AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS

between the European Community and Ukraine amending the agreement between the European Community and Ukraine on trade in textile products

A. Letter from the Council of the European Union

Sir,

1. I have the honour to refer to the negotiations held on 14 and 15 October 1999 between our respective Delegations with a view to renewing the Agreement between the European Community and Ukraine on trade in textile products including its annexes and agreed minutes ("the Agreement") initialled on 5 May 1993, as last amended and extended by the Agreement in the form of an Exchange of Letters initialled on 9 November 1995.

2. During these negotiations both Parties restated their long-term objective of enhancing textiles and clothing trade between their countries. For this purpose it was agreed that the Parties would negotiate during the year 2000 a longer-term agreement aiming at the full liberalisation of trade in textiles, in parallel with alignment of Ukrainian tariffs to the rates applied by the European Community.

Such agreement will aim at the elimination, upon its entry into force, of quantitative restrictions for product categories whose utilisation rates were below 2 % in 1999 (categories 1, 2, 2A, 3, 9, 12, 20, 23, 37, 67 and 115).

3. The Parties agreed to amend the following provisions of the Agreement:

3.1. Annex I which sets out the products referred to in Article 1 of the Agreement shall be replaced by Annex I to EC Regulation 3030/93 (Appendix 1 to this letter gives further details).

3.2. Annex II which sets out the quantitative restrictions for exports from Ukraine to the European Community shall be replaced by Appendix 2 to this letter. For the year 1999 there will be an increase of 60 % for quantitative limits for textile categories 6, 7, 15 and 16, and an increase of 50 % for categories 5, 26/27, 29 and 50. For the year 2000, the increase will be, subject to the conditions and procedures of paragraph 5 of this letter, 30 % for all textile categories over the effective 1999 levels, with the exception of categories 5, 6, 7, 15, 16, 26/27, 29 and 50, which will be increased by 50 % over the effective 1999 levels.

3.3. The Annex to Protocol C which sets out the quantitative restrictions for exports from the Republic of Ukraine to the European Community after OPT operations in the Republic of Ukraine shall be replaced by Appendix 3 to this letter.

3.4. The second and third sentence of Article 20, paragraph 1, shall be replaced by the following text: "It shall be applicable until 31 December 2000."

4. The Parties agreed that imports into Ukraine of the textiles products originating in the Community and listed in Appendix 4 shall not exceed the rates of import duties described in that Appendix (products covered by chapters 50 to 63 of the Harmonised System).

5. The Parties agreed that the balance of this Agreement, forming a package of mutual concessions, depends on the full and faithful implementation of all agreement terms. In order to monitor the implementation of the Agreement, both parties will hold consultations during the first quarter of 2000, in which the quantitative limits for the year 2000 as set out in Appendix 2 may also be reviewed in order to further facilitate the expansion of trade.

The increase of the levels of quantitative limits for the year 2000, as set out in Appendix 2, will be effected automatically upon confirmation that the tariff levels have been reduced to the levels established in Appendix 3. Ukraine undertakes to provide such confirmation by 31 March 2000.

The Parties also agreed that the volume of quantitative limits of year 2000 would be the same as those of 1999 until the moment when Ukraine applies the import tariff levels specified in Annex III.

6. In the case of non-application of these rates the Community will have the right to reintroduce for the year 2000 the levels for quantitative restrictions applicable for 1999 as specified in the Exchange of Letters initialled on 9 November 1995.

7. Should Ukraine become a Member to the World Trade Organisation before the date of expiry of the Agreement, this Agreement and its annexes will be applied and notified to the World Trade Organisation as an Administrative Arrangement, and its provisions will be applied within the framework of the Agreements and rules of the World Trade Organisation.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally no later than 1 December 1999 on the conditions to be specified in an Exchange of Notes (see Appendix 5).

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

For the Council of the European Union

Appendix 1

Annex I to the Agreement between the European Community and Ukraine on trade in textile products including initialled on 5 May 1993 is replaced by Annex I to EC Regulation 3030/93(1). It is understood that without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within that Annex by CN codes. Where there is an "ex" symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

(1) In 1999 this Annex was published in Official Journal L 134 of 28.5.1999.

Appendix 2

ANNEX II

(The full product descriptions of the categories listed in this Annex are to be found in Annex I to the Agreement)

>TABLE>

Appendix 3

Annex to Protocol C

(The full product descriptions of the categories listed in this Annex are to be found in Annex I to the Agreement)

OPT QUOTAS

Community quantitative limits

>TABLE>

Appendix 4

Maximum rates of duties applicable for imports into Ukraine of textile products from the European Community

>TABLE>

Appendix 5

Exchange of notes

The Directorate General for Trade of the European Commission presents its compliments to the Mission of Ukraine and has the honour to refer to the Agreement between the European Community and Ukraine on Trade in Textile Products initialled on 5 May 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 15 October 1999.

