Agreement in the form of an Exchange of Letters between the European Community and the People's Republic of China initialled in Beijing on 19 May 2000 amending the Agreement between them on trade in textile products and amending the Agreement between them initialled on 19 January 1995 on trade in textile products not covered by the MFA bilateral Agreement - Protocol A
Date: 2000-05-19
Institutions: China, European Community
Subjects: China, agreement (EU), textile product, trade agreement

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Official Journal of the European Communities

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AGREEMENT IN THE FORM OF AN EXCHANGE OF LETTERS

between the European Community and the People's Republic of China initialled in Beijing on 19
May 2000 amending the Agreement between them on trade in textile products and amending the
Agreement between them initialled on 19 January 1995 on trade in textile products not covered by
the MFA bilateral Agreement

A. Letter from the Council of the European Union

Sir,

1. I have the honour to refer to the consultations held between our respective delegations for the purpose
of amending and extending both the Agreement between the European Economic Community and the
People's Republic of China on trade in textile products initialled on 9 December 1988, as last amended
by an Agreement initialled on 6 December 1999 (hereinafter referred to as ‘the MFA Agreement’) and
the Agreement between the European Community and the People's Republic of China initialled on 19
January 1995 on trade in textile products not covered by the MFA bilateral Agreement, as last amended
by an Agreement initialled on 6 December 1999 (hereinafter referred to as ‘the non-MFA Agreement’).

2. As a result of the consultations, the Parties agreed to modify the MFA and non-MFA Agreements.

3. Should the People's Republic of China become a Member of the World Trade Organisation before the
date of expiry of the MFA and non-MFA bilateral Agreements, the restrictions in force under those
Agreements shall be phased out in the framework of the WTO Agreement on textiles and clothing and
China's Protocol of Accession to the WTO.

4. Without prejudice to paragraph 3, and in particular without prejudice to safeguard provisions, the
Parties recorded their mutual understanding on the following aspects concerning the notifications in
respect of the restrictions under the MFA agreement to be made to the textiles monitoring body for the
purposes of Article 2 of the Agreement on textiles and clothing:

(a) The European Union will notify to the textiles monitoring body the quantitative restrictions
maintained under the MFA Agreement (save for those quantitative limits concerning products
already included by the European Community in stages 1 or 2 of integration under the Agreement
on textiles and clothing) at the levels agreed for the year during which China accedes to the WTO as
being the restraint levels for the purposes of notification under Article 2(1) of the Agreement on
textiles and clothing, detailing the quantitative limits contained in Annex III of the above agreement
including the quantitative limits reserved for European industry within those amounts and the
separate quantitative limits reserved for outward processing traffic and European fairs respectively.

(b) The European Union will notify to the textiles monitoring body the growth rates applicable to the
restraint levels, and the relevant parts thereof, being those growth rates applied for the renewal of
the MFA agreement for the year 2000.

(c) These growth rates will be increased by the growth on growth provisions of the Agreement on
textiles and clothing for the second stage of integration beginning from 1 January of the year
following accession, and, after 1 January 2002, by the growth on growth provisions for the third
stage of integration.

(d) The European Union will notify the flexibility provisions contained in Article 5 of the MFA
Agreement save for the cap on flexibilities contained in Article 5(5) as applying to the quantitative
limits contained in Annex III of the above Agreement and to the limits set for European fairs.

5. Without prejudice to paragraph 3, and in particular without prejudice to safeguard provisions, the
Parties recorded their mutual understanding on the following aspects concerning the notifications in
respect of the restrictions under the non-MFA agreement to be made to the textiles monitoring body for
the purposes of Article 3 of the Agreement on textiles and clothing:

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(a) The European Community will notify to the textiles monitoring body the quantitative restrictions
maintained under the non-MFA Agreement at the levels specified for the year during which China
accedes to the WTO as being the restraint levels for the purposes of Article 3 of the Agreement on
textiles and clothing, detailing the quantitative limits contained in Annex II of the non-MFA
Agreement and the separate quantitative limits reserved for outward processing traffic.

(b) The Parties agree that pending liberalisation of the above quantitative restrictions the growth rates
applied to them, and to the relevant parts thereof, for the renewal of the non-MFA agreement for the
year 2000 will apply pending liberalisation of those restrictions and be included in the notification
pursuant to Article 3 of the Agreement on textiles and clothing.

(c) The European Union will include the flexibility provisions contained in Article 8 of the non-MFA
Agreement in its notification pursuant to Article 3 of the Agreement on textiles and clothing.

(d) The Parties agree that the European Community will align its programme in accordance Article 3(2)
of the ATC to phase out the quantitative restrictions progressively to follow Annex I to this
Agreement.

