RESTRICTED
WORLD TRADE WT/REG21/1
25October 1995
ORGANIZATION(95-3265)
Original:English/French/Spanish
AGREEMENT BETWEEN THE EUROPEAN COMMUNITY,
ONTHE ONE PART AND THE GOVERNMENT OFDENMARK
AND THE HOME GOVERNMENT OFTHE FAROE ISLANDS, ONTHE OTHER PART
Thefollowing textreproduces theAgreement between theEuropean Community andthe
Government ofDenmark andtheHome Government oftheFaroe Islands.1
____________________
AGREEMENT BETWEEN THE EUROPEAN ECONOMIC COMMUNITY
OFTHE ONE PART AND THE GOVERNMENT OFDENMARK AND
THE HOME GOVERNMENT OFTHE FAROE ISLANDS OFTHE OTHER PART
THE EUROPEAN ECONOMIC COMMUNITY
oftheonepart,and
THEGOVERNMENTOFDENMARKANDTHEHOMEGOVERNMENTOFTHEFAROE
ISLANDS,
oftheother part,
RECALLING thestatus oftheFaroe Islands asaself-governing integral partofoneofthe
Member States oftheCommunity;
RECALLING theResolution oftheCouncil of4February 1974ontheproblems oftheFaroe
Islands;
CONSIDERING thevitalimportance fortheFaroe Islands offisheries, which constitute their
essential economic activity, fishandfishery products being theirmain export articles;
CONSIDERING theimportance ofthefisheries relationship laiddown intheagreement on
fisheries between theparties, whoconfirm thatthetrade aspects ofthepresent agreement should not
affectthefunctioningofthefisheriesagreementandthat,consequently,thevolumeofthemutualfisheries
possibilities under thatagreement should continue tobemaintained atasatisfactory level;
1TheAnnexes andProtocols thereto havebeensubmitted totheSecretariat forconsultations by
interested Members (Office 3006).WT/REG21/1
Page2
DESIRING toconsolidate andtoextend theeconomic relations existing between theCommunity
andtheFaroe Islands andtoensure, withdueregard forfairconditions ofcompetition, theharmonious
development oftheircommerce forthepurpose ofcontributing tothework ofconstructing Europe;
RESOLVED tothisendtoeliminate progressively theobstacles tosubstantially alltheirtrade,
inaccordance withtheprovisions oftheGeneral Agreement onTariffs andTrade concerning the
establishment offreetrade areas;
DECLARING theirreadiness toexamine, inthelightofanyrelevant factor, andinparticular
ofdevelopments intheCommunity, thepossibility ofdeveloping anddeepening theirrelations where
itwould appear tobeuseful intheinterests oftheireconomies toextend them tofields notcovered
bythisAgreement;
HAVE DECIDED, inpursuit ofthese objectives andconsidering thatnoprovisions ofthis
Agreement maybeinterpreted asexempting theContracting Parties from theobligations which are
incumbent upon them, under other international agreements,
TOCONCLUDE THIS AGREEMENT:
Article 1
TheaimofthisAgreement is:
(a) topromote through theexpansion ofreciprocal trade harmonious development ofeconomic
relations between theEuropean Economic Community andtheFaroe Islands andthustofoster
intheCommunity andintheFaroe Islands theadvance ofeconomic activity, theimprovement
ofliving andemployment conditions, andincreased productivity andfinancial stability;
(b) toprovide fairconditions ofcompetition fortrade between theContracting Parties;
(c) tocontribute inthisway,bytheremoval ofbarriers totrade, totheharmonious developments
andexpansion ofworld trade.
Article 2
ThisAgreement shallapply toproducts originating intheCommunity ortheFaroe Islands:
(i) which fallwithin Chapters 25to97oftheHarmonized System, other thanthose listed in
Annex IItotheTreaty establishing theEuropean Economic Community, andother thanthose
listed inAnnex I;
(ii) which arespecified inProtocols 1,2and4,withdueregard tothearrangements provided
forinthose Protocols.
Article 3
1. Nonewcustoms dutyonimports shallbeintroduced intrade between theCommunity and
theFaroe Islands.WT/REG21/1
Page3
2. TheCommunity asconstituted on31December 1985shallabolish customs duties onimports
from theFaroe Islands on1January 1992.
3. TheKingdom ofSpain shall reduce itscustoms duties applicable totheFaroe Islands in
accordance withArticle 31(1)and(3)oftheActofAccession.
