Proposal for a COUNCIL DECISION On the conclusion of a Euro-Mediterranean Association Agreement between the European Community and its Member States of the one part, and the Republic of Lebanon, of the other part

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. The attached proposals constitute the legal instruments for the signature and conclusion of a Euro-Mediterranean Association Agreement between the European Community and its Member States, of the one part, and the Republic of Lebanon, of the other part:

(i) Proposal for a Council Decision for the signature of the Agreement;

(ii) Proposal for a Council Decision for the conclusion of the Agreement.

2. Lebanon's relations with the European Community are presently covered by the Co-operation Agreement signed in Brussels on 3 May 1977 (entered into force 1st November 1978), as modified by subsequent protocols. The Council adopted its negotiating directives and the Commission formally launched the negotiations for an Association Agreement in 1995. Progress was slow, with five rounds of negotiations held in five years. The pace of negotiations intensified in October 2000 after the election of a new Government in Lebanon, culminating in the tenth and final formal round in June 2001, followed by a series of technical discussions, leading to conclusion of the negotiations in December 2001. The text was initialled by the Commission and by the Government of Lebanon in Brussels on 10 January 2002.

3. The proposed Association Agreement between the EU and Lebanon will establish a new, closer relationship within the context of the Euro-Mediterranean partnership launched by the 1995 Barcelona Declaration. It will contribute to peace and security in the region and will stimulate trade and economic relations between Lebanon and the EU, and between Lebanon and its Mediterranean partners. With eight of the nine non-candidate countries of the Euro-Mediterranean Partnership linked to the EU by an Association Agreement, the Barcelona Declaration project is close to reality, and underlines the EU's priority to strengthen its security, economic and social relations with the partners of the southern Mediterranean Basin. Accords with Tunisia, Morocco, Egypt, Israel, the Palestinian Territories (PLO), and Jordan have already been signed; those with Algeria and Lebanon have been initialled; only Syria remains.

4. The EU-Lebanon Association Agreement is similar in content and pattern to the other association agreements in the region. It will have an unlimited duration and will open the way to deepen relations in a wide number of fields, based on reciprocity and partnership. Respect for the principles of democracy and human rights will constitute an essential element of the accord.

5. The Agreement focuses on the following main elements:

- a regular political dialogue;

- economic, social, and cultural dialogue;

- the progressive establishment of a free-trade area between the European Community and Lebanon over a maximum period of twelve years, in conformity with the rules of the WTO;

- for industrial products, the preferential regime accorded to Lebanon exports to the Community under the 1978 Co-operation Agreement is reconfirmed. Reciprocally, Lebanon will liberalise its import regime for Community products so that tariffs are reduced to zero by the end of the twelve year transition period after entry into force of the Agreement;

- for processed agricultural products, specific reciprocal concessions are foreseen;

- agricultural products from Lebanon to the Community will be liberalised, except for a list of sensitive products for which zero tariff quotas will apply. Products from the Community will enter Lebanon on a concessional basis. New reciprocal tariff concessions will be examined by both sides five years after entry into force of the Agreement;

- provisions for enhanced regional co-operation, including the creation of a regional Euro-Mediterranean free trade area;

- provisions on the movement of persons, on the rights of establishment and supply of services, payments, competition, the movement of capital, intellectual property protection, and public procurement;

- provisions for economic and financial co-operation in a wide range of fields;

- the Agreement will provide for commitments and co-operation in the control of illegal immigration and in re-admission, rule of law, combating drugs and organised crime, and money laundering;

- institutional provisions for the management of the Agreement, which will include the establishment of an Association Council to meet at ministerial level to supervise the implementation of the Agreement, and of an Association Committee;

- the Association Council shall take measures to promote co-operation between the European Parliament and the Lebanese Parliament.

6. As the request of the Lebanese authorities, an Interim Agreement is to be simultaneously proposed by the Commission to the Council for a Decision. The Interim Agreement is intended to cover the trade-related elements of the Association Agreement.

7. The Commission has judged the results of the negotiations to be satisfactory, and having initialled the texts of the proposed Agreement, the Commission requests the Council:

- to decide on the signature, on behalf of the European Community, of the Euro-Mediterranean Association Agreement between the Community and Lebanon;

- to conclude the Euro-Mediterranean Association Agreement on behalf of the Community.

The European Parliament will be called upon to give its agreement to this accord.

The Agreement will only enter into force following ratification by all Member States.

2002/0083 (AVC)

Proposal for a COUNCIL DECISION On the conclusion of a Euro-Mediterranean Association Agreement between the European Community and its Member States of the one part, and the Republic of Lebanon, of the other part

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 310 in conjunction with the second phrase of Article 300, paragraph 2, and the second sub-paragraph of paragraph 3;

Having regard to the proposal from the Commission

Having regard to the assent of the European Parliament [1];

[1] OJ C [...], [...], p

Whereas

(1) the Euro-Mediterranean Association Agreement between the European Community and their Member States, of the one part, and the Republic of Lebanon, of the other part, has been signed on behalf of the European Community, in [...] on [...] 2002, subject to the reserve of an eventual conclusion at a later date, in conformity with the decision ..../........../CE of the Council of ....

(2) The Agreement should be approved,

HAVE AGREED AS FOLLOWS :

Article 1

1. The Euro-Mediterranean Association Agreement between the European Community and its Member States, of the one part, and the Republic of Lebanon, of the other part, the annexes and protocols to the Agreement, as well as the joint declarations and the declarations of the European Community included in the final act, are approved on behalf of the European Community.

2. The initialled texts mentioned in paragraph 1 form part of this Decision.

Article 2

1. The position to be taken by the Community in the context of the Association Council and of the Association Committee, is to be defined by the Council, on the proposal of the Commission, or, if the case arises, by the Commission, in conformity with the relevant components of the Treaties.

2. In conformity with article 75 of the Euro-Mediterranean Association Agreement, the President of the Council will chair the Association Council. A representative of the Commission will chair the Association Committee, according to the agreed procedural rules.

3. The decision to publish the decisions of the Association Council and of the Association Committee in the Official Journal of the European Community will be taken in each case respectively by the Council and the Commission.

Article 3

The President of the Council is authorised to designate the person(s) empowered to proceed, in behalf of the European Community, to deposit the act of notification foreseen in article 91 of the Agreement.

Done at Brussels, [...]

For the Council For the Commission

The President The President

[...]

ANNEX

THE KINGDOM OF BELGIUM,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

IRELAND,

THE ITALIAN REPUBLIC,

THE GRAND DUCHY OF LUXEMBOURG,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE PORTUGUESE REPUBLIC,

THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,

Contracting Parties to the Treaty establishing the European Community,

hereinafter referred to as the 'Member States', and

THE EUROPEAN COMMUNITY

hereinafter referred to as 'the Community', of the one part, and

THE REPUBLIC OF LEBANON,

hereinafter referred to as 'Lebanon', of the other part,

have agreed as follows :

CONSIDERING the proximity and interdependence which historic links and common values have established between the Community, its Member States and the Republic of Lebanon;

CONSIDERING that the Community, its Member States and Lebanon wish to strengthen those links and to establish lasting relations, based on reciprocity, solidarity, partnership and co-development;

CONSIDERING the importance which the Parties attach to the principles of the United Nations Charter, particularly the observance of human rights, democratic principles and economic freedom, which form the very basis of the Association;

CONSIDERING recent political and economic developments both on the European continent and in the Middle East, and the resulting common responsibilities with regard to the stability, security and prosperity of the Euro-Mediterranean region;

CONSIDERING the importance for the Community and Lebanon of free trade, as guaranteed by the General Agreement on Tariffs and Trade of 1994 (GATT) and by the other multilateral agreements annexed to the Treaty establishing the WTO;

CONSIDERING the difference in economic and social development existing between Lebanon and the Community and the need to strengthen the process of economic and social development in Lebanon;

CONFIRMING that the provisions of this Agreement that fall within the scope of Part III, Title IV of the Treaty establishing the European Community bind the United Kingdom and Ireland as separate Contracting Parties, and not as part of the European Community, until the United Kingdom or Ireland (as the case may be) notifies Lebanon that it has become bound as part of the European Community in accordance with the Protocol on the position of the United Kingdom and Ireland Annexed to the Treaty on European Union and the Treaty establishing the European Community. The same applies to Denmark, in accordance with the Protocol Annexed to those Treaties on the position of Denmark,

DESIROUS of fully achieving the objectives of the association between them by implementing the relevant provisions of this Agreement to bring the levels of economic and social development of the Community and Lebanon closer to each other;

CONSCIOUS of the importance of this Agreement, which is based on reciprocity of interests, mutual concessions, co-operation and dialogue;

DESIROUS of developing a regular political dialogue on bilateral and international issues of mutual interest;

TAKING ACCOUNT of the Community's willingness to provide Lebanon with support in its endeavours to bring about economic reconstruction, reform and adjustment and social development;

DESIROUS of establishing, maintaining and intensifying co-operation, sustained by regular dialogue, on economic, scientific, technological, social, cultural and audiovisual issues in order to achieve better mutual understanding;

CONVINCED that this Agreement will create a climate conducive to growth in economic relations between them, more particularly in the trade and investment sectors which are essential to the success of the economic reconstruction and restructuring programme and to technological modernisation;

HAVE AGREED AS FOLLOWS:

Article 1

1. An association is hereby established between the Community and its Member States, of the one part, and Lebanon, of the other part.

