Proposal for a COUNCIL DECISION on the conclusion of an additional Protocol to the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part, on Conformity Assessment and Acceptance of Industrial Products - PECA -

(presented by the Commission)

EXPLANATORY MEMORANDUM

I. Explanatory Memorandum

On the basis of negotiating directives adopted by the Council on 21.9.1992 and of the specific decision issued by the Council in June 1997 addressing guidelines to the Commission for the negotiation of European Conformity Assessment Agreements with Central and Eastern European Countries, the Commission has negotiated and initialled an additional protocol to the Europe Agreement with Latvia (Protocol to the Europe Agreement on Conformity assessment and Acceptance of industrial products, hereinafter referred to as "PECA").

The text of this Protocol is attached to this Communication. The following provides an assessment of the Protocol in the light of the negotiating directives approved by the Council, and proposes that the Council authorises the signature of the additional Protocol to the Europe Agreement and decides to approve its conclusion on behalf of the Community. This assessment and these proposals are similar to the relevant documents for the PECAs concluded by the Council with Hungary and the Czech Republic.

I.1 Assessment of the Agreement

Considering that this agreement is intended to work only during the pre-accession period, and that an appropriate legal framework was offered by the Europe Agreement, it was decided, in consultation with the 133 Committee, to adopt this agreement as a Protocol to the Europe Agreement rather than an stand alone agreement as foreseen previously.

The draft PECA follows the general principles laid down in the Commission's communication on Community External Trade Policy in the field of standards and conformity assessment [1] under its paragraph 49. The PECA is a transitional arrangement, and thus will terminate with the candidate country accession.

[1] COM (96) 564 - final. 13.11.1996

The PECA provides for an extension of certain benefits of the Internal Market in sectors already aligned. The PECA thus facilitates market access by eliminating technical barriers to trade with respect to industrial products. To this end, the PECA provides for two mechanisms, a) for the mutual acceptance of industrial products which fulfil the requirements to be lawfully placed on the market in one of the Parties, and b) the mutual recognition of the results of conformity assessment of industrial products subject to Community law and to the equivalent national law.

The first mechanism, i.e. the mutual acceptance of industrial products, confirms that Articles 9.4 and 10.4 of the Europe Agreement with Latvia apply without other restriction as referred to in Article 35 of the Europe Agreement. This provision adds the predictability that is necessary to manufacturers and exporters, confirming in advance that industrial products under this mechanism may freely move between the Parties. The annexes making this mechanism operational have still to be negotiated.

The second mechanism is a particular type of mutual recognition agreement (MRA) in which the mutual recognition operates on the basis of the acquis communautaire. It allows industrial products certified by Notified Bodies in the European Union to be placed on the Latvian market without having to undergo any further approval procedures, and vice-versa. The following sectors are covered: electrical safety, electromagnetic compatibility, toys and construction products.

The draft with Latvia is fully in line with the PECAs concluded on 4th April 2001 by the Council with Hungary and the Czech Republic [2]. Latvia has taken over the Community technical legislation in the sectors covered by the Protocol and participates in the European organisations in the field of standards, metrology, testing laboratories and accreditation.

[2] Council Decision 2001/365/EC of 4 April 2001 on the conclusion of a PECA with the Czech Republic (OJ L 135, 17.05.2001, p.1) Council Decision 2001/366/EC of 4 April 2001 on the conclusion of a PECA with Hungary (OJ L 135, 17.05.2001, p.35)

The PECA consists of a framework agreement and a series of annexes as referred to above. A unilateral Community declaration inviting the Latvian representatives to experts meetings and committees established under the Community law referred to in the annexes is attached to the Final Act, making it clear that this will not entail any participation in the Community decision-making process. An assessment of the PECA is made in the next paragraphs.

I.1.1 Framework Agreement

An article-by-article assessment follows:

Pre-amble. This sets out the basic objective of the PECA which is that, as the application for membership of the European Union implies the implementation of the acquis communautaire by the applicant country, it provides the opportunity to extend certain benefits of the Single Market in certain sectors already aligned before.

Article 1: Purpose. This article establishes the purpose of the PECA, namely the elimination of technical barriers to trade in respect to industrial products. The PECA provides for two mechanisms, a) for the mutual acceptance of industrial products which fulfil the requirements to be lawfully placed on the market in one of the Parties, and b) the mutual recognition of the results of conformity assessment of industrial products subject to Community law and to the equivalent national law.

Article 2: Definitions. This is self-explanatory. Definitions of industrial products, Community and national law have been included. All pieces of legislation and implementation measures (administrative provisions, guidelines and other means of /implementation of the legislation) are covered by the definitions of Community and national law.

Article 3: Alignment of legislation. This contains a commitment for Latvia to take appropriate measures in order to maintain or complete the take-over of Community law, namely in the field of technical legislation and for the purpose of the PECA. Together with the 4th whereas, it means that the alignment is an ongoing process and the Parties agree to iron out any problems of transposition that could appear later.

Article 4: Mutual acceptance of industrial products. The principle under Article 1.1) is detailed in this article. It provides that listing industrial products in such annexes will confirm that these products can freely circulate between the Parties. As already stated, no such annex has been negotiated yet.

Article 5: Mutual recognition of the results of conformity assessment procedures. This provision expands the principle under Article 1.2). This kind of recognition is similar to the one in Mutual Recognition Agreements, with the special feature that all legislation and standards are aligned. The sectoral annexes will contain the references to the relevant Community and national legislation.

Article 6: Safeguard clause. This sets up the right of each Party to deny market access when such Party is able to demonstrate that a product might endanger the legitimate concern which is protected by legislation listed in the annexes (safety and/or public health of users or other persons mainly). The annexes provide for the detailed procedures to be used in such cases.

Article 7: Extension of coverage. The Parties may modify the scope and coverage of this Protocol through an amendment of the annexes or by the addition of new annexes as soon as all alignment conditions are met.

Article 8: Origin. The provisions of this Protocol shall apply to industrial products irrespective of their origin.

Article 9: Obligations of Parties as regards their authorities and bodies. This article obliges the Parties to ensure that their respective authorities continuously monitor the technical competence and compliance of the notified bodies and have the necessary power and expertise for designating, suspending, and withdrawing their bodies. In addition, it obliges the Parties to ensure that their respective notified bodies continuously comply with the requirements of Community or national law and maintain their technical competence to carry out the tasks for which they have been notified.

