Proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States of the one part, and the Republic of Azerbaijan, of the other part
Date: 1996-03-27
Institutions: European Commission
Subjects: Azerbaijan, cooperation agreement (EU), cooperation policy, economic development, mixed agreement

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COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  27.03.1996 
COM(96)  137  final 

96/094  (AVC) 

MÉBAft 

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Proposai 

for a Council and Commission Decision 

on the conclusion  of the Partnership and Cooperation  Agreement 

between the European Communities and their Member States 

of the one part, and the Republic of Azerbaijan, 

of the other part 

(presented  by the  Commission) 

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Explanatory  memorandum 

1.  The  attached  proposal  for  a  Council  and  Commission  Decision  constitutes  the  legal 
instrument  for  the  conclusion  of the Partnership  and  Cooperation  Agreement  between  the 
European  Communities  and  their  Member  States,  on  the  one  hand,  and  the  Republic  of 
Azerbaijan,  on the other. 

2.  Following  the  Council's  adoption  of  the  negotiating  directives  on  5  October  1992, 
negotiations  with  the Republic  of  Azerbaijan  were  held  in  the  course  of  1995.  After  two 
rounds of negotiations, the Agreement was initialled on  18 December  1995. 

3.  The Agreement  is a mixed  agreement  covering  areas for  which  both  the  Communities  and 

the Member States are competent, and is concluded  for an initial period often  years. 

It  establishes  a  political  dialogue.  The  Agreement  also  covers  trade  in  goods,  labour 
conditions,  establishment  and  operation  of  companies,  cross-border  supply  of  services, 
payments  and  capital,  competition, 
intellectual,  industrial  and  commercial  property 
protection,  legislative  cooperation,  economic  cooperation,  cooperation  on  human  rights 
and democracy,  cooperation  in combatting illegal activities and  illegal  immigration,  cultural 
cooperation  and financial  cooperation. 

The Agreement  contains a clause which  allows it to be suspended,  even  unilaterally,  if it is 
considered that there has been a breach  of the essential  elements underlying the  Agreement 
i.e. respect for democracy, human rights and the principles of the market economy. 

The  Agreement  sets  out  an  institutional  framework  for  its  implementation  with  a 
Cooperation  Council,  a  Cooperation  Committee  and  a  Parliamentary  Cooperation 
Committee. 

Customs cooperation is covered by a separate protocol. 

IK 

The  Agreement  will,  as far as trade  relations  between  the  Community  and  the  Republic  of 
Azerbaijan  are concerned,  replace the Agreement  on  Trade  and Commercial  and  Economic 
Cooperation  between  the  European  Economic  Community  and  the  European  Atomic 
Energy Community,  and the USSR,  signed on  18 December  1989. 

5.  The  procedures  of  the  three  Communities  (EC,  EAEC  and  ECSC)  for  signing  and 

concluding  the Agreement  differ. 

In the case of the EC, account will  have to be taken of Opinion  1/94  delivered  by the Court 
of  Justice  on  15 November  1994  on  the  competence  of  the  European  Community  to 
conclude the agreements reached during the Uruguay Round. 

For the purpose of concluding the Agreement: 

. 

. 

. 

the  Council  will  conclude  the  Agreement,  with  the  assent  of  the  European  Parliament  and 
having  consulted  the  Economic  and  Social  Committee,  on  behalf  of  the  European 
Community  in  accordance  with  Article  54(2),  the  closing  sentence  of  Article  57(2)  and 
Articles  73c(2),  75,  84(2),  113  and 235  in conjunction  with  the  second  sentence  of  Article 
228(2)  and  the  second  subparagraph  of  Article  228(3)  of  the  EC  Treaty  by  adopting  the 
attached  decision; 

the  Commission  will  conclude  the  Agreement  on  behalf  of  the  European  Atomic  Energy 
Community  after  the  Council  has  approved  it  in accordance  with  the  second  paragraph  of 
Article  101  of the Euratom Treaty. 

the  Commission  will  conclude  the  Agreement  on  behalf  of  the  ECSC  in  accordance  with 
the  ECSC  Treaty,  after  consulting  the  Consultative  Committee  and  with  the  unanimous 
assent  of the Council; 

The conclusion  of the Agreement will  have to be ratified by all the Member  States given the 
mixed  nature of the Agreement. 

6.  In  view  of  the  above,  the  Commission  proposes  that  the  Council  adopt  the  annexed 

decision. 

lb 

COUNCIL AND COMMISSION DECISION 

OF 

on the conclusion of the Partnership and Cooperation Agreement 

between the European Communities and their Member States 

and the Republic of Azerbaijan. 

(../.../ECSC, EC, EURATOM) 

THE COUNCIL OF THE EUROPEAN UNION, 

THE EUROPEAN  COMMISSION, 

Having regard to the Treaty establishing the European Coal and Steel Community, 

Having  regard  to  the  Treaty  establishing  the European  Community,  and  in  particular  Article 
54(2),  the  closing  sentence  of Article  57(2)  and  Articles  73c(2),  75, £4(2),  113  and  235  in 
conjunction  with the second sentence of Article 228(2) and the second subparagraph of Article 
228(3) thereof, 

Having  regard  to  the  Treaty  establishing  the  European  Atomic Energy  Community,  and  in 
particular the second paragraph of Article  101 thereof, 

Having regard to the assent of the European Parliament, 

Having  regard  to  the  approval  of  the  Council  given  in  accordance  with  Article  101  of  the 
Treaty establishing the European Atomic Energy Community, 

Having  consulted  the  ECSC  Consultative  Committee  and  the  Economic  and  Social 
Committee, and with the unanimous assent of the Council, 

Whereas the conclusion of the Partnership and Cooperation Agreement between the European 
on .......... would  contribute to achieving the European 
Union and Azerbaijan  signed in 
Communities' objectives; 

Whereas  that  Agreement  seeks to  strengthen  existing  links,  notably  those  established  by the 
Agreement  on  Trade  and  Commercial  and  Economic  Cooperation  between  the  European 
Economic Community and the European Atomic Energy Community and the USSR, signed on 
18 December  1989; 

Whereas  some  of  the  obligations  provided  for  in  the  Agreement  in  fields  other  than 
Community  trade  policy  affect  the  arrangements  established  by Community  acts,  particularly 
acts relating to the right of establishment and to transport; 

e 

Whereas  the  Agreement  imposes  on  the  Community  certain  obligations  relating  to  the 
movement  of capital  and payments between the Community and  Azerbaijan; 

Whereas  in the case of certain  measures  provided  for  in the Agreement  and falling  within  the 
Community's powers the EC Treaty provides no basis for action other than Article 235, 

HAVE DECIDED AS FOLLOWS : 

Article 1 

The Partnership  and  Cooperation  Agreement  between  the  European  Union  and  the  Republic 
of  Azerbaijan,  together  with  the  Protocol,  the  declarations  and  the  exchange  of  letters,  are 
hereby  approved  on  behalf of the European  Community,  the European  Coal  and  Steel  Com 
munity and the European Atomic Energy Community. 

Article 2 

1.  The  position  to  be  adopted  by  the  Community  in  the  Cooperation  Council  shall  be 
determined  by the Council, on a proposal  from  the  Commission,  or,  where  appropriate, by 
the  Commission,  in  each  case  in  accordance  with  the  relevant  provisions  of  the  Treaties 
establishing  the  European  Community,  the  European  Coal  and  Steel  Community  and  the 
European  Atomic Energy Community. 

2.  In accordance with Article 79 of the Partnership and Cooperation  Agreement,  the President 
of  the  Council  shall  chair  the  Cooperation  Council  and  shall  present  the  Community's 
position.  A  representative  of  the  Commission  shall  chair  the  Cooperation  Committee  in 
accordance with its rules of procedure and shall present the Community's position. 

Article 3 

The  President  of  the  Council  shall  give  the  notification  provided  for  in  Article  100  of  the 
Agreement  on behalf of the European Community. The President of the Commission  shall give 
such  notification  on  behalf  of  the  European  Coal  and  Steel  Community  and  the  European 
Atomic Energy Community. 

Done at Brussels, 

U 

Final Act 

The plenipotentiaries  of: 

THE KINGDOM OF BELGIUM, 

THE KINGDOM OF DENMARK, 

THE FEDERAL REPUBLIC OF GERMANY, 

THE HELLENIC REPUBLIC, 

THE KINGDOM OF SPAIN, 

THE FRENCH REPUBLIC, 

IRELAND, 

THE ITALIAN REPUBLIC, 

THE GRAND DUCHY OF LUXEMBOURG, 

THE KINGDOM OF THE NETHERLANDS, 

THE REPUBLIC OF AUSTRIA, 

THE PORTUGUESE REPUBLIC, 

THE REPUBLIC OF FINLAND, 

THE KINGDOM OF SWEDEN, 

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN  IRELAND 

Contracting  Parties  to  the  Treaty  establishing  the  EUROPEAN  COMMUNITY,  the  Treaty 
establishing  the  EUROPEAN  COAL  AND  STEEL  COMMUNITY,  and  the  Treaty 
establishing the EUROPEAN ATOMIC ENERGY COMMUNITY, 

hereinafter  referred  to as "the Member States", and of 

the  EUROPEAN  COMMUNITY,  THE  EUROPEAN  ATOMIC  ENERGY  COMMUNITY 
and the EUROPEAN COAL AND STEEL COMMUNITY, 

hereinafter  referred  to as "the Community", 

of the one part, and 

the plenipotentiaries of the Republic of Azerbaijan, 

/ e. 

of the other part, 

meeting  at  ....  on 
in the year one thousand nine hundred  and ninety-six  for the  signature 
of  the  Partnership  and  Cooperation  Agreement  establishing  a  partnership  between  the 
European  Communities  and  their  Members  States,  of  the  one  part,  and  the  Republic  of 
Azerbaijan,  of  the  other  part,  hereinafter  referred  to  as  "the  Partnership  and  Cooperation 
Agreement",  have adopted the following  text : 

the Partnership  and Cooperation  Agreement  and the Protocol  on mutual  assistance  in  customs 
matters. 

The plenipotentiaries  of the Member  States and of the Community  and the  plenipotentiaries  of 
the  Republic  of  Azerbaijan  have  adopted  the  texts  of  the  Joint  Declarations  listed  below  and 
annexed  to this Final Act: 

Joint Declaration  (concerning  the twelfth  recital  in the preamble) 

Joint Declaration  concerning Article 3bis of the Agreement 

Joint Declaration  concerning  Article 5 of the  Agreement 

Joint Declaration  concerning  Article  14 of the Agreement 

Joint  Declaration  concerning  the  notion  of  "control"  in  Article  24(b)  and  Article  36  of  the 
Agreement 

Joint Declaration  concerning Article 35 of the  Agreement 

Joint Declaration  concerning Article 42 of the  Agreement 

Joint Declaration  concerning Article 54 of the  Agreement 

Joint Declaration  concerning  Article 94 of the Agreement 

The plenipotentiaries  of the Member  States and of the Community  and the  plenipotentiaries  of 
the  Republic  of  Azerbaijan  have  adopted  the  exchange  of  letters  listed  below  and  annexed  to 
this Final  Act: 

Exchange  of letters in relation to the establishment  of companies 

The  plenipotentiaries  of  the  Member  States  and  the  Community  and  the  Republic  of 
Azerbaijan have also taken note of the declaration listed below  annexed to this Final Act: 

Unilateral  Declaration by the French Republic on the Overseas Countries and Territories 

Done  at 

in the year one thousand  nine hundred  and ninety six. 

For the Council  and the Commission  of the European  Communities. 
For the Republic  of Azerbaijan. 

// 

PARTNERSHIP AND COOPERATION AGREEMENT 

BETWEEN THE EUROPEAN COMMUNITIES 

AND THEIR MEMBER STATES, OF THE ONE PART, 

AND THE REPUBLIC OF AZERBAIJAN, OF THE OTHER PART 

9- 

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PARTNERSHIP AND COOPERATION AGREEMENT 

establishing  a partnership  between  the  European  Communities  and  their  Member  States,  of  the 
one part, and the Republic  of Azerbaijan,  of the other part. 

THE KINGDOM  OF BELGIUM, 

THE KINGDOM  OF DENMARK, 

THE FEDERAL REPUBLIC  OF  GERMANY, 

THE HELLENIC REPUBLIC, 

THE KINGDOM  OF SPAIN, 

THE FRENCH REPUBLIC, 

IRELAND, 

THE ITALIAN REPUBLIC, 

THE GRAND DUCHY  OF LUXEMBOURG, 

THE KINGDOM  OF THE NETHERLANDS. 

AUSTRIA, 

THE PORTUGUESE  REPUBLIC, 

FINLAND, 

THE KINGDOM  OF SWEDEN, 

THE UNITED KINGDOM  OF GREAT BRITAIN  AND NORTHERN  IRELAND, 

Contracting  Parties  to  the  Treaty  establishing  the  European  Community,  the  Treaty  establishing 
the  European  Coal  and  Steel  Community,  and  the  Treaty  establishing  the  European  Atomic 
Energy  Community, 

hereinafter  referred to as "Member States", and 

THE  EUROPEAN  COMMUNITY,  THE  EUROPEAN  COAL  AND  STEEL  COMMUNITY, 
AND  THE EUROPEAN  ATOMIC ENERGY  COMMUNITY, 

hereinafter referred  to as  "the Community",  of the one part, 

AND  THE REPUBLIC  OF AZERBAIJAN  of the other part, 

CONSIDERING  the  links  between  the  Community,  its  Member  States  and  the  Republic  of 
Azerbaijan  and the common values that they share, 

V - -* 

2 

* rf 

RECOGNIZING  that  the  Community  and  the  Republic  of  Azerbaijan  wish  to  strengthen  these 
links  and  to  establish  partnership  and  cooperation  which  would  strengthen  and  widen  the 
relations established  in the past  in particular  by the Agreement  between  the European  Economic 
Community  and  the  European  Atomic  Energy  Community  and  the  Union  of  Soviet  Socialist 
Republics  on Trade  and  Commercial  and  Economic  Cooperation,  signed  on  18 December  1989, 
which,  since the dissolution  of the USSR,  applies mutatis mutandis to  bilateral  relations  between 
the European Communities and each of the Independent  States. 

