CELEX: 51996PC0135
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 Georgia, of the other part

COMMISSION OF THE EUROPEAN COMMUNITIES
                                         Brussels, 27.03.1996
                                         COM(96) 135 final
                                         96/092 (AVC)
                              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 Georgia,
                          of the other part
                  (presented by the Commission)
 ---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 Georgia, on the
   other.
2. Following the Council's adoption of the negotiating directives on 5 October 1992,
   negotiations with Georgia were held in the course of 1995. After two rounds of
   negotiations, the Agreement was initialled on 15/12/95.
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.
                                            M*\
 ---pagebreak--- 4. The Agreement will, as far as trade relations between the Community and Georgia 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 thev 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.
                                              tk>
 ---pagebreak---                          COUNCIL AND COMMISSION DECISION
                                               OF
            on the conclusion of the Partnership and Cooperation Agreement
             between the European Communities and their Member States
                                            and Georgia
                                   (../.../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, 84(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 Georgia 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;
                                                  ^
 ---pagebreak--- Whereas the Agreement imposes on the Community certain obligations relating to the
movement of capital and payments between the Community and Georgia;
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,
FIAVE DECIDED AS FOLLOWS :
                                           Article 1
The Partnership and Cooperation Agreement between the European Union and Georgia,
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 Community, 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,
                                            le*-
 ---pagebreak---                                            Final Act
 The plenipotentiaries of:
 THE KINGDOM OF BELGIUM,
 TFIE 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 Georgia,
                                            Ic
 ---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 Georgia, 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
Georgia have adopted the texts of the Joint Declarations listed below and annexed to this Final
Act:
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 94 of the Agreement
The plenipotentiaries of the Member States and of the Community and the Plenipotentiaries of
Georgia have also taken note of the exchange of letters listed below annexed to this Final Act:
Establishment of companies
The plenipotentiaries of the Member States and of the Community and the Plenipotentiaries of
Georgia have also taken note of the declaration listed below annexed to this Final Act:
Unilateral Declaration by the French Republic on the Overseas Countries Territories
Done at                   in the year one thousand nine hundred and ninety six.
For the Council and the Commission of the European Communities.
For Georgia.
                                               ' /
 ---pagebreak--- PARTNERSHIP AND COOPERATION AGREEMENT
  BETWEEN THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES, OF THE ONE PART,
     AND GEORGIA, OF THE OTHER PART
                                          . • • )
                ' »
 ---pagebreak--- PARTNERSHIP AND COOPERATION AGREEMENT
establishing a partnership between the European Communities and their Member States, of the
one part, and Georgia, 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,
Contraaing 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 GEORGIA of the other part,
 ---pagebreak---  CONSIDERING the links between the Community, its Member States and Georgia and the
 common values that they share,
RECOGNIZING that the Community and Georgia 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,
CONSIDERING the commitment of the Community and its Member States and of Georgia to
strengthening the political and economic freedoms which constitute the very basis of the
partnership,
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,
CONSIDERING the firm commitment of the Community and its Member States and of Georgia
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,
RECOGNIZING in that context that support of the independence, sovereignty and territorial
integrity of Georgia will contribute to safeguarding of peace and stability in Europe,
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, and recognising the efforts of Georgia to create political and economic systems based
on these principles,
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 Georgia, 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 encouraging the process of regional cooperation in the areas covered by this
agreement with the 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,
DESIROUS of establishing and developing regular political dialogue on bilateral, regional and
international issues of mutual interest.
 ---pagebreak---   RECOGNIZING AND SUPPORTING the wish of Georgia to establish close co-operation with
  European Institutions,
  CONSIDERING the necessity of promoting investment in Georgia, including in the energy
  sector, and in this context the importance attached by the Community and its Member States to
  equitable conditions for transit for export of energy products; confirming the attachment of the
  Community and its Member States and of Georgia 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
  Georgia 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:
                                                                                             /
^
 ---pagebreak---                                            ARTICLE 1
A Partnership is hereby established between the Community and its Member States of the one
part, and Georgia 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 Georgia'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.
                                                                                            • •  ^  /
 ---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
independent states which have emerged or reestablished their independence following 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 3 bis
The Parties shall as appropriate review changing circumstances in Georgia, 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.
                                                                                  "'71
                                                                                             •i
 ---pagebreak---                                                 TITLE II
                                      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 Georgia, 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 Georgia 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 Georgia on the other
   hand;
- 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.
