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DOCUMENTS "COM"
COM(77)51
Vol.1977/0022

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)51final.
Brussels,3March1977«
DETERMINATION OFTRADEARRANGEMENTS
BETWEENTHECOMMUNITY ANDCYPRUS
(Communication andrecommendation fromtheCommissiontothe
Council)
.y~""JSorti5-<-r:Va.0-'
co::(77)51final. >6
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COMMISSION COMMUNICATION TOTHECOUNCILON
THEDETERMINATION OFTRADEARRANGEMENTS
BETWEENTHECOMMUNITY ANDCYPRUS
1.ThefirststageoftheAssociation Agreement "betweenthe
Communityand.Cyprus-whichentered,intoforceon1June1973-
isduetoexpireon30June1977.Underthetermsofthe
Agreement,thesecondstage-inprincipleoffiveyears'duration-
shouldprovideforafurthereliminationofobstaclestotrade
betweentheCommunityandCyprusandtheadoptionbyCyprusof
theCommonCustomsTariff.
InaccordancewiththeobjectivelaiddownintheAgreementthe
CommissionproposestotheCouncilthatnegotiations beinitiated
withCyprusfortheestablishment ofacustomsunion.Tothis
end,itistransmitting totheCouncilitsrecommendations ,which
aregiveninAnnexI.A.
Thesenegotiations shouldbeopenedpromptlysothatthecustoms
unionarrangements canbenegotiatedandestablishedby1July.
WithregardtoECSCproducts,theCommissionistransmittingto
theCounciladraftdecisionontheopeningofnegotiations with
Cyprusfortheconclusionofaframeworkagreement(AnnexIII).
2.TheCommissiondoesnotexcludethepossibilitythatitmay
befoundinthenegotiationsthatnotalltheeconomicdataare
availableyettoenableCyprustoformacustomsunionwiththe
Communityassoonas1July1977.Moreover,itseemsthatitwill
bedifficulttonegotiatetheprotocolonthecustomsunion
betweennowandMayandtoapplyiton1Julybecauseofthe
considerable technicalworkwhichwouldhavetobedonebeforethat
date.

If-thesepointsofconcernareconfirmedinthenegotiationstheCommissionwouldenvisagepostponingthecommencement othecustomsunionwithCyprusto,forinstance,1January19•
From1Julythetradearrangementswouldbegovernedbyare-extensionofthefirststageoftheAgreement,subjectto
themeasurescontainedinAnnexi/Bofthiscommunication .
3.TheCommissionisalsotransmittingaproposalonthe
arrangementsapplicabletoimportsintotheCommunityofcertainwines,includingthatknownas"Cyprussherry™-n®
(AnnexI.C).Sincethepresentarrangementsexpireon30Jun911,itwouldbeappropriatetoadopt,assoonaspossible,themeasures
whiohwouldreplace,on1July,thoseatpresentinforce.
TheCommissionconsidersthatthemeasuresforthiswineshoul
beapplicablethroughouttheCommunityandthatitshouldenjoyintheCommunitybalancedtreatmentinrelationtothatenjoyed
bysimilarwinesfromnon-membercountries.ThetreatmentforimportsofCyprussherrycannotthereforebelessfavourablethanthataocordedtosimilarwinesfromothercountries.
4.Furthermore,theCommissionwouldremindtheCouncilthat,initsCommunicationof4February1976(COM(76)34final)
invitedtheCounciltoactontheCommunitydeclarationannexed
totheAssociationAgreementconcerningagriculturalproducts,inwhichitdeclaresthatitisprepared"tore-examinewiththe
RepublicofCyprustheagriculturalcontentoftheAgreementinthelightoftheresultofworkinprogresswithaviewtoa
globalapproachontheCommunity'srelationswiththeMeierraneancountries.IntheoourseofthisworktheinterestsofCyprus
shallalsobetakenintoconsideration ".

