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COM (85) 358 
 
 
 
Vol. 1985/0142 
  
 
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Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), t his file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februa r 1983 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
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der genannten Verordnung freigegeben.  
COMMISSION  
OF THE
EUROPEAN COMMUNITIES
General SecretariatC0M(85) 358 final 
B russels, 22 July 1985
FOR OFFICIAL U S E  ONLY
C O M M I S S I O N  R E P O R T  T O  T H E  C O U N C I L  
O N
T H E  R E L A T I O N S  O F  T H E  R E P U B L I C  O F  S A N  M A R I N O  
W I T H  T H E  E U R O P E A N  C O M M U N I T Y
A P P R O V E D  B Y  T H E  I N T E R - D E P A R T M E N T A L  G R O U P  
O N  S A N  M A R I N O  O N  4  M a rc h  1 9 8 5
C O M (85) 358 final

E X P L A N A T O R Y  M E M O R A N D U M
O n  the 2 8  Septem ber 1 9 8 3  the authorities of S a n  M arino sent to the 
C o m m issio n  a  M e m o ra n d u m . In  it they expressed their desire to o p en  
negotiations with the com petent authorities of the C o m m u n ity  in the 
near future.
A n  inter-service group has been set u p  to exam ine the problem s raised 
b y  the M e m o ra n d u m  an d  draft a  C o m m issio n  report to the Council. This 
draft report has been approved b y  the inter-service group o n  4  M a rc h  
1985.
In this report the C o m m issio n  re c o m m e n d s the C ouncil to authorize it 
to open negotiations with the Republic of S a n  M arino with a  view  to 
concluding an  agreem ent an d  to adopt, for these negotiations, the 
directives set out in the report.

C O N T E N T S
P ag e
I. Introduction 1
II. S a n  Marino's situation with regard to the E E C  Treaty 3
III. S a n  Marino's situation with respect to Italy 4
IV . Evaluation of the situations described in II +  III 4
V . General rem arks o n  S a n  Marino's requests 5
V I. Legal basis for relations to b e established betw een
the C o m m u n ity  an d  S a n  M arino
VII. Financial considerations 8
VIII. T h e  Com m ission's position o n  S a n  Marino's requests 8
(a) General ®
(b ) C u sto m s matters 9
(c) Agriculture 9
-Legal situation 9
-T he situation in practice 1 0
-Proposals 1 0
(d) Foreign trade 1 2
-Legal situation 1 2
-T he situation in practice 1 3
-Proposals 1 3
(e) Financing 1 3
-Legal situation 1 3
-T he situation in practice 1 4
-Proposals 1 5
(f) Transport 1 5
-Legal situation 1 5
-T he situation in practice 1 5
-Proposals 1 6
(g) Social security 1 6
-Legal situation 1 6
-T he situation in practice 1 6
-Proposals 1 7
IX . Conclusion 1 8
A n n e x  I M e m o ra n d u m  of the Republic of S an  M arino
A n n e x  II A d d e n d u m  to the M e m o ra n d u m
A n n e x  III Letter of 1 7  D ecem b er 1 9 8 4  from  the S a n  
M arino M ission
A n n e x  I V  Draft directives for the negotiations with 
S a n  M arino

I. IN T R O D U C T IO N
1. In M a y  1983, the Republic of S an M arino established diplomatic 
relations with the C om m unity. This start to the country's relations 
with the C om m unity w as followed by an official visit to San M arino 
by the President of the Commission, M r  Thorn, on 18 September of 
the sam e year, in the course of which the S an M arino authorities 
announced their intention of sending the Com m ission a  M em o ran d u m
on their relations with the C om m unity.
2. T he authorities of the Republic of S an M arino sent this M em o ran d u m  
to the Com m ission on 28 September of that year (A nnex I). In it, 
they expressed their desire to open negotiations with the competent 
C om m unity authorities in the near future with a  view to determining 
the Republic's status in relation to the C om m unity and regulating 
their reciprocal relations in an appropriate manner and, m ore 
specifically, with a view to settling problems the various sectors 
of activity falling within the competence of the Com m unity. O n
5  M a y  the San M arino Mission sent an addendum  to the M em o ran d u m  
giving further information on trade relations with third countries 
(A nnex II).
3. T he Com m ission acknowledged receipt of the M em o ran d u m  from the San 
Marino government in a  note verbale of 7  D ecem ber 1983.
A n  inter-departmental group w as set up to examine the problems 
raised by the M em o ran d u m  and draft a  Com m ission report to Ihe Council.
4. A  San Marino delegation, headed by M r  Giordano Bruno Reffi, S an 
Marino's Secretary of State for Foreign and Political Affairs visited 
the Com mission on 19 July last year and explained the terms of the 
M em orandum .
Visits by Com m ission officials to S an M arino and to R o m e  enabled 
certain questions to be cleared up and led to m ore detailed 
information and requests being submitted by the San Marino authorities 
in a letter on 17 D ecem ber (A nnex III).
5. San Marino considers that there is an anomaly in the legal and 
economic relations between the C om m unity and S an Marino. There are 
tw o reasons for this :  on the one hand, S an Marino is included in 
the Community's customs territory by virtue of a  unilateral act b y  
the C om m unity and on the other, San M arino is a non-m em ber country 
and not part of the C om m unity, as the C om m unity recognized in 
agreeing to the opening of a diplomatic representation to it by 
San Marino.
San Marino cites som e examples of the problems arising from its 
anomalous position vis-à-vis the C om m unity :

(a) Agri culture
San M arino is not eligible for compensatory amounts, premiums, 
or production or export refunds. Furthermore, its agricultural 
products do not circulate freely in the M em b er States and can be 
exported to third countries only with difficulty. This is 
especially true of wine.
(b) Foreign Trade
San M arino is subject to C om m unity quantitative restrictions on 
imports while not enjoying its o w n  third country quotas. S an 
M arino products do not qualify for the preferences accorded by 
non-m em ber countries to products originating in the Com m unity, 
while products from these countries enjoy C om m unity preference 
since they transit through Italy.
(c) Finance
San Marino does not receive any transfers of financial resources 
from the C om m unity budget or E IB  financing.
(d) Transport
San Marino transport services are not granted freedom of m ovem ent 
in any M em b er State other than Italy. N or can the sector take 
advantage of the facilities provided for in the T IR  Convention.
(e) Social Security
San Marino would like to incorporate its bilateral agreements with 
Italy, Belgium and France in a multilateral C om m unity agreement 
that would extend to San Marino citizens the benefits of the 
social security regulations on a basis of full reciprocity. This 
request does not extend to the free m ovem ent of workers.
In view of the size and nature of San Marino's economy, the economic 
anomalies should not pose any real problems for the Com m unity. T he 
legal and political aspects of San Marino's status vis-à-vis the 
C om m unity do, however, have general implications for the Community's 
relations with the Republic of San Marino itself.
This report examines San Marino's position with respect to the 
C om m unity and the difficulties arising from this special position, 
and puts forward proposals taking account of these specific problems 
and of m ore general matters.