2. The aims of this Agreement are to:

- provide an appropriate framework for political dialogue between the Parties, allowing the development of close relations in all areas they consider relevant to such dialogue;

- establish the conditions for the gradual liberalisation of trade in goods, services and capital;

- promote trade and the expansion of harmonious economic and social relations between the Parties, notably through dialogue and co-operation, so as to foster the development and prosperity of Lebanon and its people;

promote economic, social, cultural, financial and monetary co-operation.

Promote co-operation in other areas which are of mutual interest.

Article 2

Relations between the Parties, as well as all the provisions of the Agreement itself, shall be based on respect of democratic principles and fundamental human rights as set out in the Universal Declaration on Human Rights, which guides their internal and international policy and constitutes an essential element of this Agreement.

TITLE I

POLITICAL DIALOGUE

Article 3

1. A regular political dialogue shall be established between the Parties. It shall help build lasting links of solidarity between the partners which will contribute to the prosperity, stability and security of the Mediterranean region and bring about a climate of understanding and tolerance between cultures.

2. Political dialogue and co-operation are intended in particular to:

(a) facilitate rapprochement between the Parties through the development of better mutual understanding and regular co-ordination on international issues of common interest:

(b) enable each Party to consider the position and interests of the other;

(c) contribute to consolidating security and stability in the Mediterranean region and in the Middle East in particular;

(d) promote common initiatives.

Article 4

Political dialogue shall cover all issues of common interest to the Parties, examining in particular the conditions required to ensure peace and security through support for co-operation. The dialogue shall also seek to create new forms of co-operation directed towards common objectives.

Article 5

1. Political dialogue shall take place at regular intervals and whenever necessary, notably:

(a) at ministerial level, mainly in the framework of the Association Council;

(b) at senior official level of Lebanon, on the one hand, and of the Presidency of the Council and of the Commission on the other;

(c) by taking full advantage of all diplomatic channels including regular briefings by officials, consultations on the occasion of international meetings and contacts between diplomatic representatives in third countries;

(d) where appropriate, by any other means which would make a useful contribution to consolidating dialogue and increasing its effectiveness.

2. A political dialogue shall be established between the European Parliament and the Lebanese Parliament.

TITLE II

FREE MOVEMENT OF GOODS

BASIC PRINCIPLES

Article 6

The Community and Lebanon shall gradually establish a free trade area over a transitional period not exceeding twelve years from the entry into force of the present Agreement according to the modalities set out in this Title and in conformity with the provisions of the General Agreement on Tariffs and Trade of 1994 and of the other multilateral agreements on trade in goods annexed to the Agreement establishing the World Trade Organisation (WTO), hereinafter referred to as the GATT.

CHAPTER 1

INDUSTRIAL PRODUCTS

Article 7

The provisions of this Chapter shall apply to products originating in the Community and Lebanon falling within Chapters 25 to 97 of the Combined Nomenclature and of the Lebanese Customs tariff with the exception of the products listed in Annex 1.

Article 8

Imports into the Community of products originating in Lebanon shall be allowed free of customs duties and of any other charge having equivalent effect.

Article 9

1. Customs duties and charges having equivalent effect applicable on import into Lebanon of products originating in the Community shall be progressively abolished in accordance with the following schedule:

- five years after the date of entry into force of this Agreement each duty and charge shall be reduced to 88% of the basic rate;

- six years after the date of entry into force of this Agreement each duty and charge shall be reduced to 76% of the basic rate;

- seven years after the date of entry into force of this Agreement each duty and charge shall be reduced to 64% of the basic rate;

- eight years after the date of entry into force of this Agreement each duty and charge shall be reduced to 52% of the basic rate;

- nine years after the date of entry into force of this Agreement each duty and charge shall be reduced to 40% of the basic rate;

- ten years after the date of entry into force of this Agreement each duty and charge shall be reduced to 28% of the basic rate;

- eleven years after the date of entry into force of this Agreement each duty and charge shall be reduced to 16% of the basic rate;

- twelve years after the date of entry into force of this Agreement the remaining duties and charges shall be abolished.

2. In the event of serious difficulties for a given product, the schedule applicable under paragraph 1 above may be reviewed by the Association Committee by common accord on the understanding that the schedule for which the review has been requested may not be extended in respect of the product concerned beyond the maximum transitional period of twelve years. If the Association Committee has not taken a decision within thirty days of an application by Lebanon to review the schedule, Lebanon may suspend the schedule provisionally for a period which may not exceed one year.

3. For each product concerned, the basic duty to be gradually reduced as provided in paragraph 1 shall be the rates referred to in Article 19.

Article 10

The provisions concerning the abolition of customs duties on imports shall also apply to customs duties of a fiscal nature.

Article 11

1. Exceptional measures of limited duration which derogate from the provisions of Article 9 may be taken by Lebanon in the form of an increase or reintroduction of customs duties.

2. These measures may only concern new and infant industries, or sectors undergoing restructuring or facing serious difficulties, particularly where these difficulties entail major social problems.

3. Customs duties on imports into Lebanon of products originating in the Community that are introduced by such exceptional measures may not exceed 25% ad valorem and shall maintain an element of preference for products originating in the Community. The total value of imports of the products which are subject to these measures may not exceed 20% of the yearly average of total imports of industrial products from the Community during the last three years for which statistics are available.

4. These measures shall be applied for a period not exceeding five years unless a longer duration is authorised by the Association Committee. They shall cease to apply at the latest on the expiry of the maximum transitional period of twelve years.

5. No such measures can be introduced in respect of a product if more than three years have elapsed since the elimination of all duties and quantitative restrictions or charges or measures having equivalent effect concerning that product.

6. Lebanon shall inform the Association Committee of any exceptional measures it intends to adopt and, at the request of the Community, consultations shall be held on the measures and sectors concerned before they are implemented. When adopting such measures Lebanon shall provide the Committee with a schedule for the elimination of the customs duties introduced under this Article. This schedule shall provide for a phasing-out of these duties in equal annual instalments starting no later than the end of the second year following their introduction. The Association Committee may decide on a different schedule.

7. By way of derogation from provisions of paragraph 4, the Association Committee may exceptionally, to take account of the difficulties involved in setting up new industries, endorse the measures already taken by Lebanon pursuant to paragraph 1 for a maximum period of three years beyond the twelve year transitional period.

CHAPTER 2

AGRICULTURAL, FISHERIES AND PROCESSED AGRICULTURAL PRODUCTS

Article 12

The provisions of this Chapter shall apply to products originating in the Community and Lebanon falling within Chapters 1 to 24 of the Combined Nomenclature and of the Lebanese Customs tariff and to the products listed in Annex 1.

Article 13

The Community and Lebanon shall progressively establish a greater liberalisation of their trade in agricultural, fisheries and processed agricultural products, of interest to both parties.

Article 14

1. Agricultural products originating in Lebanon listed in Protocol No.1 on importation into the Community shall be subject to the arrangement set out in that Protocol.

2. Agricultural products originating in the Community listed in Protocol No.2 on importation into Lebanon shall be subject to the arrangement set out in that Protocol.

3. Trade in processed agricultural products falling under this chapter shall be subject to the arrangements set out in Protocol 3.

Article 15

1. Five years after the entry into force of this Agreement, the Community and Lebanon shall assess the situation in order to determine measures to be applied by the Community and Lebanon one year following the revision of the Agreement, in accordance with the objective set out in Article 13.

2. Without prejudice to the provisions of paragraph 1 and taking account of the volume of trade in agricultural, fisheries and processed agricultural products between the two Parties and the particular sensitivity of such products, the Community and Lebanon shall examine on a regular basis in the Association Council, product by product and on an orderly and reciprocal basis, the possibility of granting each other further concessions.

Article 16

1. In the event of specific rules being introduced as a result of the implementation of its agricultural policy or of any alteration of the current rules or in the event of any alteration or extension of the provisions relating to the implementation of its agricultural policy, the Party concerned may amend the arrangements resulting from the Agreement in respect of the products concerned.

2. The Party carrying out such modification shall inform the Association Committee thereof. At the request of the other Party, the Association Committee shall meet to take due account of the interest of the other Party.

3. If the Community or Lebanon, in applying paragraph 1, modifies the arrangements made by this Agreement for agricultural products, they shall accord imports originating in the other Party an advantage comparable to that provided for in this Agreement.

4. Any modification of the arrangements made by this Agreement shall be the subject, at the request of the other Party, of consultations within the Association Council.

Article 17

1. Both Parties agree to co-operate to reduce the potential for fraud in the application of the trade provisions of this Agreement.

2. Notwithstanding other provisions of this Agreement, where one Party finds that there is sufficient evidence of fraud such as a significant increase in trade products by one party to the other party, beyond the level reflecting economic conditions such as normal production and export capacities, or failure to provide administrative co-operation as required for the verification of evidence of origin by the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such a solution, the Party concerned may take the appropriate measures it deems necessary. In the selection of the measure priority must be given to those which least disturb the functioning of the arrangements established in this Agreement.

CHAPTER 3

COMMON PROVISIONS

Article 18

1. No new customs duties on imports or exports or charges having equivalent effect shall be introduced in trade between the Community and Lebanon, nor shall those already applied upon entry into force of this Agreement be increased unless this Agreement provides otherwise.

