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COM (73)1275
Vol.1973/0240

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(73)1275final
Brussels,1October1973
j
COMMUNICATION ONPROBLEMSARISINGPROMCOOPERATION AGREEMENTS ,<
.< •-,. I
AND ■ \- <
■ " I ,,.. •
V * y •• .y
PROPOSALFORA ,
COUNCILDECISION .
ESTABLISHING ACONSULTATION PROCEDURE FORCOOPERATION .
,AGREEMENTS BETWEENMEMBERSTATESANDTHIRDCOUNTRIES
(submittedtotheCouncil "bytheCommission)
COM(73)1275final

EXPLANATORY MEMORANDUM
Part I:THE PROBLEM
InitsCommunication totheCouncil onnegotiated ,andautonomous commercial
policy with regard toState-trading countries (Doc.SEC(70 )4500 final ,20
December 1972 ),theCommission hasalready "brought totheCouncil 'sattention
theproblems arising from theextension ofcooperation agreements concluded
between Member States and East European countries .When answering written
andoral parliamentary questions ontheimplications ofthese agreements for
theimplementation ofacommon trade policy ,theCommission^has expressed its
approval oftheaims oftheagreements buthas also said that their consequen­
cesshould beexamined andthat thought needed tobegiven tohow theinstru­
ments ofthecommon commercial policy should beadapted tothenewforms and
purposes ofeconomic relations between East andWest .
I. BACK0R0UND
East-West trade hasentered anewphase .Inthefirst stage ,until about
themid-fifties ,trade wascarried onunder annual agreements ,mainly for
simple buying andselling (usually barter )operations .Thesecond stage
wastheperiod offive-year agreements with quota lists ,usually forcredit
sales ofplant andequipment toEast European countries .Thethird period ,
starting inthemid-sixties ,has seen theproliferation ofcontracts ,then
agreements ,for "cooperation ".. These exist alongside thetrade agreements ,
some ofwhich contain provisions concerning industrial cooperation .
This trend intheforms andscale ofEast-West trade hasbeen primarily due
to'thedeliberate policy ofEast European governments ,whothrough their
planning andforeign trade monopoly system .were able tousetrade with the

West foraparticular (andlimited )function intheir economic programmes .
However ,thetrend hasalso ofcourse been affected by-''changes inpolitical
relations and "bythenewmotivations "behind thetrade policies ofthewestern
countries .
Cooperation agreements arecoming into "being atajuncture inEast-West rela­
tions when theWest 'sdefensive attitude totrade is "being replaced byacon­
cern topromote trad© .This newapproach results from thenew political
climate ,theexistence ofanappropriate trade defence armoury andcertain changes
thetrading practices oftheEast European countries .^Study ofthecoopera­
tion agreements shows that they areaneffective instrument forpromoting
exports tothestate-trading countries .Since Eastern European governments
intervene inallsectors oftheeconomy andthis has'adirect orindirect
effect onexternal trade ,the "intergovernmental "or"joint "committees set
upunder thecooperation agreements fulfil animportant function fortrade .
These bodies ,which often meet atministerial level ,have general powers ;
they supervise thewhole range ofeconomic relations ,andtheir discussions
are atalevel where decisions ofprinciple canbetaken directly .Further ,
byproviding foranexchange ofinformation ontrends andinvestments planned
ingiven sectors ,these agreements make possible asectoral approach totrade
expansion .•Stronger contacts bysector ,lists showing where cooperation is
regarded asworth while andwhere enterprises' ownefforts could usefully be
encouraged -these aremethods ofmarket prospecting which areadmirably
suited totrade with countries with centrally planned economies .