CONSIDERING the commitment  of the Community  and  its Member  States and  of the Republic 
of  Azerbaijan  to  strengthening  the  political  and  economic  freedoms  which  constitute  the  very 
basis of the partnership, 

RECOGNIZING  in  that  context  that  support  of  the  independence,  sovereignty  and  territorial 
integrity  of the Republic  of Azerbaijan  will  contribute  to  safeguarding  of  peace  and  stability  in 
Europe, 

CONSIDERING  the commitment  of the Parties to  promote  international  peace  and  security,  as 
well  as the peaceful  settlement  of disputes  and to  cooperate  to this end  in the framework  of the 
United Nations and the Organisation  for  Security and Cooperation  in Europe, 

DESIROUS  of  encouraging  the  process  of  regional  cooperation  in  the  areas  covered  by  this 
agreement  with  neighbouring  countries 
in order to  promote  the  prosperity  and  stability  of the 
region  and  in particular  initiatives  aimed  at  fostering  cooperation  and  mutual  confidence  among 
Independent  States of the Transcaucasus region and other neighbouring States, 

CONSIDERING  the  firm  commitment  of  the  Community  and  its  Member  States  and  of  the 
Republic of Azerbaijan  to the full  implementation of all principles and provisions contained  in the 
Final  Act  of  the  Conference  on  Security  and  Cooperation  in  Europe  (CSCE),  the  Concluding 
Documents  of the Madrid  and  Vienna  Follow  Up  Meetings,  the  Document  of  the  CSCE  Bonn 
Conference  on Economic  Cooperation,  the  Charter  of Paris  for  a New  Europe  and  the  CSCE 
Helsinki  Document  1992  "The Challenges  of Change",  and  other  fundamental  documents  of the 
OSCE, 

CONVINCED  of  the  paramount  importance  of  the  rule  of  law  and  respect  for  human  rights, 
particularly  those  of  persons  belonging  to  minorities,, the  establishment  of  a  multiparty  system 
with  free  and  democratic  elections  and  economic  liberalization  aimed  at  setting  up  a  market 
economy, 

BELIEVING that full  implementation  of this Partnership  and  Cooperation  Agreement  will both 
depend  on  and  contribute  to  continuation  and  accomplishment  of  the  political,  economic  and 
legal  reforms  in the Republic  of  Azerbaijan,  as well  as the  introduction  of the  factors  necessary 
for cooperation, notably in the light of the conclusions of the CSCE Bonn  Conference, 

DESIROUS  of establishing  and  developing  regular  political  dialogue  on  bilateral,  regional  and 
international issues of mutual interest, 

RECOGNIZING  AND  SUPPORTING  the  wish  of the  Republic  of  Azerbaijan  to  establish  close 
co-operation  with European Institutions, 

CONSIDERING  the  necessity  of  promoting  investment  in the  Republic  of  Azerbaijan,  including 
in  the  energy  sector,  and  in  this  context  the  importance  attached  by  the  Community  and  its 
Member  States  to  equitable  conditions  for  access  to  and  transit  for  export  of  energy  products; 
confirming  the  attachment  of  the  Community  and  its  Member  States  and  of  the  Republic  of 
Azerbaijan to the European Energy  Charter,  and to the full  implementation  of the Energy  Charter 
Treaty and the Energy Charter Protocol  on energy efficiency  and related  environmental  aspects, 

TAKING  ACCOUNT  of the  Community's  willingness  to  provide  for  economic  cooperation  and 
technical  assistance  as appropriate, 

BEARING  IN MIND the utility of the Agreement  in favouring  a gradual  rapprochement  between 
the Republic  of  Azerbaijan  and  a wider  area  of  cooperation  in Europe  and  neighbouring  regions 
and its progressive  integration  into the open international  system, 

CONSIDERING  the  commitment  of  the  Parties  to  liberalise  trade,  in  conformity  with  World 
Trade Organisation (WTO) rules, 

CONSCIOUS  of  the  need  to  improve  conditions  affecting  business  and  investment,  and 
conditions  in  areas  such  as  establishment  of  companies,  labour,  provision  of  services  and  capital 
movements, 

CONVINCED  that  this Agreement  will  create  a new  climate  for  economic  relations  between  the 
Parties  and  in  particular  for  the  development  of  trade  and  investment,  which  are  essential  to 
economic  restructuring  and technological  modernization, 

DESIROUS  of  establishing  close  cooperation  in the  area  of  environment  protection  taking  into 
account the interdependence  existing between the Parties in this field, 

RECOGNIZING  that  co-operation  for  the  prevention  and  control  of  illegal  immigration 
constitutes one of the primary objectives  of this Agreement, 

DESIROUS  of establishing  cultural  cooperation  and improving the flow  of information, 

HAVE  AGREED  AS FOLLOWS: 

jrr 

ARTICLE  1 

A  Partnership  is  hereby  established  between  the  Community  and  its  Member  States  of  the  one 
part, and the Republic of Azerbaijan  of the other part.  The objectives  of this partnership are: 

- 

- 

- 

- 

to provide an appropriate framework  for the political  dialogue between the Parties  allowing 
the development  of political  relations; 
to  support the Republic of Azerbaijan's  efforts  to  consolidate  its democracy  and to develop its 
economy  and  to complete the transition into a market  economy; 
to promote trade and investment  and harmonious economic  relations between  the Parties and 
so to foster their sustainable economic  development; 
to provide a basis for legislative,  economic,  social, financial, civil  scientific,  technological  and 
cultural  cooperation. 

sir 

TITLE I 

GENERAL PRINCIPLES 

ARTICLE 2 

Respect for democracy, principles of international law and human rights as defined  in particular in 
the United Nations Charter, the Helsinki Final Act and the Charter of Paris for a New Europe, as 
well  as  the  principles  of  market  economy,  including  those  enunciated  in  the  documents  of  the 
CSCE Bonn  Conference,  underpin  the internal  and  external  policies of the Parties  and  constitute 
essential elements of partnership and of this Agreement. 

ARTICLE 3 

The  Parties  consider  that  it  is  essential  for  their  future  prosperity  and  stability  that  the  newly 
independent  states  which  have  emerged  from  the  dissolution  of  the  Union  of  Soviet  Socialist 
Republics,  hereinafter  called  "Independent  States",  should  maintain  and  develop  cooperation 
among  themselves  in  compliance  with  the  principles  of  the  Helsinki  Final  Act  and  with 
international  law  and  in  the  spirit  of  good  neighbourly  relations  and  will  make  every  effort  to 
encourage this process. 

ARTICLE 3bis 

The Parties shall as appropriate review changing circumstances in the Republic of Azerbaijan, in 
particular regarding economic conditions there and implementation  of market-oriented  economic 
reforms.  The Cooperation  Council may make recommendations to the Parties concerning 
development  of any part of this Agreement  in the light of these circumstances. 

st 

TITLE D 

POLITICAL  DIALOGUE 

ARTICLE 4 

A regular political dialogue shall be established  between the Parties which they intend  to  develop 
and  intensify.  It  shall  accompany  and  consolidate  the  rapprochement  between  the  Community 
and  the  Republic  of  Azerbaijan,  support  the  political  and  economic  changes  underway  in  that 
country and contribute to the establishment of new forms of cooperation.  The political dialogue: 

-  will strengthen the links of the Republic of Azerbaijan  with the Community and its Member 
States, and thus with the community of democratic nations as a whole.  The economic 
convergence achieved through this Agreement will lead to more intense political relations; 

-  will bring about an increasing convergence of positions on international  issues of mutual 
concern thus increasing security and stability in the region and promoting the  future 
development  of the Independent  States of the Transcaucasus, 

-  shall foresee that the Parties endeavour to co-operate on matters pertaining to the 

strengthening of stability and security in Europe, the observance of the principles of 
democracy, and the respect  and promotion of human rights, particularly those of persons 
belonging to minorities and shall hold consultations, if necessary, on relevant matters. 

Such  dialogue  may  take  place  on  a  regional  basis,  with  a  view  to  contributing  towards  the 
resolution  of regional conflicts  and tensions. 

ARTICLE 5 

At ministerial level, political dialogue shall take place within the Cooperation  Council  established 
in Article 77 and on other occasions by mutual  agreement. 

ARTICLE 6 

Other  procedures  and  mechanisms  for  political  dialogue  shall  be  set  up  by  the  Parties,  and in 
particular in the following  forms: 

-  regular meetings at senior official  level between representatives of the Community and its 
Member States on the one hand, and representatives of the Republic of Azerbaijan  on the 
other hand; 

.A#f 

taking full  advantage of diplomatic channels between the Parties including appropriate 
contacts in the bilateral as well as the multilateral field, such as United Nations, OSCE 
meetings and elsewhere, 

any other means, including the possibility of expert  meetings which would contribute to 
consolidating and developing this dialogue. 

ARTICLE 7 

Political  dialogue  at  parliamentary  level  shall  take  place  within  the  framework  of  the 
Parliamentary Cooperation  Committee established  in Article 82. 

^rr 

TITLE HI 

TRADE IN GOODS 

ARTICLE 8 

1.  The Parties shall accord  to  one another  most-favoured-nation  treatment  in all areas in respect 

of: 

-  customs duties and charges applied to imports and exports, including the method  of collecting 

such duties and charges, 

taxes and other internal charges of any kind applied directly or indirectly to imported goods, 

-  provisions relating to customs clearance, transit, warehouses and transhipment, 
- 
-  methods of payment and the transfer  of such payments, 
- 

the rules relating to the sale, purchase, transport,  distribution and use of goods on the 
domestic market. 

2.  The provisions of paragraph  1  shall not apply to: 

(a)  advantages granted  with the aim of creating a customs union or a free-trade  area or  pursuant 

to the creation of such a union or area, 

(b) advantages  granted  to  particular  countries  in  accordance  with  the  GATT  and  with  other 

international  arrangements in favour  of developing countries; 

(c) advantages accorded  to adjacent  countries in order to facilitate  frontier  traffic 

3.  The  provisions  of  paragraph  1 shall  not  apply,  during  a  transitional  period  expiring  on  the 
date  of  the  Republic  of  Azerbaijan  acceding  to  the  GATT  or  on  31  December  1998, 
whichever  is earlier,  to advantages  defined  in Annex  I granted  by the Republic  of  Azerbaijan 
to other states which have emerged  from  the dissolution of the USSR. 

ARTICLE 9 

1.  The  Parties  agree  that  the  principle  of free transit  is  an  essential  condition  of  attaining  the 

objectives of this Agreement. 

In  this  connection  each  Party  shall  secure  unrestricted  transit  via  or  through  its  territory  of 
goods  originating  in the  customs  territory  or  destined  for  the  customs  territory  of the  other 
Party. 

2.  The  rules  described  in the  Article V,  paragraphs  2,  3,  4  and  5 of the  GATT  are  applicable 

between the two Parties. 

3.  The  rules  contained  in  this  Article  are  without  prejudice  to  any  special  rules  relating  to 
specific  sectors, in particular  such  as transport,  or products agreed  between the Parties, or to 
the provisions of Article 86. 

,4#f 

ARTICLE 10 

Without  prejudice  to  the  rights  and  obligations  stemming from international  conventions  on  the 
temporary  admission  of  goods  which  bind  both  Parties,  each  Party  shall  furthermore  grant  the 
other  Party  exemption  from  import  charges  and  duties  on  goods  admitted  temporarily,  in  the 
instances and according to the procedures stipulated by any other international  convention  on this 
matter  binding  upon  it,  in  conformity  with  its  legislation.  Account  shall  be  taken  of  the 
conditions under which the obligations stemming from such  a convention  have been  accepted by 
the Party in question. 

ARTICLE 11 

1.  Goods originating in the Republic of Azerbaijan  shall be imported into the Community free of 
quantitative  restrictions without  prejudice  to the provisions  of Articles  13,  16 and  17 of this 
Agreement. 

2.  Goods originating in the Community  shall be imported  into the Republic of Azerbaijan  free  of 
all quantitative restrictions and measures of equivalent  effect  without  prejudice  to Articles  13, 
16 and  17 of this Agreement 

Goods shall be traded between the Parties at market-related  prices. 

ARTICLE 12 

ARTICLE 13 

1.  Where any product  is being imported  into the territory  of one of the Parties in such increased 
quantities  or  under  such  conditions  as  to  cause  or  threaten  to  cause  injury  to  domestic 
producers  of  like  or  direct  competitive  products,  the  Community  or  the  Republic  of 
Azerbaijan,  whichever  is  concerned,  may  take  appropriate  measures  in  accordance  with  the 
following  procedures and conditions. 

2.  Before  taking  any  measures,  or  in  cases  to  which  paragraph  4  applies  as  soon  as  possible 
thereafter,  the Community or the Republic of Azerbaijan,  as the case may be, shall supply the 
Cooperation  Council  with  all  relevant  information  with  a  view  to  seeking  a  solution 
acceptable to both Parties as provided for in Title XI. 

3.  If,  as  a  result  of  the  consultations,  the  Parties  do  not  reach  agreement  within  30  days  of 
referral  to  the  Cooperation  Council  on  actions  to  avoid  the  situation,  the  Party  which 
requested  consultations  shall  be  free  to  restrict  imports  of  the  products  concerned  to  the 
extent  and  for  such  time  as is necessary  to  prevent  or  remedy  the  injury,  or  to  adopt  other 
appropriate measures. 

4.  In critical circumstances where delay would  cause damage difficult  to  repair,  the Parties may 
take  the  measures  before  the  consultations,  on  the  condition  that  consultations  shall  be 
offered  immediately after  taking such action. 

10 

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5.  In the  selection  of measures  under  this  Article,  the  Contracting  Parties  shall  give  priority  to 

those which cause least disturbance to the achievement  of the aims of this Agreement. 

6  Nothing  in  this  Article  shall  prejudice  or  affect  in  any  way  the  taking,  by  either  Party,  of 
anti-dumping  or  countervailing  measures  in  accordance  with  Article  VI  of  the  GATT,  the 
Agreement  on  implementation  of  Article  VI  of the  GATT,  the  Agreement  on  interpretation 
and application of Articles VI, XVI and XXIII of the GATT or related  internal legislation. 

ARTICLE 14 

The  Parties undertake  to  consider  development  of the  provisions  in this  Agreement  on  trade in 
goods between them, as circumstances allow, including the situation  arising from  the accession of 
the Republic of Azerbaijan  to  the WTO.  The  Cooperation  Council  may make  recommendations 
on such developments to the Parties which could  be put  into effect,  where accepted,  by virtue of 
agreement  between the Parties in accordance with their respective procedures. 

ARTICLE 15 

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

ARTICLE 16 

This  Title  shall  not  apply  to  trade  in  textile  products  falling  under  Chapters 50  to  63  of  the 
Combined  Nomenclature.  Trade  in these  products  shall  be  governed  by  a  separate  agreement, 
initialled  on  17  November  1993  and  applied  provisionally  since  1  January  1993,  and  by  any 
successor agreements. 

ARTICLE 17 

1.  Trade in products covered  by the Treaty establishing the European  Coal and  Steel  Community 

shall be governed by the provisions of this Title, with the exception of Article 11 

2.  A  contact  group  on  coal  and  steel  matters  is  set  up,  comprising  representatives  of  the 
Community on the one hand, and representatives of the Republic of Azerbaijan  on the other. 

The contact group shall exchange, on a regular basis, information  on all coal  and  steel  matters 
of interest to the Parties. 

ARTICLE 18 

Trade  in  nuclear  materials  will  be  conducted  in  accordance  with  the  provisions  of  the  Treaty 
establishing  the  European  Atomic  Energy  Community.  If  necessary,  trade  in  nuclear  materials 
shall be subject  to the provisions of a specific  Agreement  to be concluded  between  the European 
Atomic Energy Community and the Republic of  Azerbaijan. 

11 

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TITLE IV 

PROVISIONS AFFECTING  BUSINESS AND INVESTMENT 

CHAPTER 1 

Labour  Conditions 

ARTICLE 19 

1.  Subject  to  the  laws,  conditions  and  procedures  applicable  in  each  Member  State,  the 
Community and the Member States shall endeavour to ensure that the treatment  accorded to 
Azerbaijani  nationals legally  employed  in the  territory  of a Member  State  shall  be free  from 
any  discrimination  based  on  nationality,  as  regards  working  conditions,  remuneration  or 
dismissal, as compared to its own nationals 

2.  Subject to the laws, conditions  and procedures  applicable  in the Republic  of Azerbaijan, the 
Republic  of  Azerbaijan  shall  ensure  that  the  treatment  accorded  to  nationals  of  a Member 
State  legally  employed  in the  territory  of the Republic  of  Azerbaijan  shall  be  free  from any 
discrimination based on nationality,  as regards working conditions, remuneration or dismissal, 
as compared to its own nationals. 

ARTICLE 20 

The Cooperation Council  shall examine which improvements can be made in working conditions 
for business people consistent  with the international  commitments of the Parties, including those 
set out in the document of the CSCE Bonn Conference. 

ARTICLE 21 

The Cooperation Council shall make recommendations for the implementation  of Articles  19 and 
20. 

12 

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CHAPTER  D 

Conditions  affecting  the  establishment  and  operation  of  companies 

ARTICLE  22 

1.  The  Community  and  its  Member  States  shall  grant  treatment  no  less  favourable  than  that 
accorded  to  any  third  country  for  the  establishment  of  Azerbaijani  companies  as  defined  in 
Article 24(d). 

2.  Without  prejudice  to  the  reservations  listed  in  Annex  IV,  the  Community  and  its  Member 
States  shall  grant  to  subsidiaries  of  Azerbaijani  companies  established  in  their  territories  a 
treatment  no  less  favourable  than  that  granted  to  any  Community  companies,  in  respect  of 
their operation. 

