RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/178
25 January 2000
(00-0294)
Council for Trade in Goods Original:  English
REQUEST FOR A WAIVER FOR THE APPLICATION OF
THE EU AUTONOMOUS PREFERENTIAL TREATMENT
TO THE COUNTRIES OF THE WESTERN BALKANS
The following communication, dated 17 January 2000, has been received from the Permanent
Delegation of the European Commission.
_______________
DRAFT DECISION
EUROPEAN COMMUNITY PREFERENCES FOR ALBANIA, BOSNIA-HERZEGOVINA,
CROATIA, THE FEDERAL REPUBLIC OF YUGOSLAVIA, AND
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA
Decision of […] 19991
Taking Note  of the request of the European Community for a waiver from its obligations
under paragraph 1 of Article I of the GATT 1994 to the extent necessary to permit the European
Community to afford duty-free or preferential trea tment to eligible products originating in Albania,
Bosnia-Herzegovina, Croatia, the Federal Republic of Yugoslavia and the former Yugoslav Republic
of Macedonia, without being required to extend the same duty-free or preferential treatment to likeproducts of any other member:
Taking account  of the 1979 Decision of Differential and More Favourable Treatment,
Reciprocity and Fuller Participation of Developing Countries and the 1994 Decision on Measures in
favour of Least-Developed Countries;
Considering  the exceptional situation in Albania, Bosnia-Herzegovina, Croatia, the Federal
Republic of Yugoslavia and the former Yugoslav Republic of Macedonia and the efforts being made
by the members to provide for the preservation of peace and for economic reconstruction;
Considering  that the duty-free and preferential treatment to eligible products the European
Community affords to these countries is intended to promote economic expansion and recovery in a
manner consistent with the objectives of the GATT 1994 and not to create barriers for the trade of
other members;
Noting  that Albania, Bosnia-Herzegovina, Croatia, the Federal Republic of Yugoslavia and
the former Yugoslav Republic of Macedonia have yet to accede to the WTO; Members, acting
pursuant to the provisions of paragraph 3 of Article IX of the WTO Agreement.
                                                     
1 Adopted in accordance with the Procedures on WTO Decision-Making under Articles IX and XII of
the WTO Agreement agreed by the General Council (WT/L.93)G/C/W/178
Page 2
Decide that:
1. Subject to the conditions set out in the Decision, the provisions of paragraph 1 of Article I of
the GATT 1994 shall be waived until 31 December 2006 to the extent necessary to permit the
European Community to afford duty-free or preferen tial treatment to eligible products originating in
Albania, Bosnia-Herzegovina, Croatia, the Federa l Republic of Yugoslavia and the former Yugoslav
Republic of Macedonia, without being require to extend the same duty-free or preferential treatment
to like products of any other member.
2. Such duty-free or preferential treatment shall not raise new barriers for the trade of other
members.  The European Community shall consult promptly with any member on the operation of its
preferential or duty-free concessions in respect of the countries listed in paragraph 1 of this Decision,
or on any other matter arising in respect of this Decision.  Where a member considers that its benefitsunder the GATT 1994 are or may be impaired unduly as a result of measures put in place by the
European Community and covered by this Decision, the EC shall examine the possibility of a
satisfactory adjustment of the matter.  This Decision does not affect members’ rights as set out in the
Understanding in respect of Waivers of Obligations under the GATT 1994.
3. The European Community shall report annually  to the General Council on the preferences and
duty-free treatment afforded to products from the countries listed in paragraph 1, including the extent
to which such preferences and duty-free treatment is different from the Community’s MFN and GSP
concessions, with a view to facilitating the annual review provided for in paragraph 4 of Article IX of
the WTO Agreement.
4. Accession to the WTO by Albania, Bosnia-Herzegovina, Croatia, the Federal Republic of
Yugoslavia and the former Yugoslav Republic of Macedonia will not affect the application of this
Decision.G/C/W/178
Page 3
NON-PAPER
EU TRADE RELATIONS WITH ALBANIA AND
THE COUNTRIES OF THE FORMER YUGOSLAVIA
Introduction
Trade relations between the European Community and the countries of the former Yugoslavia
are governed since 1992, by the autonomous granting by the EC of a preferential import regime.
