Agreement in the form of an Exchange of Letters

between the European Community and the State of Israel concerning reciprocal liberalisation measures and the replacement of Protocols 1 and 2 to the EC-Israel Association Agreement

A. Letter from the European Community

Sir,

I have the honour of referring to the negotiations which took place under Article 11 of the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the State of Israel, of the other part (Association Agreement), in force since 1 June 2000, which states that the Community and the State of Israel shall progressively establish greater liberalisation of their trade in agricultural products of interest to both parties.

These negotiations were held in accordance with the provisions of Article 11, which stipulates that, from 1 January 2000, the Community and Israel shall examine the situation in order to determine the measures to be applied by the Community and Israel from 1 January 2001 in accordance with the objective of progressive greater liberalisation in agriculture.

On the conclusion of the negotiations the two Parties agreed to the following:

1. Protocols 1 and 2 to the Association Agreement and their annexes shall be replaced by Protocols 1 and 2 and their annexes appearing in Annex I and II to this Exchange of Letters.

2. The Exchange of Letters between the European Community (the Community) and Israel relating to Protocol 1 and concerning imports into the Community of fresh cut flowers and flower buds falling within subheading 0603 10 of the Common Customs Tariff is hereby repealed.

3. The Joint Declaration on live plants and floriculture and horticulture products, appearing in Annex III to this Exchange of Letters, shall be inserted in the Association Agreement.

4. With regard to edible oils falling within HS heading 1507, 1512 and 1514, Israel will start the necessary internal legislative procedures in order to extend the Community's preferences to the percentage which will be decided by the Knesset as a result of its ongoing discussions.

5. From 1 January 2007 the Community and the State of Israel will assess the situation with a view to determining the liberalisation measures to be applied by the Community and the State of Israel from 1 January 2008, in accordance with the objective laid down in Article 11 of the Association Agreement.

The provisions of this Agreement shall be applicable from 1 January 2004.

I would be grateful if you could confirm the agreement of your Government to the above.

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

On behalf of the Council of the European Union

B. Letter from the State of Israel

Sir,

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

"I have the honour of referring to the negotiations which took place under Article 11 of the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the State of Israel, of the other part (Association Agreement), in force since 1 June 2000, which states that the Community and the State of Israel shall progressively establish greater liberalisation of their trade in agricultural products of interest to both parties.

These negotiations were held in accordance with the provisions of Article 11, which stipulates that, from 1 January 2000, the Community and Israel shall examine the situation in order to determine the measures to be applied by the Community and Israel from 1 January 2001 in accordance with the objective of progressive greater liberalisation in agriculture.

On the conclusion of the negotiations the two Parties agreed to the following:

1. Protocols 1 and 2 to the Association Agreement and their annexes shall be replaced by the Protocols 1 and 2 and their annexes, appearing in Annex I and II to this Exchange of Letters.

2. The Exchange of Letters between the European Community (the Community) and Israel relating to Protocol 1 and concerning imports into the Community of fresh cut flowers and flower buds falling within subheading 0603 10 of the Common Customs Tariff is hereby repealed.

3. The Joint Declaration on live plants and floriculture and horticulture products, appearing in Annex III to this Exchange of Letters, shall be inserted in the Association Agreement.

4. With regard to edible oils falling within HS heading 1507, 1512 and 1514, Israel will start the necessary internal legislative procedures in order to extend the Community's preferences to the percentage which will be decided by the Knesset as a result of its ongoing discussions.

5. From 1 January 2007 the Community and the State of Israel will assess the situation with a view to determining the liberalisation measures to be applied by the Community and the State of Israel from 1 January 2008, in accordance with the objective laid down in Article 11 of the Association Agreement.

The provisions of this Agreement shall be applicable from 1 January 2004.

I would be grateful if you could confirm the agreement of your Government to the above."

The State of Israel has the honour of confirming its agreement with the contents of this letter.

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

For the Government of the State of Israel

ANNEX I

PROTOCOL 1

concerning the arrangements applicable to imports into the Community of agricultural products originating in Israel

1. The products listed in the Annex, originating in Israel shall be admitted for importation into the Community, according to the conditions contained hereafter and in the Annex.