3.  The  Community  and  its  Member  States  shall  grant  to  branches  of  Azerbaijani  companies 
established  in their territories  treatment  no  less  favourable  than  that  accorded  to  branches  of 
companies of any third country',  in respect  of their operation. 

4.  Without  prejudice  to  the  reservations  listed  in  Annex  V,  the  Republic  of  Azerbaijan  shall 
grant  for the establishment  of Community  companies  as defined  in Article  24(d)  treatment  no 
less  favourable  than  that  accorded  to  Azerbaijani  companies  or  to  any  third  country 
companies,  whichever  is  the  better, 
and  shall  grant  to  subsidiaries  and  branches  of 
Community  companies  established  in  its  territory  treatment  no  less  favourable  than  that 
accorded  to  its  own  companies  or  branches  or  to  any  third  country  company  or  branch, 
whichever  is the better,  in respect  of their operations. 

s  ^ 

13 

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ARTICLE 23 

1.  Without  prejudice  to the  provisions  of Article  96, the provisions  of .Article 22  shall  not  apply 

to air transport, inland waterways transport  and maritime transport 

2.  However,  in respect  of activities,  as indicated  below,  undertaken  by shipping  agencies  for  the 
provision  of  services  to  international  maritime  transport,  including  intermodal  transport 
operations involving a sea-leg,  each Party  shall permit  to the companies of the other Party to 
have  a  commercial  presence  in  its  territory  in  the  form  of  subsidiaries  or  branches,  under 
conditions  of establishment  and  operation  no less favourable  than  those  accorded  to  its  own 
companies or to subsidiaries or branches of companies of any third country, whichever are the 
better, and this in conformity  with the legislation and regulations applicable in each Party. 

3.  Such activities include,  but are not limited to: 

a)  marketing  and  sales  of  maritime  transport  and  related  services  through  direct  contact  with 
customers, from  quotation  to invoicing, whether these services are operated  or offered  by the 
service  supplier  itself  or  by  service  suppliers  with  which  the  service  seller  has  established 
standing business arrangements, 

b)  purchase  and  use,  on  their  own  account  or  on  behalf  of  their  customers  (and  the  resale  to 
their customers) of any transport  and  related  services,  including inward  transport  services by 
any  mode,  particularly  inland  waterways,  road  and  rail,  necessary  for  the  supply  of  an 
integrated service; 

c)  preparation  of documentation  concerning transport  documents, customs  documents,  or  other 

documents related to the origin and character of the goods transported; 

d)  provision  of business information  by any means, including  computerised  information  systems 
and  electronic  data  interchange  (subject  to  any  non-discriminatory  restrictions  concerning 
telecommunications); 

e)  setting up of any business arrangement, including participation in the company's stock and the 
appointment  of personnel recruited  locally (or, in the case of foreign  personnel, subject  to the 
relevant provisions of this Agreement), with any locally established  shipping agency; 

f)  acting on behalf of the companies, inter alia in organizing the call of the vessel  or taking over 

cargoes when required 

For the purpose of this Agreement. 

ARTICLE 24 

(a)  A "Community company" or an "Azerbaijani  company" respectively  shall mean a company set 
up  in  accordance  with  the  laws  of  a  Member  State  or  of  the  Republic  of  Azerbaijan 
respectively  and  having  its  registered  office  or  central  administration,  or  principal  place  of 
business  in  the  territory  of  the  Community  or  the  Republic  of  Azerbaijan  respectively. 
However,  should  the company,  set  up in accordance  with the laws of a Member  State or the 
Republic  of  Azerbaijan  respectively,  have  only  its  registered  office  in  the  territory  of  the 

Community  or  the  Republic  of  Azerbaijan  respectively,  the  company  shall  be  considered  a 
Community  or  Azerbaijani  company  respectively  if  its  operations  possess  a  real  and 
continuous link with the economy  of one of the Member  States or the Republic  of  Azerbaijan 
respectively. 

(b)  "Subsidiary"  of a company  shall  mean  a company  which  is effectively  controlled  by the first 

company. 

(c)  "Branch" of à company  shall mean  a place of business not  having legal  personality  which  has 
the appearance of permanency, such as the extension of a parent body, has a management  and 
is  materially  equipped  to  negotiate  business  with  third  parties  so  that  the  latter,  although 
knowing that  there will  if necessary  be  a legal  link  with  the  parent  body,  the  head  office  of 
which is abroad, do not have to deal directly with such parent body but  may transact  business 
at the place of business constituting the extension. 

(d) "Establishment" shall mean the right of Community or Azerbaijani  companies as referred  to in 
point (a),  to  take  up  economic  activities  by  means  of  the  setting  up  of  subsidiaries  and 
branches in the Republic of Azerbaijan  or in the Community respectively 

(e)  "Operation" shall mean the pursuit  of economic activities. 

(f) "Economic  activities"  shall  mean  activities  of  an  industrial,  commercial  and  professional 

character. 

With  regard  to  international  maritime  transport,  including  inter  modal  operations  involving a 
sea leg, nationals of the Member  States  or  of the Republic  of Azerbaijan  established  outside 
the  Community  or  the  Republic  of  Azerbaijan  respectively,  and  shipping  companies 
established  outside the Community  or the Republic  of Azerbaijan  and  controlled  by nationals 
of  a  Member  State  or  Azerbaijani  nationals  respectively,  shall  also  be  beneficiaries  of  the 
provisions of this Chapter  and  Chapter  III  if their vessels are registered  in that Member  State 
or in the Republic of Azerbaijan  respectively in accordance with their respective legislation. 

ARTICLE 25 

1.  Notwithstanding any other  provisions  of the  Agreement,  a Party  shall  not  be prevented from 
taking measures for  prudential  reasons,  including  for  the  protection  of investors,  depositors, 
policy holders or persons to whom a fiduciary  duty is owed by a financial service supplier,  or 
to  ensure  the  integrity  and  stability  of  the  financial  system.  Where  such  measures  do  not 
conform  with the provisions of the Agreement,  they shall not be used  as a means of avoiding 
the obligations of a Party under the Agreement. 

2.  Nothing  in  the  Agreement  shall  be  construed  to  require  a  Party  to  disclose  information 
relating to the affairs  and  accounts  of individual  customers  or any confidential  or  proprietary 
information  in the possession of public entities 

3.  For the purpose of this Agreement,  "financial  services" shall mean those activities described in 

Annex III. 

15 

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ARTICLE 26 

The provisions of this Agreement  shall not prejudice the application by each Party of any measure 
necessary  to  prevent  the  circumvention  of  its  measures  concerning  third  country  access  to  its 
market, through the provisions of this Agreement 
marL-pt  t h r n n oh  thp  nrnviçinnc  nf  this  Aorf»f»mf»nt 

ARTICLE 27 

1.  Notwithstanding  the  provisions  of  Chapter  I  of  this  Title,  a  Community  company  or  an 
Azerbaijani  company  established  in  the  territory  of  the  Republic  of  Azerbaijan  or  the 
Community  respectively  shall  be  entitled  to  employ,  or  have  employed  by  one  of  its 
subsidiaries  or  branches,  in  accordance  with  the  legislation  in  force  in  the  host  country  of 
establishment,  in the territory  of the Republic of Azerbaijan  and the  Community  respectively, 
employees who  are  nationals  of  Community  Member  States  and  the  Republic  of  Azerbaijan 
respectively,  provided  that  such  employees  are key  personnel  as defined  in paragraph  2, and 
that  they  are  employed  exclusively  by  companies,  or  branches  The  residence  and  work 
permits of such employees shall only cover the period of such employment 

2.  Key  personnel  of  the  above  mentioned  companies  herein  referred  to  as  "organizations"  are 
"intra-corporate  transferees"  as  defined  in  (c)  in the  following  categories,  provided  that  the 
organization  is a legal  person  and  that  the  persons  concerned  have  been  employed  by  it  or 
have been  partners  in it  (other  than  majority  shareholders),  for  at  least  the  year  immediately 
preceding such movement. 

(a)  Persons  working  in  a  senior  position  with  an  organization,  who  primarily  direct  the 
management  of the  establishment,  receiving general  supervision  or  direction  principally  from 
the board of directors or stockholders of the business or their equivalent, including: 

-  directing the establishment  or a department  or subdivision of the establishment, 
-  supervising and controlling the work  of other supervisory, professional  or managerial, 

employees, 

-  having the authority personally to hire and fire or recommend  hiring, firing  or other 

personnel actions, 

(b) Persons  working  within  an  organization  who  possess uncommon  knowledge  essential  to  the 
establishment's  service,  research  equipment,  techniques  or  management.  The  assessment  of 
such knowledge may reflect,  apart from knowledge  specific  to the establishment,  a high level 
of  qualification  referring  to  a type  of work  or  trade  requiring  specific  technical  knowledge, 
including membership of an accredited  profession; 

(c)  An  "intra-corporate transferee"  is defined  as a natural person working  within  an  organization 
in  the  territory  of  a  Party,  and  being  temporarily  transferred  in  the  context  of  pursuit  of 
economic  activities in the territory  of the  other  Party; the  organization  concerned  must  have 
its principal place of business in the territory of a Party and the transfer  be to an establishment 
(branch,  subsidiary)  of that  organization,  effectively  pursuing  like  economic  activities  in  the 
territory of the other Party. 

16 

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ARTICLE 29 

1.  The  Parties  shall  use  their  best  endeavours  to  avoid  taking  any  measures  or  actions  which 
render  the  conditions  for  the  establishment  and  operation  of  each  other's  companies  more 
restrictive  than  the  situation  existing  on  the  day  preceding  the  date  of  signature  of  the 
Agreement 

2.  The  provisions  of  this  Article  are  without  prejudice  to  those  of  Article  37:  the  situations 
covered  by such  Article  37 shall be  solely  governed  by its provisions to the exclusion  of any 
other. 

3.  Acting in the spirit  of partnership and cooperation  and in the light of the provisions of Article 
43 the Government  of the Republic of Azerbaijan  shall inform  the Community of its intentions 
to  submit  new  legislation  or  adopt  new  regulations  which  may  render  the  conditions  for  the 
establishment  or  operation  in  the  Republic  of  Azerbaijan  of  subsidiaries  and  branches  of 
Community  companies  more  restrictive  than  the  situation  existing  on  the  day  preceding  the 
date of signature of the Agreement.  The Community may request  the Republic  of  Azerbaijan 
to  communicate  the  drafts  of  such  legislation  or  regulations  and  to  enter  into  consultations 
about those  drafts 

4.  Where new legislation  or regulations introduced  in the Republic of Azerbaijan  would result in 
rendering the conditions for  operation  of subsidiaries and branches of Community  companies 
established  in  the  Republic  of  Azerbaijan  more  restrictive  than  the  situation  existing  on  the 
day of  signature  of the  Agreement,  such  respective  legislation  or  regulations  shall  not  apply 
during three  years  following  the  entry  into  force  of the relevant  act  to  those  subsidiaries and 
branches  already  established  in the Republic  of Azerbaijan  at  the  time  of  entry  into  force  of 
the relevant act 

Cross  border supply of services between the Community and the Republic of Azerbaijan 

CHAPTER IQ 

ARTICLE 30 

1.  The Parties undertake in accordance with the provisions of this Chapter to take the necessary 
steps to  allow  progressively  the  supply  of  services  by  Community  or  Azerbaijani  companies 
which  are  established  in  a  Party  other  than  that  of  the  person  for  whom  the  services  are 
intended taking into account the development  of the service sectors in the  Parties 

2.  The Cooperation Council shall make recommendations for the implementation of paragraph  1. 

17 

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ARTICLE  31 

The  Parties  shall  cooperate  with  the  aim  of  developing  a  market  oriented  service  sector  in  the 
Republic  of Azerbaijan 

ARTICLE  32 

1.  The  Parties  undertake  to  apply  effectively  the  principle  of  unrestricted  access  to  the 

international  maritime market and traffic  on a commercial basis: 

(a)  the  above  provision  does  not  prejudice  the  rights  and  obligations  arising  from  the  United 
Nations  Convention  on  a  Code  of  Conduct  for  Liner  Conferences,  as  applicable  to  one  or 
other  Contracting  Party  to  this  Agreement.  Non-conference  lines  will  be  free  to  operate  in 
competition  with a conference  as long  as they adhere to  the  principle  of fair  competition  on a 
commercial basis, 

(b)  the Parties  affirm  their commitment  to  a freely  competitive  environment  as being  an  essential 

feature of the dry and liquid bulk trade 

2.  In applying the principles of paragraph  1, the Parties shall: 

(a)  not apply,  as from entry into force  of this agreement,  any cargo  sharing provisions  of bilateral 
agreements between  any Member  States of the Community  and the former  Soviet Union; 

(b)  not  introduce cargo  sharing clauses into future bilateral  agreements with third countries,  other 
than  in  those  exceptional  circumstances  where  liner  shipping  companies  from  one  or  other 
Party to tlpis Agreement  would  not  otherwise  have an effective  opportunity  to  ply for trade  to 
and from the third country  concerned; 

(c)  prohibit  cargo  sharing  arrangements  in  future  bilateral  agreements  concerning  dry  and  liquid 

bulk trade; 

(d)  abolish  upon  entry  into  force  of  this  Agreement,  all  unilateral  measures,  administrative, 
technical  and other obstacles which could have restrictive or discriminatory  effects  on the free 
supply of services in international  maritime transport. 

3.  Each  Party  shall  grant,  inter  alia,  no  less  favourable  treatment,  for  the  ships  operated  by 
nationals  or  companies  of  the  other  Party,  than  that  accorded  to  a  Party's  own  ships,  with 
regard  to  access  to  ports  open  to  international  trade,  the  use  of  infrastructure  and  auxiliary 
maritime  services  of  the  ports,  as  well  as  related  fees  and  charges,  customs  facilities  and  the 
assignment  of berths and facilities  for loading and unloading. 

4.  Nationals  and  companies  of  the  Community  providing  international  maritime  transport 
services  shall be free to  provide international  sea-river  services in the inland waterways  of the 
Republic  of Azerbaijan and vice versa. 

18 

/ 

ARTICLE  33 

With a view to assuring  a coordinated  development  of transport  between  the Parties,  adapted  to 
their  commercial  needs,  the  conditions  of  mutual  market  access  and  provision  of  services  in 
transport  by road,  rail and inland  waterways  and, if applicable, in air transport  may be dealt  with 
by specific  agreements where appropriate negotiated  between the Parties after  entry into force  of 
this Agreement 

CHAPTER  IV 

General  Provisions 

ARTICLE 34 

1.  The  provisions  of  this  Title  shall  be  applied  subject  to  limitations  justified  on  grounds  of 

public policy, public security or public health. 

2.  They  shall  not  apply  to  activities  which  in  the  territory  of  either  Party  are  connected,  even 

occasionally, with the exercise of official  authority. 

ARTICLE 35 

For  the  purpose  of  this  Title,  nothing  in the  Agreement  shall  prevent  the  Parties  from  applying 
their laws and regulations regarding entry  and  stay, work,  labour  conditions and  establishment  of 
natural  persons and  supply  of  services,  provided  that,  in  so  doing,  they  do  not  apply  them  in a 
manner  as  to  nullify  or  impair  the  benefits  accruing  to  any  Party  under  the  terms  of  a  specific 
provision  of the  Agreement  The  above  provision  does  not  prejudice  the  application  of  Article 
34. 

ARTICLE 36 

Companies  which  are  controlled  and  exclusively  owned  by  Azerbaijani  companies  and 
Community companies jointly  shall  also be beneficiaries  of the provisions  of Chapters II, III and 
IV. 

