RESTRICTED
WORLD TRADE WT/REG33/2
12November 1997
ORGANIZATION(97-4953)
Original: English Committee onRegional Trade Agreements
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OFSLOVENIA
AND THE REPUBLIC OFBULGARIA
Communication from theParties
Thefollowing communication hasbeenreceived fromthePermanent Missions oftheRepublic
ofSlovenia andtheRepublic ofBulgaria withtherequest thatitbedistributed toWTO Members.
_______________
I. BACKGROUND INFORMATION ONTHE AGREEMENT
1. DateofSignature, Ratification andEntry intoForce
TheFreeTrade Agreement between theRepublic ofSlovenia andtheRepublic ofBulgaria
wassigned on11November 1996 inSofia, Bulgaria. TheRepublic ofBulgaria already ratified the
Agreement on16January 1997. TheRepublic ofSlovenia willratify itinthenearfuture. Duetothe
lengthy procedure fortheratification oftheagreements aprovision wasincluded totheAgreement
thatallows theParties toapply theAgreement onaprovisional basis from 1January 1997.
2. Type ofAgreement
TheagreementthatwasconcludedbetweentheRepublicofSloveniaandtheRepublicofBulgaria
isaFreeTrade Agreement. TheAgreement wasconcluded withtheaimtofurther develop economic
co-operation andtraderelations between countries andtointeraliaeachotherintransition tothemarket
economy andtheintegration ofthecountries intotheworld economy bycontributing thecreation of
aEuropean-wide freetrade system.
Theprimary objective oftheAgreement istoestablish afree-trade areainatransitional period
ending on1January 2000. Thefullplans forthereduction ofcustoms duties andother tariff barriers
totradetozeroonsubstantially allthetradebetween theParties arecontained intherelevant Articles,
Annexes andProtocols oftheAgreement. (seeattachment)
3. Scope andProduct Coverage
Asevident fromtheattachment, theFreeTrade Agreement covers tradeinindustrial products
(HSChapters 25-97, withtheexception oftheproducts listed inAnnex I)andagricultural products
(Protocol2,includingtheproductslistedinAnnexI).TheAgreementalsocontainsprovisions,interalia,
onstateaid,statemonopolies, competition, government procurement, intellectual property rights and
dumping. TheParties havealsoexpressed theirreadiness todiscuss theextension ofthescope ofthe
Agreement totheareas notcurrently covered (evolutionary clause).WT/REG33/2
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Theproducts excluded fromthecoverage oftheChapter I(Industrial products) oftheAgreement
listed inAnnex Iareproducts falling within Chapters 1to24(“agricultural products ”)inthe
nomenclature preceding theHarmonized Description andCoding System (H.S.), butwhich were
transferred atthetimeoftheintroduction oftheH.S.intoH.S.Chapters 25to97(“industrial products ”).
These products listed inAnnex Iarethusproducts which areexcluded fromtheapplication ofprovisions
oftheAgreement relating toindustrial products. However, theproducts arecovered bytheprovisions
relating toagricultural products inArticles 11,12,13,14and15andProtocol 2oftheAgreement.
TheRepublic ofSlovenia andtheRepublic ofBulgaria apply asimilar system intheirrelations with
theEuropean Community.
Thefollowing summary indicates products which arecovered by,orexcluded from, the
Agreement:
(i) Allproducts falling within H.S.Chapters 25to97arecovered.
(ii) Theproducts contained inProtocol 2(agricultural products) arecovered.
Thetrade coverage oftheproducts covered bytheAgreement under review andagricultural
arrangements, which alsoform apartoftheinstruments creating thefree-trade area, ispresented in
detail inAnnex Itothisnote.
4. Trade Data
Seetables inAnnex Itothisnoteondevelopment oftrade between Slovenia andBulgaria.
Inaddition compiled economic andtrade indicators ofSlovenia areprovided inAnnex IItothisnote.
