Proposal for a COUNCIL DECISION ON THE PROVISIONAL APPLICATION OF THE AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS AMENDING THE AGREEMENTS BETWEEN THE EUROPEAN COMMUNITY AND THE PEOPLE'S REPUBLIC OF CHINA ON TRADE IN TEXTILE AND CLOTHING PRODUCTS

(presented by the Commission)

EXPLANATORY MEMORANDUM

1 In accordance with the Council negotiating directives of November 1999, the Commission has negotiated an Agreement in the form of an Exchange of Letters amending the existing Agreements between the European Community and the People's Republic of China on trade in textile and clothing products, being the 1988 MFA Agreement between the European Economic Community and the People's Republic of China as last amended by an agreement by way of an exchange of letters initialled on 20 November 1998 and the Agreement between the European Community and the People's Republic of China initialled on 19 January 1995 on trade in textiles products not covered by the MFA bilateral agreement on trade in textile products. The Agreement in the form of an Exchange of Letters provides for quantitative limits on imports from the People's Republic of China for the year 2000 and is intended to ensure stability of trade to allow the Parties time to negotiate the terms and conditions of future trade. In the event that agreement can be reached subsequently it is intended that such an agreement will supersede the extension in this exchange of letters.

2 The Commission initialled this Agreement on 6 December 1999.

3 The Council is therefore invited to approve on behalf of the Community this proposal for a Council Decision on the provisional application of the Agreement in the form of an Exchange of Letters amending the existing Agreements between the European Community and the People's Republic of China on trade in textile and clothing products pending the formal conclusion of that Agreement on behalf of the Community.

Proposal for a

1999/0271 (ACC)

COUNCIL DECISION

ON THE PROVISIONAL APPLICATION OF THE AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS AMENDING THE AGREEMENTS BETWEEN THE EUROPEAN COMMUNITY AND THE PEOPLE'S REPUBLIC OF CHINA ON TRADE IN TEXTILE AND CLOTHING PRODUCTS

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 as well as Article 300, second paragraph, first sentence thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C ...

(1) Whereas the Commission has negotiated on behalf of the Community an Agreement in the form of an Exchange of Letters amending the Agreement between the European Community and the People's Republic of China on trade in textile and clothing products, as last amended by the Agreement in the form of exchange of letters initialled on 20 November 1998 and amending the Agreement between the European Community and the People's Republic of China initialled on 19 January 1995 on trade in textiles products not covered by the MFA bilateral agreement on trade in textile products.

(2) Whereas this Agreement in the form of an Exchange of Letters should be applied on a provisional basis from 1 January 2000 pending the completion of the procedures necessary for its conclusion, subject to reciprocal provisional application of the Agreement by the People's Republic of China,

HAS DECIDED AS FOLLOWS :

Article 1

The Agreement in the form of an Exchange of Letters amending the Agreements between the European Community and the People's Republic of China on trade in textile and clothing products shall be applied on a provisional basis from 1 January 2000 pending its formal conclusion and subject to reciprocal provisional application of the Agreement by the People's Republic of China.

The text of the Agreement is annexed to this Decision.

Article 2

This Decision shall be published in the Official Journal of the European Communities.

Done at Brussels,

For the Council

The President

ANNEX

Agreement in the form of Exchange of Letters between the European Community and the People's Republic of China initialled in Beijing on 6 December 1999 amending the Agreement between the European Economic Community and the People's Republic of China on trade in textile products as last amended by an Agreement initialled on 20 November 1999 and amending the Agreement between the European Community and the People's Republic of China initialled on 19 January 1995 on trade in textile products not covered by the MFA bilateral Agreement

Letter from the council of the european union

Sir,

1. I have the honour to refer to the consultations held between our respective delegations for the purpose of amending and extending both the Agreement between the European Economic Community and the People's Republic of China on trade in textile products initialled on 9 December 1988, as last amended by Agreements initialled on 20 November 1998 (hereinafter referred to as 'the MFA Agreement') and the Agreement between the European Community and the People's Republic of China initialled on 19 January 1995 on trade in textile products not covered by the MFA bilateral Agreement (hereinafter referred to as 'the non-MFA Agreement').

2. As a result of the consultations, both Parties agree to amend as of 1 January 2000 the following provisions of the MFA Agreement in order to ensure stability of trade while they continue their efforts to agree on the appropriate terms and conditions of an agreement governing future trade which, once applied by both Parties, will substitute for the present agreement :

2.1. The text of the second sentence of Article 20, paragraph 1 is replaced by the following text:

"It shall be applicable until 31 December 2000."