                                                                                           /
 ---pagebreak---                                                 TITLE III
                                          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 Georgia acceding to the GATT or on 31 December 1998, whichever is earlier, to
     advantages defined in Annex I granted by Georgia 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.
                                                                                          7       '<
                                                                                       >7   -?;-.
 ---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 Georgia 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 Georgia free of all quantitative
      restrictions and measures of equivalent effect, without prejudice to the provisions of Article
       13 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 Georgia, 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 Georgia, 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.
  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
~                                                   9                                  J-y 7>~
 ---pagebreak---      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 lecislation.
                                            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
Georgia 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 Georgia 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 Georgia.
                                                  10
 ---pagebreak---                                               TITLE IV
                 PROVISIONS AFFECTING BUSINESS AND INVESTMENT
                                            CHAPTER I
                                         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
     Georgian 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 Georgia, Georgia shall ensure
    that the treatment accorded to nationals of a Member State, legally employed in the territory
     of Georgia 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.
                                            CHAPTER H
              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 Georgian 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 Georgian companies established in their territories a
    treatment no less favourable than that granted to any Community companies, in respect of
    their operation.
                                                                                        >       ( •
 ---pagebreak---  3. The Community and its Member States shall grant to branches of Georgian 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, and subject to the conditions set but
     therein, Georgia shall grant for the establishment of Community companies as defined in
     Article 24(d) treatment no less favourable than that accorded to Georgian 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.
                                             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 bei ;If of the companies, inter alia in organizing the call of the vessel or taking over
    cargoes when required.
                                                                                               y
                                                  12                                             /J/?
 ---pagebreak---                                               ARTICLE 24
 For the purpose of this Agreement:
 (a) A "Community company" or a "Georgian company" respectively shall mean a company set up
      in accordance with the laws of a Member State or of Georgia respectively and having its
      registered office or central administration, or principal place of business in the territory of the
      Community or Georgia respectively. However, should the company, set up in accordance
      with the laws of a Member State or Georgia respectively, have only its registered office in the
      territory of the Community or Georgia respectively^ the company shall be considered a
      Community or Georgian company respectively if its operations possess a real and continuous
      link with the economy of one of the Member States or Georgia respectively.
 (b) "Subsidiary" of a company shall mean a company which is effectively controlled by the first
     company.
(c) "Branch" of a 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 Georgian companies as referred to in
     point (a), to take up economic activities by means of the setting up of subsidiaries and
     branches in Georgia 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 Georgia established outside the Community or
    Georgia respectively, and shipping companies established outside the Community or Georgia
     and controlled by nationals of a Member State or Georgian 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 Georgia respectively in accordance with their respective
    legislation.
                                             ARTICLE 25
    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.
                                                                                              7       /
                                                   13                                          /J.
 ---pagebreak---  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.
                                             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 the provisions of this Agreement.
                                             ARTICLE 27
 1. Notwithstanding the provisions of Chapter I of this Title, a Community company or a
      Georgian company established in the territory of Georgia 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 Georgia
      and the Community respectively, employees who are nationals of Community Member States
     and Georgia 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;
                                                   14
 ---pagebreak--- (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.
                                              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 Georgia 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 Georgia 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 Georgia 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 Georgia would result in rendering the
    conditions for operation of subsidiaries and branches of Community companies established in
    Georgia 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 Georgia
    at the time of entry into force of the relevant act.
                                                     15
 ---pagebreak---                                            CHAPTER III
             Cross border supply of services between the Community and Georgia
                                            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 Georgian 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.
                                            ARTICLE 31
The Parties shall cooperate with the aim of developing a market oriented service sector in
Georgia.
                                            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 this 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;
                                                  16
 ---pagebreak---  (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
     Georgia and vice versa.
                                             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 Georgian companies and Community
companies jointly shall also be beneficiaries of the provisions of Chapters II, III and IV.
                                                   17                                     .   s-*.--,•;,
 ---pagebreak---                                              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.
                                             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 Georgia 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 Georgia 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 Georgia respectively to enter, or stay in, the territory of
    Georgia 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 Georgian companies to employ or have employed in
    the territory of the Community nationals of Georgia;
- Georgian subsidiaries or branches of Community companies to employ or have employed in
    the territory of Georgia nationals of the Member States;
- Georgian companies or Community subsidiaries or branches of Georgian companies to supply
    Georgian persons to act for and under the control of other persons by temporary employment
    contracts;
- Community companies or Georgian subsidiaries or branches of Community companies to
    supply workers who are nationals of the Member States by temporary employment contracts.
