EUROPE AGREEMENT establishing an association between the European Communities and their Member States, of the one part, and the Republic of Estonia, of the other part

THE KINGDOM OF BELGIUM,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

IRELAND,

THE ITALIAN REPUBLIC,

THE GRAND DUCHY OF LUXEMBOURG,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE PORTUGUESE REPUBLIC,

THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,

Contracting Parties to the Treaty on EUROPEAN UNION, the Treaty establishing the EUROPEAN COMMUNITY, the Treaty establishing the EUROPEAN COAL AND STEEL COMMUNITY and the Treaty establishing the EUROPEAN ATOMIC ENERGY COMMUNITY,

hereinafter referred to as 'the Member States`, and

the EUROPEAN COMMUNITY, the EUROPEAN ATOMIC ENERGY COMMUNITY and the EUROPEAN COAL AND STEEL COMMUNITY,

hereinafter referred to as 'the Community`,

acting within the framework of the European Union,

of the one part, and

the REPUBLIC OF ESTONIA,

hereinafter referred to as 'Estonia`,

of the other part,

RECALLING the historical links between the Parties and the common values they share;

RECOGNISING that the Community and Estonia wish to reinforce these links, to establish close and lasting relations on a basis of reciprocity allowing Estonia to participate in the process of European integration, in reinforcing and further developing the relations previously established, in particular via the Agreement on Trade and Commercial and Economic Cooperation and the Agreement on Free Trade and Trade-Related Matters;

CONSIDERING the commitment to the intensification of political and economic liberties which constitute the basis of this Agreement and to further development of Estonia's new economic and political system which respects - in accordance inter alia with the undertakings made within the context of the Conference on Security and Cooperation in Europe (CSCE) and the Organisation for Security and Cooperation in Europe (OSCE) - the rule of law and human rights, including the rights of persons belonging to minorities, a multiparty system with free and democratic elections and liberalisation aimed at setting up a market economy;

SHARING the understanding that Estonia has made considerable and successful reform efforts in the political and economic fields and that these efforts will be pursued;

CONSIDERING the commitment to the implementation of commitments made in the framework of the CSCE, in particular those set out in the Helsinki Final Act, the concluding documents of the Madrid, Vienna and Copenhagen meetings, those of the Charter of Paris for a New Europe, the conclusions of the CSCE's Bonn Conference, the CSCE Helsinki document 1992, the European Convention on Human Rights, the European Energy Charter Treaty as well as the Ministerial Declaration of the Lucerne Conference of 30 April 1993;

WILLING to promote improved contacts among their citizens as well as the free flow of information and ideas, as agreed by the Parties in the framework of the CSCE and the OSCE;

CONSCIOUS of the importance of this Agreement in establishing and enhancing in Europe a system of stability based on cooperation, with the European Union as one of the cornerstones;

RECOGNISING that there is a need to continue, with the Community's help, Estonia's political and economic reform;

TAKING ACCOUNT of the Community's wishes to contribute to the implementation of the reforms and to assist Estonia in facing the economic and social consequences of structural adjustment;

RECOGNISING that full implementation of the Agreement is linked to the implementation of a coherent programme of economic and political reform by Estonia;

RECOGNISING the need for continuing regional cooperation among the Baltic States, taking into account that closer integration between the European Union and the Baltic States, and the Baltic States among themselves, should proceed in parallel;

CONSIDERING the commitment to liberalise trade based on the General Agreement on Tariffs and Trade (GATT) and World Trade Organisation (WTO) principles;

EXPECTING that this Agreement will create a new climate for economic relations between them and above all for the development of trade and investment, which are essential to economic restructuring and the renewal of technology;

BEARING in mind that political dialogue on matters of mutual interest has been established by the Joint Declaration of May 1992;

DESIROUS of developing and intensifying regular political dialogue within the multilateral framework established by the Copenhagen European Council of June 1993 and enhanced by the Decision of the Council of the European Union of 7 March 1994 and the conclusions of the Essen European Council of December 1994;

RECALLING that Estonia has been an associated partner of the Western European Union (WEU) since May 1994 and that it participates in the North Atlantic Treaty Organisation (NATO) Partnership for Peace Programme;

RECOGNISING the contribution which the Pact on Stability in Europe can make to promoting stability and good-neighbourly relations in the Baltic region, and confirming their determination to work together for the success of this initiative;

TAKING ACCOUNT of the Community's willingness to employ instruments of cooperation and economic, technical and financial assistance on a global and multiannual basis;

BEARING in mind the economic and social disparities between the Community and Estonia and thus recognising that the objectives of this association should be reached through appropriate provisions of the Agreement;

DESIROUS of establishing cultural cooperation and developing exchanges of information;

WILLING to set up a framework for cooperation aimed at preventing illegal activities;

RECOGNISING the fact that Estonia's ultimate objective is to become a member of the European Union and that association through this Agreement will, in the view of the Parties, help Estonia to achieve this objective;

TAKING INTO ACCOUNT the accession preparation strategy adopted by the Essen European Council of December 1994, which is being politically implemented by the creation, between the associated States and the institutions of the European Union, of structured relations which encourage mutual trust and will provide a framework for addressing topics of common interest,

HAVE AGREED AS FOLLOWS:

Article 1

1. An association is hereby established between the Community and its Member States, of the one part, and Estonia, of the other part.

2. The objectives of this association are:

- to provide an appropriate framework for the political dialogue between the Parties allowing the development of close political relations,

- to further develop a free trade area between the Community and Estonia covering substantially all trade between them,

- to promote the expansion of trade and the harmonious economic relations between the Parties and so to foster dynamic economic development and prosperity in the Community and Estonia,

- to provide a basis for economic, financial, cultural and social cooperation and cooperation in the prevention of illegal activities, as well as for the Community's assistance to Estonia,

- to support Estonia's efforts to develop its economy,

- to provide an appropriate framework for the gradual integration of Estonia into the European Union. Estonia shall work towards fulfilling the necessary requirements in this respect,

- to set up institutions suitable to make the association effective.

TITLE I GENERAL PRINCIPLES

Article 2

1. Respect for democratic principles and human rights, established by the Helsinki Final Act and in the Charter of Paris for a New Europe, as well as the principles of market economy, inspire the domestic and external policies of the Parties and constitute essential elements of this Agreement.

2. The Parties consider that it is essential for the future prosperity and stability of the region that the Baltic States should maintain and develop cooperation among themselves and will make every effort to enhance this process.

Article 3

The Association Council established under Article 109, bearing in mind that the principles of the market economy are essential to the present association, shall proceed regularly to examine the application of the Agreement and the implementation by Estonia of economic reforms on the basis of the principles referred to in the preamble.

TITLE II POLITICAL DIALOGUE

Article 4

The political dialogue between the European Union and Estonia shall be developed and intensified. It shall accompany and consolidate the rapprochement between the European Union and Estonia, support the political and economic changes underway in that country or already realised, and contribute to the establishment of close links of solidarity and new forms of cooperation between the Parties. The political dialogue is intended to promote in particular:

- Estonia's progressive rapprochement with the European Union,

- an increasing convergence of positions of the Parties on international issues and, in particular, on those issues likely to have substantial effects on one or the other Party,

- better cooperation in areas covered by the common foreign and security policy of the European Union,

- security and stability in Europe.

Article 5

Political dialogue shall take place within the multilateral framework and in accordance with the forms and practices established with the associated countries of central Europe.

Article 6

1. At Ministerial level, bilateral political dialogue shall take place within the Association Council, which shall have the general responsibility for any matter which the Parties might wish to put to it.

2. With the agreement of the Parties, other procedures for political dialogue shall be established, in particular:

- meetings, where necessary, of senior officials (at the level of political directors) representing Estonia, on the one hand, and the Presidency of the Council of the European Union and the Commission, on the other,

- taking full advantage of all diplomatic channels between the Parties, including appropriate contacts in third countries and within the United Nations, the OSCE and other international forums,

- including Estonia in the group of countries receiving regular information on the activities managed within the framework of the common foreign and security policy as well as exchanging information with a view to achieving the objectives defined in Article 4,

- any other means which would make a useful contribution to consolidating, developing and stepping up this dialogue.

Article 7

At parliamentary level, political dialogue shall take place within the framework of the Parliamentary Committee of the association between the European Communities and their Member States and the Republic of Estonia (hereinafter referred to as the 'Parliamentary Committee`).

