ELCONSEJO DE LAS COMUNIDADES EUROPEAS,

Visto el Tratado constitutivo de la Comunidad Económica Europea y, en particular, su artículo 113,

Vista la propuesta de la Comisión,

Considerando que la Comisión ha negociado, en nombre de la Comunidad, un Acuerdo sobre el comercio de los productos textiles con Hong Kong;

Considerando que es conveniente aplicar dicho Acuerdo, con carácter provisional, a partir del 1 de enero de 1987, en espera de que se cumplan los procedimientos necesarios para su celebración, sin perjuicio de que se aplique, con carácter provisional y recíproco, por parte del país asociado,

DECIDE:

Artículo 1

Se aplicará, con carácter provisional, a partir del 1 de enero de 1987, el Acuerdo entre la Comunidad Económica Euro- pea y Hong Kong sobre el comercio de los productos textiles, en espera de su celebración formal, sin perjuicio de que se aplique, con carácter provisional y recíproco, por parte del país asociado.

El texto del Acuerdo se adjunta a la presente Decisión (1).

Artículo 2

Se invita a la Comisión a que ponga la presente Decisión en conocimiento del país asociado y recabe su consentimiento, que comunicará al Consejo.

Hecha en Bruselas, el 11 de diciembre de 1986.

Por el Consejo

El Presidente

K. CLARKE

(1) Por razones de orden material el presente Acuerdo se publica en el Diario Oficial de las Comunidades Europeas en la lengua en que ha sido negociado.

AGREEMENT between the European Economic Community and Hong Kong on trade in textile products Done at Brussels on 2 October 1986

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

of the one part, and THE GOVERNMENT OF HONG KONG,

of the other part,

RECOGNIZING the importance of trade in textile products between the European Economic Community (hereinafter referred to as the 'Community', and Hong Kong,

HAVING REGARD to the Arrangement regarding International Trade in Textiles, and in particular Article 4 thereof, and to the Protocol adopted on 31 July

1986 in accordance with the Conclusions of the Textiles Committee forming an integral part of the Protocol, which Arrangement and Protocol are hereinafter referred to as the 'Geneva Arrangement',

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

THE COUNCIL OF THE EUROPEAN COMMUNITIES:

THE GOVERNMENT OF HONG KONG:

WHO HAVE AGREED AS FOLLOWS:

SECTION I Trade arrangements

Article 1 1. The parties recognize and confirm that, subject to the provisions of this Agreement and without prejudice to their rights and obligations under the General Agreement on Tariffs and Trade, the conduct of their mutual trade in textile products shall be governed by the provisions of the Geneva Arrangement.

2. In respect of the products covered by this Agreement, the Community undertakes not to introduce quantitative restrictions under Article XIX of the General Agreement on Tariffs and Trade or Article 3 of the Geneva Arrangement.

3. Measures having equivalent effect to quantitative restrictions on the importation into the Community of the products covered by this Agreement shall be prohibited.

Article 2 1. This Agreement shall apply to trade in textile products of cotton, wool and man-made fibres originating in Hong Kong which are listed in Annex I.

2. The classification of the products covered by this Agreement is based on the nomendature of the Common Customs Tariff and on the Nomenclature of Goods for the External Trade Statistics of the Community and the Statistics of Trade between Member States (NIMEXE).

From the entry into force in the Community of the International Convention on the Harmonized Commodity Description and Coding System (HS) this classification will be based on the Harmonized System and on the Community nomenclatures derived from that system.

3. The origin of the products covered by this Agreement shall be determined in accordance with the rules in force in the Community and the procedures for control of the origin of the products set out in Protocol A.

Article 3 Hong Kong agrees to restrain its exports to the Community of the products described in Annex II to the limits set out therein for each Agreement year.

Exports of textile products set out in Annex II shall be subject to a double-checking system specified in Protocol A.

Article 4 Hong Kong and the Community recognize the special and differential character of re-imports of textile products into the Community after processing in Hong Kong.

Such re-imports may be provided for outside the quantitative limits established under this Agreement provided that they are effected in accordance with the regulations on economic outward processing in force in the Community.

Article 5 1. Exports to the Community of textile products covered by this

Agreement shall not be subject to the quantitative limits established in Annex II, 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 under the conditions referred to above shall be subject to the production of an export licence issued by the Hong Kong authorities and to proof of origin, in accordance with the provisions of Protocol A.