-3-
Itshould "benoted,thatfrom1July,Cyprus'sagricultural exports
willnolongerqualifyforCommonwealth treatmentontheUnited
KingdomandIrishmarkets.
5.InthesameCommunication of4February197°»"fcheCommission
transmittedproposalsforestablishing cooperationwithCyprus,in
thesamewayaswiththeotherMediterranean countries.
6.Finally,onthesameoccasion,theCommissionproposedthe
alignmentoftherulesonoriginapplicableinEEC-Cyprusrelations
withthoseapplicabletoothercountries.
7.TheCommission recommendsthattheCounciladoptthedirectives
ajmexedheretoandthosecontainedinitsCommunication of
4February1976assoonaspossible.

AnnexI
RECQMMENDATIONFORACOUNCILDECISION
CONCERNING THEDETERMINATION CPTRADEARRANGEMENTS
BETWEENTHEEUROPEANECONOMICCOMMUNITY ANDCYPRUS
THECOUNCILCPTHEEUROPEANCOMMUNITIES ,
Havingregard-totheTreatyestablishingtheEuropeanEconomicCommunity,
andinparticularArticle238thereof,
Havingregardtotherecommendation fromtheCommission,
Whereasitisnecessarytodeterminethetradearrangementsto"be
appliedbetweentheCommunityandCyprusasfrom1July1977»
HASDECIDEDASFOLLOWS:
SoleArticle
TheCommissionisherebyauthorizedtoopennegotiations withCyprus.
Itshallconductthosenegotiationswithintheframeworkofthe
directivesannexedheretoandsubjecttofuturedirectives,in
consultation withtherepresentatives oftheMemberStates.

AnnexI/A
AdditionalProtocoltotheAssociation Agreement
betweentheEuropeanEconomicCommunityandCyprus
TheAdditionalProtocolwouldadopttheterms,proceduresand
timetablefortheprogressive establishment ofacustomsunionbetween
theEuropeanEconomicCommunityandCyprusoveratransitional period
ofsixyears.
Subjecttothearrangements describedbelow,theprovisionsofthe
Association Agreementwouldbemaintained "!.Theprotocolwouldform
anintegralpartofthatAgreement.
Tnenoticerequiredfordenunciation oftheAgreementwouldbe
increasedtotwelvemonths.
I.INDUSTRIAL PRODUCTS
1.Freemovementofgoods
TheprovisionsbelowwouldcovergoodsproducedintheCommunity
orCyprus,includingthoseobtained,whollyorpartially,fromproducts
comingfromnon-membercountriesandinfreecirculationintheCommunity
orCyprus,goodsfromnon-membercountriesinfreecirculationinthe
CommunityorCyprus,andgoodsobtainedintheCommunityorCyprusin
whosemanufactureproductshavebeenusedwhichcomefromnon-member
countriesandarenotinfreecirculationineithertheCommunityor
Cyprus,providedthatacompensatory levywhoserateisequalto
Thesystemofsafeguardclauseswouldbereviewedandsupplemented ,
forexample,byaprovisionconcerningdeflectionoftrade.

apercentageoftheCommonCustomsTariffdutieslaiddownforthethird
countryproductsusedintheirmanufactureischargedintheStatefrom
whichthosegoodsareexported.
Productsimportedunderpreferential customsarrangements applied
onlybyoneofthetwocontractingpartieswouldnotbeeligiblefor
freedomofmovement.
TheCommunityandCypruswouldadoptmethodsofadministrative
cooperationfortheirtradeingoodssimilartothoseestablishedunder
theagreementsbasedonthecustomsunionconceptwhichhavebeen
concludedbytheCommunitywithothernon-membercountries.
Cypruswouldalso,wherenecessaryfortheproperfunctioningofthe
customsunion,alignitslaws,regulations andadministrative
provisionsrelatingtooustomsmattersinordertoensureuniform
application .
2.Elimination ofcustomsdutiesbetweentheCommunityandCyprus
(a)UpontheentryintoforoeoftheprotocoltheCommunitywouldabolish
customsdutiesandchargeshavingequivalenteffect,includingthe^
customsdutiesofafiscalnature,applyingtoimportsfromCyprus.
ForproductsfallingwithintariffheadingNo56.04or61.01,the
Communitywouldapplyasystemofannualceilings;thissystemwould
beabolishedbytheendofthetransitional periodatthelatest.
ForthepetroleumproductsinListBofAnnexItotheAgreement,the
presentarrangements wouldnotbechangedbefore31December19T9-
(b)Onthebasisofthedutiesactuallyappliedvis-a-vistheCommunity
onthedateofsignatureoftheprotocol,Cypruswouldmakereductions
inthecustomsdutiesandohargeshavingequivalenteffect,including
.1
1ThetreatmentapplicabletotheproductsinListAofAnnexIto
theAgreement(andalsotovermouthsandspirits)isdescribedin
SectionII.... .

