Treaty (22 December 1994)

December 22, 1994

MISSION OF THE REPUBLIC OF THE PHILIPPINES TO THE EUROPEAN ECONOMIC COMMUNITY BRUSSELS

Despatch No. AAP-890/94 The Honorable The Secretary for Foreign Affairs Manila Attention: OEA SUBJECT: RP - EU Textile Agreement. Sir: I am pleased to transmit herewith the Philippine original of the amended RP-EU Textile Agreement which was signed today, 22 December 1994 as authorized by the Department under telefax message no. BR-227-94. Another three (3) copies have been prepared for transmittal to pertinent offices. As may be gleaned from the covering memo of Commercial Attaché Espos, the Philippines was the first ASEAN country to sign such an agreement with the EU. Among the benefits accruing to the Philippine side would be the lowered tariffs on Philippine textile and garments exports to Austria, Sweden and Finland in view of their 1 accession to the European Union. The Union imposes lower tariffs for said products. It might be worth mentioning here what the undersigned has gathered from EU . [officials during the signing ceremony that the European Union is not likely to approve ca reported request by Thailand for a 30% increase in its quota of textile and garments exports to the Union. The Mission is monitoring developments. Very truly yours,

(Sgd.) ALBERTO A.

PEDROSA

Ambassador Enclosure: As stated.

NOTE FOR AMBASSADOR ALBERTO A. PEDROSA

SUBJECT: Amended Bilateral Textile Agreement1. Attached is a copy of the final version to be signed (all pages are to be initialled too) . The pages/substance are in order. Para 2.9 of the Letter from the Council could be invoked by the Philippines next year ( no later than February) should we still wish for a reconciliation of the trade figures for Category 73. The Commission is already aware that we might do just that and promised maximum cooperation. GTEB is now compiling the necessary trade data and advise us of their final position (whether to proceed or not with reconciliation) early January.

2. Signing is at: 10:30 A.M. tomorrow ( Dec. 22) Room No. 8, 4th Floor 28 Rue Belliard 3. The signatory for the EU is:

MR. PETER Mogens CARL Acting Director , DG-I, Directorate D (viz.

Mr. Jon Keck who was posted to Japan) concurrent Head of Unit, Services; High Technology, Intellectual Property and Investments Also attending for the Commission is Mr. Gerard Bison, O1C, ASEAN for textiles.

4. RP would be the 1st to sign among the ASEAN countries. Malaysia and Singapore have no problem with the substance and are simply waiting for authorizations from their capital Indonesia -is still considering whether to accept the Commission use of a different formula which would effectively reduce the adjustments to below the levels that would be achieved if the standard formula ( i.e. the one used for the rest of ASEAN ) was applied. Thailand is still holding out for "the moon" which the Commission refuses to discuss. Since we would be the first to sign, I have examined all the possible down-sides to an agreement other than the level of the quota itself ( which DTI finds acceptable). This merely pertains to the new tariff levels that the three EFTA countries would have to apply for their imports of textiles. A comparison of the tariff levels show that in general, Austria, Sweden, Finland would now have to apply lower import tariffs than they used to since the EU tariffs for garments and textiles are lower than & their's. This is in effect, beneficia.1 for third countries. Agreement in the form of Exchange of Letters between the European Community and the Republic of the Philippines amending the Agreement between the European Economic Community and the Republic of the Philippines on trade in textile products to take into account the expected accession of the Republic of Austria, the Republic of Finland, and the Kingdom of Sweden to the European Union.

LETTER FROM THE COUNCIL OF THE EUROPEAN UNION

1. I have the honour to refer to the Agreement between the European Economic Community and the Republic of the Philippines on trade in textile products initialledon 28 June 1986, as last amended and extended by Exchange of Letters initialled on 27 November 1992.