Article 10: Notified bodies. This describes the procedure for the notification of bodies to assess conformity in relation to the legal requirements specified in the corresponding annexes. The procedure is simplified and similar to the one applied within the Community. The second paragraph sets out the procedure for the removal of notified bodies.

Article 11: Verification of notified bodies. This article gives the right to one Party to request a verification of a body notified by the other Party. The verification may be done either by the authorities which have designated the body or together by the authorities of both Parties. If the Parties do not agree on appropriate steps to take, they may notify the Chair of the Association Council of their dissent, and leave to the Association Council to decide on appropriate action. The notified body would then be suspended from the notification of the Association Council until a final decision is taken.

Article 12: Exchange of information. A transparency provision to ensure a correct and uniform application and interpretation of the Protocol. The Parties are advised to encourage their bodies to co-operate in order to establish mutual recognition agreements in the voluntary sphere.

Article 13: Confidentiality. A classical provision to avoid disclosing information acquired under this Protocol.

Article 14: Management of the Protocol. The Association Council will be responsible for its effective functioning and may delegate its duties in conformity with the relevant Articles of the Europe Agreement.

Article 15: Technical co-operation and assistance. This confirms the Community policy on technical co-operation and assistance with a view to properly implementing this Protocol.

Article 16: Agreements with other countries. This confirms that, unless otherwise agreed, the PECA does not entail any obligation, for one Party, to accept conformity assessments carried out in another country, even if there is an agreement on recognition of conformity assessment between the other Party and any other third country.

Article 17: Entry into force. This is a standard provision that provides the arrangement for the entry into force.

Article 18: Status of the Protocol. This establishes the fact that the PECA is an integral part of the Europe Agreement.

I.1.2 The Annexes to the Protocol

I.1.2.1 Annexes on Mutual Recognition of Results of Conformity Assessment

There follows an assessment of the content of the annexes in terms of their coverage, and other implications where relevant. In making this assessment, the Commission has kept in mind the following elements:

a) the overall consistency with the Community policy objectives in the field of standardisation, certification and conformity assessment for the sectors and industrial products covered;

b) the overall consistency with Community policy objectives in the field of the removal of technical barriers to trade;

The sectoral assessment is followed in item I.2 by an overall appreciation of the benefits of the Protocol.

Annexes on Electrical Safety, Electromagnetic Compatibility, Toys and Construction products.

These annexes on mutual recognition of results of conformity assessment cover a range of industrial products subject to third party conformity assessment under the New Approach Directives in the relevant sectors All these annexes present the same structure.

Coverage is determined by the relevant Community or national law, listed under Section I of each annex. Section II, on notifying authorities, lists the authorities responsible for the designation of bodies in the Member Sates and Latvia. Section III, on notified bodies, makes reference to the notification of all Conformity Assessment Bodies notified by the Member States and by Latvia. Section IV, on specific arrangements, fixes the two procedures for the safeguard clause, relating to industrial products and to harmonised standards.

For Toys, two specific provisions are included in Section IV. According to the first, the notifying authorities may obtain on request a copy of the certificate, and, on reasoned request, a copy of the technical file and reports on the examination and tests carried out. The second one concerns the notification by Latvian bodies to its Ministry of Economy when refusing to issue an EC-type examination certificate and the subsequent notification to the European Commission.

The annex on construction products shall only apply on products covered by harmonised standards and corresponding Latvian national standards.

I.1.2.2 Annexes on Mutual Acceptance of Industrial Products

No such annexes have been negotiated for the moment. The PECA, in line with the Europe Agreement, provides nevertheless the basis for such acceptance of products, similar to the one which operates in the Community.

I.1.2.3 Unilateral Declaration

This is attached to the Final Act and is annexed to this Communication.

a) Unilateral Community Declaration relating to attendance of the Latvian representatives to Committees. Through this declaration, Latvia is invited to send observers to the meetings of the Committees established or referred to under the Community legislation included in the annexes. This declaration follows the principles of the Commission Communication on "Participation of candidate countries in Community programmes, agencies and committees" [3].

[3] Point 4.2.b. COM (99)710 - final 20.12.1999.

I.1.3 Relations with EFTA /EEA Member Countries

In accordance with the general information and consultation procedures set out in the European Economic Area-Agreement and Protocol 12 of that Agreement, the Commission kept EFTA/EEA Member Countries regularly informed on the progress of the negotiations and informed them on the final result thereof. The EFTA/EEA Member Countries are in the initial stage of negotiating a parallel mutual recognition agreement with Latvia.

I.2 Overall Appreciation

The Commission considers that the proposed PECA creates an acceptable balance of benefits for all parties in the pre-accession framework. In all sectors the Community has secured effective market access - in terms of access to all mandatory procedures of the other party. The PECA confirms that Latvia has taken over the Community legislation in certain sectors before its accession. Both political and commercial benefits are achieved with the PECA.

The Protocol will allow Community exporters, if they so choose, to test and certify their industrial products to the same (aligned) requirements prior to export, and then access that market without any further conformity assessment requirements. The certification procedures will only need to be carried out one time for both markets and against the same aligned requirements or standards. The recognition of certification will permit savings and stimulate exports. European industry federations were consulted and supported unequivocally the Protocol.

Industrial groups, while supporting the Protocol, have not always been able to quantify the costs or time taken to obtain conformity assessment of their industrial products in Latvia. The precise extent of savings in time, cost and market opportunity of this Protocol is therefore not feasible in every case to determine. This may only be possible once the Protocol has been in operation for some time. However, on the basis of a rough calculation, it is estimated [4] that this Protocol would create cost saving opportunities for the exporting industry of around EUR2.5 millions and about EUR360,000 in terms of cost savings to exporters to the EC, some of which will be passed on to European importers and consumers.

[4] Working hypothesis that certification and other related costs amount to an average of 1.5 % of trade

Trade figures between the EC and Latvia are attached for information. In 2000, the general trade balance in sectors covered by this Protocol shows a trade surplus for EU of around EUR140 million (factor of 6.9:1 varying from 3.5:1 in the toys sector to 7.3:1 in the electrical sector). However, the trade surplus is for Latvia in the construction products sector ( at this stage, Portland cement). It is expected that trade will increase further when the PECA is in force.

