Decision No.1/1999 of the Joint Committee of the Free Trade Agreement between the Republic of Latvia and the Republic of Poland on Amendments to the Protocol 3 on Rules of Origin to the Free Trade Agreement between the Republic of Latvia and the Republic of Poland

* The principality of Liechtenstein has a customs union with Switzerland, and is a Contracting Party to the Agreement on the European Economic Area.

The Republic of Latvia (hereinafter called Latvia ) and Republic of Poland (hereinafter called Poland),

Having regard to the Free Trade Agreement between the Republic of Poland , of the one part, and the Republic of Latvia, of the other part, signed in Warsaw on 28 April 1997, and in particular Article 38 thereof and Article 36 of the Protocol 3,

Whereas within this Protocol 3 the definition of the term "originating products" needs to be amended to ensure the proper operation of the extended system of cumulation which permits the use of materials originating in the European Community, the Republic of Poland, the Republic of Hungary, the Czech Republic, the Slovak Republic, the Republic of Bulgaria, Romania, the Republic of Estonia, Republic of Lithuania, the Republic of Latvia, the Republic of Slovenia, the European Economic Area (hereinafter referred to as "the EEA"), Iceland, Norway and Switzerland;

Whereas it would seem advisable to introduce the system of flat rate charges in Article 15 of this Protocol 3 in connection with the prohibition of drawback and exemption from customs duty until 31 December 2000;

Whereas, in view of the particular arrangements on industrial products obtaining between the Community and Turkey, it would also be appropriate to extend the cumulation system to such products originating in Turkey;

Whereas to facilitate trade and simplify administrative tasks it is desirable to amend the wording of Articles 3, 4 and 12 of Protocol 3;

Whereas, take account of changes in processing techniques and shortages of certain raw materials, some corrections must be made to the list of working and processing requirements which non-originating materials have to fulfil to qualify for originating status,

HAVE DECIDED AS FOLLOWS:

Article 1

Protocol 3 concerning the definition of the concept of "originating products" and methods of administrative cooperation is hereby amended as follows:

1) Article 1(i) shall be replaced by :

"(i) "added value" shall be taken to be the ex-works price minus the customs value of each of the materials incorporated which originate in the other countries referred to in Article3 and 4 or, where the customs value is not known or cannot be ascertained, the first price verifiably paid for the products in Latvia or Poland.",

2) Articles 3 and 4 shall be replaced by the following:

" Article 3

Cumulation in Latvia

1. Without prejudice to the provisions of Article 2(1) products shall be considered as originating in Latvia if such products are obtained there, incorporating materials originating in Latvia, the Community, Poland, Bulgaria, Hungary, the Czech Republic, the Slovak Republic, Romania, Lithuania, Estonia, Slovenia, Iceland, Norway, Switzerland (including Liechtenstein*) or Turkey in accordance with the provisions of the Protocol on rules of origin annexed to the Agreements between Latvia and each of these countries, provided that the working or processing carried out in Latvia goes beyond that referred to in Article 7 of this Protocol. It shall not be necessary that such materials have undergone sufficient working or processing.

2. Where the working or processing carried out in Latvia does not go beyond the operations referred to in Article 7, the product obtained shall be considered as originating in Latvia only where the value added there is greater than the value of the materials used originating in any one of the other countries referred to in paragraph 1. If this is not so, the product obtained shall be considered as originating in the country which accounts for the highest value of originating materials used in the manufacture in Latvia.

3. Products, originating in one of the countries referred to in paragraph 1, which do not undergo any working or processing in Latvia, retain their origin if exported into one of these countries.

4. The cumulation provided for in this Article may only be applied to materials and products which have acquired originating status by an application of rules of origin identical to those given in this Protocol.

Article 4

Cumulation in Poland

1. Without prejudice to the provisions of Article 2(2), products shall be considered as originating in Poland if such products are obtained there, incorporating materials originating in Latvia, the Community, Poland, Bulgaria, Hungary, the Czech Republic, the Slovak Republic, Romania, Lithuania, Estonia, Slovenia, Iceland, Norway, Switzerland (including Liechtenstein*) or Turkey in accordance with the provisions of the Protocol on rules of origin annexed to the Agreements between Poland and each of these countries, provided that the working or processing carried out in Poland goes beyond that referred to in Article 7 of this Protocol. It shall not be necessary that such materials have undergone sufficient working or processing.

