Proposal for a Council Decision concerning the conclusion of a Cooperation Agreement between the European Community and the Former Yugoslav Republic of Macedonia (97/C 79/01) COM(96) 533 final - 96/0259(AVC) (Submitted by the Commission on 26 November 1996)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 113 and 235 in conjunction with the second sentence of Article 228 (2) and the second subparagraph of Article 228 (3) thereof,

Having regard to the proposal from the Commission,

Having regard to the assent of the European Parliament,

Whereas the Cooperation Agreement between the European Community and the Former Yugoslav Republic of Macedonia signed on . . . should be approved;

Whereas the Treaty does not provide, for the adoption of this Decision, powers other than those of Article 235 of the Treaty establishing the European Community,

HAS DECIDED AS FOLLOWS:

Article 1

The Cooperation Agreement and the Final Act between the European Community and the Former Yugoslav Republic of Macedonia are hereby approved on behalf of the Community.

The texts of the Agreement and of the Final Act are annexed to this Decision.

Article 2

The President of the Council shall, on behalf of the Community, give the notification provided for in Article 48 (2) of the Agreement.

Article 3

The Commission, assisted by representatives of the Member States, shall represent the Community in the Cooperation Council set up by Article 33 of the Agreement.

Article 4

This Decision shall be published in the Official Journal of the European Communities. It shall take effect on the day of its publication.

COOPERATION AGREEMENT between the European Community and the Former Yugoslav Republic of Macedonia

THE EUROPEAN COMMUNITY, hereinafter referred to as 'the Community`,

of the one part, and

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA,

of the other part,

RESOLVED to strengthen economic cooperation between the Community and the Former Yugoslav Republic of Macedonia;

RESOLVED to promote the development and diversification of economic, financial and trade cooperation in order to foster a better balance and an improvement in the structure of their trade and expand its volume and to improve the welfare of their populations;

RESOLVED to provide a sounder basis for cooperation in conformity with their international obligations;

RESOLVED to contribute to regional stability and to open and cooperative relations among countries of South-eastern Europe, taking into consideration the specific situation of the Former Yugoslav Republic of Macedonia;

CONSCIOUS that the Interim Accord of 13 September 1995 contributes to regional stability and favours cooperative relations between Greece and the Former Yugoslav Republic of Macedonia;

AWARE that the Former Yugoslav Republic of Macedonia has taken the initiative leading to UN General Assembly Resolution No 48/84B of 16 December 1993 on the development of good-neighbourly relations among Balkan States;

CONSCIOUS of the need to bring about harmonious economic and trade relations between the Community and the Former Yugoslav Republic of Macedonia;

AWARE of the importance of giving full effect to all the provisions and principles of the Organization on Security and Cooperation in Europe process (OSCE), and in particular those set out in the Helsinki Final Act, the concluding documents of the Madrid, Vienna and Copenhagen meetings and the Charter of Paris for a New Europe, particularly with regard to the rule of law, democracy and human rights, as well as those of the Bonn Conference on economic cooperation;

CONSCIOUS that the respect for democratic principles and basic human rights, as proclaimed in the Universal Declaration of Human Rights, underpins the internal and international policies of the Community and of the Former Yugoslav Republic of Macedonia and constitutes an essential element of this Agreement;

CONSCIOUS that the same applies to the principles of a market economy as reflected in the document of the Bonn Conference on economic cooperation;

RECOGNIZING the importance of social development which should go hand in hand with any economic development;

RECOGNIZING the importance of guaranteeing the rights of ethnic and national groups and minorities, in accordance with the undertakings made within the Organization on Security and Cooperation in Europe (OSCE);

AWARE of the importance of strengthening the democratic institutions and of supporting the process of economic reform in the Former Yugoslav Republic of Macedonia, bearing in mind the overall situation in the region and the particular economic difficulties of the Former Yugoslav Republic of Macedonia;

DESIROUS of establishing regular political dialogue on bilateral and international issues of mutual interest with particular emphasis on the creation of conditions facilitating the progressive rapprochement of the Former Yugoslav Republic of Macedonia with the Community and favourable to cooperation and good-neighbourly relations in the region.

CONSCIOUS that the readiness of the Former Yugoslav Republic of Macedonia to enter into such cooperation and relations with the other countries in the region constitutes an important factor in the development of the relations and cooperation between the Community and the Former Yugoslav Republic of Macedonia;

CONSCIOUS that the present Agreement constitutes a first step of contractual relations between the Community and the Former Yugoslav Republic of Macedonia and that the Contracting Parties desire to strengthen their contractual relations as soon as possible, taking full account of the aspirations of the Former Yugoslav Republic of Macedonia for an advanced relationship with the European Union.

HAVE DECIDED to conclude this Agreement and to this end have designated as their plenipotentiaries:

THE EUROPEAN COMMUNITY:

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA:

WHO, having exchanged their full powers, found in good and due form,

HAVE AGREED AS FOLLOWS:

Article 1

The objective of this Agreement between the Community and the Former Yugoslav Republic of Macedonia is to promote comprehensive cooperation between the Contracting Parties with a view to contributing to the economic development of the Former Yugoslav Republic of Macedonia, in particular to the development of a market economy, and to deepening relations between the Contracting Parties. The Community's cooperation with and assistance to the Former Yugoslav Republic of Macedonia shall also contribute to good-neighbourly relations and the development of regional cooperation and trade. To these ends, provisions and measures will be adopted and implemented in the fields of economic, technical and financial cooperation and trade.

The readiness of the Former Yugoslav Republic of Macedonia to enter into cooperative and good-neighbourly relations with the other countries of the region, including the promotion of economic cooperation and trade, constitutes an important factor in the development of the relations and cooperation between the Community and the Former Yugoslav Republic of Macedonia as foreseen in this Agreement.

Respect for the democratic principles and human rights established by the Universal Declaration of Human Rights, the Helsinki Final Act and the Charter of Paris for a New Europe underpins the internal and international policies of the Community and of the Former Yugoslav Republic of Macedonia, and constitutes an essential element of this Agreement.

The same applies to the principles of a market economy as reflected in the document of the Bonn Conference on economic cooperation.

The Contracting Parties acknowledge the importance of social development which should go hand in hand with any economic development. In this context the Contracting Parties give particular priority to the respect for basic social rights.

TITLE I Economic, technical and financial cooperation

Article 2

The Community and the Former Yugoslav Republic of Macedonia shall cooperate with the aim of contributing to the development of the Former Yugoslav Republic of Macedonia by efforts complementary to those made by the Former Yugoslav Republic of Macedonia itself and of strengthening existing economic links between the Former Yugoslav Republic of Macedonia and the Community on as broad a basis as possible, for the mutual benefit of the Contracting Parties. Particular weight shall be attached to activities and cooperation of interregional or trans-European interest.

Article 3

In order to achieve the cooperation referred to in Article 2, account shall be taken, in particular, of the development objectives and priorities of the Former Yugoslav Republic of Macedonia.

Article 4

1. The purpose of cooperation between the Community and the Former Yugoslav Republic of Macedonia in the field of industry shall be to promote in particular:

- Community involvement in the efforts made by the Former Yugoslav Republic of Macedonia to modernize and restructure its industry with a view to facilitating the transition to a market economy and to foster economic cooperation with the other countries in the region,

- market surveys and trade promotion by both Contracting Parties on their respective markets and on the markets of third countries,

- the transfer and development of technology and know-how in the Former Yugoslav Republic of Macedonia,

- fostering of cooperation in long-term production between economic operators of the Contracting Parties in order to establish more stable and balanced links between their respective economies,

- efforts to find appropriate ways and means of removing any barriers to trade on both sides which are likely to impede access to either market,

- the putting-up for tender of goods and services contracts,

- the organization of contacts and meetings between industrial policy-makers, promoters and economic operators in order to encourage the establishment of new relations in the field of industry, in accordance with the objectives of this Agreement,

- the exchange of available information on short- and medium-term prospects and forecasts for production, consumption and trade.

2. The Contracting Parties shall encourage the development and strengthening of craft industries and small and medium-sized enterprises (SMEs) and their organizations in the Former Yugoslav Republic of Macedonia, as well as cooperation between craft industries and SMEs in the Community and the Former Yugoslav Republic of Macedonia.

To this end they shall encourage the exchange of information and the transfer of technology, as well as cooperation between enterprises, in particular by establishing appropriate links with Community operators (such as BRE, BC-Net, Euro-Info Centre, etc.) and by organizing direct business contacts between enterprises (such as Interprise events and/or participation at Europartenariats).

3. In line with the principles of a market economy and of the Energy Charter Treaty, the aim of cooperation in the field of energy between the Community and the Former Yugoslav Republic of Macedonia shall be to encourage in particular the facilitation of energy transit, the consideration of the possibility of the interconnection of energy networks and the participation of the Contracting Parties' economic operators in research, production and processing programmes in connection with the energy resources of the Former Yugoslav Republic of Macedonia and any other projects of mutual interest.

4. The Contracting Parties shall cooperate with a view to promoting the development of standards in mining and modernizing existing facilities.