6. The Parties agreed that following China's WTO accession they would, pursuant to Article 2(17) of the
Agreement on textiles and clothing, jointly notify to the textiles monitoring body the administrative
arrangements contained in Annex II to this Agreement. The Parties agreed that the administrative
arrangements would apply in respect of both the MFA Agreement and the non-MFA Agreement.

7. In the event that China accedes to the WTO after 31 December 2000 the Parties agree that both the
MFA Agreement and the non-MFA Agreement will be automatically extended for a further period of one
year to 31 December 2001, on the basis of the quantitative limits for the year 2000, together with all
the relevant parts thereof including the quantities reserved for European industry, the quantities set for
outward processing traffic and for European fairs, increased by the growth rates, if any, applied to the
quantitative limits, and the relevant parts thereof, on the renewal of the MFA Agreement and the
non-MFA Agreement for the year 2000.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing.
Should this be the case, this Agreement in form of an Exchange of Letters shall enter into force on the
first day of the month following the day on which the Parties have notified each other that the legal
procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally
on conditions of reciprocity.

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

For the Council of the European Union

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ANNEX I

Phase-out schedule for the quantitative restrictions notified pursuant to Article 3 of the Agreement on textiles
and clothing

Category

Phasing of elimination of quota

ex 13

ex 18

ex 20

ex 24

ex 39

115

117

118

120

122

123

124

125 A

125 B

126

127 A

127 B

136 A

140

145

146 A

146 B

151 B

156

157

159

160

161

Following accession

Progressively

Progressively

Following accession

Following accession

Progressively

Progressively

Progressively

Progressively

Progressively

Following accession

Following accession

Following accession

Progressively

Progressively

Following accession

Following accession

Progressively

Following accession

Progressively

Progressively

Progressively

Following accession

Progressively

Progressively

Progressively

Progressively

Progressively

For those products that are to be phased out progressively in the above table the Parties agree that, dependent on progress
in the removal by China of state trading in respect of silk products, the European Community will remove the restrictions
on no less than 9 categories on 1 January 2002 and the restrictions on all remaining products no later than 1 January
2005. Either Party may at any time request consultations pursuant to the procedures provided for in the Administrative
Arrangements agreed between the Parties concerning the application of the above provisions. In order to facilitate such
consultations the competent authorities of the European Community will inform the Chinese authorities of any intention
to make a notification in this regard to the textiles monitoring body.

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ANNEX II

Administrative arrangements between the European Community and the People's Republic of
China for notification to the textiles monitoring body under Article 2(17) of the Agreement on
textiles and clothing

Article 1

Classification system

are invited to make direct contact with the relevant Chinese
bodies by 15 February of the following year, in order to make
their purchasing intentions known.

The classification of the products covered by these adminis-
trative arrangements is based on the tariff and statistical
nomenclature of the European Community (the ‘Community’)
(hereinafter called the ‘Combined Nomenclature’, or in abbre-
viated form ‘CN’) and any amendments thereof.

Article 2

Determination of origin of covered products

1.
The origin of the products covered by these adminis-
trative arrangements shall be determined in accordance with
the rules in force in the Community and the procedures for
control of the products set out in Protocol A.

2.
If any amendment is made to the rules of origin, the
Community shall, with the agreement of the People's Republic
of China, take appropriate measures to avoid any possible
consequent reduction of the People's Republic of China's ability
to use the quantitative limits established under Article 2 of the
Agreement on textiles and clothing (ATC).

Article 3

Double-checking

The People's Republic of China agrees to restrain its exports to
the Community of the products described in the notifications
of the Community to the textiles monitoring body (TMB) under
Article 2(1) of the ATC to the limits set out therein as increased
by the growth rates provided under Article 2 of the ATC and as
may be modified by the flexibility provisions notified to the
TMB under Article 2(1) of the ATC, until such time as these
products are integrated into GATT 1994 under paragraphs 6,
8, or 9 of Article 2 of the ATC. Exports of restrained textile
products shall be subject to a double-checking system specified
in Protocol A.

Article 4

Industry reserve

1. Within the limits described in the notifications of the
Community to the textiles monitoring body (TMB) under
Article 2(1) of the Agreement on textiles and clothing (ATC)
the People's Republic of China agrees to maintain a reserve
open for Community industry for the quantities and for the
periods specified in the footnotes to the notification.

