EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

1.1. General context

OCTs have been associated to the European Union since the entry into force in 1958 of the Treaty of Rome. They are islands located in the Atlantic, Antarctic, Arctic, Caribbean, Indian Ocean and Pacific regions. They are not sovereign countries but depend on four Member States of the EU: Denmark, France, the Netherlands and the United Kingdom. The association of the OCTs with the Union flows from the constitutional relations that these countries and territories have with the four Member States.

In general, OCTs have wide ranging autonomy, covering areas such as economic affairs, employment market, public health, home affairs and customs. Defence and foreign affairs usually remain within the remit of the Member States. The OCTs are not part of the Union's customs territory and are outside the Internal Market. The Union legislation therefore does not apply.

Being nationals of the EU Member States to which their countries and territories are constitutionally linked, OCT inhabitants hold EU citizenship. The OCTs' total population represents only 0.02% of the world population (1.2 million).Their total land mass represents only 80,000 sq km[1].

Since the adoption in 2001 of the current Overseas Association Decision, the regional and international environments in which OCTs operate has considerably changed. New political priorities have emerged at European and international level, (such as environment, climate change, sustainable management of natural resources) as well as changes in global trade patterns. With the Europe 2020 Agenda, the European Commission proposed a strategy[2] articulated around three priorities: smart growth, sustainable growth and inclusive growth as a response to the economic and financial crisis.

For their part, the OCTs continue to face economic and social problems and/or struggle to found their economies on a sustainable basis. They are confronted with a number of difficulties linked to their fragile environments and the need to secure the environmental pillar of sustainable development.

The main challenge that OCTs face consists in putting their economies and societies on a sustainable development path by increasing their competitiveness, reducing their vulnerability, increasing environmental resilience, and cooperating with their neighbours and integrating in the regional and/or world economies, where this is possible. For the Union, the challenge resides in supporting the OCTs with the accomplishment of these goals and of the purpose of the association as defined in Article 198 of the Treaty on the functioning of the European Union, via a framework that is adapted to OCT needs, realities, particularities and diversity.

1.2. Existing provisions

The current rules and procedures of the EU-OCT association are laid down in Decision 2001/822/EC of the Council of 27 November 2001 on the association of the overseas countries and territories with the European Community, (OJ L 314/1, 30.11.2001), as amended by Decisions 2007/249/EC (OJ L 109/33, 26.04.2007) and XXXXXXX (Decision regarding Saint-Barthélemy).

1.3. Consistency with other EU policies

"Europe 2020" provides the benchmark against which the coherence of EU policies and the promotion of EU values, standards and interest need to be checked[3]. Coherence with the Europe 2020 strategy should be sought as far as its smart growth and sustainable priorities are concerned, promoting support to research, innovation as well as to information and communication technologies (ICT) and sustainable growth capacities as catalysts for socio-economic development.

The 2014-2020 OAD will play an important role in that respect. Indeed, the idea of establishing ‘centres of experience and expertise’ could relate to the implementation and promotion of high standards, including international standards, e.g. in the fields of environment and food safety and consumer health. The OCTs are all characterised by rich biodiversity. The sustainable use and protection of this biodiversity would benefit from better scientific documentation and access to research and innovation results. Likewise, the implementation of international standards within the area of food safety, animal and plant health could facilitate trade between OCTs and their trading partners, including EU Member States. The Union's commitment to environmental standards as well as its role as a global player in the fight against climate change could be of great value to both the Union and the OCTs. The Commission believes that biodiversity and other natural assets of the OCTs could be the object of a strengthened cooperation in the field of research, innovation and conservation. A partnership in the area of environment could be of mutual interest to both parties.

2. RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

The revision of the Overseas Association Decision has been the subject of various stakeholders' consultations throughout the period 2008-2011. These include public consultations, but also regular ad hoc meetings between the OCTs, the Member States to which they are constitutionally linked and the European Commission, as well as dialogue in the context of the instances foreseen under Article 7 of the current Overseas Association Decision: annual fora , regular trilateral meetings and partnership working parties dedicated to environmental issues, trade issues, regional integration of the OCTs, financial services in the OCTs and the future EU-OCT relations.

2.1. Consultations

The outcome of stakeholders' consultation highlighted the following issues:

In their replies to the 2008 Green Paper[4], stakeholders called for a change of the association's current focus on poverty reduction and development cooperation to a more reciprocal relationship focused on the sustainable development of the OCTs (i.e. a development model that conciliates economic activities and social well-being in the long run while preserving natural resources and ecosystems for future generations), which could, at the same time, support the promotion of EU values and standards in the wider world.

This was highlighted during the interventions at the stakeholders' conference in October 2008 which gathered over 100 interested parties from the OCTs' authorities, their Member States, the Union's institutions and bodies and civil society at large.

The Council of the European Union[5] also welcomed and expressed support to the change of paradigm.

In a Joint Position Paper[6] adopted in February 2011, the OCTs and their Member States called for a better recognition of the OCTs as part of the European family, an association further based on the mutual interests of the Union and the OCTs and a focus on potential and vulnerabilities of the OCTs. The document also calls the attention to the necessity to recognize and take the interests of the OCTs in the following areas: erosion of preferences and trade related issues, and building capacity.

It was also underlined that issues relating to environment, climate change and disaster risk reduction should constitute a priority for the future EU-OCT relations: sustainable use and protection of OCTs biodiversity and natural resources, environmental security, energy and renewable energy, ecosystems conservation, fight against climate change impacts and mitigation, preparedness and response to disasters, invasive species, sustainable fisheries. Stakeholders[7] called for an enhanced cooperation of the Union with the OCTs and outermost regions in the field of conservation of biodiversity and ecosystems services.

Solidarity between the Union and OCTs should be based on the fact that OCT inhabitants, as nationals of the related Member States, were also EU citizens. It was underlined that by helping OCTs to strengthen their competitiveness and resilience, reduce their vulnerability and implant themselves in their regional environment, the Union would actually be investing in strategic outposts able to promote Union’s values in the world.

2.2. Collection and use of expertise:

The EU-OCT association was analysed in various studies, commissioned either by the Commission or by the OCTs. These studies covered topics such as the trade regime contained in the OAD, the OCTs' environmental profiles, OCT statistical systems and capacities, OCT disaster preparedness as well as the cooperation of the Union with the OCTs during the period 1999-2009[8]. The latter was presented and discussed with the stakeholders on the occasion of the annual OCT-EU Forum in March 2011.

The main recommendations of the different studies with regard to the Union’s financial assistance to OCTs were the following:

(1) to incorporate the political priorities that emerged in the last decade in the programming of EU-OCT cooperation;

(2) to adapt rules and procedures of the programming of financial assistance so as to reduce response time of assistance;

(3) to promote cooperation between OCTs and their neighbouring countries, amongst others through a better coordination of the respective financial instruments available to OCTs, ACP States and the outermost regions;

(4) to facilitate access to Union’s horizontal programmes for which OCTs are eligible.

The main recommendations of the different studies with regard to trade and trade related aspects of the Overseas Association Decision were the following:

(1) to adapt the arrangements concerning trade in goods so as to take structural difficulties better into account, amongst others by introducing more flexible rules of origin for OCT goods exports to the Union;

(2) to allow for the possibility for OCTs to engage in more favourable trade relations with other OCTs and developing countries, so as to reflect the increasing importance that trade in services has gained in world and regional economies in the last decade and to facilitate regional integration in this area;

(3) to foresee support and capacity building for the development of OCT trade related policies as well as to assist OCTs in regulatory reform;

(4) to support dissemination within OCTs of information regarding the conditions defining access to the EU market;

(5) to maintain the direct dialogue between the European Commission and the OCTs on e.g. trade and trade related issues and ensure that OCT interests are taken into account in the context of EU trade negotiations.

With regard to environmental issues, the different studies recommended that the Union and the OCTs cooperate more in the following areas:

(1) climate change,

(2) natural disasters,

(3) threats to wildlife and biodiversity, habitat destruction,

(4) illegal, unregulated and unreported fishing,

(5) waste management,

(6) water supply and sanitation.

2.3. Impact assessment

In the impact assessment three policy options were examined in detail.

Policy option 1: Status Quo Renewal of the current Overseas Association Decision without any changes.

Under Policy option 1, the structure and the content of the currently into force Association Decision would be maintained for the period 2014-2020.

Maintaining the status quo could legitimately be considered as a valid option for the future EU-OCT association as current arrangements were found to have been beneficial for the OCTs' social and economic development, amongst others by providing free access to the large EU market and the possibility of support for exploiting the export opportunities this represents. The EU-OCT cooperation in the period 1999-2009 was considered by external studies to have been coherent with both the association's objectives and the OCTs' political priorities and concluded that no marked contradictions or inconsistencies had occurred between EU-OCT cooperation and other Union policies. Though consistent with Part Four of the TFEU and its Preamble, option 1 would not accomplish the shared ambition of OCTs, their Member States and the Commission to reshape and modernise the EU-OCT relations on a reciprocal basis. Rather than modernising the relations and introducing a more reciprocal partnership, in which mutual interests could be better taken into account, the donor/beneficiary rationale which has traditionally underpinned EU-OCT relations would be maintained.