Trade relations with Albania are regulated on a similar vein since September this year. The
preferential import regime is, however, subject to specific conditionalities that have clearly influenced
its application in recent years.
This regime, which currently applies to non-WTO members, constitutes a departure from the
provisions of Art. I GATT 1994. The European Community therefore considers it necessary to seek a
waiver from its WTO obligations.
Given the customs union linking the European Community and Turkey, the latter will also
present a waiver request to the WTO.
This non-paper outlines the political and economic conditions behind the application of the
current regime, explains briefly the characteristic of such regime and its application in Albania and in
the various countries of former Yugoslavia.
Evolution of the EU trade relations with the countries of the former Yugoslavia
In 1991, following the dissolution  of the former Socialist Federal Republic of Yugoslavia
(SFRY) the European Union sought to establish a policy which would substantially contribute to
political stability and economic development in the region.
In economic  terms, it was decided, further to the denunciation in November 1991 of the 1980
Cooperation Agreement with SFRY, to continue to  provide the trade concessions (preferential
imports, subject to quotas and ceilings - as well as an annual automatic 5% increase in the ceilings for
industrial products) of the former Agreement for the new "states", through an autonomous regime oftrade preferences known as the ATMs (Autonomous Trade Measures).    The autonomous regime is
renewed on an annual basis and is presently contained in Regulation 70/97
2, last amended by
Regulation 2863/983 of 30.12.98, based on Article 113 (EC).   The regime is global  in nature and, for
most products, not divided by country - quotas are filled on a "first come, first served" basis.     The
original (1992) quotas have, however, been reduced as a result of the Cooperation Agreements with
Slovenia and FYROM as these required the calculation and substraction of those countries' "share".
The ATM regime has, since April 1997, formed part of the European Union's global policy
framework towards Bosnia and Herzegovina, Croa tia, FRY, FYROM and Albania, known as the EU
"Regional Approach", which aims at the developmen t of bilateral relations with and between those
countries. The development of bilateral relations with the EC is subject to their compliance with
political and economic conditions set out by the General Affairs Council on 29 April 1997,concerning democratisation and respect for human rights, including minority rights, market economy
reform, regional cooperation and, for the signatories of the peace agreements, respect for the
commitments undertaken under the peace agreements.
                                                     
2 Regulation 70/97 of 20.12.96, OJ L 16, 18.1.97 p. 1
3 Regulation 2863/98 of 30.12.98, OJ L 358 of 31.12.98 p. 85.  Previous amendments were
Regulation 825/97 29.4.97, OJ L 119 of 8.5.1997, p. 4 & Regulation 2636/97 29.12.97, OJ L 356 of 31.12.97
p. 16G/C/W/178
Page 4
The "instruments" of the Regional Approach are:
/g167 Inclusion in the ATM regime
/g167 Eligibility for the PHARE assistance programme
/g167 Establishment of contractual relations
Within this framework, eligibility for inclusion in the autonomous trade regime is determined
by compliance with the political  criteria established by the General Affairs Council on 29 April 1997
i.e. "respect for fundamental principles of democr acy and human rights and … readiness of the countries
concerned to allow the development of economic relations between themselves".
General characteristics of the trade regime applied to Croatia,
Bosnia and Herzegovina and (potentially)  the Federal Republic of Yugoslavia4
The system described hereunder applies to Bosnia and Herzegovina and Croatia, as well as to
the former Yugoslav Republic of Macedonia, and Slovenia, as regards wine imports (pending
negotiation of separate Wine Agreements with them).
As general rule (Art.1 Reg.70/97) products originating in the above mentioned countries are
"admitted for import into the Community without quantitative restrictions or measure having
equivalent effect and with exemption from customs duties and charges having equivalent effect."
Products originating in the Community, on the other hand, do not enjoy any special treatment when
imported into those countries.
