COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 328 final 
Brussels, 27.07.1994 
94/0178 (ACC) 
94/0179 (ACC) 
Amended proposal for a 
COUNCIL REGULATION (EC) 
amending Council Regulation (EEC) No 636/82 94/0178 (ACC) 
establishing economic outward arrangements applicable 
to certain textilesand clothing products reimported into 
the Community after working or processing in 
certain third countries (PECOS) 
and 
amending Council Regulation (EEC) No 636/82 94/0179 (ACC) 
establishing economic outward arrangements applicable 
to certain textilesand clothing products reimported into 
the Community after working or processing in 
certain third countries 
(presented by the Commission pursuant to Article 189a(2) of the EC Treaty) 
^r/fe"#'>ipw3' 
EXPLANATORY MEMORANDUM 
At the General Affairs Council of 13-14 June 1994 the Presidency concluded that work 
should continue at a technical level on the proposal to amend Council Regulation No. 
636/82 harmonising the operation of the Community's regime for economic outward 
processing traffic (OPT) in the textiles sector (COM(93) 259 of 13 July 1993) with a 
view to a decision being taken at the next General Affairs Council. 
The Commission will continue to work with the present and future Presidencies in order 
to reach a solution on the complete range of issues, including the implementation of the 
decision of the European Council at its meeting in Copenhagen on 21-22 June 1993 
extending duty free treatement of OPT with the Central and Eastern European Countries 
(CEECs) - Bulgaria, the Czech Republic, Hungary, Poland, Romania and the Slovak 
Republic. The main outstanding issues in the overall proposal aimed at completing the 
single market in textiles, relate to (a) the link between the amount of OPT which can be 
applied for and the level of Community production/employment of the applicant, (b) the 
protection of the right of operators who have benefitted from OPT in the past and (c) the 
14% derogation for the use of non-Community origin fabrics. 
The present proposal to amend Council Regulation No. 636/82 amends the Commission 
proposal (COM(93) 259) by splitting it into two parts. It is meant to ensure that the 
Council can at least adopt, without further delay, that part of the overall proposal which 
deals with the concession to the CEECs (Point 17 of COM(93) 259)) as a separate 
Regulation in the event that it does not reach agreement on the overall OPT proposal at 
its next meeting. This enables OPT operations to be done in the CEECs in products which 
are not under any quantitative restriction and consequently it allows these products duty­
free access to the Community under the terms of Article 2(3) of the Protocols Nos. 1 on 
Textiles and Clothing Products to the Europe /Interim Agreements. 
The adoption of the present proposal would honour the European Council decision to 
make this concession with effect from 1 January 1994. 
At the same time the text of the original proposal is amended through the deletion of Point 
17. 
Amended proposal for a 
COUNCIL REGULATION (EC) 
94/0 j 7g (ACC) 
amending Council Regulation (EEC) No 6 36/82 establishing economic outward 
processing arrangements applicable to certain textiles and 
clothing products reimported into the Community after 
working or processing in certain third countries 
(PECOS) 
i THE COUNCIL OF THF. EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
and in particular Article 113 thereof, 
Having regard to the proposal from nhe Commission, 
Whereas the import arrangements m the Community for the textile and 
clothing sectors as regards certain third countries contain specific 
measures applicable to products resulting from outward processing 
operations; 
Whereas Council Regulation (EEC) No 636/82<1), as amended by the Act of 
Accession of Spain and Portugal created economic outward processing 
arrangements applicable to certain -.extile and clothing products reimported 
into the Community after working or processing in certain third countries; 
Whereas, in conformity with the decision of the European Council at its meeting in Copenhagen 
on 21-22 June 1993, and in view of Protocol No. 1 on Textiles and Clothing products to the 
Europe Agreements and the Interim Agreements concluded between the Community and the Czech 
Republic, the Slovak Republic, Poland, Hungary, Bulgaria and Romania, it is appropriate that the 
scope of the application of the Regulation be extended to certain liberalized categories of products 
originating in those countries from 1/1/94 / 
HAS ADOPTED THIS REGULATION: 
Article 1 
Regulation (EEC) No 636/82 is amended as follows 
X 
In Article 11 a third paragraph is added, as follows: 
"For the application of the provisions of Article 2(3) of 
Protocol No 1 on Textiles and Clothing Products to the Europe 
Agreement and the Interim Agreements between the Community and 
the Czech Republic, the Slovak Republic, Hungary, Poland, 
Romania and Bulgaria respectively, the products which are listed 
injAnnex and which originate in those countries in accordance 
with Protocol No 4 on origin to the Europe Agreements with the 
Community, do not need to be subject to the arrangements or the 
specific measures referred to in Article 1(3) or the annual 
limits referred to in Article 2(2)(b). Prior authorizations for 
those categories of products shall be issued by the competent 
authorities after notification to the Commission of the 
quantities requested, and provided that all other conditions of 
this Regulation are fulfilled." 