OCT goods and services access to the Union would remain subject to the existing rules and would lead to loss of market access for the OCTs (due to preference erosion). This would have a negative impact on the social and economic position of OCTs.

Policy option 2: Modernisation of the Overseas Association Decision and alignment with EU policy framework

Option 2 would modernise and align the OAD with the Union policy framework. Its objectives and principles would be revised, taking into account the political orientations of the Council of the EU, the requests the OCTs and their Member States expressed on different occasions as well as the results of external studies.

Policy option 2 would enhance an EU-OCT cooperation based on the mutual interests the stakeholders identified throughout the consultation process. It would also promote a more efficient cooperation through a more focus and coordinated action between the Union, the OCTs and their Member States. Areas of cooperation recognized as priorities by the OCTs would receive an enhanced support from the Union (e.g.: conservation of biodiversity and ecosystem services, research and innovation).

Under policy option 2, the Union would support the OCTs to address sensitive issues undermining their sustainable development, such as climate change which they cannot tackle alone. For such challenges, insular territories cannot develop successful measures alone, they need to find partners and be integrated in global responses.

Policy option 2 would offer to the OCTs a modernised trade regime with the Union that would 1) entail improved rules and origins and 2) guarantee a treatment for trade in services and establishment that would not be less favourable than the one given by the Union to other third partners, which is not the case under the current framework.

Policy option 2 would be consistent with Part Four of the TFEU and its Preamble. It would also translate the political orientations of the Council of the EU on the three objectives of competitiveness, resilience and cooperation. Under policy option 2, the association framework would take into account recent policy developments and would take stock of discussions that emerged in the last decade. Policy coherence would be ensured under this option and would be strengthened. The social, economic and environmental impacts would be more positive than under options 1.

Policy option 2 would better reflect the notion of mutual interests than it is currently the case. It would allow the integration of Union policy agenda priorities in the relations between the Union and the OCTs and the EU added value as a global partner in emerging global issues would be enhanced. In doing so, the OCTs better promote Union's values and standards in the wider world.

Policy option 3: Several partnership agreements concluded

Option 3 would entail a diversification of EU-OCT relations. In the area of trade and economic cooperation two approaches would be adopted. Certain OCTs could be included in other EU bilateral trade arrangements, namely Economic Partnership agreements (EPAs) or FTAs, where relevant and possible. For the remaining OCTs, an OCT trade regime equivalent to policy option 1 or 2 would be foreseen under the association framework. Whilst this would not cover the trade and economic cooperation with those OCTs which would have been included in other trade agreements, it could cover cooperation with all OCTs in all other areas. An alternative option would consist in having all cooperation with OCTs that would fall under an EPA or FTA take place in the context of these agreements. This would include that financial assistance would also take place outside of the association framework.

By integrating or associating OCTs to other trade agreements, some of the objectives of the EU-OCT association could be met. However, this would be done outside of the association as such. Furthermore, option 3 may not be fully adapted to the needs and realities of most or even all OCTs. There may be negative impacts also for the Union itself if significant compensation is required in order to incorporate the OCTs into existing agreements. By integrating OCTs in other trade agreements the associated countries and territories with constitutional links to Member States would legally and effectively cease to be OCTs. As the implementation of policy option 3 may result in the Union having to work out solutions for setting up different types of relations with each of the OCTs, the legal process would be very complicated and would need to be reiterated for every OCT. It would likely increase confusion as regards to their status and that of their inhabitants. Certain rules currently contained or being considered in the different agreements may not apply to OCT inhabitants to the extent that they are EU citizens. Thus, the implementation of policy option 3 may amplify the tension that exists between the territorial and personal scope of the TFEU. The confusion might be further increased by the provision of different types of cooperation under different kinds of frameworks.

3. LEGAL ELEMENTS OF THE PROPOSAL

3.1. Legal basis

The EU-OCT association is based on Part Four of the Treaty on the Functioning of the European Union. The detailed rules and procedures of the OCT-EU association are laid down in Decisions of the Council on the basis of Article 203 of the Treaty on the Functioning of the European Union, which foresees that such acts are adopted through a special legislative procedure:

3.2. Subsidiarity

The detailed arrangements of the provisions in Part Four of the TFEU necessarily have to take place at Union level as the purpose of the association, the social and economic development and close economic ties between the OCTs and the Union as a whole, cannot be achieved via actions at Member State level. Moreover, with regard to the OCT trade regime, Member States' actions would not be possible as the common commercial policy falls within the domain of the Union's exclusive competence (Part Five, Title II of the TFEU).

The approach towards cooperation with the OCTs contained in the Commission's legislative proposal respects the principles of partnership, complementarity and subsidiarity. It proposes that the Union financial assistance to OCTs be based on programming documents, for which the competent OCT authorities and the Commission would be jointly responsible and which would define the cooperation strategies between the Union and the OCTs. These cooperation strategies would be based on the development objectives, strategies and priorities adopted by the competent OCT authorities. Activities would be decided upon in close consultation between the Commission, the OCTs and their Member States, in full respect of the respective institutional, legal and financial powers of each of the partners.

Without prejudice to the Commission's powers, the OCT authorities would have primary responsibility for implementing the operations agreed upon under the cooperation strategy. The Commission would be responsible for establishing the general rules and conditions regarding these programmes and projects.

3.3. Proportionality

The objectives of the association, as mentioned in Articles 198 and 199, call for a comprehensive partnership, which comprises an institutional framework and trade arrangements and covers many areas of cooperation as well as the basic principles governing Union financial assistance to OCTs. This calls for a wide ranging and far reaching legal instrument.

The objectives set out by the Treaty project themselves into the long term. This calls for a Decision of which the duration is sufficiently long. As during the 2014-2020 Multiannual Financial Framework OCTs will benefit from both the 11th European Development Fund and from the Union's general budget, an alignment of the duration of the Decision on that of the Multiannual Financial Framework is appropriate.

The Commission proposal puts forward an approach that is flexible and tailored to the situation of each OCT. It is proposed that the effectiveness of the EU-OCT cooperation be monitored through audits, ex ante, mid-term and ex post evaluations.

4. BUDGETARY IMPLICATION

In the Commission Communication[9] on "Preparation of the multiannual financial framework regarding the financing of Union cooperation for African, Caribbean and Pacific States and Overseas Countries and Territories for the 2014-2020 period (11th European Development Fund)", an amount of EUR 343.4 million is foreseen for cooperation with the OCTs.

The amount of EUR 343.4 million shall be allocated according to a Council Decision to be taken before 31 December 2013 for implementing the Association with the OCTs, of which EUR 338.4 million to finance territorial and regional programmes, and EUR 5 million in the form of an allocation to the EIB to finance interest subsidies and technical assistance in accordance with the Overseas Association Decision.

2012/0195 (CNS)

Proposal for a

COUNCIL DECISION

on the association of the overseas countries and territories with the European Union ("Overseas Association Decision")

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 203 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national Parliaments,

Having regard to the opinion of the European Parliament

Acting in accordance with a special legislative procedure,

Whereas:

(1) Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories with the European Community[10] applies until 31 December 2013. Pursuant to Article 62 thereof, the Council must establish the provisions to be laid down for the subsequent application of the principles set out in Articles 198 to 202 of the Treaty on the functioning of the European Union.

(2) In its conclusions of 22 December 2009on the EU’s relations with Overseas Countries and Territories (OCTs)[11], the Council invited the Commission to submit a legislative proposal to revise the Overseas Association Decision before July 2012. The Council endorsed the Commission's proposal to base the future partnership between the Union and the OCTs on three key pillars comprising enhancing competitiveness, strengthening resilience and reducing vulnerability and promoting cooperation and integration between the OCTs and other partners and neighbouring regions.

(3) The Commission held a public consultation between June and October 2008 and proposed a number of orientations for a new association decision. The results of this consultation were synthesised in a Communication entitled 'Elements for a new partnership between the European Union and the Overseas Countries and Territories (OCTs)'[12].

(4) The Treaty and its secondary legislation do not automatically apply to the OCTs, except for some provisions explicitly establishing the contrary. Although not third countries, the OCTs do not form part of the single market and must comply with the obligations imposed on third countries in respect of trade, notably rules of origin, health and plant health standards and safeguard measures.

(5) The special relationship between the Union and the OCTs should move away from a classic development cooperation approach to a reciprocal partnership to support the OCTs' sustainable development. Moreover, the solidarity between the Union and the OCTs should be based on their unique relationship and their belonging to the same 'European family'.

(6) The contribution of civil society to OCT development can be enhanced by strengthening civil society organisations in all spheres of cooperation.

(7) Given the OCTs geographical position, cooperation between them and their neighbours, despite the different status vis-à-vis Union law of each actor in a given geographical area, shall be pursued in the interests of all sides, and with a particular focus on areas of common interest and the promotion the Union's values and standards.

(8) The Union shall support the policies and strategies of an OCT in an area of mutual interest on the basis of the specific need, potential and choice of the OCT concerned.

