WORLD TRADE WT/REG42/3
30January 1998
ORGANIZATION(98-0336)
Original: English Committee onRegional Trade Agreements
FREE TRADE AGREEMENT BETWEEN THE SLOVAK REPUBLIC
AND THE REPUBLIC OFBULGARIA
Communication from theParties
Thefollowing communication hasbeen received from thePermanent Mission ofthe
Slovak Republic andtheRepublic ofBulgaria, withtherequest thatitbedistributed toWTO Members.
________________
I. BACKGROUND INFORMATION ONTHE AGREEMENT
1. Membership, Dates ofSignature, Ratification andEntry intoForce
Membership: theSlovak Republic andtheRepublic ofBulgaria
Dateofsignature: 8December 1995 inSofia (Slovak Republic)
Provisional application: from 1January 1996
Dateofratification: 20June1996
Entry intoforce: 20June1996
2. Type ofAgreement
Type ofagreement: Free-trade area
Planandschedule: TheParties totheAgreement shallgradually establish afree-
trade areainatransitional period ending on1January 1998
atthelatest.
3. Scope
Theprovisions oftheAgreement areapplied toallproducts (industrial andagricultural)
originating intheParties totheAgreement andfalling within Chapters 1to97oftheHarmonized
Commodity Description andCoding System, without anyexclusions (seeArticles 2and11). The
Agreement envisages theelimination ofduties andother barriers totrade inrespect ofsubstantially
allthetrade between theParties inaccordance withtherequirement ofArticle XXIV:8 ofthe
GATT 1994. Inorder toensure theproper functioning oftheAgreement italsocontains provisions
onstateaid,statemonopolies, competition, intellectual property rights andpublic procurement.
4. Trade Data
SeeAnnex.WT/REG42/3
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II. TRADE PROVISIONS
Pursuant toArticle 4,foreachindustrial product thebasic duty, towhich thereductions of
customs duties setoutintheAgreement areapplied, istheMost Favoured Nation rateofdutyapplied
on1January 1995. However, ifafterentry intoforce oftheAgreement anytariffreduction isapplied
onanergaomnes basis, suchreduced duties willreplace thebasic duties.
TheAgreement initsChapter IIprovides alsoforliberalization oftradeinagricultural products.
TheParties totheAgreement granted eachother concessions onanumber ofthese products through
theannual tariff quotas enjoying apreferential rate. Thelevelofliberalization inagricultural sector,
laiddown intheAgreement, represents thefirstphase ofliberalization oftradeinagricultural products.
Although trade inagriculture willnotbefreeofallrestrictions attheendofthetransitional period,
theAgreement contains theprovisions onthebasisofwhich theParties totheAgreement could grant
eachother further concessions.
1. Import Restrictions
1.1 Duties andcharges
Inaccordance withArticles 3and6,respectively, theParties totheAgreement shallintroduce
nonewcustoms duties onimports ofindustrial products aswellasnoduties ofafiscal nature. The
existing customs duties shallbeabolished on1January 1998 atthelatest, withfewexceptions. By
theendofthetransitional period, i.e.on1January 1998, theRepublic ofBulgaria shallapply import
customs duties onimports ofapartofmetallurgical products originating intheSlovak Republic (3tariff
lines). These exceptions shallbeeliminated on1January 2000 atthelatest.
Inconformity withtheprovisions ofArticle 32oftheAgreement aswellasArticle XII
GATT 1994andother relevant balance-of-payment provisions, Bulgaria introduced, on4June1996,
atemporary import surcharge which isexpected tobeeliminated on1July2000. TheSlovak Republic,
pursuant tothesame provisions, introduced, on1May1997 animport deposit scheme, which was
replaced byanimport surcharge on21July1997. Forfurther details onbothmeasures seerelevant
documents ofWTO Committee onBalance-of-Payments Restrictions.1
Inaccordance withArticle 5,theParties totheAgreement shallintroduce nonewcharges having
aneffect equivalent tocustoms duties onimports ofindustrial products. Theexisting charges were
abolished onthedateofentry intoforceoftheAgreement, except fortheproducts specified inAnnex II
forwhich theimport taxwasabolished before theendof1996.
