CELEX: 51988PC0744
Language: en
Date: 1988-12-12 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION authorizing the Commission to open negotiations with a view to concluding an agreement in the form of an exchange of letters between the European Economic Community and the Principality of Andorra (presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (88) 744
Vol. 1988/0245
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
lieu par le règlement (UE) 2015/496 du Conseil du 17 mars 2015 (JO L79 du 25. 3.2015, p. 1), ce
dossier est ouvert au public. Le cas échéant, les documents classifiés présents dans ce dossier
ont été déclassifiés conformément à l'article 5 dudit règlement ou sont considérés déclassifiés
conformément aux articles 26(3) et 59(2) de la décision (UE, Euratom) 2015/444 de la
Commission du 13 mars 2015 concernant les règles de sécurité aux fins de la protection des
informations classifiées de l'Union européenne.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as last amended by Council
Regulation (EU) 2015/496 of 17 March 2015 (OJ L 79, 27.3.2015, p. 1), this file is open to the
public. Where necessary, classified documents in this file have been declassified in conformity
with Article 5 of the aforementioned regulation or are considered declassified in conformity with
Articles (26.3) and 59(2) of the Commission Decision (EU, Euratom) 2015/444 of 13 March 2015
on the security rules for protecting EU classified information.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
der Öffentlichkeit zugänglich. Soweit erforderlich, wurden die Verschlusssachen in diesem Akt in
Übereinstimmung mit Artikel 5 der genannten Verordnung freigegeben; beziehungsweise werden
sie auf Grundlage von Artikel 26(3) und 59(2) der Entscheidung der Kommission (EU, Euratom)
2015/444 vom      13. März 2015 über die Sicherheitsvorschriften für den Schutz von EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                  COM ( 88 ) 744 final
                                                  Brussels , 12  December 1988
                                 RECOMMENDATION FOR A
                                COUNCIL DECISION
  authorizing the Commission to open negotiations with a view to concluding
  an agreement in the form of an exchange of letters between the European
  Economic Community and the Principality of Andorra
                     (presented by the Commission )
                                           <1
 ---pagebreak---                   ANNEXE  PETITES ET MOYENNES ENTREPRISES
Les négociations projetées seront sans effet sur La situation des
Petites et Moyennes Entreprises de La Communauté .
 ---pagebreak---                            EXPLANATORY MEMORANDUM
1 . It was stated in the Joint Declaration on future trade arrangements with
Andorra annexed to the Act of Accession of Spain and Portugal to the European
Communities that within two years of the entry into force of the Act of
Accession an arrangement governing trade relations between the Community and
Andorra and replacing the national arrangements at present in force would be
finalized .
2.  The Commission has in the meantime contacted the staff of the two Co-Princes
the President of the French Republic and the Bishop of Urgel , and also the
French and Spanish administrations . Certain substantive and procedural problems
have been clarified as a result .
3 . The Delegation of the Principality of Andorra presented a memorandum to
the Commission on 15 July of this year requesting that negotiations be
opened between Andorra and the Community ( Annex 2 ).
4 . In the light of the foregoing , the Commission has drawn up draft directives
for negotiations with Andorra . Two main concerns underlie these directives ,
namely the removal of the disparities and points of incompatibility between
the national arrangements at present applied to Andorra and Community law ,
for the purpose of replacing them by uniform Community arrangements . The
second concern is the need to take the specific nature of Andorra 's situation
into account so as to safeguard its economic and commercial interests .
5.  The Commission proposes to the Council :
     i.  that the Commission be authorized to open negotiations with the
         Principality of Andorra with a view to concluding an agreement
         in the form of an exchange of letters ;
    ii . that the attached negotiating directives be adopted .
 ---pagebreak---                                 DRAFT DECISION
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community /
and in particular Article 113 thereof .
Having regard to the Recommendation from the Commission ,
Whereas it is stated in the Joint Declaration on future trade arrangements
with Andorra , annexed to the Act of Accession of Spain and Portugal , that
an arrangement governing trade relations between the Community and Andorra
will be finalized within two years of the entry into force of the Act of
Accession and that it will replace the national arrangements at present in
force ;
Whereas in a memorandum of 15 July 1988 the Principality of Andorra requested
the opening of negotiations with the Community ,
HAS DECIDED AS FOLLOWS :
Sole Article
The Commission is hereby authorized to open negotiations with a view to
concluding an agreement between the European Economic Community and the
Principality of Andorra in the form of an exchange of letters .
The Commission will conduct these negotiations in consultation with the
representatives of the Member States and in accordance with the directives
contained in Annex 1 .
                                                                              3
 ---pagebreak---                                                                          ANNEX I
1 . Customs union for industrial products
      1.1 . A customs union should be established between the Community and
            Andorra and apply , subject to any specific derogations , to all
            industrial products , i.e. to products not covered by Annex II
            to the EEC Treaty .
