2. If one Party is of the view that measures introduced by the other Party since the signature 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 signature of the Agreement, such first Party may request the other Party to enter into consultations.
Article 54.
1. 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 arising from the United Nations Code of Conduct for Liner Conferences, as applicable to one or other Party to the present Agreement. Non-conference lines 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 feature of the dry and liquid bulk trade.
2. In applying the principles of paragraph 1, the Parties shall:
(a) not apply, as from entry into force of this Agreement, any cargo sharing provisions of bilateral agreements between any Member State of the Community and the former Soviet Union;
(b) not introduce cargo sharing clauses into future bilateral agreements with third countries, other than in those exceptional circumstances where liner shipping companies from one or other Party to the present Agreement would not otherwise have an effective opportunity to ply for trade to and from the third country concerned;
(c) prohibit cargo sharing arrangements in future bilateral agreements concerning dry and liquid bulk trade;
(d) abolish upon entry into force of this Agreement all unilateral measures, administrative, technical and other obstacles which could have restrictive or discriminatory effects on the free supply of services in international maritime transport.
Each Party shall grant, inter alia, no less favourable treatment for the ships operated by nationals or companies of the other Party than that accorded to a Party's own ships with regard to access to ports open to international trade, the use of infrastructure and auxiliary maritime services of the ports, as well as related fees and charges, customs facilities and the assignment of berths and facilities for loading and unloading.
3. Nationals and companies of the Community providing international maritime transport services shall be free to provide international sea-river services in the inland waterways of Latvia and vice versa.
4. With a view to ensuring the transit of goods through the territory of each Party, the Parties undertake to conclude an agreement as soon as possible and before the end of 1999 on the transit of inter-modal traffic through each other's territory.
5. With a view to assuring a coordinated development and progressive liberalization of transport between the Parties, adapted to their reciprocal commercial needs, the conditions of mutual market access and provision of services in transport by road, rail and inland waterways and, if applicable, in air transport shall be dealt with by specific transport agreements where appropriate negotiated between the Parties after entry into force of this Agreement.
6. Prior to the conclusion of the agreements referred to in paragraph 5, the Parties shall not take any measures or actions which are more restrictive or discriminatory as compared with the situation existing on the day preceding the day of entry into force of the Agreement.
7. During the transitional period, Latvia shall progressively adapt its legislation including administrative, technical and other rules to that of the Community legislation existing at any time in the field of road, rail, inland waterway and air transport in so far as it serves liberalization purposes and mutual access to markets of the Parties and facilitates the movement of passengers and of goods.
8. In step with the common progress in the achievement of the objectives of this Chapter, the Association Council shall examine ways of creating the conditions necessary for improving freedom to provide road, rail, inland waterway and air transport services.
Chapter IV. GENERAL PROVISIONS
Article 55.
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 which in the territory of either Party are connected, even occasionally, with the exercise of official authority.
Article 56.
For the purpose of this Title nothing in the Agreement shall prevent the Parties from applying their laws and regulations regarding entry and stay, work, labour conditions and establishment of natural persons and supply of services, provided that - in so doing - they do not apply them in a manner as to nullify or impair the benefits accruing to any Party under the terms of a specific provision of the Agreement.
Article 57.
Companies which are controlled and exclusively owned by Latvian companies or nationals and Community companies or nationals jointly shall also be beneficiaries of the provisions of Chapters II, III and IV of this Title.
Article 58.
1. The Most Favoured Nation treatment granted in accordance with the provisions of this Title shall not apply to the tax advantages which the Parties are providing or will provide in the future on the basis of agreements to avoid double taxation, or other tax arrangements.
2. Nothing in 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. Nothing in this Title shall be construed to prevent Member States or Latvia from distinguishing, in the application of the relevant provisions of their fiscal legislation, between taxpayers who are not in identical situations, in particular as regards their place of residence.
Article 59.
The provisions of this Title shall be progressively adjusted by the Parties. In formulating recommendations to this effect, the Association Council shall take into account the respective obligations of the Parties under the General Agreement on Trade in Services (GATS), and in particular of its Article V.
Article 60.
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 V. PAYMENTS, CAPITAL, COMPETITION AND OTHER ECONOMIC PROVISIONS, APPROXIMATION OF LAWS
Chapter I. CURRENT PAYMENTS AND MOVEMENT OF CAPITAL
Article 61.
The Parties undertake to authorize, 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 residents of the Community and Latvia.
Article 62.
