation and the availability of foreign currency, budgetary situation, monetary situation, per capita GDP, social situation and, in particular, level of unemployment.

2. Projects of the following two types may be financed in accordance with paragraph 1:

- structural adjustment support in the form of sectoral or general import programmes designed to contribute to the use and strengthening of production capacity.

Counterpart funds generated by the import programmes will be used to finance measures provided for in the State's priority programme of public expenditure which are aimed at attenuating, in particular by employment creation, the negative social repercussions of structural adjustment, especially for disadvantaged groups,

- technical assistance linked to structural adjustment support programmes at macro-economic level and in sectors affected by structural adjustment.

3. A limited proportion of the grant aid provided for in this Protocol may be used to support structural adjustment under the same conditions of eligibility as set out in paragraph 1.

4. Where the relevant provisions of this Article are being applied, the necessary implementation procedures will be determined in an exchange of letters between the two Parties.

Article 5

1. Capital projects shall be eligible for financing either by loans from the Bank, combined with interest rate subsidies on the terms set out in Article 2 (2), or by risk capital, or by grants, or by a combination means.

2. Technical and economic cooperation shall normally be financed by grants.

Article 6

1. The amounts to be committed each year shall be distributed as evenly as possible throughout the period of application of this Protocol.

2. Any funds not committed at the end of the period referred to in Article 2 (1) shall be used until exhausted. In such cases, the funds shall be used in accordance with the same arrangements as those laid down in this Protocol.

Article 7

1. Loans granted by the Bank from its own resources shall be made in accordance with the arrangements, conditions and procedures laid down in its statute. They shall, as regards their duration, be subject to terms established on the basis of the economic and financial characteristics of the projects for which these loans are intended, also taking into account the conditions obtaining on the capital markets on which the Bank procures its resources. The interest rate shall be determined in accordance with the Bank's practice at the time of signature of each loan contract, subject to the interest rate subsidy referred to in Article 2 (2).

2. The terms and arrangements for contributions to risk capital formation shall be determined on a case-by-case basis.

3. Aid from the Community's budget resources, other than that in the form of interest rate subsidies for loans from the Bank or that intended for risk capital operations, shall be granted and administered by the Commission.

4. The funds referred to in Article 2 may be granted through the intermediary of the State or appropriate Egyptian bodies, on condition that they allocate the amounts to the recipients on terms decided, by agreement with the Community, on the basis of the economic and financial characteristics of the projects and operations for which they are intended.

Article 8

Aid contributed by the Community for the execution of certain projects may, with the agreement of Egypt, take the form of cofinancing in which, in particular, credit and development bodies and institutions of Egypt, of Member States or of third States or international finance organizations would take part.

Article 9

The following shall be eligible for financial and technical cooperation:

(a) in general:

- the Egyptian State;

(b) with the agreement of the Egyptian Government, for projects or operations approved by it:

- official Egyptian development agencies,

- private agencies working in Egypt for economic and social development,

- undertakings carrying on their activities in accordance with industrial and business management methods and set up as legal persons within the meaning of Article 13,

- groups of producers who are nationals of Egypt and, exceptionally, where no such groups exist, the producers themselves,

- scholarship holders and trainees sent by Egypt under the training schemes referred to in Article 3.

Article 10

1. With a view to making optimum use of the instruments and means provided for in the Protocol and achieving the objectives laid down in Article 3, the Community and Egypt shall, taking information provided by Egypt as a basis, examine:

- the priority development objectives adopted at national level,

- the sector or sectors on which the Community contribution will be focussed, taking account in particular of the contributions of other providers of funds on a bilateral or multilateral basis and other Community instruments, including food aid,

- the measures and schemes best suited to achieving the sectoral objectives referred to in the second indent or, where such schemes are not sufficiently well defined, the broad objectives of the programmes for supporting the policies defined by the country in respect of those sectors.

2. On this basis the Community and Egypt shall, by mutual agreement, draw up an indicative programme committing both parties and determining the specific objectives of financial and technical cooperation, the priority sectors for intervention and the action programmes envisaged.

3. The indicative programme may be reviewed by mutual agreement to take account of any changes in Egypt's economic situation or in the objectives and priorities laid down by its development plan.