(9) The association should aim at ensuring the conservation, restoration and sustainable use of biological diversity and ecosystem services as a key element for the achievement of sustainable development.

(10) The OCTs are host to wide terrestrial and marine biodiversity. Climate change can impact on OCTs' natural environment and constitutes a threat undermining their sustainable development. Actions in the fields of conservation of biodiversity and ecosystem services, disaster risk reduction, sustainable management of natural resources and promotion of sustainable energy will contribute to adaptation and mitigation of climate change in the OCTs.

(11) The significant role which OCTs could play in contributing to the Union's commitments under Multilateral Environmental Agreements should be recognised in the relations between the Union and the OCTs.

(12) It is important to support the OCTs in their efforts in becoming less dependent on fossil fuels, with a view to reducing their vulnerability to fuels access and price volatility, thus making their economy more resilient and less vulnerable to external shocks.

(13) The Union may assist the OCTs to reduce their vulnerability to disasters and support the actions and measures they undertake for this purpose.

(14) The effects of the OCTs' remoteness constitute a barrier to their competitiveness and thus it is important to improve the accessibility of the OCTs.

(15) The Union and the OCTs recognise the importance of education as a lever for the OCTs' sustainable development.

(16) Further economic and social development of the OCTs should be mutually supportive and aim at strengthening competitiveness of the OCTs' economy, as well as attaining social welfare and inclusion, in particular as regards vulnerable groups and persons with disabilities. To that end, cooperation between the Union and OCTs should include exchange of information and best practice in the relevant areas, including skills development and social protection, and promote the rights of persons with disabilities, bearing in mind the principles of the UN Convention on the Rights of Persons with Disabilities. Moreover, the association between the Union and OCTs should contribute to the promotion of decent work, including best practice in social dialogue, as well as respect for core labour standards, equal opportunities, non-discrimination and accessibility in the OCTs and regions where they are located.

(17) The incidence of communicable diseases in the OCTs, such as dengue in the Caribbean and the Pacific and Chikungunya in the Indian Ocean region, can have significant negative health and economic impacts. Beyond decreasing the productivity of affected populations, epidemics in OCTs are likely to heavily impact tourism, which is a mainstay of many OCTs’ economies. With large numbers of tourists and migrant workers travelling to OCTs, they are vulnerable to importation of infectious diseases. Inversely, the large flow of people travelling back from OCTs could be a vector of introduction of communicable diseases in Europe. Ensuring a “safe tourism” is therefore a critical factor for the sustainability of the OCT economies that heavily rely on tourism.

(18) The association between the Union and the OCTs shall take into account and contribute to the preservation of the cultural diversity and identity of OCTs.

(19) The Union recognises the importance to develop a more active partnership with the OCTs as regards to good governance and the fight against organised crime, trafficking in human beings, terrorism and corruption.

(20) Trade and trade-related cooperation between the Union and the OCTs should contribute to the objective of sustainable development in economic development, social development and environmental protection dimensions.

(21) Global changes, reflected in the continuing process of trade liberalisation, broadly implicate the Union, the principal trading partner of the OCTs, their ACP neighbours and other economic partners.

(22) The OCTs are fragile island environments requiring adequate protection, including in respect of waste management. In respect of radioactive waste, Article 198 of the Euratom Treaty and the related secondary legislation provide for this, except with regard to Greenland, to which the Euratom Treaty does not apply. For other waste, it should be specified which Union rules are to apply in respect of the OCTs.

(23) This Decision should provide for more flexible rules of origin, including new possibilities of cumulation of origin. Cumulation should be possible not only with OCTs and Economic Partnership Agreement (EPA) countries, but under certain conditions, also with products originating in countries with which the Union is applying a free trade agreement, and for products entering the Union duty-free quota-free under the Union's General System of Preferences[13], also subject to conditions. These conditions are necessary to prevent trade circumvention and ensure the proper functioning of the cumulation arrangements.

(24) The procedures for certification of OCT origin should be updated, in the interests of the operators and administrations concerned in the OCTs. Provisions on administrative cooperation between the Union and the OCTs should also be updated accordingly.

(25) Methods of administrative cooperation and a possibility to withdraw temporarily preferential treatment in respect of all or of certain products originating in the OCTs in cases of fraud, irregularities or systematic failure to comply with the rules concerning the origin of the products, or failure to provide administrative cooperation have to be established. In addition, sufficiently detailed safeguard and surveillance provisions should be laid down. This should allow OCTs and Union competent authorities as well as economic operators to rely on clear and transparent rules and procedures. Finally, it is a common interest to ensure the proper application of the procedures and arrangements that allow the OCTs to export goods to the EU duty-free quota-free. Therefore, it is appropriate to include a provision clarifying the consequences of administrative errors in the application of such procedures and arrangements leading to losses for the Union budget in terms of import duties. Such a provision should explicitly confirm that the financial burden of such losses incurred is not to be borne by the Union budget but by the Member State that has special relations with the OCT whose authorities have committed the error. That provision should not distinguish between goods coming from OCTs and goods coming from third countries and should cover both situations.

(26) Taking into account the aims of integration and the developments of global trade in the area of services and establishment, it is necessary to support the development of services markets and investment possibilities by improving the market access of OCT services and investment to the Union market. In this regard the Union should offer to OCTs the best possible treatment offered to any other trading partner through comprehensive most favoured nation clauses, while ensuring more flexible possibilities for trade relations for OCTs by limiting the treatment offered by OCTs to the Union to what has been offered to other major trading economies.

(27) Intellectual property rights are a crucial component for stimulating innovation and are a tool to promote economic and social development. They benefit countries by allowing them to protect intellectual creations and assets. Their protection and enforcement helps to facilitate trade, growth and foreign investment, as well as to combat the health and safety risks of counterfeit products. OCTs can benefit from a policy on intellectual property rights, in particular in the context of the preservation of biodiversity and the development of technology.

(28) Sanitary and phyto-sanitary measures and technical barriers to trade may have an impact on trade and require cooperation. Trade and trade-related cooperation also should address competition policies and intellectual property rights, which affect the equitable distribution of the gains of trade.

(29) To ensure that OCTs may participate under the best conditions in the Union's internal market as well as regional, sub-regional and international markets, it is important to develop the capacity of OCTs in relevant areas. These include the development of human resources and their skills, the development of small and medium enterprises, the diversification of economic sectors and the implementation of an appropriate legal framework in order to achieve a business climate conducive to investment.

(30) Cooperation in the area of financial services between the Union and OCTs should contribute to build a safer, sounder, more transparent financial system that is essential to enhance global financial stability and to underpin sustainable growth. Efforts in that area should focus towards convergence with internationally agreed standards and approximation of OCT legislation with Union acquis on financial services. Adequate attention should be paid to strengthening administrative capacity of OCT authorities, including supervisors.

(31) Financial assistance to the OCTs should be allocated on the basis of uniform, transparent and effective criteria, taking into account the needs and performances of the OCTs. Such criteria should take into account the size of the population, the level of Gross Domestic Product (GDP), the level of previous allocations from the European Development Fund (EDF) and constraints due to the geographical isolation of OCTs.

(32) In the interest of efficiency, simplification and recognition of the management capacities of the OCT authorities, the financial resources granted to the OCTs should be managed on the basis of a reciprocal partnership. Moreover, the authorities of the OCTs should assume the responsibility for the formulation and implementation of the policies agreed upon between the parties as cooperation strategies.

(33) The procedures regarding financial assistance provided for in Articles 9 and 82 delegate the main responsibility for 11th EDF programming and implementing cooperation to the OCTs in particular. Cooperation will be conducted predominantly in conformity with OCT territorial regulations and will underpin support for the monitoring, evaluation and audit of the operations programmed. In addition, it is necessary to clarify that OCTs are eligible to different sources of funding provided for in Article 76.

(34) In order to adopt detailed rules for the preparation of the programming documents, their follow-up, audit, evaluation, review and implementation, as well as for reporting and financial corrections, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of Part IV of this Decision. In order to take into account technological developments and changes in customs legislation, the power to adopt acts amending the Appendices to Annex VI, in accordance with Article 290 of the Treaty on the Functioning of the European Union, should also be delegated to the Commission. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the Council.

(35) [The arrangements for association laid down in this Decision should not be applied to Bermuda in accordance with the wishes of the Government of Bermuda.]

(36) By virtue of this Decision, the Council should be able to produce an innovative response to all the factors mentioned above, which is both consistent and tailored to the variety of situations.

(37) This Decision should replace Decision 2001/822/EC,

HAS ADOPTED THIS DECISION:

Part One General provisions of the Association of the Overseas Countries and Territories with the Union

Chapter 1 General provisions

Article 1

Purpose

1. The association of the overseas countries and territories (OCTs) with the Union (hereinafter referred to as the "association") constitutes a partnership, based on Article 198 of the Treaty on the functioning of the European Union, to support the OCTs' sustainable development as well as to promote the values and standards of the Union in the wider world.