Article 5

The Contracting Parties shall reactivate and develop cooperation in the field of research and technological development in accordance with the existing instruments.

Article 6

1. The main aims of cooperation in agriculture between the Community and the Former Yugoslav Republic of Macedonia shall be:

- to encourage scientific and technical cooperation on projects of mutual interest, including projects in third countries,

- in particular, to promote mutually advantageous investment projects and in that connection encourage efforts to achieve complementarity.

2. To this end the Community and the Former Yugoslav Republic of Macedonia shall:

- step up the exchange of information on their agricultural policy guidelines, including short- and medium-term production, consumption and trade forecasts,

- facilitate and encourage the study of practical schemes for cooperation in the mutual interest of both Contracting Parties,

- encourage the improvement and broadening of contacts between economic operators.

Article 7

1. In the field of transport the Community and the Former Yugoslav Republic of Macedonia shall examine the scope:

- for improving and developing international transport services including combined transport, notably in order to achieve complementarity taking into account the regional context, and

- for implementing specific schemes of mutual interest in this field.

2. Cooperation shall also aim to encourage the improvement and development of infrastructure, to the mutual benefit of the Contracting Parties.

To this end the Community and the Former Yugoslav Republic of Macedonia shall exchange information on projects of mutual interest to build trunk roads, and encourage cooperation in their execution.

3. In addition, the Community and the Former Yugoslav Republic of Macedonia shall hold exchanges of views and information on the development of their respective transport policies.

Article 8

The Community and the Former Yugoslav Republic of Macedonia shall encourage exchanges of information on tourism and participation in joint studies on possible ways of developing this sector in a balanced and sustainable manner, and shall promote contacts between their competent bodies and tourist trade associations, with a view to increasing tourist flows.

Article 9

With the aim of improving health, the quality and circumstances of life, the environment and living conditions of both Contracting Parties, pooling technical know-how on environmental matters and encouraging cooperation on environmental problems, the Community and the Former Yugoslav Republic of Macedonia shall exchange information on developments in their respective policies with particular emphasis on sustainable development and shall encourage the joint implementation of specific schemes.

Article 10

1. In the context of financial cooperation, the Community and the Former Yugoslav Republic of Macedonia shall exchange information on and undertake joint analyses of their medium-term economic policies, balance-of-payments trends and the policies which determine them, and capital market trends in European centres, with the aim of promoting the activities of economic operators.

They shall exchange information in the Cooperation Council set up by Article 33 on general conditions which may influence capital flows earmarked for financing investment projects in various sectors of mutual interest.

2. The Contracting Parties agree on the necessity of making every effort and cooperating in order to prevent the use of their financial systems for laundering of proceeds from criminal activities in general and drug offences in particular.

3. The Community shall participate in the financing of capital projects of mutual interest which take account of the objectives of this Agreement, under the conditions laid down in the Protocol on financial cooperation.

4. Financial assistance will be made available under the Phare programme in accordance with the Council Regulation (EEC) No 3906/89, as amended, on a multiannual indicative basis including projects promoting regional and other forms of cooperation.

Article 11

1. Within the limits of their powers, the Contracting Parties shall make efforts to encourage and promote cooperation in the following fields:

- establishment and supply of services, including financial services,

- payment and movement of capital,

- information,

- development of human resources, education and training, social affairs and public health,

- statistics and customs,

- telecommunications,

- standardization and certification,

- investment promotion and protection,

- public procurement.

2. The Former Yugoslav Republic of Macedonia shall endeavour to ensure that its legislation would be gradually made compatible with that of the Community. The Community shall provide appropriate technical assistance for this purpose.

3. The administrative authorities of the Contracting Parties shall assist each other in the customs field, in accordance with the provisions of the Protocol on the definition of the concept of originating products and on methods of administrative cooperation.

Article 12

1. The Cooperation Council shall periodically define the general guidelines of cooperation for the purpose of attaining the aims set out in this Agreement.

2. The Cooperation Council shall be responsible for seeking ways and means of establishing cooperation in the areas defined by this Agreement.

TITLE II Trade

Article 13

1. In the field of trade, the object of this Agreement is to promote trade between the Contracting Parties, taking account of their respective levels of development and of the need to ensure a better balance in their trade, with a view to improving the conditions for access for products of the Former Yugoslav Republic of Macedonia to the Community market.

2. The Community shall provide technical assistance for the envisaged accession of the Former Yugoslav Republic of Macedonia to the WTO.

Article 14

Subject to the special provisions laid down or envisaged in respect of certain products in this Title and in the Protocol on rules of origin, products originating in the Former Yugoslav Republic of Macedonia other than those listed in Annex II to the Treaty establishing the European Community and in Annex A to this Agreement shall be imported into the Community free of quantitative restrictions and measures having equivalent effect, and of customs duties and charges having equivalent effect.

Article 15

1. Imports into the Community of the products originating in the Former Yugoslav Republic of Macedonia listed in Annex C I shall be subject to annual ceilings, the ceilings fixed for the year of entry into force of the Agreement being indicated against each product.

2. Imports into the Community of the products listed in the Annexes D and E shall be subject to annual tariff quotas, ceilings or reference quantities, the quotas, ceilings and reference quantities fixed for the year of entry into force of the Agreement being indicated against each product.

3. Once a ceiling set for imports of a product is reached, the custom duties generally applied in respect of third countries may be reintroduced in respect of imports of the product in question until the end of the calendar year.

4. Once a tariff quota set for imports of a product is reached, the custom duties generally applied in respect of third countries will be reintroduced in respect of imports of the product in question until the end of the calendar year.

5. Once imports of a product subject to reference quantity exceed that reference quantity, a decision may be taken by the Community in accordance with the appropriate Community procedure to make it subject to a ceiling equal to the reference quantity, having regard to the Community annual balance of trade in the product.

6. If, during two consecutive years, imports of a product listed in Annex C I have been less than 80 % of the amount laid down, the Community may suspend the ceiling in question.

7. As from the second year following the entry into force of the Agreement, the amounts of the ceilings given in Annex C I shall be increased annually by 5 % except that the Community may extend for a period of one year the ceiling or ceilings set for the preceding year.

8. Additional trade arrangements for certain iron and steel products are laid down in a specific Protocol.

9. Pending the conclusion of a separate agreement setting out specific trade arrangements, the regime applicable to trade in textiles products (Chapters 50 to 63 of the combined nomenclature) shall be the one defined by Council Regulation (EC) No 517/94.

10. The trade arrangements to apply to wine products will be defined in a separate wine and spirit agreement.

Article 16

Imports into the Community of the products listed in Annex B shall be subject to the tariff arrangements and rules indicated for each of them in that Annex.

Article 17

1. For certain products, which it considers to be sensitive, the Community reserves the right to call on the Cooperation Council to determine such special conditions for access to its market as may prove necessary.

The Cooperation Council shall determine the conditions in question within a period not exceeding three months from the date of notification. Failing a decision by the Cooperation Council within that period, the Community may take the necessary measures. However, such measures shall be of the same kind as those provided for in Article 15.

2. For the purposes of implementing paragraph 1, the Contracting Parties shall hold periodic exchanges of information in the Cooperation Council before determining, if appropriate, special conditions for access by the products concerned to the markets of each of the Contracting Parties. The Contracting Parties shall notably exchange information on trade flows and medium- and long-term production and export forecasts.

3. The Cooperation Council shall examine periodically the measures taken pursuant to paragraph 1 to ascertain whether they are compatible with the objectives of the Agreement.

Article 18

The products referred to in the Agreement originating in the Former Yugoslav Republic of Macedonia may not be given more favourable treatment when imported into the Community than that given by the Member States among themselves.

Article 19

1. In the field of trade, the Former Yugoslav Republic of Macedonia shall grant the Community treatment no less favourable than most-favoured-nation treatment. However, in order to promote regional exchanges the Former Yugoslav Republic of Macedonia will be entitled during a transitional period expiring five years after the entry into force of this Agreement to grant preferential treatment to imports originating in other States which emerged from former Yugoslavia or in other adjacent countries. The Cooperation Council may decide a prolongation of this period.

2. Without prejudice to Article 20 (2) the Former Yugoslav Republic of Macedonia will refrain, as from the Agreement's entry into force, from imposing on exports to the Community new customs duties and charges having equivalent effect or new quantitative restrictions and measures having equivalent effect.

Article 20

1. The Contracting Parties shall inform each other when this Agreement is signed of the provisions relating to the trade arrangements they apply.

2. Subject to Article 19 (1), the Former Yugoslav Republic of Macedonia shall be entitled to introduce into its trade arrangements with the Community new customs duties and charges having equivalent effect or new quantitative restrictions and measures having equivalent effect, and to increase the duties and charges or the quantitative restrictions and measures having equivalent effect applied to products originating in or intended for the Community, in so far as such measures are necessitated by the needs of the Former Yugoslav Republic of Macedonia for infant industries and restructuring. In accordance with the objectives of this Agreement, the measures selected by the Former Yugoslav Republic of Macedonia shall be those which least harm the trade and economic interests of the Community.

3. The Former Yugoslav Republic of Macedonia shall inform the Community of the envisaged measures so that appropriate discussions may be held on them prior to their introduction.

