Proposal for a Council Decision on a Community position on an amendment to Protocol 4 on the definition of the concept of "originating products" and methods of administrative cooperation set out in the Europe Agreement between the European Communities and the Republic of Hungary
Date: 1999-09-14
Institutions: European Commission
Subjects: Hungary, administrative cooperation, agreement (EU), originating product, processing industry

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.09.1999
COM(1999) 417 final

99/0185 (ACC)

Proposal for a

COUNCIL DECISION

on a Community position on an amendment to Protocol 4 on the definition of the
concept of "originating products" and methods of administrative cooperation set
out in the Europe Agreement between the European Communities and the
Republic of Hungary

(presented by the Commission)

EXPLANATORY MEMORANDUM

1.

GENERAL

The rules of origin are essential to the correct functioning of the free trade
agreements between the Community and its trading partners.

The European Council meeting in Essen in December 1994 drew attention to
that differences in the origin rules included in the different
the fact
agreements signed by the Community constituted a barrier
to trade.
Therefore a programme was initiated aimed at applying identical origin rules
and thereby putting trade between the Community, the CEECs, the Baltic
States, the EFTA and the EEA countries on the same footing. It also decided
that other countries in a situation similar to those mentioned above could be
similarly integrated into the system when the time came and that was done
for Turkish industrial products from 1.1.1999.

The origin rules are not immutable. They must be adaptable to the political
and economic requirements of the free trade area in which they apply.
Therefore, some changes have already been deemed necessary to the rules
which entered into force in 1997 and an amendment has already been
adopted in the framework of all the agreement to enter into force on 1st
January 1999.

2.

AMENDMENTS TO THE RULES OF ORIGIN IN THE EU-CEECS,
EU-EFTA AND EEA AGREEMENTS

Since the entry into force of the standard protocol on rules of origin and of its
amendment of 1999, a few technical amendments to Annex II to the
protocols are already necessary and therefore proposed. Those amendments
concern products whose raw materials are in short supply in the trade zone.

3.

CONCLUSION

The annexed proposal is one of a series of 14 proposals intended to improve
the functioning of the common system of origin rules. These 14 proposals
shoould be taken as a single package. If the current arrangements allowing
cumulation of working and processing are to remain in force, it is essential
that they enter into force at the same time, i.e. on 1 January 2000.

The Commission therefore calls on the Council to draw up a common
position for presentation to the committees provided for in each of the
Agreements.

2

Proposal for a

COUNCIL DECISION

on a Community position on an amendment to Protocol 4 on the definition of the
concept of "originating products" and methods of administrative cooperation set
out in the Europe Agreement between the European Communities and the
Republic of Hungary

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular
Article 133 thereof,

Having regard to Article 2(1) of the Council and Commission Decision of 13
December 1993 on the conclusion of
the Europe Agreement establishing an
association between the European Communities and their Member States, of the one
part, and the Republic of Hungary, of the other part,

Having regard to the Commission proposal,

Whereas Article 38 of Protocol 4 to the said Europe Agreement provides that the
Association Council may amend the provisions of the Protocol,

HAS DECIDED:

The position to be adopted by the Community within the Association Council created
by virtue of Article 104 of the Europe Agreement establishing an association between
the European Communities and their Member States, of the one part, and the Republic
of Hungary, of the other part, on an amendment to Protocol 4 on the definition of the
concept of “originating products” and methods of administrative cooperation set out
in the Agreement shall be based on the draft Association Council decision annexed to
this Decision.

Done at Brussels,

For the Council
The President

3

ANNEX

EUROPE AGREEMENT
establishing an association between the European Communities and their
Member States, of the one part, and
the Republic of Hungary, of the other part

DECISION No …/… of the ASSOCIATION COUNCIL

amending Protocol 4 on the definition of the concept of "originating products"
and methods of administrative cooperation

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 Republic of
Hungary, of the other part, signed in Brussels on 16 December 1991 and in particular
Article 38 of Protocol 4 thereof,

Whereas the definition of the term “originating products” needs to be amended to
ensure the proper operation of the extended system of cumulation which permits the
use of materials originating in the European Community, Poland, Hungary, the Czech
the Slovak Republic, Bulgaria, Romania, Latvia, Lithuania, Estonia,
Republic,
Slovenia, Turkey, the European Economic Area (hereinafter referred to as the EEA),
Iceland, Norway and Switzerland;

Whereas it would seem advisable to revise the Articles concerning the amounts in
order to fully take into consideration the entry into force of the euro;

Whereas, to take account of changes in processing techniques and shortages of certain
raw materials, some corrections must be made to the list of working and processing
requirements which non-originating materials have to fulfil to qualify for originating
status,

HAS DECIDED AS FOLLOWS:

Article 1

Protocol 4 on the definition of the concept of “originating products” and methods of
administrative cooperation is hereby amended as follows:

1.

In Articles 21 and 26 the word "Ecu" shall be replaced by "euro".

4

2.

Article 30 shall be replaced by the following:

"Article 30

Amounts expressed in euro

1.
Amounts in the national currency of the exporting country equivalent
to the amounts expressed in euro shall be fixed by the exporting country and
communicated to the importing countries through the European Commission.