2. No new quantitative restriction on imports or measure having equivalent effect shall be introduced in trade between the Community and Lebanon

3. Quantitative restrictions on imports and measures having equivalent effect in trade between Lebanon and the Community shall be abolished upon the entry into force of this Agreement.

4. Neither the Community nor Lebanon shall apply to exports between themselves either customs duties or charges having equivalent effect, or quantitative restrictions or measures of equivalent effect.

Article 19

1. For each product the basic rate to which the successive reductions laid down in paragraph 1 of Article 9 are to be applied shall be that actually applied vis-à-vis the Community on the day of conclusion of the negotiations.

2. In the event of the accession of Lebanon to the WTO, the applicable rates for imports between the Parties shall be the WTO bound rate or lower effectively applied rate enforced as of the date of the accession. If, after the accession to the WTO, a tariff reduction is applied on a erga omnes basis, the reduced rate shall apply.

3. The provision laid down in paragraph 2 is of application for any tariff reduction applied after the day of conclusion of the negotiations on a erga omnes basis.

4. The Parties shall communicate to each other their respective applied rates on the day of conclusion of the negotiations.

Article 20

Products originating in Lebanon shall not enjoy more favourable treatment when imported into the Community than that applied by Member States among themselves.

Article 21

1. The Parties shall refrain from any measure or practice of an internal fiscal nature establishing, whether directly or indirectly, discrimination between the products of one Party and like products originating in the territory of the other Party.

2. Products exported to the territory of one of the Parties may not benefit from repayment of indirect internal taxation in excess of the amount of indirect taxation imposed on them either directly or indirectly.

Article 22

1. This Agreement shall not preclude the maintenance or establishment of customs unions, free trade areas or arrangements for frontier trade except in so far as they alter the trade arrangements provided for in this Agreement.

2. Consultations between the Parties shall take place within the Association Committee concerning agreements establishing such customs unions or free trade areas and, where requested, on other major issues related to their respective trade policies with third countries. In particular, in the event of a third country acceding to the Community, such consultations shall take place so as to ensure that account can be taken of the mutual interests of the Community and Lebanon.

Article 23

If one of the Parties finds that dumping is taking place in trade with the other Party in line with prevailing international rules as defined in Article VI of the General Agreement on Tariffs and Trade (GATT) 1994 and related internal legislation, it may take appropriate measures against this practice in accordance with the WTO Agreement on the implementation of Article VI of the GATT 1994 and related internal legislation.

Article 24

1. Without prejudice to Article 35, the WTO Agreement on Subsidies and Countervailing Measures shall apply between the Parties.

2. Until the necessary rules referred to in Article 35 paragraph 2 are adopted, if either Party finds that subsidy is taking place in trade with the other Party in line with prevailing international rules as defined in Articles VI and XVI of the General Agreement on Tariffs and Trade (GATT) 1994 and related internal legislation, it may invoke appropriate measures against this practice in accordance with those rules as defined by the WTO Agreement on Subsidies and Countervailing Measures and related internal legislation.

Article 25

1. The provisions of the Article XIX of the GATT 1994 and the WTO Agreement on Safeguards and related internal legislation are applicable between the Parties.

2. Before applying safeguard measures as defined by international rules, the Party intending to apply such measures shall supply the Association Committee with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties.

In order to find such a solution the Parties shall immediately hold consultations within the Association Committee. If, as a result of the consultations, the Parties do not reach an agreement within thirty days of the initiation of the consultations on a solution to avoid the application of the safeguard measures, the Party intending to apply safeguard measures may apply the provisions of the Article XIX of the GATT 1994 and the WTO Agreement on Safeguards.

3. In the selection of safeguard measures pursuant to this article, the Parties shall give priority to those, which cause least disturbance to the achievement of the objectives of this agreement.

4. Safeguard measures shall be notified immediately to the Association Committee and shall be the subject of periodic consultations within the Committee, particularly with a view to their abolition as soon as circumstances permit.

Article 26

1. Where compliance with the provisions of Article 18 paragraph 4 leads to:

(i) re-export to a third country against which the exporting Party maintains, for the product concerned, quantitative export restrictions, export duties or measures or charges having equivalent effect, or

(ii) a serious shortage, or threat thereof, of a product essential to the exporting Party,

and where the situations referred to above give rise, or are likely to give rise, to major difficulties for the exporting Party, that Party may take appropriate measures under the conditions and in accordance with the procedures laid down in paragraph 2.

2. The difficulties arising from the situations referred to in paragraph 1 shall be submitted for examination to the Association Committee. The Committee may take any decision needed to put an end to the difficulties. If it has not taken such a decision within thirty days of the matter being referred to it, the exporting party may apply appropriate measures on the exportation of the product concerned. The measures shall be non-discriminatory and shall be eliminated when conditions no longer justify their maintenance.

Article 27

Nothing in this Agreement shall preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; of the protection of health and life of humans, animals or plants; of the protection of national treasures of artistic, historic or archaeological value; of the protection of intellectual industrial and commercial property; of rules relating to gold and silver and conservation of exhaustible natural resources. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.

Article 28

The concept of "originating products" for the application of the provisions of the present Title and the methods of administrative co-operation relating thereto are laid down in Protocol 4.

Article 29

The Combined Nomenclature of goods shall be applied to the classification of goods for imports into the Community. The Lebanese customs tariff shall be applied to the classification of goods for imports into Lebanon.

TITLE III

RIGHT OF ESTABLISHMENT AND SUPPLY OF SERVICES

Article 30

1. Treatment granted by either Party to the other with respect to the right of establishment and the supply of services shall be based on each Party's commitments and other obligations under the General Agreement on Trade in Services (GATS). This provision shall take effect from the date of the final accession of Lebanon to the WTO.

2. Lebanon undertakes to provide a schedule of specific commitments on services, prepared in accordance with Article XX of the GATS, to the European Community and their Member States as soon as it is finalised.

3. The Parties undertake to consider development of the above provisions with a view to the establishment of an "economic integration agreement" as defined in Article V of the GATS.

4. The objective provided for in paragraph 3 shall be subject to a first examination by the Association Council one year after the entry into force of this Agreement.

5. The Parties shall not, between the date of entry into force of this Agreement and Lebanon's accession to the WTO, take any measures or actions which render the conditions for the supply of services by Community or Lebanese service suppliers more discriminatory than those existing on the date of entry into force of this Agreement.

6. For the purposes of this Title:

(a) "service suppliers" of a Party means any juridical or natural person that seeks to provide or provides a service;

(b) a "juridical person" means a company or a subsidiary, set up in accordance with the laws either of a Member State of the Community or of Lebanon and having its registered office, central administration or principal place of business in the territory either of the Community or of Lebanon. Should the juridical person have only its registered office or central administration in the territory either of the Community or of Lebanon, it shall not be considered as either a Community or a Lebanese juridical person, unless its operations possess a real and continuous link with the economy either of the Community or Lebanon;

(c) "subsidiary" means a juridical person which is effectively controlled by another juridical person;

(d) "natural person" means a person who is a national either of a Member State of the Community or of Lebanon according to their respective national legislations.

TITLE IV

PAYMENTS, CAPITAL, COMPETITION

AND OTHER ECONOMIC PROVISIONS

CHAPTER 1

CURRENT PAYMENTS AND MOVEMENT OF CAPITAL

Article 31

Within the framework of the provisions of this Agreement, and subject to the provisions of Articles 33 and 34, there shall be no restrictions between the Community of the one part, and Lebanon of the other part, on the movement of capital and no discrimination based on the nationality or on the place of residence of their nationals or on the place where such capital is invested.

Article 32

Current payments connected with the movement of goods, persons, services or capital within the framework of this agreement shall be free of all restrictions.

Article 33

Subject to other provisions in this Agreement and other international obligations of the Community and Lebanon, the provisions of Articles 31 and 32 shall be without prejudice to the application of any restriction which exists between them on the date of entry into force of the present Agreement, in respect of the movement of capital between them involving direct investment, including in real estate, establishment, the provision of financial services or the admission of securities to capital markets.

However, the transfer abroad of investments made in Lebanon by Community residents or in the Community by Lebanese residents and of any profit stemming therefrom shall not be affected.

Article 34

Where one or several Member States of the Community or Lebanon face or risk facing serious difficulties concerning balance of payments, the Community or Lebanon respectively may, in conformity with the conditions laid down within the framework of the GATT and Articles VIII and XIV of the Statutes of the International Monetary Fund, take restrictive measures with regard to current payments if such measures are strictly necessary. The Community or Lebanon, as appropriate, shall inform the other Party immediately thereof and shall provide as soon as possible a timetable for the removal of such measures.

CHAPTER 2

COMPETITION AND OTHER ECONOMIC MATTERS

Article 35

1. The following are incompatible with the proper functioning of the Agreement, in so far as they may affect trade between the Community and Lebanon:

(i) all agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition, as defined by their respective legislation;

(ii) abuse by one or more undertakings of a dominant position in the territories of the Community or Lebanon as a whole or in a substantial part thereof, as defined by their respective legislation.

2. The Parties will enforce their respective competition legislation and shall exchange information taking into account the limitations imposed by the requirements of confidentiality . The necessary rules for co-operation in order to implement paragraph 1 shall be adopted by the Association Committee within five years of entry into force of the Agreement.

