AGREEMENT between the European Economic Community and the Republic of India on Trade in textile products Done at Brussels on 31 October 1986

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and

THE GOVERNMENT OF THE REPUBLIC OF INDIA,

of the other part,

DESIRING to ensure the orderly and equitable development of trade in textile products between the European Economic Community (hereinafter referred to as 'the Community') and India.

ON THE BASIS of the Arrangement regarding international trade in textiles (hereinafter referred to as 'the Geneva Arrangement'), and in particular Article 4 thereof, as renewed under the Protocol and the conclusions adopted by the Textiles Committee on 31 July 1986,

HAVE DECIDED in a spirit of mutual cooperation to conclude this Agreement and to this end have designated as their Plenipotentiaries:

THE COUNCIL OF THE EUROPEAN COMMUNITIES:

THE GOVERNMENT OF THE REPUBLIC OF INDIA:

WHO HAVE AGREED AS FOLLOWS:

SECTION I

Trade arrangements

Article 1

1. The Parties recognize and confirm that, subject to the provisions of this Agreement and without prejudice to their rights and obligations under the General Agreement on Tariffs and Trade, the conduct of their mutual trade in textile products shall be governed by the provisions of the Geneva Arrangement and the Protocol of Extension dated 31 July 1986.

2. In respect of the products covered by this Agreement, the Community undertakes not to introduce quantitative restrictions under Article XIX of the General Agreement

on Tariffs and Trade or Article 3 of the Geneva Arrangement.

3. Measures having equivalent effect to quantitative restrictions on the importation into the Community of the products covered by this Agreement shall be prohibited.

Article 2

1. This Agreement shall apply to trade in textile products of cotton, wool and man-made fibres originating in India which are listed in Annex I.

2. The classification of the products covered by this Agreement is based on the nomenclature of the Common Customs Tariff and on the nomenclature of goods for the external trade statistics of the Community and statistics of trade between Member States (NIMEXE).

From the entry into force of the International Convention on the Harmonized Commodity Description and Coding System (HS) this classification will be based on theHarmonized System and on the Community nomenclatures derived from that system.

3. The origin of the products covered by this Agreement shall be determined in accordance with the rules in force in the Community.

Any amendment to these rules of origin shall be communicated to India and shall not have the effect of reducing any quantitative limit established in Annex II.

The procedures for control of the origin of the products referred to above are laid down in Protocol A.

Article 3

India agrees for each Agreement year to restrain its exports to the Community of the products described in Annex II to the limits set out therein.

Exports of textile products set out in Annex II shall be subject to a double-checking system specified in Protocol A.

Article 4

India and the Community recognize the special and differential character of re-imports of textile products into the Community after processing in India.

Such re-imports may be agreed outside the quantitative limits established under this Agreement provided that they are effected in accordance with the regulations on economic outward processing in force in the Community.

Article 5

With reference to Article 12 (3) of the Geneva Arrangement, the limitations set out in this Agreement will not apply to handloom fabrics of the cottage industry, hand-made cottage industry products made of such handloom fabrics and traditional folklore handicraft textile products provided

that these products meet the conditions laid down in Protocol B.

Article 6

1. Imports into the Community of textile products covered by this Agreement shall not be subject to the quantitative limits established in Annex II, provided that they are declared to be for re-export outside the Community in the same state or after processing, within the framework of the administrative system of control which exists within the Community.

However, the release for home use of products imported under the conditions referred to above shall be subject to the production of an export certificate issued by the Indian authorities, and to proof of origin in accordance with the provisions of Protocol A.

2. Where the Community authorities have evidence that imports of textile products have been set off against a quantitative limit established under this Agreement, but that the products have subsequently been re-exported outside the Community, the authorities concerned shall inform the Indian authorities within four weeks of the quantities involved and authorize imports of identical quantities of the same products, which shall not be set off against the quantitative limit established under this Agreement for the current or the following year.

Article 7

1. In any Agreement year advance use of a portion of the quantitative limit established for the following Agreement year is authorized for each category of products up to 5 % of the quantitative limit for the current Agreement year.

Amounts delivered in advance shall be deducted from the corresponding quantitative limits established for the following Agreement year.