2.2. Annex I which sets out the products concerned by the Agreement is replaced by Appendix 1 to this letter.

2.3. Annex III is replaced by Appendix 2 to this letter for the year 2000 .

2.4. The Annex to Protocol E which sets out the quantitative restrictions for economic outward processing operations is replaced by Appendix 3 to this letter for the year 2000.

2.5. In the Joint Declaration on Berlin Fair set out in Appendix 8 to the Agreement initialled on 8 December 1992 the reference to 'the year 1999 is replaced by the year 2000.

3 As a result of the consultations, both Parties agree to amend as of 1 January 2000 the following provisions of the non-MFA Agreement in order to ensure stability of trade while they continue their efforts to agree on the appropriate terms and conditions of an agreement governing future trade which, once applied by both Parties, will substitute for the present agreement :

3.1 The text of the second sentence of Article 17, paragraph 1, is replaced by the following text:

"It shall apply with effect from 1 January 1995 and be applicable until 31 December 2000."

3.2. Annex I which sets out the products concerned by the Agreement is replaced by Appendix 4 to this letter.

3.3. Annex II is replaced by Appendix 5 to this letter for the year 2000

3.4. The Annex to Protocol B is replaced by Appendix 6 for the year 2000.

4. All Agreed Minutes and Declarations annexed to this letter shall form an integral part of the relevant Agreement to which they refer.

5. Should the People's Republic of China become a Member of the World Trade Organization before the date of expiry of this Agreement, the restrictions in force shall be phased out in the framework of the WTO Agreement on Textiles and Clothing and China's Protocol of Accession to the WTO.

6. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in form of Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally from 1 January 2000 on conditions of reciprocity.

Please accept, Sir, the assurance of my highest consideration.

For the Council of the European Union

Appendix 1

ANNEX I

PRODUCTS REFERRED TO IN ARTICLE 1

1. When the constitutive material of the products of categories 1 to 114 is not specifically mentioned, these products are to be taken to be made exclusively of wool or of fine hair, of cotton or of man-made fibres [2].

[2] Where there is an "ex" symbol in front of a CN code, the products covered in each category are determinded by the scope of the CN code and by that of the corresponding description.

2. Garments which are not recognizable as being garments for men or boys or as being garments for women or girls are classified with the latter.

3. Where the expression "babies' garments" is used, this is meant to cover garments up to and including commercial size 86.

>TABLE>

GROUP I A

>TABLE>

GROUP I B

>TABLE>

GROUP II A

>TABLE>

GROUP II B

>TABLE>

GROUP III A

>TABLE>

GROUP III B

>TABLE>

ANNEX I A

>TABLE>

APPENDIX 2

ANNEX III

(The full product descriptions of the categories listed in this Annex are to be found in Appendix 1 of this Agreement)

COMMUNITY QUANTITATIVE LIMITS

>TABLE>

(*) Possibility of transfer to and from category 3 up to 40% of the category to which the transfer is made. (**) Quantitative limits apply also to products declared for re-export outside the European Community. 1) The following additional quantities may be exported to the EEC by China:

>TABLE>

2) For the purpose of setting off exports against the agreed quantitative limits a conversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5% of the quantitative limits.

3) These figures include the following quantity reserved for European Industry for a period of 180 days, 641 000 pieces.

4) For products of category 5 (other than anoraks, windcheaters, waister jackets and the like) of fine animal hair, the following sublimit applies within the quantitative limits estblished for category 5 2000: 229 000 pieces

5) These figures include the following quantity reserved for European Industry for a period of 180 days, 1 149 000 pieces.

The following additional quantities of shorts (CN codes 6203 41 90,6203 42 90, 6203 43 90 and 6203 49 50) may be exported to the EEC by China 2000: 1 142 000 pieces

6) These figures include the following quantity reserved for the European Industry for a period of 180 days, 691 000 pieces.

7) These figures include the following quantity reserved for the European Industry for a period of 180 days, 1 117 000 pieces.

8) These figures include the following quantity reserved for the European Industry for a period of 180 days, 312 000 pieces.

9) These figures include the following quantity reserved for the European Industry for a period of 180 days, 1 008 000 pieces.

10) For the purpose of setting off exports against the agreed quantitative limits a onversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5 % of the quantitative limits.

11) For the purpose of setting off exports against the agreed quantitative limits a conversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5 % of the quantitative limits.

12) These figures include the following quantity reserved for European Industry for a period of 180 days, 339 000 pieces.

13) For the purpose of setting off exports against the agreed quantitative limits a conversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5 % of the quantitative limits.

14) These figures include the following quantity reserved for European Industry for a period of 180 days each year, 211 tonnes.