3.
The Chinese authorities undertake to operate the system
in such a way as to ensure the maximum possible utilisation of
the industry reserve by Community industry consistent with
market forces. In order to do so China undertakes to operate
the system in a prompt and non-discriminatory manner; to
provide the names and addresses of the relevant foreign trade
administrative bodies; to provide texts of the relevant regula-
tions as soon as they are available; to ensure that export
licences under this system are identified as ‘industry reserve’; to
supply separate statistical
information concerning licences
issued pursuant to these provisions; and, to cooperate with the
European Community authorities to ensure that licences issued
pursuant
identified within the
exchanges of information via the SIGL network established
between the Community and China.

to these provisions

are

Article 5

Amounts reserved for use at European fairs

the
Within the limits described in the notifications of
Community to the textiles monitoring body (TMB) under
Article 2(1) of the ATC the separate additional amounts speci-
fied for such purposes in the notification are reserved for use at
trade fairs on the understanding that such amounts may be
used exclusively at European Fairs. Such amounts may be
modified by the flexibility provisions notified to the TMB under
Article 2(1) of the ATC.

Article 6

Re-imports after OPT

The People's Republic of China and the Community recognise
the special and differential character of re-imports of textile
products into the Community after processing in the People's
Republic of China. Such re-imports may be provided for
outside the quantitative limits established under Article 2 of the
ATC provided that they are effected in accordance with the
regulations on economic outward processing in force in the
Community.

Article 7

Imports to EC for re-export after processing

2.
To facilitate the implementation of these provisions the
Community shall provide the competent Chinese authorities,
before the end of each year, with a list of interested manufac-
turers and processors and, if possible, of the quantity of prod-
ucts requested for each firm. To this end, the firms concerned

Exports to the Community of textile products covered by
1.
these administrative arrangements shall not be subject
to
quantitative limits established under Article 2 of the ATC,
provided that they are declared to be for re-export outside the
Community in the same state or after processing, within the

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framework of the administrative system of control which exists
within the Community. However, the release for home use
within the Community of products imported under the condi-
tions referred to above shall be subject to the production of an
export licence issued by the People's Republic of China authori-
ties and to proof of origin, in accordance with the provisions
of Protocol A.

2. Where the competent authorities in the Community have
evidence that products exported from the People's Republic of
China and set off by the People's Republic of China against a
quantitative limit established under Article 2 of the ATC have
been subsequently re-exported outside the Community, the
authorities concerned shall notify the People's Republic of
China of the quantities involved. Upon receipt of such noti-
fication, the People's Republic of China may authorise exports
for the current or the following year of identical quantities of
products, within the same category, which shall not be set off
against the quantitative limits established under Article 2 of the
ATC.

Article 8

Cottage industry, handloom and folklore products

Cottage industry, handloom and folklore products fulfilling the
definitions contained in Protocol B to the MFA Agreement shall
be exempt from the quantitative restrictions established under
Article 2 of the ATC provided they are accompanied by a
certificate conforming to the model annexed to these adminis-
trative arrangements. In case of divergent opinions between
China and the competent Community authorities at the point
of entry into the Community as to the nature of such products
consultations shall be held within one month with a view to
resolving such difficulties. The Chinese authorities undertake
not to issue certificates in respect of this exemption when
exports of the products in question have exceeded 15 % of the
quantitative limit for such a product established pursuant to
Article 2 of the ATC.

Article 9

Operation of the SIGL system

The Parties agree that they will effect the management of
licensing via the direct computer links established between the
Community's SIGL system and the licensing computers of
MOFTEC pursuant to the arrangements agreed between them.

Article 10

Statistical verification of carryover

calculated and the Community's data the Community may,
within the first 120 days of the following year, request consul-
tations in accordance with the procedures referred to in Article
15(1) of these administrative arrangements on the amounts
involved. Any such request shall be accompanied by full partic-
ulars of the alleged statistical differences. Where such a request
is made, the portions carried over shall not be used until the
parties have completed consultations. If no such request is
made within a 120-day period, the portion carried over shall
be presumed to have been calculated correctly.

Article 11

Exchange of statistical information

1.
The People's Republic of China undertakes to supply the
Community with precise statistical information on all export
licences issued by the People's Republic of China authorities for
all categories of textile products subject to the quantitative
limits established under Article 2 of the ATC. The People's
Republic of China shall set out
in its periodical statistical
reports the maximum export levels for each category subject to
a quantitative limit established under Article 2 of the ATC and
the rate of utilisation of these levels.

2.
The Community shall likewise transmit to the People's
Republic of China authorities precise statistical information on
import documents issued by the Community authorities in
respect of export licences issued by the People's Republic of
China. This information shall, for all categories of products, be
transmitted before the end of the second month following the
quarter to which the statistics relate.

3.
The Community shall transmit to the People's Republic of
China authorities import statistics for products covered by
Article 7(1) of these administrative arrangements.

Should it be found on analysis of

the information
4.
exchanged above that
there are significant discrepancies
between the returns for exports and those for imports, consul-
tations may be initiated in accordance with the procedure
specified in Article 15(1) of these administrative arrangements.
Any such consultations shall be resolved on the basis of the
agreed descriptions of the products set out in the notification
under Article 2(1) of the ATC.

