External
relations including customs union
1. The Copenhagen criteria for membership: the ability to
cope with competitive pressures
1.1. Participation in a wider market
In parallel to the process of establishing a free trade area the
Bulgarian economy will be progressively involved into a wider
market encompassing the market territories of Bulgaria and the of
the European Union.
Meanwhile the harmonisation of norms, standards and technical
requirements will facilitate trade and thus strengthen the capacity
of Bulgarian industries to compete on European markets.
The restructuring and modernisation of the entire economy will
be influenced by the promotion of trade which is crucial for
strengthening its competitiveness and increasing of the benefits of
the economic reform.
With this regard the adoption of the Union’s internal market
acquis is expected to further improve market access for Bulgarian
exports in the area of technical barriers to trade.
The very establishment of the free trade area between
Bulgaria and the European Union will assist the process of
progressive adaptation to market forces within the internal
market.
At the same time the functioning of the free trade area will
take the integration process closer to achieving the objective of
customs union and thus to membership as the Community is founded on
a customs union.
1.2. Basic principles of the customs union
The establishment of the customs union between the six original
Member States involved two parallel processes of convergence: to
gradually abolish the customs duties that applied in trade between
them and to gradually introduce a Common Customs Tariff (CCT)
applicable to goods imported from third countries. On 1 July 1968
the tariff union was accomplished. Since then any new Member State
joining the Community has undergone the process of abolishing
duties on intra-Community trade and aligning its external tariff to
the CCT.
The necessity to facilitate trade resulted in growing
harmonisation and for further simplification of customs procedures.
Thus the Single administrative document and the Combined
nomenclature were introduced. In parallel, the EEC-EFTA Convention
on a Common transit procedure was signed on 20 may 1987.
As far as trading relations with non-Member States are
concerned, the Community Customs Code has consolidated virtually
all the Community customs provisions into a single coherent text.
the Community customs code and its implementing provisions entered
into force on 1 January 1994.
1.3. Level of tariff protection and alignment of
tariffs
Pre-Uruguay Round
The simple average tariff protection of the Community for
industrial products is 6.4 per cent. Under the currently applied
Bulgarian customs tariff the simple average level of protection for
industrial products is 16.8 per cent. On a sector by sector basis
the simple average varies from 10 per cent for works of art to 27.3
per cent for footwear (the respective Community averages for the
same sectors are 0 per cent and 11.7 per cent).
The comparison indicates that as a result of an alignment of
tariffs Bulgaria will face the necessity to lower its level of
tariff protection. For products for which the Community is the main
supplier (accounting for more than 50% of total Bulgarian imports)
such as plastics, rubber, textiles and textile articles, footwear,
works of art the alignment exercise may not affect substantially
the tariff protection of the economy as at that time the main
import flows for the products concerned would have been duty-free
further to the establishment of the free trade area with their main
supplier.
For products imported mainly from other sources the
implementation of a lower level of tariff protection, particularly
if these are manufactured goods will need a transitional period in
order to allow national industries to adapt. At present imports for
which the Community accounts less than 30% of total imports include
the following sectors: mineral products, fuels; wood, articles of
wood; base metals and articles thereof.
For agricultural products the comparison could be done at a
later stage as the process of Bulgarian accession to the WTO is not
completed yet while the Community recently (1 July 1995) put into
effect the results of the GATT Uruguay Round.
Post-Uruguay Round
Tariff questions/Average tariffs.
Across all products, the Communities’ simple average tariff as
of 1 July 1995 is estimated at 9.6%.
Non-agricultural products.
As an outcome of the Uruguay Round negotiations, the European
Community will have unweighted average duty rates for
non-agricultural products at the level of 3.7% in 2000 (down from
some 6% in 1995).
The EC subscribed to the complete elimination of duties (zero
for zero) in the sectors of construction equipment, medical
equipment, pharmaceuticals, furniture, most steel categories,
agricultural equipment, paper products, selected toys and soaps and
detergents. Community imports in these sectors represent around 10%
of total non-agricultural EC imports. This means that when new duty
free trade is added to previous duty free commerce, close to 40% of
all Community industrial import will, after full implementation, be
free of duty.