ARTICLE 37 

Treatment  granted by either Party to the other thereunder  shall, as from the day one month  prior 
to the  date  of entry into force  of the relevant  obligations of the General  Agreement  on  Trade in 
Services  (GATS),  in respect  of  sectors  or  measures  covered  by the  GATS,  in no  case  be  more 
favourable  than  that  accorded  by  such  first  Party  under  the  provisions  of  GATS  and  this  in 
respect of each service sector, sub-sector and mode of supply. 

19 

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ARTICLE 38 

For the purposes  of Chapters  II,  III  and  IV, no  account  shall  be taken  of treatment  accorded  by 
the  Community,  its  Member  States  or  the  Republic  of  Azerbaijan  pursuant  to  commitments 
entered  into in economic integration  agreements in accordance with the principles of Article  V of 
the GATS 

ARTICLE 39 

1.  The  most-favoured-nation  treatment  granted  in  accordance  with  the  provisions  of  this  Title 
shall  not  apply  to  the  tax  advantages  which  the Parties  are  providing  or  will  provide  in  the 
future  on the basis of agreements to avoid double taxation,  or other tax arrangements 

2.  Nothing in this Title shall be construed  to prevent  the adoption  or enforcement  by the Parties 
of  any  measure  aimed  at  preventing  the  avoidance  or  evasion  of  taxes  pursuant  to  the  tax 
provisions  of  agreements  to  avoid  double  taxation  and  other  tax  arrangements,  or  domestic 
fiscal  legislation 

3.  Nothing  in  this  Title  shall  be  construed  to  prevent  Member  States  or  the  Republic  of 
Azerbaijan  from  distinguishing,  in  the  application  of  the  relevant  provisions  of  their  fiscal 
legislation,  between  tax  payers  who  are  not  in  identical  situations,  in  particular  as  regards 
their place of residence 

ARTICLE 40 

Without  prejudice  to  Article  27,  no  provision  of  Chapters  II,  III  and  IV  shall  be  interpreted  as 
giving the right to: 

-  nationals of the Member  States or  of the Republic of Azerbaijan  respectively  to  enter,  or  stay 
in,  the  territory  of  the  Republic  of  Azerbaijan  or  the  Community  respectively  in  any  capacity 
whatsoever,  and  in particular  as a shareholder  or partner  in a company  or  manager  or  employee 
thereof or supplier or recipient  of services, 

-  Community  subsidiaries or branches of Azerbaijani  companies to  employ  or have employed in 
the territory of the Community nationals of the Republic of  Azerbaijan, 

-  Azerbaijani  subsidiaries or branches of Community  companies to  employ or have employed  in 
the territory of the Republic of Azerbaijan  nationals of the Member States, 

-  Azerbaijani  companies  or  Community  subsidiaries  or  branches  of  Azerbaijani  companies  to 
supply  Azerbaijani  persons  to  act  for  and  under  the  control  of  other  persons  by  temporary 
employment contracts, 

-  Community  companies  or  Azerbaijani  subsidiaries  or  branches  of  Community  companies  to 
supply workers who are nationals of the Member States by temporary  employment  contracts. 

20 

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CHAPTER V 

Current  payments  and  capital 

ARTICLE  41 

1.  The  Parties  undertake  to  authorise  in  freely  convertible  currency,  any  current  payments 
between  residents  of the  Community  and  of the  Republic  of  Azerbaijan  connected  with  the 
movement  of  goods,  services  or  persons  made  in  accordance  with  the  provisions  of  this 
Agreement. 

2.  With  regard  to  transactions  on  the  capital  account  of  balance  of  payments,  from  entry  into 
force  of the  Agreement,  the  free  movement  of capital  relating  to  direct  investments  made in 
companies formed  in accordance  with  the laws of the host  country  and  investments  made in 
accordance  with  the  provisions  of  Chapter II,  and  the  liquidation  or  repatriation  of  these 
investments and of any profit  stemming therefrom  shall be ensured 

3.  The  provisions  of  paragraph  2  shall  not  prevent  the  Republic  of  Azerbaijan  from  applying 
restrictions  on outward  direct  investment  by Azerbaijani  residents.  Such  restrictions  shall not 
apply  to  subsidiaries  and  branches  of  Community  companies.  Five  years  after  the  entry  into 
force  of  this  Agreement,  the  Parties  agree  to  consult  over  the  maintenance  of  these 
restrictions, taking into account  all the relevant  monetary, fiscal  and financial  considerations 

4.  Without  prejudice  to  paragraph  2  or  to  paragraph  5,  as  from  entry  into  force  of  this 
Agreement,  no  new  foreign  exchange  restrictions  on  the  movement  of  capital  and  current 
payments  connected  therewith  between  residents  of  the  Community  and  the  Republic  of 
Azerbaijan  shall  be  introduced  and  the  existing  arrangements  shall  not  become  more 
restrictive 

5.  The  Parties  shall  consult  each  other  with  a  view  to  facilitating  the  movement  of  forms  of 
capital  other  than  those  referred  to  in  paragraph  2  above  between  the  Community  and  the 
Republic of Azerbaijan  in order to promote the objectives  of this Agreement 

6.  With  reference  to  the  provisions  of  this  Article,  until  a  full  convertibility  of the  Azerbaijani 
currency within the meaning  of Article  VIII  of the Articles  of Agreement  of the International 
Monetary  Fund  (IMF)  is  introduced,  the  Republic  of  Azerbaijan  may  in  exceptional 
circumstances  apply  exchange  restrictions  connected  with  the  granting  or  taking  up  of  short 
and  medium-term  financial  credits  to  the  extent  that  such  restrictions  are  imposed  on 
the 
Republic  of  Azerbaijan  for  the  granting  of  such  credits  and  are  permitted  according  to  the 
Republic of Azerbaijan's  status under the IMF  The Republic  of Azerbaijan  shall  apply  these 
restrictions  in  a  non-discriminatory  manner.  They  shall  be  applied  in  such  a  manner  as  to 
cause the least possible disruption  to this Agreement.  The Republic of Azerbaijan  shall  inform 
the  Cooperation  Council  promptly  of the  introduction  of  such  measures  and  of any  changes 
therein 

21 

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Without  prejudice  to  paragraphs  1 and  2, where,  in exceptional  circumstances,  movement  of 
capital  between  the  Community  and  the Republic  of  Azerbaijan  cause,  or  threaten  to  cause, 
serious  difficulties  for  the  operation  of  exchange  rate  policy  or  monetary  policy  in  the 
Community  or  the  Republic  of  Azerbaijan,  the  Community  and  the  Republic  of  Azerbaijan, 
respectively,  may take  safeguard  measures with  regard  to  movements  of capital  between  the 
Community  and  the  Republic  of  Azerbaijan  for  a  period  not  exceeding  six  months  if  such 
measures are strictly necessary. 

CHAPTER VI 

Intellectual, industrial  and commercial  property  protection 

ARTICLE 42 

1.  Pursuant  to  the  provisions  of this  Article  and  of  Annex  II,  the  Republic  of  Azerbaijan  shall 
continue to improve the protection  of intellectual, industrial and commercial  property rights in 
order to provide, by the end of the fifth year after  the entry into force  of the Agreement,  for a 
level  of  protection  similar  to  that  existing  in  the  Community,  including  effective  means  of 
enforcing  such rights. 

2.  By  the  end  of  the  fifth  year  after  entry  into  force  of  the  Agreement,  the  Republic  of 
Azerbaijan  shall  accede  to  the  multilateral  conventions  on  intellectual,  industrial  and 
commercial  property rights referred  to  in paragraph  1 of  Annex  II  to  which  Member  States 
are  parties  or  which  are  de  facto  applied  by  Member  States,  according  to  the  relevant 
provisions contained in these conventions. 

22 

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TITLE V 

LEGISLATIVE  COOPERATION 

ARTICLE 43 

1.  The  Parties  recognize  that  an  important  condition  for  strengthening  the  economic  links 
between the Republic of Azerbaijan  and the Community is the approximation  of the Republic 
of  Azerbaijan's  existing  and  future  legislation  to  that  of  the  Community  The  Republic  of 
Azerbaijan  shall  endeavour  to  ensure  that  its  legislation  will  be  gradually  made  compatible 
with that of the Community. 

2.  The  approximation  of  laws  shall  extend  to  the  following  areas  in  particular:  customs  law, 
company  law, banking law, company  accounts and  taxes,  intellectual  property,  protection  of 
workers  at  the  workplace,  financial  services,  rules  on  competition,  public  procurement, 
protection  of  health  and  life  of  humans,  animals  and  plants,  the  environment  and  legislation 
regarding  the  exploitation  and  utilisation  of natural  resources,  consumer  protection,  indirect 
taxation, technical rules and standards, nuclear laws and regulations and transport. 

3.  The  Community  shall  provide  the  Republic  of  Azerbaijan  with  technical  assistance  for  the 

implementation  of these measures, which may include, inter alia : 

the exchange of experts; 
the provision  of early information  especially on relevant  legislation; 

- 
- 
-  organization  of seminars; 
- 
-  aid for translation of Community legislation in the relevant sectors. 

training activities; 

4.  The Parties agree to examine ways to apply their respective competition  laws on a concerted 

basis in such cases where trade between them is  affected. 

23 

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TITLE VI 

ECONOMIC  COOPERATION 

ARTICLE 44 

1 

The Community and the Republic of Azerbaijan  shall establish economic cooperation  aimed at 
contributing to the process of economic reform  and  recovery  and  sustainable development  of 
the Republic of Azerbaijan.  Such cooperation  shall strengthen  existing economic links, to the 
benefit  of both parties. 

Policies and  other measures will be designed  to bring about  economic  and  social  reforms  and 
restructuring  of the  economic  and  trading  systems  in the Republic  of Azerbaijan  and  will  be 
guided  by  the  requirements  of  sustainability  and  harmonious  social  development,  they  will 
also fully incorporate environmental  considerations. 

To this end, cooperation  will concentrate,  in particular,  on economic  and  social  development, 
human  resources  development,  support  for  enterprises  (including  privatization,  investment 
and  development  of  financial  services),  agriculture  and  food,  energy, 
transport,  tourism, 
environmental  protection, regional cooperation  and monetary policy 

Special attention  shall be devoted to measures, as in conformity  with the legislation  in force in 
the Republic of Azerbaijan  capable of fostering  cooperation  among the Independent  States of 
the  Transcaucasus  region,  and  with  other  neighbouring  states,  with  a view  to  stimulating  a 
harmonious development  of the region. 

Where appropriate, economic cooperation and other forms of cooperation  provided  for  in this 
Agreement  may  be  supported  by  technical  assistance  from  the  Community,  taking  into 
account  the Community's relevant  Council  regulation  applicable to  technical  assistance  in the 
Independent  States,  the  priorities  agreed  upon  in  the  indicative  programme  related  to 
Community technical assistance to the Republic of Azerbaijan  and its established  coordination 
and implementation procedures. 

ARTICLE 45 

Cooperation  in the field  of trade in goods and services 

The Parties will cooperate with a view to ensuring that  the Republic  of Azerbaijan's  international 
trade is conducted in conformity with the rules of the WTO. 

Such cooperation  shall include specific  issues directly relevant to trade facilitation,  including: 

• 

formulation  of policy  on trade  and  trade-related  questions,  including  payments,  and  clearing 
mechanisms, 

•  drafting  of relevant legislation, 
•  assistance to prepare for the Republic of Azerbaijan's  eventual accession to the WTO 

24 

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ARTICLE 46 

Industrial cooperation 

1  Cooperation  shall aim at promoting the following  in particular: 

the development  of business links between economic operators of both sides, 

- 
-  Community participation  in the Republic of Azerbaijan's  efforts  to restructure its industry, 
- 
- 

the improvement  of management, 
the  development  of appropriate  market-based  commercial  rules  and  practices,  as well  as the 
transfer  of know-how, 
-  environmental protection 

2.  The  provisions  of  this  Article  shall  not  affect  the  enforcement  of  Community  competition 

rules applicable to undertakings. 

ARTICLE  46 bis 

Construction 

The Parties shall cooperate in the field of construction  industry. 

This cooperation  shall, inter alia,  aim at modernizing  and  restructuring  the  construction  sector in 
the Republic  of Azerbaijan  in line with  the  principles of  a market  economy  and  duly  taking  into 
account  related  health, safety  and environmental aspects. 

ARTICLE 47 

Investment  promotion and  protection 

1.  Bearing  in mind the respective  powers  and  competences  of the Community  and  the  Member 
States,  cooperation  shall  aim  to  establish  a  favourable  climate  for  private  investment,  both 
domestic  and  foreign,  especially  through  better  conditions  for  investment  protection,  the 
transfer  of capital and the exchange of information  on investment  opportunities. 

2.  The aims of cooperation  shall be in particular: 

- 

- 

- 

- 

- 

the conclusion, where appropriate, between the Member  States and the Republic of Azerbaijan 
of agreements for the promotion and protection of investment; 
the conclusion, where appropriate, between the Member States and the Republic of Azerbaijan 
of agreements to avoid double taxation; 
the creation of favourable  conditions for attracting foreign  investments into the  Azerbaijani 
economy, 
to establish  stable and adequate business law and conditions, and to exchange information  on 
laws, regulations and administrative practices in the field of investment, 
to exchange information  on investment opportunities in the form  of,  inter alia, trade fairs, 
exhibitions, trade weeks and other events. 

25 

ARTICLE 48 

Public Procurement 

The  Parties  shall  cooperate  to  develop  conditions  for  open  and  competitive  award  of  contracts 
for goods and services in particular through calls for tenders. 

ARTICLE 49 

Cooperation  in the field  of standards and conformity  assessment 

1.  Cooperation  between the Parties shall promote alignment  with internationally  agreed  criteria, 
principles and guidelines followed  in the field of quality.  The required  actions will  facilitate 
progress  towards  mutual  recognition  in  the field of  conformity  assessment,  as  well  as  the 
improvement  of the quality of Azerbaijani  products . 

2  To this end they shall seek to cooperate in technical  assistance projects which will: 

•  promote appropriate cooperation  with organizations and institutions specialized  in these fields; 
•  promote the use of Community technical regulations and the application  of European 

standards and conformity  assessment  procedures; 

•  permit the sharing of experience and technical information  in the field  of quality management 

ARTICLE 50 

Mining and raw materials 

1.  The Parties shall aim at increasing investment and trade in mining and raw materials 

2.  The cooperation  shall focus in particular on the following areas: 

-  exchange of information  on the prospects of the mining and non-ferrous  metals sectors, 
- 
- 
- 
- 
-  safety  in the mining industry. 

the establishment  of a legal framework  for  cooperation, 
trade matters, 
the adoption and implementation  of environmental  legislation, 
training, 

ARTICLE 51 

Cooperation  in science and technology 

1.  The  Parties  shall  promote  cooperation  in  civil  scientific  research  and  technological 
development  (RTD) on the basis of mutual benefit  and, taking into account  the availability  of 
resources,  adequate  access to  their  respective  programmes  and  subject  to  appropriate  levels 
of effective  protection  of intellectual, industrial and commercial property rights (IPR). 

26 

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2.  Science  and technology  cooperation  shall  cover: 

the exchange  of scientific  and technical  information, 

- 
-  joint  RTD activities, 
- 

training activities and mobility  programmes for  scientists,  researchers  and technicians  engaged 
in RTD  on both sides. 

Where  such  cooperation  takes  the  form  of  activities  involving  education  and/or  training,  it 
should  be carried out in accordance  with the provisions  of Article  52 

The  Parties,  on  the  basis  of  mutual  agreement,  can  engage  in  other  forms  of  cooperation  in 
science  and technology 

3.  The  Cooperation  covered  by  this  Article  shall  be  implemented  according  to  specific 
arrangements  to  be  negotiated  and  concluded  in  accordance  with  the  procedures  adopted  by 
each Party,  and which  shall  set  out,  inter alia, appropriate  EPR provisions 

ARTICLE  52 

Education  and  training 

1.  The  Parties  shall  cooperate  with  the  aim  of  raising  the  level  of  general  education  and 
professional  qualifications  in  the  Republic  of  Azerbaijan,  both  in  the  public  and  private 
sectors. 