2. The partners to the association are the Union, the OCTs and the Member States to which they are linked.

Article 2

Objectives, principles and values

1. The association between the Union and the OCTs shall be based on objectives, principles and values shared by the OCTs, the Member States to which they are linked and the Union.

2. The association shall pursue the overall objectives laid down in Article 199 of the Treaty, by the enhancement of the OCT's competitiveness, the strengthening of the OCTs' resilience, the reduction of their vulnerability and the promotion of cooperation between them and other partners.

3. In pursuing those objectives, the association shall respect the fundamental principles of liberty, democracy, human rights and fundamental freedoms, the rule of law, good governance and sustainable development, all of which are common to the OCTs and the Member States to which they are linked

4. There shall be no discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation in the areas of cooperation referred to in this Decision.

5. The partners recognise each other's rights to determine their sustainable development policies and priorities, to establish their own levels of domestic environmental and labour protection, and to adopt or modify accordingly the relevant laws and policies, consistently with commitment to the internationally recognised standards and agreements. In doing so, they shall strive to ensure high levels of environmental and labour protection.

6. In implementing this Decision, the partners shall be guided by the principles of transparency, subsidiarity and the need for efficiency and shall equally address the three pillars of OCTs' sustainable development: economic development, social development and environmental protection.

Article 3

Management of the association

Management of the association shall be conducted by the Commission and the OCT authorities and, where necessary, by the Member State to which the OCT is linked, in accordance with respective institutional, legal and financial competences.

Article 4

Territorial application

The association shall apply to the OCTs listed in Annex II to the Treaty [except for Bermuda].

Article 5

Mutual interests, complementarity and priorities

1. The association is the framework for policy dialogue and cooperation on issues of mutual interest.

2. Priority shall be given to cooperation in areas of mutual interest, such as:

(a) the economic diversification of OCT economies, including their further integration in world and regional economies;

(b) the promotion of green growth;

(c) the sustainable management of natural resources, including the conservation and sustainable use of biodiversity and ecosystem services;

(d) the adaptation to and mitigation of impacts of climate change;

(e) the promotion of disaster risk reduction;

(f) the promotion of research, innovation and scientific cooperation activities;

(g) the promotion of social, cultural and economic exchanges between the OCTs, their neighbours and other partners.

3. Cooperation in the areas of mutual interest aims at the promotion of OCT self-reliance and of the development of OCTs' capacities to formulate, implement and monitor strategies and policies set out in paragraph 2.

Article 6

Promotion of the association

1. With an aim to strengthen the relations between themselves, the Union and the OCTs endeavour to make the association known among their citizens, in particular by promoting the development of the links and cooperation between the authorities, academic community, civil society and businesses of OCTs on the one hand and their interlocutors within the Union on the other.

2. The Member States shall support the OCTs' efforts to strengthen and promote their relations with the Union as a whole.

Article 7

Regional cooperation, regional integration and cooperation with other partners

1. Subject to Article 3 of this Decision, the association aims at supporting the OCTs in their efforts to take part in relevant international, regional and/or sub-regional cooperation initiatives as well as regional or sub-regional integration processes, in line with their own aspirations and in accordance with objectives and priorities defined by the competent OCT authorities.

2. To this end, the Union and the OCTs may exchange information and best practices or establish any other form of close cooperation and coordination with other partners in the context of the OCTs' participation in regional and international organisations, where appropriate by means of international agreements.

3. The association aims at supporting cooperation between the OCTs and other partners in the areas of cooperation set out in Parts Two and Three of this Decision. In that respect, the objective of the association is to promote the cooperation between the OCTs and the outermost regions, referred to in Article 349 of the Treaty, their neighbouring African, Caribbean and Pacific (ACP) and non-ACP States. In order to achieve that objective, the Union shall improve coordination and synergies between cooperation programmes supported by different EU financial instruments.

4. The support to OCTs' participation in relevant regional integration organisations shall focus in particular on:

(a) capacity building of relevant regional organisations and institutions of which OCTs are members;

(b) regional or sub-regional initiatives such as the implementation of sectoral reform policies relating to the areas of cooperation identified in Parts Two and Three of this Decision;

(c) the awareness and knowledge of the OCTs on the impacts of regional integration processes in different areas;

(d) OCT participation in the development of regional markets within the context of regional integration organisations;

(e) cross-border investment between OCTs and their neighbours.

Article 8

Specific treatment

1. The association shall take into account the diversity of the OCTs in terms of economic development and capacity to fully benefit from regional cooperation and regional integration referred to in Article 7.

2. A specific treatment shall be established for isolated OCTs.

3. In order to enable isolated OCTs to overcome structural and other obstacles to their development, this specific treatment shall take account of their specific difficulties, inter alia, when determining the volume of financial assistance and the conditions attached thereto.

4. The OCTs which shall be considered to be isolated are listed in Annex I.

Chapter 2

Actors of Cooperation

Article 9

General approach

1. The association shall be based on a broad dialogue and consultations on issues of mutual interest between the OCTs, the Member States to which they are linked and the Commission, and, if appropriate, the European Investment Bank (EIB).

2. The OCTs shall organise, where appropriate, a dialogue and consultations with authorities and bodies such as:

(a) the competent local and other public authorities;

(b) the economic and social partners;

(c) any other appropriate body representing civil society, environmental partners, non-governmental organisations, and bodies responsible for promoting of equality between men and women.

Article 10

Actors of cooperation

1. Actors of cooperation in the OCTs shall include:

(a) the OCTs' governmental authorities;

(b) the local authorities within the OCTs;

(c) public service providers and civil society organisations, such as social, business, employers' and trade union associations, and local, national or international non-governmental organisations;

(d) regional and sub-regional organisations.

2. The Member States to which the OCTs are linked shall inform the Commission within three months of the entry into force of this Decision of the governmental and local authorities referred to in the paragraphs 1(a) and (b).

Article 11

Responsibilities of the Non-governmental actors

1. Non-governmental actors may play a role in the exchange of information and consultations concerning the cooperation, and in particular for the preparation and implementation of cooperation assistance, projects or programmes. They may receive a delegation of financial management powers for implementing such projects or programmes for the purpose of supporting local development initiatives.

2. Non-governmental actors eligible for decentralised management of projects or programmes shall be identified by agreement between the OCT authorities, the Commission and the Member State to which the OCT is linked, taking into account the subject concerned, their expertise and field of activity. The process of identification shall be conducted in each OCT as part of the broad dialogue and consultations referred to in Article 9.

3. The association aims at contributing to the efforts of the OCTs to strengthen civil society organisations, concerning in particular their creation and development, and the development of the arrangements necessary for opening their involvement in the design, implementation and evaluation of development strategies and programmes.

Chapter 3

Institutional framework of the Association

Article 12

Guiding principles for dialogue

1. The Union, the OCTs and the Member States to which they are linked, shall regularly engage in a comprehensive and political dialogue.

2. The dialogue shall be conducted in full compliance with the respective institutional, legal and financial powers of the Union, of the OCTs and of the Member States to which they are linked. The dialogue shall be conducted in a flexible manner: it may be formal or informal, at an appropriate level or format and conducted within the framework referred to in Article 13.

3. The dialogue shall enable the OCTs to take a full part in the implementation of the association.

4. The dialogue shall focus, inter alia, on specific political issues of mutual concern or of general significance for the attainment of the objectives of the association.

Article 13

Instances of the association

1. The association shall establish the following instances of dialogue:

(a) an OCT-EU forum for dialogue (the OCT-EU Forum), shall meet annually to bring together OCT authorities, representatives of the Member States and the Commission. Members of the European Parliament, representatives of the EIB, and representatives of the outermost regions shall be associated with the OCT-EU Forum, where appropriate;

(b) on a regular basis, the Commission, the OCTs and the Member States to which they are linked shall hold trilateral consultations. These consultations shall be organised as a rule four times a year on the initiative of the Commission or at the request of the OCTs and of the Member States to which they are linked.

(c) in agreement between the OCTs, the Member States to which they are linked and the Commission, working parties, acting in an advisory capacity, shall be set up to follow the implementation of the association, in a form appropriate to the issues to be addressed. These working parties shall provide for technical discussions on matters which are of specific concern to the OCTs and the Member States to which they are linked, complementing the work that is being done in the OCT-EU Forum and / or in the trilateral consultations.

2. The Commission shall chair the OCT-EU Forum, the trilateral consultations and the working parties and shall provide their secretariat.

Part Two Areas of cooperation for sustainable development in the framework of the Association

Chapter 1 Environmental issues, climate change and disaster risk reduction

Article 14 General objectives and principles

In the context of the association, cooperation in the field of environment, climate change and disaster risk reduction may concern:

(a) support to the OCTs efforts to define and implement policies, strategies, action plans and measures;

(b) support to OCTs' efforts to integrate in regional networks and initiatives;

(c) the promotion of sustainable resource use and resource efficiency, and encouragement to the decoupling of economic growth from environmental degradation.