5.
The Parties agree that to the maximum extent possible
such exchange of information shall be made via the computer
links established between the Community's SIGL system and
the licensing computers of MOFTEC as referred to in Article 9.

The People's Republic of China shall provide the Community
with export data showing the amounts of carryover available in
any given year. The calculation of carry over will normally be
effected pursuant to the information and data provided via the
SIGL system. If substantial statistical differences exist between
the export data from which the amount to be carried over is

6.
In any event, the information provided for in paragraph 1
shall, for all categories of products, be forwarded before the
end of the month following the month to which the statistics
relate and the information referred to in paragraph 3 shall, for
all categories of products, be transmitted before the end of the
third month following the quarter to which the statistics relate,
unless they have already been exchanged by electronic means.

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Article 12

Amendments to classification

Following China's accession to the WTO cases of circum-
4.
vention taking place before accession will also be dealt with
according to the above paragraphs.

1.
The authorities of the People's Republic of China shall be
informed of any amendment to the Combined Nomenclature
or any decision, made in accordance with the procedures in
force in the Community, relating to the classification of prod-
ucts covered by these administrative arrangements. Any such
amendment or any decision which results in a modification of
the classification of products covered by these administrative
arrangements shall not have the effect of reducing the People's
Republic of China's ability to use the quantitative limits estab-
lished under Article 2 of the ATC. The procedures for the
application of this paragraph are set out in Protocol A.

In case of divergent opinions between the People's
2.
Republic of China and the competent Community authorities
at the point of entry into the Community on the classification
of products subject to quantitative limits established under
Articles 2 of the ATC, consultations in accordance with Article
15(1) of these administrative arrangements shall be held with a
view to reaching agreement on the appropriate classification of
the products concerned and to resolving any difficulties arising
therefrom. For this purpose, the authorities of the People's
Republic of China shall be informed by the competent authori-
ties of the Community as soon as a case of divergent opinions
on the classification of products arises. Pending agreement on
the appropriate classification and in order to avoid disruption
to trade, the products in question shall be imported on the
competent
basis of
Community authorities at the point of entry,
in conformity
with the provisions of these administrative arrangements.

classification indicated by the

the

Article 13

Circumvention

1.
The People's Republic of China and the Community agree
to cooperate fully in preventing the circumvention of these
administrative arrangements by transhipment, re-routing or
whatever other means in accordance with Article 5 of the ATC.

Deduction of the relevant quantitative limits, once estab-
2.
lished pursuant to Article 5 of the ATC, shall, as a general rule,
be effected by debiting an amount equivalent to the agreed
amounts from the corresponding quantitative limits for the
year in which the circumvention took place or for subsequent
years, the timing and apportioning of such debiting being
decided in consultation with the Community, to ensure that
any debiting may be satisfactorily implemented.

3.
The People's Republic of China confirms that its export
control system permits the prompt debiting of the amounts
agreed for such purposes to the corresponding quantitative
limits established under Article 2 of the ATC and the previous
bilateral Agreement.

Article 14

Regional concentration

1.
The quantitative limits established under Article 2 of the
ATC on imports into the Community of textile products of the
People's Republic of China origin will not be broken down by
the Community into regional shares.

Notwithstanding the above, for imperative technical or
2.
administrative reasons or to find a solution to economic prob-
lems resulting from regional concentration of imports, or in
order to combat circumvention and fraud of the provisions of
these administrative arrangements, the Community will estab-
lish for a limited period of time a specific management system
in conformity with the principles of
the internal market.
Should the Community have recourse to this provision, the
textile products covered by the corresponding export licences
can only be put into free circulation in the region(s) of the
Community indicated in those licences. Similarly, the products
covered by the import licences can only be put into free
circulation in the region(s) of the Community indicated in
those licences. This provision was invoked by the Community
as from 1 January 1993.

3.
The Parties shall cooperate in order to prevent sudden
and prejudicial changes in traditional trade flows resulting in
regional concentration of direct imports into the Community.

4.
The People's Republic of China shall monitor its exports
of products under restraint into the Community. Should a
sudden and prejudicial change in traditional trade flows arise,
the Community will be entitled to request consultations in
order to find a satisfactory solution to those problems. Such
consultations shall be held in accordance with Article 15(1) of
these administrative arrangements. The People's Republic of
China, from the date of request for and pending the consulta-
tions, will not issue export licences that would further aggra-
vate the problem.

