EUROPE AGREEMENT establishing an association between the European Communities and their Member States, of the one part, and the Republic of Lithuania, 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,

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 on EUROPEAN UNION, 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

the EUROPEAN COMMUNITY, the EUROPEAN ATOMIC ENERGY COMMUNITY and the EUROPEAN COAL AND STEEL COMMUNITY,

hereinafter referred to as 'the Community`,

acting within the framework of the European Union,

of the one part, and

the REPUBLIC OF LITHUANIA,

hereinafter referred to as 'Lithuania`,

of the other part,

RECALLING the historical links between the Parties and the common values they share;

RECOGNISING that the Community and Lithuania wish to reinforce these links, to establish close and lasting relations on a basis of reciprocity allowing Lithuania to participate in the process of European integration, in reinforcing and further developing the relations previously established, in particular via the Agreement on Trade and Commercial and Economic Cooperation and the Agreement on Free Trade and Trade-Related Matters;

CONSIDERING the commitment to the intensification of political and economic liberties which constitute the basis of this Agreement and to further development of Lithuania's new economic and political system which respects, in accordance, inter alia, with the undertakings made within the context of the Conference on Security and Cooperation in Europe (CSCE) and the Organisation for Security and Cooperation in Europe (OSCE), the rule of law and human rights, including the rights of persons belonging to minorities, a multiparty system with free and democratic elections and liberalisation aimed at setting up a market economy;

SHARING the understanding that Lithuania has made considerable progress in political and economic reforms and that these reforms will be pursued;

CONSIDERING the commitment to the implementation of commitments made in the framework of the CSCE, in particular those set out in the Helsinki Final Act, the concluding documents of the Madrid, Vienna and Copenhagen meetings, those of the Charter of Paris for a New Europe, the conclusions of the CSCE's Bonn Conference, the CSCE Helsinki document 1992, the European Convention on Human Rights, the European Energy Charter Treaty as well as the Ministerial Declaration of the Lucerne Conference of 30 April 1993;

WILLING to promote improved contacts among their citizens as well as the free flow of information and ideas, as agreed by the Parties in the framework of the CSCE and the OSCE;

CONSCIOUS of the importance of this Agreement in establishing and enhancing in Europe a system of stability based on cooperation, with the European Union as one of the cornerstones;

RECOGNISING that there is a need to continue, with the Community's help, Lithuania's political and economic reform;

TAKING ACCOUNT of the Community's wishes to contribute to the implementation of the reforms and to assist Lithuania in facing the economic and social consequences of structural adjustment;

RECOGNISING that full implementation of the Agreement is linked to the implementation of a coherent programme of economic and political reform by Lithuania;

RECOGNISING the need for continuing regional cooperation among the Baltic States, taking into account that closer integration between the European Union and the Baltic States, and the Baltic States among themselves, should proceed in parallel;

CONSIDERING the commitment to liberalise trade based on the General Agreement on Tariffs and Trade (GATT) and World Trade Organisation (WTO) principles;

EXPECTING that this Agreement will create a new climate for economic relations between them and above all for the development of trade matters and investment, which are essential to economic restructuring and the renewal of technology;

BEARING in mind that political dialogue on matters of mutual interest has been established by the Joint Declaration of May 1992;

DESIROUS of developing and intensifying regular political dialogue within the multilateral framework established by the Copenhagen European Council of June 1993 and enhanced by the Decision of the Council of the European Union of 7 March 1994 and the conclusions of the Essen European Council of December 1994;

RECALLING that Lithuania has been an associated partner of the Western European Union (WEU) since May 1994 and that it participates in the North Atlantic Treaty Organisation (NATO) Partnership for Peace Programme;

RECOGNISING the contribution which the Pact on Stability in Europe can make to promoting stability and good-neighbourly relations in the Baltic region, and confirming their determination to work together for the success of this initiative;

TAKING ACCOUNT of the Community's willingness to employ instruments of cooperation and economic, technical and financial assistance on a global and multiannual basis;

BEARING in mind the economic and social disparities between the Community and Lithuania and thus recognising that the objectives of this association should be reached through appropriate provisions of the Agreement;

DESIROUS of establishing cultural cooperation and developing exchanges of information;

WILLING to set up a framework for cooperation aimed at preventing illegal activities;

RECOGNISING the fact that Lithuania's ultimate objective is to become a member of the European Union and that association through this Agreement will, in the view of the Parties, help Lithuania to achieve this objective;

TAKING INTO ACCOUNT the accession preparation strategy adopted by the Essen European Council of December 1994, which is being politically implemented by the creation, between the associated States and the Institutions of the European Union, of structured relations which encourage mutual trust and will provide a framework for addressing topics of common interest,

HAVE AGREED AS FOLLOWS:

Article 1

1. An association is hereby established between the Community and its Member States, of the one part, and Lithuania, of the other part.

2. The objectives of this association are:

- to provide an appropriate framework for the political dialogue between the Parties allowing the development of close political relations,

- to establish gradually a free trade area between the Community and Lithuania covering substantially all trade between them,

- to promote the expansion of trade and the harmonious economic relations between the Parties and so to foster dynamic economic development and prosperity in Lithuania,

- to provide a basis for economic, financial, cultural and social cooperation and cooperation in the prevention of illegal activities, as well as for the Community's assistance to Lithuania,

- to support Lithuania's efforts to develop its economy and to complete the transition into a market economy,

- to provide an appropriate framework for the gradual integration of Lithuania into the European Union. Lithuania shall work towards fulfilling the necessary requirements in this respect,

- to set up institutions suitable to make the association effective.

TITLE I GENERAL PRINCIPLES

Article 2

1. Respect for democratic principles and human rights, established by the Helsinki Final Act and in the Charter of Paris for a New Europe, as well as the principles of market economy, inspire the domestic and external policies of the Parties and constitute essential elements of this Agreement.

2. The Parties consider that it is essential for the future prosperity and stability of the region that the Baltic States should maintain and develop cooperation among themselves and will make every effort to enhance this process.

Article 3

1. The association includes a transitional period which is referred to in specific Articles hereinafter and which ends at the latest on 31 December 1999.

2. The Association Council established pursuant to Article 111, bearing in mind that the principles of the market economy are essential to the present association, shall proceed regularly to examine the application of the Agreement and the implementation by Lithuania of economic reforms on the basis of the principles referred to in the preamble.

3. The transitional period envisaged under paragraph 1 shall apply neither to Title II nor to Title III.

TITLE II POLITICAL DIALOGUE

Article 4

The political dialogue between the European Union and Lithuania shall be developed and intensified. It shall accompany and consolidate the rapprochement between the European Union and Lithuania, support the political and economic changes under way in that country or already realised, and contribute to the establishment of close links of solidarity and new forms of cooperation between the Parties. The political dialogue is intended to promote in particular:

- Lithuania's full integration into the community of democratic nations and its progressive rapprochement with the European Union,

- an increasing convergence of positions of the Parties on international issues and, in particular, on those issues likely to have substantial effects on the Parties,

- better cooperation in areas covered by the common foreign and security policy of the European Union,

- security and stability in Europe.

Article 5

Political dialogue shall take place within the multilateral framework and in accordance with the forms and practices established with the associated countries of Central Europe.

Article 6

1. At Ministerial level, bilateral political dialogue shall take place within the Association Council, which shall have the general responsibility for any matter which the Parties might wish to put to it.

2. With the agreement of the Parties, other procedures for political dialogue shall be established, in particular:

- meetings, where necessary, of senior officials (at the level of political directors) representing Lithuania, on the one hand, and the Presidency of the Council of the European Union and the Commission, on the other,

- taking full advantage of all diplomatic channels between the Parties, including appropriate contacts in third countries and within the United Nations, the OSCE and other international forums,

- including Lithuania in the group of countries receiving regular information on the activities managed within the framework of the common foreign and security policy as well as exchanging information with a view to achieving the objectives defined in Article 4,

- any other means which would make a useful contribution to consolidating, developing and stepping up this dialogue.

Article 7

At parliamentary level, political dialogue shall take place within the framework of the Parliamentary Committee of the association between the European Communities and their Member States and the Republic of Lithuania (hereinafter referred to as the 'Parliamentary Committee`).

TITLE III FREE MOVEMENT OF GOODS

Article 8

1. The Community and Lithuania shall gradually establish a free trade area in a transitional period lasting a maximum of six years starting from the entry into force of the Agreement on Free Trade and Trade-Related Matters on 1 January 1995, in accordance with the provisions of this Agreement and in conformity with those of the GATT and the WTO.

2. The Combined Nomenclature of goods shall be applied to the classification of goods in trade between the two Parties.

3. For each product the basic duty to which the successive reductions set out in this Agreement are to be applied shall be that actually applied, erga omnes, on 1 March 1994. For products referred to in Chapters II and III, the basic duties shall be those set out in Annexes II to V and XII, or those actually applied, erga omnes, on 1 January 1995, whichever are the lower.

4. If, after the entry into force of the Agreement on Free Trade and Trade-Related Matters, i.e. 1 January 1995, any tariff reduction is applied on an erga omnes basis, in particular, reductions resulting from the tariff agreement concluded as a result of the GATT Uruguay Round, such reduced duties shall replace the basic duties referred to in paragraph 3 as from the date when such reductions are applied.

5. The Community and Lithuania shall communicate to each other their respective basic duties.

CHAPTER I INDUSTRIAL PRODUCTS

Article 9

1. The provisions of this Chapter shall apply to products originating in the Community and in Lithuania listed in Chapters 25 to 97 of the Combined Nomenclature with the exception of the products listed in Annex I.

2. The provisions of Articles 10 to 14 inclusive do not apply to products mentioned in Article 16.

3. Trade between the Parties in items covered by the Treaty establishing the European Atomic Energy Community will be conducted in accordance with the provisions of that Treaty.

Article 10

1. Customs duties on imports applicable in the Community to products originating in Lithuania are abolished on 1 January 1995.

2. Quantitative restrictions on imports into the Community and measures having an equivalent effect are abolished on 1 January 1995 with regard to products originating in Lithuania.

Article 11

1. Customs duties on imports applicable in Lithuania to products originating in the Community other than those listed in Annexes II, III and IV are abolished on 1 January 1995.

2. Customs duties on imports applicable in Lithuania to products originating in the Community which are listed in Annex II shall be progressively reduced in accordance with the following timetable:

- on 1 January 1996, each duty shall be reduced to 50 % of the basic duty,

- on 1 January 1997, the remaining duties shall be eliminated.

3. Customs duties on imports applicable in Lithuania to products originating in the Community which are listed in Annex III shall be progressively reduced in accordance with the following timetable:

- on 1 January 1998, each duty shall be reduced to 50 % of the basic duty,

- on 1 January 2001, the remaining duties shall be eliminated.

4. Customs duties on imports applicable in Lithuania to products originating in the Community which are listed in Annex IV shall be abolished on 1 January 2001.

5. Quantitative restrictions on imports into Lithuania of products originating in the Community and measures having an equivalent effect are abolished on 1 January 1995.

Article 12

The provisions concerning the abolition of customs duties on imports shall also apply to customs duties of a fiscal nature.

Article 13

Any charges having an effect equivalent to customs duties on imports are abolished on 1 January 1995 in trade between the Community and Lithuania.

Article 14

1. The Community and Lithuania shall progressively abolish between them by 1 January 1995 any customs duties on exports and charges having equivalent effect except those applied by Lithuania to products listed in Annex V which shall be eliminated by 1 January 2001 at the latest.

2. Quantitative restrictions on exports to Lithuania and any measures having equivalent effect are abolished by the Community on 1 January 1995.

3. Quantitative restrictions on exports to the Community and any measures having equivalent effect are abolished by Lithuania on 1 January 1995.

Article 15

Each Party declares its readiness to reduce its customs duties in trade with the other Party more rapidly than is provided for in Articles 10 and 11 if its general economic situation and the situation of the economic sector concerned so permit.

The Association Council may make recommendations to this effect.

Article 16

1. The textile products of Lithuanian origin listed in Annex VI to this Agreement shall benefit from a suspension of customs duties on imports into the Community, under the conditions set out in that Annex. The Annex may be revised by decision of the Association Council, in accordance with the procedures set out in Article 113.

2. Protocol 1 lays down the other arrangements applicable to the textile products referred to therein.

Article 17

1. The provisions of this Chapter do not preclude the retention by the Community of an agricultural component in the duties applicable to products listed in Annex VII in respect of products originating in Lithuania.

2. The provisions of this Chapter do not preclude the introduction of an agricultural component by Lithuania in the duties applicable to the products listed in Annex VIII in respect of products originating in the Community.

CHAPTER II AGRICULTURE

Article 18

1. The provisions of this Chapter shall apply to agricultural products originating in the Community and in Lithuania.

2. The term 'agricultural products` means the products listed in Chapters 1 to 24 of the Combined Nomenclature and the products listed in Annex I, but excluding fishery products as defined by Regulation (EEC) No 3759/92.

Article 19

Protocol 2 lays down the trade arrangements for processed agricultural products which are listed therein.

Article 20

1. As from 1 January 1995 no quantitative restrictions apply to imports into the Community of agricultural products originating in Lithuania nor to imports into Lithuania of agricultural products originating in the Community.

2. The Community and Lithuania shall grant each other the concessions referred to in Annexes IX to XIII on a harmonious and reciprocal basis in accordance with the conditions laid down therein.

3. The concessions referred to in paragraph 2 may be subject to revision by agreement between the Parties within a period lasting until 31 December 1997 and on the basis of the principles and procedures set out in paragraph 4.

4. Taking account of the volume of trade in agricultural products between them, of their particular sensitivity, of the rules of the common agricultural policy of the Community, of the rules of the agricultural policy in Lithuania, of the role of agriculture in Lithuania's economy, the Community and Lithuania shall examine in the Association Council, product by product and on an orderly and reciprocal basis, the possibilities of granting each other further concessions.

Article 21

Notwithstanding other provisions of this Agreement, and in particular Article 30, if, given the particular sensitivity of the agricultural markets, imports of products originating in one Party, which are the subject of concessions granted pursuant to Article 20, cause serious disturbance to the markets in the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such a solution, the Party concerned may take the measures it deems necessary.

CHAPTER III FISHERIES

Article 22

1. The provisions of this Chapter shall apply to fishery products originating in the Community and in Lithuania, which are covered by Regulation (EEC) No 3759/92.

Article 23

1. The Community and Lithuania shall grant each other the concessions referred to in Annexes XIV and XV, on a harmonious and reciprocal basis, in accordance with the conditions laid down therein.

2. The provisions of Articles 20(4) and 21 shall apply mutatis mutandis to fishery products.

CHAPTER IV COMMON PROVISIONS

Article 24

The provisions of this Title shall apply to trade between the Parties in all products except where otherwise provided herein or in Protocols 1 and 2.

Article 25

1. In trade between the Community and Lithuania from 1 January 1995:

- no new customs duties on imports or exports or charges having equivalent effect shall be introduced, nor shall those already applied be increased,

- no new quantitative restrictions on imports or exports or measures having equivalent effect shall be introduced nor shall those existing be made more restrictive.

2. Without prejudice to the concessions granted pursuant to Article 20, the provisions of paragraph 1 of this Article shall not restrict in any way the pursuance of the respective agricultural policies of Lithuania and the Community or the taking of any measures under such policies.

Article 26

1. The two Parties shall refrain from any measure or practice of an internal fiscal nature establishing, whether directly or indirectly, discrimination between the products of one Party and like products originating in the territory of the other Party.

2. Products exported to the territory of one of the two Parties may not benefit from repayment of internal indirect taxation in excess of the amount of direct or indirect taxation imposed on them.

Article 27

1. This Agreement shall not preclude the maintenance or establishment of customs unions, free trade areas or arrangements for frontier trade except in so far as they alter the trade arrangements provided for in this Agreement.

2. Consultations between the Parties shall take place within the Association Council concerning agreements establishing such customs unions or free trade areas and, where requested, on other major issues related to their respective trade policies with third countries. In particular in the event of a third country acceding to the Community, such consultations shall take place so as to ensure that account can be taken of the mutual interests of the Community and Lithuania stated in this Agreement.

Article 28

Exceptional measures of limited duration which derogate from the provisions of Article 11 and Article 25(1), first indent, may be taken by Lithuania in the form of increased customs duties.

These measures may only concern infant industries, or certain sectors undergoing restructuring or facing serious difficulties, particularly where these difficulties produce important social problems.

Customs duties on imports applicable in Lithuania to products originating in the Community introduced by these measures may not exceed 25 % ad valorem and shall maintain an element of preference for products originating in the Community.

The total value of imports of the products which are subject to these measures may not exceed 15 % of total imports of industrial products from the Community as defined in Chapter I during the last year for which statistics are available.

These measures shall be applied for a period not exceeding three years unless a longer duration is authorised by the Association Council. They shall cease to apply at the latest by 31 December 2000.

No such measures can be introduced in respect of a product if more than three years have elapsed since the elimination of all duties and quantitative restrictions or charges or measures having an equivalent effect concerning that product.

Lithuania shall inform the Association Council of any exceptional measures it intends to take and, at the request of the Community, consultations shall be held in the Association Council on such measures and the sectors to which they apply before they are applied. When taking such measures Lithuania shall provide the Association Council with a schedule for the elimination of the customs duties introduced under this Article. This schedule shall provide for a phasing out of these duties starting at the latest two years after their introduction at equal annual rates. The Association Council may decide on a different schedule.

Article 29

If one of the Parties finds that dumping is taking place in trade with the other Party within the meaning of Article VI of the GATT, it may take appropriate measures against this practice in accordance with the Agreement relating to the application of Article VI of the GATT, with related internal legislation and with the conditions and procedures laid down in Article 33.

Article 30

Where any product is being imported in such increased quantities and under such conditions as to cause or threaten to cause:

- serious injury to domestic producers of like or directly competitive products in the territory of one of the Parties, or

- serious disturbances in any sector of the economy or difficulties which could bring about serious deterioration in the economic situation of a region,

the Community or Lithuania, whichever is concerned, may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 33.

Article 31

Where compliance with the provisions of Articles 14 and 25 leads to:

(i) re-export towards a third country against which the exporting Party maintains, for the product concerned, quantitative export restrictions, export duties or measures having equivalent effect, or

(ii) a serious shortage, or threat thereof, of a product essential to the exporting Party,

and where the situations referred to above give rise, or are likely to give rise, to major difficulties for the exporting Party, that Party may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 33. The measures shall be non-discriminatory and be eliminated when conditions no longer justify their maintenance.

Article 32

The Member States of the European Union (hereinafter referred to as 'the Member States`) and Lithuania shall progressively adjust any State monopolies of a commercial character so as to ensure that, by the end of 1999, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States and of Lithuania. The Association Council will be informed about the measures adopted to implement this objective.

Article 33

1. In the event of the Community or Lithuania subjecting imports of products liable to give rise to the difficulties referred to in Article 30 to an administrative procedure having as its purpose the rapid provision of information on the trend of trade flows, it shall inform the other Party.

2. In the cases specified in Articles 29, 30 and 31, before taking the measures provided for therein or, in cases in which paragraph 3(d) applies, as soon as possible, the Community or Lithuania, as the case may be, shall supply the Association Council with all relevant information with a view to seeking a solution acceptable to the two Parties.

In the selection of measures, priority must be given to those which least disturb the functioning of this Agreement.

The safeguard measures shall be notified immediately to the Association Council and shall be the subject of periodic consultations within that body, particularly with a view to establishing a timetable for their abolition as soon as circumstances permit.

3. For the implementation of paragraph 2, the following provisions shall apply:

(a) as regards Article 30, the difficulties arising from the situation referred to in that Article shall be referred for examination to the Association Council, which may take any decision needed to put an end to such difficulties.

If the Association Council or the exporting Party has not taken a decision putting an end to the difficulties or no other satisfactory solution has been reached within 30 days of the matter being referred, the importing Party may adopt the appropriate measures to remedy the problem. These measures must not exceed the scope of what is necessary to remedy the difficulties which have arisen;

(b) as regards Article 29, the Association Council shall be informed of the dumping case as soon as the authorities of the importing Party have initiated an investigation. If no end has been put to the dumping or if no other satisfactory solution has been reached within 30 days of the matter being referred to the Association Council, the importing Party may adopt the appropriate measures;

(c) as regards Article 31, the difficulties arising from the situations referred to in that Article shall be referred for examination to the Association Council.

The Association Council may take any decision needed to put an end to the difficulties. If it has not taken such a decision within 30 days of the matter being referred to it, the exporting Party may apply appropriate measures on the exportation of the product concerned;

(d) where exceptional circumstances requiring immediate action make prior information or examination, as the case may be, impossible, the Community or Lithuania whichever is concerned may, in the situations specified in Articles 29, 30 and 31, apply forthwith the precautionary measures strictly necessary to deal with the situation.

Article 34

Protocol 3 lays down rules of origin for the application of the tariff preferences provided for in this Agreement as well as the methods of administrative cooperation therewith.

Article 35

This 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 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 36

Protocol 4 lays down the specific provisions to apply to trade between Lithuania of the one part and Spain and Portugal of the other part, and it will be valid until 31 December 1995.

TITLE IV MOVEMENT OF WORKERS, ESTABLISHMENT, SUPPLY OF SERVICES

CHAPTER I MOVEMENT OF WORKERS

Article 37

1. Subject to the conditions and modalities applicable in each Member State:

- the treatment accorded to workers of Lithuanian nationality 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 with its own nationals,

- the legally resident spouse and children of a worker legally employed in the territory of a Member State, with the exception of seasonal workers and of workers coming under bilateral agreements in the sense of Article 41, unless otherwise provided by such agreements, shall have access to the labour market of that Member State, during the period of that worker's authorised stay of employment.

2. Lithuania shall, subject to the conditions and modalities applicable in that country, accord the treatment referred to in paragraph 1 to workers who are nationals of a Member State and are legally employed in its territory as well as their spouse and children who are legally resident in the said territory.

Article 38

1. With a view to coordinating social security systems for workers of Lithuanian nationality, legally employed in the territory of a Member State and for the members of their family legally resident there, and subject to the conditions and modalities applicable in each Member State,

- all periods of insurance, employment or residence completed by such workers in the various Member States shall be added together for the purpose of pensions and annuities in respect of old age, invalidity and death and for the purpose of medical care for such workers and such family members,

- any pensions or annuities in respect of old age, death, industrial accident or occupational disease, or of invalidity resulting therefrom, with the exception of non-contributory benefits, shall be freely transferable at the rate applied by virtue of the law of the debtor Member State or States,

- the workers in question shall receive family allowances for the members of their family as defined above.

2. Lithuania shall accord to workers who are nationals of a Member State and legally employed in its territory, and to members of their families legally resident there, treatment similar to that specified in the second and third indents of paragraph 1.

Article 39

1. The Association Council shall by decision adopt the appropriate provisions to implement the objective set out in Article 38.

2. The Association Council shall by decision adopt detailed rules for administrative cooperation providing the necessary management and control guarantees for the application of the provisions referred to in paragraph 1.

Article 40

The provisions adopted by the Association Council in accordance with Article 39 shall not affect any rights or obligations arising from bilateral agreements linking Lithuania and the Member States where those agreements provide for more favourable treatment of nationals of Lithuania or of the Member States.

Article 41

1. Taking into account the labour market situation in the Member State, subject to its legislation and to the respect of rules in force in that Member State in the area of mobility of workers,

- the existing facilities for access to employment for Lithuanian workers accorded by Member States under bilateral agreements ought to be preserved and if possible improved,

- the other Member States shall consider favourably the possibility of concluding similar agreements.

2. The Association Council shall examine granting other improvements including facilities of access for professional training, in conformity with rules and procedures in force in the Member States, and taking account of the labour market situation in the Member States and in the Community.

Article 42

From the end of the transitional period or sooner if socioeconomic conditions in Lithuania have been largely aligned on those of the Member States and if the employment situation in the Community permits, the Association Council will consider ways of further improving the movement of workers. The Association Council shall make recommendations to such end.

Article 43

In the interest of facilitating the restructuring of labour resources resulting from the economic restructuring in Lithuania, the Community shall provide technical assistance for the establishment of a suitable social security system in Lithuania as set out in Article 93 of this Agreement.

CHAPTER II ESTABLISHMENT

Article 44

1. The Community and its Member States shall grant, except for the sectors included in Annex XVI, from entry into force of this Agreement:

(i) treatment no less favourable than that accorded by Member States to their own companies or to any third country company, whichever is the better, with regard to the establishment of Lithuanian companies;

(ii) to subsidiaries and branches of Lithuanian companies, established in their territory, treatment no less favourable than that accorded by Member States to their own companies and branches or to subsidiaries and branches of any third country company established in their territory, whichever is the better, in respect of their operation.

2. Lithuania shall facilitate the setting up of operations on its territory by Community companies and nationals. To that end, it shall, except for the sectors included in Annex XVIIa:

(i) grant, from entry into force of the Agreement, for the establishment of Community companies, treatment no less favourable than that accorded to its own companies or to companies of any third country, whichever is the better, save for the sectors referred to in Annex XVIIb, where national treatment shall be granted at the latest by the end of the transitional period referred to in Article 3;

(ii) grant, from entry into force of this Agreement, for the operation of branches and subsidiaries of Community companies, established in Lithuania, treatment no less favourable than that accorded to its own companies or to subsidiaries and branches of any third country company established in its territory, whichever is the better.