1. With regard to transactions on the capital account of balance of payments, from entry into force of the Agreement, the Member States and Latvia respectively 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 IV, and the liquidation or repatriation of these investments and of any profit stemming therefrom.
Without prejudice to Article 44, last paragraph, complete free movement of capital relating to establishment and operations of self-employed persons, including the liquidation and repatriation of such investments, shall be ensured from entry into force of this Agreement.
2. With regard to transactions on the capital account of balance of payments, from entry into force of this Agreement the Member States and Latvia respectively shall ensure the free movement of capital relating to portfolio investment. This shall also apply to the free movement of capital relating to credits related to commercial transactions or the provision of services in which a resident of one of the Parties is participating and to financial loans.
3. Without prejudice to paragraph 1, the Member States and Latvia shall not introduce any new restrictions on the movement of capital and current payments connected therewith between residents of the Community and Latvia and shall not make the existing arrangements more restrictive.
4. The Parties shall consult each other with a view to facilitating the movement of capital between the Community and Latvia in order to promote the objective of the present Agreement.
Article 63.
1. 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. The Association Council shall examine ways of enabling Community rules on the movement of capital to be applied in full.
Chapter II. COMPETITION AND OTHER ECONOMIC PROVISIONS
Article 64.
1. The following are incompatible with the proper functioning of this Agreement, in so far as they may affect trade between the Community and Latvia:
(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 Latvia 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 the production of certain goods.
2. Any practices contrary to this Article shall be assessed on the basis of criteria arising from the application of the rules of Articles 85, 86 and 92 of the Treaty establishing the European Community or, for products covered by the ECSC Treaty, on the basis of corresponding rules of the ECSC Treaty including secondary legislation.
3. The Association Council shall, by 31 December 1997, adopt by decision the necessary rules for the implementation of paragraphs 1 and 2.
Until these rules are adopted, the provisions of the Agreement on interpretation and application of Articles VI, XVI and XXIII of the GATT shall be applied as the rules for the implementation of paragraph 1 point (iii) and related parts of paragraph 2.
4. (a) For the purposes of applying the provisions of paragraph 1 point (iii), the Parties recognize that until 31 December 1999, any public aid granted by Latvia shall be assessed taking into account the fact that Latvia shall be regarded as an area identical to those areas of the Community described in Article 92 (3) (a) of the Treaty establishing the European Community. The Association Council shall, taking into account the economic situation of Latvia, decide whether that period should be extended by further periods of five years.
(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.
5. With regard to products referred to in Chapters II and III of Title III:
- the provision of paragraph 1 point (iii) does not apply,
- any practices contrary to paragraph 1 point (i) should be assessed according to the criteria established by the Community on the basis of Articles 42 and 43 of the Treaty establishing the European Community and in particular of those established in Council Regulation No 26/1962.
6. If the Community or Latvia considers that a particular practice is incompatible with the terms of the first paragraph of this Article, and
- is not adequately dealt with under the implementing rules referred to in paragraph 3, or
- in the absence of such rules, and if such practice causes or threatens to cause serious prejudice 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 Association Council or after 30 working days following referral for such consultation.
In the case of practices incompatible with paragraph 1 point (iii) of this Article, such appropriate measures may, where the GATT applies thereto, only be adopted in conformity with the procedures and under the conditions laid down by the GATT and any other relevant instrument negotiated under its auspices which are applicable between the Parties.
7. Notwithstanding any provisions to the contrary adopted in conformity with paragraph 3, the Parties shall exchange information taking into account the limitations imposed by the requirements of professional and business secrecy.
Article 65.
1. The Parties shall endeavour to avoid the imposition of restrictive measures including measures relating to imports for balance of payments purposes. In the event of their introduction, the Party having introduced the same shall present to the other Party, as soon as possible, a time schedule for their removal.
2. Where one or more Member States or Latvia is in serious balance of payments difficulties, or under imminent threat thereof, the Community or Latvia, as the case may be, may, in accordance with the conditions established under the GATT, adopt restrictive measures, including measures relating to imports, which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The Community or Latvia, as the case may be, shall inform the other Party forthwith.
3. Any restrictive measures shall not apply to transfers related to investments and in particular to the repatriation of amounts invested or reinvested and of any kind of revenues stemming therefrom.
Article 66.
With regard to public undertakings, and undertakings to which special or exclusive rights have been granted, the Association Council shall ensure that as from 1 January 1998, the principles of the Treaty establishing the European Community, notably Article 90, and the relevant CSCE principles, in particular entrepreneurs' freedom of decision, are upheld.