TITLE III FREE MOVEMENT OF GOODS

Article 8

1. The Community and Estonia shall establish a free trade area upon entry into force of the Agreement on Free Trade and Trade-Related Matters on 1 January 1995, in accordance with the provisions of this Agreement and in conformity with those of the GATT and the WTO.

2. The Combined Nomenclature of goods shall be applied to the classification of goods in trade between the two Parties.

3. For each product covered by this Agreement the basic duty shall be that actually applied erga omnes on 1 January 1994.

The successive reductions set out in this Agreement are to be applied to these basic duties.

4. If, after 1 January 1995, 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 Estonia shall communicate to each other their respective basic duties.

CHAPTER I INDUSTRIAL PRODUCTS

Article 9

1. The provisions of this Chapter shall apply to products originating in the Community and in Estonia listed in Chapters 25 to 97 of the Combined Nomenclature with the exception of the products listed in Annex I.

2. Trade between the Parties in items covered by the Treaty establishing the European Atomic Energy Community will be conducted in accordance with the provisions of that Treaty.

Article 10

Customs duties and quantitative restrictions on imports into the Community and measures having equivalent effect are abolished on 1 January 1995 with regard to products originating in Estonia.

Article 11

Customs duties and quantitative restrictions on imports into Estonia and measures having an equivalent effect are abolished on 1 January 1995 with regard to products originating in the Community.

Article 12

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

Article 13

Any charges having an effect equivalent to customs duties on imports are abolished on 1 January 1995 in trade between the Community and Estonia.

Article 14

1. Any customs duties on exports and charges having equivalent effect are abolished on 1 January 1995 between the Community and Estonia.

2. Quantitative restrictions on exports and any measures having equivalent effect are abolished on 1 January 1995 between the Community and Estonia.

Article 15

Specific arrangements applicable to the trade in textile and clothing products originating in Estonia are covered in Protocol 1.

Article 16

The provisions of this Chapter do not preclude an agricultural component in the duties applicable to products listed in Annex II.

CHAPTER II AGRICULTURE

Article 17

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

2. The term 'agricultural products` means the products listed in Chapters 1 to 24 of the Combined Nomenclature and the products listed in Annex I, but excluding fishery products as defined by Regulation (EEC) No 3759/92.

Article 18

Protocol 2 lays down the trade arrangements for processed agricultural products which are listed therein.

Article 19

1. As from 1 January 1995 no quantitative restrictions apply to imports into the Community of agricultural products originating in Estonia nor to imports into Estonia of agricultural products originating in the Community.

2. The concessions granted under this Agreement are referred to in Annexes III, IV and V.

3. The concessions referred to in paragraph 2 may be subject to revision by agreement between the Parties within a period lasting until 31 December 1997 and on the basis of the principles and procedures set out in paragraph 4.

4. 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, of the rules of the agricultural policy in Estonia, of the role of agriculture in Estonia's economy, the Community and Estonia shall examine in the Association Council, product by product and on an orderly and reciprocal basis, the possibilities of granting each other further concessions.

Article 20

Notwithstanding other provisions of this Agreement, and in particular Article 29, if, given the particular sensitivity of the agricultural markets, imports of products originating in one Party, which are the subject of concessions granted pursuant to Article 19, cause serious disturbance to the markets in the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such a solution, the Party concerned may take the measures it deems necessary.

CHAPTER III FISHERIES

Article 21

The provisions of this Chapter shall apply to fishery products originating in the Community and in Estonia, which are covered by Regulation (CEE) No 3759/92.

Article 22

1. The concessions granted under this Agreement are referred to in Annex VI.

2. The provisions of Article 19(4), Article 20 and Article 24(2) and (3) shall apply mutatis mutandis to fishery products.

CHAPTER IV COMMON PROVISIONS

Article 23

The provisions of this Title shall apply to trade between the Parties in all products except where otherwise provided herein or in Protocols 1 and 2.

Article 24

1. In trade between the Community and Estonia from 1 January 1995:

- no new customs duties on imports or exports or charges having equivalent effect shall be introduced, nor shall those already applied be increased,

- no new quantitative restrictions on imports or exports or measures having equivalent effect shall be introduced nor shall those existing be made more restrictive.

2. Without prejudice to the concessions granted pursuant to Article 19, the provisions of paragraph 1 of this Article shall not restrict in any way the pursuance of the respective agricultural policies of Estonia and the Community or the taking of any measures under such policies.

3. Taking account of the Estonian tariff structure at 1 January 1995, where no tariff duties are provided for agricultural products, in the event that a new tariff regime for the import of agricultural products is established, Estonia may, by way of derogation from paragraph 1 and pursuant to the implementation of its agricultural policy for its domestic production, introduce duties on a limited number of agricultural products originating in the Community. Such duties may only be introduced until 31 December 1996, and after consultation in the Association Council. In all such cases, Estonia shall ensure a sizeable margin of preference for products originating in the Community. If necessary, this period may be prolonged by one year by decision of the Association Council.

Article 25

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 an 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 indirect taxation in excess of the amount of direct or indirect taxation imposed on them.

Article 26

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 Association Council concerning agreements establishing such customs unions or free trade areas and, where requested, on other major issues related to their respective trade policies 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 Estonia stated in this Agreement.

Article 27

Exceptional measures of limited duration which derogate from the provisions of Article 11 and Article 24(1), first indent, may be taken by Estonia 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 Estonia 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 two years unless a longer duration is authorised by the Association Council. They shall cease to apply at the latest by 31 December 1997.

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.

Estonia shall inform the Association Council of any exceptional measures it intends to take and, at the request of the Community, consultations shall be held in the Association Council on such measures and the sectors to which they apply before they are applied. When taking such measures Estonia shall provide the Association Council with a schedule for the elimination of the customs duties introduced under this Article. The Association Council may decide on a different schedule.

Article 28

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 GATT, it may take appropriate measures against this practice in accordance with the Agreement relating to the application of Article VI of the GATT, with related internal legislation and with the conditions and procedures laid down in Article 32.

Article 29

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 Estonia, whichever is concerned, may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 32.

Article 30

Where compliance with the provisions of Articles 14 and 24 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 32. The measures shall be non-discriminatory and be eliminated when conditions no longer justify their maintenance.

Article 31

The Member States of the European Union and Estonia shall progressively adjust any State monopolies of a commercial character so as to ensure that, by the end of 1999, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States and of Estonia. The Association Council will be informed about the measures adopted to implement this objective.

Article 32

1. In the event of the Community or Estonia subjecting imports of products liable to give rise to the difficulties referred to in Article 29 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 28, 29 and 30, before taking the measures provided for therein or, in cases to which paragraph 3(d) applies, as soon as possible, the Community or Estonia, as the case may be, shall supply the Association Council 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 this Agreement.

The safeguard measures shall be notified immediately to the Association Council 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 29, the difficulties arising from the situation referred to in that Article shall be referred for examination to the Association Council, which may take any decision needed to put an end to such difficulties.

If the Association Council 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 28, the Association Council shall be informed of the dumping case as soon as the authorities of the importing Party have initiated an investigation. If no end has been put to the dumping or if no other satisfactory solution has been reached within 30 days of the matter being referred to the Association Council, the importing Party may adopt the appropriate measures;

(c) as regards Article 30, the difficulties arising from the situations referred to in that Article shall be referred for examination to the Association Council.

The Association Council 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 Estonia whichever is concerned may, in the situations specified in Articles 28, 29 and 30, apply forthwith the precautionary measures strictly necessary to deal with the situation.

Article 33

Protocol 3 lays down rules of origin for the application of the tariff preferences provided for in this agreement as well as the methods of administrative cooperation therewith.

Article 34

This 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 35

Protocol 4 lays down the specific provisions to apply to trade between Estonia of the one part and Spain and Portugal of the other part, and it will be valid until 31 December 1995.

TITLE IV MOVEMENT OF WORKERS, ESTABLISHMENT, SUPPLY OF SERVICES

CHAPTER I MOVEMENT OF WORKERS

Article 36

1. Subject to the conditions and modalities applicable in each Member State:

- the treatment accorded to workers of Estonian nationality legally employed in the territory of a Member State shall be free from any discrimination based on nationality, as regards working conditions, remuneration or dismissal, as compared with its own nationals,

- the legally resident spouse and children of a worker legally employed in the territory of a Member State, with the exception of seasonal workers and of workers coming under bilateral agreements in the sense of Article 40, unless otherwise provided by such agreements, shall have access to the labour market of that Member State, during the period of that worker's authorised stay of employment.

