COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 03.09.1997 
COM(97) 292 final 
97/0163 (ACC) 
Proposal for a 
COUNCIL PEQSIQN 
on the position to be taken by the Community within the Association Councir 
established by the Europe Agreement signed on 16 December 1991 between the 
European Communities and their Member States, of the one part, and the Republic of 
Hungary, of the other part, with regard to the extension for a further five years period 
in accordance with the provisions of Article 62 § 4(a) of the Europe Agreement 
(presented by the Commission) 

EXPLANATORY MEMORANDUM 
1. Article 62, paragraph 4 (a) of the Europe Agreement with Hungary provides that, 
for the purpose of applying certain provisions relating to public aid, during the first 5 years 
after the entry into force of the Agreement any public aid granted by Hungary shall be 
assessed taking into account the fact that Hungary shall be regarded as an area identical to 
those areas of the Community eligible for state aid pursuant Article 92(3) (a) of the Treaty 
establishing the European Economic Community. 
2. The period of five years referred above expired on 31 December 1996. 
3. In accordance with the last sentence of article 62(4)(a) of the Europe Agreement, the 
Association Council shall, taking into account the economic situation of Hungary, decide 
whether that period should be extended for a further period of five years. 
4. On 27 November 1996, Hungary requested the extension of the above-mentioned 
provisions. 
5. The main critérium for considering an area eligible for regional aid pursuant to 
Article 92(3)(a) provisions is that GDP per capita should be less that 75% of the average 
GDP of the EU-15, measured in PPP terms1. 
6. The relevant services of the Commission have examined the requests on the basis of 
the figures and information available for Hungary. The data shows that in the case of 
Hungary GDP/capita measured in Purchasing Power Parities (PPP) reaches 37% of the 
Community average in 1995. Data received from the Hungarian statistical office at regional 
level confirm that the whole country is under the 75 % ceiling and that even Budapest which 
shows the highest GDP/capita in the country, is only 66% of the Community average. 
Hungary is thus far from reaching the 75% ceiling mentioned above. Furthermore, it is 
clearly below the GDP figures for certain Member States whose territories are considered 
as Article 92(3)(a) areas2. 
7. Based on the above, the Commission believes that the figures available provide 
sufficient grounds for granting an extension for Hungary. However, the Commission 
should be provided with the necessary data to assess whether, in the future, Hungary will 
1 OJ C212/2 of 12.8.1988 and C163/6 of 4.7.1990 
2 In the case of Greece, the GDP per capita established in PPP is around 64% of Community average, in 
Portugal around 70% and in Ireland 85% (1994 figures). 
2 
not exceed the ceiling of 75% of the Community's average GDP which is required in order 
to benefit from 92(3)(a) status. 
8. This extension will not be applicable to products covered by Protocol 2 of the 
Europe Agreement, which will be the object of a separate examination and procedure. 
9. The Commission therefore requests the Council to adopt the attached proposal for a 
Council Decision. 
2 
Proposal for a Council Decision 
on the position to be taken by the Community within the Association Council 
established by the Europe Agreement signed on 16 December 1991 between the 
European Communities and their Member States, of the one part, and the Republic of 
Hungary, of the other part, with regard to the extension for a further five years period 
in accordance with the provisions of Article 62 § 4(a) of the Europe Agreement 
The Council of the European Union, 
Having regard to the Treaty establishing the European Community, and in particular Article 
113 in conjunction with the first sentence of Article 228(2) thereof, 
Having regard to the proposal of the Commission of the European Communities, 
Whereas the European Community and its Member States concluded the Europe Agreement 
with the Republic of Hungary on 13 December 1993 ; 
Whereas Article 62(4)(a) of the Europe Agreement lays down that the Association Council 
shall, taking into account the economic situation of Hungary, decide whether the period 
whithin which any public aid granted by Hungary shall be assessed taking into account the 
fact that Hungary shall be regarded as an area identical to those areas of the Community 
described in Article 92(3)(a) of the Treaty establishing the European Economic Community 
should be extended for a further period of five years; 
HAS DECIDED AS FOLLOWS: 
The position to be taken by the Community within the Association Council established by the 
Europe Agreement signed on 16 December 1991 between the European Communities and 
their Member States, of the one part, and the Republic of Hungary, of the other part, with 
regard to the extension for a further period of five years in accordance with Article 62 § 
4(a) shall be based on the draft decision of the Association Council annexed to this Decision. 
Done at Brussels on 
For the Council 
7 
Association between the European Union 
and the Republic of Hungary 
The Association Council 
Draft decision n° .J... of the Association Council between the European Communities and their 
Member States, of the one part, and the Republic of Hungary, of the other part, of .../..., 
adopting the extension for five years of the period whithin which any public aid granted by 
Hungary shall be assessed taking into account the fact that Hungary shall be regarded as an 
area identical to those areas of the Community described in Article 92(3)(a) of the Treaty 
establishing the European Economic Community 
The Association Council, 
Having regard to the Europe Agreement establishing an association between the European 
Communities and the Member States of the one part, and the Republic of Hungary of the other part, 
and in particular Article 62(4)(a) thereof, 
Whereas Article 62(4)(a) of the Europe Agreement lays down that the Association Council shall, 
taking into account the economic situation of Hungary, decide whether the period whithin which any 
public aid granted by Hungary shall be assessed taking into account the fact that Hungary shall be 
regarded as an area identical to those areas of the Community described in Article 92(3)(a) of the 
Treaty establishing the European Economic Community should be extended for a further period of 
five years, 
HAS DECIDED AS FOLLOWS: 
Article 1 
The period within which any public aid granted by Hungary shall be assessed taking into account the 
fact that Hungary shall be regarded as an area identical to those areas of the Community described in 
Article 92(3)(a) of the Treaty establishing the European Economic Community is extended for a 
further period of five years 
Article I 
Within two years from the date the extended period of five years enters into force and thereafter 
annually until the end of the five-year period, Hungary will provide the European Commission with 
the necessary data to assess, according to the method used by the Commission, whether Hungary 
continues to fulfill the conditions to be regarded as an area identical to those areas of the 
Community described in Article 92(3)(a) of the Treaty establishing the European Economic 
Community. 
Done at Brussels on 
The Secretaries For the Association Council 
The President 
r 

ISSN 0254-1475 
COM(97) 292 final 
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