WORLD TRADE
ORGANIZATIONWT/REG159/1
6 October 2003
(03-5236)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN CROATIA AND
BOSNIA AND HERZEGOVINA
The following text reproduces the Free Trade Agreement between the Republic of Croatia and
Bosnia and Herzegovina.*
_______________
PREAMBLE
The Republic of Croatia  and Bosnia and Herzegovina  (hereinafter referred to as "Contracting
Parties",
Recalling  their intentions to participate actively in the process of economic integration in
Europe and expressing their preparedness to co-operate in seeking ways and means to strengthen this
process,
Reaffirming  their firm commitment to contribute to the strengthening of European integration
processes in Southeast Europe,
Reaffirming  their commitment to market economy principles and basic democratic principles
and human rights,
Resolved to eliminate progressively the obstacles in mutual trade in accordance with the
provisions of the General Agreement on Tariffs and Trade (hereinafter referred to as GATT 1994) and
the Agreement establishing the World Trade Organisation (hereinafter referred to as WTO), takinginto account that the objective of Bosnia and Herzegovina is to become a WTO member,
Firmly convicted  that this Agreement will foster the intensification of mutually beneficial
economic co-operation and contribute to the process of integration in Europe,
Considering  that no provision of this Agreement may be interpreted as exempting the
Contracting Parties from their obligations under other international agreements,
Have agreed  as follows:
                                                     
* The Annexes and Protocols have been submitted to the Secretariat for consultation by interested
Members (office 1174).WT/REG159/1
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Article 1
Objectives
1. The Contracting Parties shall gradually establish a free trade area on substantially all their
bilateral trade during a transitional period ending on 31st December 2003, in accordance with the
provisions of this Agreement and in confor mity with Article XXIV of the GATT 1994 and WTO.
2. The objectives of this Agreement are:
(a) to promote through the expansion of trade, the harmonious development of economic
relations between the Contracting Parties, so to foster the development of economic
activities, increase of standard of living, increase employment and creation offinancial stability in the Contracting Parties;
(b) to provide fair conditions of competition in trade between the Contracting Parties,
(c) to contribute to the removal of barriers to trade, to the harmonious development and
expansion of the world trade;
(d) to enhance trade and co-operation between the Contracting Parties on the markets of
third countries.
CHAPTER I - INDUSTRIAL PRODUCTS
Article 2
Scope
1. The provisions of this Chapter shall apply to industrial products originating in the Contracting
Parties.
2. For the purpose of this Agreement, the term "industrial products" shall mean the products
falling within Chapters 25 to 97 of the Harmonised Commodity Description and Coding System.
Article 3
Basic Duties
1. For each product, the basic duty for which the successive reductions set out in this Agreement
are to be applied shall be the Most Favoured Nation rate of duty that was applied on the date of entry
into force of this Agreement.
2. If, after the date of entry into force of this Agreement, any tariff reduction is applied on an
erga omnes  basis, in particular the reductions resulting from agreements on tariffs which were
concluded in accordance with GATT Uruguay round of multilateral trade negotiations, such reducedduties shall replace the basic duties referred to in paragraph 1 of this Article as from the date when
such reductions are applied.
3. The reduced duties, calculated in accordance with paragraph 2, shall be applied rounded to the
first decimal place.WT/REG159/1
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4. The Contracting Parties shall communicate to each other their respective customs duties.
Article 4
Customs Duties On Imports
1. No new customs duties on imports or charges havi ng equivalent effect or other customs duties
of fiscal nature on imports in industrial products shall be introduced in trade between the Contracting
Parties as from the date of entry into force of this Agreement.
2. All customs duties applied in the Republic of Croatia for industrial products originating in
Bosnia and Herzegovina shall be abolished as from the date of entry into force of this Agreement.