In fact, most benefits are clearly not quantifiable, such as reduced time for accessing markets, better predictability, less protectionism, and harmonisation of systems. What can be ascertained is that any agreement provides reciprocal levels of market access, in terms of conformity assessment.

These advantages outweigh greatly the resources that the Commission will have to engage in maintenance activities of the Protocol, evaluated at 0.8 person per year and some travel and other expenses relating to meetings and other activities such as editing guides.

In terms of the benefits to Latvia, the PECA will facilitate access to the Community market and will give political credit for having aligned its legislation. Latvia regards the PECA as a means to develop closer industrial relations with the EU and fully to integrate certain sectors with the Single Market before accession.

II. The Draft Council Decisions

A proposal for two Council decisions is attached. Both are similar to the Commission proposals for the previous Council decisions on the signature on behalf of the Community and conclusion of the PECAs with Hungary and the Czech Republic [5]

[5] For the Czech Republic, Council decision 2001/365/EC of 4 April 2001 (OJ L 135, 17.05.2002, p.1). For Hungary, Council decision 2001/366/EC of 4 April 2001 (OJ L 135, 17.05.2002, p.35)

The first one is concerned with the signature of the Protocol. Signature is required by Latvia for the adoption of this Protocol. It is accordingly proposed that the President of the Council be authorised to designate the person empowered to sign the Protocol on behalf of the Community, subject to conclusion later, on the basis of Articles 133 and 300 of the Treaty.

The proposal for a second decision is concerned with the adoption of the PECA. In this context, the Council should, in line with the previous Council decisions on the conclusion of PECAs and mutual recognition agreements, establish the appropriate Community procedure for the implementation and management of the Protocol.

In particular, the Council should confer on the Commission, in consultation with the special committee appointed by the Council, the necessary powers for the management and implementation of the Protocol. Moreover, the Council should delegate to the Commission, acting in consultation with the special committee, the necessary powers to determine in certain cases the Community position with regard to this Protocol in the Association Council, or where applicable the Association Committee.

In all other cases the Community position with respect to the Protocol shall be determined by the Council, acting by qualified majority, on a proposal from the Commission.

The Commission therefore proposes that the Council adopts the attached decisions on the signature and conclusion of the PECA.

EU-Latvia Trade - Annex to the Explanatory Memorandum to the Council

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2002/0058 (ACC)

Proposal for a COUNCIL DECISION on the conclusion of an additional Protocol to the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part, on Conformity Assessment and Acceptance of Industrial Products - PECA -

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof, in conjunction with the first sentence of the first subparagraph of Article 300(2), the first sentence of the first subparagraph of Article 300(3) and Article 300(4) thereof,

Having regard to the proposal from the Commission [6],

[6] OJ C , , p. .

Whereas:

(1) The Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Latvia of the other part, [7] entered into force on 1 February 1998.

[7] OJ L 26, 02.02.1998, p. 3.

(2) Article 76(2) of the Europe Agreement provides that cooperation in the fields of standardisation and conformity assessment shall seek to achieve the conclusion of agreements on mutual recognition.

(3) Article 114(2) of the Europe Agreement provides that the Association Council may delegate to the Association Committee any of its powers.

(4) Article 2 of Decision 98/98/EC, ECSC, Euratom of the Council and the Commission of 19 December 1997 on the conclusion of the Europe Agreement between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part, [8] provides for the Community decision-making procedures and for the presentation of the Community position in the Association Council and in the Association Committee.

[8] OJ L 26, 02.02.1998, p. 1.

(5) Article 14 of Decision No 1/98 of the Association Council between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part of 23 February 1998 on its rules of procedure [9] provides that the Association Committee may set up further subcommittees or groups to assist in carrying out its duties.

[9] OJ L 73, 12.03.1998, p. 31.

(6) The draft Protocol to the Europe Agreement on Conformity Assessment and Acceptance of Industrial Products, has been signed in Brussels on [... 2000], on behalf of the Community, and should be approved.

(7) Certain tasks for implementation have been conferred to the Association Council and in particular the power to amend the Annexes to the Protocol.

(8) The appropriate internal procedures should be established to ensure the proper functioning of the Protocol.

(9) It is necessary to empower the Commission to make certain technical amendments to this Protocol and to take certain decisions for its implementation,

HAS DECIDED AS FOLLOWS:

Article 1

The Protocol to the Europe Agreement with the Republic of Latvia on Conformity Assessment and Acceptance of Industrial Products (hereinafter referred to as "the Protocol"), as well as the declaration annexed to the Final Act thereto, are hereby approved on behalf of the European Community.

The text of the Protocol, and of the declaration annexed to the Final Act thereto, is attached to this Decision.

Article 2

The President of the Council shall, on behalf of the Community, transmit the diplomatic note provided for in Article 17 of the Protocol [10].

[10] The date of entry into force of the Protocol will be published in the Official Journal of the European Communities by the General Secretariat of the Council.

Article 3

1. The Commission, after consultation with the special committee appointed by the Council, shall:

(a) carry into effect the notifications, acknowledgements, suspensions and withdrawals of bodies, and appointments of joint team or teams of experts, in accordance with Articles 10, 11 and 14, indent c) of the Protocol;

(b) bring about the consultations, exchange of information, the requests for verifications and for participation in verifications, in accordance with Articles 3, 12 and 14, indents d) and e), and Sections III and IV of the Annexes to the Protocol concerning electrical safety, electromagnetic compatibility, toys and construction products;

(c) if necessary, reply to requests in accordance with Article 11, Sections III and IV of the Annexes to the Protocol concerning electrical safety, electromagnetic compatibility, toys and construction products.