2. Estonia shall, subject to the conditions and modalities applicable in that country, accord the treatment referred to in paragraph 1 to workers who are nationals of a Member State and are legally employed in its territory as well as their spouse and children who are legally resident in the said territory.

Article 37

1. With a view to coordinating social security systems for workers of Estonian nationality, legally employed in the territory of a Member State and for the members of their family, legally resident there, and subject to the conditions and modalities applicable in each Member State,

- all periods of insurance, employment or residence completed by such workers in the various Member States shall be added together for the purpose of pensions and annuities in respect of old age, invalidity and death and for the purpose of medical care for such workers and such family members,

- any pensions or annuities in respect of old age, death, industrial accident or occupational disease, or of invalidity resulting therefrom, with the exception of non-contributory benefits, shall be freely transferable at the rate applied by virtue of the law of the debtor Member State or States,

- the workers in question shall receive family allowances for the members of their family as defined above.

2. Estonia shall accord to workers who are nationals of a Member State and legally employed in its territory, and to members of their families legally resident there, treatment similar to that specified in the second and third idents of paragraph 1.

Article 38

1. The Association Council shall by decision adopt the appropriate provisions to implement the objective set out in Article 37.

2. The Association Council shall by decision adopt detailed rules for administrative cooperation providing the necessary management and control guarantees for the application of the provisions referred to in paragraph 1.

Article 39

The provisions adopted by the Association Council in accordance with Article 38 shall not affect any rights or obligations arising from bilateral agreements linking Estonia and the Member States where those agreements provide for more favourable treatment of nationals of Estonia or of the Member States.

Article 40

1. Taking into account the labour market situation in the Member State concerned, subject to its legislation and to the respect of rules in force in that Member State in the area of mobility of workers,

- the existing facilities for access to employment for Estonian workers accorded by Member States under bilateral agreements ought to be preserved and if possible improved,

- the other Member States shall consider favourably the possibility of concluding similar agreements.

2. The Association Council shall examine granting other improvements including facilities of access for professional training, in conformity with rules and procedures in force in the Member States, and taking account of the labour market situation in the Member States and in the Community.

Article 41

From the end of 1999 or sooner if socio-economic conditions in Estonia have been largely aligned on those of the Member States and if the employment situation in the Community permits, the Association Council will consider ways of further improving the movement of workers. The Association Council shall make recommendations to such end.

Article 42

In the interest of facilitating the restructuring of labour resources resulting from the economic restructuring in Estonia, the Community shall provide technical assistance for the establishment of a suitable social security system in Estonia as set out in Article 92 of this Agreement.

CHAPTER II ESTABLISHMENT

Article 43

1. The Community and its Member States shall grant, except for the sectors included in Annex VII,

(i) from entry into force of this Agreement, treatment no less favourable than that accorded by Member States to their own companies or to any third country company, whichever is the better, with regard to the establishment of Estonian companies;

(ii) from entry into force of this Agreement, to subsidiaries and branches of Estonian companies, established in their territory, treatment no less favourable than that accorded by Member States to their own companies and branches or to subsidiaries and branches of any third country company established in their territory, whichever is the better, in respect of their operation;

(iii) as from 31 December 1999, for the establishment of Estonian nationals and their operation, once established, treatment no less favourable than that accorded to Community nationals or to nationals of any third country, whichever is the better.

2. Estonia shall grant from the entry into force of this Agreement:

(i) treatment no less favourable than that accorded to Estonian companies or to companies of any third country, whichever is the better, with regard to the establishment of Community companies;

(ii) to subsidiaries and branches of Community companies, established in its territory, treatment no less favourable than that accorded to Estonian companies and branches, or to subsidiaries and branches of any third country company established in its territory, whichever is the better, in respect of their operation;

(iii) for the establishment of Community nationals and their operation, once established, treatment no less favourable than that accorded to Estonian nationals or to nationals of any third country, whichever is the better.

Article 44

1. The provisions of Article 43 shall not apply to air transport, inland waterways and maritime cabotage transport services.

2. The Association Council may make recommendations for improving establishment and operations in the areas covered by paragraph 1.

Article 45

For the purposes of this Agreement:

(a) a 'Community company` or an 'Estonian company` respectively shall mean a company set up in accordance with the laws of a Member State or of Estonia respectively and having its registered office or central administration or principal place of business within the Community or in the territory of Estonia respectively.

However, should the company, set up in accordance with the laws of a Member State or Estonia respectively, have only its registered office within the Community or in the territory of Estonia respectively, the company shall be considered a Community or an Estonian company respectively if its operations possess a real and continuous link with the economy of one of the Member States or Estonia respectively;

(b) 'subsidiary` of a company shall mean a company which is effectively controlled by the first company.

(c) 'branch` of a company shall mean a place of business not having legal personality which has the appearance of permanency, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties so that the latter, although knowing that there will if necessary be a legal link with the parent body, the head office of which is abroad, do not have to deal directly with such parent body but may transact business at the place of business constituting the extension;

(d) 'establishment` shall mean:

(i) as regards nationals, the right to take up economic activities as self-employed persons and to set up undertakings, in particular companies, which they effectively control. Self-employment and business undertakings by nationals shall not extend to seeking or taking employment in the labour market or confer a right of access to the labour market of another Party. The provisions of this chapter do not apply to those who are not exclusively self-employed;

(ii) as regards Community or Estonian companies, the right to take up economic activities by means of the setting up of subsidiaries and branches in Estonia or in the Community respectively;

(e) 'operation` shall mean the pursuit of economic activities;

(f) 'economic activities` shall in principle include activities of an industrial, commercial and professional character and activities of craftsmen;

(g) 'Community national` and 'Estonian national` shall mean respectively a natural person who is a national of one of the Member States or of Estonia;

(h) with regard to international maritime transport, including inter-modal operations involving a sea leg, nationals of the Member States or of Estonia established outside the Community or Estonia respectively, and shipping companies established outside the Community or Estonia and controlled by nationals of a Member State or Estonian nationals respectively, shall also be beneficiaries of the provisions of Chapter II and Chapter III, if their vessels are registered in that Member State or in Estonia respectively in accordance with their respective legislation.

Article 46

1. Subject to the provisions of Article 43, with the exception of financial services described in Annex VIII, each Party may regulate the establishment and operation of companies and nationals on its territory, insofar as these regulations do not discriminate against companies and nationals of the other Party in comparison with its own companies and nationals.

2. In respect of financial services, notwithstanding any other provisions of this Agreement, a Party shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system. Such measures shall not be used as a means of avoiding the Party's obligations under the Agreement.

3. Nothing in the Agreement shall be construed to require a Party to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities.

Article 47

1. The provisions of Articles 43 and 46 do not preclude the application by a Party of particular rules concerning the establishment and operation in its territory of branches of companies of another Party not incorporated in the territory of the first Party, which are justified by legal or technical differences between such branches as compared with branches of companies incorporated in its territory or, as regards financial services, for prudential reasons.

2. The difference in treatment shall not go beyond what is strictly necessary as a result of such legal or technical differences or, as regards financial services, for prudential reasons.

Article 48

1. A 'Community company` or an 'Estonian company` established in the territory of Estonia or the Community respectively shall be entitled to employ, or have employed by one of its subsidiaries or branches, in accordance with the legislation in force in the host country of establishment, in the territory of Estonia and the Community respectively, employees who are nationals of Community Member States and Estonia respectively, provided that such employees are key personnel as defined in paragraph 2 of this Article, and that they are employed exclusively by companies, subsidiaries or branches.

The residence and work permits of such employees shall only cover the period of such employment.