2. Carryover to the corresponding quantitative limit for the following Agreement year of the amounts not used during any Agreement year is authorized for each category of products up to 7 % of the quantitative limit for the current Agreement year.

3. Transfers in respect of categories in Group I shall not be made from any category except as follows:

- transfers between categories 2 and 3 and from category 1 to categories 2 and 3 may be made up to 7 % of the quantitative limits for the category to which the transfer is made,

- transfers between categories 4, 5, 6, 7 and 8 may be made up to 7 % of the quantitative limit for the category to which the transfer is made.

Transfers into any category in Groups II and III may be made from any category or categories in Groups I, II and III up to 7 % of the quantitative limit for the category to which the transfer is made.

4. The table of equivalence applicable to the transfers referred to above is given in Annex I to this Agreement.

5. The increase in any category of products resulting from the cumulative application of the provisions in paragraphs 1, 2 and 3, above during an Agreement year shall not exceed 17 %.

6. Prior notification shall be given by the authorities of India in the event of recourse to the provisions of paragraphs 1, 2 and 3 above.

Article 8

1. Exports of textile products not listed in Annex II to this Agreement may be made subject to quantitative limits by India on the conditions laid down in the following paragraphs.

2. Where the Community finds, under the system of administrative control set up, that the level of imports of products in a given category not listed in Annex II originating in India exceeds, in relation to the preceding year's total imports into the Community from all sources of products in that category, the following rates:

- 1,0 % for categories of products in Group I,

- 5,0 % for categories of products in Group II,

- 10,0 % for categories of products in Group III,

it may request the opening of consultations in accordance with the procedure described in Article 16 of this Agreement, with a view to reaching agreement on an appropriate restraint level for the products in such category.

The Community shall authorize the importation of products of the said category shipped from India before the date on which the request for consultations was submitted.

3. Pending a mutually satisfactory solution, India undertakes to limit exports of the products in the category concerned to the Community or to the regions of the Community market specified by the Community for a provisional period of three months from the date on which the request for consultations is made. Such provisional limit shall be established at 25 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2, and gave rise to the request for consultation or 25 % of the level resulting from the application of the formula set out in paragraph 2, whichever is the higher.

4. Should the Parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 16 of the Agreement, the Community shall have the right to introduce a definitive quantitative limit at an annual level not lower than the level resulting from the application of the formula set out in paragraph 2, or 106 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2 and gave rise to the request for consultations, whichever is the higher.

The annual level so fixed shall be revised upwards after consultations in accordance with the procedure referred to in Article 16, with a view to fulfilling the conditions set out in paragraph 2, should the trend of total imports into the Community of the product in question make this necessary.

5. The limits introduced under paragraph 2 or 4 may in no case be lower than the level of imports of products in that category originating in India in 1986.

6. Quantitative limits may also be established by the Community on a regional basis in accordance with the provisions of Protocol C.

7. The provisions of this Article shall not apply where the percentages specified in paragraph 2 have been reached as a result of fall in total imports into the Community, and not as a result of an increase in exports of products originating in India.

8. In the event of the provisions of paragraph 2, 3 or 4 being applied, India undertakes to issue export certificates for products covered by contracts concluded before the introduction of the quantitative limit, up to the volume of the quantitative limit fixed.

9. Up to the date of communication of the statistics referred to in Article 9 (6), the provisions of paragraph 2 of this Article shall apply on the basis of the annual statistics previously communicated by the Community.

10. The provisions of this Agreement which concern exports of products subject to the quantitative limits established in Annex II shall also apply to products for which quantitative limits are introduced under this Article.

Article 9

1. India shall supply the Community with precise statistical information on all export certificates issued by the Indian authorities for all categories of textile products subject to the quantitative limits established under this Agreement as well as on all certificates issued by the Indian authorities for all products referred to in Article 5 and subject to the provisions of Protocol B.

The Community shall likewise transmit to the Indian authorities precise statistical information on import authorizations or documents issued by the Community authorities in respect of export certificates issued by India.

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

3. The Community shall supply to the Indian authorities import statistics for all products covered by the system of administrative control referred to in Article 8 (2) and for products covered by Article 6 (1).

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

5. Should it be found on analysis of the information exchanged that there are significant discrepancies between the returns for exports and those for imports, consultations may be initiated in accordance with the procedure specified in Article 16.