-3- I/72/77-iï
customs duties ofafiscal nature ,inaccordance with thefollowing
timetables
Timetable Rate ofreduction
from entry into force 20%
from thebeginning of
thethird year 40%
from thebeginning of
thefifth year 70%
from thebeginning of
theseventh year 100%
(c)Thetimetable forCypriot tariff dismantling could ,within the
limits ofthetransitional period ,beadapted asnecessary bythe
Association Council totake account ofCyprus *6economic development
and thepriorities laid down initsplan .
(d)Where protective measures prove necessary tomeet therequirements
ofindustrialization anddevelopment ,Cyprus could reintroduce ,
increase orestablish customs duties upto20%advalorem and ,in
exceptional cases 25$»upon 10%ofthetotal value ofCypriot imports
from theCommunity in1975 *
These measures should beabolished nolater than three years after
theendofthetransitional period .
(e)During thetransitional period Cyprus could replace thecustoms
duties ofafiscal nature byaninternal taxinaccordance with
decisions tobetaken ontaxation matters .
3.Adoption byCyprus oftheCommon Customs Tariff
TheCypriot Customs Tariff would beprogressively aligned with the
Common Customs Tariff asitstands atanygiven moment ,onthebasis

oftheduties actually applied byCyprus vis-a-visnon-member
countries onthedate ofsignature ,asfollows :
Inthecase ofproducts forwhich theduties actually applied by
Cyprus donotdiffer from theCCTbymore than 15%either way ,
theCCTduties aretobeapplied byCyprus upon theentry into
force oftheprotocol .
Intheother cases Cyprus will apply upon theentry into force of
theprotocol duties reducing by10$thedifference between therate
actually applied andthat oftheCCT.This difference shall again
bereduced by10%atthebeginning ofthesecond ,third andfourth
years andby20$atthebeginning ofthefifth ,sixth andseventh
years .
4.Elimination ofquantitative restrictions between theContra cting
Parties
(a)Cyprus would progressively abolish quantitative restrictions and
measures having equivalent effect bytheendofthetransitional
period atthelatest inaccordance with arrangements tobedefined
during negotiations .
(b)Quantitative restrictions onexports andallmeasures having
equivalent effect would beprohibited between theContracting Parties
andwould beabolished between them not later than atthebeginning
ofthethird year after theentry into force oftheProtocol .
(c)State monopolies ofacommercial oharacter would beprogressively
adjusted uptotheendofthetransitional period inorder toensure
that there isnodiscrimination between nationals oftheMember
States oftheCommunity andCyprus regarding theconditions under
which goods areprocured andmarketed .

1/72/77-E
5.Coordinationofcommercialpolicy
TheContractingPartieswouldholdconsultationswithintheAssociaion
Counciltocoordinatetheircommercialpoliciestowardsohirdcoun
inorderprogressivelytoachieveacommercialpolicybasedonuniormprincipleswhichcouldalsocoverpreferentialarrangements.
6.Alignmentofeconomicpolicies
Theconditionsanddetailedrulesfortheapplicationofthe
setoutin.Articles85(agreements "betweenundertakings),^6![d•Apositionofanundertaking),90(publicundertakings),92taidsgranted
byStates),95(taxationofproducts),96(repaymentsonexportation),
97(turnovertaxes),98(remissionsandrepaymentsinrespectofexports)
and100(approximation oflaws)oftheTreatyestablishingtheEuropean
EconomicCommunitywouldbelaiddownintheProtocol.
II.AORICULTURAL PRODUCTS
(a)FortheproductsinListAinAnnexItotheAgreementand:orvermouth(22.06)andspirits(22.09),theCommunitywouldabolishtaefixedcomponentupontheentryintoforceoftheProtocol.
(b)Duringthetransitionalperiod,CypruswouldprogressivelybringitsagriculturalpolicyinlinewiththatoftheCommunity.
Beforetheendofthetransitionalperiod,andfollowingtheadoptionbyCyprusofthecommonagriculturalpolicymeasures,th
provisionsrequiredfortheestablishmentoffreeproductsbetweentheCommunityandCyprusandtheabolitio „do.D+ed.variablecomponentfortheproductsreferredtoin(a)wouldbeadopted.

