Proposal for a Council Decision concerning a decision to be taken by the Association Council established by the Europe Agreement between the European Community and their Member States, of the one part, and the Czech Republic, of the other part
Date: 1997-07-23
Institutions: European Commission
Subjects: Czechia, agreement (EU), economic policy, guarantee, import

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.07.1997 
COM(97) 426 final 

97/0216 (ACC) 

Proposal for a 

COUNCIL DECISION 

concerning  a  decision  to  be  taken  by  the  Association  Council  established  by  the 
Europe Agreement between the European Community and their Member States, of the 

one part, and the Czech Republic, of the other part 

(presented by the Commission) 

Explanatory  Memorandum 

On 21 April  the Czech  government  introduced  an  import deposit scheme (IDS)  under 
Article 65 of the Europe Agreement.  It informed  the Commission  by Note Verbale of 
the  same  date.  It  stated  that  the  IDS  was  part  of  a  package  of  economic  measures 
adopted  on  16 April to tackle a number  of economic problems  such  as low  economic 
growth, the very large trade deficit  and an increasing budget  deficit. 

Article  65  provides  that  either  party  may  "adopt  restrictive  measures  including 
measures  related  to  imports," in case of  "serious  balance  of  payments  difficulties  or 
the  imminent  threat  thereof.  On  the  basis  of  the  information  available  the 
Commission  concluded  that the conditions of Article 65 were not met.  It informed  the 
Czech  Republic by  Note Verbale of 28 April and  requested  urgent consultations  with 
a view to withdrawing the scheme. 

After  initial  consultations  between  the  Commission  and  the  Czech  authorities  on 
29 April  the  Association  Committee  met  on  29  May  to  try  to  resolve  the  issue.  The 
Committee did not succeed in reaching agreement, except as regards the establishment 
of  intensified  economic  policy  dialogue between  the two  sides  to examine  economic 
data and Czech medium-term economic policy in more detail. 

On  that  occasion  the  Community  informed  the  Czech  side  that  if  the  latter  did  not 
reestablish  compatibility  with  the  Europe  Agreement  by  the  end  of  June,  the 
Community  would  submit  a  draft  decision  to  the  Association  Council  to  settle  the 
issue in accordance with Article  107(2). 

On  30  June  the  first  meeting  took  place  in  the  context  of  the  intensified  economic 
policy  dialogue.  The  data  provided  by  the  Czech  side  on  that  occasion  confirm  that 
the  conditions  of  Article  65  are  not  met.  The  Czech  side  informed  the  Commission 
that it would not withdraw the measure in the short term. 

The  Czech  side  repeated  this  position  at  the  Association  Committee  meeting  on 
11 July. 

In view of the above, the Community will now have to institute the dispute settlement 
procedure  under  Article  107 of  the  Europe  Agreement.  It therefore  proposes,  in  line 
with  Article  107(2)  of the Agreement,  the  annexed  draft  decision  of the  Association 
Council  under  which  the  Czech  side  will  abolish  the  IDS  by  15  September.  If  this 
proposal  is not  accepted  by  the Czech  side, the Community  will,  in  accordance  with 
Article  107(4), appoint  an arbitrator.  The Czech side can then appoint an arbitrator on 
its  side  and  the  Association  Council  will  appoint  a  third  one.  The  arbitrators' 
decisions will be taken by majority  vole. 

The  Commission  therefore  requests  the  Council  to  adopt  the  attached  proposal  for  a 
Council  Decision. 

-r  3 

Proposal  for  a Council  Decision 

concerning  a  decision  to  be  taken  by  the  Association  Council  established  by  the 
Europe Agreement between the European Community and their Member States, of the 
one part, and the Czech Republic, of the other part 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to the Treaty  establishing  the  European  Community,  and  in  particular 
Articles  113 and 228(2) thereof, 

Having  regard  to  the  Europe  Agreement  establishing  an  association  between  the 
European  Communities  and  their  Member  States,  of  the  one  part,  and  the  Czech 
Republic, of the other part, 

Having  regard  to  the  Council  and  Commission  Decision  of  19 December  1994 
concluding the Europe Agreement, and in particular Article 2(1) thereof, 

Having regard to the proposal from  the Commission, 

Whereas  Article  107(2) of the  Europe  Agreement  states  that  the  Association  Council 
established  by  the  Agreement  may  settle  any  dispute  relating  to  the  application  or 
interpretation  of the Agreement by means of a decision; 

Whereas the Czech Republic introduced  an import deposit scheme under Article 65 of 
ffee Europe Agreement on 21 April  1997; 

Whereas the Community concluded that the conditions of Article 65 were not  fulfilled 
at Ihe  time  the  Czech  &epublie  introduced  the  import  deposit  scheme;  whereas  it 
informed  the  Czech  Republic  accordingly  by  Note  Verbale  of  28  April  1997 
fefttesting  consultations concerning the import deposit scheme and its withdrawal; 