However, if the Parties are unable to reach a satisfactory
5.
solution during the consultations,
the People's Republic of
China will, if so requested by the Community, respect tempo-
rary export limits for one or more regions of the Community.
In such a case, these limits shall not preclude the importation
into the region(s) concerned of products which were shipped
from the People's Republic of China on the basis of export
licences obtained before the date of formal notification to the
People's Republic of China by the Community about the intro-
duction of the above limits. The Community shall inform the
People's Republic of China of the technical and administrative
measures that need to be introduced by both Parties so that
implementation is in conformity with principles of the Internal
Market.

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The People's Republic of China shall endeavour to ensure
6.
that exports of textile products subject to quantitative limits
established under Article 2 of the ATC into the Community are
spaced out as evenly as possible over the year due account
being taken in particular of seasonal factors.

7.
The People's Republic of China shall endeavour not to
deprive certain regions of the Community which have tradi-
tionally had relatively small shares of Community quotas of
imports of products serving as inputs for their processing
industry. The Community and the People's Republic of China
shall hold consultations, should the need arise, in order to avert
any problems which might occur in this respect.

Article 15

Consultations

— any request for consultations shall be notified in writing to
the other Party, together with a statement setting out the
reasons and circumstances which,
in the opinion of the
requesting Party, justify the submission of such a request;

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

2.
If necessary, at the request of either of the Parties consul-
tations shall be held on any problems arising from the applica-
tion of these administrative arrangements. Any consultations
held under this Article shall be approached by both Parties in a
spirit of cooperation and with a desire to reconcile the differ-
ences between them.

Article 16

1.
Save where it is otherwise provided for in these adminis-
special consultation procedures
trative arrangements,
referred to in these administrative arrangements shall be
governed by the following rules:

the

Quantitative limits notified under Article 3 of the ATC

The Parties agree that these administrative arrangements will
apply ‘mutatis mutandis’ to the quantitative limits notified by the
European Community under Article 3 of the ATC.

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PROTOCOL A

TITLE I

CLASSIFICATION

Article 1

The competent authorities of the Community undertake
1.
to inform the People's Republic of China of any changes in the
Combined Nomenclature (CN) before the date of their entry
into effect in the Community.

The competent authorities of the Community undertake
2.
to inform the People's Republic of China of any decisions
relating to the classification of products subject
to these
administrative arrangements within one month of their adop-
tion at the latest. Such communication shall

include:

(a) a description of the products concerned;

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

references;

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

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

4. Where a Community decision on classification resulting
in a change of classification practice or a change of categorisa-
tion of any product subject to these administrative arrange-
ments affects a category subject to restraint, the Community
undertakes to enter into consultations without delay in accord-
ance with the procedures described in paragraph 1 of Article
15 of
these administrative arrangements with a view to
agreeing necessary adjustments to the appropriate quantitative
limits established under Article 2 of the ATC and mitigating
any disruptive
from such a
effects which might arise
Community decision.

TITLE II

ORIGIN

Article 2

Products originating in the People's Republic of China for
1.
export to the Community in accordance with the arrangements
established by these administrative arrangements
shall be
accompanied by a certificate of the People's Republic of China
origin conforming to the model annexed to this Protocol.

2.
The certificate of the People's Republic of China origin
shall be issued by the competent governmental authorities of
the People's Republic of China if the products in question can
be considered products originating in that country within the
meaning of the relevant rules in force in the Community.

3.
The certificates of the People's Republic of China origin
referred to in paragraph 1 shall not be required for products of
Group III of the Community's system of categories. These may
be imported into the Community in accordance with the
arrangements set out in these administrative arrangements on
production of a declaration by the exporter on the invoice or
other commercial document relating to the products to the
effect that the products in question originated in China within
the meaning of the relevant rules in force in the Community.

4.
The certificate of the People's Republic of China origin
referred to in paragraph 1 shall not be required for import of
goods covered by a certificate of origin Form A completed in
accordance with the relevant Community rules in order to
qualify for generalised tariff preferences.

Article 3

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

TITLE III

DOUBLE-CHECKING

SYSTEM FOR
PRODUCTS WITH QUANTITATIVE LIMITS

CATEGORIES

OF

S e c t i o n I

Exportation

Article 4

The competent authorities of the People's Republic of China
issue an export licence in respect of all consignments
shall
from the People's Republic of China of textile products subject
to quantitative limits established under Article 2 of the ATC, up
to the relevant quantitative limits as increased by the growth
rates provided under Article 2 of the ATC and as may be
modified by the flexibility provisions notified to the TMB under
Article 2(1) of the ATC, until such time as these products are
integrated into GATT 1994 under paragraphs 6, 8 or 9 of
Article 2 of the ATC.

Article 5

1.
The export licence shall conform to the model annexed
to this Protocol and it shall be valid for exports throughout the
customs territory to which the Treaty establishing the Euro-
pean Community is applied.

