Proposal for a Council Decision on the position to be taken by the Community within the Association Council established by the Europe Agreement signed on 16 December 1991 between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, with regard to the extension for a further five years period in accordance with the provisions of Article 62 paragraph (4) (A) of the Europe Agreement
Date: 1997-09-03
Institutions: European Commission
Subjects: Hungary, accession to the European Union, association agreement (EU), competition policy, free-trade area

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  03.09.1997 
COM(97) 292 final 

97/0163  (ACC) 

Proposal  for  a 

COUNCIL  PEQSIQN 

on the position to be taken by the Community within the Association  Councir 
established by the Europe Agreement signed on 16 December 1991 between the 
European Communities and their Member States, of the one part, and the Republic of 
Hungary, of the other part,  with regard to the extension for a further five years  period 
in accordance with the provisions of Article 62 § 4(a) of the Europe Agreement 

(presented  by the  Commission) 

EXPLANATORY  MEMORANDUM 

1. 
Article  62,  paragraph 4  (a)  of  the Europe  Agreement  with  Hungary  provides  that, 
for  the purpose of applying certain provisions relating to public aid, during the first  5 years 
after  the  entry  into  force  of  the  Agreement  any  public  aid  granted  by  Hungary  shall  be 
assessed  taking  into account the fact  that Hungary  shall be regarded  as an area  identical  to 
those areas of the Community  eligible  for  state aid pursuant  Article 92(3)  (a) of the  Treaty 
establishing the European Economic Community. 

2. 

The period of five years referred  above expired on 31 December  1996. 

3. 
In accordance with the last sentence of article 62(4)(a) of the Europe Agreement,  the 
Association  Council  shall,  taking  into  account  the  economic  situation  of  Hungary,  decide 
whether that period  should be extended for  a further  period of five years. 

On  27  November  1996,  Hungary  requested  the  extension  of  the  above-mentioned 

4. 
provisions. 

5. 
The  main  critérium  for  considering  an  area  eligible  for  regional  aid  pursuant  to 
Article  92(3)(a)  provisions  is that  GDP per  capita  should  be  less  that  75%  of  the  average 
GDP of the EU-15, measured  in PPP terms1. 

6. 
The relevant services of the Commission have examined the requests  on the basis of 
the  figures  and  information  available  for  Hungary.  The  data  shows  that  in  the  case  of 
Hungary  GDP/capita  measured  in  Purchasing  Power  Parities  (PPP)  reaches  37%  of  the 
Community  average in  1995. Data received from the Hungarian  statistical office  at regional 
level confirm  that the whole country  is under the 75 % ceiling and that even Budapest  which 
shows  the  highest  GDP/capita  in  the  country,  is  only  66%  of  the  Community  average. 
Hungary  is  thus  far  from  reaching  the  75%  ceiling  mentioned  above.  Furthermore,  it  is 
clearly  below  the  GDP  figures  for  certain  Member  States  whose  territories  are  considered 
as Article 92(3)(a) areas2. 

7. 
Based  on  the  above,  the  Commission  believes  that  the  figures  available  provide 
sufficient  grounds  for  granting  an  extension  for  Hungary.  However,  the  Commission 
should  be  provided  with  the  necessary  data  to  assess  whether,  in the  future,  Hungary  will 

1  OJ C212/2 of 12.8.1988 and C163/6 of 4.7.1990 
2 

In the case of Greece, the GDP per capita established in PPP is around 64% of Community average, in 
Portugal around 70% and in Ireland 85% (1994 figures). 

2 

not exceed the ceiling of 75% of the Community's average GDP which is required in order 
to benefit from 92(3)(a) status. 