Whereas the special meeting of the Association  Committee established by the Europe 
Agreement  on 29 May  1997, which had been requested by the Community in order to 
discuss the measure with a view to finding a solution, was unable to reach  agreement, 
except to institute an intensified  economic policy dialogue between the Parties; 

Whereas the economic data  provided  by the Czech  Republic  during  the  first  meeting 
held  in  the  context  of  the  intensified  economic  policy  dialogue  on  30  June  1997 
confirm  that the conditions of Article 65 are not met; 

Whereas  the  Czech  authorities  indicated  on  that  occasion  that  the  import  deposit 
scheme  would  not  be  withdrawn  in  the  short  term,  a position  which  was  repeated  at 
the Association Committee meeting on  11 July 1997; 

Whereas it considers that, until  a satisfactory  solution  is found,  the dispute  settlement 
procedure  provided  for  in  Article  107  should  be  initiated  in  accordance  with 
paragraph 2 thereof; 

Whereas the Community and the Czech Republic wish to undertake a joint  assessment 
of the Czech Republic's  medium-term  economic  strategy  with  a view  to  intensifying 
the economic policy  dialogue between  the Community  and the Czech  Republic  in the 
pre-accession period, 

HAS DECIDED AS FOLLOWS: 

The  position  to  be  taken  by  the  Community  within  the  Association  Council 
established  by  the  Europe  Agreement  between  the  European  Communities  and  their 
Member  States,  of  the  one  part,  and  the  Czech  Republic  of  the  other  part,  on  the 
settlement of any disputes relating to the import deposit  scheme shall be based on the 
draft  decision by the Association Council attached to this Decision. 

Done at Brussels, 

For the Council 
The President 

Decision  No .../97  of  the  Association  Council  established  by  the  European 
Agreement between  the European  Communities  and their Member States, of the 
one part, and the Czech Republic, of the other part 

settling  the  dispute  between  the  European  Union  and  the  Czech  Republic  on  the 
import  deposit  scheme  in  accordance  with  Article  107(2)  of  the  Europe  Agreement 
between the European Communities  and their Member  States, of the one part, and the 
Czech Republic, of the other part 

The Association  Council, 

Having  regard  to  the  Europe  Agreement  establishing  an  association  between  the 
European  Communities  and  their  Member  States,  of  the  one  part,  and  the  Czech 
Republic of the other part, and in particular Article  107 thereof, 

Whereas  Article  107(2)  of  the  Europe  Agreement  stipulates  that  the  Association 
Council  established  by this agreement  may  settle by  means of a decision  any  dispute 
concerning the implementation or interpretation of the Agreement; 

Whereas,  on  21  April  1997, the  Czech  Republic  introduced,  under  Article 65  of  the 
Europe  Agreement,  an  import  deposit  scheme  for  a  large  number  of  consumer  and 
processed  agricultural  products,  of  which  it  informed  the  European  Community  by 
Note Verbale of  21 April 1997; 

Whereas the Community concluded that the conditions of Article 65 were not  fulfilled 
at  the  time  the  Czech  Republic  introduced  the  import  deposit  scheme;  whereas  it 
informed  the  Czech  Republic  accordingly  by  Note  Verbale  of  28  April  1997, 
requesting consultations concerning the import deposit scheme and its withdrawal; 

Whereas the special  meeting of the Association  Committee  established  by the  Europe 
Agreement on 29 May  1997, which  had been  requested  by the Community  in order to 
discuss the measure with  a view to finding a solution, was unable to reach  agreement, 
except to institute an economic policy dialogue between the Parties; 

Whereas the economic  data provided  by the Czech Republic  at the first meeting  held 
in the  context  of  the  intensified  economic  policy  dialogue  on  30 June  1997  confirm 
that the conditions of Article 65 are not met; 

Whereas  the  Czech  authorities  indicated  on  that  occasion  that  the  import  deposit 
scheme  would  not be  withdrawn  in  the  short  term,  a position  which  was  repeated  at 
the Association  Committee meeting on  11 July  1997; 

Whereas it considers that, until  a satisfactory  solution  is found,  the dispute  settlement 
procedure  provided  for  in  Article  107  should  be  instituted  in  accordance  with 
paragraph 2 thereof; 

Whereas the Community  and the Czech  Republic wish to undertake a joint  assessment 
of the Czech  Republic's  medium-term  economic  strategy  with  a view  to  intensifying 
the economic  policy dialogue between  the Community  and the Czech  Republic  in the 
pre-accession period, 

HAS DECIDED AS FOLLOWS: 

Article 1 

The  Czech  Republic  shall  withdraw,  not  later  than  15  September  1997,  the  import 
deposit scheme which it introduced on 21 April 1997. 

Article 2 

The Community  and the Czech  Republic shall  intensify  the economic policy  dialogue 
agreed on 29 May 1997. 

Done at Brussels, 

For the Association Council 
The President 

ISSN 0254-1475 

COM(97) 426 final 

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Catalogue number  :  CB-CO-97-428-EN-C 

ISBN 92-78-23788-4 

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