            The rules to be determined should apply to :
            ( a ) goods produced in the Community or in Andorra, including
                  those obtained wholly or in part from products which come
                  from third countries and are in free circulation in the
                  Community or in Andorra ;
            Cb )  goods which come from third countries and are in free circulation
                  in the Community or in Andorra .
            These rules should be subject , where appropriate , to special
            surveillance measures in the case of certain sensitive products
            ( see point 4.1 .).
      1.2 . In relations between the Community and Andorra , this customs union
            should entai l :
            1.2.1 .  the abolition of customs duties , and charges having equivalent
                     effect , on imports and exports ;
            1.2.2 .  the abolition of quantitative restrictions , and measures
                     having equivalent effect , on imports and exports .
            1.2.3 .  These arrangements should be applied progressively over a
                     transitional period and in accordance with a timetable to
                     be agreed on .
                     The period and timetable could be modelled on those laid
                     down in the Act of Accession of Spain .
                     During this period , Andorra should undertake to take account
                     in its trade with the Member States of the Community and
                     with third countries of the quantitative restrictions which
                     Spain is authorized under the Act of Accession to retain in
                     respect of the Member States and third countries .
                     In order to avoid deflections of trade in the products subject
                     to these quantitative restrictions , special surveillance
                     measures could be introduced .
      1.3 . In relations between Andorra and third countries , provision should
            be made for the following :
            1.3.1 . immediately upon the entry into force of the act agreed upon,
                     the adoption and application by Andorra of the Common Customs
                     Tariff and of the Community customs legislation essential to
                     the proper working of the customs union;
            1.3.2 . customs clearance ( entry into free circulation ) of goods from
                     third countries being exported to Andorra at specifically
                     designated customs offices within the Community;
            1.3.3 . the customs duties should be assigned to Andorra 's Budget in
                     accordance with a procedure to be specified . 1 Andorra should
                     undertake not to refund these sums directly or indirectly to
                     the parties concerned .
 VAn overall amount corresponding to the administrative costs borne by the customs
   authorities in the Community would be deducted from the customs duties .
                                                                                     4
 ---pagebreak---                                           - 2 -
     1.4 .  ( NB ) Arrangements applicable to processed agricultural products
            The tariff arrangements applicable to these products should involve
            the following :
               i .. between the Community and Andorra , the fixed component of
                    customs duties would be abolished ;
              ii . Andorra would apply the fixed component laid down in the
                    Common Customs Tariff to third countries ;
            iii . for the processed agricultural products covered by
                    Regulations ( EEC ) Nos 3033 / 80 and 3035 / 80, the variable
                    components and export refunds provided for in those
                    Regulations would continue to be applied in their entirety .
2.   Arrangements for agricultural products
     2.1 .  The customs union referred to above should not include agricultural
            products covered by Annex II to the Treaty . It would nevertheless
            be advisable to allow the following :
            2.1.1 . certain agricultural products which are at present covered
                     by exchanges of letters between Andorra and France and between
                     Andorra and Spain and which in accordance with rules to be
                     determined at a later date or on the basis of the preferential
                     rules of origin that exist in respect of other countries
                     originate in Andorra should be imported duty-free into the
                     Community ;
            2.1.2 . other agricultural products from Andorra should be subject
                     to " third country " treatment on import into the Community .
3 . Tax arrangements^
     As regards tax
     3.1 ' each party should undertake not to impose , directly or indirectly ,
           on products imported from the other party taxation in excess of that
           imposed , directly or indirectly , on like or competing national
           products ( provision based on Article 95 of the EEC Treaty );
     3.2 Andorra should consider adapting its taxation^ so as to avoid too
           great a disparity between the levels of indirect taxation in Andorra
           and in the Community .
 It should be pointed out that Andorra would continue to receive third-country
 treatment as regards refunds on exports from the Community to Andorra .
^For the purposes of establishing the tax relief to be granted to travellers
  returning from Andorra to the Community, account would be taken of the
 arrangements applied in this respect . to travellers returning from any third
 country and also of the specific importance of tourism for Andorra . In
 order to take account of frontier zone movements , specific quantitative
  limits could be laid down for certain sensitive products .
^The "consumer tax " at present levied on imported products would be replaced
 by a value-added tax .
 Notes 2 and 3
 The situation must be reviewed , and the agreement adapted if and when necessary ,
 to take account of the effects on taxation of the single market .
 ---pagebreak---                                        - 3 -
4. Other provisions
   4.1 . In order to prevent deflections of trade resulting from the import
          into Andorra and the re-export to the Community of goods previously
          imported from third countries , a flexible system for the statistical
          surveillance of imports into and exports from Andorra should be
          introduced for certain sensitive products . The operation of this
          system would be facilitated by the fact that products imported from
          third countries would go through specifically designated customs
          offices ( see point 1.3 . 3 .).