4. The Cooperation Council shall examine periodically the measures taken by the Former Yugoslav Republic of Macedonia pursuant to paragraph 2.

Article 21

The concept of originating products for the purposes of implementing Titles II and III and the methods of administrative cooperation relating thereto are laid down in the Protocol on rules of origin.

Article 22

In the event of modifications to the nomenclature of the customs tariffs of the Contracting Parties affecting products referred to in this Agreement, the Cooperation Council may adapt the tariff nomenclature of these products to conform with such modifications, provided the real advantages resulting from this Agreement are maintained.

Article 23

The Contracting Parties shall refrain from any internal tax establishing, whether directly or indirectly, discrimination between the products of one Contracting Party and like products originating in the territory of the other Contracting Party.

Products exported to the territory of one of the Contracting Parties may not benefit from repayment of internal indirect taxation in excess of the amount of indirect taxation imposed upon them.

Article 24

The Contracting Parties undertake to authorize in freely convertible currency, any payments on the current account balance of payments between residents of the Community and of the Former Yugoslav Republic of Macedonia connected with the movements of goods made in accordance with the provisions of the present Agreement.

Article 25

The Former Yugoslav Republic of Macedonia shall take measures guaranteeing effective and appropriate protection of intellectual, industrial and commercial property, including effective means for enforcing such rights, at a level similar to that which exists in the Community, and shall accede to international conventions on intellectual, industrial and commercial property.

Article 26

The Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; the protection of intellectual, industrial and commercial property. Such prohibitions or restrictions must not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Contracting Parties.

Article 27

1. If one of the Contracting Parties finds that dumping is taking place in trade with the other Contracting Party, it may, pursuant to Article VI of the General Agreement on Tariffs and Trade (GATT 1994) and the Agreement on implementation of Article VI of GATT 1994, take appropriate measures against this practice in accordance with the procedures laid down in Article 30.

2. In the event of measures being taken against subsidies, the Contracting Parties undertake to observe the provisions of the Agreement on subsidies and countervailing duties annexed to the WTO Agreement.

Article 28

Where any product is being imported into the territory of one of the Contracting Parties in such increased quantities or under such conditions as to cause or threaten to cause injury to domestic producers of like or directly competitive products, the Contracting Party concerned may take the necessary safeguard measures pursuant to the conditions and in accordance with the procedures laid down in Article 30.

Article 29

In the event of a Contracting Party subjecting imports of products liable to give rise to the difficulties referred to in Article 28 to an administrative procedure aimed at providing rapid information on the trend of trade flows, it shall inform the other Contracting Party.

Article 30

1. With regard to Article 27 (1), the Cooperation Council must be informed of a case of dumping as soon as the authorities of the importing Contracting Party have started the investigation. If the dumping has not ceased or if no other satisfactory solution has been found within 30 days following notification of the matter to the Cooperation Council, the importing Contracting Party may adopt appropriate measures.

2. In the cases specified in Article 28, before taking the measures provided for therein or, in cases to which paragraph 3 applies, as soon as possible, the Contracting Party in question shall supply the Cooperation Council with all relevant information required for a thorough examination of the situation, with a view to seeking a solution acceptable to the Contracting Parties. Consultations shall take place in the Cooperation Council before the Contracting Party concerned takes the appropriate measures, should the other Contracting Party so request.

3. Where exceptional circumstances require immediate action making prior examination impossible, the Contracting Party concerned may, in the situations specified in Articles 27 and 28, apply forthwith such precautionary measures as are strictly necessary to remedy the situation.

4. In the selection of measures, priority must be given to those which least disturb the functioning of the Agreement. Such measures must not exceed the limits of what is strictly necessary to counteract the difficulties which have arisen.

The safeguard measures shall be notified immediately to the Cooperation Council, which shall hold periodic consultations on them, particularly with a view to their abolition as soon as circumstances permit.

Article 31

In the event of a sudden and very substantial worsening of a trade imbalance which is liable to jeopardize the smooth functioning of this Agreement, the Contracting Parties shall hold special consultations within the Cooperation Council to examine the difficulties that have arisen with a view to keeping this Agreement functioning as normally as possible.

Article 32

Where one or more Member States of the Community or the Former Yugoslav Republic of Macedonia is in serious difficulties or is seriously threatened with difficulties as regards its balance of payments, the Contracting Party concerned may take the necessary safeguard measures. In the selection of measures, priority must be given to those which least disturb the functioning of the Agreement. They shall be notified immediately to the other Contracting Party and shall be the subject of periodic consultations within the Cooperation Council, particularly with a view to their abolition as soon as circumstances permit.

TITLE III General and final provisions

Article 33

1. A Cooperation Council is hereby established. It shall have the power, for the purpose of attaining the objectives set out in this Agreement, to take decisions in the cases provided for in the Agreement.

The decisions taken shall be binding on the Contracting Parties, which shall take such measures as are required to implement them.

2. The Cooperation Council may also formulate any resolutions, recommendations or opinions which it considers desirable for the attainment of the common objectives and the smooth functioning of this Agreement.

3. The Cooperation Council shall adopt its own rules of procedure.

Article 34

1. The Cooperation Council shall be composed of representatives of the Community on the one hand, and of representatives of the Former Yugoslav Republic of Macedonia, on the other.

The European Investment Bank shall participate in the work of the Cooperation Council where matters falling within its competence arise.

2. Members of the Cooperation Council may be represented as laid down in its rules of procedure.

3. The Cooperation Council shall act by mutual agreement between the Community, on the one hand, and the Former Yugoslav Republic of Macedonia, on the other.

Article 35

1. The office of Chairman of the Cooperation Council shall be held alternately by each of the Contracting Parties in accordance with the conditions to be laid down in the rules of procedure.

2. Meetings of the Cooperation Council shall be called once a year by its Chairman. The Cooperation Council shall hold whatever additional meetings may be necessary, at the request of either Contracting Party, as laid down in its rules of procedure.

Article 36

1. The Cooperation Council may decide to set up working parties that can assist in carrying out its duties.

2. In its rules of procedure, the Cooperation Council shall determine the composition and duties of such working parties and how they shall function.

Article 37

Where, in the course of the exchanges of information provided for in this Agreement, problems arise or seem likely to arise in the general functioning of the Agreement, particularly in the field of trade, consultations shall take place between the Contracting Parties in the Cooperation Council with a view to avoiding market disturbances as far as possible.

Article 38

Either Contracting Party shall provide, if so requested by the other Contracting Party, all relevant information on any agreements it concludes containing tariff or trade provisions, and on any amendments to its customs tariff or external trade arrangements. Where such amendments or agreements have a direct and specific impact on the functioning of this Agreement, appropriate consultations shall be held within the Cooperation Council at the request of the other Contracting Party so that the interests of the Contracting Parties may be taken into consideration.

Article 39

When the Community concludes an association or cooperation agreement having a direct and specific impact on the functioning of this Agreement, appropriate consultations shall be held within the Cooperation Council so that the Community may take into consideration the interests of the Contracting Parties as defined by this Agreement.

In the event of a third country acceding to the Community, appropriate consultations shall be held within the Cooperation Council so that the interests of the Contracting Parties as defined by this Agreement may be taken into consideration.

Article 40

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

2. If either Contracting Party considers that the other Contracting Party has failed to fulfil any of its obligations pursuant to this Agreement, it may take appropriate measures. Before so doing, except in cases of special urgency, it shall supply the Cooperation Council with all 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 measures, priority shall be given to those which least disturb the functioning of this Agreement. These measures shall be notified immediately to the Cooperation Council, and consultations shall be held on them within it, if the other Contracting Party so requests.

Article 41

1. Any dispute which arises between the Contracting Parties concerning the interpretation of this Agreement may be placed before the Cooperation Council.

2. If the Cooperation Council fails to settle the dispute at its next meeting, either Contracting Party may notify the other of the appointment of an arbitrator; the other Party must then appoint a second arbitrator within two months.

The Cooperation Council shall appoint a third arbitrator.

The decisions of the arbitrators shall be taken by majority vote.

Each Party to the dispute must take the measures required for the implementation of the arbitrators' decision.

Article 42

In the fields covered by this Agreement:

- the arrangements applied by the Former Yugoslav Republic of Macedonia in respect of the Community shall not give rise to any discrimination between the Member States and their nationals, whether natural or legal persons,

- the arrangements applied by the Community in respect of the Former Yugoslav Republic of Macedonia shall not give rise to any discrimination between its nationals, whether natural or legal persons.

Article 43

Annexes A, B, C I, C II, D and E, the Protocol on additional trade arrangements for certain iron and steel products, the Protocol on rules of origin and the Protocol on financial cooperation shall form an integral part of this Agreement.

Article 44

This Agreement is concluded for an unlimited period.

Either Contracting Party may denounce this Agreement by notifying the other Contracting Party.

This Agreement shall cease to apply six months after the date of such notification.

Article 45

The Contracting Parties will examine, in due course, when conditions are met, the possibility of strengthening their contractual relations, bearing in mind the aspiration of the Former Yugoslav Republic of Macedonia for an advanced relationship towards an association with the European Union.

