Proposal for a COUNCIL DECISION on the provisional application of a bilateral agreement between the European Community and Ukraine on trade in textile products

(presented by the Commission)

EXPLANATORY MEMORANDUM

In accordance with the Council negotiating directives of 12 July 1999, the Commission has negotiated an agreement on the revision and extension of the existing bilateral Agreement between the European Community and Ukraine on trade in textile products. This agreement in the form of an exchange of letters was initialled on 15 October 1999.

The agreement provides for an extension of the present textiles agreement until 31 December 2000. It furthermore provides for an increase of quantitative limits applied on imports of textile products from Ukraine for 1999 and 2000, as well as for reductions in tariffs applied on exports of textiles products from the EC to Ukraine. Since the agreement provides for increases of the 1999 levels of the quantitative restrictions, provisional application should become effective as soon as possible in 1999.

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

Proposal for a

COUNCIL DECISION

on the provisional application of a bilateral agreement between the European Community and Ukraine on trade in textile products

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133 in conjunction with Article 300, paragraph 2, first sentence thereof,

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

[1] OJ C &

Whereas:

(1) The Commission has negotiated on behalf of the Community a bilateral agreement to revise and extend the existing bilateral agreement and protocols on trade in textile products with Ukraine;

(2) This bilateral agreement should - considering the provisions on increases of quotas in 1999 - be applied on a provisional basis as soon as possible before the end of 1999, after publication of the present Decision in the Official Journal, pending the completion of procedures required for their conclusion, subject to the reciprocal provisional application by Ukraine.

HAS DECIDED AS FOLLOWS:

Article 1

The Agreement in the form of an Exchange of Letters amending the Agreement between the European Community and Ukraine on trade in textile products shall be applied on a provisional basis, pending its formal conclusion and subject to reciprocal provisional application of the Agreement by Ukraine [2].

[2] The date from which provisional application will become effective will be published in the Official Journal of the European Communities, C series.

The text of the Agreement is annexed to this Decision.

Article 2

This Decision shall be published in the Official Journal of the European Communities. It shall enter into force the day after its publication in the Official Journal.

Done at Brussels,

For the Council

The President

ANNEX

AGREEMENT in the form of an Exchange of Letters between the European Community and Ukraine amending the Agreement between the European Community and Ukraine on trade in textile products

Letter from the Council of the European Union

Sir,

1. I have the honour to refer to the negotiations held on 14 and 15 October 1999 between our respective Delegations with a view to renew the Agreement between the European Community and Ukraine on trade in textile products including its annexes and agreed minutes ('the Agreement') initialled on 5 May 1993, as last amended and extended by the Agreement in the form of an Exchange of Letters initialled on 9 November 1995.

2. During these negotiations both Parties restated their long-term objective of enhancing textiles and clothing trade between their countries. For this purpose it was agreed that the Parties would negotiate during the year 2000 a longer-term agreement aiming at the full liberalisation of trade in textiles, in parallel with alignment of Ukrainian tariffs to the rates applied by the European Community. Such agreement will aim at the elimination, upon its entry into force, of quantitative restrictions for product categories whose utilisation rates were below 2 % in 1999 (categories 1, 2, 2A, 3, 9, 12, 20, 23, 37, 67 and 115).

3. The Parties agreed to amend the following provisions of the Agreement:

3.1. Annex I which sets out the products referred to in Article 1 of the Agreement is replaced by Annex I to EC Regulation 3030/93 (Appendix 1 to this letter gives further details).

3.2. Annex II which sets out the quantitative restrictions for exports from Ukraine to the European Community is replaced by Appendix 2 to this letter. For the year 1999 there will be an increase of 60 % for quantitative limits for textile categories 6, 7, 15 and 16, and an increase of 50 % for categories 5, 26/27, 29 and 50. For the year 2000, the increase will be, subject to the conditions and procedures of paragraph 5 of this letter, 30 % for all textile categories over the effective 1999 levels, with the exception of categories 5, 6, 7, 15, 16, 26/27, 29 and 50, which will be increased by 50 % over the effective 1999 levels.

3.3. The Annex to Protocol C which sets out the quantitative restrictions for exports from the Republic of Ukraine to the European Community after OPT operations in the Republic of Ukraine is replaced by Appendix 3 to this letter.

