Decision of the Joint EFTA-Latvia Committee No.1 of 1999

(Adopted by written procedure on 6 January 1999)

Amendments to protocol B

* The Principality of Liechtenstein forms, pursuant to the Treaty of 29 March 1923, a customs union with Switzerland and is a Contracting Party to the Agreement of 2 May 1992 on the European Economic Area.

THE JOINT COMITTEE,

Having regard to Protocol B to the Agreement between the EFTA States and Latvia signed 7 December 1995, hereinafter referred to as "this Agreement" concerning the definition of the concept of "originating products" and methods of administrative co-operation, amended by Decision No.1 of 1996 of the Joint EFTA/Latvia Committee,

Having regard to Paragraph 1 of the Record of Understanding relating to the Agreement between the EFTA States and Latvia according to which the Parties to the Agreement declared their readiness, in case of any decision taken in the appropriate bodies concerning the implementation of European cumulation, to adapt Protocol B accordingly;

Having regard to the specific Agreements between the European Community and Turkey, in particular to the Agreement establishing a Customs Union between the European Community and Turkey and to the Free Trade Agreement on ECSC products concluded between these two Parties,

Noting the Agreement of the EFTA States and Latvia that the extension of the pan-European cumulation system to Turkey is highly desirable in order to improve the effectiveness of this Agreement,

Noting that due to the accession of Turkey to the pan-European cumulation system certain provisions of Protocol B, in particular the cumulation provisions, have to be amended,

Noting that in order to facilitate trade a derogation from the principle of territoriality shall be introduced into the pan-European cumulation provisions,

Noting that for the said reasons and in order to simplify administrative tasks it is desirable to amend Articles l, 3, 4 and 12. of Protocol B,

Having regard to paragraph 6 last sentence, of Article 15 of Protocol B allowing the partner countries in central and eastern Europe to grant partial drawback of or exemption from customs duties in derogating from the no-drawback principle, but timely limited up to the end of 1998,

Having regard to the request of several partner countries to the European Community and the EFTA States to agree on a postponement of the expiration of paragraph 6 of Article 15 of Protocol B up to the end of the year 2000, and noting the readiness of the EU and EFTA countries to meet this demand,

Noting that to take account of changes in processing techniques and shortages of certain raw materials, corrections are to be made to the Introductory Notes to the list as contained in Annex I to Protocol B and to the list of working or processing as contained in Annex II to Protocol B,

Having regard to Article 31 of the Agreement, empowering the Joint Committee to amend Protocol B to this Agreement,

DECIDES:

1. Sub-paragraph (i) of Article 1 of Protocol B shall be amended to read as follows:

"(i) "added value" shall be taken to be the ex works price minus the customs value of each of the products incorporated which originated in the other countries referred to in Articles 3 and 4 or, where the customs value is not known or cannot be ascertained, the first price verifiably paid for the products in the EFTA State concerned or in Latvia;"

2. Article 3 of Protocol B shall be amended to read as follows:

"l. Subject to the provisions of Article 2 (1), products shall be considered as originating in an EFTA State if they have been obtained there by incorporating materials originating in Latvia, Iceland, Norway, Switzerland (including Liechtenstein)*, Hungary, Poland, the Czech Republic, the Slovak Republic, Bulgaria, Romania, Slovenia, Estonia, Lithuania, Turkey or the European Community in accordance with the provisions of the Protocol on rules of origin annexed to the Agreements concluded between the EFTA States and either the European Community or each of the said countries, provided these materials have undergone treatment in the EFTA State concerned going beyond that referred to in Article 7 of this Protocol. The materials need not to have undergone sufficient working or processing.

2. Where working or processing in an EFTA State does not go beyond the treatment referred to in Article 7, the product obtained shall be considered as originating in the EFTA State concerned only if the value added there exceeds that of any incorporated materials originating either in the European Community or in one of the other countries referred to in paragraph l. If it does not, the product concerned shall be considered as originating either in the European Community or in the country which accounts for the highest value of originating materials used in working or processing in the EFTA State concerned.

3. Products originating either in the European Community or in one of the countries referred to in paragraph 1 and not having undergone any treatment in the EFTA State concerned shall retain the status of originating product if they are exported to either the European Community or one of those countries.

