Proposal for a COUNCIL DECISION on the signing, on behalf of the European Community, of an Agreement in the form of a Memorandum of Understanding between the European Community and the Islamic Republic of Pakistan on arrangements in the area of market access for textile and clothing products, and authorising its provisional application

(presented by the Commission)

EXPLANATORY MEMORANDUM

In accordance with the Council negotiating directives of 9 November, the Commission has negotiated a Memorandum of Understanding concerning market access in the textiles and clothing sector with Pakistan.

The agreement provides that Pakistan will:

- Reduce its tariffs in 2001 and 2002 to the rates agreed between the parties.

- Bind its import tariffs for the textile and clothing sector within the WTO at the rates agreed.

- Not apply any non-tariff barriers in the sector.

The agreement provides that the European Community:

- Will increase its quotas on textiles and clothing products for 2001 by 15% immediately following Pakistan's notification of bound rates to the WTO.

- Retains the right to re-apply the quota regime at the levels applicable for the year in question in the event that Pakistan fails to keep any of the above commitments.

The agreement provides for periodic consultations and for consultations on request on any of its provisions and further provides that the Parties will co-operate fully concerning any necessary notifications to be made to the WTO or any of its bodies.

The Council is invited to approve this proposal for a Council Decision on the signing, on behalf of the European Community, of a Memorandum of Understanding on Market Access in textile products between the European Community and the Islamic Republic of Pakistan and authorising its provisional application pending the formal conclusion of that Agreement.

2001/0274 (ACC)

Proposal for a COUNCIL DECISION on the signing, on behalf of the European Community, of an Agreement in the form of a Memorandum of Understanding between the European Community and the Islamic Republic of Pakistan on arrangements in the area of market access for textile and clothing products, and authorising its provisional application

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof, in conjunction with the first and second subparagrah of Article 300 (2) thereof,

Having regard to the proposal from the Commission,

Whereas:

(1) The Commission has negotiated on behalf of the Community a bilateral Agreement in the form of a Memorandum of Understanding on trade in textile products with Pakistan.

(2) The Agreement in the form of a Memorandum of Understanding was initialled on 15 October 2001.

(3) The Agreement in form of a Memorandum of Understanding should be signed on behalf of the Community.

(4) In order to allow its benefits to accrue to both Parties immediately following the relevant notifications to the WTO, it is appropriate to apply this Agreement on a provisional basis as from 1 December 2001 pending completion of the relevant procedures for its formal conclusion, subject to reciprocity,

HAS DECIDED AS FOLLOWS:

Article 1

Subject to its possible conclusion at a later date the President of the Council is hereby authorised to designate the persons empowered to sign, on behalf of the European Community, the Agreement in the form of a Memorandum of Understanding on trade in textile products with Pakistan.

The text of the Agreement is annexed to this Decision.

Article 2

Subject to reciprocity, the Agreement in the form of a Memorandum of Understanding shall be applied on a provisional basis from 1 December 2001 pending the completion of the procedures for its formal conclusion

Article 3

The Commission shall re-apply the quota levels at those formerly applicable in the event of the failure on the part of Pakistan to fulfil the obligations covered by Points 2 and 4 of the Memorandum of Understanding in accordance with the procedure referred to in Art. 17 of Council Regulation 3030/93 on common rules for imports of certain textile products from third countries [1].

[1] OJ No L 275, 8.11.1993, as last amended by Council Regulation (EC) no 824/97 (OJ No L 119, 8.5.1997,p.1)

Done at Brussels,

For the Council

The President

ANNEX

MEMORANDUM OF UNDERSTANDING

between the European Community and the Islamic Republic of Pakistan on arrangements in the area of market access

for textile and clothing products

initialled in Brussels on 15 October 2001.

For the European Community // For the Islamic Republic of Pakistan

MEMORANDUM OF UNDERSTANDING

between the European Community and the Islamic Republic of Pakistan

on transitional arrangements in the field of market access

for textile and clothing products

initialled in Brussels on 15 October 2001

1. Delegations of the European Community and the Islamic Republic of Pakistan, following earlier negotiations beginning in March 2001, met again on 15 October 2001 in Brussels to discuss improvements in access to the respective markets of both Parties for textile and clothing products. The Parties considered that, without prejudice to possible further discussions between them, they could agree on a framework for improved market access for the textiles and clothing sector. The Parties recorded their agreement in the following terms.

2. The Islamic Republic of Pakistan agrees:

1. To bind its tariffs on textiles and clothing at the rates shown in Column 1 applicable from the date of notification and at the rates shown in Column 2 of Annex 1 applicable from no later than 1st July 2002 by making an appropriate notification to this effect to the World Trade Organisation. Pakistan agrees to consult with the European Community prior to making the notification.

2. Where Pakistan applies lower rates of duty than those foreseen in Point 2.1 Pakistan undertakes not to apply any rates higher than those currently applied to imports of such products from the European Community.