4. ThePortuguese Republic shallreduce itscustoms duties applicable totheFaroe Islands in
accordance withArticle 190(1)and(3)oftheActofAccession.
Article 4
TheFaroe Islands shall abolish customs duties onimports from theCommunity on
1January 1992, asspecified inAnnex II.
Article 5
1. Theprovisions concerning theabolition ofcustoms duties onimports shallapply alsotoimport
duties ofafiscal nature.
TheFaroe Islands mayreplace animports dutyofafiscal nature orthefiscal element ofan
import dutybyaninternal tax.
2. TheFaroe Islands maytemorarily retain theimport duties ofafiscal nature inexistence on
1May1991, asmentioned inAnnex II,partA.
3. TheFaroe Islands maytemporarily introduce newimport duties ofafiscal nature andincrease
theexisting import duties ofafiscal nature, provided thatsuchduties ordutyincreases respect the
conditions laiddown inArticle 19.TheFaroe Islands shallnotify theCommunity ofsuchchanges.
4. TheFaroe Islands shall abolish allimport duties ofafiscal nature inconnection withthe
implementation ofthereform described inAnnex IIandnolaterthan1January 1993.
Article 6
Nonewcharge having aneffect equivalent toacustoms dutyshallbeintroduced intradebetween
theCommunity andtheFaroe Islands.
ChargeshavinganeffectequivalenttocustomsdutiesonimportsintradebetweentheCommunity
andtheFaroe Islands shallbeabolished upon theentry intoforce ofthisAgreement.
Article 7
Nocustoms dutyonexports orcharge having equivalent effect shallbeintroduced intrade
between theCommunity andtheFaroe Islands.
Customs duties onexports andcharges having equivalent effect shallbeabolished notlater
than1January 1992.WT/REG21/1
Page4
Article 8
Protocol 1laysdown thetarifftreatment andarrangements applicable tocertain fishandfishery
products released forfreecirculation intheCommunity orimported intotheFaroe Islands.
Article 9
Protocol2laysdownthetarifftreatmentandarrangementsapplicabletocertainproductsobtained
byprocessing agricultural products.
Article 10
1. Intheevent ofspecific rulesbeing established asaresult oftheimplementation ofitsagricultural
policy orofanyalteration ofthecurrent rules, theContracting Party inquestion mayadapt the
arrangements resulting fromthisAgreement inrespect oftheproducts which arethesubject ofthose
rules oralterations.
2. Insuchcases theContracting Party inquestion shalltakedueaccount oftheinterests ofthe
other contracting Party. TothisendtheContracting Parties mayconsult eachother within theJoint
Committee provided forinArticle 30.
Article 11
Protocol 3laysdown therules oforigin.
Article 12
AContracting Party which isconsidering thereduction oftheeffective levelofitsduties or
charges having equivalent effect applicable tothird countries benefiting from most-favoured-nation
treatment, orwhich isconsidering thesuspension oftheirapplication, shall, asfarasmaybepracticable,
notify theJoint Committee notlessthanthirty daysbefore suchreduction orsuspension comes into
effect. Itshalltakenoteofanyrepresentations bytheother Contracting Party regarding anydistortions
which might result therefrom.
Article 13
1. Nonewquantitative restrictions onimports ormeasures having equivalent effect shall be
introduced intrade between theCommunity andtheFaroe Islands.
2. TheContracting Parties shallabolish quantitative restrictions onimports andanymeasures
having aneffect equivalent toquantitative restrictions onimports notlaterthan1January 1992.
Article 14
1. TheCommunity reserves theright tomodify thearrangements applicable tothepetroleum
products falling within headings Nos. 2710, 2711, ex2712(excluding ozokerite, lignite waxandpeat
wax) and2713 ofthecombined nomenclature upon adoption ofacommon definition oforigin for
petroleum products, uponadoption ofdecisions under thecommon commercial policy fortheproducts
inquestion orupon establishment ofacommon energy policy.WT/REG21/1
Page5
Inthisevent, theCommunity shalltakedueaccount oftheinterests oftheFaroe Islands; to
thisenditshallinform theJointCommittee, which shallmeetunder theconditions setoutinArticle 32.
2. TheFaroeIslandsreservetherighttotakesimilaractionshouldtheybefacedwithlikesituations.
3. Subject toparagraphs 1and2,thisAgreement shallnotprejudice thenon-tariff rulesapplied
toimports ofpetroleum products.
Article 15
1. TheContracting Parties declare theirreadiness tofoster, sofarastheiragricultural policies
allow, theharmonious development oftrade inagricultural products towhich thisAgreement does
notapply.