2. Following consultation of the special committee referred to in paragraph 1 of this Article, the Commission shall determine the position to be taken by the Community in the Association Council and, where applicable, in the Association Committee, with regard to:

(a) amendments to the Annexes in accordance with Article 14, point (a) of the Protocol;

(b) addition of new Annexes in accordance with Article 14, point (b) of the Protocol;

(c) any decisions regarding disagreements on the results of the verifications and the suspensions, in part or totally, of any notified body in accordance with the second and third subparagraphs of Article 11 of the Protocol;

(d) any measures taken in the application of the safeguard clauses in Section IV of the Annexes of the Protocol concerning electrical safety, electromagnetic compatibility, toys and construction products;

(e) any measures concerning the verification, suspension, or withdrawal of industrial products as having mutual acceptance under Article 4 of the Protocol.

3. In all other cases the position to be taken by the Community in the Association Council and, where applicable, in the Association Committee, with regard to this Protocol shall be determined by the Council, acting by qualified majority on a proposal from the Commission.

Done at Brussels,

For the Council

The President

ANNEX

Protocol to the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part on Conformity Assessment and Acceptance of Industrial Products

-PECA-

The European Community and the Republic of Latvia hereinafter referred to as "the Parties",

Whereas the Republic of Latvia has applied for membership of the European Union and such membership implies the effective implementation of the acquis of the European Community,

Recognising that the progressive adoption and implementation of Community law by the Republic of Latvia provides the opportunity to extend certain benefits of the Internal Market and to ensure its effective operation in certain sectors before accession,

Considering that, in the sectors covered by this Protocol, the Latvian national law substantially takes over the Community law,

Considering their shared commitment to the principles of free movement of goods and to promoting product quality, so as to ensure the health and safety of their citizens and the protection of the environment, including through technical assistance and other forms of co-operation between them,

Desiring to conclude a Protocol to the Europe Agreement on Conformity Assessment and Acceptance of industrial products (hereafter the Protocol) providing for the application of the mutual acceptance of industrial products which fulfil the requirements to be lawfully placed on the market in one of the Parties and of the mutual recognition of the results of conformity assessment of industrial products which are subject to Community or national law, noting that Article 76 of the Europe Agreement provides, where appropriate, for the conclusion of an agreement on mutual recognition,

Noting the close relationship between the European Community and Iceland, Liechtenstein and Norway through the Agreement on the European Economic Area, which makes it appropriate to consider the conclusion of a parallel European Conformity Assessment Agreement between the Republic of Latvia and these countries equivalent to this Protocol,

Bearing in mind their status as Contracting Parties to the Agreement establishing the World Trade Organisation, and conscious in particular of their obligations under the World Trade Organisation Agreement on Technical Barriers to Trade,

Have agreed as follows:

Article 1

Purpose

The purpose of this Protocol is to facilitate the elimination by the Parties of technical barriers to trade in respect of industrial products. The means to this end is the progressive adoption and implementation by the Republic of Latvia of national law, which is equivalent to Community law.

This Protocol provides for:

1) the mutual acceptance of industrial products, listed in the annexes on "mutual acceptance of industrial products", which fulfil the requirements to be lawfully placed on the market in one of the Parties;

2) the mutual recognition of the results of conformity assessment of industrial products subject to Community law and to the equivalent Latvian national law, both listed in the annexes on "mutual recognition of results of conformity assessment".

Article 2

Definitions

For the purpose of this Protocol,

"Industrial products" means products, as specified in Article 9 and in Protocol 2 of the Europe Agreement.

"Community law" means any legal act and implementing practice of the European Community applicable to a particular situation, risk or category of industrial products, as interpreted by the Court of Justice of the European Communities.

"National law" means any legal act and implementing practice by which the Republic of Latvia takes over the Community law applicable to a particular situation, risk or category of industrial products.

The terms used in this Protocol shall have the meaning given in Community law and the Latvian national law.

Article 3

Alignment of legislation

For the purpose of this Protocol, the Republic of Latvia agrees to take appropriate measures, in consultation with the European Commission, to maintain or complete the take-over of Community law, in particular in the fields of standardisation, metrology, accreditation, conformity assessment, market surveillance, general safety of products, and producer's liability.

Article 4

Mutual Acceptance of industrial products

The Parties agree that, for the purpose of mutual acceptance, industrial products listed in the annexes on "mutual acceptance of industrial products", which fulfil the requirements to be lawfully placed on the market of a Party, may be placed on the market of the other Party, without further restriction. This shall be without prejudice to Article 35 of the Europe Agreement.

Article 5

Mutual Recognition of the results of conformity assessment procedures

The Parties agree to recognize the results of conformity assessment procedures carried out in accordance with the Community or national law listed in the annexes on "mutual recognition of the results of conformity assessment". The Parties shall not require procedures to be repeated, nor shall they impose additional requirements, for the purposes of accepting that conformity.

Article 6

Safeguard clause

Where a Party finds that an industrial product placed on its territory by virtue of the present Protocol, and used in accordance with its intended use, may compromise the safety or health of users or other persons, or any other legitimate concern protected by legislation identified in the annexes, it may take appropriate measures to withdraw such a product from the market, to prohibit its placing on the market, putting into service or use, or to restrict its free movement. The annexes shall provide for the procedure to be applied in such cases.

Article 7

Extension of Coverage

As the Republic of Latvia adopts and implements further national law taking over Community law, the Parties may amend the annexes or conclude new ones, in accordance with the procedure laid down in Article 14.

Article 8

Origin

The provisions of this Protocol shall apply to industrial products irrespective of their origin.

Article 9

Obligation of Parties as regards their authorities and bodies

The Parties shall ensure that authorities under their jurisdiction which are responsible for the effective implementation of Community and national law shall continuously apply it. Further, they shall ensure that these authorities are able, where appropriate, to notify, suspend, remove suspension and withdraw notification of bodies, to ensure the conformity of industrial products with Community or national law or to require their withdrawal from the market.

The Parties shall ensure that bodies, notified under their respective jurisdiction to assess conformity in relation to requirements of Community or national law specified in the annexes, continuously comply with the requirements of Community or national law. Further, they shall take all necessary steps to ensure that these bodies maintain the necessary competence to carry out the tasks for which they are notified.

Article 10

Notified bodies

Initially, the bodies notified for the purpose of this Protocol will be those included in the lists which the Republic of Latvia and the European Community have exchanged before the completion of the procedures for entry into force

Afterwards, the following procedure shall apply for the notification of bodies to assess conformity in relation to the requirements of Community or national law specified in the annexes:

a) a Party shall forward its notification to the other Party in writing;

b) on the acknowledgement of the other Party, given in writing, the body will be considered as notified and as competent to assess conformity in relation to the requirements specified in the annexes from that date.

