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Document 22004A0320(03)

Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the former Yugoslav Republic of Macedonia, of the other part - Protocol 1 on textile and clothing products - Protocol 2 on steel products - Protocol 3 on trade between the former Yugoslav Republic of Macedonia and the Community in processed agricultural products - Protocol 4 concerning the definition of the concept of "originating products" and methods of administrative cooperation - Protocol 5 on mutual administrative assistance in customs matters - Final Act

OJ L 84, 20.3.2004, p. 13–197 (ES, DA, DE, EL, EN, FR, IT, NL, PT, FI, SV)
Special edition in Czech: Chapter 11 Volume 054 P. 3 - 189
Special edition in Estonian: Chapter 11 Volume 054 P. 3 - 189
Special edition in Latvian: Chapter 11 Volume 054 P. 3 - 189
Special edition in Lithuanian: Chapter 11 Volume 054 P. 3 - 189
Special edition in Hungarian Chapter 11 Volume 054 P. 3 - 189
Special edition in Polish: Chapter 11 Volume 054 P. 3 - 189
Special edition in Slovak: Chapter 11 Volume 054 P. 3 - 189
Special edition in Slovene: Chapter 11 Volume 054 P. 3 - 189
Special edition in Bulgarian: Chapter 11 Volume 076 P. 13 - 199
Special edition in Romanian: Chapter 11 Volume 076 P. 13 - 199
Special edition in Croatian: Chapter 11 Volume 053 P. 79 - 265

In force: This act has been changed. Latest consolidated version: 01/05/2015

22004A0320(03)

Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the former Yugoslav Republic of Macedonia, of the other part - Protocol 1 on textile and clothing products - Protocol 2 on steel products - Protocol 3 on trade between the former Yugoslav Republic of Macedonia and the Community in processed agricultural products - Protocol 4 concerning the definition of the concept of "originating products" and methods of administrative cooperation - Protocol 5 on mutual administrative assistance in customs matters - Final Act

Official Journal L 084 , 20/03/2004 P. 0013 - 0197


Stabilisation and Association Agreement

between the European Communities and their Member States, of the one part, and the former Yugoslav Republic of Macedonia, 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 establishing the European Community, the Treaty establishing the European Coal and Steel Community, the Treaty establishing the European Atomic Energy Community, and the Treaty on European Union

hereinafter referred to as "Member States", and

THE EUROPEAN COMMUNITY, THE EUROPEAN COAL AND STEEL COMMUNITY, THE EUROPEAN ATOMIC ENERGY COMMUNITY,

hereinafter referred to as the "Community",

of the one part, and

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA,

hereinafter referred to as "the former Yugoslav Republic of Macedonia",

of the other part,

CONSIDERING the strong links between the Parties and the values that they share, their desire to strengthen those links and establish a close and lasting relationship based on reciprocity and mutual interest, which should allow the former Yugoslav Republic of Macedonia to further strengthen and extend the relations established previously, in particular through the Cooperation Agreement signed on 29 April 1997 by way of Exchange of Letters, which entered into force on 1 January 1998,

CONSIDERING that the relationship between the Parties in the field of inland transport should continue to be governed by the Agreement between the European Community and the former Yugoslav Republic of Macedonia in the field of transport, signed on 29 June 1997, which entered into force on 28 November 1997,

CONSIDERING the importance of this Agreement, in the framework of the Stabilisation and Association process with the countries of south-eastern Europe, to be further developed by an EU Common strategy for this region, in the establishment and consolidation of a stable European order based on cooperation, of which the European Union is a mainstay, as well as in the framework of the Stability Pact,

CONSIDERING the commitment of the Parties to contribute by all means to the political, economic and institutional stabilisation in the former Yugoslav Republic of Macedonia as well as in the region, through the development of civic society and democratisation, institution building and public administration reform, enhanced trade and economic cooperation, the strengthening of national and regional security, as well as increased cooperation in justice and home affairs,

CONSIDERING the commitment of the Parties to increasing political and economic freedoms as the very basis of this Agreement, as well as their commitment to respect human rights and the rule of law, including the rights of persons belonging to national minorities, and democratic principles through free and fair elections and a multiparty system,

CONSIDERING the commitment of the Parties to the principles of free market economy and the readiness of the Community to contribute to the economic reforms in the former Yugoslav Republic of Macedonia,

CONSIDERING the commitment of the Parties to the full implementation of all principles and provisions of the UN Charter, of the OSCE, notably those of the Helsinki Final Act, the concluding documents of the Madrid and Vienna Conferences, the Charter of Paris for a New Europe, and of the Cologne Stability Pact for south-eastern Europe, so as to contribute to regional stability and cooperation among the countries of the region,

DESIROUS of establishing regular political dialogue on bilateral and international issues of mutual interest, including regional aspects,

CONSIDERING the commitment of the Parties to free trade, in compliance with the rights and obligations arising out of the WTO,

CONVINCED that the Stabilisation and Association Agreement will create a new climate for economic relations between them and above all for the development of trade and investment, factors crucial to economic restructuring and modernisation,

BEARING IN MIND the commitment by the former Yugoslav Republic of Macedonia to approximate its legislation to that of the Community,

TAKING ACCOUNT of the Community's willingness to provide decisive support for the implementation of reform, and to use all available instruments of cooperation and technical, financial and economic assistance on a comprehensive indicative multi-annual basis to this endeavour,

CONFIRMING that the provisions of this Agreement that fall within the scope of Part III, Title IV of the Treaty establishing the European Community bind the United Kingdom and Ireland as separate Contracting Parties, and not as part of the European Community, until the United Kingdom or Ireland (as the case may be) notifies the former Yugoslav Republic of Macedonia that it has become bound as part of the European Community in accordance with the Protocol on the position of the United Kingdom and Ireland annexed to the Treaty on European Union and the Treaty establishing the European Community. The same applies to Denmark, in accordance with the Protocol annexed to those Treaties on the position of Denmark,

RECALLING the European Union's readiness to integrate to the fullest possible extent the former Yugoslav Republic of Macedonia into the political and economic mainstream of Europe and its status as a potential candidate for EU membership on the basis of the Treaty on European Union and fulfilment of the criteria defined by the European Council in June 1993, subject to successful implementation of this Agreement, notably regarding regional cooperation,

HAVE AGREED AS FOLLOWS:

Article 1

1. An Association is hereby established between the Community and its Member States of the one part and the former Yugoslav Republic of Macedonia of the other part.

2. The aims of this Association are:

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

- to support the efforts of the former Yugoslav Republic of Macedonia to develop its economic and international cooperation, also through the approximation of its legislation to that of the Community,

- to promote harmonious economic relations and develop gradually a free trade area between the Community and the former Yugoslav Republic of Macedonia,

- to foster regional cooperation in all the fields covered by this Agreement.

TITLE I GENERAL PRINCIPLES

Article 2

Respect for the democratic principles and human rights as proclaimed in the Universal Declaration of Human Rights and as defined in the Helsinki Final Act and the Charter of Paris for a New Europe, respect for international law principles and the rule of law as well as the principles of market economy as reflected in the Document of the CSCE Bonn Conference on Economic Cooperation, shall form the basis of the domestic and external policies of the Parties and constitute essential elements of this Agreement.

Article 3

International and regional peace and stability, the development of good neighbourly relations are central to the Stabilisation and Association Process. The conclusion and the implementation of this Agreement come within the framework of the regional approach of the Community as defined in the Council conclusions of 29 April 1997, based on the merits of the individual countries of the region.

Article 4

The former Yugoslav Republic of Macedonia commits itself to enter into cooperation and good neighbourly relations with the other countries of the region including an appropriate level of mutual concessions concerning the movement of persons, goods, capital and services as well as the development of projects of common interest. This commitment constitutes a key factor in the development of the relations and cooperation between the Parties and thus contributes to regional stability.

Article 5

1. The Association shall be fully realised over a transitional period of a maximum of ten years divided into two successive stages. The purpose of this division into successive stages is to implement progressively the provisions of the Stabilisation and Association Agreement and to focus on areas described hereinafter in Titles III, V, VI and VII during the first stage.

2. The Stabilisation and Association Council established under Article 108 shall regularly examine the application of this Agreement and the accomplishment by the former Yugoslav Republic of Macedonia of legal, administrative, institutional and economic reforms in the light of the preamble and in accordance with the general principles laid down in this Agreement.

3. Four years after the entry into force of this Agreement, the Stabilisation and Association Council shall evaluate the progress made and decide about the passage into the second phase and its duration, as well as on any possible changes to be brought about as regards the content of the provisions governing the second stage. In so doing, it will take into account the results of the abovementioned review.

4. The two stages envisaged in paragraphs 1 and 3 shall not apply to Title IV.

Article 6

The Agreement shall be fully compatible with the relevant WTO provisions, in particular Article XXIV of the GATT 1994 and Article V of the GATS.

TITLE II POLITICAL DIALOGUE

Article 7

Political dialogue between the Parties shall be further developed and intensified. It shall accompany and consolidate the rapprochement between the European Union and the former Yugoslav Republic of Macedonia 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:

- 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,

- regional cooperation and the development of good neighbourly relations,

- common views on security and stability in Europe, including in the areas covered by Common Foreign and Security Policy of the European Union.

Article 8

Political dialogue may take place within a multilateral framework, and as a regional dialogue including other countries of the region.

Article 9

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

2. At the request of the Parties, political dialogue may also take place in the following formats:

- meetings, where necessary, of senior officials representing the former Yugoslav Republic of Macedonia, 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 fora,

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

Article 10

Political dialogue at parliamentary level shall take place within the framework of the Stabilisation and Association Parliamentary Committee established under Article 114.

TITLE III REGIONAL COOPERATION

Article 11

In conformity with its commitment to peace and stability, and to the development of good neighbourly relations, the former Yugoslav Republic of Macedonia will actively promote regional cooperation. The Community will also support projects having a regional or cross-border dimension through its technical assistance programmes.

Whenever the former Yugoslav Republic of Macedonia foresees to reinforce its cooperation with one of the countries mentioned in Articles 12 to 14 below, it shall inform and consult the Community and its Member States according to the provisions laid down in Title X.

Article 12

Cooperation with other countries having signed a Stabilisation and Association Agreement

No later than when at least one Stabilisation and Association Agreement will have been signed with another of the countries concerned by the Stabilisation and Association Process, the former Yugoslav Republic of Macedonia shall start negotiations with the country or the countries concerned with a view to concluding a Convention on regional cooperation, the aim of which will be to enhance the scope of cooperation between the countries concerned.

The main elements of this Convention will be:

- political dialogue,

- the establishment of a free trade area between the Parties, consistent with relevant WTO provisions,

- mutual concessions concerning the movement of workers, establishment, supply of services, current payments and movement of capital at an equivalent level to that of this Agreement,

- provisions on cooperation in other fields whether or not covered by this Agreement, and notably the field of Justice and Home Affairs.

This Convention will contain provisions for the creation of the necessary institutional mechanisms, as appropriate.

This Convention on regional cooperation shall be concluded within two years after the entry into force of at least the second Stabilisation and Association Agreement. Readiness by the former Yugoslav Republic of Macedonia to conclude such a Convention will be a condition for the further development of the relations between the former Yugoslav Republic of Macedonia and the EU.

Article 13

Cooperation with other countries concerned by the Stabilisation and Association Process

The former Yugoslav Republic of Macedonia shall engage in regional cooperation with the other countries concerned by the Stabilisation and Association Process in some or all the fields of cooperation covered by this Agreement, and notably those of common interest. Such cooperation should be compatible with the principles and objectives of this Agreement.

Article 14

Cooperation with countries candidate for EU accession

The former Yugoslav Republic of Macedonia may foster its cooperation and conclude a Convention on regional cooperation with any country candidate for EU accession in any of the fields of cooperation covered by this Agreement. Such Convention should aim to gradually align bilateral relations between the former Yugoslav Republic of Macedonia and that country to the relevant part of the relations between the European Community and its Member States and that country.

TITLE IV FREE MOVEMENT OF GOODS

Article 15

1. The Community and the former Yugoslav Republic of Macedonia shall gradually establish a free trade area over a period lasting a maximum of 10 years starting from the entry into force of this Agreement in accordance with the provisions of this Agreement and in conformity with those of the GATT 1994 and the WTO. In so doing they shall take into account the specific requirements laid down hereinafter.

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 the duty actually applied erga omnes on the day preceding the signature of this Agreement.

4. If, after the signature of this Agreement, any tariff reduction is applied on an erga omnes basis, in particular reductions resulting from the tariff negotiations in the WTO, such reduced duties shall replace the basic duty referred to in paragraph 3 as from the date when such reductions are applied.

5. The Community and the former Yugoslav Republic of Macedonia shall communicate to each other their respective basic duties.

CHAPTER I INDUSTRIAL PRODUCTS

Article 16

1. The provisions of this Chapter shall apply to products originating in the Community or the former Yugoslav Republic of Macedonia listed in Chapters 25 to 97 of the Combined Nomenclature, with the exception of the products listed in Annex I. § I, (ii) of the Agreement on agriculture (GATT 1994).

2. The provisions of Articles 17 and 18 shall neither apply to textile products nor to steel products, as specified in Articles 22 and 23.

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

Article 17

1. Customs duties on imports into the Community of products originating in the former Yugoslav Republic of Macedonia shall be abolished upon the entry into force of this Agreement.

2. Quantitative restrictions on imports into the Community and measures having equivalent effect shall be abolished on the date of entry into force of this Agreement with regard to products originating in the former Yugoslav Republic of Macedonia.

Article 18

1. Customs duties on imports into the former Yugoslav Republic of Macedonia of goods originating in the Community other than those listed in Annexes I and II shall be abolished upon the entry into force of this Agreement.

2. Customs duties on imports into the former Yugoslav Republic of Macedonia of goods originating in the Community which are listed in Annex I shall be progressively reduced in accordance with the following timetable:

- on 1 January of the first year after the entry into force of this Agreement each duty shall be reduced to 90 % of the basic duty,

- on 1 January of the second year after the entry into force of this Agreement each duty shall be reduced to 80 % of the basic duty,

- on 1 January of the third year after the entry into force of this Agreement each duty shall be reduced to 70 % of the basic duty,

- on 1 January of the fourth year after the entry into force of this Agreement each duty shall be reduced to 60 % of the basic duty,

- on 1 January of the fifth year after the entry into force of this Agreement each duty shall be reduced to 50 % of the basic duty,

- on 1 January of the sixth year after the entry into force of this Agreement each duty shall be reduced to 40 % of the basic duty,

- on 1 January of the seventh year after the entry into force of this Agreement each duty shall be reduced to 30 % of the basic duty,

- on 1 January of the eighth year after the entry into force of this Agreement each duty shall be reduced to 20 % of the basic duty,

- on 1 January of the ninth year after the entry into force of this Agreement each duty shall be reduced to 10 % of the basic duty,

- on 1 January of the tenth year after the entry into force of this Agreement the remaining duties shall be abolished.

3. Customs duties on imports into the former Yugoslav Republic of Macedonia of goods originating in the Community which are listed in Annex II shall be progressively reduced and eliminated in accordance with the timetable specified in the Annex.

4. Quantitative restrictions on imports into the former Yugoslav Republic of Macedonia of goods originating in the Community and measures having equivalent effect shall be abolished upon the date of entry into force of this Agreement.

Article 19

The Community and the former Yugoslav Republic of Macedonia shall abolish upon the entry into force of this Agreement in trade between themselves any charges having an effect equivalent to customs duties on imports.

Article 20

1. The Community and the former Yugoslav Republic of Macedonia shall abolish any customs duties on exports and charges having equivalent effect upon the entry into force of this Agreement.

2. The Community and the former Yugoslav Republic of Macedonia shall abolish between themselves any quantitative restrictions on exports and measures having equivalent effect upon the entry into force of this Agreement.

Article 21

The former Yugoslav Republic of Macedonia declares its readiness to reduce its customs duties in trade with the Community more rapidly than is provided for in Article 18 if its general economic situation and the situation of the economic sector concerned so permit.

The Stabilisation and Association Council shall make recommendations to this effect.

Article 22

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

Article 23

Protocol 2 lays down the arrangements applicable to steel products referred to therein.

CHAPTER II AGRICULTURE AND FISHERIES

Article 24

Definition

1. The provisions of this Chapter shall apply to trade in agricultural and fishery products originating in the Community or former Yugoslav Republic of Macedonia.

2. The term "agricultural and fishery products" refers to the products listed in Chapters 1 to 24 of the Combined Nomenclature and the products listed in Annex I, §I, (ii) of the Agreement on agriculture (GATT, 1994).

3. This definition includes fish and fisheries products covered by chapter 3, headings 1604 and 1605, and sub-headings 0511 91, 2301 20 00 and ex 1902 20 (1).

Article 25

Protocol 3 lays down the trade arrangements for processed agricultural products that are listed therein.

Article 26

1. On the date of entry into force of this Agreement, the Community shall abolish all quantitative restrictions and measures having equivalent effect, on imports of agricultural and fishery products originating in the former Yugoslav Republic of Macedonia.

2. On the date of entry into force of this Agreement, the former Yugoslav Republic of Macedonia shall abolish all quantitative restrictions and measures having equivalent effect, on imports of agricultural and fishery products originating in the Community.

Article 27

Agricultural products

1. From the date of entry into force of this Agreement, the Community shall abolish the customs duties and charges having equivalent effect, on imports of agricultural products originating in the former Yugoslav Republic of Macedonia, other than those of heading Nos 0102, 0201, 0202 and 2204 of the Combined Nomenclature.

For the products covered by Chapters 7 and 8 of the Combined Nomenclature, for which the Common Customs Tariff provides for the application of ad valorem customs duties and a specific customs duty, the elimination applies only to the ad valorem part of the duty.