3.4. The second and third sentence of Article 20, paragraph 1, are replaced by the following text : 'It shall be applicable until 31.12.2000.'

4. The Parties agreed that imports into Ukraine of the textiles products originating in the Community and listed in Appendix 4 shall not exceed the rates of import duties described in that Appendix (products covered by chapters 50 to 63 of the Harmonised System).

5. The Parties agreed that the balance of the present agreement, forming a package of mutual concessions, depends on the full and faithful implementation of all agreement terms. In order to monitor the implementation of the agreement, both parties will hold consultations on during the first quarter of 2000, in which the quantitative limits for the year 2000 as set out in Appendix 2 may also be reviewed in order to further facilitate the expansion of trade.

The increase of the levels of quantitative limits for the year 2000, as set out in Appendix 2, will be effected automatically upon confirmation that the tariff levels have been reduced to the levels established in Appendix 3. Ukraine undertakes to provide such confirmation by 31 March 2000.

The Parties also agreed that the volume of quantitative limits of year 2000 would be the same as those of 1999 until the moment when Ukraine applies the import tariff levels specified in Annex III.

6. In the case of non-application of these rates the Community will have the right to reintroduce for the year 2000 the levels for quantitative restrictions applicable for 1999 as specified in the Exchange of Letters initialled on 9 November 1995.

7. Should Ukraine become a Member to the World Trade Organisation before the date of expiry of the Agreement, this Agreement and its annexes will be applied and notified to the World Trade Organisation as an Administrative Arrangement, and its provisions will be applied within the framework of the Agreements and rules of the World Trade Organisation.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally no later than 1 December 1999 on the conditions to be specified in an Exchange of Notes (see Appendix 5).

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

For the Council of the European Union

Appendix 1

Annex I to the Agreement between the European Community and Ukraine on trade in textile products including initialled on 5 May 1993 is replaced by Annex I to EC Regulation 3030/93 [3]. It is understood that without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within that Annex by CN codes. Where there is an 'ex' symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

[3] In 1999 this Annex was published in EC Official Journal L 134 of 28.5.1999.

Appendix 2

Annex II

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

>TABLE>

T pieces: Thousand of pieces

T pairs: Thousand of pairs

Appendix 3

Annex to Protocol C

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

OPT QUOTAS

Community quantitative limits

>TABLE>

Appendix 4

Maximum rates of duties applicable for imports into Ukraine of textile products from the European Community

>TABLE>

Appendix 5

EXCHANGE OF NOTES

The Directorate General for Trade of the European Commission presents its compliments to the Mission of Ukraine and has the honour to refer to the Agreement between the European Community and Ukraine on Trade in Textile Products initialled on 5 May 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 15 October 1999.

The Directorate General for Trade wishes to inform the Mission of Ukraine that, whilst awaiting the completion of the necessary procedures for the conclusion and coming into force of the Agreement in the form of an Exchange of Letters, the European Community is prepared to allow the provisions of the Agreement to apply de facto from &. This is on the understanding that either Party may at any time terminate this de facto application of the Agreement in the form of an Exchange of Letters provided that four months notice is given.

The Directorate General for Trade would be grateful if the Mission of Ukraine would confirm its agreement to the foregoing.

Letter from the Government of Ukraine

Sir,

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

"Sir,

1. I have the honour to refer to the negotiations held on 14 and 15 October 1999 between our respective Delegations with a view to renew the Agreement between the European Community and Ukraine on trade in textile products including its annexes and agreed minutes ('the Agreement') initialled on 5 May 1993, as last amended and extended by the Agreement in the form of an Exchange of Letters initialled on 9 November 1995.

2. During these negotiations both Parties restated their long-term objective of enhancing textiles and clothing trade between their countries. For this purpose it was agreed that the Parties would negotiate during the year 2000 a longer-term agreement aiming at the full liberalisation of trade in textiles, in parallel with alignment of Ukrainian tariffs to the rates applied by the European Community. Such agreement will aim at the elimination, upon its entry into force, of quantitative restrictions for product categories whose utilisation rates were below 2 % in 1999 (categories 1, 2, 2A, 3, 9, 12, 20, 23, 37, 67 and 115).