Each export licence shall only cover one of the categories

2.
of products.

3.
These provisions are without prejudice to any subsequent
arrangements the Parties may enter into concerning the elec-
tronic transmission of
information to replace the grant of
export licences in paper form.

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Article 6

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

Article 7

1.
Exports shall be set off against the quantitative limits
established under Article 2 of the ATC for the year in which
shipment of the goods has been effected, even if the export
licence is issued after such shipment.

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

Article 8

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

S e c t i o n I I

Importation

Article 9

Importation into the Community of textile products subject to
quantitative limits established under Article 2 of the ATC shall
be subject to the presentation of an import authorisation or
document.

Article 10

1.
The competent Community authorities shall issue such
import authorisation or document automatically within five
working days of the presentation by the importer of the orig-
inal of the corresponding export licence. The import author-
isations shall be valid for six months from the date of their
issue for imports throughout the customs territory to which
the Treaty establishing the European Community is applied.

2.
The competent Community authorities shall cancel the
already issued import authorisation or document if the corre-
sponding export licence has been withdrawn. However, if the
competent Community authorities have not been notified of
the withdrawal or cancellation of the export licence until after
the products have been imported into the Community, the
quantities involved shall be set off against the quantitative limit
established under Article 2(1) of the ATC for the category and
the quota year in question and the People's Republic of China
shall be informed as soon as possible.

Article 11

If the competent Community authorities find that the
1.
total quantities covered by export
licences issued by the
People's Republic of China for a particular category in any
given year exceed the quantitative limit established under
Article 2 of the ATC for that category as increased by the

growth rates provided under Article 2 of the ATC and as may
be modified by the flexibility provisions notified to the TMB
under Article 2(1) of the ATC, until such time as these prod-
ucts are integrated into GATT 1994 under paragraphs 6, 8 or 9
of Article 2 of the ATC, the said authorities may suspend the
further issue of import authorisations or documents. In this
event, the competent Community authorities shall immediately
inform the authorities of the People's Republic of China and
the special consultation procedure set out in Article 12(1) of
these administrative arrangements shall be initiated forthwith.

Exports of restrained textile products of

2.
the People's
Republic of China origin not covered by the People's Republic
of China export licences issued in accordance with the provi-
sions of this Protocol may be refused the issue of import
authorisations or documents by the competent Community
authorities. However, if the import of such products is allowed
into the Community by the competent Community authorities,
the quantities involved shall not be set off against the appro-
priate quantitative limits established under Article 2 of the
ATC, without the express agreement of the People's Republic
of China.

TITLE IV

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

Article 12

1.
The export licence and the certificate of origin of the
People's Republic of China may comprise additional copies
duly indicated as such. They shall be made out in English or
French. If they are completed by hand, entries must be in ink
shall measure
and in printed script. These documents
210 × 297 mm. The paper used must be writing paper
weighing not less than 25 g/m2. Only the original, clearly
marked ‘original’ shall be accepted by the competent authorities
of the Community as being valid for the purposes of export to
the Community in accordance with the arrangements estab-
lished by these administrative arrangements.

Each export

licence and certificate of

2.
the People's
Republic of China origin shall bear a serial number, whether or
not printed, by which it can be identified. The number for the
export
the
following elements:

licence shall be standardised and composed of

— two letters identifying the People's Republic of China as

follows: CN;

— two letters

identifying the intended Member State of

customs clearance as follows:

AT = Austria

BL = Benelux

DE = Germany

DK = Denmark

EL = Greece

ES = Spain

FI = Finland

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FR = France
GB = United Kingdom
IE = Ireland
IT = Italy
PT = Portugal
SE = Sweden;

— a one-digit number identifying quota year, corresponding

to the last figure in year, e.g. 7 for 1987;

— two spaces

identifying

the particular

issuing office

concerned in the People's Republic of China;

— a five-digit number running consequently from 00001 to
99999 allocated to the intended Member State of customs
clearance.

Article 13

The export licence and certificate of origin may be issued after
the shipment of the products to which they relate. In such
cases they shall bear either the endorsement ‘délivré à poster-
iori’ or the endorsement ‘issued retrospectively’.

Article 14

In the event of theft,

1.
loss or destruction of an export
licence or a certificate of origin, the exporter may apply to the
competent governmental authority which issued the document
for a duplicate to be made out on the basis of the export
documents in his possession. The duplicate of any such certifi-
cate or licence so issued shall bear the endorsement ‘duplicata’.

The duplicate must bear the date of the original export

2.
licence or certificate of origin.