2. (a) Customs duties are eliminated or reduced as indicated in column "a".

(b) For certain products, for which the Common Customs Tariff foresees the application of an ad valorem duty and a specific duty, the rates of reduction, indicated in columns "a" and "c", only apply to the ad valorem duty. However, for the products corresponding to the CN codes 0207, 0404 10, 0709 90 60, 2204 21 and 2209, the duty reductions also apply to the specific duty.

(c) For certain products, customs duties are eliminated within the limit of the tariff quotas listed in column "b" for each of them.

(d) For the quantities imported in excess of the quotas, the common customs duties are, according to the product concerned, applied in full or reduced, as indicated in column "c".

3. For certain products, the exemption of customs duties is granted in the framework of reference quantities as indicated in column "d".

Should the volume of imports of one of these products exceed the reference quantity, the Community, having regard to an annual review of trade flows which it shall carry out, may make the product in question subject to a Community tariff quota, the volume of which shall be equal to the reference quantity. In that case, for quantities imported in excess of the quota, the common customs duty is, according to the product concerned, applied in full or reduced as indicated in column "c".

4. As indicated in column "e", for some products, for which neither a quota nor a reference quantity is fixed, the Community may fix a reference quantity as provided for in point 3 if, in the light of the annual review of trade flows which it shall carry out, it establishes that the volume of imports of a product or products threatens to cause difficulties on the Community market. If subsequently, the product is subject to a tariff quota under the conditions set out in point 3, for quantities imported in excess of the quota, the customs duty is, according to the product concerned, applied in full or reduced, as indicated in column "c".

5. For the first year of application, the volumes of the tariff quotas and the reference quantities shall be calculated as a pro rata of the basic volumes, taking into account the part of the period elapsed before the date of entry into force of this agreement.

6. For all the products listed in the Annex, the tariff quota and references quantity volumes are increased from 1 January 2004 to 1 January 2007, on the basis of four equal instalments, each corresponding to 3 % of these volumes.

ANNEX TO PROTOCOL 1

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ANNEX II

PROTOCOL 2

concerning the arrangements applicable to imports into Israel of agricultural products originating in the Community

1. The products listed in the Annex originating in the Community shall be admitted for importation into Israel according to the conditions contained herein and in the Annex.

2. Import duties on imports are either eliminated or reduced to the level indicated in column "a", within the limit of the tariff quota listed in column "b", and subject to the specific provisions indicated in column "e".

3. For the quantities imported in excess of the tariff quotas, the customs duties are, according to the product concerned, applied in full or reduced, as indicated in column "c".

4. For certain products for which no tariff quota is fixed, reference quantities are fixed as indicated in column "d".

Should the volume of imports of one of the products exceed the reference quantity, Israel, having regard to an annual review of trade flows which it shall carry out, may make the product in question subject to a tariff quota, the volume of which shall be equal to the reference quantity. In that case, for quantities imported in excess of the quota, the duty referred to in point 3 shall apply.

5. For products for which neither a tariff quota nor a reference quantity is fixed, Israel may fix a reference quantity as provided for in point 4 if, in the light of the annual review of trade flows which it shall carry out, it establishes that the volume of imports of a product or products threatens to cause difficulties on the Israeli market. If subsequently, the product is subjected to a tariff quota under the conditions set out in point 4, the provisions of point 3 shall apply.

6. For the first year of application, the volumes of the tariff quotas and the reference quantities shall be calculated as a pro rata of the basic volumes, taking into account the part of the period elapsed before the date of entry into force of this agreement.

7. For all the products listed in the Annex, the tariff quota and reference quantity volumes are increased from 1 January 2004 to 1 January 2007, on the basis of four equal instalments, each corresponding to 3 % of these volumes.

ANNEX TO PROTOCOL 2

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ANNEX III

JOINT DECLARATION

In order to promote and facilitate trade particularly in live plants, floriculture and horticulture products, the contracting parties hereby agree to take all measures necessary to ensure that documentary, identity and plant health checks are carried out within a timeframe that is compatible with and proportionate to the sensitive nature of the products concerned.

Should any difficulties arise, the Commission and the Israeli authorities shall hold immediate consultations in order to seek appropriate solutions.