1.2 Quantitative restrictions
Pursuant toArticle 8,theParties totheAgreement shall introduce nonewquantitative
restrictions (QRs) ormeasures having anequivalent effect. Theexisting restrictions wereabolished
onthedateofentry intoforce oftheAgreement, withfewexceptions. TheSlovak Republic applies
QRsonimports ofindustrial products andmeasures having equivalent effect thereto oncertain products
originatinginBulgaria(uraniumorthoriumoresandtheirconcentrates,coal,lignite,radioactivechemical
elements andisotopes, natural andenriched uranium andnuclear fuelrods). These QRsshall be
abolished on1January 2001 atthelatest.
1WT/BOP/N/18, WT/BOP/G/4, WT/BOP/S/4 andWT/BOP/R/34 fortheRepublic ofBulgaria and
WT/BOP/N/21 andCorr.1-2, WT/BOP/N/28, WT/BOP/G/5 andWT/BOP/S/5 fortheSlovak Republic.WT/REG42/3
Page3
1.3 Common External Tariff
TheAgreement doesnotenvisage theestablishment ofaCommon External Tariff.
2. Export Restrictions
2.1 Duties andcharges
Export duties andcharges aregoverned bytheprovisions ofArticle 7.TheParties tothe
Agreement shallintroduce nonewcustoms dutyonexports orcharges having anequivalent effect.
Theexisting duties andcharges wereabolished onthedateofentry intoforce oftheAgreement, with
theexception oftheexport taxes applied bytheRepublic ofBulgaria oncertain products exported into
theSlovak Republic (seasnails, fuelwood andwood intherough, waste ofpaper, waste andscrap
ofstainless steelandcopper products). These export restrictions areofaspecific nature andtheyshall
beabolished on1January 2001 atthelatest.
2.2 Quantitative restrictions
Inaccordance withArticle 9,theParties totheAgreement shallintroduce nonewQRsand
measures having anequivalent effect toQRs. Theexisting restrictions wereabolished onthedateof
entry intoforce oftheAgreement, except forthetemporary export bansforseveral products exported
from Bulgaria intotheSlovak Republic. These export bansareapplied onanergaomnes basis and
shallbeterminated when conditions nolonger justify theirmaintenance.
On1January 1997, theSlovak Republic abolished measures having equivalent effect toQRs
onexports ofproducts listed inAnnex Va.
3. Rules ofOrigin
Rules oforigin ofgoods andrelated methods ofadministrative co-operation arespecified in
Article 16andinProtocol 3totheAgreement which isanintegral partofit.InthisProtocol, the
principles andtherulesforadefinition oftheconcept of"originating products", foraproof oforigin,
foraruleof"drawback orexemption", territorial requirements, arrangements foradministrative
co-operation andother provisions arelaiddown.
Thegeneral criteria usedforthepurpose ofdetermining theorigin ofproducts towhich the
Agreement applies are,asfollows: wholly obtained products andsufficiently worked orprocessed
productsaredefined,togetherwithconditionswhichhavetobefulfilled,formanufacturingorprocessing
operations toeachcommodity item, andtheyarespecified intheannex totheProtocol. Thesimilar
criterion ofsubstantial transformation applies tocases ofinsufficient working orprocessing operations,
which arealsodefined. Withregard tothechanges intariffclassification, theParties totheAgreement
shallbeguided byaprinciple thatsuchchanges shallnotaffect timetables andschedules ofliberalization
andconcessions established intheAgreement.