3. Lithuania shall, during the transitional period referred to in paragraph 2 (i) not adopt any measures or actions which introduce discrimination as regards the establishment and operations of Community companies and nationals in its territory in comparison with its own companies and nationals.

4. The Association Council shall examine regularly the possibility of accelerating the granting of national treatment in the sectors referred to in Annex XVIIb and the inclusion of areas or matters listed in Annex XVIIa within the scope of application of paragraph 2 of this Article. Amendments may be made to these Annexes by decision of the Association Council.

Following the expiration of the transitional period referred to in Article 3, the Association Council may exceptionally, on request of Lithuania, and if the necessity arises, decide to prolong the duration of exclusion of certain areas or matters listed in Annex XVIIb for a limited period of time.

5. The treatment described in paragraphs 1 and 2 shall be applicable for the establishment and operation of nationals as from the end of the transitional period referred to in Article 3.

6. Nothwithstanding the provisions of Article 44(2), Lithuanian subsidiaries and branches of Community companies shall have, from entry into force of this Agreement, the right to acquire, use, rent and sell real property, and as regards natural resources, agricultural land and forestry, the right to lease, where these are directly necessary for the conduct of economic activities for which they are established.

By the end of the transitional period referred to in Article 3 Lithuania shall grant these rights to Community nationals established in Lithuania.

Article 45

1. The provisions of Article 44 shall not apply to air transport, inland waterways and maritime cabotage transport services.

2. The Association Council may make recommendations for improving establishment and operations in the areas covered by paragraph 1.

Article 46

For the purposes of this Agreement:

(a) a 'Community company` or a 'Lithuanian company` respectively shall mean a company set up in accordance with the laws of a Member State or of Lithuania respectively and having its registered office or central administration or principal place of business within the Community or in the territory of Lithuania respectively.

However, should the company, set up in accordance with the laws of a Member State or Lithuania respectively, have only its registered office within the Community or in the territory of Lithuania respectively, the company shall be considered a Community or Lithuanian company respectively if its operations possess a real and continuous link with the economy of one of the Member States or Lithuania 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:

(i) as regards nationals, the right to take up economic activities as self-employed persons and to set up undertakings, in particular companies, which they effectively control. Self-employment and business undertakings by nationals shall not extend to seeking or taking employment in the labour market or confer a right of access to the labour market of another Party. The provisions of this Chapter do not apply to those who are not exclusively self-employed;

(ii) as regards Community or Lithuanian companies, the right to take up economic activities by means of the setting up of subsidiaries and branches in Lithuania or in the Community respectively;

(e) 'operation` shall mean the pursuit of economic activities;

(f) 'economic activities` shall in principle include activities of an industrial, commercial and professional character and activities of craftsmen;

(g) 'Community national` and 'Lithuanian national` shall mean respectively a natural person who is a national of one of the Member States or of Lithuania;

(h) with regard to international maritime transport, including intermodal operations involving a sea leg, nationals of the Member States or of Lithuania established outside the Community or Lithuania respectively, and shipping companies established outside the Community or Lithuania and controlled by nationals of a Member State or Lithuanian nationals respectively, shall also be beneficiaries of the provisions of Chapter II and Chapter III, if their vessels are registered in that Member State or in Lithuania respectively in accordance with their respective legislation.

Article 47

1. Subject to the provisions of Article 44, with the exception of financial services described in Annex XVIII, each Party may regulate the establishment and operation of companies and nationals on its territory, in so far as these regulations do not discriminate against companies and nationals of the other Party in comparison with its own companies and nationals.

2. In respect of financial services, notwithstanding any other provisions of this Agreement, a Party shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policyholders 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. Such measures shall not be used as a means of avoiding the Party's obligations under the Agreement.

3. 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.

Article 48

1. The provisions of Articles 44 and 47 do not preclude the application by a Party of particular rules concerning the establishment and operation in its territory of branches of companies of another Party not incorporated in the territory of the first Party, which are justified by legal or technical differences between such branches as compared with branches of companies incorporated in its territory or, as regards financial services, for prudential reasons.

2. The difference in treatment shall not go beyond what is strictly necessary as a result of such legal or technical differences or, as regards financial services, for prudential reasons.

Article 49

1. A 'Community company` or a 'Lithuanian company` established in the territory of Lithuania 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 Lithuania and the Community respectively, employees who are nationals of Community Member States and Lithuania respectively, provided that such employees are key personnel as defined in paragraph 2 of this Article, and that they are employed exclusively by companies, subsidiaries or branches.

The residence and work permits of such employees shall only cover the period of such employment.

2. Key personnel of the abovementioned companies herein referred to as 'organisations` are 'intracorporate transferees` as defined in (c) of this paragraph in the following categories, provided that the organisation is a juridical person and that the persons concerned have been employed by it or have been partners in it (other than as majority shareholders), for at least the year immediately preceding such movement:

(a) persons working in a senior position with an organisation, 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 sub-division of the establishment,

- supervising and controlling the work of other supervisory, professional or managerial employees,

- having the authority personally to recruit and dismiss or recommend recruiting, dismissing or other personnel actions;

(b) persons working within an organisation who possess uncommon knowledge essential to the establishment's service, research equipment, techniques or management. The assessment of such knowledge may reflect, apart from knowledge specific to the establishment, a high level of qualification referring to a type of work or trade requiring specific technical knowledge, including membership of an accredited profession;

(c) an 'intracorporate transferee` is defined as a natural person working within an organisation 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 organisation 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 organisation, effectively pursuing like economic activities in the territory of the other Party.

3. The entry into and the temporary presence within the territory of the Community or Lithuania of Lithuanian and Community nationals respectively shall be permitted, when these representatives of companies are persons working in a senior position, as defined in paragraph 2 (a), within a company, and are responsible for the setting up of a Community subsidiary or branch of a Lithuanian company or of a Lithuanian subsidiary or branch of a Community company in a Community Member State or Lithuania respectively, when:

- those representatives are not engaged in making direct sales or supplying services, and

- the company has its principal place of business outside the Community or Lithuania, respectively, and has no other representative, office, branch or subsidiary in that Community Member State or Lithuania respectively.

Article 50

In order to make it easier for the Community nationals and Lithuanian nationals to take up and pursue regulated professional activities in Lithuania and the Community respectively, the Association Council shall examine which steps are necessary to be taken to provide for the mutual recognition of qualifications. It may take all necessary measures to that end.

Article 51

During the transitional period referred to in Article 3, Lithuania may introduce measures which derogate from the provisions of this Chapter as regards the establishment of Community companies and nationals if certain industries:

- are undergoing restructuring, or

- are facing serious difficulties, particularly where these entail serious social problems in Lithuania, or

- face the elimination or a drastic reduction of the total market share held by Lithuanian companies or nationals in a given sector or industry in Lithuania, or

- are newly emerging industries in Lithuania.

Such measures:

- shall cease to apply at the latest on the expiration of the transitional period referred to in Article 3,

- shall be reasonable and necessary in order to remedy the situation, and

- shall only relate to establishments in Lithuania to be created after the entry into force of such measures and shall not introduce discrimination concerning the operations of Community companies or nationals already established in Lithuania at the time of introduction of a given measure compared with Lithuanian companies or nationals.

While devising and applying such measures, Lithuania shall grant whenever possible to Community companies and nationals a preferential treatment, and in no case a treatment less favourable than that accorded to companies or nationals from any third country.

Prior to the introduction of these measures, Lithuania shall consult the Association Council and shall not put them into effect before a one-month period following the notification of the Association Council of the concrete measures to be introduced by Lithuania, except where the threat of irreparable damage requires the taking of urgent measures in which case Lithuania shall consult the Association Council immediately after their introduction.

On expiration of the transitional period referred to in Article 3, Lithuania may introduce such measures only with the authorisation of the Association Council and under conditions determined by the latter.

CHAPTER III SUPPLY OF SERVICES

Article 52

1. The Parties undertake in accordance with the following provisions to take the necessary steps to allow progressively the supply of services by Community or Lithuanian companies or nationals which are established in a Party other than that of the person for whom the services are intended.

2. In step with the liberalisation process mentioned in paragraph 1, and subject to the provisions of Article 56, the Parties shall permit the temporary movement of natural persons providing the service or who are employed by the service provider as key personnel as defined in Article 49(2), including natural persons who are representatives of a Community or Lithuanian company or national and are seeking temporary entry for the purpose of negotiating for the sale of services or entering into agreements to sell services for that service provider, where those representatives will not be engaged in making direct sales to the general public or in supplying services themselves.

3. At the latest eight years after the entry into force of this Agreement, the Association Council shall take the measures necessary to implement progressively the provisions of paragraph 1. Account shall be taken of the progress achieved by the Parties in the approximation of their laws.

Article 53

1. The Parties shall not take any measures or actions which render the conditions for the supply of services by Community and Lithuanian nationals or companies which are established in a Party other than that of the person for whom the services are intended significantly more restrictive as compared with the situation existing on the day preceding the day of entry into force of the Agreement.

2. If one Party is of the view that measures introduced by the other Party since the signature of the Agreement result in a situation which is significantly more restrictive in respect of supply of services as compared with the situation existing at the date of signature of the Agreement, such first Party may request the other Party to enter into consultations.

Article 54

1. With regard to international maritime transport, the Parties undertake to apply effectively the principle of unrestricted access to the market and traffic on a commercial basis.

(a) The above provision does not prejudice the rights and obligations arising from the United Nations Code of Conduct for Liner Conferences, as applicable to one or other Party to the present 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 State 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 the present Agreement would not otherwise have an effective opportunity to ply for trade to and from the third country concerned;

(c) prohibit cargo-sharing arrangements in future bilateral agreements concerning dry and liquid bulk trade;

(d) abolish on 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.

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.

3. 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 Lithuania and vice versa.

4. With a view to ensuring the transit of goods through the territory of each Party, the Parties undertake to conclude an agreement as soon as possible and before the end of 1999 on the transit of intermodal traffic through each other's territory.

5. With a view to assuring a coordinated development and progressive liberalisation of transport between the Parties, adapted to their reciprocal 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 shall be dealt with by specific transport agreements where appropriate, negotiated between the Parties after entry into force of this Agreement.

6. Prior to the conclusion of the agreements referred to in paragraph 5, the Parties shall not take any measures or actions which are more restrictive or discriminatory as compared with the situation existing on the day preceding the day of entry into force of the Agreement.

7. During the transitional period, Lithuania shall progressively adapt its legislation including administrative, technical and other rules to that of the Community legislation existing at any time in the field of road, rail, inland waterway and air transport in so far as it serves liberalisation purposes and mutual access to markets of the Parties and facilitates the movement of passengers and of goods.

8. In step with the common progress in the achievement of the objectives of this Chapter, the Association Council shall examine ways of creating the conditions necessary for improving freedom to provide road, rail, inland waterway and air transport services.

CHAPTER IV GENERAL PROVISIONS

Article 55

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 56

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.

Article 57

Companies which are controlled and exclusively owned by Lithuanian companies or nationals and Community companies or nationals jointly shall also be beneficiaries of the provisions of Chapters II, III and IV of this Title.

Article 58

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 Lithuania from distinguishing, in the application of the relevant provisions of their fiscal legislation, between taxpayers who are not in identical situations, in particular as regards their place of residence.

Article 59

The provisions of this Title shall be progressively adjusted by the Parties. In formulating recommendations to this effect, the Association Council shall take into account the respective obligations of the Parties under the General Agreement on Trade in Services (GATS), and in particular of its Article V.

Article 60

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.

TITLE V PAYMENTS, CAPITAL, COMPETITION AND OTHER ECONOMIC PROVISIONS, APPROXIMATION OF LAWS

CHAPTER I CURRENT PAYMENTS AND MOVEMENT OF CAPITAL

Article 61

The Parties undertake to authorise, in freely convertible currency, any payments on the current account of balance of payments to the extent that the transaction underlying the payments concerns movements of goods, services, or persons between the Parties which have been liberalised pursuant to the present Agreement.

Article 62

1. With regard to transactions on the capital account of balance of payments, from entry into force of the Agreement, the Member States and Lithuania respectively shall ensure the free movement of capital relating to direct investments made in companies formed in accordance with the provisions of Chapter II of Title IV, and the liquidation or repatriation of these investments and of any profit stemming therefrom.

The liquidation or repatriation of investments linked to establishment of Community nationals establishing in Lithuania as self-employed persons pursuant to Chapter II of Title IV shall be liberalised from entry into force of this Agreement. Notwithstanding the above provision, complete free movement of capital for all of these investments shall be ensured by the end of the transitional period referred to in Article 3.

2. With regard to transactions on the capital account of balance of payments, from entry into force of this Agreement the Member States and Lithuania respectively shall ensure the free movement of capital relating to portfolio investment. This shall also apply to the free movement of capital relating to credits related to commercial transactions or the provision of services in which a resident of one of the Parties is participating and to financial loans.

3. Without prejudice to paragraph 1, the Member States, as from the entry into force of the Agreement, and Lithuania as from the end of the transitional period referred to in Article 3, shall be introduce any new restrictions on the movement of capital and current payments connected therewith between residents of the Community and Lithuania and shall not make the existing arrangements more restrictive.

4. The provisions of paragraphs 1 and 2 shall not prevent Lithuania from applying restrictions on outward investments by Lithuanian nationals and companies. However, the liquidation or repatriation of investments made in Lithuania and of any profit stemming therefrom shall not be affected. Five years after the entry into force of this Agreement the Parties agree to consult over the maintenance of any such restrictions, taking into account all the relevant monetary, fiscal and financial considerations.

5. The Parties shall consult each other with a view to facilitating the movement of capital between the Community and Lithuania in order to promote the objective of the present Agreement.

Article 63

1. During the transitional period referred to in Article 3, the Parties shall take measures permitting the creation of the necessary conditions for the further gradual application of Community rules on the free movement of capital.

2. By the end of the transitional period referred to in Article 3, the Association Council shall examine ways of enabling Community rules on the movement of capital to be applied in full.

CHAPTER II COMPETITION AND OTHER ECONOMIC PROVISIONS

Article 64

1. The following are incompatible with the proper functioning of this Agreement, in so far as they may affect trade between the Community and Lithuania:

(i) all agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition;

(ii) abuse by one or more undertakings of a dominant position in the territories of the Community or of Lithuania as a whole or in a substantial part thereof;

(iii) any public aid, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods.

2. Any practices contrary to this Article shall be assessed on the basis of criteria arising from the application of the rules of Articles 85, 86 and 92 of the Treaty establishing the European Community or, for products covered by the ECSC Treaty, on the basis of corresponding rules of the ECSC Treaty including secondary legislation.

3. The Association Council shall, by 31 December 1997, adopt by decision the necessary rules for the implementation of paragraphs 1 and 2.

Until these rules are adopted, the provisions of the Agreement on interpretation and application of Articles VI, XVI and XXIII of the GATT shall be applied as the rules for the implementation of paragraph 1 point (iii) and related parts of paragraph 2.

4. (a) For the purposes of applying the provisions of paragraph 1(iii), the Parties recognise that until 31 December 1999, any public aid granted by Lithuania shall be assessed taking into account the fact that Lithuania shall be regarded as an area identical to those areas of the Community described in Article 92(3)(a) of the Treaty establishing the European Community. The Association Council shall, taking into account the economic situation of Lithuania, decide whether that period should be extended by further periods of five years.

(b) Each Party shall ensure transparency in the area of public aid, inter alia, by reporting annually to the other Party on the total amount and the distribution of the aid given and by providing, on request, information on aid schemes. On request by one Party, the other Party shall provide information on particular individual cases of public aid.

5. With regard to products referred to in Chapters II and III of Title III:

- the provision of paragraph 1(iii) does not apply,

- any practices contrary to paragraph 1(i) should be assessed according to the criteria established by the Community on the basis of Articles 42 and 43 of the Treaty establishing the European Community and in particular of those established in Council Regulation No 26/1962.

6. If the Community or Lithuania considers that a particular practice is incompatible with the terms of the first paragraph of this Article, and

- is not adequately dealt with under the implementing rules referred to in paragraph 3, or

- in the absence of such rules, and if such practice causes or threatens to cause serious prejudice to the interests of the other Party or material injury to its domestic industry, including its services industry,

it may take appropriate measures after consultation within the Association Council or after 30 working days following referral for such consultation.

In the case of practices incompatible with paragraph 1(iii) of this Article, such appropriate measures may, where the GATT applies thereto, only be adopted in conformity with the procedures and under the conditions laid down by the GATT and any other relevant instrument negotiated under its auspices which are applicable between the Parties.

7. Notwithstanding any provisions to the contrary adopted in conformity with paragraph 3, the Parties shall exchange information taking into account the limitations imposed by the requirements of professional and business secrecy.

Article 65

1. The Parties shall endeavour to avoid the imposition of restrictive measures including measures relating to imports for balance of payments purposes. In the event of their introduction, the Party having introduced the same shall present to the other Party, as soon as possible, a time schedule for their removal.

2. Where one or more Member States or Lithuania is in serious balance of payments difficulties, or under imminent threat thereof, the Community or Lithuania, as the case may be, may, in accordance with the conditions established under the GATT, adopt restrictive measures, including measures relating to imports, which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The Community or Lithuania, as the case may be, shall inform the other Party forthwith.

3. Any restrictive measures shall not apply to transfers related to investments and in particular to the repatriation of amounts invested or reinvested and of any kind of revenues stemming therefrom.

Article 66

With regard to public undertakings, and undertakings to which special or exclusive rights have been granted, the Association Council shall ensure that as from 1 January 1998, the principles of the Treaty establishing the European Community, notably Article 90, and the principles of the concluding document of the April 1990 Bonn meeting of the CSCE, notably entrepreneurs' freedom of decision, are upheld.

Article 67

1. Pursuant to the provisions of this Article and of Annex XIX, the Parties confirm the importance that they attach to ensure adequate and effective protection and enforcement of intellectual, industrial and commercial property rights.

2. Lithuania shall continue to improve the protection of intellectual, industrial and commercial property rights in order to provide, by the end of the transitional period referred to in Article 3, for a level of protection similar to that existing in the Community, including effective means of enforcing such rights.

3. By the end of the transitional period referred to in Article 3, Lithuania shall accede to the multilateral conventions on intellectual, industrial and commercial property rights referred to in paragraph 1 of Annex XVII to which Member States of the Community are parties or which are, de facto, applied by Member States according to the relevant provisions contained in these conventions.

4. 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.

Article 68

1. The Parties consider the opening up of the award of public contracts on the basis of non-discrimination and reciprocity, in particular in the GATT and WTO context, to be a desirable objective.

2. The Lithuanian companies as defined in Article 46 of this Agreement, shall be granted access to contract award procedures in the Community pursuant to Community procurement rules under a treatment no less favourable than that accorded to Community companies as of the entry into force of this Agreement.

Community companies in the sense of Article 46 of this Agreement shall be granted access to contract award procedures in Lithuania under a treatment no less favourable than that accorded to Lithuanian companies at the latest by the end of the transitional period referred to in Article 3.

Community companies established in Lithuania under the provisions of Chapter II of Title IV in the form of subsidiaries as described in Article 46 and in the forms described in Article 57 shall have on entry into force of this Agreement access to contract award procedures under a treatment no less favourable than that accorded to Lithuanian companies. Community companies established in Lithuania in the form of branches and agencies as described in Article 46 shall be granted such treatment at the latest by the end of the transitional period referred to in Article 3.

The provisions in this paragraph shall also apply to public contracts covered by Directive 93/38/EEC of 14 June 1993 once Lithuania has introduced the appropriate legislation.

The Association Council shall periodically examine the possibility for Lithuania to introduce access to contract award procedures in Lithuania for all Community companies prior to the end of the transitional period.

3. As regards establishment, operations, supply of services between the Community and Lithuania, as well as employment and movement of labour linked to the fulfilment of public contracts, the provisions of Articles 37 to 60 of this Agreement are applicable.

CHAPTER III APPROXIMATION OF LAWS

Article 69

The Parties recognise that an important condition for Lithuania's economic integration into the Community is the approximation of Lithuania's existing and future legislation to that of the Community. Lithuania shall endeavour to ensure that its legislation will be gradually made compatible with that of the Community.

Article 70

The approximation of laws shall extend to the following areas in particular: customs law, company law, banking law, company accounts and taxation, intellectual property, financial services, rules on competition, protection of health and life of humans, animals and plants, protection of workers including health and safety at work, consumer protection, indirect taxation, technical rules and standards, nuclear law and regulation, transport, telecommunications, environment, public procurement, statistics, product liability.

Within these areas rapid progress in the approximation of laws should in particular be made in the fields of the internal market, competition, protection of workers, environmental protection and consumer protection.

Article 71

The Community shall provide Lithuania 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,

- organisation of seminars,

- training activities,

- aid for the translation of Community legislation in the relevant sectors.

TITLE VI ECONOMIC COOPERATION

Article 72

1. The Community and Lithuania shall further develop economic cooperation aimed at contributing to Lithuania's development and growth potential. Such cooperation shall strengthen existing economic links on the widest possible foundation, to the benefit of both Parties.

2. Policies and other measures shall be designed to bring about the economic and social development of Lithuania and will be guided by the principle of sustainable development. These policies should ensure that environmental considerations are also fully incorporated from the outset and that they are linked to the requirements of harmonious social development.

3. To this end the cooperation should focus in particular on policies and measures related to industry, investment, agriculture and the agroindustrial sector, energy, transport, regional development and tourism.

4. Special attention shall be devoted to measures capable of fostering cooperation between the three Baltic countries, and with the other countries of Central and Eastern Europe as well as the other countries bordering the Baltic Sea with a view to an integrated development of the region.

Article 73 Industrial cooperation

1. Cooperation shall seek to promote the following in particular:

- industrial cooperation between the economic operators of the two Parties, with the particular aim of strengthening the private sector in Lithuania,

- Community participation in Lithuania's efforts in both public and private sectors to modernise and restructure its industry, which will effect the transition from a centrally planned system to a market economy under conditions which ensure that the environment is protected,

- the restructuring of individual sectors,

- the establishment of new undertakings in areas offering potential for growth, particularly in branches of light industry, consumer goods and market services.

2. Industrial cooperation initiatives shall take into account priorities determined by Lithuania. The initiatives should seek in particular to establish a suitable framework for undertakings, to improve management know-how and to promote transparency as regards markets and conditions for undertakings. Technical assistance will be included where appropriate.

Article 74 Investment promotion and protection

1. Cooperation shall aim at maintaining and, if necessary, improving a legal framework and a favourable climate for private investment and its protection, both domestic and foreign, which is essential to economic and industrial reconstruction and development in Lithuania. The cooperation shall also aim to encourage and promote foreign investment and privatisation in Lithuania.

2. The particular aims of cooperation shall be:

- for Lithuania to establish a legal framework which favours and protects investment,

- the conclusion, where appropriate, with Member States of bilateral agreements for the promotion and protection of investment,

- to proceed with deregulation and to improve economic infrastructure,

- to exchange information on investment opportunities in the context of trade fairs, exhibitions, trade weeks and other events.

Assistance from the Community could be granted in the initial stage to agencies which promote inward investment.

3. Lithuania shall honour the rules on Trade-Related Aspects of Investment Measures (TRIMs).

Article 75 Small and medium-sized enterprises

1. The Parties shall aim to develop and strengthen small and medium-sized enterprises (SMEs) and cooperation between SMEs in the Community and Lithuania.

2. They shall encourage the exchange of information and know-how in the following areas:

- improving, where appropriate, the legal, administrative, technical, tax and financial conditions necessary for the setting-up and expansion of SMEs and for cross-border cooperation,

- the provision of the specialised services required by SMEs (management training, accounting, marketing, quality control, etc.) and the strengthening of agencies providing such services,

- the establishment of appropriate links with Community operators via European business cooperation networks, in order to improve the flow of information to SMEs and to promote cross-border cooperation.

3. The cooperation shall include the supply of technical assistance, in particular for the establishment of appropriate institutional back-up for SMEs at both national and regional level, regarding financial, training, advisory, technological and marketing services.

Article 76 Agricultural and industrial standards and conformity assessment

1. The cooperation between the Parties shall aim in particular to reduce differences in standards, technical regulations and conformity assessment procedures, with Community technical assistance where necessary.

2. To this end, the cooperation shall seek:

- to promote the use of Community technical regulations and European standards and conformity assessment procedures, recognising that, to reach Lithuania's objectives of environmental quality, the country is free to develop and implement special (higher) standards if necessary,

- where appropriate, to conclude agreements on mutual recognition in these fields,

- to encourage Lithuania's active and regular participation in the work of specialised organisations (CEN, Cenelec, ETSI, EOTC, Euromet),

- to support Lithuania in the European measurement and testing programmes,

- to promote the exchange of technical and methodological information in the field of quality control of production and production processes between interested parties.

3. The Community shall provide Lithuania with technical assistance where appropriate.

Article 77 Cooperation in science and technology

1. The Parties shall promote cooperation in research and technological development activities. They shall devote special attention to the following:

- the exchange of information on each other's science and technology policies,

- the organisation of joint scientific meetings (seminars and workshops),

- joint R& D activities aimed at encouraging scientific progress and the transfer of technology and know-how,

- training activities and mobility programmes for researchers and specialists from both sides,

- the development of an environment conducive to research and the application of new technologies and adequate protection of the intellectual property of results of research,

- Lithuania's participation in Community research programmes in accordance with paragraph 3.