6. For the purpose of applying the provisions of Article 8, the Community undertakes to provide the Indian authorities before 15 April of each year with the preceding year's statistics on imports of all textile products covered by this Agreement, broken down by supplying country and Community Member State.

7. India and the Community will exchange to the extent possible available statistical information on trade in textile products.

Article 10

1. Should there be divergent opinions between India and the competent Community authorities at the point of entry into the Community on the classification of products covered by the present Agreement, classification shall provisionally be based on indications provided by the Community, pending consultations in accordance with Article 16 with a view to reaching agreement on definitive classification of the product concerned.

2. If the above provisional classification results in provisional debit against a quantitative limit for a category of products other than the category indicated on the export documents issued by the competent Indian authorities, the Community shall inform India of such provisional debit within 30 days.

3. The authorities of India shall be informed of any amendment to the tariff and statistical nomenclatures in force in the Community or any decision, made in accordance with the procedures in force in the Community, relating to the classification of products covered by this Agreement.

Any amendment to the tariff and statistical nomenclatures in force in the Community or any decision which results in a modification of the classification of products covered by this Agreement shall not have the effect of reducing any quantitative limit established in Annex II.

The procedures for the application of this paragraph are set out in Protocol A.

Article 11

1. India and the Community agree to cooperate fully in preventing the circumvention of the present Agreement.

2. Where information available to the Community as a result of the investigations carried out in accordance with the procedures set out in Protocol A constitutes evidence that products of Indian origin subject to quantitative limits established under this Agreement have been transhipped, rerouted or otherwise imported into the Community in circumvention of this Agreement, the Community may request the opening of consultations in accordance with the procedures described in Article 16 of this Agreement, with a view to reaching agreement on an equivalent adjustment of the corresponding quantitative limits established under the Agreement.

3. Pending the result of the consultations referred to in paragraph 2, India shall as a precautionary measure, if so requested by the Community, make the necessary arrangements to ensure that adjustments of quantitative limits liable to be agreed following the consultations referred to in paragraph 2, may be carried out for the quota year in which the request to open consultations in accordance with paragraph 2 was made, or for the following year if the quota for the current year is exhausted, where clear evidence of circumvention is provided.

4. Should the Parties be unable in the course of consultations to reach a satisfactory solution within the

period specified in Article 16 of the Agreement, the Community shall have the right, where clear evidence of circumvention has been provided, to deduct from the quantitative limits established under this Agreement amounts equivalent to the products of Indian origin.

Article 12

India shall endeavour to ensure that exports of textile products subject to quantitative limits are spaced out as evenly as possible over an Agreement year, due account being taken, in particular, of seasonal factors.

Article 13

Should recourse be had to the denunciation provisions of Article 18 (4), the quantitative limits established in Annex II shall be adapted on a pro rata basis.

Article 14

1. Portions of the quantitative limits established in

Annex II not used in one Member State of the Community

may be reallocated to another Member State.

The Community undertakes to examine with care and shall reply within four weeks to any request made for reallocation by India. In the event of agreement on such reallocation, the flexibility provisions set out in Article 7 shall continue to be applicable to the levels of the original allocation.

If, in the course of the application of this Agreement, India finds that the break-down of a limit established in Annex II causes particular difficulties, it may request the opening of consultations in accordance with Article 16 with a view to reaching a mutually satisfactory solution.

2. After 1 June of each year of application of the Agreement, India may transfer, subject to prior notification to the Community, the unused quantities of the regional quota-shares of a Community quantitative limit, set out in Annex II, to the quota-shares of the same limit of other regions of the Community provided that the regional quota-share from which the transfer is made is utilized by less than 80 %, and up to the amount of the following percentages of the quota-share to which the transfer is made:

- 2 % in the first year of the application of the Agreement,

- 4 % in the second year of the application of the Agreement,

- 8 % in the third year of the application of the Agreement,

- 12 % in the fourth year of the application of the Agreement.

The percentage in the fifth year of the application of the agreement shall be determined following consultations between the Parties.

3. Should it appear in any given region of the Community that additional supplies are required, the Community may, where measures taken pursuant to paragraph 1 are inadequate to cover those requirements, authorize the importations of amounts greater than those stipulated in Annex II.