Inrespect ofacumulation oforigin, theParties totheAgreement apply aprinciple ofbilateral
cumulation, withapossibility ofitsextension tothepaneuropean diagonal cumulation. Thediagonal
cumulation oforigin shallbeapplied between theParties totheAgreement andathirdpartyoncondition
thatthisthirdparty (theEuropean Union (EU), Central European FreeTrade Agreement, European
FreeTrade Association andBaltic countries) hasaFreeTrade Agreement orAgreement Establishing
Customs Union withbothParties totheAgreement andthatidentical rules oforigin apply.WT/REG42/3
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Withregard totheterritorial requirements, theprinciple ofterritoriality isestablished andthe
terms related todirect transport andexhibitions, aswellastheprohibition ofdrawback of,orexemption
from, customs duties, aresetoutintheprotocol. Thisconcept wastobederogated temporarily until
applied within theframework ofthediagonal cumulation between bothParties totheAgreement and
theEU.However, eachParty maydecide onitspartial application infullaccordance withthepossible
modalities ofpartial application agreed upon withtheEU.
Intheareaofproof oforigin, thedocument EUR 1isusedasamovement certificate intrade
between theParties totheAgreement. Thearrangements foradministrative co-operation cover,
interalia,mutual assistance, dispute settlement, penalties, freezones etc.
4. Standards
4.1 Technical barriers totrade
TheAgreementcontainsAnnexVIdealingwiththeissueoftechnicalregulationsandamendments
thereto, where theprovisions oftheprocedure forthenotification ofdrafttechnical regulations are
setoutandspecified. However, theabove mentioned provisions arenotinforceandtheJointCommittee
shalldecide inthefuture onthedatefrom which these provisions shallbeimplemented.
4.2 Sanitary andphytosanitary measures
TheAgreement contains provisions (Article 15)ontheapplication ofveterinary, health-related
andphytosanitary measures. TheParties totheAgreement agreed thatthemeasures concerning
veterinary andphytosanitary control shallbeharmonized withtheEUlegislation andbetween theParties
andthattheveterino-sanitary measures andthework oftheveterinary services shallbeinaccordance
withtheOffice International desEpizoodies Codex andother international conventions inthisfield.
TheParties totheAgreement alsocommit themselves nottointroduce discriminatory orother measures
which would limittheflowofinformation, animals, plants orproducts.
5. Safeguards
Each Party totheAgreement canapply safeguard andemergency measures ontheconditions
andinconformity withtheprocedures specified intheAgreement. These safeguard measures cover
general safeguards (Article 27),structural adjustment (Article 28),re-export andserious shortage of
goods (Article 29),balance-of-payments difficulties (Article 32)andspecial safeguard measures in
theagricultural sector (Article 14).
Article 31oftheAgreement provides foraprocedure fortheapplication ofsafeguard measures
which foresees consultations within aJoint Committee (JC)withaview ofsolving anydifferences
andfinding amutually acceptable solution, aswellasperiodic reviews ofthemeasures withaview
totheirgradual relaxation andabolition.
6. Anti-Dumping Measures
Ascontained inArticle 26,theapplication oftheabove mentioned measures hastobein
accordance withArticle VIoftheGATT 1994 andtheAgreement onImplementation ofArticle VI
oftheGATT 1994, aswellaswiththeconditions andprovisions laiddown intheAgreement.WT/REG42/3
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7. Subsidies andState-Aid
TheAgreement contains provisions relating tosubsidies, stateaid,statemonopolies, rulesof
competition concerning undertakings andpublic procurement.
7.1 State aid
Asprovided forinArticle 23,theParties totheAgreement adopted anobligation toavoid
anyaidgranted byastatebeing aParty totheAgreement orthrough stateresources inanyformwhatever
which distorts orthreatens todistort competition byfavouring certain undertakings ortheproduction
ofcertain goods. Theagricultural products areexcluded from theabove mentioned provisions.
Ifaparty totheAgreement considers thataparticular practice, including thatinagriculture,
isincompatible withtheprovisions oftheAgreement orifsuchapractice causes orthreatens tocause
aserious prejudice totheinterests ofthatparty ormaterial injury toitsdomestic industry, theconcerned
party maytakeappropriate measures inaccordance withtheprocedure setoutintheAgreement. Such
measures mayonlybetaken inconformity withthecommitments undertaken intheWTO.