   4.2 .  The Community could request consultations with Andorra should
          deflections of trade undermine the application of Community commercial
          policy measures .
   4.3 .  The agreement to be concluded could contain a safeguard clause
          applicable in cases where such deflection occurred .    This clause
          could be based on Article 115 of the EEC Treaty .
   4.4 .  A joint working party should be set up . This working party , which
          would meet at the request of one of the contracting parties , would
          be responsible for the administration of the agreement and would
          examine any matters which arose during its implementation , notably
          matters concerning the application of the measures referred to in
          paragraphs 4.1 , 4.2 and 4.3 above .
   4.5 .  The agreement should apply for five years . One year before its
          expiry , the two parties should open negotiations in order to
          determine , in the light of the results of the application of the
          agreement , the provisions which should subsequently govern their
          relations .
5. Legal form
   As regards the legal form which the act to be negotiated should take
   ( agreement , arrangement , exchange of letters with annex ), that of an
   exchange of letters would appear to be preferable given its flexibility
   and the special international status of Andorra .
 ---pagebreak---                                                     ANNEX 2
                                    Document
for the attention of Mr Jacques Delors , President of the Commission of the
European Communities
                                   containing
the official request for the opening of negotiations and proposals which could
form the basis for a trade agreement between the European Economic Community
and the Principality of Andorra
                                 transmitted by
the Andorran Delegation for relations with the European Economic Community .
Brussels ,
             15 July 1988
Andorra la Vella ,
 ---pagebreak--- Letter from : Andorran Delegation for relations with the European Economic
              Community
To :           Mr Jacques Delors
Following your communication of 7 March 1988, we have the honour hereby to
request the official opening of negotiations between the European Economic
Community and Andorra in order to determine , as planned , the new trade
arrangements between the two sides .
We enclose a paper setting out the proposals which we consider could form a
basis for the negotiations .
 ---pagebreak---                                    Introduction
In the light of Joint Declaration No 9, contained in the Act of Accession of
Spain to the European Communities of 12 June 1985 , concerning the establishment
of new trade relations between Andorra and the Community to replace , in
accordance with Article 234 of the EEC Treaty , the bilateral agreements which
have been in force between Andorra and France and Spain since 1867, Andorra ,
as a non-Community country situated in the middle of the Community , declares its
willingness to adapt to the new European context while maintaining its population'
standard of living and its independence .
In making this adjustment Andorra will have to act in accordance with the
Community 's rules and interests . Andorra is therefore anxious that the
adjustment should not in any way undermine the proper functioning of the
common commercial policy in accordance with Article 113 of the EEC Treaty .
The Community for its part must recognize Andorra 's right and need to preserve
the basis of its prosperity and to be able to develop its economy . In this
respect it must be noted that Spain 's full integration into the common market
will inevitably cause the Principality 's commercial attractiveness to decline ,
and a certain degree of diversification is the only means of offsetting this .
It will also be necessary to overcome the drawbacks specific to Andorra , such
as geographical isolation, the lack of space and infrastructure , the lack of
skilled labour , and so on .
For this diversification to take place Andorra must define clearly its economic
relations with the Community .
 ---pagebreak--- The main fac tors which could determine future trade relations between Andorra
and the European Community
( a ) Taking into account the present features of Andorra 's economy and the
prospects for the future ( see attached document : Andorra 's economy - present and
future ), Andorra wishes to negotiate trade arrangements with the European
Community covering the following spheres :
1.    Industrial products .
2.    Agricultural products .
3.    Tax relief for travellers .
4.    Establishment of a joint structure .
( b ) Without wishing to predjudice the results of the forthcoming negotiations
and considering that none of the matters to be discussed can , generally
speaking , be negotiated separately but that each item will form an integral
part of the future agreement , the Andorran Delegation presents brief comments
on the four factors listed :
1.    Industrial products
In order to avoid undermining the proper functioning of the Community 's customs
union , Andorra is prepared to forgo the exercise of some of its rights and to
make an effort to adapt by establishing a customs union with the Community ,
subject to possible exceptions, and adapting its legislation accordingly .
2.    Agricultural products
Andorra wishes to maintain , subject to possible exceptions , its status of third
country in respect of agricultural products . This seems logical given the
absence of any reasons which would justify Andorra 's participation in the common
agricultural policy .
                                                                                  4?
 ---pagebreak--- 3.   Tax and customs relief granted to travellers
Since tourism and trade form the mainstay of its economy , Andorra would like
this matter to be redefined in the light of the arrangements adopted .
4.   Establishment of a joint structure
Andorra proposes that a joint management committee should be set up . It would
be authorized to ensure the proper functioning of the agreement and to make
proposals for extending the scope of arrangements .
 ---pagebreak---                   ANNEXE  PETITES ET MOYENNES ENTREPRISES
Les négociations projetées seront sans effet sur La situation des
Petites et Moyennes Entreprises de la Communauté .