AGREEMENT between the European Economic Community and Malaysia on trade in textile products Done at Brussels on 28 June 1986.

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and

THE GOVERNMENT OF MALAYSIA,

of the other part,

DESIRING to promote, with a view to permanent cooperation and in conditions providing every security for trade, the orderly and equitable development of trade in textile products between the European Economic Community (hereinafter referred to as 'the Community') and Malaysia,

RESOLVED to take the fullest possible account of the serious economic and social problems at present affecting the textile industry in both importing and exporting countries, and in particular, to eliminate real risks of market disruption on the market of the Community and real risks of disruption to the textile trade of Malaysia,

HAVING REGARD to the Arrangement regarding International Trade in Textiles (hereinafter referred to as 'the Geneva Arrangement'), and in particular Article 4 thereof, and to the conditions set out in the Protocol extending the Arrangement,

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

THE COUNCIL OF THE EUROPEAN COMMUNITIES:

THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE:

WHO HAVE AGREED AS FOLLOWS:

SECTION I

Trade arrangements

Article 1

1. The Parties recognize and confirm that, subject to the provisions of this Agreement and without prejudice to their rights and obligations under the General Agreement on Tariffs and Trade, the conduct of their mutual trade in textile products shall be governed by the provisions of the Geneva Arrangement.

2. In respect of the products covered by this Agreement, the Community undertakes not to introduce quantitative restrictions under Article XIX of the General Agreement on Tariffs and Trade or Article 3 of the Geneva Arrangement.

3. Measures having equivalent effect to quantitative restrictions on the importation into the Community of the products covered by this Agreement shall be prohibited.

Article 2

1. This Agreement shall apply to trade in textile products of cotton, wool and man-made fibres originating in Malaysia which are listed in Annex I.

2. The classification of the products covered by this Agreement is based on the Nomenclature of the Common Customs Tariff and on the Nomenclature of Goods for the External Trade Statistics of the Community and the Statistics of Trade between Member States (NIMEXE).

From the entry into force of the International Convention on the Harmonised Commodity Description and Coding System (HS) this classification will be based on the harmonized system and on the Community nomenclatures derived from that system.

3. The origin of the products covered by this Agreement shall be determined in accordance with the rules in force in the Community.

Any amendment to these rules of origin shall be communicated to Malaysia and shall not have the effect of reducing any quantitative limit established in Annex II.

The procedures for control of the origin of the products referred to above are laid down in Protocol A.

Article 3

Malaysia agrees for each Agreement year to restrain its exports to the Community of the products described in Annex II to the limits set out therein.

Exports of textile products set out in Annex II shall be subject to a double-checking system specified in Protocol A.

Article 4

Malaysia and the Community recognize the special and differential character of re-imports of textile products into the Community after processing in Malaysia.

Provided that they are effected in accordance with the regulations on economic outward processing in force in the Community, these re-imports are not subject to the quantitative limits set out in Annex II when they are subject to the specific arrangements laid down in Protocol E.

Article 5

Exports of cottage industry fabrics woven on hand- or foot-operated looms, garments or other articles obtained manually from such fabrics and traditional folklore handicraft products shall not be subject to quantitative limits, provided that these products meet the conditions laid down in Protocol B.

Article 6

1. Imports into the Community of textile products covered by this Agreement shall not be subject to the quantitative limits established in Annex II, provided that they are declared to be for re-export outside the Community in the same state or after processing, within the framework of the administrative system of control which exists within the Community.

However, the release for home use of products imported under the conditions referred to above shall be subject to the production of an export certificate issued by the Malaysian authorities, and to proof of origin in accordance with the provisions of Protocol A.

2. Where the Community authorities have evidence that imports of textile products have been set off against a quantitative limit established under this Agreement, but that the products have subsequently been re-exported outside the Community, the authorities concerned shall inform the Malaysian authorities within four weeks of the quantities involved and authorize imports of identical quantities of the same products, which shall not be set off against the quantitative limit established under this Agreement for the current or the following year.

Article 7

1. In any Agreement year advance use of a portion of the quantitative limit established for the following Agreement year is authorized for each category of products up to 5 % of the quantitative limit for the current Agreement year.

Amounts delivered in advance shall be deducted from the corresponding quantitative limits established for the following Agreement year.

2. Carryover to the corresponding quantitative limit for the following Agreement year of the amounts not used during any Agreement year is authorized for each category of products up to 7 % of the quantitative limit for the current Agreement year.