3. If the Community or Lebanon considers that a particular practice is incompatible with the terms of the first paragraph of this Article, and if such practice causes or threatens to cause serious prejudice to the other Party, it may take appropriate measures after consultation within the Association Committee or after thirty working days following referral for such consultation.

Article 36

The Member States and Lebanon shall progressively adjust, without prejudice to their commitments respectively taken or to be taken under the GATT, any State monopolies of a commercial character, so as to ensure that, by the end of the fifth year following the entry into force of this Agreement, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States and of Lebanon. The Association Committee will be informed about the measures adopted to implement this objective.

Article 37

With regard to public enterprises and enterprises to which special or exclusive rights have been granted, the Association Council shall ensure that as from the fifth year following the date of entry into force of this Agreement there is neither enacted nor maintained any measure distorting trade between the Community and Lebanon to an extent contrary to the Parties' interests. This provision should not obstruct the performance in law or in fact of the particular tasks assigned to these enterprises.

Article 38

1. Pursuant to the provisions of this Article and of Annex 2, the Parties shall ensure adequate and effective protection of intellectual, industrial and commercial property rights in conformity with the highest international standards, including effective means of enforcing such rights.

2. The implementation of this Article and of Annex 2 shall be regularly reviewed by the Parties. If problems in the area of intellectual property protection affecting trading conditions occur, urgent consultations shall be undertaken, at the request of either Party, with a view to reaching mutually satisfactory solutions.

Article 39

1. The Parties shall take as their aim a reciprocal and gradual liberalisation of public procurement contracts.

2. The Association Council shall take the steps necessary to implement paragraph 1.

TITLE V

ECONOMIC AND SECTOR CO-OPERATION

Article 40

Objectives

1. The two Parties shall together establish the strategies and procedures needed to achieve co-operation in the fields covered by this Title.

2. The Parties undertake to intensify economic co-operation in their mutual interest and in the spirit of partnership which is at the root of this Agreement.

3. The aim of economic co-operation shall be to support Lebanon's own efforts to achieve sustainable economic and social development.

Article 41

Scope

1. Co-operation shall be targeted first and foremost at areas of activity suffering the effects of internal constraints and difficulties or affected by the process of liberalising Lebanon's economy as a whole, and more particularly by the liberalisation of trade between Lebanon and the Community.

2. Similarly, co-operation shall focus on areas likely to bring the economies of the Community and Lebanon closer together, particularly those which will generate growth and employment.

3. Preservation of the environment and ecological balances shall constitute a central component of the various fields of economic co-operation

4. The Parties may agree to extend the economic co-operation to other sectors not covered by the provisions of this Title.

Article 42

Methods and Modalities

Economic co-operation shall be implemented in particular by:

(a) a regular economic dialogue between the Parties, which covers all areas of macroeconomic policy

(b) regular exchange of information and ideas in every sector of co-operation including meetings of officials and experts;

(c) transfer of advice, expertise and training;

(d) implementation of joint actions such as seminars and workshops;

(e) technical, administrative and regulatory assistance;

(f) the dissemination of information on co-operation.

Article 43

Education and training

Co-operation aims at:

a) defining the means to appreciably improve the situation in the field of education and training, particularly in vocational training;

b) encouraging the setting up of strong links between agencies specialised in joint actions, and the exchange of experiences and know-how, essentially, the exchange of youth, exchanges between universities and other educational institutions, so as to bring cultures closer together;

c) particularly encouraging access of the female population to education, including technical and higher education, and vocational training.

Article 44

Scientific, technical and technological co-operation

The aim of co-operation shall be to:

(a) encourage the establishment of permanent links between the Parties' scientific communities, notably by means of:

- providing Lebanon with access to Community research and technological development programmes in accordance with Community rules governing non-Community countries' involvement in such programmes;

- Lebanese participation in networks of decentralised co-operation;

- promoting synergy between training and research;

(b) improve Lebanon's research capabilities; and its technological development;

(c) stimulate technological innovation and the transfer of new technology and dissemination of know-how;

(d) study the ways Lebanon can participate in European framework programmes for research.

Article 45

Environment

1. The Parties shall encourage co-operation in preventing deterioration of the environment, controlling pollution and ensuring the rational use of natural resources, with a view to ensuring sustainable development.

2. Co-operation shall be centred upon:

- water quality in the Mediterranean, and control and prevention of marine pollution;

- waste management, particularly that of toxic waste;

- salinisation;

- environmental management of sensitive coastal areas;

- environmental education and awareness;

- the use of advanced instruments for environmental management and monitoring, and in particular the use of the environment information system and studies on environmental impact;

- the effect of industrial development on the environment in general and on the safety of industrial plant in particular;

- the effect of agriculture on soil quality and water quality;

- soil preservation and conservation;

- rational management of water resources

- joint research and monitoring activities as well as programmes and projects.

Article 46

Industrial co-operation

The aim of co-operation shall be to:

(a) encourage co-operation between the Parties' economic operators, including co-operation in the context of access for Lebanon to Community business networks;

(b) support the effort to modernise and restructure Lebanon's public and private sector industry (including the agri-food industry);

(c) foster an environment which favours private initiative, with the aim of stimulating and diversifying output for the domestic and export markets;

(d) enhance Lebanon's human resources and industrial potential through better use of policy in the fields of innovation and research and technological development;

(d) facilitate access to capital markets to finance productive investment.

(f) encourage the development of SMEs, particularly by:

- promoting contacts between enterprises, partly by using Community networks and instruments for the promotion of industrial co-operation and partnership;

- facilitating credit access for financing investment;

- making information and support services available;

- enhance human resources to encourage innovation, and setting up projects and economic activities.

Article 47

Promotion and protection of investment

Co-operation shall aim at increasing the flow of capital, expertise and technology to Lebanon through, interalia:

(a) appropriate means of identifying investment opportunities and information channels on investment regulations;

(b) providing information on European investment regimes (technical assistance, direct financial support, fiscal incentives, investment insurance, etc.) related to outward investment and enhancing the possibility of Lebanon to benefit from them;

(c) examining the creation of joint ventures (especially for small and medium-sized enterprises), and when appropriate the conclusion of agreements between the Member States and Lebanon;

(d) establishing mechanisms for encouraging and promoting investments;

(e) the development of a legal framework conducive to investment between the two Parties, through the conclusion by Lebanon and the Member States of investment protection agreements, where appropriate, and agreements preventing double taxation.

Co-operation may extend to the planning and implementation of projects demonstrating the effective acquisition and use of basic technologies, the use of standards, the development of human resources and the creation of jobs locally.

Article 48

Co-operation in standardisation and conformity assessment

The Parties shall co-operate in:

(a) reducing divergences in standardisation, metrology, quality control and conformity assessment;

(b) developing the updating of Lebanese laboratories;

(c) negotiating mutual recognition agreements as soon as the conditions for them are met;

(d) strengthening the Lebanese institutions responsible for standardisation, quality, and intellectual, industrial and commercial property.

Article 49

Approximation of legislation

The Parties shall use their best endeavours to approximate their respective laws in order to facilitate the implementation of this Agreement.

Article 50

Financial services

The aim of co-operation shall be to achieve closer common rules and standards in areas including the following:

(a) developing the financial markets in Lebanon;

(b) improving accounting, auditing, supervision and regulation of financial services and financial monitoring in Lebanon.

Article 51

Agriculture and fisheries

The aims of co-operation shall be:

(a) to support policies aiming to diversify production;

(b) to reduce food dependency;

(c) to promote a form of agriculture which pays due regard to the environment;

(d) to establish closer relations between enterprises, groupings and professional organisations of the two Parties;

(e) to provide assistance and technical training; support for agronomic research, advisory services, agricultural education and technical training of staff in the agricultural sector;

(f) to harmonise phytosanitary and veterinary standards;

(g) to support integrated rural development, including improvement of basic services and development of ancillary economic activities, particularly in the regions affected by the eradication of illicit crops;

(h) co-operation between rural areas, exchange of experience and know-how on rural development;

(i) development of sea fishing and aquaculture;

(j) development of packaging, storage and marketing techniques; and the improvement of distribution channels;

(k) to develop agricultural water resources;

(l) to develop the forestry sector, especially in the fields of reafforestation, forest fire prevention, forest pasture and combating desertification;

(m) to develop agricultural mechanisation and promotion of agricultural service cooperatives;

(n) to strengthen the agricultural credit system.

Article 52

Transport

The aim of co-operation shall be to:

(a) restructure and modernise road, rail, port and airport infrastructure linked to the main trans-European lines of communication of common interest;

(b) establish and enforce operating and safety standards comparable to those prevailing in the Community;

(c) upgrade technical equipment to Community standards for multimodal transport, container traffic and transshipment;

(d) improve road, maritime and multimodal transit and the management of ports, airports, sea and air traffic control, railways and navigation aids;

(e) reorganise and restructure of the mass transport sector including public transport.

Article 53

Information society and telecommunications

1. The Parties recognise that information and communication technologies constitute a key element of modern society, vital to economic and social development, and a cornerstone of the emerging information society.