8,S A N  M A R IN O 'S S IT U A T IO N  W I T H  R E G A R D  T O  T H E  E E C  T R E A T Y
7. T he very terms of Article 227 m ake it clear that the E E C  Treaty
d„ r ° ndr V : r  at:°n  d° not apply t0 San "ar'"»· San M arino is not part of the Italian Republic (Article 227(1), nor is it a
European territory for w hose external relations a M em b er State 
(Italy) is responsible (Article 227(4)).
This point is not disputed b y  S an Marino. San M arino is therefore 
a  non-m em ber country with respect to the E E C .
But although it is a  non-m em ber country, S an M arino is included in
the C om m unity ^customs territory by virtue of a  unilateral act of the C om m unity .
T he fact that San M arino has remained a  non-m em ber country does not 
m ean that the setting up of the E E C  has not affected its interests. 
W h at is more, conflicts were likely to arise between the E E C  Treaty 
and secondary legislation and the rights San M arino had acquired 
through conventions c^luded with Italy prior to the entry into force of the E E C  Treaty.
O n  the issue of such conflicting rights, Article 234 E E C  stipulates 
that the Treaty does not affect such rights. However, it does not 
exclude the possibility of conflict since it states that in the 
case of incompatibility between such conventions and the Treaty, it 
is the responsibility of the M em b er State to eliminate these 
incompatibilities. This could go so far as to m ean the denunciation 
of such conventions by the M e m b e r State concerned.
In the case of San Marino, the 1939 Convention effectively established 
a customs union with Italy. In other words, this is the only 
convention concluded with Italy prior to the Treaty from  which 
San Marino could acquire rights incompatible with the effects the 
E E C  has on S an Marino.
T he C om m unity included S an M arino in its customs territory with the 
aim  of avoiding incompatibility between this convention, establishing 
a customs union with Italy, on the one hand and the Treaty 
establishing the customs union, on the other, and also to safeguard 
the rights San M arino had acquired from its customs union with 
Italyv  .
Regulation (E E C ) N o  1496/68 on the definition of the customs 
territory of the C om m unity (O J  L  238 of 28.9.68, p . 1 )  lays d o w n  
in Article 2  that : "The territories situated outside the
territory of M em b er States and covered by the A nnex to this 
Regulation shall, taking the conventions and treaties applicable 
to them into account, be considered to be part of the customs 
territory of the Com m unity". - A n n ex  : "Italy : the territory
of the Republic of San M arino as defined in the Convention of 
3 1  M arch 1939". This text has been included in Article 2  of 
Regulation N o  2151/84 (O J L  197/1), which abrogated Regulation N o  
1496/68, and in the A nnex thereto.
Given the existence of other conventions, other small territories 
were either included in (Jungholz and Mittelberg - Germ any; M onaco - 
France) or excluded from  (Busingen - G erm any; Livigno, C am ione d'ltalia, 
part of Lake Lugano - Italy) the C om m unity customs territory.

S A N  M A R IN O 'S  S IT U A T IO N  W I T H  R E S P E C T  T O  IT A L Y
10. Relations between San Marino and Italy are governed by the 1939
Convention plus many agreements and exchanges of letters amplifying,  
amending or deleting some of its provisions.
San M arino has indicated that it would like to re-examine the 
following articles of the 1939 Convention :
- Articles 42 and 43 (undertaking to prohibit any infringement of 
property, industrial, scientific or otherwise, of the other state)
- Article 44 (renunciation by San Marino of the right to free transit 
except for a  limited num ber of goods intended for the government)
- Article 46 (under which the government and inhabitants of San 
Marino benefit from all Italian exemptions and facilities regarding 
customs duties and manufacturing taxes
- Article 5 1  (free m ovem ent of goods between the states, except for 
monopolies).
T he San Marino M em o ran d u m  points out in this connection that San 
Marino has already notified the Italian government of its intention 
to open official negotiations for a bilateral agreement with the 
Com m unity.
E V A L U A T I O N  O F  T H E  S IT U A T IO N S  D E S C R IB E D  IN  II A N D  III
11. T he description by San M arino of the situation resulting from its 
inclusion in the C om m unity customs territory is incomplete. This 
inclusion m eans that San Marino traders are in practice subject 
to C om m unity rules concerning the customs territory. Italy's 
application of the C C T , the Community's customs regulations and the 
c o m m o n  commercial policy rules in respect of third countries (which 
the M em o ran d u m  cahllenges - see 2  (a)) and Italy's application of 
the Treaty's provisions on the free m ovem ent of goods with respect 
to other M ^ iji^ e r States also concern products for consumption in 
San Marino^ . T w o  remarks should be m ade here. Firstly, San 
Marino's inclusion in the EEC's custom's territory has its origin 
in the customs union convention between Italy and San Marino, which 
San Marino could have denounced. Secondly, having opted for 
continuation of its customs union with Italy and so becoming part 
of the Community's customs territory, San Marino w as enabled, in 
practice at least, to export its products to the whole of the 
c o m m o n  market under the sam e customs arrangements as those applying 
to Italian products.
C om m unity rules are not applied in full, however, notably in cases 
where the according of exemptions or facilities requires authorization 
or an on-the-spot check which the Italian customs cannot carry out. 
This situation has not given rise to any complaint from San Marino.

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f e e  transit (exception ceit i C d  b' M|" V
to which the government and inhabitant a t ' s ^  ino ^ a T l " 9  
the concessnons regarding customs duties accorded", I ta iin
13‘  I o n s ^ e d P o r°U lS 1 '0nS  at the 1939 f d ^ t i o n  which should also be considered give rise to the following observations :
" they°referred io 'th u  "ann0.auth°'-f f =  have m ade it clear that .  7 y  reTerred to this provision because they are considerina thP
introduction of legislation in San marine for the project o" Jf
industrial property, which Italy would be obliged ?o e n S c e
be asked to do Jh°“ “hether the rest of the "ember States should 
not be the^ase^ba.i^it *would°seem 9veryT compiicated
extendingPCommunity°patent
- Article 52 concerning payments to be m ad e by Italy to S an M arino
- u .nciations the « « . o ; t*.i°*Mno",: ,no
V *  G E N E R A L  R E M A R K S  O N  S A N  M A R IN O 'S  R E Q U E S T S
H.  Before deciding on what approach to take with respect to San
Marino's requests, it is necessary to examine these requests in
terriioHp°f *5® Community's present relations with other similar
create°diff icuLtie«?3" >haUti°U^ y t0 av°id 3 Precedent which could  create difficulties with regard to other "mini-states".
(1)u  .  .  .  .
it should be noted that C om m unity customs L a w  covers the sam e ground 
as the second indent of Article 44 with the exception of certain 
objects for which duties ranging between 2.7%  and 1 2 %  are laid dow n.