3. Transfers in respect of categories in Group I shall not be made from any category except as follows:

- transfers between categories 2 and 3 and from category 1 to categories 2 and 3 may be made up to 7 % of the quantitative limits for the category to which the transfer is made,

- transfers between categories 4, 5, 6, 7 and 8 may be made up to 7 % of the quantitative limit for the category to which the transfer is made.

Transfers into any category in Groups II and III may be made from any category or categories in Groups I, II and III up to 7 % of the quantitative limit for the category to which the transfer is made.

4. The table of equivalence applicable to the transfers referred to above is given in Annex I to this Agreement.

5. The increase in any category of products resulting from the cumulative application of the provisions in paragraphs 1, 2 and 3 above during an Agreement year shall not exceed 17 %.

6. Prior notification shall be given by the authorities of Malaysia in the event of recourse to the provisions of paragraphs 1, 2 and 3 above.

Article 8

1. Exports of textile products not listed in Annex II to this Agreement may be made subject to quantitative limits by Malaysia on the conditions laid down in the following paragraphs.

2. Where the Community finds, under the system of administrative control set up, that the level of imports of products in a given category not listed in Annex II originating in Malaysia exceeds, in relation to the preceding year's total imports into the Community from all sources of products in that category, the following rates:

- 1 % for categories of products in Group I,

- 5 % for categories of products in Group II,

- 10 % for categories of products in Group III,

it may request the opening of consultations in accordance with the procedure described in Article 16 of this Agreement, with a view to reaching agreement on an appropriate restraint level for the products in such category.

The Community shall authorize the importation of products of the said category shipped from Malaysia before the date on which the request for consultations was submitted.

3. Pending a mutually satisfactory solution, Malaysia undertakes to limit exports of the products in the category concerned to the Community or to the regions of the Community market specified by the Community for a provisional period of three months from the date on which the request for consultations is made. Such provisional limit shall be established at 25 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2, and gave rise to the request for consultation or 25 % of the level resulting from the application of the formula set out in paragraph 2, whichever is the higher.

4. Should the Parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 16 of the Agreement, the Community shall have the right to introduce a definitive quantitative limit at an annual level not lower than the level resulting from the application of the formula set out in paragraph 2, or 106 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2, and gave rise to the request for consultations, whichever is the higher.

The annual level so fixed shall be revised upwards after consultations in accordance with the procedure referred to in Article 16, with a view to fulfilling the conditions set out in paragraph 2, should the trend of total imports into the Community of the product in question make this necessary.

5. The limits introduced under paragraph 2 or paragraph 4 may in no case be lower than the level of imports of products in that category originating in Malaysia in 1986.

6. Quantitative limits may also be established by the Community on a regional basis in accordance with the provisions of Protocol C.

7. The annual growth rate for the quantitative limits introduced under this Article shall be determined in accordance with the provisions of Protocol D.

8. The provisions of this Article shall not apply where the percentages specified in paragraph 2 have been reached as a result of fall in total imports into the Community, and not as a result of an increase in exports or products originating in Malaysia.

9. In the event of the provisions of paragraph 2, 3 or 4 being applied, Malaysia undertakes to issue export licences

for products covered by contracts concluded before the introduction of the quantitative limit, up to the volume of the quantitative limit fixed.

10. Up to the date of communication of the statistics referred to in Article 9 (6), the provisions of paragraph 2 of this Article shall apply on the basis of the annual statistics previously communicated by the Community.

11. The provisions of this Agreement which concern exports of products subject to the quantitative limits established in Annex II shall also apply to products for which quantitative limits are introduced under this Article.

Article 9

1. Malaysia undertakes to supply the Community with precise statistical information on all export licences issued by the Malaysian authorities for all categories of textile products subject to the quantitative limits established under this Agreement as well as on all certificates issued by the Malaysian authorities for all products referred to in Article 5 and subject to the provisions of Protocol B.

The Community shall likewise transmit to the Malaysian authorities precise statistical information on import authorizations or documents issued by the Community authorities in respect of export licences and certificates issued by Malaysia.

2. The information referred to in paragraph 1 shall, for all categories of products, be forwarded before the end of the second month following the quarter to which the statistics relate.

3. Malaysia will to the extent possible transmit to the Community available statistical information on all textile exports by country of destination.

The Community shall transmit to the Malaysian authorities import statistics for all products covered by the system of administrative control referred to in Article 8 (2) and for products covered by Article 6 (1).

4. The information referred to in paragraph 3 shall, for all categories of products, be transmitted before the end of the third month following the quarter to which the statistics relate.