Products listed in Annex II to the Treaty establishing the European Community (mainly
agricultural products - see attachment) and in Annex A to Regulation 70/97 are excluded from the
preferential treatment described above.
Special provisions are foreseen for:
• Processed agricultural products : for these products, listed in Annex B to Regulation (EC)
70/97, the import duties are those specified in the said annex;
• Textile products : they are subject to the annual quantitative limits fixed in Regulation (EC)
517/94;
• Specific industrial products : the products listed in annexes C I to IV are subject to tariff
ceilings and Community surveillance. The amount of the ceilings is increased annually by
5%. Once the ceiling has been reached, the Community may reintroduce MFN duties.
• Specific agricultural products : the agricultural products listed in Annex D are subject to
specific tariff concessions listed in that annex. Special tariff quotas apply to sour cherries,
plum spirit, tobacco of the Prilep type, baby beef and wine imports originating in FYROM
and the Republic of Slovenia.
The regime originally applied from 1 January to 31 December 1997. Renewal, which is
annual, is not automatic but granted on the basis of the conditions outlined above and established by
the Council in relation to the development of the relations between the Community and each of the
countries concerned, including the Regional Approach.    Countries can be excluded from or included
                                                     
4 The regime was extended to the Federal Republic of Yugoslavia from May to December 1997
(Regulation n.825/97) but FRY is presently excluded fr om the regime due to non-compliance with eligibility
criteria.G/C/W/178
Page 5
in the regime at any time, depending on their compli ance with the relevant eligibility criteria - as in
the case of the Federal Republic of Yugoslavia which was included in the regime on 29 April 1997
but excluded again from 1 January 1998 due to non-respect for the relevant "conditionality".
General characteristics of the trade regime applied to Albania5
The regime applied to Albania is similar to the one described above. The sole difference
concerns textile products that in the case of Albania follow the same regime foreseen for “specific
industrial products”.
General characteristics of the trade regime applied to the
former Yugoslav Republic of Macedonia
Since 1 January 1998, relations with FYROM ar e regulated by a Cooperation Agreement.
Cooperation Agreements are a qualitative step forwar d in the bilateral relations between the European
Community and the country concerned as bilateral relations go beyond trade matters to cover
economic, technical and financial cooperation. In addition a Cooperation Council is established, with
the power to take binding decisions on the Contracting Parties.
As far as the trade regime is concerned, this is made up of three components: the first is the
preferential treatment granted to the import into the Community of goods or iginating in FYROM; the
second is the treatment granted to the import in to FYROM of goods originating in the Community;
the third is the rules applicable to non-tariff measures.
The first component is modelled along the lines of the regime described above which applies
to the other countries of the former Yugoslavia, with the exception of certain products that the
Community considers to be sensitive and for which it reserves the right to call upon the Cooperation
Council to determine the special conditions fo r access to its market as may prove necessary.  As
specified above, wine imports from FYROM are covered by the ATMs
As far as Community exports to FYROM are c oncerned, the latter shall grant the Community
MFN treatment, subject however to one exception; the right of FYROM to grant, for a period not
exceeding five years, preferential treatment to imports originating in other states of the formerYugoslavia or in other adjacent countries.
In addition, FYROM undertakes not to introduce new customs duties and charges having
equivalent effect or new quantitative restrictions and measures having equivalent effect and not to
increase such duties and quantitative restrictions except insofar as such measures are needed for
protecting its infant industries and restructuring.
Finally the Agreement includes a number of provisions aiming at fostering the protection of
intellectual property rights, prohibiting direct and indirect tax discrimination on imported products,
specifying the application of the WTO provisions for subsidies and countervailing measures,
specifying the procedures to be followed and measures to be taken in case of dumping, sudden and
substantial worsening of the trade imbalance and difficulties in the balance of payments.