I/72/77-B
AnnexI/B
Measuresleadingtotheestablishment oftheCustomsUnion
betweentheCommunityandCyprus
1,ThefirststageoftheAssociation Agreementwouldbeextended
until31December1979.
Thetransitional periodfortheestablishment oftheCustomsUnion
wouldbeginon1January1980.
2.Asregardstheindustrialsector,theEECwouldgrantCyprus
duty-freeentryfrom1July1977for"theproductscoveredbythe
Agreement.
AsconcernstheproductsreferredtoinArticle4ofAnnexIto
theAgreement,theabolitionofcustomsdutiesrelatesonlytothe
fixedcomponent# ListAinAnnexItotheAgreementwouldbe
supplementedbytheadditionofvermouth(22.06)andspirits(22.0;
Thederogationsfromtherulesororiginwouldbemaintaineduntil
31December1979*
3.OnthebasisoftheCypriotcustomstariff,Cypruswouldmaketariffreductions asfollows:
1.7.77 1.1.79
Generalarrangements 35%45#
ListA
ListB357°
15#45#
25#

1/72/77
Annexi/C
Treatmentapplicableto
certainwinesoriginatinginCyprus
(Page5oftheAnnextotheCommissionproposal(COM(76)
34finalof4February1976)should "bereplaced "bythe
attachedtext.)

CCÏ
22.05DescriptionRateof
Réduction
Wineoffreshgrapes;grapemustwith
fermentation arrestedlaytheaddition
ofalcohol:
C.Other
I.Ofanactualalcgholicstrengthnotexceeding13,incontainers
holding:
exa)2litresorless:i
-Wineoffreshgrapes
II.
III.Ofanactualalcoholicstrength
exceeding13hutnotexceeding
15°.incontainersholding:
exa)2litresorless:
-Wineoffreshgrapes
Ofanactualalcoholicstrength
exceeding15°,notexceeding
ia°'in.containersholding:
0
■b)2litresorless:
ex.2.OtherîOther:
-Wineoffreshgrapes
Morethan2litres
ex3.Other:Other:
-Wineoffreshgrapes
IV.Ofanactualalcoholicstrength
exceedijig18°.hutnot.exceeding
22°,incontainersholding:
2litresorless:
ex2.Other:
-Wineoffreshgrapes
Morethan2litres:
ex3»Other:
-Wineoffreshgrapes1W
757°
70$2,3
2,3
70%
70o2,3
2,3
(1)ThetarifreductionissubjecttotheconditionthatthepricesintheEECplusthecustom
dutiesactuallyleviedshouldatalltimeshenotlessthantheCommunity'sreferencepn
applicabletothesewines. _ .
(2)Theseconditionswouldbegrantedprovidedthataminimumexportpriceisobservedwic
wouldbefixedinsuchawaythattheEECimportpricesplusthecustomsdutiesactuayleviedwouldatalltimesbeequaltothereferencepriceapplicabletothesewines.
Thisconditionwouldbeapplicableassoonascomparablewinescomingfromthirdcounn
becametheBubjectofasimilarmeasure. _TT.(3)WithinanannualCommunitytarifcpiotaof250000hiforallthesubheadings22.05
ex2andb)ex3and22.050IVa)ex2andb)ex3»