Article 46

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 hand, to the territory of the Former Yugoslav Republic of Macedonia.

Article 47

This Agreement is drawn up in duplicate in each of the official languages of the Contracting Parties, each of these texts being equally authentic.

Article 48

This Agreement shall be approved by the Contracting Parties in accordance with their own procedures.

This Agreement shall enter into force on the first day of the second month following notification that the procedures referred to in the first paragraph have been completed.

ANNEX A concerning the products referred to in Article 14

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ANNEX B concerning the tariff arrangements and rules applicable to certain goods resulting from the processing of agricultural products referred to in Article 16

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ANNEX C I (1a) (2b)

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(1a) Notwithstanding the rules for the interpretation of the combined nomenclature, the wording for the designation 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 application of the CN code. Where ex CN code positions are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

(2b) See Taric codes in Annex C II.

ANNEX C II

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ANNEX D

PRODUCTS REFERRED TO IN ARTICLE 15 (2) Imports into the Community of the following products shall be subject to the exemption from the applying duty

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ANNEX E

PRODUCTS REFERRED TO IN ARTICLE 15 (2)

Imports into the Community of the following products shall be subject to a reduction of 80 % of the applying duty>TABLE>

PROTOCOL on additional trade arrangements for certain iron and steel products

Article 1

This Protocol shall apply to the products listed in Chapters 72 and 73 of the Common Customs Tariff (1) under the following headings: 7204, 7208 to 7212, 7303 to 7306. It shall also apply to other finished steel products which may originate in future in the Former Yugoslav Republic of Macedonia.

Article 2

1. Imports into the Community of the products originating in the Former Yugoslav Republic of Macedonia listed in Annex I to this Protocol shall be subject to annual tariff ceilings, the ceilings fixed for the year of entry into force of the Agreement being indicated against each product.

2. As from the second year following the entry into force of the Agreement, the amounts of the tariff ceilings given in Annex I shall be increased annually by 5 % except that the Community may extend for a period of one year the ceiling or ceilings set for the preceding year.

Article 3

1. Quantitative restrictions, customs duties or charges on exports to the Community and any measures having equivalent effect shall be abolished by the Former Yugoslav Republic of Macedonia on entry into force of the Agreement, with the exception of those applying to ferrous waste and scrap under the complete CN heading 7204, which shall be progressively reduced and shall be eliminated at the latest by the end of the second year after the entry into force of the Agreement.

2. The Former Yugoslav Republic of Macedonia will liberalize progressively the export restrictions relating to wastes and scrap of ferrous metals. It will therefore permit the export of these products to the Community within the following quantitative limits: 20 000 tonnes in the first year after the entry into force of the Agreement and 35 000 tonnes in the second year after the entry into force of the Agreement.

3. The authorities of the Former Yugoslav Republic of Macedonia will notify the Community, within three months of the entry into force of the Agreement, of the internal measures taken to implement fully this progressive liberalization and will send the Community details of the export licences issued and of exports realized at six-monthly intervals. The contact group will periodically review the progressive liberalization of the export restrictions and, where appropriate, make recommendations to the Cooperation Council.

Article 4

Where any product is being imported into the territory of one of the Contracting Parties in such increased quantities or under such conditions as to cause or threaten to cause injury to domestic producers of like or directly competitive products or serious disturbances to the steel markets of the other Contracting Party, the Contracting Parties shall enter into consultations immediately to find an appropriate solution before the Contracting Party concerned takes the appropriate measures. In the selection of measures, priority must be given to those which least disturb the functioning of the Agreement.

Article 5

1. The Contracting Parties recognize the need for an administrative procedure having as its purpose the rapid provision of information on the trend in trade flows in respect of the trade in steel products originating in the Former Yugoslav Republic of Macedonia in order to increase transparency and to avoid possible diversions of trade.

2. The Contracting Parties therefore agree to establish a double-checking system, without quantitative limits, for the import into the Community of steel products originating in the Former Yugoslav Republic of Macedonia; to exchange statistical information on export and surveillance documents and to hold consultations promptly on any problems arising from the operation of such a system.

3. The details of the double-checking system are contained in Annex III to this Protocol. The continuing need for this system shall be regularly reviewed. The Annex may subsequently be amended or the double-checking system abolished by means of a decision of the Cooperation Council.

Article 6

The Contracting Parties commit themselves to close cooperation in matters relating to the iron and steel industry, particularly in the areas listed in Article 4 of the Agreement. In this context, they agree to ensure transparency through regular exchanges of information on policy in areas such as competition, public aid and restructuring.

Article 7

The Parties agree that one of the special bodies established by the Cooperation Council shall be a contact group responsible for discussing the implementation of this Protocol.

(1) OJ No OJ No L 319, 30. 12. 1995.

ANNEX I

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ANNEX II

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ANNEX III concerning the introduction of a double-checking system for the export of certain ECSC and EC steel products from the Former Yugoslav Republic of Macedonia to the European Communities

Article 1

1. From the date of entry into force of the Cooperation Agreement between the European Community and the Former Yugoslav Republic of Macedonia (hereinafter referred to as respectively 'the Agreement` and 'the Community`), imports into the Community of the products listed in Appendix I originating in the Former Yugoslav Republic of Macedonia shall be subject to the presentation of a surveillance document conforming to the model shown at Appendix II issued by the authorities in the Community.

2. The classification of the products covered by this Decision is based on the tariff and statistical nomenclature of the Community (hereinafter called the 'combined nomenclature`, or in abbreviated form 'CN`). The origin of the products covered by this Decision shall be determined in accordance with the rules in force in the Community.

3. The competent authorities of the Community undertake to inform the Former Yugoslav Republic of Macedonia of any changes in the combined nomenclature (CN) in respect of products covered by the double-checking system before the date of their entry into force in the Community.

4. Import into the Community of the iron and steel products listed in Appendix I and which originate in the Former Yugoslav Republic of Macedonia shall, in addition, be subject to the issue of an export document by the competent authorities of the Former Yugoslav Republic of Macedonia. In order to avoid problems at the end of a year, presentation by the importer of the original of the export document must be effected not later than 31 March of the year following that in which in the goods covered by the document were shipped.

5. An export document will not be required for goods already shipped before the date of entry into force of the Agreement, provided that the destination of such products is not changed from a non-Community destination and that those products which, under the prior surveillance regime applicable in 1996, could be imported only on presentation of a surveillance document are in fact accompanied by such a document.

6. Shipment is considered to have taken place on the date of loading onto the exporting means of transport.

7. The export document shall conform to the model shown at Appendix III. It shall be valid for exports throughout the customs territory of the Community.

8. The Former Yugoslav Republic of Macedonia shall notify the Commission of the European Communities of the names and addresses of the appropriate governmental authorities of the Former Yugoslav Republic of Macedonia which are authorized to issue and to verify export documents together with specimens of the stamps and signatures they use. The Former Yugoslav Republic of Macedonia shall also notify the Commission of any change in these particulars.

9. Certain technical provisions on the implementation of the double-checking system are set out in Appendix IV.

Article 2

1. The Former Yugoslav Republic of Macedonia undertakes to supply the Community with precise statistical information on the export documents issued by the authorities of the Former Yugoslav Republic of Macedonia pursuant to Article 1. Such information shall be transmitted to the Community by the end of the month following the month to which the statistics relate.

2. The Community undertakes to supply the authorities of the Former Yugoslav Republic of Macedonia with precise statistical information on surveillance documents issued by Member States in respect of the products listed in Appendix 1. Such information shall be transmitted to the authorities of the Former Yugoslav Republic of Macedonia by the end of the month following the month to which the statistics relate.

Article 3

If necessary, at the request of either of the Parties, consultations shall be held on any problems arising from the operation of the double-checking system. Such consultations shall be held promptly. Any consultations held under this Article shall be approached by both Parties in a spirit of cooperation and with a desire to reconcile the difference between them.

Article 4

Any notices to be given hereunder shall be given:

- in respect of the Community, to the European Commission (DG I/D/2 and DG III/C/2),

- in respect of the Former Yugoslav Republic of Macedonia, to its Mission to the European Communities, the Ministry of Foreign Affairs and the Ministry of Economy.