Conclusions
This approach has proven to be good leverage on the countries concerned, with the
perspective of improved relations and enhanced cooperation with the EC encouraging them towards
                                                     
5 These trade preferences complement the 1992 Trade and Cooperation Agreement between the EC and
Albania. Council Regulation (EC) No 1763/99 (OJ L211, 11.8.98). In force since 1.9.99.G/C/W/178
Page 6
democratisation.   In this framework, economic in centives such as the ATMs are crucial as positive
economic results have been judged by the international community as a key step in the transition from
war to peace and stability, and from a planned to a market economy.
Having therefore in mind the important aim of the regime currently applied to the countries
which emerged from the dissolution of the former Socialist Federal Republic of Yugoslavia (SFRY),
we consider it appropriate to request the WTO General Council that the provisions of paragraph 1 of
Article I of the GATT 1994 should be waived until 31 December 2006 to the extent necessary to
permit the European Community to afford duty-free or preferential treatment to eligible products
originating in Bosnia- Herzegovina, Croatia, the Federal Republic of Yugoslavia, the former
Yugoslav Republic of Macedonia a nd Albania, without being required to extend the same duty-free or
preferential treatment to like products of any other WTO Member.G/C/W/178
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ANNEX II - TREATY OF ROME
LIST
referred to in Article 38 of the Treaty
- 1 -
Number in the
Brussels
nomenclature- 2 -
Description of products
CHAPTER 1 Live animals
CHAPTER 2 Meat and edible meat offal
CHAPTER 3 fish, crustaceans and molluscs
CHAPTER 4 Dairy produce; birds 'eggs; natural honey
CHAPTER 5
05.04Guts, bladders and stomachs of animals (other than fish), whole and pieces
thereof
05.15Animal products not elsewhere specified or included; dead animals o f
Chapter 1 or Chapter 3, unfit for human consumption
CHAPTER 6Live trees and other plants: bulbs, roots and the like; cut flowers an d
ornamental foliage
CHAPTER 7 Edible vegetables and certain roots and tubers
CHAPTER 8 Edible fruit and nuts; peel of melons or citrus fruit
CHAPTER 9 Coffee, tea and spices, excluding mat‚ (heading No 09.03)
CHAPTER 10 Cereals
CHAPTER 11 Products of the milling industry, malt and starches; gluten; inulin
CHAPTER 12Oil seeds and oleaginous fruit; miscellaneous grains, seeds and fruit;
industrial and medical plants; straw and fodder
CHAPTER 13
ex 13.03Pectin
CHAPTER 15
15.01Lard and other rendered pig fat; rendered poultry fat
15.02Unrendered fats of bovine cattle, sheep or goats; tallow (including 'premier
jus') produced from those fats
15.03Lard stearin, oleostearin and tallow stearin; lard oil, oleo-oil and tallow oil,
not emulsified or mixed or prepared in any wayG/C/W/178
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15.04Fats and oil, of fish and marine mammals, whether or not refined
15.07Fixed vegetable oils, fluid or solid, crude, refined or purified15.12Animal or vegetable fats and oils, hydrogenated, whether or not refined,
but not further prepared
15.13Margarine, imitation lard and other prepared edible fats15.17Residues resulting from the treatment of fatty substances or animal or
vegetable waxes
CHAPTER 16 Preparations of meat, of fis h, of crustaceans or molluscs
CHAPTER 17
17.01Beet sugar and cane sugar, solid
17.02Other sugars; sugar syrups; artificial honey (whether or not mixed with
natural honey); caramel
17.03Molasses, whether or not decolourized
17.05 (*)
Flavoured or coloured sugars, syrups and molasses, but not including fruit
juices containing added sugar in any proportion
CHAPTER 18
18.01Cocoa beans, whole or broken, raw or roasted
18.02Cocoa shells, husks, skins and waste
CHAPTER 20 Preparations of vegetables, fruit or other parts of plants
CHAPTER 22
22.04Grape must, in fermentation or with fermentation arrested otherwise than
by the addition of alcohol
22.05Wine of fresh grapes; grape must with fermentation arrested by the
addition of alcohol
22.07Other fermented beverages (for example, cider, perry and mead)
ex 22.08 (*)
ex 22.09 (*)Ethyl alcohol or neutral spirits, whether or not denatured, of any strength,
obtained from agricultural products listed in Annex II to the Treaty,excluding liqueurs and other spirituous beverages and compound alcoholic
preparations (known as 'concentrated extracts') for the manufacture o f
beverages
ex 22.10 (*) Vinegar and substitutes for vinegar
CHAPTER 23 Residues and waste from the food i ndustries; prepared animal fodder
CHAPTER 24
24.01Unmanufactured tobacco, tobacco refuseG/C/W/178
Page 9
CHAPTER 45
45.01Natural cork, unworked, crushed, granulated or ground; waste cork
CHAPTER 54
54.01Flax, raw or processed but not spun; flax tow and waste (including pulled
or garnetted rags)
CHAPTER 57
57.01True hemp ( Cannabis sativa ), raw or processed but not spun; tow and
waste of true hemp (including pulled or garnetted rags or ropes)
(*) Heading added by Article 1 of Regulation No 7a of the Council of the European
Economic Community, of 18 December 1959 (OJ 7, 30. 1. 1961, p. 71 - Special edition
(English edition) 1959-62, p. 68).