3. Customs duties and charges having equivalent e ffect and other customs duties of fiscal nature
applied in Bosnia and Herzegovina on industrial products originating in the Republic of Croatia shallbe progressively reduced according to the following timetable:
on 1st January 2001 to 70% of the basic duty
on 1st January 2002 to 60% of the basic duty
on 1st January 2003 to 40% of the basic duty
on 1st January 2004 all the remaining duties shall be abolished
Article 5
Customs Duties On Exports And Charges Having Equivalent Effect
1. No new customs duties on exports or charges havi ng equivalent effect or other customs duties
of fiscal nature shall be introduced in trade between the Contracting Parties as from the date of entry
into force of this Agreement.
2. All existing customs duties on exports and any charges having equivalent effect or other
customs duties of fiscal nature shall be abolished as from the date of entry into force of thisAgreement.
Article 6
Quantitative Restrictions On Imports And Measures Having Equivalent Effect
1. No new quantitative restrictions on imports or measures having equivalent effect shall be
introduced in trade between the Contracting Parties.
2. All quantitative restrictions on imports and measures having equivalent effect shall be
abolished as from the date of entry into force of this Agreement.
Article 7
Quantitative Restrictions On Exports And Measures Having Equivalent Effect
1. No new quantitative restrictions on exports or measures having equivalent effect shall be
introduced in trade between the Contracting Parties.
2. All quantitative restrictions on imports and measures having equivalent effect shall be
abolished as from the date of entry into force of this Agreement.WT/REG159/1
Page 4
Article 8
Abolishment Of Technical Barriers To Trade
1. Rights and obligations of the Contracting Parties regarding standards or technical regulations
and corresponding measures shall be regulated in compliance with the provisions of the WTO
Agreement on Technical Barriers to Trade.
2. The Contracting Parties shall co-operate and exchange information in the field of
standardisation, metrology, conformity assessment and accreditation with the objective ot remove
technical barriers to trade.
3. Every Contracting Party shall submit information and of each individual case on standards,
technical norms or similar measures if requested by the other Contracting Party.
4. With the aim to removing technical barriers and implementing efficiently this Agreement, the
Contracting Parties shall conclude agreements on reciprocal recognition of testing reports, conformity
certificates and other documents which are directly or indirectly related to conformity assessment of a
products being exchanged between the Contracting Parties.
CHAPTER II - AGRICULTURAL PRODUCTS
Article 9
Scope
1. The provisions of Chapter II of this Agreement shall apply to agricultural products originating
in the Contracting Parties.
2. For the purpose of this Agreement, the term “agricultural products“ means the products
falling within Chapters 1 to 24 of the Harmonised Commodity Description and Coding System.
Article 10
Basic Duties
1. For each product, the basic duty for which the successive reductions set out in this Agreement
are to be applied shall be the Most Favoured Nation rate of duty that was applied on the date of entry
into force of this Agreement.
2. If, after the date of entry into force of this Agreement, any tariff reduction is applied on an
erga omnes  basis, in particular the reductions resulting from agreements on tariffs which were
concluded in accordance with GATT Uruguay round of multilateral trade negotiations, such reduced
duties shall replace the basic duties referred to in paragraph 1 of this Article as from the date when
such reductions are applied.
3. The reduced duties, calculated in accordance with paragraph 2, shall be applied rounded to the
first decimal place.
4. The Contracting Parties shall communicate to each other their respective customs duties.WT/REG159/1
Page 5
Article 11
Customs Duties On Imports
1. No new customs duties on imports or charges havi ng equivalent effect or other customs duties
of fiscal nature on imports shall be introduced in trade in agricultural products between the
Contracting Parties as from the date of entry into force of this Agreement.
2. All customs duties applied in the Republic of Croatia for agricultural products originating in
Bosnia and Herzegovina shall be abolished as from the date of entry into force of this Agreement.