2. Where the working or processing carried out in Poland does not go beyond the operations referred to in Article 7, the product obtained shall be considered as originating in Poland only where the value added there is greater than the value of the materials used originating in any one of the other countries referred to in paragraph 1. If this is not so, the product obtained shall be considered as originating in the country which accounts for the highest value of originating materials used in the manufacture in Poland.

3. Products, originating in one of the countries referred to in paragraph 1, which do not undergo any working or processing in Poland, retain their origin if exported into one of these countries.

4. The cumulation provided for this Article may only be applied to materials and products which have acquired originating status by an application of rules of origin identical to those given in this Protocol.";

3) Article 12 shall be replaced by the following:

" Article 12

Principle of territoriality

1. Except as provided for in Articles 3 and 4 and paragraph 3 of this Article, the conditions for acquiring originating status set out in Title II must continue to be fulfilled at all times in Latvia or Poland.

2. Except as provided for in Articles 3 and 4, where originating goods exported from Latvia or Poland 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 outside Latvia or Poland on materials exported from Latvia or Poland and subsequently reimported there, provided:

(a) the said materials are wholly obtained in Latvia or Poland 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 Latvia or Poland by applying the provisions of this Article does not exceed 10% of the ex-works price of the end 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 Latvia or Poland. 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 end product, the total value of the non-originating materials incorporated in the territory of the party concerned, taken together with the total added value acquired outside Latvia or Poland by applying the provision 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 Latvia or Poland, 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 or which can be considered sufficiently worked or processed only if the general values fixed in Article 6(2) are applied.

7. The provisions of paragraphs 3 and 4 shall not apply to products coming under Chapters 50 to 63 of the Harmonised System.

8. Any working or processing of the kind covered by the provisions of this Article and done outside Latvia or Poland shall be done under the outward processing arrangements, or similar arrangements.";

4) In Articles 13,14,15,17,21,27,30 and 32, the phrase "referred to in Article 4" shall be replaced by "referred to in Articles 3 and 4" ;

5) In Article 15 the following paragraph 6 shall be added:

"Notwithstanding paragraph 1, Poland and Latvia 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 of customs charge shall be retained in respect of products falling within Chapters 25 to 49 and 64 to 97 of the Harmonized System, or such lower rate as is in force in Poland or Latvia;

b) a 10 per cent of customs charge shall be retained in respect of products falling within Chapters 50 to 63 of the Harmonized System, or such lower rate as is in force in Poland or Latvia.

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

6) In Article 26 (1), the terms C2/CP3" shall be replaced by "CN22/CN23";

7) In Annex I, Note 5.2 :

(a) between the indents

"- artificial man-made filaments" and

"- synthetic man-made staple fibres of polypropylene",

the following shall be inserted:

"- current conducting filaments";

(b) the fifth Example ("A carpet with tufts ...are met.") shall be deleted;

8) In Annex II shall be amended as follows:

(a) the following shall be inserted between the entries for HS heading Nos 2202 and 2208:

(b) the entry for Chapter 57 shall be replaced by:

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

2 The use of jute is authorised from 1 July 2000.";

(c) the entry for HS heading 7006 shall be replaced by:

1 SEMII - Semiconductor Equipment and Materials Institute Incorporated.";

(d) the rule for heading No 7601 shall be replaced by:

Article 2

This Decision shall enter into force fifteen days after the last notification of the Party that its internal legal procedures related to entering into force of the Agreement have been completed.

IN WITNESS WHEREOF the undersigned plenipotentiaries, being duly authorised thereto, have signed this Decision.

DONE at Riga, this first day of July, one thousand nine hundred and ninety nine in duplicate copies in the Latvian, Polish and English languages, all texts being equally authentic. In case of divergence the English text shall prevail.

On behalf of On behalf of the

the Republic of Latvia Republic of Poland

State secretary of the State secretary

Ministry of the Ministry

of Economy of Economy

Kaspars Anna

Gerhards Skowronska-

Luczynska