Article X 
This Regulation shall enter into force on // / /tqqç. 
This Regulation shall be binding in its entirety and directly applicable in 
all Member States. 
Done at Brussels, For the Council 
The President 
2> 
Amended proposal for a 
CPULN.t IL REGULATION (EC) 
amending Council Regulation (EEC) no 616/B2 establishing economic outtrard 
processing arrangements applicable to certain textiles and 
clothing products reimported into the Community after 
working or processing in certain third countries 94/0179 (ACC) 
HE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community/ 
and in particular Article 113 thereof, 
Having regard to the proposal from '.he Commission, 
,* 
Whereas the import arrangements ..n the Community for the textile and 
clothing sectors as regards certain third countries contain specific 
measures applicable to products resulting frem \ outward processing 
operations; 
Whereas Council Regulation (EEC) NO 636/82^>, as amended by the Act of 
Accession of Spain and Portuga] created economic outward processing 
arrangements applicable to certain -.extile and clothing products reimported 
into the community after working or processing in certain third countries; 
Whereas the creation of the InternaL Market of 1993 entails an area without 
frontiers in which in particular the tree movement of goods will be 
ensured; Whereas this entails, inter alia, the abolition of controls at 
internal frontiers and the elimination of disparities as regards import 
arrangements/ as well Be the opticn of reimporting compensating products 
into a Member State other than that in which the prior authorization was 
granted; 
•V 
(l) OJ Ho f, It, 70,3.19B7, p. 1 
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Whereas trade in textile and clothing products should be in line with the 
functioning of the said Internal Market/ in particular at regard* the 
application of the economic outward processing arrangements for textiles; 
Whereas the earlier regional outward processing quotas have been replaced 
aa from 1 January/ 1993 by a system of Community quotas not allocated 
between Member States; 
Whereas the competent authorities of Member States should continue to issue 
prior authorizations to applicants wanting to make use of outward 
processing/ but in doing so should communicate to the Commission the 
quantities requested in order to verify whether those quantities are 
available within the total limits established at Community level; 
Whereas quantities should be allocated by maximum tranches/ and the 
applications for a new tranche should only be possible when the previously 
allocated tranche has been utilized by at least 50?.; 
whereas the criteria and conditions which Member state operators must 
observe in order to qualify under these arrangements are not at present 
applied uniformly throughout the Community; 
Whereas, therefore/ the rules for implementation of these criteria and 
conditions have to be harmonized in order to allow access to outward 
processing under conditions common to the whole Community/ especially in 
respect of the definition "beneficiary"/ the term of "similar products"/ 
the priority for manufacturers maintaining an important production within 
the Community and the derogation fr^xm the rule concerning the origin of the 
product exported for outward processing; 
Whereas the allocation of product quantities to each applicant should take 
account not only of the quantities available under the import arrangements 
established with regard to the particular product and third country 
CùtiOêtftëé/ but also of the bona fide status of the beneficiary as 
manufacturer and the efforts of the manufacturer to maintain production and 
employment within the Community of articles at the same stage of 
manufacture, while at the same time not reducing the quantities made 
available to and used by legitimate past beneficiaries; 
•b 
-l^d^ 
Whereas in keeping with the objectives of this Regulation it is appropriate 
that the product quantities allocated to persons who have not manufactured 
similar products in the Community for more than three yoatt should be 
reviewed at the end of each ye-ir in which available quantities for 
newcomers do net prove sufficient; 
Whereas for the purpose of ensuring art efficient and impartial management 
of the system, the distribution of outward processing quantities which have 