2. From the date of entry into force of this Agreement, the Community shall fix the customs duties applicable to imports into the Community of "baby-beef" products defined in Annex III and originating in the former Yugoslav Republic of Macedonia, at 20 % of the ad valorem duty and 20 % of the specific duty as laid down in the Common Customs Tariff of the European Communities, within the limit of an annual tariff quota of 1650 tonnes expressed in carcass weight.

3. From the date of entry into force of this Agreement, the former Yugoslav Republic of Macedonia shall:

(a) abolish the customs duties applicable on imports of certain agricultural products originating in the Community, listed in Annex IV(a);

(b) abolish the customs duties applicable on imports of certain agricultural products originating in the Community, listed in Annex IV(b) within the limits of tariff quotas indicated for each product in that Annex. For the quantities exceeding the tariff quotas the former Yugoslav Republic of Macedonia shall reduce progressively the customs duties in accordance with the timetable indicated for each product in that Annex;

(c) reduce progressively the customs duties applicable on imports of certain agricultural products originating in the Community, listed in Annex IV(c) within the limits of tariff quotas and in accordance with the timetable indicated for each product in that Annex.

4. The trade arrangements to apply to wine and spirit products will be defined in a separate wine and spirit agreement.

Article 28

Fisheries products

1. From the entry into force of this Agreement the Community shall totally eliminate customs duties on fish and fisheries products originating in the former Yugoslav Republic of Macedonia. Products listed in Annex V(a) shall be subject to the provisions laid down therein.

2. From the entry into force of this Agreement the former Yugoslav Republic of Macedonia shall abolish all charges having an equivalent effect to a custom duty and reduce customs duties on fish and fisheries products originating in the European Community by 50 % of the MFN duty. The residual duties shall be reduced over a period of six years to be eliminated at the end of this period.

The rules contained in this paragraph shall not apply to products listed in Annex V(b) which shall be subject to tariff reductions laid down in the said Annex.

Article 29

1. Taking account of the volume of trade in agricultural and fishery products between the Parties, of their particular sensitivities, of the rules of the Community common policies for agriculture and fisheries, of the rules of the agricultural policies of the former Yugoslav Republic of Macedonia, of the role of agriculture in the former Yugoslav Republic of Macedonia's economy, of the production and export potential of its traditional branches and markets and of the consequences of the multilateral trade negotiations under the WTO, the Community and the former Yugoslav Republic of Macedonia shall examine in the Stabilisation and Association Council, no later than 1 January 2003, product by product and on an orderly and appropriate reciprocal basis, the opportunities for granting each other further concessions with a view to implementing greater liberalisation of the trade in agricultural and fishery products.

2. The provisions of this Chapter shall in no way affect the application, on a unilateral basis, of more favourable measures by one or the other Party.

Article 30

Notwithstanding other provisions of this Agreement, and in particular Article 37, given the particular sensitivity of the agricultural and fisheries markets, if imports of products originating in one of the two Parties, which are the subject of concessions granted pursuant to Article 25, 27 and 28, cause serious disturbance to the markets or to their domestic regulatory mechanisms, in the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such solution, the Party concerned may take the appropriate measures it deems necessary.

CHAPTER III COMMON PROVISIONS

Article 31

The provisions of this Chapter shall apply to trade in all products between the Parties except where otherwise provided herein or in Protocols 1, 2 and 3.

Article 32

Standstill

1. From the date of entry into force of this Agreement, no new customs duties on imports or exports or charges having equivalent effect shall be introduced, nor shall those already applied be increased, in trade between the Community and the former Yugoslav Republic of Macedonia.

2. From the date of entry into force of this Agreement, no new quantitative restriction on imports or exports or measure having equivalent effect shall be introduced, nor shall those existing be made more restrictive, in trade between the Community and the former Yugoslav Republic of Macedonia.

3. Without prejudice to the concessions granted under Article 26, the provisions of paragraphs 1 and 2 of this Article shall not restrict in any way the pursuit of the respective agricultural policies of the former Yugoslav Republic of Macedonia and the Community or the taking of any measures under those policies insofar as the import regime in the Annexes III, IV(a), (b) and (c) and V(a) and (b) is not affected.

Article 33

Prohibition of fiscal discrimination

1. The Parties shall refrain from, and abolish where existing, 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 Parties may not benefit from repayment of internal indirect taxation in excess of the amount of indirect taxation imposed on them.

Article 34

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

Article 35

Customs unions, free trade areas, cross-border arrangements

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

2. During the transitional periods specified in Articles 17 and 18, this Agreement shall not affect the implementation of the specific preferential arrangements governing the movement of goods either laid down in frontier agreements previously concluded between one or more Member States and the Socialist Federal Republic of Yugoslavia and succeeded to by the former Yugoslav Republic of Macedonia or resulting from the bilateral agreements specified in Title III concluded by the former Yugoslav Republic of Macedonia in order to promote regional trade.

3. Consultations between the Parties shall take place within the Stabilisation and Association Council concerning the agreements described in paragraphs 1 and 2 of this Article and, where requested, on other major issues related to their respective trade policies towards 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 is taken of the mutual interests of the Community and the former Yugoslav Republic of Macedonia stated in this Agreement.

Article 36

Dumping

1. 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 1994, it may take appropriate measures against this practice in accordance with the Agreement on implementation of Article VI of the GATT 1994 and its own related internal legislation.

2. As regards paragraph 1 of this Article, the Stabilisation and Association Council shall be informed of the dumping case as soon as the authorities of the importing Party have initiated an investigation. When no end has been put to the dumping within the meaning of Article VI of the GATT or no other satisfactory solution has been reached within 30 days of the matter being referred to the Stabilisation and Association Council, the importing Party may adopt the appropriate measures.

Article 37

General safeguard clause

1. Where any product of one Party is being imported into the territory of the other Party in such increased quantities and under such conditions as to cause or threaten to cause:

- serious injury to the domestic industry of like or directly competitive products in the territory of the importing Party, or

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

the importing Party may take appropriate measures under the conditions and in accordance with the procedures laid down in this Article.

2. The Community and the former Yugoslav Republic of Macedonia shall only apply safeguard measures between themselves in accordance with the provisions of this Agreement. Such measures shall not exceed what is necessary to remedy the difficulties which have arisen, and should normally consist of the suspension of the further reduction of any applicable rate of duty provided for under this Agreement for the product concerned or the increase of the rate of duty for that product.

Such measures shall contain clear elements progressively leading to their elimination at the end of the set period, at the latest. Measures shall not be taken for a period exceeding one year. In very exceptional circumstances, measures may be taken up to a total maximum period of three years. No safeguard measure shall be applied to the import of a product that has previously been subject to such a measure for a period of, at least, three years since the expiry of the measure.

3. In the cases specified in this Article, before taking the measures provided for therein or, in the cases to which paragraph 4(b) of this Article applies, as soon as possible, the Community or the former Yugoslav Republic of Macedonia, as the case may be, shall supply the Stabilisation and Association Committee with all relevant information, with a view to seeking a solution acceptable to the two Parties.

4. For the implementation of the above paragraphs the following provisions shall apply:

(a) the difficulties arising from the situation referred to in this Article shall be referred for examination to the Stabilisation and Association Committee, which may take any decisions needed to put an end to such difficulties. If the Stabilisation and Association Committee 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 to the Stabilisation and Association Committee, the importing Party may adopt the appropriate measures to remedy the problem in accordance with this Article. In the selection of safeguard measures priority must be given to those which least disturb the functioning of the arrangements established in this Agreement;

(b) where exceptional and critical circumstances requiring immediate action make prior information or examination, as the case may be, impossible, the Party concerned may, in the situations specified in this Article, apply forthwith precautionary measures necessary to deal with the situation and shall inform the other Party immediately thereof.

5. The safeguard measures shall be notified immediately to the Stabilisation and Association Committee 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.

6. In the event of the Community or the former Yugoslav Republic of Macedonia subjecting imports of products liable to give rise to the difficulties referred to in this Article to an administrative procedure having at its purpose the rapid provision of information on the trend of trade flows, it shall inform the other Party.

Article 38

Shortage clause

1. Where compliance with the provisions of this Title leads to:

(a) a critical shortage, or threat thereof, of foodstuffs or other products essential to the exporting Party; or

(b) re-export to a third country of a product against which the exporting Party maintains quantitative export restrictions, export duties or measures or charges having equivalent effect, 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 this Article.

2. In the selection of measures, priority must be given to those which least disturb the functioning of the arrangements in this Agreement. Such measures shall not be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination where the same conditions prevail, or a disguised restriction on trade and shall be eliminated when the conditions no longer justify their maintenance.

3. Before taking the measures provided for in paragraph 1 of this Article or, as soon as possible in cases to which paragraph 4 of this Article applies, the Community or the former Yugoslav Republic of Macedonia, as the case may be, shall supply the Stabilisation and Association Committee with all relevant information, with a view to seeking a solution acceptable to the Parties. The Parties within the Stabilisation and Association Committee may agree on any means needed to put an end to the difficulties. If no agreement is reached within 30 days of the matter being referred to the Stabilisation and Association Committee, the exporting Party may apply measures under this Article on the exportation of the product concerned.

4. Where exceptional and critical circumstances requiring immediate action make prior information or examination, as the case may be, impossible, the Community or the former Yugoslav Republic of Macedonia, whichever is concerned, may apply forthwith the precautionary measures necessary to deal with the situation and shall inform the other Party immediately thereof.

5. Any measures applied pursuant to this Article shall be immediately notified to the Stabilisation and Association Committee and shall be the subject of periodic consultations within that body, particularly with a view to establishing a timetable for their elimination as soon as circumstances permit.

Article 39

State monopolies

The former Yugoslav Republic of Macedonia shall progressively adjust any State monopolies of a commercial character so as to ensure that, by the end of the fifth year following the entry into force of this Agreement, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States and of the former Yugoslav Republic of Macedonia. The Stabilisation and Association Council shall be informed about the measures adopted to attain this objective.

Article 40

Protocol 4 lays down the rules of origin for the application of tariff preferences provided for in this Agreement.

Article 41

Restrictions authorised

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 42

Both Parties agree to cooperate to reduce the potential for fraud in the application of the trade provisions of this Agreement.

Notwithstanding other provisions of this Agreement, and in particular Articles 30, 37 and 88 and Protocol 4, where one Party finds that there is sufficient evidence of fraud such as a significant increase in trade of products by one Party to the other Party, beyond the level reflecting economic conditions such as normal production and export capacities, or failure to provide administrative cooperation as required for the verification of evidence of origin by the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such solution, the Party concerned may take the appropriate measures it deems necessary. In the selection of the measures priority must be given to those which least disturb the functioning of the arrangements established in this Agreement.

Article 43

The application of this Agreement shall be without prejudice to the application of the provisions of Community law to the Canary Islands.

TITLE V MOVEMENT OF WORKERS, ESTABLISHMENT, SUPPLY OF SERVICES, CAPITAL

CHAPTER I MOVEMENT OF WORKERS

Article 44

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

- treatment accorded to workers who are nationals of the former Yugoslav Republic of Macedonia and who are legally employed in the territory of a Member State shall be free of any discrimination based on nationality, as regards working conditions, remuneration or dismissal, compared to 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, within the meaning of Article 45, 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. The former Yugoslav Republic of Macedonia shall, subject to conditions and modalities in that country, accord the treatment refereed to in paragraph 1 to workers who are nationals of a Member State and are legally employed in its territory as well as to their spouse and children who are legally resident in the said country.

Article 45

1. Taking into account the labour market situation in the Member States, subject to their legislation and to compliance with the rules in force in the Member States in the area of mobility of workers:

- the existing facilities of access to employment for workers of the former Yugoslav Republic of Macedonia accorded by Member States with bilateral agreements should be preserved and if possible improved,

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

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

Article 46

Rules shall be laid down for the coordination of social security system for workers with the nationality of the former Yugoslav Republic of Macedonia, legally employed in the territory of a Member State, and for the members of their families legally resident there. To that effect, a decision of the Stabilisation and Association Council, which should not affect any rights or obligations arising from bilateral agreements where the latter provide for more favourable treatment, will put the following provisions in place:

- 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 families as defined above.

The former Yugoslav Republic of Macedonia 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 the first paragraph.

CHAPTER II ESTABLISHMENT

Article 47

For the purposes of this Agreement:

(a) a "Community company" or a "company of the former Yugoslav Republic of Macedonia" respectively shall mean a company set up in accordance with the laws of a Member State or of former Yugoslav Republic of Macedonia respectively and having its registered office or central administration or principal place of business in the territory of the Community or former Yugoslav Republic of Macedonia respectively.

However, should the company, set up in accordance with the laws of a Member State or of the former Yugoslav Republic of Macedonia respectively, have only its registered office in the territory of the Community or the former Yugoslav Republic of Macedonia respectively, the company shall be considered a Community or a company from the former Yugoslav Republic of Macedonia respectively if its operations possess a real and continuous link with the economy of one of the Member States or the former Yugoslav Republic of Macedonia 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 set up undertakings, in particular companies, which they effectively control. 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;

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

(e) "operations" 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 "national of the former Yugoslav Republic of Macedonia" shall mean respectively a natural person who is a national of one of the Member States or of the former Yugoslav Republic of Macedonia;

(h) with regard to international maritime transport, including inter-modal operations involving a sea leg, nationals of the Member States or of the former Yugoslav Republic of Macedonia established outside the Community or of the former Yugoslav Republic of Macedonia respectively, and shipping companies established outside the Community or the former Yugoslav Republic of Macedonia and controlled by nationals of a Member State or the nationals of the former Yugoslav Republic of Macedonia respectively, shall also be beneficiaries of the provisions of this Chapter and Chapter III, if their vessels are registered in that Member State or in the former Yugoslav Republic of Macedonia respectively, in accordance with their respective legislation;

(i) "financial services" shall mean those activities described in Annex VI. The Stabilisation and Association Council may extend or modify the scope of that Annex.

Article 48

1. The former Yugoslav Republic of Macedonia shall grant, upon entry into force of this Agreement:

(i) as regards the establishment of Community companies treatment no less favourable than that accorded to its own companies or to any third country company, whichever is the better, and

(ii) as regards the operation of subsidiaries and branches of Community companies in the former Yugoslav Republic of Macedonia, once established, treatment no less favourable than that accorded to its own companies and branches or to any subsidiary and branch of any third country company, whichever is the better.

2. The former Yugoslav Republic of Macedonia shall not adopt any new regulations or measures which introduce discrimination as regards the establishment of Community companies on its territory or in respect of their operation, once established, by comparison with its own companies.

3. The Community and its Member States shall grant, from the entry into force of this Agreement:

(i) as regards the establishment of companies from the former Yugoslav Republic of Macedonia, treatment no less favourable than that accorded by Member States to their own companies or to any company of any third country, whichever is the better;

(ii) as regards the operation of subsidiaries and branches of companies from the former Yugoslav Republic of Macedonia, established in their territory, treatment no less favourable than that accorded by Member States to their own companies and branches, or to any subsidiary and branch of any third country company, established in their territory, whichever is the better.

4. Five years after the entry into force of this Agreement, and in the light of the relevant European Court of Justice case law, and the situation of the labour market, the Stabilisation and Association Council will examine whether to extend the above provisions to the establishment of nationals of both Parties to this Agreement to take up economic activities as self-employed persons.

5. Notwithstanding the provisions of this Article:

(a) subsidiaries and branches of Community companies shall have, from the entry into force of this Agreement, the right to use and rent real property in the former Yugoslav Republic of Macedonia;

(b) subsidiaries of Community companies shall also have the right to acquire and enjoy ownership rights over real property as the companies of the former Yugoslav Republic of Macedonia and as regards public goods/goods of common interest, including natural resources, agricultural land and forestry, the same rights as enjoyed by companies of the former Yugoslav Republic of Macedonia, where these rights are necessary for the conduct of the economic activities for which they are established;

(c) by the end of the first stage of transitional period the Stabilisation and Association Council shall examine the possibility of extending the rights under (b) to branches of the Community companies.

Article 49

1. Subject to the provisions of Article 48, with the exception of financial services described in Annex VI, each Party may regulate the establishment and operation of companies and nationals on its territory, insofar 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, policy holders or persons to whom a fiduciary duty is owned 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 50

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

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

Article 51

1. The provisions of Articles 48 and 49 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 to 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 52

In order to make it easier for Community nationals and nationals of the former Yugoslav Republic of Macedonia to take up and pursue regulated professional activities in the former Yugoslav Republic of Macedonia and Community respectively, the Stabilisation and Association Council shall examine which steps are necessary for the mutual recognition of qualifications. It may take all necessary measures to that end.

Article 53

1. A Community company or a company from the former Yugoslav Republic of Macedonia established in the territory of the former Yugoslav Republic of Macedonia 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 the former Yugoslav Republic of Macedonia and the Community respectively, employees who are nationals of the Community Member States and former Yugoslav Republic of Macedonia respectively, provided that such employees are key personnel as defined in paragraph 2 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 "intra-corporate transferees" as defined in (c) of this paragraph in the following categories, provided that the organisation is a legal 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 of 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 "intra-corporate 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 the former Yugoslav Republic of Macedonia of nationals of the former Yugoslav Republic of Macedonia 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) above, within a company, and are responsible for the setting up of a Community subsidiary or branch of a company from the former Yugoslav Republic of Macedonia or of a subsidiary or branch in the former Yugoslav Republic of Macedonia of a Community company in a Community Member State or in the former Yugoslav Republic of Macedonia 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 the former Yugoslav Republic of Macedonia, respectively, and has no other representative, office, branch or subsidiary in that Community Member State or former Yugoslav Republic of Macedonia respectively.