If a Party decides to withdraw a notified body under its jurisdiction, it shall inform the other Party in writing. The body will cease to assess conformity in relation to the requirements specified in the annexes from the date of its withdrawal at the latest. Nevertheless, conformity assessment carried out before that date shall remain valid, unless otherwise decided by the Association Council.

Article 11

Verification of notified bodies

Each Party may request the other Party to verify the technical competence and compliance of a notified body under its jurisdiction. Such request will be justified in order to allow the Party responsible for the notification to carry out the requested verification and report speedily to the other Party. The Parties may also jointly examine the body, with the participation of the relevant authorities. To this end, the Parties shall ensure the full co-operation of bodies under their jurisdiction. The Parties shall take all appropriate steps, and use whatever available means may be necessary, with a view to resolving any problems which are detected.

If the problems cannot be resolved to the satisfaction of both Parties, they may notify the chairman of the Association Council of their dissent, giving their reasons. The Association Council may decide on appropriate action.

Unless and until decided otherwise by the Association Council, the notification of the body and the recognition of its competence to assess conformity in relation to the requirements of Community or national law specified in the annexes shall be suspended in part or totally from the date on which the disagreement of the Parties has been notified to the chairman of the Association Council.

Article 12

Exchange of information and Co-operation

In order to ensure a correct and uniform application and interpretation of this Protocol, the Parties, their authorities and their notified bodies shall:

a) exchange all relevant information concerning implementation of law and practice including, in particular, on procedure to ensure compliance of notified bodies;

b) take part, as appropriate, in the relevant mechanisms of information, co-ordination and other related activities of the Parties.

c) encourage their bodies to co-operate with a view to establishing mutual recognition arrangements in the voluntary sphere.

Article 13

Confidentiality

Representatives, experts and other agents of the Parties shall be required, even after their duties have ceased, not to disclose information acquired under this Protocol which is of the kind covered by the obligation of professional secrecy. This information may not be used for purposes other than those envisaged by this Protocol.

Article 14

Management of the Protocol

Responsibility for the effective functioning of this Protocol shall be held by the Association Council in conformity with Article 110 of the Europe Agreement. In particular, it shall have the power to take decisions regarding:

a) amending the annexes;

b) adding new annexes;

c) appointing a joint team or teams of experts to verify the technical competence of a notified body and its compliance with the requirements;

d) exchanging information on proposed and actual modifications of the Community and national law referred to in the annexes;

e) considering new or additional conformity assessment procedures affecting a sector covered by an annex;

f) resolving any questions relating to the application of this Protocol.

The Association Council may delegate the above responsibilities set out under this Protocol, in conformity with Articles 114(2) of the Europe Agreement.

Article 15

Technical co-operation and assistance

The European Community may provide technical co-operation and assistance to the Republic of Latvia where necessary in order to support the effective implementation and application of this Protocol.

Article 16

Agreements with other Countries

Agreements on conformity assessment concluded by either Party with a country which is not a Party to this Protocol shall not entail an obligation upon the other Party to accept the results of conformity assessment procedures carried out in that third country, unless there is an explicit agreement between the Parties in the Association Council.

Article 17

Entry into force

This Protocol shall enter into force on the first day of the second month following the date on which the Parties have exchanged diplomatic notes confirming the completion of their respective procedures for entry into force of the Protocol.

Article 18

Status of the Protocol

This Protocol constitutes an integral part of the Europe Agreement.

This Protocol is drawn up in two originals in Latvian, Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish and Swedish languages, each text being equally authentic.

Done at ...

**********

ANNEXES ON MUTUAL RECOGNITION

OF RESULTS OF CONFORMITY ASSESSMENT

Table of contents

1. Electrical Safety

2. Electromagnetic Compatibility

3. Toys

4. Construction Products

Annex on Mutual Recognition of results of Conformity Assessment:

Electrical Safety

SECTION I

Community and national law

>TABLE POSITION>

SECTION II

NOTIFYING AUTHORITIES

European Community:

>TABLE POSITION>

SECTION III

NOTIFIED BODIES

European Community:

Bodies which have been notified by the Member States of the Community in accordance with the Community law of Section I and notified to Latvia in accordance with Article 10 of this Protocol.

Latvia:

Bodies which have been authorised by Latvia in accordance with the Latvian national law of Section I and notified to the Community in accordance with Article 10 of this Protocol.

SECTION IV

SPECIFIC ARRANGEMENTS

Safeguard Clauses

A. Safeguard clause relating to industrial products

1. Where a Party has taken a measure to deny free access to its market for industrial products bearing the CE marking, subject to this Annex, it shall immediately inform the other Party, indicating the reasons for its decision and how non compliance has been assessed.

2. The Parties shall consider the matter and the evidence brought to their knowledge, and shall report to each other the results of their investigations.

3. In case of agreement, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

4. In case of disagreement on the outcome of such investigations the matter shall be forwarded to the Association Council who may decide to have an expertise carried out.

5. Where the Association Council finds that the measure is:

(a) unjustified, the national authority of the Party who has taken the measure shall withdraw it;

(b) justified, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

B. Safeguard clause relating to harmonised standards

1. Where the Republic of Latvia considers that a harmonised standard referred to in the legislation defined in this Annex, does not meet the essential requirements of such legislation, it shall inform the Association Council giving the reasons thereof.

2. The Association Council shall consider the matter and may request the Community to proceed in accordance with the procedure provided for in the Community legislation identified in this Annex.

3. The Community shall keep the Association Council and the other Party informed of the proceedings.

4. The outcome of the procedure shall be notified to the other Party.

Annex on Mutual Recognition of results of Conformity Assessment:

Electromagnetic Compatibility

SECTION I

Community and national law

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SECTION II

NOTIFYING AUTHORITIES

European Community:

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SECTION III

NOTIFIED AND COMPETENT BODIES

European Community:

Bodies which have been notified by the Member States of the Community in accordance with the Community law of Section I and notified to Latvia in accordance with Article 10 of this Protocol.

