PROTOCOL amending the Agreement between Hungary and the European Economic Community on trade in textile products

1. Delegations of the European Economic Community and Hungary met in Brussels on 11 and 12 July and 23 and 24 September 1991. The purpose of the consultations was to amend the Agreement between the Community and Hungary on trade in textile products, initialled on 11 July 1986 and provisionally applied since 1 January 1987.

2. The Parties agreed to extend the period of application of the agreement provided for in Article 18 (1) until 31 December 1992.

3. The percentages of transfers between regional quota-shares referred to in Article 13 (3) of the Agreement and in paragraph 4 (d) of Protocol E for the sixth year of application of the Agreement shall be determined following consultations between the Parties.

4. The Parties agreed further to amend Annex I to the Agreement with a view to including categories 115 to 123 in the product coverage of the Agreement. The text of Annex I is appended to this Protocol (Appendix 1).

5. In view of the prospective association of Hungary with the Community the Parties agreed to replace the following provisions of the Agreement:

- Article 4 concerning flexibilities,

- Annex II concerning quantitative limitations for direct imports, and

- Protocol E concerning the special regime for outward processing, including its Annex on the corresponding quantitative limitations,

by the texts of Article 4 (Appendix 2), Annex II (Appendix 3), and Protocol E (Appendix 4) which are appended to this Protocol.

The Parties agreed further to delete Article 5 of the Agreement.

6. The Parties agreed that the amendments to the Agreement specified in paragraphs 2, 3 and 4 of this Protocol shall be applied from 1 January 1992.

7. The Parties agreed that the amendments to the Agreement specified in paragraph 5 of this Protocol shall be applied from the date of application of the trade provisions of the European Agreement between Hungary and the Community. The Parties agreed that all provisions of the Agreement which are not modified by this Protocol remain unchanged.

Done at Brussels, 24 September 1991.

Delegation of Hungary

Delegation of the

European Economic Community

Appendix 1

ANNEX I

LIST OF PRODUCTS

1. When the constitutive material of the products of categories 1 to 114 is not specifically mentioned, these products are to be taken to be made exclusively of wool or of fine hair, of cotton or of man-made fibres.

2. Garments which are not recognizable as being garments for men or boys or as being garments for women or girls are classified with the latter.

3. Where the expression babies' garments is used, this is meant also to cover girls' garments up to and including commercial size 86.

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Appendix 2

Article 4

1. Advance use of a portion of the quantitative limit established for the following year shall be authorized for each category of products up to 5 % of the quantitative limit for the current year.

Amounts delivered in advance shall be deducted from the quantitative limits established for the following year.

2. Carry-over to the corresponding quantitative limit for the following year of amounts not used during any given year shall be authorized up to 9 % of the quantitative limit for the current year.

3. In the case of Group I, transfers shall be allowed only in the following cases:

- amounts may be transferred from category 2 to category 3 or from category 3 to category 2 up to 7 % of the quantitative limit for the category to which the transfer is made,

- amounts may be transferred between categories 4, 5, 6, 7 and 8 up to 7 % of the quantitative limits for the category to which the transfer is made.

Amounts may be transferred to any category in Group II or III from any category in Group I, II or III, up to 10 % of the quantitative limit for the category to which the transfer is made.

4. The table of equivalence applicable to the transfers referred to above is given in Annex I.

5. The increase in any given category of products resulting from the cumulative application of the provisions in paragraphs 1, 2 and 3 during a single year must not exceed the following limits:

- 17 % for categories of products in Group I,

- 17 % for categories of products in Groups II and III.

6. Prior notification must be given by the Hungarian authorities to the Community of any recourse to the provisions of paragraphs 1, 2 and 3 above.

Appendix 3

ANNEX II

COMMUNITY QUANTITATIVE LIMITS FOR HUNGARY

(For practical reasons the products description used in the Annex are given in abbreviated form)

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Appendix 4

PROTOCOL E

Reimports into the Community, within the meaning of Article 3 (4) of this Agreement, of products listed in the Annex to this Protocol shall be subject to the provisions of the Agreement, unless the special provisions below provide otherwise:

1. Subject to paragraph 2, only reimports into the Community of products affected by the specific quantitative limits laid down in the Annex to this Protocol shall be considered reimports within the meaning of Article 3 (4).

2. Reimports not covered by the Annex to this Protocol may be made subject to specific quantitative limits following consultations in accordance with the procedures set out in Article 14 of the Agreement, provided the products concerned are subject to quantitative limits under Annex II to the Agreement.

3. Having regard to the interests of both Contracting Parties, the Community may at its discretion, or in response to a request from Hungary under Article 14 of the Agreement, examine:

(a) the possibility of transferring from one category to another, using in advance or carrying over from one year to the next portions of specific quantitative limits;

(b) the scope for allocating portions of the specific quantitative limit unused in one region of the Community to another such region;

(c) the possibility of increasing specific quantitative limits.