-3-
Alongside theCommunity 'snewemphasis onexport problems ,theEast
European countries arechanging their attitudes asregards "both the
purposes oftrade itself anditsform andcontent .
Until recently ,theEast European countries didnotregard exporting asa
factor ofeconomic development per so,"butonly asameans ofpayment .As
aresult ,thescale ofEast-West trade waslimited financially bythevolume
ofgoods made available forexport ,which wasgoverned byproduction
possibilities andtheeconomic policies ofthecentral authorities .A
primary aimofthetrade policy oftheEast European countries wasbalance
ofpayments equilibrium .Imports were intended tomake upforshortages
incertain vital sectors oftheeconomy ,tosolve crises resulting from
planning errors and toprevent production shutdowns ,orasameans of
obtaining goods which could notbeproduced intheComecon countries .
Profitability andcomparative cost considerations were notdetermining
criteria .
Taking advantage ofthepolitical detente (andtoadegree welcoming itas
anopportunity toattain their economic goals ),theEast European countries
nowhope tobridge thetechnological gapbetween them andtheWest by
stepping uptheir imports ofproducer goods andWestern know-how .They
also hope nodoubt togain greater advantage from amore equitable distribu­
tion ofresources andmeans ofproduction and toavoid alevel ofeconomic
waste which isnottolerable inthelong run .With improved political
1relations ,they canplan forassistance from abroad forlong-term projects ,
whereas previously trade with theWest ,regarded asuncertain ,wasrestricted
toarrangements which were short-term andtherefore oflimited scope .
Atpresent ,-however ,thecontribution from abroad isregarded asdecisive in
certain seotors .Inview oftheBcale ofcertain cooperation projects ,
Thelatest cooperation agreements have been concluded forten-year periods .

-4-
thecontribution from abroad ,will have repercussions "beyond ,theproject
itself ,affecting even theeconomic infrastructure .Theforms andaims
ofthese cooperation agreements will bedifferent intheUSSR from those
inthepeople 'sdemocracies .IntheSoviet Union there arenomixed
undertakings andtheemphasis isonprimary products atatime when the
industrialized ,countries areseeking new sources ofsupply .Thepeople 's
democracies ,ontheother hand ,aretrying bymeans ofcertain types of
joint undertaking toindustrialize ,tocreate newactivities and to
integrate theii ;economies more fully into world trade .However ,foreign
plant andexpertise cannot bepaid forbytheir present exports ,except
atthe cost ofother imports .This newimporting policy therefore means
that theEast European countries must ,inconjunction with their western
partners ,atthe same time find asolution tothepayments problem .
Cooperation initsmost diverse forms isthemeans ofachieving this dual
aim ,forpayment will bemade inwhole orinpart byaproportion ofthe
goods produced bymeans ofimported plant ,and these goods will usually
bemarketed bywestern companies .
TheEast European countries thus hope toincrease thevolume andespecially
thestructure oftheir exports ,both essential ifthey are toachieve a
healthy balance ofpayments ,whose state atpresent isanobstacle tothe
harmonious andvigorous expansion oftrade .
Furthermore ,theEast European countries arenow farless interested in
five-year trade agreements .Thebasic features ofthese agreements were
most-favoured -nation treatment ,quota lists andajoint committee .The
accession toGATT offour East European countries has tosome extent
removed theattraction ofbilateral most-favoured -nation provisions .The
intergovernmental committees setupunder the cooperation agreements more
than adequately replace theconsultation machinery ofthetrade agreements ,
andgrowing trade liberalization reduces thesignificance ofthequotas .
Finally ,thenewconomic policy calls forprojects ofmore than five years'
duration .
•••/•••