2. In order to take into account of the likely accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the European Union on 1 January 1995, the European Community considers that the following amendments should be made to the Agreement between the European Economic Community and the Republic of the Philippines on trade in textile products: 2.1 Should the Uruguay Round Agreement on Textiles and Clothing become applicable in our relationships, as a consequence of the accession of the Republic of the Philippines and the European Community to the WTO, Appendix I sets out the notional quantitative restrictions for the enlarged Community to be considered, for the purposes of the notification to the Textiles Monitoring Body, as those maintained by the enlarged Community and in force before the day of entry into force of the Uruguay Round Agreement on Textiles and Clothing, within the meaning of Article 2 of the Uruguay Round Agreement on Textiles and Clothing. Should the Uruguay Round Agreement on Textiles and Clothing not become applicable in our relationships Annex II of the Agreement which sets out the quantitative restrictions for exports from the Republic of the Philippines to the European Union is replaced for the period 1 January 1995 to 31 December 1995 by Appendix II to this letter. 2.2. Article 14 paragraph 2, sub-paragraph 2, second indent of Protocol A, Title HI, Section II should be amended as follows: two letters identifying the intended Member State of customs clearance as follows: AT = Austria BL = Benelux DE = Federal Republic of Germany DK = Denmark EL = Greece ES = Spain FI = Finland FR = France GB = United Kingdom IE = Ireland IT = Italy PT = Portugal SE = Sweden" 2.3. The Annex of Protocol A, setting out the model of the Certificate of Origin is replaced by Appendix III to this letter. 2.4 . The Annex to Protocol A setting out the model of the Export Licence is replaced by Appendix IV to this letter.2.5 . The Annex to Protocol B setting out the model of the Certificate applicable to certain cottage industry and folklore products is replaced by Appendix V to this letter. 2.6. Should the Uruguay Round Agreement on Textiles and Clothing become applicable in our relationships, as a consequence of the accession of the Republic of the Philippines and the European Community to the WTO, Appendix VI sets out the notional quantitative restrictions for economic outward processing operations for the enlarged Community to be considered, for the purposes of notification to the Textiles Monitoring Body, as those maintained by the enlarged Community and in force before the day of entry into force of the Uruguay Round Agreement on Textiles and Clothing, within the meaning of Article 2 of the Uruguay Round Agreement on Textiles and Clothing. 2.7. Should one or more acceding countries not join the European Union the adjustments calculated for this or these countries shall be deducted from the 'Adjusted Limits' set out in the Appendices to this Letter and the respective amendments mentioned under Point 2.2 above shall not enter into force. 2.8 Notwithstanding the modifications referred to under points 2.3, 2.4 and 2.5, during a transitional period that will end on 30 June 1995, the competent authorities of the Republic of the Philippines shall be authorized to continue issuing the forms that were in use in 1994. 2.9 Should inaccuracies appear in the trade figures used to establish the adjustments contained in appendices I, II, VI and VII, technical revisions of these adjustments will be made following consultations and provided that the request for consultations is made not later than 28 February 1995.

3. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary to this end have been completed. In the meantime, it shall be applied provisionally from 1 January 1995 on the conditions to be specified in an Exchange of Notes (see Appendix VIII). Please accept, Sir, the assurance of my highest consideration. For the Council of the European Union APPENDIX I NOTIONAL COMMUNITY QUANTITATIVE LIMITS 1994 DIKECT QUOTAS EXISTING Adjustment NOTIONALGROWTH GRPCAT UNIT LIMIT LIMIT RATE SwedenFinlandAustria 1994IB 4 1000 pcs 16,611 255 115 220 17,201 4.50 % IB 5 1000 pcs 7,863 102 46 132 8,142 5.00 % IB 6 1000 pcs 6,755 113 51 94 7,012 5.50 % IB 7 1000 pcs 4,426 78 35 65 4,605 4.00 % IB 8 1000 pcs 5,351 108 48 89 5,597 3.50 % IIB 13 1000 pcs 15,554 1,152 516 954 18,176 6.00 % IIB 15 1000 pcs 2,038 84 38 69 2,228 6.00 % IIB 21 1000 pcs 5,872 159 71 132 6,234 6.00 % IIB 26 1000 pcs 2,634 149 67 124 2,974 6.00 % IIB 31 1000 pcs 10,667 263 118 218 11,266 6.00 % IIB 73 1000 pcs 10,826 53 24 100 11,003 5.00 % IIIB 10 1000 pcs 13,604 694 311 574 15,183 6.00 % The footnotes to Annex II of the Agreement as initialled on 28 June 1986 remain unchanged APPENDIX II