Article 15 Sustainable management and conservation of biodiversity and ecosystem services

In the context of the association, cooperation in the field of sustainable management and conservation of biodiversity and ecosystem services may concern:

(a) the promotion of the establishment and effective management of marine and terrestrial protected areas and improved management of existing protected areas;

(b) the encouragement of sustainable management of marine and terrestrial resources, which contribute to protecting important species, habitats and ecosystem functions outside protected areas;

(c) the strengthening of conservation and sustainable use of marine and terrestrial biodiversity and ecosystems by:

(i) addressing the wider ecosystem challenge of climate change by maintaining healthy, resilient ecosystems and fostering green infrastructure and ecosystem- based approaches to climate change adaptation and mitigation which often bring multiple benefits;

(ii) strengthening capacities at a local, regional and/or international scale, by promoting exchange of information, knowledge and best practice amongst all stakeholders including public authorities, landowners, private sector, researchers and civil society;

(iii) strengthening existing nature conservation programmes and related efforts within and outside conservation areas;

(iv) broadening the knowledge base and filling the knowledge gaps, including quantifying the value of ecosystem functions and services;

(d) the encouragement and facilitation of regional cooperation in order to address issues such as invasive alien species or the impacts of climate change;

(e) the development of mechanisms to lever resources including payments for ecosystem services.

Article 16 Sustainable forest management

In the context of the association, cooperation in the field of sustainable forest management may concern the promotion, the conservation and sustainable management of forests, including the use of trees to conserve the environment for erosion protection and desertification control, afforestation and management of timber exports.

Article 17 Integrated coastal zone management

In the context of the association, cooperation in the field of integrated coastal zone management may concern:

(a) the support to the efforts of the OCTs towards an effective sustainable management of marine and coastal zones in defining strategic and integrated approaches to marine and coastal zone planning and management;

(b) conciliation of economic and social activities such as fisheries and aquaculture, tourism, maritime transports with the potential of marine and coastal zones in terms of renewable energy, raw materials, whilst taking into account impacts of climate change and human activities.

Article 18 Maritime Affairs

In the context of the association, cooperation in the field of maritime affairs may concern:

(a) the strengthening of the dialogue on issues of common interest in that field;

(b) the promotion of marine knowledge and biotechnology, ocean energy, maritime surveillance, coastal zone management and an ecosystem based management;

(c) the promotion of integrated approaches at international level.

Article 19 Sustainable management of fish stocks

1. In the context of the association, cooperation in the field of sustainable management of fish stocks shall be based on the following principles:

(a) commitment to responsible fisheries management and fishing practices;

(b) refraining from measures or activities that are inconsistent with the principles of sustainable exploitation of fisheries resources;

(c) without prejudice to existing or future bilateral fisheries partnership agreements between the Union and the OCTs, the Union and the OCTs shall aim to regularly consult each other on the conservation and management of the living marine resources and to exchange information on the ongoing state of resources within the context of the relevant instances of the association provided for in Article 13.

2. Cooperation in the field referred to in paragraph 1 may concern:

(a) the active promotion of good governance, best practices and responsible fisheries management in the conservation and sustainable management of fish stocks, including fish stocks of common interest and those managed by regional fisheries management organisations;

(b) dialogue and cooperation regarding the conservation of fish stocks including measures to fight illegal, unreported and unregulated fishing and effectively cooperating with and within regional fisheries management organisations. Dialogue and cooperation shall include control and inspection schemes, incentives and obligations for a more effective management of fisheries and coastal environments in the long term.

Article 20 Sustainable water management

1. In the context of the association, the Union and the OCTs may cooperate in the area of sustainable water management through water policy and institution building, protecting water resources, water supplies in rural and urban areas for domestic, industrial or agricultural purposes, storage, distribution and management of water resources and waste water management.

2. In the field of water supply and sanitation sector, particular attention shall be given to access in under-served areas to drinking water supply and sanitation services, which contribute directly to human resources development by improving the state of health and increasing productivity.

3. Cooperation in these areas shall be guided by the principle that the continuing need to extend the provision of basic services in water and sanitation to both urban and rural populations must be addressed in environmentally sustainable ways.

Article 21 Waste management

In the context of the association, cooperation in the field of waste management may concern the promotion of the use of the best environmental practice in all operations related to waste management, including the reduction of waste, recycling or other processes for the extraction of secondary raw materials and the disposal of the waste.

Article 22 Sustainable energy

In the context of the association, cooperation in the field of sustainable energy may concern:

(a) energy production, in particular the development, promotion, use and storage of sustainable energies such as solar, hydro-electric, biomass, geothermal, wave, marine and wind energies;

(b) energy policies and regulations, in particular the formulation of policies and adoption of regulations guaranteeing affordable and sustainable energy tariffs;

(c) energy efficiency, in particular the development and introduction of energy efficiency standards and implementation of energy efficiency measures in different sectors (industrial, commercial, public and households), as well as accompanying educational and awareness activities;

(d) transport, in particular the development, promotion and use of more environmental-friendly public and private transport means such as hybrid, electric or hydrogen vehicles, carpooling and cycling schemes;

(e) town planning and construction, in particular the promotion and introduction of high environment quality standards and high energy performance in urban planning and construction;

(f) tourism, in particular the promotion of energy self-sufficient (renewable energy based) and/or green tourism infrastructures.

Article 23 Climate change

In the context of the association, cooperation in the field of climate change aims at supporting the initiatives of the OCTs concerning adaptation to climate change and its mitigation, and may cover:

(a) the identification of territorial, regional and/or international actions, plans, or measures in view of adapting to climate change;

(b) the integration of adaptation to climate change and its mitigation in public policies and strategies;

(c) the elaboration and identification of statistical data and indicators, essential tools for policy making and implementation;

(d) the promotion of the participation of the OCTs in regional and international instances of dialogue in order to foster exchange of knowledge and experience.

Article 24 Disaster risk reduction

In the context of the association, cooperation in the field of disaster risk reduction may concern:

(a) the development or perfection of systems of disaster prevention and preparedness, including prediction and early-warning systems, with a view to reducing the consequences of disasters;

(b) the development of detailed knowledge of the exposure to the disasters and the current response capacities in the OCTs and in the regions where they are located;

(c) the strengthening of existing measures of disaster prevention and preparation at local, national and regional levels;

(d) the improvement of response capacities of the actors concerned, to render them more coordinated, effective and efficient;

(e) the improvement of awareness-raising and information to the population regarding the exposure to risks, prevention, preparation and the response in the event of disaster, with due attention to the specific needs of persons with disabilities;

(f) the strengthening of collaboration between key actors involved in civil protection;

(g) the promotion of the participation of the OCTs in regional, European and/or international instances in order to allow a more regular exchange of information and a closer cooperation among the different partners in the event of disaster.

Chapter 2 Accessibility

Article 25 General objectives

1. In the context of the association, cooperation in the field of accessibility aims at:

(a) ensuring greater access of OCTs to global transport networks;

(b) ensuring greater access of OCTs to information and communication technologies and services.

2. Cooperation in the context referred to in paragraph 1 may encompass:

(a) policy and institution building;

(b) transport by road, rail, air, sea or inland waterway;

(c) storage facilities in sea- and airports.

Article 26 Maritime transport

1. In the context of the association, cooperation in the field of maritime transport aims at the development and promotion of cost-effective and efficient maritime transport services in the OCTs and may concern:

(a) the promotion of efficient shipment of cargo at economically and commercially meaningful rates;

(b) the facilitation of greater OCT participation in international shipping services;

(c) the encouragement of regional programmes;

(d) the support to local private sector involvement in shipping activities;

2. The Union and the OCTs shall promote shipping safety, security of crews and the prevention of pollution.

Article 27 Air transport

In the context of the association, cooperation in the field of air transport may concern:

(a) the reform and modernisation of the OCT air transport industries;

(b) the promotion of their commercial viability and competitiveness;

(c) the facilitation of private sector investment and participation;

(d) the promotion of exchange of knowledge and good business practice.

Article 28 Air transport safety

In the context of the association, cooperation in the field of air transport safety aims at supporting the OCTs in their efforts to comply with the relevant international standards and may cover inter alia:

(a) the implementation of air navigation safety systems;

(b) the implementation of airport security and strengthening of the capacity of civil aviation authorities to manage all aspects of operational security placed under their control;

(c) the development of infrastructures and human resources.

Article 29 Information and communication technologies services

In the context of the association, cooperation in the field of information and communication technology (ICT) services aims at spurring, in the OCTs, innovation, economic growth and improvements in daily life for both citizens and businesses, including the promotion of accessibility for persons with disabilities. Cooperation shall, in particular, be directed at enhancing OCTs' regulatory capacity and may support the expansion of ICT networks and services through the following measures:

(a) creation of a predictable regulatory environment that keeps pace with technological developments, stimulates growth and innovation and fosters competition and consumer protection;

(b) dialogue on the various policy aspects regarding the promotion and monitoring of the information society;

(c) exchange of information on standards and interoperability issues;

(d) promotion of cooperation in the field of ICT research and in the field of ICT-based research infrastructures;

(e) development of services and applications in domains of high societal impact.

