 
 RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/REG142/M/1 
7 April 2004 
 
 (04-1586) 
Committee on Regional Trade Agreements 
Thirty-Sixth Session  
 
 
EXAMINATION OF THE EUROPEAN COMMUNITY - 
CROATIA INTERIM AGREEMENT 
 
Note on the Meeting of 29 March 2004  
 
Chairman: Mr. R. Saborío (Costa Rica) 
  
1. The meeting was convened in document WTO/AIR/2276/Rev.1. 
2. Under Agenda Item C.II of its Thirty-Sixth Session, the Committee on Regional Trade 
Agreements (hereinafter CRTA or  the Committee) took up the first round of examination of the 
European Community (EC)-Croatia Interim Agre ement.  The following topics were discussed: 
 A. G
ENERAL REMARKS  
 B. S ECTION I - BACKGROUND INFORMATION ON THE AGREEMENT  
 C. S ECTION II - TRADE PROVISIONS  
 
A. G ENERAL REMARKS  
3. The Chairman  said that the EC-Croatia Interim Agr eement had entered into force on 1 March 
2002 and had been notified to the WTO on 24 D ecember 2002 as document WT/REG142/N/1/Rev.1,  
with the text of the Agreement appearing in document WT/REG142/1.  The terms of reference for the examination had been adopted by the Council for Trade in Goods on 23 January 2003 and were 
contained in document WT/REG142/2.  He pro posed to use the Standard Format, document 
WT/REG142/3, to guide the debate.  
4. The representative of the European Commun ities, speaking also on behalf of Croatia
, stated 
that the Parties were pleased to present the Inte rim Agreement on trade and trade related matters, 
under which they had agreed to establish a Free Trade Area in the field of trade in goods. The text of 
the Agreement had been circulated to WTO Me mbers on 6 January 2003 (document WT/REG142/1). 
As a basis for the examination by the Committee, the Parties had also circulated the "Standard 
Format" material on 18 March 2004 (document WT/REG 142/3).  Noting that he would like to place 
this Agreement in the wider context of the evolu tion of trade and economic relations between the EC 
and Croatia, he stated that in 2000 the EC had gran ted the countries of South East Europe autonomous 
trade preferences, with a view to providing the necessary opportunities for these countries to develop 
their economies, create stronger ties with the Europ ean Union (EU) and ultimately ensure peace and 
stability in the whole region.  Soon afterwards, th e EU and Croatia had negotiated a Stabilisation and 
Association Agreement (SAA), which had been signed  on 20 October 2001. This Agreement provided 
the framework for political dialogue, promotion of  trade and economic relations and the mechanism 
for the implementation, management and monitoring  of all areas of relations. It was an essential 
contractual framework to prepare Croatia to st ronger ties with the EU and ultimately for EU 
membership. Croatia had recently taken another impo rtant step, by presenting its application for EU 
accession, which the Commission was currently analys ing.  The entry into force of the SAA was 
conditional on the completion of the ratification pro cedures by the Parties to the Agreement, including WT/REG142/M/1 
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 all EU Member States. Pending the completion of such procedures, the trade and trade-related 
provisions of the Agreement - i.e. those related to  trade in goods or other matters within the sole 
competence of the EC - had been implemented by  means of the Interim Agreement which was being 
presented. Turning into the key elements of the In terim Agreement, he said that it established a free-
trade area over a transitional period of maximum six years from the date of entry into force, i.e. by     
1 January 2007.  It provided for gradual and recipr ocal liberalization of trade in goods;  it included 
provisions concerning competition matters, investme nt and related payments, and a high level of 
protection of intellectual property rights;  and it strengthened co-operation in customs matters.  The 
Agreement covered products in all Chapters of the Harmonised System. The EC and Croatia had 
abolished all quantitative restrictions and measures having equivalent effect upon entry into force of 
the Agreement.  Customs duties on exports and measures having equivalent effect were also 
eliminated from entry into force.  As regards im port tariffs, the Interim Agreement consolidated the 
EC's autonomous trade measures.  Hence, the EC ha d eliminated all charges and duties on imports of 
all goods – industrial, agricultural and fish – even be fore the entry into force of the Agreement. There 
were only very few exceptions related to beef, wine , certain fruit and vegeta bles and certain fishery 
products, to which preferential concessi ons applied on imports into the EC; these were detailed in the 
"Standard Format".  Croatia was to eliminate cust oms duties on imports of i ndustrial products by the 
end of a transitional period of six years. In fact, most liberalization was "front-loaded": Croatia had 
already eliminated duties on 80 per cent of trade in industrial products an d would eliminate the 
remaining 20 per cent by 1 January 2007, according to a progressive schedule of liberalization.  As regards import tariffs on agricultural and fisheries pr oducts, Croatia had already eliminated tariffs on a 
number of products on entry into force or one  year after. For a number of other products, 
liberalization was achieved on a stag ed basis, as described in the Sta ndard Format. By the end of the 
six-year transitional period, based on 2000-2002 figu res, 95 per cent of Croatian agricultural exports 
to the EC and 47 per cent of the EC's exports to Croatia would receive duty-free treatment. The same 
would be true for 68 per cent of Cr oatia's exports of fisheries products  to the EC and for 66 per cent of 
the EC's fisheries exports to Croatia.  For the re maining agricultural and fisheries products, complete 
tariff elimination was not immediately foreseen. Howe ver, the Agreement provided for a review to be 
held at the latest by 2006 to consider further step s in the process of full liberalization of trade between 
the EC and Croatia.  Taking trade in industrial, agricultural and fisheries products together, 97 per 
cent of bilateral trade would be liberalized by th e end of the transitional period of six years.  
Furthermore, no major sector of trade was exclude d from the scope of the Agreement.  The Parties 
therefore had no doubt that the Agreement met th e requirement of GATT Ar ticle XXIV:8(b) that 