2. Key personnel of the abovementioned companies herein referred to as 'organisations` are 'intra-corporate transferees` as defined in (c) of this paragraph in the following categories, provided that the organisation is a juridical person and that the persons concerned have been employed by it or have been partners in it (other than as majority shareholders), for at least the year immediately preceding such movement:

(a) persons working in a senior position with an organisation, who primarily direct the management of the establishment, receiving general supervision or direction principally from the board of directors or stockholders of the business or their equivalent, including:

- directing the establishment or a department or subdivision of the establishment,

- supervising and controlling the work of other supervisory, professional or managerial employees,

- having the authority personally to recruit and dismiss or recommend recruiting, dismissing or other personnel actions;

(b) persons working within an organisation who possess uncommon knowledge essential to the establishment's service, research equipment, techniques or management. The assessment of such knowledge may reflect, apart from knowledge specific to the establishment, a high level of qualification referring to a type of work or trade requiring specific technical knowledge, including membership of an accredited profession;

(c) an 'intra-corporate transferee` is defined as a natural person working within an organisation in the territory of a Party, and being temporarily transferred in the context of pursuit of economic activities in the territory of the other Party; the organisation concerned must have its principal place of business in the territory of a Party and the transfer must be to an establishment (branch, subsidiary) of that organisation, effectively pursuing like economic activities in the territory of the other Party.

3. The entry into and the temporary presence within the territory of the Community or Estonia of Estonian and Community nationals respectively shall be permitted, when these representatives of companies are persons working in a senior position, as defined in paragraph 2(a) above, within a company, and are responsible for the setting up of a Community subsidiary or branch of an Estonian company or of an Estonian subsidiary or branch of a Community company in a Community Member State or Estonia respectively when

- those representatives are not engaged in making direct sales or supplying services, and

- the company has its principal place of business outside the Community or Estonia, respectively, and has no other representative, office, branch or subsidiary in that Community Member State or Estonia respectively.

Article 49

In order to make it easier for the Community nationals and Estonian nationals to take up and pursue regulated professional activities in Estonia and the Community respectively, the Association Council shall examine which steps are necessary to be taken to provide for the mutual recognition of qualifications. It may take all necessary measures to that end.

Article 50

Up to the end of 1999, Estonia may introduce measures which derogate from the provisions of this Chapter as regards the establishment of Community companies and nationals if certain industries:

- are undergoing restructuring, or

- are facing serious difficulties, particularly where these entail serious social problems in Estonia, or

- face the elimination or a drastic reduction of the total market share held by Estonian companies or nationals in a given sector or industry in Estonia, or

- are newly emerging industries in Estonia.

Such measures:

- shall cease to apply at the latest on 31 December 1999,

- shall be reasonable and necessary in order to remedy the situation, and

- shall only relate to establishments in Estonia to be created after the entry into force of such measures and shall not introduce discrimination concerning the operations of Community companies or nationals already established in Estonia at the time of introduction of a given measure compared with Estonian companies or nationals.

While devising and applying such measures, Estonia shall grant whenever possible to Community companies and nationals a preferential treatment, and in no case a treatment less favourable than that accorded to companies or nationals from any third country.

Prior to the introduction of these measures, Estonia shall consult the Association Council and shall not put them into effect before a one-month period following the notification of the Association Council of the concrete measures to be introduced by Estonia, except where the threat of irreparable damage requires the taking of urgent measures in which case Estonia shall consult the Association Council immediately after their introduction.

CHAPTER III SUPPLY OF SERVICES

Article 51

1. The Parties undertake in accordance with the following provisions to take the necessary steps to allow progressively the supply of services by Community or Estonian companies or nationals which are established in a Party other than that of the person for whom the services are intended.

2. In step with the liberalisation process mentioned in paragraph 1, and subject to the provisions of Article 55, the Parties shall permit the temporary movement of natural persons providing the service or who are employed by the service provider as key personnel as defined in Article 48(2), including natural persons who are representatives of a Community or an Estonian company or national and are seeking temporary entry for the purpose of negotiating for the sale of services or entering into agreements to sell services for that service provider, where those representatives will not be engaged in making direct sales to the general public or in supplying services themselves.

3. At the latest eight years after the entry into force of this Agreement, the Association Council shall take the measures necessary to implement progressively the provisions of paragraph 1. Account shall be taken of the progress achieved by the Parties in the approximation of their laws.

Article 52

1. The Parties shall not take any measures or actions which render the conditions for the supply of services by Community and Estonian nationals or companies which are established in a Party other than that of the person for whom the services are intended significantly more restrictive as compared with the situation existing on the day preceding the day of entry into force of the Agreement.

2. If one Party is of the view that measures introduced by the other Party since the signature of the Agreement result in a situation which is significantly more restrictive in respect of supply of services as compared with the situation existing at the date of signature of the Agreement, such first Party may request the other Party to enter into consultations.

Article 53

1. With regard to international maritime transport, the Parties undertake to apply effectively the principle of unrestricted access to the market and traffic on a commercial basis.

(a) The above provision does not prejudice the rights and obligations arising from the United Nations Code of Conduct for Liner Conferences, as applicable to one or other Party to the present Agreement. Non-conference lines will be free to operate in competition with a conference as long as they adhere to the principle of fair competition on a commercial basis.

(b) The Parties affirm their commitment to a freely competitive environment as being an essential feature of the dry and liquid bulk trade.

2. In applying the principles of paragraph 1, the Parties shall:

(a) not apply, as from entry into force of this Agreement, any cargo sharing provisions of bilateral agreements between any Member State of the Community and the former Soviet Union;

(b) not introduce cargo sharing clauses into future bilateral agreements with third countries, other than in those exceptional circumstances where liner shipping companies from one or other Party to the present Agreement would not otherwise have an effective opportunity to ply for trade to and from the third country concerned;

(c) prohibit cargo sharing arrangements in future bilateral agreements concerning dry and liquid bulk trade;

(d) abolish upon entry into force of this Agreement all unilateral measures, administrative, technical and other obstacles which could have restrictive or discriminatory effects on the free supply of services in international maritime transport.

Each Party shall grant, inter alia, no less favourable treatment for the ships operated by nationals or companies of the other Party than that accorded to a Party's own ships with regard to access to ports open to international trade, the use of infrastructure and auxiliary maritime services of the ports, as well as related fees and charges, customs facilities and the assignment of berths and facilities for loading and unloading.

3. Nationals and companies of the Community providing international maritime transport services shall be free to provide international sea-river services in the inland waterways of Estonia and vice versa.

4. With a view to ensuring the transit of goods through the territory of each Party, the Parties undertake to conclude an agreement as soon as possible and before the end of 1999 on the transit of inter-modal traffic through each other's territory.

5. With a view to assuring a coordinated development and progressive liberalisation of transport between the Parties, adapted to their reciprocal commercial needs, the conditions of mutual market access and provision of services in transport by road, rail and inland waterways and, if applicable, in air transport shall be dealt with by specific transport agreements where appropriate negotiated between the Parties after entry into force of this Agreement.

6. Prior to the conclusion of the agreements referred to in paragraph 5, the Parties shall not take any measures or actions which are more restrictive or discriminatory as compared with the situation existing on the day preceding the day of entry into force of the Agreement.

7. By the end of 1998, Estonia shall progressively adapt its legislation including administrative, technical and other rules to that of the Community legislation existing at any time in the field of road, rail, inland waterway and air transport insofar as it serves liberalisation purposes and mutual access to markets of the Parties and facilitates the movement of passengers and of goods. Progress in this field will be jointly assessed by the Parties within the framework of the Association Council at least every two years.

8. In step with the common progress in the achievement of the objectives of this chapter, the Association Council shall examine ways of creating the conditions necessary for improving freedom to provide road, rail, inland waterway and air transport services.

CHAPTER IV GENERAL PROVISIONS

Article 54

1. The provisions of this Title shall be applied subject to limitations justified on grounds of public policy, public security or public health.

2. They shall not apply to activities which in the territory of either Party are connected, even occasionally, with the exercise of official authority.

Article 55

For the purpose of this Title nothing in the Agreement shall prevent the Parties from applying their laws and regulations regarding entry and stay, work, labour conditions and establishment of natural persons and supply of services, provided that - in so doing - they do not apply them in a manner as to nullify or impair the benefits accruing to any Party under the terms of a specific provision of the Agreement.

Article 56

Companies which are controlled and exclusively owned by Estonian companies or nationals and Community companies or nationals jointly shall also be beneficiaries of the provisions of Chapters II, III and IV of this Title.

Article 57

1. The most favoured nation treatment granted in accordance with the provisions of this Title shall not apply to the tax advantages which the Parties are providing or will provide in the future on the basis of agreements to avoid double taxation, or other tax arrangements.

