Proposal for a Council Decision on the signature on behalf of the Community of an additional Protocol to the Europe Agreement establishing an Association between the European Communities and their Member States, of the one part, and the Republic of Estonia, of the other part, on Conformity Assessment and Acceptance of Industrial Products
Date: 2002-11-07
Institutions: European Commission
Subjects: Estonia, approval, association agreement (EU), industrial product, mutual recognition principle, protocol to an agreement

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Proposal for a Council Decision on the signature on behalf of the Community of an additional
Protocol
to the Europe Agreement establishing an Association between the European
Communities and their Member States, of the one part, and the Republic of Estonia, of the
other part, on Conformity Assessment and Acceptance of Industrial Products

(2003/C 45 E/25)

COM(2002) 608 final — 2002/0260(ACC)

(Submitted by the Commission on 7 November 2002)

EXPLANATORY MEMORANDUM

I. EXPLANATORY MEMORANDUM

On the basis of negotiating directives adopted by the Council on 21 September 1992 and of the specific
decision issued by the Council in June 1997 addressing guidelines to the Commission for the negotiation
of European Conformity Assessment Agreements with Central and Eastern European Countries,
the
Commission has negotiated and initialled an additional protocol to the Europe Agreement with Estonia
(Protocol to the Europe Agreement on Conformity assessment and Acceptance of industrial products,
hereinafter referred to as ‘PECA’).

The text of this Protocol is attached to this Communication. The following provides an assessment of the
Protocol in the light of the negotiating directives approved by the Council, and proposes that the Council
authorises the signature of the additional Protocol to the Europe Agreement and decides to approve its
conclusion on behalf of the Community. This assessment and these proposals are similar to the relevant
documents for the PECAs concluded by the Council with Latvia, Lithuania, Hungary, and the Czech
Republic.

1. Assessment of the Agreement

Considering that this agreement is intended to work only during the pre-accession period, and that an
appropriate legal framework was offered by the Europe Agreement, it was decided, in consultation with
the 133 Committee, to adopt this agreement as a Protocol to the Europe Agreement rather than an stand
alone agreement as foreseen previously.

The draft PECA follows the general principles laid down in the Commission's communication on
Community External Trade Policy in the field of standards and conformity assessment (1) under its
paragraph 49. The PECA is a transitional arrangement, and thus will terminate with the candidate
country accession.

The PECA provides for an extension of certain benefits of the Internal Market in sectors already aligned.
The PECA thus facilitates market access by eliminating technical barriers to trade with respect to industrial
products. To this end, the PECA provides for two mechanisms, a) for the mutual acceptance of industrial
products which fulfil the requirements to be lawfully placed on the market in one of the Parties, and b) the
mutual recognition of the results of conformity assessment of industrial products subject to Community
law and to the equivalent national law.

The first mechanism, i.e. the mutual acceptance of industrial products, confirms that Articles 11 and 14.2
of the Europe Agreement with Estonia apply without other restriction as referred to in Article 34 of the
Europe Agreement. This provision adds the predictability that is necessary to manufacturers and exporters,
confirming in advance that industrial products under this mechanism may freely move between the Parties.
The annexes making this mechanism operational have still to be negotiated.

(1) COM(96) 564 final, 13.11.1996.

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The second mechanism is a particular type of mutual recognition agreement (MRA) in which the mutual
recognition operates on the basis of the acquis communautaire. It allows industrial products certified by
Notified Bodies in the European Union to be placed on the Estonian market without having to undergo
any further approval procedures, and vice-versa. The following sectors are covered: electrical safety,
electromagnetic compatibility, lifts and safety of toys.

The draft with Estonia is fully in line with the PECAs concluded by the Council on 25th June 2002 with
Latvia and Lithuania and also with those concluded with on 4th April 2001 with Hungary and the Czech
Republic (1). Estonia has taken over the Community technical legislation in the sectors covered by the
Protocol and participates in the European organisations in the field of standards, metrology, testing
laboratories and accreditation.

The PECA consists of a framework agreement and a series of annexes as referred to above. A unilateral
Community declaration inviting the Estonian representatives to experts meetings and committees estab-
lished under the Community law referred to in the annexes is attached to the Final Act, making it clear
that this will not entail any participation in the Community decision-making process. An assessment of the
PECA is made in the next paragraphs.

1.1. Framework Agreement

An article-by-article assessment follows:

Pre-amble. This sets out the basic objective of the PECA which is that, as the application for membership of
the European Union implies the implementation of the acquis communautaire by the applicant country, it
provides the opportunity to extend certain benefits of the Single Market in certain sectors already aligned
before.