1/72/77-E
AnnexII
DraftDécision
oftheRepresentatives oftheGovernmentsoftheMemberStates
oftheECSC,
meetinginCouncil,ontheopeningofnegotiations withCyprus

1/72/77-E
THEREPRESENTATIVES OFTHEGOVERNMENTS OPTHEMEMBERSTATESOFTHE
EUROPEANCOALAM)STEELCOMMUNITY',MEETINGINCOUNCIL,
Whereastheabovementioned MemberStateshaveconcludedbetweenthem
theTreatyestablishingtheEuropeanCoalandSteelCommunity;
WhereastheyhavealsoconcludedtheTreatyestablishingtheEuropean
EconomicCommunity,Article232ofwhichstipulatesthattheprovisions
ofthatTreatyshallnotaffecttheprovisionsoftheTreatyestablishing
theEuropeanCoalandSteelCommunity,inparticularasregardsthe
rightsandobligations ofMemberStates;
MindfulofthefaotthattheAgreementestablishing anAssociation
betweentheEuropeanEconomicCommunityandCyprusdoesnotapplyto
theproductscoveredbytheEuropeanCoalandSteelCommunity;
Desiring,however,tomaintainandincreasetradeinthoseproducts
betweentheMemberStatesandCyprus,
HAVEDECIDEDASFOLLOWS:
1.TheCommissionisrequestedtoopennegotiations withCypruson
behalfoftheMemberStates.Theobjectiveofthosenegotiations
willbetoinvestigatewhetheranagreementcanbereachedinrespect
oftheproductscoveredbytheEuropeanCoalandSteelCommunityon
thebasissetoutbelowandsubjecttodirectivestobeissued
subsequently .
2.TheCommissionwillbeassistedbytheRepresentatives ofthe
MemberStatesintheimplementation ofthisDecision.

1/72/77-E
Annex
1.ForproductsfromtheMemberStatesandCypruscoveredbythe
EuropeanCoalandSteelCommunity,customsdutiesandchargeshavinganequivalenteffectandquantitativerestrictionsand
measureshavingequivalenteffectinforcebetweentheMember
StatesandCypruswouldbeprogressivelyabolishedunderthe
conditionssetoutin2.
2.ThebarrierstotradewouldbeabolishedbytheMemberStates
andCyprusinaccordancewithatimetablefixedbymutual
agreementbetweentheContractingParties®
TheContractingPartieswouldalsoestablishtheconditionsunder
whichtheproductsinquestionwouldbenefitfromthe
preferential arrangements .
3.CypruscouldnotbeaccordedtreatmentmorefavourablethanthatappliedbytheMemberStatesamongthemselves.
4.Consultations wouldbeheldbetweenthepartiesconcerned
wherever,intheopinionofoneoftheparties,theapplication
oftheaboveprovisionsmadethisnecessary.

1/72/77-E
FINANCIALRECORDSHEET Date:11February1977
1.Relevantbudretentry:Title1"Ownresources"
2.Titleofproject:Exchangeofletters "betweentheCommunityandCyprus
concerningthearrangementsfortheimportationintotheCommunityof
"CyprusSherry"originatinginandcomingfromCyprus
3.Legalbasis:Article113oftheEECTreaty
4.Aimsoftheproject:Determination ofthearrangementsforthe
importationintotheCommunityof"CyprusSherry"originatinginand
comingfromCyprus
5.Financialimplications :duringthe
marketing
yearcurrent
financial
year1977following
financial
year1978
5-0Expenditure
-chargedtotheEECBudget
(refundsandintervention )I
i
I
I
II
I
I
-chargedtonational
administrative departments
-chargedtoother
nationalsectors
I
5.1Revenue I
-EECownresources
(levies/customsduties)nil•T1mlnil1
-atnationallevel
5.0.1Multiannual timetable
expenditure year•••.year...•year....
5.1.1Multiannual timetable
revenue
5.2Methodofcalculation
ThiswineismarketedonlyontheUnitedKingdomandIrishmarkets.
ThepurposeoftheproposalistogiveaCommunityframeworktothe
arrangementsapplied "bytheUnitedKingdomandIreland.