AGREEMENT in the form of an Exchange of Letters between the European Community, of the one part, and the Kingdom of Norway, of the other part, on Protocol 2 to the Agreement between the European Economic Community and the Kingdom of Norway

A. Letter from the Community

Brussels, 20 December 1996

Sir,

I have the honour to confirm the agreement of the European Community to the 'Agreed Minutes` annexed hereto concerning Protocol 2 to the Agreement between the European Economic Community and the Kingdom of Norway.

I should be grateful if you would confirm the agreement of the Government of the Kingdom of Norway with the content of this letter.

Please accept, Sir, the assurance of my highest consideration.

For the European Community

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B. Letter from Norway

Brussels, 20 December 1996

Sir,

I have the honour to acknowledge receipt of your letter of today worded as follows:

'I have the honour to confirm the agreement of the European Community to the "Agreed Minutes" annexed hereto concerning Protocol 2 to the Agreement between the European Economic Community and the Kingdom of Norway.`

I have the honour to confirm the agreement of my Government with the contents of your letter and to the date proposed for the entry into force of the amendments.

Please accept, Sir, the assurance of my highest consideration.

For the Government of the Kingdom of Norway

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AGREED MINUTES

I. Introduction

1. Following a number of meetings held between officials from the Commission and Norway it was agreed to submit to their respective authorities for approval a series of adjustments to the respective import regimes applied by the Community and Norway for processed agricultural products falling within the scope of Protocol 2 to the 1973 Free Trade Agreement. These adjustments would apply from 1 September 1996.

2. The adjustments referred to in paragraph 1 follow the agreement of both sides that an adaptation of the duties in bilateral trade between the Community and Norway needed to be achieved following GATT implementation by both sides. For that purpose and subject to the Additional Arrangements set out in Part V both parties agreed that the reference rates for the agricultural raw materials set out in Parts II (1) and III would be applied.

II. Norwegian import regime

1. The following reference rates (Nkr/kg) of the agricultural raw materials would be used for the calculation of the duties for the processed agricultural products:

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2. Norwegian tariff codes mentioned in these minutes refer to those communicated to the Commission by Norway in its Regular Notification dated 15 February 1996 covering Protocol 2 to the Free Trade Agreement. The terms of these minutes will not be prejudiced by any future changes that may be made in Norwegian tariff nomenclature.

3. The de minimis quantity below which a duty would not be applied for flour, starch and/or glucose would be 5 %.

4. An additional interval of not less than 5 kg but less than 15 kg of starch and/or glucose assumed to have been used per 100 kg of processed agricultural product would be introduced and within this range a quantity of 12,5 kg of starch/glucose would be taken to calculate the duty. For the interval of not less than 15 kg but less than 25 kg of starch and/or glucose the duty would be calculated on the basis of 22,5 kg.

5. The de minimis quantity below which a duty would not be applied for the additional raw materials (meat, cheese, eggs and soft fruits (frozen raspberries, frozen blackcurrants and frozen strawberries)) would be 3 %. In calculating the duty, fresh soft fruits would be assimilated to frozen on the basis of a one to one conversion.

6. The revised intervals of the notional quantities and the agreed quantities of agricultural raw materials to be taken into account, notably as a result of points 3 to 5 above, are shown at Annex A, (Parts 1 and 2).

7. The duty for Norwegian code 1806.1000 Cocoa powder containing sugar or other sweetening matter would be zero.

8. The agricultural element of the duty for Norwegian codes 1806.2012 Table cream powders in containers or immediate packings, of a content exceeding 2 kg. 1806.2090 Other (other than ice cream powders or table cream powders) in blocks, slabs or bars weighing more than 2 kg in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg, 1806.3100 Other, in blocks slabs or bars - filled, 1806.3200 Other, in blocks, slabs or bars - not filled, 1806.9010 Other chocolate, including sugar confectionery, containing cocoa (other than in blocks, slabs or bars weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg), 1806.9022 Table cream powders, 1806.9090 Other edible preparations would be determined from the actual content declared for the raw materials on which an agricultural duty is applied.

9. The industrial element of the duty for Norwegian code 1901.1010 Preparations for infant use, put up for retail sale: of goods of heading Nos 04.01 to 04.04 would be zero.

10. The agricultural element of the duty for Norwegian code 1901.2010 Cake mixes of a content not less than 2 kg would be corrected so as to be Nkr/kg 2,34 calculated on the basis of the standard recipe (35 kg wheat flour, 5 kg potato starch and 3 kg whole egg powder per 100 kg of goods).

11. The agricultural element of the duty for Norwegian code 1901.2099 Cake mixes in containers of a net content of not less than 2 kg (other than doughs) would be zero for products declared as free from gluten for sufferers of coeliac disease.

12. The agricultural element of the duty for Norwegian code 1904.1090 Prepared foods obtained by the swelling or roasting of cereals or cereal products (other than 'corn flakes`) would be Nkr/kg 0,40 and the industrial element would be zero.

13. The agricultural element duty for Norwegian code 1905.2000 Gingerbread and the like would be at the fixed rate of Nkr/kg 2,09 and the industrial element would be zero.

14. The industrial element of the duty for Norwegian codes 2004.1010 Edible preparations composed of flour, meal or flakes based on potatoes containing not less than 75 % by weight of potatoes frozen, 2004.1020 Edible preparations composed of flour, meal or flakes based on potatoes (other than containing not less than 75 % by weight of potatoes) frozen, 2005.2010 Edible preparations composed of flour, meal or flakes based on potatoes containing not less than 75 % by weight of potatoes not frozen, 2005.2020 Edible preparations composed of flour, meal or flakes based on potatoes (other than containing not less than 75 % by weight of potatoes) not frozen would be zero.