Chapter 3 Research and innovation

Article 30 Cooperation in research and innovation

In the context of the association, cooperation in the field of research and innovation may cover science, technology, including information and communication technologies, with the aim to contribute to the OCTs' sustainable development and to promote excellence and industrial competitiveness within OCTs. In particular, cooperation may concern:

(a) dialogue, coordination and creation of synergies between OCT and Union policies and initiatives with regard to science, technology and innovation;

(b) policy and institutional building within OCTs and concerted actions at local, national or regional level, with a view to developing science, technology and innovation activities and their application;

(c) cooperation between legal entities from the OCTs, the Union, the Member States and the third countries;

(d) participation of individual OCT researchers, research bodies and legal entities from OCTs in the framework for cooperation related to research and innovation programmes within the Union;

(e) training and international mobility of OCT researchers and exchange.

Chapter 4 Youth, education, training, health, employment and social policy

Article 31 Youth

1. The Union shall ensure that natural persons from OCTs, as defined in Article 49, can participate in initiatives of the Union concerning youth on the same basis as nationals of Member States.

2. The association aims at strengthening the ties between young people living in the OCTs and the Union, among others by promoting learning mobility of OCT youth and by fostering mutual understanding between young people.

Article 32 Education and training

1. In the context of the association, cooperation in the field of education and training may cover:

(a) the provision of high quality, inclusive education at primary, secondary and higher education level and in the area of vocational education and training;

(b) the support to the OCTs in defining and implementing education policies.

2. The Union shall ensure that natural persons from the OCTs, as defined in Article 49, can participate in education initiatives of the Union on the same basis as nationals of Member States.

3. The Union shall ensure that educational bodies and institutes from OCTs can take part in education related cooperation initiatives of the Union on the same basis as the educational bodies and institutes of the Member States.

Article 33 Employment and social policy

1. The Union and the OCTs shall maintain dialogue in the area of employment and social policy in order to contribute to the economic and social development of the OCTs and the promotion of decent work in the OCTs and regions where they are located. Such a dialogue shall also aim at supporting the efforts of the OCTs' authorities to develop policies and legislation in this area.

2. The dialogue shall mainly consist of exchange of information and best practices relating to policies and legislation in the area of employment and social policy that are of mutual interest to the Union and the OCTs. In this regard, areas such as skills development, social protection, social dialogue, equal opportunities, non-discrimination and accessibility for persons with disabilities, health and safety at work and other labour standards shall be taken into consideration.

Article 34 Public health

In the context of the association, cooperation in the field of public health aims at strengthening the OCTs' capacity for surveillance, early detection and response to outbreaks of communicable diseases through measures including:

(a) actions to strengthen preparedness and response capacity against cross-border health threats such as infectious diseases which should be built on existing structures and should target unusual events;

(b) capacity building through strengthening public health networks at regional level, facilitating exchange of information among experts and promoting adequate training;

(c) development of tools and communication platforms as well as e-learning programs adapted to OCTs’ particular needs.

Chapter 5 Culture

Article 35 Cultural exchanges and dialogue

1. In the context of the association, cooperation in the field of cultural exchanges and dialogue may concern:

(a) the self-reliant development of the OCTs, this being a process centred on people themselves and rooted in each people's culture;

(b) the support to the policies and measures adopted by the competent authorities of OCTs to enhance their human resources, increase their own creative capacities and promote their cultural identities;

(c) the participation by the population in the process of development.

(d) the development of a common understanding and enhanced exchange of information on cultural and audiovisual matters through dialogue.

2. Through their cooperation the Union and the OCTs shall seek to stimulate cultural exchanges between each other through:

(a) cooperation between the cultural and creative sectors of all partners;

(b) promotion of the circulation of cultural and creative works and operators between them;

(c) policy cooperation in order to foster policy development, innovation, audience building and new business models.

Article 36 Audiovisual cooperation

1. In the context of the association, cooperation in the audiovisual field aims at promoting each other's audiovisual productions and may cover the following actions:

(a) cooperation and exchange between the respective broadcasting industries;

(b) encouraging exchange of audiovisual works;

(c) exchange of information and views on audiovisual and broadcasting policy and regulatory framework between competent authorities;

(d) encouraging visits to and participation in international events held in each other's territory as well as in third countries.

2. Co-produced audiovisual works shall be entitled to benefit from any scheme for the promotion of local or regional cultural content set up in the Union, the OCTs and the Member States to which they are linked.

Article 37 Performing arts

In the context of the association, cooperation in the field of performing arts may concern:

(a) the facilitation of increased contacts between practitioners of performing arts in areas such as professional exchanges and training including participation in auditions, development of networks and promotion of networking.

(b) the encouragement of joint productions between producers of one or several Member States of the Union and one or several OCTs.

(c) the encouragement of the development of international theatre technology standards and the use of theatre stage signs, including through appropriate standardisation bodies.

Article 38 Protection of cultural heritage sites and historic monuments

In the context of the association, cooperation in the field of cultural heritage sites and historic monuments aims at allowing the promotion of exchanges of expertise and best practices through:

(a) the facilitation of exchanges of experts;

(b) the collaboration on professional training;

(c) the awareness of the local public;

(d) the counselling on the protection of the historic monuments and protected spaces and on the legislation and implementation of measures related to heritage, in particular its integration into local life.

Chapter 6 Fight against organised crime

Article 39 Fight against organised crime, trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption

1. In the context of the association, cooperation in the field of organised crime may include:

(a) the development of innovative and effective means of police and judicial cooperation, including cooperation with other stakeholders such as civil society, in the prevention of and fight against organised crime, trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption;

(b) support in order to increase the efficiency of OCTs' policies to prevent and fight against organised crime, trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption, as well as the production, distribution and trafficking of all kinds of narcotic drugs and psychotropic substances, preventing and reducing drug use and drug-related harms, taking into account work carried out in these areas by international bodies, through inter alia:

(i) training and capacity building in preventing and fighting organised crime, including trafficking in human beings, child sexual abuse and sexual exploitation, terrorism and corruption;

(ii) prevention including training, education and health promotion, treatment and rehabilitation of dependent drug users, including projects for the reintegration of dependent drug users into work and social environments;

(iii) development of effective enforcement measures;

(iv) technical, financial and administrative assistance on the development of effective policies and legislation on trafficking in human beings, in particular awareness raising campaigns, referral mechanisms and victim protection systems, involving all relevant stakeholders and civil society;

(v) technical, financial and administrative assistance relating to the prevention, treatment and reduction of harms related to drug use;

(vi) technical assistance to support the development of legislation and of policy against child sexual abuse and sexual exploitation;

(vii) technical assistance and training to support capacity building and encourage compliance with minimum international anti-corruption standards, and notably bearing in mind those set out in the UN Convention against Corruption.

2. In the context of the association, the OCTs shall cooperate with the Union as regards the combat against money laundering in accordance with Articles 69 and 70.

Part Three Trade and trade related cooperation

Title I

General provisions

Article 40 General objectives

The general objectives of the trade and trade related cooperation between the Union and the OCTs are to:

(a) promote the economic and social development of the OCTs by establishing close economic relations between them and the Union as a whole;

(b) stimulate the OCTs' effective integration in the regional and world economies and the development of trade in goods and services;

(c) support OCTs in creating a favourable investment climate to support social and economic development of OCTs;

(d) promote the stability, integrity and transparency of the global financial system, and good governance in the tax area;

(e) support the process of diversification of OCT economies;

(f) support OCT capacities to formulate and implement policies necessary for the development of their trade in goods and services;

(g) support the OCTs' export and trading capacities;

(h) support OCTs' efforts to converge their local legislation with Union legislation, where relevant;

(i) provide possibilities for targeted cooperation and dialogue with the Union on trade and trade related areas.

Title II Arrangements for trade in goods and services and establishment

Chapter 1 Arrangements for trade in goods

Article 41 Free access for originating goods

1. Products originating in the OCTs shall be imported into the Union free of import duty.

2. The definition of originating products and the methods of administrative cooperation relating thereto are laid down in Annex VI.

Article 42 Quantitative restrictions and measures having equivalent effect

1. The Union shall not apply to imports of products originating in the OCTs any quantitative restrictions or measures having equivalent effect.

2. Paragraph 1 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality or public policy, the protection of health and life of humans, animals and plants, the protection of national treasures possessing artistic, historic or archaeological value, the conservation of exhaustible natural resources or the protection of industrial and commercial property.

Such prohibitions or restrictions shall in no case constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction of trade generally.

Article 43 Measures adopted by the OCTs

1. The authorities of the OCTs may retain or introduce in respect of imports of products originating in the Union, such customs duties or quantitative restrictions as they consider necessary in view of their respective development needs.

2. For the fields covered by this chapter, the OCTs shall grant to the Union a treatment no less favourable than the most favourable treatment applicable to any major trading economy as defined in paragraph 4.

3. The provisions of paragraph 2 shall not preclude an OCT from granting certain other OCTs or other developing countries more favourable treatment than that accorded to the Union.