2. Nothing in this Title shall be construed to prevent the adoption or enforcement by the Parties of any measure aimed at preventing the avoidance or evasion of taxes pursuant to the tax provisions of agreements to avoid double taxation and other tax arrangements, or domestic fiscal legislation.

3. Nothing in this Title shall be construed to prevent Member States or Estonia from distinguishing, in the application of the relevant provisions of their fiscal legislation, between taxpayers who are not in identical situations, in particular as regards their place of residence.

Article 58

The provisions of this Title shall be progressively adjusted by the Parties. In formulating recommendations to this effect, the Association Council shall take into account the respective obligations of the Parties under the General Agreement on Trade in Services (GATS), and in particular of its Article V.

Article 59

The provisions of this Agreement shall not prejudice the application by each Party of any measure necessary to prevent the circumvention of its measures concerning third country access to its market through the provisions of this Agreement.

TITLE V PAYMENTS, CAPITAL, COMPETITION AND OTHER ECONOMIC PROVISIONS, APPROXIMATION OF LAWS

CHAPTER I CURRENT PAYMENTS AND MOVEMENT OF CAPITAL

Article 60

The Parties undertake to authorise, in freely convertible currency, in accordance with the provisions of Article VIII of the Articles of Agreement of the International Monetary Fund, any payments and transfers on the current account of balance of payments between residents of the Community and Estonia.

Article 61

1. With regard to transactions on the capital account of balance of payments, from entry into force of the Agreement, the Member States and Estonia respectively shall ensure the free movement of capital relating to direct investments made in companies formed in accordance with the laws of the host country and investments made in accordance with the provisions of Chapter II of Title IV, and the liquidation or repatriation of these investments and of any profit stemming therefrom.

Without prejudice to Article 43(1)(iii), complete free movement of capital relating to establishment and operations of self-employed persons, including the liquidation and repatriation of such investments, shall be ensured from entry into force of this Agreement.

2. With regard to transactions on the capital account of balance of payments, from entry into force of this Agreement the Member States and Estonia respectively shall ensure the free movement of capital relating to portfolio investment. This shall also apply to the free movement of capital relating to credits related to commercial transactions or the provision of services in which a resident of one of the Parties is participating and to financial loans.

3. Without prejudice to paragraph 1, the Member States and Estonia shall not introduce any new restrictions on the movement of capital and current payments connected therewith between residents of the Community and Estonia and shall not make the existing arrangements more restrictive.

4. The Parties shall consult each other with a view to facilitating the movement of capital between the Community and Estonia in order to promote the objective of the present Agreement.

Article 62

1. The Parties shall take measures permitting the creation of the necessary conditions for the further gradual application of Community rules on the free movement of capital.

2. The Association Council shall examine ways of enabling Community rules on the movement of capital to be applied in full.

CHAPTER II COMPETITION AND OTHER ECONOMIC PROVISIONS

Article 63

1. The following are incompatible with the proper functioning of this Agreement, insofar as they may affect trade between the Community and Estonia:

(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 Estonia 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 Community or, for products covered by the ECSC Treaty, on the basis of corresponding rules of the ECSC Treaty including secondary legislation.

3. The Association Council shall, by 31 December 1997, adopt by decision the necessary rules for the implementation of paragraphs 1 and 2.

Until these rules are adopted, the provisions of the Agreement on interpretation and application of Articles VI, XVI and XXIII of the GATT shall be applied as the rules for the implementation of paragraph 1(iii) and related parts of paragraph 2.

4. (a) For the purposes of applying the provisions of paragraph 1(iii), the Parties recognise that until 31 December 1999 any public aid granted by Estonia shall be assessed taking into account the fact that Estonia 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 Community. The Association Council shall, taking into account the economic situation of Estonia, 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 III:

- 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 Community and in particular of those established in Council Regulation No 26.

6. If the Community or Estonia 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 interests of the other Party or material injury to its domestic industry, including its services industry,

it may take appropriate measures after consultation within the Association Council 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 GATT applies thereto, only be adopted in conformity with the procedures and under the conditions laid down by the GATT 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.

Article 64

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 State or Estonia is in serious balance of payments difficulties, or under imminent threat thereof, the Community or Estonia, as the case may be, may, in accordance with the conditions established under the GATT, 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 Estonia, as the case may be, shall inform the other Party forthwith.

3. Any restrictive measures shall not apply to transfers related to investments and in particular to the repatriation of amounts invested or reinvested and of any kind of revenues stemming therefrom.

Article 65

With regard to public undertakings, and undertakings to which special or exclusive rights have been granted, the Association Council shall ensure that as from 1 January 1998, the principles of the Treaty establishing the European Community, notably Article 90, and the principles of the concluding document of the April 1990 Bonn meeting of the CSCE, notably entrepreneurs' freedom of decision, are upheld.

Article 66

1. Pursuant to the provisions of this Article and of Annex IX, the Parties confirm the importance that they attach to ensure adequate and effective protection and enforcement of intellectual, industrial and commercial property rights.

2. Estonia shall continue to improve the protection of intellectual, industrial and commercial property rights in order to provide, by 31 December 1999, for a level of protection similar to that existing in the Community, including effective means of enforcing such rights.

3. By 31 December 1999, Estonia shall accede to the multilateral conventions on intellectual, industrial and commercial property rights referred to in paragraph 1 of Annex IX to which Member States of the Community are parties or which are de facto applied by Member States according to the relevant provisions contained in these conventions.

4. If problems in the area of intellectual, industrial and commercial property affecting trading conditions were to occur, urgent consultations will be undertaken, at the request of either Party, with a view to reaching mutually satisfactory solutions.

Article 67

1. The Parties consider the opening up of the award of public contracts on the basis of non-discrimination and reciprocity, in particular in the GATT and WTO context, to be a desirable objective.

2. The Estonian companies as defined in Article 45 of this Agreement, shall be granted access to contract award procedures in the Community pursuant to Community procurement rules under a treatment no less favourable than that accorded to Community companies as of the entry into force of this Agreement.

Community companies and branches of Community companies in the sense of Article 45 and subsidiaries of Community companies as described in Article 45 and in the forms of Article 56 shall be granted access to contract award procedures in Estonia under a treatment no less favourable than that accorded to Estonian companies as of the entry into force of this Agreement.

The provisions in this paragraph shall also apply to public contracts covered by Directive 93/38/EEC of 14 June 1993 once Estonia has introduced the appropriate legislation.

3. As regards establishment, operations, supply of services between the Community and Estonia, as well as employment and movement of labour linked to the fulfilment of public contracts, the provisions of Article 36 to 59 of this Agreement are applicable.

CHAPTER III APPROXIMATION OF LAWS

Article 68

The Parties recognise that an important condition for Estonia's economic integration into the Community is the approximation of Estonia's existing and future legislation to that of the Community. Estonia shall endeavour to ensure that its legislation will be gradually made compatible with that of the Community.

Article 69

The approximation of laws shall extend to the following areas in particular: customs law, company law, banking law, company accounts and taxation, intellectual property, financial services, rules on competition, protection of health and life of humans, animals and plants, protection of workers including health and safety at work, consumer protection, indirect taxation, technical rules and standards, nuclear law and regulation, transport, telecommunications, environment, public procurement, statistics and product liability.

Within these areas rapid progress in the approximation of laws should in particular be made in the fields of the internal market, competition, protection of workers, environmental protection, consumer protection, financial services and technical rules and standards.

Article 70

The Community shall provide Estonia with technical assistance for the implementation of these measures, which may include, inter alia:

- the exchange of experts,

- the provision of early information especially on relevant legislation,

- organisation of seminars,

- training activities,

- aid for the translation of Community legislation in the relevant sectors.

TITLE VI ECONOMIC COOPERATION

Article 71

1. The Community and Estonia shall further develop economic cooperation aimed at contributing to Estonia's development and growth potential. Such cooperation shall strengthen existing economic links on the widest possible foundation, to the benefit of both Parties.

2. Policies and other measures shall be designed to bring about the economic and social development of Estonia and will be guided by the principle of sustainable development. These policies should ensure that environmental considerations are also fully incorporated from the outset and that they are linked to the requirements of harmonious social development.

3. To this end the cooperation should focus in particular on policies and measures related to industry, investment, agriculture and the agro-industrial sector, energy, transport, regional development and tourism.