3. Customs duties and charges having equivalent e ffect and other customs duties of fiscal nature
applied in Bosnia and Herzegovina on agricultural products originating in the Republic of Croatia
shall be progressively reduced acco rding to the following timetable:
on 1st January 2001 to 70% of the basic duty
on 1st January 2002 to 60% of the basic duty
on 1st January 2003 to 40% of the basic duty
on 1st January 2004 all the remaining duties shall be abolished
Article 12
Agricultural Policy
1. Without prejudice to the concessions granted under Article 10 to this Agreement the
provisions of Chapter II shall not restrict in any way the pursuance of the respective agricultural
policies of the Contracting Parties or the taking of any measures under such policies, including the
implementation of the results of the Agreements of the Uruguay Round.
2. The Parties shall notify to the Joint Committee about the changes in their respective
agricultural policies pursued or measures applied, which may affect the conditions of trade inagricultural products between them as provided for in this Agreement. On the request of any Party,
prompt consultations shall be held to examine the situation.
Article 13
Specific Safeguards
Notwithstanding other provisions of this Agreement, and in particular Article 27 to this
Agreement, and given the particular sensitivity of the agricultural products, if imports of products
originating in a Party, which are subject to concessions granted under this Agreement, cause serious
disturbances to the markets of the other Party,  the Party concerned shall immediately enter into
consultations to find an appropriate solution. Pending such solution, the Party concerned may take the
measures it deems necessary.
Article 14
Sanitary And Phytosanitary Measures
1. In veterinary, phytosanitary and sanitary fields, the Contracting Parties shall apply their
regulations, especially in the exchange of information on quarantine diseases, plant pests and weeds,
in the way it is regulated in the WTO Agreement on Sanitary and Phytosanitary Measures.WT/REG159/1
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2. The Contracting Parties shall apply their regulations in the veterinary, phytosanitary and
sanitary field in a non-discriminatory manner and they shall not introduce any measure that has the
effect of unduly obstructing trade.
3. The measures related to veterinary and phytosanitary control between the Contracting Parties
shall be harmonised in accordance with the legislation of the European Union.
4. The Contracting Parties undertake the obligation to exchange regularly the information on the
level of sanitary and phytosanitary protection of animals, plants and products.
Article 15
Abolishment Of Technical Barriers On Trade
1. Rights and obligations of the Contracting Parties regarding standards or technical regulations
and corresponding measures shall be regulated in compliance with the provisions of the WTO
Agreement on Technical Barriers to Trade.
2. The Contracting Parties shall co-operate and exchange information in the field of
standardisation, metrology, conformity assessment and accreditation with the objective to remove
technical barriers to trade.
3. Every Contracting Party shall submit information and of each individual case on standards,
technical norms or similar measures if requested by the other Contracting Party.
4. With the aim to removing technical barriers and implementing efficiently this Agreement, the
Contracting Parties shall conclude agreements on reciprocal recognition of testing reports, conformity
certificates and other documents, which are directly or indirectly related to conformity assessment ofproducts being exchanged between the Contracting Parties.
CHAPTER III - GENERAL PROVISIONS
Article 16
Rules Of Origin And Co-Operation In Customs Administration
1. The Contracting Parties agree to apply pan-Eur opean rules on origin of goods in their mutual
trade, including all the existing and future amendments thereof. In case of amendments to pan-
European rules of origin of goods, the Joint Committee shall adopt a decision on amendments to rules
of origin.
2. Protocol I to this Agreement lays down the rules of origin and related methods of
administrative co-operation.
3. The Contracting Parties shall take appropriate measures, including regular reviews by the
Joint Committee and arrangements for administrative co-operation, to ensure that the pan-European
rules of origin of goods and provisions of Articles 3 to 8, 10, 11 and 12, 17, 27, 28 and 29 to thisAgreement are effectively and harmoniously applied, and to reduce, as far as possible, the formalities
imposed on trade, and to achieve mutually satisfacto ry solutions to any difficulties arising from the
operation of those provisions.WT/REG159/1
Page 7
Article 17
Internal Taxation
1. The Parties shall refrain from any measure or practice of an internal fiscal nature establishing,
whether directly or indirectly, discrimination be tween the products originat ing in the Contracting
Parties.