Technical assistance shall be provided where appropriate.

2. The Association Council shall determine the appropriate procedures for developing cooperation.

3. Cooperation under the Community's framework programme in the field of research and technological development shall be implemented according to specific arrangements to be negotiated and concluded in accordance with the legal procedures of each Party.

Article 78 Education and training

1. Cooperation shall aim at a harmonious development of human resources and at raising the level of general education and professional qualifications in Lithuania, both in the public and private sectors, taking into consideration the priorities of Lithuania. Institutional frameworks and plans of cooperation will be established under the auspices of the European Training Foundation, the Tempus programme and the Eurofaculty. Participation of Lithuania in other Community programmes shall also be considered in this context.

2. The cooperation shall focus in particular on the following areas:

- reform of the education and training system in Lithuania,

- initial training, in-service training and retraining, including the training of public and private sector executives and senior civil servants, particularly in priority areas to be determined,

- in-service training for teachers,

- cooperation between universities, cooperation between universities and firms, mobility for teachers, students, administrators and young people,

- promoting teaching in the field of European studies within the appropriate institutions,

- mutual recognition of periods of studies and diplomas,

- promoting language training in Lithuania, in particular for resident persons belonging to minorities,

- teaching of Community languages, training of translators and interpreters and promotion of the use of Community standards and terminology,

- development of distance education and new training technologies,

- provision of training materials and equipment.

Article 79 Agriculture and the agroindustrial sector

1. Cooperation in this field shall aim at modernising, restructuring and privatising agriculture, fresh water (inland) fisheries and the agroindustrial sector as well as forestry. Such cooperation will promote the protection and sustainable use of natural landscapes and non-polluted soils.

To this end cooperation shall endeavour notably to:

- develop private farms and distribution channels, methods of storage, marketing etc.,

- modernise the rural infrastructure (transport, water supply, telecommunications),

- improve land-use planning, including construction and town planning,

- develop criteria for areas for extensive and intensive agriculture, forestry and fresh water (inland) fisheries in accordance with national and regional development plans and programmes,

- establish and promote effective cooperation on agricultural information systems,

- improve productivity and quality by using appropriate methods and products; provide training and monitoring in the use of anti-pollution methods connected with inputs,

- promote development of organic agriculture, processing, marketing of production,

- promote implementation of Community food standards,

- restructure, develop, modernise and decentralise food-processing firms and their marketing techniques,

- promote complementarity in agriculture,

- promote industrial cooperation in agriculture and the exchange of know-how, particularly between the private sectors in the Community and Lithuania,

- develop cooperation on sanitary and phytosanitary legislation, with the aim of bringing about gradual harmonisation with Community standards through assistance for training and the organisation of checks,

- promote exchange of information in respect of agricultural policy and legislation,

- promote joint ventures, particularly for cooperation on the markets of third countries.

2. To these ends, technical assistance shall be provided by the Community as appropriate.

Article 80 Fisheries

1. The Parties shall develop their cooperation on fisheries in accordance with the Agreement on Fisheries Relations between the European Economic Community and the Republic of Lithuania.

2. The cooperation shall in particular take into account:

- the establishment of sustainable fishing in the world's oceans and the Baltic Sea,

- traditional cooperation on fisheries,

- the necessity of developing fishing control systems, catch-statistics and information systems,

- the development of scientific potential for the study of fishery resources in the Baltic Sea and mutual action for the conservation and renewal of fish stocks (especially salmon and cod) and the introduction of modern technologies in this field,

- the gradual modernisation of Lithuania's fishing fleet and fish-processing industry, through the establishment of joint ventures,

- the development of private enterprises in this field and the necessity of obtaining EC experience in marketing techniques,

- the development of industrial cooperation in fisheries and exchange of know-how,

- the introduction in Lithuania of EC production quality and health standards for fish farming (including feed),

- the exchange of information on fisheries policy and legislation and on the establishment of a market for fishery products,

- cooperation in international fishery organisations.

Article 81 Energy

1. Within the principles of the market economy and of the Treaty on the European energy charter, the Parties shall cooperate to develop the progressive integration of the energy markets in Europe.

2. The cooperation shall focus on the following in particular:

- formulation and planning of energy policy, including its long-term aspects,

- management and training in the energy sector,

- promotion of energy saving and energy efficiency,

- development of energy resources,

- improvement of distribution as well as improvement and diversification of supply,

- environmental impact of energy production and consumption,

- the nuclear energy sector, in particular nuclear safety,

- opening up the energy market to a greater degree, including facilitating transit of gas and electricity,

- the electricity and gas sectors, including consideration of the possibility of the inter-connection of European supply networks,

- modernisation of energy infrastructures,

- formulation of framework conditions for cooperation between undertakings in this sector,

- transfer of technology and know-how,

- cooperation on pricing and taxation policies in the energy sector,

- regional cooperation in the energy sector among the Baltic States, particularly as an important contribution to security of energy supply in the region.

3. Technical assistance shall be provided where appropriate.

Article 82 Nuclear safety

1. The aim of cooperation is to provide for a safer use of nuclear energy.

2. Cooperation in the nuclear field shall mainly cover the following topics:

- industrial measures to upgrade the safety of Lithuanian nuclear power plants,

- evaluation of the feasibility of improving the safety of the existing power plant in Ignalina,

- upgrading of staff training,

- upgrading of Lithuania's laws and regulations on nuclear safety and strengthening of the supervisory authorities and their resources,

- nuclear safety, preparation for nuclear emergencies and accident management,

- radiation protection, including environmental radiation monitoring,

- fuel cycle problems, safeguarding and physical protection of nuclear materials,

- radioactive waste management,

- decommissioning and dismantling of nuclear installations,

- decontamination,

- establishment of uniform safety standards to protect the health of workers, the general public and the environment and ensuring that they are applied.

3. Cooperation will include the exchange of information and experience and R& D activities in accordance with the provisions on science and technology.

4. The Parties agree on the necessity of making efforts to cooperate, within the framework of their respective powers and competences, in order to combat nuclear smuggling. Cooperation in this area should include exchange of information, technical support for analysing and identifying the material, and administrative and technical assistance for the installation of efficient customs controls. Further cooperation in this field could be identified as need arises.

Article 83 Environment

1. The Parties shall develop and strengthen their cooperation on environment and human health.

2. Cooperation shall concern in particular:

- effective monitoring of pollution levels,

- combating local, regional and cross-border air and water pollution,

- efficient, sustainable and clean energy production and consumption; safety of industrial plants (including nuclear power stations),

- classification and safe handling of chemicals,

- water quality, particularly in cross-border waterways (protection of the Baltic Sea against pollution from ships, artificial islands, platforms and other sources),

- reduction, recycling and safe disposal of waste and implementation of the Basle Convention,

- sustainable use of non-renewable natural resources,

- the environmental impact of agriculture, soil erosion and pollution by agricultural chemicals, water eutrophication,

- protection of forests and flora and fauna,

- conservation of biodiversity,

- protected areas,

- land-use planning, including construction and town planning,

- improvement of public transport, especially in cities,

- use of economic and fiscal instruments,

- management of the coastline and prevention of marine pollution,

- global climate change,

- rehabilitation of contaminated areas,

- protecting human health against environmental hazards.

3. Cooperation shall take place notably through:

- exchange of information and experts, especially in the field of the transfer of clean technologies and the safe use of environmentally-friendly biotechnologies,

- institution-building and training programmes,

- transfer of technology and know-how,

- approximation of laws (Community standards),

- cooperation at regional level (including cooperation between the three Baltic States and in the framework of the European Environment Agency) and at international level,

- development of strategies, particularly with regard to global and climatic issues,

- education and information on environmental issues,

- environmental impact studies.

4. The Parties shall develop cooperation in various fields of water management with special regard to:

- environment-friendly utilisation of the water of trans-boundary water shed and cross-boundary rivers and lakes,

- harmonisation of regulations concerning water management and means of technical water regulation (directives, limits, standards, normatives, logistics),

- modernisation of research and development (R& D) and the scientific basis of water management.

Article 84 Transport

1. The Parties shall develop and step up their cooperation in the field of transport in order to enable Lithuania to:

- restructure and modernise transport,

- improve the movement of passengers and goods and the access to transport markets by removing administrative, technical and other obstacles,

- facilitate Community transit through Lithuania by road, rail, inland waterway and combined transport,

- achieve operating standards comparable to those in the Community.

2. The cooperation shall cover the following in particular:

- economic, legal and technical training programmes and the preparation of the legislative and institutional framework for policy development and implementation, including privatisation of the transport sector,

- the provision of technical assistance and advice, and the exchange of information (conferences and seminars),

- support for the development of infrastructure in Lithuania.

3. Priority areas of cooperation will be:

- the construction and modernisation, on recognised trans-European corridors and major routes of common interest, of road, rail, inland waterway, port and airport infrastructures,

- the improvement of conditions, the reduction of waiting times and the easing of transit at the border crossings on the Lithuanian stretch of the multimodal Crete corridors No 1 and No 9, on the basis of norms set by international agreements of the European Union to secure interoperability,

- the management of railways, ports and airports, including cooperation between the appropriate national authorities,

- land-use planning, including construction and urban planning,

- the upgrading of technical equipment to meet Community standards; particularly in the fields of road-rail transport, containerisation and trans-shipment,

- contributing to the development of transport policies compatible with those in the Community,

- the promotion of short-sea shipping as an alternative to overland transport and as a transport mode particularly suited to the Baltic Sea region,

- the promotion of joint research and development programmes,

- concrete projects in a tri- or multilateral (CBSS - Council of the Baltic Sea States) context of regional cooperation, such as Via Baltica.

Article 85 Telecommunications, postal services and broadcasting

1. The Parties shall endeavour to expand and strengthen telecommunications cooperation. This shall involve:

- exchange of information on telecommunications policies, postal services and broadcasting policies,

- establishment of a stable and consistent regulatory framework for telecommunications, postal services and broadcasting,

- exchange of technical and other information and the organisation of seminars, workshops and conferences for experts of both sides,

- training and advisory operations,

- transfer of technology,

- joint execution of projects by competent bodies from both sides,

- promotion of European standards and certification systems,

- promotion of new communication facilities, services and installations, particularly those with commercial applications,

- collaboration in development of integrated services digital network (ISDN) implementation strategic plan.

2. These activities shall focus on the following priority areas:

- development and application of a sectoral market policy in telecommunications, postal services and broadcasting in Lithuania, of legal acts and procedures,

- modernisation of Lithuania's telecommunications network and its integration into European and world networks,

- cooperation within European standardisation structures,

- integration of trans-European systems,

- legal aspects of telecommunications,

- management of telecommunications in the new European business environment: organisational structures, strategy and planning, purchasing principles, tariffs structure in voice telephony,

- land-use planning, construction and town planning,

- upgrading of the data network and development of data-based information services.

Article 86 Information infrastructure

The Parties shall endeavour to expand and strengthen cooperation, with a view to setting up a global information infrastructure. This shall involve:

- exchange of information on policies and programmes aimed at setting up the information infrastructure and the corresponding services,

- close cooperation between institutions managing current information networks (academic and/or government agencies),

- exchange of information on technologies, market needs and other information, organisation of seminars, workshops and conferences for experts and industrialists from both sides,

- training and advisory operations,

- joint execution of projects,

- promotion and agreement of information technology standards, hardware and software certification and testing,

- promotion of an appropriate regulatory framework, assessment of existing information technology legislation in relation to European Union laws,

- action to promote the growth of information services and infrastructure,

- cooperation in the areas of electronic data interchange (EDI) technology and information security systems and policies.

Article 87 Banking, insurance and other financial services

1. The Parties shall cooperate with the aim of establishing and developing a suitable framework for the encouragement of a banking, insurance and financial services sector in Lithuania.

2. The cooperation shall focus on:

- the improvement of efficient accounting and audit systems in Lithuania based on international rules and European Community standards,

- the strengthening and restructuring of the banking and financial systems,

- the improvement and harmonisation of supervision and regulation systems of banking and financial services,

- the preparation of glossaries of terminology,

- the exchange of information in particular in respect of laws in force or being drafted,

- the preparation and translation of Community and Lithuanian legislation.

3. To this end, the cooperation shall include the provision of technical assistance and training.

Article 88 Audit and financial control cooperation

1. The Parties shall cooperate with the aim of developing efficient financial control and audit systems in the Lithuanian administration following standard Community methods and proceedings.

2. Cooperation shall focus on:

- the exchange of relevant information on audit systems,

- the uniformisation of audit documentation,

- training and advisory operations.

3. To this end, technical assistance shall be provided by the Community as appropriate.

Article 89 Monetary policy

At the request of the Lithuanian authorities, the Community shall provide technical assistance designed to support Lithuania's efforts towards the gradual alignment of its policies on those of the European monetary system. At the request of Lithuania, it will organise informal exchange of information concerning the principles and the functioning of the European monetary system.

Article 90 Money laundering

1. The Parties agree on the necessity of making strenuous efforts and cooperating in order to prevent the use of their financial systems for the 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 to combat money laundering, equivalent to those adopted by the Community and other international bodies in this field, in particular the Financial Action Task Force (FATF).

Article 91 Regional development

1. The Parties shall strengthen cooperation between them on regional development and land-use planning.

2. To this end, any of the following measures may be taken:

- exchange of information by national, regional or local authorities on regional and land-use planning policy, and, where appropriate, the provision of assistance to Lithuania for the formulation of such policy,

- joint action by regional and local authorities in the field of economic development,

- study of a joint approach towards the development of interregional cooperation with Baltic Sea regions in the Community,

- exchange of visits to explore cooperation and assistance opportunities,

- exchange of civil servants or experts,

- provision of technical assistance with special emphasis on the development of disadvantaged regions, including border areas,

- establishment of programmes for the exchange of information and experience, by methods including seminars.

Article 92 Housing and construction

The Parties will cooperate in the housing and construction sector. This cooperation has the objective, among others, of modernising and restructuring the housing and construction sector, taking into account the related aspects of health, safety, environment and energy efficiency.

Article 93 Social cooperation

1. With regard to health and safety at work and public health, the Parties shall develop cooperation between them with the aim of improving the level of protection of the health and safety of workers, taking as a reference the level of protection existing in the Community. Cooperation shall comprise the following in particular:

- the provision of technical assistance,

- the exchange of experts,

- cooperation between companies,

- information and training operations,

- cooperation on public health.

2. With regard to employment, cooperation between the Parties shall focus in particular on:

- organisation of the labour market,

- modernisation of job-finding, careers advice and workers' retraining services,

- planning and implementation of regional restructuring programmes,

- encouragement of local employment development.

Cooperation in these fields shall be realised through actions such as the performance of studies, provision of the services of experts and information and training.

3. With regard to social security, cooperation between the Parties shall seek to adapt the Lithuanian social security system to the new economic and social situation, primarily by providing the services of experts and information and training.

Article 94 Tourism

The Parties shall increase and develop cooperation between them in the field of tourism, which will be aimed in particular at:

- facilitating the tourist trade,

- strengthening the flow of information through international networks, databases, etc.,

- transferring know-how through training, exchanges, seminars,

- enhancing regional cooperation projects,

- studying the opportunities for joint operations (cross-border projects, town twinning, etc.),

- developing of agro-tourism,

- introducing computerised booking and information systems (preferably common to all three Baltic States) and consumer protection standards for tourists.

Article 95 Information and communication

1. With regard to information and communication, the Community and Lithuania shall take appropriate steps to stimulate effective mutual exchange of information. Priority shall be given to programmes aimed at providing the general public with basic information about the European Union and specific circles in Lithuania with more specialised information, including, where possible, access to Community databases.

2. The Parties shall coordinate and, where appropriate, harmonise their policies regarding the regulation of cross-border broadcasts, technical standards and the promotion of European audiovisual technology.

3. Cooperation may include providing for exchange programmes, scholarships, training facilities for journalists and experts in the sectors of the media as appropriate.

Article 96 Consumer protection

1. The Parties shall cooperate with the aim of achieving full compatibility between the systems of consumer protection in Lithuania and the Community. Effective consumer protection is needed to ensure that the market economy functions properly.

2. To this end, and in view of their common interests, the Parties shall encourage and ensure:

- a policy of active consumer protection, in accordance with Community law and any relevant UN guidelines on consumer protection,

- the approximation of legislation and the alignment of consumer protection in Lithuania with that of the Community,

- effective legal protection for consumers in order to improve the quality of consumer goods and maintain appropriate safety standards.

3. Cooperation may include:

- the exchange of information on dangerous products,

- the training of consumer protection specialists for the government and NGOs,

- help with the development of independent organisations intended to increase consumer awareness, particularly by providing information,

- the establishment of information and advisory centres for the settlement of disputes and the provision of legal and other advice to consumers; provision will be made for cooperation between Lithuania's centres and those in the Community,

- access to Community data banks,

- the development of exchanges between consumer representatives.

4. Technical assistance shall be provided by the Community as appropriate.

Article 97 Customs

1. The aim of cooperation in the customs field shall be to guarantee compliance with all the provisions scheduled for adoption in the area of trade and to achieve the approximation of Lithuania's customs system to that of the Community, thereby helping to pave the way for liberalisation measures planned under this Agreement.

2. Cooperation shall include the following in particular:

- the exchange of information including on the methods of investigation,

- the development of cross-border infrastructure,

- the introduction of the single administrative document and the interconnection between the transit systems of the Community and Lithuania,

- the simplification of inspections and formalities in respect of the carriage of goods,

- the organisation of seminars and placements,

- support in the introduction of modern customs information systems.

Technical assistance shall be provided where appropriate.

3. Without prejudice to further cooperation foreseen in this Agreement, and in particular Article 101 and Title VII, the mutual assistance between administrative authorities in customs matters of the Parties shall take place in accordance with the provisions of Protocol 5.

Article 98 Statistical cooperation

1. Cooperation in this area shall have as its aim the development of an efficient statistical system to provide, in a rapid and timely fashion, the reliable statistics needed to support and monitor the process of economic reform and contribute to the development of private enterprise in Lithuania.

2. The Parties shall cooperate in particular to:

- strengthen Lithuania's statistical apparatus,

- bring about harmonisation with international (and particularly Community) methods, standards and classifications,

- provide the data needed to support and monitor economic reform,

- provide private sector economic operators with the appropriate macroeconomic and microeconomic data,

- guarantee the confidentiality of data,

- exchange statistical information.

3. Technical assistance shall be provided by the Community as appropriate.

Article 99 Economics

1. The Community and Lithuania shall facilitate the process of economic reforms and integration by cooperating to improve understanding of the fundamentals of their respective economies and the formulation and implementation of economic policy in market economies.

2. To these ends, the Community and Lithuania shall:

- exchange information on macroeconomic performance and prospects and on strategies for development,

- analyse jointly economic issues of mutual interest, including the framing of economic policy and the instruments for implementing it,

- through the programme of Action for Cooperation in Economics (ACE) in particular, encourage extensive cooperation between economists and managers in the Community and Lithuania in order to expedite the transfer of know-how for the drafting of economic policies, and provide for wide dissemination of the results of policy-relevant research.

Article 100 Public administration

The Parties shall promote cooperation between their public administration authorities, providing technical assistance where appropriate, including the setting up of exchange programmes, in order to improve mutual knowledge of the structure and functioning of their respective systems.

Article 101 Drugs

1. Within the scope of their respective powers and competences, 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.

2. The Parties shall agree on the necessary methods of cooperation to attain these objectives, including the modalities of the implementation of common actions.

3. The cooperation in this area shall be based on mutual consultation and close cooperation between the Parties over the objectives and measures in the fields targeted in paragraph 1 and shall, inter alia, include where available technical assistance from the Community.

Cooperation aimed at preventing the illicit traffic of narcotic drugs and psychotropic substances will comprise technical and administrative assistance including:

- drafting and implementation of national legislation,

- creation or strengthening of institutions and information centres and of social health centres,

- increasing the efficiency of the institutions engaged in combating illicit drug trafficking,

- training of personnel and research,

- prevention of diversion of precursors and other essential chemicals used for the purpose of illicit manufacture of narcotic drugs or psychotropic substances, by establishing suitable standards equivalent to those adopted by the Community and relevant international bodies, in particular the Chemical Action Task Force (CATF).

The Parties may agree to include other areas.

TITLE VII COOPERATION IN THE PREVENTION OF ILLEGAL ACTIVITIES

Article 102

1. The Parties shall cooperate, within the scope of their powers and competences, with the aim of preventing the following illegal activities in particular:

- illegal immigration and the illegal presence of their nationals on the other's territory, while taking account of the principles and the practice of readmission,

- corruption,

- illegal transactions involving industrial waste and counterfeit products,

- illegal trafficking in drugs and psychotropic substances,

- organised crime.

2. Cooperation in the matters referred to in paragraph 1 shall be based on mutual consultations and close coordination between the Parties and should include technical and administrative assistance for:

- the drafting of national legislation,

- the establishment of information centres,

- enhancing the efficiency of the institutions charged to prevent illegal activities,

- staff training and the development of investigative facilities,

- the formulation of mutually acceptable measures to prevent illegal activities.

The Parties may agree to include other areas.

TITLE VIII CULTURAL COOPERATION

Article 103

1. The Parties undertake to promote, encourage and facilitate cultural cooperation. Where appropriate, the Community's cultural cooperation activities or those of one or more Member States may be extended to Lithuania and further activities of interest to both sides developed.

This cooperation may cover in particular:

- literary translations,

- exchange of non-commercial works of art and artists,

- conservation and restoration of monuments and sites (architectural and cultural heritage),

- training,

- cultural events (e.g. song festivals),

- publicising significant cultural events,

- cooperation between libraries.

2. The Parties may cooperate in the promotion of the audiovisual industry in Europe. In particular, the audiovisual sector in Lithuania could apply to take part in activities set up by the Community in the framework of the Media programme, in accordance with the procedures laid down by the bodies responsible for the various activities and the Council Decision of 21 December 1990 setting up that programme.

The Parties shall coordinate and, where appropriate, harmonise their policies on the regulation of cross-border broadcasting, paying particular attention to matters relating to the acquisition of intellectual property rights for programmes broadcast by satellite or cable, technical standards in the audiovisual field and the promotion of European audiovisual technology.

Cooperation could include, inter alia, the exchange of programmes, bursaries and facilities for the training of journalists and other media professionals.

TITLE IX FINANCIAL COOPERATION

Article 104

In order to achieve the objectives of this Agreement and in accordance with Articles 105, 106, 107 and 108, without prejudice to Article 107, Lithuania shall benefit from temporary financial assistance from the Community in the form of grants and loans, including loans from the European Investment Bank (EIB) according to the provisions of Article 18 of the Statute of the Bank to accelerate the economic transformation of Lithuania.

Article 105

This financial assistance shall be covered:

- either within the framework of an indicative multiannual programme through PHARE foreseen in Council Regulation EEC No 3906/89, as amended, or within a new multiannual financial framework established by the Community following consultations with Lithuania and taking into account the considerations set out in Articles 106 and 107,

- by loan(s) provided by the European Investment Bank within a ceiling and during a period of availability to be established, following consultations with Lithuania in application of the relevant provisions of the Treaty on European Union.

Article 106

The objectives and the areas of the Community's financial assistance shall be laid down in an indicative programme to be agreed between the two Parties. The Parties shall inform the Association Council.

Article 107

1. The Community shall, in case of special need, taking into account the availability of all financial resources, on the request of Lithuania and in coordination with international financial institutions, in the context of the G24, examine the possibility of granting temporary financial assistance:

- to support measures with the aim of maintaining the convertibility of the Lithuanian currency,

- to support medium-term stabilisation and structural adjustment efforts, including balance of payments assistance.

2. This financial assistance is subject to Lithuania's presentation of IMF-supported programmes in the context of the G24, as appropriate, for convertibility and/or for restructuring its economy, to the Community's acceptance thereof, to Lithuania's continued adherence to these programmes and, as an ultimate objective, to rapid transition to reliance on finance from private sources.

3. The Association Council will be informed of the conditions under which this assistance will be provided and of the respect of the obligations undertaken by Lithuania concerning such assistance.

Article 108

The Community financial assistance shall be evaluated in the light of the needs which arise and of Lithuania's development level, taking into account established priorities and the absorption capacity of Lithuania's economy, the ability to repay loans and the progress towards a market economy system and restructuring in Lithuania.

Article 109

In order to permit optimum use of the resources available, the Parties shall ensure that Community contributions are made in close coordination with those from other sources such as the Member States, other countries, including the G24, and international financial institutions, such as the International Monetary Fund, the International Bank for Reconstruction and Development and the European Bank for Reconstruction and Development.

Article 110

Lithuania shall participate in framework programmes, specific programmes, projects or other actions of the Community in the fields laid down in Annex XX. Without prejudice to the existing participation of Lithuania in the activities referred to in Annex XX, the Association Council shall decide the terms and conditions for the participation of Lithuania in these activities. The financial contribution of Lithuania to the activities referred to in Annex XX shall be based on the principle that Lithuania shall meet the costs resulting from its participation itself. If necessary, the Community may decide, on a case-by-case basis, and pursuant to the rules applicable to the general budget of the European Communities, to pay a supplement to Lithuania's contribution.