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15- There are som e territories (mostly in Europe) which are part of, 
or have special relations with, som e M em b er States but to which 
the Treaty does not fully apply (subject to specific provisions; :
- Gibraltar, subject to the Treaty by Article 227(4), is not however, 
subject to the agricultural rules nor the harmonization of taxes
on turnover, and is excluded from the customs territory;
- in practice, despite the principle set out in Article 227(4), the 
Channel Islands and the Isle of M a n  are, by virtue of Article 227 
(5), subject to the Treaty rules only to the extent necessary to 
apply the arrangements for those islands provided for in the 1972 
Act of Accession. Protocol 3  to the Act of Accession includes 
them in the customs territory but does not provide for the 
application of any tax rules. In the case of agricultural 
products, only import levies and other import measures are 
applied, together with certain provisions on free m ovem ent and 
competition. W h at is more, the su m  raised on these islands in 
the form of customs duties, levies, etc. are not allocated to the 
C om m unity budget. C om m unity regulations to promote exports do 
not apply but C om m unity amounts ^yve as the ceiling to the aids 
the islands are allowed to grant . Free m ovem ent of workers 
and services is not applied, subject to the principle of non­
discrimination.
16. In contrast, there are certain European territories which are neither 
part of M em b er States nor have special relations with them but which, 
like San Marino, concluded agreements with M em b er States setting up 
customs unions bef^g^ the Treaty of R om e, the m ain examples being 
M onaco t^ h  France^ and Mittelburg and Jungholz (Austria) with 
G erm any
For the principality of Andorra, a  system regulating trade relations 
between the C om m unity and Andorra to replace the national systems 
operating at present could be set up once the A ct of Accession for 
Spain com es into force.
T he French overseas departments co m e under Article 227(2) of the 
Treaty and C om m unity law  n o w  applies to them  in full.
Special arrangements apply to the Faroe Islands and Greenland.
Regulation 706/73, 0J L 6 8  of 1 5  M arch 1983, p. 1.
Custom s Convention of 18 M a y  1963.
Treaty of 1890.

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VI*  ïII"A ' m a rÎn oS  F 0 R  rela tio n s  t o b e establi s h e d  b e t w e e n  t h e c o m m u n it y  a n d
17. San Marino's M em o ran d u m  proposes the conclusion of a bilateral 
agreement on the basis of Articles 113 and 238 of the E E C  Treaty.
Article H3 concerns commercial policy (including agricultural 
matters), for instance changes in tariff rates, tariff and trade 
agreements, the standardizati^ of liberalization measures, export policy and anti-dumping, etc. .
J Î n he clearLy 90es beyond the scope of this policy and
falls within the category of "agreements establishing an association 
involving reciprocal rights and obligations, c o m m o n  action and 
special procedures" recourse would have to be had to Article 238.
Article 238 requires that agreements be concluded by the Council, 
acting unanimously after consulting the Assembly (Parliament). 
Article 113 lays dow . "hat the agreement be negotiated by the 
Com m ission and concluded by the Council acting by a  qualified majority.
T he possibility of setting up autonomous arrangements, which could 
supplement a trade agreement of the type provided for in Article 
113, so avoiding the complication of an association agreement, 
should not be discounted.
Other Articles of the Treaty could be taken into consideration for 
sectors not covered by Article 113, especially if reciprocal 
obligations were entered into.
. W ith a view to concluding an agreement based on Article 113, a  
simplified form  of agreement could be envisaged (exchange of letters 
with annexes). This formula might also be considered if there are 
points to be dealt with outside the area of commercial policy, and 
thus the cum bersom e formula of Article 238 would be avoided.
. Irrespective of the legal basis for a possible agreement, it is not 
planned to set up c o m m o n  bodies; such bodies have not been set u p  
between Italy and S an Marino. A d  hoc meetings are called w hen both 
parties feel it -to  be useful.
T he sam e system could be envisaged in relations between S an M arino 
and the Com m unity. T he S an M arino authorities have no objection to 
such an approach.
A n d  also services, at least in the Commission's view.

-  8 -
VII. F IN A N C IA L  C O N S ID E R A T IO N S
21. Under Article 52 of the 1939 Convention, Italy currently pays 
San Marino a  fee ("canone doganale") of Lit. 9.000 million 
annually in return for San Marino's renunciation of certain financial 
rights (Art. 47) and freedom of transit (Art. 44 5 1). T h e customs duties
.  imposed by Italy on goods intended forman Marine  and not in free transit are
currently paid into the Com m unity' . In addition, Italy sells to San M arino various 
quantities of tobacco, salt, alcohol and petroleum in respect of which San M arino enjoys 
tax benefits (Arts. 48, 49 and 50).
22. San Marino imposes a  single-stage tax on all imports. In 1984  the 
net revenue from such taxation amounted to nearly Lit. 25.000 
million (Lit. 45.000 million on imports less Lit. 20.000 million 
on re-exports). T he average level of this tax is in the region of 
12% , with the result that the value of definitively taxed
imports totals approximately Lit. 200.000 million. T he receipts from this  tax 
constitute around 2 0 %  of government revenue.
23. T he S an Marino authorities have stated that no tax is levied o n  
domestic production or services. Local economic activity revolves 
around the services sector (hotels and tourism), agriculture and 
industry (chiefly the processing of products imported for subsequent 
re-export).
It will have to be examined at the appropriate juncture whether the 
single-stage tax concerned would be compatible with an agreement 
with the Com m unity.
VIII. T H E  C O M M IS S IO N 'S  P O S IT IO N  O N  S A N  M A R IN O 'S  R E Q U E S T S
(a) Genera],
24. In its M em orandum , San Marino argues that there is "an anomaly in the 
legal and economic relations between the E E C  and San Marino" (second 
paragraph, page 2). But, in fact, as regards their content, these 
legal relations are comparable to those existing between parties 
to a  customs union. In other words, the present situation is already 
substantially comparable to that which would result from an agreement 
establishing a  simple customs union between the E E C  and San Marino.
F ro m  the institutional point of view, however, and here the M em o ran d u m  
is silent, the situation is out of the ordinary. Normally, an 
independent country which sets up a  customs union with other countries 
participates in the taking of decisions on the customs tariff and, 
where appropriate, the customs union's import arrangements. B ut 
San Marino is not involved as such in the Community's decision-making 
in this sphere. Moreover, by the terms of the 1939  Convention,
San M arino has never been involved by Italy in the decisions 
concerning the customs tariff and import arrangements applied by Italy 
to it.
T he Italian government has just asked the Com m ission to reimburse from 1979  the 
customs duties collected on goods intended for Saint Marino.