2. Products exported to the territory of one of the Contracting Parties may not benefit from
repayment of internal taxation in excess of the amount of direct or indirect taxation imposed on them.
Article 18
General Exceptions
This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in
transit justified on grounds of public morality, public policy or public security; of the protection of
health and life of humans, animals or plants; the protection of environment, of the protection of
national treasures possessing artistic, historic or archaeological value; of the protection of intellectualproperty or of the rules relating to gold or silver or to the conservation of exhaustible natural
resources, if such measures are made effective in conjunction with restrictions on domestic production
or consumption. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary
discrimination or a disguised restriction on trade between the Contracting Parties.
Article 19
Security Exceptions
1. The provisions of this Agreement shall not prevent the Contracting Parties to take any
measure which it considers necessary:
(a) to prevent the disclosure of information  essential for the security of the Contracting
Parties;
(b) for the protection of its essential security interests or for the implementation of
international obligations or national policies;
(i) relating to the traffic in arms, ammunition and implements of war, provided
that such measures do not impair the conditions of competition in respect ofproducts not intended for specifically military purposes, and to such traffic in
other goods, materials and services as is carried on directly or indirectly for
the purpose of supplying a military establishment; or
(ii) relating to the non-proliferation of biological and chemical weapons, nuclear
weapons or other nuclear explosive devices; or
(iii) taken in time of war or other serious international tension.
2. For products subject to import and export licensing regime, which is stipulated in
international agreements and conventions, the competent institutions shall issue import or export
licences in accordance with the existing legislation of the Contracting Parties.WT/REG159/1
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3. The Contracting Parties shall apply the provisions of regulations in accordance with
international agreements and conventions for mutual  trade in goods, which pollute the environment
originating in the Contracting Parties.
Article 20
State Monopolies
1. The Parties shall adjust progressively any state monopoly of a commercial character so as to
ensure that by the end of the transitional period defined in Article 1 of this Agreement, no
discrimination regarding the conditions under which goods are procured and marketed exists between
legal and physical persons of the Contracting Parties. The Contracting Parties shall inform each other
on measures undertaken in order to attain this objective.
2. The provisions of this Article shall apply to any body through which the competent authorities
of the Contracting Parties, in law or in fact, directly or indirectly supervise, determine or appreciably
influence imports or exports between the Contracting Parties. These provisions shall likewise apply to
monopolies delegated by the State to other bodies.
Article 21
Payments
1. Payments in freely convertible currencies relating to trade in goods between the Contracting
Parties and the transfer of such payments to the territory of the Contracting Party, where the creditorresides, shall be free from any restrictions.
2. The Contracting Parties shall refrain from any ex change or administrative restrictions on the
grant, repayment or acceptance of short and medium term credits related to trade in goods in which a
resident of a Contracting Party participates.
3. Notwithstanding the provisions of paragraph 2 of this Article, any measure concerning current
payments connected with the movement of goods sha ll be in conformity with the conditions laid down
under Article VIII of the Articles of the Agreement of the International Monetary Fund and shall be
applied in a non-discriminatory basis.
Article 22
Rules Of Competition Concerning Undertakings
1. The following are incompatible with the proper functioning of this Agreement in so far as
they may affect trade between the Contracting Parties:
(a) 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;
(b) abuse by one or more undertakings of a dominant position in the territories of the
Contracting Parties as a whole or in substantial part thereof.
2. The provisions of paragraph 1 shall apply to the activities of all undertakings including public
undertakings and undertakings to which the Contra cting Parties grant special or exclusive rights.
Undertakings entrusted with the operation of services of general economic interest or having theWT/REG159/1
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character of a revenue-producing monopoly, shall be subject to provisions of paragraph 1 insofar as
the application of these provisions does not obstruct the performance, in law or fact, of the particular
public tasks assigned to them.
