RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG84/4
8 January 2001
(01-0068)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN HUNGARY AND LATVIA
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/REG84/3.
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I. BACKGROUND INFORMATION ON THE AGREEMENTS3. Scope1. With respect to coverage of agricultural items, the tables on page 10 of WT/REG84/3
specify that no imports from Hungary into Latvia will be subject to duty elimination.  Rather,
the MFN rate will remain for 59.32 per cent of agricultural imports from Hungary (based on
1999 trade), while 40.68 per cent will be subject to preferential rates.  Similarly, no Latvianimports into Hungary will be subject to duty elimination, with most imports receiving instead
preferential rates.  Please explain on what basis the use of preferential rates is permitted under
the GATT 1994.
We have concluded the Agreement on the basis of Article XXIV of the GATT.  The Parties
are convinced that the provisions of the Agreement are in full conformity with the existing WTO rules
set out in Article XXIV of the GATT 1994.  The issue of "trade coverage" belongs to the so-called
"systemic" issues.  Otherwise there is no provision in Article XXIV, which would exclude the use ofpreferential rates.
2. What percentage of tariff line items (at the eight-digit level) is covered?
The question is not relevant in the context of Article XXIV review.
4. Trade Data
3. We note from WT/REG84/3 that 0 per cent of agricultural trade between the Parties is
subject to zero duty.  Thus, we would be grateful for more information on:
(a) which agricultural product lines still face duties, and the percentage of trade
between the Parties (for each Party) each of these product lines represent;
(b) what percentage of trade between the Parties (of both Parties) is trade in
agricultural products;
(c) how the Parties established which agricultural product lines should be excluded
from the agreement;WT/REG84/4
Page 2
(d) What plans the Parties have to ensure that a greater proportion of trade in
agriculture will be subject to a duty rate of 0 per cent.
(a) Detailed information relating to agricultural  concession could be found in Protocol 2 of the
Agreement.  (In our view tariff line information is not relevant in the context of Article XXIV
review.)
(b) The agricultural import of Hungary from Latvia was 13.7 per cent of the total import in 1999,
while Latvia's agricultural import from Hungary was 32.1 per cent of the total import from
Hungary.
(c) The Agreement contains a positive list relating to agricultural products.  The products were
selected on the basis their importance in trade, as well as giving preference to traditional andpotential export products.
(d) Article 33 of the Agreement (Evolutionary clause) provides for the possibility of further
liberalization.  The parties have no concrete plan for the time being to introduce duty free
treatment in agricultural trade.
II. TRADE PROVISIONS
1. Import Restrictions
4. We note from WT/REG84/3 that there do not appear to be provisions regarding the
abolition of quantitative restrictions (QRs) on imports, or measures having equivalent effect, on
agricultural products.  Thus, we would be grateful for information concerning:
• what QRs on imports or measures having  an equivalent effect currently exist on
agricultural products;
• when the Parties intend to eliminat e QRs on agricultural products.
The Agreement does not contain provisions regarding the abolition of QRs concerning
agricultural products because the parties of the Agreement do not maintain such restrictions.
5. Can the Parties confirm that all tariffs and non-tariff barriers scheduled for elimination
will be eliminated as of 1 January 2001?
Yes.
2. Export Restrictions
6. With respect to QRs, which measures are be ing applied or might be applied in either
Hungary or Latvia that “are required for the administration of international obligations”
(section II.2.2 of WT/REG84/3)?
The measures are applied for arms, drugs, radioactive material and waste, hazardous waste
and products falling under UN embargo.
3. Rules of Origin
7. In the interest of brevity, the US would lik e to incorporate by reference our comments in
the examinations of other agreements with respect  to the Pan-European system of cumulation.
In addition:WT/REG84/4
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(a) Is drawback disallowed for goods originating in all non-Parties in the Latvia-
Hungary Agreement, or for goods originating only in Members that are not
participants in the pan-European  cumulation system of origin?