Appendix 1 to Annex III

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA

LIST OF PRODUCTS SUBJECT TO DOUBLE-CHECKING

Complete CN heading 7208

Complete CN heading 7209

Complete CN heading 7210

Complete CN heading 7211

Complete CN heading 7212

Complete CN heading 7303

Complete CN heading 7304

Complete CN heading 7305

Complete CN heading 7306

Appendix 2 to Annex III

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EUROPEAN COMMUNITY SURVEILLANCE DOCUMENT 1 1 Holder's copy 1. Consignee (name, full address, country, VAT number) 2. Issue number 3. Proposed place and date of import 4. Authority responsible for issue (name, address and telephone No) 5. Declarant/representative as applicable (name and full address) 6. Country of origin (and geonomenclature code) 7. Country of consignment (and geonomenclature code) 8. Last day of validity 9. Description of goods 10. CN code and category 11. Quantity in kilograms (net mass) or in additional units 12. Value in ecus, cif at Community frontier 13. Additional remarks 14. Competent authority's endorsement Date: . Signature: . Stamp: 15. ATTRIBUTIONS Indicate the quantity available in part 1 of column 17 and the quantity attributed in part 2 thereof 16. Net quantity (net mass or other unit of measure stating the unit) 17. In figures 18. In words for the quantity attributed 19. Customs document (form and number) or extract No and date of attribution 20. Name, Member State, stamp and signature of the attributing authority 1 2 1 2 1 2 1 2 1 2 1 2 1 2 Extension pages to be attached hereto.>END OF GRAPHIC>

>START OF GRAPHIC>

EUROPEAN COMMUNITY SURVEILLANCE DOCUMENT 2 2 Copy for the issuing authority 1. Consignee (name, full address, country, VAT number) 2. Issue number 3. Proposed place and date of import Einfuhrdatum 4. Authority responsible for issue (name, address and telephone No) 5. Declarant/representative as applicable (name and full address) 6. Country of origin (and geonomenclature code) 7. Country of consignment (and geonomenclature code) 8. Last day of validity 9. Description of goods 10. CN code and category 11. Quantity in kilograms (net mass) or in additional units 12. Value in ecus, cif at Community frontier 13. Additional remarks 14. Competent authority's endorsement Date: . Signature: . Stamp: 15. ATTRIBUTIONS Indicate the quantity available in part 1 of column 17 and the quantity attributed in part 2 thereof 16. Net quantity (net mass or other unit of measure stating the unit) 17. In figures 18. In words for the quantity attributed 19. Customs document (form and number) or extract No and date of attribution 20. Name, Member State, stamp and signature of the attributing authority 1 2 1 2 1 2 1 2 1 2 1 2 1 2 Extension pages to be attached hereto.>END OF GRAPHIC>

Appendix 3 to Annex III

>START OF GRAPHIC>

(1) Show net weight (kg) and also quantity in the unit prescribed where other than net weight. (2) In the currency of the sale contract. 1. Exporter (name, full address, country) ORIGINAL 2. No. 3. Year 4. Product group EXPORT DOCUMENT (ECSC products) 5. Consignee (name, full address, country) 6. Country of origin 7. Country of destination 8. Place and date of shipment - Means of transport 9. Supplementary details 10. Description of goods - Manufacturer 11. CN code 12. Quantity (1) 13. FOB Value (2) 14. CERTIFICATION BY THE COMPETENT AUTHORITY 15. Competent authority (name, full address, country) At . , on . . (Signature) (Stamp) >END OF GRAPHIC>

EXPORT LICENCE (ECSC products)

>START OF GRAPHIC>

1. Exporter (name, full address, country)

2. No

3. Year

4. Product group

5. Consignee (name, full address, country)

6. Country of origin

7. Country of destination

8. Place and date of shipment - Means of transport

9. Supplementary details

10. Description of goods - Manufacturer

11. CN code

12. Quantity (1)

13. FOB Value (2)

14. CERTIFICATION BY THE COMPETENT AUTHORITY

15. Competent authority (name, full address, country)

At: .

(Signature)

(Stamp)

(1) Show net weight (kg) and also quantity in the unit prescribed where other than net weight.(2) In the currency of the sale contract.>END OF GRAPHIC>

>REFERENCE TO A GRAPHIC>

>START OF GRAPHIC>

(1) Show net weight (kg) and also quantity in the unit prescribed where other than net weight. (2) In the currency of the sale contract. 1. Exporter (name, full address, country) COPY 2. No. 3. Year 4. Product group EXPORT DOCUMENT (ECSC products) 5. Consignee (name, full address, country) 6. Country of origin 7. Country of destination 8. Place and date of shipment - Means of transport 9. Supplementary details 10. Description of goods - Manufacturer 11. CN code 12. Quantity (1) 13. FOB Value (2) 14. CERTIFICATION BY THE COMPETENT AUTHORITY 15. Competent authority (name, full address, country) At . , on . . (Signature) (Stamp) >END OF GRAPHIC>

Annex IV to Annex III

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA

TECHNICAL ANNEX ON THE DOUBLE-CHECKING SYSTEM

1. The export documents shall measure 210m × 297 mm. The paper used shall be white writing paper, sized, not containing mechanical pulp, and weighing not less than 25 g/m². They shall be made out in English. If they are completed by hand, entries must be in ink and in printed script. These documents may comprise additional copies duly indicated as such. If the documents have several copies only the top copy is the original. This copy shall be clearly marked as 'original` and other copies as 'copies`. Only the original shall be accepted by the competent authorities of the Community as being valid for the control of export to the Community in accordance with the provisions of the double-checking system.

2. Each document shall bear a standardized serial number, whether or not printed, by which it can be identified. This number shall be composed of the following elements:

- a two-digit number identifying the exporting country as follows: 96,

- a two-digit number identifying the intended Member State of customs clearance as follows:

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- a one-digit number identifying the year, corresponding to the last figure in the respective year, e. g. 7 for 1997,

- a two-digit number from 01 to 99, identifying the particular issuing office concerned in the exporting country,

- a five-digit number running consecutively from 00001 to 99999 allocated to the intended Member State of customs clearance.

3. The export documents shall be valid for four months from the date of their issue. Export documents may be renewed or prolonged.

4. Since the importer needs to present the original export document when requesting an import document, export documents should, as far as possible, be issued in respect of individual commercial transactions, not global contracts.

5. The Former Yugoslav Republic of Macedonia need not show price information on the export document if there is a genuine need to protect commercial confidentiality. In such cases, box 9 of the export document should indicate the reason for not showing the price information and that it is available to the competent authorities of the Community on request.

6. Export documents may be issued after the shipment of the products to which they relate. In such cases they must bear the endorsement 'issued retrospectively`.

7. In the event of theft, loss or destruction of an export document, the exporter may apply to the competent governmental authority which issued the document for a duplicate to be made out on the basis of the export documents in his possession. The duplicate of any such document so issued shall bear the endorsement 'duplicate`. The duplicate shall bear the date of the original export document.

8. The competent authorities of the Community shall be informed immediately of the withdrawal or modification of any export documents already issued and, where relevant, of the basis for such action.

PROTOCOL on rules of origin

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 Wholly obtained products

Article 5 Sufficiently worked or processed products

Article 6 Insufficient working or processing operations

Article 7 Unit of qualification

Article 8 Accessories, spare parts and tools

Article 9 Sets

Article 10 Neutral elements

TITLE III TERRITORIAL REQUIREMENTS

Article 11 Principle of territoriality

Article 12 Direct transport

Article 13 Exhibitions

TITLE IV DRAWBACK OR EXEMPTION

Article 14 Prohibition of drawback of, or exemption from, customs duties

TITLE V PROOF OF ORIGIN

Article 15 General requirements

Article 16 Procedure for the issue of an EUR.1 movement certificate

Article 17 EUR.1 movement certificates issued retrospectively

Article 18 Issue of a duplicate EUR.1 movement certificate

Article 19 Issue of EUR.1 movement certificates on the basis of a proof of origin issued or made out previously

Article 20 Conditions for making out an invoice declaration

Article 21 Approved exporter

Article 22 Validity of proof of origin

Article 23 Submission of proof of origin

Article 24 Importation by instalments

Article 25 Exemptions from proof of origin

Article 26 Supporting documents

Article 27 Preservation of proof of origin and supporting documents

Article 28 Discrepancies and formal errors

Article 29 Amounts expressed in ecus

TITLE VI ARRANGEMENTS FOR ADMINISTRATIVE COOPERATION

Article 30 Mutual assistance

Article 31 Verification of proofs of origin

Article 32 Dispute settlement

Article 33 Penalties

Article 34 Free zones

TITLE VII CEUTA AND MELILLA

Article 35 Application of the Protocol

Article 36 Special conditions

TITLE VIII FINAL PROVISIONS

Article 37 Amendments to the Protocol

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 the Former Yugoslav Republic of Macedonia 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 the Former Yugoslav Republic of Macedonia;

(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 4 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 5 of this Protocol;

2. For the purpose of implementing this Agreement, the following products shall be considered as originating in the Former Yugoslav Republic of Macedonia:

(a) products wholly obtained in the Former Yugoslav Republic of Macedonia within the meaning of Article 4 of this Protocol;

(b) products obtained in the Former Yugoslav Republic of Macedonia incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in the Former Yugoslav Republic of Macedonia within the meaning of Article 5 of this Protocol.

Article 3 Bilateral cumulation of origin

1. Materials originating in the Community shall be considered as materials originating in the Former Yugoslav Republic of Macedonia 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 6 (1) of this Protocol.

2. Materials originating in the Former Yugoslav Republic of Macedonia 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 6 (1) of this Protocol.