5. Should it be found on analysis of the information exchanged that there are significant discrepancies between the returns for exports and those for imports, consultations may be initiated in accordance with the procedure specified in Article 16.

6. For the purpose of applying the provisions of Article 8, the Community undertakes to provide the Malaysian authorities before 15 April of each year with the preceding year's statistics on imports of all textile products covered by this Agreement, broken down by supplying country and Community Member State.

Article 10

1. In case of divergent opinions between Malaysia and the competent Community authorities at the point of entry into the Community on the classification of products covered by the present Agreement, classification shall provisionally be based on indications provided by the Community, pending consultations in accordance with Article 16 with a view to reaching agreement on definitive classification of the product concerned.

2. If the above provisional classification results in provisional debit against a quantitative limit for a category of products other than the category indicated on the export documents issued by the competent Malaysian authorities, the Community shall inform Malaysia of such provisional debit within 30 days.

3. The authorities of Malaysia shall be informed of any amendment to the tariff and statistical nomenclatures in force in the Community or any decision, made in accordance with the procedures in force in the Community, relating to the classification of products covered by this Agreement.

Any amendment to the tariff and statistical nomenclatures in force in the Community or any decision which results in a modification of the classification of products covered by this Agreement shall not have the effect of reducing any quantitative limit established in Annex II.

The procedures for the application of this paragraph are set out in Protocol A.

Article 11

1. Malaysia and the Community agree to cooperate fully in preventing the circumvention of the present Agreement by transhipment, rerouting or whatever other means.

2. Where information available to the Community as a result of the investigations carried out in accordance with the procedures set out in Protocol A constitutes evidence that products of Malaysian origin subject to quantitative limits established under this Agreement have been transhipped, rerouted or otherwise imported into the Community in circumvention of this Agreement, the Community may request the opening of consultations in accordance with the procedures described in Article 16, with a view to reaching agreement on an equivalent adjustment of the corresponding quantitative limits established under this Agreement.

3. Pending the result of the consultations referred to in paragraph 2, Malaysia shall as a precautionary measure, if so requested by the Community, make the necessary arrangements to ensure that adjustments of quantitative limits liable to be agreed following the consultations referred to in paragraph 2, may be carried out for the quota year in which the request to open consultations in accordance with paragraph 2 was made, or for the following year if the quota for the current year is exhausted, where clear evidence of circumvention is provided.

4. Should the parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 16, the Community shall have the right, where clear evidence of circumvention has been provided, to deduct from the quantitative limits established under this Agreement amounts equivalent to the products of Malaysian origin.

Article 12

1. Malaysia shall endeavour to ensure that exports of textile products subject to quantitative limits are spaced out as evenly as possible over an Agreement year, due account being taken, in particular, of seasonal factors.

2. Should there be an excessive concentration of imports on any product within a category subject to quantitative limits under this Agreement, the Community may request consultations in accordance with the procedure specified in Article 16 of this Agreement with a view to finding a solution.

Article 13

Should recourse be had to the denunciation provisions of Article 18 (4), the quantitative limits established in Annex II shall be adapted on a pro rata basis.

Article 14

1. For the purpose of the administration of this Agreement, the limits referred to in Article 3 are broken down by the Community into shares for each of its Member States.

2. Portions of the quantitative limits established in Annex II not used in one Member State of the Community may be reallocated to another Member State in accordance with the procedures in force in the Community.

The Community undertakes to examine with care and reply within four weeks to any request made for reallocation by Malaysia. In the event of agreement on such reallocation, the flexibility provisions set out in Article 7 shall continue to be applicable to the levels of the original allocation.

If, in the course of the application of this Agreement, Malaysia finds that the break-down of a limit established in Annex II causes particular difficulties, it may request the opening of consultations in accordance with Article 16 with a view to reaching a mutually satisfactory solution.

3. After the first of June of each year of application of the Agreement, Malaysia may transfer, subject to prior notification to the Community, the unused quantities of the regional quota-shares of a Community quantitative limit, set out in Annex II, to the quota-shares of the same limit of other regions of the Community provided that the regional quota-share from which the transfer is made is utilized by less than 80 %, and up to the amount of the following

percentages of the quota-share to which the transfer is made:

- 2 % in the first year of the application of the Agreement,

- 4 % in the second year of the application of the Agreement,

- 8 % in the third year of the application of the Agreement,

- 12 % in the fourth year of the application of the Agreement.

4. Should it appear in any given region of the Community that additional supplies are required, the Community may, where measures taken pursuant to paragraph 1 are inadequate to cover those requirements, authorize the importation of amounts greater than those stipulated in Annex II.