ANNEX II

COMMUNITY QUANTITATIVE LIMITS 1995

EXISTING Adjustment for ADJUSTED GRPCAT UNIT LIMIT LIMIT 1995 Sweden Finland Austria 1995 IB 4 1000 pcs 17,358 267 120 230 17,975 IB 5 1000 pcs 8,257 107 48 138 8,550 IB 6 1000 pcs 7,127 119 53 99 7,398 IB 7 1000 pcs 4,603 82 37 68 4,789 IB 8 1000 pcs 5,538 112 50 93 5,793 IIB 13 1000 pcs 16,487 1,221 547 1,011 19,267 IIB 15 1000 pcs 2,161 89 40 73 2,363 IIB 21 1000 pcs 6,225 169 76 140 6,609 IIB 26 1000 pcs 2,792 158 71 131 3,153 IIB 31 1000 pcs 11,307 279 125 231 11,941 IIB 73 1000 pcs 11,367 56 25 105 11,553 IIIB 10 1000 pcs 14,421 735 330 608 16,094 The footnotes to Annex II of the Agreement as initialled on 28 June 1936 remain unchanged. APPENDIX III (See Orginal Document) APPENDIX IV (See Orginal Document) APPENDIX V (See Orginal Document)APPENDIX VI NOTIONAL OUTWARD PROCESSING TRAFFIC QUOTAS 1994 EXISTING Adjustment NOTIONALGROWTH GRPCAT UNIT LIMIT LIMIT RATE SwedenFinlandAustria 1994 IB 6 1000 pcs 423 12 5 10 451 5.50 % IB 8 1000 pcs 115 3 1 3 123 3.50 % IIB 21 1000 pcs 180 5 2 4 192 6.50 % APPENDIX VII ANNEX TO PROTOCOL E OUTWARD PROCESSING TRAFFIC QUOTAS 1995 EXISTING Adjustment for ADJUSTED GRPCAT UNIT LIMIT LIMIT 1995 Sweden Finland Austria 1995 IB 6 1000 pcs 446 13 6 11 475 IB 8 1000 pcs 119 3 2 3 127 IIB 21 1000 pcs 191 6 2 5 204 APPENDIX VIII EXCHANGE OF NOTES The Directorate General for External Economic Relations of the Commission of the European Communities presents its compliments to the Mission of the Republic of the Philippines and has the honour the refer to the Agreement on Trade in Textile Products between the Republic of the Philippines and the European Economic Community initialed 28 June 1986 as amended and extended by Exchange of Letters initialed on 27 November 1992 and further amended by the Exchange of Letters initialed on (date of initialing). The Directorate General wishes to inform the Republic of the Philippines that whilst waiting the completion of the necessary procedures for the conclusion and coming into force of the amended Agreement, the European Community is prepared to allow the provisions of the Agreement to apply de facto from 1 January 1995. This is on the understanding that either Party may at any time terminate this de facto application of the amended Agreement provided that one hundred and twenty days' notice is given. The Directorate General for External Economic Relations would be grateful if the Mission ¦the Republic of the Philippines would confirm its agreement to theforegoing. The Directorate General for External Economic Relations of the Commission of the European Communities avails itself of this opportunity to renew to the Mission of the Republic of the Philippines the assurance of its highest consideration. LETTER FROM THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES Sir, I have the honour to acknowledge receipt of your letter of which reads as follows: "Sir, 1. I have the honour to refer to the Agreement between the European Economic Community and the Republic of the Philippines on trade in textile products initialled on 28 June 1986, as last amended and extended by Exchange of Letters initialled on 27 November 1992.