2. Where the competent authorities in the Community have evidence that products exported from Hong Kong and set off by Hong Kong against a quantitative limit established in Annex II have been subsequently re-exported outside the Community, the authorities concerned shall notify Hong Kong of the quantities involved. Upon receipt of such notification, Hong Kong may authorize exports for the current or the following Agreement year of identical quantities of products, within the same category, which shall not be set off against the quantitative limits established in Annex II.

Article 6 1. In any one Agreement year advance use of a portion of the quantitative limit established for the following Agreement year may be agreed following consultations in accordance with the procedures referred to in Article 14 (1) for each category of products between 1 % and 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. Carryover to the corresponding quantitative limit for the following Agreement year of amounts not used during any one Agreement year may be agreed following consultations in accordance with the procedures referred to in Article 14 (1) for each category of product between 2 % and 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 categories except as follows:

- transfers between categories 2 and 3 may be made for any Agreement year up to 4 % of the quantitative limit for the category to which the transfer is made,

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

Transfers into any category in Groups II and III may be made from any category or categories in Groups I, II and III for any Agreement year up to 5 % of the quantitative limit for the category to which the transfer is made.

The table of equivalence applicable to such transfers is given in Annex I to this Agreement.

4. 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 12 %.

5. Prior notification shall be given by the authorities of Hong Kong in the event of recourse to the provisions of paragraphs 1, 2 and 3 above.

6. Hong Kong shall provide the Community with export data showing the amounts of carryover available in any Agreement year. If substantial statistical differences exist between the export data from which the amount to be carried over is calculated and the Community's data, the Community may, within the first 120 days of the following Agreement year, request consultations in accordance with the procedures referred to in Article 14 (1) on the amounts involved. Any such request shall be accompanied by full particulars of the alleged statistical differences. Where such a request is made, the portions carried over shall not be used until the parties have completed consultations. If no such request is made within a 120-day period, the portion carried over shall be presumed to have been calculated correctly.

Article 7 1. Given the desire of both parties to eliminate real risks of market disruption, and in view of the well-established and effective Hong Kong system of export authorization, the following procedures shall apply.

2. Exports of textile products described in the categories listed in Annex I which are not subject to quantitative limits in Annex II shall be subject to the issue of export authorizations.

3. In respect of textile products covered by export authorizations mentioned in paragraph 2 above, the Community may request consultations in accordance with the procedure described in Article 14 (1) with a view to establishing a quantitative limit.

4. Until a mutually acceptable conclusion has been arrived at by means of such consultation, Hong Kong undertakes, if so requested, to suspend from the date of receipt of the request for consultation, the issue of export authorizations for the product or products in any category concerned, and to inform the Community forthwith of the level of quantities covered by export authorizations issued at the time of suspension. The Community shall accept exports from Hong Kong of the product or products concerned in respect of export authorizations issued prior to the receipt of the request for suspension.

5. Should the parties be unable in the course of consultations held in accordance with the provisions of paragraph 3 to reach a mutually acceptable solution, Hong Kong undertakes, if so requested by the Community, to limit exports of the product or products in the category in question for the Agreement year in which the request for consultations is made to an annual level not lower than the highest of the following:

(a) the level of imports into the Community in 1985 of products originating in Hong Kong in that category;

(b) the level resulting from the application of paragraph 8 below;

(c) the level resulting from the application of paragraph 9 below;

(d) 106 % of the level of exports reached during the calendar year preceding that in which the level of export authorizations issued by Hong Kong exceeded the level resulting from the application of paragraphs 8 and 9 and gave rise to the request for consultations; or (e) the level of export authorizations already issued at the time of suspension.

6. The annual growth rate for the quantitative limits introduced under this Article shall be determined during the course of the consultations referred

to in paragraph 3 above.

7. The provisions of this Article may be invoked by the Community at a regional level.

8. The Community undertakes not to invoke the provisions of paragraph 3 of this Article before the level of export authorizations for textile products mentioned in paragraph 2 in any category exceeds, in relation to the preceding year's total imports into the Community of products in that category, the following rates:

- for categories of products in Group I:0,4 %,

- for categories of products in Group II:2,0 %,

- for categories of products in Group III:6,0 %.