not been set aside to meet th*» applications of persons with past 
performance rights should be effected on a first-come/ first-served basis; 
Whereas it is necessary that the list of products to which this Regulation 
applies should be in conformity with the present classification of textile 
products (categories) based on the combined Nomenclature; 
Whereas the present Regulation should not affect reimportations into the 
community of products after their working or processing in third countries 
pursuant to prior authorizations issued before the date of its application; 
ifhetêaa an efficient Community administration of the outward processing 
arrangements requires close cooperation between the Member states and the 
Commission/ 
HAS ADOPTED Ttfïfl RECUXATÏÔWJ 
Article 1 
Regulation (EEC) tfo 636/82 is amended as follows: 
I. in Article 1(1), the words "50 to 62 of the Common Customs Tariff-
ate replaced by the words "SO to 63 of the Combined Nomenclature". 
6 
2. At the beginning of Article ){J> the following words are inserted! 
«without prejudice to the third paragraph of Article 11." 
3. in Article 1(4) the following subparagraphs ate added ». 
"(6) 'competent authority means the authority in a Member state 
which is competent to »pply the provisions laid down in the 
present Regulation, in particular the granting of prior 
authorizations. 
(d) 'similar products' are lefined as products falling within the 
same category or within the same group of categories as is 
listed in Annex 1, which may be modified in accordance with the 
procedure laid down in Article 12." 
4. Article 2(2)(a) i* replaced bv the following text: 
"(a) that person must: 
prove to the competent authority, when applying for his 
first prior authorization each year, that he has 
manufactured in the preceding year products which are 
similar to and at the same stage of manufacture aa the 
compensating products in respect of which the application 
for the arrangement is made; 
perform, within -.he Community, the main production 
processes on those products (cutting, sewing, assembling, 
or knitting> on his own account, either in his or her own 
factory, or alternatively, in respect of some but not all 
of those production processes, in a factory of another 
manufacturer linked to him by a joint venture, by 
subcontracting, or by some other form of long-term 
cooperation eontracn; 
manufacture in the community those products for sale on the 
market." 
1-
&f 
In Article 2(2)(b) the second part of the sentence is replaced by the 
following textJ 
"... operations within the quantities allocated by the competent 
authorities of the Member St*te where the application is made, and 
subject to the conditions laid dovn in Article 3." 
In Article 2(2) (c) the last sentence of the first subparagraph is 
replaced by the following texr, : 
"Such derogations may not be granted in respect of more than 14* of 
the total value of the goods'*> in respect of which the benefit of 
the arrangement was granted :o the beneficiary during the previous 
year. In exceptional and economically justified cases the competent 
authorities, on the basis of a decision taken in accordance with the 
procedure laid down in Artie je J 2, may agree to a higher percentage 
of derogation. 
(*) 'Total Value of the good»" means: 
in the cane of the goods imported beforehand, their value 
for customs purposes an Ho/ined by Pegulation (EEC) 
2913/92 (OJ No. 1302, 19.10.1992, PI) 
in all other cases, the ex-factory price." 
7. In Article 2(3), the second sentence of the fourth subparagraph is 
deleted. 
8. .Article 3 i3 replaced by the -'oilowing text: 
"Article 3 
1. The Council shall establish at Community level the annual 
quantities of compensating products whose reimportation may be 
authorized under the specific import arrangements ref»rr*»d to in 
Article 1(3). 
2. The Competent authorities shall distribute the annual quantities 
tatêtreà to in paragraph (1) above amongst the beneficiaries as 
âotined in Article 2. 
g 
Atr -
3. Without prejudice to Article 2(3) or paragraph (5> below, this 
distribution shall be such as to ensure that the objective of 
maintaining the industrial activity of the beneficiary in the 
Community, as laid dowr, in Article 2(2)(a), is respected as 
regards both the nature of the products and their quantities 
expressed in physical units or added value. 