Article 15

India and the Community undertake to refrain from discrimination in the allocation of export certificates and import authorizations or documents referred to in Protocols A and B.

Article 16

1. The special consultation procedures referred to in this Agreement shall be governed by the following rules:

- any request for consultations shall be notified in writing to the other Party,

- the request for consultations shall be followed within a reasonable period and in any case not later than 15 days following the notification by a statement setting out the reasons and circumstances which, in the opinion of the requesting Party, justify the submission of such a request,

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

2. The Community may request consultations in accordance with paragraph 1 of this Article and of paragraph 11 of the Protocol of Extension of the Geneva Arrangement when it ascertains that during a particular year of application of the Agreement, real difficulties arise in the Community or one of its regions from a sharp and substantial increase, by comparison to the preceding year, in imports of a given category of Group I subject to the quantitative limits set out in Annex II.

3. If necessary, at the request of either of the Parties and in conformity with the provisions of the Geneva Arrangement, consultations shall be held on any problems arising from

the application of this Agreement. Any consultations held under this Article shall be approached by both Parties in a spirit of cooperation and with a desire to reconcile the difference between them.

Article 17

This Agreement shall apply, on the one hand, to the territories in which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty and, on the other hand, to the territory of India.

SECTION II

Transitional and final provisions

Article 18

1. This Agreement shall enter into force on the first day of the month following the date on which the Contracting Parties notify each other of the completion of the procedures necessary for this purpose. It shall be applicable until 31 December 1991, except that, for the period 1 August to 31 December 1991, this Agreement is subject to both Parties being free to request, at any time, consultations with a view to proposing revisions in the light of any successor arrangement to the Geneva Arrangement.

2. This Agreement shall apply with effect from 1 January 1987.

3. Either Party may at any time propose modifications to the Agreement.

4. Either Party may at any time donounce this Agreement provided that at least 60 days' notice is given. In that event, the Agreement shall come to an end on the expiry of the period of notice.

5. The Annexes, Protocols and Agreed Minutes to this Agreement shall form an integral part thereof.

Article 19

This Agreement shall be drawn up in two copies in the Danish, Dutch, English, French, German, Greek, Italian, Portuguese, Spanish and Hindi languages, each of these texts being equally authentic.

ANNEX I

LIST OF PRODUCTS

1. When the constitutive material of the products of categories 1 to 114 is not specifically mentioned these products are to be taken to be made exclusively of wool or of fine animal hair, of cotton or of man-made fibres.

2. Garments which are not recognizable as being garments for men or boys or as garments for women or girls are classified with the latter.

3. Where the expression 'babies' garments' is used, this is meant also to cover girls' garments up to and including commercial size 86.

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

ANNEX II

For practical reasons the product descriptions used in Annex I are given in the present Annex in abbreviated form

>TABLE>

PROTOCOL A

TITLE I

CLASSIFICATION

Article 1

1. The competent authorities of the Community undertake to inform India of any changes in the tariff and statistical nomenclatures before the date of their entry into effect in the Community.

2. The competent authorities of the Community undertake to inform India of any decisions relating to the classification of products subject to the Agreement within one month of their adoption at the latest. Such communication shall include:

(a) a description of the products concerned;

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

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

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

4. Where a Community decision on classification resulting in a change of classification practice or a change of categorization of any product subject to the Agreement affects a category subject to restraint, the two Parties

agree to enter into consultations in accordance with the procedures described in Article 16 (1) of the Agreement with a view to honouring the obligation under the second subparagraph of Article 10 (3) of the Agreement.

TITLE II

ORIGIN

Article 2

1. Products originating in India for export to the Community in accordance with the arrangements established by this Agreement shall be accompanied by a certificate of Indian origin conforming to the model annexed to this Protocol.

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

3. However, the products in Group III may be imported into the Community in accordance with the arrangements established by this Agreement on production of a declaration by the exporter on the invoice or other commercial document relating to the products to the effect that the products in question originate in India within the meaning of the relevant rules in force in the Community.

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

Article 3

Where different criteria for determining origin are laid down for products falling within the same category, certificates or declarations of origin will bring out these criteria.