Article 15

Malaysia and the Community undertake to refrain from discrimination in the allocation of export licences and import authorizations or documents referred to in Protocols A

and B.

Article 16

1. The special consultation procedures referred to in this Agreement shall be governed by the following rules:

- any request for consultations shall be notified in writing to the other Party,

- the request for consultations shall be followed within a reasonable period (and in any case not later than 15 days following the notification) by a statement setting out the reasons and circumstances which, in the opinion of the requesting Party, justify the submission of such a request,

- the Parties shall enter into consultations within one month at the latest of notification of the request, with a view to reaching agreement or a mutually acceptable conclusion within one further month at the latest.

2. The Community may request consultations in accordance with paragraph 1 when it ascertains that during a particular year of application of the Agreement difficulties arise in the Community or one of its regions from a sharp and

substantial increase, by comparison to the preceding year, in imports of a given category of Group I subject to the quantitative limits set out in Annex II.

3. If necessary, at the request of either of the Parties and in conformity with the provisions of the Geneva Arrangement, consultations shall be held on any problems arising from the application of this Agreement. 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 17

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

SECTION II

Transitional and final provisions

Article 18

1. This Agreement shall enter into force on the first day of the month following the date of its signature. It shall be applicable until 31 December 1990.

2. This Agreement shall apply with effect from 1 January 1987.

3. Either Party may at any time propose modifications to the Agreement.

4. Either Party may at any time denounce this Agreement provided that at least 120 days' notice is given. In that event, the Agreement shall come to an end on the expiry of the period of notice.

5. The Annexes, Protocols, Agreed Minutes, the Joint Declaration and the Memorandum of Understanding to this Agreement shall form an integral part thereof.

Article 19

This Agreement shall be drawn up in two copies in the Danish, Dutch, English, French, German, Greek, Italian, Portuguese, Spanish and Bahasa Malaysia languages, each of these texts being equally authentic.

ANNEX

LIST OF PRODUCTS

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

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

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

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ANNEX II

For practical reasons the product descriptions used in Annex I are given in the present Annex in abbreviated form

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PROTOCOL A

TITLE I

CLASSIFICATION

Article I

1. The competent authorities of the Community undertake to inform Malaysia of any changes in the tariff and statistical nomenclatures before the date of their entry into effect in the Community.

2. The competent authorities of the Community undertake to inform Malaysia of any decisions relating to the classification of products subject to the Agreement within one month of their adoption at the latest. Such communication shall include:

(a) a description of the products concerned;

(b) the relevant category and the related tariff and statistical references;

(c) the reasons which have led to the decision.

3. Where a decision on classification results in a change of classification practice or a change of category of any product subject to the Agreement, the competent authorities of the Community shall provide 30 days' notice, from the date of the Community's communication, before the decision is put into effect. Products shipped before the date of application of the decision shall remain subject to the earlier classification practice, provided that the goods in question are presented for importation into the Community within 60 days of that date.

4. Where a Community decision on classification resulting in a change of classification practice or a change of categorization of any product subject to the Agreement affects a category subject to restraint, the two parties agree to enter into consultations in accordance with the procedures described in Article 16 (1) of the Agreement with a view to honouring the obligation under the second subparagraph of Article 10 (3) of the Agreement.

TITLE II

ORIGIN

Article 2

1. Products originating in Malaysia for export to the Community in accordance with the arrangements established by this Agreement shall be accompanied by a certificate of Malaysian origin conforming to the model annexed to this Protocol.

2. The certificate of origin shall be issued by the

competent governmental authorities of Malaysia if the

products in question can be considered products originating in that country within the meaning of the relevant rules in force in the Community.

3. However, the products in Group III may be imported into the Community in accordance with the arrangements established by this Agreement on production of a declaration by the exporter on the invoice or other commercial document relating to the products to the effect that the products in question originate in Malaysia within the meaning of the relevant rules in force in the Community.

4. The certificate of origin referred to in paragraph 1 shall not be required for import of goods covered by a certificate of origin Form A or Form APR completed in accordance with the relevant Community rules in order to qualify for generalized tariff preferences.

Article 3

Where different criteria for determining origin are laid down for products falling within the same category, certificates or declarations of origin shall contain a sufficiently detailed description of the goods to enable the criterion to be determined on the basis of which the certificate was issued or the declaration drawn up.

Article 4

The discovery of slight discrepancies between the statements made in the certificate of origin and those made in the documents produced to the customs office for the purpose of carrying out the formalities for importing the product shall not ipso facto cast doubt upon the statements in the certificate.