As a result, the Community customs tariffs will become,
particularly for industrial products, even more homogeneous than
before, with the vast mass of duty rates between 3 and 10%. Only
three sectors, clothing, footwear and fish, will have an average
tariff of 10% or more; in these three sectors, the average rates
are anyway lower than 12.5%. The Community will have only few rates
above 15% and none above 22% (trucks).
Agricultural products.
The new tariff profile for agricultural products shows peaks for
meat and meat products, dairy products, sugar and derivatives, and
tobacco products. Tariffs will remain low or zero on oilseeds,
fruit and vegetables, and plants (cut flowers and many fruit and
vegetable categories are subject to seasonal tariffs).
Tariff suspensions.
Under Article 28 of the Treaty of Rome, the Council may grant
tariff suspensions by a qualified majority vote. There are some 650
such cases per year, representing a revenue loss of about 5% of
total duties collected. Suspensions are generally granted for one
year, in some cases for 6 months, with the possibility of
extension. Suspensions have been relatively frequent for
microelectronics and chemicals.
1.4. Trade policy alignment
The necessity to adapt the existing Bulgarian trade policy is
very much facilitated by the finalization of the Uruguay Round of
multilateral trade negotiations under the GATT and the
establishment as of January 1st, 1995 of the World Trade
Organisation.
The trade policy maintained by the EC is based on same
multilaterally agreed principles that are laid down in the
Marrakesh Agreement establishing the WTO and its Annexes. In this
respect, any alignment with the EC trade policy can turn irrelevant
without prior Bulgarian accession to the said World Trade
Organization. The necessity of Bulgaria joining the GATT system is
as well stipulated in the Europe Agreement. However, it should be
stressed that the new WTO embodies rules and disciplines which have
a much wider scope than the GATT, because now they cover important
new areas: Agriculture, Services (GATS), TRIMS, TRIPS.
The currently negotiated accession of Bulgaria to the WTO will
fulfil the obligation undertaken under the Europe Agreement and
will give the economy the so badly needed qualification of "being a
transparent and predictable one". In addition the WTO accession
will align Bulgaria with the other Central and East European
economies (already WTO Members) while negotiating details on
membership to the EU.
Following are the main trade policy areas where Bulgaria has to
align with the EU on the basis of the multilaterally agreed
principles stipulated in the Marrakesh Agreement establishing the
WTO and its respective Annexes.
Tariffs
Under the accession to the WTO the Bulgarian tariff protection
will be reduced in comparison to the one the economy presently
enjoys and will be bound at certain level (different for each
respective tariff line), which means that tariffs could be lowered
but certainly cannot be increased above the set "bound level". On
most of the tariff lines Bulgaria will still even after WTO
accession maintain considerably higher than the EU tariff
protection. In a very limited number of cases Bulgaria will bind
the tariff under the WTO at "0" level. This is a positive element
for the protection of the Bulgarian economy vis-a-vis third
countries for the present.
However, when becoming a member of the EU, Bulgaria will have to
undertake the Common customs tariff and thus face a considerable
discrepancy in the level of tariff protection, i.e. between high
pre-EU membership tariff protection and the low or in some
instances "0" tariff protection in the post-EU membership period.
With the view to have the economy prepared for membership in the EU
and secure a smooth transition, respective measures are to be taken
without delay now. These might be complex and include inter
alia:
-- To develop a mid- and where possible long-term programme for
each sector of the economy and for each particular production. Due
consideration in this process is to be given to the availability of
inputs, present markets, assessment of future market possibilities,
availability of human resources, and last but not least - financing
of the "modernisation process" (privatisation may in this respect
be also considered).