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25. According to the Memorandum (page 2), San Marino's traders are  
completely excluded from the possibility of enjoying the benefits  
provided for in the Community regulations to offset the effects
of the regulations on customs duties and tariffs, such rights being  
reserved for traders of the Member States only.
San Marino doubtless also wants to suggest that it has been unjustly  
excluded from the benefits of these measures, but this premise does  
not seem to be correct. The common policies referred to here are  
not part of the customs union set up by the EEC Treaty since the  
Treaty itself clearly distinguishes between the customs union and  
the common policies, even if these policies, the CAP for example,  
are implemented mainly through customs union mechanisms. It is  
indeed these common policies which bestow on the European Community  
its specific character.
What is more, customs union is not merely a burden for San Marino,  
it also affords the country certain benefits such as those described  
above, especially the opportunity to export its products to the whole  
of the common market under the same customs arrangements as Italy.
(b) Customs_matters
26. In its letter of 17 December 1984, San Marino requested a re­
examination, in the context of the negotiations between the Community  
and San Marino, of Articles 42, 43, 44, 46 and 51 of the 1939  
Convention.
As the customs union between San Marino and Italy resulting from  
these articles does not in reality pose major practical difficulties  
and does not conflict with the Treaty, there is no reason to  
propose to Italy that the Community take over the articles concerned.  
Moreover, Article 46(2) enables any practical problem which might  
arise in future between Italy and San Marino to be resolved. In  
addition, even if the provisions establishing a customs union were  
expressly provided for in the agreement between the Community and  
San Marino, in practice they would be implemented, monitored and so  
on by the Italian customs authorities. It would simply be necessary  
to record in the agreement that, de jure, the Community had  
succeeded Italy in the customs union concerned.
(c) Agriculture  
Legal situation
27. In its Memorandum, San Marino argues that the agricultural sector  
illustrates the problems and difficulties arising from its anomalous  
situation with respect to the Community.
According to San Marino, its farmers are unable to take advantage of  
the benefits accorded by Community rules to farmers in the Member  
States (compensatory amounts, aids, refunds). Its agricultural  
products, particularly wine, do not circulate freely in the Community  
and are exported to third countries only with difficulty.

-  10  -
28. Finally, in the bovine meat sector, San Marino wishes to be fully  
entitled to participate in the allocation of the annual GATT quotas  
granted to the Member States or to be able to import freely a duty­
free quota corresponding to its own requirements, while providing  
every guarantee that the meat will not be re-exported.
The situation in practice
29. San Marino's agricultural production is very small. The main product  
are wine grapes (sone 2000 tonnes in 1983), cereals (3400 tonnes in  
1983), milk (1613000 litres in 1983), meat (some 250 tonnes in 1983)  
and olive oil (some 30000kg annually). Relatively large quantities
of cereals, olives, meat and milk are imported, mostly from Italy,  
some being re-exported after processing to Italy.
30. In view of its position, San Marino's farm prices are virtually aligned  
on Community prices. Tor this purpose, a number of support measures  
have been introduced by the San Marino authorities (for cereals and  
olive oil, for example).
San Marino's health and quality regulations are generally in line  
with Community Legislation although one cannot speak of real  
harmonization.
31. As regards trade with third countries, since San Marino is part of  
the Community customs territory, imports are subject to levies or  
customs duties on entering the Community. Community tariff measures,  
including concessions, apply equally to San Marino. In practice,
these levies and customs duties are currently included in own resources, since  
Italy has not distinguished to date between Community trade and that of  
San Marino.
Proposals
32. For a number of reasons, it appears difficult to accede to San Marino's  
request for an extension of Community price guarantees (with EAGGF  
financing) to its products. For trade with third countries, however,  
the simplest solution would be to extend Community treatment to  
products imported into or exported by San Marino.
In this way, all imports would still be subject to levies or customs  
duties on entry into the Community, provided that these continue to  
form part of own resources. The Community could see if there were reasons  
for granting export refunds to products originating in San Marino under  
the same conditions as those applicable to Community products. In this 
respect, the balance between the reciprocal advantages and burdens,  
particularly in the financial area, should be taken into account.

-  11  -
On trade between the Community and San Marino, the agreement should  
provide for an undertaking by San Marino to apply Community rules  
concerning animal and plant.health, quality control, etc. to products  
exported to the Community .  There would have to be close  
cooperation between San Marino and the Community for on-the-spot  
checks on compliance with Community rules; for this purpose the  
Community could delegate its supervisory powers to a Member State,  
for example Italy.
33. Movemen-j^f San Marino wine in the Community poses a particular  
problem .  In the absence of specific import formalities, the  
problem could be resolved rapidly, even before the conclusion of any  
agreement, by recourse to the simplified procedure of an exchange
of letters between the Community and San Marino. In which case,
San Marino would
Ci) undertake not to authorize practices and types of treatment in  
wine production that do not comply with those laid down in  
Annex III of Regulation (EEC) No 337/79 and to ensure compliance  
with Community rules on wine production,
(ii) agree to cooperate closely in stamping out fraud, particularly  
with the Italian authorities and with those of the other Member  
States,
(iii) agree, in the case of wine transported in bulk, that the
accompanying document used be drawn up by the competent Italian  
authorities or by the San Marino consignor duly authorized by  
the Italian authorities. In the latter case, periodic checks  
on the consignor would have to be carried out by the Italian  
authorities with the cooperation of the San Marino authorities.  
The Commission has drawn up a proposal for appropriate measures  
to be incorporated in the Community rules on this question.
34. On the question of meat, it should firstly be noted that San Marino  
already enjoys part of the share allocated to Italy of the GATT  
quota since customs controls on the Italy-San Marino border are  
virtually non-existent.
Moreover, it would be difficult to get agreement on an increase in  
the quota in view of the situation on the Community market (see  
C0M(83)500 of 28 July 1983).
Lastly, it should be noted that a specific quota for San Marino  
supposes the setting-up of controls on the Italy-San Marino border,  
which seems exaggerated in relation to the size of the problem.
For these reasons, it is difficult to agree to San Marino's request.
That is, San Marino would align itself on Italy, for example, for  
the application of animal health legislation, etc.
The problem of San Marino's wine exports in the bottle to the  
Community was dealt with by Community regulations (see Reg. 997/81).

-  12  -
35. Moving Lastly to olive oil, since a certain quantity of olives  
harvested in Italy are pressed in San Marino, San Marino would have  
to agree to the Italian authorities' verifying the facts in order  
that Community aid could accordingly be granted.
(d) .Foreign trade  
Legal situation
36. With regard to the complaints concerning the lack of its own import  
quotas, the lack of facilities and benefits for exports and fact  
that San Marino cannot give its exports a "national profile" ,  
the following remarks should be made.
37. The fact that restrictions, decided on or authorized by the Community  
as a result of the present situation, on imports originating in  
third countries (Menu fendum point 2(a)) are applied to San Marino  
would seem to be the inevitable consequence of its inclusion in the  
Community customs territory. San Marino would probably have been
in the same situation if it had concluded an agreement with the  
Community establishing a customs union but without the Community  
having made special provisions in the agreement. In the present  
situation, if better account is to be taken of San Marino's interests  
in Community decisions, it must come about in relations between Italy  
and San Marino.
38. With the exception of agricultural products, one cannot really speak  
of "benefits and facilities provided by the Community to support  
export-oriented production" (Memorandum point 2(b)). Although  
subject to Community discipline to a certain extent, export credits  
are still granted by the individual Member State.
39. San Marino's situation as regards the preferential agreements with  
third countries depends on the terms of each agreement. However,  
as these agreements refer to products "of Community origin" and to  
application to territories to which the Treaties apply, San Marino  
would not be able to take advantage of them from the strictly legal  
point of view. But since San Marino's imports enter through Italy,
San Marino has been able to take advantage of the tariff concessions  
on imports up to now.
San Marino's exports have, on occasion in the past, met with refusals  
by third countries to grant San Marino preference, such goods not  
having EUR 1 certificates, which the Italian customs authorities  
cannot issue. As for San Marino's exports to non-preferential  
countries, Regulation 802/68 on the common definition of the concept  
of the origin of goods would appear not to apply to San Marino.
In any case, neither the Italian Chambers of Commerce nor the Italian  
customs authorities issue such certificates for San Marino's products.
See page 2 of the May 1984 addendum to the Memorandum (Annex II).