TITLE X INSTITUTIONAL, GENERAL AND FINAL PROVISIONS

Article 111

An Association Council is hereby established which shall supervise the implementation of this Agreement. It shall meet at ministerial level once a year and when circumstances require. It shall examine any major issues arising within the framework of the Agreement and any other bilateral or international issues of mutual interest.

Article 112

1. The Association 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 appointed by the Government of Lithuania, on the other.

2. Members of the Association Council may arrange to be represented, in accordance with the conditions to be laid down in its rules of procedure.

3. The Association Council shall establish its rules of procedure.

4. The Association Council shall be presided in turn by a member of the Council of the European Union and a member of the Government of Lithuania, in accordance with the provisions to be laid down in its rules of procedure.

5. Where appropriate, the EIB will take part, as an observer, in the work of the Association Council.

Article 113

The Association Council shall, for the purpose of attaining the objectives of the Agreement, have the power to take decisions in the cases provided for therein. The decisions taken shall be binding on the Parties which shall take the measures necessary to implement the decisions taken. The Association Council may also make appropriate recommendations.

It shall draw up its decisions and recommendations by agreement between the two Parties.

Article 114

1. Each of the two Parties may refer to the Association Council any dispute relating to the application or interpretation of this Agreement.

2. The Association Council may settle the dispute by means of a decision.

3. Each Party shall be bound to take the measures involved in carrying out the decision referred to in paragraph 2.

4. In the event of it not being possible to settle the dispute in accordance with paragraph 2 of this Article, either Party may notify the other of the appointment of an arbitrator; 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 Association Council shall appoint a third arbitrator.

The arbitrators' decisions shall be taken by majority vote.

Each Party to the dispute must take the steps required to implement the decision of the arbitrators.

Article 115

1. The Association Council shall be assisted in the performance of its duties by an Association 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 Lithuania on the other, normally at senior civil servant level.

In its rules of procedure the Association Council shall determine the duties of the Association Committee, which shall include the preparation of meetings of the Association Council and how the Committee shall function.

2. The Association Council may delegate to the Association Committee any of its powers. In this event the Association Committee shall take its decisions in accordance with the conditions laid down in Article 113.

Article 116

The Association Council may decide to set up any other special committee or body that can assist it in carrying out its duties.

In its rules of procedure, the Association Council shall determine the composition and duties of such committees or bodies and how they shall function.

Article 117

A Parliamentary Committee is hereby established. It shall be a forum for members of the Parliament of Lithuania and the European Parliament to meet and exchange views. It shall meet at intervals which it shall itself determine.

Article 118

1. The Parliamentary Committee shall consist of members of the European Parliament, on the one hand, and of members of the Parliament of Lithuania, on the other.

2. The Parliamentary Committee shall establish its rules of procedure.

3. The Parliamentary Committee shall be presided in turn by the European Parliament and the Parliament of Lithuania, in accordance with the provisions to be laid down in its rules of procedure.

Article 119

The Parliamentary Committee may request relevant information regarding the implementation of this Agreement from the Association Council, which shall then supply the Committee with the requested information.

The Parliamentary Committee shall be informed of the decisions of the Association Council.

The Parliamentary Committee may make recommendations to the Association Council.

Article 120

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.

Article 121

Nothing in this 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, ammunition 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 on the control of dual use industrial goods and technologies.

Article 122

1. In the fields covered by this Agreement and without prejudice to any special provisions contained therein:

- the arrangements applied by Lithuania in respect of the Community shall not give rise to any discrimination between the Member States, their nationals, or their companies or branches,

- the arrangements applied by the Community in respect of Lithuania shall not give rise to any discrimination between Lithuanian nationals or its companies or branches.

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 taxpayers who are not in identical situations as regards their place of residence.

Article 123

Products originating in Lithuania shall not enjoy more favourable treatment when imported into the Community than that applied by Member States among themselves.

The treatment granted to Lithuania under Title IV and Chapter I of Title V shall not be more favourable than that accorded by Member States among themselves.

Article 124

1. The Parties shall take any general or specific measures required to fulfil their obligations under this Agreement. They shall see to it that the objectives set out in this Agreement are attained.

2. If either Party considers that the other Party has failed to fulfil an obligation under this Agreement, it may take appropriate measures. Before so doing, except in cases of special urgency, it shall supply the Association 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 measures, priority must be given to those which least disturb the functioning of this Agreement. These measures shall be notified immediately to the Association Council and shall be the subject of consultations within the Association Council if the other Party so requests.

Article 125

The present Agreement shall not, until equivalent rights for individuals and economic operators have been achieved under the present Agreement, affect rights assured to them through agreements binding one or more Member States, on the one hand, and Lithuania, on the other, except for sectors of Community competence and without prejudice of Member States' obligations resulting from this Agreement in sectors of their competence.

Article 126

For the purposes of this Agreement, the term 'Parties` shall mean the Community, or its Member States, or the Community and its Member States, in accordance with their respective powers, of the one part, and Lithuania, of the other part.

Article 127

Protocols 1 to 5 and Annexes I to XX shall form an integral part of this Agreement.

Article 128

This Agreement is concluded for an unlimited period.

Either Party may denounce this Agreement by notifying the other Party. This Agreement will cease to apply six months after the date of such notification.

Article 129

The General Secretariat of the Council of the European Union shall be the depository of this Agreement.

Article 130

This Agreement shall apply, on the one hand, to the territories in which the Treaties establishing the European Community, the European Atomic Energy Community and the European Coal and Steel Community are applied and under the conditions laid down in those Treaties and, on the other hand, to the territory of the Republic of Lithuania.

Article 131

This Agreement is drawn up in duplicate in the Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish, Swedish and Lithuanian languages, each of these texts being equally authentic.

Article 132

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 each other that the procedures referred to in the first paragraph have been completed.

On its entry into force, this Agreement shall replace the Agreement between the European Economic Community, the European Atomic Energy Community and the Republic of Lithuania on trade and economic and commercial cooperation signed in Brussels on 11 May 1992.

The present Agreement is partly based on, further develops and incorporates the essential provisions of the Agreement between the European Community, the European Atomic Energy Community and the European Coal and Steel Community and the Republic of Lithuania on Free Trade and Trade-Related Matters signed on 18 July 1994. On its entry into force, this Agreement shall replace the Agreement on Free Trade and Trade-Related Matters.

The decisions of the Joint Committee established by the Agreement on trade and economic and commercial cooperation and which performs also the duties assigned by the Agreement on Free Trade and Trade-Related Matters shall continue to apply until repealed by decisions of the Association Council.

The Association Council shall adopt at its first meeting all the modifications to this Agreement, in particular to the Protocols and Annexes, necessary to align it with changes to the Agreement on Free Trade and Trade-Related Matters decided by the Joint Committee between the signature and the entry into force of this Agreement.

Hecho en Luxemburgo, el doce de junio de mil novecientos noventa y cinco.

Udfærdiget i Luxembourg den tolvte juni nitten hundrede og fem og halvfems.

Geschehen zu Luxemburg am zwölften Juni neunzehnhundertfünfundneunzig.

¸ãéíå óôï Ëïõîåìâïýñãï, óôéò äþäåêá Éïõíßïõ ÷ßëéá åííéáêüóéá åíåíÞíôá ðÝíôå.

Done at Luxembourg on the twelfth day of June in the year one thousand nine hundred and ninety-five.

Fait à Luxembourg, le douze juin mil neuf cent quatre-vingt-quinze.

Fatto a Lussemburgo, addì dodici giugno millenovecentonovantacinque.

Gedaan te Luxemburg, de twaalfde juni negentienhonderd vijfennegentig.

Feito em Luxemburgo, em doze de Junho de mil novecentos e noventa e cinco.

Tehty Luxemburgissa kahdentenatoista päivänä kesäkuuta vuonna tuhatyhdeksänsataayhdeksänkymmentäviisi.

Som skedde i Luxemburg den tolfte juni nittonhundranittiofem.

Pasira Osyta Liuksemburge bir Ozelio dvylikt Na dien Na t Eukstantis devyni Osimtai devyniasde Osimt penktais metais.

Pour le royaume de Belgique

Voor het Koninkrijk België

Für das Königreich Belgien

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Deze handtekening verbindt eveneens de Vlaamse Gemeenschap, de Franse Gemeenschap, de Duitstalige Gemeenschap, het Vlaamse Gewest, het Waalse Gewest en het Brusselse Hoofdstedelijke Gewest.

På Kongeriget Danmarks vegne

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Für die Bundesrepublik Deutschland

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ÃéÜ ôçí ÅëëçíéêÞ Äçìïêñáôßá

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Por el Reino de España

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Pour la république française

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Thar ceann na hÉireann

For Ireland

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Per la Repubblica italiana

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Pour le grand-duché de Luxembourg

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Voor het Koninkrijk der Nederlanden

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Für die Republik Österreich

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Pela República Portuguesa

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Suomen tasavallan puolesta

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För Konungariket Sverige

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For the United Kingdom of Great Britain and Northern Ireland

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Por las Comunidades Europeas

For de Europæiske Fællesskaber

Für die Europäischen Gemeinschaften

ÃéÜ ôéò ÅõñùðáúêÝò Êïéíüôçôåò

For the European Communities

Pour les Communautés européennes

Per le Comunità europee

Voor de Europese Gemeenschappen

Pelas Comunidades Europeias

Euroopan yhteisöjen puolesta

På Europeiska gemenskapernas vägnar

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Lietuvos Respublikos vardu

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ANNEX I

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ANNEX II

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ANNEX III

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ANNEX IV

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ANNEX V

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ANNEX VI

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ANNEX VII

Goods referred to in Article 17(1)

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ANNEX VIII

Goods referred to in Article 17(2)

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ANNEX IX

List of products referred to in Article 20(2)

Imports into the Community of the following products originating in Lithuania shall be subject to the duties set out below

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Annex to Annex IX

Minimum import price arrangement for certain soft fruit for processing

1. Minimum import prices are fixed for each marketing year for the following products:

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The minimum import prices are fixed by the Community in consultation with Lithuania taking into consideration the price evolution, imported quantities and market development in the Community.

2. The minimum import prices shall be respected in accordance with the following criteria:

- during each three-month period of the marketing year the average unit value for each product listed in paragraph 1, imported into the Community, shall not be lower than the minimum import price for that product,

- during any period of two weeks the average unit value for each product listed in paragraph 1, imported in the Community shall not be lower than 90 % of the minimum import price for that product, in so far as the quantities imported during this period are not less than 4 % of the normal annual import.

3. In case of non-respect of one of these criteria the Community may introduce measures ensuring that the minimum import price is respected for each consignment of the product concerned imported from Lithuania.

ANNEX X

Products referred to in Article 20(2)

Arrangements for imports of live bovine animals, bovine meat, sheep- and goatmeat into the Community

1. Independently of the balance sheet arrangements foreseen in Regulation (EEC) No 805/68, a global tariff quota of 3 500 head of live bovine animals for fattening or for slaughter, with a live weight of not less than 160 kg and not more than 300 kg, falling within CN code 0102, shall be opened to imports from Latvia, Lithuania and Estonia.

The reduced levy or specific duty rate applicable to animals under this quota shall be fixed at 25 % of the full amount of the levy or the specific duty rate.

2. In case forecasts show that imports into the Community may exceed 425 000 head for any given year, the Community may take safeguard measures in accordance with Regulation (EEC) No 805/68, notwithstanding any other rights given under the Agreement.

3. A global tariff quota of 1 500 tonnes of meat of bovine animals, fresh, chilled or frozen, falling within CN codes 0201 and 0202, shall be opened to imports from Latvia, Lithuania and Estonia.

The reduced duty rate and levy or specific duty rate applicable under this quota shall be fixed at 40 % of their full amount.

4. Within the framework of the autonomous import arrangements provided for in Regulation (EEC) No 3643/85, a global quota of 100 tonnes of meat of sheep or goats, fresh, chilled or frozen, falling within CN code 0204, shall be reserved for Latvia, Lithuania and Estonia.

ANNEX XI

Products referred to in Article 20(2)

Imports into the Community of the following products originating in Lithuania will be subject to a 60 % reduction of the variable levy, the ad valorem duty and/or the specific duty rates within the limits of the indicated quantities (tariff quotas)

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ANNEX XII

List of products referred to Article 20(2)

1. Imports into Lithuania of the following products originating in the Community shall be subject to the duties set out below.

2. Imports into Lithuania of those agricultural products originating in the Community other than those listed in this Annex, are free of duty or of any charges having equivalent effect.

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ANNEX XIII

List of products referred to in Article 20(2)

Imports into Lithuania of the following products originating in the Community shall be subject to the preferential treatment set out in Annex XII within the limits of the quantities indicated below (tariff quota)

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ANNEX XIV

List of products referred to in Article 23(1)

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ANNEX XV

List of products referred to in Article 23(1)

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ANNEX XVI Concerning Article 44(1)

Legal acts relating to real-estate property in frontier regions in accordance with legislation in force in certain Member States of the Community.

This reservation is not to be applied in a manner inconsistent with the most favoured nation treatment.

ANNEX XVIIa Concerning Article 44(2)

1. Acquisition of land in the territory of the Republic of Lithuania.

2. Acquisition of mineral deposits and natural resources.

3. Organisation of gambling, betting, lotteries and other similar activities.

These reservations are not to be applied in a manner inconsistent with the most favoured nation treatment.

ANNEX XVIIb Concerning Article 44(2)(i)

1. Manufacturing of vodka, liqueurs, or other alcoholic beverages.

2. Exploration for and exploitation of mineral deposits, exploitation of natural resources.

3. Operation of post (regular receiving, delivering and transportation of letters, postcards, parcels, receiving and delivery of money orders, Giro banking) and telecommunications (the commercial provision for the public of the direct transport and switching of speech in real-time between public fixed-wire switched network termination points) with facilities ensuring the objects functioning.

These reservations are not to be applied in a manner inconsistent with the most favoured nation treatment.

ANNEX XVIII Concerning Article 47

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 transactions;

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 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 underwriting and placement as agent (whether publicly or privately) and provision of services related to such issues;

8. money broking;

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, including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy;

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.

ANNEX XIX Concerning Article 67

Intellectual, industrial and commercial property protection

1. Article 67(3) concerns the following multilateral Conventions:

- International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (Rome, 1961);

- Madrid Agreement concerning the International Registration of Marks (Stockholm Act, 1967 and amended in 1979);

- Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks (Geneva, 1977 and amended in 1979);

- Protocol relating to the Madrid Agreement concerning the International Registration of Marks (Madrid 1989);

- Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the purposes of Patent Procedures (1977, modified 1980);

- International Convention for the Protection of New Varieties of Plants (UPOV) (Geneva Act, 1991).

The Association Council may decide that Article 67(3) shall apply to other multilateral conventions.

2. 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);

- Patent Cooperation Treaty (Washington, 1970, amended in 1979 and modified in 1984).

3. From entry into force of this Agreement, Lithuania 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.

4. The provisions of paragraph 3 shall not apply to advantages granted by Lithuania to any third country on an effective reciprocal basis.

ANNEX XX Concerning Article 110

Participation of Lithuania in Community programmes

Lithuania may participate in Community framework programmes, specific programmes, projects or other actions in the fields of:

- research,

- information services,

- the environment,

- education, training and youth,

- social policy and health,

- consumer protection,

- small and medium-sized enterprises,

- tourism,

- culture,

- the audiovisual sector,

- civil protection,

- trade facilitation,

- energy,

- transport, and

- the fight against drugs and drug addiction.

The Association Council may agree to add other fields of Community activities to those listed above, where it is considered to be of mutual interest or to contribute to the attainment of the objectives of the Europe Agreement.

PROTOCOL 1 referred to in Article 16(2) laying down other arrangements applicable to textile products

This Protocol consists of the Agreement between the European Economic Community and the Republic of Lithuania on trade in textile products, initialled in Brussels on 20 July 1993, and annexed hereto.

AGREEMENT between the European Economic Community and the Republic of Lithuania on trade in textile products

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and

THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA,

of the other part,

DESIRING to promote, with a view to permanent cooperation and in conditions providing every security for trade, the orderly and equitable development of trade in textile products between the European Economic Community (hereinafter referred to as 'the Community`) and the Republic of Lithuania (hereinafter referred to as 'Lithuania`);

RESOLVED to take the fullest possible account of the serious economic and social problems at present affecting the textile industry in both importing and exporting countries, and in particular, to eliminate real risks of market disruption on the market of the Community and real risks of disruption to the textile trade of Lithuania,

HAVE DECIDED to conclude this Agreement and to this end have designated as their plenipotentiaries:

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA,

WHO HAVE AGREED AS FOLLOWS:

Article 1

1. Trade in textile products listed in Annex I and originating within the Contracting Parties shall be liberalised for the duration of this Agreement under the conditions set out therein.

2. Subject to the provisions of this or any successive Agreement, the Community undertakes, in respect of the products listed in Annex I, to suspend the application of quantitative import restrictions currently in force and not to introduce new quantitative restrictions.

Quantitative import restrictions shall be reintroduced in case of denunciation or non-replacement of the present Agreement.

3. Measures having equivalent effect to quantitative restrictions on the importation into the Community of the products listed in Annex I shall be prohibited for the duration of this Agreement.

Article 2

1. Exports from Lithuania to the Community of products listed in Annex I and originating in Lithuania shall, at the time of entry into force of this Agreement, be free from quantitative limits. However, quantitative limits may subsequently be introduced under conditions specified in Article 5.

2. Should quantitative limits be introduced, exports of the textile products made subject to quantitative limits shall be subject to a double-checking system as specified in Protocol A.

3. As the time of entry into force of this Agreement, exports of products listed in Annex II not subject to quantitative limits shall be subject to the double-checking system referred to in paragraph 2.

4. Following consultations in accordance with the procedures set out in Article 15, exports of products in Annex I not subject to quantitative limits other than those listed in Annex II may be subject, subsequently to the entry into force of this Agreement, to the double-checking system referred to in paragraph 2 or to a prior surveillance system introduced by the Community.

Article 3

1. Imports into the Community of textile products covered by this Agreement shall not be subject to the quantitative limits established under this Agreement, provided that they are declared to be for re-export outside the Community in the same state or after processing, within the framework of the administrative system of control which exists within the Community.

However, the release for home use of products imported into the Community under the conditions referred to above shall be subject to the production of an export licence issued by the authorities of Lithuania, and to proof of origin in accordance with the provisions of Protocol A.

2. Where the Community authorities ascertain that imports of textile products have been set off against a quantitative limit established under this Agreement, but that the products have subsequently been re-exported outside the Community, the authorities shall inform the Lithuania authorities within four weeks of the quantities, involved and authorise imports of identical quantities of the same products which shall not be set off against the quantitative limit established under this Agreement for the current or the following year, as appropriate.

3. The Community and Lithuania recognise the special and differential character of reimports of textile products into the Community after processing in Lithuania as a specific form of industrial and trade cooperation.

Should quantitative limits be established pursuant to Article 5, provided that they are effected in accordance with the regulations on economic outward processing in force in the Community, these reimports shall not be subject to these quantitative limits if they are subject to the specific arrangements laid down in Protocol C.

Article 4

Should quantitative limits be introduced pursuant to Article 5, the following provisions shall apply:

1. In any Agreement year advance use of a portion of the quantitative limit established for the following Agreement year is authorised for each category of products up to 5 % of the quantitative limit for the current Agreement year.

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

2. Carry-over to the corresponding quantitative limit for the following Agreement year of the amounts not used during any Agreement year is authorised for each category of products up to 7 % of the quantitative limit for the current Agreement year.

3. Transfers in respect of categories in group I shall not be made from any category except as follows:

- transfers between categories 2 and 3 and from category 1 to categories 2 and 3 may be made up to 4 % of the quantitative limits for the category to which the transfer is made,

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

Transfers into any category in groups II, III, IV and V may be made from any category or categories in groups I, II, III, IV and V up to 5 % 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 to this Agreement.

5. The increase in any category of products resulting from the cumulative application of the provisions in paragraphs 1, 2 and 3 above during an Agreement year shall not exceed the following limits:

- 13 % for categories of products in group I;

- 13,5 % for categories of products in groups II, III, IV and V.

6. Prior notification shall be given by the Lithuanian authorities in the event of recourse to the provisions of paragraphs 1, 2 and 3 above, at least 15 days in advance.

Article 5

1. Exports of textile products listed in Annex I to this Agreement may be made subject to quantitative limits on the conditions laid down in the following paragraphs.

2. Where the Community finds, under the system of administrative control set up, that the level of imports of products in a given category listed in Annex I originating in Lithuania exceeds, in relation to the preceding year's total imports into the Community from all sources of products in that category, the following rates:

- 0,4 % for categories of products in group I,

- 2,4 % for categories of products in group II,

- 8 % for categories of products in groups III, IV and V,

it may request the opening of consultations in accordance with the procedure described in Article 15 of this Agreement, with a view to reaching agreement on an appropriate restraint level for the products in such category.

3. Pending a mutually satisfactory solution, Lithuania undertakes, from the date of notification of the request for consultations, to suspend or limit at the level indicated by the Community exports of the category of products in question to the Community or to the region or regions of the Community market specified by the Community.

The Community shall authorise the importation of products of the said category shipped from Lithuania before the date on which the request for consultations was submitted.

4. Should the Contracting Parties be unable in the course of consultations to reach a satisfactory solution within the period specified in Article 15 the Community shall have the right to introduce a definitive quantitative limit at an annual level not lower than the level resulting from the application of the formula set out in paragraph 2, or 106 % of the level of imports reached during the calendar year preceding that in which imports exceeded the level resulting from the application of the formula set out in paragraph 2 and gave rise to the request for consultations, whichever is the higher.

The annual level so fixed shall be revised upwards after consultations in accordance with the procedure referred to in Article 15, with a view to fulfilling the conditions set out in paragraph 2, should the trend of total imports into the Community of the product in question make this necessary.

5. The annual growth rate for the quantitative limits introduced pursuant to this Article shall be determined in accordance with the provisions of Protocol D.

6. The provisions of this Article shall not apply where the percentages specified in paragraph 2 have been reached as a result of a fall in total imports into the Community, and not as a result of an increase in exports of products originating in Lithuania.

7. In the event of the provisions of paragraph 2, 3 or 4 being applied, Lithuania undertakes to issue export licences for products covered by contracts concluded before the introduction of the quantitative limit, up to the volume of the quantitative limit fixed.

8. Up to the date of communication of the statistics referred to in Article 12(6), the provisions of paragraph 2 of this Article shall apply on the basis of the annual statistics previously communicated by the Community.

Article 6

1. In view of ensuring the effective functioning of this Agreement, the Community and Lithuania agree to cooperate fully in order to prevent, to investigate and to take any necessary legal and/or administrative action against circumvention by transhipment, re-routing, false declaration concerning the country or place of origin, falsification of documents, false declaration concerning fibre content, quantities description or classification of merchandise any by whatever other means. Accordingly, Lithuania and the Community agree to establish the necessary legal provisions and administrative procedures permitting effective action to be taken against such circumvention, which shall include the adoption of legally binding corrective measures against exporters and/or importers involved.

2. Should the Community believe on the basis of information available that the present Agreement is being circumvented, the Community will consult with Lithuania with a view to reaching a mutually satisfactory solution. These consultations will be held as early as possible and at the latest within 30 days from the date of request.

3. Pending the results of the consultation referred to in paragraph 2, Lithuania shall, as a precautionary measure, if so requested by the Community, take all necessary measures to ensure that, where sufficient evidence of circumvention is provided, adjustments of quantitative limits established pursuant to Article 5 liable to be agreed following the consultations referred to in paragraph 2 may be carried out for the quota year in which the request to open consultations in accordance with paragraph 2 was made, or for the following year if the quota for the current year is exhausted.

4. Should the Parties be unable, in the course of the consultation referred to in paragraph 2 to reach a mutually satisfactory solution, the Community shall have the right:

(a) where there is sufficient evidence that products originating in Lithuania have been imported in circumvention of the present Agreement, to set off the relevant quantities against the quantitative limits established pursuant to Article 5;

(b) where sufficient evidence shows that a false declaration concerning fibre content, quantities, description or classification of products originating in Lithuania has occurred, to refuse to import the products in question;

(c) should it appear that the territory of Lithuania is involved in transhipment or re-routing of products not originating in Lithuania, to introduce quantitative limits against the same products originating in Lithuania if they are not already subject to quantitative limits, or to take any other appropriate measures.

5. The Parties agree to establish a system of administrative cooperation to prevent and to address effectively all problems arising from circumvention in accordance with the provisions of Protocol A to this Agreement.

Article 7

1. The quantitative limits established pursuant to this Agreement on imports into the Community of textile products of Lithuanian origin will not be broken down by the Community into regional shares.

2. The Parties shall cooperate in order to prevent sudden and prejudicial changes in traditional trade flows resulting in regional concentration of direct imports into the Community.

3. Lithuania shall monitor its exports of products under restraint or surveillance into the Community. Should a sudden and prejudicial change in traditional trade flows arise, the Community will be entitled to request consultations in order to find a satisfactory solution to those problems. Such consultations must be held within 15 working days of their being requested by the Community.

4. Lithuania shall endeavour to ensure that exports of textile products subject to quantitative limits into the Community are spaced out as evenly as possible over the year due account being taken in particular of seasonal factors.

Article 8

In the event of denunciation of this Agreement as provided for in Article 19(3), the quantitative limits established pursuant to this Agreement shall be reduced on a pro rata temporis basis unless the Contracting Parties decide otherwise by common agreement.