Article 54

During the first four years following the date of entry into force of this Agreement, the former Yugoslav Republic of Macedonia may introduce measures which derogate from the provisions of this Chapter as regards the establishment of Community companies and nationals of certain industries which:

- are undergoing restructuring, or are facing serious difficulties, particularly where these entail serious social problems in the former Yugoslav Republic of Macedonia, or

- face the elimination or a drastic reduction of the total market share held by the former Yugoslav Republic of Macedonia companies or nationals in a given sector or industry in the former Yugoslav Republic of Macedonia, or

- are newly emerging industries in the former Yugoslav Republic of Macedonia.

Such measures:

(i) shall cease to apply at the latest two years after the end of the first stage of the transitional period;

(ii) shall be reasonable and necessary in order to remedy the situation, and

(iii) shall not introduce discrimination concerning the activities of Community companies or nationals already established in the former Yugoslav Republic of Macedonia at the time of introduction of a given measure, by comparison with companies or nationals from the former Yugoslav Republic of Macedonia.

While devising and applying such measures, the former Yugoslav Republic of Macedonia shall grant preferential treatment wherever possible to Community companies and nationals, and in no case treatment less favourable than that accorded to companies or nationals from any third country. Prior to the adoption of these measures, the former Yugoslav Republic of Macedonia shall consult the Stabilisation and Association Council and shall not put them into effect before a one month period has elapsed following the notification to the Stabilisation and Association Council of the concrete measures to be introduced by the former Yugoslav Republic of Macedonia, except where the threat of irreparable damage requires the taking of urgent measures, in which case the former Yugoslav Republic of Macedonia shall consult the Stabilisation and Association Council immediately after their adoption.

Upon the expiry of the fourth year following the entry into force of this Agreement the former Yugoslav Republic of Macedonia may introduce or maintain such measures only with the authorisation of the Stabilisation and Association Council and under conditions determined by the latter.

CHAPTER III SUPPLY OF SERVICES

Article 55

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 the former Yugoslav Republic of Macedonia 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, 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 53, including natural persons who are representatives of a Community or the former Yugoslav Republic of Macedonia 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. As from the second stage of the transition period, the Stabilisation and 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 56

1. The Parties shall not take any measures or actions which render the conditions for the supply of services by Community and the former Yugoslav Republic of Macedonia 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 to 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 entry into force 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 entry into force of the Agreement, such first Party may request the other Party to enter into consultations.

Article 57

With regard to supply of transport services between the Community and the former Yugoslav Republic of Macedonia, the following provisions shall apply:

1. with regard to inland transport, the relationship between the Parties is governed by the Agreement between the European Community and the former Yugoslav Republic of Macedonia in the field of transport entered into force on 28 November 1997. The Parties confirm the importance they attach to the correct application of this Agreement;

2. 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 under the United Nations Code of Conduct for Liner Conferences, as applied by one or the other Party to this Agreement. Non-conference liners 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 of the dry and liquid bulk trade.

3. In applying the principles of paragraph 2, the Parties shall:

(a) not introduce cargo-sharing clauses in future bilateral agreements with third countries, other than in those exceptional circumstances where liner shipping companies from one or other Party to this Agreement would not otherwise have an effective opportunity to ply for trade to and from the third country concerned;

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

(c) abolish, upon the entry into force of this Agreement, all unilateral measures and administrative, technical and other obstacles that could have restrictive or discriminatory effects on the free supply of services in international maritime transport.

4. With a view to ensuring a coordinated development and progressive liberalisation of transport between the Parties adapted to their reciprocal commercial needs, the conditions of mutual market access in air transport shall be dealt with by special agreements to be negotiated between the Parties after the entry into force of this Agreement.

5. Prior to the conclusion of the agreement referred to in paragraph 4, the Parties shall not take any measures or actions which are more restrictive or discriminatory as compared with the situation existing prior to the entry into force of this Agreement.

6. During the transitional period, the former Yugoslav Republic of Macedonia shall adapt its legislation, including administrative, technical and other rules, to that of the Community existing at any time in the field of air and inland transport insofar as it serves liberalisation purposes and mutual access to markets of the Parties and facilitates the movement of passengers and of goods.

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

CHAPTER I CURRENT PAYMENTS AND MOVEMENT OF CAPITAL

Article 58

The Parties undertake to authorise, in freely convertible currency, in accordance with the provisions of Article VIII of the Articles of Agreement of the International Monetary Fund, any payments and transfers on the current account of balance of payments between the Community and the former Yugoslav Republic of Macedonia.

Article 59

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

2. With regard to transactions on the capital and financial account of balance of payments, from the entry into force of this Agreement, the Parties shall ensure the free movement of capital relating to credits related to commercial transactions or to the provision of services in which a resident of one of the Parties is participating, and to financial loans and credits, with a maturity longer than a year.

They shall also ensure, from the beginning of the second stage, free movement of capital relating to portfolio investment and financial loans and credits with a maturity shorter than a year.

3. Without prejudice to paragraph 1, the Parties shall not introduce any new restrictions on the movement of capital and current payments between residents of the Community and the former Yugoslav Republic of Macedonia and shall not make the existing arrangements more restrictive.

4. Without prejudice to the provisions of Article 58 and of this Article, where, in exceptional circumstances, movements of capital between the Community and the former Yugoslav Republic of Macedonia cause, or threaten to cause, serious difficulties for the operation of exchange rate policy or monetary policy in the Community or the former Yugoslav Republic of Macedonia, the Community and the former Yugoslav Republic of Macedonia, respectively, may take safeguard measures with regard to movements of capital between the Community and the former Yugoslav Republic of Macedonia for a period not exceeding six months if such measures are strictly necessary.

5. The Parties shall consult each other with a view to facilitating the movement of capital between the Community and the former Yugoslav Republic of Macedonia in order to promote the objectives of this Agreement.

Article 60

1. During the first stage, 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 first stage, the Stabilisation and Association Council shall examine ways of enabling Community rules on the movement of capital to be applied in full.

CHAPTER V GENERAL PROVISIONS

Article 61

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 that in the territory of either Party are connected, even occasionally, with the exercise of official authority.

Article 62

For the purpose of this Title, nothing in this Agreement shall prevent the Parties from applying their laws and regulations regarding entry and stay, employment, working conditions, establishment of natural persons and supply of services, provided that, in so doing, they do not apply them in such a manner as to nullify or impair the benefits accruing to any Party under the terms of a specific provision of this Agreement. This provision shall be without prejudice to the application of Article 61.

Article 63

Companies which are controlled and exclusively owned jointly by the former Yugoslav Republic of Macedonia companies or nationals and Community companies or nationals shall also be covered by the provisions of this Title.

Article 64

1. The Most-Favoured-Nation treatment granted in accordance with the provisions of this Title shall not apply to the tax advantages that the Parties are providing or will provide in the future on the basis of agreements designed to avoid double taxation or other tax arrangements.

2. None of the provisions of 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. None of the provisions of this Title shall be construed to prevent Member States or the former Yugoslav Republic of Macedonia in applying the relevant provisions of their fiscal legislation, from distinguishing between taxpayers who are not in identical situations, in particular as regards their place of residence.

Article 65

1. The Parties shall endeavour wherever possible to avoid the imposition of restrictive measures, including measures relating to imports, for balance of payments purposes. A Party adopting such measures shall present as soon as possible to the other Party a timetable for their removal.

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

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

Article 66

The provisions of this Title shall be progressively adjusted, notably in the light of requirements arising from Article V of the General Agreement on Trade in Services (GATS).

Article 67

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 VI APPROXIMATION OF LAWS AND LAW ENFORCEMENT

Article 68

1. The Parties recognise the importance of the approximation of the existing and future laws of the former Yugoslav Republic of Macedonia to those of the Community. The former Yugoslav Republic of Macedonia shall endeavour to ensure that its laws will be gradually made compatible with those of the Community.

2. This gradual approximation of law will take place in two stages.

3. Starting on the date of signing of the Agreement and lasting as explained in Article 5, the approximation of laws shall extend to certain fundamental elements of the Internal Market acquis as well as to other trade-related areas, along a programme to be defined in coordination with the Commission of the European Communities. The former Yugoslav Republic of Macedonia will also define, in coordination with the Commission of the European Communities, the modalities for the monitoring of the implementation of approximation of legislation and law enforcement actions to be taken, including reform of the judiciary.

Deadlines will be set for competition law, intellectual property law, standards and certification law, public procurement law and data protection law. Legal approximation in other sectors of the internal market will be an obligation to be met at the end of the transition period.

4. During the second stage of the transitional period laid down in Article 5 the approximation of laws shall extend to the elements of the acquis that are not covered by the previous paragraph.

Article 69

Competition and other economic provisions

1. The following are incompatible with the proper functioning of the Agreement, insofar as they may affect trade between the Community and the former Yugoslav Republic of Macedonia:

(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 the former Yugoslav Republic of Macedonia 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 certain products.

2. Any practices contrary to this Article shall be assessed on the basis of criteria arising from the application of the rules of Articles 81, 82 and 87 of the Treaty establishing the European Community.

3. (a) For the purposes of applying the provisions of paragraph 1(iii), the Parties recognise that during the first four years after the entry into force of this Agreement, any public aid granted by the former Yugoslav Republic of Macedonia shall be assessed taking into account the fact that the former Yugoslav Republic of Macedonia shall be regarded as an area identical to those areas of the Community described in Article 87(3)(a) of the Treaty establishing the European Community.

(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, upon request, information on aid schemes. Upon request by one Party, the other Party shall provide information on particular individual cases of public aid.

Each Party shall ensure that the provisions of this Article are applied within five years of the Agreement's entry into force.

4. With regard to products referred to in Chapter II of Title IV:

- paragraph 1 (iii) shall not apply,

- any practices contrary to paragraph 1(i) shall be assessed according to the criteria established by the Community on the basis of Articles 36 and 37 of the Treaty establishing the European Community and specific Community instruments adopted on this basis.

5. If the Community or the former Yugoslav Republic of Macedonia considers that a particular practice is incompatible with the terms of paragraph 1, and:

- if such practice causes or threatens to cause serious injury 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 Stabilisation and Association Council or after thirty working days following referral for such consultation.

In the case of practices incompatible with paragraph 1(iii), such appropriate measures may, where the WTO Agreement applies thereto, only be adopted in accordance with the procedures and under the conditions laid down thereby or the relevant Community internal legislation.

6. The Parties shall exchange information taking into account the limitations imposed by the requirements of professional and business confidentiality.

Article 70

With regard to public undertakings, and undertakings to which special or exclusive rights have been granted, each Party shall ensure that as from the third year following the date of entry into force of this Agreement, the principles of the Treaty establishing the European Community, in particular Article 86 thereof, are upheld.

Article 71

Intellectual, industrial and commercial property

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

2. The former Yugoslav Republic of Macedonia shall take the necessary measures in order to guarantee no later than five years after entry into force of this agreement a level of protection of intellectual, industrial and commercial property rights similar to that existing in the Community, including effective means of enforcing such rights.

3. The former Yugoslav Republic of Macedonia undertakes to accede, within the period referred above, to the multilateral conventions on intellectual, industrial and commercial property rights referred to in Annex VII.

If problems in the area of intellectual, industrial and commercial property affecting trading conditions occur, they shall be referred urgently to the Stabilisation and Association Council, at the request of either Party, with a view to reaching mutually satisfactory solutions.

Article 72

Public contracts

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 WTO context, to be a desirable objective.

2. The companies of the former Yugoslav Republic of Macedonia, whether established or not in the Community, shall be granted access to contract award procedures in the Community pursuant to Community procurement rules under treatment no less favourable than that accorded to Community companies as from the entry into force of this Agreement.

The above provisions will also apply to contracts in the utilities sector once the government of the former Yugoslav Republic of Macedonia has adopted the legislation introducing the Community rules in this area. The Community shall examine periodically whether the former Yugoslav Republic of Macedonia has indeed introduced such legislation.

Community companies not established in the former Yugoslav Republic of Macedonia shall be granted access to contract award procedures in the former Yugoslav Republic of Macedonia pursuant to the Law on Public Procurement under treatment no less favourable than that accorded to companies of the former Yugoslav Republic of Macedonia at the latest five years after the entry into force of this Agreement. Community companies established in the former Yugoslav Republic of Macedonia under the provisions of Chapter II of Title V shall have, upon entry into force of this Agreement, access to contract award procedures under treatment no less favourable than that accorded to companies of the former Yugoslav Republic of Macedonia.

The Stabilisation and Association Council shall periodically examine the possibility for the former Yugoslav Republic of Macedonia to introduce access to award procedures in the former Yugoslav Republic of Macedonia for all Community companies.

3. As regards establishment, operations, supply of services between the Community and the former Yugoslav Republic of Macedonia, and also employment and movement of labour linked to the fulfilment of public contracts, the provisions of Articles 44 to 67 are applicable.

Article 73

Standardisation, metrology, accreditation and conformity assessment

1. The former Yugoslav Republic of Macedonia shall take the necessary measures in order to gradually achieve conformity with Community technical regulations and European standardisation, metrology, accreditation and conformity assessment procedures.

2. To this end, the Parties shall seek:

- to promote the use of Community technical regulations and European standards, tests and conformity assessment procedures,

- to conclude, where appropriate, European Conformity Assessment Protocols,

- to foster the development of the quality infrastructure: standardisation, metrology, accreditation and conformity assessment,

- to promote participation in the work of specialised European organisations (CEN, CENELEC, ETSI, EA, WELMEC, EUROMED, etc.).

TITLE VII JUSTICE AND HOME AFFAIRS

Article 74

Reinforcement of institutions and rule of law

In their cooperation in justice and home affairs the Parties will attach particular importance to the reinforcement of institutions at all levels in the areas of administration in general and law enforcement and the machinery of justice in particular. This includes the consolidation of the rule of law. Cooperation in the field of justice will focus in particular on the independence of the judiciary, the improvement of its effectiveness and training of the legal professions.

Article 75

Visa, border control, asylum and migration

1. The Parties shall cooperate in the areas of visa, border control, asylum and migration and will set up a framework for cooperation, including at a regional level, in these fields.

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:

- exchange of information on legislation and practices,

- the drafting of legislation,

- enhancing the efficiency of the institutions,

- training of staff,

- security of the travel documents and detection of false documents.

3. Cooperation will focus in particular:

- in the area of asylum, on the development and implementation of national legislation to meet the standards of the 1951 Geneva Convention and thereby to ensure that the principle of non-refoulement is respected,

- in the field of legal migration, on admission rules and rights and status of the persons admitted. In relation to migration, the Parties agree to the fair treatment of nationals of other countries who reside legally on their territories and to promote an integration policy aiming at granting them rights and obligations comparable to those of their citizens.

The Stabilisation and Association Council can recommend additional subjects for cooperation under this Article.

Article 76

Prevention and control of illegal immigration; readmission

1. The Parties agree to cooperate in order to prevent and control illegal immigration. To this end:

- the former Yugoslav Republic of Macedonia agrees to readmit any of its nationals illegally present on the territory of a Member State, upon request by the latter and without further formalities once such persons have been positively identified as such,

- and each Member State of the European Union agrees to readmit any of its nationals illegally present on the territory of the former Yugoslav Republic of Macedonia, upon request by the latter and without further formalities once such persons have been positively identified as such.

The Member States of the European Union and the former Yugoslav Republic of Macedonia will provide their nationals with appropriate identity documents and will extend to them the administrative facilities necessary for such purposes.

2. The Parties agree to conclude, upon request, an agreement between the former Yugoslav Republic of Macedonia and the European Community regulating the specific obligations for the former Yugoslav Republic of Macedonia and for the Member States of the European Union for readmission, including an obligation for the readmission of nationals of other countries and stateless persons.

3. Pending the conclusion of the agreement with the Community referred to in paragraph 2, the former Yugoslav Republic of Macedonia agrees to conclude, upon request of a Member State, bilateral agreements with individual Member States of the European Union regulating the specific obligations for readmission between the former Yugoslav Republic of Macedonia and the Member State concerned, including an obligation for the readmission of nationals of other countries and stateless persons.

4. The Stabilisation and Association Council shall examine what other joint efforts can be made to prevent and control illegal immigration, including the trafficking in human beings.

Article 77

Combating money laundering

1. The Parties agree on the necessity of making every effort and cooperating in order to prevent the use of their financial systems for laundering of proceeds from criminal activities in general and drug offences in particular.

2. Cooperation in this area may include administrative and technical assistance with the purpose to develop the implementation of regulations and efficient functioning of the suitable standards and mechanisms to combat money laundering equivalent to those adopted by the Community and international fora in this field.

Article 78

Preventing and combating crime and other illegal activities

1. The Parties agree to cooperate on fighting and preventing criminal and illegal activities, organised or otherwise, such as:

- trafficking in human beings,

- illegal economic activities, and in particular corruption, illegal transactions on products such as industrial waste, radioactive material and transactions involving illegal or counterfeit products,

- illicit trafficking in drugs and psychotropic substances,

- smuggling,

- illicit arms trafficking,

- terrorism.

Cooperation in the above matters will be the subject of consultations and close coordination between the parties.

2. The technical and administrative assistance in this field may include:

- the drafting of national legislation in the field of criminal law,

- enhancing the efficiency of the institutions charged with fighting and preventing crime,

- staff training and the development of investigative facilities,

- the formulation of measures to prevent crime.

Article 79

Cooperation on illicit drugs

1. Within their respective powers and competencies, the Parties shall cooperate to ensure a balanced and integrated approach towards drugs. Drug policies and actions shall be aimed at reducing the supply, trafficking and demand of illicit drugs as well as at a more effective control of precursors.