II.COOPERATION AND THE COMMON COMMERCIAL POLICY
Both forMember States and for theEast European countries ,then ,thevarious
types ofcooperation are setinaclimate ofintensifying economic relations .
Even though some aspects ofcooperation ,such astheexchange ofscientific
information orjoint research ,donotdirectly affect trade relations ,
cooperation ineconomic affairs takes theform oftransfers ofgoods and
services .More generally ,even though itiscast inthelonger term and
hasmanifold implications ,thebasic aim ofcooperation chimes with the
fundamental purposes ofinternational trade .
Toachieve certain economic aims Member States make great useofthemethods
ofexport policy (prospecting ,promotion ,credit policy );many aspects of
import policy arealso affected where theterms onwhich goods areimported
arespecified inthecooperation agreements .Consequently ,cooperation
agreements substantively affect thecommon commercial polioy asdefined in
Article 113 -However ,there hasbeen nosystematic prior consultation on
these agreements .
This situation arises both from thevery general character ofthese agreements
which also cover non-trade fields andmaycontain noprecise reference to
trade policy .Moreover ,certain Member States considered that cooperation
ingeneral isnotpart oftheCommunity 'scompetence .
Some Member States ,however ,have submitted draft agreements toCommission
departments under consultation procedures ;inother cases ,theCommission
wassimply informed after theagreement hadbeen signed .

-6-
Itisafact that the East European countries try toget round the
establishment ofthecommon commercial policy byconcluding cooperation
agreements with theindividual Member States .This explains their repeated
efforts when negotiating with Member States toinsert trade-agreement
clauses inten-year cooperation agreements ,andthus tocreate alegal basis
forpursuing bilateral negotiations atnational level ;intheir view ,
Community agreements would then beunnecessary .
The east European countries maintain that cooperation isaquite specific
form ofrelationship andthey seek arrangements forgoods produced under
cooperation agreements ,that istariff exemption andespecially the
elimination ofquantitative restrictions .Itisinteresting tonote an
article intheofficial Soviet foreign trade review No11/72inwhich
V,Vetrov and V.Kazakevich consider that "industrial cooperation hasproved
itsworth asameans oflowering some ofthebarriers putupbythecapitalist
countries which artificially restrict trade with East Europe ",andthey
specifically refer toquantitative restrictions .
•••/•••

III.CONCLUSION
Thesecooperation agreements ,then,areproliferating ataparticularjuncture
intheconstruction ofEurope.Themostrecenthavebeenconcludedfor
ten-yearperiods,andtheyarebeingnegotiatedatatimewhenthepowerto
negotiatetradeagreementsisbeingtransferredtoCommunityinstitutions
buttheexerciseoftheCommunity'scompetenceinthefieldofcooperation
hasnotbeensystematically organized.TheEastEuropeancountriesare
takingadvantageofthissituation.
Furthermore ,cooperationwillcallformuchmorefar-reaching intervention
bythepoliticalauthoritiesthanthatrequiredbystraightforward buying
andsellingoperations ,inthatthenatureandcomplexityoftheproblems
arequitedifferent.Whileinbarteroperationstheroleofthepolitical
authorities wasminor,tobecomemoreimportantincreditsalesofplantand
equipment,itcanbedecisivewhencompleteinstallations orevenwholenew
industriesarebeingsetup.Cooperationwillhaverepercussions notonly
ontheproductioncapacitiesoftheexportersandoncompetitionresulting
fromthearrivalonourmarketsofproductsmanufactures andsoldunder
cooperation agreements ,butalsoonrawmaterialssupplypolicy,the
development ofcertainsectorsofourinfrastructure andthepossible
transfertoEasternEuropeofcertaintypesofproduction ,withallthe
socialconsequences ,bothpositiveandnegative,ofsuchanoccurrence.
Atthesametimetherewillbetheproblemofthecompetitivecapacityof
MemberStateswhich,continuetoallowtheEastEuropeancountriestoplay
themoffagainsteachother,andwhichmustfacepowerfulnewcompetitors ,
theUnitedStatesandJapan.Asaresulteitheroftheirpowerand
structureorofgovernmentsupport,theenterprises concernedinthesetwo
countriesseemtobeparticularly wellorganizedtocopewithallthestages
andconditionsofmajorcooperationprojects,whicharebeyondthe
capabilities oftheMemberStates,takenseparately.