4. Special attention shall be devoted to measures capable of fostering cooperation between the three Baltic countries, and with the other countries of central and eastern Europe as well as the other countries bordering the Baltic Sea with a view to an integrated development of the region.

Article 72 Industrial cooperation

1. Cooperation shall seek to promote the following in particular:

- industrial cooperation between the economic operators of the two Parties, with the particular aim of strengthening the private sector in Estonia,

- Community participation in Estonia's efforts in both public and private sectors to modernise and restructure its industry, which will effect the further development of a market economy under conditions which ensure that the environment is protected,

- the restructuring of individual sectors,

- the establishment of new undertakings in areas offering potential for growth, particularly in high technology, clean technologies, consumer goods and market services, branches of light industry and the wood industry.

2. Industrial cooperation initiatives shall take into account priorities determined by Estonia. The initiatives should seek in particular to establish a suitable framework for undertakings, to improve management know-how and to promote transparency as regards markets and conditions for undertakings. The Community shall provide Estonia with technical assistance where appropriate.

Article 73 Investment promotion and protection

1. Cooperation shall aim at maintaining and, if necessary, improving a legal framework and a favourable climate for private investment and its protection, both domestic and foreign, which is essential to economic and industrial reconstruction and development in Estonia. The cooperation shall also aim to encourage and promote foreign investment and privatisation in Estonia.

2. The particular aims of cooperation shall be:

- for Estonia to further develop and maintain a legal framework which favours and protects investment,

- the conclusion, where appropriate, with Member States of bilateral agreements for the promotion and protection of investment,

- to proceed with deregulation and to improve economic infrastructure,

- to exchange information on investment opportunities in the context of trade fairs, exhibitions, trade weeks and other events.

Assistance from the Community could be granted in the initial stage to agencies which promote inward investment.

3. Estonia shall honour the rules on Trade-Related Aspects of Investment Measures (TRIMs).

Article 74 Small and medium-sized enterprises

1. The Parties shall aim to develop and strengthen small and medium-sized enterprises (SMEs) and cooperation between SMEs in the Community and Estonia.

2. They shall encourage the exchange of information and know-how by means of:

- improving, where appropriate, the legal, administrative, technical, tax and financial conditions necessary for the setting-up and expansion of SMEs and for cross-border cooperation,

- providing the specialised services required by SMEs (management training, accounting, marketing, quality control, etc.) and the strengthening of agencies providing such services,

- establishing appropriate links with Community operators via European business cooperation networks, in order to improve the flow of information to SMEs and to promote cross-border cooperation.

3. The cooperation shall include the supply of technical assistance, in particular for the establishment of appropriate institutional back-up for SMEs at both national and regional level, regarding financial, training, advisory, technological and marketing services.

Article 75 Agricultural and industrial standards and conformity assessment

1. The cooperation between the Parties shall aim in particular to reduce differences in standards, technical regulations and conformity assessment procedures, with Community technical assistance where necessary.

2. To this end, the cooperation shall seek:

- to promote the use of Community technical regulations and European standards and conformity assessment procedures, recognising that, to reach Estonia's objectives of environmental quality, the country is free to develop and implement special (higher) standards if necessary,

- where appropriate, to conclude agreements on mutual recognition in these fields,

- to encourage Estonia's active and regular participation in the work of specialised organisations (CEN, Cenelec, ETSI, EOTC, Euromet),

- technical assistance, where appropriate, in training programmes for Estonian experts in the field of standardisation, metrology, certification and quality systems in the Community,

- to promote the exchange of technical and methodological information in the field of quality control and production process.

3. The Community shall provide Estonia with technical assistance where appropriate.

Article 76 Cooperation in science and technology

1. The Parties shall promote cooperation in research and technological development activities. They shall devote special attention to the following:

- the exchange of information on each other's science and technology policies,

- the organization of joint scientific meetings (seminars and workshops),

- joint R & D activities aimed at encouraging scientific progress and the transfer of technology and know-how,

- training activities and mobility programmes for researchers and specialists from both sides,

- the development of an environment conducive to research and the application of new technologies and adequate protection of the intellectual property of results of research,

- Estonia's participation in Community research programmes in accordance with paragraph 3.

Technical assistance shall be provided where appropriate.

2. The Association Council shall determine the appropriate procedures for developing cooperation.

3. Cooperation under the Community's framework programme in the field of research and technological development shall be implemented according to specific arrangements to be negotiated and concluded in accordance with the legal procedures of each Party.

Article 77 Education and training

1. Cooperation shall aim at a harmonious development of human resources and at raising the level of general education and professional qualifications in Estonia, both in the public and private sectors, taking into consideration the priorities of Estonia. Institutional frameworks and plans of cooperation will be established under the auspices of the European Training Foundation, the Tempus programme and the Eurofaculty. Participation of Estonia in other Community programmes shall also be considered in this context.

2. The cooperation shall focus in particular on the following areas:

- reform of the education and training system in Estonia,

- initial training, in-service training and retraining, including the training of public and private sector executives and senior civil servants, particularly in priority areas to be determined,

- in-service training for teachers,

- cooperation between universities, cooperation between universities and firms, mobility for teachers, students, administrators and young people,

- promoting teaching in the field of European Studies within the appropriate institutions,

- mutual recognition of periods of studies and diplomas,

- promoting language training in Estonia, in particular for resident persons belonging to minorities,

- teaching of Community languages, training of translators and interpreters and promotion of the use of Community standards and terminology,

- development of distance education and new training technologies,

- provision of training materials and equipment,

- cooperation with the European professional education development centre (Cedefop).

Article 78 Agriculture and the agro-industrial sector

1. Cooperation in this field shall aim at modernising, restructuring and privatising agriculture, fresh water (inland) fisheries and the agro-industrial sector as well as forestry. Such cooperation will promote the protection and sustainable use of natural landscapes and non-polluted soils.

To this end cooperation shall endeavour notably to:

- develop private farms and distribution channels, methods of storage, marketing, etc.,

- modernize the rural infrastructure (transport, water supply, telecommunications),

- improve land-use planning, including construction and town planning,

- develop criteria for areas for extensive and intensive agriculture, forestry and fresh water (inland) fisheries in accordance with national and regional development plans and programmes,

- establish and promote effective cooperation on agricultural information systems,

- improve productivity and quality by using appropriate methods and products, provide training and monitoring in the use of anti-pollution methods connected with inputs,

- promote development of organic agriculture, processing, marketing of production,

- promote implementation of Community food standards,

- restructure, develop, mondernise and decentralise food-processing firms and their marketing techniques,

- promote complementarity in agriculture,

- promote industrial cooperation in agriculture and the exchange of know-how, particularly between the private sectors in the Community and Estonia,

- develop cooperation on animal and plant health with the aim of bringing about gradual harmonisation with Community standards through assistance for training and the organisation of checks,

- promote exchange of information in respect of agricultural policy and legislation,

- promote joint ventures, particularly for cooperation on the markets of third countries.

2. To these ends, technical assistance shall be provided by the Community as appropriate.

Article 79 Fisheries

1. The Parties shall develop their cooperation on fisheries in accordance with the Agreement on Fisheries Relations between the European Economic Community and the Republic of Estonia.

2. The cooperation shall in particular take into account:

- the establishment of sustainable fishing in the world's oceans and the Baltic Sea,

- traditional cooperation on fisheries,

- the necessity of developing fishing control systems, catch statistics and information systems,

- the development of scientific potential for the study of fishery resources in the Baltic Sea and mutual action for the conservation and renewal of fish stocks (especially salmon and cod) and the introduction of modern technologies in this field,

- the gradual modernisation of Estonia's fishing fleet and fish-processing industry, through the establishment of joint ventures,

- the development of private enterprises in this field and the necessity of obtaining EC experience in marketing techniques,

- the development of industrial cooperation in fisheries and exchange of know-how,

- the introduction in Estonia of EC production quality and health standards for fish farming (including feed),

- the exchange of information on fisheries policy and legislation and on the establishment of a market for fishery products,

- cooperation in international fishery organisations.

Article 80 Energy

1. Within the principles of the market economy and of the Treaty on the European Energy Charter, the Parties shall cooperate to develop the progressive integration of the energy markets in Europe.