3. With regard to products referred to in Chapter II to this Agreement the provisions stipulated in
paragraph 1 (a) shall not apply to such agreements, decisions and practices which form an integralpart of a national market organisation.
4. If a Contracting Party considers that a given practice is incompatible with paragraphs 1, 2 and
3 of this Article or if such practice causes or threatens to cause serious prejudice to the interest of that
Contracting Party or material injury to its domestic industry, the Contracting Party concerned may
take appropriate measures under the conditions and in accordance with the procedure laid down in
Article 31 to this Agreement.
Article 23
State Aid
1. Any aid granted by state, a Contracting Party to this Agreement or in any form whatsoever
which distorts or threatens to distort competition by favouring certain undertakings or the productionof certain goods, shall, in so far as it may affect trade between the Contracting Parties, be
incompatible with the proper functioning of this Agreement.
2. The Joint Committee shall adopt criteria, within the period of 2 years from the entry into force
of this Agreement, on the basis of which the activit ies contrary to paragraph 1 of this Article shall be
assessed, as well as the rules for their implementation.
3. The Contracting Parties shall ensure transparency in the area of state aid, inter alia , by
reporting annually to the Joint Committee on the total amount and the distribution of the aid given and
by providing to the other Contracting Party, upon request, information on aid schemes and on
particular individual cases of state aid.
4. If a Contracting Party considers that a particular practice:
− is incompatible with the terms of paragraph 1 of this Article and that is not
appropriately in line with the rules for their implementation under paragraph 2 of thisArticle, or
− lacking such rules under paragraph 2 of this Article, causes or threatens to cause
serious prejudice to the interests of that Contracting Party or material injury to itsdomestic industry,
it may take appropriate measures under the conditions of and in accordance with the provisions laid
down in Article 31 of this Agreement.
5. Such appropriate measures may only be taken in conformity with the procedures and under
the conditions laid down by the GATT 1994 and the WTO, and any other relevant instrument
negotiated under their auspices which are applicable between the Contracting Parties.WT/REG159/1
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Article 24
Public Procurement
1. The Contracting Parties consider the liberalisation of their respective public procurement
markets as an objective of this Agreement.
2. The Contracting Parties shall progressively develop their respective regulations for public
procurement with a view to grant suppliers of the other Contracting Party access to contract award
procedures on their respective public procurement markets.
3. The Joint Committee shall examine developments related to the achievement of the objectives
of this Article and may recommend practical modalities of implementing the provisions of paragraph
2 so as to ensure free access, transparency, full balance of rights and obligations and mutual openingof their respective public procurement markets.
4. The Contracting Parties shall aim at accessing to appropriate agreements on state
procurements under the auspices of the WTO.
Article 25
Protection Of Intellectual Property
1. The Contracting Parties shall ensure the protection of intellectual property rights (industrial
property and copyright and related rights) to citizens, companies and institutions of the other
Contracting Party, as well as to their legal successors in accordance with national law, under the sameconditions that are determined for their own citizens, companies and institutions.
2. The Contracting Parties agree, inter alia , to respect reciprocally the intellectual property
rights (industrial property and copyright and related rights) of their own citizens, companies and
institutions, in accordance with protection standards, which may not be less than these stipulated in
Bern, Rome and Paris conventions.
Article 26
Damping
If a Party finds that dumping within the mean ing of Article VI of the GATT 1994 is taking
place in trade relations governed by this Agreement, it may take appropriate measures against that
practice in accordance with Article VI of the GATT 1994 and with the WTO Agreement onImplementation of Article VI of the GATT 1994 under the conditions and in accordance with the
procedure laid down in Article 28 to this Agreement.