Article 9

Lithuanian exports of cottage-industry fabrics woven on hand- or foot-operated looms, garments or other made-up articles obtained manually from such fabrics and of traditional folklore handicraft products shall not be subject to quantitative limits, provided that these products originating in Lithuania meet the conditions laid down in Protocol B.

Article 10

1. Should the Community consider that a textile product covered by this Agreement is being imported into the Community from Lithuania at a price abnormally lower than the normal competitive level and is for this reason causing or threatening to cause serious injury to Community producers of like or directly competing products, it may request consultations pursuant to Article 15, and in that event the following specific provisions shall be applicable.

2. If following such consultations it is acknowledged by common accord that the situation described in paragraph 1 exists, Lithuania shall take, within the limits of its powers, the necessary steps, notably as regards the price at which the product in question will be sold, to remedy the situation.

3. In order to determine whether the price of a textile product is abnormally lower than the normal competitive level, it may be compared with:

- the prices generally charged for like products sold under the ordinary conditions by other exporting countries on the market of the importing country,

- the prices of like national products at a comparable marketing stage on the market of the importing country,

- the lowest prices charged by a third country for the same product in the course of ordinary commercial dealings in the three months preceding the request for consultations, and not having led to the adoption of any measure by the Community.

4. Should the consultations referred to in paragraph 2 fail to lead to an agreement within 30 days of the Community's request for consultations, the Community may, until these consultations have produced a mutually satisfactory solution, temporarily refuse consignments of the product in question at prices under the conditions referred to in paragraph 1.

5. In totally exceptional and critical circumstances, where consignments of products are being imported from Lithuania into the Community at prices abnormally lower than the normal competitive level, such as to cause injury which it would be difficult to repair, the Community may temporarily suspend imports of the products concerned pending agreement on a solution in the course of consultations, which shall be opened immediately. The Contracting Parties shall do their utmost to reach a mutually acceptable solution within 10 working days' notice of the opening of such consultations.

6. Should the Community have recourse to the measures referred to in paragraphs 4 and 5, Lithuania may at any time request the opening of consultations to examine the possibility of eliminating or modifying these measures where the causes which made them necessary no longer exist.

Article 11

1. The classification of the products covered by this Agreement is based on the tariff and statistical nomenclature of the Community (herinafter called the 'Combined Nomenclature`, or in abbreviated form 'CN`) and any amendments thereof.

Where any decision on classification results in a change of classification practice or a change of category of any product subject to this Agreement the affected products shall follow the trade regime applicable to the practice or category they fall into after such changes.

Any amendment to the Combined Nomenclature (CN) made in accordance with the procedures in force in the Community concerning categories of products covered by this Agreement or any decision relating to the classification of goods shall not have the effect of reducing quantitative limits introduced pursuant to this Agreement.

2. The origin of the products covered by this Agreement shall be determined in accordance with the rules in force in the Community.

Any amendment to these rules of origin shall be communicated to Lithuania and shall not have the effect of reducing any quantitative limit established pursuant to this Agreement.

The procedures for control of the origin of the products referred to above are laid down in Protocol A.

Article 12

1. Lithuania shall supply the Commission with precise statistical information on all export licences issued for categories of textile products subject to the quantitative limits established pursuant to this Agreement, or to a double-checking system expressed in quantities and in terms of value and broken down by Member States of the Community, as well as on all certificates issued by the competent Lithuanian authorities for products referred to in Article 9 and subject to the provisions of Protocol B.

2. The Community shall likewise transmit to the Lithuanian authorities precise statistical information on import authorisations issued by the Community authorities and import statistics for products covered by the system referred to in Article 5(2).

3. The information referred to above shall, for all categories of products, be forwarded before the end of the month following the month to which the statistics relate.

4. On request by the Community, Lithuania shall supply import statistics for all products covered by Annex I.

5. Should it be found on analysis of the information exchanged, that there are significant discrepancies between the returns for exports and those for imports, consultations may be initiated in accordance with the procedure specified in Article 15 of this Agreement.

6. For the purpose of applying the provisions of Article 5, the Community undertakes to provide the Lithuanian authorities before 15 April of each year with the preceding year's statistics on imports of all textile products covered by this Agreement, broken down by supplying country and Community Member State.

Article 13

1. Lithuania shall create favourable conditions for imports of textile products originating in the Community listed in Annex I and, where appropriate inter alia, accord to them non-discriminatory treatment as regards the application of quantitative restrictions, and the granting of licences and the allocation of currency needed to pay for such imports. Lithuania will also recommend to its importers to use the possibilities offered by the Community producers of textiles mentioned above while according the highest possible degree of liberalisation to those imports taking into account the development of trade between the Contracting Parties.

2. Where a need for additional supplies arises and in particular a need leading to the diversification on imports of textile products in Lithuania, Lithuania shall accord non-discriminatory treatment to imports of textile products originating in the Community.

Article 14

1. The Contracting Parties agree to examine the trend of trade in textile products and garments each year, in the framework of the consultations provided for in Article 15 and on the basis of the statistics referred to in Article 12.

2. If the Community finds that in the cases foreseen in Article 13(2) of this Agreement it is placed in an unfavourable position as compared with a third country, it may request consultations with Lithuania in accordance with the procedure specified in Article 15 with a view to taking appropriate action.

Article 15

1. Save where it is otherwise provided for in this Agreement, the consultation procedures referred to in this Agreement shall be governed by the following provisions:

- as far as possible consultations shall be held periodically. Specific additional consultations may also be held,

- any request for consultations shall be notified in writing to the other Contracting Party,

- where appropriate, the request for consultations shall be followed within a reasonable period and in any case not later than 15 days following the notification by a report setting out the circumstances which, in the opinion of the requesting Party, justify the submission of such a request,

- the Contracting Parties shall enter into consultations within one month of notification of the request at the latest, with a view to reaching agreement or a mutually acceptable conclusion within one further month at the latest,

- the period of one month referred to above for the purpose of reaching agreement or a mutually acceptable conclusion may be extended by common accord.

2. The Community may request consultations in accordance with paragraph 1 when it ascertains that during a particular year of application of the Agreement difficulties arise in the Community or one of its regions due to a sharp and substantial increase, by comparison to the preceding year, in imports of a given category of group I subject to the quantitative limits established pursuant to this Agreement.

3. At the request of either of the Contracting Parties, consultations shall be held on any problems arising from the application of this Agreement. Any consultations held pursuant to this Article shall take place in a spirit of cooperation and with a desire to reconcile the differences between the Contracting Parties.

Article 16

The Contracting Parties undertake to promote the exchange of visits by persons, groups and delegations from business, trade and industry, to facilitate contacts in the industrial, commercial and technical fields connected with trade and cooperation in textile industry and textile products and garments, and to assist in the organisation of fairs and exhibitions of mutual interest.

Article 17

As regards intellectual property, at the request of either Contracting Party, consultations shall be held in accordance with the procedure laid down in Article 15 with a view to finding an equitable solution to problems relating to the protection of marks, designs or models of articles of apparel and textile products.

Article 18

This Agreement shall apply, on the one hand, to the territories in which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty and, on the other hand, to the territory of the Republic of Lithuania.

Article 19

1. This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other of the completion of the procedures necessary for that purpose. It shall be applicable until 31 December 1997.

2. This Agreement shall apply with effect from 1 January 1993.

3. Either Contracting Party may at any time propose modifications to this Agreement or denounce it, provided that at least six months's notice is given. In that event, the Agreement shall come to an end on the expiry of the period of notice.

4. The Contracting Parties agree to enter into consultations not later than six months before the expiration of the present Agreement with a view to possibly concluding a new Agreement.

5. The Annexes, Protocols, Agreed Minutes and letters exchanged or attached to this Agreement, shall form an integral part thereof.

Article 20

This Agreement shall be drawn up in two copies in the Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish, Swedish and Lithuanian languages, each of these texts being equally authentic.

For the Government of the Republic of Lithuania

For the Council of the European Communities

ANNEX I

PRODUCTS REFERRED TO IN ARTICLE 1

1. Without prejudice to the rules for the interpretation of the Combined Nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within this Annex, by CN codes. Where there is an 'ex` symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

2. Garments which are not recognisable 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 to cover garments up to and including commercial size 86.

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ANNEX II

Products without quantitative limits subject to the double-checking system referred to in Article 2(3) of the Agreement

(The full product descriptions of the categories listed in this Annex are to be found in Annex I to the Agreement)

Category:

1

2

3

4

5

6

7

8

12

13

20

24

28

39

117

118

Protocol A

TITLE I CLASSIFICATION

Article 1

1. The competent authorities of the Community undertake to inform Lithuania of any changes in the Combined Nomenclature (CN) before the date of their entry into force in the Community.

2. The competent authorities of the Community undertake to inform the competent authorities of Lithuania of any decisions relating to the classification of products subject to the present Agreement, within one month of their adoption at the latest. Such communication shall include:

(a) a description of the products concerned;

(b) the relevant category and the related CN codes;

(c) the reasons which have led to the decision.

3. Where a decision on classification results in a change of classification practice or a change of category of any product subject to the Agreement, the competent authorities of the Community shall provide 30 days' notice, from the date of the Community's communication, before the decision is put into effect. Products shipped before the date of entry into effect of the decision shall remain subject to the earlier classification practice, provided that the goods in question are presented for importation into the Community within 60 days of that date.

4. Where a Community decision on classification resulting in a change of classification practice or a change of categorisation of any product subject to the Agreement affects a category subject to quantitative limits, the Contracting Parties agree to enter into consultation in accordance with the procedures described in Article 15 of the Agreement with a view to honouring the obligation under the second subparagraph of Article 11(1) of the Agreement.

5. In case of divergent opinions between Lithuania and the competent Community authorities at the point of entry into the Community on the classification of products covered by the present Agreement, classification shall provisionally be based on indications provided by the Community, pending consultations in accordance with Article 15 with a view to reaching agreement on definitive classification of the products concerned.

TITLE II ORIGIN

Article 2

1. Products originating in Lithuania for export to the Community in accordance with the arrangements established by this Agreement shall be accompanied by a certificate of Lithuanian origin conforming to the model annexed to this Protocol.

2. The certificate of origin shall be certified by the competent Lithuanian organisations authorised under the Lithuanian legislation if the products in question can be considered products originating in that country within the meaning of the relevant rules in force in the Community.

3. However, the products in groups III, IV and V may be imported into the Community in accordance with the arrangements established by this Agreement on production of a declaration by the exporter on the invoice or other commercial document relating to the products to the effect that the products in question originate in Lithuania within the meaning of the relevant rules in force in the Community.

4. The certificate of origin referred to in paragraph 1 shall not be required for import of goods covered by a certificate of origin Form A or Form APR completed in accordance with the relevant Community rules in order to qualify for generalised tariff preferences.

Article 3

The certificate of origin shall be issued only on application having been made in writing by the exporter or, under the exporter's responsibility, by his authorised representative. The competent Lithuanian organisations authorised under Lithuanian legislation shall ensure that the certificate of origin is properly completed and for this purpose they shall call for any necessary documentary evidence or carry out any check which they consider appropriate.

Article 4

Where different criteria for determining origin are laid down for products falling within the same category, the certificates or declarations of origin must contain a sufficiently detailed description of the goods so as to enable Lithuanian criterion to be determined, on the basis of which the certificate was issued or the declaration drawn up.

Article 5

The discovery of slight discrepancies between the statements made in the certificate of origin and those made in the documents produced to the customs office for the purpose of carrying out the formalities for importing the products shall not ipso facto cast doubt on the statements in the certificate.

TITLE III DOUBLE-CHECKING SYSTEM

Section I Exportation

Article 6

The competent authorities of Lithuania shall issue an export licence in respect of all consignments from Lithuania of textile products subject to any definitive or provisional quantitative limits established pursuant to Article 5 of the Agreement, up to the relevant quantitative limits as may be modified by Articles 4, 6 and 8 of the Agreement, as well as of all consignments of textile products subject to a double-checking system without quantitative limits as provided for in Article 2(3) and (4) of the Agreement.

Article 7

1. For products subject to quantitative limits under this Agreement the export licence shall conform to model 1 annexed to this Protocol and it shall be valid for exports throughout the customs territory to which the Treaty establishing the European Economic Community applies. However, where the Community has made recourse to the provisions of Articles 5 and 7 of the Agreement in accordance with the provision of the Agreed Minute No 1, or to the Agreed Minute No 2, the textile products covered by the export licences can only be put into free circulation in the region(s) of the Community indicated in those licences.

2. Where quantitative limits have been introduced pursuant to this Agreement, each export licence must certify, inter alia, that the quantity of the product in question has been set off against the quantitative limit established for the category of the products concerned and shall only cover one category of products subject to quantitative limits. It may be used for one or more consignments of the products in question.

3. For products subject to a double-checking system without quantitative limits the export licence shall conform to model 2 annexed to this Protocol. It shall only cover one category of products and may be used for one or more consignments of the products in question.

Article 8

The competent authorities of the Community must be informed immediately of the withdrawal or modification of any export licence already issued.

Article 9

1. Exports of textile products subject to quantitative limits pursuant to this Agreement shall be set off against the quantitative limits established for the year in which the shipment of the goods has been effected, even if the export licence is issued after such shipment.

2. For the purpose of applying paragraph 1, shipment of the goods is considered to have taken place on the date of their loading onto the exporting aircraft, vehicle or vessel.

Article 10

The presentation of an export licence, in application of Article 12 hereafter, shall be effected not later than 31 March of the year following that in which the goods covered by the licence have been shipped.

Section II Importation

Article 11

Importation into the Community of textile products subject to quantitative limits or to a double-checking system pursuant to this Agreement shall be subject to the presentation of an import authorisation.

Article 12

1. The competent authorities of the Community shall issue the import authorisation referred to in Article 11 within five working days of the presentation by the importer of the original of the corresponding export licence.

2. The import authorisations concerning products subject to quantitative limits under this Agreement shall be valid for six months from the date of their issue for imports throughout the customs territory to which the Treaty establishing the European Economic Community is applied. However, where the Community has recourse to the provisions of Articles 5 and 7 of the Agreement in accordance with the provisions of the Agreed Minute No 1, or to the Agreed Minute No 2, the products covered by the import licences can only be put into free circulation in the region(s) of the Community indicated in those licences.

3. The import authorisations for products subject to a double-checking system without quantitative limits shall be valid for six months from the date of their issue for imports throughout the customs territory to which the Treaty establishing the European Economic Community is applicable.

4. The competent authorities of the Community shall cancel the import authorisation already issued whenever the corresponding export licence has been withdrawn.

However, if the competent authorities of the Community are notified of the withdrawal or the cancellation of the export licence only after the importation of the products into the Community, the relevant quantities shall be set off against the quantitative limits established for the category and the quota year concerned.

Article 13

1. If the competent authorities of the Community find that the total quantities covered by export licences issued by the competent authorities of Lithuania for a particular category in any year exceed the quantitative limit established in accordance with Article 5 of the Agreement for that category, as may be modified by Articles 4, 6 and 8 of the Agreement, the said authorities may suspend the further issue of import authorisations. In this event, the competent authorities of the Community shall immediately inform the authorities of Lithuania and the special consultation procedure set out in Article 15 of the Agreement shall be initiated forthwith.

2. Exports of products of Lithuanian origin subject to quantitative limits or the double-checking system and not covered by Lithuanian export licences issued in accordance with the provisions of this Protocol may be refused an import authorisation by the competent Community authorities.

However, without prejudice to Article 6 of the Agreement if the import of such products is allowed into the Community by the competent authorities of the Community, the quantities involved shall not be set off against the appropriate quantitative limits established pursuant to this Agreement, without the express agreement of the competent authorities of Lithuania.

TITLE IV FORM AND PRODUCTION OF EXPORT LICENCES AND CERTIFICATES OF ORIGIN, AND COMMON PROVISIONS CONCERNING EXPORTS TO THE COMMUNITY

Article 14

1. The export licence and the certificate of origin may comprise additional copies duly indicated as such. They shall be made out in English or French. If they are completed by hand, entries must be in ink and in printed script.

These documents shall measure 210 x 297 mm. The paper used shall be white writing paper, sized, not containing mechanical pulp, and weighing not less than 25 g/m². If the documents have several copies only the top copy, which is the original, shall be printed with the guilloche pattern background. This copy shall be clearly marked as 'original` and the other copies as 'copies`. Only the original shall be accepted by the competent authorities of the Community as being valid for the purpose of export to the Community in accordance with the provisions of the Agreement.

2. Each document shall bear a standardised serial number, whether or not printed, by which it can be identified.

This number shall be composed of the following elements:

- two letters identifying the exporting country as follows: LT,

- two letters identifying the intended Member State of customs clearance as follows:

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- a one-digit number identifying quota year, corresponding to the last figure in the respective year, e.g. 3 for 1993,

- a two-digit number from 01 to 99, identifying the particular issuing office concerned in the exporting country,

- a five-digit number running consecutively from 00001 to 99999 allocated to the intended Member State of customs clearance.

Article 15

The export licence and the certificate of origin may be issued after the shipment of the products to which they relate. In such cases they must bear the endorsement 'délivré a posteriori` or the endorsement 'issued retrospectively`.

Article 16

1. In the event of a theft, loss or destruction of an export licence or a certificate of origin, the exporter may apply to the competent Lithuanian authorities which issued the document for a duplicate to be made out on the basis of the export documents in his possession. The duplicate of any such certificate or licence so issued shall bear the endorsement 'duplicata` or 'duplicate`.

2. The duplicate shall bear the date of the original export licence or certificate of origin.

TITLE V ADMINISTRATIVE COOPERATION

Article 17

The Community and Lithuania shall cooperate closely in the implementation of the provisions of this Protocol. To this end, contacts and exchange of views, including on technical matters, shall be facilitated by both Parties.

Article 18

In order to ensure the correct application of this Protocol, the Community and Lithuania offer mutual assistance for the checking of the authenticity and the accuracy of export licences and certificates of origin issued or of any declarations made within the terms of this Protocol.

Article 19

Lithuania shall transmit to the Commission of the European Communities the names and addresses of the authorities competent to issue and verify the export licences and the certificates of origin, together with specimens of the stamps used by these authorities and specimen signatures of officials responsible for signing the export licences and the certificates of origin. Lithuania shall also notify the Community of any change in this information.

Article 20

1. Subsequent verification of certificates of origin or export licences shall be carried out at random, or whenever the competent Community authorities have reasonable doubt as to the authenticity of the certificate or licence or as to the accuracy of the information regarding the true origin of the products in question.

2. In such cases, the competent authorities in the Community shall return the certificate of origin or the export licence or a copy thereof to the competent Lithuanian authorities, giving, where appropriate, the reasons of form or substance which justify an enquiry. If the invoice has been submitted, such invoice or a copy thereof shall be attached to the certificate or to the licence or their copies. The authorities shall also forward any information that has been obtained suggesting that the particulars given on the said certificate or licence are inaccurate.

3. The provisions of paragraph 1 above shall also apply to subsequent verifications of the declarations of origin provided for in Article 2 of this Protocol.

4. The results of the subsequent verifications carried out in accordance with paragraphs 1 and 2 shall be communicated to the competent authorities of the Community within three months at the latest. The information communicated shall indicate whether the disputed certificate, licence or declaration, applies to the goods actually exported and whether these goods are eligible for export under the arrangements established by the Agreement. The information shall also include, at the request of the Community, copies of all documentation necessary to fully determine the facts, and in particular, the true origin of the goods.

Should such verifications reveal systematic irregularities in the use of declarations of origin, the Community may subject imports of the products in question to the provisions of Article 2(1) of this Protocol.

5. For the purpose of subsequent verification of certificates of origin, copies of the certificates as well as any export documents referring to them shall be kept for at least two years by the competent Lithuanian authorities.

6. Recourse to the random verification procedure specified in this Article must not constitute an obstacle to the release for home use of the products in question.

Article 21

1. Where the verification procedure referred to in Article 20 or where information available to the competent authorities of the Community or of Lithuania indicates or appears to indicate that the provisions of this Agreement are being circumvented or infringed, the two Contracting Parties shall cooperate closely and with the appropriate urgency in order to prevent any such circumvention or infringement.

2. To this end, the competent authorities of Lithuania shall, on their own initiative or at the request of the Community, carry out appropriate inquiries, or arrange for such inquiries to be carried out, concerning operations which are, or appear to the Community to be, in circumvention or infringement of this Protocol. Lithuania shall communicate the results of these inquiries to the Community, including any other pertinent information enabling the cause of the circumvention or infringement, including the true origin of the goods, to be determined.

3. By agreement between the Community and Lithuania, officials designated by the Community may be present at the inquiries referred to in paragraph 2.

4. Pursuant to the cooperation referred to in paragraph 1, the competent authorities of the Community and Lithuania shall exchange any information considered by either Contracting Party to be of use in preventing circumvention or infringement of the provisions of this Agreement. These exchanges may include information on the production of textile products in Lithuania and on the trade in the type of products covered by this Agreement between Lithuania and third countries, particularly where the Community has reasonable grounds to consider that the products in question may be in transit across the territory of Lithuania prior to their importation into the Community. This information may include at the request of the Community, copies of all available relevant documentation.

5. Where sufficient evidence shows that the provisions of this Protocol have been circumvented or infringed, the competent authorities of Lithuania and the Community may agree to take the measures set out in Article 6(4) of the Agreement, and any other measures as are necessary to prevent a recurrence of such circumvention or infringement.

Annex to Protocol A, Article 2(1)

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Annex to Protocol A, Article 7(1): Model 1

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Annex to Protocol A, Article 7(3): Model 2

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Protocol B referred to in Article 9

Cottage industry and folklore products originating in Lithuania

1. The exemption provided for in Article 9 in respect of cottage industry products shall apply to the following types of products only:

(a) fabrics woven on looms operated solely by hand or foot, being fabrics of a kind traditionally made in the cottage industry of Lithuania;

(b) garments or other textile articles of a kind traditionally made in the cottage industry of Lithuania obtained manually from the fabrics referred to above and sewn exclusively by hand without the aid of any machine;

(c) traditional folklore products of Lithuania made by hand, in a list to be agreed between the Community and Lithuania.

Exemption shall be granted in respect only of products covered by a certificate conforming to the specimen attached to this Protocol and issued by the competent authorities in Lithuania. These certificates must indicate the reasons justifying their issuance; the competent authorities of the Community will accept them after having checked that the products concerned have fulfilled the conditions established in this Protocol. The certificates concerning the products envisaged in (c) above must bear a stamp 'FOLKLORE` marked clearly. In the case of a difference of opinion between the Parties concerning the nature of these products, consultations shall be held within one month in order to resolve these differences.

Should imports of any product covered by this Protocol reach proportions liable to cause problems within the Community, consultations with Lithuania shall be initiated as soon as possible, with a view to resolving the situation by the adoption if necessary of a quantitative limit, in accordance with the procedure laid down in Article 15 of this Agreement.

2. The provisions of Titles IV and V of Protocol A shall apply mutatis mutandis to the products covered by paragraph 1 of this Protocol.

Annex to Protocol B

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Protocol C

Reimports into the Community, within the meaning of Article 3(3) of this Agreement, of products listed in the Annex to this Protocol shall be subject to the provisions of this 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(3) of the Agreement.

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 15 of the Agreement, provided the products concerned are subject to quantitative limits pursuant to the Agreement, to a double-checking system or to surveillance measures.

3. Having regard to the interests of both Parties, the Community may at its discretion, or in response to a request pursuant to Article 15 of the Agreement:

(a) examine 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) consider the possibility of increasing specific quantitative limits.

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

(a) transfers between categories may not exceed 20 % of the quantity for the category to which the transfer is made;

(b) carry-over of a specific quantitative limit from one year to the next may not exceed 10,5 % of the quantity set for the year of actual utilisation;

(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 utilisation.

5. The Community shall inform Lithuania 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 authorisation 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 authorisation is issued.

7. A certificate of origin made out by the organisations authorised to do so under Lithuanian 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 authorisation mentioned in paragraph 6 above as evidence that the processing operation it describes has been carried out in Lithuania.

8. The Community shall provide Lithuania with the names and addresses of, and specimens of the stamps used by, the competent authorities of the Community which issue the prior authorisations referred to in paragraph 6 above.

9. Without prejudice to the provisions of paragraphs 1 to 8 above, Lithuania and the Community shall continue consultations with a view to seeking 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 Lithuania and the Community.

Annex to Protocol C

(The product descriptions of the categories listed in this Annex are to be found in Annex I of this Agreement)

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Protocol D

The annual growth rate for the quantitative limits which may be introduced pursuant to Article 5 of the Agreement for the products covered by the Agreement shall be fixed by Agreement between the Parties in accordance with the consultation procedures established in Article 15 of the Agreement.

Agreed Minute No 1

In the context of the Agreement between the European Economic Community and the Republic of Lithuania on trade in textile and clothing products, initialled at Brussels on 20 July 1993, the Parties agreed that Article 5 of the Agreement does not preclude the Community, if the conditions are fulfilled, from applying the safeguard measures for one or more of its regions in conformity with the principles of the internal market.

In such an event, Lithuania shall be informed in advance of the relevant provisions of Protocol A to the Agreement to be applied, as appropriate.