                                                   1R                              •   /'
 ---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 Georgia 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.   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 cuirent
    payments connected therewith between residents of the Community and Georgia shall be
    introduced and the existing arrangements shall not become more restrictive.
4. 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
    Georgia in order to promote the objectives of this Agreement.
5. With reference to the provisions of this Article, until a full convertibility of the Georgian
    currency within the meaning of Article VIII of the Articles of Agreement of the International
   Monetary Fund (IMF) is introduced, Georgia 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 Georgia for the granting
    of such credits and are permitted according to Georgia's status under the IMF. Georgia 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. Georgia shall inform the
    Cooperation Council promptly of the introduction of such measures and of any changes
   therein.
6. Without prejudice to paragraph 1 and 2, where, in exceptional circumstances, movement of
    capital between the Community and Georgia cause, or threaten to cause, serious difficulties
   for the operation of exchange rate policy or monetary policy in the Community or Georgia,
    the Community and Georgia, respectively, may take safeguard measures with regard to
    movements of capital between the Community and Georgia for a period not exceeding six
    months if such measures are strictly necessary.
                                                                                /
                                                 19
 ---pagebreak---                                             CHAPTER VI
                  Intellectual, industrial and commercial property protection
                                            ARTICLE 42
1. Pursuant to the provisions of this Article and of Annex II, Georgia shall continue to improve
   the protection of intellectual, industrial and commercial propertyrightsin 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, Georgia 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.
                                                                     j _ . _     /-
                                                                      x
                                                  20                      '
 ---pagebreak---                                                 TITLE V
                                 LEGISLATIVE COOPERATION
                                             ARTICLE 43
 1. The Parties recognize that an important condition for strengthening the economic links
     between Georgia and the Community is the approximation of Georgia's existing and future
     legislation to that of the Community. Georgia 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: laws and
     regulations governing investments by companies, 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, consumer protection, indirect taxation,
     technical rules and standards, nuclear laws and regulations and transport.
3. The Community shall provide Georgia 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.
                                           ARTICLE 43 bis
1. Further to Article 43, the Commmunity shall provide Georgia with technical assistance
    regarding the formulation and implementation of legislation in the field of competition, in
    particular as concerns:
• agreements and associations between undertakings and concerted practices which may have
    the effect of preventing, restricting or distorting competition,
   abuse by understandings of a dominant position in the market,
   state aids which have the effect of distorting competition,
   state monopolies of a commercial character,
   public undertakings and undertakings with special or exclusive rights,
   review and supervision of the application of competition laws and means of ensuring
    compliance with them.
    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.
                                                   21                               7:
 ---pagebreak---                                              TITLE VI
                                  ECONOMIC COOPERATION
                                            ARTICLE 44
 1. The Community and Georgia shall establish economic cooperation aimed at contributing to
     the process of economic reform and recovery and sustainable development of Georgia. Such
     cooperation shall strengthen existing economic links, to the benefit of both parties.
 2. Policies and other measures will be designed to bring about economic and social reforms and
     restructuring of the economic and trading systems in Georgia and will be guided by the
     requirements of sustainability and harmonious social development; they will also fully
     incorporate environmental considerations.
 3.   To this end the 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 and regional cooperation.
4. Special attention shall be devoted to measures capable of fostering cooperation among the
    Independent States of the Transcaucasian region, and with other neighbouring states, with a
    view to stimulating a harmonious development of the region.
5. 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 Georgia 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 Georgia'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 Georgia's eventual accession to the WTO.
                                                 22
 ---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 Georgia's efforts to restructure its industry,
 -   the improvement of management;
 -   the development of appropriate commercial rules and practices;
 -   environmental protection.
 _   conversion of the military - industrial complex.
 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
Georgia 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 Georgia of agreements for
    the promotion and protection of investment;
- the conclusion, where appropriate, between the Member States and Georgia of agreements to
    avoid double taxation;
- the creation of favourable conditions for attracting foreign investments into the Georgian
    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.
                                                   23                          /••
 ---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 Georgian 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).
                                                                                    _      A
                                                    24
 ---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.
    In carrying out such cooperation activities, special attention shall be devoted to the
    redeployment of scientists, engineers, researchers and technicians which are or have been
    engaged in research and/or production of weapons of mass destruction.
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 IPR 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 Georgia, 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 Georgia 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.