Article 27
General Safeguards
Where any product is being imported in such increased quantities and under such conditions
as to cause or threaten to cause:
(a) serious injury to domestic producers of like or directly competitive products in the
territory of the importing Party, orWT/REG159/1
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(b) serious disturbances in any related sector of the economy or difficulties which could
bring about serious deterioration in the economic situation of a region,
the Party concerned may take appropriate measures under the conditions and in accordance with the
procedure laid down in Article 31 to this Agreement.
Article 28
Structural Adjustments
1. Exceptional measures of limited duration, which derogate from the provisions of Article 4
may be taken by any of the Parties in the form of increased customs duties.
2. These measures may only concern infant industries or certain sectors undergoing restructuring
or facing serious difficulties, particularly where these difficulties produce important social problems.
3. Customs duties on imports applicable in one of the Contracting Parties to products originating
in other Contracting Party, on the basis of measures referred to in paragraphs 1 and 2 of this Article
may not exceed 25% ad valorem  and shall maintain an element of preference for products originating
in the other Contracting Party. The total value of imports of the products which are subject to thesemeasures may not exceed 15 % of total imports of industrial products from the other Party as defined
in Chapter I, during the last year for which statistics are available.
4. The provisional measures shall be applied for a period not exceeding the transitional period
specified in paragraph 1 of Article 1 of this Agreement.
5. The Contracting Party concerned shall inform the Joint Committee of any exceptional
measures it intends to take and at the request of the other Contracting Party consultations shall be held
in the Joint Committee on such measures and the sectors to which they apply before they are applied.
When taking such measures the Contracting Party concerned shall provide the Joint Committee with a
schedule for the elimination of the customs duties introduced under this Article. This schedule shall
provide for a phasing out of these duties starting at the latest two years after their introduction at equal
annual rates. The Joint Committee may decide on a different schedule.
Article 29
Re-Export And Serious Shortage
Where compliance with the provisions of Articles 5 and 7 leads to:
(a) re-export towards a third country against which the exporting Contracting Party
maintains for the product concerned quantitative export restrictions export duties or
measures or charges having equivalent effect, or
(b) a serious shortage, or threat thereof, of a product essential to the exporting
Contracting Party,
and where the situations referred to above give rise or are likely to give rise to major difficulties for
the exporting Contracting Party, that Contracting Party may take appropriate measures under the
conditions and in accordance with the procedures laid down in Article 31 to this Agreement.WT/REG159/1
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Article 30
Fulfilment Of Obligations
1. The Contracting Parties shall take any general or  specific measures required to fulfill their
obligations under this Agreement. They shall ensure to  it that the objectives set out in this Agreement
are achieved.
2. If a Contracting Party considers that the other Party has failed to fulfill an obligation under
this Agreement, the Contracting Party concerned may take appropriate measures under the conditions
and in accordance with the procedure laid down in Article 31 to this Agreement.
Article 31
Procedure For The Application Of Safeguard Measures
1. Before initiating the procedure for the application of safeguard measures set out in the
following paragraphs of the present Article, the Contracting Parties shall endeavour to solve any
differences between them through direct consultations.
2. If a Contracting Party subjects imports of products liable to give rise to the situation referred
to in Article 27 to an administrative procedure, the purpose of which is the rapid provision of
information on the trend of trade flows, it  shall inform the other Contracting Party.
3. (a) As regards Articles 26, 27 and 29, in case that a joint solution cannot be found or that
the Contracting Parties cannot or do not meet within 30 days in order to consult eachother, the Contracting Party concerned may adopt the measures necessary in order to
remedy the situation, and notify the other Contracting Party.
(b) As regards Article 30, the Party concerned may take appropriate measures after the
consultations have been concluded or after a period of three months has elapsed from
the date of the first notification to the other Contracting Party.
(c) As regards Article 22 and 23, the Contracting Party concerned shall provide all the
necessary assistance to the Joint Committee in order to examine the case. If the
Contraction Party does not eliminate the practice objected to within the period
determined by the Joint Committee or if an  agreement cannot be reached within thirty
working days, the Contracting Party concerned may adopt appropriate
countermeasures to deal with the difficulties resulting from the practice in question.