- 13 -
The situation in practice
40. The situation with regard to San Marino's exports is perfectly  
correct legally but puts San Marino at a theoretical economic  
disadvantage, although in practice the preferential countries have  
often ended up by accepting the application of the preferential  
a’ 'ran9ements to products originating in San Marino. It  
should also be noted that of the preferential countries, only the  
EFTA countries, Spain, Portugal, Turkey, Cyprus, Malta and Israel  
grant tariff preferences to Community products. San Marino's  
exports to such preferential countries which accord a preference to  
Community products account for about 3% of its total exports.
41Proposals
The San Marino authorities are not satisfied with the present  
situation and want to highlight the origin of the products exported  
and retain all powers to negotiate with other third countries with  
regard to foreign trade.
T° de*L With the probLem of origin and meet San Marino's demands, an  
addendum to the preferential agreements would have to be negotiated  
to enable San Marino products to be treated as products originating  
in the Community.
San Marino has indicated that it is prepared to authorize the  
Community to act accordingly on its behalf. The number of countries  
with which it would be necessary to negotiate is, moreover, very  small.
.  The issue of EUR 1 certificates by the authorities of the Republic of  
San Marino presupposes the existence of a customs administration in  
that country. Close collaboration between San Marino and the  
customs authorities of another state (Italy), which would issue the  
EUR 1 certificates could, however, resolve this problem.
Such^a solution would also raise the problem of San Marino's  
participation in the administrative cooperation provided for in the  
agreements. San Marino has proposed for itself observer status.
The Commission has, however, already pointed out that such status  
does not exist and cannot be accorded.
(e) Financing
Legal situation
43. Access to funds from the Community budget or to Community financing  
instruments and improved coordination with the Community banking  
system would mean that San Marino would have to become a member of  
the Community or establish very close relations by means of an  
agreement, since these funds are linked to policies which go beyond  
the scope of the customs union.

- 14 -
The situation in practice
The following remarks can be made about the possibility of a non­
member country having access to Community funds and a Community  
financing system :
(a) The purpose of the Community regional and social funds is to  
correct imbalances within the Community. It is legally  
impossible to use these Community funds for the benefit of  
non-Community countries.
(b) Of the financing instruments - the NCI, the ECSC, Euratom and  
the EIB - the NCI may not legally be used outside the Community.  
The ECSC and Euratom have carried out very few operations  
outside the Community up to now. The EIB, however, plays a  
bigger role here although such operations account for a  
relatively small proportion of its total activities (some
12% per year bet ;c?n 1979 and 1983).
The EIB makes Loans (some with interest-rate subsidies from  
Community budget resources) from its own resources, which it  
administers on a mandate from the Community pursuant to  
financing agreements and financial protocols under agreements  
with the applicant countries, the Mediterranean countries and  
the ACP states.
Exceptionally, on a case-by-case basis the EIB's Board of  
Governors has special powers to authorize the extending of loans  
outside the Community (Article 18 of the EIB Statute) for  
financing certain investments of particular importance to the 
Community. Such loans, however, are made from the EIB's own  
resources and the terms (interest rate, maturity) are aligned  
on those prevailing on the market.
The Community also makes special loans or provides risk capital  
from the Community budget in the context of financial protocols  
and ad hoc agreements. It should be noted, however, that San  
Marino has not asked for an agreement establishing privileged  
relations in the financial sphere.

- 15 -
Proposals
Since San Marino is not a member of the Community, any question of  
access to Community funds must be ruled out. There simply remains  
the possibility that San Marino could be granted a loan by the  
EIB under Article 18 of its Statute. It should be emphasized,  
however, that even if the EIB were to approve a request from San  
Marino for financing, there would be no special rate for such an  
operation.
(f) Transport
Legal situation
46. San Marino complains in its Memorandum that its transport undertakings  
are not covered, except in Italy, by the provisions establishing free  
movement of road carriers in the Community.
The main form of Community transport organization is a system of  
bilateral quotas between the Member States. In addition to these  
bilateral quotas, there are a number of multilateral quotas,  
including Community quotas. These multilateral quotas, however,  
cover only a minute percentage of the total tonnage transported by  
road hauliers between the Member States.
Council Regulation (EEC) No 3164/76 of 16 December 1976 (amended text)  
on the Community quota for the carriage of goods by road between the  
Member States applies only to carriers on the territory of each  
Member State.
47. San Marino feels that the situation outlined above is greatly
aggravated by the fact that it is excluded from any possibility of  
taking advantage of the facilities offered by the TIR Convention.  
This Convention was negotiated in the context of the United Nations,  
of which San Marino is not a member.
The situation in practice
48. Community legislation and the UN Convention referred to above do not  
allow San Marino to enjoy complete freedom of movement for the  
carriage of goods by road in the Community. This undoubtedly puts  
San Marino carriers at a disadvantage and harms the San Marino  
economy.
However, there are apparently only six road haulage undertakings in  
San Marino, employing 17 persons.

- 16 -
Proposa Ls
49. Under these circumstances, the requirements of San Marino's  
carriers should be satisfied by the granting of bilateral  
authorizations, which could be negotiated between San Marino and  
its main trading partners at national level since there is no  
significant triangular movement between San Marino and its trading  
partners.
50. It is neither practical nor politically desirable to amend Community  
legislation on multilateral authorizations in order to satisfy the  
needs of non-member countries like San Marino. Nevertheless, the  
Commission could help San Marino to establish contacts with the  
Member State authorities and thus obtain the required authorizations  
for its carriers. San Marino should be invited by the United  
Nations to accede to the TIR Convention.
(g) Soci_a l_securi_t^
Legal situation
51. San Marino wants to conclude an agreement with the Community which  
would extend the benefits of the social security regulations  
concerning migrant workers to its citizens.
These regulations provide for the coordination of social security  
arrangements for workers who move from one Member State to another,  
in particular equal treatment, the aggregation of periods of  
insurance completed in the Member States and the export of benefits  
from one Member State to another. These regulations were adopted  
in the framework of the free movement of workers.
Similar provisions are contained in bilateral agreements concluded  
by San Marino with France, Italy and Belgium.
The situation in practice
52. Since San Marino is not asking for freedom of movement for its  
workers in the Community, and since the recruitment of non-Community  
nationals is virtually at a standstill in the Community, extension  
of the Community regulations (supposing that it were possible)  
would have a very limited practical effect on San Marino nationals  
working in the Community.
According to the figures notified by San Marino, the situation is  
as follows :
(a) San Marino workers currently or previously employed in a Member  
State with no bilateral agreement with San Marino
Germany 80 
Luxembourg 25 
Netherlands 5 
United Kingdom 20  
Greece 2 
Ireland 2
TOTAL :134