duties and other restrictive regulations of commerc e be eliminated on substantially all the trade 
between them.  Similarly, as there was nothing in th e Agreement that required the Parties to raise the 
level of duties or other regulations of commerce app licable to the trade of third-party Members of the 
WTO, the Parties also considered that it met the requirements of Article XXIV:5(b) of the GATT 
1994.  Finally, the EC representative recalled that the Agreement was not limited to the elimination of 
duties and non-tariff restrictions on bilateral trade,  important though that was, but included provisions 
concerning competition matters, investment and re lated payments, a high level of protection of 
intellectual property rights and strengthened co-ope ration  in customs matters.  When the SAA would 
enter into force, it would also bring disciplin es concerning notably government procurement, 
legislative approximation in many areas including st andardisation, and provisions regarding services 
and establishment.   
5. The representative of Croatia
 emphasized that the SAA and th e Interim Agreement were the 
first bilateral agreements to be  concluded between the EU and Croatia.  This was of crucial 
importance since it represented not only the first form al step in institutionalising the relations with the 
EU, but also marked the beginning of preparations of Croatia towards the ultimate objective of full 
EU membership.  Croatia had submitted its applica tion to join the EU, and his country hoped and 
expected that the positive opinion and the decisi on on beginning the accession negotiations would be 
taken soon.  He noted that the EU was Croatia’s  major trading partner and the Interim Agreement 
would undoubtedly further dynamise their bilatera l trade. Given its comprehensive coverage, the  WT/REG142/M/1 
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 Agreement should also be seen as a part of Croatia’s  wider integration into the global economy and a 
complementary process to the multilateral trading syst em.  In addition to its economic importance, the 
Interim Agreement and the SAA also contributed to  the overall reform process in Croatia. It had 
therefore to be viewed in its broader perspec tive of establishing a regular political dialogue to 
facilitate Croatia’s future integra tion into the EU; that would, in  return, send a signal and have a 
positive impact on wider efforts to achieve sustaina ble political and economic stability in the entire  
South-East Europe.  
B. SECTION I - BACKGROUND INFORMATION ON THE AGREEMENT  
6. Noting that nine months elapsed between the time the Agreement entered into force and its 
notification, the representative of Japan  asked what was the reason for not having notified the 
Agreement earlier.  The representative of the European Communities  requested that the question be 
submitted in writing so that an appropr iate written reply could be provided. 
7. The representative of United States  noted that she had a number of questions on wine and 
steel Protocols, as well as on tariff quotas.  Given that she had not had enough time for reviewing the 
Agreement, she might have additional ques tions that would be submitted in writing. 
C. SECTION II - TRADE PROVISIONS  
8. The representative of United States  requested the Parties to describe the treatment of steel and 
wine in the respective Protocols of the Agreemen t.  Regarding wine, she wondered when the tariff-
quota provided for in the Agreement would be phased out  or eliminated.  She requested the Parties to 
describe the treatment of processed agricultural products and also the tariff lines that were not covered 
by the Agreement.  Regarding the application of tariff-rate quotas, she wondered whether the quota 
shares came out of the MFN shares available to al l Members, i.e. whether there was an MFN share 
that was divided up to make room for this preferential tariff-rate quota.  
9. Referring to sub-heading 1.1.2.A of WT /REG142/3, the representative of Australia  indicated 
her delegation's interest for any analysis the Parties had carried out on the coverage of trade in 
agriculture under this Agreement.  Noting that fo r products covered by HS Chapters 7 and 8, the 
Agreement provided for  the application of ad valorem  customs duties and a specific customs duty, 
while the elimination applied only to the ad valorem  part of the duty, she requested the Parties to 
provide additional information on that.  Referring to  that same issue, the representative of Japan  asked 
what were the policy objectives behind the fact that only ad valorem  duties were eliminated.  
10. Noting that the questions were of a specific nature, the representative of the European 
Communities  stated that he would prefer to reply to them in written form in due course.  Regarding 
the steel Protocol, another representative of the European Communities  noted that Croatia's exports 
entered the EC duty-free, as other industrial produc ts;  the Protocol referred therefore only to EC 
exports into Croatia.  The first el ement of the Protocol was that it set out a timetable for the reduction 
of customs duties on steel products by Croatia over a four-year period.  The second element was the principle that Croatia would restructure its steel sector within a period of two years.  The third 
element was the conditions under which Croatia might  exceptionally maintain subsidies and public 
aid to its steel industry within a period of five years.   He indicated that more  details could be provided 
in writing, if needed.  
11. The representative of United States
 asked whether any safeguard action had been taken to 
date under the Agreement.  The represe ntative of the European Communities  indicated that he would 
reply to this question in writing. WT/REG142/M/1 
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 12. The Chairman
 said that although the meeting had allowed the Committee to clarify some 
questions regarding the EC-Croatia Interim Agreemen t, a number of issues remained pending.  He 
asked delegations wishing to submit written questions to do so by 16 April 2004 and for the Parties to 
provide written responses by 28 May 2004.  The exam ination of this Agreemen t would continue at a 
future Session of the Committee.   
13. The Committee took note  of the comments made. 
 
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