2. Co-operation in this field shall aim at :

- a dialogue on the various aspects of the information society, including telecommunications policies;

- exchanges of information and technical assistance on regulatory matters, standardisation, conformity tests and certification as regards information technology and telecommunications technology;

- dissemination of new information and telecommunications technology, and of updated facilities for advanced communications, information services and technology;

- promotion and implementation of joint projects for research, technical development and industrial applications in information technologies, communications, telematics and the information society;

- the participation of Lebanese organisations in pilot projects and European programmes within the established frameworks;

- interconnection and interoperability between Community telematic networks and services and those of Lebanon;

- a dialogue on regulatory co-operation on international services, including aspects relating to protection of data and privacy.

Article 54

Energy

Co-operation shall focus on:

(a) promotion of renewable energy;

(b) promotion of energy-saving and energy efficiency;

(c) applied research relating to networks of databases linking the two Parties' economic and social operators;

(d) supporting modernisation and development of energy networks and the interconnection of such networks with Community networks.

Article 55

Tourism

Co-operation shall aim to:

- promote investment in tourism;

- improve the knowledge of the tourist industry and ensure greater consistency of policies affecting tourism;

- promote a good seasonal spread of tourism;

- highlight the importance of the cultural heritage for tourism;

- ensure that the interaction between tourism and the environment is suitably maintained;

- make tourism more competitive through support for increased standards and professionalism;

- enhance information flows;

- intensify training activities in hotel management and administration, and training in other hotel trades;

- organise exchanges of experience so as to ensure balanced, sustainable development of tourism, notably through exchanges of information, exhibitions, conventions and publications on tourism.

Article 56

Customs Co-operation

1. The Parties shall develop customs co-operation to ensure that the provisions on trade are observed. For this purpose they shall establish a dialogue on customs matters.

2. Co-operation will focus in particular on:

- the simplification of controls and procedures concerning the customs clearance of goods;

- the possibility of interconnection between the transit systems of the Community and of Lebanon

- the exchange of information among experts and vocational training;

- technical assistance where appropriate.

3. Without prejudice to other forms of co-operation provided for in this Agreement, particularly in the fields of combating drug abuse and money laundering, the Contracting Parties' administrative authorities shall provide mutual assistance in accordance with the terms of Protocol 5.

Article 57

Co-operation in statistics

The aim of co-operation shall be to harmonise methodology used by the Parties and to put to use data, including data-banks, on all areas covered by this Agreement for which statistics can be collected.

Article 58

Consumer Protection

Co-operation in this field should be geared to making consumer protection schemes in the European Community and Lebanon compatible and should, as far as possible, involve:

- increasing the compatibility of consumer legislation in order to avoid barriers to trade;

- establishment and development of systems of mutual information on dangerous food and industrial products and interconnecting them (rapid alert systems);

- exchanges of information and experts;

- organising training schemes and supplying technical assistance.

Article 59

Co-operation in reinforcement of institutions and rule of law

The Parties reiterate the importance of the rule of law and the proper functioning of institutions at all levels in the areas of administration in general, and law enforcement and the machinery of justice in particular. An independent and effective judiciary and well-trained legal profession are of particular importance in this context.

Article 60

Money laundering

1. The Parties agree on the necessity of making every effort to co-operate to prevent the use of their financial systems for laundering of proceeds from criminal activities in general and drug offences in particular.

2. Co-operation in this area may include administrative and technical assistance aimed at establishing effective standards and their efficient implementation in the area of combatting money laundering in line with international standards.

Article 61

Prevention and fight against organised crime

1. The Parties agree to co-operate in order to prevent and fight organised crime, in particular in the following fields: human trafficking; exploitation for sexual purposes; corruption; the counterfeit of financial instruments; the illicit traffic of prohibited, counterfeited or pirated products and of illegal transactions concerning in particular industrial refuse or radioactive material; the trafficking of firearms and explosives; computer criminality; stolen cars.

2. Parties shall co-operate closely in order to establish appropriate mechanisms and standards.

3. Technical and administrative co-operation in this field will include training and the strengthening of the effectiveness of the authorities and structures responsible for fighting and for preventing criminality and the formulation of measures for crime prevention.

Article 62

Co-operation on illicit drugs

1. Within their respective powers and competencies, the Parties shall co-operate to ensure a balanced and integrated approach towards drugs. Drug policies and actions shall be aimed at reducing the supply, trafficking and demand of illicit drugs as well as at a more effective control of precursors.

2. The Parties shall agree on the necessary methods of co-operation to attain these objectives. Actions shall be based on commonly agreed principles along the lines of the five basic principles endorsed at the United Nations General Assembly Special Session on Drugs of 1998 (UNGASS).

3. Co-operation between the Parties may comprise technical and administrative assistance in particular in the following areas: drafting of national legislation and policies; establishment of institutions and information centres; training of personnel; drug related research; and the prevention of diversion of precursors used for the illicit manufacture of drugs. The Parties may agree to include other areas.

TITLE VI

CO-OPERATION IN SOCIAL AND CULTURAL MATTERS

CHAPTER 1

DIALOGUE AND CO-OPERATION IN THE SOCIAL FIELD

Article 63

The two Parties shall decide together on the methods needed to achieve co-operation in the fields covered by this Title.

Article 64

1. The Parties shall conduct regular dialogue on any social matter which is of interest to them.

2. This dialogue shall be used to find ways to achieve progress in the field of movement of workers and equal treatment and social integration of Lebanese and Community nationals legally residing in the territories of their host countries.

3. The dialogue shall notably cover all issues related to:

(a) the living and working conditions of the migrant communities;

(b) migration;

(c) illegal immigration;

(d) schemes and programmes to encourage equal treatment between Lebanese and Community nationals, mutual knowledge of cultures and civilisations, the furthering of tolerance and the removal of discrimination.

Article 65

1. With a view to consolidating co-operation between the Parties in the social field, projects and programmes shall be carried out in any area of interest to them, including:

(a) improving living conditions, particularly in disadvantaged areas and areas whose population has been displaced;

(b) promoting the role of women in the economic and social development process, particularly through education and the media;

(c) bolstering and developing Lebanon's family planning and mother and child protection programmes;

(d) improving the social security and health insurance systems,

(e) improving the health care system, notably through co-operation in the field of public health and prevention, health security and medical training and management;

(f) implementing and financing exchange and leisure programmes for mixed groups of Lebanese and European young people, youth workers, youth NGO representatives, and other experts in the youth field residing in the Member States, with a view to promoting mutual knowledge of their respective cultures and fostering tolerance.

2. The Parties shall engage in a dialogue on all aspects of mutual interest, and particularly on social problems such as unemployment, rehabilitation of the less able-bodied, equal treatment for men and women, labour relations, vocational training, safety and health at work.

Article 66

Co-operation schemes may be carried out in co-ordination with Member States and relevant international organisations.

CHAPTER 2

CO-OPERATION IN CULTURAL MATTERS, AUDIOVISUAL MEDIA AND INFORMATION

Article 67

1. The Parties agree to promote cultural co-operation in fields of mutual interest and in a spirit of respect for each other's cultures. They shall establish a sustainable cultural dialogue. This co-operation shall promote in particular:

- conservation and restoration of historic and cultural heritage (monuments, sites, artefacts, rare books and manuscripts, etc.);

- exchange of art exhibitions and artists;

- training of persons working in the cultural field.

2. Co-operation in the field of audiovisual media shall seek to encourage co-operation in such areas as co-production and training. The Parties shall seek ways to encourage Lebanese participation in Community initiatives in this sector.

3. The Parties agree that existing cultural programmes of the Community and of one or more of the Member States and further activities of interest to both sides, can be extended to Lebanon.

4. The Parties shall in addition, work to promote cultural co-operation of a commercial nature, particularly through joint projects (production, investment and marketing), training and exchange of information.

5. The Parties shall, in identifying co-operation projects, programmes and joint activities, give special attention to young people, self-expression, heritage conservation issues, the dissemination of culture, and communication skills using written and audiovisual media.

6. Co-operation shall be implemented in the way set out in article 42.

CHAPTER 3

CO-OPERATION FOR THE PREVENTION AND CONTROL OF ILLEGAL IMMIGRATION

Article 68

1. The Parties agree to co-operate in order to prevent and control illegal immigration. To this end:

- each of the Member States agrees to readmit any of its nationals present on the territory of Lebanon, upon request by the latter and without further formalities once such persons have been positively identified as such;

- Lebanon agrees to readmit any of its nationals illegally present on the territory of a Member State, upon request by the latter and without further formalities once such persons have been positively identified as such;

The Member States and Lebanon will also provide their nationals with appropriate identity documents for such purposes.

In respect of the Member States of the European Union, the obligation in this Article applies only in respect of those persons who are to be considered their nationals for Community purposes in accordance with Declaration No. 2 to the Treaty establishing the European Community.

In respect of Lebanon, the obligation in this Article applies only in respect to those persons who are considered Lebanese in accordance to the Lebanese legal system and all the relevant laws concerning citizenship.

Article 69

After the entry into force of the Agreement, the Parties, at the request of any of them, shall negotiate and conclude bilateral agreements with each other, regulating specific obligations for the readmission of their nationals. These agreements shall also cover, if deemed necessary by any of the Parties, arrangements for the readmission of third country nationals. Such agreements will lay down details about categories of persons covered by these arrangements as well as the modalities of their readmission.

Adequate financial and technical assistance to implement these agreements may be provided to Lebanon.

Article 70

The Association Council shall examine what other joint efforts can be made to prevent and control illegal immigration.