4. For the purposes of this Title, a "major trading economy" means any developed country, or any country accounting for a share of world merchandise exports above one percent , or, without prejudice to paragraph 3, any group of countries acting individually, collectively or through an economic integration agreement accounting collectively for a share of world merchandise exports above 1.5 percent. For this calculation the latest available official data by the WTO on leading exporters in world merchandise trade (excluding intra-EU trade) shall be used.

5. The authorities of the OCTs shall communicate to the Commission within a period of three months following the entry into force of this Decision, the customs tariffs and lists of quantitative restrictions which they apply in compliance with this Decision.

The authorities of the OCTs shall also communicate to the Commission any subsequent amendments to such measures as and when they are adopted.

Article 44 Non- discrimination

1. The Union shall not discriminate between OCTs and the OCTs shall not discriminate between Member States of the Union.

2. In compliance with Article 64, the implementation of the specific provisions in this Decision and in particular its Articles 42(2) and 43, 46, 48, 50 and 58(3) shall not be deemed to constitute a discrimination.

Article 45 Conditions for movements of waste

1. Movements of waste between the Member States and the OCTs shall be controlled in accordance with international and Union law. The Union shall support the establishment and development of effective international cooperation in this area with a view to protecting the environment and public health.

2. The Union shall prohibit all direct or indirect export of waste to the OCTs, with the exception of exports of non-hazardous waste destined for recovery operations while at the same time the OCT authorities shall prohibit the direct or indirect import into their territory of such waste from the Union or any third country, without prejudice to specific international undertakings concerning these areas that have been made, or may be made in future, in the competent international fora.

3. As regards those OCTs, which, due to their constitutional status, are not Party to the Basel Convention, their relevant authorities shall expedite adoption of the necessary internal legislation and administrative regulations to implement the provisions of the Basel Convention[14] in those OCTs.

4. In addition, the Member States to which OCTs are linked shall promote the adoption by the OCTs of the necessary internal legislation and administrative regulations to implement the following acts:

(a) Regulation (EC) No 1013/2006 of the European Parliament and of the Council[15], as follows:

– Article 40 as regards exports of waste to overseas countries or territories;

– Article 46 as regards imports of waste from overseas countries or territories;

(b) Council Regulation (EC) No 1420/1999[16];

(c) Commission Regulation (EC) No 1547/1999[17];

(d) Directive 2000/59/EC of the European Parliament and of the Council[18] subject to the time limits for transposition laid down in Article 16 thereof.

5. One or more OCTs and the Member States to which they are linked may apply their own procedures to export of waste from the OCTs to that Member State.

6. In this case, the Member State to which the OCT is linked shall notify to the Commission the applicable legislation within six months from the entry into force of this Decision as well as any future relevant national legislation, and any subsequent amendments to such legislation.

Article 46 Temporary withdrawal of preferences

In order to ensure the proper implementation of this Decision, the Union may temporarily withdraw preferences from an OCT in accordance with the provisions set out in Annex VII.

Article 47 Management of administrative errors

In case of error by the competent OCT authorities in the issuance of certificates and methods of administrative cooperation, and where this error leads to losses affecting Union import duties, the Member State with whom the OCT that has committed the error has special relations, shall compensate the Union budget for the loss incurred.

Article 48 Safeguard and surveillance measures

In order to ensure the proper implementation of this Decision, the Union may take safeguard and surveillance measures set out in Annex VIII.

Chapter 2 Arrangements for trade in services and for establishment

Article 49 Definitions

For the purposes of this Chapter:

(a) 'natural person from an OCT' means persons ordinarily resident in an OCT who are nationals of a Member State or who enjoy a legal status specific to an OCT. This definition is without prejudice to the rights conferred by citizenship of the Union within the meaning of the Treaty;

(b) 'legal person of an OCT' means a legal person of the OCT set up in accordance with the laws applicable in a given OCT, and having its registered office, its central administration, or its principal place of business in the territory in this OCT; should the legal person have only its registered office or central administration in the OCT, it shall not be considered as a legal person of the OCT, unless it engages in an activity which has a real and continuous link with the economy of that country or territory;

(c) the respective definitions laid down in the economic integration agreements referred to in Article 50(1) shall apply to the treatment accorded between the Union and the OCTs.

Article 50 Most favourable treatment

1. With respect to any measures affecting trade in services and establishment in economic activities:

(a) the Union shall accord to natural and legal persons of the OCTs a treatment no less favourable than the most favourable treatment applicable to like natural and legal persons of any third country with whom the Union concludes or has concluded an economic integration agreement;

(b) An OCT shall accord to the natural and legal persons of the Union a treatment no less favourable than the most favourable treatment applicable to like natural and legal persons of any major trading economy with whom it has concluded an economic integration agreement after the entry into force of this Decision.

2. The obligations set out in paragraph 1 of this Article shall not apply to treatment granted:

(a) in the framework of an internal market requiring the parties thereto to significantly approximate their legislation with a view to removing non-discriminatory obstacles to establishment and to trade in services

(b) under measures providing for recognition of qualifications, licences or prudential measures in accordance with Article VII of the General Agreement on Trade in Services (GATS) or the GATS Annex on Financial Services. This is without prejudice to OCT specific measures under this Article;

(c) under any international agreement or arrangement relating wholly or mainly to taxation;

(d) under measures benefiting from the coverage of a most-favoured nation exemption listed in accordance with Article II.2 of the GATS.

3. The authorities of an OCT may with a view to promoting or supporting local employment, adopt regulations to aid their natural persons and local activities. In this event, the OCT authorities shall notify the Commission of the regulations they adopt so that it may inform the Member States.

Article 51 Professional qualifications

With regard to the professions of doctor, dentist, midwife, general nurse, pharmacist and veterinary surgeon, the Council, acting unanimously on a proposal from the Commission, shall adopt the list of professional qualifications specific to the OCTs which are to be recognised in the Member States.

Title III trade related Areas

Chapter 1 Trade and sustainable development

Article 52 General approach

Trade and trade related cooperation under the association aims at contributing to sustainable development in its economic, social and environmental dimensions.

In this context, the domestic environmental or labour laws and regulations of OCTs shall not be lowered in order to encourage trade or investment.

Article 53 Environmental and climate change standards in trade

1. Trade and trade related cooperation under the association aims at enhancing the mutual supportiveness between trade and environmental policies and obligations. Trade and trade related cooperation under the association shall take into account the principles of international environmental governance and multilateral environmental agreements.

2. The ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol shall be pursued. Cooperation shall be based on the development of the future international climate change framework in accordance with the Bali Action Plan and the implementation of decisions emanating from the UNFCCC Conferences of the Parties related to global temperature and emissions targets.

3. Measures to implement multilateral environmental agreements shall not be applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the partners or a disguised restriction of trade.

Article 54 Labour standards in trade

1. The association aims at promoting trade in such a way that it is conducive to full and productive employment and decent work for all.

2. The internationally recognised core labour standards, as defined by the relevant International Labour Organisation Conventions, shall be respected and implemented in law and practice. Such labour standards include in particular respect for freedom of association, right to collective bargaining, abolition of all forms of forced or compulsory labour, elimination of the worst forms of child labour, the minimum age for admission to employment and non-discrimination in respect to employment.

3. The violation of core labour standards cannot be invoked or otherwise used as a legitimate comparative advantage. They shall not be used for protectionist purposes.

Article 55 Sustainable trade in fisheries products

With a view to promoting the sustainable management of fish stocks, the association may include cooperation regarding the combat of illegal, unreported and unregulated fishing and related trade. Cooperation in this field aims at:

(a) promoting the implementation of measures to combat illegal, unreported and unregulated fishing and related trade in OCTs;

(b) facilitating cooperation between OCTs and regional fisheries management organisations, in particular with respect to the development and effective implementation of control and inspection schemes, incentives and measures for effective long term management of fisheries and marine ecosystems.

Article 56 Sustainable timber trade

In the context of the association, cooperation in the field of timber trade aims at promoting trade in legally harvested timber. Such cooperation may include dialogue on regulatory measures as well as exchange of information on market-based or voluntary measures such as forest certification or green procurement policies.

Article 57 Sustainable development in trade

1. In the context of the association, cooperation in the of field sustainable development may be pursued by:

(a) facilitating and promoting trade and investment in environmental goods and services and goods that contribute to the improvement of social conditions in OCTs;

(b) facilitating the removal of obstacles to trade or investment regarding goods and services of particular relevance for climate change mitigation, such as sustainable renewable energy and energy efficient products and services, including through the adoption of policy frameworks conducive to the deployment of best available technologies and through the promotion of standards that respond to environmental and economic needs and minimise technical obstacles to trade;

(c) promoting trade in goods that contribute to social conditions and environmentally sound practices, including goods that are the subject of voluntary sustainability assurance schemes such as fair and ethical trade schemes, eco-labels, and certification schemes for natural resource-based products;

(d) promoting internationally recognised principles and guidelines in the area of corporate social responsibility, and encourage companies operating in the territory of OCTs to implement them;

(e) exchanging information and best practices in the area of corporate social responsibility.