(*) Heading added by Article 1 of Regulation No 7a of the Council of the European
Economic Community, of 18 December 1959 (OJ 7, 30. 1. 1961, p. 71 - Special edition(English edition) 1959-62, p. 68).
(*) Heading added by Article 1 of Regulation No 7a of the Council of the European
Economic Community, of 18 December 1959 (OJ 7, 30. 1. 1961, p. 71 - Special edition
(English edition) 1959-62, p. 68).
(*) Heading added by Article 1 of Regulation No 7a of the Council of the European
Economic Community, of 18 December 1959 (OJ 7, 30. 1. 1961, p. 71 - Special edition(English edition) 1959-62, p. 68).G/C/W/178
Page 10
INDUSTRIAL PRODUCTS
a) General rule  (applying to all
products not included sub b)
Products originated in the
beneficiary countries shall be
admitted for import into the EC
without quantitative restrictions
or measures having equivalent effect
and with exemption from customs duties 
and charges having equivalent effect,
unless otherwise established.b) Specific products
Products listed in Annexes CI/CIV of
Reg. 70/97 shall be admitted for
import into the EC with exemption
from customs duties within tariff ceilings.
The amounts of ceilings shall be
increased annually by 5%. As soon as the
ceilings have been reached, the
Commission may  adopt a Regulation
reintroducing, until the end of the
calendar year, the customs duties actually
applied in respect of third countries(in
practice, often ceilings are exceeded
without any reintroduction of duties)AUTONOMOUS TRADE MESURES REGIME  (ATM)
Legal basis : Regulation (EC) N° 70/97 of 20.12.1996 as modified by
Regulation 825/97 of 29.04.97, Regulation (EC)
N° 2636/97 of 29.12.97 and Regulation (EC) N° 2863/98 of
30.12.98
Beneficiaries (to January 99) Croatia and Bosnia and Herzegovina
Slovenia and Fyrom only for imports of wine (due to the
absence of a bilateral wine agreements with these countries
that otherwise have contractual relations with the EC)
Regime : The ceilings, reference quantities and quotas provided for
through ATM are global volumes, applicable to all thebeneficiary countries together, except for “baby beef”products for which national quotas are established. Theyare all unilateral concessions.