4. The cumulation provided for in this Article may be applied only where the materials or products incorporated have acquired the status of originating product by application of rules of origin identical to those set out in this Protocol."

3. Article 4 of Protocol B shall be amended to read as follows:

"1. Subject to the provisions of Article 2 (2), products shall be considered as originating in Latvia if they have been obtained there by incorporating materials originating in Iceland, Norway, Switzerland (including Liechtenstein)*, Latvia, Hungary, Poland, the Czech Republic, the Slovak Republic, Bulgaria, Romania, Slovenia, Estonia, Lithuania, Turkey, or the European Community in accordance with the provisions of the Protocol on rules of origin annexed to the Agreements concluded between Latvia and either the European Community or each of the said countries, provided these materials have undergone. treatment in Latvia going beyond that referred to in Article 7 of this Protocol. The materials need not to have undergone sufficient working or processing.

2. Where working or processing in Latvia does not go beyond the treatment referred to in Article 7, the product obtained shall be considered as originating in Latvia only if the value added there exceeds that of any incorporated materials originating either in the European Community or in one of the other countries referred to in paragraph 1. If it does not, the product concerned shall be considered as originating either in the European Community or in the country which accounts for the highest value of originating materials used in working or processing in Latvia.

3. Products originating either in the European Community or in one of the countries referred to in paragraph 1 and not having undergone any treatment in Latvia shall retain the status of originating product if they are exported to either the European Community or one of those countries.

4. The cumulation provided for in this Article may be applied only where the materials or products incorporated have acquired the status of originating product by application of rules of origin identical to the rules in this Protocol."

4. Article 12 of Protocol B shall be amended to read as follows:

"1. Except as provided for in Article 2 (1) (c), Articles 3 and 4 and paragraph 3 of this Article, the conditions for acquiring originating status set out in Title II must be fulfilled without interruption in an EFTA State or Latvia.

2. Except as provided for in Articles 3 and 4, where originating goods exported from an EFTA State or Latvia to another country return, 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.

3. The acquisition of originating status in accordance with the conditions set out in Title II shall not be affected by working or processing done side an EFTA State or Latvia on materials exported from an EFTA State or Latvia and subsequently reimported there, provided:

(a) the said materials are wholly obtained in an EFTA State or Latvia or have undergone working or processing beyond the insufficient operations listed in Article 7 prior to being exported; and

(b) it can be demonstrated to the satisfaction of the customs authorities that:

(i) the reimported goods have been obtained by working or processing the exported materials; and

(ii) the total added value acquired outside the EFTA State concerned or Latvia by applying the provisions of this Article does not exceed 10 per cent of the ex-works price of the final product for which originating status is claimed.

4. For the purposes of paragraph 3, the conditions for acquiring originating status set out in Title II shall not apply to working or processing done outside an EFTA State or Latvia. But where, in the list in Annex II, a rule setting a maximum value for all the non-originating materials incorporated is applied in determining the originating status of the final product, the total value of the non-originating materials incorporated in the territory of the State Party concerned, taken together with the total added value acquired outside the EFTA State concerned or Latvia by applying the provisions of this Article, shall not exceed the stated percentage.

5. For the purposes of applying the provisions of paragraphs 3 and 4, "total added value" shall be taken to mean all costs arising outside the EFTA State concerned or Latvia, including the value of the materials incorporated there.

6. The provisions of paragraphs 3 and 4 shall not apply to products which do not fulfil the conditions set out in the list in Annex II and which can be considered sufficiently worked or processed only if the general tolerance in Article 6 (2) is applied.

7. The provisions of paragraphs 3 and 4 shall not apply to products falling within Chapters 50 to 63 of the Harmonized System.

8. Any working or processing of the kind covered by the provisions of this Article carried out outside an EFTA State or Latvia shall be effected by means of outward processing arrangements, or similar arrangements."

5. Paragraph 1 of Article 13 of Protocol B shall be amended to read as follows:

"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 State Parties or through the territories of the other countries or the European Community as referred to in Articles 3 and 4. 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 State Parties."