2.  The cooperation  shall focus  in particular on the following  areas: 

-  updating  higher education  and training systems in  the Republic  of Azerbaijan  including the 

- 

system of certification  of higher educational  establishments  and diplomas of higher education; 
the training of public and private  sector executives  and civil  servants in priority  areas to be 
determined; 

-  cooperation between  educational  establishments  and between  educational  establishments and 

firms; 

-  mobility for teachers, graduates,  administrators, young  scientists and researchers,  and young 

people; 

teaching Community languages; 

-  promoting teaching in the field of European  Studies within the appropriate  institutions; 
- 
-  post-graduate training of conference  interpreters: 
- 
- 
-  exchange  of teaching methods,  encouraging  the utilisation  of modern  educational  programmes 

training of journalists; 
training of trainers. 

and technical  means of education. 

3.  The possible participation  of one Party in the  respective  programmes  in the field  of  education 
and  training  of  the  other  Party  could  be  considered  in  accordance  with  their  respective 
procedures  and,  where  appropriate,  institutional  frameworks  and  plans  of  cooperation  will 
then be established  building  on  participation  of the Republic  of Azerbaijan  in the  Community's 
TEMPUS programme 

27 

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ARTICLE  53 

Agriculture  and  the agro-industrial  sector 

The  purpose  of  cooperation  in  this  area  shall  be  the  pursuance  of  agrarian  reform,  the 
modernization,  privatization  and  restructuring  of  agriculture,  the  agro-industrial  and  service 
sectors  in  the  Republic  of  Azerbaijan,  development  of  domestic  and  foreign  markets  for 
Azerbaijani  products,  in  conditions  that  ensure  the  protection  of  the  environment,  taking  into 
account  the  necessity  to  improve  security  of  food  supply  as  well  as  the  development  of 
agri-business, the processing  and  distribution  of agricultural  products.  The Parties  shall  also aim 
at  the  gradual  approximation  of  Azerbaijani  standards  to  Community  technical  regulations 
concerning  industrial  and  agricultural  food  products  including  sanitary  and  phytosanitary 
standards. 

ARTICLE  54 

Energy 

1.  Cooperation  shall  take  place  within  the  principles  of the  market  economy  and  the  European 
Energy  Charter,  and  bearing  in mind  the Energy  Charter  Treaty  and  the  Protocol  on  Energy 
Efficiency  and  Related  Environmental  Aspects,  against  a  background  of  the  progressive 
integration  of the energy markets in Europe. 

2.  The cooperation  shall include among others the following areas: 

-  formulation  and development  of energy policy, 
- 

improvement  in management  and regulation  of the energy sector in line with a market 
economy, 
improvement  of energy supply, including security of supply, in an economic and 
environmentally  sound manner, 

- 

-  promotion  of energy saving arid energy efficiency  and implementation  of the Energy Charter 

Protocol  on Energy Efficiency  and related  environmental  aspects, 

improvement of energy technologies in supply and end use across the range of energy types, 

-  modernisation  of energy  infrastructures, 
- 
-  management  and technical training in the energy sector, 
- 
-  The introduction  of the range of institutional, legal, fiscal and other conditions necessary to 

transportation  and transit  of energy materials and products, 

encourage increased energy trade and investment. 

-  development  of hydro-electric and other renewable energy resources 

3 

The Parties shall exchange relevant  information  relating to investment  projects  in the energy 
sector,  in particular  concerning the construction  and  refurbishing  of oil and gas pipelines or 
other  means  of  transporting  energy  products.  They  shall  cooperate  with  a  view  to 
implementing  as  efficaciously  as  possible  the  provisions  of  Title  IV  and  of  Article  47,  in 
respect  of investments in the energy sector. 

28 

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ARTICLE  55 

Environment 

1.  Bearing  in mind  the European  Energy  Charter  and  the Declaration  of the  Lucerne  Conference 
of  1993, and  taking  into  account  the  Energy  Charter  Treaty,  and  especially  its  article  19,  and 
the  Energy  Charter  Protocol  on  Energy  Efficiency  and  related  environmental  aspects,  the 
Parties  shall  develop  and  strengthen  their  cooperation  on  environment  and  human  health. 

2.  Cooperation  shall  aim at  combating the  deterioration  of the  environment  and  in  particular: 

-  effective  monitoring  of pollution  levels  and  assessment  of environment;  system  of  information 

on  the  state  of the  environment; 

-  combating  local, regional  and  transboundary  air  and  water  pollution, 
-  ecological  restoration; 
-  sustainable,  efficient  and  environmentally  effective  production  and  use  of  energy, 
-  ecological  safety  of industrial  facilities; 
-  classification  and  safe  handling  of  chemicals, 
-  water  quality, 
-  waste  reduction,  recycling  and  safe  disposal,  implementation  of the Basle  Convention, 
- 
- 
- 

the  environmental  impact  of agriculture,  soil  erosion,  and  chemical  pollution; 
the  protection  and  renewal  of  forests; 
the  conservation  of biodiversity,  protected  areas  and  sustainable  use  and  management  of 
biological  resources; 
land-use  planning,  including  construction  and  urban  planning; 

- 
-  use  of economic  and  fiscal  instruments; 
-  global  climate  change, 
-  environmental  education  and  awareness; 
- 

technical  assistance  concerning  rehabilitation  of zones  affected  by radioactivity  and  addressing 
related  health  and  social  problems; 
implementation  of the Espoo  Convention  on Environmental  Impact  Assessment  in a 
transboundary  context 

- 

3.  Cooperation  shall take  place particularly  through: 

-  disaster  planning  and  other  emergency  situations, 
-  exchange  of information  and  experts,  including  information  and  experts  dealing  with  the 

transfer  of clean technologies  and  the  safe  and  environmentally  sound  use  of  biotechnologies, 
joint  research  activities, 
- 
- 
improvement  of laws towards  Community  standards; 
-  environmental  training and  institutional  strengthening; 
-  cooperation  at  regional  level, including  cooperation  within  the  framework  of the  European 

Environment  Agency,  and  at  international  level, 

-  development  of strategies,  particularly  with  regard  to  global  and  climatic  issues and  also in 

view  of achieving  sustainable  development, 

-  environmental  impact  studies, 
-  ecological  monitoring 

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ARTICLE 56 

Transport 

The Parties shall develop and strengthen their cooperation  in the field of transport 

This  cooperation  shall,  inter  alia,  aim  at  restructuring  and  modernizing  transport  systems  and 
networks  in  the  Republic  of  Azerbaijan,  and  developing  and  ensuring,  where  appropriate, 
compatibility  of  transportation  systems  in  the  context  of  achieving  a  more  global  transport 
system.  In  particular,  consideration  shall  be  given  to  traditional  communications  links  among 
Independent  States in the Transcaucasus region and with other neighbouring states 

The cooperation  shall include, inter alia: 

the modernizing of management  and operations of road transport,  railways, ports and airports; 

- 
-  modernization and development  of railways, waterways, roads, ports, airports and air 

navigation infrastructure  including the modernization  of major  routes of common interest and 
the trans-European  links for the above modes,  particularly those related to the TRACECA 
project; and training in the above-mentioned  areas; 
-  promotion and development  of multi-modal  transport; 
- 
-  preparation of the legislative and institutional framework  for policy development and 

the promotion of joint  research and development  programmes; 

implementation including privatization  of the transport  sector 

ARTICLE 57 

Postal services and  telecommunications 

Within  their  respective  powers  and  competences  the  Parties  shall  expand  and  strengthen 
cooperation in the following areas: 

- 

the establishment  of policies and guidelines for the development  of the telecommunications 
sector and postal services; 

-  development of principles of a tariff policy and marketing in telecommunications and postal 

services; 

-  carry out transfer  of technology and know how, including on European Technical  standards 

and certification  systems; 

-  encouraging the development  of projects for telecommunications and postal  services and 

attracting investment; 

-  enhancing efficiency  and quality of the provision of telecommunications and postal services, 

amongst others through liberalization of activities of sub-sectors; 

-  advanced application of telecommunications, notably in the area of electronic funds  transfer, 
-  management of telecommunications networks and their  "optimization"; 
-  an appropriate regulatory basis for the provision of telecommunication  and postal  services and 

- 

for the use of the radio frequency spectrum; 
training in the field of telecommunications  and postal  services for operations in market 
conditions. 

30 

^ 

ARTICLE  58 

Financial  Services 

Cooperation shall in particular aim at facilitating  the  involvement  of the Republic  of Azerbaijan in 
universally  accepted  systems of mutual  settlements.  Technical  assistance  shall focus on: 

- 

- 

- 

the development  of a modern  system of private and in particular commercial  banking and 
financial  services, the development  of a common  market  of credit  resources, the  involvement 
of the Republic  of Azerbaijan  in a universally accepted  system of mutual  settlements; 
the development  of fiscal system  and its institutions in the Republic  of Azerbaijan,  exchange  of 
experience and personnel  training; 
the development  of insurance  services, which would, inter alia, create  a favourable  framework 
for Community  companies participation  in the establishment  of joint  ventures in the insurance 
sector in the Republic of Azerbaijan,  as well  as the development  of export  credit insurance. 

This  cooperation  shall  in particular  contribute  to  foster  the  development  of  relations between  the 
Republic  of Azerbaijan  and the Member  States in the financial  services  sector. 

ARTICLE  58  bis 

Enterprise  restructuring  and  privatisation 

Recognizing  that  privatisation  is  of  fundamental  importance  to  a sustainable  economic  recovery, 
the  parties  agree  to  cooperate  in  the  development  of  the  necessary  institutional,  legal  and 
methodological  framework.  To  this  end,  technical  assistance  shall  be  given  to  implement  the 
privatisation  programme  adopted  by  the  Parliament  of  Azerbaijan.  Particular  attention  will  be 
paid to the orderly and transparent  nature of the privatisation  process 

Technical  assistance  shall focus  on,  inter alia: 

• 

the  development  of  an  institutional  base  within  the  government  of  Azerbaijan  capable  of 
defining  and managing the privatisation process; 
the establishment  of a database  of enterprises; 
the corporatisation  of enterprises; 
the  development  of a system  of  mass privatisation,  which  will  aim to  transfer  property  to  the 
population, based  on a system  of vouchers; 
the development  of a system for the registration of share holdings, 
the  development  of  a  system  for  the  sale  by  tender  of  particular  enterprises  deemed  not 
suitable for participation in the mass privatisation  programme 
the restructuring of those enterprise not yet ready for  privatisation 
the development  of private enterprise, particularly in the small and medium enterprise  sector. 

The  objective  of  this  cooperation  is  to  contribute  to  the  revitalization  of  the  economy  of 
Azerbaijan,  the  promotion  of  foreign  investment  and  the  development  of  relations  between 
Azerbaijan  and the Member States 

31 

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ARTICLE 59 

Regional  development 

1.  The Parties shall strengthen  cooperation  on regional  development  and land-use planning 

2.  To  this  end,  they  shall  encourage  exchange  of  information  by  national,  regional  and  local 
authorities  of the  Community  and  its Member  States  and  of the  Republic  of  Azerbaijan  on 
regional and land-use planning policy and on methods of formulation  of regional  policies with 
special emphasis on the development of disadvantaged areas 

They  shall  also  encourage  direct  contacts  between  the  above  mentioned  authorities  and 
between regional and public organizations responsible for  regional  development  planning with 
the aim, inter alia, to exchange methods and ways of fostering  regional  development. 

ARTICLE 60 

Social  cooperation 

1.  With regard  to health and  safety,  the parties shall develop cooperation  between them with the 

aim of improving the level of protection  of the health and safety  of workers 

The cooperation  shall include notably: 

-  education and training on health and safety issues with specific  attention  to high risk sectors of 

activity; 

-  development and promotion  of preventive measures to combat work  related  diseases and 

other work related ailments; 

-  prevention of major  accident hazards and the management  of toxic chemicals, 
-  research to develop the knowledge base in relation to working environment  and the health and 

safety of workers. 

2.  With regard to employment, the cooperation  shall include notably technical  assistance to: 

-  optimization of the labour market, 
-  modernization  of the job-finding  and consulting services; 
-  planning and management  of the restructuring  programmes, 
-  encouragement  of local employment  development; 
-  exchange of information  on the programmes of flexible  employment, including those 

stimulating self-employment  and promoting entrepreneurship. 

3.  The Parties shall pay special  attention to cooperation  in the sphere of social protection  which, 
inter alia, shall include cooperation  in planning and  implementing  social  protection  reforms in 
the Republic of Azerbaijan. 

These  reforms  shall  aim  to  develop  in  the  Republic  of  Azerbaijan  methods  of  protection 
intrinsic to market economies and shall comprise all forms of social protection 

32 

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ARTICLE  61 

Tourism 

The Parties shall increase and develop  cooperation  between  them, which  shall include: 

-  facilitating  the tourist trade, 

-  increasing the flow  of information; 
-  transferring  know-how; 
-  studying the opportunities for joint  operations; 
-  cooperation between  official  tourism bodies; 
-  training for tourism development. 

ARTICLE  62 

Small  and  medium-sized  enterprises 

1.  The  Parties  shall  aim to  develop  and  strengthen  small  and  medium-sized  enterprises  and  their 
associations  and  cooperation  between  SMEs  in  the  Community  and  the  Republic  of 
Azerbaijan. 

2.  Cooperation  shall include technical  assistance,  in particular in the following areas: 

- 
- 

- 
- 

the development  of a legislative  framework  for SMEs; 
the development  of an appropriate infrastructure  (an agency to support  SMEs, 
communications,  assistance to the creation  of a fund  for SMEs); 
the development  of technology parks. 
training in the areas of  marketing,  accounting  and control  of the quality of products. 

ARTICLE  63 

Information  and  communication 

The Parties shall  support  the  development  of  modern  methods  of information  handling,  including 
the media,  and stimulate the  effective  mutual  exchange  of information.  Priority  shall  be given  to 
programmes  aimed  at providing  the  general  public  with  basic  information  about  the  Community 
and the  Republic  of Azerbaijan,  including,  where  possible,  access  to  databases,  in full  respect  of 
intellectual  property rights. 

33 

'^•r 

ARTICLE  64 

Consumer  Protection 

The  Parties  will  enter  into  close  cooperation  aimed  at  achieving  compatibility  between  their 
systems  of  consumer  protection.  This  cooperation  may  include  the  exchange  of  information  on 
legislative  work  and  institutional  reform,  establishment  of  permanent  systems  of  mutual 
information  on  dangerous  products,  the  improvement  of  information  provided  to  consumers 
especially  on  prices,  characteristics  of  products  and  services  offered,  the  development  of 
exchanges  between  the  consumer  interest  representatives,  and  increasing  the  compatibility  of 
consumer protection policies,  and the organization  of seminars and training periods. 

ARTICLE  65 

Customs 

1.  The aim of cooperation  shall be to  guarantee  compliance  with  all  the  provisions  scheduled  for 
adoption  in  connection  with  trade  and  fair  trade  and  to  achieve  the  approximation  of  the 
Republic  of Azerbaijan's customs system to that of the  Community. 

2.  Cooperation  shall include the following  in particular: 

- 
- 
- 
- 

the exchange of information; 
the improvement  of working methods; 
the introduction  of the Combined Nomenclature  and the single administrative  document; 
the interconnection between the transit  systems of the Community  and of the Republic  of 
Azerbaijan; 

-  simplification  of inspections and formalities  in respect  of the carriage of goods; 
- 
- 

the support in the introduction  of modern customs information  systems; 
the organization of seminars and training periods. 

Technical  assistance shall be provided where necessary. 

3.  Without  prejudice to further  cooperation  foreseen  in this agreement  and in particular  Articles 
in  customs  matters  between  administrative  authorities  of  the 
69,  and  71,  mutual  assistance 
Parties  shall  take  place  in  accordance  with  the  provisions  of  the  Protocol  attached  to  this 
Agreement. 