TITLE VII

FINANCIAL CO-OPERATION

Article 71

With a view to full attainment of the Agreement's objectives, financial co-operation shall be considered for Lebanon in line with the appropriate financial procedures and resources.

These procedures shall be adopted by mutual agreement between the Parties by means of the most suitable instruments once the Agreement enters into force.

In addition to the areas covered by Titles V and VI of this Agreement, co-operation may entail inter alia:

- facilitating reforms aimed at modernising the economy;

- rebuilding and updating economic infrastructure;

- promoting private investment and job creation activities;

- taking into account the effects of the progressive introduction of a free trade area on the Lebanese economy, in particular where the updating and restructuring of the affected economic sectors, especially industry, is concerned;

- flanking measures for policies implemented in the social sectors, particularly for reform of social security.

Article 72

Within the framework of Community instruments intended to buttress structural adjustment programmes in the Mediterranean countries - and in close co-ordination with the Lebanese authorities and other contributors, in particular the international financial institutions - the Community will examine suitable ways of supporting structural policies carried out by Lebanon to restore financial equilibrium in all its key aspects and create an economic environment conducive to boosting growth, while at the same time enhancing social welfare.

Article 73

In order to ensure a co-ordinated approach to dealing with the exceptional macroeconomic and financial problems which could stem from the progressive implementation of the Agreement, the Parties shall closely monitor the development of trade and financial relations between the Community and Lebanon as part of the regular economic dialogue established under Title V.

TITLE VIII

INSTITUTIONAL, GENERAL AND FINAL PROVISIONS

Article 74

An Association Council is hereby established which shall meet at ministerial level when circumstances require, on the initiative of its Chairman and in accordance with the conditions laid down in its rules of procedure.

It shall examine any major issues arising within the framework of this Agreement and any other bilateral or international issues of mutual interest.

Article 75

1. The Association Council shall consist of the members of the Council of the European Union and members of the Commission of the European Community, on the one hand, and of members of the Government of Lebanon, on the other.

2. Members of the Association Council may arrange to be represented, in accordance with the provisions laid down in its rules of procedure.

3. The Association Council shall establish its rules of procedure.

4. The Association Council shall be chaired in turn by a member of the Council of the European Union and a member of the Government of Lebanon in accordance with the provisions laid down in its rules of procedure.

Article 76

The Association Council shall, for the purpose of attaining the objectives of the Agreement, have the power to take decisions in the cases provided for therein.

The decisions taken shall be binding on the Parties, which shall take the measures necessary to implement the decisions taken. The Association Council may also make appropriate recommendations.

It shall draw up its decisions and recommendations by agreement between the two Parties.

Article 77

1. Subject to the powers of the Council, an Association Committee is hereby established which shall be responsible for the implementation of the Agreement.

2. The Association Council may delegate to the Association Committee, in full or in part, any of its powers.

Article 78

1. The Association Committee, which shall meet at the level of officials, shall consist of representatives of members of the European Union and of the European Commission, on the one hand, and of representatives of the Government of Lebanon, on the other.

2. The Association Committee shall establish its rules of procedure.

3. The Association Committee shall normally meet alternately in the Community and in Lebanon.

Article 79

1. The Association Committee shall have the power to take decisions for the management of the Agreement as well as in the areas in which the Association Council has delegated its powers to it.

2. It shall draw up its decisions by agreement between the Parties. These decisions shall be binding on the Parties, which shall take the measures necessary to implement the decisions taken.

Article 80

The Association Council may decide to set up any working group or body necessary for the implementation of the Agreement. It shall define the terms of reference of any such working group or body that shall be subordinated to it.

Article 81

The Association Council shall take all appropriate measures to facilitate co-operation and contacts between the European Parliament and the Lebanese Parliament, and between the Economic and Social Committee of the Community and its counterpart in Lebanon.

Article 82

1. Each of the Parties may refer to the Association Council any dispute relating to the application or interpretation of this Agreement.

2. The Association Council may settle the dispute by means of a decision.

3. Each Party shall be bound to take the measures involved in carrying out the decision referred to in paragraph 2.

4. In the event of it not being possible to settle the dispute in accordance with paragraph 2 of this Article, either Party may notify the other of the appointment of an arbitrator; the other Party must then appoint a second arbitrator within two months. For the application of this procedure, the Community and the Member States shall be deemed to be one Party to the dispute.

The Association Council shall appoint a third arbitrator.

The arbitrators' decisions shall be taken by majority vote.

Each party to the dispute must take the steps required to implement the decision of the arbitrators.

Article 83

Nothing in the Agreement shall prevent a Party from taking any measures:

(a) which it considers necessary to prevent the disclosure of information contrary to its essential security interests;

(b) which relate to the production of, or trade in, arms, munitions or war materials or to research, development or production indispensable for defence purposes, provided that such measures do not impair the conditions of competition in respect of products not intended for specifically military purposes;

(c) which it considers essential to its own security in the event of serious internal disturbances affecting the maintenance of law and order, in time of war or serious international tension constituting threat of war or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security.

Article 84

1. In the fields covered by this Agreement, and without prejudice to any special provisions contained therein:

- the arrangements applied by Lebanon in respect of the Community shall not give rise to any discrimination between the Member States, their nationals, or their companies or firms;

- the arrangements applied by the Community in respect of Lebanon shall not give rise to any discrimination between Lebanese nationals or its companies or firms.

Article 85

As regards direct taxation, nothing in the Agreement shall have the effect of:

- extending the fiscal advantages granted by either Party in any international agreement or arrangement by which it is bound;

- preventing the adoption or application by either Party of any measure aimed at preventing fraud or the evasion of taxes;

- opposing the right of either Party to apply the relevant provisions of its tax legislation to taxpayers who are not in an identical situation, in particular as regards their place of residence.

Article 86

1. The Parties shall take any general or specific measures required to fulfil their obligations under the Agreement. They shall see to it that the objectives set out in the Agreement are attained.

2. If either Party considers that the other Party has failed to fulfil an obligation under the Agreement, it may take appropriate measures. Before so doing, except in cases of special urgency, it shall supply the Association Council with all the relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties.

3. In the selection of the appropriate measures referred to in paragraph 2, priority must be given to those which least disturb the functioning of the Agreement. The Parties also agree that these measures shall be taken in accordance with international law and shall be proportional to the violation.

These measures shall be notified immediately to the Association Council and shall be the subject of consultations within the Association Council if the other Party so requests.

Article 87

Annexes 1 and 2 and Protocols 1 to 5 inclusive shall form an integral part of the Agreement.

Article 88

For the purposes of this Agreement, "Parties" shall mean, on the one hand, the Community, or the Member States, or the Community and its Member States, in accordance with their respective powers, and Lebanon, on the other hand.

Article 89

This Agreement shall be concluded for an unlimited period.

Either Party may denounce this Agreement by notifying the other Party. The Agreement shall cease to apply six months after the date of such notification.

Article 90

This Agreement shall apply, on the one hand, to the territories in which the Treaty establishing the European Community is applied and under the conditions laid down in that Treaty and, on the other, to the territory of Lebanon.

Article 91

This Agreement is drawn up in duplicate in the Arabic, Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish, and Swedish languages, each of these texts being equally authentic. It shall be deposited with the General Secretariat of the Council of the European Union.

Article 92

1. The Agreement shall be approved by the Parties in accordance with their own procedures. This Agreement shall enter into force on the first day of the second month following the date on which the Parties notify each other that the procedures referred to in the first sentence have been completed.

2. Upon its entry into force, this Agreement shall replace the Co-operation Agreement between the European Economic Community and the Republic of Lebanon and the Agreement between the Member States of the European Coal and Steel Community and Lebanon, signed in Brussels on 3 May 1977.

JOINT DECLARATIONS

Joint declaration relating to the Preamble

The Parties declare their awareness of the fact that liberalisation of trade between them implies measures to adapt and restructure the Lebanese economy which may have effects on budgetary resources and the speed of Lebanon's reconstruction.

Joint declaration relating to Article 3

The Parties reiterate their intention to support efforts to achieve an equitable, comprehensive and lasting peace settlement in the Middle East.

Joint Declaration on Article 14

Both Parties agree to negotiate with a view to granting each other concessions in the trade of fish and fishery products on the basis of reciprocity and mutual interest, with the objective of reaching agreement on the details no later than two years after the signature of this Agreement.Joint declaration relating to Article 27

The Parties confirm their intention to prohibit the export of toxic waste and the European Community confirms its intention to assist Lebanon in seeking solutions to the problems posed by such waste.

Joint declaration relating to Article 28

In order to take account of the time-scale necessary for setting up the free trade areas between Lebanon and the other Mediterranean countries, the Community undertakes to give favourable consideration to requests presented to it for anticipated application of the diagonal cumulation with those countries.

Joint Declaration relating to Article 35

The implementation of co-operation mentioned in Article 35 paragraph 2 is conditional upon the entry into force of a Lebanese competition law and of the taking up of the duties of the authority responsible for its application.

Joint declaration relating to Article 38

The Parties agree that for the purpose of the Agreement, intellectual, industrial and commercial property includes in particular copyright, including the copyright in computer programmes, and neighbouring rights, the rights relating to databases, the rights relating to patents, industrial designs, geographical indications, including designations of origin, trademarks and service marks, topographies of integrated circuits, as well as protection against unfair competition as referred to in Article 10 Bis of the Paris Convention for the Protection of Industrial Property and protection of undisclosed information on know-how.