4. The Community and Egypt shall continue their exchanges of views within the appropriate bodies and shall, at least once during the period of implementation of the Protocol and at the latest before the end of the third year following the entry into force of the Protocol, make an assessment of the implementation of the indicative programme.

Article 11

1. Within the framework laid down in accordance with Article 10, the Egyptian State or, with the agreement of its Government, the other possible beneficiaries referred to in Article 9 shall submit their requests for financial aid to the Community.

2. The Community shall appraise the requests for financing in collaboration with the competent Egyptian authorities and other beneficiaries, in accordance with the objectives referred to in Article 10, and shall inform them of the decisions taken on such requests.

Article 12

1. The execution, management and maintenance of schemes that are the subject of financing under this Protocol shall be the responsibility of Egypt or of the other beneficiaries referred to in Article 9 of this Protocol.

The Community shall make sure that this financial aid is expended in accordance with the agreed allocations and to the best economic advantage.

2. The projects and action programmes shall be the subject of appropriate evaluation, the outcome of which shall be communicated to both parties, which shall take appropriate measures by mutual agreement.

3. Certain rules for administering the financial aid granted by the Community shall be the subject of an exchange of letters or a framework agreement between the Commission and Egypt upon conclusion of this Protocol.

Article 13

1. All natural and legal persons falling within the scope of the Treaty establishing the European Economic Community and all natural and legal persons of Egypt may participate on equal terms in tendering procedures and other procedures for the award of contracts likely to be financed. Any such legal person, formed in accordance with the law of a Member State of the European Economic Community or with that of Egypt must have its registered office, its administrative head office or its principal establishment in the territories in which the Treaty establishing the European Economic Community is applied or in Egypt; however, where only its registered office is in the said territories or in Egypt, the activities of such legal person must be effectively and continuously linked with the economy of those territories or of Egypt.

2. In agreement with Egypt and with the aim of encouraging regional cooperation, natural and legal persons who are nationals of developing countries associated with the Community through overall cooperation or association agreements may be authorized by the Community, on a case-by-case basis, to participate in the operations referred to in paragraph 1 which are financed by the Community. The eligibility of the natural or legal persons shall be assessed on the same terms as those set out in paragraph 1, mutatis mutandis.

Article 14

To promote participation by Egyptian undertakings in the performance of contracts and to ensure the rapid and effective implementation of projects and operations financed from resources administered by the Commission:

1. an accelerated procedure for issuing invitations to tender, involving shorter time limits for the submission of tenders, may be used by Egypt in agreement with the Commission where it is a question of works contracts which, because of their scale, are mainly of interest to Egyptian undertakings.

The organization of this accelerated procedure shall not rule out the possibility of issuing an international invitation to tender where it appears that the nature of the works to be carried out or the usefulness of widening participation justifies recourse to international competition;

2. where urgency of the situation is established or where the nature, small scale or particular characteristics of certain works or supplies so warrant, Egypt may, in agreement with the Commission, authorize, as an exception, the placing of contracts after restricted invitations to tender, the conclusion of contracts by direct agreement and the performance of contracts through public works departments.

The procedures referred to in points 1 and 2 above may be used for operations whose estimated cost is less than ECU 4 million.

Article 15

1. Egypt shall apply to contracts awarded for the execution of projects or schemes financed by the Community tax and customs arrangements no less favourable than those applied vis-à-vis the most favoured State or international development organization.

2. The content of the arrangements referred to in paragraph 1 shall be the subject of an exchange of letters between the Parties.

Article 16

Egypt shall take the necessary measures to ensure that interest and all other payments due to the Bank in respect of transactions concluded under this Protocol are exempted from any national or local tax or levy.

Article 17

Where a loan is accorded to a beneficiary other than the Egyptian State, the provision of a guarantee by the latter or of other adequate guarantees shall be required by the Bank as a condition of the grant of the loan.

Article 18

Throughout the duration of the loans and risk capital operations provided for in Article 2, Egypt shall undertake to:

(a) place at the disposal of the beneficiaires or their guarantors the currency necessary for the payment of interest and commission and amortization of loans and risk-capital aid granted for the implementation of aid measures on its territory;

(b) make available to the Bank the currency necessary for the transfer of all sums received by it in national currency which represent the net revenue and proceeds from transactions involving the acquisition by the Community of holdings in the capital of undertakings.