II. TRADE PROVISIONS
1. Industrial Products
1.1 Import restrictions
1.1.1 Duties andcharges
CustomsdutiesonimportsarereducedinaccordancewiththeprovisionslaiddowninProtocol1
totheAgreement. TheProtocol 1contains Annexes A,BandC.Annex Adetermines thereduction
ofcustoms duties applied inSlovenia forproducts originating inBulgaria, whereas Annexes BandC
determine thereduction ofcustoms duties applied inBulgaria forproducts originating inSlovenia.
Theproduct coverage differs depending ontheindustrial structure ofeachcountry. Thefinaldateof
theelimination ofduties forproducts listed inAnnexes A,BandCis1January 2000. Fortheproducts
notlisted inAnnexes A,BandCthecustoms duties were abolished on1January 1997.
Allcharges having aneffect equivalent tocustoms duties onimports were abolished on
1January 1997, except thefortheimport taxonsome products thatisapplied inBulgaria.
Theprovisions concerning theprohibition andabolition ofcustoms duties onimports alsoapply
tocustoms duties ofafiscal nature.WT/REG33/2
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1.1.2. Quantitative restrictions
Theprovisions onquantitative restrictions (QRs) onimports intheFreeTrade Agreement apply
toallproducts covered bytheAgreement, asitisspecified inArticle 2oftheFreeTrade Agreement.
TheAgreement foresees totalelimination ofQRsonimports upontheentryintoforceoftheAgreement.
1.2 Export Restrictions
1.2.1. Duties andcharges
Allduties onexports andcharges having equivalent effect wereabolished uponentry intoforce
oftheFreeTrade Agreement, withthefollowing exceptions:
(a) Slovenia shallabolish export charges equivalent tocustoms duties on1January 1999
atthelatest;
(b) Bulgaria shallabolish taxes onexports atthelatest bythe1January 2001.
1.2.2 Quantitative restrictions
Theprovisions onquantitative export restrictions intheFreeTrade Agreement apply toall
products covered bytheAgreement, asitisspecified inArticle 2oftheFreeTrade Agreement. The
Agreement foresees totalelimination ofQRsonexports upon theentry intoforce oftheAgreement,
withtheexception ofQRsonexports applied inBulgaria foralimited number ofproducts specified
inAnnex IVtotheAgreement.
3. Rules ofOrigin andCo-operation inCustoms Administration
Theprovisions onrules oforigin laidintheProtocol 3totheAgreement areconceived for
thepurpose oftheAgreement. These rulesarebased ontheconcept ofpan-European cumulation which
isappliedinanumberofFreeTradeAgreementswithinEurope.Asaconsequenceoftheimplementation
ofthisorigin network, semi-finished products originating inapartner country linked tothesystem -
Slovenia andBulgaria arelinked toit-maynowbeusedwithout restrictions formanufacturing and
processing inwhatever other partner country connected tothesystem. Under thenewrules finished
products originating intheEuropean Union andexported toBulgaria canbere-exported under the
agreed preferential terms (either duty-free orpreferential duties inaccordance tothedutydismantling
schedules established under theAgreement) toSlovenia andvice-versa.
4. Standards
4.1. Technical barriers totrade
TheParties shallco-operate andexchange information inthefieldofstandardization, metrology,
conformity, assessment andaccreditation withtheaimofreducing technical barriers totrade. TheParties
mayconclude anarrangement formutual recognition oftestreports, certificates ofconformity and
otherdocuments directly orindirectly related toconformity assessment ofproducts which arethesubject
ofthegoods exchange between theParties onthebasis ofregulation inforce intheimporting state.WT/REG33/2
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4.2. Sanitary andphytosanitary measures
TheParties shallapply theirregulations inveterinary, plant health andhealth matters ina
non-discriminatory fashion andshallnotintroduce anynewmeasures thathavetheeffect ofunduly
obstructing trade.
5. Safeguards
Thefollowing emergency measures andother safeguard mechanisms applicable tointra-trade
areprovided forintheAgreement:
- Specific safeguards
Given theparticular sensitivity oftheagricultural markets, ifimports ofproducts originating
inaParty, which arethesubject toconcessions granted under theAgreement, cause serious disturbance
tothemarkets oftheother Party, theParty concerned shallenter intoconsultations immediately to
findanappropriate solution. Pending suchsolution, theParty concerned maytakemeasures itdeems
necessary.