-- Competitive vital productions and those undergoing or
scheduled for "modernisation of the production" should consider as
of day one of the Bulgarian application for membership to the EU
the possible changes in the competition conditions on the Bulgarian
market when Bulgaria undertakes the Common customs tariff (this
issue is also relevant to the question of adaptation of the economy
for smooth implementation of the Europe Agreement where some 35-40%
of the Bulgarian total imports will enter at "0" duty by the year
2002).
-- Based on the results under 1. and 2. above, the difficulties
for adaptation areas could be identified and thus enable the
preparation of documentation in advance for specific transitional
requirements which are possible but negotiable (f.ex.
Finland was allowed a reduction over 3 years of the customs tariff
applicable to third countries for certain products, mostly
textiles, clothing, footwear, metals, plastic and rubber
products).
Trade defence instruments
Within the framework of the accession of Bulgaria to the WTO,
the Bulgarian Government undertook the obligation to implement the
respective agreements under Annex 1A: inter alia, the new Agreement
on implementation of Article VI (the Anti-Dumping Agreement), the
new Agreement on Subsidies and Countervailing Measures (the
Subsidies Agreement), the Agreement on Safeguards and the Agreement
on TBT. In practical terms this means that the WTO Anti-Dumping
Agreement and the Agreement on Safeguards are to be transposed into
the Bulgarian legislation and thus substitute the presently
existing Regulations No.180/1993 (Safeguards) and No.181/1993
(Anti-dumping).
Bulgaria has also to reorganize the national standardization
system to make it in conformity with the requirements of the
Agreement on Technical Barriers to Trade. The mandatory "standards"
under the Bulgarian legislation (equivalent to "technical
regulations" as defined in the TBT Agreement) are to be transposed
to voluntary non-mandatory status. The conformity assessment
infrastructure is to be developed.
Other general trade policy issues.
In general the Bulgarian trade policy, while aligned with the EC
trade policy based on WTO principles and discipline, should inter
alia:
-- not result in discrimination between domestic and foreign
suppliers;
-- be predictable and transparent, i.e. frequent changes would
be totally unacceptable by the respective trading partners;
-- apply protectionist measures only within the scope of those
allowed in the WTO; in this respect following trade policy tools
are questionable under the WTO rules and thus need further
corrective measures on the part of the Bulgarian Government:
application of export taxes (in most cases actually an export ban
and thus an indirect subsidy), export bans, non-automatic
licensing, the scope of the automatic licensing.
1.5. Harmonisation of legislation
In parallel to the process of trade liberalisation the adoption
of the Combined Nomenclature (CN) of the Community for coding and
description of goods is under way. At present for customs and
statistical purposes Bulgaria applies the classification under the
Bulgarian customs tariff. The basis of the two classifications is
the Harmonised System for coding and description of goods and
therefore the adoption of the CN may not involve major efforts of
the Bulgarian side. A lot of progress has been achieved so far with
a view to introduce the CN as of the beginning of 1996. Bulgaria
already applies the Single Administrative Document. With the
introduction of the CN will be possible to aim at simplification of
procedures and thus facilitate of trade.
According to the services of the Commission the four Visegrad
counties, Romania and Slovenia have officially applied to start
negotiations for joining the Common Transit system. The adhesion to
the Common Transit System will require the adoption of the
Community’s Combined Nomenclature (which is under way in Bulgaria),
the adoption of the single administrative document together with
the establishment of a credible guarantee system. The Bulgarian
side has not applied yet for joining the system.
As far as other elements of tariff policy are concerned the
Customs Code of Bulgaria (not adopted yet) has been drafted on the
basis of the Community Customs Code.
2. Agreements of the European Union with third countries
concerning trade
The agreements, concluded by the European Union with third
countries constitute the Community acquis in the area of external
relations.
The legal basis for the conclusion of association agreements is
Article 238 of the Treaty establishing the European Economic
Community according to the provisions of which the Community may
conclude with a third State, a union of States or an international
organisation agreements establishing an association involving
reciprocal rights and obligations, common action and special
procedures.