2. When the amounts exceed the corresponding amounts fixed by the
importing country, the latter shall accept them if the products are invoiced in
the currency of the exporting country. When the products are invoiced in the
currency of EC Member States or another country referred to in Articles 3
and 4, the importing country shall recognise the amount notified by the
country concerned.

3.
The amounts to be used in any given national currency shall be the
equivalent in that national currency of the amounts expressed in euro as at
the first working day of October 1999.

4.
The amounts expressed in euro and their equivalents in the national
currencies of Member States and Hungary shall be reviewed by the
Association Committee at the request of the Community or Hungary. When
carrying out this review, the Association Committee shall ensure that there
will be no decrease in the amounts to be used in national currency and shall
furthermore consider the desirability of preserving the effects of the limits
concerned in real terms. For this purpose, it may decide to modify the
amounts expressed in euro."

5

3.

Annex II shall be amended as follows:

(a) the entry for HS heading 1904 shall be replaced by:

1904

Prepared foods obtained by the
swelling or
roasting of cereal or
cereal products (for example, corn
flakes); cereals (other
than maize
(corn)) in grain form or in the form of
flakes or other worked grains (except
flour
and meal), pre-cooked, or
otherwise prepared, not elsewhere
specified or included

Manufacture:

- from materials not
classified within
heading No 1806;

- in which all the
cereals and flour
(except durum
wheat and its
derivatives and Zea
indurata maize)
used must be wholly
obtained;¹

- in which the value
of any materials of
Chapter 17 used
does not exceed
30% of the ex-
works price of the
product

¹

The exception concerning the Zea indurata maize is applicable until 31.12.2002.

(b) the entry for HS heading 2207 shall be replaced by:

Manufacture:

- from materials not
classified within
heading Nos 2207
or 2208,
- in which all

or

the
any
grapes
material
derived
from grapes used
be wholly
must
obtained or
if all
the other materials
already
used
originating, arrack
may be used up to
a limit of 5% by
volume

are

2207

Undenatured ethyl alcohol of an
alcoholic strength by volume of 80 %
vol or higher; ethyl alcohol and other
spirits, denatured, of any strength

6

(c) the entry for HS Chapter 57 shall be replaced by:

Manufacture from¹:
- natural fibres
or
- chemical materials

or textile pulp

However:
- polypropylene

filament of heading
No 5402, or
- polypropylene

fibres of heading
Nos 5503 or 5506,
or

- polypropylene

filament
tow of
heading No 5501,
of
the
which
denomination in all
cases of a single
filament or fibre is
less than 9 decitex,
used
be
may
provided their value
does not exceed 40%
of the ex-works price
of the product
Jute fabric may be
used as backing

Manufacture from ¹:
- natural

fibres not
carded or combed
otherwise
or
processed
for
spinning,

or
- chemical materials

or textile pulp

Chapter
57

Carpets and other
coverings:

textile floor

- Of needleloom felt

- Of other felt

7

- Of other textiles materials

Manufacture from ¹:
- coir or jute yarn,
- synthetic or

artificial filament
yarn,

- natural fibres, or
- man-made staple
fibres not carded
or combed or
otherwise
processed for
spinning

Jute fabric may be
used as backing

¹
see Introductory Note 5.

For special conditions relating to products made of a mixture of textile materials,

(d) the entry for HS heading 8401 shall be replaced by:

ex 8401

Nuclear fuel elements

Manufacture in which
all the materials used
are classified within a
heading other
than
that of the product¹

Manufacture in
which the value
the
of
all
materials
does
not exceed 30%
of the ex-works
price of the final
product

¹

This rule shall apply until 31 December 2005.

(e) the following shall be inserted between the entries for HS heading
Nos 9606 and 9612:

9608

pens;

duplicating

Ball-point pens; felt-tipped and other
porous-tipped pens
and markers;
fountain pens, stylograph pens and
other
stylos;
propelling or sliding pencils; pen-
holders, pencil-holders and similar
holders; parts (including caps and
clips) of the foregoing articles, other
than those of heading No 9609

Manufacture in which
all the materials used
are classified within a
heading other
than
that of the product.
However, nibs or nib-
classified
points
within
same
the
heading may be used

That Decision shall enter into force on the day of its adoption.

Article 2

It is applicable from 1 January 2000.

Done at Brussels,

For the Association Council
The President

8

FINANCIAL STATEMENT

1.

BUDGET HEADING INVOLVED

Chapter 12, Article 120
(zero-rated duty)

2.

LEGAL BASIS

Article 133 of the Treaty.

3.

TITLE OF THE MEASURES

Proposal for an amendment to the definition of the concept of “originating
products” and the methods of administrative cooperation set out in Protocol 4
to the different Europe Agreements between the EC and the CEECs, the
Baltic States and Slovenia and the Agreement on the European Economic
Area, and in Protocol 3 to the free trade agreements between the EEC and the
EFTA countries

4.

OBJECTIVE

To revise certain rules concerning the working or processing of non-
originating materials that confers originating status and to take into account
the introduction of the euro.

5.

COST OF THE OPERATION

As the purpose of the amendments is essentially to revise some of the origin
rules without any implication on the concessions granted by the agreement,
this proposal would not seem to have any financial implications.

9