3. The Parties agreed to amend the following provisions of the Agreement:

3.1. Annex I which sets out the products referred to in Article 1 of the Agreement is replaced by Annex I to EC Regulation 3030/93 (Appendix 1 to this letter gives further details).

3.2. Annex II which sets out the quantitative restrictions for exports from Ukraine to the European Community is replaced by Appendix 2 to this letter. For the year 1999 there will be an increase of 60 % for quantitative limits for textile categories 6, 7, 15 and 16, and an increase of 50 % for categories 5, 26/27, 29 and 50. For the year 2000, the increase will be, subject to the conditions and procedures of paragraph 5 of this letter, 30 % for all textile categories over the effective 1999 levels, with the exception of categories 5, 6, 7, 15, 16, 26/27, 29 and 50, which will be increased by 50 % over the effective 1999 levels.

3.3. The Annex to Protocol C which sets out the quantitative restrictions for exports from the Republic of Ukraine to the European Community after OPT operations in the Republic of Ukraine is replaced by Appendix 3 to this letter.

3.4. The second and third sentence of Article 20, paragraph 1, are replaced by the following text : 'It shall be applicable until 31.12.2000.'

4. The Parties agreed that imports into Ukraine of the textiles products originating in the Community and listed in Appendix 4 shall not exceed the rates of import duties described in that Appendix (products covered by chapters 50 to 63 of the Harmonised System).

5. The Parties agreed that the balance of the present agreement, forming a package of mutual concessions, depends on the full and faithful implementation of all agreement terms. In order to monitor the implementation of the agreement, both parties will hold consultations on during the first quarter of 2000, in which the quantitative limits for the year 2000 as set out in Appendix 2 may also be reviewed in order to further facilitate the expansion of trade. The increase of the levels of quantitative limits for the year 2000, as set out in Appendix 2, will be effected automatically upon confirmation that the tariff levels have been reduced to the levels established in Appendix 3. Ukraine undertakes to provide such confirmation by 31 March 2000.

The Parties also agreed that the volume of quantitative limits of year 2000 would be the same as those of 1999 until the moment when Ukraine applies the import tariff levels specified in Annex III.

6. In the case of non-application of these rates the Community will have the right to reintroduce for the year 2000 the levels for quantitative restrictions applicable for 1999 as specified in the Exchange of Letters initialled on 9 November 1995.

7. Should Ukraine become a Member to the World Trade Organisation before the date of expiry of the Agreement, this Agreement and its annexes will be applied and notified to the World Trade Organisation as an Administrative Arrangement, and its provisions will be applied within the framework of the Agreements and rules of the World Trade Organisation.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally no later than 1 December 1999 on the conditions to be specified in an Exchange of Notes (see Appendix 5).

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

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

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

For the Government of Ukraine

Appendix 1

Annex I to the Agreement between the European Community and Ukraine on trade in textile products including initialled on 5 May 1993 is replaced by Annex I to EC Regulation 3030/93 [4]. It is understood that without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within that Annex by CN codes. Where there is an 'ex' symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

[4] In 1999 this Annex was published in EC Official Journal No. L 134 of 28.5.1999.

Appendix 2

Annex II

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

>TABLE>

T pieces: Thousand of pieces

T pairs: Thousand of pairs

Appendix 3

Annex to Protocol C

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

OPT QUOTAS

Community quantitative limits

>TABLE>

T pieces: Thousand of pieces

T pairs: Thousand of pairs

Appendix 4

Maximum rates of duties applicable for imports into Ukraine of textile products from the European Community

>TABLE>

Appendix 5

EXCHANGE OF NOTES

The Mission of Ukraine presents its compliments to the Directorate General for Trade of the European Commission and has the honour to refer to the Note of the Directorate General (date of Note Verbale) regarding the Agreement on trade in textile products initialled on 5 May 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 15 October 1999.

The Mission of Ukraine wishes to confirm to the Directorate General for Trade that, whilst awaiting the completion of the necessary procedures for the conclusion and coming into force of the Agreement in the form of an Exchange of Letters, the Government of Ukraine is prepared to allow the provisions of the Agreement to be applied de facto from &. This is on the understanding that either Party may at any time terminate this de facto application of the Agreement in the form of an Exchange of Letters provided that four months notice is given.

The Mission of Ukraine avails itself of this opportunity to renew to the Directorate General for Trade of the European Commission the assurance of its highest consideration.