2. The Parties shall agree on the necessary methods of cooperation to attain these objectives. Actions shall be based on commonly agreed principles along the lines of the EU Drug Strategy.

3. The cooperation between the Parties shall comprise technical and administrative assistance in particular in the following areas: drafting of national legislation and policies; establishment of institutions and information centres; training of personnel; drug related research; and the prevention of diversion of precursors used for the illicit manufacture of drugs. The Parties may agree to include other areas.

TITLE VIII COOPERATION POLICIES

Article 80

1. The Community and the former Yugoslav Republic of Macedonia shall establish a close cooperation aimed at contributing to the development and growth potential of the former Yugoslav Republic of Macedonia. Such cooperation shall strengthen existing economic links on the widest possible foundation, to the benefit of both Parties.

2. Policies and other measures will be designed to bring about the economic and social development of the former Yugoslav Republic of Macedonia. 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. Cooperation policies shall be integrated into a regional framework of cooperation. Special attention will have to be devoted to measures that can foster cooperation between the former Yugoslav Republic of Macedonia and its neighbouring countries including Member States, thus contributing to regional stability. The Stabilisation and Association Council may define priorities between and within the cooperation policies described hereinafter.

Article 81

Economic policy

1. The Community and the former Yugoslav Republic of Macedonia shall facilitate the process of economic reform by cooperating to improve understanding of the fundamentals of their respective economies and of implementing economic policy in market economies.

2. To these ends the Community and the former Yugoslav Republic of Macedonia shall cooperate to:

- 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.

3. At the request of the authorities of the former Yugoslav Republic of Macedonia, the Community may provide assistance designed to support the efforts of the former Yugoslav Republic of Macedonia towards the introduction of full convertibility of the Denar and the gradual development of its policies towards those of the European Monetary System. Cooperation in this area will include informal exchange of information concerning the principles and the functioning of the European Monetary System and the European System of Central Banks.

Article 82

Statistical cooperation

1. Cooperation in the area of statistics shall aim at the development of an efficient and sustainable statistical system capable of providing in due time reliable, objective and accurate data needed to plan and monitor the process of transition and reform in the former Yugoslav Republic of Macedonia. It shall enable the national statistical system coordinated by the State Statistical Office to meet better the needs of its customers, both public administration and private businesses. The statistical system is to respect the fundamental principles of statistics issued by the United Nations and the stipulations of the European Statistical law and develop towards the acquis communautaire in statistics.

2. To this end the Parties may cooperate in particular:

- to promote the development of an efficient statistical service in the former Yugoslav Republic of Macedonia based on an appropriate institutional framework,

- to develop and maintain national capacity for collecting, processing and disseminating statistical information of high quality using modern technologies in the most efficient way,

- to provide private and public sector economic operators and the research community with the appropriate socio-economic data needed to monitor state reforms,

- to enable the national statistical system to adopt the principles and standards of the European statistical system,

- to ensure the confidentiality of individual data.

3. Cooperation in this field shall include, but not limited to, providing information on methods, participation in selected EUROSTAT working groups and exchange of statistical data.

Article 83

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 banking, insurance and financial services sector in the former Yugoslav Republic of Macedonia.

The cooperation shall focus on:

- the adoption of a common accounting system compatible with European standards,

- the strengthening and restructuring of the banking, insurance and other financial sectors,

- the improvement of supervision and regulation of banking and other financial services,

- the exchange of information in particular in respect of proposed legislation,

- the preparation of translations and terminology glossaries.

2. The Parties shall cooperate with the aim of developing efficient audit systems in the former Yugoslav Republic of Macedonia following the harmonised Community methods and procedures.

Cooperation shall focus on:

- technical assistance to the Office of Auditors in the former Yugoslav Republic of Macedonia,

- the establishment of internal audit units in official agencies,

- the exchange of information with regard to auditing systems,

- the standardisation of audit documentation,

- training and advisory operations.

Article 84

Investment promotion and protection

1. Cooperation between the Parties shall be aimed at establishing a favourable climate for private investment, both domestic and foreign.

2. The particular aims of cooperation shall be:

- for the former Yugoslav Republic of Macedonia to improve 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,

- the implementation of suitable arrangements for the transfer of capital,

- the improvement of investment protection.

Article 85

Industrial cooperation

1. Cooperation shall be aimed at promoting the modernisation and restructuring of the industry and individual sectors in the former Yugoslav Republic of Macedonia, as well as industrial cooperation between economic operators of both sides, with the particular objective of strengthening the private sector under conditions that ensure that the environment is protected.

2. Industrial cooperation initiatives will reflect the priorities determined by both Parties. They will take into account the regional aspects of industrial development, promoting trans-national partnerships when relevant. The initiatives should seek in particular to establish a suitable framework for undertakings, to improve management know-how and to promote markets, market transparency and the business environment.

Article 86

Small and medium-sized enterprises

The Parties shall aim to develop and strengthen private sector small and medium-sized enterprises (SMEs), the establishment of new undertakings in areas offering potential for growth and cooperation between SMEs in the Community and the former Yugoslav Republic of Macedonia.

Article 87

Tourism

Cooperation between the Parties in the field of tourism will be aimed at facilitating and encouraging tourism and tourist trade through know-how transfer, participation of the former Yugoslav Republic of Macedonia in important European tourism organisations and studying the opportunities for joint operations, notably in regional tourism projects.

Article 88

Customs

1. The aim of cooperation shall be to guarantee compliance with all the provisions scheduled for adoption in the area of trade and to achieve the approximation of the customs system of the former Yugoslav Republic of Macedonia to that of the Community, thus 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 between the Parties,

- the possibility of interconnection between the transit systems of the Community and the former Yugoslav Republic of Macedonia, as well as the adoption and use of the Single Administrative Document (SAD),

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

- support for introduction of modern customs information systems.

3. Without prejudice to further cooperation provided for in this Agreement, and in particular Articles 76, 77 and 78, mutual assistance between administrative authorities in customs matters of the Parties shall take place in accordance with the provisions of Protocol 5.

Article 89

Taxation

The Parties will establish cooperation in the field of taxation including measures aiming at the further reform of the fiscal system, the modernisation of the tax services with a view to ensuring effectiveness of tax collection and the fight against fiscal fraud.

Article 90

Social cooperation

1. With regard to employment, cooperation between the Parties shall focus notably on upgrading job-finding and careers advice services, providing back-up measures and promoting local development to assist industrial and labour market restructuring. It shall also include measures such as studies, the secondment of experts and information and training operations.

2. With regard to social security, cooperation between the Parties shall seek to adapt the social security system of the former Yugoslav Republic of Macedonia to the new economic and social requirements, notably by providing the services of experts and organising information and training activities.

3. Cooperation between the Parties will involve the adjustment of legislation in the former Yugoslav Republic of Macedonia concerning working conditions and equal opportunities for women and men.

4. 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.

Article 91

Education and training

1. The Parties shall cooperate with the aim of raising the level of general education and professional qualifications in the former Yugoslav Republic of Macedonia taking into consideration the priorities of the former Yugoslav Republic of Macedonia.

2. The Tempus programme will contribute to strengthening cooperation between the two Parties in the field of education and training, promoting democracy, the rule of law and economic reform.

3. The European Training Foundation will also contribute to the upgrading of training structures and activities in the former Yugoslav Republic of Macedonia.

Article 92

Cultural cooperation

The Parties undertake to promote cultural cooperation. This cooperation serves, inter alia, to raise mutual understanding and esteem between individuals, communities and peoples.

Article 93

Information and communication

The Community and the former Yugoslav Republic of Macedonia will take the measures necessary to stimulate the mutual exchange of information. Priority will be given to programmes aimed at providing the general public with basic information about the Community and professional circles in the former Yugoslav Republic of Macedonia with more specialised information.

Article 94

Cooperation in the audio-visual field

The Parties shall cooperate to promote the audio-visual industry in Europe and encourage co-production in the fields of cinema and television.

The Parties will coordinate, and where appropriate, harmonise their policies on the regulation of content aspects of cross-border broadcasting, paying particular attention to matters relating to the acquisition of intellectual property rights for programmes and broadcast by satellite or cable.

Article 95

Electronic communications infrastructure and associated services

The Parties will strengthen cooperation in the area of electronic communications infrastructures, including classical telecommunications networks and relevant electronic audio-visual transport networks, and associated services, with the objective of ultimate alignment with the acquis by the former Yugoslav Republic of Macedonia one year after the entry into force of the Agreement.

The abovementioned cooperation will focus on the following priority areas:

- policy development,

- legal and regulatory aspects,

- institution building required for a liberalised environment,

- modernisation of the former Yugoslav Republic of Macedonia's electronic infrastructure and its integration into European and world networks, with a focus on improvements at a regional level,

- international cooperation,

- cooperation within European structures especially those involved in standardisation,

- coordinating positions in international organisations and fora.

Article 96

Information Society

The Parties agree to strengthen cooperation with the objective of further developing the Information Society in the former Yugoslav Republic of Macedonia. Global objectives will be preparing society as a whole for the digital age, attracting investments and interoperability of networks and services.

The authorities of the former Yugoslav Republic of Macedonia, with the assistance of the Community, will review carefully any political commitment undertaken in the European Union with the objective of aligning its own policies on those of the Union.

The authorities of the former Yugoslav Republic of Macedonia will establish a plan for the adoption of Community legislation in the area of the Information Society.

Article 97

Consumer protection

The Parties will cooperate in order to align the standards of consumer protection in the former Yugoslav Republic of Macedonia on those of the Community. Effective consumer protection is necessary in order to ensure that the market economy functions properly, and this protection will depend on the development of an administrative infrastructure in order to ensure market surveillance and law enforcement in this field.

To that end, and in view of their common interests, the Parties will encourage and ensure:

- the harmonisation of legislation and the alignment of consumer protection in the Republic of Macedonia on that in force in the Community,

- a policy of active consumer protection including the increase of information and development of independent organisations,

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

Article 98

Transport

1. In addition to the Agreement between the European Community and the former Yugoslav Republic of Macedonia in the field of transport, the Parties shall develop and step up the cooperation in order to enable the former Yugoslav Republic of Macedonia to:

- restructure and modernise transport and related infrastructure,

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

- achieve operating standards comparable to those in the Community,

- develop a transport system compatible with and aligned on the Community system,

- improve the protection of environment in transport, reduction of harmful effects and pollution.

2. Cooperation shall include the following priority areas:

- the development of road, rail, airport and port infrastructure and other major routes of common interest and Trans-European and Pan-European links,

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

- road transport, including taxation and social and environmental aspects,

- combined rail and road transport,

- the harmonisation of international transport statistics,

- the modernisation of technical transport equipment in line with Community standards, and assistance in acquiring financing to that end, particularly as regards road-rail transport, multi-modal transport and transhipment,

- the promotion of joint technological and research programmes,

- the adoption of coordinated transport policies that are compatible with those applied in the Community.

Article 99

Energy

1. Cooperation will reflect the principles of the market economy and the European Energy Charter Treaty, and will develop with a view to the gradual integration of Europe's energy markets.

2. Cooperation shall include the following in particular:

- formulation and planning of energy policy, including modernisation of infrastructure, improvement and diversification of supply and improvement of access to the energy market, including facilitation of transit,

- management and training for the energy sector and transfer of technology and know-how,

- the promotion of energy saving, energy efficiency, renewable energy and studying the environmental impact of energy production and consumption,

- the formulation of framework conditions for restructuring of energy utilities and cooperation between undertakings in this sector.

Article 100

Agriculture, and the agro-industrial sector

Cooperation in this field shall have as its aim the modernisation and restructuring of agriculture and the agro-industrial sector, water management, rural development, the gradual harmonisation of veterinary and phytosanitary legislation with Community standards and the development of fishery and forestry sectors in the former Yugoslav Republic of Macedonia.

Article 101

Regional and local development

The Parties will strengthen regional development cooperation, with the objective of contributing to economic development and reducing regional imbalances.

Specific attention will be given to cross-border, trans-national and interregional cooperations. To this end, the exchange of information and experts may be undertaken.

Article 102

Cooperation in research and technological development

1. The Parties shall promote bilateral cooperation in civil scientific research and technological development (RTD) on the basis of mutual benefit and, taking into account the availability of resources, adequate access to their respective programmes, subject to appropriate levels of effective protection of intellectual, industrial and commercial property rights (IPR).

2. Science and technology cooperation shall cover:

- the exchange of scientific and technical information,

- the organisation of joint scientific meetings,

- joint RTD activities,

- training activities and mobility programmes for scientists, researchers and technicians engaged in RTD on both sides.

3. Such cooperation shall be implemented according to specific arrangements to be negotiated and concluded in accordance with the procedures adopted by each Party, and which shall set out, inter alia, appropriate IPR provisions.

Article 103

Environment and nuclear safety

1. The Parties shall develop and strengthen their cooperation in the vital task of combating environmental degradation, with the view to supporting environmental sustainability.

2. Cooperation could centre on the following priorities:

- combating local, regional and cross-border pollution (air, water quality, including waste water treatment and drinking water pollution) and establishing effective monitoring,

- development of strategies with regard to global and climate issues,

- efficient, sustainable and clean energy production and consumption, safety of industrial plants,

- classification and safe handling of chemicals,

- waste reduction, recycling and safe disposal, and the implementation of the Basle Convention on the control of transboundary movements of hazardous wastes and their disposal (Basle 1989),

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

- the protection of forests, the flora and fauna; the conservation of bio-diversity,

- town and country planning, including construction and urban planning,

- environmental impact assessment and strategic environmental assessment,

- continuous approximation of laws and regulations to Community standards,

- international Conventions in the area of environment to which the Community is Party,

- cooperation at regional level as well as cooperation within the framework of the European Environment Agency,

- education, information and awareness on environmental issues.

3. In the field of protection against natural disasters, the aim of cooperation is to ensure the protection of people, animals, property and environment against man-made disasters. To this end the cooperation could include the following areas:

- exchange of the outcome of scientific and research development projects,

- mutual monitoring, early notification and warning systems on hazards, disasters and their consequences,

- rescue and relief exercises and assistance systems in case of disasters,

- exchange of experience in rehabilitation and reconstruction after disaster.

4. Cooperation in the field of nuclear safety could cover the following topics:

- upgrading the laws and regulations of the former Yugoslav Republic of Macedonia on nuclear safety and strengthening the supervisory authorities and their resources,

- radiation protection, including environmental radiation monitoring,

- radioactive waste management: the former Yugoslav Republic of Macedonia undertakes to provide to the Stabilisation and Association Council information concerning any intention to import or store radioactive waste,

- encouraging the promotion of Agreements between the EU Member States, or Euratom, and the former Yugoslav Republic of Macedonia on early notification of information in cases of nuclear accidents and on nuclear safety issues generally, if appropriate,

- strengthening the supervision and control on the transport of materials sensitive to radioactive pollution.

TITLE IX FINANCIAL COOPERATION

Article 104

In order to achieve the objectives of this Agreement and in accordance with Articles 3, 108 and 109 the former Yugoslav Republic of Macedonia may receive financial assistance from the Community in the forms of grants and loans, including loans from the European Investment Bank.

Article 105

Financial assistance, in the form of grants, shall be covered by the operation measures provided for in the relevant Council Regulation within a multi-annual indicative framework established by the Community following consultations with the former Yugoslav Republic of Macedonia.

The overall objectives of the assistance, in the form of institution-building and investment, shall contribute to the democratic, economic and institutional reforms of the former Yugoslav Republic of Macedonia, in line with the Stabilisation and Association process. Financial assistance may cover all areas of harmonisation of legislation and cooperation policies of this Agreement, including Justice and Home Affairs.

Consideration should be given to the full implementation of the infrastructure projects of common interest identified in the Transport Agreement.

Article 106

At the request of the former Yugoslav Republic of Macedonia and in case of special need, the Community could examine in coordination with international financial institutions, the possibility of granting on an exceptional basis macro-financial assistance subject to certain conditions taking into account the availability of all financial resources.

Article 107

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 and international financial institutions.

To this effect, information on all sources of assistance shall be exchanged regularly between the Parties.

TITLE X INSTITUTIONAL, GENERAL AND FINAL PROVISIONS

Article 108

A Stabilisation and Association Council is hereby established which shall supervise the application and implementation of this Agreement. It shall meet at an appropriate level at regular intervals and when circumstances require. It shall examine any major issues arising within the framework of this Agreement and any other bilateral or international issues of mutual interest.

Article 109

1. The Stabilisation and 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 of the Government of the former Yugoslav Republic of Macedonia, on the other.

2. The Stabilisation and Association Council shall establish its rules of procedure.

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

4. The Stabilisation and Association Council shall be chaired in turn by a representative of the European Community and a representative of the former Yugoslav Republic of Macedonia, in accordance with the provisions to be laid down in its rules of procedure.

5. In matters that concern it, the European Investment Bank shall take part, as an observer, in the work of the Stabilisation and Association Council.

Article 110

The Stabilisation and Association Council shall, for the purpose of attaining the objectives of this Agreement, have the power to take decisions within the scope of the Agreement 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. When deciding on the transition to the second stage, as provided for in Article 5, the Stabilisation and Association Council may also decide on any possible changes to be brought about as regards the content of the provisions governing the second stage.

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

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

The Stabilisation and Association Council may also make appropriate recommendations.

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

Article 111

Each Party may refer to the Stabilisation and Association Council any dispute relating to the application or interpretation of this Agreement. The Stabilisation and Association Council may settle the dispute by means of a binding decision.

Article 112

The Stabilisation and Association Council shall be assisted in the performance of its duties by a Stabilisation and Association Committee, composed of representatives of the Council of the European Union and of representatives of the Commission of the European Communities, on the one hand, and of representatives of the former Yugoslav Republic of Macedonia on the other.