2. TheContracting Parties shallapply theirrules inveterinary, health andplant health matters
inanon-discriminatory fashion andshallnotintroduce anynewmeasures thathavetheeffect ofunduly
obstructing trade.
3. TheContracting Parties shallexamine, under theconditions setoutinArticle 33,anydifficulties
thatmight ariseintheirtradeinagricultural products andshallendeavour toseekappropriate solutions.
Article 16
TheHome Government oftheFaroe Islands shalltakethenecessary control measures toensure
thecorrect application ofthereference price fixed ortobefixed bytheCommunity, referred toin
Article 2ofProtocol 1.
TheContracting Parties shallensure thecorrect application ofthedefinition oftheconcept
of'originating products 'andmethods ofadministrative cooperation, laiddown inProtocol 3.
Article 17
Protocol 4laysdown thespecial provisions applicable toimports ofcertain agricultural products
other thanthose listed inProtocol 1.
Article 18
TheContracting Parties reaffirm theircommitment togrant eachother most-favoured-nation
treatment inaccordance withtheGeneral Agreement onTariffs andTrade (GATT).
ThisAgreement shallnotpreclude themaintenance orestablishment ofcustoms unions, free
tradeareasorarrangementsforfrontiertrade,exceptinsofarastheyalterthetradearrangementsprovided
forinthisAgreement, inparticular theprovisions concerning rules oforigin.
Article 19
TheContracting Parties shallrefrain fromanymeasure orpractice ofaninternal fiscal nature
establishing, whether directly orindirectly, discrimination between theproducts ofoneContracting
Party andlikeproducts originating intheterritory oftheother Contracting Party.WT/REG21/1
Page6
Products exported totheterritory ofoneoftheContracting Parties maynotbenefit from
repayment ofinternal taxation inexcess oftheamount ofdirect orindirect taxation imposed onthem.
Article 20
Payments relating totrade ingoods andthetransfer ofsuchpayments totheMember State
oftheCommunity inwhich thecreditor isresident ortotheFaroe Islands shallbefreefrom any
restrictions.
Article 21
ThisAgreement shallnotpreclude prohibitions orrestrictions onimports, exports orgoods
intransit justified ongrounds ofpublic morality, lawandorder orpublic security, theprotection of
lifeandhealth ofhumans, animals orplants, theprotection ofnational treasures ofartistic, historic
orarchaeological value, theprotection ofindustrial andcommercial property, orrulesrelating togold
orsilver.
Suchprohibitionsorrestrictionsmustnot,however,constituteameansofarbitrarydiscrimination
oradisguised restriction ontrade between theContracting Parties.
Article 22
Nothing inthisAgreement shallprevent aContracting Party from taking anymeasures:
(a) which itconsiders necessary toprevent thedisclosure ofinformation contrary toitsessential
security interests;
(b) which relate totrade inarms, munitions orwarmaterials ortoresearch, development or
production indispensable fordefence purposes, provided thatsuchmeasures donotimpair the
conditions ofcompetition inrespect ofproducts notintended forspecifically military purposes;
(c) which itconsiders essential toitsownsecurity intimeofwarorserious international tension.
Article 23
1. TheContracting Parties shallrefrain from anymeasure likely tojeopardize thefulfilment of
theobjectives ofthisAgreement.
2. They shalltakeanygeneral orspecific measures required tofulfiltheirobligations under this
Agreement.
Ifeither Contracting Party considers thattheother Contracting Party hasfailed tofulfil an
obligationunderthisAgreement,itmaytakeappropriatemeasuresundertheconditionsandinaccordance
withtheprocedures laiddown inArticle 28.
Article 24
1. Thefollowing areincompatible withtheproper functioning ofthisAgreement insofar asthey
mayaffect trade between theCommunity andtheFaroe Islands:WT/REG21/1
Page7
(i) allagreements between undertakings, decisions byassociations ofundertakings andconcerted
practices between undertakings which haveastheirobject oreffect theprevention, restriction
ordistortion ofcompetition asregards theproduction of,ortrade in,goods;
(ii) abuse byoneormore undertakings ofadominant position intheterritories oftheContracting
Parties asawhole orinasubstantial partthereof;
(iii) anypublic aidwhich distorts, orthreatens todistort, competition byfavouring certain
undertakings ortheproduction ofcertain goods.
2. Should aContracting Party consider thatagiven practice isincompatible withthisArticle,
itmaytakeappropriate measures under theconditions andinaccordance withtheprocedure laiddown
inArticle 28.
