CELEX: 51996PC0137
Language: en
Date: 1996-03-27
Title: Proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States of the one part, and the Republic of Azerbaijan, of the other part

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  •M                         COMMISSION OF THE EUROPEAN COMMUNITIES
                                                               Brussels, 27.03.1996
                                                               COM(96) 137 final
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                                                               96/094 (AVC)
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                                                  Proposai
                                 for a Council and Commission Decision
                   on the conclusion of the Partnership and Cooperation Agreement
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                    between the European Communities and their Member States
                            of the one part, and the Republic of Azerbaijan,
                                             of the other part
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 ---pagebreak---  ---pagebreak---                                   Explanatory memorandum
1. The attached proposal for a Council and Commission Decision constitutes the legal
   instrument for the conclusion of the Partnership and Cooperation Agreement between the
   European Communities and their Member States, on the one hand, and the Republic of
   Azerbaijan, on the other.
2. Following the Council's adoption of the negotiating directives on 5 October 1992,
   negotiations with the Republic of Azerbaijan were held in the course of 1995. After two
   rounds of negotiations, the Agreement was initialled on 18 December 1995.
3. The Agreement is a mixed agreement covering areas for which both the Communities and
   the Member States are competent, and is concluded for an initial period often years.
   It establishes a political dialogue. The Agreement also covers trade in goods, labour
   conditions, establishment and operation of companies, cross-border supply of services,
   payments and capital, competition, intellectual, industrial and commercial property
   protection, legislative cooperation, economic cooperation, cooperation on human rights
   and democracy, cooperation in combatting illegal activities and illegal immigration, cultural
   cooperation and financial cooperation.
   The Agreement contains a clause which allows it to be suspended, even unilaterally, if it is
   considered that there has been a breach of the essential elements underlying the Agreement
   i.e. respect for democracy, human rights and the principles of the market economy.
   The Agreement sets out an institutional framework for its implementation with a
   Cooperation Council, a Cooperation Committee and a Parliamentary Cooperation
   Committee.
   Customs cooperation is covered by a separate protocol.
                                            IK
 ---pagebreak---     The Agreement will, as far as trade relations between the Community and the Republic of
    Azerbaijan are concerned, replace the Agreement on Trade and Commercial and Economic
    Cooperation between the European Economic Community and the European Atomic
    Energy Community, and the USSR, signed on 18 December 1989.
 5. The procedures of the three Communities (EC, EAEC and ECSC) for signing and
    concluding the Agreement differ.
    In the case of the EC, account will have to be taken of Opinion 1/94 delivered by the Court
    of Justice on 15 November 1994 on the competence of the European Community to
    conclude the agreements reached during the Uruguay Round.
    For the purpose of concluding the Agreement:
.   the Council will conclude the Agreement, with the assent of the European Parliament and
    having consulted the Economic and Social Committee, on behalf of the European
    Community in accordance with Article 54(2), the closing sentence of Article 57(2) and
    Articles 73c(2), 75, 84(2), 113 and 235 in conjunction with the second sentence of Article
    228(2) and the second subparagraph of Article 228(3) of the EC Treaty by adopting the
    attached decision;
.   the Commission will conclude the Agreement on behalf of the European Atomic Energy
    Community after the Council has approved it in accordance with the second paragraph of
    Article 101 of the Euratom Treaty.
.   the Commission will conclude the Agreement on behalf of the ECSC in accordance with
    the ECSC Treaty, after consulting the Consultative Committee and with the unanimous
    assent of the Council;
    The conclusion of the Agreement will have to be ratified by all the Member States given the
    mixed nature of the Agreement.
6. In view of the above, the Commission proposes that the Council adopt the annexed
    decision.
                                              lb
 ---pagebreak---                           COUNCIL AND COMMISSION DECISION
                                                OF
            on the conclusion of the Partnership and Cooperation Agreement
              between the European Communities and their Member States
                                and the Republic of Azerbaijan.
                                    (../.../ECSC, EC, EURATOM)
 THE COUNCIL OF THE EUROPEAN UNION,
 THE EUROPEAN COMMISSION,
 Having regard to the Treaty establishing the European Coal and Steel Community,
Having regard to the Treaty establishing the European Community, and in particular Article
 54(2), the closing sentence of Article 57(2) and Articles 73c(2), 75, £4(2), 113 and 235 in
 conjunction with the second sentence of Article 228(2) and the second subparagraph of Article
228(3) thereof,
Having regard to the Treaty establishing the European Atomic Energy Community, and in
particular the second paragraph of Article 101 thereof,
Having regard to the assent of the European Parliament,
Having regard to the approval of the Council given in accordance with Article 101 of the
Treaty establishing the European Atomic Energy Community,
Having consulted the ECSC Consultative Committee and the Economic and Social
Committee, and with the unanimous assent of the Council,
Whereas the conclusion of the Partnership and Cooperation Agreement between the European
Union and Azerbaijan signed in               on .......... would contribute to achieving the European
Communities' objectives;
Whereas that Agreement seeks to strengthen existing links, notably those established by the
Agreement on Trade and Commercial and Economic Cooperation between the European
Economic Community and the European Atomic Energy Community and the USSR, signed on
18 December 1989;
Whereas some of the obligations provided for in the Agreement in fields other than
Community trade policy affect the arrangements established by Community acts, particularly
acts relating to the right of establishment and to transport;
                                                      e
 ---pagebreak--- Whereas the Agreement imposes on the Community certain obligations relating to the
movement of capital and payments between the Community and Azerbaijan;
Whereas in the case of certain measures provided for in the Agreement and falling within the
Community's powers the EC Treaty provides no basis for action other than Article 235,
HAVE DECIDED AS FOLLOWS :
                                           Article 1
The Partnership and Cooperation Agreement between the European Union and the Republic
of Azerbaijan, together with the Protocol, the declarations and the exchange of letters, are
hereby approved on behalf of the European Community, the European Coal and Steel Com-
munity and the European Atomic Energy Community.
                                           Article 2
1. The position to be adopted by the Community in the Cooperation Council shall be
   determined by the Council, on a proposal from the Commission, or, where appropriate, by
   the Commission, in each case in accordance with the relevant provisions of the Treaties
   establishing the European Community, the European Coal and Steel Community and the
   European Atomic Energy Community.
2. In accordance with Article 79 of the Partnership and Cooperation Agreement, the President
   of the Council shall chair the Cooperation Council and shall present the Community's
   position. A representative of the Commission shall chair the Cooperation Committee in
   accordance with its rules of procedure and shall present the Community's position.
                                           Article 3
The President of the Council shall give the notification provided for in Article 100 of the
Agreement on behalf of the European Community. The President of the Commission shall give
such notification on behalf of the European Coal and Steel Community and the European
Atomic Energy Community.
Done at Brussels,
                                              U
 ---pagebreak---                                             Final Act
 The plenipotentiaries of:
 THE KINGDOM OF BELGIUM,
 THE KINGDOM OF DENMARK,
 THE FEDERAL REPUBLIC OF GERMANY,
 THE HELLENIC REPUBLIC,
 THE KINGDOM OF SPAIN,
 THE FRENCH REPUBLIC,
 IRELAND,
 THE ITALIAN REPUBLIC,
 THE GRAND DUCHY OF LUXEMBOURG,
 THE KINGDOM OF THE NETHERLANDS,
 THE REPUBLIC OF AUSTRIA,
 THE PORTUGUESE REPUBLIC,
THE REPUBLIC OF FINLAND,
THE KINGDOM OF SWEDEN,
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
Contracting Parties to the Treaty establishing the EUROPEAN COMMUNITY, the Treaty
establishing the EUROPEAN COAL AND STEEL COMMUNITY, and the Treaty
establishing the EUROPEAN ATOMIC ENERGY COMMUNITY,
hereinafter referred to as "the Member States", and of
the EUROPEAN COMMUNITY, THE EUROPEAN ATOMIC ENERGY COMMUNITY
and the EUROPEAN COAL AND STEEL COMMUNITY,
hereinafter referred to as "the Community",
of the one part, and
the plenipotentiaries of the Republic of Azerbaijan,
                                             / e.
 ---pagebreak--- of the other part,
meeting at .... on       in the year one thousand nine hundred and ninety-six for the signature
of the Partnership and Cooperation Agreement establishing a partnership between the
European Communities and their Members States, of the one part, and the Republic of
Azerbaijan, of the other part, hereinafter referred to as "the Partnership and Cooperation
Agreement", have adopted the following text :
the Partnership and Cooperation Agreement and the Protocol on mutual assistance in customs
matters.
The plenipotentiaries of the Member States and of the Community and the plenipotentiaries of
the Republic of Azerbaijan have adopted the texts of the Joint Declarations listed below and
annexed to this Final Act:
Joint Declaration (concerning the twelfth recital in the preamble)
Joint Declaration concerning Article 3bis of the Agreement
Joint Declaration concerning Article 5 of the Agreement
Joint Declaration concerning Article 14 of the Agreement
Joint Declaration concerning the notion of "control" in Article 24(b) and Article 36 of the
Agreement
Joint Declaration concerning Article 35 of the Agreement
Joint Declaration concerning Article 42 of the Agreement
Joint Declaration concerning Article 54 of the Agreement
Joint Declaration concerning Article 94 of the Agreement
The plenipotentiaries of the Member States and of the Community and the plenipotentiaries of
the Republic of Azerbaijan have adopted the exchange of letters listed below and annexed to
this Final Act:
Exchange of letters in relation to the establishment of companies
The plenipotentiaries of the Member States and the Community and the Republic of
Azerbaijan have also taken note of the declaration listed below annexed to this Final Act:
Unilateral Declaration by the French Republic on the Overseas Countries and Territories
Done at                   in the year one thousand nine hundred and ninety six.
For the Council and the Commission of the European Communities.
For the Republic of Azerbaijan.
                                           / /
 ---pagebreak---     PARTNERSHIP AND COOPERATION AGREEMENT
      BETWEEN THE EUROPEAN COMMUNITIES
   AND THEIR MEMBER STATES, OF THE ONE PART,
AND THE REPUBLIC OF AZERBAIJAN, OF THE OTHER PART
                     9-                           J*
 ---pagebreak---    PARTNERSHIP AND COOPERATION AGREEMENT
   establishing a partnership between the European Communities and their Member States, of the
   one part, and the Republic of Azerbaijan, of the other part.
   THE KINGDOM OF BELGIUM,
   THE KINGDOM OF DENMARK,
   THE FEDERAL REPUBLIC OF GERMANY,
   THE HELLENIC REPUBLIC,
   THE KINGDOM OF SPAIN,
   THE FRENCH REPUBLIC,
   IRELAND,
   THE ITALIAN REPUBLIC,
   THE GRAND DUCHY OF LUXEMBOURG,
   THE KINGDOM OF THE NETHERLANDS.
    AUSTRIA,
   THE PORTUGUESE REPUBLIC,
   FINLAND,
   THE KINGDOM OF SWEDEN,
  THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,
  Contracting Parties to the Treaty establishing the European Community, the Treaty establishing
  the European Coal and Steel Community, and the Treaty establishing the European Atomic
  Energy Community,
  hereinafter referred to as "Member States", and
  THE EUROPEAN COMMUNITY, THE EUROPEAN COAL AND STEEL COMMUNITY,
  AND THE EUROPEAN ATOMIC ENERGY COMMUNITY,
  hereinafter referred to as "the Community", of the one part,
  AND THE REPUBLIC OF AZERBAIJAN of the other part,
  CONSIDERING the links between the Community, its Member States and the Republic of
  Azerbaijan and the common values that they share,
V - - *                                            2                                     * rf
 ---pagebreak---  RECOGNIZING that the Community and the Republic of Azerbaijan wish to strengthen these
 links and to establish partnership and cooperation which would strengthen and widen the
 relations established in the past in particular by the Agreement between the European Economic
 Community and the European Atomic Energy Community and the Union of Soviet Socialist
 Republics on Trade and Commercial and Economic Cooperation, signed on 18 December 1989,
 which, since the dissolution of the USSR, applies mutatis mutandis to bilateral relations between
 the European Communities and each of the Independent States.
