RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG55/M/1
23 July 1999
(99-3103)
Committee on Regional Trade Agreements
Twenty-Third Session
EXAMINATION OF THE FREE TRADE AGREEMENT BETWEEN
CROATIA AND SLOVENIA
Note on the Meeting of 2 July 1999
Chairman:  Mr. Andrew Stoler (United States)
1. This meeting was convened  in document WTO/AIR/1118.
2. Under Agenda Item C. XVI, the Committee on Regional Trade Agreements (CRTA) took up
the examination of the Free Trade Agreement (FTA) between Croatia and Slovenia.  The following
topics were discussed:
A. General Remarks
B. Section I – Background Information on the Agreement
- I.1 - Date of Signature, Ratification and Entry into Force
- I.3 - Scope and Product Coverage
- I.4 - Trade Data
C. Section II - Trade Provisions
- II.2 - Export Restrictions- II.3 - Rules of Origin and Co-operation in Customs Administration
- II.5 - Safeguards
- II.8 - Sector-Specific Provisions
A. General Remarks
3. The Chairman noted that this was the first round of examination of this Agreement, which
was signed on 12 December 1997 and provisionally entered into force on 1 January 1998.  Dated
30 March 1998, the notification could be found as  document WT/REG55/N/1 while the Agreement
itself could be found as document WT/REG55/1.  Th e meeting would be organized in the following
manner: first the floor would be opened to general comments from the delegation of Slovenia, which
would also speak for Croatia, and then from other Members.  Subsequently, the Committee would
examine the specifics of the Agreement following the structure of the Standard Format
(WT/REG55/2).  The terms of reference for the examination were contained in documentWT/REG55/3:  "to examine, in light of the relevant provisions of the GATT 1994, the Free Trade
Agreement between Croatia and Slovenia and to submit a report to the C ouncil for Trade in Goods".
These terms of reference applied in conjunction w ith the following Understanding:  "It was understood
that the understanding read out by the Chairman of  the Council for Trade in Goods under item 7 of the
Agenda of the meeting of the Council on 20 Febr uary 1995, as contained in document WT/REG3/1,WT/REG55/M/1
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would apply mutatis mutandis  to the examination.  It was also understood that, during the examination,
due account would be taken of the intrinsic differe nces between customs unions and free-trade areas."
4. The representative of Slovenia said that although the Agreement was fairly standard, there
was a special political relationship between the countries stemming from their common border and
their shared history as parts of the former Yugoslavia; they were also important trading partners.  TheAgreement reflected the need to increase economic cooperation and to integrate the two economies;
the most significant feature of the Agreement was the establishment of an FTA by the beginning
of 2001.  The Parties had provided information in the Standard Format containing the main features of
the Agreement and, with the recent provision of new information, there was little further comment he
could offer.
B. Section I - Background Information on the Agreement
Section I.1 - Date of Signature, Ratification and Entry into Force
5. The representative of the United States said that as the Agreement appeared to be only
provisionally in force, his delegation wanted to know  when the Agreement was actually notified to the
WTO and when the Agreement would be formally ratified.
6. The representative of Slovenia said that the Agreement had been notified to the WTO in
March 1998 and that the text of the Agreement was itself transmitted to the WTO in December 1998.
The Agreement had been ratified by Slovenia on 13 April 1999 and had also been ratified by
Slovenia; he did not have the date of ratification on the Croatian side but offered to provide the datesubsequently.
Section I.3 - Scope and Product Coverage
7. The representative of Canada requested that the Parties elaborate on the products and number
of tariff lines within HS Chapters 25-97 which were not covered by the Agreement as well as those
agricultural products which were covered by the Agreement.  The representative of Slovenia offered
to provide the requested information in writing, at a later time.
Section I.4 - Trade Data
8. Referring to the trade data provided in the Annexes to the Standard Format, the representative
of the United States said that more than 30 per cent of products carried non-zero preferential tariffs.
He stated the view of his delegation that Article XXIV did not provide for anything except zero or
MFN rates and was uncertain if the Agreement covered "substantially all the trade".
C. Section II - Trade Provisions
Section II.2 - Export Restrictions
9. Directing attention to Annex II referred to in Article 9 of the Agreement, the representative of
Slovenia said that all quantitative restrictions on exports had since been abolished in Croatia.WT/REG55/M/1
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Section II.3 - Rules of Origin and Co-operation in Customs Administration
10. The representative of the United States said th at information provided in the Standard Format
indicated that the Agreement did not employ the pan-European System of Cumulation but that the
rules of origin regime applied by the Agreement was harmonised with other FTAs in Europe.  Giventhat the Agreement was not part of that pan-European System of Cumulation, how were rules of
origin harmonised?  Was there an intention by the Parties to participate in the pan-European System
of Cumulation or a provision in the Agreement to that effect?  The representative of  Slovenia said
that there was no provision envisaging the participation of Croatia in the pan-European System ofCumulation.  The use of the word harmonisation resulted from the similarity between the rules of
origin provisions in the Agreement to those in other agreements.
11. The representative of the United States was interested in learning about the types of additional
processing or other requirements that would be necessary for a product imported from Croatia into
Slovenia to benefit from the pan-European System of Cumulation.  Were the processing requirements
for imports coming into Slovenia from Croatia to qualify for benefit under the pan-European System
of Cumulation different from those applied to the products of other WTO Members?  The
representative from Slovenia said that he would need to consult his capital before providing a reply to
the question.
Section II.5 - Safeguards
12. Noting that the Parties were allowed to take  safeguard action in order to protect infant
industries, and that no such measure was permitted after 1 January 2001, the representative of  Canada
asked if there was a limit to how long these meas ures could be enforced.  Could a Party apply a
measure on 31 December 2000 and then be able to maintain it for a five- or ten-year period
afterwards?  Was the time-limit only enforced on the date a safeguard was introduced, or was there
also a limit on the duration of the safeguard itself?  The representative of  Slovenia said that the date
referred to by the representative of Canada appeared under structural adjustment and not under
safeguards.  He did not consider it possible for a measure to be introduced on 31 December 2000 and
then be maintained for five to ten years.
13. The representative of the United States asked whether there was any provision in the
Agreement which would prohibit the application of safeguards pursuant to the WTO Agreement on
Safeguards between the Parties.  The representative of  Slovenia said that there was no such provision
in the Agreement.
Section II.8 - Sector-Specific Provisions
14. The representative of  Canada wondered what type of mechanism was in place to deal with
the possibility of granting further concessions in the area of agriculture and whether there was any
specific timetable associated with such liberalisation.  The representative of  Slovenia said that there
were no specific provisions for providing further concessions in this respect.  However, the main
mechanism for addressing this issue would be the Joint Committee.  Still, under current discussions
between Croatia and Slovenia for Croatia's accession to the WTO, the two countries were conducting
negotiations to expand agricultural concessions on an MFN basis.WT/REG55/M/1
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15. The Chairman said that there were a number of questions which remained outstanding and
that they should be submitted along with any further questions to the Secretariat by 15 July 1999.
This would allow the written questions and answers to be circulated in time for the next round of
examination of the Agreement.
16. The Committee took note of the comments made.
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