Re
gime a pplicable to different t ypes of products :   
TEXTILE  PRODUCTS
They can benefit from exemption from customs duties and charges having equivalent effect within
the quantitative limits established in Regulation (EC) 517/94G/C/W/178
Page 11
INDUSTRIAL PRODUCTS
b) Specific products ( contd)
List of concerned products Ceilings (tonnes for 99)
Chemicals Urea 6.045
Other Urea 53.083Other fertilizers 79.051Regenerated cellulose 1.861Cellulose nitrates 1.164
New and used tires of rubber and inner tubes of rubber 5.273
Articles of apparel and clothing accessories in leather 610Wood Plywood, veneered panels and similar 
laminated wood and wood marquetry 168.647 m
3
“Artificial” wood 22.838
Footwear Rubber or plastic footwear 756
Leather footwear 899Other footwear 374
Glass Drawn glass and blown glass 9.083
Parts of lamps and lighting 2.812
Tubes, pipes and hollow profiles of iron and steel 14.766Copper bars, rods, profiles, wire, tubes and pipes 5.101
Copper plates, sheets and strips 1.424Aluminium bars, rods, profiles and wire 1.412Aluminium plates, sheets and strip 4.944Electric motors, generators, generati ng sets and rotary converters 6.123
Parts suitable for those machines, electrical tr ansformers, static converters, inductors 3.279
Insulated wires and cables 3.928
Electrical insulators 641
Trailers and semi-trailers 1.214Furniture Seats and bed-seats 9.359
Other 8.351
Petroleum products 1.058.400Ferro-alloys Ferro-silicon 4.680
Ferro-silicon-manganese 1.744Ferro-chromium 1.338Unwrought zinc 1.619
Iron and steel products Pig-iron, other ferro-alloys 
and ferrous products 41.525Semi-finished bars of iron ornon-alloy steel 39.724Semi-finished profiles of iron ornon-alloy steel 5.664Flat-rolled products of iron or 40.994non-alloy steel (different types) 7.964
49.409
Ingots, semi-finished products, other flatrolled products, bars, rods,angles,shapes 
and sections 39.579G/C/W/178
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__________AGRICULTURAL  PRODUCTS
All agricultural products, are subject to specific, more restrictive rules. As a  general rule, agricultural
products are excluded from free import with exemption from custom duties . Special regimes are
nevertheless provided for some specific products.
Products subject to preferential regime
Products with a special regime     Products which can be imported
    duty free without any quotas
 
Baby beef
reduced customs
duties (20% ofthe applicableCCT duty) within
a quota of
Croatia: 9.400 tonnesBiH: 1.500 tonnes
(carcass weight)Sour cherries
duty-free within
ceilingsLive horses
Mushrooms, fresh or chilled, excludingmushrooms of the genus Agaricus
Dried vegetables: onions
mushrooms, excludingcultivated mushroomsand truffles
Dried leguminous vegetables
beans other than for sowing
Fresh  raspberries, blackberries,mulberries and loganberriesDried sour cherries
Pepper
Sweet peppersSeeds of anise, badian, fennel, coriandercumin, juniper berriesSeeds, fruit and spores used for sowing
Sweet peppers/Sweet peppers prepared
by  vinegar or acetic acidAjvarProducts which can be imported
duty-free subject to a quota or a
reference quantity
tariff quote
tonnes
Garlic
(from 1.2 to 31.5) 100Sweet peppers 700Peas 600Sweet cherries intended
for manufacture of
chocolate products 2.600Wines
545.000 hl*
Plum spirit “Slijvovica”4.920 hlCucumbers, prepared
with vinegar of acetic
acid
2.000Sauerkraut 100
* Slovenia and Fyrom included
PROCESSED AGRICULTURAL  PRODUCTS
Some of them are clearly excluded (list in Annex A to Reg 70/97) while some others (see list below) can
benefit from concessions (Annex B Reg70/97) ( Agricultural Components set out in the CCT, exemption from other
customs duties )
Indicative list
Yoghurt containing added fruit, nuts or cocoa  Some margarine
Sweet corn  Some chocolate and other food preparations
Sugar confectionery: chewing gum  containing cocoa
liquorice extract  Some types of pasta and couscouswhite chocolate
Some preparations for infant use  Some vegetables prepared or preserved in vinegarCorn flakes and other cereals in form of grain or flakes (sweet corn, yams, sweet potatoes)
Some kind of preparations containing extracts, Potatoes in form of flour, meal or flakes
essences and concentrated of coffee, tea or maté Palm heartsHidrolisates of proteins and autolysates of yeast Yeasts 
Dairy spreads Cheese fondues
Ice cream Other food preparations not elsewhere specified or included
  R. GILI 17.02.1999