7.2 State monopolies
TheAgreement initsArticle 20contains anobligation fortheParties toadjust progressively
anystatemonopoly ofacommercial nature soastoensure, thatby1July1999nodiscrimination exists
inthisfieldbetween nationals oftheParties.
7.3 Rules ofcompetition
TheAgreement initsArticle 22callsalsoforanobservance ofaprinciple offreecompetition
between theundertakings oftheParties totheAgreement withtheaimtorefrain fromsuchpractices
which haveastheirobject oreffect theprevention, restriction ordistortion ofcompetition, aswell
astoavoid theabuse byoneormoreundertakings ofadominant position ontheterritories oftheParties.
Certain exemptions, intheformofadvantages, concessions andotherfavouring elements, from
theprovisions relating torules ofcompetition concerning undertakings arepossible. They maybe
granted toundertakings ofparticular public tasks assigned tothem, andtothose entities which are
entrusted withtheoperation ofservices ofgeneral economic interest orwhich haveacharacter ofa
revenue-producing monopoly. Thesimilar exclusions inthisfieldarepossible foragricultural products,
since inthisareatherespective provisions oftheAgreement donotapply.
Ifaparty totheAgreement considers thataparticular practice isincompatible withthe
provisions oftheAgreement inthefieldofrulesofcompetition andifsuchpractice causes orthreatens
tocause aserious prejudice totheinterests ofthatparty ormaterial injury toitsdomestic industry,
theconcerned partymaytakeappropriate measures according totheprocedure setoutintheAgreement.
7.4 Public procurement
InArticle 24,theParties totheAgreement commit themselves toprogressively develop their
respective public procurement regulations withtheaimtogrant suppliers oftheother Party, bythe
endof1998 atthelatest, access tocontract award procedures ontheirrespective public procurement
markets. Thisaccess should bebased onaprinciple of”freecompetition ”andhastobeinaccordance
withtheprovisions oftheWTO Agreement onGovernment Procurement.WT/REG42/3
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8. Sector-Specific Provisions
With theexception ofagriculture, theAgreement doesnotcontain anyspecific provisions
applicable totrade between theParties totheAgreement inindividual sectors.
9. Other Issues
TheAgreement contains Protocol 3which isanintegral partofitandwhich deals withthe
co-operation incustoms administration. TheProtocol includes provisions onthemutual assistance
incustomsmattersbetweenrespectivecustomsadministrativeauthoritiesofthePartiestotheAgreement.
TheParties should change information ontheirsituation incustoms matters andprovide theassistance
eachother.
III. GENERAL PROVISIONS OFTHE AGREEMENT
1. Exceptions andReservations
TheAgreement alsoincludes provisions regarding general andsecurity exceptions (Articles 18
and19).TheParties totheAgreement mayprohibit orrestrict theirimports, exports orgoods intransit
justified onthegrounds ofpublic morality, public policy orpublic security andonthegrounds of
protectionofhuman,animalorplantlifeorhealth,theprotectionofnationaltreasurespossessingartistic,
historic orarchaeological value; protection ofintellectual property orrules relating togoldorsilver
andtheconservation ofexhaustible natural resources ifsuchmeasures aremade inconjunction with
restrictions ondomestic production orconsumption.
Suchprohibitions orrestrictions mustnotbeameans ofarbitrary discrimination oradisguised
restriction ontrade between theparties totheAgreement. Forthereason ofsecurity eachParty to
theAgreement maytakeanyappropriate measures, which itconsiders necessary, inorder toprevent
disclosure ofinformation contrary toitsessential security interests andfortheirprotection orforthe
implementation ofitsinternational obligations oritsnational policies.
2. Accession
There isnoprovision intheAgreement thatallows other countries toaccede totheAgreement.
3. Dispute Settlement Procedures
Theprovisions regarding thedispute settlement arenotcontained intheAgreement.
4. Relation withOther Trade Agreements
Ascontained inArticle 36,theAgreement applies totraderelations between theSlovak Republic
andBulgaria. Itdoesnotprevent themaintenance orestablishment ofcustoms unions, free-trade areas
orarrangements forborder trade totheextent thattheydonotaffect negatively thetrade regime and,
inparticular, theprovisions concerning therules oforigin provided forbytheAgreement.