TITLE III

DOUBLE-CHECKING SYSTEM FOR CATEGORIES OF PRODUCTS WITH QUANTITATIVE LIMITS

Section I

Exportation

Article 5

The competent authorities of Malaysia shall issue an export licence in respect of all consignments from Malaysia of textile products referred to in Annex II, up to the relevant quantitative limits as may be modified by Articles 7, 13 and 14 of the Agreement and of textile products subject to any definitive or provisional quantitative limits established as a result of the application of Article 8 of the Agreement.

Article 6

1. The export licence shall conform to the model annexed to this Protocol. It must certify inter alia that the quantity of the product in question has been set off against the quantitative limit prescribed for the category of the product in question.

2. Each export licence shall only cover one of the categories of products listed in Annex II of this Agreement. It may be used for one or more consignments of the products in question.

3. Where the conversion rate provided for in Annex II is applied the following note must be inserted in box 9 of the export certificate: 'conversion rate for garments of a commercial size not exceeding 130 cm is to be applied'.

Article 7

The competent Community authorities must be notified forthwith of the withdrawal or alteration of any export licence already issued.

Article 8

1. Exports shall be set off against the quantitative limits established for the year in which shipment of the goods has been effected, even if the export licence is issued after such shipment.

2. For the purpose of applying paragraph 1, shipment of the goods is considered to have taken place on the date of their loading on to the exporting aircraft, vehicle or vessel.

Article 9

The presentation of an export licence, in application of Article 11, shall be effected not later than 31 March of the year following that in which the goods covered by the licence have been shipped.

Section II

Importation

Article 10

Importation into the Community of textile products subject to quantitative limits shall be subject to the presentation of an import authorization or document.

Article 11

1. The competent Community authorities shall issue such import authorization or document automatically within five working days of the presentation by the importer of the original of the corresponding export certificate.

The import authorization or document shall be valid for six months.

2. The competent Community authorities shall cancel the already issued import authorization or document if the corresponding export licence has been withdrawn.

However, if the competent Community authorities have not been notified of the withdrawal or cancellation of the export licence until after the products have been imported into the Community, the quantities involved shall be set off against the quantitative limit for the category and the quota year in question.

Article 12

1. If the competent Community authorities find that the total quantities covered by export certificates issued by Malaysia for a particular category in any Agreement year exceed the quantitative limit established in Annex II for that category, as may be modified by Articles 7, 13 and 14 of the Agreement, or any definitive or provisional limit established under Article 8 of the Agreement, the said authorities may suspend the further issue of import authorizations or documents. In this event, the competent Community authorities shall immediately inform the authorities of Malaysia and the special consultation procedure set out in Article 16 of the Agreement shall be initiated forthwith.

2. Exports of Malaysian origin not covered by Malaysian export licences issued in accordance with the provisions of this Protocol may be refused the issue of import authorizations or documents by the competent Community authorities.

However, if the import of such products is allowed into the Community by the competent Community authorities, the quantities involved shall not be set off against the appropriate quantitative limits set out in Annex II or established as a result of the application of Article 8 of the Agreement, without the express agreement of Malaysia save as provided for in Article 11 of the Agreement.

TITLE IV

FORM AND PRODUCTION OF EXPORT CERTIFICATES AND CERTIFICATES OF ORIGIN, AND COMMON PROVISIONS

Article 13

1. The export licence and the certificate of origin may comprise additional copies duly indicated as such. They shall be made out in English or French. If they are completed by hand, entries must be ink and in block capitals.

These documents shall measure 210 × 297 mm. The paper used must be white writing paper, sized, not containing mechanical pulp and weighing not less than 25 g/m$. Each

part shall have a printed guilloche-pattern background making any falsification by mechanical or chemical means apparent to the eye.

If the documents have several copies only the top copy which is the original shall be printed with the guilloche-pattern background. This copy shall be clearly marked as 'original' and the other copies as 'copy'. Only the original shall be accepted by the competent authorities in the Community as being valid for the purposes of export to the Community in accordance with the arrangements established by this Agreement.

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:

- two letters identifying Malaysia as follows: MY,

- two letters identifying countries of destination as follows:

BL: Benelux

DE: Federal Republic of Germany

DK: Denmark

ES: Spain

FR: France

GB: United Kingdom

GR: Greece

IE: Ireland

IT: Italy

PT: Portugal

- a one-digit number identifying quota year, corresponding to the last figure in year, e.g. 7 for 1987,

- a two-digit number running consecutively from 01 to 99 identifying the issuing office,

- a five-digit number running consecutively from 00001 to 99999 allocated to the country of destination.