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 Georgia in the Community's TEMPUS
    programme.                                                                 ^          /
——•                                                25                          ~'-,
 ---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 Georgia, development of domestic and foreign markets for the Georgian 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
 Georgian 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 and 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.
                                                  26
                                                                              y//"*
 ---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;
- safety of industrial plants;
- 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 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.
                                                  27
 ---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 Georgia, and developing and ensuring, where appropriate, compatibility of
 transportation systems in the context of achieving a more global transport system. 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;
- 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.
                                                  28
 ---pagebreak---                                              ARTICLE 58
                                          Financial Services
 Cooperation shall in particular aim at facilitating the involvement of Georgia in universally
 accepted systems of mutual settlements. Technical assistance shall focus on:
 - the development of banking and financial services, the development of a common market of
     credit resources, the involvement of Georgia in a universally accepted system
     of mutual settlements;
 - the development of fiscal system and its institutions in Georgia, 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 Georgia, as well as the development of export credit insurance.
 This cooperation shall in particular contribute to foster the development of relations between
 Georgia and the Member States in the financial services sector.
                                             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 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 respective regions 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.
                                                                                    7        A
                                                                                           V
'      -~"                                         29                            ^7/7
 ---pagebreak---    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
        Georgia.
       These reforms shall aim to develop in Georgia methods of protection intrinsic to market
        economies and shall comprise all forms of social protection.
                                                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 Georgia.
 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.
                                               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
                                                                                 .-        /
--      r—                                           30                        ,-•/-
 ---pagebreak---  programmes aimed at providing the general public with basic information about the Community
 and Georgia, including, where possible, access to databases, in full respect of intellectual property
 rights
                                            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 compatibihty 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
     Georgia'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 Georgia;
-   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.
                                            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 Georgia.                    0          /
-—                                                 31                            -   7f7^7
 ---pagebreak---  The Parties, in particular, shall cooperate in the following fields:
 - adaptation of the Georgian 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 Georgia.
                                             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 Georgia 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 Georgian authorities, the Union shall provide technical assistance designed
to support the efforts of Georgia 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 Georgia's monetary and
credit policy, in full coordination with the international financial institutions; for the training of
personnel:; and for the development of financial markets, 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 on financial markets and capital movements.
                                                                          *-7r*y
                                                   32
 ---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.
                                                    33                               '
 ---pagebreak---                                                 TITLE VIII
          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.
                                                    34
 ---pagebreak---                                        ARTICLE 71 BIS
                                      Illegal Immigration
1. The Member States of the European Union and Georgia agree to cooperate in order to
   prevent and control illegal immigration. To this end:
   - Georgia, 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 Georgia., upon request by .the latter and
       without further formalities.
   The Member States and Georgia.will also provide their nationals with appropriate
   identity documents for such purposes.
   Georgia, 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 Georgia or who have arrived on the territory of
   Georgia from any such Member State.
3. The Cooperation Council shall examine what other joint efforts can be made to prevent and
   control illegal immigration.
                                                35
                                                                                        *y
 ---pagebreak---                                             TITLE L\
                                 CULTURAL COOPERATION
                                          ARTICLE 72
1. 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.
2. Cooperation may cover, inter alia, the following areas:
- exchange of information and experience in the field of conservation and protection of
   monuments, sites (architectural heritage), and museum values;
- cultural exchanges between institutions, artists and other persons working in the area of
   culture.
- translation of literary works.
                                                                                 y
                                                36                             /
 ---pagebreak---                                              TITLE X
     FINANCIAL COOPERATION IN 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 Georgia 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 Georgia.
                                           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 Georgia'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.
                                                                                             /\
                                                                                            S-7
                                                37                                 / / ,
 ---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 Georgia, 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 Georgia
                                          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 Georgia 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 Georgia.
    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.
                                                38
 ---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 GATT 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 Georgian 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 Georgian 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 Georgian 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
    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.
                                                    39
 ---pagebreak--- 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 Georgia;
- 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 Georgia 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 Georgia shall not give rise to any
   discrimination between Georgian 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.                                                    n         /
                                                    40
                                                                                           ? y
 ---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 arbitrator 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 Georgia 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 Georgia on the one part, and
the Community, 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.
                                                                                         •i
                                                  41
 ---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 Georgia, 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 Georgia.
                                           ARTICLE 98
The Secretary-General of the Council of the European Union shall be the depository of this
Agreement.