-δ-
Competition withtheUnitedStatesandJapaninthetastfhiropeanmarket
wi11inevitably haveeffectsonothermarketswheretheseenterprises
arecompeting.Further,thequestionariseswhetherEuropemaynotsoon
"lor;citspositionasleadingsuppliertoEastEuropeanmarketsandbecome
baoicallythemarketforproductsmanufactured throughcooperation between
thosecountriesandtheUnitedStatesandJapan.ThenEuropewouldbe
supplyingtotheEastEuropeancountriestheforeigncurrencyneededto
pnyforplantandequipmentpurchasedoutsideEurope.
Thetimehastherefore comefortheCommunitytoconsiderthecooperation
agreementswiththeEastEuropeancountries ,andparticularly their
implementation ,inaCommunityperspective ,withinthecontextofcommon
commercialpolicy,inordertoevaluatehowtheycanbestservethegreatest
interestsoftheCommunityasawhole.Shouldthelatestdevelopments be
eventuallyreflectedintheestablishment oflinksbetweentheCommunityand
Comecon,"thearrangements envisagedinthiscommunication wouldbeentirely
withoutprejudicetosuchactioninfieldsofmutualinterestasmightemergebetween
ComeconandEEEC.

Part II:MEASURES TOBEENVISAGED
I. INTRODUCTION
Atpresent theattitude adopted "bytheEast European countries towards the
Community makes itdifficult towork towards adequate solutions totheproblems
ofcooperation .Inthefirst place ,asMember States cannolonger open trade
negotiations ,they cannot accede torequests from non-member countries and
therefore cannot ask forreturn concessions .Atthe same time ,byrefusing
tonegotiate with theCommunity ,theEast European countries prevent the
conclusion ofCommunity agreements which would supplement thebilateral
agreements andthus institute anewlegal framework which would give cooperation
anewdimension whereby political resolve could betranslated into economic
reality .
Community agreements would establish thebest possible conditions ,inthelight
ofCommunity legislation andinternational rules ,fortrade
under cooperation agreements andatthe same time would consolidate thecommon
commercial policy .The continuation andafortiori thepermanent acceptance
ofcooperation based solely onbilateral relations between Member States and
East European countries ,ontheother hand ,holds very serious drawbacks both
fortheCommunity asawhole and foreach ofitsMember States .Such a
situation would inevitably induce theEast European countries tostep uptheir
outbidding policy byplaying offMember States against each other andespecially
against other competitors .This vertical separation prevents transactors in
theCommunity from exploiting thepossibilities inherent intheCommunity ;
infact ,bymultiplying individual arrangements itisliable tohamper thefree
movement ofgoods andlead totheadoption ofsafeguard measures .Atrade
policy which wascircumvented ,fragmented orprevented from playing itsrole
inanexpanding sector would increasingly lose itsraison d'etre ifitnolonger
provided Community undertakings with themeans ofaction which they expeot from
it.
•••/•••

-10-
Cooperation with theEast European countries ,especially that foreshadowed
fortheperiod after 1975 »will cover projects onascale which will call for
cooperation among several European firms ,industrial aswell asfinancial or
commercial .Avery small number offirms will nodoubt still heable to
provide thegoods ,capital and services called forbythese projects .
Only Community action based onuniform principles progressively drawn from
current national rules inthe financial sectors ofcredit insurance and for
processing systems will enable Community enterprises tomeasure uptochanged
circum stances and tostand uptothe competition .
However ,thefact that itisnotyetpossible tofind asolution byagreement
which would both meet therequirements oftheCommunity andcontribute to
expanded East-West cooperation does not justify acquiescence ,still less total
inaction .What theCommunity hasalready achieved must first besafeguarded ;
then thefoundations must belaid forfuture action ;andfinally itmust be
determined what conditions andinstruments arerequired foraction based both
onthefinancial andindustrial potential offered byexistence ofaCommunity
and onthe trade flows andcontacts already established onbilateral bases .
Asafirst step ,therefore ,theCommission proposes measures intheform of
adraft decision ,inthefield ofautonomous policy andsuggests guidelines for
medium-term action .
II.DRAPT DECISION
The Commission proposal provides for :
(a)theestablishment ofaconsultation procedure ,
(b)thecompulsory inclusion ofa"review "clause innewcooperation
agreements .