- General safeguards
Anysuspensionofobligationinwholeorinpartorwithdrawalormodificationoftheconcessions
under theseprovisions shallbeapplied inthesense ofrequirements ofArticle XIXoftheGATT 1994,
particularly theAgreement onSafeguards, unless theyarebased onArticle XX.
- Structural adjustment
Themeasuresundertheprovisionsapplyingtostructuraladjustmentmayconcerninfantindustries
orsectors undergoing restructuring orfacing serious difficulties, particularly where these difficulties
might leadtoimportant social problems. Themaximum coverage oftrade represented byproducts
onwhich structural adjustment measures maybeapplied isdefined intherelevant Article.
NomeasuresintroducedintheframeworkofArticlesonSpecificsafeguards,Generalsafeguards
orStructural adjustment totheAgreement against thirdcountries canbebased ontheprovisions of
these Articles, since theFreeTrade Agreement doesnotaltertheParties ’respective rights vis-a-vis
thirdcountries under theGATT 1994.
- Re-export andserious shortage
Anyexport restrictions introduced under these provisions shallbeapplied inthesense ofthe
requirements ofArticle XIoftheGATT 1994 unless theyarebased onArticle XX.
- Balance ofpayments difficulties
Anymeasuresforbalance-of-paymentspurposesshallbeappliedinaccordancewiththeprovisions
oftheGATT1994inparticularlytheUnderstandingonBalance-of-PaymentsProvisionsofGATT1994.
6. Anti-Dumping
TheParties mayonlytakeanti-dumping measures inaccordance withtheAgreement on
Implementation ofArticle VIoftheGATT 1994. TheAgreement contains provisions fortheprocedures
fortheapplication ofsafeguard measures which areapplicable toanti-dumping measures.WT/REG33/2
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7. State AidandCountervailing Measures
Anyactions taken inaccordance withthestateaidprovisions oftheFreeTrade Agreement
willbeinaccordance withtherelevant provisions oftheWorld Trade Organization (WTO). TheParties
ensure transparency intheareaofstateaidbyreporting annually toeachother onthetotalamount
andthedistribution oftheaidgiven andprovide theinformation onaidschemes andonparticular
individual cases ofstateaid.AnyParty canintroduce, ifitconsiders thataparticular practice is
incompatible withagreement ’sprovisions, appropriate countervailing measures inconformity with
WTO.
8. Sector-Specific Provisions
Agricultural products
TheAgreement reduces, within thelimits ofannual tariff quotas, theMFN rateofdutyon
anumber ofagricultural products, thereby, providing better access conditions forthose products.
Without prejudice totheconcessions granted inProtocol 2,theprovisions ofChapter II
(agricultural products) shallnotrestrict inanywaythepursuance oftherespective agricultural policies
ofthePartiesortakingofanymeasureundersuchpolicies,includingtheimplementationoftherespective
provisions oftheAgreement Establishing theWTO.
Furthermore,thePartiesshallexaminethepossibilitiesofgrantingeachotherfurtherconcessions,
taking intoaccount theroleofagriculture intheireconomies; thedevelopment oftradeinagricultural
productsbetweenthem;theparticularsensitivityoftheagriculturalproducts;therulesoftheiragricultural
policies andrespecting provisions oftheAgreement Establishing theWTO.
Thearrangements, concluded within theframework oftheFree Trade Agreement, contribute
tothedevelopment ofcloser integration between theeconomies oftheParties tothefree-trade area,
without raising barriers totrade oftheother WTO Members ’withtheParties tothisarea.
10. Other
Customs administration co-operation
Theprovisions onmutual assistance incustoms matters laidintheProtocol 4totheAgreement
areconceived forthepurpose oftheAgreement. Themain goalofProtocol 4isthattheParties shall
assist eachotherinensuring thatcustoms legislation iscorrectly applied, inparticular bytheprevention,
detection andinvestigation ofcontraventions ofthislegislation.