 CONSIDERING the commitment of the Community and its Member States and of the Republic
 of Azerbaijan to strengthening the political and economic freedoms which constitute the very
 basis of the partnership,
 RECOGNIZING in that context that support of the independence, sovereignty and territorial
 integrity of the Republic of Azerbaijan will contribute to safeguarding of peace and stability in
 Europe,
 CONSIDERING the commitment of the Parties to promote international peace and security, as
 well as the peaceful settlement of disputes and to cooperate to this end in the framework of the
 United Nations and the Organisation for Security and Cooperation in Europe,
DESIROUS of encouraging the process of regional cooperation in the areas covered by this
 agreement with neighbouring countries in order to promote the prosperity and stability of the
region and in particular initiatives aimed at fostering cooperation and mutual confidence among
Independent States of the Transcaucasus region and other neighbouring States,
CONSIDERING the firm commitment of the Community and its Member States and of the
Republic of Azerbaijan to the full implementation of all principles and provisions contained in the
Final Act of the Conference on Security and Cooperation in Europe (CSCE), the Concluding
Documents of the Madrid and Vienna Follow Up Meetings, the Document of the CSCE Bonn
Conference on Economic Cooperation, the Charter of Paris for a New Europe and the CSCE
Helsinki Document 1992 "The Challenges of Change", and other fundamental documents of the
OSCE,
CONVINCED of the paramount importance of the rule of law and respect for human rights,
particularly those of persons belonging to minorities,, the establishment of a multiparty system
with free and democratic elections and economic liberalization aimed at setting up a market
economy,
BELIEVING that full implementation of this Partnership and Cooperation Agreement will both
depend on and contribute to continuation and accomplishment of the political, economic and
legal reforms in the Republic of Azerbaijan, as well as the introduction of the factors necessary
for cooperation, notably in the light of the conclusions of the CSCE Bonn Conference,
DESIROUS of establishing and developing regular political dialogue on bilateral, regional and
international issues of mutual interest,
 ---pagebreak--- RECOGNIZING AND SUPPORTING the wish of the Republic of Azerbaijan to establish close
co-operation with European Institutions,
 CONSIDERING the necessity of promoting investment in the Republic of Azerbaijan, including
in the energy sector, and in this context the importance attached by the Community and its
Member States to equitable conditions for access to and transit for export of energy products;
 confirming the attachment of the Community and its Member States and of the Republic of
 Azerbaijan to the European Energy Charter, and to the full implementation of the Energy Charter
Treaty and the Energy Charter Protocol on energy efficiency and related environmental aspects,
TAKING ACCOUNT of the Community's willingness to provide for economic cooperation and
technical assistance as appropriate,
BEARING IN MIND the utility of the Agreement in favouring a gradual rapprochement between
the Republic of Azerbaijan and a wider area of cooperation in Europe and neighbouring regions
and its progressive integration into the open international system,
CONSIDERING the commitment of the Parties to liberalise trade, in conformity with World
Trade Organisation (WTO) rules,
CONSCIOUS of the need to improve conditions affecting business and investment, and
conditions in areas such as establishment of companies, labour, provision of services and capital
movements,
CONVINCED that this Agreement will create a new climate for economic relations between the
Parties and in particular for the development of trade and investment, which are essential to
economic restructuring and technological modernization,
DESIROUS of establishing close cooperation in the area of environment protection taking into
account the interdependence existing between the Parties in this field,
RECOGNIZING that co-operation for the prevention and control of illegal immigration
constitutes one of the primary objectives of this Agreement,
DESIROUS of establishing cultural cooperation and improving the flow of information,
HAVE AGREED AS FOLLOWS:
                                                                                      jrr
 ---pagebreak---                                            ARTICLE 1
A Partnership is hereby established between the Community and its Member States of the one
part, and the Republic of Azerbaijan of the other part. The objectives of this partnership are:
- to provide an appropriate framework for the political dialogue between the Parties allowing
   the development of political relations;
- to support the Republic of Azerbaijan's efforts to consolidate its democracy and to develop its
   economy and to complete the transition into a market economy;
- to promote trade and investment and harmonious economic relations between the Parties and
   so to foster their sustainable economic development;
- to provide a basis for legislative, economic, social, financial, civil scientific, technological and
   cultural cooperation.
                                                                                             sir
 ---pagebreak---                                               TITLE I
                                    GENERAL PRINCIPLES
                                            ARTICLE 2
Respect for democracy, principles of international law and human rights as defined in particular in
the United Nations Charter, the Helsinki Final Act and the Charter of Paris for a New Europe, as
well as the principles of market economy, including those enunciated in the documents of the
CSCE Bonn Conference, underpin the internal and external policies of the Parties and constitute
essential elements of partnership and of this Agreement.
                                            ARTICLE 3
The Parties consider that it is essential for their future prosperity and stability that the newly
independent states which have emerged from the dissolution of the Union of Soviet Socialist
Republics, hereinafter called "Independent States", should maintain and develop cooperation
among themselves in compliance with the principles of the Helsinki Final Act and with
international law and in the spirit of good neighbourly relations and will make every effort to
encourage this process.
                                          ARTICLE 3bis
The Parties shall as appropriate review changing circumstances in the Republic of Azerbaijan, in
particular regarding economic conditions there and implementation of market-oriented economic
reforms. The Cooperation Council may make recommendations to the Parties concerning
development of any part of this Agreement in the light of these circumstances.
                                                                                           st
 ---pagebreak---                                                 TITLE D
                                      POLITICAL DIALOGUE
                                              ARTICLE 4
 A regular political dialogue shall be established between the Parties which they intend to develop
 and intensify. It shall accompany and consolidate the rapprochement between the Community
 and the Republic of Azerbaijan, support the political and economic changes underway in that
 country and contribute to the establishment of new forms of cooperation. The political dialogue:
 - will strengthen the links of the Republic of Azerbaijan with the Community and its Member
    States, and thus with the community of democratic nations as a whole. The economic
    convergence achieved through this Agreement will lead to more intense political relations;
 - will bring about an increasing convergence of positions on international issues of mutual
    concern thus increasing security and stability in the region and promoting the future
    development of the Independent States of the Transcaucasus,
- shall foresee that the Parties endeavour to co-operate on matters pertaining to the
   strengthening of stability and security in Europe, the observance of the principles of
   democracy, and the respect and promotion of human rights, particularly those of persons
   belonging to minorities and shall hold consultations, if necessary, on relevant matters.
Such dialogue may take place on a regional basis, with a view to contributing towards the
resolution of regional conflicts and tensions.
                                              ARTICLE 5
At ministerial level, political dialogue shall take place within the Cooperation Council established
in Article 77 and on other occasions by mutual agreement.
                                             ARTICLE 6
Other procedures and mechanisms for political dialogue shall be set up by the Parties, and in
particular in the following forms:
- regular meetings at senior official level between representatives of the Community and its
   Member States on the one hand, and representatives of the Republic of Azerbaijan on the
   other hand;
                                                                                           .A#f
 ---pagebreak---    taking full advantage of diplomatic channels between the Parties including appropriate
   contacts in the bilateral as well as the multilateral field, such as United Nations, OSCE
   meetings and elsewhere,
   any other means, including the possibility of expert meetings which would contribute to
   consolidating and developing this dialogue.
                                             ARTICLE 7
Political dialogue at parliamentary level shall take place within the framework of the
Parliamentary Cooperation Committee established in Article 82.
                                                                                            ^rr
 ---pagebreak---                                                 TITLE HI
                                          TRADE IN GOODS
                                               ARTICLE 8
  1. The Parties shall accord to one another most-favoured-nation treatment in all areas in respect
       of:
 - customs duties and charges applied to imports and exports, including the method of collecting
     such duties and charges,
 - provisions relating to customs clearance, transit, warehouses and transhipment,
 - taxes and other internal charges of any kind applied directly or indirectly to imported goods,
 - methods of payment and the transfer of such payments,
 - the rules relating to the sale, purchase, transport, distribution and use of goods on the
     domestic market.
 2. The provisions of paragraph 1 shall not apply to:
 (a) advantages granted with the aim of creating a customs union or a free-trade area or pursuant
      to the creation of such a union or area,
(b) advantages granted to particular countries in accordance with the GATT and with other
      international arrangements in favour of developing countries;
(c) advantages accorded to adjacent countries in order to facilitate frontier traffic
3. The provisions of paragraph 1 shall not apply, during a transitional period expiring on the
      date of the Republic of Azerbaijan acceding to the GATT or on 31 December 1998,
     whichever is earlier, to advantages defined in Annex I granted by the Republic of Azerbaijan
     to other states which have emerged from the dissolution of the USSR.
                                               ARTICLE 9
1. The Parties agree that the principle of free transit is an essential condition of attaining the
     objectives of this Agreement.
     In this connection each Party shall secure unrestricted transit via or through its territory of
     goods originating in the customs territory or destined for the customs territory of the other
     Party.
2. The rules described in the Article V, paragraphs 2, 3, 4 and 5 of the GATT are applicable
     between the two Parties.
3. The rules contained in this Article are without prejudice to any special rules relating to
     specific sectors, in particular such as transport, or products agreed between the Parties, or to
     the provisions of Article 86.
                                                                                               ,4#f
 ---pagebreak---                                              ARTICLE 10
 Without prejudice to the rights and obligations stemming from international conventions on the
 temporary admission of goods which bind both Parties, each Party shall furthermore grant the
 other Party exemption from import charges and duties on goods admitted temporarily, in the
 instances and according to the procedures stipulated by any other international convention on this
 matter binding upon it, in conformity with its legislation. Account shall be taken of the
 conditions under which the obligations stemming from such a convention have been accepted by
the Party in question.
                                             ARTICLE 11
 1. Goods originating in the Republic of Azerbaijan shall be imported into the Community free of
      quantitative restrictions without prejudice to the provisions of Articles 13, 16 and 17 of this
      Agreement.
2. Goods originating in the Community shall be imported into the Republic of Azerbaijan free of
      all quantitative restrictions and measures of equivalent effect without prejudice to Articles 13,
      16 and 17 of this Agreement
                                             ARTICLE 12
Goods shall be traded between the Parties at market-related prices.
                                             ARTICLE 13
1. Where any product is being imported into the territory of one of the Parties in such increased
     quantities or under such conditions as to cause or threaten to cause injury to domestic
     producers of like or direct competitive products, the Community or the Republic of
     Azerbaijan, whichever is concerned, may take appropriate measures in accordance with the
     following procedures and conditions.
2. Before taking any measures, or in cases to which paragraph 4 applies as soon as possible
    thereafter, the Community or the Republic of Azerbaijan, as the case may be, shall supply the
     Cooperation Council with all relevant information with a view to seeking a solution
     acceptable to both Parties as provided for in Title XI.
3. If, as a result of the consultations, the Parties do not reach agreement within 30 days of
     referral to the Cooperation Council on actions to avoid the situation, the Party which
     requested consultations shall be free to restrict imports of the products concerned to the
     extent and for such time as is necessary to prevent or remedy the injury, or to adopt other
     appropriate measures.
4. In critical circumstances where delay would cause damage difficult to repair, the Parties may
    take the measures before the consultations, on the condition that consultations shall be
    offered immediately after taking such action.
                                                    10
                                                                                               ^f
 ---pagebreak---  5. In the selection of measures under this Article, the Contracting Parties shall give priority to
      those which cause least disturbance to the achievement of the aims of this Agreement.
 6    Nothing in this Article shall prejudice or affect in any way the taking, by either Party, of
      anti-dumping or countervailing measures in accordance with Article VI of the GATT, the
      Agreement on implementation of Article VI of the GATT, the Agreement on interpretation
      and application of Articles VI, XVI and XXIII of the GATT or related internal legislation.
                                            ARTICLE 14
 The Parties undertake to consider development of the provisions in this Agreement on trade in
 goods between them, as circumstances allow, including the situation arising from the accession of
 the Republic of Azerbaijan to the WTO. The Cooperation Council may make recommendations
 on such developments to the Parties which could be put into effect, where accepted, by virtue of
 agreement between the Parties in accordance with their respective procedures.
                                            ARTICLE 15
 The Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in
transit justified on grounds of public morality, public policy or public security, the protection of
 health and life of humans, animals or plants; the protection of natural resources, the protection of
national treasures of artistic, historic or archaeological value or the protection of intellectual,
industrial and commercial property or rules relating to gold and silver Such prohibitions or
restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised
restriction on trade between the Parties.
                                           ARTICLE 16
This Title shall not apply to trade in textile products falling under Chapters 50 to 63 of the
Combined Nomenclature. Trade in these products shall be governed by a separate agreement,
initialled on 17 November 1993 and applied provisionally since 1 January 1993, and by any
successor agreements.
                                           ARTICLE 17
1. Trade in products covered by the Treaty establishing the European Coal and Steel Community
     shall be governed by the provisions of this Title, with the exception of Article 11
2. A contact group on coal and steel matters is set up, comprising representatives of the
     Community on the one hand, and representatives of the Republic of Azerbaijan on the other.
    The contact group shall exchange, on a regular basis, information on all coal and steel matters
     of interest to the Parties.
                                           ARTICLE 18
Trade in nuclear materials will be conducted in accordance with the provisions of the Treaty
establishing the European Atomic Energy Community. If necessary, trade in nuclear materials
shall be subject to the provisions of a specific Agreement to be concluded between the European
Atomic Energy Community and the Republic of Azerbaijan.
                                                  11
                                                                                            ïtrT
 ---pagebreak---                                              TITLE IV
                PROVISIONS AFFECTING BUSINESS AND INVESTMENT
                                           CHAPTER 1
                                        Labour Conditions
                                           ARTICLE 19
 1. Subject to the laws, conditions and procedures applicable in each Member State, the
    Community and the Member States shall endeavour to ensure that the treatment accorded to
    Azerbaijani nationals legally employed in the territory of a Member State shall be free from
    any discrimination based on nationality, as regards working conditions, remuneration or
    dismissal, as compared to its own nationals
2. Subject to the laws, conditions and procedures applicable in the Republic of Azerbaijan, the
    Republic of Azerbaijan shall ensure that the treatment accorded to nationals of a Member
    State legally employed in the territory of the Republic of Azerbaijan shall be free from any
    discrimination based on nationality, as regards working conditions, remuneration or dismissal,
    as compared to its own nationals.
                                           ARTICLE 20
The Cooperation Council shall examine which improvements can be made in working conditions
for business people consistent with the international commitments of the Parties, including those
set out in the document of the CSCE Bonn Conference.
                                           ARTICLE 21
The Cooperation Council shall make recommendations for the implementation of Articles 19 and
20.
                                                 12
                                                                                    ^rT
 ---pagebreak---                                                CHAPTER D
                 Conditions affecting the establishment and operation of companies
                                               ARTICLE 22
  1. The Community and its Member States shall grant treatment no less favourable than that
       accorded to any third country for the establishment of Azerbaijani companies as defined in
       Article 24(d).
   2. Without prejudice to the reservations listed in Annex IV, the Community and its Member
       States shall grant to subsidiaries of Azerbaijani companies established in their territories a
       treatment no less favourable than that granted to any Community companies, in respect of
       their operation.
  3.    The Community and its Member States shall grant to branches of Azerbaijani companies
       established in their territories treatment no less favourable than that accorded to branches of
       companies of any third country', in respect of their operation.
