RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG55/4
8 February 2000
(00-0476)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN CROATIA AND SLOVENIA
Questions and Replies
This document reproduces questions addressed to the Parties and the responses submitted.
The questions and replies set out below are organized in accordance with document WT/REG55/2.
_______________
I. BACKGROUND INFORMATION ON THE AGREEMENT
2. Type of Agreement
We note that Slovenia is a member of the Central European Free Trade Agreement
(CEFTA) and that Croatia is negotiating accessio n to the WTO.  Given the continuing economic
integration within Europe, is this FTA considered  to be a stepping stone to possible eventual
accession to CEFTA or other European regional trade agreements?
Parties to CEFTA agreed only on two conditions for a country to become a Party to CEFTA:
a membership in the WTO and an agreement with the EU.  Thus, a condition to have a bilateral FTA
is not one of the requirements.
4. Trade Data
What percentage of Free Trade Agreement (FTA ) trade (for industrial and agricultural)
between the Parties (for each Party):
- has the duties eliminated?
- has other regulations of commerce eliminated?
- is given concessions (rather than having duties etc. removed) or excluded?
All data have been provided in the annexes to document WT/REG55/2.
II. TRADE PROVISIONS
5. Safeguards
Have any specific safeguard actions been taken under Article 14 on agricultural
products?  If so, on which products and what was the nature of the measures taken?  What is
the procedure for utilising specific safeguards, what criteria are to be used to determine
whether a "serious disturbance" to agricultu re markets is being caused and what are the
"appropriate solutions" to be used?  Would such measures be WTO consistent?  Can theWT/REG55/4
Page 2
Parties give assurances that such measures would not prejudice the rights of non-parties to this
Agreement?
No measures under Article 14 have been taken so far.  For now it is impossible to foresee
which exact measures the Parties would take if imports from one Party caused serious disturbance tothe other Party.
However, such measures would be taken only toward imports originating in the Party to
which a concession has been granted under the FTA, and causing the serious disturbance.  They
would aim at the elimination of the disturbance caused by the concessions.  One of such measures
could be provisional elimination of such "disturbing" concessions.
When a Party judges that imports from the other Party are causing serious disturbances to its
market, the Parties enter into consultations immediately.  They decide, on a case-by-base basis, if such
imports really caused serious disturbance to the market of that particular Party and try to find an
appropriate solution, acceptable for both sides.  Priority must be given to those measures which least
disturb the functioning of the Agreement.  The Party will be requested to provide all available datashowing the serious disturbance.
Any measure taken under Article 14 would be WTO consistent.
Article 27 (General safeguards) states that the Party may take "appropriate measures" -
what would be considered "appropriate measures"?
"Appropriate measures" means that priority must be given to those measures which least
disturb the functioning of the Agreement.
Can the Parties explain whether there is  any difference in practice between the
obligations under Articles 27, 28, 29 and 31 (General safeguards/Structural
adjustment/Re-export and serious shortage/Saf eguards procedures) and the manner in which
they will operate, and the obliga tions of the Parties under the WTO?
In general there are no big differences between the FTA and WTO provisions regarding the
procedures for the application of such measures.  However, the differences that exist are a reflectionof the fact that the FTA is a bilateral agreement.  Thus, the procedures have to be modified to support
the bilateral relations between the contracting parties.  The priority is given to direct consultations and
mutual examination of the situation in order to find an appropriate solution.
Will balance-of-payments (BOP) measures under Article 32 be applied in a
non-discriminatory manner and without prejudice to the interests of non-parties to the
Agreement?
The Agreement does not provide for the exclusion of the Parties to the Agreement from BOP
measures applied to imports from WTO Members.
4. State Aid and Countervailing Measures
We note that the provisions of Article 23 on State aid do not apply to agricultural
products, and therefore that there is no limitation under the Agreement on use of State aid foragriculture.  What is the reason that agriculture is  excluded from the provisions of that Article?
Exempting trade in agricultural products from the provisions of Article 23.1 does not exempt
agricultural products from the measures that could be taken under Article 23.5.WT/REG55/4
Page 3
Without prejudice to the concessions granted under the Agreement concerning agricultural
products, the provisions of the Agreement shall not restrict in any way the pursuance of the respective
agricultural policies of the Parties or taking of any measures under such policies.
Article 23.3 (State aid) says that a Joint Committee will establish criteria on State aid.
Has a Joint Committee been set up?  If so, has it developed criteria and rules on their
implementation?
The Joint Committee was set up last year, but the criteria and rules on State aid have not yet
been developed since they are supposed to be adopted within three years from the entry into force of
the Agreement.
IV OTHER
2. State Monopolies
Which products are currently subject to State monopolies (Article 20)?  This Article
suggests that State monopolies might currently disc riminate in their commercial decisions.  Can
the Parties confirm that such monopolies operate in a matter consistence with GATT
Article XVII in their purchases from and sales to third countries?
There are no products currently subject to State monopolies in Slovenia.  The objective of the
Article has been to clearly ensure that there would be no discrimination.  Slovenia is bound by its
commitments under GATT Article XVII and the Understanding on the Interpretation of Article XVII
of the GATT 1994, including those relating to notification.
We acknowledge that competition policy (Art icle 22) is not covered explicitly by the
WTO rules.  However, certain aspects of competition are captured by various WTO rules and
we therefore would be grateful for comments on the following questions:
- What criteria are to be applied in asse ssing whether actions prevent, restrict or
distort competition, or whether actions by dominant undertakings constitute an
abuse of their position?  Are these cond itions subject to specific legally-based
processes?
- Can the Parties give assurances that implementation of Article 22 does not
discriminate against the interests of non-parties to the Agreement (particularly
given that it exempts agricultural products which "form an integral part of a
national market organization" from the provisions stipulated in paragraph 1(a)
of this Article)?
No further criteria have been defined in Article 22 of the Agreement.  The assessment of
conduct of undertakings is made on a case-by-case basis, taking into consideration the effects of
competition and trade between the Parties.
The Parties can give assurances that implementation of Article 22 does not discriminate
against the interests of non-parties to the Agreement.
__________