15. The duty for Norwegian code 2103.2010 Tomato ketchup would be zero.

16. The agricultural element of the duty for Norwegian code 2103.9090 Other sauces and preparations therefore, mixed condiments and mixed seasonings (other than tomato ketchup and other tomato sauce, mustard flour and meal and prepared mustard, mayonnaise and remoulades and mango chutney liquid) would be determined from the actual content declared by the raw materials on which an agricultural duty is applied.

17. The agricultural element of the duty for Norwegian code 2104.1010 Meat broth in airtight containers would be maintained at Nkr 3,14/kg calculated on the basis of the standard recipe (15 kg of bovine meat per 100 kg of goods).

18. The agricultural element of the duty applying to Norwegian code 2105.0010 Ice cream and other edible ice containing cocoa would be Nkr 4,12/kg calculated on the basis of the standard recipe (35 kg of whole milk powder per 100 kg of goods). The industrial element would be Nkr 0,38/kg.

19. The agricultural element of the duty applying to Norwegian code 2105.0020 Ice cream containing edible fats would be calculated on the basis of the standard recipe (35 kg of whole milk powder and 6 kg of frozen strawberries per 100 kg of goods). The industrial element would be Nkr 0,97/kg.

20. The agricultural element of the duty for Norwegian code 2106.9020 Preparations of the juice of apples or blackcurrants for the manufacture of beverages would be 9 % ad valorem and the industrial element of the duty would be 5 % ad valorem.

21. The duty for Norwegian code ex 2106.9030 Other preparations for the manufacture of beverages inter alia concentrated extracts of other juices would be zero.

22. The agricultural element of the duty for Norwegian code 2106.9051 Cream substitutes (in dry matter form) would be at the fixed rate of Nkr 6,01/kg.

23. The agricultural element of the duty for Norwegian code 2106.9052 Cream substitutes (in liquid form) would be at the fixed rate of Nkr 3,01/kg.

24. The agricultural element of the duty for Norwegian code 2106.9060 Emulsified fats and similar products containing more than 15 % by weight of milk fats would be Nkr 2,63/kg calculated on the basis of the standard recipe (20 kg of butter per 100 kg of goods).

25. The agricultural element of the duty applying under the standard recipe (300 kg of skimmed-milk powder) for Norwegian codes 3501.1000 Casein and 3501.9010 Caseinates and other derivatives would be maintained at the average of the level imposed during the period February 1994 to January 1995 inclusive of Nkr 33,75/kg.

26. The agricultural element of the duty for Norwegian codes 3505.1001 Esterified or etherified dextrins and other modified starches and 3505.1009 Dextrins and other modified starches (other than esterified or etherified) would be Nkr 8,0/kg on application by the operator to the responsible Norwegian authority.

III. Community import regime

The following basic amounts would be used for the calculation of the agriculture components and the additional duties:

- Cereals (common wheat, durum wheat, rye, barley and maize) ECU 7,817/100 kg

- Long grain husked rice ECU 36,33/100 kg

- Whole milk powder ECU 162,837/100 kg

- Skimmed-milk powder ECU 118,800/100 kg

- Butter ECU 235,632/100 kg

- Sugar ECU 46,522/100 kg.

IV. Renewal of quotas

1. Tariff quotas applied in 1995 on an autonomous basis would be applied retroactively from 1 January 1996.

2. With effect from 1 September 1996 an annual quota of 5 500 tonnes would be opened by the Community for imports of chocolate and other food preparations containing cocoa falling within code 1806 except subheading 1806 10 (cocoa powder containing added sugar or other sweetening matter), to which a fixed rate of duty of ECU 35,15/100 kg would apply. This arrangement would not prejudice exports from Norway to the Community at the rate of duty resulting from the application of the amounts referred to in part III.

V. Additional arrangements

Both sides agreed to put to their respective authorities the following:

(a) The reference rates of frozen soft fruits specified in Part II (1) applied under the matrix, actual content and standard recipes would be subject to annual joint review before 15 June. Such joint reviews would take account of the market prices, the market situation, Norwegian production and imports to Norway. The reference prices and as a result the duties thereafter would be adapted.

(b) The reference rates of the cereals applied in the columns headed 'Matrix`, 'Actual content' and 'Standard recipes` by Norway and under the columns headed 'Matrix` and 'Standard recipes` by the Community would be adjusted if the market prices, market situation and/or significant changes in trade indicated such a need. As a result the duties would be adapted. Consultations would be held between the parties prior to such adjustments.

(c) The reference rates of the dairy raw materials applied in the columns headed 'Matrix`, 'Actual content` and 'Standard recipes` by Norway and under the columns headed 'Matrix` and 'Standard recipes` by the Community would be adjusted if the market prices, market situation and/or significant changes in trade indicated such a need. As a result the duties would be adapted. Consultations would be held between the parties prior to such adjustments.

(d) The references rates of starch and glucose applied in the columns headed 'Matrix`, 'Actual content` and 'Standard recipes` by Norway and under the columns headed 'Matrix` and 'Standard recipes` by the Community would be adjusted if the market prices, market situation and/or significant changes in trade indicated such a need. As a result the duties would be adapted. Consultations would be held between the parties prior to such adjustments.

(e) If difficulties were to occur in the implementation of the quota concerning chocolate and other food preparations containing cocoa referred to under Part IV appropriate measures would be taken if necessary taking full account of Norwegian interests. Consultations would be held between the parties prior to the introduction of these measures.

VI. Future trading conditions

Both sides agreed to use their best endeavours to improve trading conditions in the future taking account of relevant criteria, such as the evolution of trade flows, bilateral preference applied in trade in processed agricultural products and the evolution of raw materials' markets and prices. In this respect both sides agreed to seek to obtain improved preferential treatment within the context of Protocol 3 of the European Economic Area Agreement.

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