TheAgreement doesnotcontain anyprovision which establishes anyspecific relation with
other bilateral, plurilateral and/or multilateral trade agreements. However, inthepreamble tothe
Agreement, areference totheGATT 1994 andtheWTO ismade.WT/REG42/3
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5. Institutional Framework
Inaccordance withArticle 34,theJCwasestablished. Itconsists oftwomembers, eachfrom
oneParty totheAgreement. Themembers oftheJCarerepresentatives oftheGovernments. The
JCisnotanintergovernmental orsupranational institution created tooperate theAgreement. Themain
taskoftheJCistosupervise andtoadminister theimplementation oftheAgreement.
TheJCmaytakedecisions inthecases provided forintheAgreement. Onother matters, it
maymake recommendations. Inrespect oftheprocedures oftheJCreferred toinArticle 35,theJC
meets, whenever necessary, butatleastonceayear, andactsbyacommon agreement. Each party
totheAgreement mayrequest thatameeting oftheJCbeheld. TheJCmaydecide tosetupsuch
subcommittees andworking groups asitconsiders necessary toassist itinaccomplishing itstasks.
Forthepurpose oftheAgreement, theJCshalladopt itsrulesofprocedure which, interalia,
contain provisions forconvening meetings andforthedesignation oftheChairman andhistermof
office. Theoperation ofnational entities oftheParties totheAgreement issubject totheprovisions
oftheAgreement andalsotoimplementing policies relating totheAgreement.
IV. OTHER
Before theentry intoforce theAgreement wasapplied provisionally. TheAgreement covers
trade ingoods; trade inservices isnotsubject totheprovisions oftheAgreement. InArticle 33it
contains anevolutionary clause providing forthepossibility ofextending thecoverage oftheAgreement
tonewfields.WT/REG42/3
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Imports ofBulgaria from theSlovak Republic
(in'000USD, c.i.f.)
HSSections 1994 1995 1996
I 63.8 1.5
II 322.2 126.4 134.8
III 15.7 0.0 0.0
IV 36.5 335.3 288.8
V 7.1 43.5 69.6
VI 1,188.1 5,055.9 2,803.0
VII 1,675.6 4,233.8 4,212.8
VIII 1,104.3 767.8 1,020.8
IX 0.3 16.4 136.1
X 101.6 284.6 238.2
XI 1,548.1 1,390.7 945.8
XII 9.7 4.7 20.6
XIII 730.1 1,767.9 2,831.7
XIV 1.1 0.0 0.0
XV 1,232.0 2,499.2 2,081.3
XVI 1,006.2 1,486.1 1,963.4
XVII 805.8 850.0 1,211.1
XVIII 202.4 173.4 100.6
XX 189.3 145.9 118.6
XXI 0.0 0.0 0.0
TOTAL 10,284.9 19,183.0 18,177.2WT/REG42/3
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Imports ofSlovak Republic from Bulgaria
(in'000USD, f.o.b.)
HSSections 1994 1995 1996
I 0.0 41.2 0.0
II 382.3 982.3 232.6
III 0.0 0.0 0.0
IV 728.4 322.3 618.7
V 4,505.8 3,731.9 111.2
VI 128.9 917.6 1,688.4
VII 132.5 148.5 686.8
VIII 0.0 0.0 0.0
IX 28.7 91.2 218.2
X 10.3 10.1 0.0
XI 228.9 101.6 69.3
XII 48.3 59.4 21.6
XIII 10.1 48.7 117.7
XIV 20.3 19.9 28.6
XV 1,528.4 1,721.3 2,342.8
XVI 1,521.3 1,386.7 2,117.6
XVII 968.7 609.5 1,138.5
XVIII 241.9 348.6 32.8
XX 48.7 57.9 42.3
XXI 0.0 0.0 0.0
TOTAL 10,533.5 11,107.1 9,759.7