WORLD TRADE WT/REG24/3
13February 1997
ORGANIZATION(97-0542)
Original: English Committee onRegional Trade Agreements
FREE TRADE AGREEMENT BETWEEN THE SWISS GOVERNMENT
AND THE FAROE ISLANDS (GOVERNMENT OFDENMARK)
Communication from theParties
Inacommunication dated 6February 1997, thePermanent Mission ofSwizterland, alsoon
behalf ofDenmark andtheFaroe Islands, hastransmitted thefollowing documentation forthecirculation
totheMembers oftheCommittee onRegional Trade Agreements.
________________________________
I. Background Information ontheAgreement
TheFaroe Islands, asaself-governing partofDenmark, wereearlier partoftheEFTA through
Denmark 'smembership ofthatorganization, butwerenotincluded inDenmark 'smembership ofthe
EC. After theconclusion ofamore extensive freetrade agreement between theFaroe Islands and
theEC,theFaroe Islands introduced theECexternal customs tariff towards third countries on
1February 1992. AtthesametimetheFaroe Islands invited theNordic Countries andlaterSwitzerland
andAustria1tonegotiate freetrade agreements tore-establish freetrade between theFaroe Islands
andtheEFTA countries.
1. Membership anddates ofsignature, ratification andentry intoforce
TheParties totheagreement aretheSwiss Government ononesideandtheGovernment of
Denmark andtheHome Government oftheFaroe Islands ontheother. Asprescribed byArticle 10
oftheagreement, theagreement applies, ontheonehand, totheFaroe Islands, andontheother hand,
totheterritory ofSwitzerland. The agreement alsoapplies tothePrincipality ofLiechtenstein for
aslongasthePrincipality remains bound totheSwiss Confederation byacustoms union treaty.
Theagreement wassigned on12January 1994.
Itwassubsequently ratified bySwitzerland andDenmark (also onbehalf oftheHome
Government oftheFaroe Islands) byexchange ofnotes dated 30December 1994and31January 1995.
Itwasapplied provisionally on9April 1994, pending theratification bytheParties andentered into
force on1March 1995.
1TheAgreemen tbetweenAustriaandtheFaroeIslandsdidnotenterintoforcepriortotheaccessionofAustria
totheEuropean Union.WT/REG24/3
Page2
Itwasnotified totheWTO byDenmark, alsoonbehalf oftheHome Government oftheFaroe
Islands, andbySwitzerland on12February 1996(WT/REG24/N/1 andWT/REG24/1), inaccordance
withArticle XXIV:7(a) ofGATT 1994.
2. Type ofagreement
Theagreementcreatesafree-tradeareainconformitywiththedefinitionsetinArticleXXIV:8(b)
ofGATT 1994.
3. Scope
Asprescribed byitsArticle 2,theagreement applies toproducts falling within Chapters 25
to97oftheHarmonized Commodity Description andCoding System excluding theproducts listsin
Protocol 1oftheagreement, andtoproducts listed inProtocol 2oftheagreement withdueregard
tospecific provisions. Theproducts covered areproducts originating intheFaroe Islands orSwitzerland
according totherules oforigin laiddown inProtocol 3oftheagreement.
Thedataontrade coverage arepresented inAnnex 1.
Asprescribed byArticle 8oftheagreement, thepossibility exists toenvisage theextension
oftheproduct coverage oftheagreement atalatter stage, ifrequested byoneoftheParties tothe
agreement.
4. Trade data
Dataonintra-trade arepresented inAnnex 2.
II. Trade Provisions
1.&
2. Import andexport restrictions
(a) Duties andcharges
Asprescribed byArticle 3oftheagreement, customs duties onimports andexports, andany
charges having equivalent effect, areprohibited between theParties totheagreement. Asprescribed
byArticle 4oftheagreement, Parties shallalsorefrain from anymeasure orpractice ofaninternal
fiscal nature establishing whether directly ofindirectly, discrimination between theproducts ofone
Party totheagreement andlikeproducts originating intheterritory oftheother Party totheagreement.