  4.   Without prejudice to the reservations listed in Annex V, the Republic of Azerbaijan shall
       grant for the establishment of Community companies as defined in Article 24(d) treatment no
       less favourable than that accorded to Azerbaijani companies or to any third country
       companies, whichever is the better, and shall grant to subsidiaries and branches of
       Community companies established in its territory treatment no less favourable than that
       accorded to its own companies or branches or to any third country company or branch,
       whichever is the better, in respect of their operations.
s    ^                                                13                                       <7*^f
 ---pagebreak---                                                ARTICLE 23
  1. Without prejudice to the provisions of Article 96, the provisions of .Article 22 shall not apply
       to air transport, inland waterways transport and maritime transport
  2. However, in respect of activities, as indicated below, undertaken by shipping agencies for the
       provision of services to international maritime transport, including intermodal transport
       operations involving a sea-leg, each Party shall permit to the companies of the other Party to
       have a commercial presence in its territory in the form of subsidiaries or branches, under
       conditions of establishment and operation no less favourable than those accorded to its own
       companies or to subsidiaries or branches of companies of any third country, whichever are the
       better, and this in conformity with the legislation and regulations applicable in each Party.
 3. Such activities include, but are not limited to:
 a) marketing and sales of maritime transport and related services through direct contact with
      customers, from quotation to invoicing, whether these services are operated or offered by the
      service supplier itself or by service suppliers with which the service seller has established
      standing business arrangements,
 b) purchase and use, on their own account or on behalf of their customers (and the resale to
      their customers) of any transport and related services, including inward transport services by
      any mode, particularly inland waterways, road and rail, necessary for the supply of an
      integrated service;
 c) preparation of documentation concerning transport documents, customs documents, or other
      documents related to the origin and character of the goods transported;
 d) provision of business information by any means, including computerised information systems
     and electronic data interchange (subject to any non-discriminatory restrictions concerning
     telecommunications);
e) setting up of any business arrangement, including participation in the company's stock and the
     appointment of personnel recruited locally (or, in the case of foreign personnel, subject to the
     relevant provisions of this Agreement), with any locally established shipping agency;
f) acting on behalf of the companies, inter alia in organizing the call of the vessel or taking over
     cargoes when required
                                              ARTICLE 24
For the purpose of this Agreement.
(a) A "Community company" or an "Azerbaijani company" respectively shall mean a company set
     up in accordance with the laws of a Member State or of the Republic of Azerbaijan
     respectively and having its registered office or central administration, or principal place of
     business in the territory of the Community or the Republic of Azerbaijan respectively.
     However, should the company, set up in accordance with the laws of a Member State or the
     Republic of Azerbaijan respectively, have only its registered office in the territory of the
 ---pagebreak---      Community or the Republic of Azerbaijan respectively, the company shall be considered a
     Community or Azerbaijani company respectively if its operations possess a real and
     continuous link with the economy of one of the Member States or the Republic of Azerbaijan
     respectively.
(b) "Subsidiary" of a company shall mean a company which is effectively controlled by the first
     company.
(c) "Branch" of à company shall mean a place of business not having legal personality which has
     the appearance of permanency, such as the extension of a parent body, has a management and
     is materially equipped to negotiate business with third parties so that the latter, although
     knowing that there will if necessary be a legal link with the parent body, the head office of
     which is abroad, do not have to deal directly with such parent body but may transact business
     at the place of business constituting the extension.
(d) "Establishment" shall mean the right of Community or Azerbaijani companies as referred to in
     point (a), to take up economic activities by means of the setting up of subsidiaries and
     branches in the Republic of Azerbaijan or in the Community respectively
(e) "Operation" shall mean the pursuit of economic activities.
(f) "Economic activities" shall mean activities of an industrial, commercial and professional
     character.
    With regard to international maritime transport, including inter modal operations involving a
    sea leg, nationals of the Member States or of the Republic of Azerbaijan established outside
    the Community or the Republic of Azerbaijan respectively, and shipping companies
    established outside the Community or the Republic of Azerbaijan and controlled by nationals
    of a Member State or Azerbaijani nationals respectively, shall also be beneficiaries of the
    provisions of this Chapter and Chapter III if their vessels are registered in that Member State
    or in the Republic of Azerbaijan respectively in accordance with their respective legislation.
                                             ARTICLE 25
1. Notwithstanding any other provisions of the Agreement, a Party shall not be prevented from
    taking measures for prudential reasons, including for the protection of investors, depositors,
    policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or
    to ensure the integrity and stability of the financial system. Where such measures do not
    conform with the provisions of the Agreement, they shall not be used as a means of avoiding
    the obligations of a Party under the Agreement.
2. Nothing in the Agreement shall be construed to require a Party to disclose information
    relating to the affairs and accounts of individual customers or any confidential or proprietary
    information in the possession of public entities
3. For the purpose of this Agreement, "financial services" shall mean those activities described in
    Annex III.
                                                   15
                                                                                         .**-9^
 ---pagebreak---                                                     ARTICLE 26
 The provisions of this Agreement shall not prejudice the application by each Party of any measure
 necessary to prevent the circumvention of its measures concerning third country access to its
 market, through
 marL-pt   t h r n n o h the
                         thp provisions
                             nrnviçinnc of
                                        n f this
                                            this Agreement
                                                 Aorf»f»mf»nt
                                                    ARTICLE 27
 1. Notwithstanding the provisions of Chapter I of this Title, a Community company or an
      Azerbaijani company established in the territory of the Republic of Azerbaijan or the
      Community respectively shall be entitled to employ, or have employed by one of its
      subsidiaries or branches, in accordance with the legislation in force in the host country of
      establishment, in the territory of the Republic of Azerbaijan and the Community respectively,
      employees who are nationals of Community Member States and the Republic of Azerbaijan
      respectively, provided that such employees are key personnel as defined in paragraph 2, and
     that they are employed exclusively by companies, or branches The residence and work
      permits of such employees shall only cover the period of such employment
 2. Key personnel of the above mentioned companies herein referred to as "organizations" are
      "intra-corporate transferees" as defined in (c) in the following categories, provided that the
     organization is a legal person and that the persons concerned have been employed by it or
     have been partners in it (other than majority shareholders), for at least the year immediately
     preceding such movement.
(a) Persons working in a senior position with an organization, who primarily direct the
     management of the establishment, receiving general supervision or direction principally from
     the board of directors or stockholders of the business or their equivalent, including:
   - directing the establishment or a department or subdivision of the establishment,
   - supervising and controlling the work of other supervisory, professional or managerial,
        employees,
   - having the authority personally to hire and fire or recommend hiring, firing or other
        personnel actions,
(b) Persons working within an organization who possess uncommon knowledge essential to the
    establishment's service, research equipment, techniques or management. The assessment of
    such knowledge may reflect, apart from knowledge specific to the establishment, a high level
    of qualification referring to a type of work or trade requiring specific technical knowledge,
    including membership of an accredited profession;
(c) An "intra-corporate transferee" is defined as a natural person working within an organization
    in the territory of a Party, and being temporarily transferred in the context of pursuit of
    economic activities in the territory of the other Party; the organization concerned must have
    its principal place of business in the territory of a Party and the transfer be to an establishment
    (branch, subsidiary) of that organization, effectively pursuing like economic activities in the
    territory of the other Party.
                                                          16                                  ^fff
 ---pagebreak---                                             ARTICLE 29
 1. The Parties shall use their best endeavours to avoid taking any measures or actions which
     render the conditions for the establishment and operation of each other's companies more
     restrictive than the situation existing on the day preceding the date of signature of the
     Agreement
2. The provisions of this Article are without prejudice to those of Article 37: the situations
     covered by such Article 37 shall be solely governed by its provisions to the exclusion of any
     other.
3. Acting in the spirit of partnership and cooperation and in the light of the provisions of Article
     43 the Government of the Republic of Azerbaijan shall inform the Community of its intentions
     to submit new legislation or adopt new regulations which may render the conditions for the
     establishment or operation in the Republic of Azerbaijan of subsidiaries and branches of
     Community companies more restrictive than the situation existing on the day preceding the
     date of signature of the Agreement. The Community may request the Republic of Azerbaijan
    to communicate the drafts of such legislation or regulations and to enter into consultations
    about those drafts
4. Where new legislation or regulations introduced in the Republic of Azerbaijan would result in
    rendering the conditions for operation of subsidiaries and branches of Community companies
    established in the Republic of Azerbaijan more restrictive than the situation existing on the
    day of signature of the Agreement, such respective legislation or regulations shall not apply
    during three years following the entry into force of the relevant act to those subsidiaries and
    branches already established in the Republic of Azerbaijan at the time of entry into force of
    the relevant act
                                           CHAPTER IQ
  Cross border supply of services between the Community and the Republic of Azerbaijan
                                           ARTICLE 30
1. The Parties undertake in accordance with the provisions of this Chapter to take the necessary
    steps to allow progressively the supply of services by Community or Azerbaijani companies
    which are established in a Party other than that of the person for whom the services are
    intended taking into account the development of the service sectors in the Parties
2. The Cooperation Council shall make recommendations for the implementation of paragraph 1.
                                                17
                                                                                     ^r
 ---pagebreak---                                              ARTICLE 31
 The Parties shall cooperate with the aim of developing a market oriented service sector in the
 Republic of Azerbaijan
                                             ARTICLE 32
 1.    The Parties undertake to apply effectively the principle of unrestricted access to the
      international maritime market and traffic on a commercial basis:
 (a) the above provision does not prejudice the rights and obligations arising from the United
      Nations Convention on a Code of Conduct for Liner Conferences, as applicable to one or
      other Contracting Party to this Agreement. Non-conference lines will be free to operate in
      competition with a conference as long as they adhere to the principle of fair competition on a
      commercial basis,
(b) the Parties affirm their commitment to a freely competitive environment as being an essential
     feature of the dry and liquid bulk trade
2. In applying the principles of paragraph 1, the Parties shall:
(a) not apply, as from entry into force of this agreement, any cargo sharing provisions of bilateral
     agreements between any Member States of the Community and the former Soviet Union;
(b) not introduce cargo sharing clauses into future bilateral agreements with third countries, other
     than in those exceptional circumstances where liner shipping companies from one or other
     Party to tlpis Agreement would not otherwise have an effective opportunity to ply for trade to
     and from the third country concerned;
(c) prohibit cargo sharing arrangements in future bilateral agreements concerning dry and liquid
     bulk trade;
(d) abolish upon entry into force of this Agreement, all unilateral measures, administrative,
    technical and other obstacles which could have restrictive or discriminatory effects on the free
     supply of services in international maritime transport.
3. Each Party shall grant, inter alia, no less favourable treatment, for the ships operated by
     nationals or companies of the other Party, than that accorded to a Party's own ships, with
     regard to access to ports open to international trade, the use of infrastructure and auxiliary
    maritime services of the ports, as well as related fees and charges, customs facilities and the
    assignment of berths and facilities for loading and unloading.
4.    Nationals and companies of the Community providing international maritime transport
    services shall be free to provide international sea-river services in the inland waterways of the
    Republic of Azerbaijan and vice versa.
                                                   18                                     /
 ---pagebreak---                                               ARTICLE 33
 With a view to assuring a coordinated development of transport between the Parties, adapted to
 their commercial needs, the conditions of mutual market access and provision of services in
 transport by road, rail and inland waterways and, if applicable, in air transport may be dealt with
 by specific agreements where appropriate negotiated between the Parties after entry into force of
 this Agreement
                                             CHAPTER IV
                                          General Provisions
                                             ARTICLE 34
 1. The provisions of this Title shall be applied subject to limitations justified on grounds of
     public policy, public security or public health.
 2. They shall not apply to activities which in the territory of either Party are connected, even
     occasionally, with the exercise of official authority.
                                             ARTICLE 35
For the purpose of this Title, nothing in the Agreement shall prevent the Parties from applying
their laws and regulations regarding entry and stay, work, labour conditions and establishment of
natural persons and supply of services, provided that, in so doing, they do not apply them in a
manner as to nullify or impair the benefits accruing to any Party under the terms of a specific
provision of the Agreement The above provision does not prejudice the application of Article
34.
                                             ARTICLE 36
Companies which are controlled and exclusively owned by Azerbaijani companies and
Community companies jointly shall also be beneficiaries of the provisions of Chapters II, III and
IV.
                                             ARTICLE 37
Treatment granted by either Party to the other thereunder shall, as from the day one month prior
to the date of entry into force of the relevant obligations of the General Agreement on Trade in
Services (GATS), in respect of sectors or measures covered by the GATS, in no case be more
favourable than that accorded by such first Party under the provisions of GATS and this in
respect of each service sector, sub-sector and mode of supply.
                                                   19                                    s*T
 ---pagebreak---                                             ARTICLE 38
 For the purposes of Chapters II, III and IV, no account shall be taken of treatment accorded by
 the Community, its Member States or the Republic of Azerbaijan pursuant to commitments
 entered into in economic integration agreements in accordance with the principles of Article V of
 the GATS
                                            ARTICLE 39
 1. The most-favoured-nation treatment granted in accordance with the provisions of this Title
      shall not apply to the tax advantages which the Parties are providing or will provide in the
     future on the basis of agreements to avoid double taxation, or other tax arrangements
 2. Nothing in this Title shall be construed to prevent the adoption or enforcement by the Parties
     of any measure aimed at preventing the avoidance or evasion of taxes pursuant to the tax
     provisions of agreements to avoid double taxation and other tax arrangements, or domestic
     fiscal legislation
 3.   Nothing in this Title shall be construed to prevent Member States or the Republic of
     Azerbaijan from distinguishing, in the application of the relevant provisions of their fiscal
     legislation, between tax payers who are not in identical situations, in particular as regards
     their place of residence
                                            ARTICLE 40
Without prejudice to Article 27, no provision of Chapters II, III and IV shall be interpreted as
giving the right to:
- nationals of the Member States or of the Republic of Azerbaijan respectively to enter, or stay
in, the territory of the Republic of Azerbaijan or the Community respectively in any capacity
whatsoever, and in particular as a shareholder or partner in a company or manager or employee
thereof or supplier or recipient of services,
- Community subsidiaries or branches of Azerbaijani companies to employ or have employed in
the territory of the Community nationals of the Republic of Azerbaijan,
- Azerbaijani subsidiaries or branches of Community companies to employ or have employed in
the territory of the Republic of Azerbaijan nationals of the Member States,
- Azerbaijani companies or Community subsidiaries or branches of Azerbaijani companies to
supply Azerbaijani persons to act for and under the control of other persons by temporary
employment contracts,
- Community companies or Azerbaijani subsidiaries or branches of Community companies to
supply workers who are nationals of the Member States by temporary employment contracts.