9. The Community further undertakes not to invoke the provisions of this Article on a regional basis before the level of export authorizations for textile products mentioned in paragraph 2 in any category exceeds the following regional percentages of the levels referred to in paragraph 8:

Germany25,5 %.

Benelux9,5 %.

France16,5 %.

Italy13,5 %.

Denmark2,7 %.

Ireland0,8 %.

United Kingdom21,0 %.

Greece1,5 %.

Spain7,5 %.

Portugal1,5 %.

10. Up to the date of communication of the statistics referred to in Article 9 (6) the provisions of paragraph 2 as qualified by paragraphs 7 and 8 of this Article shall apply on the basis of the annual statistics previously communicated by the Community.

11. In order to facilitate forecasts of Hong Kong's future export trends, Hong Kong undertakes to supply the Community with half-monthly statistical returns showing the quantities covered by the export authorizations mentioned in paragraph 1 which are issued under the system to Hong Kong exporters. Such data on export authorizations shall be provided by the Hong Kong authorities promptly in such detail and as frequently as the Community may reasonably request.

12. In the implementation of the provisions of the Article, Hong Kong shall notify the Community immediately upon receipt of any application for an export authorization in an exceptionally large amount.

13. The Hong Kong authorties undertake to notify the Community of any changes to the export authorization system having a direct effect on the implementation of this Agreement. Where necessary, consultations may be requested under Article 14 (1) of this Agreement.

14. The provisions of this Agreement which concern exports of products subject to the quantitative limits established in Annex II shall also apply to products for which quantitative limits are introduced under this Article.

Article 8 1. Hong Kong undertakes to supply the Community with precise statistical information on all export licences issued by the Hong Kong

authorities for all categories of textile products subject to the quantitative limits established under this Agreement.

Hong Kong shall set out in its periodical statistical reports the maximum export levels for each category subject to a quantitative limit and the rate of utilization of these levels.

2. The Community shall likewise supply to the Hong Kong authorities precise statistical information on import documents issued by the Community authorities in respect of export licenses issued by Hong Kong.

3. The information referred to in paragraphs 1 and 2 shall, for all categories of products, be transmitted before the end of the second month following the quarter to which the statistics relate.

4. For the purpose of applying provisions of Article 8, the Community may ask Bulgaria to transmit available statistical information on textiles exports of products covered by this Agreement by country of destination.

The Community shall transmit to the Hong Kong authorities import statistics for all products covered by Article 7, and for products covered by Article 5 (1).

5. The information referred to in paragraph 4 shall, for all categories of products, be transmitted before the end of the third month following the quarter to which the statistics relate.

6. For the purpose of applying the provisions of Article 7, the Community undertakes to provide the Hong Kong 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.

7. 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 14 of this Agreement.

Any such consultations shall be resolved on the basis of the agreed descriptions of the products contained in Annex I.

8. Hong Kong also undertakes to supply the Community with statistical information on all textile exports by country of destination. This information shall be transmitted before the end of the third month following the quarter to which the statistics refer.

Article 9 1. The authorities of Hong Kong shall be informed of any amendment to the Common Customs Tariff, the NIMEXE or the HS based nomenclatures of the Community or any decision, made in accordance with the procedures in force in the Community, relating to the classification of products covered by this Agreement.

Any such amendment or any decision which results in a modification of the classification of products covered by this Agreement shall not have the effect of reducing Hong Kong's ability to use the quantitative limits established in Annex II.

The procedures for the application of this paragraph are set out in Protocol A.

2. In case of divergent opinions between Hong Kong and the competent Community authorities at the point of entry into the Community on the

classification of products covered by the present Agreement, consultations in accordance with Article 14 (1) shall be held with a view to reaching agreement on the appropriate classification of the products concerned and to resolving any difficulties arising therefrom.

For this purpose, the authorities of Hong Kong shall be informed by the competent authorities of the Community as soon as a case of divergent opinions on the classification of products arises.

Pending agreement on the appropriate classification and in order to avoid disruption to trade, the products in question shall be imported on the basis of the classification indicated by the competent Community authorities at the point of entry, in conformity with the provisions of this Agreement.

Article 10 1. Hong Kong and the Community agree to cooperate fully in preventing the circumvention of the present Agreement by transhipment, re-routing or whatever other means.