                                                                                     ?         /
                                                  42
                                                                                    /
 ---pagebreak---                                            ARTICLE 99
The original of this Agreement of which the Danish, Dutch, English, Finnish, French, German,
Greek, Italian, Portuguese, Spanish, Swedish and Georgian 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 Georgia 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 Georgia, 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.
                                                 43                                   / V
 ---pagebreak---                                  LIST OF DOCUMENTS ATTACHED
Annex I    Indicative list of advantages granted by Georgia to the Independent
           States in accordance with Article 8(3).
Annex D Intellectual, industrial and commercial property conventions referred to in Article 42.
Annex IH Financial services definitions, referred to in Article 25.
Annex IV Community reservations in accordance with Article 22 (2)
Annex V Reservations of Georgia in accordance with Article 22 (4).
Protocol on mutual assistance between administrative authorities in customs matters.
                                               44                                 =- 7j    7'7
 ---pagebreak---                                                                                      ANNEX I
Indicative list of advantages granted by Georgia to the Independent States in accordance
with Article 8 (3)
1. All Independent States:
   No import duties are implemented.
   No VAT on excise duties are applied to imports
2. All Independent States:
   Special system of non-commercial operations, including payments resulting from these
   operations.
                                                                                        C
                                             45                               ••- -Y
 ---pagebreak---                                                                                              ANNEX II
  INTELLECTUAL, INDUSTRIAL AND COMMERCIAL PROPERTY CONVENTIONS REFERRED TO IN
                                               ARTICLE 42
 1. Paragraph 2 of Article 42 concerns the following multilateral conventions:
     - 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 Marks (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:
   - Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971);
   - 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, Georgia 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 Georgia to any third
    country on an effective reciprocal basis and to advantages granted by Georgia to another
    country of the former USSR.
                                                                                                i
                                                   46
 ---pagebreak---                                                                                            ANNEX m
                                     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.
                                                  47
 ---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.
                                                                                    ;7r~A
                                                  48                                   7/
 ---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 Mepiber 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.
                                                                                            /
                                                    49                            7"
 ---pagebreak---                                                                                              ANNEX V
         GEORGIAN RESERVATIONS IN ACCORDANCE WITH ARTICLE 22 (4)
 1.       Current Georgian investment legislation requires investments by foreign companies and
          investments by Georgian companies in which the state does not hold a controlling
          interest1 to be licensed by the competent Georgian authorities. The conditions for the
          issue of such licenses shall not result in discrimination between private Georgian and
          foreign companies, as set out in Georgian law.
          Such licensing may not be used in order to nullify the benefits accorded to Community
          companies pursuant to Article 22 (4) of this Agreement, nor to circumvent any other
          provisions of this Agreement. In particular it may not be used to impede the
          establishment of Community Companies in any area of economic activity, except as
          provided for below. No license may be revoked without due justification and any such
          revocation may be subject to appeal and, if necessary, dispute settlement.
          At the latest by 31 December 1998, Georgia shall bring its legislation on licensing into
          conformity with standard international practice and in particular with Community
          legislation. The EU shall provide technical assistance in this area. During this transitional
          period, Georgia shall not take any measures or actions which render the conditions for
          establishment and operations of Community companies more restrictive than the situation
          on the day preceding the date of initialling of this Agreement.
2.        Foreign investment is prohibited in the following areas:
                   defence and security of Georgia;
                   preparation and sale of narcotics and psychotropic substances;
                   cultivation and sale of plants containing narcotic or poisonous substances.
          A foreign company requires special permission from the competent authorities in
          Georgia if it wishes to carry out activities within 20 km. of Georgia's borders or in other
          zones designated as vital to national security or for the protection of Georgia's
          environment.
4.        In the following areas of economic activity, Georgian legislation requires the State to
          hold at least 51 % of the shares of enterprises with foreign participation. This
          percentage may be reduced if the Parliament of Georgia so determines:
1
  as defined in the Joint Declaration to this Agreement concerning the notion of "control"
                                                        50
 ---pagebreak---                  Operation of gas and oil pipelines , communication and power transmission
                 lines, thermal lines of national importance and the buildings and other facilities
                 essential for their operation,
                 Operation of motor highways and railways, airports and maritime ports of
                 national importance in Georgia,
                 Issue of securities, bank notes, coins and stamps;
                 Treatment of patients suffering from highly dangerous infectious diseases,
                 including contagious skin and venereal diseases and mental disorders;
                 Veterinary treatment of animals suffering from dangerous diseases;
                 Production of raw spirit.