Article 19

The results of financial and technical cooperation may be examined within the Cooperation Council. The latter shall establish, where appropriate, the general guidelines for such cooperation.

Article 20

One year before the expiry of this Protocol, the Contracting Parties shall examine what arrangements could be made for financial and technical cooperation during a possible further period.

Article 21

This Protocol shall be annexed to the Cooperation Agreement between the European Economic Community and the Arab Republic of Egypt.

Article 22

1. This Protocol shall be subject to approval in accordance with the Contracting Parties' own procedures, and the Parties shall notify one another that the procedures necessary to this end have been completed.

2. This Protocol shall enter into force on the first day of the second month following the date on which the notifications provided for in paragraph 1 have been given.

Article 23

This Protocol is drawn up in two copies in the Danish, Dutch, English, French, German, Greek, Italian, Portuguese, Spanish and Arabic languages, each of these texts being equally authentic.

EN FE DE LO CUAL, los plenipotenciarios abajo firmantes suscriben el presente Protocolo.

TIL BEKRÆFTELSE HERAF har undertegnede befuldmægtigede underskrevet denne protokol.

ZU URKUND DESSEN haben die unterzeichneten Bevollmächtigten ihre Unterschriften unter dieses Protokoll gesetzt.

ÅÉÓ ÐÉÓÔÙÓÇ ÔÙÍ ÁÍÙÔÅÑÙ, ïé õðïãåãñáììÝíïé ðëçñåîïýóéïé Ýèåóáí ôéò õðïãñáöÝò ôïõò óôï ðáñüí ðñùôüêïëëï.

IN WITNESS WHEREOF the undersigned Plenipotentiaries have signed this Protocol.

EN FOI DE QUOI, les plénipotentiaires soussignés ont apposé leurs signatures au bas du présent protocole.

IN FEDE DI CHE, i plenipotenziari sottoscritti hanno apposto le loro firme in calce al presente protocollo.

TEN BLIJKE WAARVAN de ondergetekende gevolmachtigden hun handtekening onder dit Protocol hebben gesteld.

EM FÉ DO QUE, os plenipotenciários abaixo assinados apuseram as suas assinaturas no final do presente protocolo.

Hecho en Bruselas, el veintiséis de junio de mil novecientos noventa y uno.

Udfærdiget i Bruxelles, den seksogtyvende juni nitten hundrede og enoghalvfems.

Geschehen zu Brüssel am sechsundzwangzigsten Juni neunzehnhunderteinundneunzig.

¸ãéíå óôéò ÂñõîÝëëåò, óôéò åßêïóé Ýîé Éïõíßïõ ÷ßëéá åííéáêüóéá åíåíÞíôá Ýíá.

Done at Brussels on the twenty-sixth day of June in the year one thousand nine hundred and ninety-one.

Fait à Bruxelles, le vingt-six juin mil neuf cent quatre-vingt-onze.

Fatto a Bruxelles, addì ventisei giugno millenovecentonovantuno.

Gedaan te Brussel, de zesentwintigste juni negentienhonderd eenennegentig.

Feito em Bruxelas, em vinte e seis de Junho de mil novecentos e noventa e um.

Por el Consejo de las Comunidades Europeas

For Rådet for De Europæiske Fællesskaber

Für den Rat der Europäischen Gemeinschaften

Ãéá ôï Óõìâïýëéï ôùí Åõñùðáúêþí ÊïéíïôÞôùí

For the Council of the European Communities

Pour le Conseil des Communautés européennes

Per il Consiglio delle Comunità europee

Voor de Raad van de Europese Gemeenschappen

Pelo Conselho das Comunidades Europeias

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Por la República Árabe de Egipto

For Den Arabiske Republik Egypten

Für die Arabische Republik Ägypten

Ãéá ôçí ÁñáâéêÞ Äçìïêñáôßá ôçò Áéãýðôïõ

For the Arab Republic of Egypt

Pour la république arabe d'Égypte

Per la Repubblica araba d'Egitto

Voor de Arabische Republiek Egypte

Pela República Árabe do Egipto

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