A.Consultation procédure
Inproposing consultation ,theCommission considers that three major aims
could beachieved :
(a)tofacilitate mutual information andexchanges ofviews ;
(b)toverify that theagreements andthemeasures proposed bythe
intergovernmental committees areconsistent with theprovisions'
ofthecommon commercial policy j
(c)toharmonize measures proposed regarding imports ofgoods produced by
cooperation activities ;
(d)toharmonize theterms andduration ofexport credits .
Theexperience gained from theapplication oftheDecision of9October I96I
onprior consultation hasbeen quite conclusive ;ithasmade itpossible to
attain similar objectives inthecontext oftheoldtrade agreements atatime
when thecommon commercial policy was less advanced than itisnow .
Aa.Bylaunching asystem ofmutual information andexchanges ofviews
between delegations ,theprocedure under theDecision of9October I96I
enabled Member States tostand firm against acontinuing process of
concessions andoutbidding .Each Member State hasbeen able tobenefit
from the experience' ofthe others and ,turning thetables ontheEast
European countries ,toask inturn fortheconcessions which these countries
hadmade toanother Member State .Inthis waytheagreements have gradually
been harmonized ,andas "they align their positions theMember States have
individually gained innegotiating strength .

-12-
Inafield asnowandcomplex asthat ofcooperation ,standing
arrangements formutual information arenot only advisable butwould
appear tobeindispensable forsuccess .Thenecessity isfurther
confirmed bytheemergence ofnewandvery dynamic competitors who in
some respects have powerful means attheir disposal compared with those
available toexporters intheMember States .
Ab.Itseems obvious that agreements must boscrutinized toensure that
they contain noclauses incompatible with Community provisions and
that they will notconstitue obstacles totheachievement ofinte­
gration .That this isincontrovertible (anditwasthereason behind
theDecision of9October 1961 )isfurther confirmed bytheattempts
made bythecountries ofEastern Europe tousecooperation agreements
asameans ofgetting round theprovisions ofthecommon commercial
policy .
However ,this scrutiny cannot beconfined only tocooperation
agreements tobenegotiated after such aprocedure hasbeen put into
effect .Todosowould betoignore thefeatures peculiar to
cooperation agreements and tounderestimate theimportance and
potentialities oftheintergovernmental orjoint committee ,for it
isthis committee ,with -itsoversight ofthewhole range ofeconomic
relations ,which gives substance tothegeneral provisions oftheagreement .
Inparticular ,thecommittee defines thesectors inwhich cooperation
istotake place andapproves theoperations which subsequently may
benefit from various measures ofencouragement .Thus theintergovern­
mental committee candirectly influence thetrend andstructure of
trade andthereby indirectly affect thesituation incertain sectors
oftheCommunity .Insofaras,bydefinition ,cooperation with
Eastern Europe implies notonly exports ofplant andequipment to'
these countries butalso imports into theCommunity ofrawmaterials
•••J•••