The competent Community authorities may request
2.
subsequent verification of certificates of the People's Republic
of China origin or export licences at random or whenever they
have reasonable doubt as to the authenticity of such certificates
or licences or as to the accuracy of the information regarding
the products in question. In such cases the competent authori-
ties in the Community shall return the certificate of
the
People's Republic of China origin or export licence, or a copy
thereof to the People's Republic of China authorities, giving,
where appropriate, the reasons for an enquiry. If the invoice
has been submitted, such invoice shall be attached to the
certificate or licence or its copy. The authorities shall also
forward any information that has been obtained suggesting
that the particulars given on the said certificate or licence are
inaccurate.

these administrative arrangements,

3.
Should the results of the random verification referred to
in paragraph 1 above reveal serious contravention of the provi-
the People's
sions of
Republic of China authorities shall notify the competent
Community authorities of the results. Where the competent
Community authorities have requested verification under para-
graph 2 above, the results of such verification shall be commu-
nicated to the competent Community authorities within three
months at
the latest. The information communicated shall
indicate whether the disputed certificate or licence applies to
the goods actually exported and whether these goods are
eligible for export in accordance with the arrangements estab-
lished by these administrative arrangements. Where
the
competent Community authorities so request, the information
communicated shall also include copies of such other available
documentation as may facilitate the full determination of the
facts and,

in particular, the true origin of the goods.

TITLE V

ADMINISTRATIVE COOPERATION

Article 15

4.
For the purpose of subsequent verification of certificates
of the People's Republic of China origin and export licences,
copies of these together with relevant supporting documenta-
tion required to be lodged with the People's Republic of China
authorities for the issue of such certificates or licences shall be
kept for a period of at least two years by the People's Republic
of China authorities.

The Community and the People's Republic of China shall coop-
erate closely to implement the provisions of these adminis-
trative arrangements. To this end, contacts and exchanges of
views (including on technical matters) shall be facilitated by
in particular to establish the authenticity and
both parties,
accuracy of documentation required under the provisions of
these administrative arrangements.

Article 16

The People's Republic of China shall send to the Commission
of the European Community the names and addresses of the
governmental authorities competent for the issue and verifica-
tion of export licences and certificates of origin together with
specimens of the stamps used by these authorities. the People's
Republic of China shall also notify the Commission of any
change in this information.

Article 17

1.
Verification of certificates of the People's Republic of
China origin or export licences shall be carried out at random
by the People's Republic of China authorities.

Article 18

1. Where the verification procedure referred to in Article 17
above or where information available to the Community or to
the People's Republic of China indicates or appears to indicate
that the provisions of these administrative arrangements are
being contravened, both parties shall cooperate closely and
with appropriate urgency to prevent such contravention.

2.
To this end, the People's Republic of China shall, on its
own initiative or at the request of the Community, carry out
appropriate enquiries or arrange for such enquiries to be
carried out concerning operations which are or appear to be in
contravention of
arrangements. The
People's Republic of China shall communicate the results of
these enquiries to the Community together with such other
available information as may facilitate the determination of the
true origin of the goods.

administrative

these

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By agreement between the Community and the People's
3.
Republic of China, officials designated by the Community may
be present at the enquiries referred to in paragraph 2.

4.
In pursuance of the cooperation referred to in paragraph
1, the People's Republic of China and the Community shall
exchange any information considered by either party to be of
use in preventing the contravention of the provisions of these
administrative arrangements. These exchanges may include
information on textile production in the People's Republic of
China and on trade in textile products of a kind covered by
these
arrangements between the People's
Republic of China and other countries, particularly where the
Community has reasonable grounds to consider that the prod-
ucts in question may be in transit across the territory of the

administrative

People's Republic of China prior to their importation into the
Community. This information shall include at the request of
the Community copies of all relevant documentation. The
People's Republic of China will provide such information as is
available and in accordance with the People's Republic of China
law.

5.
The Community shall where appropriate at the request of
the People's Republic of China cooperate jointly with the
People's Republic of China in cases of circumvention which
in conformity with
the People's Republic of China,
affect
procedures in force in the Community.

6. Where it is established to the satisfaction of both parties
that the provisions of these administrative arrangements have
the People's Republic of China and the
been contravened,
Community agree to take all reasonable measures to prevent a
recurrence of such contravention.

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B. Letter from the Government of the People's Republic of China

Sir,

I have the honour to acknowledge receipt of your letter which reads as follows:

‘1. I have the honour to refer to the consultations held between our respective delegations for the
purpose of amending and extending both the Agreement between the European Economic
Community and the People's Republic of China on trade in textile products initialled on 9
December 1988, as last amended by an Agreement initialled on 6 December 1999 (hereinafter
referred to as “the MFA Agreement”) and the Agreement between the European Community and the
People's Republic of China initialled on 19 January 1995 on trade in textile products not covered by
the MFA bilateral Agreement, as last amended by an Agreement initialled on 6 December 1999
(hereinafter referred to as “the non-MFA Agreement”).

