ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)307
Vol.1977/0103

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COMMISSION OFTHE EUROPEAN COMMUNITIES
I
COM(77)307 final .
Brussels ,4July 1977 *
: ' 1 1
\
t • .
COMMISSION COMMUNICATION TOTEE COUNCIL
onthenegotiation ofthethird Financial Protocol under
theEEC -Turkey Association Agreement
RECOMMENDATION FOR ACOLTO ILDECISION
concerning theconclusion ofaFinancial Protocol between
theEuropean Economic Community andTurkey
COX(77)307final .

E&planator.T Memorandum
J.o Thenegotiations forathi^l financial nrot^nol inth^oo-;,t «:ct
oftheAssociation Agroetren'' :h~twp«~ !the F330andTerkey w^r.-e compl oted o
3February 1977 „Asthe Gornmu.nit -r'f -id«1«nation hasindicate' ]its
agreement ad theCommission crj/bsnitted theresult 3ofthe
negotiations tothoOopno ?Xwhich arirsroved then atitsmeeting on
8March 1977o Theprotocol hasbeensigned on .12Way .1077»
2C With aview totheconclusion ofthis protocol onbehalf ofthe
Comnunitj theCommission isrequested ,toapprove thedraft cominuni cation
totheCouno.il onthenegotiations andtherecommendation foraCouncil
decision toconclude theprotocol®

COMMISSION COMMUNICATION TOTHECOUNCIL
onthenegotiation ofthethirdFinanoialProtocolunder
theEEC-TurkeyAssociation Agreement
1,ByaDeoisionof29November1976ftheCouncilauthorizedthe
Commissiontoopennegotiations withtheRepublicofTurkeyforthe
conclusion ofthethirdFinancialProtocolundertheEEC-Turkey
Association Agreementandissuedthedirectivesforthosenegotiations ..
Thenegotiations withtheTurkishDelegationtookplacewithinthe
CouncilofAssociation .Theywerecompletedon3February1977c
TheTurkishdelegationindicateditsapprovalofthecontentofthe
textsofthedraftProtocolandtheCommunitydeclaration concerning
theEuropeanunitofaocount.TheCommunitydelegationindicated
itsapprovaladreferendum.Thesetextsareattachedtothis
Communication .
2.InordertoenabletheProtocoltobesignedat-anearlydate,
theCommissionsubmittedthedrafttextstotheCouncilon8Jiarch1977
proposingthatittakethenecessarystepstoenablethesignature
totakeplaceassoonaspossible.TheDrotooolhasbeensignedon1?
May1977.
InorderthatthisProtocolmaybeconcludedonbehalfoftheCommunity
theCommissionistransmitting totheCouncilherewitharecommendation
foradecisionconcludingtheProtocol,towhichisannexedthe
Communitydeclaration .
TheCommissionalsorecommendsthattherepresentatives ofthe
governmentsoftheMemberStates,meetingintheCouncil,takethe
stepsrequired .fortheimplementation oftheratification ,acceptonee
orapprovalprocedureslaiddowninArticle16(l)oftheProtocol.

RECQMMDATION
for a
GOQNCIL DECISION
concerning theconclusion ofaFinancial Protocol between theEuropean
Eoonomio Community andTurkey
THECOUNCIL OPTHEEUROPEAN COMMUNITIES ,
Having regard totheTreaty establishing theEuropean Economic
Community ,andinpartioular Article 238thereof .
Having regard totherecommendation from theCommission ,
Having regard totheOpinion oftheEuropean Parliament ,
Whereas theFinancial Protocol between the European Economio
Community andTurkey ,
signed at Brussels on 12Kay1977
should beconoluded ,
HAS DECIDED ASFOLLOWS :
Artide 1
The Financial Protocol between theEuropean Economic Community and Turicey ,
ishereby approved onbehalf oftheCommunity .
Thetext referred tointhefirst subparagraph isannexed tothis Decision .
Article 2
ThePresident oftheCouncil shall oanry out ,onbehalf ofthe Ccnunui-.it .v,
thenotification procedure provided forinArticle 16(l)oftheProtocol .
Done at 19
?orthe Council
The Prraiaent

FINANCIAL PROTOCOL
BETWEEN THE EUROPEAN ECONOMIC COMMUNITY
AND TURKEY

HISMAJESTY THE KING OPTHE BELGIANS ,
HER MAJESTY THE QUEEN OFDENMARK ,
THE PRESIDENT OPTHE FEDERAL REPUBLIC OFGERMANY ,
THE PRESIDENT OPTHE FRENCH REPUBLIC ,
THE PRESIDENT OPIRELAND .
THE PRESIDENT OPTHE ITALIAN REPUBLIC ,
HIS ROYAL HIGHNESS THE GRAND DUKE OFLUXEMBOURG ,
HER MAJESTY THE QUEEN OPTHE NETHERLANDS ,
HER MAJESTY THE QUEEN OPTHE UNITED KINGDOM OFGREAT BRITAIN
AND NORTHERN IRELAND ,
and ,
THE COUNCIL OPTHE EUROPEAN COMMUNITIES ,
ofthe one part ,
THE PRESIDENT OPTHE REPUBLIC OPTURKEY ,
ofthe other part ,
CONSCIOUS ofthe need topromote theaccelerated development
oftheTurkish economy with aview tofacilitating the
pursuit oftheobjectives oftheAgreement establishing an
Association between theEuropean Economic Community and
Turkey ,
HAVE DESIGNATED astheir Plenipotentiaries :
CEE /TR/e2

HISMAJESTY THE KING OPTHEBELGIANS :
HER MAJESTY THE QUEEN OPDENMARK :
THE PRESIDENT OFTHE FEDERAL REPUBLIC OFGERMANY
THE PRESIDENT OPTHE FRENCH REPUBLIC :
THE PRESIDENT OFIRELAND :
THE PRESIDENT OFTHE ITALIAN REPUBLIC :

HISROYAL HIGHNESS THE GRAND DUKE OFLUXEMBOURG ;
HER MAJESTY THE QUEEN OFTHE NETHERLANDS t
HER MAJESTY THE QUEEN OFTHE UNITED KINGDOM OFGREAT BRITAIN
AND NORTHERN IRELAND ; '
THE COUNCIL OFTHE EUROPEAN COMMUNITIES ;
THE PRESIDENT OFTHE REPUBLIC OFTURKEY ;
WHO ,having exchanged their Full Powers sfound ingood and
due form ,
HAVE AGREED ASFOLLOWS :
CEE/TR/e

ARTICLE 1
Within the framework ofthe Association between the
European Economic Community andTurkey ,theCommunity shall
participate ontheterms setoutinthis Protocol in
measures designed topromote ,byefforts additional to
those made byTurkey itself ,thedevelopment ofTurkey .
ARTICLE 2
1. For thepurposes specified inArticle 1,and for a
period expiring on31October 1981 ,anaggregate amount
of310million European units ofaccount (EUA )may be
committed asfollows :
(a)90million EUA inthe form ofloans from the
European Investment Bank ,hereinafter called the
"Bank ",granted from itsownresources ;
(b)220million EUA intheform ofloans onspecial
terms granted bytheBank acting oninstructions
from theCommunity .
2. Capital projects shall beeligible forfinancing
which have been submitted tothe Bank bytheTurkish
State or,with the latter' sagreement ,byanauthority
orbypublic orprivate undertakings having their seat or
aplace ofbusiness inTurkey which :
CEE/TR/e

M toincrease theproductivity oftheTurkish
economy and ,inparticular ,aimtopro-ride Turkey
with &better economic infrastructure ,higher
agricultural output ,andmodern 8efficiently-run
undertakings intheindustrial andservice sectors
whether they arepublicly orprivately managed ;
(b)further therealization oftheobjectives ofthe
Association Agreement ;
ft
(c)arepart oftheTurkish Development Plan in
force .
3. With respect tothechoice ofcapital projects
within the framework ofthe above provisions :
(a)only individual projects may befinanced ;
(b)asageneral rule ,capital projects which are tobe
carried out onTurkish territory may *inprinciple ,be
financed inall the sectors oftheeconomy ;
(c)special consideration shall begiven toprojects
which could serve toimprove Turkey 'sbalance of
payments .
I* Examination oftheeligibility ofprojects and the
granting ofloans shall beundertaken inaccordance with
thedetailed rules ,conditions andprocedures laid
down bythe Bank 'sStatute .
CEE/TR/®6