(b) Quantitative restrictions
Asprescribed byArticle 5oftheagreement, quantitative restrictions onimports andexports
andallmeasures having equivalent effect areprohibited between theParties totheAgreement.
3. Rules oforigin
Protocol 3oftheagreement laysdown therules oforigin applicable between theParties to
theagreement andincludes adefinition oftheconcept "originating products". Theorigin provisions
allow forcumulation withmaterials fromallEFTA States. Theorigin rulesareinlinewiththeCommonWT/REG24/3
Page3
Declaration withRegard toPreferential Rules ofOrigin contained inAnnex IItotheAgreement on
Rules ofOrigin assetoutintheFinal ActoftheUruguay Round.
4. Standards
Theagreement doesnotcontain anyspecific provisions concerning "Technical barriers totrade"
and/or "Sanitary andphytosanitary measures" except forArticle 4ofProtocol 2oftheagreement which
stipulates thattheParties shallapply theirregulations inveterinary, health andplant health matters
inanon-discriminatory fashion andshallnotintroduce anynewmeasures thathavetheeffect ofunduly
obstructing trade.
5. Safeguards
Asprescribed byArticle 7oftheagreement, safeguard measures taken bySwitzerland orby
theFaroe Islands might beextended totheirmutual trade onlyiftheyareinconformity withthe
provisions oftheGeneral Agreement onTariffs andTrade.
6. Anti-dumping andcountervailing measures
Theagreement does notcontain anyspecific provisions concerning "Anti-dumping and
countervailing measures".
7. Subsidies andState-aid
Theagreement doesnotcontain anyspecific provisions concerning "Subsidies andState-aid".
8. Sector-specific provisions
Asprescribed byArticle 3ofProtocol 2oftheagreement, theagreement doesnotpreclude
thattheParties apply totheirimports orexports ofprocessed agricultural goods variable amounts or
internal price compensation measures, inorder totakeaccount ofdifferences inthecostofthe
agricultural products incorporated therein.
III. General Provisions oftheAgreement
1. Exceptions andreservations
Protocol 4oftheagreement contains elements concerning thetreatment Switzerland canapply
toimports ofcertain products under theregime ofmandatory reserves.
Article 6oftheagreement prescribes thattheagreement shallnotpreclude prohibitions or
restrictions onimports, orgoods intransit justified ongrounds ofpublic morality, public policy, public
security; theprotection ofhealth andlifeofhumans, animals orplants andtheenvironment; the
protection ofnational treasure possessing artistic, historic orarcheological value; theprotection of
intellectual property; orrulesrelating togoldorsilver; orconservation ofexhaustible natural resources,
ifsuch measures aremade effective inconjunction withrestrictions ondomestic production or
consumption. Suchprohibitions orrestrictions shallnot,however, constitute ameans ofdiscrimination
oradisguised restriction ontrade between theParties totheagreement.WT/REG24/3
Page4
2. Accession/Withdrawal
There arenospecific provisions intheagreement relating toaccession.
Each Party totheagreement maydenounce theagreement bynotification totheother Party.
Theagreement shallcease tobeinforce twelve months afterthedateofwhich suchnotification was
received bytheother Party.
3. Dispute settlement procedures
There arenoDispute settlement procedures provisions contained intheagreement but,for
thepurpose oftheproper implementation oftheagreement, theParties shall, whenever necessary,
exchange information and,atrequest ofeither Party, holdconsultations, asprescribed byArticle 8
oftheagreement.
4. Relation withother trade agreements
Asexplicitly mentioned inthePreamble oftheagreement, theParties havedecided toconclude
theagreement considering thatnoprovisions oftheagreement maybeinterpreted asexempting the
Parties from theirobligations under other international agreements.
Furthermore, thePreamble oftheagreement refers explicitly totheGATT. Inconcluding the
agreement, theParties were resolved toeliminate theobstacles tosubstantially alltheir trade, in
accordance withtheprovisions oftheGATT concerning theestablishment offree-trade areas.
Byconcluding theagreement, theParties weredesiring toconsolidate andextend theeconomic
relations existing between them andtoensure theharmonious development oftheirmutual trade in
thecontext ofEuropean cooperation.