Such Agreements are negotiated by the Commission subject to the
powers vested in it in this field and concluded by the Council,
after consulting the European Parliament where required by the
Treaty. Agreements concluded under these conditions shall be
binding on the institutions of the Community and on Member
States.
The legal basis for the conclusion of tariff and trade
agreements is Article 113 of the Treaty related to the context of
the common commercial policy, which is based on uniform principles,
particularly in regard to changes in tariff rates, the achievement
of uniformity in measures of liberalisation, export policy and
measures to protect trade such as those to be taken in case of
dumping or subsidies. Where agreements with third countries need to
be negotiated the Commission makes recommendations to the Council
which authorises the Commission to open such negotiations. In
exercising the powers conferred upon it by Article 113 the Council
shall act by a qualified majority. The agreements under Article 113
are concluded by the Council on behalf of the Community by a
qualified majority.
Upon accession any new Member State accepting the Treaties on
which the European Union is founded shall apply the Agreements
concluded by the European Union (association Agreements and
agreements concluded in the context of the common commercial
policy. 1)
The necessary adjustments to those Agreements to take account of
the enlargements of the Union are negotiated by the Commission with
the co-contracting countries.
At present the list of those Agreements comprise the
following:
2.1. Agreements based on Article 238
2.1.1. The Agreement establishing the European Economic
Area has been signed in Oporto in May 1992 between the European
Communities and their Member States of the one side and the each
one of the EFTA States of the other (Austria, Finland, Iceland,
Liechtenstein, Norway, Sweden and the Swiss Confederation). The
purpose of the Agreement is to establish an integrated economic
area (19 countries and 380 million people) making provisions for
free movement of goods, persons, services and capital. The
Agreement entered into force in 1 January 1994. 2), 3). In the area
of free movement of goods, the Agreement provides for prohibition
of duties and quantitative restrictions and measures with
equivalent effect in trade in industrial products between the
parties to it. The objective of free trade has been partially met
by the application of the free trade Agreements concluded in 1972
with each of the EFTA countries.
The aim of the EEA Agreement is to extend the prohibition on
duties to include also a ban on quantitative restrictions and
measures of equivalent effect; emphasis is also placed with regard
to prohibition of all discriminatory trade practices by state
monopolies, anti-dumping measures and technical barriers to trade;
border controls and formalities relating to goods are subject to
simplification and the common market is extended to include public
procurement.
2.1.2. The Europe Agreements with countries from Central and
Eastern Europe
These agreements are based on Articles 113 and 238 of the
Treaty. The Agreements are establishing an Association between
the European Communities and their member States and each one of
the countries from Central and Eastern Europe and are forerunners
to possible accession providing for a time-table and a phased
approach. All agreements are based on identical model,
providing for the establishment of bilateral free trade areas
between the Community and each one of those countries. As of 1995
the schedule for duty dismantling on the Community side provides
for equal treatment for any of the countries concerned. The
respective schedules of the countries differ according to their
bilateral Agreements with the Community.
At present such Agreements are concluded with:
- Poland and Hungary- signed on 16 December 1991, entered
into force on 1 February 1994; Interim agreements providing for the
entry into force of the trade provisions were signed on the same
date and entered into force on 1 March 1992;
- Poland and Hungary presented an application for accession
in March 1994;
- the Czech Republic, the Slovak Republic - signed on 16
December 1991, entered into force on 1 February 1995 (due to the
necessity to conclude two separate agreements with the Czech and
the Slovak Republic based on the Europe Agreement with former
Czechoslovakia); Interim agreements providing for the entry into
force of the trade provisions were signed on the same date and
entered into force on 1 March 1992;
- the Slovak Republic presented an application for accession
in June 1995;
- Romania - signed 28 February 1993 entered into force 1
February 1995; Interim Agreement, providing for the entry into
force of the trade provisions was signed on the same date and
entered into force on 1 May 1993; Romania presented an
application for accession in June 1995.
