Article 2
1. The benefit of the arrangements shall be accorded only to natural or legal persons established within the Community. 2. Any person referred to in paragraph 1 applying to benefit under the arrangements must fulfil the following conditions: (a) that person must: - manufacture, in the Community, products which are similar to and at the same stage of manufacturing as the compensating products in respect of which the application for the arrangement is made, and - perform in his own factory, within the Community, the main production processes on those products, at least sewing and assembly, or knitting in the case of fully fashioned garments obtained from yarn. In determining the eligibility of an application under this provision, the competent authorities shall not take into account the design or manufacture of models or samples; (b) that person may have compensating products manufactured, in a third country, by means of processing within the quantities allocated by the competent authorities of the Member State where the application is made, and subject to the conditions laid down in Article 3; (c) the goods which that person exports temporarily for processing operations must be in free circulation within the meaning of Article 9 (2) of the Treaty and of Community origin within the meaning of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (3) and its implementing regulations. Derogations from the provisions of this subparagraph may be granted by Member States' authorities only in respect of goods of which Community production is insufficient. Such derogations may not be granted in respect of more than 14 % of the total value of the goods for which a prior authorization is requested or in respect of which the benefit of the arrangement was granted to the beneficiary during the previous year. In exceptional and economically justified cases the competent authorities, on the basis of a decision taken in accordance with the procedure laid down in Article 12, may agree to a higher percentage of derogation. Past beneficiaries who benefited in 1994 from a percentage higher than 14 % may continue to do so for the same quantities for a period of three years on the basis of a list to be established by the Commission. Thereafter, such exceptions may be renewed on the basis of a decision taken in accordance with the procedure laid down in Article 12. The Member State shall communicate quarterly to the Commission the main aspects of the derogations thus granted, namely, the nature, origin and quantities of the goods in question originating outside the Community. The Commission shall communicate this information to the other Member States with a view to an examination by the Committee referred to in Article 12. (d) the processing operations to be carried out in third countries must not be more extensive than those stipulated for each product in Annex II. The processing operations to be carried out may, however, be less extensive than those stipulated for each product in Annex II. 3. Member States may derogate from the provisions of paragraph 2 (a) in respect of persons not fulfilling the conditions laid down in that paragraph. Such derogations shall apply only to the amount of the total quantities imported under specific arrangements of the type defined in Article 1 (3) during one of the two years preceding the entry into force of Regulation (EEC) No 636/82, and to products not different in kind or purpose. Where, following the entry into force of this Regulation, a specific arrangement of a type defined in Article 1 (3) is established for the first time with regard to a country, and replaces for certain quantities the non-specific import limitation arrangement previously applicable to such quantities without, however, giving rise to an overall increase in the import possibilities as a result of the cumulative application of the two arrangements, similar derogations may be applied up to the limit of the quantities of products resulting from processing operations which were previously imported under the non-specific import limitation arrangement. The derogations referred to in the preceding subparagraphs shall apply with priority to those persons who have previously benefited from the specific arrangements referred to above. Cases of the application of this paragraph shall be communicated to the Commission, which shall forward them to Member States with a view to annual examination by the Committee referred to in Article 12.