Article 1: Purpose. This article establishes the purpose of the PECA, namely the elimination of technical
barriers to trade in respect to industrial products. The PECA provides for two mechanisms, a) for the
mutual acceptance of industrial products which fulfil the requirements to be lawfully placed on the market
in one of the Parties, and b) the mutual recognition of the results of conformity assessment of industrial
products subject to Community law and to the equivalent national law.

Article 2: Definitions. This is self-explanatory. Definitions of industrial products, Community and national
law have been included. All pieces of legislation and implementation measures (administrative provisions,
guidelines and other means of /implementation of the legislation) are covered by the definitions of
Community and national law.

Article 3: Alignment of legislation. This contains a commitment for Estonia to take appropriate measures in
order to maintain or complete the take-over of Community law, namely in the field of technical legislation
and for the purpose of the PECA. Together with the 4th whereas,
it means that the alignment is an
ongoing process and the Parties agree to iron out any problems of transposition that could appear later.

Article 4: Mutual acceptance of industrial products. The principle under Article 1.1) is detailed in this article. It
provides that listing industrial products in such annexes will confirm that these products can freely
circulate between the Parties. As already stated, no such annex has been negotiated yet.

(1) Council Decision 2001/365/EC of 4 April 2001 on the conclusion of a PECA with the Czech Republic (OJ L 135,
17.5.2001, p. 1) Council Decision 2001/366/EC of 4 April 2001 on the conclusion of a PECA with Hungary (OJ L
135, 17.5.2001, p. 35).

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Article 5: Mutual recognition of the results of conformity assessment procedures. This provision expands the
principle under Article 1.2). This kind of recognition is similar to the one in Mutual Recognition
Agreements, with the special feature that all legislation and standards are aligned. The sectoral annexes
will contain the references to the relevant Community and national legislation.

Article 6: Safeguard clause. This sets up the right of each Party to deny market access when such Party is
able to demonstrate that a product might endanger the legitimate concern which is protected by legislation
listed in the annexes (safety and/or public health of users or other persons mainly). The annexes provide
for the detailed procedures to be used in such cases.

Article 7: Extension of coverage. The Parties may modify the scope and coverage of this Protocol through an
amendment of the annexes or by the addition of new annexes as soon as all alignment conditions are met.

Article 8: Origin. The provisions of this Protocol shall apply to industrial products irrespective of their
origin.

Article 9: Obligations of Parties as regards their authorities and bodies. This article obliges the Parties to ensure
that their respective authorities continuously monitor the technical competence and compliance of the
notified bodies and have the necessary power and expertise for designating, suspending, and withdrawing
their bodies. In addition, it obliges the Parties to ensure that their respective notified bodies continuously
comply with the requirements of Community or national law and maintain their technical competence to
carry out the tasks for which they have been notified.

Article 10: Notified bodies. This describes the procedure for the notification of bodies to assess conformity in
relation to the legal requirements specified in the corresponding annexes. The procedure is simplified and
similar to the one applied within the Community. The second paragraph sets out the procedure for the
removal of notified bodies.

Article 11: Verification of notified bodies. This article gives the right to one Party to request a verification of a
body notified by the other Party. The verification may be done either by the authorities which have
designated the body or together by the authorities of both Parties. If the Parties do not agree on appro-
priate steps to take, they may notify the Chair of the Association Council of their dissent, and leave to the
Association Council to decide on appropriate action. The notified body would then be suspended from the
notification of the Association Council until a final decision is taken.

Article 12: Exchange of information. A transparency provision to ensure a correct and uniform application
and interpretation of the Protocol. The Parties are advised to encourage their bodies to cooperate in order
to establish mutual recognition agreements in the voluntary sphere.

Article 13: Confidentiality. A classical provision to avoid disclosing information acquired under this Protocol.

Article 14: Management of the Protocol. The Association Council will be responsible for its effective func-
tioning and may delegate its duties in conformity with the relevant Articles of the Europe Agreement.

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Article 15: Technical cooperation and assistance. This confirms the Community policy on technical coop-
eration and assistance with a view to properly implementing this Protocol.

Article 16: Agreements with other countries. This confirms that, unless otherwise agreed, the PECA does not
entail any obligation, for one Party, to accept conformity assessments carried out in another country, even
if there is an agreement on recognition of conformity assessment between the other Party and any other
third country.

Article 17: Entry into force. This is a standard provision that provides the arrangement for the entry into
force.