The provisions of Article 38 shall not be interpreted in a manner to oblige either Party to accede to international conventions other than those referred to in Annex 2.

The Community will grant technical assistance to the Lebanese Republic in its endeavour to comply with its obligations under Article 38.

Joint declaration relating to Article 47

The Parties recognise the need to modernise the Lebanese productive sector in order to adapt it better to the realities of the international and of the European economy.

The Community may give its support to Lebanon in implementing a support programme for the industrial sectors which are to benefit from restructuring and modernisation in order to cope with difficulties which may stem from the liberalisation of trade and in particular the dismantling of tariffs.

Joint Declaration relating to Article 60

The Parties agree that the standards established by the Financial Action Task Force (FATF) are part of the international standards referred to in paragraph 2.

Joint Declaration relating to Workers (Article 65)

The Parties reaffirm the importance they attach to fair treatment of foreign workers legally employed on their territory. The Member States agree that, if Lebanon so requests, they are each prepared to negotiate bilateral Agreements relating to the working conditions, remuneration, dismissal and social security rights of Lebanese workers legally employed on their territory.

Joint declaration relating to Article 67

The Parties declare that special attention will be accorded to protection, conservation and restoration of sites and monuments.

They agree to co-operate in seeking to ensure the return of those parts of the Lebanese cultural heritage illegally removed from the country since 1974.

Joint declaration relating to Article 86

(a) The Parties agree, for the purpose of the correct interpretation and practical application of this Agreement, that the term "cases of special urgency" in Article 86 means a case of the material breach of the Agreement by one of the Parties. A material breach of the Agreement consists in:

- repudiation of the Agreement not sanctioned by the general rules of international law;

- violation of the essential element of the Agreement, namely its Article 2.

(b) The Parties agree that the "appropriate measures" referred to in Article 86 are measures taken in accordance with international law. If a Party takes a measure in a case of special urgency as provided for under Article 86, the other Party may avail itself of the procedure relating to settlement of disputes.

Joint declaration relating to visas

The Parties agree to study the simplification and acceleration of visa issue procedures, in particular with regard to bona-fide persons active in the implementation of this agreement, including inter alia business persons, investors, academics, trainees, government officials; spouses and minor children of persons legally resident in the territory of the other Party shall also be considered.

DECLARATIONS BY THE EUROPEAN COMMUNITY

Declaration by the European Community on Turkey

The Community recalls that according to the Customs Union in force between the Community and Turkey, this country has the obligation, in relation to countries which are not members of the Community, to align itself on the Common Customs Tariff and, progressively, with the preferential customs regime of the Community, taking the necessary measures and negotiating agreements on mutually advantageous basis with the countries concerned. Consequently, the Community invites Lebanon to enter into negotiations with Turkey as soon as possible.

Declaration by the European Community relating to Article 35

The European Community declares that, in the context of the interpretation of Article 35(1), it will assess any practice contrary to that Article on the basis of the criteria resulting from the rules contained in Articles 81 and 82 of the Treaty establishing the European Community, including secondary legislation.

LIST OF ANNEXES AND PROTOCOLS

ANNEX 1 List of agricultural and processed agricultural products falling under HS chapters 25 to 97 referred to in articles 7 and 12

ANNEX 2 Concerning intellectual property

PROTOCOL 1 Concerning arrangements applicable to import into the Community of agricultural products originating in Lebanon

PROTOCOL 2 Concerning arrangements applicable to import into Lebanon of agricultural products originating in the Community

PROTOCOL 3 Arrangements concerning processed agricultural products

PROTOCOL 4 Concerning the definition of the concept "originating products" and methods of administrative co-operation

PROTOCOL 5 On mutual customs assistance between administrative authorities

ANNEX 1

List of agricultural and processed agricultural products falling under HS chapters 25-97 of the HS REFERRED to in ARTICLES 7 AND 12

HS Code 2905.43 (mannitol)

HS Code 2905.44 (sorbitol)

HS Code 2905.45 (glycerol)

HS Heading 33.01 (essential oils)

HS Code 3302.10 (odoriferous substances)

HS Headings 35.01 to 35.05 (albuminoidal substances, modifies starches, glues)

HS Code 3809.10 (finishing agents)

HS Heading 38.23 (industrial fatty acids, acid from oil refining, industrial fatty alcohols).

HS Code 3824.60 (sorbitol n.e.p.)

HS Headings 41.01 to 41.03 (hides and skins)

HS Heading 43.01 (raw furskins)

HS Headings 50.01 to 50.03 (raw silk and silk waste)

HS Headings 51.01 to 51.03 (wool and animal hair)

HS Headings 52.01 to 52.03 (raw cotton, waste and cotton carded or combed)

HS Heading 53.01 (raw flax)

HS Heading 53.02 (raw hemp)

ANNEX 2

(referred to in article 38)

INTELLECTUAL, INDUSTRIAL AND COMMERCIAL PROPERTY

1. By the end of the fifth year after the entry into force of the Agreement, Lebanon shall ratify the revisions to the following multilateral conventions on intellectual property, to which Member States and Lebanon are parties or which are de facto applied by member states:

- Paris Convention for the protection of industrial property (Stockholm Act 1967 and amended in 1979);

- Berne Convention for the Protection of Literary and Artistic Works (revised at Paris in 1971 and amended in 1979);

- Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks (Geneva 1977, amended in 1979).

2. By the end of the fifth year after the entry into force of the Agreement, Lebanon shall accede to the following multilateral conventions to which member states are parties or which are de facto applied by member states:

- International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (Rome 1961);

- Patent co-operation Treaty (Washington, 1970, amended in 1979 and modified in 1984);

- Budapest Treaty on the International Recognition of the deposit of Micro-organisms for the Purposes of Patent Procedure ( 1977, modified in 1980);

- Protocol to the Madrid Agreement concerning the international registration of marks (Madrid 1989);

- Trademark Law Treaty (Geneva, 1994);

- International Convention for the Protection of New Varieties of Plants (UPOV) (Geneva Act of 1991);

- Agreement on Trade-related Aspects of Intellectual Property, Annex 1C to the Agreement establishing the World Trade Organisation (TRIPs, Marrakesh 1994).

The Parties shall make every effort to ratify the following multilateral conventions at the earliest possible opportunity:

- WIPO Copyright Treaty (Geneva, 1996);

- WIPO Performances and Phonograms Treaty (Geneva, 1996).

3. The Association Council may decide that paragraph 1 shall apply to other multilateral conventions in this field.

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LIST OF ANNEXES AND PROTOCOLS

Protocol I

List of products referred to in Article 14

1. Imports into the Community of the following products originating in the Republic of Lebanon shall be subject to the conditions set out below

2. Imports into the Community of those agricultural products originating in the Republic of Lebanon other than those listed in this Protocol shall be allowed free of customs duty

3. For the first year of application, the volumes of tariff quotas shall be calculated as a pro rata of the basic volumes, taking into account the part of the period elapsed before the date of entry into force of this agreement

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(1) Notwithstanding the rules for the implementation of the Combined Nomenclature, the wording of the description of the products is to be considered as having no more than

an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN-code. Where ex CN codes are indicated, the preferential

scheme is to be determined by application of the CN code and description taken together.

(2) The reduction only applies to the ad valorem part of the duty

(3) Entry under this subheading is subject to conditions laid down in the relevant Community provisions (see Articles 1 to 13 of Commission Regulation (EEC) No 1047/2001 (OJ L 145, 31.05.2001, p. 35) and subsequent amendments)

(4) Entry under this subheading is subject to conditions laid down in the relevant Community provisions (see Articles 291 to 300 of Commission Regulation (EEC) No 2454/93 (OJ L 253, 11.10.1993, p. 71) and subsequent amendments)

(5) The concession applies to imports of untreated olive oil, wholly obtained in Lebanon and transported direct from Lebanon to the Community.

Protocol 2

List of products referred to in Article 14

1. Imports into the Republic of Lebanon of the following products originating in the Community shall be subject to the conditions set out below.

2. The reduction rates in column (B) of the customs duty in (A) shall neither apply to the minimum duties nor to the excise duties in (C).

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(1) Notwithstanding the rules for the implementation of the Lebanese Customs Nomenclature, the wording of the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the Lebanese customs code. Where ex codes are indicated, the preferential scheme is to be determined by application of the code and description taken together.

Protocol 3

on trade between Lebanon and the Community in processed agricultural products

Article 1

Imports into the Community of processed agricultural products originating in Lebanon shall be subject to the customs duties and charges having equivalent effects mentioned in Annex 1 of this Protocol.

Article 2

1) Imports into Lebanon of processed agricultural products originating in the Community shall be subject to the customs duties and charges having equivalent effect as mentioned in Annex 2 of this Protocol.

2) The tariff dismantling schedule applying in accordance to paragraph 1 shall be that referred to in article 9 1 of the Agreement, unless otherwise specified in Annex 2 of this Protocol.

Article 3

The reductions of customs duties mentioned in Annexes 1 and 2 shall apply to the basic duties referred to in Article 19 of the Agreement.