2. In order to take into account of the likely accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the European Union on 1 January 1995, the European Community considers that the following amendments should be made to the Agreement between the European Economic Community and the Republic of the Philippines on trade in textile products: 2.1. Should the Uruguay Round Agreement on Textiles and Clothing become applicable in our relationships, as a consequence of the accession of the Republic of the Philippines and the European Community to the WTO, Appendix I sets out the notional quantitative restrictions for the enlarged Community to be considered, for the purposes of the notification to the Textiles Monitoring Body, as those maintained by the enlarged Community and in force before the day of entry into force of the Uruguay Round Agreement on Textiles and Clothing, within the meaning of Article 2 of the Uruguay Round Agreement on Textiles and Clothing. Should the Uruguay Round Agreement on Textiles and Clothing not become applicable in our relationships Annex II of the Agreement which sets out the quantitative restrictions for exports from the Republic of the Philippines to the European Union is replaced for the period 1 January 1995 to 31 December 1995 by Appendix II to this letter. 2.2. Article 14 paragraph 2, sub-paragraph 2, second indent of Protocol A, Title III, Section II should be amended as follows: "-two letters identifying the intended Member State of customs clearance as follows: AT = Austria BL = Benelux DE = Federal Republic of GermanyDK = Denmark EL = Greece ES = Spain FI = Finland FR = France GB = United Kingdom IE = Ireland IT – Italy PT-Portugal SE – Sweden 2.3. The Annex of Protocol A, setting out the model of the Certificate of Origin is replaced by Appendix III to this letter. 2.4. The Annex to Protocol A setting out the model of the Export Licence is replaced by Appendix IV to this letter. 2.5. The Annex to Protocol B setting out the model of the Certificate applicable to certain cottage industry and folklore products is replaced by Appendix V to this letter. 2.6 Should the Uruguay Round Agreement on Textiles and Clothing become applicable in our relationships, as a consequence of the accession of the Republic of the Philippines and the European Community to the WTO, Appendix VT sets out the notional quantitative restrictions for economic outward processing operations for the enlarged Community to be considered, for the purposes of the notification to the Textiles Monitoring Body, as those maintained by the enlarged Community and in force before the day of entry into force of the Uruguay Round Agreement on Textiles and Clothing, within the meaning of Article 2 of the Uruguay Round Agreement on Textiles and Clothing. Should the Uruguay Round Agreement on Textiles and Clothing not become applicable in our relationships the Annex to Protocol E of the Agreement which sets out the quantitative restrictions for economic outward processing operations is replaced for the period 1 January 1995 to 31 December 1995 by Appendix VII to this letter. 2.7. Should one or more acceding countries not join the European Union the adjustments calculated for this or these countries shall be deducted from the 'Adjusted Limits' set out in the Appendices to this Letter and the respective amendments mentioned under Point 2.2 above shall not enter into force. 2.8 Notwithstanding the modifications referred to under points 2.3, 2.4 and 2.5, during a transitional period that will end on 30 June 1995, the competent authorities of the Republic of the Philippines shall be authorized to continue issuing the forms that were in use in 1994. 2.9 Should inaccuracies appear in the trade figures used to establish the adjustments contained in appendices I, II, VI and VTI, technical revisions of these adjustments will be made following consultations and providedthat the request for consultations is made not later than 28 February 1995.

3. I should be obliged if you could kindly confirm the acceptance of your Government of the foregoing. Should this be the case, this Agreement in the form of an Exchange of Letters shall enter into force on the first day of the month following the day on which the Parties have notified each other that the legal procedures necessary ti this end have been complete. In the meantime. it shall be applied provisionally from 1 January 1995 on the conditions to be specified in an Notes (see Appendix VIII). Please accept, Sir, the assurance of my highest consideration." I have the honour to confirm that my Government is in agreement with the contents of your letter. Please accept, Sir, the assurance of my highest consideration. For the Government of the Republic of the Philippines