4. The safeguard measures taken shall be notified immediately to the other Contracting Party.
They shall be limited with regard to their extent and to their duration to what is strictly necessary in
order to rectify the situation giving rise to their application and shall not be in excess of the injury
caused by the practice or the difficulty in question. Priority shall be given to such measures as will
least disturb the functioning of this Agreement. The measures taken by a party against an action or an
omission of another Contracting Party may only c oncern the trade with that Contracting Party.
5. The safeguard measures taken shall be the object of periodic consultations with a view to their
relaxation as soon as possible, or abolition when conditions no longer justify their maintenance.
6. Where exceptional circumstances requiring immediate action make prior examination
impossible, the Party concerned may, in the cases of Articles 26, 27 and 29, apply forthwith theWT/REG159/1
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provisional measures strictly necessary to remedy the situation. The measures taken shall be notified
without delay and consultations between the Contracting Parties shall take place as soon as possible.
7. Without prejudice to paragraph 6 of this Article, a Contracting Party which considers
resorting to safeguard measures shall promptly notify the other Contracting Party thereof and supply
all relevant information. Consultations between the Contracting Parties shall take place without delaywith a view to finding a solution.
Article 32
Balance Of Payment Difficulties
1. The Contracting Parties shall endeavour to avoid the imposition of restrictive measures
including measures relating to imports for balance of payments purposes.
2. Where one of the Contracting Parties is in serious balance of payments difficulties, or under
imminent threat thereof, the Contracting Party concerned may, in accordance with the conditions
established under the GATT 1994 adopt restrictive measures, including measures related to imports,
which shall be of limited duration and may not go beyond what is necessary to remedy the balance of
payments situation. The measures shall be progressively relaxed as balance of payments conditionsimprove and they shall be eliminated when conditio ns no longer justify their maintenance. The Party
shall inform the other Party forthwith of their introduction and, whenever practicable, of a time
schedule for their removal.
Article 33
Evolutionary Clause
1. Where a Contracting Party considers that it would be useful in the interests of the economies
of the Contracting Parties to develop and deepen the relations established by this Agreement by
extending them to fields not covered thereby, it shall submit a reasoned request to the otherContracting Party. The Joint Committee shall examine such a request and, where appropriate, make
recommendations, particularly with a view to opening negotiations.
2. Agreements resulting from the procedure referred to in paragraph 1 will be subject to
ratification by the Contracting Parties in accordance with their internal legislation.
Article 34
Joint Committee
1. The Contracting Parties agree to set up the Joint Committee composed of representatives of
the Contracting Parties.
2. The implementation of this Agreement shall be supervised and administered by the Joint
Committee.
3. For the purpose of the proper implementation of this Agreement, the Contracting Parties shall
exchange information and, at the request of any Cont racting Party, shall hold consultations within the
Joint Committee. The Committee shall keep under review the possibility of further removal of the
obstacles to trade between the Contracting Parties.WT/REG159/1
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4. The Joint Committee may take decisions in cases provided for in this Agreement. On other
matters, the Committee may make recommendations.
Article 35
Procedures Of The Joint Committee
1. For the proper implementation of this Agreement, the Joint Committee shall meet whenever
necessary but at least once a year. Each Contracting Party may request that a meeting be held.
2. The Joint Committee shall act by consensus.
3. If a representative of a Contracting Party in the Joint Committee has accepted a decision
subject to the fulfilment of internal legal requirem ents, the decision shall enter into force, if no later
date is contained therein, on the day of the receipt of a written notification as to the fulfilment of suchrequirements.
4. For the purpose of this Agreement, the Joint Committee shall adopt its rules of procedure,
which shall, inter alia , contain provisions for convening meetings, and for the designation of the
Chairman and his term of office.