Article 14

The export licence and certificate of origin may be issued after the shipment of the products to which they relate. In such cases they shall bear either the endorsement 'délivré a posteriori' or the endorsement 'issued retrospectively'.

Article 15

1. In the event of theft, loss or destruction of an export licence or a certificate of origin, 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 certificate so issued shall bear the endorsement 'duplicata'.

2. The duplicate must bear the date of the original export licence or certificate of origin.

TITLE V

ADMINISTRATIVE COOPERATION

Article 16

The Community and Malaysia shall cooperate closely to implement the provisions of this Agreement. To this end,

contacts and exchanges of views (including on technical matters) shall be facilitated by both parties.

Article 17

In order to ensure that the Agreement is properly applied, the Community and Malaysia shall assist each other in checking the authenticity and accuracy of export licences and certificates of origin issued or declarations made under this Protocol.

Article 18

Malaysia shall send the Commission of the European Communities the names and addresses of the governmental authorities competent for the issue and verification of export licences and certificates of origin together with specimens of the stamps used by these authorities. Malaysia shall also notify the Commission of any change in this information.

Article 19

1. Subsequent verification of certificates of origin or export licences shall be carried out at random, or whenever the competent Community authorities have reasonable doubt as to the authenticity of the certificate or licence or as to accuracy of the information regarding the products in question.

2. In such cases the competent authorities in the Community shall return the certificate of origin or export licence or a copy thereof to the competent governmental authority in Malaysia giving, where appropriate, the reasons of form or substance for an enquiry. If the invoice has been submitted, such invoice or a copy thereof shall be attached to the certificate or licence or its copy. The authorities shall also forward any information that has been obtained suggesting that the particulars given on the said certificate or licence are inaccurate.

3. The provisions of paragraph 1 shall be applicable to subsequent verifications of the declarations of origin referred to in Article 2 of this Protocol.

4. The results of the subsequent verifications carried out in accordance with paragraphs 1 and 2 shall be communicated to the competent authorities of the Community within three months at the latest. The information communicated shall indicate whether the disputed certificate or licence or declaration applied to the goods actually exported and whether these goods are eligible for export in accordance with the arrangements established by this Agreement. The information shall also include, at the request of the Community, copies of all documentation necessary to determine the facts fully and in particular the true origin of the goods.

Should such verifications reveal systematic irregularities in the use of declarations of origin, the Community may subject imports of the products in question to the provisions of Article 2 (1) of this Protocol.

5. For the purpose of subsequent verification of certificates of origin, copies of the certificates as well as any export documents referring to them shall be kept for at least two years by the competent governmental authority in Malaysia.

6. Recourse to the random verification procedure specified in this Article must not constitute an obstacle to the release for home use of the products in question.

Article 20

1. Where the verification procedure referred to in Article 19 or where information available to the Community or to Malaysia indicates or appears to indicate that the provisions of this Agreement are being contravened, both parties shall cooperate closely and with appropriate urgency to prevent such contravention.

2. To this end Malaysia shall on its own initiative or at

the request of the Community, carry out appropriate

enquiries or arrange for such enquiries to be carried out

concerning operations which are, or appear to the Community to be in contravention of this Agreement. Malaysia shall communicate the results of these enquiries to the Community together with any other pertinent information enabling the true origin of the goods to be determined.

3. Subect to agreement between the Community and Malaysia, officials designated by the Community may be present at the enquiries referred to above.

4. In pursuance of the cooperation referred to in paragraph 1, Malaysia and the Community shall exchange any information considered by either Party to be of use in preventing the contravention of the provisions of the Agreement. These exchanges may include information on textile production in Malaysia and on trade in textile products of a kind covered by this Agreement, between Malaysia and other countries, particularly where the Community has reasonable grounds to consider that the products in question may be in transit across the territory of Malaysia prior to their importation into the Community. This information shall include at the request of the Community copies of all relevant documentation.

5. Where it is established that the provisions of this Agreement have been contravened, Malaysia and the Community may agree to take such measures as are necessary to prevent a recurrence of such contravention.

PROTOCOL B

1. The exemption provided for in Article 5 of the Agreement in respect of cottage industry products shall apply only to the following products:

(a) fabrics woven on hand- or foot-operated looms, being fabrics of a kind traditionally made in the cottage industry of Malaysia;

(b) garments or other textile articles of a kind traditionally made in the cottage industry of Malaysia obtained manually from the fabrics referred to above and sewn exclusively by hand without the aid of any machine;

(c) traditional folklore textile products of Malaysia made by hand in the cottage industry of Malaysia as defined in a list to be agreed between both Parties.