- the Baltic States (Lithuania, Latvia, Estonia) - The
Agreements on free trade and trade related matters were signed on
18 July 1994 and entered into force on 1 January 1995. The Europe
Agreements were negotiated afterwards and concluded during the
first half of 1995;
- Slovenia - the Commission’s mandate to negotiate an
Association Agreement (Europe Agreement) with Slovenia was approved
by Council in May 1995 with a view to conclude such an Agreement by
the end of 1995.
2.1.3. Agreement establishing an association between the
European Economic Community and the Republic of Cyprus was
signed on 19 December 1972 and entered into force on 1 June 1973.
The first stage was due to be completed by 30 June 1977, but was
subsequently extended. The Protocol laying down the conditions and
procedures for the implementation of the second stage of the
Agreement establishing an Association between the EEC and the
Republic of Cyprus was signed on 19 October 1987 and entered into
force on 1 January 1988. It provides for the establishment of a
customs union in two phases:
-during a first phase of 10 years (1988-97 in principle) Cyprus
is to abolish customs duties for industrial products originating in
the EEC and adopt the Common Customs Tariff. The two parties will
abolish their customs duties for the agricultural products covered
by reciprocal concessions in the Association Agreement. The
Community will progressively increase the tariff quotas for
Cyprus’s principal agricultural exports of cereals, beef and veal
and vegetable oils;
- the second phase (5 years) will enter into force by a decision
of the Association Council. The measures necessary to implement the
free movement of agricultural products in a customs union will be
applied Cyprus has now presented an application for accession. The
Community took a decision to open the accession negotiations six
months after the end of the Intergovernmental Conference due to be
opened in 1996.
2.1.4. An Agreement establishing an Association between the
European Economic Community and Malta was signed on 5 December
1970 and entered into force on 1 April 1971 for an unlimited
period. The Agreement provides for two stages:
- the first (duration: 5 years) was twice extended by an
Agreement and an Additional Protocol (expiring on 31 December
1980). The trade provisions of the Agreement and the protocols were
unilaterally extended until 30 June 1984 and subsequently further
extended to 31 December 1985. The Community and Malta subsequently
implemented unilaterally the trade provisions of the Agreement.
A Supplementary Protocol to the Agreement establishing an
Association between the European Economic Community and Malta was
signed on 14 December 1988 and entered into force on 1 April 1989
extending the first stage until 31 December 1990.
Another protocol was signed on 20 December 1990 extending the
first stage until 31 December 1991 and providing for further
automatic extensions from year to year thus providing for an
extension de facto for an unlimited period.
Following the lodging by Malta of its application for accession,
the Association Council called on 8 April 1992 for negotiations to
begin as soon as possible.
The Community took a decision to open the accession negotiations
six months after the end of the Intergovernmental Conference (as
with Cyprus).
2.1.5 An Agreement establishing an Association between the
European Economic Community and Turkey was signed on 12
September 1963 and entered into force on 1 December 1964 for an
unlimited period. The Agreement provides for the establishment of a
customs union. It comprises three stages:
- a preparatory stage (duration: around five years);
- a transitional stage (twelve years) involving the
establishment of a customs union;
- a final stage.
A Financial Protocol was signed on 23 November 1970 providing
for the establishment of the conditions, arrangements and a
timetable for the transitional stage. During the following periods
second, third and fourth financial protocols were negotiated and
concluded. On the last (fourth protocol) negotiations were
completed on 19 June 1981. The Protocol was initialled only in
1991, but the Greek opposition continues to block the release of
the ECU 600 million set aside by this Protocol for the financing of
development and co-operation projects over a period of five years
(1991-96).
The attainment of the objectives set by the Agreement is
administered by the Association Council (it resumed its activities
on 30 September 1991 following a five year gap).
In 1992 a co-operation programme was finalised between the
Commission and the Turkish government with the aim of relaunching
the EEC- Turkey association. In a joint statement issued at the end
of the meeting of the EEC-Turkey Association Council in November
1992 the Association Council called for political dialogue and
co-operation to be stepped up. The Association Council meeting in
March 1995 called for the entry into force of the final stage of
the customs union on 1 January 1996 (duration of this stage: five
years after entry into force).