5.       Whereas Georgian legislation does not discriminate between foreign investors and
         Georgian non-state enterprises regarding the long-term leasing of land, it does not
         currently allow them to purchase land or natural resources.
6.       Foreign companies willing to prospect for or to exploit mineral deposits, as to extract
         and exploit natural resources in Georgia or on Georgia's continental shelf, require a
         concession from the Government of Georgia.
The application of the reservations in this annex can in no case result in treatment less favourable
than that accorded to companies of any third country. Any relaxation of these restrictions will be
extended to Community companies on the basis of national treatment or most- favoured-nation
treatment, whichever is the better.
The future development of investment legislation in Georgia will take place in conformity with
the provisions and the spirit of this Agreement including in particular its General Principles, the
conditions affecting the establishment and operation of companies, and the provisions regarding
legislative cooperation (Titles I, IV and V) as well as the Exchange of Letters between the
Community and Georgia in Relation to the Establishment of Companies.
                                                                                                    1
                                                    57
 ---pagebreak---          DRAFT PROTOCOL
      ON MUTUAL ASSISTANCE
BETWEEN ADMINISTRATIVE AUTHORITIES
       IN CUSTOMS MATTERS
                52
 ---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
    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.
    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
1.   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.
2.   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.
5r                                                53                                    •^7'i-
 ---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.
                                               ARTICLE 6
                               Form and substance of requests for assistance
      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.                                                                       ..         /
                                                    54                                       "   '
 ---pagebreak---   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
  1. 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.
 2.  Requests for assistance shall be executed in accordance with the laws, rules and other legal
     instruments of the requested Contracting Party.
 3.  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.
 4.  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.
                                              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.
;
     ^                                             55                                   /•-?<•
 ---pagebreak---    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 Georgia 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. WTiere 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.
4. 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.
5. 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.
                                                 56                                   /       ^
 ---pagebreak---                                               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
     Georgia 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.
                                              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 Georgia 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.
                                                                                         7
                                                                                                -,<
 ---pagebreak---                    JOINT DECLARATION IN 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.
                                              58
 ---pagebreak---                                     JOINT DECLARATION
                                  CONCERNING ARTICLE 14
Until Georgia 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.
                                                  59
 ---pagebreak---                                       JOENT 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.
                                                                                    / • /
                                                  60
 ---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.
                                                                                            7^
                                                                                          / :
                                                   61
 ---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.
                                                                                               /
                                                 62
 ---pagebreak---                                       JOINT DECLARATION
                                   CONCERNING ARTICLE 94
1. 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. -
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.
                                                  63
 ---pagebreak---                                         DECLARATION
                              BY THE FRENCH GOVERNMENT
The French Republic notes that the Partnership and Cooperation Agreement with Georgia does
not apply to the overseas countries and territories associated with the European Community
pursuant to the Treaty establishing the European Community.
                                                                                      A
                                                                                •75'"7 '/
                                                                            • y/
                                                64
 ---pagebreak---              EXCHANGE OF LETTERS
           BETWEEN THE COMMUNITY
                 AND GEORGIA
IN RELATION TO THE ESTABLISHMENT OF COMPANIES
 ---pagebreak--- A. Letter from the Government of Georgia
Dear Sir,
I refer to the Partnership and Cooperation Agreement initialled on
As I underlined during the negotiations, Georgia grants to Community companies establishing
and operating in Georgia in certain respects a privileged treatment. I explained that this reflects
the Georgian policy to promote by all means the establishment of Community companies in
Georgia.
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,
Georgia shall hot adopt measures or regulations which would introduce or worsen discrimination
of Community companies vis-à-vis Georgian 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 Georgia
                                                                                    •/ -y,   -y^
                                                 66
 ---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, Georgia grants to Community companies
         establishing and operating in Georgia in certain respects à privileged treatment. I explained
         that this reflects the Georgian policy to promote by all means the establishment of
         Community companies in Georgia.
         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, Georgia shall not adopt measures or regulations which would introduce or
         worsen discrimination of Community companies vis-à-vis Georgian 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
                                                      67
 ---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 Georgian authorities and economic operators to benefit in full
from the advantages granted under the Community GSP as currently applied to Georgia.
                                                                           /
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                     ISSN 0254-1475
                                                             COM(96) 135 final
                                              DOCUMENTS
EN                                                                              11
                                     Catalogue number : CB-CO-96-156-EN-C
                                                              ISBN 92-78-02502-X
Office for Official Publications of the European Communities
L-2985 Luxembourg
                                                     (A