Article 113

The Stabilisation and Association Committee may create subcommittees. The Transport Committee established under the Transport Agreement shall assist the Stabilisation and Association Committee.

Article 114

A Stabilisation and Association Parliamentary Committee is hereby established. It shall be a forum for Members of the former Yugoslav Republic of Macedonian Parliament and the European Parliament to meet and exchange views. It shall meet at intervals that it shall itself determine.

The Stabilisation and Association Parliamentary Committee shall consist of members of the European Parliament, on the one hand, and of Members of the Parliament of the former Yugoslav Republic of Macedonia, on the other.

The Stabilisation and Association Parliamentary Committee shall establish its rules of procedure.

The Stabilisation and Association Parliamentary Committee shall be chaired in turn by the European Parliament and the Parliament of the former Yugoslav Republic of Macedonia, in accordance with the provisions to be laid down in its rules of procedure.

Article 115

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.

Article 116

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, munitions 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.

Article 117

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

- the arrangements applied by the former Yugoslav Republic of Macedonia in respect of the Community shall not give rise to any discrimination between the Member States, their nationals or their companies or firms,

- the arrangements applied by the Community in respect of the former Yugoslav Republic of Macedonia shall not give rise to any discrimination between the nationals of the former Yugoslav Republic of Macedonia or its companies or firms.

2. The provisions of paragraph 1 shall be 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 118

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 Stabilisation and 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 Stabilisation and Association Council and shall be the subject of consultations within the Stabilisation and Association Council if the other Party so requests.

Article 119

The Parties agree to consult promptly through appropriate channels at the request of either Party to discuss any matter concerning the interpretation or implementation of this Agreement and other relevant aspects of the relations between the Parties.

The provisions of this Article shall in no way affect and are without prejudice to Articles 30, 37, 38 and 42.

Article 120

This Agreement shall not, until equivalent rights for individuals and economic operators have been achieved under this Agreement, affect rights ensured to them through existing agreements binding one or more Member States, on the one hand, and the former Yugoslav Republic of Macedonia, on the other.

Article 121

Protocols 1, 2, 3, 4 and 5 and Annexes I to VII shall form an integral part of this Agreement.

Article 122

This Agreement is concluded for an unlimited period.

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

Article 123

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 the former Yugoslav Republic of Macedonia, of the other part.

Article 124

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

Article 125

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

Article 126

This Agreement is drawn up in duplicate each of the official languages of the Parties, each of these texts being equally authentic.

Article 127

The Parties shall approve this Agreement 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.

Upon its entry into force, this Agreement shall replace the Cooperation Agreement between the European Community and the former Yugoslav Republic of Macedonia signed on 29 April 1997 by way of Exchange of Letters.

Article 128

Interim Agreement

In the event that, pending the completion of the procedures necessary for the entry into force of this Agreement, the provisions of certain parts of this Agreement, in particular those relating to the free movement of goods, are put into effect by means of an Interim Agreement between the Community and the former Yugoslav Republic of Macedonia, the Parties agree that, in such circumstances, for the purpose of Title IV, Articles 69, 70 and 71 of this Agreement and Protocol 1 to 5 hereto, the terms "date of entry into force of this Agreement" mean the date of entry into force of the Interim Agreement in relation to obligations contained in these Articles and Protocols.

(1) ex 1902 20 is "stuffed pasta containing more than 20 % by weight of fish, crustaceans, molluscs or other aquatic invertebrates".

INDEX OF ANNEXES

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ANNEX I

Imports into the former Yugoslav Republic of Macedonia of less sensitive industrial goods originating in the Community

(Referred to in Article 18(2))

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ANNEX II

Imports into the former Yugoslav Republic of Macedonia of sensitive industrial goods originating in the Community

(Referred to in Article 18(3))

Customs duties on imports into the former Yugoslav Republic of Macedonia of goods originating in the Community which are listed in this Annex shall be progressively reduced in accordance with the following timetable:

- on 1 January of the third year after the entry into force of the Agreement each duty shall be reduced to 80 % of the basic duty;

- on 1 January of the fifth year after the entry into force of the Agreement each duty shall be reduced to 70 % of the basic duty;

- on 1 January of the sixth year after the entry into force of the Agreement each duty shall be reduced to 60 % of the basic duty;

- on 1 January of the seventh year after the entry into force of the Agreement each duty shall be reduced to 50 % of the basic duty;

- on 1 January of the eighth year after the entry into force of the Agreement each duty shall be reduced to 40 % of the basic duty;

- on 1 January of the ninth year after the entry into force of the Agreement each duty shall be reduced to 20 % of the basic duty;

- on 1 January of the tenth year after the entry into force of the Agreement the remaining duties shall be abolished.

>TABLE>

ANNEX III

EC definition of "baby beef" products

(Referred to in Article 27(2))

Notwithstanding the rules for the interpretation of the Combined Nomenclature, the wording for the description of the products is to be considered as having no more than an indicative value, the preferential scheme being determined, within the context of this Annex, by the coverage of the CN codes. Where ex CN codes are indicated, the preferential scheme is to be determined by application of the CN code and corresponding description taken together.

>TABLE>

ANNEX IV(a)

Imports into the former Yugoslav Republic of Macedonia of agricultural goods originating in the Community (zero-duty tariff)

(Referred to in Article 27(3)(a))

>TABLE>

ANNEX IV(b)

Imports into the former Yugoslav Republic of Macedonia of agricultural goods originating in the Community (zero-duty tariff within tariff quotas)

(Referred to in Article 27(3)(b))

>TABLE>

ANNEX IV(c)

Imports into the former Yugoslav Republic of Macedonia of agricultural goods originating in the Community (concessions within tariff quotas)

(Referred to in Article 27(3)(c))

>TABLE>

ANNEX V(a)

Imports into the Community of fish and fisheries products originating in the former Yugoslav Republic of Macedonia

(Referred to in Article 28(1))

>TABLE>

ANNEX V(b)

Imports into the former Yugoslav Republic of Macedonia of fish and fisheries products originating in the Community

(Referred to in Article 28(2))

>TABLE>

ANNEX VI

Establishment: financial services

(Referred to in Title V, Chapter II Articles 47 and 49)

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 inter mediation, 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 transaction;

3. financial leasing;

4. all payment and money transmission services, including credit charge and debit cards, travellers cheques and bankers draft;

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 above, 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 by financial service providers in competition with public entities or private institutions.

ANNEX VII

Intellectual, industrial and commercial property rights

(Referred to in Article 71)

1. Article 71(3) concerns the following Multilateral Conventions:

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

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

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

The Stabilisation and Association Council may decide that Article 71(3) shall apply to other multilateral conventions.

2. The Parties confirm the importance they attach to the obligations arising from the following multilateral conventions:

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

- Paris Convention for the Protection of Industrial Property (Stockholm Act, 1967 and amended in 1979);

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

- Patent Co-operation Treaty (Washington, 1970, amended in 1979 and modified in 1984);

- Convention for the Protection of Producers of Phonograms against Unauthorised Duplications of their Phonograms (Geneva 1971);

- Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971);

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

3. From entry into force of this Agreement, the former Yugoslav Republic of Macedonia 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.

LIST OF PROTOCOLS

>TABLE>

Protocol 1

on textile and clothing products

Article 1

This Protocol applies to the textile and clothing products (hereinafter "textile products") listed in Section XI (Chapter 50 to 63) of the combined nomenclature of the Community.

Article 2

1. Textile products falling within Section XI (Chapter 50 to 63) of the combined nomenclature and originating in the former Yugoslav Republic of Macedonia as defined in Protocol 4 of this Agreement will enter into the Community free of customs duties on the day of entry into force of this Agreement.

2. The duties applied to direct imports into the former Yugoslav Republic of Macedonia of textile products falling within Section XI (Chapter 50 to 63) of the combined nomenclature and originating in the Community as defined in Protocol 4 of the Agreement, shall be abolished on the date of entry into force of Agreement except for products listed in Annex I to this Protocol for which the rates of duties shall be progressively reduced as provided therein.

3. Subject to this Protocol, the provisions of the Agreement and in particular Articles 19 and 34 of the Agreement shall apply to trade in textile products between the Parties.

Article 3

The double-checking arrangements and other related issues regarding exports of textile products originating in the former Yugoslav Republic of Macedonia to the Community and originating in the Community to the former Yugoslav Republic of Macedonia are stipulated in the Agreement between the European Community and the former Yugoslav Republic of Macedonia on trade in textile products as renewed and applied since 1 January 2000.

Article 4

From the entry into force of this Agreement, no new quantitative restrictions or measures of equivalent effect shall be imposed except as provided for under the above Agreement and its Protocols.

ANNEX I

CUSTOMS DUTIES REFERED TO IN ARTICLE 2(2)

Customs duties on imports into the former Yugoslav Republic of Macedonia of textile products listed in this Annex and originating in the Community shall be progressively reduced in accordance with the following timetable:

- on 1 January of the first year after the entry into force of the Agreement each duty shall be reduced to 70 % of the basic duty;

- on 1 January of the second year after the entry into force of the Agreement each duty shall be reduced to 63 % of the basic duty;

- on 1 January of the third year after the entry into force of the Agreement each duty shall be reduced to 56 % of the basic duty;

- on 1 January of the fourth year after the entry into force of the Agreement each duty shall be reduced to 49 % of the basic duty;

- on 1 January of the fifth year after the entry into force of the Agreement each duty shall be reduced to 42 % of the basic duty;

- on 1 January of the sixth year after the entry into force of the Agreement each duty shall be reduced to 35 % of the basic duty;

- on 1 January of the seventh year after the entry into force of the Agreement each duty shall be reduced to 28 % of the basic duty;

- on 1 January of the eighth year after the entry into force of the Agreement each duty shall be reduced to 21 % of the basic duty;

- on 1 January of the ninth year after the entry into force of the Agreement each duty shall be reduced to 14 % of the basic duty;

- on 1 January of the tenth year after the entry into force of the Agreement the remaining duties shall be abolished.

List of products for which the rates shall be reduced:

500710

500720

500790

510610

510620

510710

510720

510810

510820

510910

510990

511000

511111

511112

511112

511113

511190

511211

511219

511220

511230

511290

511300

520420

520511

520512

520513

520514

520515

520521

520522

520523

520524

520526

520527

520528

520531

520532

520533

520534

520535

520541

520542

520543

520544

520546

520547

520548

520611

520612

520613

520614

520615

520621

520622

520623

520624

520625

520631

520632

520633

520634

520635

520641

520642

520643

520644

520645

520710

520790

520811

520812

520813

520819

520821

520822

520823

520829

520831

520832

520833

520839

520841

520842

520843

520849

520851

520852

520853

520859

520911

520912

520919

520921

520922

520929

520931

520932

520939

520941

520942

520943

520949

520951

520952

520959

521011

521012

521019

521021

521022

521029

521031

521032

521039

521041

521042

521049

521051

521052

521059

521111

521112

521119

521121

521122

521129

521131

521132

521139

521141

521142

521143

521149

521151

521152

521159

521211

521112

521213

521214

521215

521221

521222

521223

521224

521225

530911

530919

530921

530929

531010

531090

531100

540110

540120

540210

540220

540231

540232

540233

540239

540241

540242

540243

540249

540251

540252

540259

540261

540262

540269

540310

540320

540333

540339

540341

540342

540349

540490

540500

540610

540620

540710

540720

540730

540741

540742

540743

540744

540751

540752

540753

540754

540761

540769

540771

540772

540773

540774

540781

540782

540783

540791

540792

540793

540794

540810

540821

540822

540823

540824

540831

540832

540833

540834

550110

550120

550130

550190

550310

550320

550330

550340

550390

550510

550520

550610

550620

550630

550690

550810

550820

550911

550912

550921

550922

550931

550932

550941

550942

550951

550952

550953

550959

550961

550962

550969

550991

550992

550999

551011

551012

551020

551030

551090

551110

551120

551130

551211

551219

551221

551229

551297

551299

551311

551312

551313

551319

551321

551322

551323

551329

551331

551332

551333

551339

551341

551342

551343

551349

551411

551412

551413

551419

551421

551422

551423

551429

551431

551432

551433

551439

551441

551442

551443

551449

551511

551512

551513

551519

551521

551522

551529

551591

551592

551599

551611

551612

551613

551614

551621

551622

551623

551624

551631

551632

551633

551634

551641

551642

551643

551644

551691

551692

551693

551694

560110

560121

560122

560129

560130

560210

560221

560229

560290

560311

560312

560313

560314

560391

560392

560393

560394

560600

560919

560890

560900

570110

570190

570210

570220

570231

570232

570239

570241

570242

570249

570251

570252

570259

570291

570292

570299

570310

570320

570330

570390

570410

570490

570500

580110

580121

580122

580123

580124

580125

580126

580131

580132

580133

580134

580135

580136

580190

580211

580219

580220

580230

580310

580390

580410

580421

580429

580430

580500

580610

580620

580631

580632

580639

580640

580710

580790

580810

580890

580900

581010

581091

581092

581099

581100

590110

590190

590210

590220

590290

590410

590491

590492

590500

590610

590691

590699

590700

590800

591000

600110

600121

600122

600129

600191

600192

600199

600210

600220

600230

600241

600242

600243

600249

600291

600292

600293

600299

610110

610120

610130

610190

610210

610220

610230

610290

610311

610312

610319

610321

610322

610323

610329

610331

610332

610333

610339

610341

610342

610343

610349

610411

610412

610413

610419

610421

610422

610423

610429

610431

610432

610433

610439

610441

610442

610443

610444

610449

610451

610452

610453

610459

610461

610462

610463

610469

610510

610520

610590

610610

610620

610690

610711

610712

610719

610721

610722

610729

610791

610792

610799

610811

610819

610821

610822

610829

610831

610832

610839

610891

610892

610899

610910

610990

611010

611020

611030

611090

611110

611120

611130

611190

611211

611212

611219

611220

611231

611239

611241

611249

611300

611410

611420

611430

611490

611511

611512

611519

611520

611591

611591

611592

611593

611599

611610

611691

611692

611693

611699

611710

611720

611780

611790

620111

620112

620113

620119

620191

620192

620193

620199

620211

620212

620213

620219

620291

620292

620293

620299

620311

620312

620319

620321

620322

620323

620329

620331

620332

620333

620339

620341

620342

620343

620349

620411

620412

620413

620419

620421

620422

620423

620429

620431

620432

620433

620439

620441

620442

620443

620444

620449

620451

620452

620453

620459

620461

620462

620463

620469

620510

620520

620530

620590

620610

620620

620630

620640

620690

620711

620719

620721

620722

620729

620791

620792

620799

620811

620819

620821

620822

620829

620891

620892

620899

620910

620920

620930

620990

621010

621020

621030

621040

621050

621111

621112

621120

621131

621132

621133

621139

621141

621142

621143

621149

621210

621220

621230

621290

621310

621320

621390

621410

621420

621430

621440

621490

621510

621520

621590

621600

621710

621790

630110

630120

630130

630140

630190

630210

630221

630222

630229

630231

630232

630239

630240

630251

630252

630253

630259

630260

630291

630292

630293

630299

630311

630312

630319

630391

630392

630399

630411

630419

630491

630492

630493

630499

630510

630520

630532

630533

630539

630590

630611

630612

630619

630621

630622

630629

630631

630639

630641

630649

630691

630699

630710

630720

630790

630800

Protocol 2

on steel products

Article 1

This Protocol shall apply to the products listed in Chapters 72 of the Common Customs Tariff. It shall also apply to other finished steel products that may originate in future in the former Yugoslav Republic of Macedonia under the above chapter.

Article 2

Customs duties on imports applicable in the Community on steel products originating in the former Yugoslav Republic of Macedonia shall be abolished on the date of the entry into force of the Agreement.

Article 3

Customs duties applicable in the former Yugoslav Republic of Macedonia on imports of steel products originating in the Community shall be progressively abolished in accordance with the following timetable:

1. each duty shall be reduced to 80 % of the basic duty at the beginning of the first year after the entry into force of the Agreement;

2. further reductions to 60 %, 40 %, 20 % and 0 % of the basic duty shall be made at the beginning of the second, third, fourth and fifth year respectively after the entry into force of the Agreement.

Article 4

1. Quantitative restrictions on imports into the Community of steel products originating in the former Yugoslav Republic of Macedonia as well as measures having equivalent effect shall be abolished on the date of entry into force of the Agreement.

2. Quantitative restrictions on imports into the former Yugoslav Republic of Macedonia of steel products originating in the Community, as well as measures having equivalent effect, shall be abolished on the date of entry into force of the Agreement.

Article 5

1. In view of the disciplines stipulated by Article 69 of this Agreement, the Parties recognise the need and urgency that each Party addresses promptly any structural weaknesses of its steel sector to ensure the global competitiveness of its industry. The former Yugoslav Republic of Macedonia shall therefore establish within two years the necessary restructuring and conversion programme for its steel industry to achieve viability of this sector under normal market conditions. Upon request, the Community shall provide former Yugoslav Republic of Macedonia with the appropriate technical advice to achieve this objective.

2. Further to the disciplines stipulated by Article 69 of this Agreement, any practices contrary to that Article shall be assessed on the basis of specific criteria arising from the application of the State aid disciplines of the Community, including its secondary legislation, and including any specific rules on State aid control applicable to the steel sector after the expiry of the ECSC Treaty.