34 

^r 

ARTICLE 66 

Statistical  cooperation 

Cooperation  in this area  shall have as its aim the development  of an efficient  statistical  system  to 
provide the reliable statistics needed  to  support  and monitor the process of economic reform  and 
contribute  to  the  development  of  private  enterprise  in the  Republic  of  Azerbaijan.  It  shall  also 
address the protection of confidentially. 

The Parties, in particular, shall cooperate in the following fields. 

-  adaptation  of the Azerbaijani  statistical system to international methods, standards 

and  classification, 

-  exchange of statistical  information; 
-  provision of necessary statistical  macro- and microeconomic information  to implement and 

manage economic reforms. 

The  Community  shall  contribute  to  this  end  by rendering  technical  assistance  to  the Republic  of 
Azerbaijan 

ARTICLE  67 

Economics 

The  Parties  shall  facilitate  the  process  of  economic  reform  and  the  coordination  of  economic 
policies  by  cooperating  to  improve  understanding  of  the  fundamentals  of  their  respective 
economies and the design  and implementation  of economic  policy in market  economies.  To this 
end, the Parties shall exchange information  on macroeconomic performance  and prospects. 

The Community shall provide technical  assistance so as to: 

-  assist the Republic of Azerbaijan  in the process of economic reform  by providing expert 

advisory and technical assistance, 

-  encourage cooperation  among economists in order to expedite the transfer  of know-how for 
the drafting  of economic policies, and provide for wide dissemination of policy-relevant 
research. 

ARTICLE 67 bis 

Monetary Policy 

At the request of the Azerbaijani  authorities, the Union shall provide technical  assistance 
designed to support the efforts  of the Republic of Azerbaijan  towards the strengthening of its 
monetary system and the introduction of full convertibility of the currency. 

This will include technical assistance for the design and application of Azerbaijan's monetary and 
credit policy, in full  coordination with the international financial institutions, for the training of 
personnel, and for the development  of financial markets, including the stock exchange, it shall 
also include informal  exchanges of views concerning the principles and the functioning  of the 
European  Monetary System and EC regulations on financial markets and capital movements. 

35 

.**f 

TITLE VII 

COOPERATION  ON MATTERS RELATING  TO DEMOCRACY 
AND HUMAN  RIGHTS 

ARTICLE 68 

The Parties shall cooperate on all questions relevant to the establishment  or reinforcement  of 
democratic institutions, including those required  in order to strengthen the rule of law, and the 
protection of human rights and fundamental  freedoms  according to international  law and OSCE 
principles. 

This cooperation  shall take the form  of technical  assistance programmes intended to assist, inter 
alia, in the drafting  of relevant legislation and regulations,  the implementation of such legislation; 
the functioning  of the judiciary,  the role of the State in questions of justice;  and the operation  of 
the electoral  system.  They may include training where appropriate.  The Parties shall encourage 
contacts and exchanges between their national, regional and judicial authorities, parliamentarians, 
and non-governmental  organisations. 

36 

TITLE VTH 

COOPERATION  ON  PREVENTION  OF  ILLEGAL  ACTIVITIES  AND  THE 
PREVENTION  AND  CONTROL  OF  ILLEGAL  IMMIGRATION 

ARTICLE  69 

The Parties shall  establish  cooperation  aimed at preventing  illegal  activities  such as: 

• 
• 
• 

illegal  activities in the sphere of economics,  including  corruption; 
illegal  transactions of various goods,  including  industrial  waste; 
counterfeiting 

Cooperation  in  the  abovementioned  areas  will  be  based  on  mutual  consultation  and  close 
interaction.  Technical  and  administrative  assistance  may  be  provided,  including  in  the  following 
areas: 

drafting  of national  legislation  in the sphere of preventing  illegal  activities; 
creation  of information  centres; 
increasing the efficiency  of institutions engaged  in preventing  illegal  activities, 
training of personnel  and development  of research  infrastructures, 
elaboration  of mutually  acceptable  measures impeding  illegal  activities. 

ARTICLE  70 

Money  laundering 

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

2.  Cooperation  in this area  shall  include  administrative  and technical  assistance  with  the  purpose 
of establishing suitable standards against  money laundering  equivalent  to those adopted  by the 
Community  and  international  fora  in  this  field,  including  the  Financial  Action  Task  Force 
(FATF) 

ARTICLE  71 

Drugs 

Within  the framework of their  respective  powers  and  competencies  the  Parties  shall  cooperate  in 
increasing  the  effectiveness  and  efficiency  of  policies  and  measures  to  counter  the  illicit 
production,  supply  and  traffic  of  narcotic  drugs  and  psychotropic  substances,  including  the 
prevention  of diversion  of  precursor  chemicals,  as well  as  in  promoting  drug  demand  prevention 
and  reduction.  The  cooperation  in  this  area  shall  be  based  on  mutual  consultation  and  close 
coordination  between  the  Parties  over  the  objectives  and  measures  on  the  various  drug-related 
fields. 

*r 

ARTICLE  71 BIS 

Illegal  Immigration 

1. 

The Member  States of the European Union and the Republic of Azerbaijan  agree to 
cooperate in order to prevent  and control  illegal immigration. To this end: 

-  The Republic of Azerbaijan  agrees to readmit any of its nationals illegally present  on the 

territory of a Member State, upon request  by the latter and without  further 
formalities; 

-  and each Member State agrees to readmit  any of its nationals, as defined  for community 
purposes, illegally present  on the territory of  the Republic of Azerbaijan,  upon request 
by the latter and without  further  formalities 

The Member States and the Republic of Azerbaijan  will also provide their nationals with 
appropriate  identity documents for  such purposes. 

2. 

The Republic of Azerbaijan  agrees to conclude bilateral agreements with Member States 

which so request, regulating specific  obligations for readmission  including an obligation 
for the readmission of nationals of other countries and stateless persons who have arrived 
on the territory of any such Member  State from  the Republic of Azerbaijan  or who have 
arrived  on the territory of  the Republic of Azerbaijan  from  any such Member State. 

3. 

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

38 

^  -r 

TITLE IX 

CULTURAL  COOPERATION 

ARTICLE 72 

The Parties undertake to promote, encourage and facilitate  cultural cooperation.  Where 
appropriate, the Community's cultural  cooperation  programmes or those of one or more Member 
States may be the subject  of cooperation  and further  activities of mutual interest may be 
developed. 

The cooperation may include: 
-  exchange of information  and experience in the sphere of protection  and maintenance of 

monuments and historic places (architectural legacy), 

-  cultural exchange between institutions, artists, and other people working in the area of art 

^^ 

39 

rft 

TITLE X 

FINANCIAL COOPERATION  ES THE FIELD OF TECHNICAL  ASSISTANCE 

ARTICLE 73 

In order  to  achieve the objectives  of this Agreement  and  in accordance  with  Articles 74, 75  and 
76,  the  Republic  of  Azerbaijan  shall  benefit  from  temporary  financial  assistance  from  the 
Community  by way of technical  assistance  in the form  of grants.  The purpose  of this  assistance 
shall be to accelerate the economic transformation  of  the Republic of Azerbaijan. 

ARTICLE 74 

This financial assistance  shall  be  covered  within  the  framework  of  TACIS  as  foreseen  in  the 
Community's relevant  Council Regulation 

ARTICLE  75 

The  objectives  and  the  areas  of  the  Community's  financial  assistance  shall  be  laid  down  in  an 
indicative programme reflecting  established  priorities to be agreed  between  the two Parties taking 
into account  the Republic  of Azerbaijan's  needs, sectoral  absorption  capacities and  progress with 
reform.  The Parties shall inform  the Cooperation  Council thereof 

ARTICLE 76 

In  order  to  permit  optimum  use  of  the  resources  available,  the  Parties  shall  ensure  that 
Community  technical  assistance  contributions  are  made  in  close  coordination  with  those  from 
other sources such as the Member  States, other countries, and international  organizations such as 
the  International  Bank  for  Reconstruction  and  Development  and  the  European  Bank  for 
Reconstruction  and Development. 

40 

^t 

TITLE  XI 

INSTITUTIONAL,  GENERAL AND FINAL  PROVISIONS 

ARTICLE 77 

A  Cooperation  Council  is  hereby  established  which  shall  supervise  the  implementation  of  this 
Agreement. 
It  shall  meet  at  ministerial  level  once  a  year.  It  shall  examine  any  major  issues 
arising within  the  framework  of the  Agreement  and  any other  bilateral  or  international  issues of 
mutual  interest  for  the  purpose  of  attaining  the  objectives  of this  Agreement.  The  Cooperation 
Council may also make appropriate recommendations, by agreement between the two Parties. 

ARTICLE 78 

1  The Cooperation  Council  shall  consist  of the members of the Council  of the European Union 
and  members  of  the  Commission  of  the  European  Communities,  on  the  one  hand,  and  of 
members of the Government  of  the Republic of Azerbaijan,  on the other. 

2.  The Cooperation  Council shall establish its rules of procedure. 

3.  The office  of President  of the Cooperation  Council  shall be held alternately by a representative 

of the Community and by a member of the Government  of  the Republic of Azerbaijan. 

ARTICLE 79 

1.  The  Cooperation  Council  shall  be assisted  in the  performance  of its duties by a  Cooperation 
Committee  composed  of  representatives  of  the  members  of  the  Council  of  the  European 
Union and of members of the Commission of the European  Communities on the one hand and 
of representatives  of the Government  of the Republic  of Azerbaijan  on the other,  normally at 
senior civil servant  level.  The office  of President  of the Cooperation  Committee  shall be held 
alternately by the Community and by  the Republic of Azerbaijan. 

In  its  rules  of  procedure  the  Cooperation  Council  shall  determine  the  duties  of  the 
Cooperation  Committee, which  shall  include the preparation  of meetings  of the  Cooperation 
Council, and how the Committee shall  function. 

2.  The  Cooperation  Council  may  delegate  any  of  its  powers  to  the  Cooperation  Committee, 

which will ensure continuity between  meetings of the Cooperation  Council. 

ARTICLE 80 

The  Cooperation  Council  may  decide  to  set  up  any  other  special  committee  or  body  that  can 
assist  it  in  carrying  out  its  duties  and  shall  determine  the  composition  and  duties  of  such 
committees or bodies and how they shall  function. 

41 

^tftf 

ARTICLE 81 

When  examining  any  issue  arising  within  the  framework  of  this  Agreement  in  relation  to  a 
provision  referring  to  an  article  of  the  GATT/WTO,  the  Cooperation  Council  shall  take  into 
account  to. the greatest  extent  possible  the  interpretation  that  is generally  given  to  the  article  of 
the GATTAVTO in question by the Contracting Parties to the GATT/WTO~ 

ARTICLE 82 

A Parliamentary  Cooperation  Committee  is hereby  established.  It  shall be a forum  for  Members 
of the Azerbaijani  Parliament  and the European  Parliament  to  meet and exchange views.  It  shall 
meet at intervals which it shall itself determine. 

ARTICLE 83 

1.  The  Parliamentary  Cooperation  Committee  shall  consist  of  members  of  the  European 
Parliament,  on the one hand, and of members of the Azerbaijani  Parliament,  on the other. 

2.  The Parliamentary Cooperation  Committee shall establish  its rules of procedure. 

3.  The  Parliamentary  Cooperation  Committee 

the 
European Parliament  and  the  Azerbaijani  Parliament  respectively,  in  accordance  with  the 
provisions to be laid down in its rules of procedure. 

shall  be  presided 

turn  by 

in 

ARTICLE 84 

The  Parliamentary  Cooperation  Committee  may  request  relevant  information  regarding  the 
implementation  of  this  Agreement  from  the  Cooperation  Council,  which  shall  then  supply  the 
Committee with the requested  information. 

The  Parliamentary  Cooperation  Committee  shall  be  informed  of  the  recommendations  of 
Cooperation Council 

the 

The  Parliamentary  Cooperation  Committee  may  make  recommendations  to  the  Cooperation 
Council. 

ARTICLE 85 

1.  Within the  scope  of this  Agreement,  each  Party  undertakes  to  ensure  that  natural  and  legal 
persons of the other Party have access free of discrimination in relation to its own nationals to 
the competent  courts and administrative organs of the Parties to defend  their individual rights 
and their  property  rights,  including  those  concerning  intellectual,  industrial  and  commercial 
property. 

2.  Within the limits of their respective powers and competences, the Parties 

-  shall encourage the adoption of arbitration for the settlement  of disputes arising out of 

commercial and cooperation transactions concluded  by economic operators of the Community 
and those of  the Republic of Azerbaijan, 

agree that where a dispute  is submitted  to  arbitration,  each party to the dispute  may,  except 
where the rules of the arbitration centre chosen by the parties provide otherwise,  choose  its 
own  arbitrator,  irrespective  of his nationality,  and that the presiding third  arbitrator or the  sole 
arbitrator may be a citizen  of a third  State; 
will  recommend  their economic  operators to choose  by mutual  consent  the law applicable  to 
their contracts, 
shall  encourage  recourse to the arbitration rules elaborated  by the United Nations  Commission 
on International  Trade Law (Uncitral) and to arbitration by any centre of a State signatory to 
the Convention  on Recognition  and Enforcement  of Foreign  Arbitral  Awards done at New 
York  on  10 June  1958 

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

ARTICLE  86 

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

security interests, 

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

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

(d) which  it  considers  necessary  to  respect  its  international  obligations  and  commitments  in  the 

control  of dual use industrial goods  and technology. 

ARTICLE  87 

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

contained therein. 

- 

- 

the arrangements applied  by the Republic of Azerbaijan in respect  of the Community  shall not 
give rise to any discrimination  between the Member States, their nationals or their companies 
or  firms; 
the arrangements applied by the Community  in respect  of the Republic  of Azerbaijan  shall not 
give rise to any discrimination  between  Azerbaijani  nationals or its companies or  firms. 

2.  The  provisions  of  paragraph  1 are  without  prejudice  to  the  right  of  the  Parties  to  apply  the 
relevant  provisions of their fiscal  legislation  to tax payers who  are not in identical  situations as 
regards their place of residence 

43 

ARTICLE  88 

1.  Each  of  the  two  Parties  may  refer  to  the  Cooperation  Council  any  dispute  relating  to  the 

application  or interpretation  of this Agreement. 

2.  The Cooperation  Council may settle the dispute by means of a recommendation 

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

The Cooperation  Council  shall appoint  a third conciliator 

The  conciliators' recommendations  shall  be  taken  by  majority  vote.  Such  recommendations 
shall not be binding upon the Parties 

4.  The Cooperation  Council may establish  rules of procedure for  dispute settlement. 

ARTICLE  89 

The Parties agree to consult  promptly  through  appropriate  channels at  the request  of either Party 
to  discuss  any  matter  concerning  the  interpretation  or  implementation  of  this  Agreement  and 
other relevant  aspects of the relations between the Parties. 

The provisions  of this Article  shall  in  no way affect  and  are  without  prejudice  to  Articles  13, 88 
and 94. 

ARTICLE 90 

Treatment  granted  to the Republic  of Azerbaijan  thereunder  shall  in no case be more  favourable 
than that granted  by the Member  States to each other 

ARTICLE 91 

For the purposes of this Agreement,  the term  "Parties" shall mean the Republic of Azerbaijan  on 
the  one  part,  and  the  Commumty,  or  the  Member  States,  or  the  Community  and  the  Member 
States, in accordance with their respective powers, on the other part. 

ARTICLE 92 

Insofar  as  matters  covered  by  this  Agreement  are  covered  by  the  Energy  Charter  Treaty  and 
Protocols  thereto,  such  Treaty  and  Protocols  shall  upon  entry  into  force  apply  to  such  matters 
but only to the extent that  such application  is provided  for therein. 