- 17 -
Nationals of Member States with no bilateral agreement with  
San Marino currently or previously employed in San Marino
Germany 15
Netherlands 3
United Kingdom 10
Greece 2
Ireland 3
TOTAL :  “33
lc)  San Marino workers currently or previously employed in more  
than one Member State
France Belgium 15
Italy France 20
Other 50
TOTAL : S 5
The total number of San Marino workers employed in Member States  
not linked by a bilateral agreement with San Marino is 134 and the  
total number of Community workers employed in San Marino is 33.
53. The extension of the Community regulations would not make it possible  
to transfer benefits outside the Member States. The only additional  
advantage over and above the bilateral agreements would be the  
aggregation of periods of insurance completed in the Community,  
which concern only 85 persons.
The same is true of the association and cooperation agreements  
concluded between the Community and certain non-member countries  
(Turkey, Algeria, Morocco, Tunisia, Portugal, Yugoslavia).
These agreements do not provide for the extension of the Community  
regulations, but set up more limited arrangements, applying only  
to nationals of these countries who move from one Member State to  
another.
Proposals
54. Pending implementation of the measures recommended in the Commission  
report on guidelines for a Community policy on migration ^1 , it is 
proposed that the social security provisions to be included in an  
agreement with San Marino be confined to confirming the principle  
of equal treatment (San Marino workers employed in the Community  
receiving the same treatment as Community workers and vice versa).
The text below could be proposed :
"1. Employed and self-employed workers of San Marino nationality,  
and members of their families residing with them, shall be  
covered, as regards social security legislation, by arrangements  
which do not discriminate on the basis of nationality in relation  
to the nationals of the Member State where they are employed.
2. San Marino shall extend the same arrangements as those set out in  
paragraph 1 to employed and self-employed workers who are nationals  
of a Member State and employed in its territory and to members of  
their families."
COM (85)48, point 40.

- 18 -
CONCLUSION
55. In the final analysis, San Marino's requests do not present any major  
problems from the economic point of view. However, when formulating  
its position on the status of San Marino, the Community should not  
overlook the precedent which an agreement would constitute for other  
small European states that are not part of the Community.
With this in view, responses acceptable to San Marino's requests,  
possibly accompanied by counter requests, could be as follows :
Agri culture
(i) Export refunds for products originating in San Marino.
(ii) Movement of San Marino's agricultural products, notably wine,  
in the Community.
(iii) Granting of Community aid for the pressing in San Marino of  
certain quantities of olives harvested in Italy.
Foreign Trade
(i) Giving San Marino's products a national profile.
(ii) Community treatment for San Marino's exports in the context of  
trade agreements between the Community and third countries.
Transport
Possibility of helping San Marino in its efforts to obtain bilateral  
authorizations for road transport operators.
Social Security
Same treatment for San Marino workers employed in the Community as for  
Community workers.
56. The Commission believes that such an agreement should settle both the
legal and practical anomalies existing in relations between the Community  
and San Marino.
As regards the form and practicalities of such an agreement, a  
simplified formula (exchange of letters with annexes), based on Article  
113, and possibly on other articles, might be envisaged. This approach,  
avoiding the cumbersome formula of Article 238, should permit a speedy  
solution to the problems listed above and satisfy the wishes of the  
Government of San Marino.

- 19 -
te f0™ aUzin9 the proposed solutions to the problems  presented by San Manno, the Commission recommends that the  Council :
(i) authorize it to open negotiations with the Republic of San  
Marino with a view to concluding an agreement;
(ii) adopt for these negotiations the directives set out in  
Annex IV.
The adoption of these negotiations will enable the Commission to  
open negotiations in 1985.

Annex I
MEMORANDUM
As made clear in the course of talks held on 18 September 1983 between  
the President of the Commission of the European Communities, Mr. THORN,  
and the Secretary of State, Mr. REFFI,the government of San Marino intends  
entering into negotiations shortly with the Community authorities with a  
view to determining the Republic of San Marino's status vis-à-vis the EEC  
and reaching a satisfactory agreement on rules and procedures in the various  
sectors and aspects of trade and economic, financial and social relations.
Although the Treaties of Rome were signed more than 25 years ago, the  
Republic of San Marino's position in relation to the EEC, particularly as  
regards the legal and economic aspects of relations between them, still  
appears ambiguous and ill-defined. This situation creates many problems  
and difficulties for the government and also for San Marino traders, pre­
judicing their légitimai·.- ,  ights and interests.
This explains why the elimination of all anomalies in these relations  
represents one of the new San Marino government's top foreign policy priori­
ties. A first very significant step in this direction was made with the  
recent improvement of procedures in the form of the setting up of official  
relations between the Republic and the European Communities and the subsequent  
opening of a San Marino Mission in Brussels.
Although officially the problem has not yet been referred to the Communi­
ty authorities, two facts are indisputable.
1. The territory of the Republic of San Marino is to all intents and purposes  
an integral part of the Community's customs territory by virtue of Article 2  
of Regulation (EEC) No 1496/68 of 27 September 1968. This is not the result,  
as one would logically presume, of the conclusion of an agreement reached  
between the parties following negotiations but rather a unilateral decision  
based on the premiss that the de facto customs union established by the  
Italy-San Marino Convention of 31 March 1939 should necessarily entail the  
assimilation and unification for customs purposes of these two states' ter­
ritories in the EEC.

~  2 -
2. The Republic of San Marino is not an EEC Member State and is treated  
a non-member State in all respects, especially since there is no  
provision in the Treaty establishing the EEC which stipulates that th e  
citizens of San Marino are subject to Community rules and laws. In no  
way can Article 227 (4) of the EEC Treaty, which provides for the Treaty's
S  r ;  ” V °  Ehi°^eaK territories for wh°se external relations a Member  S ate is responsible , be applied to San Marino. This is fully recognized
by the Commission of the European Communities, which otherwise would not  
have agreed to San Marino's request for the establishment of offical  
relations.
These two facts are the source of the already mentioned anomaly in  
legal and economic relations between the EEC and the Republic of San Marino  
which has existed up to now.
On the one hand the inclusion of San Marino in the Community's customs  
territory means that San Marino's traders are subject, in accordance with  
Regulation No 1496/68 retired to above, to all the obligations and charges  
imposed by Community legislation on goods and services which circulate  
in the Community's customs territory.
On the other, San Marino's traders are completely excluded from the  
possibility of enjoying the benefits provided for in the Community to offset  
the effects of the regulations on customs duties and tariffs, such right  
being reserved for traders of the Member States only.
Under these circumstances, the San Marino government's intention of  
opening official negotiations with the Commission of the European Communities,  
of which notice has been given to the Italian government, is fully justi­
fied ; the purpose of the negotiations being to rectify San Marino's anoma­
lous position with respect to the EEC by means of an appropriate bilateral  
agreement, as provided for in Articles 113 and 238 of the Treaty establishing  
the EEC, and lay down the forms and procedures for relations in all areas  
of Community competence.
From a practical point of view and to help experts form both sides  
find the most appropriate legal and procedural solutions and the most  
practicable rational and timely formula for agreement, it was regarded  
as useful and advisable to outline some of the major problems which  
place the government, citizens and traders of San Marino in an unjust  
position of inferiority within the Community customs territory in which  
they are included together with the Member States.
1. AGRICULTURE
a) EAGGF benefits
The prices of San Marino's agricultural products (milk, butter,  
olive oil, etc.) must, for obvious reasons, be fully aligned with  
those fixed by the Community.