They declare theirreadiness toexamine, inthelightofanyrelevant factor andinparticular
ofdevelopments inEuropean cooperation, thepossibility ofdeveloping anddeepening theirrelations
inorder toextend them tofields notcovered bytheagreement.
Asalready mentioned, theagreement alsoapplies tothePrincipality ofLiechtenstein foras
longasthePrincipality remains bound totheSwiss Confederation byacustoms union treaty.
5. Institutional framework
Besides theprovisions ofArticle 8oftheagreement relating toexchange ofinformation and
possibleconsultations,thePartieshavenotconsiderednecessarytoprovideforaninstitutionalframework
intheagreement.WT/REG24/3
Page5
STRUCTURE OFTHE AGREEMENT
Article
Preamble
Objectives 1
Scope 2
- Protocol Protocol
Protocol 2anditsAnnexes 1and2
Rules ororigin andcooperation incustoms 2
administration
- Protocol Protocol 3anditsAppendixes ItoIX
Customs duties andcharges onimports 3
Customs duties ofafiscal nature 4
- Protocol
Customs duties andcharges onexports 3
QRsonimports andexports 5
General exceptions 6
Safeguard measures 7
Internal taxation 4
Implementation oftheAgreement/Consultation 8
Evolutionary clause 8
Annexes andProtocols 9
Territorial application 10
Amendments 8
Withdrawal andexpiration 12
Entry intoforce 11
Protocol concerning scheme forbuilding up Protocol 4
compulsory reserves inCHandFLWT/REG24/3
Page6
ANNEX I
Trade between Switzerland andtheFaroe Islands
Trade Coverage
Value Sfr Coverage byFTA in1996
IMPORTS
Chap. 1-24 1,509,258 100
Chap. 25-97 229,776 100
TOTAL 1,739,034 100
EXPORTS 100
Chap. 1-24 0 100
Chap. 25-97 114,284 100
TOTAL 114,284 100
IMPORTS &EXPORTS
Chap. 1-24 1,509,258 100
Chap. 25-07 344,060 100
TOTAL TRADE 1,853,318 100
Source: Swiss CustomsWT/REG24/3
Page7
ANNEX 2
Trade between Switzerland andtheFaroe Island
Intra-Trade
Imports from CH(inSfr)
1992 1993 1994 1995 19962
HSSection
1 1,616,647 1,420,088 57,735 825,096 477,413
2
3
4 584,753 1,892,400 705,560 684,162 478,599
5
6
7 729
8
9
10 17,309 185,901 31,491
11
12
13
14
15
16
17
18
19
20 260
21 315,866 337,989 261,832 198,025 94,193
Chap. 1-24 2,201,400 3,312,488 1,283,295 1,509,258 956,012
Chap. 25-97 315,866 355,298 447,733 229,776 94,922
TOTAL 2,517,266 3,667,786 1,731,028 1,739,034 1,050,934
2January toSeptember only.WT/REG24/3
Page8
Trade between Switzerland andtheFaroe Island
Intra-Trade (Contd.)
Exports from CH(Sfr)
1992 1993 1994 1995 19962
HSSection
1
2
3
4 2,647
5
6 6,170 887
7 39,603
8
9
10 39,332 17,894
11 9,328
12
13
14
15 43,875 26,283 23,351 43,960 8,737
16 38,801 75,565 59,801 26,278 34,758
17 7,645 1,759 4,843 20,102 11,581
18 33,016 4,834 1,733 4,639
19
20
21 14,616 80,494
Chap. 1-24 0 0 2,647 0 0
Chap. 25-97 162,669 126,335 95,898 114,284 180,694
TOTAL 162,669 126,335 98,545 114,284 180,694WT/REG24/3
Page9
1992 1993 1994 1995 19962
Imports 2,517,266 3,667,786 1,731,028 1,739,034 1,050,934
Exports 162,669 126,335 98,545 114,284 180,694
TOTAL
TRADE2,679,935 3,794,121 1,829,573 1,853,318 1,231,628