                                                 20                                   ^rfo
 ---pagebreak---                                              CHAPTER V
                                   Current payments and capital
                                             ARTICLE 41
 1. The Parties undertake to authorise in freely convertible currency, any current payments
     between residents of the Community and of the Republic of Azerbaijan connected with the
     movement of goods, services or persons made in accordance with the provisions of this
     Agreement.
2. With regard to transactions on the capital account of balance of payments, from entry into
     force of the Agreement, the free movement of capital relating to direct investments made in
     companies formed in accordance with the laws of the host country and investments made in
     accordance with the provisions of Chapter II, and the liquidation or repatriation of these
     investments and of any profit stemming therefrom shall be ensured
3. The provisions of paragraph 2 shall not prevent the Republic of Azerbaijan from applying
     restrictions on outward direct investment by Azerbaijani residents. Such restrictions shall not
    apply to subsidiaries and branches of Community companies. Five years after the entry into
    force of this Agreement, the Parties agree to consult over the maintenance of these
    restrictions, taking into account all the relevant monetary, fiscal and financial considerations
4. Without prejudice to paragraph 2 or to paragraph 5, as from entry into force of this
    Agreement, no new foreign exchange restrictions on the movement of capital and current
    payments connected therewith between residents of the Community and the Republic of
    Azerbaijan shall be introduced and the existing arrangements shall not become more
    restrictive
5. The Parties shall consult each other with a view to facilitating the movement of forms of
    capital other than those referred to in paragraph 2 above between the Community and the
    Republic of Azerbaijan in order to promote the objectives of this Agreement
6. With reference to the provisions of this Article, until a full convertibility of the Azerbaijani
    currency within the meaning of Article VIII of the Articles of Agreement of the International
    Monetary Fund (IMF) is introduced, the Republic of Azerbaijan may in exceptional
    circumstances apply exchange restrictions connected with the granting or taking up of short
    and medium-term financial credits to the extent that such restrictions are imposed on the
    Republic of Azerbaijan for the granting of such credits and are permitted according to the
    Republic of Azerbaijan's status under the IMF The Republic of Azerbaijan shall apply these
    restrictions in a non-discriminatory manner. They shall be applied in such a manner as to
    cause the least possible disruption to this Agreement. The Republic of Azerbaijan shall inform
    the Cooperation Council promptly of the introduction of such measures and of any changes
    therein
                                                   21                                       ^'t
 ---pagebreak---    Without prejudice to paragraphs 1 and 2, where, in exceptional circumstances, movement of
   capital between the Community and the Republic of Azerbaijan cause, or threaten to cause,
   serious difficulties for the operation of exchange rate policy or monetary policy in the
   Community or the Republic of Azerbaijan, the Community and the Republic of Azerbaijan,
   respectively, may take safeguard measures with regard to movements of capital between the
   Community and the Republic of Azerbaijan for a period not exceeding six months if such
   measures are strictly necessary.
                                          CHAPTER VI
                 Intellectual, industrial and commercial property protection
                                          ARTICLE 42
1. Pursuant to the provisions of this Article and of Annex II, the Republic of Azerbaijan shall
   continue to improve the protection of intellectual, industrial and commercial property rights in
   order to provide, by the end of the fifth year after the entry into force of the Agreement, for a
   level of protection similar to that existing in the Community, including effective means of
   enforcing such rights.
2. By the end of the fifth year after entry into force of the Agreement, the Republic of
   Azerbaijan shall accede to the multilateral conventions on intellectual, industrial and
   commercial property rights referred to in paragraph 1 of Annex II to which Member States
   are parties or which are de facto applied by Member States, according to the relevant
   provisions contained in these conventions.
                                                 22
                                                                                                  r
 ---pagebreak---                                                TITLE V
                                 LEGISLATIVE COOPERATION
                                            ARTICLE 43
1. The Parties recognize that an important condition for strengthening the economic links
     between the Republic of Azerbaijan and the Community is the approximation of the Republic
     of Azerbaijan's existing and future legislation to that of the Community The Republic of
     Azerbaijan shall endeavour to ensure that its legislation will be gradually made compatible
     with that of the Community.
2. The approximation of laws shall extend to the following areas in particular: customs law,
     company law, banking law, company accounts and taxes, intellectual property, protection of
     workers at the workplace, financial services, rules on competition, public procurement,
     protection of health and life of humans, animals and plants, the environment and legislation
     regarding the exploitation and utilisation of natural resources, consumer protection, indirect
     taxation, technical rules and standards, nuclear laws and regulations and transport.
3. The Community shall provide the Republic of Azerbaijan with technical assistance for the
     implementation of these measures, which may include, inter alia :
   -   the exchange of experts;
   -   the provision of early information especially on relevant legislation;
   -   organization of seminars;
   -   training activities;
   -   aid for translation of Community legislation in the relevant sectors.
4. The Parties agree to examine ways to apply their respective competition laws on a concerted
    basis in such cases where trade between them is affected.
                                                  23
                                                                                          **«f
 ---pagebreak---                                              TITLE VI
                                   ECONOMIC COOPERATION
                                            ARTICLE 44
  1 The Community and the Republic of Azerbaijan shall establish economic cooperation aimed at
     contributing to the process of economic reform and recovery and sustainable development of
     the Republic of Azerbaijan. Such cooperation shall strengthen existing economic links, to the
     benefit of both parties.
     Policies and other measures will be designed to bring about economic and social reforms and
     restructuring of the economic and trading systems in the Republic of Azerbaijan and will be
     guided by the requirements of sustainability and harmonious social development, they will
     also fully incorporate environmental considerations.
     To this end, cooperation will concentrate, in particular, on economic and social development,
     human resources development, support for enterprises (including privatization, investment
     and development of financial services), agriculture and food, energy, transport, tourism,
     environmental protection, regional cooperation and monetary policy
     Special attention shall be devoted to measures, as in conformity with the legislation in force in
    the Republic of Azerbaijan capable of fostering cooperation among the Independent States of
    the Transcaucasus region, and with other neighbouring states, with a view to stimulating a
    harmonious development of the region.
    Where appropriate, economic cooperation and other forms of cooperation provided for in this
    Agreement may be supported by technical assistance from the Community, taking into
    account the Community's relevant Council regulation applicable to technical assistance in the
    Independent States, the priorities agreed upon in the indicative programme related to
    Community technical assistance to the Republic of Azerbaijan and its established coordination
    and implementation procedures.
                                           ARTICLE 45
                      Cooperation in the field of trade in goods and services
The Parties will cooperate with a view to ensuring that the Republic of Azerbaijan's international
trade is conducted in conformity with the rules of the WTO.
Such cooperation shall include specific issues directly relevant to trade facilitation, including:
•   formulation of policy on trade and trade-related questions, including payments, and clearing
    mechanisms,
• drafting of relevant legislation,
• assistance to prepare for the Republic of Azerbaijan's eventual accession to the WTO
                                                 24
                                                                                                jr?
 ---pagebreak---                                              ARTICLE 46
                                        Industrial cooperation
  1 Cooperation shall aim at promoting the following in particular:
 -  the development of business links between economic operators of both sides,
 -  Community participation in the Republic of Azerbaijan's efforts to restructure its industry,
 -  the improvement of management,
-   the development of appropriate market-based commercial rules and practices, as well as the
    transfer of know-how,
 - environmental protection
 2. The provisions of this Article shall not affect the enforcement of Community competition
      rules applicable to undertakings.
                                           ARTICLE 46 bis
                                             Construction
 The Parties shall cooperate in the field of construction industry.
 This cooperation shall, inter alia, aim at modernizing and restructuring the construction sector in
the Republic of Azerbaijan in line with the principles of a market economy and duly taking into
account related health, safety and environmental aspects.
                                             ARTICLE 47
                                Investment promotion and protection
 1. Bearing in mind the respective powers and competences of the Community and the Member
     States, cooperation shall aim to establish a favourable climate for private investment, both
     domestic and foreign, especially through better conditions for investment protection, the
     transfer of capital and the exchange of information on investment opportunities.
2. The aims of cooperation shall be in particular:
- the conclusion, where appropriate, between the Member States and the Republic of Azerbaijan
   of agreements for the promotion and protection of investment;
- the conclusion, where appropriate, between the Member States and the Republic of Azerbaijan
   of agreements to avoid double taxation;
- the creation of favourable conditions for attracting foreign investments into the Azerbaijani
   economy,
- to establish stable and adequate business law and conditions, and to exchange information on
   laws, regulations and administrative practices in the field of investment,
- to exchange information on investment opportunities in the form of, inter alia, trade fairs,
   exhibitions, trade weeks and other events.
                                                   25
 ---pagebreak---                                                 ARTICLE 48
                                            Public Procurement
  The Parties shall cooperate to develop conditions for open and competitive award of contracts
  for goods and services in particular through calls for tenders.
                                                ARTICLE 49
                   Cooperation in the field of standards and conformity assessment
  1. Cooperation between the Parties shall promote alignment with internationally agreed criteria,
         principles and guidelines followed in the field of quality. The required actions will facilitate
         progress towards mutual recognition in the field of conformity assessment, as well as the
         improvement of the quality of Azerbaijani products .
 2 To this end they shall seek to cooperate in technical assistance projects which will:
 • promote appropriate cooperation with organizations and institutions specialized in these fields;
 • promote the use of Community technical regulations and the application of European
      standards and conformity assessment procedures;
 • permit the sharing of experience and technical information in the field of quality management
                                                ARTICLE 50
                                        Mining and raw materials
 1. The Parties shall aim at increasing investment and trade in mining and raw materials
2. The cooperation shall focus in particular on the following areas:
-    exchange of information on the prospects of the mining and non-ferrous metals sectors,
-    the establishment of a legal framework for cooperation,
-    trade matters,
-    the adoption and implementation of environmental legislation,
-   training,
-    safety in the mining industry.
                                               ARTICLE 51
                                Cooperation in science and technology
1.     The Parties shall promote cooperation in civil scientific research and technological
      development (RTD) on the basis of mutual benefit and, taking into account the availability of
      resources, adequate access to their respective programmes and subject to appropriate levels
      of effective protection of intellectual, industrial and commercial property rights (IPR).
                                                     26                                         ^r
 ---pagebreak---  2. Science and technology cooperation shall cover:
 - the exchange of scientific and technical information,
 - joint RTD activities,
 - training activities and mobility programmes for scientists, researchers and technicians engaged
     in RTD on both sides.
     Where such cooperation takes the form of activities involving education and/or training, it
      should be carried out in accordance with the provisions of Article 52
     The Parties, on the basis of mutual agreement, can engage in other forms of cooperation in
      science and technology
 3.    The Cooperation covered by this Article shall be implemented according to specific
      arrangements to be negotiated and concluded in accordance with the procedures adopted by
      each Party, and which shall set out, inter alia, appropriate EPR provisions
                                             ARTICLE 52
                                       Education and training
 1. The Parties shall cooperate with the aim of raising the level of general education and
      professional qualifications in the Republic of Azerbaijan, both in the public and private
      sectors.
2. The cooperation shall focus in particular on the following areas:
- updating higher education and training systems in the Republic of Azerbaijan including the
    system of certification of higher educational establishments and diplomas of higher education;
- the training of public and private sector executives and civil servants in priority areas to be
    determined;
- cooperation between educational establishments and between educational establishments and
    firms;
- mobility for teachers, graduates, administrators, young scientists and researchers, and young
    people;
- promoting teaching in the field of European Studies within the appropriate institutions;
- teaching Community languages;
- post-graduate training of conference interpreters:
- training of journalists;
- training of trainers.
- exchange of teaching methods, encouraging the utilisation of modern educational programmes
    and technical means of education.
3.    The possible participation of one Party in the respective programmes in the field of education
     and training of the other Party could be considered in accordance with their respective
     procedures and, where appropriate, institutional frameworks and plans of cooperation will
     then be established building on participation of the Republic of Azerbaijan in the Community's
     TEMPUS programme
                                                    27
                                                                                              r-^f
 ---pagebreak---                                             ARTICLE 53
                             Agriculture and the agro-industrial sector
 The purpose of cooperation in this area shall be the pursuance of agrarian reform, the
 modernization, privatization and restructuring of agriculture, the agro-industrial and service
 sectors in the Republic of Azerbaijan, development of domestic and foreign markets for
 Azerbaijani products, in conditions that ensure the protection of the environment, taking into
 account the necessity to improve security of food supply as well as the development of
 agri-business, the processing and distribution of agricultural products. The Parties shall also aim
 at the gradual approximation of Azerbaijani standards to Community technical regulations
 concerning industrial and agricultural food products including sanitary and phytosanitary
 standards.
                                            ARTICLE 54
                                               Energy
 1. Cooperation shall take place within the principles of the market economy and the European
     Energy Charter, and bearing in mind the Energy Charter Treaty and the Protocol on Energy
     Efficiency and Related Environmental Aspects, against a background of the progressive
     integration of the energy markets in Europe.