4. The annual quantities of compensating products shall be 
distributed among the beneficiaries on the basis of their 
demands presented in conformity with Article 4(2). 
The allocation wi L1 b« effected by maximum amounts for each 
category and for e*ch third country concerned. if a new 
application is submitte'i, additional amounts for each category 
and for each third cour try concerned may be allocated by the 
competent authorities to a particular beneficiary only when the 
previously authorized amount for that beneficiary has been 
actually utilized by at .east 50'*. 
5. Each legitimate benefici-iry shall be entitled to an amount equal 
to the total quantity of compensating products for each category 
and for each third country concerned for which it carried out 
outward processing operations in conformity with the provisions 
of the Regulation, during one of the two calendar years 
preceding the year of ira application. Beneficiaries mentioned 
in this paragraph become eligible for allocations in accordance 
with paragraph (6) only when they have fully used their past 
performance rights. 
In addition, a legitimate beneficiary who waives his past 
performance rights in respect of a specific category and/or 
country becomes eligible to apply for an equivalent quantity in 
another category and/or country, in accordance vith the first 
subparagraph of paragraph (6) (general rules for newcomers); the 
criteria generally to be applied in such cases shall be decided 
in accordance with the procedure laid down in Article \/. 
74 1 <i 
ttf -
6. The competent authorities shall allocate on a first-come, first-
served oasis the quantities of compensating products which have 
not been temporarily set aside to fulfil the application» made 
under paragraph (5). 
During the first nine months of each year allocations shall be 
granted to those manufacturers who can prove that in the 
preceding year they maintained a production value in the 
Community of at least SO», of their total turnover. 
During the remaining three months of each year those 
manufacturers who can \ro*/e that in the preceding year they 
maintained, in the Coînmunity, a significant production of 
similar products, in relation to the quantities requested, can 
participate in the distribution of the remaining quota. 
7. Where those** bene*iri8ri«>3 referred in paragraph (S) do not use 
the total quantities to which they are entitled, the remainder 
of such quantities, but in any case not more than 10. S# of each 
total quantityO, sha>l be added to the following year's 
quantities referred to J:I paragraph ($). 
9. At the end of each y*ar in which available quantities of 
compensating products pjove to be insufficient to satisfy the 
applications made under paragraph (6) consideration shall be 
given in accordance with the procedure laid down in Article 12, 
to the extent to which, and the way in which, allocations to 
those persons who have not manufactured similar products for at 
least three years have to be reduced. 
9. Provisions relating to -he application of this Article shall be 
adopted in accordance with the procedures laid down in 
Article 12. 
(*> According to Article 4(2) of Annex XXIII of Council 
Regulation no 4i36/J.6, which expired on 3 1 December 19?2." 
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9. Article 4(1) is replaced by the following text: 
"1. Application of the arrangements contained in this 
Regulation is subject to the issue of a prior authorization 
by the competent authorities. 
In order to ensure that the allocated prior authorizations 
do not exceed the -.otal annual quantities of compensating 
products established at Community level the competent 
authorities shall issue prior avithorizations only upon 
confirmation by the Commission that there are still 
quantities available of the total Community quota for the 
category and the - hird country concerned, for which the 
quantities are requested by the persons concerned." 
10. Article 4(2)is deleted. 
11. Article Sfii is replaced by the following text: 
"4. When granting prior authorizations the competent 
authorities must be satisfied that the level of employment 
in the factory or factories of the applicant is not 
significantly af fee ".ed.~ 
12. In Article 7, the first paragraph is deleted. 
13. In Article 8, the word? at the ond of paragraph (1) "by the 
Kember State that issuer! the prior authorization for those 
products" are deleted. 
14. Article 8(2) is deleted. 
15. in the first and second paragraphs of Article 7, the words "of 
the Member State concerned" aro deleted. 