(aswill nodoubt "bethecase with theUSSR )and .semi-manufactures
(from thepeople 'sdemocracies ),then itisobvious that such
operations should notescape Community scrutiny .
Consultation should therefore likewise "cover theactivities ofthe
intergovernmental committee totheextent that theywill have an
■r
impact onthedevelopment ofeconomic relation .
Thedecision of19December 1972 sets upaprocedure forconsultation
andcoordination which ismandatory forallchanges totheimport
systeir .
Yet atthe same time ,
inmost trade and/orcooperation agreements ,theEast European
countries have obtained clauses whereby imports ofgoods produced
hyapproved cooperation activities arenotsubject totheagreed
quotas .Germany ,France andItaly have usually agreed tosuch a
olause ,theBenelux countries andtheUnited Kingdom occasionally .
Clearly ,many difficulties mayarise from this discrepancy between
theMember States andfrom thedifferent treatment given tothesame
product according tothelegal instrument under which itisimported .
These difficulties will bethegreater inthat there isnorecognized
definition ofcooperation ;itcantake avariety offorms andat
present itsdistinguishing feature isstill thewill oftheparties .
Further ,under thecover ofcooperation ,bartering ,which wasthought
tobedisappearing ,isbecoming current again ,andonalarger scale than beTtas .
And itwasprecisely bartering which wasusually attheroot of
disturbances orpotential disturbances tothemarket intheperiod
when this type oftrade waspredominant .
Community scrutiny therefore seems essential before products are
•1
almost entirely freed from quota restrictions through cooperation
andsobecome liable ,ifthey aresensitive goods ,toinjure certain
economic sectors ofaMember State notparty totheagreement

-14-
andaffect "thefunctioning of "thecommon market .Intheabsence ofsuch
scrutiny ,increasing usewill bemade ofderogations and exceptions as
trade defence measures ,tothedetriment ofthefree movement ofgoods ,
which byopening upbroader markets forEast European goods increases those
countries *revenues and thus their purchasing power .
The idea ofCommunity scrutiny wasaccepted bythePermanent Representatives
1Committee asearly as6May 1970 ,when itwasagreed that there should be
acase-by-case study ofproducts imported under thesystem setupbythe
agreement between theFederal Republic ofGermany andHungary for goods
produced under cooperation arrangements .
Theprocedure advocated bythat Committee ,however ,hasnever been resorted
to, (because sofarnoMember State hasannounced itsintention on
cooperation grounds ofimporting without limits aproduct subject toaquota .
IfMember States which have granted this concession have approved
cooperation arrangements only forproducts which arealready free of
restrictions orwhich are tobeimported within theagreed quotas ,then
theabsence ofinformation from theMember States isself-explanatory .
Thesystematic application ofacommunity procedure would ,however,' make
amore liberal policy possible formany products andcould thus help to
expand trade while contributing toacommon commercial policy *
Ad.Atatime when credit isplaying agrowing role inexports totheEast
European countries ,particularly forlarge-scale projects such asthose
planned under cooperation ^thecompetitive bidding seen intheCommunity
isofbenefit tonobody except theEast European countries .
Byproviding formutual information ,consultation isafirst step towards
adopting amore common attitude towards demands from East Europe .
•••/•••
SeeS/392/7O(Comer 113)

-15-
B.Review clause
There isnoneed "todescribe why from the early days ofthe Community
the Council asked Member States toinclude the EEC clause intheir
agreements with non-member countries ,andlater more specifically a
review clause intrade agreements with state-trading countries .
Inview ofthelength (tenyears )ofthecooperation agreements now
being concluded with East European countries ,andtheir expanding scope
atatime when Community powers anditsrange ofaction aregrowing ,
the Commission proposes that aclause ofthis nature beincluded in
cooperation agreements .Thecase fordoing soisstrengthened asaresult
oftherecent negotiations between Germany andtheUSSR ,atwhich Germany
secured theinclusion ofareview clause (Article $oftheAgreement ,
signed inMay1973 )referring expressly tothemultilateral commitments
undertaken bytheContracting Parties .TheSoviet delegation ,duly
informed ofthereasons forandscope oftheclause ,accepted itand
required that anyreview should not compromise thebasic purposes ofthe
agreement .Such areservation hadalready been made inmany trade agreements
which contained areview clause ofthis kind .The Soviet Union 'sacceptance
isawelcome precedent forother negotiations .
Itsinclusion inother agreements will make itpossible toavoid incom­
patibilities which could give rise todisputes with non-member countries
ordifficulties within theCommunity .
Member States whose agreements lack this clause will reach agreement on
appropriate provisions with theother Contracting Party ;this could bedone ,
forinstance ,atthenext meeting oftheintergovernmental committee .