2. The cooperation shall include among others the following areas:
- formulation and development of energy policy,
- improvement in management and regulation of the energy sector in line with a market
    economy,
- improvement of energy supply, including security of supply, in an economic and
    environmentally sound manner,
- promotion of energy saving arid energy efficiency and implementation of the Energy Charter
    Protocol on Energy Efficiency and related environmental aspects,
- modernisation of energy infrastructures,
- improvement of energy technologies in supply and end use across the range of energy types,
- management and technical training in the energy sector,
- transportation and transit of energy materials and products,
- The introduction of the range of institutional, legal, fiscal and other conditions necessary to
    encourage increased energy trade and investment.
- development of hydro-electric and other renewable energy resources
3     The Parties shall exchange relevant information relating to investment projects in the energy
      sector, in particular concerning the construction and refurbishing of oil and gas pipelines or
      other means of transporting energy products. They shall cooperate with a view to
      implementing as efficaciously as possible the provisions of Title IV and of Article 47, in
      respect of investments in the energy sector.
                                                 28
                                                                                             ,^f
 ---pagebreak---                                                   ARTICLE 55
                                                  Environment
  1. Bearing in mind the European Energy Charter and the Declaration of the Lucerne Conference
       of 1993, and taking into account the Energy Charter Treaty, and especially its article 19, and
       the Energy Charter Protocol on Energy Efficiency and related environmental aspects, the
       Parties shall develop and strengthen their cooperation on environment and human health.
  2. Cooperation shall aim at combating the deterioration of the environment and in particular:
 -    effective monitoring of pollution levels and assessment of environment; system of information
      on the state of the environment;
 -    combating local, regional and transboundary air and water pollution,
 -    ecological restoration;
 -    sustainable, efficient and environmentally effective production and use of energy,
 -    ecological safety of industrial facilities;
 -    classification and safe handling of chemicals,
 -    water quality,
 -   waste reduction, recycling and safe disposal, implementation of the Basle Convention,
 -   the environmental impact of agriculture, soil erosion, and chemical pollution;
 -   the protection and renewal of forests;
 -   the conservation of biodiversity, protected areas and sustainable use and management of
     biological resources;
 -   land-use planning, including construction and urban planning;
 -   use of economic and fiscal instruments;
 -   global climate change,
-    environmental education and awareness;
-    technical assistance concerning rehabilitation of zones affected by radioactivity and addressing
    related health and social problems;
-    implementation of the Espoo Convention on Environmental Impact Assessment in a
    transboundary context
3. Cooperation shall take place particularly through:
-   disaster planning and other emergency situations,
-   exchange of information and experts, including information and experts dealing with the
    transfer of clean technologies and the safe and environmentally sound use of biotechnologies,
-   joint research activities,
-   improvement of laws towards Community standards;
-   environmental training and institutional strengthening;
-   cooperation at regional level, including cooperation within the framework of the European
    Environment Agency, and at international level,
-   development of strategies, particularly with regard to global and climatic issues and also in
    view of achieving sustainable development,
-   environmental impact studies,
-   ecological monitoring
                                                      29
                                                                                              ^ff
 ---pagebreak---                                               ARTICLE 56
                                                Transport
  The Parties shall develop and strengthen their cooperation in the field of transport
  This cooperation shall, inter alia, aim at restructuring and modernizing transport systems and
  networks in the Republic of Azerbaijan, and developing and ensuring, where appropriate,
  compatibility of transportation systems in the context of achieving a more global transport
  system. In particular, consideration shall be given to traditional communications links among
  Independent States in the Transcaucasus region and with other neighbouring states
  The cooperation shall include, inter alia:
 - the modernizing of management and operations of road transport, railways, ports and airports;
 - modernization and development of railways, waterways, roads, ports, airports and air
      navigation infrastructure including the modernization of major routes of common interest and
     the trans-European links for the above modes, particularly those related to the TRACECA
     project; and training in the above-mentioned areas;
 - promotion and development of multi-modal transport;
 - the promotion of joint research and development programmes;
 - preparation of the legislative and institutional framework for policy development and
     implementation including privatization of the transport sector
                                              ARTICLE 57
                                Postal services and telecommunications
 Within their respective powers and competences the Parties shall expand and strengthen
 cooperation in the following areas:
- the establishment of policies and guidelines for the development of the telecommunications
     sector and postal services;
- development of principles of a tariff policy and marketing in telecommunications and postal
    services;
- carry out transfer of technology and know how, including on European Technical standards
    and certification systems;
- encouraging the development of projects for telecommunications and postal services and
    attracting investment;
- enhancing efficiency and quality of the provision of telecommunications and postal services,
    amongst others through liberalization of activities of sub-sectors;
- advanced application of telecommunications, notably in the area of electronic funds transfer,
- management of telecommunications networks and their "optimization";
- an appropriate regulatory basis for the provision of telecommunication and postal services and
    for the use of the radio frequency spectrum;
- training in the field of telecommunications and postal services for operations in market
    conditions.
                                                  30                                          ^
 ---pagebreak---                                              ARTICLE 58
                                          Financial Services
 Cooperation shall in particular aim at facilitating the involvement of the Republic of Azerbaijan in
universally accepted systems of mutual settlements. Technical assistance shall focus on:
- the development of a modern system of private and in particular commercial banking and
   financial services, the development of a common market of credit resources, the involvement
   of the Republic of Azerbaijan in a universally accepted system of mutual settlements;
- the development of fiscal system and its institutions in the Republic of Azerbaijan, exchange of
   experience and personnel training;
- the development of insurance services, which would, inter alia, create a favourable framework
   for Community companies participation in the establishment of joint ventures in the insurance
   sector in the Republic of Azerbaijan, as well as the development of export credit insurance.
This cooperation shall in particular contribute to foster the development of relations between the
Republic of Azerbaijan and the Member States in the financial services sector.
                                          ARTICLE 58 bis
                             Enterprise restructuring and privatisation
Recognizing that privatisation is of fundamental importance to a sustainable economic recovery,
the parties agree to cooperate in the development of the necessary institutional, legal and
methodological framework. To this end, technical assistance shall be given to implement the
privatisation programme adopted by the Parliament of Azerbaijan. Particular attention will be
paid to the orderly and transparent nature of the privatisation process
Technical assistance shall focus on, inter alia:
•   the development of an institutional base within the government of Azerbaijan capable of
    defining and managing the privatisation process;
    the establishment of a database of enterprises;
    the corporatisation of enterprises;
    the development of a system of mass privatisation, which will aim to transfer property to the
    population, based on a system of vouchers;
    the development of a system for the registration of share holdings,
    the development of a system for the sale by tender of particular enterprises deemed not
    suitable for participation in the mass privatisation programme
    the restructuring of those enterprise not yet ready for privatisation
    the development of private enterprise, particularly in the small and medium enterprise sector.
The objective of this cooperation is to contribute to the revitalization of the economy of
Azerbaijan, the promotion of foreign investment and the development of relations between
Azerbaijan and the Member States
                                                   31
                                                                                              ^f
 ---pagebreak---                                               ARTICLE 59
                                         Regional development
  1. The Parties shall strengthen cooperation on regional development and land-use planning
 2. To this end, they shall encourage exchange of information by national, regional and local
      authorities of the Community and its Member States and of the Republic of Azerbaijan on
      regional and land-use planning policy and on methods of formulation of regional policies with
      special emphasis on the development of disadvantaged areas
     They shall also encourage direct contacts between the above mentioned authorities and
      between regional and public organizations responsible for regional development planning with
      the aim, inter alia, to exchange methods and ways of fostering regional development.
                                             ARTICLE 60
                                           Social cooperation
 1. With regard to health and safety, the parties shall develop cooperation between them with the
      aim of improving the level of protection of the health and safety of workers
The cooperation shall include notably:
- education and training on health and safety issues with specific attention to high risk sectors of
    activity;
- development and promotion of preventive measures to combat work related diseases and
    other work related ailments;
- prevention of major accident hazards and the management of toxic chemicals,
- research to develop the knowledge base in relation to working environment and the health and
    safety of workers.
2. With regard to employment, the cooperation shall include notably technical assistance to:
-   optimization of the labour market,
-   modernization of the job-finding and consulting services;
-   planning and management of the restructuring programmes,
-   encouragement of local employment development;
-   exchange of information on the programmes of flexible employment, including those
    stimulating self-employment and promoting entrepreneurship.
3. The Parties shall pay special attention to cooperation in the sphere of social protection which,
     inter alia, shall include cooperation in planning and implementing social protection reforms in
     the Republic of Azerbaijan.
    These reforms shall aim to develop in the Republic of Azerbaijan methods of protection
     intrinsic to market economies and shall comprise all forms of social protection
                                                   32
                                                                                              4<( f
 ---pagebreak---                                             ARTICLE 61
                                               Tourism
 The Parties shall increase and develop cooperation between them, which shall include:
 - facilitating the tourist trade,
 - increasing the flow of information;
 - transferring know-how;
 - studying the opportunities for joint operations;
 - cooperation between official tourism bodies;
 - training for tourism development.
                                            ARTICLE 62
                                  Small and medium-sized enterprises
 1. The Parties shall aim to develop and strengthen small and medium-sized enterprises and their
     associations and cooperation between SMEs in the Community and the Republic of
     Azerbaijan.
2. Cooperation shall include technical assistance, in particular in the following areas:
- the development of a legislative framework for SMEs;
- the development of an appropriate infrastructure (an agency to support SMEs,
    communications, assistance to the creation of a fund for SMEs);
- the development of technology parks.
- training in the areas of marketing, accounting and control of the quality of products.
                                            ARTICLE 63
                                   Information and communication
The Parties shall support the development of modern methods of information handling, including
the media, and stimulate the effective mutual exchange of information. Priority shall be given to
programmes aimed at providing the general public with basic information about the Community
and the Republic of Azerbaijan, including, where possible, access to databases, in full respect of
intellectual property rights.
                                                 33
                                                                                         '^•r
 ---pagebreak---                                            ARTICLE 64
                                       Consumer Protection
 The Parties will enter into close cooperation aimed at achieving compatibility between their
 systems of consumer protection. This cooperation may include the exchange of information on
 legislative work and institutional reform, establishment of permanent systems of mutual
 information on dangerous products, the improvement of information provided to consumers
 especially on prices, characteristics of products and services offered, the development of
 exchanges between the consumer interest representatives, and increasing the compatibility of
 consumer protection policies, and the organization of seminars and training periods.
                                           ARTICLE 65
                                              Customs
 1. The aim of cooperation shall be to guarantee compliance with all the provisions scheduled for
     adoption in connection with trade and fair trade and to achieve the approximation of the
     Republic of Azerbaijan's customs system to that of the Community.
2. Cooperation shall include the following in particular:
-   the exchange of information;
-   the improvement of working methods;
-   the introduction of the Combined Nomenclature and the single administrative document;
-   the interconnection between the transit systems of the Community and of the Republic of
    Azerbaijan;
- simplification of inspections and formalities in respect of the carriage of goods;
- the support in the introduction of modern customs information systems;
- the organization of seminars and training periods.
Technical assistance shall be provided where necessary.
3. Without prejudice to further cooperation foreseen in this agreement and in particular Articles
     69, and 71, mutual assistance in customs matters between administrative authorities of the
     Parties shall take place in accordance with the provisions of the Protocol attached to this
     Agreement.
                                                 34
                                                                                         ^r
 ---pagebreak---                                              ARTICLE 66
                                        Statistical cooperation
Cooperation in this area shall have as its aim the development of an efficient statistical system to
provide the reliable statistics needed to support and monitor the process of economic reform and
contribute to the development of private enterprise in the Republic of Azerbaijan. It shall also
address the protection of confidentially.
The Parties, in particular, shall cooperate in the following fields.
- adaptation of the Azerbaijani statistical system to international methods, standards
    and classification,
- exchange of statistical information;
- provision of necessary statistical macro- and microeconomic information to implement and
    manage economic reforms.
The Community shall contribute to this end by rendering technical assistance to the Republic of
Azerbaijan
                                             ARTICLE 67
                                              Economics
The Parties shall facilitate the process of economic reform and the coordination of economic
policies by cooperating to improve understanding of the fundamentals of their respective
economies and the design and implementation of economic policy in market economies. To this
end, the Parties shall exchange information on macroeconomic performance and prospects.
The Community shall provide technical assistance so as to:
- assist the Republic of Azerbaijan in the process of economic reform by providing expert
   advisory and technical assistance,
- encourage cooperation among economists in order to expedite the transfer of know-how for
   the drafting of economic policies, and provide for wide dissemination of policy-relevant
   research.
                                          ARTICLE 67 bis
                                           Monetary Policy
At the request of the Azerbaijani authorities, the Union shall provide technical assistance
designed to support the efforts of the Republic of Azerbaijan towards the strengthening of its
monetary system and the introduction of full convertibility of the currency.
This will include technical assistance for the design and application of Azerbaijan's monetary and
credit policy, in full coordination with the international financial institutions, for the training of
personnel, and for the development offinancialmarkets, including the stock exchange, it shall
also include informal exchanges of views concerning the principles and the functioning of the
European Monetary System and EC regulations onfinancialmarkets and capital movements.
                                                   35
                                                                                                    .**f
 ---pagebreak---                                                TITLE VII
               COOPERATION ON MATTERS RELATING TO DEMOCRACY
                                        AND HUMAN RIGHTS
                                              ARTICLE 68
The Parties shall cooperate on all questions relevant to the establishment or reinforcement of
democratic institutions, including those required in order to strengthen the rule of law, and the
protection of human rights and fundamental freedoms according to international law and OSCE
principles.