Exemption shall be granted only for products accompanied by a certificate issued by the competent Malaysian authorities in accordance with the specimen annexed to this Protocol. Such certificates shall state the ground on which exemption is based and shall be accepted by the competent Community authorities provided that they are satisfied that the products concerned conform to the conditions set out in this Protocol. Certificates covering the products referred to in paragraph (c) above shall bear a conspicuous stamp: 'FOLKLORE'. In case of divergent opinion between Malaysia and the competent Community authorities at the point of entry into the Community as to the nature of such products, consultations shall be held within one month with a view to resolving such divergences. Should imports of any of the above products reach such proportions as to cause difficulties to the Community, the two Parties shall open consultations forthwith in accordance with the procedure laid down in Article 16 of the Agreement with a view to finding a quantitative solution to the problem.

2. The provisions of Titles IV and V of Protocol A shall apply mutatis mutandis to the products referred to in paragraph 1 of this Protocol.

PROTOCOL C

Under Article 8 (6) of the Agreement, a quantitative limit may be fixed on a regional basis where imports of a given product into any region of the Community in relation to the amounts determined in accordance with paragraph 2 of the said Article 8 exceed the following regional percentage:

Germany // 25,5 %

Benelux // 9,5 %

France // 16,5 %

Italy // 13,5 %

Denmark // 2,7 %

Ireland // 0,8 %

United Kingdom // 21,0 %

Greece // 1,5 %

Spain // 7,5 %

Portugal // 1,5 %

PROTOCOL D

The annual growth rate for the quantitative limits introduced under Article 8 of the Agreement shall be determined as follows:

For products in categories falling within Group I, II, III, the growth rate shall be fixed by Agreement between the Parties in accordance with the consultation procedure established in Article 16 of the Agreement. Such growth rate may in no case be lower than the highest rate applied to corresponding products under bilateral agreements concluded under the Geneva Arrangement between the Community and other third countries having a level of trade equal to or comparable with that of Malaysia.

PROTOCOL E

Re-imports in the sense of Article 4 (2) of this Agreement into the Community of products listed in the Annex to this Protocol shall be subject to the provisions of the Agreement except as specifically provided for by the particular provisions set out below:

1. Only re-imports into the Community subject to the specific quantitative limits set out in the Annex to this Protocol, as may be modified by the application of paragraphs 2 and 3, shall be considered re-imports in the sense of Article 4 (2).

2. Re-imports not covered by the Annex may be submitted to specific quantitative limits following consultations in accordance with the procedures set out in Article 16 of the Agreement, provided the products concerned are subject to the quantitative limits established under Annex II to the Agreement.

3. The Community may, at its own discretion, and bearing in mind the interest of both parties, or in the framework of a request set out in Article 16 of the Agreement:

(a) examine the possibilities of transfers between categories and advance use or carryover of portions of specific quantitative limits from one year to another;

(b) consider the scope for reallocating portions of any specific quantitative limits not used in one region of the Community to another region.

4. However the Community may automatically carry out the flexibilities in the sense of paragraph 3 up to the following extent:

(a) transfer between categories up to 20 % of the share established for the category to which the transfer is made;

(b) carryover of specific quantitative limits from one year to another up to 10,5 % of the share for the year of actual utilization;

(c) advance use of specific quantitative limits from one year to another up to 7,5 % of the share for the year of actual utilization.

5. The Community shall inform Malaysia of any measures taken pursuant to the preceding paragraphs.

6. Debiting against a specific quantitative limit referred to in paragraph 1 shall be carried out by the competent authorities of the Community at the time of issuing the prior authorization provided for by the Community Regulation on economic outward processing, Regulation (EEC) N° 636/82. A specific quantitative limit shall be debited for the year in which a prior authorization is issued.

7. A certificate of origin shall be issued for all products covered by the present Protocol by Malaysia in accordance with the provisions of Protocol A of the Agreement, bearing a reference to the prior authorization referred to in paragraph 6 as evidence that the processing operation described in the prior authorization has been carried out in Malaysia.

8. The Community shall provide Malaysia with the names, addresses and the specimens of stamps used by the competent authorities of the Community for the issue of the prior authorizations referred to in paragraph 6.

9. Notwithstanding the provisions of paragraphs 1 to 8 above Malaysia and the Community will continue to consult together to seek a mutually acceptable means to enable both parties to take advantage of the OPT provisions in the Agreement with a view to effective development of trade in textiles between Malaysia and the Community.