III. GENERAL PROVISIONS
1. Exceptions andReservations
- General exceptions
Anyprohibition orrestriction maybeintroduced inthesense ofArticle XXoftheGATT 1994.WT/REG33/2
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- Security exceptions
Theprovisions onsecurity exceptions oftheAgreement areinthesense oftheArticle XXI
oftheGATT 1994.
IV. OTHER
1. Internal Taxation
There arenomeasures orpractices ofaninternal fiscal nature applied bytheParties, implying
directly orindirectly discrimination against theproducts oftheParties. Asanexample ofdirect taxation
onecanmention income taxorcorporate tax,whereas turnover taxandvalue added taxareexamples
ofindirect taxation.
2. State Monopolies
Theprovisions onstatemonopolies ensure thatprocurement ormarketing ofproducts byany
statemonopolies ofcommercial nature, asdefined intheArticle oftheAgreement, alsoinclude
monopolies delegated bytheParties toothers. TheParties willadjust progressively anystatemonopoly
ofacommercial character soastoensure thatby1July1999nodiscrimination regarding theconditions
under which goods areprocured andmarketed existbetween nationals oftheParties. TheParties are
bound bytheir commitments under Article XVII andtheUnderstanding ontheInterpretation of
Article XVII oftheGATT 1994.
3. Payments
TheAgreement provides freedom ofpayments relating totradeandtransfer ofsuchpayments
totheterritory oftheParty where thecreditor resides. They include acommitment torefrain from
anyexchange oradministrative restrictions ongrant, repayment oracceptance ofcredits covering
commercial transactions. TheParties havereserved therighttoapply exchange restrictions connected
withthegranting ortaking upofshort andmedium termcredits totheextent permitted according to
theirstatus under theIMF. Such restrictions shallbeapplied onanon-discriminatory basis.
4. Government Procurement
TheParties shallprogressively develop theirrespective regulations forgovernment procurement
withaviewtogrant suppliers oftheother Party bytheendof1999 atthelatest, access tocontract
award procedures ontheirrespective government procurement markets according totheprovisions
oftheWTO Agreement onGovernment Procurement.
5. Protection ofIntellectual Property
TheParties shall grant andensure theprotection ofintellectual property rights ona
non-discriminatorybasis,includingmeasuresforgrantingandenforcingsuchrights.Thetermintellectual
property protection isdefined intheAgreement. TheParties shallco-operate inmatters ofintellectual
property. Theyshallhold,uponrequest ofanyParty, expert consultations onthesematters, inparticular
onactivities, relating totheexisting ortofuture international conventions onharmonization,
administration andenforcement ofintellectual property andonactivities ininternational organizations,
suchastheAgreement Establishing theWTO, World Intellectual Property Organization, aswellas
relations ofParties withthirdcountries onmatters concerning intellectual property.WT/REG33/2
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6. Evolutionary Clause
Afuture deepening andextension ofthecoverage oftheAgreement, asprovided forbythis
provisions maybedefined bytheParties.