Appendix 3

ANNEX to PROTOCOL E

OUTWARD PROCESSING TRAFFIC

COMMUNITY QUANTITATIVE LIMITS

>TABLE>

APPENDIX 4

Annex I

1. This Annex covers textile raw materials (categories 128 and 154), textile products other than those of wool and fine animal hair, cotton and man-made fibres, as well as man-made fibres and filaments and yarns of categories 124, 125 A, 125B, 126, 127A and 127B.

2. Without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within this Annex, by CN codes. Where there is an 'ex' symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

3. Garments which are not recognizable as being garments for men or boys or as being garments for women or girls are classified with the latter.

4. Where the expression "babies' garments" is used, this is meant to cover garments up to and including commercial size 86.

Group I

>TABLE>

Group II

>TABLE>

>TABLE>

Group III A

>TABLE>

>TABLE>

Group III B

>TABLE>

>TABLE>

>TABLE>

>TABLE>

Group IV

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

Appendix 5

ANNEX II

(The full product descriptions of the categories listed in this Annex are to be found in Appendix 4 of this Agreement)

COMMUNITY QUANTITATIVE LIMITS

>TABLE>

(1) Categories marked by 'ex' cover products other than those of wool or fine animal hairs, cotton or synthetic or artificial textile materials.

(2) This limit does not apply to fibers of polyvinyl alcohol falling within CN code ex 5503 90 90.

Appendix 6

Annex to Protocol B

(the product descriptions of the categories listed in this Annex

are to be found in Annex I to the Agreement)

OPT Quotas

Community quantitative limits for the year 2000

Category Unit

159 8.1 tonnes

161 15.5 tonnes

Letter from the government of THE People's Republic of China

Sir,

I have the honour to acknowledge receipt of your letter of which reads as follows:

'1. I have the honour to refer to the consultations held between our respective delegations for the purpose of amending and extending both the Agreement between the European Economic Community and the People's Republic of China on trade in textile products initialled on 9 December 1988, as last amended by Agreements initialled on 20 November 1998 (hereinafter referred to as 'the MFA Agreement') and the Agreement between the European Community and the People's Republic of China initialled on 19 January 1995 on trade in textile products not covered by the MFA bilateral Agreement (hereinafter referred to as 'the non-MFA Agreement').

2. As a result of the consultations, both Parties agree to amend as of 1 January 2000 the following provisions of the MFA Agreement in order to ensure stability of trade while they continue their efforts to agree on the appropriate terms and conditions of an agreement governing future trade which, once applied by both Parties, will substitute for the present agreement:

2.1. The text of the second sentence of Article 20, paragraph 1, is replaced by the following text:

"It shall be applicable until 31 December 2000."

2.2. Annex I which sets out the products concerned by the Agreement is replaced by Appendix 1 to this letter.

2.3. Annex III is replaced by Appendix 2 to this letter for the year 2000.

2.4. The Annex to Protocol E which sets out the quantitative restrictions for economic outward processing operations is replaced by Appendix 3 to this letter for the year 2000.

2.5. In the Joint Declaration on Berlin Fair set out in Appendix 8 to the Agreement initialled on 8 December 1992 the reference to 'the year 1999 is replaced by the year 2000.

3. As a result of the consultations, both Parties agree to amend as of 1 January 2000 the following provisions of the non-MFA Agreement in order to ensure stability of trade while they continue their efforts to agree on the appropriate terms and conditions of an agreement governing future trade which, once applied by both Parties, will substitute for the present agreement:

3.1 The text of the second sentence of Article 17, paragraph 1, is replaced by the following text:

"It shall apply with effect from 1 January 1995 and be applicable until 31 December 2000."

3.2. Annex I which sets out the products concerned by the Agreement is replaced by Appendix 4 to this letter.

3.3. Annex II is replaced by Appendix 5 to this letter for the year 2000.

3.4. The Annex to Protocol B is replaced by Appendix 6 for the year 2000.

4. All Agreed Minutes and Declarations annexed to this letter shall form an integral part of the relevant Agreement to which they refer.

5. Should the People's Republic of China become a Member of the World Trade Organization before the date of expiry of this Agreement, the restrictions in force shall be phased out in the framework of the WTO Agreement on Textiles and Clothing and China's Protocol of Accession to the WTO.

6. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in form of Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally from 1 January 2000 on conditions of reciprocity.

Please accept, Sir, the assurance of my highest consideration.

For the Council of the European Union'

I have the honour to confirm that my Government is in agreement with the contents of your letter.

Please accept, Sir , the assurance of my highest consideration.