Annex to Protocol E

OPT QUANTITATIVE LIMITS

For pratical reasons the product descriptions used in Annex I are given in the present Annex in abbreviated form

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PROTOCOL F

The Community and Malaysia agree that if the Multifibre Arrangement is extended for a period going beyond 31 December 1990 then the present Agreement will be automatically prolonged for a further period of one year up to 31 December 1991 in accordance with the economic and technical terms of the existing Agreement, with the adaptations strictly necessary for the application of the Agreement for the fifth year.

Agreed Minute

In the context of the Agreement between the Community and Malaysia on trade in textile products initialled on 28 June 1986 the Community declared its readiness to consider in a spirit of cooperation any request made by Malaysia for advance use and carryover of a portion of any quantitative limit, as provided for in Article 7 (1) and (2) of the Agreement, beyond the extent provided for in the said Article 7.

It was agreed that advance use of a portion of the quantitative limits for 1987 for each category of products is authorized up to 5 % of the corresponding quantitative limit for 1986.

It was further agreed that carryover to the quantitative limits for the year 1987 of amounts not used during the year 1986 is authorized up to 7 % of the corresponding quantitative limit for 1987.

At Malaysia's request, the Community will favourably consider additional flexibility (swing) between categories 4 and 5 up to 5 % (maximum 10 %) concerning the Community's region of Germany and Benelux.

Head of Delegation of Malaysia

Head of Delegation of the

European Economic Community

Agreed Minute

The Community and Malaysia agree that transfers into any category of Groups I, II and III may be made, after notification, up to 10 % of the regional share of a quantitative limit to which the transfer is made, provided that an equivalent quantity is deducted from the share of the corresponding quantitative limit for the same region established in the Community's Agreement with another ASEAN country.

Implementation of such transfers shall be subject to receipt of a corresponding notification from the ASEAN country accepting a deduction of the quantitative limit concerned.

Such transfers shall be applicable for the year during which the notification is made.

Head of Delegation of Malaysia

Head of Delegation of the

European Economic Community

Exchange of Notes

The Mission of Malaysia to the European Communities presents its compliments to the Directorate-General for External Relations of the Commission of the European Communities and has the honour to refer to the Agreement on trade in textile products between Malaysia and the Community initialled on 28 June 1986.

The Mission wishes to inform the Directorate-General that whilst awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Government of Malaysia is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1987 if the Community is disposed to do likewise.

The Mission would be grateful if the Community would confirm its agreement to the foregoing.

The Mission of Malaysia to the European Communities avails itself of this opportunity to renew to the Directorate-General for External Relations of the Commission of the European Communities the assurance of its highest consideration.

Exchange of Notes

The Directorate-General for External Relations of the Commission of the European Communities presents its compliments to the Mission of Malaysia to the European Communities and has the honour to refer to the Note of Malaysia regarding the Agreement on trade in textile products between Malaysia and the Community initialled on 28 June 1986.

The Directorate-General wishes to confirm that whilst awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Community is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1987.

The Directorate-General for External Relations of the Commission of the European Communities avails itself of this opportunity to renew to the Mission of Malaysia to the European Communities the assurance of its highest consideration.

Joint Declaration concerning batik fabrics and products thereof

A.

The Community and Malaysia agree that handicraft batik is produced by a traditional process by which colours and shades are added to a bleached or white fabric. The process is carried out by hand in three stages namely:

(a)

waxing (application of wax by hand to the fabric);

(b)

dyeing/painting (application of colour either by the traditional cottage method of dyeing or by hand-painting);

(c)

de-waxing (boiling the fabric to remove the wax).

B.

The Parties hereby further agree to the following arrangements:

1.

The competent Community authorities will accept as traditional folklore handicraft textile products within the meaning of Article 1 (c) of Protocol B all batik fabrics, irrespective of the method of manufacture of the basic fabric, and all products made or made up therefrom, whether sewn by hand or on a hand- or foot-operated sewing machine, provided that the process of applying colours and shades to the fabric has been the traditional handicraft batik process described at A above, and subject to appropriate certification by the competent Malaysian authorities.

2.

The competent Malaysian authorities will issue certificates conforming to the model annexed to Protocol B for batik fabrics or products thereof only when such fabrics or products have been produced by the processes, including in particular the traditional handicraft batik process, specified in the preceding paragraph.

Done at Brussels, 28 June 1986.

Head of Delegation of Malaysia

Head of Delegation of the

European Economic Community