Proposal for a COUNCIL DECISION concerning the conclusion of an Agreement in the form of an Exchange of Letters between the European Community, of the one part, and the Republic of Iceland, of the other part, on Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland

(presented by the Commission)

EXPLANATORY MEMORANDUM

The trade regime for processed agricultural products between the EC, on the one hand, and Norway and Iceland, on the other hand, is regulated by Protocol 2 of the respective bilateral Free Trade agreements and Protocol 3 of the Agreement on the European Economic Area.

Protocol 3 has not yet been finalised. The EC and Iceland agreed to adapt Protocol 2 of the bilateral agreement to take into account the implementation of the Uruguay Round and the enlargement to new countries and to improve bilateral trade regime.

In 1996, the European Community and Norway agreed in the form of an exchange of letters (Council Decision 96/753/EC of 6.12.1996) to adapt Protocol 2, within the scope of a common mandate.

The result of this agreement is the improvement, on the reciprocal basis, of the market access conditions for operators of both parties.

In 1997, the European Community and the Republic of Iceland started exploratory talks with a view to improving trade on a reciprocal basis in a similar way to the preferential regime agreed in 1996 with Norway.

Moreover the adaptation of the EC/Iceland agreement is necessary, as it would allow the Community to have a common basis with both partners before launching the negotiations to complete Protocol 3 of the Agreement on the European Economic Area.

The Commission has concluded these negotiations and it proposes to the Council to approve this proposal for a decision reflecting the result of the negotiations.

Proposal for a COUNCIL DECISION concerning the conclusion of an Agreement in the form of an Exchange of Letters between the European Community, of the one part, and the Republic of Iceland, of the other part, on Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 113 in conjunction with the first sentence of Article 228 (2) thereof,

Having regard to the proposal from the Commission,

Whereas an Agreement in the form of an Exchange of Letters between the European Community, of the one part, and the Republic of Iceland, of the other part, on Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland (1) has been negotiated in order to take into account the accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the European Union and the implementation of the Uruguay Round Settlement;

(1) OJ L 301 of 31.12.1972, p. 2

Whereas the Agreement should be approved,

HAS DECIDED AS FOLLOWS:

Article 1

The Agreement in the form of an Exchange of Letters between the European Community, of the one part, and the Republic of Iceland, of the other part, on Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland is hereby approved on behalf of the Community.

The text of the Agreement is attached to this Decision.

Article 2

Detailed rules for the application of this Decision shall be adopted by the Commission assisted by the Committee referred to in Article 15 of Regulation (EC) No 3448/93 (2) in accordance with the procedure provided for in Article 16 of that Regulation.

(2) OJ L 318 of 20.12.1993, p. 18

Article 3

The President of the Council is hereby authorised to designate the person empowered to sign the Agreement referred to in Article 1 in order to bind the Community.

Done at Brussels,

For the Council

The President

AGREEMENT in the form of an Exchange of Letters between the European Community, of the one part, and the Republic of Iceland, of the other part, on Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland

A. Letter from the Community

Brussels,

Sir,

I have the honour to confirm the agreement of the European Community to the "Agreed Minutes" annexed hereto concerning Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland.

I should be grateful if you would confirm the agreement of the Government of the Republic of Iceland with the content of this letter.

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

For the European Community

B. Letter from Iceland

Brussels,

Sir,

I have the honour to acknowledge receipt of your letter of today worded as follows:

'I have the honour to confirm the agreement of the European Community to the "Agreed Minutes" annexed hereto concerning Protocol 2 to the Agreement between the European Economic Community and the Republic of Iceland.`

I have the honour to confirm the agreement of my Government with the contents of your letter and to the date proposed for the entry into force of the amendments.

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

For the Government of the Republic of Iceland

AGREED MINUTES

I. Introduction

1. Following a number of meetings held between officials from the Commission of the EC and Iceland it was agreed to submit to their respective authorities for approval a series of adjustments to the import regimes applied respectively by the Community and Iceland for processed agricultural products falling within the scope of Protocol 2 to the 1972 Free Trade Agreement.

These adjustments should enter into force on 1 May 1999.

2. Both parties agreed that implementation of the Uruguay Round Settlement by both sides required an adaptation of the duties applied in bilateral trade between the Community and Iceland. To this end it was agreed to apply the duties set out below.

3. Both parties agreed to examine on a regular basis the functioning of this Agreement and the possibility to improve it.

II. Icelandic import regime

The duties (ISK/kg) applicable to the processed agricultural products covered by Protocol 2 of the Agreement are as follows:

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III. Community import regime

1. The following basic amounts shall be used for the calculation of the agricultural components and the additional duties:

Cereals (common wheat, durum wheat, rye, barley and maize): 7,817 EUR/100 kg

Long grain husked rice : 28,910 EUR/100 kg

Whole milk powder : 142,660 EUR/100 kg

Skimmed-milk powder : 118,800 EUR/100 kg

Butter : 207,333 EUR/100 kg

Sugar : 43,675 EUR/100 kg.

2. The basic amounts laid down in paragraph 1 may not be higher than those applied to third countries.

3. Annual quotas of 300, 400 and 500 tonnes will be opened by the Community respectively for 1999, 2000 and 2001 and the following years, for imports of:

sugar confectionery products (including white chocolate) not containing cocoa falling within CN code 1704 90 and

chocolate and other food preparations containing cocoa falling within CN codes 1806 32, 1806 90 and 1905 30.

The duties applicable to this quota will be the erga omnes duties reduced by 50 % with a maximum of 35,15 EUR/100 kg.

IV. Spirits

Both parties agreed to apply a duty free regime from the entry into force of this Agreement for goods falling within CN codes 2208 50, 2208 60, 2208 90.

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