Article 4 Wholly obtained products

1. The following shall be considered as wholly obtained in the Community or the Former Yugoslav Republic of Macedonia:

(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 the Former Yugoslav Republic of Macedonia 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 the Former Yugoslav Republic of Macedonia;

(b) which sail under the flag of an EC Member State or of the Former Yugoslav Republic of Macedonia;

(c) which are owned to an extent of at least 50 % by nationals of EC Member States or of the Former Yugoslav Republic of Macedonia, or by a company with its head office in one of these States, of which the manager or managers, Chairman of the Board of Directors or the Supervisory Board, and the majority of the members of such boards are nationals of EC Member States or of the Former Yugoslav Republic of Macedonia and of which, in addition, in the case of partnerships or limited companies, at least half the capital belongs to those States or to public bodies or nationals of the said States;

(d) of which the master and officers are nationals of EC Member States or of the Former Yugoslav Republic of Macedonia; and

(e) of which at least 75 % of the crew are nationals of EC Member States or of the Former Yugoslav Republic of Macedonia.

Article 5 Sufficiently worked or processed products

1. For the purposes of Article 2, products which are not wholly obtained are considered to be sufficiently worked or processed when the conditions set out in the list in Annex II are fulfilled.

The conditions referred to above indicate, for all products covered by this Agreement, the working or processing which must be carried out on non-originating materials used in manufacturing and apply only in relation to such materials. Accordingly, it follows that if a product, which has acquired originating status by fulfilling the conditions set out in the list is used in the manufacture of another product, the conditions applicable to the product in which it is incorporated do not apply to it, and no account shall be taken of the non-originating materials which may have been used in its manufacture.

2. Notwithstanding paragraph 1, non-originating materials which, according to the conditions set out in the list, should not be used in the manufacture of a product may nevertheless be used, provided that:

(a) their total value does not exceed 10 % of the ex-works price of the product;

(b) any of the percentages given in the list for the maximum value of non-originating materials are not exceeded through the application of this paragraph.

This paragraph shall not apply to products falling within Chapters 50 to 63 of the Harmonized System.

3. Paragraphs 1 and 2 shall apply except as provided in Article 6.

Article 6 Insufficient working or processing operations

1. Without prejudice to paragraph 2, the following operations shall be considered as insufficient working or processing to confer the status of originating products, whether or not the requirements of Article 5 are satisfied:

(a) operations to ensure the preservation of products in good condition during transport and storage (ventilation, spreading out, drying, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations);

(b) simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching (including the making-up of sets of articles), washing, painting, cutting up;

(c) (i) changes of packaging and breaking up and assembly of packages;

(ii) simple placing in bottles, flasks, bags, cases, boxes, fixing on cards or boards, etc., and all other simple packaging operations;

(d) affixing marks, labels and other like distinguishing signs on products or their packaging;

(e) simple mixing of products, whether or not of different kinds, where one or more components of the mixtures do not meet the conditions laid down in this Protocol to enable them to be considered as originating in the Community or the Former Yugoslav Republic of Macedonia;

(f) simple assembly of parts to constitute a complete product;

(g) a combination of two or more operations specified in subparagraphs (a) to (f);

(h) slaughter of animals.

2. All the operations carried out in either the Community or the Former Yugoslav Republic of Macedonia on a given product shall be considered together when determining whether the working or processing undergone by that product is to be regarded as insufficient within the meaning of paragraph 1.

Article 7 Unit of qualification

1. The unit of qualification for the application of the provisions of this Protocol shall be the particular product which is considered as the basic unit when determining classification using the nomenclature of the Harmonized System.

Accordingly, it follows that:

(a) when a product composed of a group or assembly of articles is classified under the terms of the Harmonized System in a single heading, the whole constitutes the unit of qualification;

(b) when a consignment consists of a number of identical products classified under the same heading of the Harmonized System, each product must be taken individually when applying the provisions of this Protocol.

2. Where, under General Rule 5 of the Harmonized System, packaging is included with the product for classification purposes, it shall be included for the purposes of determining origin.

Article 8 Accessories, spare parts and tools

Accessories, spare parts and tools dispatched with a piece of equipment, machine, apparatus or vehicle, which are part of the normal equipment and included in the price thereof or which are not separately invoiced, shall be regarded as one with the piece of equipment, machine, apparatus or vehicle in question.

Article 9 Sets

Sets, as defined in general rule 3 of the Harmonized System, shall be regarded as originating when all component products are originating. Nevertheless, when a set is composed of originating and non-originating products, the set as a whole shall be regarded as originating, provided that the value of the non-originating products does not exceed 15 % of the ex-works price of the set.

Article 10 Neutral elements

In order to determine whether a product originates, it shall not be necessary to determine the origin of the following which might be used in its manufacture:

(a) energy and fuel;

(b) plant and equipment;

(c) machines and tools;

(d) goods which do not enter and which are not intended to enter into the final composition of the product.

TITLE III TERRITORIAL REQUIREMENTS

Article 11 Principle of territoriality

1. The conditions set out in Title II relative to the acquisition of originating status must be fulfilled without interruption in the Community or the Former Yugoslav Republic of Macedonia.

2. If originating goods exported from the Community or the Former Yugoslav Republic of Macedonia to another country are returned, they must be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that:

(a) the goods returned are the same goods as those exported; and

(b) they have not undergone any operation beyond that necessary to preserve them in good condition while in that country or while being exported.

Article 12 Direct transport

1. The preferential treatment provided for under the Agreement applies only to products, satisfying the requirements of this Protocol, which are transported directly between the Community and the Former Yugoslav Republic of Macedonia. However, products constituting one single consignment may be transported through other territories with, should the occasion arise, trans-shipment or temporary warehousing in such territories, provided that they remain under the surveillance of the customs authorities in the country of transit or warehousing and do not undergo operations other than unloading, reloading or any operation designed to preserve them in good condition.

Originating products may be transported by pipeline across territory other than that of the Community or the Former Yugoslav Republic of Macedonia.

2. Evidence that the conditions set out in paragraph 1 have been fulfilled shall be supplied to the customs authorities of the importing country by the production of:

(a) a single transport document covering the passage from the exporting country through the country of transit; or

(b) a certificate issued by the customs authorities of the country of transit:

(i) giving an exact description of the products;

(ii) stating the dates of unloading and reloading of the products and, where applicable, the names of the ships, or the other means of transport used; and

(iii) certifying the conditions under which the products remained in the transit country; or

(c) failing these, any substantiating documents.

Article 13 Exhibitions

1. Originating products, sent for exhibition in a country and sold after the exhibition for importation in the Community or the Former Yugoslav Republic of Macedonia, shall benefit on importation from the provisions of the Agreement provided it is shown to the satisfaction of the customs authorities that:

(a) an exporter has consigned these products from the Community or the Former Yugoslav Republic of Macedonia to the country in which the exhibition is held and has exhibited them there;

(b) the products have been sold or otherwise disposed of by that exporter to a person in the Community or the Former Yugoslav Republic of Macedonia;

(c) the products have been consigned during the exhibition or immediately thereafter in the state in which they were sent for exhibition; and

(d) the products have not, since they were consigned for exhibition, been used for any purpose other than demonstration at the exhibition.

2. A proof of origin must be issued or made out in accordance with the provisions of Title V and submitted to the customs authorities of the importing country in the normal manner. The name and address of the exhibition must be indicated thereon. Where necessary, additional documentary evidence of the conditions under which they have been exhibited may be required.

3. Paragraph 1 shall apply to any trade, industrial, agricultural or crafts exhibition, fair or similar public show or display which is not organized for private purposes in shops or business premises with a view to the sale of foreign products, and during which the products remain under customs control.

TITLE IV DRAWBACK OR EXEMPTION

Article 14 Prohibition of drawback of, or exemption from, customs duties

1. Non-originating materials used in the manufacture of products originating in the Community or in the Former Yugoslav Republic of Macedonia for which a proof of origin is issued or made out in accordance with the provisions of Title V shall not be subject in the Community or the Former Yugoslav Republic of Macedonia to drawback of, or exemption from, customs duties of whatever kind.

2. The prohibition in paragraph 1 shall apply to any arrangement for refund, remission or non-payment, partial or complete, of customs duties or charges having an equivalent effect, applicable in the Community or the Former Yugoslav Republic of Macedonia to materials used in the manufacture where such refund, remission or non-payment applies, expressly or in effect, when products obtained from the said materials are exported and not when they are retained for home use there.

3. The exporter of products covered by a proof of origin shall be prepared to submit at any time, on request from the customs authorities, all appropriate documents proving that no drawback has been obtained in respect of the non-originating materials used in the manufacture of the products concerned and that all customs duties or charges having equivalent effect applicable to such materials have actually been paid.

4. The provisions of paragraphs 1 to 3 shall also apply in respect of packaging within the meaning of Article 7 (2), accessories, spare parts and tools within the meaning of Article 8 and products in a set within the meaning of Article 9 when such items are non-originating.

5. The provisions of paragraphs 1 to 4 shall apply only in respect of materials which are of the kind to which the Agreement applies. Furthermore, they shall not preclude the application of an export refund system for agricultural products, applicable on export in accordance with the provisions of the Agreement.

6. Notwithstanding paragraph 1, the Former Yugoslav Republic of Macedonia may apply arrangements for drawback of, or exemption from, customs duties or charges having an equivalent effect, applicable to materials used in the manufacture of originating products, subject to the following provisions:

(a) a 5 % rate of customs charge shall be retained in respect of products falling within Chapters 25 to 49 and 64 to 97 of the Harmonized System, or such lower rate as is in force in the Former Yugoslav Republic of Macedonia;

(b) a 10 % rate of customs charge shall be retained in respect of products falling within Chapters 50 to 63 of the Harmonized System, or such lower rate as is in force in the Former Yugoslav Republic of Macedonia.