Article 4

1. Customs duties applied pursuant to Article 1 and 2 may be reduced where in trade between the Community and Lebanon, the duties applied to the basic products are reduced, or where such reductions are the result of mutual concessions relating to processed agricultural products.

2. As regards the duties applied by the Community, the reductions provided for under the first paragraph will be calculated on the part of the duty designated as the agricultural component which shall correspond to the agricultural products actually used in the manufacture of the processed agricultural products in question and deduced from the duties applied to these basic agricultural products.

3. The reduction referred to in paragraph 1, the list of products concerned and, where appropriate, the tariff quotas within which the reduction applies shall be established by the Association Council.

Article 5

The European Community and Lebanon shall inform each other of the administrative arrangements adopted for the products covered by this Protocol.

These arrangements should ensure equal treatment for all interested parties and should be as simple and flexible as possible.

Protocol 3

Annex 1 - EU Scheme

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than indicative value, the preferential scheme being determined, within the context of this Protocol, by the coverage of the CN codes as they exist at the time of adoption of the current act . Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description together

List 1

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EU Scheme

List 2

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EU Scheme

List 3

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Protocol 3 ANNEX 2 - Lebanese Scheme

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(1) Notwithstanding the rules for the implementation of the Lebanese customs Nomenclature, the wording of the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the Lebanese customs code. Where ex codes are indicated, the preferential scheme is to be determined by application of the code and description taken together.

(2) The reduction in column B of the customs duty in A shall neither apply to the minimum duty nor to the excise duty in C.

PROTOCOL 4

CONCERNING THE DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS" AND METHODS OF ADMINISTRATIVE COOPERATION

TABLE OF CONTENTS

TITLE I GENERAL PROVISIONS

- Article 1 Definitions

TITLE II DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS"

- Article 2 General requirements

- Article 3 Bilateral cumulation of origin

- Article 4 Diagonal cumulation of origin

- Article 5 Wholly obtained products

- Article 6 Sufficiently worked or processed products

- Article 7 Insufficient working or processing operations

- Article 8 Unit of qualification

- Article 9 Accessories, spare parts and tools

- Article 10 Sets

- Article 11 Neutral elements

TITLE III TERRITORIAL REQUIREMENTS

- Article 12 Principle of territoriality

- Article 13 Direct transport

- Article 14 Exhibitions

TITLE IV DRAWBACK OR EXEMPTION

- Article 15 Prohibition of drawback of, or exemption from, customs duties (amended)

TITLE V PROOF OF ORIGIN

- Article 16 General requirements

- Article 17 Procedure for the issue of a movement certificate EUR.1

- Article 18 Movement certificates EUR.1 issued retrospectively

- Article 19 Issue of a duplicate movement certificate EUR.1

- Article 20 Issue of movement certificates EUR.1 on the basis of a proof of origin issued or made out previously

- Article 21 Conditions for making out an invoice declaration

- Article 22 Approved exporter

- Article 23 Validity of proof of origin

- Article 24 Submission of proof of origin

- Article 25 Importation by instalments

- Article 26 Exemptions from proof of origin

-Article 27 Supporting documents

- Article 28 Preservation of proof of origin and supporting documents

- Article 29 Discrepancies and formal errors

- Article 30 Amounts expressed in Euro

TITLE VI ARRANGEMENTS FOR ADMINISTRATIVE COOPERATION

- Article 31 Mutual assistance

- Article 32 Verification of proofs of origin

- Article 33 Dispute settlement

- Article 34 Penalties

- Article 35 Free zones

TITLE VII CEUTA AND MELILLA

- Article 36 Application of the Protocol

- Article 37 Special conditions

TITLE VIII FINAL PROVISIONS

- Article 38 Amendments to the Protocol

- Article 39 Implementation of the Protocol

- Article 40 Goods in transit or storage

ANNEXES

ANNEX I: Introductory notes to the list in Annex II

ANNEX II: List of working or processing required to be carried out on non-originating materials in order that the products manufactured can obtain originating status.

ANNEX III : List of products originating in Turkey to which the provisions of Article 4 do not apply, listed in the order of HS Chapters and Headings

ANNEX IV: Movement certificate EUR.1 and application for a movement certificate EUR.1

ANNEX V: Invoice declaration

ANNEX VI: Joint declarations

TITLE I

GENERAL PROVISIONS

Article 1 Definitions

For the purposes of this Protocol:

(a) "manufacture" means any kind of working or processing including assembly or specific operations;

(b) "material" means any ingredient, raw material, component or part, etc., used in the manufacture of the product;

(c) "product" means the product being manufactured, even if it is intended for later use in another manufacturing operation;

(d) "goods" means both materials and products;

(e) "customs value" means the value as determined in accordance with the 1994 Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (WTO Agreement on customs valuation);

(f) "ex-works price" means the price paid for the product ex works to the manufacturer in the Community or Lebanon in whose undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any internal taxes which are, or may be, repaid when the product obtained is exported;

(g) "value of materials" means the customs value at the time of importation of the non-originating materials used, or, if this is not known and cannot be ascertained, the first ascertainable price paid for the materials in the Community or Lebanon;

(h) "value of originating materials" means the value of such materials as defined in subparagraph (g) applied mutatis mutandis;

(i) "added value" shall be taken to be the ex-works price minus the customs value of each of the products incorporated which did not originate in the country in which those products were obtained;

(j) "chapters" and "headings" mean the chapters and the headings (four-digit codes) used in the nomenclature which makes up the Harmonized Commodity Description and Coding System, referred to in this Protocol as "the Harmonized System" or "HS";

(k) "classified" refers to the classification of a product or material under a particular heading;

(l) "consignment" means products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice;

(m) "territories" includes territorial waters.

TITLE II

DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS"

Article 2 General requirements

1. For the purpose of implementing this Agreement, the following products shall be considered as originating in the Community:

(a) products wholly obtained in the Community within the meaning of Article 5 of this Protocol;

(b) products obtained in the Community incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in the Community within the meaning of Article 6 of this Protocol;

2. For the purpose of implementing this Agreement, the following products shall be considered as originating in Lebanon:

(a) products wholly obtained in Lebanon within the meaning of Article 5 of this Protocol;

(b) products obtained in Lebanon incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in Lebanon within the meaning of Article 6 of this Protocol.

Article 3 Bilateral cumulation of origin

1. Materials originating in the Community shall be considered as materials originating in Lebanon when incorporated into a product obtained there. It shall not be necessary that such materials have undergone sufficient working or processing, provided they have undergone working or processing going beyond that referred to in Article 7(1) of this Protocol.

2. Materials originating in Lebanon shall be considered as materials originating in the Community when incorporated into a product obtained there. It shall not be necessary that such materials have undergone sufficient working or processing, provided they have undergone working or processing going beyond that referred to in Article 7(1) of this Protocol.

Article 4 Diagonal cumulation of origin

1. Subject to the provisions of paragraphs 2 and 3, materials originating in any of the countries which are signatory to a European-Mediterranean Association Agreement,, within the meaning of the Agreements between the Community and Lebanon and these countries shall be considered as originating in the Community or Lebanon when incorporated into a product obtained there. It shall not be necessary that such materials have undergone sufficient working or processing.

This paragraph shall not apply to materials originating in Turkey which are mentioned in the list at Annex III to this Protocol."

2. Products which have acquired originating status by virtue of paragraph 1 shall only continue to be considered as products originating in the Community or Lebanon when the value added there exceeds the value of the materials used originating in any one of the other countries referred to in paragraph 1. If this is not so, the products concerned shall be considered as originating in the country referred to in paragraph 1 which accounts for the highest value of originating materials used. In the allocation of origin, no account shall be taken of materials originating in the other countries referred to in paragraph 1 which have undergone sufficient working or processing in the Community or Lebanon.

3. The cumulation provided for in this Article may only be applied where the materials used have acquired the status of originating products by an application of rules of origin identical to the rules in this Protocol. The Community and Lebanon shall provide each other, through the European Commission with details of agreements and their corresponding rules of origin which have been concluded with the other countries referred to in paragraph 1.

4. Once the requirements laid down in paragraph 3 have been fulfilled, and a date for the entry into force of these provisions has been agreed, each party shall fulfill its own notification and information obligations.

Article 5 Wholly obtained products

1. The following shall be considered as wholly obtained in the Community or Lebanon:

(a) mineral products extracted from their soil or from their seabed;

(b) vegetable products harvested there;

(c) live animals born and raised there;

(d) products from live animals raised there;

(e) products obtained by hunting or fishing conducted there;

(f) products of sea fishing and other products taken from the sea outside the territorial waters of the Community or Lebanon by their vessels;

(g) products made aboard their factory ships exclusively from products referred to in subparagraph (f);

(h) used articles collected there fit only for the recovery of raw materials, including used tyres fit only for retreading or for use as waste;

(i) waste and scrap resulting from manufacturing operations conducted there;

(j) products extracted from marine soil or subsoil outside their territorial waters provided that they have sole rights to work that soil or subsoil;

(k) goods produced there exclusively from the products specified in subparagraphs (a) to (j).

2. The terms "their vessels" and "their factory ships" in paragraph 1(f) and (g) shall apply only to vessels and factory ships:

(a) which are registered or recorded in an EC Member State or in Lebanon;

(b) which sail under the flag of an EC Member State or of Lebanon;

(c) which are owned to an extent of at least 50 per cent by nationals of EC Member States or of Lebanon, or