RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG56/5
WT/REG57/5
24 June 1999
(99-2579)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN ISRAEL AND THE CZECH REPUBLIC
FREE TRADE AGREEMENT BETWEEN ISRAEL AND THE SLOVAK REPUBLIC
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 documents WT/REG56/4
and WT/REG57/4.
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I. BACKGROUND INFORMATION ON THE AGREEMENTS
4. Trade Data
The Parties to the Agreements have circulate d overall two-way trade data at the chapter
or section level for the last few years.  While this information is useful, unfortunately the
information does not respond to the request ma de by the Committee.  Committee members are
still unclear on the treatment of certain type s of products under the Agreements.  While the
Parties claim that all trade is covered by the Agreements, it appears that some products –
primarily agricultural – are not subject to tariff elimination and in fact may receive only tariffpreferences.  Committee members have requested, on several occasions, statistical information
that would show the amount/type of trade s ubject to varying treatment under the Agreements.
Similar data has been provided by the parties to other agreements.  We are not prepared to
complete the factual review of these Agreements – or any other agreements - until satisfactory
trade data has been provided.  We note that while the Parties to the Agreements may consider
the meaning of the term "substantially all trade" to be a topic for the discussion on systemic
issues, the information we have requested has been provided by the parties in reviews of other
agreements.  Please provide the trade data that has been requested.
We welcome the trade statistics provided by the FTA Parties in the Standard Format
Report.  We would be grateful for clarification of what percentage of FTA trade between the
Parties (for each party):
For agricultural products (Chapters 1-24)
- will have the duties/regulations eliminated?
- receives concessions (less than MFN but greater than zero duties and/or quotas)
or is excluded from FTA provisions?WT/REG56/5
WT/REG57/5
Page 2
For industrial products (Chapters 25-97
- will have the duties/regulations eliminated?
- receives concessions (less than MFN but greater than zero duties and/or quotas)
or is excluded from FTA provisions?
See Annex.
II. TRADE PROVISIONS
1. Import Restrictions
Article 11 (Agriculture):  Is consideration being given to establishing free trade in
agriculture, or to extending existing provisions on agriculture and fisheries to cover moreproducts or to liberalise further (e.g., eliminating duties/quotas on products currently only listed
for concessions or currently exempt)?
The Parties have granted each other preferential market access possibilities under the
Agreements for a number of agricultural and processed agricultural products and are determined tocover products that are currently exempt.  Further liberalization of trade is an important component of
the Agreements and will be reviewed within the framework of the Joint Committee meetings, in
accordance with Article 11.4 of Israel’s Free Trade Agreements with the Czech and Slovak Republics.
5. Safeguards
Articles 25, 26, 27 and 29 (General Safeguar ds/Structural Adjustment/Re-export and
Serious Shortage/Safeguard Procedures):  Can the Parties explain whether there is any
difference in practice between the obligations under these Articles and the manner in which
they will operate, and the obligations of the Parties under the WTO?  Can the Parties confirm
that measures applied under these Articles will  be applied in a non-discriminatory manner
without prejudice to the interests of non-parties to these FTAs?
Article 26 (Structural Adjustment):  This Article makes provision for exceptional
measures to be taken concerning infant industries, or sectors undergoing restructuring or facing
serious difficulties.  Have any structural adjustment measures been taken, and if so, on what
products?  How is it decided that exceptional measures can be taken?
As already mentioned during the examination of the Free Trade Agreements, these explicitly
provide that a Party taking emergency measures shall exclude from the action imports from the other
Party, unless these are a substantial cause of serious injury or threat thereof.  The aim of this provision
is to eliminate any possible unjustified factor, which may hamper the gradual elimination of tariffduties as well other restrictive measures.  This was done in light of GATT Article XXIV, which
provides for the removal of customs duties and other restrictive regulations of commerce (except,
when necessary, those permitted under Articles XI, XII, X III, XIV, XV and XX).  Therefore, it is the
view of the Parties that this is not inconsistent with Article XXIV.  Other RTAs have also similar
provisions in this regard.
In relation to safeguards measures to protect ne w industries, sectors being restructured or with
serious difficulties, these possible measures are of a limited duration and in any way could be taken
only until the expiration of the transitional period.  No such measures have been applied so far.WT/REG56/5
WT/REG57/5
Page 3
Regarding Re-export & Serious Shortage, the Parties wish to refer to the last sentence of
Articles 27 in the Agreements which states as follows:  “The measures shall be non-discriminatory
and be eliminated when conditions no longer justify their maintenance”.