Article 25
Where anincrease inimports ofagiven product is,orislikely tobe,seriously detrimental
toanyproduction activity carried onintheterritory ofoneoftheContracting Parties andwhere this
increase isdueto:
(i) thepartial ortotalreduction intheimporting Contracting Party, asprovided forinthis
Agreement, ofcustoms duties andcharges having equivalent effect levied ontheproduct in
question; and
(ii) thefactthattheduties orcharges having equivalent effect levied bytheexporting Contracting
Party onimports ofrawmaterials orintermediate products usedinthemanufacture ofthe
product inquestion aresignificantly lower thanthecorresponding duties orcharges levied by
theimporting Contracting Party,
theContracting Party concerned maytakeappropriate measures under theconditions andinaccordance
withtheprocedures laiddown inArticle 28.
Article 26
IfoneoftheContracting Parties finds thatdumping istaking place intrade withtheother
Contracting Party, itmaytakeappropriate measures against thispractice inaccordance withthe
Agreement onTariffs andTrade, under theconditions andinaccordance withtheprocedures laiddown
inArticle 28.
Article 27
Ifserious disturbances ariseinanysector oftheeconomy orifdifficulties arisewhich could
bring about serious deterioration intheeconomic situation ofaregion, theContracting Party concerned
maytakeappropriate measures under theconditions andinaccordance withtheprocedures laiddown
inArticle 28.
Article 28
1. Intheevent ofaContracting Party subjecting imports ofproducts liable togiverisetothe
difficulties referred toinArticles 25and27toanadministrative procedure, thepurpose ofwhich is
toprovide rapid information onthetrend oftrade flows, itshallinform theother Contracting Party.WT/REG21/1
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2. Inthecases specified inArticles 23to27,before taking themeasures provided fortherein
or,incases towhich paragraph 3(d)applies, assoonaspossible, theContracting Party inquestion
shallsupply theJoint Committee withallrelevant information required forathorough examination
ofthesituation withaviewtoseeking asolution acceptable totheContracting Parties.
Intheselection ofmeasures, priority mustbegiven tothose which leastdisturb thefunctioning
ofthisAgreement.
Thesafeguard measures shallbenotified immediately totheJointCommittee andshallbethe
subject ofperiodical consultations within theCommittee, particularly withaviewtotheirabolition
assoonascircumstances permit.
3. Fortheimplementation ofparagraph 2,thefollowing provisions shallapply:
(a) asregards Article 24,either Contracting Party mayreferthematter totheJointCommittee
ifitconsiders thatagiven practice isincompatible withtheproper functioning ofthisAgreement
within themeaning ofArticle 24(1).
TheContracting Parties shallprovide theJointCommittee withallrelevant information and
shallgiveittheassistance itrequires inorder toexamine thecaseand,where appropriate,
toeliminate thepractice objected to.
IftheContracting Party inquestion failstoputanendtothepractice objected towithin the
period fixed bytheJointCommittee, orintheabsence ofagreement intheJointCommittee
within three months ofthematter being referred toit,theContracting Party concerned may
adopt anysafeguard measures itconsiders necessary todealwiththeserious difficulties resulting
from thepractices inquestion; inparticular itmaywithdraw tariff concessions;
(b) asregards Article 25,thedifficulties arising fromthesituation referred tointhatArticle shall
bereferred forexamination totheJointCommittee, which maytakeanydecision needed to
putanendtosuchdifficulties.
IftheJointCommittee ortheexporting Contracting Party hasnottaken adecision putting an
endtothedifficulties within thirty daysofthematter being referred, theimporting Contracting
Party shallbeauthorized tolevyacompensatory charge ontheproduct imported.
Thecompensatory charge shallbecalculated according totheincidence onthevalue ofthe
goods inquestion ofthetariffdisparities inrespect oftherawmaterials orintermediate products
incorporated therein;
(c) asregards Article 26,consultation intheJointCommittee shalltakeplacebefore theContracting
Party concerned takes theappropriate measures;
(d) whereexceptionalcircumstancesrequiringimmediateactionmakepriorexaminationimpossible,
theContracting Party concerned may, inthesituations specified inArticles 25,26and27,
andalsointhecaseofexport aidshaving adirect andimmediate incidence ontrade, apply
forthwith theprecautionary measures strictly necessary toremedy thesituation.WT/REG21/1
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Article 29
Where oneormore Member States oftheCommunity ortheFaroe Islands isindifficulties
orisseriously threatened withdifficulties asregards itsbalance ofpayments, theContracting Party
concerned maytakethenecessary safeguard measures. Itshallinform theother Contracting Party
forthwith.