Article 67.
1. Pursuant to the provisions of this Article and of Annex XVII, the Parties confirm the importance that they attach to ensure adequate and effective protection and enforcement of intellectual, industrial and commercial property rights.
2. Latvia shall continue to improve the protection of intellectual, industrial and commercial property rights in order to provide, by the end of the transitional period referred to in Article 3 of this Agreement, for a level of protection similar to that existing in the Community, including effective means of enforcing such rights.
3. By the end of the transition period referred to in Article 3, Latvia shall accede to the multilateral conventions on intellectual, industrial and commercial property rights referred to in paragraph 1 of Annex XVII to which Member States of the Community are parties or which are de facto applied by Member States according to the relevant provisions contained in these conventions.
4. If problems in the area of intellectual, industrial and commercial property affecting trading conditions were to occur, urgent consultations will be undertaken, at the request of either Party, with a view to reaching mutually satisfactory solutions.
Article 68.
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 GATT and WTO context, to be a desirable objective.
2. The Latvian companies as defined in Article 46 of this Agreement, shall be granted access to contract award procedures in the Community pursuant to Community procurement rules under a treatment no less favourable than that accorded to Community companies as of the entry into force of this Agreement.
Community companies in the sense of Article 46 of this Agreement shall be granted access to contract award procedures in Latvia under a treatment no less favourable than that accorded to Latvian companies at the latest by the end of the transitional period referred to in Article 3.
Community companies established in Latvia under the provisions of Chapter II of Title IV in the form of subsidiaries as described in Article 46 and in the forms described in Article 57 shall have upon entry into force of this Agreement access to contract award procedures under a treatment no less favourable than that accorded to Latvian companies. Community companies established in Latvia in the form of branches and agencies as described in Article 46 shall be granted such treatment at the latest by the end of the transitional period referred to in Article 3.
The provisions in this paragraph shall also apply to public contracts covered by Directive 93/38/EEC of 14 June 1993 once Latvia has introduced the appropriate legislation.
The Association Council shall periodically examine the possibility for Latvia to introduce access to contract award procedures in Latvia for all Community companies prior to the end of the transitional period.
3. As regards establishment, operations, supply of services between the Community and Latvia, as well as employment and movement of labour linked to the fulfilment of public contracts, the provisions of Articles 37 to 60 of this Agreement are applicable.
Chapter III. APPROXIMATION OF LAWS
Article 69.
The Parties recognize that an important condition for Latvia's economic integration into the Community is the approximation of Latvia's existing and future legislation to that of the Community. Latvia shall endeavour to ensure that its legislation will be gradually made compatible with that of the Community.
Article 70.
The approximation of laws shall extend to the following areas in particular: customs law, company law, banking law, company accounts and taxation, intellectual property, financial services, rules on competition, protection of health and life of humans, animals and plants, protection of workers including health and safety at work, consumer protection, indirect taxation, technical rules and standards, nuclear law and regulation, transport, telecommunications, environment, public procurement, statistics, product liability, labour law and entrepreneurial law.
Within these areas rapid progress in the approximation of laws should in particular be made in the fields of the internal market, competition, protection of workers, environmental protection and consumer protection.
Article 71.
The Community shall provide Latvia with technical assistance for the implementation of these measures, which may include inter alia:
- the exchange of experts,
- the provision of early information especially on relevant legislation,
- organization of seminars,
- training activities,
- aid for the translation of legislation in the relevant sectors,
- aid for improving customs procedures and statistics,
- aid for legislation in the context of approximation of Latvia's legislation to European Union laws.
Title VI. ECONOMIC COOPERATION
Article 72.
1. The Community and Latvia shall further develop economic cooperation aimed at contributing to Latvia's development and growth potential. Such cooperation shall strengthen existing economic links on the widest possible foundation, to the benefit of both Parties.
2. Policies and other measures shall be designed to bring about the economic and social development of Latvia and will be guided by the principle of sustainable development. 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. To this end the cooperation should focus in particular on policies and measures related to industry, investment, agriculture and the agro-industrial sector, energy, transport, regional development and tourism.
4. Special attention shall be devoted to measures capable of fostering cooperation between the three Baltic countries, and with the other countries of central and eastern Europe as well as the other countries bordering the Baltic Sea with a view to an integrated development of the region.