2. In the design and implementation of measures aimed at protecting the environment or labour conditions that may affect trade or investment, the Union and the OCTs shall take account of available scientific and technical information, and relevant international standards, guidelines or recommendations, including the precautionary principle.

3. The Union and the OCTs shall apply full transparency to develop, introduce and implement any measures aimed at protecting the environment and labour conditions affecting trade or investment.

Chapter 2 Other trade related areas

Article 58 Current payments and capital movements

1. No restrictions shall be imposed on any payments in freely convertible currency on the current account of balance of payments between residents of the Union and of the OCTs.

2. With regard to transactions on the capital account of balance of payments, the Member States and the OCT authorities shall impose no restrictions on the free movement of capital for direct investments in companies formed in accordance with the laws of the host Member State, country or territory and to ensure that the assets formed by such investment and any profit stemming therefrom can be realised and repatriated.

3. The Union and the OCTs shall be entitled to take the measures referred to in Articles 64, 65, 66, 75 and 215 of the Treaty on the Functioning of the European Union in accordance with the conditions laid down therein mutatis mutandis.

4. The OCT authorities, the Member State concerned or the Union shall inform one another immediately of any such measures and submit a timetable for their elimination as soon as possible.

Article 59 Competition policies

The elimination of distortions to competition, with due consideration to the different levels of development and economic needs of the OCTs, shall involve the implementation of local, national or regional rules and policies including the control and, under certain conditions, the prohibition of agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition. Such prohibition also relates to the abuse by one or more undertakings of a dominant position in the territory of the Union or of the OCTs.

Article 60 Protection of intellectual property rights

1. An adequate and effective level of protection of intellectual property rights, including means for enforcing such rights, shall be ensured in line with the highest international standards, where appropriate, with a view to reducing distortions and impediments to bilateral trade.

2. In the context of the association, cooperation in this field may concern the preparation of laws and regulations for the protection and enforcement of intellectual property rights, the prevention of the abuse of such rights by right holders and the infringement of such rights by competitors and support for regional intellectual property organisations involved in enforcement and protection, including the training of personnel.

Article 61 Technical barriers to trade

The association may include cooperation in the fields of technical regulation for goods, standardisation, conformity assessment, accreditation, market surveillance and quality assurance with a view to removing unnecessary technical barriers to trade between the Union and the OCTs and to reduce differences in those areas.

Article 62 Consumer policy, consumer health protection and trade

In the context of the association, cooperation in the field of consumer policy, consumer health protection and trade may include the preparation of laws and regulations in the area of consumer policy and consumer health protection, with a view to avoiding unnecessary barriers to trade.

Article 63 Sanitary and phyto-sanitary measures

In the context of the association, cooperation in the field of sanitary and phyto-sanitary measures aims at:

(a) facilitating trade between the Union and the OCTs as a whole and between OCTs and third countries, whilst safeguarding human, animal and plant health or life in accordance with the WTO SPS Agreement;

(b) addressing problems arising from sanitary and phyto-sanitary measures;

(c) ensuring transparency as regards sanitary and phyto-sanitary measures applicable to trade between the Union and the OCTs;

(d) promoting the harmonisation of measures with international standards, in accordance with the WTO SPS Agreement;

(e) supporting the effective participation of OCTs in organisations that set international sanitary and phyto-sanitary standards;

(f) promoting consultation and exchanges between OCTs and European institutes and laboratories;

(g) establishing and enhancing OCTs technical capacity to implement and monitor sanitary and phyto-sanitary measures;

(h) promoting technology transfer in the area of sanitary and phyto-sanitary measures.

Article 64 Prohibition of protectionist measures

The provisions of Chapters 1 and 2 shall not be used as a means of arbitrary discrimination or a disguised restriction on trade.

Chapter 3 Monetary and tax matters

Article 65 Tax carve out

1. Without prejudice to the provisions of Article 66, the most favoured- nation treatment granted in accordance with the provisions of this Decision shall not apply to tax advantages which the Member States or OCT authorities are providing or may provide in the future on the basis of agreements to avoid double taxation or other tax arrangements, or domestic tax legislation in force.

2. Nothing in this Decision may be construed so as to prevent the adoption or enforcement of any measure aimed at preventing tax fraud or avoidance or evasion of taxes pursuant to the tax provisions of agreements to avoid double taxation or other tax arrangements, or domestic tax legislation in force.

3. Nothing in this Decision shall be construed so as to prevent the respective competent authorities from distinguishing, in the application of the relevant provisions of their tax legislation, between taxpayers who are not in the same situation, in particular with regard to their place of residence, or with regard to the place where their capital is invested.

Article 66 Tax and customs arrangements for Union funded contracts

1. The OCTs shall apply to contracts funded by the Union tax and customs arrangements no less favourable than those applied by them to the Member State to which the OCT is linked or to the states to which the most-favoured nation treatment is granted, or to international development organisations with which they have relations, whichever treatment is the most favourable.

2. Subject to paragraph 1, the following arrangements shall apply to contracts financed by the Union:

(a) the contract shall not be subject in the beneficiary OCT to stamp or registration duties or to fiscal charges having equivalent effect, whether such charges already exist or are to be instituted in the future; however, such contracts shall be registered in accordance with the laws in force in the OCT and a fee corresponding to the service rendered may be charged for it;

(b) profits and/or income arising from the performance of contracts shall be taxable according to the internal fiscal arrangements of the beneficiary OCT, provided that the natural or legal persons who realise such profit and/or income have a permanent place of business in that OCT, or that the performance of the contract takes longer than six months;

(c) enterprises which must import equipment in order to carry out works contracts shall, if they so request, benefit from the system of temporary admission as laid down by the legislation of the beneficiary OCT in respect of that equipment;

(d) professional equipment necessary for carrying out tasks defined in a service contract shall be temporarily admitted into the beneficiary OCT free of fiscal, import and customs duties and of other charges having equivalent effect where these duties and charges do not constitute remuneration for services rendered;

(e) imports under supply contracts shall be admitted into the beneficiary OCT without customs duties, import duties, taxes or fiscal charges having equivalent effect. The contract for supplies originating in the OCT concerned shall be concluded on the basis of the ex-works price of the supplies, to which may be added such internal fiscal charges as may be applicable to those supplies in the OCT;

(f) fuels, lubricants and hydrocarbon binders and all materials used in the performance of works contracts shall be deemed to have been purchased on the local market and shall be subject to fiscal rules applicable under the legislation in force in the beneficiary OCT;

(g) personal and household effects imported for use by natural persons, other than those recruited locally, engaged in carrying out tasks defined in a service contract and members of their families, shall be exempt from customs or import duties, taxes and other fiscal charges having equivalent effect, within the limits of the legislation in force in the beneficiary OCT.

3. Any contractual matter not covered by paragraphs 1 and 2 shall remain subject to the legislation of the OCT concerned.

Chapter 4 Trade capacity development

Article 67 General approach

With a view to ensuring that OCTs derive the maximum benefit from the provisions of this Decision and that they may participate under the best possible conditions in the Union's internal market as well as regional, sub-regional and international markets, the association aims at contributing to the development of the OCTs' trade capacities by:

(a) increasing the OCTs' competitiveness, self-reliance and economic resilience, through diversifying the range and increasing the value and volume of OCT trade in goods and services and by strengthening the OCTs' ability to attract private investments in various sectors of economic activity;

(b) improving cooperation in trade in goods, services and establishment between the OCTs and neighbouring countries.

Article 68 Trade dialogue, cooperation and capacity development

In the context of the association, trade dialogue, cooperation and capacity development initiatives may include:

(a) strengthening the OCTs' capacities to define and implement policies necessary for the development of trade in goods and services;

(b) encouraging the efforts of OCTs to put into place appropriate legal, regulatory and institutional frameworks as well as the necessary administrative procedures;

(c) promoting private sector development, in particular SMEs;

(d) facilitating market and product development, including product quality improvement;

(e) contributing to the development of human resources and professional skills relevant to trade in goods and services;

(f) enhancing the capacity of business intermediaries to provide OCT enterprises services pertinent to their exporting activities, such as market intelligence;

(g) contributing to the creation of a business climate conducive to investment.

Chapter 5 Cooperation in the area of financial services and taxation matters

Article 69 Cooperation on international financial services

With a view to promote the stability, integrity and transparency of the global financial system, the association may include cooperation on international financial services. Such cooperation may concern:

(a) the provision of effective and adequate protection of investors and other consumers of financial services;

(b) the prevention and combat of money laundering and financing of terrorism;

(c) the promotion of co-operation between different actors of the financial system, including regulators and supervisors;

(d) the setup of independent and effective mechanisms for supervision of financial services.

Article 70 Regulatory convergence in financial services

The Union and the OCTs shall promote regulatory convergence with recognised international standards on regulation and supervision in the area of financial services including: the Basel Committee's “Core Principle for Effective Banking Supervision”, the International Association of Insurance Supervisors' “Insurance Core Principles”, the International Organisation of Securities Commissions' “Objectives and Principles of Securities Regulation”, the OECD's “Agreement on exchange of information on tax matters”, the G20 “Statement on Transparency and exchange of informatio