Article 18: Status of the Protocol. This establishes the fact that the PECA is an integral part of the Europe
Agreement.

1.2. The Annexes to the Protocol

1.2.1. Annexes on Mutual Recognition of Results of Conformity Assessment

There follows an assessment of the content of the annexes in terms of their coverage, and other impli-
cations where relevant.
In making this assessment, the Commission has kept in mind the following
elements:

a) the overall consistency with the Community policy objectives in the field of standardisation, certifi-

cation and conformity assessment for the sectors and industrial products covered;

b) the overall consistency with Community policy objectives in the field of the removal of technical

barriers to trade.

The sectoral assessment is followed in item I.2 by an overall appreciation of the benefits of the Protocol.

Annexes on Electrical Safety, Electromagnetic Compatibility, Lifts and Safety of Toys

These annexes on mutual recognition of results of conformity assessment cover a range of industrial
products subject
to third party conformity assessment under the New Approach Directives in the
relevant sectors All these annexes present the same structure.

Coverage is determined by the relevant Community or national law, listed under Section I of each annex.
Section II, on notifying authorities, lists the authorities responsible for the designation of bodies in the
Member Sates and Estonia. Section III, on notified bodies, makes reference to the notification of all
Conformity Assessment Bodies notified by the Member States and by Estonia. Section IV, on specific
arrangements, fixes the two procedures for the safeguard clause, relating to industrial products and to
harmonised standards.

1.2.2. Annexes on Mutual Acceptance of Industrial Products

No such annexes have been negotiated for the moment. The PECA, in line with the Europe Agreement,
provides nevertheless the basis for such acceptance of products, similar to the one which operates in the
Community.

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1.2.3. Unilateral Declaration

This is attached to the Final Act and is annexed to this Communication.

Unilateral Community Declaration relating to attendance of the Estonian representatives to Committees.
Through this declaration, Estonia is invited to send observers to the meetings of the Committees estab-
lished or referred to under the Community legislation included in the annexes. This declaration follows the
principles of the Commission Communication on ‘Participation of candidate countries in Community
programmes, agencies and committees’ (1).

1.3. Relations with EFTA /EEA Member Countries

In accordance with the general information and consultation procedures set out in the European Economic
Area-Agreement and Protocol 12 of that Agreement, the Commission kept EFTA/EEA Member Countries
regularly informed on the progress of the negotiations and informed them on the final result thereof. The
EFTA/EEA Member Countries are in the initial stage of negotiating a parallel mutual recognition agreement
with Estonia.

2. Overall Appreciation

The Commission considers that the proposed PECA creates an acceptable balance of benefits for all parties
in the pre-accession framework. In all sectors the Community has secured effective market access — in
terms of access to all mandatory procedures of the other party. The PECA confirms that Estonia has taken
over the Community legislation in certain sectors before its accession. Both political and commercial
benefits are achieved with the PECA.

The Protocol will allow Community exporters,
if they so choose, to test and certify their industrial
products to the same (aligned) requirements prior to export, and then access that market without any
further conformity assessment requirements. The certification procedures will only need to be carried out
one time for both markets and against the same aligned requirements or standards. The recognition of
certification will permit savings and stimulate exports. European industry federations were consulted and
supported unequivocally the Protocol.

Industrial groups, while supporting the Protocol, have not always been able to quantify the costs or time
taken to obtain conformity assessment of their industrial products in Estonia. The precise extent of savings
in time, cost and market opportunity of this Protocol is therefore not feasible in every case to determine.
This may only be possible once the Protocol has been in operation for some time. However, on the basis
of a rough calculation, it is estimated (2) that this Protocol would create cost saving opportunities for the
European exporting industry of around EUR 6,5 millions per year and about EUR 13 millions per year in
terms of cost savings to Estonian exporters to the EC. Some of these savings will be passed on to European
importers and consumers.

Trade figures between the EC and Estonia are attached for information. In 2001 the general trade balance
in sectors covered by this Protocol shows a trade surplus for Estonia of around EUR 400 million owing to
Estonian strength in the electrical sector. However, the trade surplus is for the EU in lifts and safety of toys
sectors. It is expected that trade will increase further when the PECA is in force.

(1) COM (1999) 710 final, 20.12.1999, point 4.2.b.
(2) Working hypothesis that certification and other related costs amount to an average of 1,5 % of trade.

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In fact, most benefits are clearly not quantifiable, such as reduced time for accessing markets, better
predictability,
less protectionism, and harmonisation of systems. What can be ascertained is that any
agreement provides reciprocal levels of market access, in terms of conformity assessment.