44 

> - /* 

ARTICLE 93 

This  Agreement  is  concluded  for  an  initial  period  of  ten  years  The  Agreement  shall  be 
automatically  renewed  year  by  year  provided  that  neither  Party  gives  the  other  Party  written 
notice of denunciation of the Agreement  six months before  it expires 

ARTICLE 94 

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

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

In  the  selection  of  these  measures,  priority  must  be  given  to  those  which  least  disturb  the 
These  measures  shall  be  notified  immediately  to  the 
functioning  of  the  Agreement 
Cooperation  Council if the other Party so requests. 

ARTICLE  95 

Annexes  I,  II,  III,  IV  and  V  together  with  the  Protocol  shall  form  an  integral  part  of  this 
Agreement. 

ARTICLE 96 

This  Agreement  shall  not,  until  equivalent  rights  for  individuals  and  economic  operators  have 
been achieved  thereunder,  affect  rights assured  to them through  existing Agreements binding one 
or more Member  States, on the one hand, and the Republic of Azerbaijan,  on the other,  except in 
areas falling  within  Community  competence  and  without  prejudice  to the  obligations  of Member 
States resulting from this Agreement  in areas falling within their competence 

ARTICLE 97 

This Agreement  shall apply, on the one hand,  to the territories  in which the Treaties  establishing 
the European  Community,  the  European  Coal  and  Steel  Community  and  the  European  Atomic 
Energy  Community  are applied  and  under the conditions laid  down  in those Treaties  and,  on the 
other hand, to the territory of  the Republic of Azerbaijan. 

ARTICLE 98 

The  Secretary-General  of  the  Council  of  the  European  Union  shall  be  the  depository  of  this 
Agreement. 

45 

^

:^ 

ARTICLE 99 

The  original  of this  Agreement  of  which  the  Danish,  Dutch,  English,  Finnish,  French,  German, 
Greek,  Italian,  Portuguese.  Spanish,  Swedish  and  Azerbaijani  languages  are  equally  authentic, 
shall be deposited with the Secretary-General  of the Council of the European Union. 

ARTICLE 100 

This Agreement will be approved  by the Parties in accordance with their own procedures 

This Agreement  shall enter  into force  on the first day of the second  month following  the  date on 
which  the  Parties  notify  the  Secretary-General  of  the  Council  of  the  European  Union  that  the 
procedures referred  to in the first paragraph have been completed. 

Upon  its  entry  into  force,  and  as  far  as  relations  between  the  Republic  of  Azerbaijan  and  the 
Community  are  concerned,  this  Agreement  shall  replace  the  Agreement  between  the  European 
Economic  Community,  the  European  Atomic  Energy  Community  and  the  Union  of  Soviet 
Socialist  Republics on trade  and  economic  and  commercial  cooperation  signed  in Brussels  on  18 
December  1989 

ARTICLE 101 

In the event  that,  pending the completion  of the procedures  necessary  for  the entry  into  force  of 
this Agreement,  the provisions of certain  parts of this Agreement  are put  into effect  by means of 
an Interim  Agreement  between  the  Community  and  the Republic  of Azerbaijan,  the  Contracting 
Parties  agree  that,  in  such  circumstances,  the  term  "date  of entry  into  force  of  the  Agreement" 
shall mean the date of entry into force  of the Interim Agreement. 

46 

LIST  OF DOCUMENTS  ATTACHED 

Annex  I 

Indicative  list  of advantages granted by  the Republic  of Azerbaijan  to the 
Independent  States in accordance with Article 8(3). 

Annex  D 

Intellectual,  industrial  and commercial  property  conventions  referred  to in Article 42. 

Annex  in  Financial  services definitions,  referred to in Article 25. 

Annex  IV  Community reservations  in accordance with Article 22 (2). 

Annex  V  Reservations  of the Republic  of Azerbaijan  in accordance with Article 22 (4). 

Protocol  on mutual  assistance  between  administrative  authorities in customs matters 

47 

, S'~fy 

ANNEX I 

Advantages  granted  by  the  Republic  of  Azerbaijan 
accordance with Article 8(3) 

to  the  Independent  States  in 

1.  No import duties are applied 

2.  No  export  duties  are applied  with  respect  to  goods  delivered  under  annual  bilateral  interstate 

trade and cooperation arrangements, within the nomenclature stipulated  therein. 

3.  No VAT is applied on import 

4.  No excise duties are applied  on import 

^ 

48 

^f 

INTELLECTUAL,  I N D U S T R UL  AND  COMMERCIAL  P R O P E R TY  CONVENTIONS  REFERRED  TO  IN 

A R T I C LE  42 

ANNEX  II 

1  Paragraph  2 of Article  42  concerns  the following  multilateral  conventions: 

-  Berne  Convention  for  the Protection  of Literary  and  Artistic  Works  (Paris  Act,  1971), 

- 

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

-  Protocol  relating  to the Madrid  Agreement  concerning  the International  Registration  of 

Marks  (Madrid,  1989); 

-  Nice  Agreement  concerning  the International  Classification  of Goods  and  Services  for  the 

purposes  of the Registration  of Mcirks (Geneva  1977  and  amended  in  1979), 

-  Budapest  Treaty  on  the  International  Recognition  of the Deposit  of Micro-organisms  for 

the  purposes  of Patent  Procedures  (1977,  modified  in  1980); 

- 

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

2.  The  Cooperation  Council  may  recommend  that  paragraph  2 of Article 42  shall apply  to  other 
multilateral  conventions.  If problems; in the area  of intellectual,  industrial  and  commercial 
property  affecting  trading  conditions were to  occur,  urgent  consultations  will be  undertaken, 
at  the  request  of either  party,  with  a view to  reaching  mutually  satisfactory  solutions 

3.  The Parties  confirm  the  importance  they  attach  to  the  obligations  arising  from  the  following 

multilateral  conventions: 

-  Paris Convention  for  the Protection  of Industrial  Property  (Stockholm  Act,  1967 and 

amended  in  1979); 

-  Madrid  Agreement  concerning  the International  Registration  of Marks  (Stockholm  Act, 

1967  and  amended  in  1979), 

-  Patent  Cooperation  Treaty  (Washington,  1970, amended  in  1979 and  modified  in  1984) 

4.  From  the  entry  into force  of this Agreement,  the Republic  of Azerbaijan  shall grant  to 
Community  companies  and  nationals,  in respect  of the recognition  and  protection  of 
intellectual,  industrial  and  commercial  property,  treatment  no less favourable  than  that 
granted  by it to  any third  country  under bilateral  agreements. 

5.  The  provisions  of paragraph  4  shall  not  apply to  advantages  granted  by the  Republic  of 

Azerbaijan  to  any third  country  on  an effective  reciprocal  basis and  to  advantages  granted  by 
the Republic  of Azerbaijan  to  another  country  of the  former  USSR 

49 

^^7* 

CONCERNING  ARTICLE  25 

FINANCIAL  SERVICES:  DEFINITIONS 

ANNEX  HI 

A financial service is any service of a financial  nature offered  by a financial  service provider of a 
party.  Financial  services include the following  activities: 

A. 

B. 

All insurance and insurance-related  services; 
1. 

life 
non-life 

Direct  insurance (including co-insurance), 
(i) 
(ii) 
Reinsurance and retrocession. 
Insurance intermediation,  such as brokerage and agency. 
Services auxiliary to insurance,  such as consultancy,  actuarial,  risk assessment and 
claim settlement  services. 

Banking and other financial  services (excluding insurance). 
1. 
2. 

Acceptance  of deposits and other repayable funds from the public. 
Lending of all types, including, inter-alia, consumer credit, mortgage credit, 
factoring and financing  of commercial  transaction. 
Financial  leasing. 
All payment and money transmission  services, including credit charge and debit 
cards, travellers cheques  and bankers drafts. 
Guarantees and commitments. 
Trading for own account  or for the account  of customers,  whether on an 
exchange,  in an over the counter market or otherwise, the following: 
(a) 
(b) 
(c) 
(d) 

money market instruments (cheques, bills, certificates  of deposits,  etc.) 
foreign  exchange 
derivative products including, but not limited to, futures and options 
exchange rates and interest rate instruments,  including products such as 
swaps, forward rate agreements, etc. 
(e) 
transferable  securities 
other negotiable instruments and financial assets, including bullion. 
(f) 
Participation in issues of all kinds of securities, including under-writing and 
placement  as agent (whether publicly or privately) and provision  of services 
related to such issues. 
Money brokering. 
Asset  management,  such as cash or portfolio  management,  all forms of collective 
investment  management,  pension fund management,  custodial  depository  and trust 
services. 
Settlement  and clearing services for financial  assets,  including securities,  derivative 
products,  and other negotiable instruments. 
Advisory intermediation  and other auxiliary financial  services on all the activities 
listed in points  1 to  10 above,  including credit  reference  and analysis,  investment 
and portfolio  research and advice,  advice on acquisitions and on corporate 
restructuring and strategy. 

2. 
3. 
4. 

3. 
4. 

5. 
6. 

7. 

8. 
9. 

10. 

11. 

50 

12. 

Provision  and transfer  of financial  information,  and financial  data processing  and 
related  software  by providers of other financial services. 

The following  activities are excluded  from the definition  of financial  services 

(a) 

(b) 

(c) 

Activities carried out by central  banks or by any other public institution  in pursuit  of 
monetary  and exchange  rate policies. 

Activities conducted  by central banks, government  agencies or departments,  or public 
institutions,  for the account  or with the guarantee  of the government,  except  when  those 
activities may be carried out  by financial  service providers in competition  with  such public 
entities. 

Activities forming  part of a statutory  system  of social  security or public retirement  plans, 
except  when those  activities may be carried  out by financial  service providers in 
competition  with public  entities  or private institutions. 

51 

,^n 

ANNEX  IV 

COMMUNITY  RESERVATIONS  IN ACCORDANCE  WITH  ARTICLE  22 

(2) 

Mining 

In some Member  States,  a concession  may be required for mining and mineral rights for  non-EC 
controlled  companies 

Fishing 

Access to and use of the biological  resources and fishing grounds  situated  in the maritime waters 
coming under the sovereignty  or within the jurisdicrion  of Member States of the Community  is 
restricted  to fishing vessels  flying  the flag of a Community Member  State and registered in 
Community territory unless  otherwise provided  for. 

Real  estate  purchase 

In some Member  States,  the purchase  of real estate by non-EC  companies  is subject  ot 
restrictions 

Audiovisual  services  including  radio 

National  treatment  concerning  production  and distribution,  including broadcasting  and other 
forms  of transmission to the public,  may be reserved  to  audiovisual  works  meeting  certain  origin 
criteria. 

Telecommunications  services  including  mobile  and  satellite  services 

Reserved  services 

In some Member  States market  access  concerning complementary  services and infrastructure  is 
restricted. 

Professional  services 

Services reserved to  natural  persons nationals of Member  States.  Under certain conditions  those 
persons may create companies 

Agriculture 

In some Member  States national  treatment  is not applicable to non-EC controlled  companies 
which wish to undertake  an agricultural  enterprise.  The acquisition  of vineyards by non-EC 
controlled  companies is subject  to notification,  or, as necessary,  authorization 

News  agency  services 

In some Member  States limitations  of foreign  participation  in publishing  companies and 
broadcasting  companies 

52 

,~*~ 

Reservations  of the  Republic  of Azerbaijan  in  accordance  with  Article  22 (4). 

ANNEX  V 

Utilisation of subsoil and natural resources, including exploration and production, and mining. 
A concession may be required for foreign companies for exploration and production of hydrocarbon 
resources as well as for mining some ores and metals. 

Fishing 
Authorisation from the competent governmental body is necessary for  fishing 

Hunting 
Authorisation from the competent governmental body is necessary for hunting 

Real estate (immovable property) purchase 
Foreign companies are not allowed to acquire plots of land. Those companies can, however,  lease plots of 
land on a long term basis. 

Banking services 
Total capital of foreign-owned banks may not exceed a given percentage of the total capital in the domestic 
banking system. 

Azerbaijan undertakes not to reduce for Azerbaijani subsidiaries and branches of Community companies, 
the ceiling limiting the overall share of foreign capital in the Azerbaijani banking system which applies on 
the date of initialling of this Agreement unless so required in the framework of IMF programmes in 
Azerbaijan. 

At the latest within five years from the date of signature of the Agreement, Azerbaijan will consider the 
possibility to increase this ceiling, taking into consideration all relevant monetary, fiscal, financial and 
balance of payments considerations and thé state of the banking system of Azerbaijan. 

Telecommunications  and mass media services 
Some limitations may be applied to foreign participation. 

Professional  activities 
Some activities are closed, limited, or subject to special requirements for natural persons who are not 
Azerbaijani  nationals. 

Historical buildings and Monuments 
Activities in this area are subject to restrictions. 

The application of the reservations in this annex can in no case result in treatment less favorable than that 
accorded to companies of any third country. 

53 

^ -f 

DRAFT PROTOCOL 

ON MUTUAL ASSISTANCE 

BETWEEN  ADMINISTRATIVT  AUTHORITIES 

IN CUSTOMS  MATTERS 

54 

.**? 

ARTICLE 1 

Definitions 

For the purposes  of this Protocol : 

a)  "customs  legislation"  shall  mean  any  legal  or  regulatory  provisions  applicable  in  the 
territory of the Contracting Parties governing the import,  export,  transit  of goods  and 
their  placing  under  any  customs  procedure,  including  measures  of  prohibition, 
restriction  and control, 

b)  "applicant authority",  shall mean a competent  administrative authority which has been 
appointed  by  a  Contracting  Party  for  this  purpose  and  which  makes  a  request  for 
assistance  in customs matters; 

c)  "requested  authority",  shall  mean  a  competent  administrative  authority  which  has 
been  appointed  by a Contracting  Party  for  this  purpose  and  which  receives  a request 
for assistance  in customs matters; 

d)  "personal  data",  shall  mean  all  information  relating  to  an  identified  or  identifiable 

individual 

ARTICLE 2 

Scope 

1  The  Contracting  Parties  shall  assist  each  other,  in  the  areas  within  their jurisdiction,  in  the 
manner  and  under  the  conditions  laid  down  in  this  Protocol,  in  preventing,  detecting  and 
investigating  operations in breach of customs legislation. 

2.  Assistance  in  customs  matters,  as  provided  for  in  this  Protocol,  shall  apply  to  any 
administrative  authority  of the  Contracting  Parties which  is  competent  for  the  application  of 
this Protocol.  It shall  not  prejudice the rules governing  mutual  assistance  in criminal  matters. 
Nor  shall  it  cover  information  obtained  under powers  exercised  at  the  request  of the judicial 
authorities,  unless those authorities  so agree. 

ARTICLE 3 

Assistance  on request 

At  the  request  of  the  applicant  authority,  the  requested  authority  shall  furnish  it  with  all 
relevant  information  which  may  enable  it  to  ensure  that  customs  legislation  is  correctly 
applied,  including  information  regarding  operations  noted  or  planned  which  are  or  could  be 
in breach of such legislation. 

At  the  request  of  the  applicant  authority,  the  requested  authority  shall  inform  it  whether 
goods  exported  from  the  territory  of  one  of  the  Contracting  Parties  have  been  properly 
imported  into  the  territory  of  the  other  Party,  specifying,  where  appropriate,  the  customs 
procedure applied to the goods. 