Article 73. Industrial Cooperation
1. Cooperation shall seek to promote the following in particular:
- industrial cooperation between the economic operators of the two Parties, with the particular aim of strengthening the private sector in Latvia,
- Community participation in Latvia's efforts in both public and private sectors to modernize and restructure its industry, which will effect the transition to a market economy under conditions which ensure that the environment is protected,
- the restructuring of individual sectors,
- the establishment of new undertakings in areas offering potential for growth, particularly in branches of light industry, consumer goods and market services.
2. Industrial cooperation initiatives shall take into account priorities determined by Latvia. The initiatives should seek in particular to establish a suitable framework for undertakings, to improve management know-how and to promote transparency as regards markets and conditions for undertakings. Technical assistance will be included where appropriate.
Article 74. Investment Promotion and Protection
1. Cooperation shall aim at maintaining and, if necessary, improving a legal framework and a favourable climate for private investment and its protection, both domestic and foreign, which is essential to economic and industrial reconstruction and development in Latvia. The cooperation shall also aim to encourage and promote foreign investment and privatization in Latvia.
2. The particular aims of cooperation shall be:
- for Latvia to establish 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,
- to proceed with deregulation and to improve economic infrastructure,
- to exchange information on investment opportunities in the context of trade fairs, exhibitions, trade weeks and other events.
Assistance from the Community could be granted in the initial stage to agencies which promote inward investment.
3. Latvia shall honour the rules on Trade-Related Aspects of Investment Measures (TRIMs).
Article 75. Small and Medium-sized Enterprises
1. The Parties shall aim to develop and strengthen small and medium-sized enterprises (SMEs) and cooperation between SMEs in the Community and Latvia.
2. They shall encourage the exchange of information and know-how in the following areas:
- improving, where appropriate, the legal, administrative, technical, tax and financial conditions necessary fot the setting-up and expansion of SMEs and for cross-border cooperation,
- the provision of the specialized services required by SMEs (management training, accounting, marketing, quality control, etc.) and the strengthening of agencies providing such services,
- the establishment of appropriate links with Community operators via European business cooperation networks, in order to improve the flow of information to SMEs and to promote cross-border cooperation.
3. The cooperation shall include the supply of technical assistance, in particular for the establishment of appropriate institutional back-up for SMEs at both national and regional level, regarding financial, training, advisory, technological and marketing services.
Article 76. Agricultural and Industrial Standards and Conformity Assessment
1. The cooperation between the Parties shall aim in particular to reduce differences in standards, technical regulations and conformity assessment procedures, with Community technical assistance where necessary.
2. To this end, the cooperation shall seek:
- to promote the use of Community technical regulations and European standards and conformity assessment procedures, recognizing that, to reach Latvia's objectives of environmental quality, the country is free to develop and implement special (higher) standards if necessary,
- where appropriate, to conclude agreements on mutual recognition in these fields,
- to encourage Latvia's active and regular participation in the work of specialized organizations (CEN, Cenelec, ETSI, EOTC, Euromet).
3. Where appropriate, the Community shall provide Latvia with technical assistance, in particular in training programmes for Latvian experts in the fields of standardization, metrology, certification and quality systems in European countries.
Article 77. Cooperation In Science and Technology
1. The Parties shall promote cooperation in research and technological development activities. They shall devote special attention to the following:
- the exchange of information on each other's science and technology policies,
- the organization of joint scientific meetings (seminars and workshops),
- joint R& D activities aimed at encouraging scientific progress and the transfer of technology and know-how,
- training activities and mobility programmes for researchers and specialists from both sides,
- the development of an environment conducive to research and the application of new technologies and adequate protection of the intellectual property of results of research,
- Latvia's participation in Community research programmes in accordance with paragraph 3.
Technical assistance shall be provided where appropriate.
2. The Association Council shall determine the appropriate procedures for developing cooperation.
3. Cooperation under the Community's framework programme in the field of research and technological development shall be implemented according to specific arrangements to be negotiated and concluded in accordance with the legal procedures of each Party.
Article 78. Education and Training
1. Cooperation shall aim at a harmonious development of human resources and at raising the level of general education and professional qualifications in Latvia, both in the public and private sectors, taking into consideration the priorities of Latvia. Institutional frameworks and plans of cooperation will be established under the auspices of the European Training Foundation, the Tempus programme and the Eurofaculty. Participation of Latvia in other Community programmes shall also be considered in this context.
2. The cooperation shall focus in particular on the following areas: