COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 4.12.2003
COM(2003) 753 final
Proposal for a
COUNCIL DECISION
on the position to be taken by the Community within the Association Council established
by the Europe Agreement si gned on 8 March 1993 between  the European Communities
and their Member States, of the one part, a nd the Republic of Bulgaria, of the other
part, with regard to amendments to Article 2 and Article 3 of the A dditional Protocol to
the Europe Agreement
(presented by the Commission)
2EXPLANATORY MEMORANDUM
The Europe Agreement (EA), establishing an Association between the European
Communities and their Member States, of the one  part, and the Republic of Bulgaria, of the
other part, came into force on 1 February 1995.
Protocol 2 of the Agreement governs ECSC produc ts (i.e. steel and coal), including the issue
of public aid for these sectors. According to Pr otocol 2, public aid in any form whatsoever –
apart from the derogations allowed pursuant to the ECSC Treaty – is incompatible with theEurope Agreement. Consequently, Bulgaria  can grant public aid only for the following
purposes: (i) environmental improvements; (ii) research and development; (iii) permanentclosure of capacity.
Protocol 2 of this Agreement, however, excep tionally also permitted Bulgaria to grant public
aid in order to allow the Bulgarian steel industr y to restructure during the five years following
the entry into force of the Agreement (the so-called grace period), which expired on 31
st of
December 1997. In any event, aid granted for such  a restructuring would be authorised if it
respected certain criteria1.
The Bulgarian authorities have requested and signed up on 21 November 2002 an Additional
Protocol with the European Union to provisi onally extend the period during which public aid
could exceptionally be granted to steel companie s to allow restructuring. The final decision on
the prolongation of the so-called “grace period”  remains however cond itional to the approval
of the restructuring plans for the Bulgarian st eel sector by the Council on the basis of the
assessment done by the Commission.
Taking into account recent changes in the Bu lgarian legislation on distribution of functions
between implementing institutions , Bulgaria would like to propose an amendment to Article 2
and Article 3 of the Additional Protocol by replacing the reference to the “CompetitionCouncil” in both Article s with reference to “the Commissi on on Protection of Competition” in
Article 2 and “the Ministry of Finance” in Article 3 respectively.
The Bulgarian authorities need these changes to be adopted so as to ensure the conformity of
the Europe Agreement, and its subsequent Protocol 2 to Bulgarian institutional organisation.This conformity will allow the Additional Protocol to enter into force and provide for thelegal basis allowing the adop tion of a national restructuring plan for the steel sector.
                                                
1The restructuring programme was linked to a global reduction and rationalisation involving an overall
permanent reduction in the overall production capacity for finished products in Bulgaria;It led to the viability of the benefiting firm under normal market conditions at the end of therestructuring period and,The amount and intensity of such aid was strictly limited to what was absolutely necessary in order to
reach the objective of viability and that such aid was progressively reduced.
3In order to ensure conformity between the Europe Agreement and the Bulgarian legislation,
the Council is invited to adopt the annexed pr oposal for decision concer ning an amendment to
the Additional Protocol signed on 21 November 2002.
4Proposal for a
COUNCIL DECISION
on the position to be taken by the Community within the Association Council established
by the Europe Agreement si gned on 8 March 1993 between  the European Communities
and their Member States, of the one part, a nd the Republic of Bulgaria, of the other
part, with regard to amendments to Article 2 a nd Article 3 of the A dditional Protocol to
the Europe Agreement
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular
Article 87(3)(e), in c onjunction with the first sentence of the first subparagraph of Article
300(2) and the first subparagra ph of Article 300(3) thereof,
Having regard to the Council Decision of 14 October 2002 on the Additional Protocol to the
Europe Agreement… with regard to an exte nsion of the period laid down in art 9(4)…
Having regard to the proposal from the Commission,Whereas:(1) A Europe Agreement establishing an association between the European Communities
and their Member States, of the one part, and the Republic of Bu lgaria, of the other
part
2,was signed on 8 March 1993.
(2) Article 9(4) of Protocol 2 to the above Europe Agreement lays down that during the
first five years after the entry into force of the Agreement, and by way of derogationfrom paragraph 1(iii) of the said Article, Bulgaria may exceptionally, as regards steelproducts, grant public aid for restructuring purposes, provided that this leads to the
viability of the benefiting firms under norma l market conditions at the end of the
restructuring period; that the amount and in tensity of such aid is strictly limited to
what is absolutely necessary in order to restore viability and that aid is progressivelyreduced; and that the restructuring programme is linked to a global rationalisation andreduction of overall production capacity in Bulgaria.
(3) The initial period of five years expired on 31 December 1997.(4) The Republic of Bulgaria  requested the extension of  the above-mentioned period in
October 1997.
(5) This period was provisionally extended fo r an additional eight years starting on 1
January 1998 or until the date of Bulgar ia's accession to the European Union,
whichever comes first.
                                                
2OJ L 358, 31.12.1994, p.3
5(6) The final decision on the extension of the period provided under art 9(4) of the
Protocol 2 of the Europe Agreement is cond itional to the approval of the restructuring
plans for the Bulgarian steel sector by the Council on the basis of the assessment done
by the Commission
(7) To this effect, an Additional Protocol to the Europe Agreement has been agreed and
signed between the Parties.
(8) Recent changes in the Bulgarian legislation modified the distribution of functions
between implementing institutions.
(9) In order to ensure conformity between the Europe Agreement and the Bulgarian
institutional organisation, it is  appropriate to amend Artic le 2 and Article 3 of the
Additional Protocol by replacing the refe rence to the “Competition Council” in both
Articles with reference to “the Commission on Protection of Competition” in Article 2and “the Ministry of Financ e” in Article 3 respectively.
(10) This conformity is necessary to allow the entry into force in Bulgarian law of the
Additional Protocol to the Eur ope Agreement mentioned above.
HAS DECIDED AS FOLLOWS:
Sole Article
The position to be taken by the Community with in the Association Council established by the
Europe Agreement between the European Communities and their Member States, of the onepart, and the Republic of Bulgaria , of the other part, with regard to amendments to Article 2
and Article 3 of the Add itional Protocol to the Europe Agr eement, shall be based on the draft
decision of the Association Council annexed to this decision.
Done at Brussels,
For the Council
The President
6ANNEX
ASSOCIATION BETWEEN THE EUROPEAN UNION AND THE REPUBLIC OF
BULGARIA The Association Council
DECISION No …/2003 OF THE ASSOCIATION COUNCIL
BETWEEN THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES, OF THE ONE PART,
AND THE REPUBLIC OF BULGARIA, OF THE OTHER PART
Amending Article 2 and Article  3 of the Additional Protocol  of the Europe Agreement
THE ASSOCIATION COUNCIL,Having regard to the Europe Agreement establishing an association between the European
Communities and their Member States, of, the one  part, and the Republic of Bulgaria, of the
other part,
Having regard to Protocol 2 of the Europe Agreement and in particular to Article 2 and
Article 3 of the Additi onal Protocol thereof;
Whereas(1) An Additional Protocol, w ith regard to an extension of the period laid down in
Article 9(4) of Protocol 2 to the Eur ope Agreement has been agreed and signed
between the Parties.
(2) The Additional Protocol to the Europe  Agreement, on behalf of the European
Community, was subject to a decisi on 12685 of the Council on 14 October 2002.
(3) Recent changes in the Bulgarian legislation modified the distribution of functions
between implementing institutions.
(4) In order to ensure conformity betwee n the Additional Protocol to the Europe
Agreement and the Bulgarian institutional changes, it is appropriate to amend Article2 and Article 3 of the Add itional Protocol by replacing the reference to the
“Competition Council” in bot h Articles with referen ce to “the Commission on
Protection of Competition” in Article 2 and “the Ministry of Finance” in Article 3respectively.
(5) This conformity is necessary to allow the entry into force in Bulgarian law of the
Additional Protocol to the Eur ope Agreement mentioned above.
7HAS DECIDED AS FOLLOWS:
Article 1
In Article 2 of the Additional Protocol to the Europe Agreement establishing an association
between the European Communities and their Member States, of the one part, and theRepublic of Bulgaria, of the other part, with re gard to an extension of the period laid down in
Article 9(4) of Protocol 2 to the Europe Agreement, th e term “Competition Council” is
replaced by “the Commission on Protection of Competition”.
In Article 3 of the Additiona l Protocol, the term “Competiti on Council” is replaced by “the
Ministry of Finance”.
The text of the amended Additional Pr otocols attached to this Decision.
Article 2
This Decision shall enter into force on the da y of its adoption by the Association Council.
Done at Brussels,For the Association CouncilThe President
8Version with the modifications proposed
ADDITIONAL PROTOCOL TO THE EUROPE AGREEMENT ESTABLISHING AN
ASSOCIATIONBETWEEN THE E UROPEAN COMMUNITIES AND THEIR
MEMBER STATES, OF THE ONE PART, AND THE REPUBLIC OF BULGARIA,OF THE OTHER PART , WITH REGARD TO AN EXTENSION OF THE PERIOD
LAID DOWN IN ARTICLE 9(4) OF PROTOCOL 2 TO THE EUROPE AGREEMENT
THE EUROPEAN COMMUNITY, hereinafter referr ed to as "the Community",of the one
part, and
THE REPUBLIC OF BULGARIA, of the other part,HAVING REGARD to the Europe Agreement establishing an association between the
European Communities and their Member Stat es, of the one part, and the Republic of
Bulgaria, of the other part, and in partic ular Article 9(4) of Protocol 2 thereto,
WHEREAS(1) Article 9(4) of Protocol 2 to the Eu rope Agreement lays down that during the
first five years after the entry into force of the Agreement, and by way of derogationfrom paragraph 1(iii) of the same Article, Bulgaria may exceptionally, as regardsECSC steel products, grant public aid for restructuring purposes, provided that it
leads to the viability of the benefiting fi rms under normal market conditions at the
end of the restructuring period; that the am ount and intensity of such aid are strictly
limited to what is absolutely necessary in order to restore such viability and areprogressively reduced; and that the restru cturing programme is linked to a global
rationalisation and reduc tion of overall production capacity in Bulgaria.
(2) The initial period of five years expired on 31 December 1997.(3) The Republic of Bulgaria requested the extension of the above mentioned period in
October 1997.
(4) This extension should be granted for an additional period of eight years starting on
1 January 1998 or until the date of Bulgar ia’s accession to the European Union,
whichever comes first,
HAVE AGREED AS FOLLOWS:
ARTICLE 1
The period within which the Republic of Bulgaria may exceptionally, as regards steel
products, grant public aid for restructuring purpos es under the conditions listed in Article 9(4)
of Protocol 2 shall be extended for a further period of eight years starting on 1 January 1998
or until the date of Bulgaria's accession to th e European Union, whichever comes first. The
extension shall be subject to fulfilment of the conditions laid dow n in Articles 2 and 3.
9ARTICLE 2
The Republic of Bulgaria shall submit to the European Commission a restructuring
programme and business plans that meet the requi rements listed in Article  9(4) of Protocol 2,
and that have been assessed and agreed by its  National State Aid Monitoring Authority (the
Competition Council  [to be replaced by:] the Commi ssion on Protection of Competition).
ARTICLE 3
The Commission shall provide a fi nal assessment of whether the restructuring programme and
business plans meet the requirements listed in Ar ticle 9(4) of Protocol  2. The Council of the
European Union shall decide whether the programme and the plans are in compliance with therequirements of the a bove mentioned Article.
The Commission shall regularly monitor the implementation of the plans on behalf of the
Community, and the National State Aid Mon itoring Authority (the Competition Council
 [to
be replaced by:] the Ministry of Finance)  shall do so for the Republic of Bulgaria.
ARTICLE 4
This Protocol may be amended by decision of  the Association Council set up by the Europe
Agreement establishing an association between the European Communities and their MemberStates, of the one part, and the Repub lic of Bulgaria, of the other part.
ARTICLE 5
This Protocol shall enter into force on the first day of the month following the date on which
the Parties notify each other of the completion of the internal procedures necessary for thatpurpose. It shall apply provisiona lly from the date of signature.
Done at Brussels,
For the European CommunityFor the Republic of Bulgaria