(b) Can you confirm whether goods originating in certain third countries that are
not Party to the Hungary-Latvia Agreem ent (but are participants in the pan-
European system of cumulation) will receive preferential treatment under the
rules of origin or no-drawback rule, while goods of WTO Members who are
similarly not Parties to the Hungary-Latvia Agreement (but not participants in
the pan-European system of cumulation ) will not receive preferential treatment
under cumulation?
(a) The drawback is not allowed for goods origin ating only from members not participants in the
Pan-European system of cumulation.
(b) Yes.
4. Standards
8. With respect to standards, do the Partie s participate in any arrangements on the
recognition of conformity assessment procedures , any mutual recognition arrangement, or have
plans to do so?  Would such an arrangement be an amendment or part of this RTA?
Hungary has initialled and Latvia has signed an Agreement on the recognition of conformity
assessment procedures with the European Union which does not in any way modifies the Free Trade
Agreement.
5. Safeguards
9. With respect to safeguards generally: does the agreement provide for the exclusion of
the other party from global safeguard measures?  Does it require preferential treatment to the
other party in the application of a global safeguard measure?  If so, please describe how the
preferential treatment operates.  Does the agree ment allow preferential treatment to the other
party in the application of a global safeguard measure?
The Agreement does not effect the rights and obligations of the parties in relation with
safeguard measures applied vis-à-vis third parties.
10. Article 14 provides for what appears to be a unilateral safeguard mechanism available
for agricultural products, permitting a Party to take whatever “measures it deems necessary”
with respect to agricultural products subject to concessions under the RTA.  Are there any
bilateral legal constraints on the extent of the measures taken under this article?  Are such
measures limited to a snapback provision (i.e. to restore the MFN rate)?  
The Agreement does not contain explicit provision in this respect but only the concession
could be partially or fully withdrawn.
7. Subsidies and State-aid
11. WT/REG84/3 provides that agricultural pr oducts are excluded from the provisions
limiting/regulating State-aid.  In light of this, we would be grateful for information regarding an
estimate of the percentage of agricultural trade between the Parties (for each Party) whichwould have benefited from State-aid.WT/REG84/4
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The question is not relevant in the context of the review of this FTA.  All support measures
relating to agricultural products are contained in the relevant notifications provided by the Parties to
the WTO.
12. Please provide information on the operatio n of the subsidies and State-aid provisions.
Have they been used?
We have never used such provisions.
13. With respect to public procurement, what  is the status of current Latvian and
Hungarian efforts to open up their procurement processes?  Have the Parties developed any
lists or schedules of types of procurement that will be subject to special contract award
procedures?
There is no such a list.  The issue will be examined by the Joint Committee.
8. Sector-Specific Provisions
14. Does Article 12.2 or any other part of the agreement require a margin of preference
vis-à-vis MFN trade for agricultural imports?  If so, what is the average or mean margin of
preference?  Please provide more detailed information on the treatment of agricultural
products, particularly in terms of groups of products.
The Agreement does not require a margin of preference vis-à-vis MFN trade of agricultural
imports.  More detailed information could be obtained about the treatment of agricultural products inAnnex A and B of Protocol 2.
15. With respect to agricultural trade, Article 13 of the Agreement appears to permit each
Party to deviate from the RTA to any extent it  wishes to adopt measures under its respective
agriculture policy.  Does this mean that a Party can unilaterally restore MFN treatment withoutconsequences in the balance of concessions of the agreement?
No.  The said Article contains the expressi on of "without prejudice to the concession".
IV. OTHER
16. Does either of the Parties employ a consolidated tariff schedule that reflects all the rates
of duty applicable to all the free trade agreements to which they are party?
Yes.  Hungary provides each and every year her customs tariff to the WTO.
17. Does this Agreement in any way prevent or discourage Parties to the Agreement from
making multilateral concessions, including MFN concessions?  Are there any implicit
agreements between the parties to refrain from making multilateral concessions?
No.
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