The provisions of this paragraph shall apply until 31 December 1998 and may be reviewed by common accord.

TITLE V PROOF OF ORIGIN

Article 15 General requirements

1. Products originating in the Community shall, on importation into the Former Yugoslav Republic of Macedonia, and products originating in the Former Yugoslav Republic of Macedonia shall, on importation into the Community, benefit from this Agreement on submission of either:

(a) an EUR.1 movement certificate, a specimen of which appears in Annex III; or

(b) in the cases specified in Article 20 (1), a declaration, the text of which appears in Annex IV, given by the exporter on an invoice, a delivery note or any other commercial document which describes the products concerned in sufficient detail to enable them to be identified (hereinafter referred to as the 'invoice declaration`).

2. Notwithstanding paragraph 1, originating products within the meaning of this Protocol shall, in the cases specified in Article 25, benefit from this Agreement without it being necessary to submit any of the documents referred to above.

Article 16 Procedure for the issue of an EUR.1 movement certificate

1. An EUR.1 movement certificate shall be issued by the customs authorities of the exporting country on application having been made in writing by the exporter or, under the exporter's responsibility, by his authorized representative.

2. For this purpose, the exporter or his authorized representative shall fill out both the EUR.1 movement certificate and the application form, specimens of which appear in Annex III. These forms shall be completed in one of the languages in which this Agreement is drawn up and in accordance with the provisions of the domestic law of the exporting country. If they are handwritten, they shall be completed in ink in printed characters. The description of the products must be given in the box reserved for this purpose without leaving any blank lines. Where the box is not completely filled, a horizontal line must be drawn below the last line of the description, the empty space being crossed through.

3. The exporter applying for the issue of an EUR.1 movement certificate shall be prepared to submit at any time, at the request of the customs authorities of the exporting country where the EUR.1 movement certificate is issued, all appropriate documents proving the originating status of the products concerned as well as the fulfilment of the other requirements of this Protocol.

4. An EUR.1 movement certificate shall be issued by the customs authorities of an EC Member State or the Former Yugoslav Republic of Macedonia if the products concerned can be considered as products originating in the Community, the Former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol.

5. The issuing customs authorities shall take any steps necessary to verify the originating status of the products and the fulfilment of the other requirements of this Protocol. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check considered appropriate. The issuing customs authorities shall also ensure that the forms referred to in paragraph 2 are duly completed. In particular, they shall check whether the space reserved for the description of the products has been completed in such a manner as to exclude all possibility of fraudulent additions.

6. The date of issue of the EUR.1 movement certificate shall be indicated in box 11 of the certificate.

7. An EUR.1 movement certificate shall be issued by the customs authorities and made available to the exporter as soon as actual exportation has been effected or ensured.

Article 17 EUR.1 movement certificates issued retrospectively

1. Notwithstanding Article 16 (6), an EUR.1 movement certificate may exceptionally be issued after exportation of the products to which it relates if:

(a) it was not issued at the time of exportation because of errors or involuntary omissions or special circumstances; or

(b) it is demonstrated to the satisfaction of the customs authorities that an EUR.1 movement certificate was issued but was not accepted at importation for technical reasons.

2. For the implementation of paragraph 1, the exporter must indicate in his application the place and date of exportation of the products to which the EUR.1 movement certificate relates, and state the reasons for his request.

3. The customs authorities may issue an EUR.1 movement certificate retrospectively only after verifying that the information supplied in the exporter's application agrees with that in the corresponding file.

4. EUR.1 movement certificates issued retrospectively must be endorsed with one of the following phrases:

'NACHTRÄGLICH AUSGESTELLT`, 'DÉLIVRÉ A POSTERIORI`, 'RILASCIATO A POSTERIORI`, 'AFGEGEVEN A POSTERIORI`, 'ISSUED RETROSPECTIVELY`, 'UDSTEDT EFTERFØLGENDE`, 'ÅÊÄÏÈÅÍ ÅÊ ÔÙÍ ÕÓÔÅÑÙÍ`, 'EXPEDIDO A POSTERIORI`, 'EMITIDO A POSTERIORI`, 'ANNETTU JÄLKIKÄTEEN`, 'UTFÄRDAT I EFTERHAND`, >REFERENCE TO A GRAPHIC>

.

5. The endorsement referred to in paragraph 4 shall be inserted in the 'Remarks` box of the EUR.1 movement certificate.

Article 18 Issue of a duplicate EUR.1 movement certificate

1. In the event of theft, loss or destruction of an EUR.1 movement certificate, the exporter may apply to the customs authorities which issued it for a duplicate made out on the basis of the export documents in their possession.

2. The duplicate issued in this way must be endorsed with one of the following words:

'DUPLIKAT`, 'DUPLICATA`, 'DUPLICATO`, 'DUPLICAAT`, 'DUPLICATE`, 'ÁÍÔÉÃÑÁÖÏ`, 'DUPLICADO`, 'SEGUNDA VIA`, 'KAKSOISKAPPALE`, >REFERENCE TO A GRAPHIC>

.

3. The endorsement referred to in paragraph 2 shall be inserted in the 'Remarks box` of the duplicate EUR.1 movement certificate.

4. The duplicate, which must bear the date of issue of the original EUR.1 movement certificate, shall take effect as from that date.

Article 19 Issue of EUR.1 movement certificates on the basis of a proof of origin issued or made out previously

When originating products are placed under the control of a customs office in the Community or the Former Yugoslav Republic of Macedonia, it shall be possible to replace the original proof of origin by one or more EUR.1 movement certificates for the purpose of sending all or some of these products elsewhere within the Community or the Former Yugoslav Republic of Macedonia. The replacement EUR.1 movement certificate(s) shall be issued by the customs office under whose control the products are placed.

Article 20 Conditions for making out an invoice declaration

1. An invoice declaration as referred to in Article 15 (1) (b) may be made out:

(a) by an approved exporter within the meaning of Article 21, or

(b) by any exporter for any consignment consisting of one or more packages containing originating products whose total value does not exceed ECU 6 000.

2. An invoice declaration may be made out if the products concerned can be considered as products originating in the Community or the Former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol.

3. The exporter making out an invoice declaration shall be prepared to submit at any time, at the request of the customs authorities of the exporting country, all appropriate documents proving the originating status of the products concerned as well as the fulfilment of the other requirements of this Protocol.

4. An invoice declaration shall be made out by the exporter by typing, stamping or printing on the invoice, the delivery note or another commercial document, the declaration, the text of which appears in Annex IV, using one of the linguistic versions set out in that Annex and in accordance with the provisions of the domestic law of the exporting country. If the declaration is handwritten, it shall be written in ink in printed characters.

5. Invoice declarations shall bear the original signature of the exporter in manuscript. However, an approved exporter within the meaning of Article 21 shall not be required to sign such declarations provided that he gives the customs authorities of the exporting country a written undertaking that he accepts full responsibility for any invoice declaration which identifies him as if it had been signed in manuscript by him.

6. An invoice declaration may be made out by the exporter when the products to which it relates are exported, or after exportation on condition that it is presented in the importing country no longer than two years after the importation of the products to which it relates.

Article 21 Approved exporter

1. The customs authorities of the exporting country may authorize any exporter who makes frequent shipments of products under this Agreement to make out invoice declarations irrespective of the value of the products concerned. An exporter seeking such authorization must offer to the satisfaction of the customs authorities all guarantees necessary to verify the originating status of the products as well as the fulfilment of the other requirements of this Protocol.

2. The customs authorities may grant the status of approved exporter subject to any conditions which they consider appropriate.

3. The customs authorities shall grant to the approved exporter a customs authorization number which shall appear on the invoice declaration.

4. The customs authorities shall monitor the use of the authorization by the approved exporter.

5. The customs authorities may withdraw the authorization at any time. They shall do so where the approved exporter no longer offers the guarantees referred to in paragraph 1, does not fulfil the conditions referred to in paragraph 2 or otherwise makes an incorrect use of the authorization.

Article 22 Validity of proof of origin

1. A proof of origin shall be valid for four months from the date of issue in the exporting country, and must be submitted within the said period to the customs authorities of the importing country.

2. Proofs of origin which are submitted to the customs authorities of the importing country after the final date for presentation specified in paragraph 1 may be accepted for the purpose of applying preferential treatment, where the failure to submit these documents by the final date set is due to exceptional circumstances.

3. In other cases of belated presentation, the customs authorities of the importing country may accept the proofs of origin where the products have been submitted before the said final date.

Article 23 Submission of proof of origin

Proofs of origin shall be submitted to the customs authorities of the importing country in accordance with the procedures applicable in that country. The said authorities may require a translation of a proof of origin and may also require the import declaration to be accompanied by a statement from the importer to the effect that the products meet the conditions required for the implementation of the Agreement.