55 

«flF 

At  the  request  of the  applicant  authority,  the  requested  authority  shall,  within  the  framework 
of its laws, take  the  necessary  steps  to  ensure  that  a special  watch  is kept  on 

(a) 

(b) 

natural  or  legal  persons  of  whom  there  are  reasonable  grounds  for  believing  that 
they  are  breaching  or  have  breached  customs  legislation, 
places  where  goods  are  stored  in  a way  that  gives  grounds  for  suspecting  that  they 
are  intended  to  supply  operations  in breach  of customs  legislation, 

(c)  movements  of  goods  notified  as  possibly  giving  rise  to  breaches  of  customs 

legislation, 

(d)  means  of  transport  for  which  there  are  reasonable  grounds  for  believing  that  they 
have been,  are  or  might  be used  in  operations  in breach  of customs  legislation 

ARTICLE  4 

Spontaneous  assistance 

The  Contracting  Parties  shall  provide  each  other,  in  accordance  with  their  laws,  rules  and  other 
legal  instruments,  with  assistance  without  prior  request  if  they  consider  that  to  be  necessary  for 
information 
the  correct  application  of  customs 
pertaining  to : 

legislation,  particularly  when 

they  obtain 

-  operations  which  are  or  appear  to  be  in breach  of  such  legislation  and  which  may  be  of 

interest  to  another  Contracting  Party; 

-  new  means  or  methods  employed  in carrying  out  such  operations. 
-  goods  known  to  be  subject  to  breaches  of customs  legislation 
-  natural  or  legal  persons  of  whom  there  are  reasonable  grounds  for  believing  that  they 

are  or  have been  in breach  of customs  legislation 

-  means  of transport  for  which  there  are  reasonable  grounds  for  believing  that  they  have 

been,  are  or  might  be used  in operations  in breach  of customs  legislation 

ARTICLE  5 

Delivery/Notification 

At  the  request  of  the  applicant  authority,  the  requested  authority  shall,  in  accordance  with  its 
legislation,  take  all  necessary  measures  in order : 

- to  deliver  all  documents, 
- to  notify  all  decisions, 

falling  within  the  scope  of this Protocol  to  an addressee,  residing  or  established  in its territory.  In 
such  cases, Article 6(3)  shall  apply  as far  as the  request  itself is concerned 

56 

^ Jr 

.">'" 

ARTICLE 6 

Form and  substance of requests for  assistance 

1  Requests  pursuant  to  this Protocol  shall be made in writing.  They  shall  be  accompanied  by 
the  documents  necessary  to  enable  compliance with  the request  When  required  because  of 
the urgency of the situation,  oral  requests may be accepted,  but  must  be confirmed  in writing 
immediately 

2.  Requests pursuant  to paragraph  1  shall include the following  information  : 

(a) 
(b) 
(c) 
(d) 
(e) 

the applicant  authority  making the request; 
the measure requested, 
the object  of and the reason for the request, 
the laws, rules and  other legal elements involved, 
indications as exact  and comprehensive as possible on the natural  or  legal  persons 

who are the target  of the investigations; 

(f) 

a summary of the  relevant  facts  and  of the  enquiries  already  carried  out.  except in 

cases provided  for  in Article 5. 

3.  Requests  shall  be  submitted  in  an  official  language  of  the  requested  authority  or  in  a 

language acceptable to that  authority. 

4. 

If  a  request  does  not  meet  the  formal  requirements,  its  correction  or  completion  may  be 
requested, precautionary measures may, however, be ordered 

ARTICLE 7 

Execution of requests 

In  order  to  comply  with  a  request  for  assistance,  the  requested  authority  shall  proceed, 
within  the  limits  of  its  competence  and  available  resources,  as though  it  were  acting  on  its 
own  account  or  at  the  request  of  other  authorities  of  that  same  Contracting  Party,  by 
supplying  information  already  possessed,  by  carrying  out  appropriate  enquiries  or  by 
arranging  for  them  to  be  carried  out.  This  provision  shall  also  apply  to  the  administrative 
department  to  which  the  request  has  been  addressed  by  the  requested  authority  when  the 
latter cannot act on its own 

Requests for assistance  shall  be  executed  in accordance with  the  laws,  rules  and  other  legal 
instruments of the requested  Contracting Party. 

Duly  authorized  officials  of  a  Contracting  Party  may,  with  the  agreement  of  the  other 
Contracting Party involved  and  subject  to the conditions laid down by the latter,  obtain  from 
the offices  of the requested  authority  or  other  authority  for  which  the  requested  authority  is 
responsible,  information  relating  to  operations  which  are  or  may  be  in  breach  of  customs 
legislation which the applicant  authority needs for the purposes of this Protocol 

Officials  of  a  Contracting  Party  may,  with  the  agreement  of  the  other  Contracting  Party 
involved  and subject  to the conditions laid down by the latter,  be present  at  enquiries  carried 
out  in the latter's territory 

57 

</"f 

ARTICLE 8 

Form in which information  is to be communicated 

1.  The  requested  authority  shall  communicate  results  of  enquiries to  the  applicant  authority in 

the form  of documents, certified  copies of documents, reports and the like 

2.  The  documents  provided  for  in  paragraph  1 may  be  replaced  by  computerized  information 

produced  in any form  for the same purpose 

ARTICLE 9 

Exceptions to the obligation to provide assistance 

1.  The Contracting Parties may refuse  to give assistance as provided  for  in this Protocol, where 

to do would: 

(a) 

be  likely  to  prejudice  the  sovereignty  of  the  Republic  of  .Azerbaijan  or  that  of a 
Member  State  of the  European  Union  which  has  been  asked  for  assistance  under 
this Protocol; or 

(b)  be likely to prejudice  public policy,  security or other  essential  interests, in particular 

in the cases referred  to under Article  10 (2); or 
involve currency or tax regulations other than customs legislation, or 

(c) 
(d)  violate an industrial, commercial  or professional  secret 

2.  Where the applicant  authority  requests  assistance  which  it  would  itself be unable to  provide 
if  so  asked,  it  shall  draw  attention  to  that  fact  in  its  request  It  shall  then  be  left  to  the 
requested  authority to decide how to respond to such a request 

3. 

If assistance is refused,  the decision and the reasons therefor  must be notified  to the applicant 
authority without delay. 

ARTICLE  10 

Information  exchange and  confidentiality 

1.  Any  information  communicated  in whatsoever  form  pursuant  to  this Protocol  shall  be  of a 
confidential  or restricted  nature, depending on the rules applicable in each of the Contracting 
Parties.  It shall be covered by the obligation of official  secrecy and shall enjoy the protection 
extended to like information  under the relevant  laws of the Contracting Party which  received 
it and the corresponding provisions applying to the Community institutions 

2.  Personal  data  may be  exchanged  only  where  the  receiving  Contracting  Party  undertakes  to 
protect such data in at least an equivalent way to the one applicable to that  particular  case in 
the supplying Contracting Party 

3 

Information  obtained  shall  be  used  solely  for  the  purposes  of this  Protocol  Where  one  of 
the Contracting  Parties requests the use of such  information  for  other  purposes,  it  shall  ask 
for  the prior written  consent  of the authority which  furnished  the information  Moreover,  it 
shall be subject to any restrictions laid down by that authority 

Paragraph  3  shall  not  impede  the  use  of  information  in  any  judicial  or  administrative 
proceedings  subsequently  instituted  for  failure  to  comply  with  customs  legislation  The 
competent  authority which  supplied  that information  shall  be notified  of such use. 

The  Contracting  Parties  may,  in  their  records  of  evidence,  reports  and  testimonies  and  in 
proceedings  and charges brought  before the courts, use as evidence  information  obtained  and 
documents consulted  in accordance with the provisions of this Protocol 

ARTICLE  11 

Experts and  witnesses 

1.  An  official  of  a requested  authority  may  be  authorized  to  appear,  within  the  limitations  of  the 
authorization  granted,  as an expert  or witness  in judicial  or administrative  proceedings  regarding 
the  matters  covered  by  this  Protocol  in  the  jurisdiction  of  the  other  Contracting  Party,  and 
produce  such  objects,  documents  or  authenticated  copies  thereof,  as  may  be  needed  for  the 
proceedings.  The  request  for  an  appearance  must  indicate  specifically  on  what  matters  and  by 
virtue of what title or qualification  the official  will  be questioned 

2.  The  authorized  official  shall  enjoy  the  protection  guaranteed  by  existing  legislation  to  officials 
of the applicant  authority on its territory. 

ARTICLE  12 

Assistance  expenses 

The  Contracting  Parties  shall  waive  all  claims  on  each  other  for  the  reimbursement  of  expenses 
incurred  pursuant  to  this Protocol,  except,  as  appropriate,  for  expenses  to  experts  and  witnesses 
and to interpreters and translators who  are not public service  employees. 

ARTICLE  13 

Application 

1.  The  application  of  this Protocol  shall  be  entrusted  to  the  central  customs  authorities  of  the 
Republic  of  Azerbaijan  on  the  one  hand  and  the  competent  services  of  the  European 
Commission  and,  where  appropriate,  the  customs  authorities  of  the  Member  States  of  the 
European  Union  on the  other.  They  shall  decide  on  all  practical  measures  and  arrangements 
necessary  for  its  application,  taking  into  consideration  the  rules  in  force  in the  field  of  data 
protection.  They may recommend  to  the  competent  bodies  amendments which they  consider 
should be made to this Protocol. 

2.  The  Contracting  Parties  shall  consult  each  other  and  subsequently  keep  each  other  informed 
of the  detailed  rules of implementation  which  are adopted  in  accordance  with  the  provisions 
of this Protocol. 

59 

^4-r 

ARTICLE  14 

Complementarity 

Without  prejudice  to  Article  10,  any  agreements  on  mutual  assistance  which  have  been 
concluded  between  one  or more  Member  States  of the European  Union  and  the Republic  of 
Azerbaijan  shall  not  prejudice  Community  provisions  governing  the  communication  between 
the competent  services  of the  Commission  and the customs  authorities  of the Member  States 
of any information  obtained  in customs  matters which could  be of Community  interest. 

60 

tfiff 

JOINT  DECLARATION 

The Parties confirm that the twelfth  recital in the preamble to this Agreement  does not imply any 
judgement  as to which countries,  other than Azerbaijan,  energy  products should transit. 

61 

*"? 

JOLNT DECLARATION  CONCERNING  ARTICLE 3 BIS 

In reviewing changing circumstances in the Republic of Azerbaijan,  as foreseen  in Art. 3 bis, the 
Parties shall discuss important changes which may have a significant  bearing on Azerbaijan's 
future  development. This could include accession by Azerbaijan  to the WTO, the Council of 
Europe or other international bodies or accession to any regional customs union or any form of 
regional integration  agreement. 

62 

^T 

JOINT DECLARATION  EST RELATION  TO ARTICLE  5 

Should the Parties agree that  circumstances warrant  meetings at the highest  level,  such meetings 
may be arranged on an ad hoc basis 

63 

**? 

JOINT DECLARATION 
CONCERNING ARTICLE 14 

Until the Republic  of Azerbaijan  accedes to the WTO, the Parties shall hold  consultations in the 
Cooperation  Committee  on their  import  tariff  policies,  including changes in tariff  protection.  In 
particular,  such consultations shall be offered  prior to the increase of tariff protection. 

64 

r^f^ 

JOINT  DECLARATION 
CONCERNING  THE  NOTION  OF  "CONTROL" 
IN ARTICLE  24(b)  AND  ARTICLE  36 

1  The  Parties  confirm  their  mutual  understanding  that  the  question  of  control  shall  depend  on 

the factual  circumstances of the particular case. 

2.  A  company  shall,  for  example,  be  considered  as being  "controlled"  by  another  company,  and 

thus a subsidiary of such other company  if: 

- 

the other company holds directly or indirectly  a majority of the voting rights, or 

- 
the  other  company  has the right to  appoint  or  dismiss  a majority  of  the  administrative  organ, 
of  the  management  organ  or  of  the  supervisory  organ  and  is  at  the  same  time  a  shareholder  or 
member of the subsidiary. 

3.  Both Parties consider the criteria in paragraph 2 to be non-exhaustive. 

65 

JOINT  DECLARATION 
CONCERNING  ARTICLE  35 

The sole fact  of requiring a visa for natural  persons of certain Parties and not for those  of others 
shall not be regarded  as nullifying  or impairing benefits  under a specific  commitment. 

66 

.A*"*^ 

JOINT DECLARATION 
CONCERNING  ARTICLE 42 

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

67 

,-/<?* 

JOINT DECLARATION 
CONCERNING  ARTICLE 54 

The provisions of Article 54 (3) shall not require either of the Parties to provide information of a 
confidential nature. 

68 

^r 

JOLNT DECLARATION 
CONCERNING  ARTICLE 94 

The Parties  agree,  for  the  purpose  of  its correct  interpretation  and  its  practical  application, 
that the term "cases of special  urgency" included  in Article 94 of the Agreement  means cases 
of  material  breach  of  the  Agreement  by  one  of  the  Parties  A  material  breach  of  the 
Agreement consists in 

(a) repudiation of the Agreement  not sanctioned by the general rules of international law 

or 

(b) violation of the essential elements of the Agreement set out in Article 2 

The parties agree that the "appropriate measures" referred to in Article 94 are measures taken 
in accordance with international  law  If a party takes a measure in a case  of special  urgency 
as provided  for under Article 94. the  other party may avail  itself of the  procedure  relating to 
settlement of disputes 

69 

**? 

EXCHANGE OF LETTERS 

BETWEEN THE  COMMUNITY 

AND THE REPUBLIC OF AZERBAIJAN 

IN RELATION  TO THE ESTABLISHMENT  OF COMPANIES 

70 

^ff 

A. Letter  from  the Government  of the Republic  of  Azerbaijan 

Dear Sir, 

I refer to the Partnership and Cooperation Agreement  initialled on 

As I underlined  during the negotiations, the Republic of Azerbaijan  grants to Community 
companies establishing and operating in the Republic of Azerbaijan  in certain respects a 
privileged treatment.  I explained  that this reflects the Azerbaijani  policy to promote by all means 
the establishment  of Community companies in the Republic of Azerbaijan 

With this in mind, it is my understanding that during the period between the date of initialling of 
this Agreement  and the entry into force  of the relevant  articles on establishment  of companies, the 
Republic of Azerbaijan  shall not adopt  measures or regulations which would  introduce or worsen 
discrimination  of Community companies vis-à-vis Azerbaijani  companies or companies from  any 
third  country as compared  to the situation  existing on the date of initialling of this agreement. 

I would  be obliged  if you could  acknowledge receipt  of this letter 

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

For the Government  of the Republic of Azerbaijan 

71 

^^ 

B.  Letter from  the European  Community 

Dear Sir, 

Thank you for your letter of today's date, which reads as follows: 

"I refer to the Partnership and Cooperation  Agreement initialled on . 

As I underlined during the negotiations, the Republic of Azerbaijan  grants to Community 
companies establishing and operating in the Republic of Azerbaijan  in certain respects a 
privileged treatment.  I explained that this reflects the Azerbaijani  policy to promote by all 
means the establishment  of Community companies in the Republic of Azerbaijan 

With this in mind, it is my understanding that  during the period between the date of initialling 
of this agreement and the entry into force of the relevant  articles on establishment  of 
companies, the Republic of Azerbaijan  shall not adopt  measures or regulations which would 
introduce or worsen discrimination  of Community companies vis-à-vis Azerbaijani  companies 
or companies from any third country as compared to the situation  existing on the date of 
initialling of this agreement. 

I would be obliged if you could  acknowledge receipt  of this letter." 

I can acknowledge receipt  of this letter 

Please accept, Sir, the assurance of my highest  consideration 

On behalf of the European  Community 

72 

DECLARATION 
BY  THE  FRENCH  GOVERNMENT 

The French Republic  notes that the Partnership and Cooperation  Agreement  with the Republic  of 
Azerbaijan  does  not  apply to  the  overseas  countries  and territories  associated  with  the  European 
Community pursuant to the Treaty establishing the European  Community. 

73 

^ff 

Outside the Agreement 

Declaration  by the  Community 

The  Community  undertakes  to  provide  technical  assistance  in  the  form  of  seminars  or  other 
appropriate  means in order  to  help  Azerbaijani  authorities  and  economic  operators  to  benefit  in 
full from the advantages granted  unter the Community GSP as currently applied to  Azerbaijan. 

74 

ISSN 0254-1475 

COM(96) 137  final 

DOCUMENTS 

EN 

11 

Catalogue number  : CB-CO-96-158-EN-C 

ISBN 92-78-02524-0 

Office for Official Publications of the European Communities 

L-2985 Luxembourg