6. Paragraph 1 of Article 14 of Protocol B shall be amended to read as follows:

"1. Originating products, sent for exhibition outside the State Parties or the other countries or the European Community as referred to in Articles 3 and 4 and sold after the exhibition for importation into an EFTA State or Latvia shall benefit on importation from the provisions of the Agreement provided it is shown to the satisfaction of the customs authorities that:"

7. Paragraph 1 of Article 15 of Protocol B shall be amended to read as follows:

"1. Non-originating materials used in the manufacture of products originating in an EFTA State, in Latvia or in one of the other countries or the European Community as referred to in Articles 3 and 4 for which a proof of origin is issued or made out in accordance with the provisions of Title V shall not be subject in an EFTA State or Latvia to drawback of, or exemption from, customs duties of whatever kind."

8. The last indent of paragraph 6 of Article 15 of Protocol B shall be amended to read as follows:

"The provisions of this paragraph shall apply until 31 December 2000 and may be reviewed by common accord."

9. Paragraph 4 of Article 17 of Protocol B shall be amended to read as follows:

"4. A movement certificate EUR. l shall be issued by the customs authorities of an EFTA State or Latvia if the products concerned can be considered as products originating in an EFTA State, in Latvia or in one of the other countries or the European Community as referred to in Articles 3 and 4 and fulfil the other requirements of this Protocol."

10. Paragraph 2 of Article 21 of Protocol B shall be amended to read as follows:

"2. An invoice declaration may be made out if the products concerned can be considered as products originating in an EFTA State, in Latvia or in one of the other countries or the European Community as referred to in Articles 3 and 4 and fulfil the other requirements of this Protocol."

11. Paragraph 1 of Article 26 of Protocol B shall be amended to read as follows:

"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."

12. The first indent of Article 27 of Protocol B shall be amended to read as follows:

"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. l or an invoice declaration can be considered as products originating in an EFTA State, in Latvia or in one of the other countries or the European Community as referred to in Articles 3 and 4 and fulfil the other requirements of this Protocol may consist inter alia of the following:"

13. Sub-paragraph (d) of Article 27 of Protocol B shall be amended to read as follows:

"(d) movement certificates EUR.1 or invoice declaration proving the originating status of materials used, issued or made out in an EFTA State or Latvia in accordance with this Protocol, or in one of the other countries or the European Community as referred to in Articles 3 and 4, in accordance with rules of origin which are identical to the rules in this Protocol."

14. Paragraph 2 of Article 30 of Protocol B shall be amended to read as follows:

"2. When the amounts exceed the corresponding amounts fixed by the importing country, the latter shall accept them if the products are invoiced in the currency of the exporting country. When the products are invoiced in the currency of another State Party or of another country referred to in Articles 3 and 4 or one of the Member States of the European Community, the importing country shall recognize the amount notified by the country concerned".

15. Paragraph 5 of Article 32 of Protocol B shall be amended to read as follows:

"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 Community as referred to in Articles 3 and 4 and fulfil the other requirements of this Protocol."

16. In the enumeration of paragraph 5.2 of Note 5 of Annex I to Protocol B "Introductory notes to the list in Annex II" the following basic material shall be added after "artificial man- made filaments":

"-current conducting filaments,"

17. In the enumeration of paragraph 5.2 of Note 5 of Annex I to Protocol B "Introductory notes to the list in Annex II" the fifth example ("A carpet with tufts...are met.") shall be deleted.

18. The list rules to HS Heading 2207, HS Chapter 57, HS Headings 7006 and 7601 in Annex II to Protocol B shall be amended to read as follows:

(1) For special conditions relating to products made of a mixture of textile materials, see Introductory Note 5

(2) The use of jute yarn is authorised as from 1 July 2000.

(3) SEMII - Semiconductor Equipment and Materials Institute Incorporated.

19. This decision shall enter into force on 1 January 1999. For the Republic of Latvia the entry into force of this decision is subject to ratification.

If the Republic of Latvia has not notified the other States Parties on the ratification before 1 January 1999 it shall apply this decision provisionally from that date until the ratification has been notified.

20. The Secretary - General of the European Free Trade Association shall deposit the text of this Decision with the Depositary.