3. For the purposes of applying the provisions of paragraph 1(iii) of Article 69 of this Agreement with regard to steel products, the Community recognises that during five years after the entry into force of this Agreement, the former Yugoslav Republic of Macedonia may exceptionally grant State aid for restructuring purposes provided that:

- it leads to the viability of the benefiting firms under normal market conditions at the end of the restructuring period, and

- the amount and intensity of such aid are strictly limited to what is absolutely necessary in order to restore such viability and are progressively reduced, and

- the restructuring programme is linked to a global rationalisation and reduction of capacity in the former Yugoslav Republic of Macedonia.

4. Each Party shall ensure full transparency with respect to the implementation of the necessary restructuring and conversion programme by a full and continuous exchange of information to the other Party, including details on the restructuring plan as well as amount, intensity and purpose for any State aid granted on the basis of paragraph 2 and 3 of this Article.

5. The Stabilisation and Association Council shall monitor the implementation of the requirements set out at paragraphs (1) to (4) above.

6. If one of the Parties considers that a particular practice of the other Party is incompatible with the terms of this Article, and if that practice causes or threatens to cause prejudice to the interests of the first Party or material injury to its domestic industry, this Party may take appropriate measures after consultation within the Contact Group referred to in Article 8, or after thirty working days following referral for such consultation.

Article 6

The provisions of Articles 19, 20 and 34 of the Agreement shall apply to trade between the Parties in steel products.

Article 7

1. The Contracting Parties recognise the need for an administrative procedure having as its purpose the rapid provision of information on the trend in trade flows in respect of the trade in steel products originating in the former Yugoslav Republic of Macedonia in order to increase transparency and to avoid possible diversions of trade.

2. The Contracting Parties therefore agree to establish a double-checking system, without quantitative limits, for the import into the Community of steel products originating in the former Yugoslav Republic of Macedonia; to exchange statistical information on export and surveillance documents and to hold consultations promptly on any problems arising from the operation of such a system.

3. The details of the double-checking system are contained in Annex I to this Protocol. The continuing need for this system shall be regularly reviewed. The Annex may subsequently be amended or the double-checking system abolished by means of a Decision of the Stabilisation and Association Council.

Article 8

The Parties agree that one of the special bodies established by the Stabilisation and Association Council shall be a contact group, which will discuss the implementation of this Protocol.

ANNEX I

concerning the introduction of a double-checking system for the export of certain steel products from the former Yugoslav Republic of Macedonia to the European Communities

Article 1

1. From the date of entry into force of the Stabilisation and Association Agreement between the European Community and the former Yugoslav Republic of Macedonia (hereinafter referred to as respectively "the Agreement" and "the Community"), imports into the Community of the products listed in Appendix I originating in the former Yugoslav Republic of Macedonia shall be subject to the presentation of a surveillance document conforming to the model shown in Appendix II issued by the authorities in the Community.

2. The classification of the products covered by this Protocol is based on the tariff and statistical nomenclature of the Community (hereinafter called the "Combined nomenclature", or in abbreviated form "CN"). The origin of the products covered by this Protocol shall be determined in accordance with the rules in force in the Community.

3. The competent authorities of the Community undertake to inform the former Yugoslav Republic of Macedonia of any changes in the combined nomenclature (CN) in respect of products covered by the double-checking system before the date of their entry into force in the Community.

4. Imports into the Community of the iron and steel products listed in Appendix I and which originate in the former Yugoslav Republic of Macedonia shall, in addition, be subject to the issue of an export document by the competent authorities of the former Yugoslav Republic of Macedonia. In order to avoid problems at the end of a year, presentation by the importer of the original of the export document must be effected not later than 31 March of the year following that in which in the goods covered by the document were shipped.

5. An export document will not be required for goods already shipped before the date of entry into force of the Agreement, provided that the destination of such products is not changed from a non-Community destination and that those products which, under the prior surveillance regime applicable in 1996, could be imported only on presentation of a surveillance document are in fact accompanied by such a document.

6. Shipment is considered to have taken place on the date of loading onto the exporting means of transport.

7. The export document shall conform to the model shown at Appendix III. It shall be valid for exports throughout the customs territory of the Community.

8. The former Yugoslav Republic of Macedonia shall notify the Commission of the European Communities of the names and addresses of the appropriate governmental authorities of the former Yugoslav Republic of Macedonia which are authorised to issue and to verify export documents together with specimens of the stamps and signatures they use. The former Yugoslav Republic of Macedonia shall also notify the Commission of any change in these particulars.

9. Certain technical provisions on the implementation of the double-checking system are set out in Appendix IV.

Article 2

1. The former Yugoslav Republic of Macedonia undertakes to supply the Community with precise statistical information on the export documents issued by the authorities of the former Yugoslav Republic of Macedonia pursuant to Article 1.

Such information shall be transmitted to the Community by the end of the month following the month to which the statistics relate.

2. The Community undertakes to supply the authorities of the former Yugoslav Republic of Macedonia with precise statistical information on surveillance documents issued by Member States in respect of the products listed in Appendix I. Such information shall be transmitted to the authorities of the former Yugoslav Republic of Macedonia by the end of the month following the month to which the statistics relate.

Article 3

If necessary, at the request of either of the Parties, consultations shall be held on any problems arising from the operation of the double-checking system. Such consultations shall be held promptly. Any consultations held under this Article shall be approached by both Parties in a spirit of co-operation and with a desire to reconcile the difference between them.

Article 4

Any notices to be given hereunder shall be given:

- in respect of the Community, to the Commission of the European Communities (DG Trade E/2 and DG Enterprise C/2),

- in respect of the former Yugoslav Republic of Macedonia, to its Mission to the European Communities, the Ministry of Foreign Affairs and the Ministry of Economy.

APPENDIX I TO ANNEX I

LIST OF PRODUCTS SUBJECT TO DOUBLE-CHECKING

Complete CN heading 7208

Complete CN heading 7209

Complete CN heading 7210

Complete CN heading 7211

Complete CN heading 7212

The remaining technical annexes will be added at a later stage and will reflect the technical annexes currently in force.

Protocol 3

on trade between the former Yugoslav Republic of Macedonia and the Community in processed agricultural products

Article 1

1. The Community and the former Yugoslav Republic of Macedonia apply to processed agricultural products the duties, listed in Annex I and Annex II respectively in accordance with the conditions mentioned therein, whether limited by quota or not.

2. The Stabilisation and Association Council shall decide on:

- extensions of the list of processed agricultural products under this Protocol,

- amendments to the duties referred to in Annexes I and II,

- increases in or the abolition of tariff quotas.

3. The Stabilisation and Association Council may replace the duties established by this Protocol by a regime established on the basis of the respective market prices of the Community and the former Yugoslav Republic of Macedonia of agricultural products actually used in the manufacture of processed agricultural products subject to this Protocol. It will establish the list of goods subject to these amounts and as a consequence, the list of basic products; to this end, it will decide the general rules of application.

Article 2

The duties applied pursuant to Article 1 may be reduced by decision of the Stabilisation and Association Council:

- when in trade between the Community and the former Yugoslav Republic of Macedonia the duties applied to the basic products are reduced, or

- in response to reductions resulting from mutual concessions relating to processed agricultural products.

The reductions provided for under the first indent shall be calculated on the part of the duty designated as the agricultural component which shall correspond to the agricultural products actually used in the manufacture of the processed agricultural products in question and deducted from the duties applied to these basic agricultural products.

Article 3

The Community and the former Yugoslav Republic of Macedonia shall inform each other of the administrative arrangements adopted for the products covered by this Protocol. These arrangements should ensure equal treatment for all interested parties and should be as simple and flexible as possible.

ANNEX I

DUTIES APPLICABLE UPON IMPORTS INTO THE COMMUNITY OF GOODS ORIGINATING IN THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA

Duties are set to zero for imports into the Community of processed agricultural products originating in the former Yugoslav Republic of Macedonia as listed hereafter

>TABLE>

ANNEX II

DUTIES APPLICABLE TO GOODS ORIGINATING IN THE COMMUNITY ON IMPORT INTO THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA

>TABLE>

Protocol 4

concerning the definition of the concept of "originating products" and methods of administrative cooperation

TABLE OF CONTENTS

>TABLE>

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 1994 Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (WTO Agreement on customs valuation);

(f) "ex-works price" means the price paid for the product ex works to the manufacturer in the Community or the former Yugoslav Republic of Macedonia in whose undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any 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 Community or the former Yugoslav Republic of Macedonia;

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

(i) "chapters" and "headings" mean 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;

(m) "territories" includes territorial waters.

TITLE II DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS"

Article 2

General requirements

1. For the purpose of implementing this Agreement, the following products shall be considered as 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 incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in the Community within the meaning of Article 6 of this Protocol;

2. For the purpose of implementing this Agreement, the following products shall be considered as originating in the former Yugoslav Republic of Macedonia:

(a) products wholly obtained in the former Yugoslav Republic of Macedonia within the meaning of Article 5 of this Protocol;

(b) products obtained in the former Yugoslav Republic of Macedonia incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in the former Yugoslav Republic of Macedonia within the meaning of Article 6 of this Protocol.

Article 3

Bilateral cumulation in the European Community

Materials originating in the former Yugoslav Republic of Macedonia shall be considered as materials originating in the Community when incorporated into a product obtained there. It shall not be necessary that such materials have undergone sufficient working or processing, provided they have undergone working or processing going beyond that referred to in Article 6(1).

Article 4

Bilateral cumulation in the former Yugoslav Republic of Macedonia

Materials originating in the Community shall be considered as materials originating in the former Yugoslav Republic of Macedonia when incorporated into a product obtained there. It shall not be necessary that such materials have undergone sufficient working or processing, provided they have undergone working or processing going beyond that referred to in Article 6(1).

Article 5

Wholly obtained products

1. The following shall be considered as wholly obtained in the Community or the former Yugoslav Republic of Macedonia:

(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 conducted there;

(f) products of sea fishing and other products taken from the sea outside the territorial waters of the Community or the former Yugoslav Republic of Macedonia 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 for 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 there exclusively from the products specified in subparagraphs (a) to (j).

2. The terms "their vessels" and "their factory ships" in paragraph 1(f) and (g) shall apply only to vessels and factory ships:

(a) which are registered or recorded in an EC Member State or in of the former Yugoslav Republic of Macedonia;

(b) which sail under the flag of an EC Member State or of the former Yugoslav Republic of Macedonia;

(c) which are owned to an extent of at least 50 per cent by nationals of EC Member States or of the former Yugoslav Republic of Macedonia, or by a company with its head office in one of these States, 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 EC Member States or of the former Yugoslav Republic of Macedonia and of which, in addition, in the case of partnerships or limited companies, at least half the capital belongs to those States or to public bodies or nationals of the said States;

(d) of which the master and officers are nationals of EC Member States or of the former Yugoslav Republic of Macedonia; and

(e) of which at least 75 per cent of the crew are nationals of EC Member States or of the former Yugoslav Republic of Macedonia.

Article 6

Sufficiently worked or processed products

1. For the purposes of Article 2, products which are not wholly obtained are considered to be sufficiently worked or processed when the conditions set out in the list in Annex II are fulfilled.

The conditions referred to above indicate, for all products covered by this Agreement, the working or processing which must be carried out on non-originating materials used in manufacturing 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 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.

2. Notwithstanding paragraph 1, non-originating materials which, according to the conditions set out in the list, should not be used in the manufacture of a product may nevertheless be used, provided that:

(a) their total value does not exceed 10 per cent of the ex-works price of the product;

(b) any of the percentages given in the list for the maximum value of non-originating materials are not exceeded through the application of this paragraph.

This paragraph shall not apply to products falling within Chapters 50 to 63 of the Harmonised System.

3. Paragraphs 1 and 2 shall apply except as provided in Article 7.

Article 7

Insufficient working or processing operations

1. Without prejudice to paragraph 2, the following operations shall be considered as insufficient working or processing to confer the status of originating products, whether or not the requirements of Article 6 are satisfied:

(a) preserving operations to ensure that the products remain in good condition during transport and storage;

(b) breaking-up and assembly of packages;

(c) washing, cleaning; removal of dust, oxide, oil, paint or other coverings;

(d) ironing or pressing of textiles;

(e) simple painting and polishing operations;

(f) husking, partial or total bleaching, polishing, and glazing of cereals and rice;

(g) operations to colour sugar or form sugar lumps;

(h) peeling, stoning and shelling of fruits, nuts and vegetables;

(i) sharpening, simple grinding or simple cutting;

(j) sifting, screening, sorting, classifying, grading, matching; (including the making-up of sets of articles);

(k) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;

(l) affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;

(m) simple mixing of products, whether or not of different kinds,

(n) simple assembly of parts of articles to constitute a complete article or disassembly of products into parts;

(o) a combination of two or more operations specified in subparagraphs (a) to (n);

(p) slaughter of animals.

2. All operations carried out either in the Community or in the former Yugoslav Republic of Macedonia on a given product shall be considered together when determining whether the working or processing undergone by that product is to be regarded as insufficient within the meaning of paragraph 1.

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 per cent of the ex-works price of the set.

Article 11

Neutral elements

In order to determine whether a product originates, it shall not be necessary to determine the origin of the following which might be used in its manufacture:

(a) energy and fuel;

(b) plant and equipment;

(c) machines and tools;

(d) goods which do not enter and which are not intended to enter into the final composition of the product.

TITLE III TERRITORIAL REQUIREMENTS

Article 12

Principle of territoriality

1. The conditions for acquiring originating status set out in Title II must continue to be fulfilled at all times in the Community or the former Yugoslav Republic of Macedonia.

2. If originating goods exported from the Community or the former Yugoslav Republic of Macedonia to another country are returned, they must be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that:

(a) the returning goods are the same as those that were 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 13

Direct transport

1. The preferential treatment provided for under the Agreement applies only to products, satisfying the requirements of this Protocol, which are transported directly between the Community and the former Yugoslav Republic of Macedonia. However, products constituting one single consignment may be transported through other territories with, should the occasion arise, trans-shipment or temporary warehousing in such territories, provided that they remain under the surveillance of the customs authorities in the country of transit or warehousing and do not undergo operations other than unloading, reloading or any operation designed to preserve them in good condition.

Originating products may be transported by pipeline across territory other than that of the Community or the former Yugoslav Republic of Macedonia.

2. Evidence that the conditions set out in paragraph 1 have been fulfilled shall be supplied to the customs authorities of the importing country by the production of:

(a) a single transport document covering the passage from the exporting country 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, or the other means of transport used; and

(iii) certifying the conditions under which the products remained in the transit country; or

(c) failing these, any substantiating documents.

Article 14

Exhibitions

1. Originating products, sent for exhibition in a country other than the Community or the former Yugoslav Republic of Macedonia shall benefit on importation from the provisions of the Agreement provided it is shown to the satisfaction of the customs authorities that:

(a) an exporter has consigned these products from the Community or the former Yugoslav Republic of Macedonia 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 the Community or the former Yugoslav Republic of Macedonia;

(c) the products have been consigned during the exhibition or immediately thereafter 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 V and submitted to the customs authorities of the importing country in the normal manner. The name and address of the exhibition must be indicated thereon. Where necessary, additional documentary evidence of 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 DRAWBACK OR EXEMPTION

Article 15

Prohibition of drawback of, or exemption from, customs duties

1. Non-originating materials used in the manufacture of products originating in the Community, in the former Yugoslav Republic of Macedonia, for which a proof of origin is issued or made out in accordance with the provisions of Title V shall not be subject in the Community or the former Yugoslav Republic of Macedonia to drawback of, or exemption from, customs duties of whatever kind.

2. The prohibition in paragraph 1 shall apply to any arrangement for refund, remission or non-payment, partial or complete, of customs duties or charges having an equivalent effect, applicable in the Community or the former Yugoslav Republic of Macedonia to materials used in the manufacture and to products covered by paragraph 1(b) above, where such refund, remission or non-payment applies, expressly or in effect, when products obtained from the said materials are exported and not when they are retained for home use there.

3. The exporter of products covered by a proof of origin shall be prepared to submit at any time, upon request from the customs authorities, all appropriate documents proving that no drawback has been obtained in respect of the non-originating materials used in the manufacture of the products concerned and that all customs duties or charges having equivalent effect applicable to such materials have actually been paid.

4. The provisions of paragraphs 1 to 3 shall also apply in respect of packaging within the meaning of Article 8(2), accessories, spare parts and tools within the meaning of Article 9 and products in a set within the meaning of Article 10 when such items are non-originating.

5. The provisions of paragraphs 1 to 4 shall apply only in respect of materials which are of the kind to which the Agreement applies. Furthermore, they shall not preclude the application of an export refund system for agricultural products, applicable upon export in accordance with the provisions of the Agreement.

6. Notwithstanding paragraph 1, the former Yugoslav Republic of Macedonia may apply arrangements for drawback of, or exemption from, customs duties or charges having an equivalent effect, applicable to materials used in the manufacture of originating products, subject to the following provisions:

(a) a 5 per cent rate of customs charge shall be retained in respect of products falling within Chapters 25 to 49 and 64 to 97 of the Harmonised System, or such lower rate as is in force in the former Yugoslav Republic of Macedonia;

(b) a 10 per cent rate of customs charge shall be retained in respect of products falling within Chapters 50 to 63 of the Harmonised System, or such lower rate as is in force in the former Yugoslav Republic of Macedonia.

The provisions of this Article shall apply from 1 January 2003 and may be reviewed by common accord.

TITLE V PROOF OF ORIGIN

Article 16

General requirements

1. Products originating in the Community shall, on importation into the former Yugoslav Republic of Macedonia and products originating in the former Yugoslav Republic of Macedonia shall, on importation into the Community benefit from this Agreement upon submission of either:

(a) a movement certificate EUR.1, a specimen of which appears in Annex III; or

(b) in the cases specified in Article 21(1), a declaration, the text of which appears in Annex IV, given by the exporter on an invoice, a delivery note or any other commercial document which describes the products concerned in sufficient detail to enable them to be identified (hereinafter referred to as the "invoice declaration").