2.1.6 Several co-operation agreements between the EEC and the
Mediterranean and Middle East countries were concluded in the
late 1970's as follows:
- with the People's Democratic Republic of Algeria -
signed on 26 April 1976, entered into force on 1 November 1978 for
an unlimited period;
- with the Arab Republic of Egypt - signed on 18 January
1977, entered into force on 1 November 1978 for an unlimited
period;
- with the Hashemite Kingdom of Jordan - signed on 18
January 1977, entered into force on 1 January November 1979 for an
unlimited period;
- with the Lebanese Republic - signed on 3 May 1977,
entered into force on 1 November 1978 for an unlimited period;
- with the Kingdom of Morocco - signed on 27 April 1976,
entered into force on 1 November 1978 for an unlimited period;
- with the Syrian Arab Republic - signed on 18 January
1977, entered into force on 1 November 1978 for an unlimited
period;
- with the Republic of Tunisia - signed on 25 April 1976,
entered into force on 1 November 1978 for an unlimited period.
All these are comprehensive co-operation agreements, providing
for the possibilities for financial arrangements governed by
specific protocols and allowing for the conclusions of protocols
enabling traditional export trade of these countries with the
Community to be maintained. On the basis of these agreements and in
conformity with Article 113 of the Treaty arrangements for specific
agricultural imports into the Community originating in each of
these countries were concluded.
Negotiations for the conclusion of new generation agreements
are currently underway. A new Agreement has been initialled
with Tunisia by the end of the first half of 1995 and the
conclusion of such agreements with Morocco and Israel is expected
to take place until the end of 1995. A lot of progress has been
achieved also in the negotiations with Egypt, Jordan and
Lebanon.
The Euro- Mediterranean Conference to be held in Barcelona on
27-28 November 1995 is expected to lay the foundations for a
Euro-Mediterranean partnership with ambitious co-operation
goals with a view to establish a Euro-Mediterranean economic
area based on free trade in accordance with the obligations arising
from the WTO. The establishment of the free trade area is to be
progressively completed by the year 2010 covering most
trade.
2.2. Agreements based on Article 113 of the Treaty
2.2.1. Agreement between the European Economic Community and
the Swiss Confederation
The Agreement was signed on 22 July 1972 and entered into force
on 1 January 1973 for an unlimited period; It is a preferential
Agreement, creating a free trade area and laying down a detailed
schedule for the dismantling of tariffs, on completion of which
industrial products circulate freely. The Agreement has been
amended on several occasions by Additional protocols, Exchange of
letters or Decisions of the Joint Committee. Since the Swiss
Confederation did not join the European Economic Area bilateral
negotiations are under way with a view to improve the economic
provisions of the existing Agreement.
2.2.2. An Agreement between the European Economic Community
and the State of Israel was signed on 11 may 1975 and entered
into force on 1 July 1975 for an unlimited period. This is a free
trade and co-operation agreement. Several protocols governing the
financial aspects of the co-operation were concluded. The latest
one covering a period of five years expires on 31 October 1996.
Negotiations for a new generation agreement are currently
under way in the context of the Mediterranean policy of the
European Union.
Notes:
1) After their accession Austria, Finland and Sweden had to
withdraw from the Convention establishing the European Free-Trade
Association and to apply to their former EFTA partners the
Agreements concluded by the European Union.
2)After referendum the Swiss Confederation did not ratify the
Agreement;
3) After their accession to the EU Austria, Finland and
Sweden participate on the Union's side; at present parties to the
EEA Agreement are the EC-15 of the one side and Iceland, Norway,
Liechtenstein of the other side.