For the Government of the Republic of Lithuania

For the Council of the European Communities

Agreed Minute No 2

Notwithstanding Article 7(1) of this Agreement, for imperative technical or administrative reasons or to find a solution to economic problems resulting from regional concentration of imports, or in order to combat circumvention and fraud of the provisions of this Agreement, the Community will establish for a limited period of time a specific management system in conformity with the principles of the internal market.

However, if the Parties are unable to reach a satisfactory solution during the consultations provided for in Article 7(3), Lithuania undertakes, if so requested by the Community, to respect temporary export limits for one or more regions of the Community. In such a case, these limits shall not preclude the importation into the region(s) concerned of products which were shipped from Lithuania on the basis of export licences obtained before the date of formal notification to Lithuania by the Community about the introduction of the above limits.

The Community shall inform Lithuania of the technical and administrative measures, that need to be introduced by both Parties in order to implement the above paragraphs in conformity with the principles of the internal market.

For the Government of the Republic of Lithuania

For the Council of the European Communities

Agreed Minute No 3

In the context of the Agreement between the European Economic Community and the Republic of Lithuania on trade in textile and clothing products, initialled at Brussels on 20 July 1993, the Parties agreed that Lithuania shall endeavour not to deprive certain regions of the Community which have traditionally had relatively small shares of Community quotas of imports of products serving as inputs for their processing industry.

The Community and Lithuania further agreed to hold consultations, should the need arise, in order to avert any problems which might occur in this respect.

For the Government of the Republic of Lithuania

For the Council of the European Communities

Agreed Minute No 4

In the context of the Agreement between the European Economic Community and the Republic of Lithuania on trade in textile and clothing products, initialled at Brussels on 20 July 1993, Lithuania agreed that, from the date of request for and pending the consultations referred to in Article 7(3), it shall cooperate by not issuing export licences that would further aggravate the problems resulting from the regional concentration of direct imports into the Community.

For the Government of the Republic of Lithuania

For the Council of the European Communities

Exchange of notes

The Directorate-General for External Relations of the Commission of the European Communities presents its compliments to the Minister for Foreign Affairs of the Republic of Lithuania and has the honour to refer to the Agreement on textile products between Lithuania and the Community initialled at Brussels on 20 July 1993.

The Directorate-General wishes to inform the Ministry that, while awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Community is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1993. This is on the understanding that either Party may at any time terminate this de facto application of the Agreement provided that 120 days' notice is given.

The Directorate-General for External Relations would be grateful if the Ministry would confirm its Agreement to the foregoing.

The Directorate-General for External Relations avails itself of the opportunity to renew to the Ministry of Foreign Affairs of the Republic of Lithuania the assurance of its highest consideration.

Exchange of notes

The Ministry of Foreign Affairs of the Republic of Lithuania 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 on textile products between Lithuania and the Community initialled at Brussels on 20 July 1993.

The Ministry of Foreign Affairs of the Republic of Lithuania wishes to confirm to the Directorate-General that while awaiting the completion of the necessary procedures for the conclusion and the coming into force of the Agreement, the Government of the Republic of Lithuania is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1993. This is on the understanding that either Party may at any time terminate this de facto application of the Agreement provided that 120 days' notice is given.

The Ministry of Foreign Affairs of the Republic of Lithuania 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.

PROTOCOL 2 on trade between the Community and Lithuania in processed agricultural products

Article 1

1. The Community shall grant tariff concessions referred to in Annex I for processed agricultural products originating in Lithuania. In the case of the goods referred to in Annex II, however, reductions of the agricultural component shall be granted within the quantity limits referred to therein.

2. Lithuania shall grant tariff concessions determined in accordance with Article 4.

3. The Association Council may:

- add to the list of processed agricultural products referred to in this Protocol,

- increase the quantities of processed agricultural products eligible for the tariff concessions established by this Protocol.

4. The Association Council may replace the concessions with a system of compensatory amounts with no quantity limits, established on the basis of the difference found between the prices on the Community and Lithuanian markets of the agricultural products actually used to produce the processed agricultural products covered by this Protocol. The Association Council shall draw up a list of the products to which the compensatory amounts are applicable and a list of basic products. It shall adopt general implementing rules to that end.

Article 2

For the purposes of this Protocol, the following definitions shall apply:

- 'goods` means the processed agricultural products referred to in this Protocol,

- 'agricultural component` means the part of the charge corresponding to the difference between the prices on the internal market of the Contracting Parties of the agricultural products considered to have been used for the production of the goods and the prices of those agricultural products incorporated in imports from third countries,

- 'non-agricultural component` means the part of the charge remaining when the agricultural component is deducted from the total charge,

- 'basic products` means the agricultural products considered as having been used in the production of goods within the meaning of Regulation (EC) No 3448/93,

- 'base quantity` means the quantity of a basic product calculated in the manner stipulated in Article 3 of Regulation (EC) No 3448/93 and which is used to determine the agricultural component applicable to goods of a given type, in accordance with the terms of the same Regulation.

Article 3

1. The Community grants to Lithuania the following concessions:

- the non-agricultural component of the charge shall be reduced as per Annex I,

- for the goods for which Annex I stipulates a reduced agricultural component (MOBR) the level of the latter shall be calculated by reducing the base quantities of the basic products for which a levy reduction is granted by 20 % in 1995, 40 % in 1996 and 60 % from 1997. For the other basic products of those goods, the corresponding reductions, for the same years, shall be 10 %, 20 % and 30 %. These reductions shall be granted within the limits of tariff quotas stipulated in Annex II. For quantities in excess of those quotas the agricultural component applicable to third countries shall apply.

2. The agricultural components shall be replaced by reduced agricultural components in the case of goods added in accordance with the procedure described in Article 1(3).

Article 4

1. Before 31 December 1996 Lithuania shall determine the agricultural component of the charge on the goods falling within Regulation (EC) No 3448/93 on the basis of import duties stipulated in paragraph 2 and applicable to the basic agricultural products originating in the Community considered to have been used in the production of these goods. It shall forward that information to the Association Council.

2. Duties are set to zero for imports into Lithuania of processed agricultural products originating in the Community and falling within Regulation (EC) No 3448/93, except for the goods listed in Annex III which are subject to the duties indicated therein. However, if reform of the Lithuanian agriculture policy causes the agricultural component of the charge defined in Article 2 to increase, Lithuania shall inform the Association Council accordingly, which may agree to the rate of duty concerned which corresponds to the size of the agricultural component.

3. Lithuania shall reduce the duties applicable to goods falling within Regulation (EC) No 3448/93 in accordance with the following timetable:

- the non-agricultural component of the charge shall be removed by 31 December 2001,

- the agricultural component shall be reduced by the Association Council in accordance with the principles referred to in Article 3.

ANNEX I

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ANNEX II

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ANNEX III

List of products referred to in Article 4

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PROTOCOL 3 concerning the definition of originating products and methods of administrative cooperation

TITLE I GENERAL PROVISIONS

Article 1

Definitions

For the purposes of this Protocol:

(a) 'manufacture` means any kind of working or processing including assembly or specific operations;

(b) 'material` means any ingredient, raw material, component or part, etc., used in the manufacture of the product;

(c) 'product` means the product being manufactured, even if it is intended for later use in another manufacturing operation;

(d) 'goods` means both materials and products;

(e) 'customs value` means the value as determined in accordance with the Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade, done at Geneva on 12 April 1979;

(f) 'ex-works price` means the price paid for the product ex-works to the manufacturer in whose undertaking the last working or processing is carried out provided the price includes the value of all the materials used, minus all internal taxes which are, or may be, repaid when the product obtained is exported;

(g) 'value of materials` means the customs value at the time of importation of the non-originating materials used, or, if this is not known and cannot be ascertained, the first ascertainable price paid for the materials in the territories concerned;

(h) 'value of originating materials` means the customs value of such materials as defined in subparagraph (g) applied mutatis mutandis;

(i) 'added-value` shall be taken to be the ex-works price minus the customs value of each of the products incorporated which did not originate in the country in which those products were obtained;

(j) 'chapters` and 'headings` means the chapters and the headings (four-digit codes) used in the nomenclature which makes up the Harmonised Commodity Description and Coding System, referred to in this Protocol as 'the Harmonised System` or 'HS`;

(k) 'classified` refers to the classification of a product or material under a particular heading;

(l) 'consignment` means products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice.

TITLE II DEFINITION OF THE CONCEPT OF 'ORIGINATING PRODUCTS`

Article 2

Origin criteria

For the purpose of implementing this Agreement, and without prejudice to the provisions of Articles 3 and 4 of this Protocol, the following products shall be considered as:

1. products originating in the Community:

(a) products wholly obtained in the Community, within the meaning of Article 5 of this Protocol;

(b) products obtained in the Community which contain materials not wholly obtained there, provided that the said materials have undergone sufficient working and processing in the Community within the meaning of Article 6 of this Protocol;

2. products originating in Lithuania:

(a) products wholly obtained in Lithuania, within the meaning of Article 5 of this Protocol;

(b) products obtained in Lithuania which contain materials not wholly obtained there, provided that the said materials have undergone sufficient working or processing in Lithuania within the meaning of Article 6 of this Protocol.

Article 3

Bilateral cumulation

1. Notwithstanding Article 2(1)(b), materials originating in Lithuania within the meaning of this Protocol shall be considered as materials originating in the Community and it shall not be necessary that such materials have undergone sufficient working or processing there, provided however that they have undergone working or processing going beyond that referred to in Article 7 of this Protocol.

2. Notwithstanding Article 2(2)(b), materials originating in the Community within the meaning of this Protocol shall be considered as materials originating in Lithuania and it shall not be necessary that such materials have undergone working or processing there, provided however that they have undergone working or processing going beyond that referred to in Article 7 of this Protocol.

Article 4

Cumulation with materials originating in Latvia and Estonia

1. (a) Notwithstanding Article 2(1)(b) and subject to the provisions of paragraphs 2 and 3, materials originating in Latvia or Estonia within the meaning of Protocol 3 annexed to the Agreements between the Community and these countries shall be considered as originating in the Community and it shall not be necessary that such materials have undergone sufficient working or processing, on condition however that they have undergone working or processing beyond that referred to in Article 7 of this Protocol.

(b) Notwithstanding Article 2(2)(b) and subject to the provisions of paragraphs 2 and 3, materials originating in Latvia or Estonia within the meaning of Protocol 3 annexed to the Agreements between the Community and these countries shall be considered as originating in Lithuania and it shall not be necessary that such materials have undergone sufficient working or processing, on condition however that they have undergone working or processing beyond that referred to in Article 7 of this Protocol.

2. Products which have acquired originating status by virtue of paragraph 1 shall only continue to be considered as originating in the Community or in Lithuania, when the value added there exceeds the value of the materials used originating in Latvia or Estonia.

If this is not so, the products concerned shall be considered for the purposes of implementing this Agreement or of the Agreement between the Community and Latvia or Estonia as originating in Latvia or Estonia according to which of these countries accounts for the highest value of originating materials used.

3. For the purposes of this Article, identical rules of origin to those in this Protocol shall be applied in trade between the Community and Latvia and Estonia and between Lithuania and those two countries and also between each of these three countries themselves.

Article 5

Wholly obtained products

1. Within the meaning of Article 2(1)(a) and (2)(a), the following shall be considered as wholly obtained either in the Community or in Lithuania:

(a) mineral products extracted from their soil or from their seabed;

(b) vegetable products harvested there;

(c) live animals born and raised there;

(d) products from live animals raised there;

(e) products obtained by hunting or fishing there;

(f) products of sea fishing and other products taken from the sea by their vessels;

(g) products made aboard their factory ships exclusively from products referred to in subparagraph (f);

(h) used articles collected there fit only for the recovery of raw materials, including used tyres fit only for retreading or use as waste;

(i) waste and scrap resulting from manufacturing operations conducted there;

(j) products extracted from marine soil or subsoil outside their territorial waters provided that they have sole rights to work that soil or subsoil;

(k) goods produced exclusively from products specified in subparagraphs (a) to (j).

2. The term 'their vessels` and 'their factory ships` in paragraph 1(f) and (g) shall apply only to vessels and factory ships:

- which are registered or recorded in Lithuania or in a Member State of the Community,

- which sail under the flag of Lithuania or of a Member State of the Community,

- which are owned to an extent of at least 50 % by nationals of Lithuania or of a Member State of the Community, or by a company with its head office in one of these States or in Lithuania, of which the manager or managers, chairman of the board of directors or the supervisory board, and the majority of the members of such boards are nationals of Lithuania or of Member States of the Community and of which, in addition, in the case of partnerships or limited companies, at least half the capital belongs to these States, to Lithuania, to their public bodies or to their nationals,

- of which the master and officers are nationals of Lithuania or of Member States of the Community,

- of which at least 75 % of the crew are nationals of Lithuania or of Member States of the Community.

3. The terms 'Lithuania` and 'the Community` shall also cover the territorial waters which surround Lithuania and the Member States of the Community.

Sea-going vessels, including factory ships on which the fish caught is worked or processed, shall be considered as part of the territory of the Community or of Lithuania provided that they satisfy the conditions set out in paragraph 2.

Article 6

Sufficiently worked or processed products

1. For the purposes of Article 2, non-originating materials are considered to be sufficiently worked or processed when the product obtained is classified in a heading which is different from that in which all the non-originating materials used in its manufacture are classified, subject to paragraphs 2 and 3.

2. For a product mentioned in columns 1 and 2 of the list in Annex II, the conditions set out in column 3 for the product concerned must be fulfilled instead of the rule in paragraph 1.

Where in the list in Annex II a percentage rule is applied in determining the originating status of a product obtained in the Community or in Lithuania the value-added by the working or processing shall correspond to the ex-works price of the product obtained, less the value of third-country materials imported into the Community or Lithuania.

3. These conditions indicate, for all products covered by this Agreement, the working or processing which must be carried out on the non-originating materials used in the manufacture of these products, and apply only in relation to such materials. Accordingly, it follows that if a product which has acquired originating status by fulfilling the conditions set out in the list for that product, is used in the manufacture of another product, the conditions applicable to the product in which it is incorporated do not apply to it, and no account shall be taken of the non-originating materials which may have been used in its manufacture.

Article 7

Insufficient working or processing operations

For the purpose of implementing Article 6 the following shall be considered as insufficient working or processing to confer the status of originating products, whether or not there is a change of heading:

(a) operations to ensure the preservation of products in good condition during transport and storage (ventilation, spreading out, drying, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations);

(b) simple operations consisting of removal of dust, sifting or screening, sorting, classifying, matching (including the making-up of sets of articles), washing, painting, cutting up;

(c) (i) changes of packaging and breaking up and assembly of packages;

(ii) simple placing in bottles, flasks, bags, cases, boxes, fixing on cards or boards, etc., and all other simple packaging operations;

(d) affixing marks, labels and other like distinguishing signs on products or their packaging;

(e) simple mixing of products, whether or not of different kinds, where one or more components of the mixture do not meet the conditions laid down in this Protocol to enable them to be considered as originating in the Community or in Lithuania;

(f) simple assembly of parts to constitute a complete product;

(g) a combination of two or more operations specified in subparagraphs (a) to (f);

(h) slaughter of animals.

Article 8

Unit of qualification

1. The unit of qualification for the application of the provisions of this Protocol shall be the particular product which is considered as the basic unit when determining classification using the nomenclature of the Harmonised System.

Accordingly, it follows that:

(a) when a product composed of a group or assembly of articles is classified under the terms of the Harmonised System in a single heading, the whole constitutes the unit of qualification;

(b) when a consignment consists of a number of identical products classified under the same heading of the Harmonised System, each product must be taken individually when applying the provisions of this Protocol.

2. Where, under general rule 5 of the Harmonised System, packaging is included with the product for classification purposes, it shall be included for the purposes of determining origin.

Article 9

Accessories, spare parts and tools

Accessories, spare parts and tools dispatched with a piece of equipment, machine, apparatus or vehicle, which are part of the normal equipment and included in the price thereof or which are not separately invoiced, shall be regarded as one with the piece of equipment, machine, apparatus or vehicle in question.

Article 10

Sets

Sets, as defined in general rule 3 of the harmonised System, shall be regarded as originating when all component products are originating. Nevertheless, when a set is composed of originating and non-originating products, the set as a whole shall be regarded as originating, provided that the value of the non-originating products does not exceed 15 % of the ex-works price of the set.

Article 11

Neutral elements

In order to determine whether a product originates in the Community or in Lithuania, it shall not be necessary to establish whether the electrical energy, fuel, plant and equipment as well as machines and tools used to obtain such product, or whether any goods, used in the course of production which do not enter and which were not intended to enter into the final composition of the product, are originating or not.

TITLE III TERRITORIAL REQUIREMENTS

Article 12

Principle of territoriality

The conditions set out in Title II relative to the acquisition of originating status must be fulfilled without interruption in the Community or in Lithuania without prejudice to the provisions of Articles 3 or 4.

Article 13

Reimportation of goods

If originating products exported from the Community or Lithuania to another country are returned, except in so far as provided for in Articles 3 or 4 they must be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that:

(a) the goods returned are the same goods as those exported; and

(b) they have not undergone any operation beyond that necessary to preserve them in good condition while in that country or while being exported.

Article 14

Direct transport

1. The preferential treatment provided for under the Agreement applies only to products or materials which are transported between the territories of the Community and Lithuania or, when the provisions of Article 4 are applied, of Estonia or Latvia without entering any other territory. However, goods originating in Lithuania or in the Community and constituting one single consignment which is not split up may be transported through territory other than that of the Community or Lithuania or, when the provisions of Article 4 apply, of Estonia or Latvia with, should the occasion arise, transhipment or temporary warehousing in such territory, provided that the goods have remained under the surveillance of the customs authorities in the country of transit or of warehousing and that they have not undergone operations other than unloading, reloading or any operation designed to preserve them in good condition.

Products originating in Lithuania or in the Community may be transported by pipeline across territory other than that of the Community or that of Lithuania.

2. Evidence that the conditions set out in paragraph 1 have been fulfilled may be supplied to the customs authorities of the importing country by the production of:

(a) a through bill of lading issued in the exporting country covering the passage through the country of transit, or

(b) a certificate issued by the customs authorities of the country of transit:

(i) giving an exact description of the products,

(ii) stating the dates of unloading and reloading of the products and, where applicable, the names of the ships used, and

(iii) certifying the conditions under which the products remained in the transit country, or

(c) failing these, any substantiating documents.

Article 15

Exhibitions

1. Products sent from one of the Contracting Parties for exhibition in a third country and sold after the exhibition for importation in another Party shall benefit on importation from the provisions of this Agreement on condition that the products meet the requirements of this Protocol entitling them to be recognised as originating in the Community or in Lithuania and provided that it is shown to the satisfaction of the customs authorities that:

(a) an exporter has consigned these products from one of the Contracting Parties to the country in which the exhibition is held and has exhibited them there;

(b) the products have been sold or otherwise disposed of by that exporter to a person in another Contracting Party;

(c) the products have been consigned during the exhibition or immediately thereafter to the latter Contracting Party in the state in which they were sent for exhibition; and

(d) the products have not, since they were consigned for exhibition, been used for any purpose other than demonstration at the exhibition.

2. A proof of origin must be issued or made out in accordance with the provisions of Title IV and submitted to the customs authorities of the importing State in the normal manner. The name and address of the exhibition must be indicated thereon. Where necessary, additional documentary evidence of the nature of the products and the conditions under which they have been exhibited may be required.

3. Paragraph 1 shall apply to any trade, industrial, agricultural or crafts exhibition, fair or similar public show or display which is not organised for private purposes in shops or business premises with a view to the sale of foreign products, and during which the products remain under customs control.

TITLE IV PROOF OF ORIGIN

Article 16

Movement certificate EUR.1

Evidence of originating status of products, within the meaning of this Protocol, shall be given by a movement certificate EUR.1, a specimen of which appears in Annex III to this Protocol.

Article 17

Normal procedure for the issue of a movement certificate EUR.1

1. A movement certificate EUR.1 shall be issued by the customs authorities of the exporting State on application having been made in writing by the exporter or, under the exporter's responsibility, by his authorised representative.

2. For this purpose, the exporter or his authorised representative shall fill out both the movement certificate EUR.1 and the application form, specimens of which appear in Annex III.

These forms shall be completed in one of the languages in which this Agreement is drawn up, in accordance with the provisions of the domestic law of the exporting State. If they are handwritten, they shall be completed in ink in capital letters. The description of the products must be given in the box reserved for this purpose without leaving any blank lines. Where the box is not completely filled a horizontal line must be drawn below the last line of the description, the empty space being crossed through.

3. The exporter applying for the issue of a movement certificate EUR.1 shall be prepared to submit at any time, at the request of the customs authorities of the exporting State where the movement certificate EUR.1 is issued, all appropriate documents proving the originating status of the products concerned as well as the fulfilment of the other requirements of this Protocol.

The exporter must retain for at least three years the documents referred to in the preceding paragraph.

Applications for movement certificates EUR.1 must be preserved for at least three years by the customs authorities of the exporting State.

4. The movement certificate EUR.1 shall be issued by the customs authorities of a Member State of the Community if the goods to be exported can be considered as products originating in the Community within the meaning of Article 2(1) of this Protocol. The movement certificate EUR.1 shall be issued by the customs authorities of Lithuania, if the goods to be exported can be considered as products originating in Lithuania within the meaning of Article 2(2) of this Protocol.

5. Where the cumulation provisions of Articles 2 to 4 are applied, the customs authorities of the Member State of the Community or of Lithuania may issue movement certificates EUR.1 under the conditions laid down in this Protocol if the goods to be exported can be considered as originating products within the meaning of this Protocol and provided that the goods covered by the movement certificates EUR.1 are in the Community or in Lithuania.

In these cases movement certificates EUR.1 shall be issued subject to the presentation of the proof of origin previously issued or made out. This proof of origin must be kept for at least three years by the customs authorities of the exporting State.

6. The issuing customs authorities shall take any steps necessary to verify the originating status of the products and the fulfilment of the other requirements of this Protocol. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check which they consider appropriate.

The issuing customs authorities shall also ensure that the forms referred to in paragraph 2 are duly completed. In particular, they shall check whether the space reserved for the description of the products has been completed in such a manner as to exclude all possibility of fraudulent additions.

7. The date of issue of the movement certificate EUR.1 shall be indicated in the part of the certificate reserved for the customs authorities.

8. A movement certificate EUR.1 shall be issued by the customs authorities of the exporting State when the products to which it relates are exported. It shall be made available to the exporter as soon as actual exportation has been effected or ensured.

Article 18

Movement certificates EUR.1 issued retrospectively

1. Notwithstanding Article 17(8), a movement certificate EUR.1 may exceptionally be issued after exportation of the products to which it relates if:

(a) it was not issued at the time of exportation because of errors or involuntary omissions or special circumstances; or

(b) it is demonstrated to the satisfaction of the customs authorities that a movement certificate EUR.1 was issued but was not accepted at importation for technical reasons.

2. For the implementation of paragraph 1, the exporter must indicate in this application the place and date of exportation of the products to which the movement certificate EUR.1 relates, and state the reasons for his request.

3. The customs authorities may issue a movement certificate EUR.1 retrospectively only after verifying that the information supplied in the exporter's application agrees with that in the corresponding file.

4. Movement certificates EUR.1 issued retrospectively must be endorsed with one of the following phrases:

'NACHTRÄGLICH AUSGESTELLT`, 'DELIVRE A POSTERIORI`, 'RILASCIATO A POSTERIORI`, 'AFGEGEVEN A POSTERIORI`, 'ISSUED RETROSPECTIVELY`, 'UDSTEDT EFTERFØLGENDE`, 'ÅÊÄÏÈÅÍ ÅÊ ÔÙÍ ÆÓÔÅÐÙÍ`, 'EXPEDIDO A POSTERIORI`, 'EMITADO A POSTERIORI`, 'I OSDUOTAS PO EKSPORTAVIMO`, 'ANNETTU JÄLKIKÄTEEN`, 'UTFÄRDAT I EFTERHAND`.

5. The endorsement referred to in paragraph 4 shall be inserted in the 'Remarks` box of the movement certificate EUR.1.

Article 19

Issue of a duplicate movement certificate EUR.1

1. In the event of theft, loss or destruction of a movement certificate EUR.1, the exporter may apply to the customs authorities which issued it for a duplicate made out on the basis of the export documents in their possession.

2. The duplicate issued in this way must be endorsed with one of the following words:

'DUPLIKAT`, 'DUPLICATA`, 'DUPLICATO`, 'DUPLICAAT`, 'DUPLICATE`, 'ÁÍÔÉÃÐÁÖÏ`, 'DUPLICADO`, 'SEGUNDA VIA`, 'DUBLIKATAS`, 'KAKSOISKAPPALE`, 'DUPLIKAT`.

3. The endorsement referred to in paragraph 2, and the date of issue and the serial number of the original certificate shall be inserted in the 'Remarks` box of the duplicate movement certificate EUR.1.

4. The duplicate, which must bear the date of issue of the original movement certificate EUR.1, shall take effect as from that date.

Article 20

Replacement of certificates

1. It shall at any time be possible to replace one or more movement certificates EUR.1 by one or more other certificates provided that this is done by the customs office responsible for controlling the goods.

2. The replacement certificate shall be regarded as a definite movement certificate EUR.1 for the purpose of the application of this Protocol, including the provisions of this Article.

3. The replacement certificate shall be issued on the basis of a written request from the re-exporter, after the authorities concerned have verified the information supplied in the applicant's request. The date and serial number of the original movement certificate EUR.1 shall be given in box 7.