2. Notwithstanding paragraph 1, originating products within the meaning of this Protocol shall, in the cases specified in Article 26, benefit from this Agreement without it being necessary to submit any of the documents referred to above.

Article 17

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 country 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 and in accordance with the provisions of the domestic law of the exporting country. If they are hand-written, they shall be completed in ink in printed characters. 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 country 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.

4. A movement certificate EUR.1 shall be issued by the customs authorities of an EC Member State or the former Yugoslav Republic of Macedonia if the products concerned can be considered as products originating in the Community or in the former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol.

5. 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 considered 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.

6. The date of issue of the movement certificate EUR.1 shall be indicated in Box 11 of the certificate.

7. A movement certificate EUR.1 shall be issued by the customs authorities and 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(7), 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 his 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", "ΕΚΔΟΘΕΝ ΕΚ ΤΩΝ ΥΣΤΕΡΩΝ", "EXPEDIDO A POSTERIORI", "EMITIDO A POSTERIORI", "ANNETTU JÄLKIKÄTEEN", "UTFÄRDAT I EFTERHAND", "DOPOLNITELNO IZDADENO"

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", "ΑΝΤΙΓΡΑΦΟ", "DUPLICADO", "SEGUNDA VIA", "KAKSOISKAPPALE", "DUPLIKAT"

3. The endorsement referred to in paragraph 2 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

Issue of movement certificates EUR.1 on the basis of a proof of origin issued or made out previously

When originating products are placed under the control of a customs office in the Community or the former Yugoslav Republic of Macedonia, it shall be possible to replace the original proof of origin by one or more movement certificates EUR.1 for the purpose of sending all or some of these products elsewhere within the Community or the former Yugoslav Republic of Macedonia. The replacement movement certificate(s) EUR.1 shall be issued by the customs office under whose control the products are placed.

Article 21

Conditions for making out an invoice declaration

1. An invoice declaration as referred to in Article 16(1)(b) may be made out:

(a) by an approved exporter within the meaning of Article 22, or

(b) by any exporter for any consignment consisting of one or more packages containing originating products whose total value does not exceed EUR 6000.

2. An invoice declaration may be made out if the products concerned can be considered as products originating in the Community or in the former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol.

3. The exporter making out an invoice declaration shall be prepared to submit at any time, at the request of the customs authorities of the exporting country, all appropriate documents proving the originating status of the products concerned as well as the fulfilment of the other requirements of this Protocol.

4. An invoice declaration shall be made out by the exporter by typing, stamping or printing on the invoice, the delivery note or another commercial document, the declaration, the text of which appears in Annex IV, using one of the linguistic versions set out in that Annex and in accordance with the provisions of the domestic law of the exporting country. If the declaration is hand-written, it shall be written in ink in printed characters.

5. Invoice declarations shall bear the original signature of the exporter in manuscript. However, an approved exporter within the meaning of Article 22 shall not be required to sign such declarations provided that he gives the customs authorities of the exporting country a written undertaking that he accepts full responsibility for any invoice declaration which identifies him as if it had been signed in manuscript by him.

6. An invoice declaration may be made out by the exporter when the products to which it relates are exported, or after exportation on condition that it is presented in the importing country no longer than two years after the importation of the products to which it relates.

Article 22

Approved exporter

1. The customs authorities of the exporting country may authorise any exporter who makes frequent shipments of products under this Agreement to make out invoice declarations irrespective of the value of the products concerned. An exporter seeking such authorisation must offer to the satisfaction of the customs authorities all guarantees necessary to verify the originating status of the products as well as the fulfilment of the other requirements of this Protocol.

2. The customs authorities may grant the status of approved exporter subject to any conditions which they consider appropriate.

3. The customs authorities shall grant to the approved exporter a customs authorisation number which shall appear on the invoice declaration.

4. The customs authorities shall monitor the use of the authorisation by the approved exporter.

5. The customs authorities may withdraw the authorisation at any time. They shall do so where the approved exporter no longer offers the guarantees referred to in paragraph 1, does not fulfil the conditions referred to in paragraph 2 or otherwise makes an incorrect use of the authorisation.

Article 23

Validity of proof of origin

1. A proof of origin shall be valid for four months from the date of issue in the exporting country, and must be submitted within the said period to the customs authorities of the importing country.

2. Proofs of origin which are submitted to the customs authorities of the importing country 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 exceptional circumstances.

3. In other cases of belated presentation, the customs authorities of the importing country may accept the proofs of origin where the products have been submitted before the said final date.

Article 24

Submission of proof of origin

Proofs of origin shall be submitted to the customs authorities of the importing country in accordance with the procedures applicable in that country. The said authorities may require a translation of a proof of origin and 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 25

Importation by instalments

Where, at the request of the importer and on the conditions laid down by the customs authorities of the importing country, dismantled or non-assembled products within the meaning of General Rule 2(a) of the Harmonised System falling within Sections XVI and XVII or heading Nos 7308 and 9406 of the Harmonised System are imported by instalments, a single proof of origin for such products shall be submitted to the customs authorities upon importation of the first instalment.

Article 26

Exemptions from 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 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 CN22/CN23 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 shall not exceed EUR 500 in the case of small packages or EUR 1200 in the case of products forming part of travellers' personal luggage.

Article 27

Supporting documents

The documents referred to in Articles 17(3) and 21(3) used for the purpose of proving that products covered by a movement certificate EUR.1 or an invoice declaration can be considered as products originating in the Community or in the former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol may consist inter alia of the following:

(a) direct evidence of the processes carried out by the exporter or supplier to obtain the goods concerned, contained for example in his accounts or internal bookkeeping;

(b) documents proving the originating status of materials used, issued or made out in the Community or the former Yugoslav Republic of Macedonia where these documents are used in accordance with domestic law;

(c) documents proving the working or processing of materials in the Community or the former Yugoslav Republic of Macedonia, issued or made out in the Community or the former Yugoslav Republic of Macedonia, where these documents are used in accordance with domestic law;

(d) movement certificates EUR.1 or invoice declarations proving the originating status of materials used, issued or made out in the Community or the former Yugoslav Republic of Macedonia in accordance with this Protocol.

Article 28

Preservation of proof of origin and supporting documents

1. The exporter applying for the issue of a movement certificate EUR.1 shall keep for at least three years the documents referred to in Article 17(3).

2. The exporter making out an invoice declaration shall keep for at least three years a copy of this invoice declaration as well as the documents referred to in Article 21(3).

3. The customs authorities of the exporting country issuing a movement certificate EUR.1 shall keep for at least three years the application form referred to in Article 17(2).

4. The customs authorities of the importing country shall keep for at least three years the movement certificates EUR.1 and the invoice declarations submitted to them.

Article 29

Discrepancies and formal errors

1. The discovery of slight discrepancies between the statements made in the proof of origin 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 proof of origin 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 proof of origin 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 30

Amounts expressed in euro

1. For the application of the provisions of Article 21(1)(b) and Article 26(3) in cases where products are invoiced in a currency other than euro, amounts in the national currency of the former Yugoslav Republic of Macedonia equivalent to the amounts expressed in euro shall be fixed annually.

2. A consignment shall benefit from the provisions of Article 21(1)(b) or Article 26(3) by reference to the currency in which the invoice is drawn up, according to the amount fixed by the Community or the former Yugoslav Republic of Macedonia.

3. The amounts to be used in any given national currency shall be the equivalent in that currency of the amounts expressed in euro as at the first working day of October. The amounts shall be communicated to the European Commission by 15 October and shall apply from 1 January the following year. The European Commission shall notify the former Yugoslav Republic of Macedonia of the relevant amount.

4. The Community or the former Yugoslav Republic of Macedonia may round up or down the amount resulting from the conversion into its national currency of an amount expressed in euro. The rounded-off amount may not differ from the amount resulting from the conversion by more than 5 per cent. The former Yugoslav Republic of Macedonia may retain unchanged its national currency equivalent to an amount expressed in euro if, at the time of the annual adjustment provided for in paragraph 3, the conversion of that amount, prior to any rounding-off, results in an increase of less that 15 per cent in the national currency equivalent. The national currency equivalent may be retained unchanged if the conversion would result in a decrease in that equivalent value.

5. The amounts expressed in euro shall be reviewed by the Stabilisation and Association Committee at the request of the Community or the former Yugoslav Republic of Macedonia. When carrying out this review, the Stabilisation and Association Committee shall 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 euro.

TITLE VI ARRANGEMENTS FOR ADMINISTRATIVE COOPERATION

Article 31

Mutual assistance

1. The customs authorities of the EC Member States and of the former Yugoslav Republic of Macedonia shall provide each other, through the European Commission, with specimen impressions of stamps used in their customs offices for the issue of movement certificates EUR.1 and with the addresses of the customs authorities responsible for verifying those certificates and invoice declarations.

2. In order to ensure the proper application of this Protocol, the Community and the former Yugoslav Republic of Macedonia shall assist each other, through the competent customs administrations, in checking the authenticity of the movement certificates EUR.1 or the invoice declarations and the correctness of the information given in these documents.

Article 32

Verification of proofs of origin

1. Subsequent verifications of proofs of origin shall be carried out at random or whenever the customs authorities of the importing country have reasonable doubts as to 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 country shall return the movement certificate EUR.1 and the invoice, if it has been submitted, the invoice declaration, or a copy of these documents, to the customs authorities of the exporting country giving, where appropriate, the reasons for the enquiry. Any documents and information obtained suggesting that the information given on the proof or origin is incorrect shall be forwarded in support of the request for verification.

3. The verification shall be carried out by the customs authorities of the exporting country. 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 considered appropriate.

4. If the customs authorities of the importing country decide to suspend the granting of preferential treatment to the products concerned while awaiting the results of the verification, release of the products shall be offered 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 as soon as possible. These results must indicate clearly whether the documents are authentic and whether the products concerned can be considered as products originating in the Community or the former Yugoslav Republic of Macedonia and fulfil the other requirements of this Protocol.

6. If in cases of reasonable doubt there is no reply within ten months of the date of the verification request 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 exceptional circumstances, refuse entitlement to the preferences.

Article 33

Dispute settlement

Where disputes arise in relation to the verification procedures of Article 32 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 Stabilisation and Association Committee.

In all cases the settlement of disputes between the importer and the customs authorities of the importing country shall be under the legislation of the said country.

Article 34

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 35

Free zones

1. The Community and the former Yugoslav Republic of Macedonia shall take all necessary steps to ensure that products traded under cover of a proof of origin which in the course of transport use a free zone situated in their territory, are not substituted by other goods and 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 the former Yugoslav Republic of Macedonia are imported into a free zone under cover of a proof of origin and undergo treatment or processing, the authorities concerned shall 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 VII CEUTA AND MELILLA

Article 36

Application of the Protocol

1. The term "Community" used in Article 2 does not cover Ceuta and Melilla.

2. Products originating in the former Yugoslav Republic of Macedonia, when imported into Ceuta or Melilla, shall enjoy in all respects the same customs regime as that which is applied to products originating in the customs territory of the Community under Protocol 2 of the Act of Accession of the Kingdom of Spain and the Portuguese Republic to the European Communities. The former Yugoslav Republic of Macedonia shall grant to imports of products covered by the Agreement and originating in Ceuta and Melilla the same customs regime as that which is granted to products imported from and originating in the Community.

3. For the purpose of the application of paragraph 2 concerning products originating in Ceuta and Melilla, this Protocol shall apply mutatis mutandis subject to the special conditions set out in Article 37.

Article 37

Special conditions

1. Providing they have been transported directly in accordance with the provisions of Article 13, 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 the former Yugoslav Republic of Macedonia 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(1).

(2) products originating in the former Yugoslav Republic of Macedonia:

(a) products wholly obtained in the former Yugoslav Republic of Macedonia;

(b) products obtained in the former Yugoslav Republic of Macedonia, 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(1).

2. Ceuta and Melilla shall be considered as a single territory.

3. The exporter or his authorised representative shall enter "the former Yugoslav Republic of Macedonia" and "Ceuta and Melilla" in Box 2 of movement certificates EUR.1 or on invoice declarations. In addition, in the case of products originating in Ceuta and Melilla, this shall be indicated in Box 4 of movement certificates EUR.1 or on invoice declarations.

4. The Spanish customs authorities shall be responsible for the application of this Protocol in Ceuta and Melilla.

TITLE VIII FINAL PROVISIONS

Article 38

Amendments to the Protocol

The Stabilisation and Association Council may decide to amend the provisions of this Protocol.

ANNEX I

INTRODUCTORY NOTES TO THE LIST IN ANNEX II

Note 1:

The list sets out the conditions required for all products to be considered as sufficiently worked or processed within the meaning of Article 6.

Note 2:

2.1. The first two columns in the list describe the product obtained. The first column gives the heading number or 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 or 4. Where, in some cases, the entry in the first column is preceded by an "ex", this signifies that the rules in column 3 or 4 apply only to the part of that heading as described in column 2.

2.2. Where several heading numbers are grouped together in column 1 or a Chapter number is given and the description of products in column 2 is therefore given in general terms, the adjacent rules in column 3 or 4 apply to all products which, under the Harmonised System, are classified in headings of the Chapter or in any of the headings grouped together in column 1.

2.3. 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 rules in column 3 or 4.

2.4. Where, for an entry in the first two columns, a rule is specified in both columns 3 and 4, the exporter may opt, as an alternative, to apply either the rule set out in column 3 or that set out in column 4. If no origin rule is given in column 4, the rule set out in column 3 has to be applied.

Note 3:

3.1. The provisions of Article 6, concerning products having acquired originating status which are used in the manufacture of other products, shall apply, regardless of whether this status has been acquired inside the factory where these products are used or in another factory in the former Yugoslav Republic of Macedonia or in the Community.

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 ex 7224.

If this forging has been forged in the former Yugoslav Republic of Macedonia from a non-originating ingot, it has already acquired originating status by virtue of the rule for heading No ex 7224 in the list. The forging can then count as originating in the value-calculation for the engine, regardless of whether it was produced in the same factory or in another factory in the former Yugoslav Republic of Macedonia. The value of the non-originating ingot is thus not taken into account when adding up the value of the non-originating materials used.

3.2. 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 originating status. Thus, if a rule provides 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.

3.3. Without prejudice to Note 3.2, 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 and of a different description than that of the product as given in column 2 of the list may be used.

3.4. When a rule in the list specifies that a product may be manufactured from more than one material, this means that one or more materials may be used. It does not require that all be used.

Example:

The rule for fabrics of headings Nos 5208 to 5212 provides 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; it is possible to use one or the other, or both.

3.5. Where 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. (See also Note 6.2 below in relation to textiles).

Example:

The rule for prepared foods of heading No 1904, which specifically excludes the use of cereals and their derivatives, does not prevent the use of mineral salts, chemicals and other additives which are not products from cereals.

However, this does not apply to products which, although they cannot be manufactured from the particular materials specified in the list, can be produced from a material of the same nature at an earlier stage of manufacture.

Example:

In the case of an article of apparel of ex Chapter 62 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.

3.6. Where, in a rule in the list, two percentages are given for the maximum value of non-originating materials that can be used, then these percentages may not be added together. In other words, the maximum value of all the non-originating materials used may never exceed the higher of the percentages given. Furthermore, the individual percentages must not be exceeded, in relation to the particular materials to which they apply.

Note 4:

4.1. The term "natural fibres" is used in the list to refer to fibres other than artificial or synthetic fibres. It is restricted to the stages before spinning takes place, including waste, and, unless otherwise specified, includes fibres which have been carded, combed or otherwise processed, but not spun.

4.2. The term "natural fibres" includes horsehair of heading No 0503, silk of headings Nos 5002 and 5003, as well as wool-fibres and fine or coarse animal hair of headings Nos 5101 to 5105, cotton fibres of headings Nos 5201 to 5203, and other vegetable fibres of headings 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. Where, for a given product in the list, reference is made to this Note, the conditions set out in column 3 shall not be applied to any basic textile materials used in the manufacture of this product and which, taken together, represent 10 % or less of the total weight of all the basic textile materials used. (See also Notes 5.3 and 5.4 below.)

5.2. However, the tolerance mentioned in Note 5.1 may be applied only 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,

- current-conducting filaments,

- synthetic man-made staple fibres of polypropylene,

- synthetic man-made staple fibres of polyester,

- synthetic man-made staple fibres of polyamide,

- synthetic man-made staple fibres of polyacrylonitrile,

- synthetic man-made staple fibres of polyimide,

- synthetic man-made staple fibres of polytetrafluoroethylene,

- synthetic man-made staple fibres of polyphenylene sulphide,

- synthetic man-made staple fibres of polyvinyl chloride,

- other synthetic man-made staple fibres,

- artificial man-made staple fibres of viscose,

- other artificial man-made staple fibres,

- yarn made of polyurethane segmented with flexible segments of polyether, whether or not gimped,

- yarn made of polyurethane segmented with flexible segments of polyester, whether or not gimped,

- products of heading No 5605 (metallised yarn) 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 a transparent or coloured adhesive between two layers of plastic film,

- other products of heading No 5605.

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 which 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.

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 which 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 provided their total weight does not exceed 10 % of the weight of the fabric.

Example:

Tufted textile fabric, of heading No 5802, made from cotton yarn of heading No 5205 and cotton fabric of heading No 5210, is a only mixed product if the cotton fabric is itself a mixed fabric made from yarns classified in two separate headings, or if the cotton yarns used are themselves mixtures.

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.

5.3. In the case of products 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 products 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 layers of plastic film", this tolerance is 30 % in respect of this strip.