2. The cooperation shall focus on the following in particular:

- formulation and planning of energy policy, including its long-term aspects,

- management and training in the energy sector,

- promotion of energy saving and energy efficiency,

- development of energy resources,

- improvement of distribution as well as improvement and diversification of supply,

- environmental impact of energy production and consumption,

- the nuclear energy sector, in particular nuclear safety,

- opening up the energy market to a greater degree, including facilitating transit of gas and electricity,

- the electricity and gas sectors, including consideration of the possibility of the inter-connection of European supply networks,

- modernisation of energy infrastructures;

- formulation of framework conditions for cooperation between undertakings in this sector,

- transfer of technology and know-how,

- cooperation on pricing and taxation policies in the energy sector,

- regional cooperation in the energy sector among the Baltic Sea States, particularly as an important contribution to security of energy supply in the region.

3. Technical assistance shall be provided where appropriate.

Article 81 Nuclear safety

1. The aim of cooperation is to provide for a safer use of nuclear energy.

2. Cooperation in the nuclear field shall mainly cover the following topics:

- research and protective measures to increase safety particularly of the tailings at the uranium ore processing plant at Sillamäe, and at the former Soviet nuclear submarine training centre at Paldiski,

- staff training,

- upgrading of Estonia's laws and regulations on nuclear safety and strengthening of the supervisory authorities and their resources,

- nuclear safety, preparation for nuclear emergencies and accident management,

- radiation protection, including environmental radiation monitoring,

- fuel cycle problems, safeguarding and physical protection of nuclear materials,

- radioactive waste management,

- decommissioning and dismantling of nuclear installations,

- decontamination,

- establishment of uniform safety standards to protect the health of workers, the general public and the environment and ensuring that they are applied.

3. Cooperation will include the exchange of information and experience and R & D activities in accordance with the provisions on science and technology.

4. The Parties agree on the necessity of making efforts to cooperate, within the framework of their respective powers and competences, in order to combat nuclear smuggling. Cooperation in this area should include exchange of information, technical support for analysing, identifying and disposing of the material, and administrative and technical assistance for the installation of efficient customs controls. Further cooperation in this field could be identified as need arises.

Article 82 Environment

1. The Parties shall develop and strengthen their cooperation on environment and human health.

2. Cooperation shall concern in particular:

- effective monitoring of pollution levels,

- combating local, regional and cross-border air and water pollution,

- efficient, sustainable and clean energy production and consumption, safety of industrial plants (including nuclear facilities),

- classification and safe handling of chemicals,

- water quality, particularly in cross-border waterways (protection of the Baltic Sea against pollution from ships, artificial islands, platforms and other sources),

- reduction, recycling and safe disposal of waste and implementation of the Basle Convention,

- sustainable use of non-renewable natural resources,

- the environmental impact of agriculture, soil erosion and pollution by agricultural chemicals, water eutrophication,

- protection of forests and flora and fauna,

- conservation of biodiversity,

- protected areas,

- land-use planning, including construction and town planning,

- improvement of public transport, especially in cities,

- use of economic and fiscal instruments,

- management of the coastline and prevention of marine pollution,

- global climate change,

- rehabilitation of contaminated areas,

- protecting human health against environmental hazards.

3. Cooperation shall take place notably through:

- exchange of information and experts, especially in the field of the transfer of clean technologies and the safe use of environmentally-friendly biotechnologies,

- institution-building and training programmes,

- transfer of technology and know-how,

- approximation of laws (Community standards),

- cooperation at regional level (including cooperation between the three Baltic States and in the framework of the European Environment Agency) and at international level,

- development of strategies, particularly with regard to global and climatic issues,

- education and information on environmental issues,

- environmental impact studies.

Article 83 Transport

1. The Parties shall develop and step up their cooperation in the field of transport in order to enable Estonia to:

- restructure and modernize transport,

- improve the movement of passengers and goods and the access to transport markets by removing administrative, technical and other obstacles,

- facilitate Community transit through Estonia by road, rail, inland waterway and combined transport,

- achieve operating standards comparable with those in the Community,

- improve traffic and transport safety, reduce harmful effects on the environment.

2. The cooperation shall cover the following in particular:

- economic, legal and technical training programmes and the preparation of the legislative and institutional framework for policy development and implementation, including privatisation of the transport sector,

- the provision of technical assistance and advice, and the exchange of information (conferences and seminars),

- support for the development of infrastructure in Estonia.

3. Priority areas of cooperation will be:

- the construction and modernisation, on recognised trans-European corridors and major routes of common interest, of road, rail, inland waterway, port and airport infrastructures,

- the improvement of conditions, the reduction of waiting times and the easing of transit at the border crossings on the Estonian stretch of the multimodal Crete corridor No 1, on the basis of norms set by international agreements of the European Union to secure interoperability,

- the management of railways, ports and airports, including cooperation between the appropriate national authorities,

- land-use planning, including construction and urban planning,

- the upgrading of technical equipment to meet Community standards, particularly in the fields of road-rail transport, containerisation and trans-shipment,

- contributing to the development of transport policies compatible with those in the Community,

- the promotion of short-sea shipping as an alternative to overland transport and as a transport mode particularly suited to the Baltic Sea region,

- the promotion of joint research and development programmes,

- concrete projects in a tri- or multilateral (CBSS - Council of the Baltic Sea States) context of regional cooperation, such as Via Baltica,

- mutual exchange of transport data.

Article 84 Telecommunications, postal services and broadcasting

1. The Parties shall endeavour to expand and strengthen telecommunications cooperation. This shall involve:

- exchange of information on telecommunications policies, postal services and broadcasting policies,

- establishment of a stable and consistent regulatory framework for telecommunications, postal services and broadcasting,

- exchange of technical and other information and the organisation of seminars, workshops and conferences for experts of both sides,

- training and advisory operations,

- transfer of technology,

- joint execution of projects by competent bodies from both sides,

- promotion of European standards and certification systems,

- promotion of new communications facilities, services and installations, particularly those with commercial applications.

2. These activities shall focus on the following priority areas:

- development and application of a sectoral market policy in telecommunications, postal services and broadcasting in Estonia, of legal acts and procedures,

- modernisation of Estonia's telecommunications network and its integration into European and world networks,

- cooperation within European standardisation structures,

- integration of trans-European systems,

- legal aspects of telecommunications,

- management of telecommunications in the new European business environment: organisational structures, strategy and planning, purchasing principles, tariffs structure in voice telephony,

- land-use planning, construction and town planning,

- upgrading of the data network and development of data-based information services.

Article 85 Information infrastructure

The Parties shall endeavour to expand and strengthen cooperation, with a view to setting up a global information infrastructure. This shall involve:

- exchange of information on policies and programmes aimed at setting up the information infrastructure and the corresponding services,

- close cooperation between institutions managing current information networks (academic and/or government agencies),

- exchange of information on technologies, market needs and other information, organisation of seminars, workshops and conferences for experts and industrialists from both sides,

- training and advisory operations,

- joint execution of projects,

- promotion and agreement of standards, certification and testing,

- promotion of an appropriate regulatory framework,

- action to promote the growth of information services and infrastructure.

Article 86 Banking, insurance and other financial services

1. The Parties shall cooperate with the aim of establishing and developing a suitable framework for the encouragement of a banking, insurance and financial services sector in Estonia.

2. The cooperation shall focus on:

- the improvement of efficient accounting and audit systems in Estonia based on international rules and European Community standards,

- the strengthening and restructuring of the banking and financial systems,

- the improvement and harmonisation of supervision and regulation system of banking and financial services,

- the preparation of glossaries of terminology,

- the exchange of information in particular in respect of laws in force or being drafted,

- the preparation and translation of Community and Estonian legislation.

3. To this end, the cooperation shall include the provision of technical assistance and training.

Article 87 Audit and financial control cooperation

1. The Parties shall cooperate with the aim to developing efficient financial control and audit systems in the Estonian administration following standard Community methods and proceedings.

2. Cooperation shall focus on:

- the exchange of relevant information on audit systems,

- the uniformisation of audit documentation,

- training and advisory operations.

3. To this end, technical assistance shall be provided by the Community as appropriate.

Article 88 Monetary policy

At the request of the Estonian authorities, the Community shall provide technical assistance designed to support Estonia's efforts towards the gradual alignment of its policies on those of the European Monetary System. This will include informal exchange of information concerning the principles, the policies and the functioning of the European Monetary System.

Article 89 Money laundering

1. The Parties agree on the necessity of making strenuous efforts and cooperating in order to prevent the use of their financial systems for the laundering of proceeds from criminal activities in general and drug offences in particular.