16-
III .FUTURE WORK
Work tobeundertaken covers thefollowing fieldsi
A. CREDIT INSURANCE
1.Asregards credit insurance ,theCommission reminds the Council ofits
proposals forlimiting theduration ofcredit andobserving aminimum
1interest rate .Theadoption ofthese measures would place all firms
inMember States onasimilar competitive footing andwould also
facilitate discussions with the other industrialized countries .
2.Thedirect participation ofCommunity enterprises injoint ventures
will befacilitated byadoption ofthe Commission 'sproposal on
2investment guarantees innon-member countries .This proposal could
beadapted tomeet theconditions peculiar tocentrally planned
economies .
B. CUSTOMS ARRANGEMENTS
Inthenational agreements now inforce ,thearticle oncooperation
usually states "theParties agree togrant each other themost favourable
treatment ". Itisclear that because oftheCommunity 'sdeveloping
customs system ,and since customs duties areCommunity revenue ,the
Member States nolonger have autonomous anddiscretionary power togrant
themost favourable tariff and customs treatment totheir East European
trading partners ifsuch treatment oversteps thelimits setbyCommunity
law .•
This isalready soforinward processing arrangements ,including industrial
warehouse processing ,andwill soon apply also tooutward processing .
Since alarge proportion ofcurrent cooperation arrangements fall within
these twocustoms systems ,itisobvious that only under aderogation
agreed toatCommunity level will itbepossible toinclude
most-favourable -treatment clauses incooperation agreements .
4
SeeDoc .COM(72 )1526 final of6December 1972 ..
SeeDoc..COM(72)1461 final of20December 1972 .

-17-ι
Even then ,such treatment cannot relate totariffs without "being univer­
sally extended .
Forthemoment itwould bepossible toadopt atCommunity level the
principle that imports orre-imports ,made tinder theinward and/oroutward
processing arrangements ofindustrial cooperation contracts andapproved
atCommunity level "byconsultation procedures ,aretoberegarded as
satisfying theeconomic requirements ofthose arrangements .Directive
No69/73/EEConinward processing arrangements provides asystem v/hereby
theCouncil canbeasked toadopt implementing rules foreconomio
supervision .
Inthelonger term ,theintroduction ofCommunity rules forinternational
industrial cooperation forms part ofcontinuing harmonization work inthe
sector ofeconomic customs systems .
These rules should offer acomplete range ofcustoms facilities specifically
tailored totheneeds ofCommunity policy forthepromotion ofinternational
industrial cooperation .
Asindustrial cooperation isexpanding ,work inthis field should be
speeded up.Without such unification andagreater degree ofcoordination ,
distortions ofcompetition will soon occur .
*
* *
Theparticular system which might beadopted forapproved cooperation
arrangements should apply only tooperations either intheCommunity orin
theEast European country orcountries concerned .
•9•/•••

-IS-
C'.CREATION OFASPECIAL STUDY GROUP
Besides thepoints referred tointheprevious section ,thefactors which
determine orwhich may inthefuture determine thetrend oftrade between
the Community and the East European countries are socomplex that the
Commission feels itshould consult agroup ofhigh-level independent experts
from public administrations ,financial institutions andindustry ..This
group ,meeting under adistinguished chairman ,would include representatives
from various geographical areas sothat various types ofexperience could be
drawn on.
Having setupthis special study group ,theCommission would aslc itto
present ,bynext spring atthelatest ,anoverall report ontheways
andmeans bywhich theCommunity canhenceforth ,inaccordance with
its economic potential andbearing inmind itstraditional links with East
European countries ,participate tothefull intheprojects which will be
proposed bythose countries orbyCommunity enterprises .