With regard to Safeguards Procedures, the purpose of this Article is to provide for a
consultation process, in accordance with the letter and the spirit of the WTO.
7. Subsidies and State-Aid
7.1 State-aid
Article 20 (State Aid):  We note that the provisions of this Article do not apply to
agricultural products, and that therefore there is  no limitation under the Agreements on the use
of state aid for agriculture.  What is the reason for agriculture being excluded from the
provision of this Article?
This Article does not apply to agricultural products, because these are subject to special
provisions within the framework of the WTO Agreement on Agriculture.
7.2 State monopolies
Article 17 (State Monopolies):  Which products are currently subject to state
monopolies?  This Article suggests that state mo nopolies might currently discriminate in their
commercial decisions – can the Parties confir m that such monopolies operate in a manner
consistent with GATT Article XVII in their purchase from and sales to third countries?
The aim of the provision on state monopolies is to stress that any state monopoly of a
commercial character should act in a manner consistent with the principles of non-discrimination.  As
to products subject to state trading and consistency with GATT Article XVII, please refer to the
Parties’ notifications, which have been notified to the Committee on State Trading Enterprises.
7.3 Rules of competition concerning undertakings
Article 19 (Competition Policy):  We acknowledge that competition policy is not covered
in 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 considerations subject to specific legally based processes?WT/REG56/5
WT/REG57/5
Page 4
- Can the Parties give assurances that implementation of that Article does not
discriminate against the interests of non-parties to the Agreements (particularly
given that it exempts agricultural pro ducts which “form an integral part of
a national market organisation” from the provisions stipulated in paragraph 1(a) of
this Article)?
The Agreements do not specify what criteria are to be applied in assessing whether actions
prevent, restrict or distort competition, or whether actions by dominant undertakings constitute an
abuse of their position.  The Agreements provide that measures against such actions may be only
taken insofar as they affect trade between the Parties and are a cause of serious prejudice to theinterest of a Party or of material injury to its domestic industry.  Implementation of this article could
not discriminate against the interests of non-parties to the Agreements, including in the case of
agricultural products to which the Article does not apply.WT/REG56/5
WT/REG57/5
Page 5
ANNEX
Imports of Israel from the Czech Republic, 1995-1997,
by different duty levels according to the Agreement
1995
Agricultural products Industrial products Total imports Duty
rate US$ % US$ % US$ %
0% 1,486,451 39.8 53,735,583 100.0 55,222,034 96.1
Less than MFN 2,131,516 57.1 - - 2,131,516 3.7
MFN 117,207 3.1 - - 117,207 0.2
Total 3,735,174  100.0 53,735,583  100.0 57,470,757  100.0
1996
Agricultural products Industrial products Total imports Duty
rate US$ % US$ % US$ %
0% 190,840 50.0 35,322,519 100.0 35,513,359 99.6
Less than MFN 38,227 10.0 - - 38,227 0.1
MFN 152,942 40.0 - - 152,942 0.4
Total 382,009  100.0 35,322,519  100.0 35,704,528  100.0
1997
Agricultural products Industrial products Total imports Duty
rate US$ % US$ % US$ %
0% 387,334 35.7 41,647,974 100.0 42,015,308 98.4
Less than MFN 15,678 1.5 - - 15,678 0.0
MFN 647,185 62.8 - - 647,185 1.5
Total 1,030,197  100.0 41,647,974  100.0 42,678,171  100.0
Imports of Israel from the Slovak Republic, 1995-1997,
by different duty levels according to the Agreement
1995
Agricultural products Industrial products Total imports Duty
rate US$ % US$ % US$ %
0% 33,413 25.3 18,929,131 100.0 18,962,544 99.5
Less than MFN 29,415 22.3 - - 29,415 0.2
MFN 69,088 52.4 - - 69,088 0.4
Total 131,916  100.0 18,929,131  100.0 19,061,047  100.0
1996
Agricultural products Industrial products Total imports Duty
rate US$ % US$ % US$ %
0% 600 0.4 6,159,080 100.0 6,159,680 97.4
Less than MFN 117,783 72.3 - - 117,783 1.9
MFN 44,548 27.3 - - 44,548 0.7
Total 182,931  100.0 6,159,080  100.0 6,322,011  100.0
1997
Agricultural products Industrial products Total imports Duty
rate US$ % US$ % US$ %
0% 0 0.0 7,277,854 100.0 7,277,854 98.2
Less than MFN 58,301 42.7 - - 58,301 0.6
MFN 78,105 57.3 - - 78,105 1.1
Total 136,406  100.0 7,277,854  100.0 7,414,260  100.0
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