Article 21

Simplified procedure for the issue of certificates

1. By way derogation from Articles 17, 18 and 19 of this Protocol, a simplified procedure for the issue of EUR.1 movement certificates can be used in accordance with the following provisions.

2. The customs authorities in the exporting State may authorise any exporter, hereinafter referred to as 'approved exporter`, making frequent shipments for which EUR.1 movement certificates may be issued and who offers, to the satisfaction of the competent authorities, all guarantees necessary to verify the originating status of the products, not to submit to the customs office of the application for an EUR.1 certificate relating to those goods, for the purpose of obtaining an EUR.1 certificate under the conditions laid down in Article 17 of this Protocol.

3. The authorisation referred to in paragraph 2 shall stipulate, at the choice of the competent authorities, that box No 11 'Customs endorsement` of the EUR.1 movement certificate must:

(a) either be endorsed beforehand with the stamp of the competent customs office of the exporting State and the signature, which may be a facsimile, of an official of that office; or

(b) be endorsed by the approved exporter with a special stamp which has been approved by the customs authorities of the exporting State and corresponds to the specimen given in Annex V of this Protocol. Such stamp may be pre-printed on the forms.

4. In the cases referred to in paragraph 3(a), one of the following phrases shall be entered in box No 7 'Remarks` of the EUR.1 movement certificate: 'PROCEDIMIENTO SIMPLIFICADO`, 'FORENKLET PROCEDURE`, 'VEREINFACHTES VERFAHREN`, 'ÁÐËÏÆÓÔÆÌÅÍÇ ÄÉÁÄÉÊÁÓÉÁ`, 'SIMPLIFIED PROCEDURE`, 'PROCEDURE SIMPLIFIEE`, 'PROCEDURA SEMPLIFICATA`, 'VEREENVOUDIGDE PROCEDURE`, 'PROCEDIMENTO SIMPLIFICADO`, 'SUPAPRASTINTA PROCEDURA`, 'YKSINKERTAISTETTU MENETTELY`, 'FÖRENKLAD PROCEDUR`.

5. Box No 11 'Customs endorsement` of the EUR.1 certificate shall be completed if necessary by the approved exporter.

6. The approved exporter shall, if necessary, indicate in box No 13 'Request for verification` of the EUR.1 certificate the name and address of the authority competent to verify such a certificate.

7. Where the simplified procedure is applied, the customs authorities of the exporting State may prescribe the use of EUR.1 certificates bearing a distinctive sign by which they may be identified.

8. In the authorisation referred to in paragraph 2 the competent authorities shall specify in particular:

(a) the conditions under which the applications for EUR.1 certificates are to be made;

(b) the conditions under which these applications are to be kept for at least three years;

(c) in the cases referred to in paragraph 3(b) the authority competent to carry out the subsequent verification referred to in Article 30 of this Protocol.

9. The customs authorities of the exporting State may declare certain categories of goods ineligible for the special treatment provided for in paragraph 2.

10. The customs authorities shall refuse the authorisation referred to in paragraph 2 to exporters who do not offer all the guarantees which they consider necessary. The competent authorities may withdraw the authorisation at any time. They must do so where the approved exporter no longer satisfies the conditions or no longer offers these guarantees.

11. The approved exporter may be required to inform the competent authorities, in accordance with the rules which they lay down, of the goods to be dispatched by him, so that such authorities may make any verification they think necessary before the departure of the goods.

12. The customs authorities of the exporting State may carry out any check on approved exporters which they consider necessary. Such exporters must allow this to be done.

13. The provisions of this Article shall be without prejudice to the application of the rules of the Community, the Member States and Lithuania concerning customs formalities and the use of customs documents.

Article 22

Validity of proof of origin

1. A movement certificate EUR.1 shall be valid for four months from the date of issue in the exporting State, and must be submitted within the said period to the customs authorities of the importing State.

2. Movement certificates EUR.1 which are submitted to the customs authorities of the importing State after the final date for presentation specified in paragraph 1 may be accepted for the purpose of applying preferential treatment, where the failure to submit these documents by the final date set is due to reasons of force majeure or exceptional circumstances.

3. In other cases of belated presentation, the customs authorities of the importing State may accept the movement certificates EUR.1 where the products have been submitted to them before the said final date.

Article 23

Submission of proof of origin

Movement certificates EUR.1 shall be submitted to the customs authorities of the importing State in accordance with the procedures applicable in that State. The said authorities may require a translation of a movement certificate EUR.1 or an invoice declaration. They may also require the import declaration to be accompanied by a statement from the importer to the effect that the products meet the conditions required for the implementation of the Agreement.

Article 24

Importation by instalments

Where, at the request of the importer and on the conditions laid down by the customs authorities of the importing State, dismantled or non-assembled products within the meaning of general rule 2(a) of the Harmonised System falling within Chapters 84 and 85 of the Harmonised System are imported by instalments, a single proof of origin for such products shall be submitted to the customs authorities on importation of the first instalment.

Article 25

Form EUR.2

1. Notwithstanding Article 16, the evidence of originating status, within the meaning of this Protocol, for consignments containing only originating products and whose value does not exceed ECU 3 000 per consignment, may be given by a form EUR.2, a specimen of which appears in Annex IV to this Protocol.

2. The form EUR.2 shall be completed and signed by the exporter or, under the exporters responsibility, by his authorised representative in accordance with this Protocol.

3. A form EUR.2 shall be completed for each consignment.

4. The exporter who applied for the form EUR.2 shall submit at the request of the customs authorities of the exporting State all supporting documents concerning the use of this form.

5. Articles 22 and 23 shall apply mutatis mutandis to forms EUR.2.

Article 26

Exemptions from formal proof of origin

1. Products sent as small packages from private persons to private persons or forming part of travellers' personal luggage shall be admitted as originating products without requiring the submission of a formal proof of origin, provided that such products are not imported by way of trade and have been declared as meeting the requirements of this Protocol and where there is no doubt as to the veracity of such a declaration. In the case of products sent by post, this declaration can be made on the customs declaration C2/CP3 or on a sheet of paper annexed to that document.

2. Imports which are occasional and consist solely of products for the personal use of the recipients or travellers or their families shall not be considered as imports by way of trade if it is evident from the nature and quantity of the products that no commercial purpose is in view.

3. Furthermore, the total value of these products must not exceed ECU 300 in the case of small packages or ECU 800 in the case of products forming part of travellers' personal luggage.

Article 27

Discrepancies and formal errors

1. The discovery of slight discrepancies between the statements made in a movement certificate EUR.1 or in a form EUR.2 and those made in the documents submitted to the customs office for the purpose of carrying out the formalities for importing the products shall not ipso facto render the movement certificate EUR.1, or the form EUR.2 null and void if it is duly established that this document does correspond to the products submitted.

2. Obvious formal errors such as typing errors on a movement certificate EUR.1, or a form EUR.2 should not cause this document to be rejected if these errors are not such as to create doubts concerning the correctness of the statements made in this document.

Article 28

Amounts expressed in ecus

1. Amounts in the national currency of the exporting State equivalent to the amounts expressed in ecus shall be fixed by the exporting State and communicated to the other Contracting Parties.

When the amounts exceed the corresponding amounts fixed by the importing State, the latter shall accept them if the products are invoiced in the currency of the exporting State or in the currency of one of the other States referred to in Article 4 of this Protocol.

If the goods are invoiced in the currency of another Member State of the Community the importing State shall recognise the amount notified by the country concerned.

2. Up to and including 30 April 2000, the amounts to be used in any given national currency shall be the equivalent in that national currency of the amounts expressed in ecus as at 1 October 1994.

For each successive period of five years, the amounts expressed in ecus and their equivalents in the national currencies of the States shall be reviewed by the Association Council on the basis of the exchange rates of the ecu as at the first working day in October in the year immediately preceding that five-year period.

When carrying out this review, the Association Council shall ensure that there will be no decrease in the amounts to be used in any national currency and shall furthermore consider the desirability of preserving the effects of the limits concerned in real terms. For this purpose, it may decide to modify the amounts expressed in ecus.

TITLE V ARRANGEMENTS FOR ADMINISTRATIVE COOPERATION

Article 29

Communication of stamps and addresses

The customs authorities of the Member States and of Lithuania shall provide each other, through the Commission of the European Communities, with specimen impressions of stamps used in their customs offices for the issue of EUR.1 certificates and with the addresses of the customs authorities responsible for issuing movement certificates EUR.1 and for verifying those certificates and forms EUR.2.

Article 30

Verification of movement certificates EUR.1 and of forms EUR.2

1. Subsequent verification of movement certificates EUR.1 and forms EUR.2 shall be carried out randomly or whenever the customs authorities of the importing State have reason to doubt the authenticity of such documents, the originating status of the products concerned or the fulfilment of the other requirements of this Protocol.

2. For the purposes of implementing the provisions of paragraph 1, the customs authorities of the importing State shall return the movement certificate EUR.1, the form EUR.2, or a copy of these documents, to the customs authorities of the exporting State giving, where appropriate, the reasons of substance or form for an inquiry.

3. The verification shall be carried out by the customs authorities of the exporting State. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check which they consider appropriate.

4. If the customs authorities of the importing State decide to suspend the granting of preferential treatment to the products concerned while awaiting the results of the verification, they shall offer to release the products to the importer subject to any precautionary measures judged necessary.

5. The customs authorities requesting the verification shall be informed of the results of this verification within a maximum of 10 months. These results must indicate clearly whether the documents are authentic and whether the products concerned can be considered as originating products and fulfil the other requirements of this Protocol.

6. If in cases of reasonable doubt there is no reply within 10 months or if the reply does not contain sufficient information to determine the authenticity of the document in question or the real origin of the products, the requesting customs authorities shall, except in the case of force majeure or in exceptional circumstances, refuse entitlement to the preferences.

Article 31

Dispute settlement

Where disputes arise in relation to the verification procedures of Article 30 which cannot be settled between the customs authorities requesting a verification and the customs authorities responsible for carrying out this verification or where they raise a question as to the interpretation of this Protocol, they shall be submitted to the Association Council.

In all cases the settlement of disputes between the importer and the customs authorities of the importing State shall be under the legislation of the said State.

Article 32

Penalties

Penalties shall be imposed on any person who draws up, or causes to be drawn up, a document which contains incorrect information for the purpose of obtaining a preferential treatment for products.

Article 33

Free zones

1. The Member States and Lithuania shall take all necessary steps to ensure that products traded under cover of a movement certificate EUR.1, which in the course of transport use a free zone situated in their territory, are not substituted by other goods and that they do not undergo handling other than normal operations designed to prevent their deterioration.

2. By means of an exemption to the provisions contained in paragraph 1, when products originating in the Community or in Lithuania and imported into a free zone under cover of an EUR.1 certificate and undergo treatment or processing, the authorities concerned must issue a new EUR.1 certificate at the exporter's request, if the treatment or processing undergone is in conformity with the provisions of this Protocol.

TITLE VI CEUTA AND MELILLA

Article 34

Application of the Protocol

1. The term 'Community` used in this Protocol does not cover Ceuta or Melilla. The term 'products originating in the Community` does not cover products originating in these zones.

2. This Protocol shall apply mutatis mutandis to products originating in Ceuta and Melilla, subject to particular conditions set out in Article 35.

Article 35

Special conditions

1. The following provisions shall apply instead of Article 2 and references to that Article shall apply mutatis mutandis to this Article.

2. Providing they have been transported directly in accordance with the provisions of Article 14, the following shall be considered as:

1. products originating in Ceuta and Melilla:

(a) products wholly obtained in Ceuta and Melilla;

(b) products obtained in Ceuta and Melilla in the manufacture of which products other than those referred to in (a) are used, provided that:

(i) the said products have undergone sufficient working or processing within the meaning of Article 6 of this Protocol; or that

(ii) those products are originating in Lithuania or the Community within the meaning or this Protocol, provided that they have been submitted to working or processing which goes beyond the insufficient working or processing referred to in Article 7;

2. products originating in Lithuania:

(a) products wholly obtained in Lithuania;

(b) products obtained in Lithuania, in the manufacture of which products other than those referred to in (a) are used, provided that:

(i) the said products have undergone sufficient working or processing within the meaning of Article 6 of this Protocol; or that

(ii) those products are originating in Ceuta and Melilla or the Community within the meaning of this Protocol, provided that they have been submitted to working or processing which goes beyond the insufficient working or processing referred to in Article 7.

3. Ceuta and Melilla shall be considered as a single territory.

4. The exporter or his authorised representative shall enter 'Lithuania` and 'Ceuta and Melilla` in box 2 of movement certificates EUR.1. In addition, in the case of products originating in Ceuta and Melilla, this shall be indicated in box 4 of movement certificates EUR.1.

5. The Spanish customs authorities shall be responsible for the application of this Protocol in Ceuta and Melilla.

TITLE VII FINAL PROVISIONS

Article 36

Amendments to the Protocol

The Association Council shall examine at two-yearly intervals, or whenever Lithuania or the Community so request, the application of the provisions of this Protocol, with a view to making any necessary amendments or adaptations.

Such examination shall take into account in particular the participation of the Parties in free-trade zones or customs unions with third countries.

Article 37

Customs Cooperation Committee

1. A Customs Cooperation Committee shall be set up, charged with carrying out administrative cooperation with a view to the correct and uniform application of this Protocol and with carrying out any other tasks in the customs field which may be entrusted to it.

2. The Committee shall be composed, on the one hand, of experts of the Member States and of officials of the Commission of the European Communities who are responsible for customs questions and, on the other hand, of experts nominated by Lithuania.

Article 38

Annexes

The Annexes to this Protocol shall form an integral part thereof.

Article 39

Implementation of the Protocol

The Community and Lithuania shall each take the steps necessary to implement this Protocol.

Article 40

Arrangements with Latvia and Estonia

The Contracting Parties shall take any measures necessary for the conclusion of arrangements with Latvia and Estonia enabling this Protocol to be applied. The Contracting Parties shall notify each other of measures taken to this effect.

Article 41

Goods in transit or storage

The provisions of this Agreement may be applied to goods which comply with the provisions of this Protocol and which on the date of entry into force of this Agreement are either in transit or are in the Community or in Lithuania or, in so far as the provisions of Article 2 are applicable, in Latvia or Estonia in temporary storage in bonded warehouses or in free zones, subject to the submission to the customs authorities of the importing State, within four months of that date, of a certificate EUR.1 endorsed retrospectively by the competent authorities of the exporting State together with the documents showing that the goods have been transported directly.

ANNEX I

INTRODUCTORY NOTES

Foreword

These notes shall apply, where appropriate, to all manufactured products using non-originating materials, even if they are not subject to specific conditions contained in the list in Annex II but are subject instead to the change of heading rule set out in Article 6(1).

Note 1

1.1. The first two columns in the list describe the product obtained. The first column gives the heading number, or the chapter number, used in the Harmonised System and the second column gives the description of goods used in that system for that heading or chapter. For each entry in the first two columns a rule is specified in column 3. Where, in some cases, the entry in the first column is preceded by an 'ex`, this signifies that the rule in column 3 only applies to the part of that heading or chapter as described in column 2.

1.2. Where several heading numbers are grouped together in column 1 or a chapter number is given and the description of product in column 2 is therefore given in general terms, the adjacent rule in column 3 applies to all products which, under the Harmonised System, are classified within headings of the chapter or within any of the headings grouped together in column 1.

1.3. Where there are different rules in the list applying to different products within a heading, each indent contains the description of that part of the heading covered by the adjacent rule in column 3.

Note 2

2.1. In the case of any heading not in the list or any part of a heading that is not in the list, the 'change of heading` rule set out in Article 6(1) applies. If a 'change of heading` condition applies to any entry in the list, then it is contained in the rule in column 3.

2.2. The working or processing required by a rule in column 3 has to be carried out only in relation to the non-originating materials used. The restrictions contained in a rule in column 3 likewise apply only to the non-originating materials used.

2.3. Where a rule states that 'materials of any heading` may be used, materials of the same heading as the product may also be used, subject, however, to any specific limitations which may also be contained in the rule. However, the expression 'manufacture from materials of any heading, including other materials of heading No . . .` means that only materials classified in the same heading as the product of a different description than that of the product as given in column 2 of the list may be used.

2.4. If a product made from non-originating materials which has acquired originating status during manufacture by virtue of the change of heading rule or its own list rule is used as a material in the process of manufacture of another product, then the rule applicable to the product in which it is incorporated does not apply to it.

For example:

An engine of heading No 8407, for which the rule states that the value of the non-originating materials which may be incorporated may not exceed 40 % of the ex-works price, is made from 'other alloy steel roughly shaped by forging` of heading No 7224.

If this forging has been forged in the country concerned from a non-originating ingot then the forging has already acquired origin by virtue of the rule for heading No ex 7224 in the list. It can then count as originating in the value calculation for the engine regardless of whether it was produced in the same factory or another. The value of the non-originating ingot is thus not taken into account when adding up the value of the non-originating materials used.

2.5. Even if the change of heading rule or the other rules contained in the list are satisfied, a product shall not acquire originating status if the processing carried out, taken as a whole, is insufficient within the meaning of Article 7.

Note 3

3.1. The rule in the list represents the minimum amount of working or processing required and the carrying out of more working or processing also confers originating status; conversely, the carrying out of less working or processing cannot confer origin. Thus if a rule says that non-originating material at a certain level of manufacture may be used, the use of such material at an earlier stage of manufacture is allowed and the use of such material at a later stage is not.

3.2. When a rule in the list specifies that a product may be manufactured from more than one material, this means that any one or more materials may be used. It does not require that all be used.

For example:

The rule for fabrics say that natural fibres may be used and that chemical materials, among other materials, may also be used. This does not mean that both have to be used; one can use one or the other or both.

If, however, a restriction applies to one material and other restrictions apply to other materials in the same rule, then the restrictions only apply to the materials actually used.

For example:

The rule for sewing machines specifies that both the thread tension mechanism used and the zigzag mechanism used must originate; these two restrictions only apply if the mechanisms concerned are actually incorporated into the sewing machine.

3.3. When a rule in the list specifies that a product must be manufactured from a particular material, the condition obviously does not prevent the use of other materials which, because of their inherent nature, cannot satisfy the rule.

For example:

The rule for heading No 1904 which specifically excludes the use of cereals or their derivatives does not prevent the use of mineral salts, chemicals and other additives which are not produced from cereals.

For example:

In the case of an article made from non-woven materials, if the use of only non-originating yarn is allowed for this class of article, it is not possible to start from non-woven cloth - even if non-woven cloths cannot normally be made from yarn. In such cases, the starting material would normally be at the stage before yarn - that is the fibre stage.

See also Note 6.3 in relation to textiles.

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3.4. If in a rule in the list two or more percentages are given for the maximum value of non-originating materials that can be used, then these percentages may not be added together. The maximum value of all the non-originating materials used may never exceed the highest of the percentages given. Furthermore, the individual percentages must not be exceeded in relation to the particular materials they apply to.

Note 4

4.1. The term 'natural fibres` is used in the list to refer to fibres other than artificial or synthetic fibres and is restricted to the stages before spinning takes place, including waste, and, unless otherwise specified, the term 'natural fibres` includes fibres that have been carded, combed or otherwise processed but not spun.

4.2. The term 'natural fibres` includes horsehair of heading No 0503, silk of heading Nos 5002 and 5003 as well as the wool fibres, fine or coarse animal hair of heading Nos 5101 to 5105, the cotton fibres of heading Nos 5201 to 5203 and the other vegetable fibres of heading Nos 5301 to 5305.

4.3. The terms 'textile pulp`, 'chemical materials` and 'paper-making materials` are used in the list to describe the materials not classified in Chapters 50 to 63, which can be used to manufacture artificial, synthetic or paper fibres or yarns.

4.4. The term 'man-made staple fibres` is used in the list to refer to synthetic or artificial filament tow, staple fibres or waste, of headings Nos 5501 to 5507.

Note 5

5.1. In the case of the products classified within those headings in the list to which a reference is made to this Note, the conditions set out in column 3 of the list shall not be applied to any basic textile materials used in their manufacture which, taken together, represent 10 % or less of the total weight of all the basic textile materials used (but see also Notes 5.3 and 5.4 below).

5.2. However, this tolerance may only be applied to mixed products which have been made from two or more basic textile materials.

The following are the basic textile materials:

- silk,

- wool,

- coarse animal hair,

- fine animal hair,

- horsehair,

- cotton,

- paper-making materials and paper,

- flax,

- true hemp,

- jute and other textile bast fibres,

- sisal and other textile fibres of the genus Agave,

- coconut, abaca, ramie and other vegetable textile fibres,

- synthetic man-made filaments,

- artificial man-made filaments,

- synthetic man-made staple fibres,

- artificial man-made staple fibres.

For example:

A yarn of heading No 5205 made from cotton fibres of heading No 5203 and synthetic staple fibres of heading No 5506 is a mixed yarn. Therefore, non-originating synthetic staple fibres that do not satisfy the origin rules (which require manufacture from chemical materials or textile pulp) may be used up to a weight of 10 % of the yarn.

For example:

A woollen fabric of heading No 5112 made from woollen yarn of heading No 5107 and synthetic yarn of staple fibres of heading No 5509 is a mixed fabric. Therefore synthetic yarn which does not satisfy the origin rules (which require manufacture from chemical materials or textile pulp) or woollen yarn that does not satisfy the origin rules (which require manufacture from natural fibres, not carded or combed or otherwise prepared for spinning) or a combination of the two may be used up to a weight of 10 % of the fabric.

For example:

Tufted textile fabric of heading No 5802 made from cotton yarn of heading No 5205 and cotton fabric of heading No 5210 is only a mixed product if the cotton fabric is itself a mixed fabric being made from yarns classified in two separate headings or if the cotton yarns used are themselves mixtures.

For example:

If the tufted textile fabric concerned had been made from cotton yarn of heading No 5205 and synthetic fabric of heading No 5407, then, obviously, the yarns used are two separate basic textile materials and the tufted textile fabric is accordingly a mixed product.

For example:

A carpet with tufts made from both artificial yarns and cotton yarns and with a jute backing is a mixed product because three basic textile materials are used. Thus, any non-originating materials that are at a later stage of manufacture than the rule allows may be used, provided their total weight taken together does not exceed 10 % of the weight of the textile materials in the carpet. Thus, both the jute backing and/or the artificial yarns could be imported at that stage of manufacture, provided the weight conditions are met.

5.3. In the case of fabrics incorporating 'yarn made of polyurethane segmented with flexible segments of polyether whether or not gimped` this tolerance is 20 % in respect of this yarn.

5.4. In the case of fabrics incorporating strip consisting of a core of aluminium foil or of a core of plastic film whether or not coated with aluminium powder, of a width not exceeding 5 mm, sandwiched by means of an adhesive between two films of plastic film, this tolerance is 30 % in respect of this strip.

Note 6

6.1. In the case of those textile products which are marked in the list by a footnote referring to this note, textile materials with the exception of linings and interlinings which do not satisfy the rule set out in the list in column 3 for the made up products concerned may be used provided that they are classified in a heading other than that of the product and that their value does not exceed 8 % of the ex-works price of the product.

6.2. Materials which are not classified within Chapters 50 to 63 may be used freely, whether or not they contain textiles.

Example:

If a rule in the list provides that for a particular textile item, such as trousers, yarn must be used, this does not prevent the use of metal items, such as buttons, because buttons are not classified within Chapters 50 to 63. For the same reason, it does not prevent the use of slide-fasteners even though slide-fasteners normally contain textiles.

6.3. Where a percentage rule applies, the value of trimmings and accessories must be taken into account when calculating the value of the non-originating materials incorporated.

Note 7

7.1. For the purposes of heading Nos ex 2707, 2713 to 2715, ex 2901, ex 2902 and ex 3403, the 'specific processes` are the following:

(a) vacuum distillation;

(b) redistillation by a very thorough fractionation process (1);

(c) cracking;

(d) reforming;

(e) extraction by means of selective solvents;

(f) the process comprising all the following operations: processing with concentrated sulphuric acid, oleum or sulphuric anhydride; neutralisation with alkaline agents; decolorisation and purification with naturally active earth, activated earth, activated charcoal or bauxite;

(g) polymerisation;

(h) alkylation;

(i) isomerisation.

7.2. For the purposes of heading Nos 2710, 2711 and 2712, the 'specific processes` are the following:

(a) vacuum distillation;

(b) redistillation by a very thorough fractionation process;

(c) cracking;

(d) reforming;

(e) extraction by means of selective solvents;

(f) the process comprising all the following operations: processing with concentrated sulphuric acid, oleum or sulphuric anhydride; neutralisation with alkaline agents; decolorisation and purification with naturally active earth, activated earth, activated charcoal or bauxite;

(g) polymerisation;

(h) alkylation;

(ij) isomerisation;

(k) (in respect of heavy oils falling within heading No ex 2710 only) desulphurisation with hydrogen resulting in a reduction of at least 85 % of the sulphur content of the products processed (ASTM D 1266-59 T method);

(l) (in respect of products falling within heading No 2710 only) deparaffining by a process other than filtering;

(m) (in respect of heavy oils falling within heading No ex 2710 only) treatment with hydrogen at a pressure of more than 20 bar and a temperature of more than 250 °C with the use of a catalyst, other than to effect desulphurisation, when the hydrogen constitutes an active element in a chemical reaction. The further treatment with hydrogen of lubricating oils of heading No ex 2710 (e.g. hydrofinishing or decolorisation) in order, more especially, to improve colour or stability shall not, however, be deemed to be a specific process;

(n) (in respect of fuel oils falling within heading No ex 2710 only) atmospheric distillation, on condition that less than 30 % of these products distils, by volume, including losses, at 300 °C by the ASTM D 86 method;

(o) (in respect of heavy oils other than gas oils and fuel oils falling within heading No ex 2710 only) treatment by means of a high-frequency electrical brush-discharge.