This cooperation shall take the form of technical assistance programmes intended to assist, inter
alia, in the drafting of relevant legislation and regulations, the implementation of such legislation;
the functioning of the judiciary, the role of the State in questions of justice; and the operation of
the electoral system. They may include training where appropriate. The Parties shall encourage
contacts and exchanges between their national, regional and judicial authorities, parliamentarians,
and non-governmental organisations.
                                                    36
 ---pagebreak---                                                 TITLE VTH
          COOPERATION ON PREVENTION OF ILLEGAL ACTIVITIES AND THE
                 PREVENTION AND CONTROL OF ILLEGAL IMMIGRATION
                                               ARTICLE 69
 The Parties shall establish cooperation aimed at preventing illegal activities such as:
 •    illegal activities in the sphere of economics, including corruption;
 •    illegal transactions of various goods, including industrial waste;
 •    counterfeiting
 Cooperation in the abovementioned areas will be based on mutual consultation and close
 interaction. Technical and administrative assistance may be provided, including in the following
 areas:
     drafting of national legislation in the sphere of preventing illegal activities;
     creation of information centres;
     increasing the efficiency of institutions engaged in preventing illegal activities,
     training of personnel and development of research infrastructures,
    elaboration of mutually acceptable measures impeding illegal activities.
                                               ARTICLE 70
                                             Money laundering
 1. The Parties agree on the necessity of making efforts and cooperating in order to prevent the
     use of their financial systems for laundering of proceeds from criminal activities in general and
     drug offences in particular.
2. Cooperation in this area shall include administrative and technical assistance with the purpose
     of establishing suitable standards against money laundering equivalent to those adopted by the
     Community and international fora in this field, including the Financial Action Task Force
     (FATF)
                                               ARTICLE 71
                                                  Drugs
Within the framework of their respective powers and competencies the Parties shall cooperate in
increasing the effectiveness and efficiency of policies and measures to counter the illicit
production, supply and traffic of narcotic drugs and psychotropic substances, including the
prevention of diversion of precursor chemicals, as well as in promoting drug demand prevention
and reduction. The cooperation in this area shall be based on mutual consultation and close
coordination between the Parties over the objectives and measures on the various drug-related
fields.
                                                                                             *r
 ---pagebreak---                                           ARTICLE 71 BIS
                                         Illegal Immigration
1.     The Member States of the European Union and the Republic of Azerbaijan agree to
       cooperate in order to prevent and control illegal immigration. To this end:
       - The Republic of Azerbaijan agrees to readmit any of its nationals illegally present on the
          territory of a Member State, upon request by the latter and without further
          formalities;
       - and each Member State agrees to readmit any of its nationals, as defined for community
          purposes, illegally present on the territory of the Republic of Azerbaijan, upon request
          by the latter and without further formalities
       The Member States and the Republic of Azerbaijan will also provide their nationals with
       appropriate identity documents for such purposes.
2.     The Republic of Azerbaijan agrees to conclude bilateral agreements with Member States
   which so request, regulating specific obligations for readmission including an obligation
   for the readmission of nationals of other countries and stateless persons who have arrived
   on the territory of any such Member State from the Republic of Azerbaijan or who have
   arrived on the territory of the Republic of Azerbaijan from any such Member State.
3.     The Cooperation Council shall examine what other joint efforts can be made to prevent and
       control illegal immigration.
                                                    38
                                                                                            ^
                                                                                                 -r
 ---pagebreak---                                             TITLE IX
                                 CULTURAL COOPERATION
                                          ARTICLE 72
 The Parties undertake to promote, encourage and facilitate cultural cooperation. Where
 appropriate, the Community's cultural cooperation programmes or those of one or more Member
 States may be the subject of cooperation and further activities of mutual interest may be
 developed.
 The cooperation may include:
- exchange of information and experience in the sphere of protection and maintenance of
    monuments and historic places (architectural legacy),
- cultural exchange between institutions, artists, and other people working in the area of art
                                               39
^^                                                                                           rft
 ---pagebreak---                                              TITLE X
      FINANCIAL COOPERATION ES THE FIELD OF TECHNICAL ASSISTANCE
                                           ARTICLE 73
In order to achieve the objectives of this Agreement and in accordance with Articles 74, 75 and
76, the Republic of Azerbaijan shall benefit from temporary financial assistance from the
Community by way of technical assistance in the form of grants. The purpose of this assistance
shall be to accelerate the economic transformation of the Republic of Azerbaijan.
                                           ARTICLE 74
This financial assistance shall be covered within the framework of TACIS as foreseen in the
Community's relevant Council Regulation
                                           ARTICLE 75
The objectives and the areas of the Community's financial assistance shall be laid down in an
indicative programme reflecting established priorities to be agreed between the two Parties taking
into account the Republic of Azerbaijan's needs, sectoral absorption capacities and progress with
reform. The Parties shall inform the Cooperation Council thereof
                                          ARTICLE 76
In order to permit optimum use of the resources available, the Parties shall ensure that
Community technical assistance contributions are made in close coordination with those from
other sources such as the Member States, other countries, and international organizations such as
the International Bank for Reconstruction and Development and the European Bank for
Reconstruction and Development.
                                                40
                                                                                           ^t
 ---pagebreak---                                               TITLE XI
                  INSTITUTIONAL, GENERAL AND FINAL PROVISIONS
                                            ARTICLE 77
A Cooperation Council is hereby established which shall supervise the implementation of this
Agreement. It shall meet at ministerial level once a year. It shall examine any major issues
arising within the framework of the Agreement and any other bilateral or international issues of
mutual interest for the purpose of attaining the objectives of this Agreement. The Cooperation
Council may also make appropriate recommendations, by agreement between the two Parties.
                                            ARTICLE 78
1 The Cooperation Council shall consist of the members of the Council of the European Union
    and members of the Commission of the European Communities, on the one hand, and of
    members of the Government of the Republic of Azerbaijan, on the other.
2. The Cooperation Council shall establish its rules of procedure.
3. The office of President of the Cooperation Council shall be held alternately by a representative
    of the Community and by a member of the Government of the Republic of Azerbaijan.
                                            ARTICLE 79
1. The Cooperation Council shall be assisted in the performance of its duties by a Cooperation
    Committee composed of representatives of the members of the Council of the European
    Union and of members of the Commission of the European Communities on the one hand and
    of representatives of the Government of the Republic of Azerbaijan on the other, normally at
    senior civil servant level. The office of President of the Cooperation Committee shall be held
    alternately by the Community and by the Republic of Azerbaijan.
    In its rules of procedure the Cooperation Council shall determine the duties of the
    Cooperation Committee, which shall include the preparation of meetings of the Cooperation
    Council, and how the Committee shall function.
2. The Cooperation Council may delegate any of its powers to the Cooperation Committee,
    which will ensure continuity between meetings of the Cooperation Council.
                                            ARTICLE 80
The Cooperation Council may decide to set up any other special committee or body that can
assist it in carrying out its duties and shall determine the composition and duties of such
committees or bodies and how they shall function.
                                                  41
                                                                                       ^tftf
 ---pagebreak---                                               ARTICLE 81
  When examining any issue arising within the framework of this Agreement in relation to a
  provision referring to an article of the GATT/WTO, the Cooperation Council shall take into
  account to. the greatest extent possible the interpretation that is generally given to the article of
  the GATTAVTO in question by the Contracting Parties to the GATT/WTO~
                                              ARTICLE 82
 A Parliamentary Cooperation Committee is hereby established. It shall be a forum for Members
 of the Azerbaijani Parliament and the European Parliament to meet and exchange views. It shall
 meet at intervals which it shall itself determine.
                                              ARTICLE 83
  1. The Parliamentary Cooperation Committee shall consist of members of the European
      Parliament, on the one hand, and of members of the Azerbaijani Parliament, on the other.
 2. The Parliamentary Cooperation Committee shall establish its rules of procedure.
 3. The Parliamentary Cooperation Committee shall be presided in turn by the
     European Parliament and the Azerbaijani Parliament respectively, in accordance with the
     provisions to be laid down in its rules of procedure.
                                              ARTICLE 84
The Parliamentary Cooperation Committee may request relevant information regarding the
implementation of this Agreement from the Cooperation Council, which shall then supply the
Committee with the requested information.
The Parliamentary Cooperation Committee shall be informed of the recommendations of the
Cooperation Council
The Parliamentary Cooperation Committee may make recommendations to the Cooperation
Council.
                                              ARTICLE 85
 1. Within the scope of this Agreement, each Party undertakes to ensure that natural and legal
     persons of the other Party have access free of discrimination in relation to its own nationals to
     the competent courts and administrative organs of the Parties to defend their individual rights
     and their property rights, including those concerning intellectual, industrial and commercial
     property.
2. Within the limits of their respective powers and competences, the Parties
- shall encourage the adoption of arbitration for the settlement of disputes arising out of
    commercial and cooperation transactions concluded by economic operators of the Community
    and those of the Republic of Azerbaijan,
 ---pagebreak---      agree that where a dispute is submitted to arbitration, each party to the dispute may, except
    where the rules of the arbitration centre chosen by the parties provide otherwise, choose its
     own arbitrator, irrespective of his nationality, and that the presiding third arbitrator or the sole
     arbitrator may be a citizen of a third State;
    will recommend their economic operators to choose by mutual consent the law applicable to
    their contracts,
     shall encourage recourse to the arbitration rules elaborated by the United Nations Commission
    on International Trade Law (Uncitral) and to arbitration by any centre of a State signatory to
    the Convention on Recognition and Enforcement of Foreign Arbitral Awards done at New
    York on 10 June 1958
                                               ARTICLE 86
Nothing in the Agreement shall prevent a Party from taking any measures:
 (a) which it considers necessary to prevent the disclosure of information contrary to its essential
      security interests,
(b) which relate to the production of, or trade in arms, munitions or war materials or to research,
      development or production indispensable for defence purposes, provided that such measures
      do not impair the conditions of competition in respect of products not intended for
      specifically military purposes,
(c) which it considers essential to its own security in the event of serious internal disturbances
     affecting the maintenance of law and order, in time of war or serious international tension
     constituting threat of war or in order to carry out obligations it has accepted for the purpose
     of maintaining peace and international security;
(d) which it considers necessary to respect its international obligations and commitments in the
     control of dual use industrial goods and technology.
                                              ARTICLE 87
1. In the fields covered by this Agreement and without prejudice to any special provisions
     contained therein.
- the arrangements applied by the Republic of Azerbaijan in respect of the Community shall not
    give rise to any discrimination between the Member States, their nationals or their companies
    or firms;
- the arrangements applied by the Community in respect of the Republic of Azerbaijan shall not
    give rise to any discrimination between Azerbaijani nationals or its companies or firms.
2. The provisions of paragraph 1 are without prejudice to the right of the Parties to apply the
     relevant provisions of their fiscal legislation to tax payers who are not in identical situations as
     regards their place of residence
                                                     43
 ---pagebreak---                                              ARTICLE 88
  1. Each of the two Parties may refer to the Cooperation Council any dispute relating to the
     application or interpretation of this Agreement.
 2. The Cooperation Council may settle the dispute by means of a recommendation
 3. In the event of it not being possible to settle the dispute in accordance with paragraph 2,
     either Party may notify the other of the appointment of a conciliator; the other Party must
     then appoint a second conciliator within two months. For the application of this procedure,
     the Community and the Member States shall be deemed to be one Party to the dispute
    The Cooperation Council shall appoint a third conciliator
     The conciliators' recommendations shall be taken by majority vote. Such recommendations
     shall not be binding upon the Parties
 4. The Cooperation Council may establish rules of procedure for dispute settlement.
                                            ARTICLE 89
 The Parties agree to consult promptly through appropriate channels at the request of either Party
to discuss any matter concerning the interpretation or implementation of this Agreement and
 other relevant aspects of the relations between the Parties.
The provisions of this Article shall in no way affect and are without prejudice to Articles 13, 88
and 94.
                                            ARTICLE 90
Treatment granted to the Republic of Azerbaijan thereunder shall in no case be more favourable
than that granted by the Member States to each other
                                            ARTICLE 91
For the purposes of this Agreement, the term "Parties" shall mean the Republic of Azerbaijan on
the one part, and the Commumty, or the Member States, or the Community and the Member
States, in accordance with their respective powers, on the other part.
                                            ARTICLE 92
Insofar as matters covered by this Agreement are covered by the Energy Charter Treaty and
Protocols thereto, such Treaty and Protocols shall upon entry into force apply to such matters
but only to the extent that such application is provided for therein.
                                                  44                                >-/*
 ---pagebreak---                                             ARTICLE 93
 This Agreement is concluded for an initial period of ten years The Agreement shall be
 automatically renewed year by year provided that neither Party gives the other Party written
 notice of denunciation of the Agreement six months before it expires
                                            ARTICLE 94
 1. The Parties shall take any general or specific measures required to fulfil their obligations under
     the Agreement They shall see to it that the objectives set out in the Agreement are attained.
 2. If either Party considers that the other Party has failed to fulfil an obligation under the
     Agreement, it may take appropriate measures. Before so doing, except in cases of special
     urgency, it shall supply the Cooperation Council with all relevant information required for a
     thorough examination of the situation with a view to seeking a solution acceptable to the
     Parties.
     In the selection of these measures, priority must be given to those which least disturb the
     functioning of the Agreement        These measures shall be notified immediately to the
     Cooperation Council if the other Party so requests.
                                           ARTICLE 95
Annexes I, II, III, IV and V together with the Protocol shall form an integral part of this
Agreement.