2. Where information available to the Community as a result of the investigation carried out in accordance with the procedures set out in Protocol A constitutes evidence that products of Hong Kong origin subject to quantitative limits established under this Agreement have been transhipped, re-routed or otherwise imported into the Community in circumvention of this Agreement, the Community may request the opening of consultations in accordance with the procedures described in Article 14 (1) of this Agreement, with a view to reaching agreement on an equivalent adjustment of the corresponding quantitative limits established under the Agreement.

3. Should the parties be unable in the course of consultation to reach a satisfactory solution within the period specified in Article 14 (1) of the Agreement, the Community shall have the right, where clear evidence of circumvention has been provided, to deduct from the quantitative limits established under this Agreement amounts equivalent to the products of Hong Kong origin.

Article 11 1. Hong Kong shall endeavour to ensure that exports of textile products subject to quantitative limits are spaced out as evenly as possible over an Agreement year, due account being taken, in particular, of seasonal factors.

2. Export data shall be provided by the Hong Kong authorities promptly in such detail and as frequently as the Community may reasonably request. If, on the basis of such data, the Community has evidence that there is a sharp and substantial increase in the concentration of exports, other than a concentration attributable to normal seasonal factors, of particular products in any one category subject to quantitative limits established in Annex II, the Community may request consultations in accordance with the procedure specified in Article 14 of this Agreement with a view to remedying this situation.

Article 12 1. For the purpose of the administration of this Agreement, the limits referred to in Article 3 are broken down into shares for each of the Community's regions as set out in Annex II.

2. The Community undertakes to examine with care and reply within four weeks to any request by Hong Kong for a portion of any quantitative limit established in Annex II not used in one region of the Community to be

re-allocated to another region.

If, in the course of the application of the Agreement Hong Kong finds that the break-down of a limit established in Annex II causes particular difficulties, it may request the opening of consultations in accordance with the procedure specified in Article 14 with a view to reaching a mutually satisfactory solution.

3. After the first of June of each year of application of the Agreement, Hong Kong may transfer, subject to prior notification to the Community, unused quantities within the regional quota-shares of a Community quantitative limit, set out in Annex II, to the quota-shares of the same limit of other regions of the Community provided that the regional quota-share from which the transfer is made is utilized by less than 80 %, and up to the amount of the following percentages of the quota-share to which the transfer is made:

1 % in the first year of application of the Agreement.

2 % in the second year of application of the Agreement,

4 % in the third year of application of the Agreement,

6 % in the fourth year of application of the Agreement.

The percentage in the fifth year of the application of the Agreement shall be determined following consultations between the parties.

4. Should it appear in any given region of the Community that additional supplies are required, the Community may, where measures taken pursuant to paragraph 1 above are inadequate to cover those requirements, authorize the importation of amounts greater than those stipulated in Annex II.

Article 13 1. Hong Kong and the Community undertake to refrain from discrimination in the allocation of export licences and import documents respectively.

Artikel 14 1. The special consultation procedures referred to in this Agreement shall be governed by the following rules:

- any request for consultations shall be notified in writing to the other Party, together with a statement setting out the reasons and circumstances which, in the opinion of the requesting Party, justify the submission of such a request,

- the Parties shall enter into consultations within 15 days of notification of the request at the latest, with a view to reaching agreement or a mutually acceptable conclusion within a further 15 days at the latest.

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 set out in Annex II.

3. If necessary, at the request of either of the Parties and in conformity with the provisions of the Geneva Arrangement, consultations shall be held on any problems arising from the application of this Agreement. Any consultations held under this Article shall be approached by both Parties in a spirit of cooperation and with a desire to reconcile the differences between them.

Article 15 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 Hong Kong.

Article 16 1. This Agreement shall enter into force on the first day of the month following its signature. It shall be applicable until 31 December 1991.

2. This Agreement shall apply with effect from 1 January 1987.

3. Either Party may at any time propose amendments to this Agreement.

4. Either Party may at any time denounce this Agreement, provided that at least 120 days' notice is given. In that event the Agreement shall come to an end on the expiry of the period of notice.

5. The Annexes and Protocols, as well as Exchanges of Letters, Agreed Minutes and Declarations to this Agreement shall form an integral part thereof.

Article 17 This Agreement shall be drawn up in two copies in the Danish, Dutch, English, French, German, Greek, Italian, Portuguese and Spanish languages, each of those texts being equally authentic.