7.3. For the purposes of heading Nos ex 2707, 2713 to 2715, ex 2901, ex 2902 and ex 3403, simple operations such as cleaning, decanting, desalting, water separation, filtering, colouring, marketing obtaining a sulphur content as a result of mixing products with different sulphur contents, any combination of these operations or like operations do not confer origin.

(1) See additional explanatory note 4(b) to Chapter 27 of the Combined Nomenclature.

ANNEX II

LIST OF WORKING OR PROCESSING REQUIRED TO BE CARRIED OUT ON NON-ORIGINATING MATERIALS IN ORDER THAT THE PRODUCT MANUFACTURED CAN OBTAIN ORIGINATING STATUS

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ANNEX III

MOVEMENT CERTIFICATES EUR.1

1. Movement certificates EUR.1 shall be made out on the form of which a specimen appears in this Annex. This form shall be printed in one or more of the languages in which the Agreement is drawn up. Certificates shall be made out in one of these languages and in accordance with the provisions of the domestic law of the exporting State. If they are handwritten, they shall be completed in ink and in capital letters.

2. Each certificate shall measure 210 × 297 mm; a tolerance of up to minus 5 mm or plus 8 mm in the length may be allowed. The paper used must be white, sized for writing, not containing mechanical pulp and weighing not less than 25 g/m². It shall have a printed green guilloche pattern background making any falsification by mechanical or chemical means apparent to the eye.

3. The competent authorities of the Member States of the Community and of Lithuania may reserve the right to print the certificates themselves or may have them printed by approved printers. In the latter case each certificate must include a reference to such approval. Each certificate must bear the name and address of the printer or a mark by which the printer can be identified. It shall also bear a serial number, either printed or not, by which it can be identified.

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ANNEX IV

FORM EUR.2

1. Form EUR.2 shall be made out on the form of which a specimen appears in this Annex. This form shall be printed in one or more of the languages in which the Agreement is drawn up. Forms shall be made out in one of these languages and in accordance with the provisions of the domestic law of the exporting State. If they are handwritten, they shall be completed in ink and in capital letters.

2. Each form EUR.2 shall measure 210 × 148 mm; a maximum tolerance of up to minus 5 mm or plus 8 mm in the length may be allowed. The paper used must be white, sized for writing, not containing mechanical pulp and weighing not less than 64 g/m2.

3. The competent authorities of the Member States of the Community and of Lithuania may reserve the right to print the forms themselves or may have them printed by approved printers. In the latter case each form must include a reference to such approval. Each form must bear the name and address of the printer or a mark by which the printer can be identified. It shall also bear a serial number, either printed or not, by which it can be identified.

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ANNEX V

Specimen impression of the stamp mentioned in Article 21(3)(b)

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(1) Initials or coat of arms of the exporting State.

(2) Such information as is necessary for the identification of the approved exporter.

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PROTOCOL 4 on specific provisions relating to trade between Lithuania and Spain and Portugal

CHAPTER I Specific provisions relating to trade between Spain and Lithuania

Article 1

The provisions of the Agreement relating to trade in Title II shall be amended as follows in order to take account of the measures and undertakings listed in the Act of Accession of the Kingdom of Spain to the European Communities (hereinafter called 'the Act of Accession`).

Article 2

Under the Act of Accession, Spain shall not grant to products originating in Lithuania more favourable treatment than it provides for imports originating or in free circulation in other Member States.

Article 3

The implementation by Spain of the undertakings covered by Article 4(2) of the Agreement shall take place at the time set for the remaining Member States always provided that Lithuania has been removed from the scope of Regulation (EC) No 519/94 on common rules for imports from certain third countries.

Article 4

Quantitative restrictions may be applied to imports into Spain of products originating in Lithuania until 31 December 1995 in respect of the products listed in Annex A hereto.

Article 5

Application of the provisions of this Protocol shall be without prejudice to Council Regulation (EEC) No 1911/91 of 26 June 1991 on the application of the provisions of Community law to the Canary Islands or Council Decision 91/314/EEC of 26 June 1991 setting up a programme of options specific to the remote and insular nature of the Canary Islands (Poseican).

CHAPTER II Specific provisions relating to trade between Portugal and Lithuania

Article 6

The provisions of the Agreement relating to trade in Title II shall be amended as follows in order to take account of the measures and undertakings listed in the Act of Accession of the Portuguese Republic to the European Communities (hereinafter called 'the Act of Accession`).

Article 7

Under the Act of Accession, Portugal shall not grant to products originating in Lithuania more favourable treatment than it provides for imports originating or in free circulation in other Member States.

Article 8

The implementation by Portugal of the undertakings covered by Article 4(2) of the Agreement shall take place at the time set for the remaining Member States always provided that Lithuania has been removed from the scope of Regulation (EC) No 519/94 on common rules for imports from certain third countries.

Article 9

Quantitative restrictions may be applied to imports into Portugal of products originating in Lithuania until 31 December 1995 in respect of the products listed in Annex B hereto.

ANNEX A

CN code

ex 0102 90 10 (1)

ex 0102 90 31 (2)

ex 0102 90 33 (3)

ex 0102 90 35 (4)

ex 0102 90 37 (5)

0103 91 10

0103 92 11

0103 92 19

0203 11 10

0203 12 11

0203 12 19

0203 19 11

0203 19 13

0203 19 15

0203 19 55

0203 19 59

0203 21 10

0203 22 11

0203 22 19

0203 29 11

0203 29 13

0203 29 15

0203 29 55

0203 29 59

0206 30 21

0206 30 31

0206 41 91

0206 49 91

0208 10 10

0209 00 11

0209 00 19

0209 00 30

0210 11 11

0210 11 19

0210 11 31

0210 11 39

0210 12 11

0210 12 19

0210 19 10

0210 19 20

0210 19 30

0210 19 40

0210 19 51

0210 19 59

0210 19 60

0210 19 70

0210 19 81

0210 19 89

0210 90 31

0210 90 39

ex 0210 90 90 (6)

ex 0401 (7)

0403 10 22

0403 10 24

0403 10 26

ex 0403 90 51

ex 0403 90 53 (8)

ex 0403 90 59 (9)

0404 10 91

0404 90 11

0404 90 13

0404 90 19

0404 90 31

0404 90 33

0404 90 39

ex 1601 (10)

ex 1602 10 00 (11)

ex 1602 20 90 (12)

1602 41 10

1602 42 10

1602 49 11

1602 49 13

1602 49 15

1602 49 19

1602 49 30

1602 49 50

ex 1602 90 10 (13)

1602 90 51

ex 1902 20 30 (14)

(1) Excluding animals for bullfights.

(2) Domestic swine only.

(3) In packings of a net content not exceeding two litres.

(4) Not preserved or concentrated or packed, destined for human consumption only.

(5) Only those containing meat or edible offal of domestic swine.

(6) Only those containing pig blood.

(7) Only:

- sausage made of meat, edible offal or blood of domestic swine,

- any preparation or preserved product containing meat or edible offal of domestic swine.

ANNEX B

CN code

0701 10 00

0701 90 10

0701 90 51

0701 90 59

PROTOCOL 5 on mutual assistance between administrative authorities in customs matters

Article 1

Definitions

For the purposes of this Protocol:

(a) 'customs legislation` shall mean provisions adopted by the Community and Lithuania, governing the import, export, transit of goods and their placing under any customs procedure, including measures of prohibition, restriction and control;

(b) 'customs duties` shall mean all duties, taxes, fees or other charges which are levied and collected in the territories of the Parties, in application of customs legislation, but not including fees and charges which are limited in amount to the approximate costs of services rendered;

(c) 'applicant authority` shall mean a competent administrative authority which has been appointed by a Party for this purpose and which makes a request for assistance in customs matters;

(d) 'requested authority` shall mean a competent administrative authority which has been appointed by a Party for this purpose and which receives a request for assistance in customs matters;

(e) 'contravention` shall mean any violation of the customs legislation as well as any attempted violation of such legislation.

Article 2

Scope

1. The Parties shall assist each other, within their competences, in the manner and under the conditions laid down in this Protocol, in ensuring that customs legislation is correctly applied, in particular by the prevention, detection and investigation of contraventions of this legislation.

2. Assistance in customs matters, as provided for in this Protocol, applies to any administrative authority of the 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 authority, 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 to enable it to ensure that customs legislation is correctly applied, including information regarding operations noted or planned which contravene or would contravene 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 Parties have been properly imported into the territory of the other Party, specifying, where appropriate, the customs procedure applied to the goods.

3. At the request of the applicant authority, the requested authority shall take the necessary steps to ensure that a surveillance is kept on:

(a) natural or legal persons of whom there are reasonable grounds for believing that they are contravening or have contravened customs legislation;

(b) places where stocks of goods have been assembled in such a way that there are reasonable grounds for supposing that they are intended as supplies for operations contrary to the legislation of the other Party;

(c) movements of goods notified as possibly giving rise to substantial contraventions of customs legislation;

(d) means of transport for which there are reasonable grounds for believing that they have been, are or may be used in the contravening of customs legislation.

Article 4

Spontaneous assistance

Without prior request, the Parties shall provide each other, in accordance with their laws, rules and other legal instruments, with assistance if they consider that to be necessary for the correct application of customs legislation, particularly when they obtain information pertaining to:

- operations which have contravened, contravene or would contravene such legislation and which may be of interest to the other Party,

- new means or methods employed in realising such operations,

- goods known to be subject to substantial contravention 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 a case Article 6(3) is applicable.

Article 6

Form and substance of requests for assistance

1. Requests pursuant to this Protocol shall be made in writing. Documents necessary for the execution of such requests shall accompany the request. When required because of the urgency of the situation, oral requests may be accepted, but must be confirmed in writing immediately.

2. Requests pursuant to paragraph 1 shall include the following information:

(a) the applicant authority making the request;

(b) the measure requested;

(c) the object of and the reason for the request;

(d) the laws, rules and other legal elements involved;

(e) indications as exact and comprehensive as possible on the natural or legal persons being 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 such authority.

4. If a request does not meet the formal requirements, its correction or completion may be demanded; the ordering of precautionary measures may, however, take place.

Article 7

Execution of requests

1. In order to comply with a request for assistance, the requested authority or, when the latter cannot act on its own, the administrative department to which the request has been addressed by this authority, shall proceed, within its competence and available resources, as though it were acting on its own account or at the request of other authorities of that same Party, by supplying information already possessed, by carrying out appropriate enquiries or by arranging for them to be carried out.

2. Requests for assistance will be executed in accordance with the laws, rules and other legal instruments of the requested Party.

3. Duly authorised officials of one of the Parties may, with the agreement of the other Party involved and within 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 the contravention of customs legislation which the applicant authority needs for the purposes of this Protocol.

4. Officials of one of the Parties may, with the agreement of the other Party involved and within 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.

2. The documents provided for in paragraph 1 may be replaced by computerised information produced in any form for the same purpose.

Article 9

Exceptions to the obligation to provide assistance

1. The Parties may refuse to give assistance as provided for in this Protocol, where to do so would:

(a) be likely to prejudice sovereignty, public policy, security or other essential interests; or

(b) involve currency or tax regulations other than regulations concerning customs duties; or

(c) violate an industrial, commercial or professional secret.

2. Where the applicant authority asks for 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 withheld or denied, the decision and the reasons therefor must be notified to the applicant authority without delay.

Article 10

Obligation to observe confidentiality

1. Any information communicated in whatsoever form pursuant to this Protocol shall be of a confidential nature. It shall be covered by the obligation of official secrecy and shall enjoy the protection extended to like information under the relevant legislation of the Party which received it and the corresponding provisions applying to the Community authorities.

2. Nominative data shall not be transmitted whenever there are reasonable grounds to believe that the transfer or the use made of the data transmitted would be contrary to the basic legal principles of one of the Parties, and, in particular, if the person concerned would suffer undue disadvantages. On request, the receiving Party shall inform the furnishing Party of the use made of the information supplied and of the results achieved.

3. Nominative data may only be transmitted to customs authorities and, in the case of need for prosecution purposes, to public prosecution and judicial authorities. Other persons or authorities may obtain such information only upon previous authorisation by the furnishing authority.

4. The furnishing Party shall verify the accuracy of the information to be transferred. Whenever it appears that the information supplied was inaccurate or to be deleted, the receiving Party shall be notified without delay. The latter shall be obliged to carry out the correction or deletion.

5. Without prejudice to cases of prevailing public interest, the person concerned may obtain, on request, information on the data stores and the purpose of this storage.

Article 11

Use of information

1. Information obtained shall be used solely for the purposes of this Protocol and may be used within each Party for other purposes only with the prior written consent of the administrative authority which furnished the information and shall be subject to any restrictions laid down by that authority. These provisions are not applicable when the information obtained for the purposes of this Protocol could also be used for the purposes of fighting against illicit traffic related to narcotic drugs and psychotropic substances. Such information may be communicated to other authorities directly involved in the combating of illicit drug traffic, within the limits of Article 2.

2. Paragraph 1 shall not impede the use of information in any judicial or administrative proceedings subsequently instituted for failure to comply with customs legislation.

3. The Parties may, in their records of evidence, reports and testimonies and in proceedings and charges brought before the courts, use as evidence information obtained and documents consulted in accordance with the provisions of this Protocol.

Article 12

Experts and witnesses

An official of a requested authority may be authorised to appear, within the limitations of the authorisation granted, as expert or witness in judicial or administrative proceedings regarding the matters covered by this Protocol in the jurisdiction of the other 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.

Article 13

Assistance expenses

The 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 dependent on public services.

Article 14

Implementation

1. The management of this Protocol shall be entrusted to the customs department under the Ministry of Finances of the Republic of Lithuania on the one hand and the competent services of the Commission of the European Communities 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 rules in the field of data protection. They may recommend to the Association Council Committee amendments which they consider be made to this Protocol.

2. The 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 15

Complementarity

1. This Protocol shall complement and not impede the application of any agreements on mutual assistance which have been concluded or may be concluded between individual or several Member States of the European Union and Lithuania. Nor shall it preclude more extensive mutual assistance granted under such agreements.

2. Without prejudice to Article 11, these agreements do 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.

FINAL ACT

The plenipotentiaries of:

THE KINGDOM OF BELGIUM,

THE KINGDOM OF DENMARK,

THE FEDERAL REPUBLIC OF GERMANY,

THE HELLENIC REPUBLIC,

THE KINGDOM OF SPAIN,

THE FRENCH REPUBLIC,

IRELAND,

THE ITALIAN REPUBLIC,

THE GRAND DUCHY OF LUXEMBOURG,

THE KINGDOM OF THE NETHERLANDS,

THE REPUBLIC OF AUSTRIA,

THE PORTUGUESE REPUBLIC,

THE REPUBLIC OF FINLAND,

THE KINGDOM OF SWEDEN,

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,

Contracting Parties to the Treaty on EUROPEAN UNION, 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`,

acting within the framework of the European Union,

of the one part, and

the plenipotentiaries of the REPUBLIC OF LITHUANIA,

hereinafter referred to as 'Lithuania`,

of the other part,

meeting at Luxembourg on the fifteenth day of July in the year one thousand nine hundred and ninety-five for the signature of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and Lithuania, of the other part, hereinafter referred to as the 'Europe Agreement`, have adopted the following texts:

the Europe Agreement and the following Protocols:

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The plenipotentiaries of the Member States and of the Community and the plenipotentiaries of Lithuania have adopted the texts of the Joint Declarations listed below and annexed to this Final Act:

Joint Declaration on Article 37 (1) of the Agreement

Joint Declaration on Article 37 of the Agreement

Joint Declaration on Article 38 of the Agreement

Joint Declaration on Chapter II of Title IV of the Agreement

Joint Declaration on Article 46 (d) (i) of the Agreement

Joint Declaration on Article 56 of the Agreement

Joint Declaration on Article 67 of the Agreement

Joint Declaration on Article 116 of the Agreement

Joint Declaration on Protocol 5 to the Agreement.

The plenipotentiaries of the Member States and of the Community and the plenipotentiaries of Lithuania have also taken note of the following Exchanges of Letters annexed to this Final Act:

Agreement in the form of an Exchange of Letters between the European Community and the Republic of Lithuania on maritime transport

Agreement in the form of an Exchange of Letters between the European Community and the Republic of Lithuania concerning the recognition of regionalisation of African swine fever in the Kingdom of Spain.

The plenipotentiaries of Lithuania have taken note of the Unilateral Declaration mentioned below and annexed to this Final Act:

Declaration by the French Government.

The plenipotentiaries of the Member States and of the Community have taken note of the Unilateral Declarations listed below and annexed to this Final Act:

Declaration by Lithuania concerning Title III of the Agreement

Declaration by Lithuania concerning Article 44 (6) of the Agreement

Declaration by Lithuania concerning Article 56 of the Agreement.

Hecho en Luxemburgo, el doce de junio de mil novecientos noventa y cinco.

Udfærdiget i Luxembourg den tolvte juni nitten hundrede og fem og halvfems.

Geschehen zu Luxemburg am zwölften Juni neunzehnhundertfünfundneunzig.

¸ãéíå óôï Ëïõîåìâïýñãï, óôéò äþäåêá Éïõíßïõ ÷ßëéá åííéáêüóéá åíåíÞíôá ðÝíôå.

Done at Luxembourg on the twelfth day of June in the year one thousand nine hundred and ninety-five.

Fait à Luxembourg, le douze juin mil neuf cent quatre-vingt-quinze.

Fatto a Lussemburgo, addì dodici giugno millenovecentonovantacinque.

Gedaan te Luxemburg, de twaalfde juni negentienhonderd vijfennegentig.

Feito em Luxemburgo, em doze de Junho de mil novecentos e noventa e cinco.

Tehty Luxemburgissa kahdentenatoista päivänä kesäkuuta vuonna tuhatyhdeksänsataayhdeksänkymmentäviisi.

Som skedde i Luxemburg den tolfte juni nittonhundranittiofem.

Pasira Osyta Liuksemburge bir Ozelio dvylikt Na dien Na t Eukstantis devyni Osimtai devyniasde Osimt penktais metais.

Pour le royaume de Belgique

Voor het Koninkrijk België

Für das Königreich Belgien

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Deze handtekening verbindt eveneens de Vlaamse Gemeenschap, de Franse Gemeenschap, de Duitstalige Gemeenschap, het Vlaamse Gewest, het Waalse Gewest en het Brusselse Hoofdstedelijke Gewest.

På Kongeriget Danmarks vegne

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Für die Bundesrepublik Deutschland

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Ãéá ôçí ÅëëçíéêÞ Äçìïêñáôßá

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Por el Reino de España

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Pour la République française

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Thar ceann na hÉireann

For Ireland

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Per la Repubblica italiana

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Pour le grand-duché de Luxembourg

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Voor het Koninkrijk der Nederlanden

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Für die Republik Österreich

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Pela República Portuguesa

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Suomen tasavallan puolesta

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För Konungariket Sverige

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For the United Kingdom of Great Britain and Northern Ireland

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Por las Comunidades Europeas

For de Europæiske Fællesskaber

Für die Europäischen Gemeinschaften

Ãéá ôéò ÅõñùðáúêÝò Êïéíüôçôåò

For the European Communities

Pour les Communautés européennes

Per le Comunità europee

Voor de Europese Gemeenschappen

Pelas Comunidades Europeias

Euroopan yhteisöjen puolesta

På Europeiska gemenskapernas vägnar

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Lietuvos Respublikos vardu

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JOINT DECLARATIONS

1. Article 37(1)

It is understood that the concept 'conditions and modalities applicable in each Member State` includes Community rules where appropriate.

2. Article 37

It is understood that the notion 'children` is defined in accordance with national legislation of the host country concerned.

3. Article 38

It is understood that the notion 'members of their family` is defined in accordance with the national legislation of the host country concerned.

4. Chapter II of Title IV

Without prejudice to the provisions of Chapter II of Title IV, the Parties agree that treatment of the nationals or companies of one Party shall be considered to be less favourable than that accorded to those of the other Party if such treatment is either formally or de facto less favourable than the treatment accorded to those of the other Party.

5. Article 46(d)(i)

Without prejudice to Article 46, the Parties agree that no provision under the Agreement can be interpreted as denying the right of the Parties to control and regulate in order to ensure that natural persons benefiting from the right of establishment effectively pursue an activity as self-employed persons.

6. Article 56

The sole fact of requiring a visa for natural persons of certain Member States and not for those of other Member States by Lithuania or of requiring a visa for natural persons of Lithuania by certain Member States and not by others shall not be regarded as nullifying or impairing benefits under a specific commitment.

7. Article 67

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, trade marks and service marks, topographies of integrated circuits as well as protection against unfair competition as referred to in Article 10bis of the Paris Convention for the Protection of Industrial Property and protection of undisclosed information on know-how.

8. Article 116

The Parties agree that the Association Council, in conformity with Article 116 of the Agreement, shall examine the option of creating an advisory body comprising members of the Community's Economic and Social Committee and their Lithuanian counterparts.

9. Protocol 5 to the Agreement

The Parties agree that, for the implementation of Article 8(2), all relevant information for the interpretation or the utilisation of the material should be supplied at the same time.

AGREEMENT in the form of an Exchange of Letters between the European Community and the Republic of Lithuania on maritime transport

A. Letter from the Community

Sir,

We would be grateful if you would confirm that your Government agrees with the following:

When the Free Trade Agreement between the European Communities and Lithuania was signed, the Parties undertook to address in the appropriate manner, issues relating to the operation of shipping, particularly where the development of trade might be hindered. Mutually satisfactory solutions on shipping will be sought while the principle of free and fair competition on a commercial basis is observed.

It has likewise been agreed that such issues should also be discussed by the Association Council.

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

On behalf of the Council of the European Union

B. Letter from the Republic of Lithuania

Sir,

I have the honour to acknowledge receipt of your letter and to confirm that my Government agrees with the following:

'When the Free Trade Agreement between the European Communities and Lithuania was signed, the Parties undertook to address in the appropriate manner, issues relating to the operation of shipping, particularly where the development of trade might be hindered. Mutually satisfactory solutions on shipping will be sought while the principle of free and fair competition on a commercial basis is observed.

It has likewise been agreed that such issues should also be discussed by the Association Council.`

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

For the Government of the Republic of Lithuania

AGREEMENT in the form of an Exchange of Letters between the European Community and the Republic of Lithuania concerning the recognition of regionalisation of African swine fever in the Kingdom of Spain

A. Letter from Lithuania

Sir,

I have the honour to refer to the discussions concerning trade agreements for certain agricultural products between the Community and Lithuania which have taken place in the framework of the negotiations of the Free Trade Agreement.

I hereby confirm that Lithuania accepts to recognise that the territory of the Kingdom of Spain, with the exception of the provinces of Badajoz, Huelva, Sevilla and Cordoba, is free from African swine fever, under the same terms as foreseen in Council Decision 89/21/EEC of 14 December 1988, and the successive Commission Decisions.

Lithuania accepts this derogation without prejudice to all other requirements foreseen by the Lithuanian veterinary legislation.

I should be obliged if you would confirm the agreement of the Community to the contents of this letter.

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

For the Government of the Republic of Lithuania

B. Letter from the Community

Sir,

I have the honour to acknowledge receipt of your letter of today's date which reads as follows:

'I have the honour to refer to the discussions concerning trade agreements for certain agricultural products between the Community and Lithuania which have taken place in the framework of the negotiations of the Free Trade Agreement.

I hereby confirm that Lithuania accepts to recognise that the territory of the Kingdom of Spain, with the exception of the provinces of Badajoz, Huelva, Sevilla and Cordoba, is free from African swine fever, under the same terms as foreseen in Council Decision 89/21/EEC of 14 December 1988, and the successive Commission Decisions.

Lithuania accepts this derogation without prejudice to all other requirements foreseen by the Lithuanian veterinary legislation.

I should be obliged if you would confirm the agreement of the Community to the contents of this letter.`

I have the honour to confirm that the Community is in agreement with the contents of your letter.

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

On behalf of the Council of the European Union

UNILATERAL DECLARATIONS

Declaration by the French Government

France notes that the Europe Agreement with the Republic of Lithuania does not apply to the overseas countries and territories associated with the European Community pursuant to the Treaty establishing the European Community.

Declarations by the Republic of Lithuania

1. Title III

Taking into account the accession of the Scandinavian countries to the European Union, Lithuania expresses its interest to renegotiate trade in textile and agricultural products with an aim to provide appropriate adjustment to deepen mutual trade liberalisation.

2. Article 44(6)

Lithuania shall take every effort to ensure that by the end of the transitional period Lithuanian subsidiaries and branches of Community companies and nationals shall enjoy the same rights as Community subsidiaries and branches of Lithuanian companies and nationals.

3. Article 56

Lithuania considers it essential for achieving the objectives of this association to establish a visa-free regime between the Republic of Lithuania and the Member States of the European Union.