3. Without prejudice to sub-paragraph 2 Pakistan agrees to reduce its applied rates to the bound rates set out in Annex 1 and to continue to apply those rates until further reduced by any subsequent notifications by Pakistan.

3. Following confirmation by Pakistan of the notification foreseen in Point 2.1 above and the application of the tariffs foreseen in Annex I Column 1 for 2001, the European Community agrees to increase the quota as currently foreseen for the year 2001 by 15 % following which increase the quota levels for the years 2002 to 2004 will be calculated on this new base level for 2001.

4. The Parties agree to refrain from adopting any non-tariff measures that could hinder trade in textile and clothing products.

5.

1. The Parties agree that the balance of the present agreement, forming a package of mutual concessions freely extended between the Parties, depends on the full and faithful implementation of all the terms of this Memorandum of Understanding. As a result the Parties agreed to consult periodically in order to ensure the proper implementation of this Memorandum of Understanding. In addition, the Parties agree to consult following the request of either Party concerning any aspect of this Memorandum of Understanding.

2. In the event that the European Community seeks to exercise the right contained in Point 6 the European Community will provide Pakistan with details of any alleged failure in writing. Consultations with a view to remedying the failure in question will be held within 30 days of such written request unless the Parties agree otherwise. In the event that the Parties cannot agree on appropriate remedial action within 30 days from the start of the consultations the European Community will have the right to proceed under point 6.

6. The Parties agree that the European Community retains the right to reduce the quota level to the levels previously applicable in the event that Pakistan fails to fulfil any of the obligations contained in Points 2 and 4 of this Agreement.

7. The Parties agree to co-operate fully in respect of any notifications that may be necessary to the World Trade Organisation or any of its Bodies. Any such notifications will be made jointly by the Parties unless they agree otherwise.

8. The Parties agree that this Memorandum of Understanding is without prejudice to the possibility of seeking mutual concessions concerning market access from other trading partners in the sector.

9. The Parties agree that this Memorandum of Understanding is without prejudice to their rights to invoke the WTO Dispute Settlement Understanding.

10. Any Agreed Minutes and Declarations annexed to this Memorandum of Understanding letter shall form an integral part of it.

11. The Parties agree that this Agreement in the form of a Memorandum of Understanding shall enter into force on the first day of the month following the day on which the Parties have notified each other that the internal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally from 1 December 2001 on conditions of reciprocity.

For the European Community // For the Islamic Republic of Pakistan

Annex 1

>TABLE POSITION>

Agreed Minute

In the context of the Agreement in the form of a Memorandum of Understanding on trade in textile and clothing products between the European Community and the Islamic Republic of Pakistan initialled in Brussels on 15 October 2001 and more particularly with reference to Paragraph 4 thereof the Parties recorded their understanding that non-tariff barriers related to all forms of hindrance to trade in the sector, include but are not limited to matters such as:

* any additional duties on the import or sale of products of EU origin in excess of the custom duties set out in the Agreement, or any other taxes of equivalent effect, which are higher than any such duties or taxes imposed on the production or sale of equivalent domestic goods

* technical regulations or standards, or conformity assessment or certification rules, procedures or practices going beyond the purposes for which they are required

* any formal or informal minimum import price requirement, or other customs valuation rules, procedures or practices giving rise to barriers to trade

* rules, procedures or practices for pre-shipment inspection that are discriminatory, non-transparent, excessively lengthy or the imposition of customs controls for the clearance of goods to shipments that have been subject of pre-shipment inspection

* excessively burdensome, costly or arbitrary rules, procedures or practices concerning the certification of the origin of products or requiring direct shipment of goods from the country of origin to the country of destination

* any non-automatic or discretionary licensing requirements, or any automatic licensing rules, procedures or practices imposing disproportionate burdens or having restrictive effects on imports

* requirements or practices concerning marking, labeling, the description or composition of the product or the description of the manufacturing of products which, either in their formulation of in their application, are in any form discriminatory as compared with domestic products

* unduly long customs clearance delays or excessively burdensome, excessive or costly customs procedures, including inspection requirements, which have an unnecessary restrictive effect on imports

* subsidies causing injury to the EU textiles and clothing industry.

For the European Community // For the Islamic Republic of Pakistan

Declaration

In the context of the Agreement in the form of a Memorandum of Understanding on trade in textile and clothing products between the European Community and the Islamic Republic of Pakistan and the Agreed Minute thereto initialled in Brussels on 15 October 2001 the Parties declare that the commitments taken concerning non-tariff barriers are bilateral commitments entered into between the parties independently of any multilateral commitments also applicable to the Parties. In consequence the Parties agree that the application of these provisions is of a purely bilateral nature. The Parties further agree that these bilateral commitments are not intended to go beyond or place them under higher standards or obligations than the level of commitments they have entered into in a multilateral context.

For the European Community // For the Islamic Republic of Pakistan