Article 24 Importation by instalments

Where, at the request of the importer and on the conditions laid down by the customs authorities of the importing country, dismantled or non-assembled products within the meaning of general rule 2 (a) of the Harmonized System falling within Sections XVI and XVII or heading Nos 7308 and 9406 of the Harmonized System are imported by instalments, a single proof of origin for such products shall be submitted to the customs authorities on importation of the first instalment.

Article 25 Exemptions from proof of origin

1. Products sent as small packages from private persons to private persons or forming part of travellers' personal luggage shall be admitted as originating products without requiring the submission of a proof of origin, provided that such products are not imported by way of trade and have been declared as meeting the requirements of this Protocol and where there is no doubt as to the veracity of such a declaration. In the case of products sent by post, this declaration can be made on the customs declaration C2/CP3 or on a sheet of paper annexed to that document.

2. Imports which are occasional and consist solely of products for the personal use of the recipients or travellers or their families shall not be considered as imports by way of trade if it is evident from the nature and quantity of the products that no commercial purpose is in view.

3. Furthermore, the total value of these products shall not exceed ECU 500 in the case of small packages or ECU 1 200 in the case of products forming part of travellers' personal luggage.

Article 26 Supporting documents

The documents referred to in Articles 16 (3) and 20 (3) used for the purpose of proving that products covered by an EUR.1 movement certificate or an invoice declaration can be considered as products originating in the Community or the Former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol may consist inter alia of the following:

(a) direct evidence of the processes carried out by the exporter or supplier to obtain the goods concerned, contained for example in his accounts or internal bookkeeping;

(b) documents proving the originating status of materials used, issued or made out in the Community or the Former Yugoslav Republic of Macedonia where these documents are used in accordance with domestic law;

(c) documents proving the working or processing of materials in the Community or the Former Yugoslav Republic of Macedonia, issued or made out in the Community or the Former Yugoslav Republic of Macedonia, where these documents are used in accordance with domestic law;

(d) EUR.1 movement certificates or invoice declarations proving the originating status of materials used, issued or made out in the Community or the Former Yugoslav Republic of Macedonia in accordance with this Protocol in accordance this Protocol.

Article 27 Preservation of proof of origin and supporting documents

1. The exporter applying for the issue of an EUR.1 movement certificate shall keep for at least three years the documents referred to in Article 16 (3).

2. The exporter making out an invoice declaration shall keep for at least three years a copy of the invoice declaration as well as the documents referred to in Article 20 (3).

3. The customs authorities of the exporting country issuing an EUR.1 movement certificate shall keep for at least three years the application form referred to in Article 16 (2).

4. The customs authorities of the importing country shall keep for at least three years the EUR.1 movement certificates and the invoice declarations submitted to them.

Article 28 Discrepancies and formal errors

1. The discovery of slight discrepancies between the statements made in the proof of origin and those made in the documents submitted to the customs office for the purpose of carrying out the formalities for importing the products shall not ipso facto render the proof of origin null and void if it is duly established that this document does correspond to the products submitted.

2. Obvious formal errors such as typing errors on a proof of origin should not cause this document to be rejected if these errors are not such as to create doubts concerning the correctness of the statements made in this document.

Article 29 Amounts expressed in ecus

1. Amounts in the national currency of the exporting country equivalent to the amounts expressed in ecus shall be fixed by the exporting country and communicated to the importing countries through the European Commission.

2. When the amounts exceed the corresponding amounts fixed by the importing country, the latter shall accept them if the products are invoiced in the currency of the exporting country. When the products are invoiced in the currency of another EC Member State the importing country shall recognize the amount notified by the country concerned.

3. The amounts to be used in any given national currency shall be the equivalent in that national currency of the amounts expressed in ecus as at the first working day in October 1995.

4. The amounts expressed in ecus and their equivalents in the national currencies of the EC Member States and the Former Yugoslav Republic of Macedonia shall be reviewed by the Cooperation Committee at the request of the Community or the Former Yugoslav Republic of Macedonia. When carrying out this review, the Cooperation Committee shall ensure that there will be no decrease in the amounts to be used in any national currency and shall furthermore consider the desirability of preserving the effects of the limits concerned in real terms. For this purpose, it may decide to modify the amounts expressed in ecus.

TITLE VI ARRANGEMENTS FOR ADMINISTRATIVE COOPERATION

Article 30 Mutual assistance

1. The customs authorities of the EC Member States and of the Former Yugoslav Republic of Macedonia shall provide each other, through the European Commission, with specimen impressions of stamps used in their customs offices for the issue of EUR.1 movement certificates and with the addresses of the customs authorities responsible for verifying those certificates and invoice declarations.

2. In order to ensure the proper application of this Protocol, the Community and the Former Yugoslav Republic of Macedonia shall assist each other, through the competent customs administrations, in checking the authenticity of the EUR.1 movement certificates or the invoice declarations and the correctness of the information given in these documents.

Article 31 Verification of proofs of origin

1. Subsequent verifications of proofs of origin shall be carried out at random or whenever the customs authorities of the importing country have reasonable doubts as to the authenticity of such documents, the originating status of the products concerned or the fulfilment of the other requirements of this Protocol.

2. For the purposes of implementing the provisions of paragraph 1, the customs authorities of the importing country shall return the EUR.1 movement certificate and the invoice, if it has been submitted, the invoice declaration, or a copy of these documents, to the customs authorities of the exporting country giving, where appropriate, the reasons for the enquiry. Any documents and information obtained suggesting that the information given on the proof or origin is incorrect shall be forwarded in support of the request for verification.

3. The verification shall be carried out by the customs authorities of the exporting country. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check considered appropriate.

4. If the customs authorities of the importing country decide to suspend the granting of preferential treatment to the products concerned while awaiting the results of the verification, release of the products shall be offered to the importer subject to any precautionary measures judged necessary.

5. The customs authorities requesting the verification shall be informed of the results of this verification as soon as possible. These results must indicate clearly whether the documents are authentic and whether the products concerned can be considered as products originating in the Community or the Former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol.

6. If in cases of reasonable doubt there is no reply within 10 months of the date of the verification request or if the reply does not contain sufficient information to determine the authenticity of the document in question or the real origin of the products, the requesting customs authorities shall, except in exceptional circumstances, refuse entitlement to the preferences.

Article 32 Dispute settlement

Where disputes arise in relation to the verification procedures of Article 31 which cannot be settled between the customs authorities requesting a verification and the customs authorities responsible for carrying out this verification or where they raise a question as to the interpretation of this Protocol, they shall be submitted to the Cooperation Committee.

In all cases the settlement of disputes between the importer and the customs authorities of the importing country shall be under the legislation of the said country.

Article 33 Penalties

Penalties shall be imposed on any person who draws up, or causes to be drawn up, a document which contains incorrect information for the purpose of obtaining a preferential treatment for products.

Article 34 Free zones

1. The Community and the Former Yugoslav Republic of Macedonia shall take all necessary steps to ensure that products traded under cover of a proof of origin which in the course of transport use a free zone situated in their territory, are not substituted by other goods and do not undergo handling other than normal operations designed to prevent their deterioration.

2. By means of an exemption to the provisions contained in paragraph 1, when products originating in the Community or the Former Yugoslav Republic of Macedonia are imported into a free zone under cover of a proof of origin and undergo treatment or processing, the authorities concerned shall issue a new EUR.1 certificate at the exporter's request, if the treatment or processing undergone is in conformity with the provisions of this Protocol.

TITLE VII CEUTA AND MELILLA

Article 35 Application of the Protocol

1. The term 'Community` used in Article 2 does not cover Ceuta and Melilla.

2. Products originating in the Former Yugoslav Republic of Macedonia, when imported into Ceuta or Melilla, shall enjoy in all respects the same customs regime as that which is applied to products originating in the customs territory of the Community pursuant to Protocol 2 of the Act of Accession of the Kingdom of Spain and the Portuguese Republic to the European Communities. The Former Yugoslav Republic of Macedonia shall grant to imports of products covered by the Agreement and originating in Ceuta and Melilla the same customs regime as that which is granted to products imported from and originating in the Community.

3. For the purpose of the application of paragraph 2 concerning products originating in Ceuta and Melilla, this Protocol shall apply mutatis mutandis subject to the special conditions set out in Article 36.

Article 36 Special conditions

1. Providing they have been transported directly in accordance with the provisions of Article 12, the following shall be considered as:

(1) products originating in Ceuta and Melilla:

(a) products wholly obtained in Ceuta and Melilla;

(b) products obtained in Ceuta and Melilla in the manufacture of which products other than those referred to in (a) are used, provided that:

(i) the said products have undergone sufficient working or processing within the meaning of Article 5 of this Protocol; or that

(ii) the products are originating in the Former Yugoslav Republic of Macedonia or the Community within the meaning of this Protocol, provided that they have been submitted to working or processing which goes beyond the insufficient working or processing referred to in Article 6 (1);

(2) products originating in the Former Yugoslav Republic of Macedonia:

(a) products wholly obtained in the Former Yugoslav Republic of Macedonia;

(b) products obtained in the Former Yugoslav Republic of Macedonia, in the manufacture of which products other than those referr