Latvia:

Bodies which have been authorised by Latvia in accordance with the Latvian national law of Section I and notified to the Community in accordance with Article 10 of this Protocol.

SECTION IV

SPECIFIC ARRANGEMENTS

Safeguard Clauses

A. Safeguard clause relating to industrial products

1. Where a Party has taken a measure to deny free access to its market for industrial products bearing the CE marking, subject to this Annex, it shall immediately inform the other Party, indicating the reasons for its decision and how non compliance has been assessed.

2. The Parties shall consider the matter and the evidence brought to their knowledge, and shall report to each other the results of their investigations.

3. In case of agreement, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

4. In case of disagreement on the outcome of such investigations the matter shall be forwarded to the Association Council who may decide to have an expertise carried out.

5. Where the Association Council finds that the measure is:

(a) unjustified, the national authority of the Party who has taken the measure shall withdraw it;

(b) justified, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

B. Safeguard clause relating to harmonised standards

1. Where the Republic of Latvia considers that a harmonised standard referred to in the legislation defined in this Annex, does not meet the essential requirements of such legislation, it shall inform the Association Council giving the reasons thereof.

2. The Association Council shall consider the matter and may request the Community to proceed in accordance with the procedure provided for in the Community legislation identified in this Annex.

3. The Community shall keep the Association Council and the other Party informed of the proceedings.

4. The outcome of the procedure shall be notified to the other Party.

Annex on Mutual Recognition of results of Conformity Assessment:

Toys

SECTION I

Community and National law

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SECTION II

NOTIFYING AUTHORITIES

European Community

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SECTION III

NOTIFIED BODIES

European Community

Bodies which have been notified by the Member States of the Community in accordance with the Community law of Section I and notified to the Latvia in accordance with Article 10 of this Protocol.

Latvia:

Bodies which have been authorised by Latvia in accordance with the Latvian national law of Section I and notified to the Community in accordance with Article 10 of this Protocol.

SECTION IV

SPECIFIC ARRANGEMENTS

1. Information concerning the certificate and the technical file

In accordance with Article 10(4) of Directive 88/378/EEC, the authorities listed in section II may obtain on request a copy of the certificate and, on reasoned request, a copy of the technical file and the reports on the examinations and tests carried out.

2. Notification of grounds for refusal by approved bodies

In accordance with Article 10(5) of Directive 88/378/EEC, the Latvian bodies shall inform the Ministry of Economy when refusing to issue an EC type- examination certificate. The Ministry of Economy shall likewise notify the Commission of the European Communities thereof.

3. Safeguard Clauses

A. Safeguard clause relating to products

1. Where a Party has taken a measure to deny free access to its market for products bearing the CE marking, subject to this Annex, it shall immediately inform the other Party, indicating the reasons for its decision and how non compliance has been assessed.

2. The Parties shall consider the matter and the evidence brought to their knowledge, and shall report to each other the results of their investigations.

3. In case of agreement, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

4. In case of disagreement on the outcome of such investigations the matter shall be forwarded to the Association Council who may decide to have an expertise carried out.

5. Where the Association Council finds that the measure is:

(a) unjustified, the national authority of the Party who has taken the measure shall withdraw it;

(b) justified, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

B. Safeguard clause relating to harmonised standards

1. Where the Republic of Latvia considers that a harmonised standard referred to in the legislation defined in the present annex, does not meet the essential requirements of such legislation, it shall inform the Association Council giving the reasons thereof.

2. The Association Council shall consider the matter and may request the Community to proceed in accordance with the procedure provided for in the Community legislation identified in this Annex.

3. The Community shall keep the Association Council and the other Party informed of the proceedings.

4. The outcome of the procedure shall be notified to the other Party.

Annex on Mutual Recognition of results of Conformity Assessment:

Construction products:

SECTION I

Community and National law

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SECTION II

NOTIFYING AUTHORITIES

European Community

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SECTION III

NOTIFIED BODIES

European Community

Bodies which have been notified by the Member States of the Community in accordance with the Community law of Section I and notified to the Latvia in accordance with Article 10 of this Protocol.

Latvia:

Bodies which have been authorised by Latvia in accordance with the Latvian national law of Section I and notified to the Community in accordance with Article 10 of this Protocol.

SECTION IV

SPECIFIC ARRANGEMENTS

1. Scope and coverage

The provisions of this Annex shall only apply construction products covered by harmonised standards and corresponding Latvian national standards.

2. Safeguard Clauses

A. Safeguard clause relating to products

1. Where a Party has taken a measure to deny free access to its market for products bearing the CE marking, subject to this Annex, it shall immediately inform the other Party, indicating the reasons for its decision and how non compliance has been assessed.

2. The Parties shall consider the matter and the evidence brought to their knowledge, and shall report to each other the results of their investigations.

3. In case of agreement, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

4. In case of disagreement on the outcome of such investigations the matter shall be forwarded to the Association Council who may decide to have an expertise carried out.

5. Where the Association Council finds that the measure is:

(a) unjustified, the national authority of the Party who has taken the measure shall withdraw it;

(b) justified, the Parties shall take appropriate measures to ensure that such products are not placed on the market.

B. Safeguard clause relating to harmonised standards

1. Where the Republic of Latvia considers that a harmonised standard referred to in the legislation defined in the present annex, does not meet the essential requirements of such legislation, it shall inform the Association Council giving the reasons thereof.

2. The Association Council shall consider the matter and may request the Community to proceed in accordance with the procedure provided for in the Community legislation identified in this Annex.

3. The Community shall keep the Association Council and the other Party informed of the proceedings.

4. The outcome of the procedure shall be notified to the other Party.

DECLARATION BY THE COMMUNITY ON THE ATTENDANCE

OF LATVIAN REPRESENTATIVES AT COMMITTEE MEETINGS

In order to ensure a better understanding of the practical aspects of the application of the acquis communautaire, the Community declares that the Republic of Latvia is invited, under the following conditions, to the meetings of the committees established or referred to under the Community law on electromagnetic compatibility, electrical safety and construction products.

This participation shall be limited to meetings or parts thereof during which the application of the acquis is discussed; it shall not entail attendance at meetings intended to prepare and issue opinions on implementation or management powers delegated to the Commission by the Council.