ARTICLE 3
1. The amounts tobecommitted each year shall be
distributed asevenly aspossible throughout theperiod of
application ofthis Protocol .During theinitial period
ofapplication ,however ,aproportionately higher amount
may ,within reasonable limits .,becommitted .
2. Anyfunds notcommitted may .,bytheendoftheperiod
referred toinArticle 2(1),beused ,until exhausted .In
that case ,the funds shall beused inaccordance with the
same arrangements asprovided for inthis Protocol .
ARTICLE 4
1. The loans may begranted through the intermediary of
theState orappropriate Turkish bodies ,oncondition
that they onlend theamounts totherecipients onterms
decided ,byagreement with theBank ,onthe basis ofthe
economic and financial characteristics ofthe projects
forwhich they are intended .
2. Loans granted bythe Bank from its own resources
shall besubject toterms astoduration established on
the basis ofthe economic and financial characteristics
ofthe projects .The interest rate shall bethat applied
bytheBank atthe time ofsignature ofeach loan contract .
3f Loan3 onspecial terms shall begranted tothe
Turkish State forforty yeafs with postponement of
amortization oftenyears and ataninterest rate of
2„5£ per annum .
CEE /TR/e7

!f&)help toincrease theproductivity oftheTurkish
economy anclf ,inparticulars aim toprovide Turkey
with abetter economic infrastructure ,higher
agricultural output ,andmodern 0efficiently-run
undertakings intheindustrial andservice sectors
whether they arepublicly orprivately managed ;
(b)further therealisation oftheobjectives ofthe
Association Agreement ;
a
(e)are part oftheTurkish Development Plan in
force .
3. With respect tothechoice ofcapital projects
within the framework ofthe above provisions :
(a)only individual projects may befinanced ;
(b)asageneral rule ,capital projects which are tobe
carried out onTurkish territory may *inprinciple ,be
financed inall the sectors oftheeconomy ;
(c)special consideration shall begiven to.projects
which could serve toimprove Turkey 'sbalance of
payments .
t. Examination oftheeligibility ofprojects and the
granting ofloans shall beundertaken inaccordance with
thedetailed rules ,conditions andprocedures laid
down bytheBank 'sStatute .
CEE/TR/®6

Tfcs Turkish Stat® shalA ensure thsv :rep 'oy
beneficiaries rshioh ar«not iBBP.^dia^sl :?r?.seded by fch-sSta^«
foy theamortisation ofloans from theBank areused to
finance capital projects wifr-hin th®meaning of
Article 2(2). Itshall notify the Bank each year ofthe
use ofthese amounts .This provision shall also apply
toprojects carried outunder theearlier Financial
Protocols .
*5„ Loaas accorded bytheBank from itsownresources
shall beused primarily tofinance projects showing a
normal return ;loans onspecial terms shall beused
primarily tofinance indirect orlong-term return
projects .
ARTICLE 5
The loans may beused tocover expenditure onimports
orthedomestic expenditure required for -carrying out
approved capital project s„including expenditure onplanning B
ontheservices ofconsulting engineers and ontechnical
assistance .
ARTICLE 6
Aidfrom theBank fortheexecution ofprojects may ,
with theagreement ofTurkey ,take theform ofco-financing .
ARTICLE 7
Undertakings whose risk capital comes wholly
from countries oftheCommunity shall have access
finance provided for inthis Protocol onthe same
asundertakings frith national capital .
CEE/TR/e8orpartly
tothe
conditions

ARTICLE 8
The execution ,management andmaintenance ofschemes
which are the subject offinancing under this Protocol shall
betheresponsibility ofTurkey orofthe other beneficiaries
referred toinArticle 2(2).
TheBank shall ensure that its financial aid isexpended
inaccordance with theagreed allocations and tothe best
economic advantage .
ARTICLE 9
1. All natural and legal persons ofthe Republic of
Turkey orofMember States ofthe Community may
participate onequal terms intendering procedures and
other procedures for the award ofcontracts financed by
loans .
2. Turkey shall apply tocontracts awarded for the
execution ofprojects financed under this Protocol fiscal
and customs arrangements atleast asfavourable asthat
applied inrespect ofother international organizations .
ARTICLE 10
Turkey shall ?take allnecessary measures toensure that
interest andallother payments due totheBank inrespect of
loans granted under this Protocol areexampted from any
national orlocal taxorlevy .
vr'!.><; "JoV.. :!>•'i /i'- ' ■
.?i.tvi:/'- nr'­
r.îJi M;
I•;?: -x'-<r!-
CEE/TR/e9

ARTICLE 11
Ifher® aloan isaccorded toabeneficiary other than the
-Turkish State ,theprovision ofaguarantee bythelatter
KtAyberequired bytheBank asacondition ofthegrant of
the loan .
.ARTICLE 12
Throughout theduration ofthe loans granted pursuant
tothis Protocol ,Turkey shall undertake tomake available
todebtors enjoying such loans and totheguarantors ofthe
loans theforeign currency necessary for the payment of
interest ,commission andother charges and for therepayment
ofcapital .
ARTICLE 13
The results offinancial co-operation may beexamined
within theAssociation Council setupbyArticle 6ofthe
Agreement establishing anAssociation between theEuropean
Economic Community andTurkey .
ARTICLE 11
TheContracting Parties will 9oneyear before theexpiry
ofthis Protocols consider what provisions relating
tofinancial assistance might beadopted for alater period .
ARTICLE 15
This Protocol shall beannexed totheAgreement
establishing anAssociation between theEuropean Economic
Community andTurkey .
CETS/TR/g10