                                           ARTICLE 96
This Agreement shall not, until equivalent rights for individuals and economic operators have
been achieved thereunder, affect rights assured to them through existing Agreements binding one
or more Member States, on the one hand, and the Republic of Azerbaijan, on the other, except in
areas falling within Community competence and without prejudice to the obligations of Member
States resulting from this Agreement in areas falling within their competence
                                           ARTICLE 97
This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing
the European Community, the European Coal and Steel Community and the European Atomic
Energy Community are applied and under the conditions laid down in those Treaties and, on the
other hand, to the territory of the Republic of Azerbaijan.
                                           ARTICLE 98
The Secretary-General of the Council of the European Union shall be the depository of this
Agreement.
                                                  45
                                                                                   ^   :   ^
 ---pagebreak---                                             ARTICLE 99
The original of this Agreement of which the Danish, Dutch, English, Finnish, French, German,
Greek, Italian, Portuguese. Spanish, Swedish and Azerbaijani languages are equally authentic,
shall be deposited with the Secretary-General of the Council of the European Union.
                                           ARTICLE 100
This Agreement will be approved by the Parties in accordance with their own procedures
This Agreement shall enter into force on the first day of the second month following the date on
which the Parties notify the Secretary-General of the Council of the European Union that the
procedures referred to in the first paragraph have been completed.
Upon its entry into force, and as far as relations between the Republic of Azerbaijan and the
Community are concerned, this Agreement shall replace the Agreement between the European
Economic Community, the European Atomic Energy Community and the Union of Soviet
Socialist Republics on trade and economic and commercial cooperation signed in Brussels on 18
December 1989
                                           ARTICLE 101
In the event that, pending the completion of the procedures necessary for the entry into force of
this Agreement, the provisions of certain parts of this Agreement are put into effect by means of
an Interim Agreement between the Community and the Republic of Azerbaijan, the Contracting
Parties agree that, in such circumstances, the term "date of entry into force of the Agreement"
shall mean the date of entry into force of the Interim Agreement.
                                                  46
 ---pagebreak---                                  LIST OF DOCUMENTS ATTACHED
Annex I    Indicative list of advantages granted by the Republic of Azerbaijan to the
           Independent States in accordance with Article 8(3).
Annex D    Intellectual, industrial and commercial property conventions referred to in Article 42.
Annex i n Financial services definitions, referred to in Article 25.
Annex IV Community reservations in accordance with Article 22 (2).
Annex V    Reservations of the Republic of Azerbaijan in accordance with Article 22 (4).
Protocol on mutual assistance between administrative authorities in customs matters
                                                47                                   , S'~fy
 ---pagebreak---                                                                                       ANNEX I
Advantages granted by the Republic of Azerbaijan to the Independent States in
accordance with Article 8(3)
1. No import duties are applied
2. No export duties are applied with respect to goods delivered under annual bilateral interstate
   trade and cooperation arrangements, within the nomenclature stipulated therein.
3. No VAT is applied on import
4. No excise duties are applied on import
   ^
                                              48
                                                                                   ^f
 ---pagebreak---                                                                                            ANNEX II
  INTELLECTUAL, I N D U S T R U L AND COMMERCIAL P R O P E R T Y CONVENTIONS REFERRED T O IN
                                               A R T I C L E 42
 1 Paragraph 2 of Article 42 concerns the following multilateral conventions:
    - Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971),
    - International Convention for the Protection of Performers, Producers of Phonograms
        and Broadcasting Organizations (Rome, 1961);
    - Protocol relating to the Madrid Agreement concerning the International Registration of
        Marks (Madrid, 1989);
    - Nice Agreement concerning the International Classification of Goods and Services for the
        purposes of the Registration of Mcirks (Geneva 1977 and amended in 1979),
    - Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for
        the purposes of Patent Procedures (1977, modified in 1980);
    -   International Convention for the Protection of New Varieties of Plants (UPOV) (Geneva
        Act. 1991).
2. The Cooperation Council may recommend that paragraph 2 of Article 42 shall apply to other
     multilateral conventions. If problems; in the area of intellectual, industrial and commercial
     property affecting trading conditions were to occur, urgent consultations will be undertaken,
     at the request of either party, with a view to reaching mutually satisfactory solutions
3. The Parties confirm the importance they attach to the obligations arising from the following
     multilateral conventions:
    - Paris Convention for the Protection of Industrial Property (Stockholm Act, 1967 and
        amended in 1979);
    - Madrid Agreement concerning the International Registration of Marks (Stockholm Act,
1967 and amended in 1979),
    - Patent Cooperation Treaty (Washington, 1970, amended in 1979 and modified in 1984)
4. From the entry into force of this Agreement, the Republic of Azerbaijan shall grant to
     Community companies and nationals, in respect of the recognition and protection of
     intellectual, industrial and commercial property, treatment no less favourable than that
     granted by it to any third country under bilateral agreements.
5. The provisions of paragraph 4 shall not apply to advantages granted by the Republic of
     Azerbaijan to any third country on an effective reciprocal basis and to advantages granted by
     the Republic of Azerbaijan to another country of the former USSR
                                                      49
                                                                                              ^^7*
 ---pagebreak---                                                                                           ANNEX HI
                                      CONCERNING ARTICLE 25
                                 FINANCIAL SERVICES: DEFINITIONS
A financial service is any service of a financial nature offered by a financial service provider of a
party. Financial services include the following activities:
A.     All insurance and insurance-related services;
        1.      Direct insurance (including co-insurance),
                (i)      life
                (ii)     non-life
       2.       Reinsurance and retrocession.
       3.       Insurance intermediation, such as brokerage and agency.
       4.       Services auxiliary to insurance, such as consultancy, actuarial, risk assessment and
                claim settlement services.
B.     Banking and other financial services (excluding insurance).
        1.      Acceptance of deposits and other repayable funds from the public.
       2.      Lending of all types, including, inter-alia, consumer credit, mortgage credit,
                factoring and financing of commercial transaction.
       3.      Financial leasing.
       4.       All payment and money transmission services, including credit charge and debit
                cards, travellers cheques and bankers drafts.
       5.       Guarantees and commitments.
       6.      Trading for own account or for the account of customers, whether on an
                exchange, in an over the counter market or otherwise, the following:
               (a)      money market instruments (cheques, bills, certificates of deposits, etc.)
               (b)      foreign exchange
               (c)      derivative products including, but not limited to, futures and options
               (d)      exchange rates and interest rate instruments, including products such as
                        swaps, forward rate agreements, etc.
               (e)      transferable securities
               (f)      other negotiable instruments and financial assets, including bullion.
       7.      Participation in issues of all kinds of securities, including under-writing and
               placement as agent (whether publicly or privately) and provision of services
               related to such issues.
       8.      Money brokering.
       9.      Asset management, such as cash or portfolio management, all forms of collective
               investment management, pension fund management, custodial depository and trust
               services.
       10.     Settlement and clearing services for financial assets, including securities, derivative
               products, and other negotiable instruments.
       11.     Advisory intermediation and other auxiliary financial services on all the activities
               listed in points 1 to 10 above, including credit reference and analysis, investment
               and portfolio research and advice, advice on acquisitions and on corporate
               restructuring and strategy.
                                                  50
 ---pagebreak---         12.      Provision and transfer of financial information, and financial data processing and
                 related software by providers of other financial services.
The following activities are excluded from the definition of financial services
(a)     Activities carried out by central banks or by any other public institution in pursuit of
        monetary and exchange rate policies.
(b)     Activities conducted by central banks, government agencies or departments, or public
        institutions, for the account or with the guarantee of the government, except when those
        activities may be carried out by financial service providers in competition with such public
        entities.
(c)     Activities forming part of a statutory system of social security or public retirement plans,
        except when those activities may be carried out by financial service providers in
        competition with public entities or private institutions.
                                                   51
                                                                                           ,^n
 ---pagebreak---                                                                                         ANNEX IV
                COMMUNITY RESERVATIONS IN ACCORDANCE WITH ARTICLE 22                (2)
 Mining
 In some Member States, a concession may be required for mining and mineral rights for non-EC
 controlled companies
 Fishing
 Access to and use of the biological resources and fishing grounds situated in the maritime waters
 coming under the sovereignty or within the jurisdicrion of Member States of the Community is
 restricted to fishing vessels flying the flag of a Community Member State and registered in
 Community territory unless otherwise provided for.
 Real estate purchase
 In some Member States, the purchase of real estate by non-EC companies is subject ot
 restrictions
 Audiovisual services including radio
National treatment concerning production and distribution, including broadcasting and other
forms of transmission to the public, may be reserved to audiovisual works meeting certain origin
 criteria.
Telecommunications services including mobile and satellite services
Reserved services
In some Member States market access concerning complementary services and infrastructure is
restricted.
Professional services
Services reserved to natural persons nationals of Member States. Under certain conditions those
persons may create companies
Agriculture
In some Member States national treatment is not applicable to non-EC controlled companies
which wish to undertake an agricultural enterprise. The acquisition of vineyards by non-EC
controlled companies is subject to notification, or, as necessary, authorization
News agency services
In some Member States limitations of foreign participation in publishing companies and
broadcasting companies
                                                    52
                                                                                              ,~*~
 ---pagebreak---                                                                                                   ANNEX V
Reservations of the Republic of Azerbaijan in accordance with Article 22 (4).
Utilisation of subsoil and natural resources, including exploration and production, and mining.
A concession may be required for foreign companies for exploration and production of hydrocarbon
resources as well as for mining some ores and metals.
Fishing
Authorisationfromthe competent governmental body is necessary for fishing
Hunting
Authorisationfromthe competent governmental body is necessary for hunting
Real estate (immovable property) purchase
Foreign companies are not allowed to acquire plots of land. Those companies can, however, lease plots of
land on a long term basis.
Banking services
Total capital of foreign-owned banks may not exceed a given percentage of the total capital in the domestic
banking system.
Azerbaijan undertakes not to reduce for Azerbaijani subsidiaries and branches of Community companies,
the ceiling limiting the overall share of foreign capital in the Azerbaijani banking system which applies on
the date of initialling of this Agreement unless so required in the framework of IMF programmes in
Azerbaijan.
At the latest within five yearsfromthe date of signature of the Agreement, Azerbaijan will consider the
possibility to increase this ceiling, taking into consideration all relevant monetary,fiscal,financialand
balance of payments considerations and thé state of the banking system of Azerbaijan.
Telecommunications and mass media services
Some limitations may be applied to foreign participation.
Professional activities
Some activities are closed, limited, or subject to special requirements for natural persons who are not
Azerbaijani nationals.
Historical buildings and Monuments
Activities in this area are subject to restrictions.
The application of the reservations in this annex can in no case result in treatment less favorable than that
accorded to companies of any third country.
                                                        53                                             ^ - f
 ---pagebreak---          DRAFT PROTOCOL
      ON MUTUAL ASSISTANCE
BETWEEN ADMINISTRATIVT AUTHORITIES
       IN CUSTOMS MATTERS
                54
                                   .**?
 ---pagebreak---                                              ARTICLE 1
                                              Definitions
For the purposes of this Protocol :
        a)  "customs legislation" shall mean any legal or regulatory provisions applicable in the
            territory of the Contracting Parties governing the import, export, transit of goods and
            their placing under any customs procedure, including measures of prohibition,
            restriction and control,
        b)  "applicant authority", shall mean a competent administrative authority which has been
            appointed by a Contracting Party for this purpose and which makes a request for
            assistance in customs matters;
        c)  "requested authority", shall mean a competent administrative authority which has
            been appointed by a Contracting Party for this purpose and which receives a request
            for assistance in customs matters;
        d)  "personal data", shall mean all information relating to an identified or identifiable
            individual
                                             ARTICLE 2
                                                Scope
1   The Contracting Parties shall assist each other, in the areas within their jurisdiction, in the
    manner and under the conditions laid down in this Protocol, in preventing, detecting and
    investigating operations in breach of customs legislation.
2.  Assistance in customs matters, as provided for in this Protocol, shall apply to any
    administrative authority of the Contracting Parties which is competent for the application of
    this Protocol. It shall not prejudice the rules governing mutual assistance in criminal matters.
    Nor shall it cover information obtained under powers exercised at the request of the judicial
    authorities, unless those authorities so agree.
                                             ARTICLE 3
                                        Assistance on request
    At the request of the applicant authority, the requested authority shall furnish it with all
    relevant information which may enable it to ensure that customs legislation is correctly
    applied, including information regarding operations noted or planned which are or could be
    in breach of such legislation.
    At the request of the applicant authority, the requested authority shall inform it whether
    goods exported from the territory of one of the Contracting Parties have been properly
    imported into the territory of the other Party, specifying, where appropriate, the customs
    procedure applied to the goods.
                                                  55
                                                                                            «flF
 ---pagebreak---       At the request of the applicant authority, the requested authority shall, within the framework
      of its laws, take the necessary steps to ensure that a special watch is kept on
         (a)     natural or legal persons of whom there are reasonable grounds for believing that
                 they are breaching or have breached customs legislation,
         (b)     places where goods are stored in a way that gives grounds for suspecting that they
                 are intended to supply operations in breach of customs legislation,
         (c)     movements of goods notified as possibly giving rise to breaches of customs
                 legislation,
         (d)     means of transport for which there are reasonable grounds for believing that they
                 have been, are or might be used in operations in breach of customs legislation
                                              ARTICLE 4
                                         Spontaneous assistance
The Contracting Parties shall provide each other, in accordance with their laws, rules and other
legal instruments, with assistance without prior request if they consider that to be necessary for
the correct application of customs legislation, particularly when they obtain information
pertaining to :
         -    operations which are or appear to be in breach of such legislation and which may be of
             interest to another Contracting Party;
         -    new means or methods employed in carrying out such operations.