This  extension  will  not  be  applicable  to  products  covered  by  Protocol  2  of  the 

8. 
Europe Agreement, which will be the object of a separate examination and procedure. 

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

9. 
Council Decision. 

2 

Proposal for a Council Decision 
on the position to be taken by the Community within the Association Council 
established by the Europe Agreement signed on 16 December  1991 between the 
European Communities and their Member States, of the one part, and the Republic of 
Hungary,  of the other part, with regard to the extension for a further five years period 
in accordance with the provisions of Article 62 § 4(a) of the Europe Agreement 

The Council of the European Union, 

Having regard  to the Treaty establishing  the European  Community,  and in particular  Article 
113 in conjunction  with the first sentence of Article 228(2) thereof, 

Having regard to the proposal of the Commission of the European Communities, 

Whereas  the European  Community  and  its Member  States concluded  the  Europe  Agreement 
with the Republic of Hungary on  13 December  1993 ; 

Whereas  Article  62(4)(a)  of the  Europe  Agreement  lays  down  that  the  Association  Council 
shall,  taking  into  account  the  economic  situation  of  Hungary,  decide  whether  the  period 
whithin  which  any public  aid  granted  by Hungary  shall  be  assessed  taking  into  account  the 
fact  that  Hungary  shall  be  regarded  as  an  area  identical  to  those  areas  of  the  Community 
described  in Article  92(3)(a)  of the Treaty  establishing  the European  Economic  Community 
should be extended for a further period of five years; 

HAS DECIDED AS FOLLOWS: 

The position to be taken by the Community within the Association Council established by the 
Europe  Agreement  signed  on  16  December  1991  between  the  European  Communities  and 
their  Member  States,  of  the  one  part,  and  the  Republic  of  Hungary,  of  the  other  part,  with 
regard  to  the  extension  for  a  further  period  of  five  years  in  accordance  with  Article  62  § 
4(a) shall be based on the draft  decision of the Association Council annexed to this Decision. 

Done at Brussels on 

For the Council 

7 

Association between the European Union 
and the Republic of Hungary 
The Association Council 

Draft decision n° .J... of the Association Council between the European Communities and their 
Member  States,  of  the  one  part,  and  the  Republic  of  Hungary,  of  the  other  part,  of  .../..., 
adopting  the  extension  for  five  years  of  the  period  whithin  which  any  public  aid  granted  by 
Hungary  shall  be  assessed  taking  into  account  the  fact  that  Hungary  shall  be  regarded  as  an 
area  identical  to  those  areas  of  the  Community  described  in  Article  92(3)(a)  of  the  Treaty 
establishing the European Economic Community 

The Association Council, 

Having  regard  to  the  Europe  Agreement  establishing  an  association  between  the  European 
Communities and the Member States of the one part, and the Republic of Hungary  of the other part, 
and in particular Article 62(4)(a) thereof, 

Whereas  Article  62(4)(a)  of  the  Europe  Agreement  lays  down  that  the  Association  Council  shall, 
taking into account the economic situation of Hungary, decide whether the period whithin which any 
public  aid  granted by  Hungary  shall be  assessed  taking  into  account  the  fact  that  Hungary  shall  be 
regarded  as an  area  identical  to  those  areas  of the  Community  described  in  Article  92(3)(a)  of  the 
Treaty  establishing  the European  Economic  Community  should be  extended  for  a further  period  of 
five years, 

HAS DECIDED AS FOLLOWS: 

Article 1 

The period within which any public aid granted by Hungary shall be assessed taking into account the 
fact that Hungary shall be regarded as an area identical to those areas of the Community described in 
Article  92(3)(a)  of  the  Treaty  establishing  the  European  Economic  Community  is  extended  for  a 
further period of five years 

Article I 

Within  two  years  from  the  date  the  extended  period  of  five  years  enters  into  force  and  thereafter 
annually until the end of the five-year period,  Hungary  will provide the European Commission  with 
the  necessary  data  to assess,  according  to  the  method  used  by  the  Commission,  whether  Hungary 
continues  to  fulfill  the  conditions  to  be  regarded  as  an  area  identical  to  those  areas  of  the 
Community  described  in  Article  92(3)(a)  of  the  Treaty  establishing  the  European  Economic 
Community. 

Done at Brussels on 

The Secretaries 

For the Association Council 
The President 

r 

ISSN 0254-1475 

COM(97) 292 final 

DOCUMENTS 

EN 

11  08  01  02 

Catalogue number  :  CB-CO-97-283-EN-C 

ISBN 92-78-21242-3 

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