2. As a result of the consultations, the Parties agreed to modify the MFA and non-MFA Agreements.

3. Should the People's Republic of China become a Member of the World Trade Organisation before
the date of expiry of the MFA and non-MFA bilateral Agreements, the restrictions in force under
those Agreements shall be phased out in the framework of the WTO Agreement on textiles and
clothing and China's Protocol of Accession to the WTO.

4. Without prejudice to paragraph 3, and in particular without prejudice to safeguard provisions, the
Parties recorded their mutual understanding on the following aspects concerning the notifications in
respect of the restrictions under the MFA agreement to be made to the textiles monitoring body for
the purposes of Article 2 of the Agreement on textiles and clothing:

(a) The European Union will notify to the textiles monitoring body the quantitative restrictions
maintained under the MFA Agreement (save for those quantitative limits concerning products
already included by the European Community in stages 1 or 2 of integration under the
Agreement on textiles and clothing) at the levels agreed for the year during which China accedes
to the WTO as being the restraint levels for the purposes of notification under Article 2(1) of
the Agreement on textiles and clothing, detailing the quantitative limits contained in Annex III
of the above agreement including the quantitative limits reserved for European industry within
those amounts and the separate quantitative limits reserved for outward processing traffic and
European fairs respectively.

(b) The European Union will notify to the textiles monitoring body the growth rates applicable to
the restraint levels, and the relevant parts thereof, being those growth rates applied for the
renewal of the MFA agreement for the year 2000.

(c) These growth rates will be increased by the growth on growth provisions of the Agreement on
textiles and clothing for the second stage of integration beginning from 1 January of the year
following accession, and, after 1 January 2002, by the growth on growth provisions for the
third stage of integration.

(d) The European Union will notify the flexibility provisions contained in Article 5 of the MFA
Agreement save for the cap on flexibilities contained in Article 5(5) as applying to the
quantitative limits contained in Annex III of the above Agreement and to the limits set for
European fairs.

5. Without prejudice to paragraph 3, and in particular without prejudice to safeguard provisions, the
Parties recorded their mutual understanding on the following aspects concerning the notifications in
respect of the restrictions under the non-MFA agreement to be made to the textiles monitoring body
for the purposes of Article 3 of the Agreement on textiles and clothing:

(a) The European Community will notify to the textiles monitoring body the quantitative restric-
tions maintained under the non-MFA Agreement at the levels specified for the year during
which China accedes to the WTO as being the restraint levels for the purposes of Article 3 of
the Agreement on textiles and clothing, detailing the quantitative limits contained in Annex II of
the non-MFA Agreement and the separate quantitative limits reserved for outward processing
traffic.

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(b) The Parties agree that pending liberalisation of the above quantitative restrictions the growth
rates applied to them, and to the relevant parts thereof, for the renewal of the non-MFA
agreement for the year 2000 will apply pending liberalisation of those restrictions and be
included in the notification pursuant to Article 3 of the Agreement on textiles and clothing.

(c) The European Union will

include the flexibility provisions contained in Article 8 of the
non-MFA Agreement in its notification pursuant to Article 3 of the Agreement on textiles and
clothing.

(d) The Parties agree that the European Community will align its programme in accordance Article
3(2) of the ATC to phase out the quantitative restrictions progressively to follow Annex I to this
Agreement.

6. The Parties agreed that following China's WTO accession they would, pursuant to of Article 2(17) of
the Agreement on textiles and clothing, jointly notify to the textiles monitoring body the adminis-
trative arrangements contained in Annex II to this Agreement. The Parties agreed that the adminis-
trative arrangements would apply in respect of both the MFA Agreement and the non-MFA
Agreement.

7. In the event that China accedes to the WTO after 31 December 2000 the Parties agree that both the
MFA Agreement and the non-MFA Agreement will be automatically extended for a further period of
one year to 31 December 2001, on the basis of the quantitative limits for the year 2000, together
with all the relevant parts thereof including the quantities reserved for European industry, the
quantities set for outward processing traffic and for European fairs, increased by the growth rates, if
any, applied to the quantitative limits, and the relevant parts thereof, on the renewal of the MFA
Agreement and the non-MFA Agreement for the year 2000.

8. I should be obliged if you could kindly confirm the acceptance of your Government of the
foregoing. Should this be the case, this Agreement in form of an Exchange of Letters shall enter into
force on the first day of the month following the day on which the Parties have notified each other
that the legal procedures necessary to this end have been completed. In the meantime, it shall be
applied provisionally on conditions of reciprocity.’

I have the honour to confirm that my Government is in agreement with the contents of your letter and the
annexes attached thereto.

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

For the Government of the People's Republic of China