- 3 -
San Marino's farmers,however, are not eligible for the benefits granted  
to farmers in the Member States (compensatory amounts, price support or  
refunds and premiums, etc.) or for any other form of compensation.
b) Meat
San Marino's livestock production is severely penalized by Community  
legislation for the reasons already referred to in the paragraph above,  
and even the government finds itself in a difficult situation, faced with  
ever increasing pressure for action from traders and representative organi­
zations.
There is absolutely no legal or moral justification for the fact that  
a sovereign state such as San Marino continues to be unable to participate  
in its own right in the EEC's annual allocation of the GATT meat quotas  
or to import freely a fixed, duty-free meat quota corresponding to its  
own requirements, together with the fertilizers and feed needed by San Marino's  
farmers, with all the required guarantees that they will not be re-exported.
c) Agricultural exports
Not only do San Marino's agricultural products, particularly wine,  
not circulate freely in the Community, but exporting to third countries  
is rendered difficult by administrative and customs red tape. Unlike their  
counterparts in the Member States, San Marino's farmers cannot procure on-  
the-spot the various forms and authorisations required or issued by the  
Community customs authorities. They are thus obliged to turn to private  
or official sources in the neighbouring parts of Italy without any certainty  
that such sources will always be willing or able to collaborate and, whatever  
the case, this entails additional costs and naturally mars their image and  
credibility.
At the same time, there is the continuing and already noted discrimi­
nation against San Marino's farmers, who do not receive the export and  
production aids and premiums granted to their competitors in the EEC Member  
States.
2. FOREIGN TRADE  
a) Import Restrictions
The potential development of San Marino's economy is seriously com­
promised by its being subjected to all the EEC rules regarding quantitative  
import restrictions with no compensation in return. The fact that San

Marino does not have the benefit of its own quotas for the import of goods  
from third countries greatly reduces its industry's competitiveness, which  
is mainly directed towards the processing of semi-finished products (textiles,  
porcelain, metal products and machinery, etc.), which are often available
at more advantageous terms in the Third World, Asian countries and Eastern  Europe.
b) Export refunds and premiums
The observations concerning the agricultural sector also apply here :
San Marino's exporters are barred access to any of the benefits and facilities  
provided by the Community to support export-oriented production. This obviously  
aggravates the unfavourable conditions in which San Marino's industrialists  
operate, subject as they are to the same obligations and charges as their  
Community counterparts.
3. CREDIT
Community legislation provides for a whole range of financial aids and  
facilities aimed at reducing the imbalances between the Member States' 
economies and between different regions within individual States. These  
benefits are allocated either through the transfer of financial resources  
from the EEC budget to the Member States’  budgets for the implementation of  
specific programmes (vocational training, the development of infrastructure  
and industry, export credits, etc.) or through special soft loans made by  
the EIB.
San Marino's exclusion from the possibility of obtaining any form of  
concessionary financing or credit from the Community obviously further  
reduces the competitiveness of San Marino's industry, which is also hard  
hit by the unfavourable repercussions of the frequent crises of the European  
monetary system and the lack of coordination between the Community's and  
San Marino's credit systems.
4. TRANSPORT
San Marino's road carriers have long found themselves at a disadvantage  
in international transport. While there is no obstacle to their free move­
ment on Italian territory thanks to the agreements in force between the two  
countries, this is not at all the case with regard to the other EEC Member  
States.
The sectors unfavourable situation is further aggravated by the fact  
it is excluded from the benefits of the TIR Convention.

-  b  -
This gives rise to the absurd situation by which San Marino's exporters  
and importers are obliged to turn to foreign road hauliers to avoid diffi­
culties and delays, which can prove very costly indeed.
Here again, it is absolutely necessary to find an agreement that will  
eliminate all discrimination and lay down conditions and procedures for the 
free and profitable exercise, on the basis of full and real equality and  
reciprocity, of an activity that could offer a significant number of jobs.
5. SOCIAL SECURITY
Thanks to the provisions of the Italy-San Marino Social Security  
Convention of 10 July 1974, the necessary foundations have been laid for  
remedying the anachronistic position of inferiority of San Marino workers  
who have emigrated to the various EEC Member States.
Since equal treatment has already been brought about at bilateral  
level between nationals of Italy, Belgium, France and San Marino, not to  
mention the fact that migration from San Marino is derisory and all but  
ceased a long time ago, it should not be difficult to conclude a multilateral  
agreement that would extend Community social security regulations to San  
Marino nationals on the basis of full reciprocity with the obvious exception  
of the provisions concerning the free movement of workers.
N.B. Any further examination of the problems outlined in this memorandum  
could be studied further at ad hoc meetings of experts called even at  
short notice. Whatever the case, a more detailed explanation of the 
policy proposed by the San Marino government in its relations with the  
Community could be given when the Secretary of State for Foreign and  
Political Affairs pays an official visit to Brussels, the date of which  
could be agreed as soon as it is convenient for the President, Mr. Thorn,  
and any other members of the Commission concerned.

Annex II
The Permanent Mission of the Republic of San Marino to  
the European Communities presents its compliments to the Commission's  
Directorate-General for External Relations and is writing in reference  
to the correspondence and talks that have been held following the  
sending of a memorandum to the Commission on the subject of relations  
between the Republic of San Marino and the European Communities.
In the light of the informal contacts that have taken place  
with the various departments of the Commission involved in the  
negotiations and the new aspects and factors that have come to light,  
particularly in the sphere of trade relations with third countries,  
an addition to the memorandum seemed warranted.
For this reason, the Directorate-General for External Relations  
will find an addendum annexed to this letter. At the same time,  
the mission unreservedly confirms its willingness to supply any  
further information that might be required by the departments responsible  
for examining the dossier, without prejudice to the possibility of  
organising a working meeting for this purpose.
Complimentary close.
Brussels, 5 May 1984

-  <L ~
Addendum
Further to the memorandum submitted to the Commission of the  
European Communities on 27 September 1983, attention needs to be drawn  
to other problems and matters to be settled in the framework of an  
overall or sectoral bilateral agreement.
The most important problems concern foreign trade and, although  
these problems have only recently been raised officially by certain  
third countries, the root cause lies in the lack of any clear provisions  
and established procedures, under the Community's customs union arrange­
ments, for imports and above all exports of goods of San.Marino origin.
The most serious aspect of this situation is that any third  
country may, from one moment to the next, refuse to grant goods imported  
from San Marino the trade facilities provided for in the preferential  
agreements with the EEr,  even though it is clear that these goods come  
from the Community customs territory - one country has already done so  
and others may soon follow suit.
In practice, third countries have, up to now, always finally  
agreed, somtiemes merely out of goodwill, to apply to products originating  
in San Marino the tariff arrangements for Community goods under the  
bilateral or multilateral agreements concluded with the EEC, in which  
San Marino is never mentioned (and rightly so in the absence of any pact,  
protocol or agreement to this effect between the two parties).
It is thus undeniable that from the legal point of view, there  
are some lacunae to be filled if one wants to prevent any third country  
from invoking the absence of any provision or official act in order to  
refuse the extension of the customs and commercial arrangements reserved  
for goods from the Member States to a sovereign country such as San Marino,  
officially considered as a third country in relation to the EEC (a list  
of San Marino's major trading partners is annexed).