4. However, the Community may apply automatically the flexibility rules set out in paragraph 3 within the following limits:

(a) transfers between categories may not exceed 25 % of the quantity for the category to which the transfer is made (¹);

(b) carry-over of a specific quantitative limit from one year to the next may not exceed 13,5 % of the quantity set for the year of actual utilization;

(c) advance use of specific quantitative limits from one year to another may not exceed 7,5 % of the quantity set for the year of actual utilization;

(d) transfers from one region to another may not exceed a certain percentage of the quantity set for the region to which the transfer is made; this percentage shall be equal to 1,5 times the percentage provided for in Article 13 (3) of the Agreement.

5. The Community shall inform Hungary of any measures taken pursuant to the preceding paragraphs.

6. The competent authorities in the Community shall debit the specific quantitative limits referred to in paragraph 1 at the time of issue of the prior authorization required by Council Regulation (EEC) No 636/82 which governs economic outward processing arrangements. A specific quantitative limit shall be debited for the year in which a prior authorization is issued.

7. Transfers from one category to another and combined debits from the quantitative limit for products of Groups II and III will be calculated in accordance with the table of equivalence in Annex I to the Agreement.

(¹) However, for categories in Group II or Group III, transfers between quota-shares under the German, French, Italian and Benelux quotas shall be allowed up to 100 % of the category from which the transfer is made.

8. A certificate of origin made out by the organizations authorized to do so under Hungarian law shall be issued, in accordance with Protocol A to the Agreement, for all products covered by this Protocol. This certificate shall bear a reference to the prior authorization mentioned in paragraph 6 as evidence that the processing operation it describes has been carried out in Hungary.

9. The Community shall provide Hungary with the names and addresses of, and specimens of the stamps used by, the competent authorities of the Community which issue the prior authorizations referred to in paragraph 6.

10. Without prejudice to the provisions of paragraphs 1 to 9 above, Hungary and the Community shall continue consultations with a view to reaching a mutually acceptable solution enabling both Contracting Parties to benefit from the Agreement's provisions on outward processing traffic and so ensure the effective development of trade in textile products between Hungary and the Community.

ANNEX TO PROTOCOL E

OPT QUANTITATIVE LIMITS FOR HUNGARY

(For practical reasons the product descriptions used in the Annex are given in abbreviated form)

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Note verbale

The Directorate-General for External Relations of the Commission of the European Communities presents its compliments to the Mission of the Republic of Hungary to the European Communities and has the honour to refer to the Agreement between Hungary and the European Communities on trade in textile products, initialled on 11 July 1986 and applied since 1 January 1987, as amended by the Protocol initialled on 24 September 1991.

With reference to paragraph 3 of the abovementioned Protocol, the Directorate-General has the honour to inform the Mission that it is now in a position to propose the following paragraph, already accepted by a certain number of supplier countries of the Community:

'The percentage of transfers between regional quota-shares referred to in Article 13 (3) of the Agreement for the year 1992 shall be 40 %.

It is understood that if, as a result of the application of the above percentage, serious difficulties, following significant changes in the pattern of trade, occur in certain regions of the Community, both Parties shall hold consultations without delay with a view to reviewing the situation.`

The Directorate-General for External Relations would be grateful if the authorities of the Republic of Hungary would confirm their acceptance of the above adaptation of the Agreement, as agreed at the time of initialling of the said Protocol.

The Directorate-General for External Relations of the Commission of the European Communities avails itself of this opportunity to renew to the Mission of the Republic of Hungary to the European Communities the assurance of its highest consideration.

Note verbale

The Mission of the Republic of Hungary to the European Communities presents its compliments to the Directorate-General for External Relations of the Commission of the European Communities and has the honour to refer to the Agreement between Hungary and the European Community on trade in textile products, initialled on 11 July 1986 and applied since 1 January 1987, as amended by the Protocol initialled on 24 September 1991.

With reference to paragraph 3 of the abovementioned Protocol, the Mission of the Republic of Hungary has the honour to inform the Commission that it is in a position to accept the following paragraph, in the form in which it appeared in the Note verbale of 25 October 1991 from the Commission of the European Communities:

'The percentage of transfers between regional quota-shares referred to in Article 13 (3) of the Agreement for the year 1992 shall be 40 %.

It is understood that if, as a result of the application of the above percentage, serious difficulties, following significant changes in the pattern of trade, occur in certain regions of the Community, both Parties shall hold consultations without delay with a view to reviewing the situation.`

The Mission of the Republic of Hungary to the European Communities avails itself of this opportunity to renew to the Directorate-General for External Relations of the Commission of the European Communities the assurance of its highest consideration.