7. Validity andTermination
TheAgreement wasconcluded foranindefinite period oftime. EachParty mayterminate this
Agreement byawritten notification totheother Party. Thetermination shalltakeeffect onthefirst
dayoftheseventh month following thedateonwhich thenotification wasreceived bytheother Party.WT/REG33/2
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ATTACHMENT
Summary oftheStructure oftheAgreement, including Annexes andProtocols
Preamble
Objectives Article 1
CHAPTER I-Industrial products
Scope Article 2andAnnex I
(industrial products thatcount asagricultural)
Customs duties onimports Article 3andProtocol 1
Basic duties Article 4
Charges equivalent toduties Article 5andAnnex II
Fiscal duties Article 6
Customs duties andequivalent charges onexports Article 7andAnnexes III(a), III(b)
QRonimports andmeasures having equivalent effect Article 8
QRonexports andmeasures having equivalent effect Article 9andAnnex IV
Technical regulation Article 10
CHAPTER II-Agricultural products
Scope Article 11andAnnex I
Concessions Article 12andProtocol 2
Agricultural policies Article 13
Specific safeguards Article 14
Veterinary, Health -andPhytosanitary measures Article 15
CHAPTER III-General provisions
Rules oforigin andco-operation incustoms administration Article 16andProtocols 3and4
Internal taxation Article 17
General exceptions Article 18
Security exceptions Article 19
State monopolies Article 20
Payments Article 21
Rules ofcompetition concerning undertakings Article 22
State aid Article 23
Government procurement Article 24
Protection ofintellectual property Article 25andAnnex V
Dumping Article 26
General safeguards Article 27
Structural Adjustment Article 28
Re-export andserious shortage Article 29
Fulfilment ofobligations Article 30
Procedure forapplication ofsafeguard measures Article 31
Balance ofpayments difficulties Article 32
Evolutionary cause Article 33
TheJoint Committee Article 34
Procedures oftheJC Article 35
Trade relations governed bythisandother Agreements Article 36
Annexes, Protocols andAmendments Article 37
Territorial application Article 38
Amendments Article 39
Entry intoforce Article 40
Validity andtermination Article 41WT/REG33/2
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ANNEX I
Slovenian Trade withBulgaria
(Value in1,000 ofUSDollars)
1996 Jan-June 1997
IMPORTS
Agricultural products -- --
Protocol 2 855 248
Industrial products 5,502 8,517
TOTAL 6,357 8,765
EXPORTS
Agricultural products -- --
Protocol 2 277 184
Industrial products 5,287 4,643
TOTAL 5,564 4,827WT/REG33/2
Page10Slovenian Trade withBulgaria byHS-Sections
(Inthousand ofUSDollars)
TOTAL I II III IV V VI VII VIII IX X XI
IMPORTS
1996 6,990 66 1,184 0 238 38 263 9 54 71 416 307
I-VI1997 8,838 72 111 0 138 5,082 84 28 67 16 0 158
IMPORTS XII XIII XIV XV XVI XVII XVIII XIX XX XXI
1996 7 390 0 586 328 64 29 2,848 94 0
I-VI1997 34 209 0 539 173 1 5 2,098 20 0
TOTAL I II III IV V VI VII VIII IX X XI
EXPORTS
1996 9,296 0 3,609 0 400 8 2,055 971 0 15 890 98
I-VI1997 4,898 49 17 0 187 2 853 556 0 16 780 223
EXPORTS XII XIII XIV XV XVI XVII XVIII XIX XX XXI
1996 6 131 0 7,752 1,677 18 95 0 172 0
I-VI1997 0 45 0 1,170 874 26 56 0 42 0
Section:
I Liveanimals; animal products VIII Rawhides andskins, leather, furskins; travel goods XV Basemetals andarticles ofbasemetals
II Vegetable products IX Wood andarticles ofwood; basketware XVI Machinery; elect. equipment; recorders
III Animal orvegetable fatsandoils;waxes X Pulpofwood; paper; waste paper XVII Vehicles; aircraft, vessels, transport equip
IV Prepare foodstuffs; beverages; tobacco XI Textiles andtextile articles XVIII Optical, photographic etc.instruments
V Mineral products XII Footwear; headgear; art.flowers XIX Arms andammunition
VI Products ofthechemicals orallied industries XIII Articles ofstone; plaster, cement; glass XX Misc. manufactured articles
VII Plastic andarticles thereof; rubber XIV Natural orcultured pearls, jewellery; coin XXI Works orart,collectors 'pieces andantiquesWT/REG33/2
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ANNEX II
Basic DataonSlovenia for1996
Population 1,982,265
GDP, inmillions ofUSDollars 18,557
GDP percapita, inUSDollars 9,362
Land area(sq.km) 20,253
Imports inmillions ofUSDollars 9,397
Exports inmillions ofUSDollars 8,306
Trade balance inmillions ofUSDollars -1,091
Source: Monthly Bulletin ofBank ofSlovenia, June-July 1997