These advantages outweigh greatly the resources that the Commission will have to engage in maintenance
activities of the Protocol, evaluated at 0.8 person per year and some travel and other expenses relating to
meetings and other activities such as editing guides.

In terms of the benefits to Estonia, the PECA will facilitate access to the Community market and will give
political credit for having aligned its legislation. Estonia regards the PECA as a means to develop closer
industrial relations with the EU and fully to integrate certain sectors with the Single Market before
accession.

II. THE DRAFT COUNCIL DECISIONS

A proposal for two Council decisions is attached. Both are similar to the Commission proposals for the
previous Council decisions on the signature on behalf of the Community and conclusion of the PECAs
with Latvia, Lithuania, Hungary and the Czech Republic (1).

The first one is concerned with the signature of the Protocol. Signature is required by Estonia for the
adoption of this Protocol. It is accordingly proposed that the President of the Council be authorised to
designate the person empowered to sign the Protocol on behalf of the Community, subject to conclusion
later, on the basis of Articles 133 and 300 of the Treaty.

The proposal for a second decision is concerned with the adoption of the PECA. In this context, the
in line with the previous Council decisions on the conclusion of PECAs and mutual
Council should,
recognition agreements, establish the appropriate Community procedure for the implementation and
management of the Protocol.

In particular, the Council should confer on the Commission, in consultation with the special committee
appointed by the Council, the necessary powers for the management and implementation of the Protocol.
Moreover,
the Council should delegate to the Commission, acting in consultation with the special
committee, the necessary powers to determine in certain cases the Community position with regard to
this Protocol in the Association Council, or where applicable the Association Committee. The delegation of
powers to the Commission includes delegation of the power to add new Annexes, since, as indicated in the
Preamble, membership of the European Union,
implies the effective
implementation of all the Community acquis.

for which Estonia has applied,

In all other cases the Community position with respect to the Protocol shall be determined by the Council,
acting by qualified majority, on a proposal from the Commission.

The Commission therefore proposes that the Council adopts the attached decisions on the signature and
conclusion of the PECA.

(1) For the Czech Republic, Council decision 2001/365/EC of 4 April 2001 (OJ L 135, 17.5.2001, p. 1). For Hungary,

Council decision 2001/366/EC of 4 April 2001 (OJ L 135, 17.5.2001, p. 35).

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EU-Estonia Trade — Annex to the Explanatory Memorandum to the Council (EUR 1 000)

1999

2000

2001

Import

Export

Balance

Total Trade

Import

Export

Balance

Total Trade

Import

Export

Balance

Total Trade

Electrical
sector

Lifts

Toys

Total
sectors

183 529

202 968

19 439

386 496 1 099 637 631 442 – 468 195 1 731 078 831 884 411 390 – 420 494 1 243 274

1

1 623

1 622

1 623

44

1 492

1 448

1 536

5

2 108

2 103

2 113

10 122

11 831

1 709

21 953

15 538

17 283

1 744

32 821

15 924

25 445

9 521

41 369

193 652

216 422

22 770

410 072 1 115 219 650 217 – 465 003 1 765 435 847 813 438 943 – 408 870 1 286 756

Source: Comext/Eurostat. Date extracted on 25 July 2002 and elaborated by DG Trade-F2.

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 133,
conjunction the first sentence of the first subparagraph of Article 300(2) thereof,

in

Having regard to the proposal from the Commission,

Whereas:

(1) The Europe Agreement establishing an association between the European Communities and their
Member States, of the one part, and the Republic of Estonia of the other part (1), entered into force
on 1st February 1998.

(2) Article 75 of the Europe Agreement provides that cooperation in the fields of standardisation and
conformity assessment shall seek to achieve the conclusion of agreements on mutual recognition.

(3) The Protocol to the Europe Agreement on Conformity Assessment and Acceptance of Industrial

Products has been negotiated by the Commission on behalf of the Community.

(4) Subject to its possible conclusion at a later date, the Protocol to the Europe Agreement on Conformity
Assessment and Acceptance of Industrial Products initialled in Brussels on 19th July 2002 should be
signed.

HAS DECIDED AS FOLLOWS:

Sole Article

Subject to a possible conclusion at a later date, the President of the Council
is hereby authorised to
designate the person empowered to sign, on behalf of the Community, the Protocol to the Europe
Agreement with the Republic of Estonia on Conformity Assessment and Acceptance of Industrial Products.

(1) OJ L 68, 9.3.1998, p. 3.