I) 
l** la Article n, th* *<*eortd paragraph i* r&p\*c*4 by ih+ following 
^^T^cXi^^\p\t^,0 Ar,icles 154 ,o 159 of c°--i 
Code of the Coming liJ 12 °ctober 199?- establishing the Customs 
standard excha"V 9 * ,he °U,Ward Pr°CeSS,'n9 ^"ngements and 
'".I Nu I 502, 19. 10.1W2, f.. i \ 
/"^- Th# *tt*<5h*d App4T\6iy( 1 b*eom«* Ann** 1 to thn Regulation. 
/#.' Th# Arirt** 1* ttplactd Y.y th« attached Appendix" 2 and becomes 
Xrtrt#y 2 to th* Regulation; and fefez'enee* made in the Regulation 
to th# Anrtetf boaotn* reference* to Anne* 2. 
11 
Article 2 
The present Regulation shall not affect the r«impo»-tat. or 'nto the 
Community of products after working or proeessii-g in third countries on the 
basis of prior authorizations i«sund before the entry into force of this 
Regulation. 
Article 3 
This Regulation shall enter into force on the seventh day following its 
publication in the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in 
all Member States. 
Done at Brussels/ ror the Council 
The President 
15 
- 1* -
App«ndl* 1 
"ktmtx l 
Group* erf t*t*qtjtL«§ t*t*tt*d to lft Artiftl* l(4)di 
Similar product§ at the ««me «tage of manufacture are defined a* product* 
fillip within th« §am« eatagary &r within th# «am« group af eat#gttri«« a* 
lifted btldWf 
lit group (outerwear; 
categories 4, $/ «/ 7/ 8/ 14/ 1$/ 16/ 17/ 21/ 26/ 27/ 28/ 29/ 11, 74/ 75/ 
7«/ 77, 70/ 83. 
2nd group <</nderwear> 
GJtegOfief 4/ 13/ 18, 24/ 28/ 31/ 6'f/ 72/ 78/ $1, 86. 
ltd group (other product*i 
OiUqotitM ib, il, 69, 1tj, 11, IB, M, 85/ 87. 
Appendix 2 
•Awwex 2 
tiét of ««imam p*oce««ing level* referred to in Article 2(2j(dj 
compensating product* by e*tégorié*(l) MaxiÊiua procé**ing l«*él 
Cmtegotieg operation 
•4/ 5/ 6, 7/ §/ 1&/ 12/ 13/ 14/ 15/ 
lé/ 17/ 18/ 21/ 24/ 26/ 27/ 28/ 29 
31/ éf, ««/ 10, 12, 11, 74/ 7$/ 76/ 77/ 
78/ 83/ 85/ 86/ 87/ pre­processing from woven or 
Knitted fabric*(2) 
* (1) categories refer to those listed in Annex 1 to Council Regulation (EEC) No. 768/88 (OJ nr. L 84 
of 23.3.1988) and of Regulation (EEC) No. 369/92 (OJ No. L 45 of 20.2.1992) l 
(1) «/owéVér/ thé opération wh*réi/y fully fashioned knitwear i« obtained 
from yarti m«y al*o eount a* a proce**ing operation within the meaning 
of thi* Regulation/ provided that thé temporary étfport* of y«rn 
authorized for thi* purpo** in «ny year do not exceed It by weight of 
thé total temporary exports authorized in the community in thé 
préviou* y*«r under specific arrangements of the type referred to in 
Article l(3j. 
The Connie a ion shall ensure chat the limit of 71 aa foreseen above 
will not bé exceeded at thé Community level. 
ter thi* ênd thé provi*ion* of Article i, paragraph 1, subparagraph 2, 
«hall apply/-
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ïi£5;\ •'*»<*'. Ti:•;•.. :.v5'.;-.: 
ISSN 0254-1475 
COM(94) 328 final 
DOCUMENTS 
EN 1103 
Catalogue number : CB-CO-94-344-EN-C 
ISBN 92-77-71859-5 
OfiBce for Official Publications of the European Communities 
L-2985 Luxembourg 
it