ARTICLE 16
1. This Protocol shall besubject toratification ,
acceptance orapproval inaccordance with theContracting
Parties *ownprocedures ;theContracting Parties shall
notify each other that the procedures necessary tothis
end have been completed .
2. This Protocol shall enter into force onthe first
day ofthesecond month folloxiring thedate onwhich the
notifications provided for inparagraph 1have been given .
ARTICLE 17
This Protocol isdrawn upintwo copies inthe Danish ,
Dutch ,English ,French ,German ,Italian andTurkish languages
each ofthese texts being equally authentic .
CEE/TR/e1

ANNEX
Declaration oftheEuropean Economic Community
onArticle 2ofthe Financial Protocol
TheEuropean unit ofaccount used toexpress the
amounts specified inArticle 2oftheFinancial Protocol
isdefined ast>he sum ofthe following amounts inthe
currencies oftheMember States ofthe Community :
German mark 0.828
Pound sterling 0.0885
Prench franc 1.15
Italian lira 109
Dutch guilder 0.286
Belgian franc 3.66
Luxembourg franc 0.14
Danish krone 0.217
Irish pound 0.00759
The value oftheEuropean unit ofaccount inany
given currency isequal tothe sumoftheequivalent in
that currency oftheamounts ofcurrency referred toin
paragraph 1.Itiscalculated bytheCommission using
daily market exchange rates .
The daily rates ofexchange inthevarious national
currencies arepublished intheOfficial Journal ofthe
European Communities .
CEE /TR/e13

FINANCIAL RECORD
forthe1977Budget
PART1sINTERVENTION APPROPRIATIONS
(forexistingandnewprojeots)
loRELEVANTBUDGETHEADINGCODE
Article962
2.TITLEOPBUDGETHEADING
"Financialcooperation withoertainnon-memberoountries"
3.LEGALBASIS
Ajrticle238oftheEECTreaty
4.DESCRIPTION,OBJECTIVE(S)ANDJUSTIFICATION OFTHEPROJECT
ThirdfinancialprotocolbetweenEECandTurkey,concluded
3February1977,annexedtotheAssociation Agreementbetween
EECandTurkey.
5.APPROPRIATION (inu.a.)
Nocommitmentwillbemadeinthe1977Budgetundertheheadof
thefinancialja.idprovidedforinthefinancialprotocol(the
budgetheadingconcernedisatokenentry)oThebudgetappropriations
maybeusedonlyfromthe1978financialyearonwards,afterthe
protocolhasbeenratifiedoThisprotocolprovidesforasumof
220millionEXJAtobecommittedupto31Ootober1981frombudget
appropriations (withanadditional90millionHXJAinloansfromthe
ECB)oThebreakdownofthissumwillbedecidedannuallyinthe
courseofthebudgetnrocodurso
6,TYPEOFCONTROLTOBEAPPLIED
.AsliiddownintheFinancialRegulationof<!'}April1973aoclicable
tot:eGeneralBudgetofthePJarooeanCommunities ,,

.'•ÄAiVÄtW.X' -»-.».– «■«/ -'4-.IMIW1IIH L-j|»«fcr ~ .A.M * «•-» W«-».
-2-
BoPART 2sADDITIONAL DATA TOB3BPROVIDED FORAMEM PROJECT
7.COST OPTHEPROJECT (FORTOEWHOLE OPITSEXPECTED DURATION )
220million SUAcharged against theCommunity Budget forthe
whole duration ofapplication oftheprotocol ,i0e.upto
31October 1981 .
80 INFORMATION REGARDING STAFFING ANDTHE APPROPRIATIONS FOR
ADMINISTRATIVE EKPfNDITURE NBCESSARY FOR THE IMPLEMENTATION
OFTHE PROJECT
Theproject will beimplemented within theframework ofthe
Commission 'sestablishment plan »
9,PROJECT FINANCED FROM ;
Th9 financial aid for the total duration ofthe financial
protocol will befinanced from Community Budget appropriations
(220million ELIA)andEIBownresouroes (-90million EUA).
Thebudget appropriations will bemade intheform ofspecial
loans *