Article 4

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

TITLE III

DOUBLE CHECKING SYSTEM FOR CATEGORIES OF PRODUCTS WITH QUANTITATIVE LIMITS

Section I

Exportation

Article 5

The competent authorities of India shall issue an export certificate in respect of all consignments from India of textile products referred to in Annex II, up to the relevant quantitative limits as may be modified by Articles 7, 13 and 14 of the Agreement and of textile products subject to any definitive or provisional quantitative limits established as a result of the application of Article 8 of the Agreement.

Article 6

1. The export certificate shall conform to the model annexed to this Protocol. It must certify inter alia that the quantity of the product in question has been set off against the quantitative limit prescribed for the category of the product in question.

2. Each export certificate shall only cover one of the categories of products listed in Annex II to this Agreement. It may be used for one or more consignments of the products in question.

3. Where the conversion rate provided for in Annex II is applied the following note must be inserted in box 9 of the export licence: 'conversion rate for garments of a commercial size not exceeding 130 cm is to be applied'.

Article 7

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

Article 8

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

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

Article 9

The presentation of an export certificate, pursuant to Article 11, shall be effected not later than 31 March of the year following that in which the goods covered by the certificate have been shipped.

Section I I

Importation

Article 10

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

Article 11

1. The competent Community authorities shall issue the import authorization or document referred to in Article 10 automatically within five working days of the presentation by the importer of the original of the corresponding export certificate.

The import authorization or document shall be valid for six months.

2. The competent Community authorities shall cancel the already issued import authorization or document if the corresponding export certificate has been withdrawn.

However, if the competent Community authorities are notified about the withdrawal or cancellation of the export certificate only after the products have been imported into the Community, the quantities involved shall be set off against the quantitative limit for the category and the quota year in question.

Article 12

1. If the competent Community authorities find that the total quantities covered by export certificates issued by India for a particular category in any Agreement year exceed the quantitative limit established in Annex II for that category, as may be modified by Articles 7, 13 and 14 of the Agreement, or any definitive or provisional limit established under Article 8 of the Agreement, the said authorities may suspend the further issue of import authorizations or documents. In this event, the competent Community authorities shall immediately inform the authorities of India and the special consultation procedure set out in Article 16 of the Agreement shall be initiated forthwith.

2. Exports of products of Indian origin subject to quantitative limits not covered by Indian export certificates issued in accordance with the provisions of this Protocol may be refused the issue of import authorizations or documents by the competent Community authorities.

However, if the import of such products is allowed into the Community by the competent Community authorities, the quantities involved shall not be set off against the appropriate quantitative limits set out in Annex II or established as a result of the application of Article 8 of the Agreement, without the express agreement of India, save as provided for in Article 11 of the Agreement.

TITLE IV

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

Article 13

1. The export certificate and the certificate of origin may comprise additional copies duly indicated as such. They shall be made out in English or French. If they are completed by hand, entries must be in ink and in block capitals. Where the export certificate and the certificate of origin are issued at the same time, the certificate of origin may be a carbon copy of the export certificate.

These documents shall measure 210 × 297 mm. The paper used must be white writing paper, sized, not containing mechanical pulp and weighing not less than 25 g/m$. Each part shall have a printed guilloche-pattern background making any falsification by mechanical or chemical means apparent to the eye.

If the documents have several copies only the top copy which is the original shall be printed with the guilloche-pattern background. This copy shall be clearly marked as 'original' and the other copies as 'copy'. Only the original shall be accepted by the competent authorities in the Community as being valid for the purposes of export to the Community in accordance with the arrangements established by this Agreement.

2. Each export certificate and certificate of origin shall bear a serial number, whether or not printed, by which it can be identified.

This number for the export certificate shall be standardized and composed of the following elements:

- two letters identifying India as follows: IN,

- two letters identifying country of destinations as follows:

BL = Benelux

DE = Federal Republic of Germany

DK = Denmark

ES = Spain

FR = France

UK = United Kingdom

GR = Greece

IE = Ireland

IT = Italy

PT = Portugal,

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

- a two-digit number running consecutively from 01 to 99 identifying the issuing office in India,

- a five-digit number running consecutively from 00001 to 99999 allocated to the country of destination.