This invitation may be extended, on a case-by-case basis, to groups of experts convened by the Commission.

LEGISLATIVE FINANCIAL STATEMENT

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1. BUDGET LINE(S) + HEADING(S):

B7-8500

A-7010

2. OVERALL FIGURES

2.1. Total allocation for action (Part B): EUR72380

2.2. Period of application:

The general action undertaken will be of a definite duration. The PECA has a lifetime limited to the pre-accession period of the Republic of Latvia. The initial period of confidence building will require a more intensive effort but the expenditure should be substantially less after 1 year. However, during the life of the PECA a continued effort will be needed to ensure management and maintenance of confidence.

2.3. Overall multiannual estimate of expenditure:

(a) Schedule of commitment appropriations/payment appropriations (financial intervention) (see point 6.1.1)

EUR

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(b) Technical and administrative assistance and support expenditure(see point 6.1.2)

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(c) Overall financial impact of human resources and other administrative expenditure (see points 7.2 and 7.3)

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2.4. Compatibility with financial programming and financial perspective

Proposal is compatible with existing financial programming.

2.5. Financial impact on revenue:

Proposal does not involve any type of revenue.

3. BUDGET CHARACTERISTICS

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4. LEGAL BASIS

Article 133 of the Treaty establishing the European Community.

Council Decision 98/552/EC of 24 September 1998 on the implementation by the Commission of activities relating to the Community market access strategy (OJ L 265, 30.9.1998, p. 31).

Proposal for a Council decision N°.... on the conclusion by the European Community of an additional Protocol to the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Latvia, of the other part, on Conformity Assessment and Acceptance of Industrial Products (PECA)

5. DESCRIPTION AND GROUNDS

5.1. Need for Community intervention

5.1.1. Objectives pursued

Community trade objectives in the field of standards and conformity assessment can be summarised. First, to reduce technical barriers to trade in external markets and to prevent the emergence of new ones; and second, to encourage our trading partners to adopt standards and regulatory approaches based on, or compatible with international or European practice.

These Community's trade objectives have so far been pursued through a four-fold strategy. One of them is the negotiation of Mutual Recognition Agreements (MRAs). PECAs are mutual recognition agreements in which the mutual recognition operates on the basis of the acquis communautaire. They are trade agreements with the applicant countries, and are an important element of the pre-accession strategy.

The main objective of the PECA is to facilitate trade by means of the elimination of technical barriers in respect of industrial products in certain sectors in which the candidate country has aligned its legislation on the acquis communautaire.

The purpose of this PECA is to establish the mutual acceptance of industrial products which fulfil the requirements to be lawfully placed on the market and the mutual recognition of the results of conformity assessment of industrial products subject to the Community technical regulations and to the equivalent Latvian national legislation.

5.1.2. Measures taken in connection with ex ante evaluation

The Protocols to the Europe Agreement on Conformity Assessment and Acceptance of Industrial products (PECAs) are to be considered in the context of Enlargement policy of the European Union.

The Europe Agreements recognise that a major precondition for the Associated Countries' economic integration into the Community is the integration into the internal market via the approximation of their legislation to the Community

The Article 76 of the Europe Agreement establishing an Association between the European Communities and their Member States, of one part, and the Republic of Latvia, of the other part, promotes the conclusion of agreements on mutual recognition in the field of industrial standards and conformity assessment.

5.1.3. Measures taken following ex post evaluation

The major actions, which will be pursued by the Commission under this budget line, will be the following:

-Confidence-building activities to facilitate the proper implementation of the PECA.

-Management of the PECA and maintenance of the necessary degree of confidence.

-Extension of the PECA to new sectors.

The Commission will be assisted by experts, particularly in regard to sectoral activities. It will however remain the final arbiter in the management of this PECA.

5.2. Action envisaged and budget intervention arrangements

-the target population

The target population are the exporting companies, business associations, chambers of commerce and public institutions of the European Union and the general consumer which will benefit, or have an interest in, the mutual acceptance of industrial products and recognition of results of conformity assessment certification.

The specific objectives of PECAs (Protocols on Conformity Assessment and Acceptance of Industrial Products) are:

-to avoid duplication of certification by economic operators.

-to promote exports, employment, competitivity and investment.

-to reduce costs, in particular for small and medium-sized enterprises and ultimately for the consumer,

-to extend certain benefits of the Internal Market to the Republic of Latvia

-to ensure the effective operation of the Internal Market in certain sectors before accession of the Republic of Latvia.

-the concrete measures to be taken to implement the action are:

A. Attendance at the Association Council, the Association Committee or any special subcommittee or group to which has been delegated the management of the PECA.

This will be attended by Commission officials and some experts from the Member States. Travel and per diem expenses should be foreseen within the normal range of such expenses. The travel expenditure for officials will be covered by the "Mission budget" (A-7010). The reimbursement of travel and related expenses for experts will be made on line B7-8500.

B. Workshops and Seminars

These will be held to familiarise economic and other operators with the requirements of the PECA. The cost of these seminars will vary according to the subject matter and location, and will include travel and organisational costs (when in the EC) and substantial travel costs when in the Republic of Latvia. Organisational costs will cost c. 3000 Euro each. The number of seminars will vary depending on the individual industrial sectors covered by the PECA.

C. Verification actions

The competence of the notified bodies will in some cases have to be checked, more so in the initial period of the PECA, but as a matter of course throughout the life of the PECA to maintain confidence in the system.

This will involve on-site assessment by teams of experts of notified bodies in the partner country in the initial stages, and subsequently investigation of complaints. This expenditure will cover all sectors of the PECA and may involve several notified bodies in each sector.

D. Production and dissemination of information

Certain costs may need to be incurred for the dissemination of information. Guides to regulations and assessment procedures may be needed typically at a cost of 10,000 Euro.

5.3. Methods of implementation

Under Article 133 of the Treaty the Community has exclusive competence for commercial policy and this agreement have been negotiated in accordance with a mandate of the Council of Ministers and in consultation with the 133 Committee. The Commission will be responsible for implementation and management of this Protocol.