Note 6:

6.1. Where, in the list, reference is made 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 product 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. Without prejudice to Note 6.3, materials, which are not classified within Chapters 50 to 63, may be used freely in the manufacture of textile products, 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 materials which are not classified within Chapters 50 to 63 must be taken into account when calculating the value of the non-originating materials incorporated.

Note 7:

7.1. For the purposes of headings 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 of the following operations: processing with concentrated sulphuric acid, oleum or sulphuric anhydride; neutralisation with alkaline agents; decolourisation and purification with naturally-active earth, activated earth, activated charcoal or bauxite;

(g) polymerisation;

(h) alkylation;

(i) isomerisation.

7.2. For the purposes of headings Nos 2710, 2711 and 2712, the "specific processes" are the following:

(a) vacuum-distillation;

(b) redistillation by a very thorough fractionation-process(2);

(c) cracking;

(d) reforming;

(e) extraction by means of selective solvents;

(f) the process comprising all of the following operations: processing with concentrated sulphuric acid, oleum or sulphuric anhydride; neutralisation with alkaline agents; decolourisation and purification with naturally-active earth, activated earth, activated charcoal or bauxite;

(g) polymerisation;

(h) alkylation;

(ij) isomerisation;

(k) in respect of heavy oils of 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 of heading No 2710 only, deparaffining by a process other than filtering;

(m) in respect of heavy oils of 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 decolourisation), 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 of 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 of heading No ex 2710 only, treatment by means of a high-frequency electrical brush-discharge.

7.3. For the purposes of headings Nos ex 2707, 2713 to 2715, ex 2901, ex 2902 and ex 3403, simple operations, such as cleaning, decanting, desalting, water-separation, filtering, colouring, marking, obtaining a sulphur-content as a result of mixing products with different sulphur-contents, or 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.

(2) 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 CERTIFICATE EUR.1 AND APPLICATION FOR A MOVEMENT CERTIFICATE EUR.1

1. Each form 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 weighting 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.

2. The competent authorities of the parties 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 IV

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Protocol 5

on mutual administrative assistance in customs matters

Article 1

Definitions

For the purposes of this Protocol:

(a) "customs legislation" shall mean any legal or regulatory provisions applicable in the territories of the European Community and former Yugoslav Republic of Macedonia, governing the import, export and transit of goods and their placing under any other customs regime or procedure, including measures of prohibition, restriction and control;

(b) "applicant authority" shall mean a competent administrative authority which has been designated by a Contracting Party for this purpose and which makes a request for assistance on the basis of this Protocol;

(c) "requested authority" shall mean a competent administrative authority which has been designated by a Contracting Party for this purpose and which receives a request for assistance on the basis of this Protocol;

(d) "personal data" shall mean all information relating to an identified or identifiable individual;

(e) "operation in breach of customs legislation" shall mean any violation or attempted violation of customs legislation.

Article 2

Scope

1. The Contracting Parties shall assist each other, in the areas within their competence, in the manner and under the conditions laid down in this Protocol, to ensure the correct application of the customs legislation, in particular by preventing, investigating and combating operations in breach of that legislation.

2. Assistance in customs matters, as provided for in this Protocol, shall apply to any administrative authority of the Contracting 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 a judicial authority, except where communication of such information is authorised by that authority.

3. Assistance to recover duties, taxes or fines is not covered by this Protocol.

Article 3

Assistance on request

1. At the request of the applicant authority, the requested authority shall provide it with all relevant information which may enable it to ensure that customs legislation is correctly applied, including information regarding activities noted or planned which are or could be operations in breach of customs legislation.

2. At the request of the applicant authority, the requested authority shall inform it:

(a) whether goods exported from the territory of one of the Contracting Parties have been properly imported into the territory of the other Contracting Party, specifying, where appropriate, the customs procedure applied to the goods;

(b) whether goods imported into the territory of one of the Contracting Parties have been properly exported from 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, within the framework of its legal or regulatory provisions, take the necessary steps to ensure special surveillance of:

(a) natural or legal persons in respect of whom there are reasonable grounds for believing that they are or have been involved in operations in breach of customs legislation;

(b) places where stocks of goods have been or may be assembled in such a way that there are reasonable grounds for believing that these goods are intended to be used in operations in breach of customs legislation;

(c) goods that are or may be transported in such a way that there are reasonable grounds for believing that they are intended to be used in operations in breach of customs legislation;

(d) means of transport that are or may be used in such a way that there are reasonable grounds for believing that they are intended to be used in operations in breach of customs legislation.

Article 4

Spontaneous assistance

The Contracting Parties shall assist each other, at their own initiative and in accordance with their legal or regulatory provisions, if they consider that to be necessary for the correct application of customs legislation, particularly by providing information obtained pertaining to:

- activities which are or appear to be operations in breach of customs legislation and which may be of interest to the other Contracting Party;

- new means or methods employed in carrying out operations in breach of customs legislation;

- goods known to be subject to operations in breach of customs legislation;

- natural or legal persons in respect of whom there are reasonable grounds for believing that they are or have been involved in operations in breach of customs legislation;

- means of transport in respect of which there are reasonable grounds for believing that they have been, are, or may be used in operations in breach of customs legislation.

Article 5

Delivery, Notification

At the request of the applicant authority, the requested authority shall, in accordance with legal or regulatory provisions applicable to the latter, take all necessary measures in order:

- to deliver any documents or

- to notify any decisions,

emanating from the applicant authority and falling within the scope of this Protocol, to an addressee residing or established in the territory of the requested authority.

Requests for delivery of documents or notification of decisions shall be made in writing in an official language of the requested authority or in a language acceptable to that authority.

Article 6

Form and substance of requests for assistance

1. Requests pursuant to this Protocol shall be made in writing. They shall be accompanied by the documents necessary to enable compliance with 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;

(b) the measure requested;

(c) the object of and the reason for the request;

(d) the legal or regulatory provisions and other legal elements involved;

(e) indications as exact and comprehensive as possible on the natural or legal persons who are the target of the investigations;

(f) a summary of the relevant facts and of the enquiries already carried out.

3. Requests shall be submitted in an official language of the requested authority or in a language acceptable to that authority. This requirement shall not apply to any documents that accompany the request under paragraph 1.

4. If a request does not meet the formal requirements set out above, its correction or completion may be requested; in the meantime precautionary measures may be ordered.

Article 7

Execution of requests

1. In order to comply with a request for assistance, the requested authority shall proceed, within the limits of its competence and available resources, as though it were acting on its own account or at the request of other authorities of that same Contracting Party, by supplying information already possessed, by carrying out appropriate enquiries or by arranging for them to be carried out. This provision shall also apply to any other authority to which the request has been addressed by the requested authority when the latter cannot act on its own.

2. Requests for assistance shall be executed in accordance with the legal or regulatory provisions of the requested Contracting Party.

3. Duly authorised officials of a Contracting Party may, with the agreement of the other Contracting Party involved and subject to the conditions laid down by the latter, be present to obtain in the offices of the requested authority or any other concerned authority in accordance with paragraph 1, information relating to activities that are or may be operations in breach of customs legislation which the applicant authority needs for the purposes of this Protocol.

4. Duly authorised officials of a Contracting Party may, with the agreement of the other Contracting Party involved and subject to 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 writing together with relevant documents, certified copies or other items.

2. This information may be in computerised form.

3. Original documents shall be transmitted only upon request in cases where certified copies would be insufficient. These originals shall be returned at the earliest opportunity.

Article 9

Exceptions to the obligation to provide assistance

1. Assistance may be refused or may be subject to the satisfaction of certain conditions or requirements, in cases where a Party is of the opinion that assistance under this Protocol would:

(a) be likely to prejudice the sovereignty of former Yugoslav Republic of Macedonia or that of a Member State which has been requested to provide assistance under this Protocol; or

(b) be likely to prejudice public policy, security or other essential interests, in particular in the cases referred to under Article 10(2); or

(c) violate an industrial, commercial or professional secret.

2. Assistance may be postponed by the requested authority on the ground that it will interfere with an ongoing investigation, prosecution or proceeding. In such a case, the requested authority shall consult with the applicant authority to determine if assistance can be given subject to such terms or conditions as the requested authority may require.

3. Where the applicant authority seeks assistance which it would itself be unable to provide if so requested, it shall draw attention to that fact in its request. It shall then be for the requested authority to decide how to respond to such a request.

4. For the cases referred to in paragraphs 1 and 2, the decision of the requested authority and the reasons therefor must be communicated to the applicant authority without delay.

Article 10

Information exchange and confidentiality

1. Any information communicated in whatsoever form pursuant to this Protocol shall be of a confidential or restricted nature, depending on the rules applicable in each of the Contracting Parties. It shall be covered by the obligation of official secrecy and shall enjoy the protection extended to similar information under the relevant laws of the Contracting Party that received it and the corresponding provisions applying to the Community authorities.

2. Personal data may be exchanged only where the Contracting Party which may receive them undertakes to protect such data in at least an equivalent way to the one applicable to that particular case in the Contracting Party that may supply them. To that end, Contracting Parties shall communicate to each other information on their applicable rules, including, where appropriate, legal provisions in force in the Member States of the Community.

3. The use, in judicial or administrative proceedings instituted in respect of operations in breach of customs legislation, of information obtained under this Protocol, is considered to be for the purposes of this Protocol. Therefore, the Contracting 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. The competent authority which supplied that information or gave access to those documents shall be notified of such use.

4. Information obtained shall be used solely for the purposes of this Protocol. Where one of the Contracting Parties wishes to use such information for other purposes, it shall obtain the prior written consent of the authority which provided the information. Such use shall then be subject to any restrictions laid down by that authority.

Article 11

Experts and witnesses

An official of a requested authority may be authorised to appear, within the limitations of the authorisation granted, as an expert or witness in judicial or administrative proceedings regarding the matters covered by this Protocol, and produce such objects, documents or certified copies thereof, as may be needed for the proceedings. The request for appearance must indicate specifically before which judicial or administrative authority the official will have to appear, on what matters and by virtue of what title or qualification the official will be questioned.

Article 12

Assistance expenses

The Contracting 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 those to interpreters and translators who are not public service employees.

Article 13

Implementation

1. The implementation of this Protocol shall be entrusted on the one hand to the customs authorities of former Yugoslav Republic of Macedonia and on the other hand to the competent services of the Commission of the European Communities and the customs authorities of the Member States as appropriate. They shall decide on all practical measures and arrangements necessary for its application, taking into consideration the rules in force in particular in the field of data protection. They may recommend to the competent bodies amendments which they consider should be made to this Protocol.

2. The Contracting 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 14

Other agreements

1. Taking into account the respective competencies of the European Community and the Member States, the provisions of this Protocol shall:

- not affect the obligations of the Contracting Parties under any other international agreement or convention;

- be deemed complementary to agreements on mutual assistance which have been or may be concluded between individual Member States and former Yugoslav Republic of Macedonia; and shall

- not affect the Community provisions governing the communication between the competent services of the Commission of the European Communities and the customs authorities of the Member States of any information obtained under this Protocol which could be of interest to the Community.

2. Notwithstanding the provisions of paragraph 1, the provisions of this Protocol shall take precedence over the provisions of any bilateral agreement on mutual assistance which has been or may be concluded between individual Member States and former Yugoslav Republic of Macedonia insofar as the provisions of the latter are incompatible with those of this Protocol.

3. In respect of questions relating to the applicability of this Protocol, the Contracting Parties shall consult each other to resolve the matter in the framework of the Stabilisation and Association Committee set up under Article 114 of the Stabilisation and Association Agreement.

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 establishing the European Community, the Treaty establishing the European Coal and Steel Community, the Treaty establishing the European Atomic Energy Community, and the Treaty on European Union,

hereinafter referred to as "the Member States", and of

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

hereinafter referred to as "the Community",

of the one part, and

the plenipotentiaries of the FORMER YUGOSLAV REPUBLIC OF MACEDONIA,

of the other part,

meeting in Luxembourg on ... in the year 2001 for the signature of the Stabilisation and Association Agreement between the European Communities and their Member States, of the one part, and the former Yugoslav Republic of Macedonia of the other part, hereinafter referred to as "the Agreement", have adopted the following texts:

the Agreement, its Annexes I-VII, namely:

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and the following Protocols:

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The plenipotentiaries of the Member States and of the Community and the plenipotentiaries of former Yugoslav Republic of Macedonia have adopted the texts of the joint declarations listed below and annexed to this Final Act:

Joint Declaration concerning Article 34 of the Agreement

Joint Declaration concerning Article 40 of the Agreement

Joint Declaration concerning Article 44 of the Agreement

Joint Declaration concerning Article 46 of the Agreement

Joint Declaration concerning Article 57 of the Agreement

Joint Declaration concerning Article 71 of the Agreement

Joint Declaration concerning Article 118 of the Agreement

The plenipotentiaries of the former Yugoslav Republic of Macedonia have taken note of the Declarations listed below and annexed to this Final Act:

Declaration by Community and its Member States concerning Articles 27 and 29

Declaration of the Community on Article 76

Done at Luxembourg, ...

JOINT DECLARATIONS

JOINT DECLARATION ON ARTICLE 34

The European Communities and the former Yugoslav Republic of Macedonia, aware of the impact that the sudden elimination of the 1 % fee applied for customs clearance purposes to imported goods could have on the budget of the latter, agree, as an exceptional measure, that the fee would be maintained until 1 January 2002 or until the entry into force of the Stabilisation and Association Agreement, whichever occurs first.

Should this fee, in the meantime, be reduced or eliminated vis-à-vis a third country, the former Yugoslav Republic of Macedonia undertakes to immediately apply the same treatment to goods of EC origin.

The content of this Joint Declaration is without prejudice to the position of the European Communities in the negotiations on the accession of the former Yugoslav Republic of Macedonia to the World Trade Organisation.

JOINT DECLARATION CONCERNING ARTICLE 40

Declaration of intent by the Contracting Parties on the trade arrangements between the States that emerged from the former Socialist Federal Republic of Yugoslavia:

1. The European Community and former Yugoslav Republic of Macedonia consider it essential for economic and trade cooperation between the States that emerged from the former Socialist Federal Republic of Yugoslavia to be reestablished as quickly as possible, as soon as political and economic circumstances permit.

2. The Community is prepared to grant cumulation of origin to the States that emerged from the former Socialist Federal Republic of Yugoslavia which have restored normal economic and trade cooperation as soon as the administrative cooperation needed for cumulation to work properly has been established.

3. With this in mind, former Yugoslav Republic of Macedonia declares its readiness to enter into negotiations as soon as possible in order to establish cooperation with other States that emerged from the former Socialist Federal Republic of Yugoslavia.

JOINT DECLARATION CONCERNING ARTICLE 44

It is understood that the notion "children" is defined in accordance with national legislation of the host country concerned.

JOINT DECLARATION CONCERNING ARTICLE 46

It is understood that the notion "members of their family" is defined in accordance with national legislation of the host country concerned.

JOINT DECLARATION CONCERNING ARTICLE 57

The Parties agree to seek the earliest possible implementation of Article 12(3)(b) of the Transport Agreement between the European Community and the former Yugoslav Republic of Macedonia, on a system of ecopoints through the conclusion of the relevant agreement, in the form of an exchange of letters, as soon as possible and at the latest by the conclusion of the Interim Agreement.

JOINT DECLARATION CONCERNING ARTICLE 71

The Parties agree that for the purpose of this Agreement, intellectual, industrial and commercial property includes in particular copyright, including the copyright in computer programmes, and neighbouring rights, the rights relating to databases, patents, industrial designs, trademarks and service marks, topographies of integrated circuits, geographical indications, including appellation of origins, as well as protection against unfair competition as referred to in Article 10a of the Paris Convention for the Protection of Industrial Property and protection of undisclosed information on know-how.

JOINT DECLARATION CONCERNING ARTICLE 118

(a) For the purposes of the interpretation and practical application of the Agreement, the Parties agree that the cases of special urgency referred to in Article 118 of the Agreement mean cases of material breach of the Agreement by one of the two parties. A material breach of the Agreement consists of:

- repudiation of the Agreement not sanctioned by the general rules of international law;

- violation of the essential elements of the Agreement set out in Article 2.

(b) The Parties agree that the "appropriate measures" referred to in Article 118 are measures taken in accordance with international law. If a Party takes a measure in a case of special urgency pursuant to Article 118, the other Party may avail itself of the dispute settlement procedure.

UNILATERAL DECLARATIONS

DECLARATION BY THE COMMUNITY AND ITS MEMBER STATES CONCERNING ARTICLES 27 AND 29

Considering that exceptional trade measures are granted by the European Community to countries participating or linked to the EU Stabilisation and Association Process including the former Yugoslav Republic of Macedonia on the basis of Council Regulation (EC) No 2007/2000 as amended, the European Community and its Member States declare:

- that, pursuant to Article 29(2) of this Agreement, those of the unilateral autonomous trade measures which are more favourable shall apply in addition to the contractual trade concessions offered by the Community in this Agreement as long as Regulation (EC) No 2007/2000 as amended applies;

- that, in particular, for the products covered by Chapters 7 and 8 of the Combined Nomenclature, for which the Common Customs Tariff provides for the application of ad valorem customs duties and a specific customs duty, the elimination shall apply also to the specific customs duty in derogation from the relevant provision of Article 27(1).

DECLARATION OF THE EUROPEAN COMMUNITY ON ARTICLE 76

As far as the readmission of nationals of other countries and of stateless persons by former Yugoslav Republic of Macedonia is concerned, the repatriation policy of the European Community is based on the following main elements:

- Priority is given to voluntary return;

- Repatriation into the country of origin is the overriding principle.

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