5. The Joint Committee may decide to set up such  subcommittees and working parties, as it
considers necessary to assist it in accomplishing its tasks.
Article 36
Services And Investment
1. The Contracting Parties recognise the growing importance of certain areas, such as services
and investments. In their efforts to gradually develop and broaden their co-operation in particular in
the context of the European integration, they will co-operate with the aim of achieving a progressive
liberalisation and mutual opening of their markets for investments and trade in services, taking into
account relevant provisions of the General Agreement on Trade in Services.
2. The issue of opening the market for investments and trade in services shall be defined in
separate bilateral agreements.
Article 37
Customs Unions, Free Trade Areas And Frontier Trade
This Agreement shall not prevent the maintenance or establishment of customs unions, free
trade areas or arrangements for frontier trade in so far as they do not have adverse effects on trade
regime between the Contracting Parties, in particul ar on the provisions on rules of origin laid out in
this Agreement.
Article 38
Annexes, Protocols And Amendments
1. Record of Understandings and Protocol on the definition of term "originating product" and
methods of administrative co-operation are an integral part of this Agreement. The Joint CommitteeWT/REG159/1
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may decide on their amendments in accordance with the provisions of paragraph 3 of Article 35 of
this Agreement.
2. Any Contracting Party may propose amendments to this Agreement and they enter into force
in the manner laid out in Article 39 of this Agreement.
Article 39
Entry Into Force
This Agreement shall enter into force on the firs t day of the month following the date of the
last written notification by which the Contracting Parties have notified each other through diplomatic
channels that respective internal requirements for the entry into force of this Agreement have been
completed.
Article 40
Provisional Application
This Agreement shall be provisionally applied as from 1st January 2001.
Article 41
Validity And Denunciation
1. This Agreement is concluded for an indefinite period of time. Each Contracting Party may
denounce it by written notification through diplomatic channels to the other Contracting Party. This
Agreement shall cease to be valid on the first day of the seventh month following the month when the
other Contracting Party received the written notification.
IN WITNESS WHEREOF the undersigned plenipoten tiaries, being duly authorised thereto, have
signed the present Agreement.
DONE in Zagreb, on 19th December 2000, in two originals in Croatian and official languages of
Bosnia and Herzegovina: Bosnian, Croatian and Serbian language, all texts being equally authentic.
_______________WT/REG159/1
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RECORD OF UNDERSTANDING
1. The Contracting Parties agreed that in the process of issuing licences for goods subject to
import and export licences, the Republic of Croatia shall extend to Bosnia and Herzegovina the sametreatment as to any other member of the World Trade Organisation (WTO).
2. The Contracting Parties agreed that Bosnia and Herzegovina shall not conclude free trade
agreements with third countries in which it shall pr ovide more favourable treatment than the treatment
provided for in the Agreement applied on the Republic of Croatia.
3. The Contracting Parties agreed that basic customs duties for agricultural products, which are
applied from the date of implementation of this Agreement and on which gradual concessions
provided for in this Agreement shall be applied on imports of agricultural products into Bosnia andHerzegovina, will be the duties in force on the date of signing of this Agreement.
Notwithstanding the provisions of paragraph 1, if customs duties and other charges having
equivalent effect are increased before the date of signature of this Agreement, basic duties under
paragraph 1 may not exceed the level of MFN duties from the new customs tariff of Bosnia and
Herzegovina, which was submitted to the Croatian side in July 2000.
The Contracting Parties agree that the inclusion of charges having equivalent effect as well as
duties into duties shall not be considered as increased duties if such charges are abolished and
included into new duties in the same amount and if the level of duties determined in this way shall not
be higher that total duties and other charges having equivalent effect as duties applied in Bosnia andHerzegovina on the date of signing the Agreement.
4. The Contracting Parties agree to examine the possibilities of extending trade relations in the
field of foreign direct investments and trade in services within the Joint Committee.
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