AGREEMENT in the form of an exchange of letters amending the exchange of letters between the European Economic Community ('the Community`) and Hungary concerning transit signed in Brussels on 16 December 1991)

A.

Letter from the Community

Sir,

Upon the occasion of the signature on 16 December 1991 of the Europe Agreement between the Communities and their Member States and Hungary and of the Interim Agreement on trade and trade related matters between the European Economic Community and the European Coal and Steel Community, of the one part, and Hungary, of the other part, an Agreement in the form of an Exchange of Letters between the European Economic Community ('the Community`) and Hungary concerning transit was signed. The Europe Agreement has not yet come into force. The Interim Agreement came into force on 1 March 1992.

Since the signature of the Exchange of Letters, Hungary adopted Law No LXXXII of 1991 on vehicle taxes. The parties consider it necessary to come to an agreement through the present Exchange of Letters, to amend the relevant provisions of the Exchange of Letters signed on 16 December 1991 to take account thereof.

Accordingly, I propose that the Exchange of Letters signed on 16 December 1991 be amended as follows:

The part of paragraph 2 (a) beginning with the words '. . . Hungary hereby grants . . .` shall be replaced by the following text:

'(i) Hungary hereby grants in 1992, in place of the existing quotas granted pursuant to the bilateral agreement between Greece and Hungary for 1991 permits in the following way:

- 10 000 untaxed,

- 14 000 taxable with a tax rate of 1 Forint per tonne/km,

- 1 200 with a tax rate of 3 Forint per tonne/km,

- 600 third country (1) (2).

All untaxed and taxable permits are of a round-trip character. For 1993 and 1994 the total number of untaxed and taxable permits will be increased annually by five percent so that the permits amount in 1993 to 10 500 untaxed and 14 700 and 1 260 taxable permits and in 1994 to 11 025 untaxed and 15 435 and 1 323 taxable permits. The number of third country permits remains 600 in each of the years 1993 and 1994.

The rates of tax of 1 Forint and 3 Forint per tonne/kilometer shall be adjusted for 1993 so as to maintain an exchange rate for the Forint to the ecu equal to the average of such rate obtaining in the period from 6 February to 31 December 1992 and for 1994 so as to maintain an average rate equal to the average obtaining in the period from 1 January to 31 December 1993.

(ii) The Community hereby grants to Hungary in 1992 12 000 untaxed permits for use only on the territory of Greece.

If the transit situation on the territory of the republics which formed part of Yugoslavia in 1991 is not normalized, the Community and Hungary shall jointly examine before 31 December 1992 the possible changes concerning the arrangements set out in paragraph 2 (a).

Changes in the above provisions can, until the end of 1994 or, if this happens at an earlier date, until the conclusion of a bilateral transport agreement between the Community and Hungary, be made by common agreement between the parties.

The Community takes note of the Hungarian understanding that discussions will take place with the Commission and the Member States most directly concerned on other transportation questions such as aviation and third country road permits.`

If the foregoing is acceptable to Hungary, I have the honour to propose that this letter, together with Your Excellency's reply to that effect, shall constitute an amendment to the Exchange of Letters signed on 16 December 1991.

This Agreement is hereby approved by the parties in accordance with their respective procedures.

This Agreement shall enter into force on the first day following that on which the parties notify each other that the procedures mentioned in the preceding subparagraph have been completed. It shall apply as from 1 March 1992.

I should be obliged if you would confirm the agreement of the Government of Hungary to the contents of this letter.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the Community

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For the Council of the European Communities

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B. Letter from Hungary

Sir,

I have the honour to acknowledge receipt of your letter of today's date which reads as follows:

'Upon the occasion of the signature on 16 December 1991 of the Europe Agreement between the Communities and their Member States and Hungary and of the Interim Agreement on trade and trade related matters between the European Economic Community and the European Coal and Steel Community of the one part and Hungary of the other part, an Agreement in the form of an Exchange of Letters between the European Economic Community ("the Community") and Hungary concerning transit was signed. The Europe Agreement has not yet come into force. The Interim Agreement came into force on 1 March 1992.

Since the signature of the Exchange of Letters, Hungary adopted Law No LXXXII of 1991 on vehicle taxes. The parties consider if necessary to come to an agreement through the present Exchange of Letters, to amend the relevant provisions of the Exchange of Letters signed on 16 December 1991 to take account thereof.

Accordingly, I propose that the Exchange of Letters signed on 16 December 1991 be amended as follows:

The part of paragraph 2 (a) beginning with the words ". . . Hungary hereby grants . . ." shall be replaced by the following text:

"(i) Hungary hereby grants in 1992, in place of the existing quotas granted pursuant to the bilateral agreement between Greece and Hungary for 1991 permits in the following way:

- 10 000 untaxed,

- 14 000 taxable with a tax rate of 1 Forint per tonne/km,

- 1 200 with a tax rate of 3 Forint per tonne/km,

- 600 third country (3) (4).

All untaxed and taxable permits are of a round-trip character. For 1993 and 1994 the total number of untaxed and taxable permits will be increased annually by 5 % so that the permits amount in 1993 to 10 500 untaxed and 14 700 and 1 260 taxable permits and in 1994 to 11 025 untaxed and 15 435 and 1 323 taxable permits. The number of third country permits remains 600 in each of the years 1993 and 1994.

The rates of tax of 1 Forint and 3 Forint per tonne/kilometer shall be adjusted for 1993 so as to maintain an exchange rate for the Forint to the ecu equal to the average of such rate obtaining in the period from 6 February to 31 December 1992 and for 1994 so as to maintain an average rate equal to the average obtaining in the period from 1 January to 31 December 1993.

(ii) The Community hereby grants to Hungary in 1992 12 000 untaxed permits for use only on the territory of Greece.

If the transit situation on the territory of the republics which formed part of Yugoslavia in 1991 is not normalised the Community and Hungary shall jointly examine before 31 December 1992 the possible changes concerning the arrangements set out in this paragraph 2 (a).

Changes in the above provisions can, until the end of 1994 or, if this happens at an earlier date, until the conclusion of a bilateral transport agreement between the Community and Hungary, be made by common agreement between the parties.

The Community takes note of the Hungarian understanding that discussions will take place with the Commission and the Member States most directly concerned on other transportation questions such as aviation and third country road permits."

If the foregoing is acceptable to Hungary, I have the honour to propose that this letter, together with Your Excellency`s reply to that effect, shall constitute an amendment to the Exchange of Letters signed on 16 December 1991.

This Agreement is hereby approved by the parties in accordance with their respective procedures.

This Agreement shall enter into force on the first day following that on which the parties notify each other that the procedures mentioned in the preceding subparagraph have been completed. It shall apply as from 1 March 1992.

I should be obliged if you would confirm the agreement of the Government of Hungary to the contents of this letter.'

I have the honour to confirm that Hungary is in agreement with the contents of this letter.

Pleace accept, Sir, the assurance of my highest consideration.

For the Republic of Hungary

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(1) All above existing and additional third country permits may be exchanged for transit permits in the ratio 1:2 (1 third country permit for 2 transit permits).

(2) The Community shall grant 600 third country permits to Hungary for use only in traffic to or from Greece.

(3) All above existing and additonal third country permits may be exchanged for transit permits in the ratio 1:2 (1 third country permit for 2 transit permits).

(4) The Community shall grant 600 third country permits to Hungary for use only in traffic to or from Greece.