4) Bulgaria, Hungary, the Czech and the Slovak Republic shall
abolish duties on imports from the Community nine years after the
entry into force of the Agreement, Poland - seven years after entry
into force, Lithuania - seven years after entry into force, Latvia
- four years after entry into force, Estonia abolished duties and
quantitative restrictions on imports from the Community with the
entry into force of the Agreement. Thus the Europe Agreement
between Estonia and the Community is the only one providing for an
immediate establishment of a free trade area including trade in the
sensitive sectors (in trade in textiles applies the double checking
system on imports into the Community).
5)However in October 1990, to allow for the consequences of
the Gulf crisis, the European Communities adopted an economic aid
programme for Turkey, Jordan and Egypt
3. Current status of regional co-operation of
Bulgaria
The integration process of the European Union is an example how
economies sharing common values may develop their co-operation on
the basis of mutual benefit.
To prepare for the intensive type of integration within the
Community co-operation with associated to the EC countries must be
developed.
The Central European countries (the Visegrad) countries realised
the necessity of deepening relationship between themselves in
parallel to their bilateral agreements with the European Union.
The Central European Free Trade Agreement was concluded between
the Czech Republic, the Republic of Hungary, the Republic of Poland
and the Slovak Republic and entered into force on 1 March 1993.
The implementation of the Agreement is aimed to progressively
eliminate the obstacles to substantially all trade thus fostering
the intensification of mutually beneficial trade relations and
contributing to the process of integration in Europe.
3.1. Free trade agreement with EFTA
In March 1993 Bulgaria has signed a Free Trade Agreement with
the EFTA States, covering trade in industrial products, fish and
processed agricultural products. The Agreement is parallel in many
ways with the Europe Agreement with the EC. There is also an
asymmetry in the implementation schedule of trade liberalisation in
favour of Bulgaria. Bilateral agreements in agricultural products
were concluded with each individual EFTA State and signed on the
same date
3.2. Free trade agreements with the associated countries from
Central and Eastern Europe
The Bulgarian side indicated its willingness to negotiate
bilateral free trade agreements with the other associated to the EU
countries from Central and Eastern Europe.
Negotiations with the Czech Republic and the Slovak Republic are
well under way with a view to be completed by the end of 1995.
Exploratory talks have been held with Poland and Romania with a
view to schedule negotiations as soon as possible. Bulgaria and
Slovenia agreed in principle to hold negotiations on a free trade
agreement.
3.3. Cumulation of rules of origin
While technical in character the cumulation of preferential
rules of origin between the associated countries from Central and
Eastern Europe and the European Union will foster trade in the
region.
This will also strengthen the effectiveness of the Europe
Agreement by allowing economic operators to fully exploit its
provisions. At present the diagonal cumulation provision is
included in the Agreements of the Visegrad countries.
The adaptation of the their Europe Agreements to extend the
diagonal cumulation to include Bulgaria (and Romania) is dependant
on all associated countries agreeing on one system and agreeing on
an agreement between themselves.
The intentions of the Community are afterwards to introduce
diagonal cumulation to the extent possible (some product sectors,
probably textiles and vehicles will be excluded) between EC/EFTA
treated as one territory for the purposes of rules of origin and
the associated countries.
As a result all EC/CEEC/EFTA countries would then be involved in
what could be called European cumulation.
Before the introduction of full cumulation into all Europe
agreements as a third stage a thorough evaluation would be
undertaken on the basis of the sectoral and regional consequences
on European industry of introducing full cumulation, taking into
account the effects of the first two stages.
The progress achieved so far in the multilateral discussions
between the six associated countries on the adaptation of their
Europe Agreements in order to harmonise the rules of origin and to
extend the cumulation of origin to include Bulgaria and Romania
indicate their willingness to proceed expeditiously (two rounds of
negotiations have been held in Brussels between the European
Commission and the customs authorities of the countries
concerned).
When achieved, harmonisation of rules of origin and the
extension of cumulation possibilities, would strengthen the
effectiveness of the Europe Agreements, improve market access for
originating products and stimulate economic co-operation throughout
Europe.
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