2. Cooperation in this area shall include administrative and technical assistance with the purpose of establishing suitable standards to combat money laundering, equivalent to those adopted by the Community and other international bodies in this field, in particular the Financial Action Task Force (FATF).

Article 90 Regional development

1. The Parties shall strengthen cooperation between them on regional development and land-use planning.

2. To this end, any of the following measures may be taken:

- exchange of information by national, regional or local authorities on regional and land-use planning policy, and, where appropriate, the provision of assistance to Estonia for the formulation of such policy,

- joint action by regional and local authorities in the field of economic development,

- study of a joint approach towards the development of inter-regional cooperation with Baltic Sea regions in the Community,

- exchange of visits to explore cooperation and assistance opportunities,

- exchange of civil servants and experts,

- provision of technical assistance with special emphasis on the development of disadvantaged regions,

- establishment of programmes for the exchange of information and experience, by methods including seminars.

Article 91 Social cooperation

1. With regard to health and safety at work and public health, the Parties shall develop cooperation between them with the aim of improving the level of protection of the health and safety of workers, taking as a reference the level of protection existing in the Community. Cooperation shall comprise the following in particular:

- the provision of technical assistance,

- the exchange of experts,

- cooperation between companies,

- information and training operations,

- cooperation on public health.

2. With regard to employment, cooperation between the Parties shall focus in particular on:

- organisation of the labour market,

- modernisation of job-finding and careers advice services,

- planning and implementation of regional restructuring programmes,

- encouragement of local employment development.

Cooperation in these fields shall be realised through actions such as the performance of studies, provision of the services of experts and information and training.

3. With regard to social security, cooperation between the Parties shall seek to adapt the Estonian social security system to the new economic and social situation, primarily by providing the services of experts and information and training.

Article 92 Tourism

The Parties shall increase and develop cooperation between them in the field of tourism, which will be aimed in particular at:

- facilitating the tourist trade,

- strengthening the flow of information through international networks, databases, etc.,

- transferring know-how through training, exchanges, seminars,

- enhancing regional cooperation projects,

- studying the opportunities for joint operations (cross-border projects, town twinning, etc.),

- introducing computerised booking and information systems (preferably common to all three Baltic States) and consumer protection standards for tourists.

Article 93 Information and communication

1. With regard to information and communication, the Community and Estonia shall take appropriate steps to stimulate effective mutual exchange of information. Priority shall be given to programmes aimed at providing the general public with basic information about the European Union and specific circles in Estonia with more specialised information, including, where possible, access to Community databases.

2. The Parties shall coordinate and, where appropriate, harmonise their policies regarding the regulation of cross-border broadcasts, technical standards and the promotion of European audiovisual technology.

3. Cooperation may include providing for exchange programmes, scholarships, training facilities for journalists and experts in the sectors of the media as appropriate.

Article 94 Consumer protection

1. The Parties shall cooperate with the aim of achieving full compatibility between the systems of consumer protection in Estonia and the Community. Effective consumer protection is needed to ensure that the market economy functions properly.

2. To this end, and in view of their common interests, the Parties shall encourage and ensure:

- a policy of active consumer protection, in accordance with Community law and any relevant UN guidelines on consumer protection,

- the approximation of legislation and the alignment of consumer protection in Estonia with that of the Community,

- effective legal protection for consumers in order to improve the quality of consumer goods and maintain appropriate safety standards.

3. Cooperation shall include:

- the exchange of information on dangerous products,

- the training of consumer protection specialists for the government and NGOs,

- help with the development of independent organisations intended to increase consumer awareness, particularly by providing information,

- the establishment of information and advisory centres for the settlement of disputes and the provision of legal and other advice to consumers; provision will be made for cooperation between Estonia's centres and those in the Community,

- acces to Community data banks,

- the development of exchanges between consumer representatives.

4. Technical assistance shall be provided by the Community as appropriate.

Article 95 Customs

1. The Parties commit themselves to developing customs cooperation in order to guarantee compliance with all the provisions to be adopted in connection with trade and achieve the approximation of Estonia's customs system to that of the Community, thus helping to ease the steps towards liberalisation planned under this Agreement.

2. Cooperation shall include the following in particular:

- the exchange of information including on the methods of investigation,

- the development of cross-border infrastructure,

- the introduction of the single administrative document and the interconnection between the transit systems of the Community and Estonia,

- the simplification of inspections and formalities in respect of the carriage of goods,

- the organisation of seminars and placements,

- support in the introduction of modern customs information system,

- the approximation of the Estonian Nomenclature of Goods to be Combined Nomenclature of the Community,

- the approximation of the structure of Estonia's customs tariff system to that of the Community.

Technical assistance shall be provided where appropriate.

3. Without prejudice to further cooperation foreseen in this Agreement, and in particular Article 99 and Title VII, the mutual assistance between administrative authorities in customs matters in the Parties shall take place in accordance with the provisions of Protocol 5.

Article 96 Statistical cooperation

1. Cooperation in this area shall have as its aim the development of an efficient statistical system to provide, in a rapid and timely fashion, the reliable statistics needed to support and monitor the process of economic reform and contribute to the development of private enterprise in Estonia.

2. The Parties shall cooperate in particular to:

- strengthen Estonia's statistical system,

- bring about harmonisation with international (and particularly Community) methods, standards and classifications,

- provide the data needed to support and monitor economic reform,

- provide the private sector, the press and any other social and economic operators with appropriate macroeconomic and microeconomic data,

- guarantee the confidentiality of data,

- exchange statistical information,

3. Technical assistance shall be provided by the Community as appropriate.

Article 97 Economics

1. The Community and Estonia shall facilitate the process of economic reforms and integration by cooperating to improve understanding of the fundamentals of their respective economies and the formulation and implementation of economic policy in market economies.

2. To these ends, the Community and Estonia shall:

- exchange information on macroeconomic performance and prospects and on strategies for development,

- analyse jointly economic issues of mutual interest, including the framing of economic policy and the instruments for implementing it,

- through the programme of Action for Cooperation in Economics (ACE) in particular, encourage extensive cooperation between economists and managers in the Community and Estonia in order to expedite the transfer of know-how for the drafting of economic policies, and provide for wide dissemination of the results of policy-relevant research.

Article 98 Public administration

The Parties shall promote cooperation between their public administration authorities, including the setting up of exchange programmes, in order to improve mutual knowledge of the structure and functioning of their respective systems.

Article 99 Drugs

1. Within the scope of their respective powers and competences, the Parties shall cooperate in increasing the effectiveness and efficiency of policies and measures to counter the illicit production, supply and traffic of narcotic drugs and psychotropic substances, including the prevention of diversion of precursor chemicals, as well as in promoting drug demand prevention and reduction.

2. The Parties shall agree on the necessary methods of cooperation to attain these objectives, including the modalities of the implementation of common actions.

3. The cooperation in this area shall be based on mutual consultation and close cooperation between the Parties over the objectives and measures in the fields targeted in paragraph 1 and shall, inter alia, include where available technical assistance from the Community.

Cooperation aimed at preventing the illicit traffic of narcotic drugs and psychotropic substances will comprise technical and administrative assistance including:

- drafting and implementation of national legislation,

- creation or strengthening of institutions and information centres and of social health centres,

- increasing the efficiency of the institutions engaged in combating illicit drug trafficking,

- training of personnel and research,

- prevention of diversion of precursors and other essential chemicals used for the purpose of illicit manufacture of narcotic drugs or psychotropic substances, by establishing suitable standards equivalent to those adopted by the Community and relevant international bodies, in particular the Chemical Action Task Force (CATF).

The Parties may agree to include other areas.

TITLE VII COOPERATION IN THE PREVENTION OF ILLEGAL ACTIVITIES

Article 100

1. The Parties shall cooperate, within the scope of their powers and competences, with the aim of preventing the following illegal activities in particular:

- illegal immigration and the illegal presence of their nationals on the other's territory, while taking account of the principles and the practice of readmission,

- corruption,

- illegal transactions involving industrial waste and counterfeit products,

- illegal trafficking in drugs and psychotropic substances,

- organised crime,

- trafficking of human beings and crime related to activity of illegal immigration networks,

- theft of and illegal trade in radioactive and nuclear material,

- illegal transfer of motor vehicles.

2. Coope