WORLD TRADE
ORGANIZATIONG/AG/NG/W/141
23 March 2001
(01-1456)
Committee on Agriculture
Special SessionOriginal:  English
WTO NEGOTIATIONS ON AGRICULTURE
Submission by Croatia
INTRODUCTION
The Uruguay Round has played an important role in the process of establishing a fair and
market-oriented agricultural trading system.  The reform process agreed during the Uruguay Roundwas related to trade concerns (market access, export competition, domestic support), and non-trade
concerns, which were reflecting the important societal goals.
We have now embarked upon the continuation the process of gradual reform, governing the
production and the trade of agricultural products, as called for in Article 20 of the Agreement onAgriculture.
The Croatian position in the existing WTO round of multilateral negotiations on agriculture is
connected with the fact that Croatia only recently became a Member of WTO, and that our
agricultural sector is in the transition process.  Needless to say, Croatian negotiations for a WTOaccession were the most difficult in the agricultural area.
Croatia is one of the co-sponsors of the negotiating proposals of the transition countries on
market access (G/AG/NG/W/57) and domestic support (G/AG/NG/W/56).  We believe that inclusion
of the mentioned proposals as a specific provision into the Agreement on Agriculture as well as in anynegotiating guidelines and modalities, would address the particular needs of transition countries, as it
would help them to establish and consolidate a market-oriented domestic agricultural sector.
In addition to these proposals at this stage we would like to point out Croatian position on
four elements of future negotiations:
• non-trade concerns
• special safeguard clause
• export competition
• the application of new obligations
NON-TRADE CONCERNS
Being a country in transition with long tradition and employment in agricultural sector,
Croatia recognises the multifunctional role of agriculture and considers that it should be given the
place that deserves.  It is especially important to emphasise the role of agriculture in sustainable
development, in the protection of environment, and poverty alleviation in the areas with unfavourable
economic conditions in agriculture.G/AG/NG/W/141
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In order to achieve the objectives of creating a fair and market-oriented agricultural trading
system as envisaged in Article 20 of AoA, there is a need to acknowledge, inter alia , the future
coexistence of various forms of agriculture based on each country's production conditions and
potentials and historical and cultural background.
The continuation of the reform process should ensure that different functions of agriculture
for different Members, which are of vital interest to them, are preserved.
Croatian agricultural policy is an important building block of overall economic policy
contributing to sustainable growth of whole economy, employment, conservation of natural potentials
and regional development.
In Croatia, agriculture contributes about 9 per cent in GDP and employs about 10 per cent of
the economically active population.  Its share (inclu ding agro-processing) in total foreign trade is
about 12 per cent.  However, due to its multifunctionality, the importance of agriculture is much more
important for rural areas.
In total population of 4.5 million almost 45 per cent live in rural areas according to the last
census of population.  Significant number of population is engaged in agricultural production as a
periodical or permanent activity.  More than 2/3 of family farms are part-time farms.  Besides that
there is a high percentage of old households – 51 per cent of farmers are older than 50 years.
In accordance with mutually agreed rules, each country should be given the possibility to
achieve its own societal goals arising from specific and multifunctional characteristic of agriculture.
Strengthening the socio-economic viability and development of rural areas, food security and
promoting the co-existence of various types of agriculture are of great importance.
Croatia has very diversified scope of less favoured areas for agricultural production such as
islands, mountain regions, depopulated areas, war da maged areas (especially problem of mined areas).
We think that all relevant aspects have to be examined throughout the negotiations and taken
into account when preparing new rules and disciplines for agricultural trade in the future.
Attention should also be paid that measures which address non-trade concerns should be well
targeted, transparent and implemented in no more than minimally trade-distorting ways and should
not become disguised restrictions to trade.
SPECIAL SAFEGUARD CLAUSE
During the post Uruguay Round period, the Special Safeguard Clause (SSG) has played an
important role in preventing unpredictable surges in imports or fluctuations in import prices.
During the accession process Croatia converted all import barriers (quantitative import
restrictions, non-tariff measures maintained through state-trading enterprises) into ordinary custom
duties (tariffs).  In that way the conditions for SSG use were created but as a new Member that
acceded to the WTO after the conclusion of the Uruguay Round, Croatia had not been given the right
to use such a measure for a limited number of most sensitive agricultural commodities.
If all countries agree that due to special character of agriculture, the special safeguard clause
should be maintained, Croatia would like to have the right to use SSG measure.G/AG/NG/W/141
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EXPORT COMPETITION
Export subsidies reduction commitments are among the most important achievement of the
UR agricultural negotiations and gives hope that further reduction in export competition will
contribute to an improvement of agricultural trade based on comparative advantages of each Membercountry.