- 3 -
^The fact that San Marino's territory is an integral part of  
the EEC s customs territory and that exports from third countries to  
San Marino are in all ways subject to the Community's customs regu­
lations and thus benefit from any advantages specified in the EEC's  
increasingly numerous preferential trade agreements, which in principle  
cover the whole of the Community customs territory, does not seem to  
constitute in itself a sufficiently valid legal argument for treatment  
placing San Marino's goods on an equal footing with those of the Member  
States.
A solution can obviously always be found in practice. It would  
be sufficient to hand over goods originating in San Marino intended for  
export to intermediaries exercising their activities on EEC territory  
but a makeshift solution of this kind could naturally never be accepted  
by the San Marino government which, on the contrary, is anxious to  
emphasise the origin of its exports and retain all its powers of negotiation  
with other countries in the field of foreign trade.
This highlighting of the products' origin raises another problem  
to which it would be possible and desirable to find a solution in the  
framework of the same bilateral agreement, which should be negotiated  
without delay to provide a clear and lasting legal basis for relations  
between San Marino and the EEC and to avoid any possibility of disputes  
with and complaints from third countries. The problem referred to above  
is the reaching of agreement on the criteria and procedures offering each  
side the greatest guarantees concerning the issue and recognition of  
certificates of origin and like documents issued by the authorities of the  
Republic of San Marino.

Republic of San Marino ANNEX III
Permanent Mission to the  
European Communities
Ref. No. 0702/84
The Permanent Mission of the Republic of San Marino presents its  
compliments to the Commission of the European Communities (Directorate-  
General for External Relations) and is providing, attached, the  
following additional information requested by the interdepartmental  
group following the working meeting held in San Marino on 22 November  
1984 :
1. Agricultural legislation of the Republic of San Marino
(laws in force and draff 'egislation in the process of examination);
2. List of San Marino's international goods and passenger carriers;
3. Foreign trade statistics for 1983;
4. Estimate of possible beneficiaries of an extension of Community  
social security rules to the Republic of San Marino;
5. List of provisions in the Convention of 31 March 1939 between Italy  
and San Marino to be re-examined in the context of the negotiations  
with the European Community.
The Permanent Mission of the Republic of San Marino to the European  
Communities wishes on this occasion to reiterate to the Directorate-  
General for External Relations the assurance of its highest esteem.
Brussels, 17 December 1984
Enel.
Commission of the European Communities,  
Directorate-General for External Relations,  
200 rue de la Loi,
1049 Brussels.

San Marino, 14 December 1984
ROAD TRANSPORT OPERATORS ENGAGED IN  
INTERNATIONAL TRANSPORT FROM SAN MARINO TO, OR IN TRANSIT  
THROUGH, COUNTRIES OF THE,. EUROPEAN COMMUNITY
MUSCI ROBERTO di Pompeo head office :  Borgo M.-Scale Martelli (small-scale)
ERCOLANI ERMANNO head office :  Dogana (large-scale)
ERCOLANI PIERINA head office :  Dogana (large-scale)
KREUZER KARIN in Bonelli head office :  Rimini (large-scale) coach service
BENDINELLI FRANCA head office :  Borgom M. Str.S. Michel (Large-scale)
S.A. S.A.T. AUTOTRANSPORTI ,  ,TITANO head office :  Dogana (Società Anonima)
BENEDETTINI FORTUNATO head office :  Borgo M. (large-scale) coach service
The above firms employ a total of 17 persons; in each case the vehicles  
involved in international transport are limited to four or five.

ESTIMATE OF POSSIBLE BENEFICIARIES OF AN AGREEMENT
ON SOCIAL SECURITY BETWEEN THE EEC AND THE REPUBLIC OF SAN MARINO
San Marino nationals currently or  
Member State having no bilateralpreviously employed in a EEC  
agreement with San Marino.
Country Estimated number
Germany 80
Greece 2
Ireland 2
Luxembourg 25
Netherlands 5
United Kingdom 20
San Marino nationals currently or  
one Member State of the Community  
aggregation of insurance periods.previously employed in more  
with no opportunity for
Country Estimated number
France-Belgium-San Marino 15
Italy-France-San Marino 20
Others 50
Nationals of EEC countries having no bilateral agreement with  
Marino currently or previously employed in San Marino.
Country Estimated number
Germany 15
Greece 2
Ireland 3
Netherlands 3
United Kingdom 10

Republic of San Marino
Permanent Mission to the  
European Communities
LIST OF PROVISIONS IN THE CONVENTION OF 31 MARCH 1939  
BETWEEN ITALY AND SAN MARINO (AND SUCCESSIVE AMENDMENTS)
TO BE RE-EXAMINED IN THE CONTEXT OF THE NEGOTIATIONS  
WITH THE EEC
Arts. 42 and 43 :  protection of intellectual and industrial property
Art. 44 :  customs union and foreign trade
Art. 46 :  customs facilities and exemptions
Art. 51 :  free movement of goods

ANNEX IV
DRAFT DIRECTIVES
FOR NEGOTIATIONS WITH SAN MARINO
The agreement between the Community and San Marino would be aimed at  
resolving certain legal and economic problems arising between the  
European Community and San Marino, notably in the following spheres :
Agri culture
(i) Export refunds for products originating in San Marino.
(ii) Movement of San Marino's agricultural products, notably wine,  
in the Community.
(iii) Granting of Community aid for the pressing in San Marino of certain  
quantities of olives harvested in Italy.
Foreign trade and customs matters
(i) Giving San Marino's products a national profile by exter.ding to  
San Marino the Community treatment provided for in the reciprocal  
preferential agreements concluded by the Community.
(ii) Examination of the compatibility of the single-stage tax with the  
rule on free transit of goods.
Transport
Possibility of discussing authorizations for San Marino's road transport  
operators.
Social security
Equal treatment (San Marino workers employed in the Community receiving  
the same treatment as Community workers and vice versa).
With regard to the form and procedures of such an agreement, a simplified  
formula (exchange of letters with annexes), based on Article 113 and if necessary o t h e  
articles could be envisaged. Such an approach, which would avoid the cunbersome formula of  
Article 238, should permit a rapid solution to the problems referred to  
above and prove satisfactory to the Government of San Marino.
Provision for formal joint bodies is not required. Should problems arise,  
the procedure will be to convene ad hoc meetings. San Marino has no  
objection to this approach.