Article 14

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

Article 15

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

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

TITLE V

ADMINISTRATIVE COOPERATION

Article 16

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

Article 17

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

Article 18

1. Subsequent verification of documentation required under the Agreement shall be carried out at random, or whenever the competent authorities of either Party have reasonable doubt as to the authenticity or accuracy of such documentation.

2. In such cases the competent authorities shall make available relevant documentation or a copy thereof to the competent governmental authority of the other Party, giving the reasons of form or substance for an enquiry. If the invoice has beens submitted, such invoice or a copy thereof shall

be attached to the relevant document(s) or its copy. The authorities shall also forward any information that has been obtained suggesting that the particulars given on the said documentation are inaccurate.

3. The results of the subsequent verifications carried out in accordance with paragraphs 1 and 2 shall be communicated to the competent authorities of the other Party within three months at the latest together with any other pertinent information.

Should such verifications reveal systematic irregularities in the use of declarations of origin, the Community may subject imports of the products in question to the provisions of Article 2 (1) of this Protocol.

4. For the purpose of subsequent verification of certificates of origin, copies of the certificates as well as any export documents referring to them shall be kept for a period of at least two years by the competent governmental authority in India.

5. Recourse to the random verification procedure specified in this Article must not constitute an obstacle to the release for home use of the products in question.

Article 19

1. Where the verification procedure referred to in Article 18 or where information available to the Community or to India indicates that the provisions of this Agreement are being contravened, both Parties shall cooperate closely and with appropriate urgency to prevent such contravention.

2. To this end appropriate enquiries shall be carried out, if necessary, concerning operations which are or appear to be in contravention of the Agreement. The results of these enquiries shall be communicated together with other pertinent information.

3. Subject to agreement between the Community and India, officials designated by the Community may cooperate with the authorities designated by India in the enquiries referred to in paragraph 2.

4. Pursuant to the cooperation referred to in paragraph 1, India and the Community shall exchange any information considered by either Party to be of use in preventing the contravention of the provisions of the Agreement. These exchanges may include information on textile production in India and on trade in textile products of a kind covered by this Agreement between India and other countries, particularly where the Community has reasonable grounds to consider that the products in question may be in transit across the territory of India prior to their importation into the Community. This information may include at the request of the Community copies of all relevant documentation.

5. Where it is established that the provisions of this Agreement have been contravened, India and the Community may agree to take such measures as are necessary to prevent a recurrence of such contravention.

>TABLE>

>TABLE>

PROTOCOL B

1. The exemption provided for in Article 5 of the Agreement in respect of cottage industry products shall apply only to the following products:

(a) fabrics woven on hand- or foot-operated looms in the cottage industry of India;

(b) hand-made textile products made in the cottage industry of India from fabrics referred to in (a) above;

(c) hand-made garments made in the cottage industry of India from fabrics referred to in (a);

(d) traditional folklore textile products of India made in the cottage industry of India as defined in the list agreed between both the Parties and annexed to this Protocol.

2. Exemption shall be granted only for products accompanied by a certificate issued by the competent Indian authorities in accordance with the specimen annexed to this Protocol. Such certificates shall state the ground on which exemption is based. Certificates covering products referred to in (d) shall bear a stamp 'FOLKLORE'.

3. The provisions of Titles IV and V of Protocol A shall apply mutatis mutandis to the products referred to in paragraph 1 of this Protocol.

4. The application of the provisions of Article 5 of the Agreement with respect to the products referred to in paragraph 1 (c) of this Protocol is subject to the arrangements set out in Agreed Minute number 7.

AGREED LIST OF TRADITIONAL FOLKLORE HANDICRAFT TEXTILE PRODUCTS OF INDIA

Indian items are traditional folklore handicraft textile products, uniquely and historically Indian, made in the cottage industry. They cover the products enumerated below (clothes and clothing accessories, decorative furnishings) and such other items as may be agreed upon from time to time.

I. CLOTHES AND CLOTHING ACCESSORIES

All the garments and accessories listed below are uniquely and historically Indian traditional folklore textile products on account of their similarity in shape and design with those of clothes and accessories traditionally worn in India.