The application of export subsidies and all other instruments of export competition is putting
Member countries, which are not allowed to apply them or cannot afford them, into disadvantaged
position.
Therefore Croatia expects that, in addition to further significant reduction of value and
quantity of export subsidies, all other forms of export competition will be covered by specific WTO
rules and disciplines.  That is to say that Members should undertake obligations to regulate and reduce
other instruments of export competition such as food aid, export credits, state trading enterprises.
THE APPLICATION OF NEW COMMITMENTS
The similar problems of other economies in transition and the need for flexible approach in
the WTO Commitments are the natural reasons that led Croatia to co-sponsor the negotiating
proposals of a group of numerous transition economies in respect of market access and domesticsupport.
Private producers always dominated Croatian agriculture.  Currently, many of them face
difficulties caused by war and transition of the economy to a market-based economic system.  Perhaps
the most serious problem is the small average farm size (average of less than 3 ha) fragmented intoseveral land plots, which make agricultural production uneconomic in a market-orientated way.  Also,
from the large number of agricultural households (approximately 500,000), only a small part are full-
time market-oriented agricultural producers.  A large number of them are old households forced to
engage in some kind of agricultural production to compensate for low pensions.  Despite these
problems, many private farm producers are optimistic about the prospects for Croatian agriculture.
During occupation, 29 per cent of agricultural land was inaccessible for several years.  During
the war one third of the livestock (one half of the cattle) and one fourth of agricultural mechanisation
were destroyed.  More than 400,000 people mostly from rural areas were dislocated and turned from
agricultural producers into consumers.
Restructuring in agricultural sector and the process of adjustment to a market-based economy
faces difficulties.  A particular difficulty is  the restructuring of the former agrocombinats
1, which
dominated food processing and distribution.  Despite favourable conditions for agricultural production
in Croatia, the dislocations caused by the restructuring of agrocombinats1 resulted in huge declines in
agricultural production and food processing, which was compensated by imports.  It is important to
highlight the accelerated import value growth of agricultural and food products since independence.Agricultural imports increased from US$400 million in 1993 to US$865 million (average import from
the 1997 to 1999). For the same period, agricultural exports increased only marginally - from
US$497 million to US$506 million.
Average annual deficit in agricultural and food trade at the end of 90s was about US$411
million or approximately 20 per cent of agricultural GDP.  For the same period, average agricultural
and food import accounted for about 40-50 per cent of agricultural GDP.
                                                     
1 Formerly state-owned, large-scale agricultural enterprises.G/AG/NG/W/141
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Croatian agricultural sector is in reform process trying to increase its efficiency and
competitiveness.  It is a long-term process and results will not be seen over night in our socially
sensitive agricultural sector.  Even the negotiation results of our accession process are one of the
additional factors that should be considered.
Croatia is aware that further reduction in support and protection are necessary but in process
to adjust to the international competition, additional flexibility is needed.  Croatia only recently
became a WTO member and the transitional period for most of tariff lines is 3 or 4 years.  Due to
situation in agricultural sector, the application of new commitments needs some postponement.
Therefore we would like to stress out the following:
1. Market access:
The new reduction commitments should not affect the transitional period for the
implementation of the commitments made in accession's negotiations.
Croatia would like to ask for a possibility of at least 2 years as a pause after the
implementation of accession's commitments at the level of individual tariff line before it begins with
the implementation of new reduction commitments.  For products which do not have transitional
period (or transitional periods are significantly shorter), the beginning of implementation of new
commitments should not be before 1 January 2005.
As a co-sponsor of the proposal made by group of transitional economies with regard to
market access, Croatia would like to once again emphasise the elements contained therein.  This
proposal aims at the following:  inclusion in any negotiating guidelines and modalities for the purpose
of future tariff reductions and other market access commitments, specific flexibility provision.  Suchprovision would, inter alia , exempt low tariffs from further reduction commitments for transition
countries, as well as would allow for selective reduction commitments.
2. Domestic support:
The new reduction commitments should not affect the transitional period for the
implementation of the commitments made in accession's negotiations.
Croatia would like to ask for a possibility of at least 2 years as a pause after the
implementation of accession’s commitments.  That means that the beginning of implementation of
new reduction commitments should not be before 1 January 2006.
As a co-sponsor of domestic support proposal of transitional group of countries, Croatia
would once again like to emphasise the necessity of specific provision.  This provision would exempt
investment subsidies and input subsidies generally available to agriculture, interest subsidies to reduce
the costs of financing as well as grants to cover debt repayment from domestic support reduction
commitments that would otherwise be applicable to such measures.  It would also increase the de
minimis threshold applicable to the transition economies.  The provision could be invoked by
individual countries only until the problems in the agricultural sector described above do persist.
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