BRAFT
Proposal foraCouncil Decision establishing a
consultation procedure forcooperation agreements
between Member States and third countries
TEDSCOUNCIL OFTHEEUROPEAN COMMUHITIES ,
Having regard totheTreaty establishing theEuropean Economic Community ,
and inparticular Article 113thereof ;
Having regard totheproposal from theCommission ;
Having regard totheOpinion oftheEuropean Parliament ;
Whereas thenegotiation andimplementation of"cooperation "agreements between
Member States andthird countries may affect trade relations with those
countries ;
Whereas thenegotiation andimplementation ofsuch agreements should therefore
besubject toaprior consultation procedure without prejudice toparticular
Community procedures forcertain categories ofnational commercial policy
measures ;
Whereas such aconsultation procedure should make itpossible toestablish
whether thenegotiation andimplementation ofsuch agreements areconsistent
with therequirements ofthecommon commercial policy anddonotprejudice
theinterests oftheCommunity orofanyofitsMember States ;whereas it
may also facilitate theexchange ofinformation andthus coordination among
Member States asregards thethird countries concerned ;
Whereas such agreements should also include aclause safeguarding the
respect ofCommunity obligations intheimplementation oftheagreements and
enabling these agreements tobereviewed inthelight ofthedevelopment
oftheCommunity 'scommon policies ,

HAS ADOPTED THIS DECISION :
Article 1
TheMember States shall inform theCommission ,which shall inturn inform
the other Member States ,
-ofagreements relating toeconomic ,industrial orscientific cooperation
(hereinafter called "cooperation agreements ")which they propose tonegotiate
with third countries ;
-ofmeasures which they propose totake inimplementing cooperation agreements ,
where applicable before they arestudied intheintergovernmental orjoint
committees setupbythese agreements .
Article 2
1.There shall beprior consultation with theother Member States and the
theCommission ontheagreements andmeasures referred toinArticle lj
this consultation shall take place within three weeks ofthe Commission
andthe other Member States being informed .
2.lihere thematter isurgent ,consultation shall take place assoon as
the Commission and the other Member States have been informed .
3.Thepurposes oftheconsultation shall beinter alia ;
(a)toestablish whether thenegotiations andother measures proposed are
consistent with therequirements ofthecommon commercial policy anddo
notprejudice theinterests oftheCommunity orofany ofitsMember
States ;
(b)tocoordinate measures proposed which relate totheimportation
orexportation ofproducts orservices arising from cooperation operations ;
(c)tofacilitate theexchange ofinformation andviews inorder ,whore
applicable ,toenable theMember States tocoordinate their action
with regard tothethird countries concerned .

-3-
4«TheMember States shall transmit totheCommission thetexts ofcooperation
agreements concluded ,with third countries andofimplementation measures
pertaining tothese agreements adopted after consultation asreferred toin
thepreceding paragraphs .
Article 3
Consultation ontheapplication ofacooperation agreement maybeinstituted
atanytime ,either attherequest ofaMember State orupon theinitiative
ofthe Commission .
Article 4
Theconsultations provided forinArticles 2and 3shall take place within
the committee oflimited size referred tointhe Council decision of
9October 1961^concerning aconsultation procedure inrespect ofthe
negotiation ofagreements concerning commercial relations between Member
States andthird countries and inrespect ofchanges inthe state of
liberalization inrelation tothird countries®
Article 5
Theprovisions ofArticles 1,2and 3shall bewithout prejudice tothe
particular Community procedures laid down forcertain categories ofcommercial
policy measures taken byMember States .
Article 6
Incooperation agreements which they have concluded orwhich they propose to
conclude with third countries ,Member States shall include provisions tothe
effect that nothing therein shall affect their obligations asMember States of
theEuropean Communities andthat theparties will review theagreement when
theneed arises inorder totake account oftheprogressive development ofthe
Community 'scommon policies andoftheresulting obligations forallMember
States .
Article 7
This decision isaddressed totheMember States .
QJNo71,4November 1961 ,p.1273/61