For the Government of the People's Republic of China

Appendix 1

ANNEX I

PRODUCTS REFERRED TO IN ARTICLE 1

1. When the constitutive material of the products of categories 1 to 114 is not specifically mentioned, these products are to be taken to be made exclusively of wool or of fine hair, of cotton or of man-made fibres [3].

[3] Where there is an "ex" symbol in front of a CN code, the products covered in each category are determinded by the scope of the CN code and by that of the corresponding description.

2. Garments which are not recognizable as being garments for men or boys or as being garments for women or girls are classified with the latter.

3. Where the expression "babies' garments" is used, this is meant to cover garments up to and including commercial size 86.

>TABLE>

GROUP I A

>TABLE>

GROUP I B

>TABLE>

GROUP II A

>TABLE>

GROUP II B

>TABLE>

GROUP III A

>TABLE>

GROUP III B

>TABLE>

ANNEX I A

>TABLE>

APPENDIX 2

ANNEX III

(The full product descriptions of the categories listed in this Annex are to be found in Appendix 1 of this Agreement)

COMMUNITY QUANTITATIVE LIMITS

>TABLE>

(*) Possibility of transfer to and from category 3 up to 40% of the category to which the transfer is made. (**) Quantitative limits apply also to products declared for re-export outside the European Community. 1) The following additional quantities may be exported to the EEC by China:

>TABLE>

2) For the purpose of setting off exports against the agreed quantitative limits a conversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5% of the quantitative limits.

3) These figures include the following quantity reserved for European Industry for a period of 180 days, 641 000 pieces.

4) For products of category 5 (other than anoraks, windcheaters, waister jackets and the like) of fine animal hair, the following sublimit applies within the quantitative limits estblished for category 5 2000: 229 000 pieces

5) These figures include the following quantity reserved for European Industry for a period of 180 days, 1 149 000 pieces.

The following additional quantities of shorts (CN codes 6203 41 90,6203 42 90, 6203 43 90 and 6203 49 50) may be exported to the EEC by China 2000: 1 142 000 pieces

6) These figures include the following quantity reserved for the European Industry for a period of 180 days, 691 000 pieces.

7) These figures include the following quantity reserved for the European Industry for a period of 180 days, 1 117 000 pieces.

8) These figures include the following quantity reserved for the European Industry for a period of 180 days, 312 000 pieces.

9) These figures include the following quantity reserved for the European Industry for a period of 180 days, 1 008 000 pieces.

10) For the purpose of setting off exports against the agreed quantitative limits a onversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5 % of the quantitative limits.

11) For the purpose of setting off exports against the agreed quantitative limits a conversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5 % of the quantitative limits.

12) These figures include the following quantity reserved for European Industry for a period of 180 days, 339 000 pieces.

13) For the purpose of setting off exports against the agreed quantitative limits a conversion rate of 5 garments (other than babies' garments) of a maximum commercial size of 130 cm, for 3 garments whose commercial size exceeds 130 cm may be applied for up to 5 % of the quantitative limits.

14) These figures include the following quantity reserved for European Industry for a period of 180 days each year, 211 tonnes.

Appendix 3

ANNEX TO PROTOCOL E

OUTWARD PROCESSING TRAFFIC

COMMUNITY QUANTITATIVE LIMITS

>TABLE>

Appendix 4

Annex I

This Annex covers textile raw materials (categories 128 and 154), textile products other than those of wool and fine animal hair, cotton and man-made fibres, as well as man-made fibres and filaments and yarns of categories 124, 125 A, 125B, 126, 127A and 127B.

2. Without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within this Annex, by CN codes. Where there is an 'ex' symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

3. Garments which are not recognizable as being garments for men or boys or as being garments for women or girls are classified with the latter.

4. Where the expression "babies' garments" is used, this is meant to cover garments up to and including commercial size 86.

Group I

>TABLE>

Group II

>TABLE>

>TABLE>

Group III A

>TABLE>

>TABLE>

Group III B

>TABLE>

>TABLE>

>TABLE>

>TABLE>

Group IV

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

>TABLE>

Appendix 5

ANNEX II

(The full product descriptions of the categories listed in this Annex are to be found in Appendix 4 of this Agreement)

COMMUNITY QUANTITATIVE LIMITS

>TABLE>

(1) Categories marked by 'ex' cover products other than those of wool or fine animal hairs, cotton or synthetic or artificial textile materials.

(2) This limit does not apply to fibers of polyvinyl alcohol falling within CN code ex 5503 90 90.

Appendix 6

Annex to Protocol B

(the product descriptions of the categories listed in this Annex

are to be found in Annex I to the Agreement)

OPT Quotas

Community quantitative limits for the year 2000

Category Unit

159 8.1 tonnes

161 15.5 tonnes