The choice of management method (Association Council) has been set out in the PECA and constitute a minimum necessary for the proper functioning of the PECA. The use of seminars in the initial phases will allow ensuring familiarity with other systems.

These seminars and verifications are also designed to build mutual confidence; verifications will also be required to ensure this confidence is maintained throughout the life of the PECA. Confidence and its maintenance are keys to the successful operation of the PECA.

The importance of this budget is justified when put in perspective with the trade involved in this PECA and the yearly savings for EU exporters which are expected (estimated on a yearly basis at EUR 3 million for EU exporters to the Republic of Latvia).

There is no main factors of uncertainty which could affect the specific results of the operation.

6. FINANCIAL IMPACT

6.1. Total financial impact on Part B - (over the entire programming period)

(The method of calculating the total amounts set out in the table below must be explained by the breakdown in Table 6.2. )

6.1.1. Financial intervention

Commitments (in EUR )

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6.2. Calculation of costs by measure envisaged in Part B (over the entire programming period) [11]

[11] For further information, see separate explanatory note.

(Where there is more than one action, give sufficient detail of the specific measures to be taken for each one to allow the volume and costs of the outputs to be estimated.)

Commitments (in EUR )

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If necessary explain the method of calculation (See table annexed)

7. IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

7.1. Impact on human resources

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7.2. Overall financial impact of human resources

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The amounts are total expenditure for twelve months.

7.3. Other administrative expenditure deriving from the action

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The amounts are total expenditure for the period 2002-2006

Specify the type of committee and the group to which it belongs.

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(In the estimate of human and administrative resources required for the action, DGs/Services must take into account the decisions taken by the Commission in its orientation/APS debate and when adopting the preliminary draft budget (PDB). This means that DGs must show that human resources can be covered by the indicative pre-allocation made when the PDB was adopted.

Exceptional cases (i.e. those where the action concerned could not be foreseen when the PDB was being prepared) will have to be referred to the Commission for a decision on whether and how (by means of an amendment of the indicative pre-allocation, an ad hoc redeployment exercise, a supplementary/amending budget or a letter of amendment to the draft budget) implementation of the proposed action can be accommodated.)

8. FOLLOW-UP AND EVALUATION

8.1. Follow-up arrangements

The success of this PECA can be quantified by trade facilitation through avoidance of duplication of testing and certification and costs. It is estimated on a yearly basis at EUR 3 million for EU exporters to the Republic of Latvia.

Success can also be measured by increased EU and Latvian exports and this factor will be taken into consideration although export performance is subject to such a wide range of variables (e.g. changes in exchange rates, general economic trends) that this can never been the sole factor for evaluation. In addition, official trade data are not always available for all types of specific products covered by the sectoral annexes to the PECA.

Success can also be measured increased certificates delivered to companies in accordance with the PECA. This could be put into relation to the number of certificates delivered under the domestic systems before the PECA entered into force.

8.2. Arrangements and schedule for the planned evaluation

Progress in the attainment of the PECA objectives will be monitored by Commission officials, the Association Council and by the economic operators concerned.

The evaluation of the effectiveness and usefulness of the PECA will be regularly monitored by the Commission, by the Association Council at its annual meeting, by the Association Committee at its annual meeting, or by any special subcommittee or group to which the Association Council has delegated the management of the PECA. At least, the first major evaluation will be two years after the entry into force.

9. ANTI-FRAUD MEASURES

Methods of control (submission of reports, etc.) will be included in all contracts or grant agreements between the Commission and beneficiaries.

A close co-operation with the delegations of the Commission and the participation of a representative of the Commission at events in third countries will check on the spot the work to ensure that it corresponds with the terms of reference, contract provisions and required professionalism.

The checks take place before the final payment. The same rule applies to the financial incentives paid to participating companies. Where appropriate, agreements also require organisations to submit financial accounts certified by their auditors.

IMPACT ASSESSMENT FORM

THE IMPACT OF THE PROPOSAL ON BUSINESS with special reference to small and medium-sized enterprises

Title of proposal

Proposal for Council Decisions on the signature and conclusion of an additional Protocol to the Europe Agreement between the European Community and the Republic of Latvia on Conformity Assessment and Acceptance of Industrial Products (PECA).

Reference number

The proposal

These decisions are necessary to conclude the Protocol to the Europe Agreement between the European Community and the Republic of Latvia on Conformity Assessment and Acceptance of Industrial Products. The Commission negotiated the draft Protocol in accordance with the negotiating guidelines for the negotiation of European Conformity Assessment Agreement with the Central Eastern European Countries, adopted by the Council in June 1997.

The impact on business

The business sectors affected are electrical safety, electromagnetic compatibility, toys and construction products.

The PECA provides to extend certain benefits of the Internal Market in industrial sectors already aligned. The PECA permits certification of conformity with technical regulations on product safety, etc, to be conducted in the European Union for exports destined the Republic of Latvia. This avoids the need for further certification by Latvian conformity assessment bodies before putting them on the Latvian market. The certification procedure and the technical regulations are the same as the Community one.

The PECA also envisages acceptance of industrial products that fulfil the requirements to be legally placed on the EU market by the Republic of Latvia without subject further requirement. Annexes under this mechanism have still to be negotiated.

The PECA therefore presents important advantages from the point of view of transparency, market access, avoidance of duplication especially of cost, effective operation in certain sectors before accession and general facilitation of trade. This is of particular importance for small and medium-sized enterprises. The PECA covers a wide range of sectors and therefore affects an extensive range of firms both large and small. The advantages are not limited to specific geographical areas in the Community.

Businesses will have to apply Latvian regulations and procedures. However, these are aligned on the EC ones in sectors covered by the PECA. Furthermore, certification, as stated above, will be conducted by conformity assessment bodies located and already designated by the Member States in the Community, and not in the Republic of Latvia. The PECA will substantially reduce certification costs and improve prospects for exports, employment, investment and competitiveness by Community firms.

The PECA does not contain measures to take account of the specific situation of small and medium-sized firms, but by its nature and by reducing certification costs which are the same for all firms, the agreement will benefit small and medium sized enterprises to a greater extent proportionately than larger firms.

Consultation

The main industry organisations (e.g. EFPIA, Eurobit, Unice and Orgalime) have been consulted and have declared their support for this Protocol.