         -   goods known to be subject to breaches of customs legislation
         -   natural or legal persons of whom there are reasonable grounds for believing that they
             are or have been in breach of customs legislation
         -   means of transport for which there are reasonable grounds for believing that they have
             been, are or might be used in operations in breach of customs legislation
                                              ARTICLE 5
                                          Delivery/Notification
At the request of the applicant authority, the requested authority shall, in accordance with its
legislation, take all necessary measures in order :
         - to deliver all documents,
         - to notify all decisions,
falling within the scope of this Protocol to an addressee, residing or established in its territory. In
such cases, Article 6(3) shall apply as far as the request itself is concerned
                                                   56
                                                                                                 ^ J r.">'"
 ---pagebreak---                                             ARTICLE 6
                             Form and substance of requests for assistance
 1   Requests pursuant to this Protocol shall be made in writing. They shall be accompanied by
    the documents necessary to enable compliance with the request When required because of
    the urgency of the situation, oral requests may be accepted, but must be confirmed in writing
    immediately
2.  Requests pursuant to paragraph 1 shall include the following information :
       (a)     the applicant authority making the request;
       (b)     the measure requested,
       (c)     the object of and the reason for the request,
       (d)     the laws, rules and other legal elements involved,
       (e)     indications as exact and comprehensive as possible on the natural or legal persons
              who are the target of the investigations;
       (f)     a summary of the relevant facts and of the enquiries already carried out. except in
              cases provided for in Article 5.
3. Requests shall be submitted in an official language of the requested authority or in a
    language acceptable to that authority.
4. If a request does not meet the formal requirements, its correction or completion may be
   requested, precautionary measures may, however, be ordered
                                            ARTICLE 7
                                       Execution of requests
   In order to comply with a request for assistance, the requested authority shall proceed,
   within the limits of its competence and available resources, as though it were acting on its
   own account or at the request of other authorities of that same Contracting Party, by
   supplying information already possessed, by carrying out appropriate enquiries or by
   arranging for them to be carried out. This provision shall also apply to the administrative
   department to which the request has been addressed by the requested authority when the
   latter cannot act on its own
   Requests for assistance shall be executed in accordance with the laws, rules and other legal
   instruments of the requested Contracting Party.
   Duly authorized officials of a Contracting Party may, with the agreement of the other
   Contracting Party involved and subject to the conditions laid down by the latter, obtain from
   the offices of the requested authority or other authority for which the requested authority is
   responsible, information relating to operations which are or may be in breach of customs
   legislation which the applicant authority needs for the purposes of this Protocol
   Officials of a Contracting Party may, with the agreement of the other Contracting Party
   involved and subject to the conditions laid down by the latter, be present at enquiries carried
   out in the latter's territory
                                                 57
                                                                                            </"f
 ---pagebreak---                                                 ARTICLE 8
                             Form in which information is to be communicated
  1.   The requested authority shall communicate results of enquiries to the applicant authority in
       the form of documents, certified copies of documents, reports and the like
 2.    The documents provided for in paragraph 1 may be replaced by computerized information
       produced in any form for the same purpose
                                                ARTICLE 9
                             Exceptions to the obligation to provide assistance
 1. The Contracting Parties may refuse to give assistance as provided for in this Protocol, where
       to do would:
          (a)    be likely to prejudice the sovereignty of the Republic of .Azerbaijan or that of a
                 Member State of the European Union which has been asked for assistance under
                 this Protocol; or
          (b)    be likely to prejudice public policy, security or other essential interests, in particular
                 in the cases referred to under Article 10 (2); or
          (c)    involve currency or tax regulations other than customs legislation, or
          (d)    violate an industrial, commercial or professional secret
2.    Where the applicant authority requests assistance which it would itself be unable to provide
      if so asked, it shall draw attention to that fact in its request It shall then be left to the
      requested authority to decide how to respond to such a request
3.    If assistance is refused, the decision and the reasons therefor must be notified to the applicant
      authority without delay.
                                               ARTICLE 10
                                 Information exchange and confidentiality
1. Any information communicated in whatsoever form pursuant to this Protocol shall be of a
     confidential or restricted nature, depending on the rules applicable in each of the Contracting
     Parties. It shall be covered by the obligation of official secrecy and shall enjoy the protection
     extended to like information under the relevant laws of the Contracting Party which received
     it and the corresponding provisions applying to the Community institutions
2.   Personal data may be exchanged only where the receiving Contracting Party undertakes to
     protect such data in at least an equivalent way to the one applicable to that particular case in
     the supplying Contracting Party
3    Information obtained shall be used solely for the purposes of this Protocol Where one of
     the Contracting Parties requests the use of such information for other purposes, it shall ask
     for the prior written consent of the authority which furnished the information Moreover, it
     shall be subject to any restrictions laid down by that authority
 ---pagebreak---       Paragraph 3 shall not impede the use of information in any judicial or administrative
      proceedings subsequently instituted for failure to comply with customs legislation The
      competent authority which supplied that information shall be notified of such use.
      The Contracting Parties may, in their records of evidence, reports and testimonies and in
      proceedings and charges brought before the courts, use as evidence information obtained and
      documents consulted in accordance with the provisions of this Protocol
                                              ARTICLE 11
                                         Experts and witnesses
 1. An official of a requested authority may be authorized to appear, within the limitations of the
 authorization granted, as an expert or witness in judicial or administrative proceedings regarding
the matters covered by this Protocol in the jurisdiction of the other Contracting Party, and
produce such objects, documents or authenticated copies thereof, as may be needed for the
proceedings. The request for an appearance must indicate specifically on what matters and by
virtue of what title or qualification the official will be questioned
2. The authorized official shall enjoy the protection guaranteed by existing legislation to officials
of the applicant authority on its territory.
                                              ARTICLE 12
                                          Assistance expenses
The Contracting Parties shall waive all claims on each other for the reimbursement of expenses
incurred pursuant to this Protocol, except, as appropriate, for expenses to experts and witnesses
and to interpreters and translators who are not public service employees.
                                              ARTICLE 13
                                               Application
1.   The application of this Protocol shall be entrusted to the central customs authorities of the
     Republic of Azerbaijan on the one hand and the competent services of the European
     Commission and, where appropriate, the customs authorities of the Member States of the
     European Union on the other. They shall decide on all practical measures and arrangements
     necessary for its application, taking into consideration the rules in force in the field of data
     protection. They may recommend to the competent bodies amendments which they consider
     should be made to this Protocol.
2.   The Contracting Parties shall consult each other and subsequently keep each other informed
     of the detailed rules of implementation which are adopted in accordance with the provisions
     of this Protocol.
                                                    59
                                                                                              ^4-r
 ---pagebreak---                                      ARTICLE 14
                                    Complementarity
Without prejudice to Article 10, any agreements on mutual assistance which have been
concluded between one or more Member States of the European Union and the Republic of
Azerbaijan shall not prejudice Community provisions governing the communication between
the competent services of the Commission and the customs authorities of the Member States
of any information obtained in customs matters which could be of Community interest.
                                          60                                         tfiff
 ---pagebreak---                                     JOINT DECLARATION
The Parties confirm that the twelfth recital in the preamble to this Agreement does not imply any
judgement as to which countries, other than Azerbaijan, energy products should transit.
                                                  61
                                                                                               *"?
 ---pagebreak---                   JOLNT DECLARATION CONCERNING ARTICLE 3 BIS
In reviewing changing circumstances in the Republic of Azerbaijan, as foreseen in Art. 3 bis, the
Parties shall discuss important changes which may have a significant bearing on Azerbaijan's
future development. This could include accession by Azerbaijan to the WTO, the Council of
Europe or other international bodies or accession to any regional customs union or any form of
regional integration agreement.
                                                62
                                                                                            ^T
 ---pagebreak---                  JOINT DECLARATION EST RELATION TO ARTICLE 5
Should the Parties agree that circumstances warrant meetings at the highest level, such meetings
may be arranged on an ad hoc basis
                                               63
                                                                                           **?
 ---pagebreak---                                      JOINT DECLARATION
                                  CONCERNING ARTICLE 14
Until the Republic of Azerbaijan accedes to the WTO, the Parties shall hold consultations in the
Cooperation Committee on their import tariff policies, including changes in tariff protection. In
particular, such consultations shall be offered prior to the increase of tariff protection.
                                                  64
                                                                                            r^f^
 ---pagebreak---                                      JOINT DECLARATION
                       CONCERNING THE NOTION OF "CONTROL"
                             IN ARTICLE 24(b) AND ARTICLE 36
1   The Parties confirm their mutual understanding that the question of control shall depend on
    the factual circumstances of the particular case.
2. A company shall, for example, be considered as being "controlled" by another company, and
    thus a subsidiary of such other company if:
- the other company holds directly or indirectly a majority of the voting rights, or
- the other company has the right to appoint or dismiss a majority of the administrative organ,
of the management organ or of the supervisory organ and is at the same time a shareholder or
member of the subsidiary.
3. Both Parties consider the criteria in paragraph 2 to be non-exhaustive.
                                                  65
 ---pagebreak---                                      JOINT DECLARATION
                                   CONCERNING ARTICLE 35
The sole fact of requiring a visa for natural persons of certain Parties and not for those of others
shall not be regarded as nullifying or impairing benefits under a specific commitment.
                                                  66                                              .A*"*^
 ---pagebreak---                                      JOINT DECLARATION
                                   CONCERNING ARTICLE 42
The Parties agree that for the purpose of the Agreement, intellectual, industrial and commercial
property includes in particular copyright, including the copyright in computer programs, and
neighbouring rights, the rights relating to patents, industrial designs, geographical indications,
including appellations of origin, trademarks and service marks, topographies of integrated circuits
as well as protection against unfair competition as referred to in Article 10 bis of the Paris
Convention for the protection of Industrial Property and protection of undisclosed information on
know-how.
                                                67                                         ,-/<?*
 ---pagebreak---                                     JOINT DECLARATION
                                 CONCERNING ARTICLE 54
The provisions of Article 54 (3) shall not require either of the Parties to provide information of a
confidential nature.
                                                 68
                                                                                              ^r
 ---pagebreak---                                    JOLNT DECLARATION
                                CONCERNING ARTICLE 94
 The Parties agree, for the purpose of its correct interpretation and its practical application,
 that the term "cases of special urgency" included in Article 94 of the Agreement means cases
 of material breach of the Agreement by one of the Parties A material breach of the
 Agreement consists in
(a) repudiation of the Agreement not sanctioned by the general rules of international law
or
(b) violation of the essential elements of the Agreement set out in Article 2
 The parties agree that the "appropriate measures" referred to in Article 94 are measures taken
 in accordance with international law If a party takes a measure in a case of special urgency
 as provided for under Article 94. the other party may avail itself of the procedure relating to
 settlement of disputes
                                               69
                                                                                        **?
 ---pagebreak---              EXCHANGE OF LETTERS
           BETWEEN THE COMMUNITY
        AND THE REPUBLIC OF AZERBAIJAN
IN RELATION TO THE ESTABLISHMENT OF COMPANIES
                       70                     ^ff
 ---pagebreak--- A. Letter from the Government of the Republic of Azerbaijan
Dear Sir,
I refer to the Partnership and Cooperation Agreement initialled on
As I underlined during the negotiations, the Republic of Azerbaijan grants to Community
companies establishing and operating in the Republic of Azerbaijan in certain respects a
privileged treatment. I explained that this reflects the Azerbaijani policy to promote by all means
the establishment of Community companies in the Republic of Azerbaijan
With this in mind, it is my understanding that during the period between the date of initialling of
this Agreement and the entry into force of the relevant articles on establishment of companies, the
Republic of Azerbaijan shall not adopt measures or regulations which would introduce or worsen
discrimination of Community companies vis-à-vis Azerbaijani companies or companies from any
third country as compared to the situation existing on the date of initialling of this agreement.
I would be obliged if you could acknowledge receipt of this letter
Please accept, Sir, the assurance of my highest consideration.
                                                  For the Government of the Republic of Azerbaijan
                                                  71
                                                                                                  ^ ^
 ---pagebreak---     B.     Letter from the European Community
    Dear Sir,
    Thank you for your letter of today's date, which reads as follows:
"I refer to the Partnership and Cooperation Agreement initialled on .
         As I underlined during the negotiations, the Republic of Azerbaijan grants to Community
         companies establishing and operating in the Republic of Azerbaijan in certain respects a
         privileged treatment. I explained that this reflects the Azerbaijani policy to promote by all
         means the establishment of Community companies in the Republic of Azerbaijan
         With this in mind, it is my understanding that during the period between the date of initialling
         of this agreement and the entry into force of the relevant articles on establishment of
         companies, the Republic of Azerbaijan shall not adopt measures or regulations which would
         introduce or worsen discrimination of Community companies vis-à-vis Azerbaijani companies
         or companies from any third country as compared to the situation existing on the date of
         initialling of this agreement.
         I would be obliged if you could acknowledge receipt of this letter."
    I can acknowledge receipt of this letter
   Please accept, Sir, the assurance of my highest consideration
                                                                  On behalf of the European Community
                                                      72
 ---pagebreak---                                       DECLARATION
                            BY THE FRENCH GOVERNMENT
The French Republic notes that the Partnership and Cooperation Agreement with the Republic of
Azerbaijan does not apply to the overseas countries and territories associated with the European
Community pursuant to the Treaty establishing the European Community.
                                              73
                                                                                            ^ff
 ---pagebreak--- Outside the Agreement
Declaration by the Community
The Community undertakes to provide technical assistance in the form of seminars or other
appropriate means in order to help Azerbaijani authorities and economic operators to benefit in
full from the advantages granted unter the Community GSP as currently applied to Azerbaijan.
                                              74
 ---pagebreak---  ---pagebreak---                                                                    ISSN 0254-1475
                                                            COM(96) 137 final
                                              DOCUMENTS
EN                                                                            11
                                     Catalogue number : CB-CO-96-158-EN-C
                                                             ISBN 92-78-02524-0
Office for Official Publications of the European Communities
L-2985 Luxembourg