The Directorate General for Trade wishes to inform the Mission of Ukraine that, whilst awaiting the completion of the necessary procedures for the conclusion and coming into force of the Agreement in the form of an Exchange of Letters, the European Community is prepared to allow the provisions of the Agreement to apply de facto from ... This is on the understanding that either Party may at any time terminate this de facto application of the Agreement in the form of an Exchange of Letters provided that four months notice is given.

The Directorate General for Trade would be grateful if the Mission of Ukraine would confirm its agreement to the foregoing.

B. Letter from the Government of Ukraine

Sir,

I have the honour to acknowledge receipt of your letter of ... which reads as follows: "1. I have the honour to refer to the negotiations held on 14 and 15 October 1999 between our respective Delegations with a view to renewing the Agreement between the European Community and Ukraine on trade in textile products including its annexes and agreed minutes ('the Agreement') initialled on 5 May 1993, as last amended and extended by the Agreement in the form of an Exchange of Letters initialled on 9 November 1995.

2. During these negotiations both Parties restated their long-term objective of enhancing textiles and clothing trade between their countries. For this purpose it was agreed that the Parties would negotiate during the year 2000 a longer-term agreement aiming at the full liberalisation of trade in textiles, in parallel with alignment of Ukrainian tariffs to the rates applied by the European Community.

Such agreement will aim at the elimination, upon its entry into force, of quantitative restrictions for product categories whose utilisation rates were below 2 % in 1999 (categories 1, 2, 2A, 3, 9, 12, 20, 23, 37, 67 and 115).

3. The Parties agreed to amend the following provisions of the Agreement:

3.1. Annex I which sets out the products referred to in Article 1 of the Agreement shall be replaced by Annex I to EC Regulation 3030/93 (Appendix 1 to this letter gives further details).

3.2. Annex II which sets out the quantitative restrictions for exports from Ukraine to the European Community shall be replaced by Appendix 2 to this letter. For the year 1999 there will be an increase of 60 % for quantitative limits for textile categories 6, 7, 15 and 16, and an increase of 50 % for categories 5, 26/27, 29 and 50. For the year 2000, the increase will be, subject to the conditions and procedures of paragraph 5 of this letter, 30 % for all textile categories over the effective 1999 levels, with the exception of categories 5, 6, 7, 15, 16, 26/27, 29 and 50, which will be increased by 50 % over the effective 1999 levels.

3.3. The Annex to Protocol C which sets out the quantitative restrictions for exports from the Republic of Ukraine to the European Community after OPT operations in the Republic of Ukraine shall be replaced by Appendix 3 to this letter.

3.4. The second and third sentence of Article 20, paragraph 1, shall be replaced by the following text: 'It shall be applicable until 31 December 2000.'

4. The Parties agreed that imports into Ukraine of the textiles products originating in the Community and listed in Appendix 4 shall not exceed the rates of import duties described in that Appendix (products covered by chapters 50 to 63 of the Harmonised System).

5. The Parties agreed that the balance of this Agreement, forming a package of mutual concessions, depends on the full and faithful implementation of all agreement terms. In order to monitor the implementation of the Agreement, both parties will hold consultations during the first quarter of 2000, in which the quantitative limits for the year 2000 as set out in Appendix 2 may also be reviewed in order to further facilitate the expansion of trade.

The increase of the levels of quantitative limits for the year 2000, as set out in Appendix 2, will be effected automatically upon confirmation that the tariff levels have been reduced to the levels established in Appendix 3. Ukraine undertakes to provide such confirmation by 31 March 2000.

The Parties also agreed that the volume of quantitative limits of year 2000 would be the same as those of 1999 until the moment when Ukraine applies the import tariff levels specified in Annex III.

6. In the case of non-application of these rates the Community will have the right to reintroduce for the year 2000 the levels for quantitative restrictions applicable for 1999 as specified in the Exchange of Letters initialled on 9 November 1995.

7. Should Ukraine become a Member to the World Trade Organisation before the date of expiry of the Agreement, this Agreement and its annexes will be applied and notified to the World Trade Organisation as an Administrative Arrangement, and its provisions will be applied within the framework of the Agreements and rules of the World Trade Organisation.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally no later than 1 December 1999 on the conditions to be specified in an Exchange of Notes (see Appendix 5)."

I have the honour to confirm that my Government is in agreement with the content of your letter and the Appendices attached thereto.

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

For the Government of Ukraine