The products listed below must have the following characteristics:

- they are produced in cottage industry units,

- they do not include zip fasteners,

- they are ornamented in the characteristic Indian folk styles, using any one or more of the following methods: the garments called Churidar Pyjama, Salwar and Gararra need not be ornamented,

- hand-painting or hand-printing or hand-decoration, or handicraft batik or handicraft tie and dye or kalamkari,

- embroidery or crocheted ornamentation,

- appliqué work of sequins, glass or wooden beads, shells, mirrors or ornamental motifs of textile,

- extra-weft or extra-warp ornamentation.

>TABLE>

II. DECORATIVE FURNISHINGS

>TABLE>

>TABLE>

PROTOCOL C

Under Article 8 (6) of the Agreement, a quantitative limit may be fixed on a regional basis where imports of a given product into any region of the Community in relation to the amounts determined in accordance with paragraph 2 of the said Article 8 exceed the following regional percentage:

Germany // 25,5 %

Benelux // 9,5 %

France // 16,5 %

Italy // 13,5 %

Denmark // 2,7 %

Ireland // 0,8 %

United Kingdom // 21,0 %

Greece // 1,5 %

Spain // 7,5 %

Portugal // 1,5 %

Agreed Minute 5

With reference to Article 14 (3) of the Agreement on trade in textiles between the European Economic Community and the Republic of India, initialled on 31 October 1986, it is understood that the percentage for the fifth year of the application of the Agreement will be at least equal to the percentage applicable in the fourth year.

Head of Delegation of the Republic of India

Head of Delegation of the European Economic Community

Agreed Minute 7

In the context of the Agreement between the Community and the Republic of India on trade in textile products initialled on 31 October 1986, the following was agreed:

1. Exports of hand-made garments made in the cottage industry of India from fabrics referred to in paragraph 1 (a) of Protocol B (i.e. those categories of products falling within Groups I (B), II (B) and III (B) in Annex I of the initialled Agreement) will be included in the quantitative limits established under the Agreement. These products will be covered by export certificates.

2. In addition, for such products belonging to categories 6, 8, 15 and 27, the following global quantities:

1987: 3 350 000 pieces

1988: 3 481 000 pieces

1989: 3 619 000 pieces

1990: 3 763 000 pieces

1991: 3 912 000 pieces

may be exported to the Community, provided they are accompanied by the certificate referred to in paragraph 2 of Protocol B bearing the following reference in box 7: 'Hand-made garments'. The category of the product in question, as well as the quota year, must also be indicated in the same box.

For each of the categories in question the total quantity exported to the Community shall not exceed the following levels:

>TABLE>

These quantities are broken down into shares for each of the regions of the Community. The breakdown for 1987 is set out in the annex to this Agreed Minute.

3. The provisions of Articles 7 and 14 (2) of the Agreement shall apply to the above quantities, except that there shall be no inter-category or inter-regional transfers between the quantitative limits referred to above and those set out in Annex II to the Agreement.

4. The provisions of Title III, IV and V of Protocol A shall apply mutatis mutandis to the above products.

Head of Delegation of the Republic of India

Head of Delegation of the European Economic Community

Annex to Agreed Minute 7

Regional breakdown for 1987

>TABLE>

Exchange of Notes

The Mission of the Republic of India to the European Communities presents its compliments to the Directorate-General for External Relations of the Commission of the European Communities and has the honour to refer to the Agreement on trade in textile products between the Republic of India and the Community initialled on 31 October 1986.

The Mission wishes to inform the Directorate-General that whilst awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Government of the Republic of India is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1987 if the Community is disposed to do likewise.

The Mission would be grateful if the Community would confirm its agreement to the foregoing.

The Mission of the Republic of India to the European Communities avails itself of this opportunity to renew to the Directorate-General for External Relations of the European Communities the assurance of its highest consideration.

Exchange of Notes

The Directorate-General for External Relations of the Commission of the European Communities presents its compliments to the Mission of the Republic of India to the European Communities and has the honour to refer to the Note regarding the Agreement on trade in textile products between the Republic of India and the Community initialled on 31 October 1986.

The Directorate-General wishes to confirm that whilst awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Community is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1987.

The Directorate-General for External Relations of the Commission of the European Communities avails itself of this opportunity to renew to the Mission of the Republic of India to the European Communities the assurance of its highest consideration.