Article 30
1. AJointCommittee ishereby established which shallberesponsible fortheadministration of
thisAgreement andshall ensure itsproper implementation. Forthispurpose, itshall make
recommendations andtakedecisions inthecases provided forintheAgreement. These decisions shall
beputintoeffect bytheContracting Parties inaccordance withtheirownrules.
2. Forpurpose oftheproper implementation ofthisAgreement, theContracting Parties shall
exchange information and,attherequest ofeither Party, shall holdconsultations within theJoint
Committee.
3. TheJoint Committee shalladopt itsownrules ofprocedure.
Article 31
1. TheJoint Committee shallconsist ofrepresentatives oftheContracting Parties.
2. TheJoint Committee shallactbythemutual agreement.
Article 32
1. EachContracting Party shallpreside inturnovertheJointCommittee, inaccordance withthe
agreements tobelaiddown initsrules ofprocedure.
2. TheChairman shallconvene meetings oftheJoint Committee atleastonceayearinorder
toreview thegeneral functioning ofthisAgreement.
TheJoint Committee shall, inaddition, meetwhenever special circumstances sorequire, at
therequest ofeither Contracting Party, inaccordance withtheconditions tobelaiddown initsrules
ofprocedure.
3. Intheevent ofmodifications tothenomenclature ofthecustoms tariffs oftheContracting Parties
affecting products referred tointhisAgreement, theJointCommittee mayadopt thetariffnomenclature
ofthese products toconform withsuchmodifications.
4. TheJointCommittee maydecide tosetupanyworking party thatcanassist itincarrying out
itsduties.
Article 33
1. Where aContracting Party considers thatitwould beuseful inthecommon interest ofboth
Contracting Parties todevelop therelations established bythisAgreement byextending themtofields
notcovered thereby, itshallsubmit areasoned request totheother Contracting Party.WT/REG21/1
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TheContracting Parties mayinstruct theJointCommittee toexamine thisrequest and,where
appropriate, tomake recommendations tothem, particularly withaviewtoopening negotiations.
2. Theagreements resulting from thenegotiations referred toinparagraph 1willbesubject to
ratification orapproval bytheContracting Parties inaccordance withtheirownprocedures.
Article 34
Attherequest oftheFaroe Islands, theCommunity willconsider:
- improving theaccess possibilities forspecific products,
- extending itstariffconcessions forFaroese fishery products toinclude newfishspecies caught
byFaroese fishing vessels based andoperating intheNorth Atlantic, ortoinclude fishery
products pertaining thereto notcurrently produced bytheFaroese fishing industry. These new
fishspecies orfishery products could beimported freeofdutyintotheCommunity, subject
tothenecessary quantitative limitations, should thenewfishspecies orfishery products be
ofasensitive nature intheCommunity.
Article 35
TheAnnexes andProtocols tothisAgreement shallform anintegral partthereof.
Article 36
EitherContractingPartymaydenouncethisAgreementbynotifyingtheotherContractingParty.
TheAgreement shallcease tobeinforce twelve months afterthedateofsuchnotification.
Article 37
ThisAgreement shallapply, ontheonehand, totheterritories towhich theTreaty establishing
theEuropean Economic Community isapplied andunder theconditions laiddown inthatTreaty and,
ontheother hand, totheterritory oftheFaroe Islands.
Article 38
ThisAgreementisdrawnupinduplicateintheDanish,Dutch,English,French,German,Greek,
Italian, Portuguese, Spanish andFaroese languages, eachofthese textsbeing equally authentic.
ThisAgreement willbeapproved bytheContracting Parties inaccordance withtheirown
procedures.
Itshallenterintoforce on1January 1992, provided thattheContracting Parties havenotified
eachother before thatdatethattheprocedures necessary tothisendhavebeencompleted. After this
date, thisAgreement shall enter intoforce onthefirstdayofthesecond month following such
notification.WT/REG21/1
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Theprovisions applicable on1January 1992shallbeapplied upontheentry intoforce ofthis
Agreement ifitenters intoforce afterthatdate.
Done atBrussels onthesecond dayofDecember intheyearonethousand ninehundred and
ninety-one.
FortheCouncil oftheEuropean Communities
FortheGovernment ofDenmark andtheHome Government oftheFaroe Islands