WORLD TRADE
ORGANIZATIONWT/REG78/3
11 June 2001
(01-2863)
Committee on Regional Trade Agreements Original:  English
AGREEMENT BETWEEN POLAND AND THE
FAROE ISLANDS (GOVERNMENT OF DENMARK)
Communication from the Parties
I. BACKGROUND INFORMATION ON THE AGREEMENT
The overall foreign trade policy objective of the Farce Islands is to create favourable
conditions for the development and diversification of trade and to be a part of the harmonious
development of free trade within Europe.  As an impetus to this, the Faroese Government has decided
to conclude Free Trade Agreements with the Central and Eastern European Countries.  The FreeTrade Agreements are at the same time a contribu tion to the integration in Europe and to the
strengthening of the multilateral trading system, as they are elaborated with the principles of the
Agreement Establishing the World Trade Organization.
1. Membership, Dates of Signature, Ratification and Entry into Force
The Contracting Parties to the Agreement are the Government of Denmark and the Home
Government of the Faroe Islands, of the one part, and the Government of the Republic of Poland, of
the other part.  As prescribed by Article 1 of the Agreement, the Agreement applies, on the one hand,
to the Faroe Islands, and, on the other hand, to the Republic of Poland.
The Agreement was signed on 3 November 1998 in Warsaw.It was subsequently ratified by the Republic of Poland and Denmark (also on behalf of the
Home Government of the Faroe Islands) by exchange of Notes (Poland on the 8 April 1999 and
Denmark, on behalf of the Faroe Islands, on the 18 January 1999).
It entered into force on 1 June 1999.
2. Type of Agreement
The Agreement created a free-trade area in conformity with the definition set in
Article XXIV:8(b) of the GATT 1994.
3. Scope
As prescribed by Article 2, the Agreement applies to products falling within Chapters 25
to 97 of the Harmonised Commodity Description and Coding System.  Annexes I, II, III(a) and III(b)
to the Agreement provide for the conditions on custom duties in trade in certain industrial and
agricultural products.  Protocols 1, 2 and 3 to the Agreement provide for the conditions on custom
duties in trade in certain agricultural and marine products.  The products covered by the Agreement
are products originating in the Faroe Islands or in the Republic of Poland.  As prescribed by Article 10WT/REG78/3
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the rules of origin and methods of administrative  co-operation are laid down in Protocol 4 to the
Agreement.
4. Trade Data
There are some statistical limitations in the export figures from the Faroe Islands as the
custom authorities on the Faroe Islands only register exports in the fisheries sector.  The fisheries
sector accounts for about 99 per cent of the total export.
Data on intra-trade will be presented soon.
II. TRADE PROVISIONS
1. Import Restrictions &
2. Export Restrictions
1.1/2.1 Duties and charges
As prescribed by Article 3, no new customs dut ies on imports and exports or charges having
equivalent effect may be introduced between the Contracting Parties.  On the date of entry into force
of the Agreement, the Contracting Parties abolished all customs duties on exports and charges havingequivalent effect.  The Faroe Islands also abolished all customs duties and charges having equivalent
effect on imports.  The Republic of Poland abolished all customs duties and charges having equivalent
effect on imports of industrial products, except as provided for in Annex II to the Agreement.  The
provisions on custom duties on imports also applies to customs duties of a fiscal nature.  In line with
Article 11 of the Agreement, the Contracting Parties shall refrain from any measures or practices of aninternal fiscal nature establishing, whether directly or indirectly, discrimination between products
originating in the Faroe Islands and like products originating in the Republic of Poland.
1.2/2.2 Quantitative restrictions
As prescribed by Article 5 of the Agreement, no new quantitative restrictions on imports and
exports or measures having equivalent effect may be introduced between the Contracting Parties.  Allquantitative restrictions on imports and exports and measures having equivalent effect were abolished
upon the entry into force of the Agreement, except as provided for in Annex III to the Agreement.
3. Rules of Origin
Protocol 4 of the Agreement lays down the Rules of Origin applicable between the
Contracting Parties to the Agreement.
The Rules of Origin are in line with the Common Declaration with Regard to Preferential
Rules of Origin contained in Annex II to the Agreem ent on Rules of Origin as set out in the Final Act
of the Uruguay Round.  The relevant provisions on the definition of the concept originating products
are contained in Title II of Protocol 4.  The origin provisions allow for bilateral cumulation between
the Contracting Parties to the Agreement.
4. Standards
The Agreement does not contain any specific provisions concerning technical barriers to trade
and/or Sanitary and phytosanitary measures.  Ar ticle 7 stipulates, however, that the ContractingWT/REG78/3
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Parties shall apply their regulations in veterinary, health and plant health matters in a
non-discriminatory fashion and shall not introduce any new measures that have the effect of unduly
obstructing trade.
5. Safeguards
The Agreement contains provisions relating to special safeguards on imports of particular
products (Article 8), general safeguards (Article 21), re-export and serious shortage (Article 22) and
balance-of-payments difficulties (Article 23).  The procedures for the application of safeguard
measures are laid down in Article 26.
Article 23 of the Agreement stipulates that where one of the Contracting Parties is in serious
balance of payments difficulties, or under imminent threat thereof, the Contracting Party concerned
may, in accordance with the relevant provisions of the General Agreement on Tariffs and Trade 1994
adopt restrictive measures, including measures related to imports which shall be of limited duration
and may not go beyond what is necessary to remedy the balance of payments situation.
6. Anti-dumping and Countervailing Measures
According to the provisions of Article 20, the Contracting Parties may only take anti-dumping
measures in accordance with Article VI of the General Agreement on Tariffs and Trade 1994 and the
WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs andTrade 1994 under the conditions and in accordance with the procedures laid down in Article 26.
7. Subsidies and State-aid
Any public aid granted which threatens to distort competition in trade between the
Contracting Parties is considered incompatible with the proper functioning of the Agreement
(Article 24).  The provisions of paragraph 1 of Article 24 does not apply to products referred to in
Chapters II and III.  Appropriate measures against practices contrary to Article 24 may be taken in
accordance with the procedures for implementation of appropriate measures against such practices
laid down in Article 26.  Such appropriate measures may only be taken in conformity with the
procedures and under the conditions of the World Trade Organization and any other relevant
instrument negotiated under its auspices which are applicable between the Contracting Parties.
8. Sector-Specific Provisions
Article 7 of the Agreement states that the provisions of Chapter II of the Agreement shall not
restrict in any way the pursuance of the respective agricultural policies of the Contracting Parties.
In this connection, Protocol 1 (Article 2) to the Agreement takes into account that the Faroe
Islands have maintained customs duties and other charges of equivalent effect on imports of certain
agricultural products.  Protocol 1 also defines ce rtain tariff quotas on agricultural products, which are
imported by the Republic of Poland from the Faroe Islands.
Protocol 2 of the Agreement defines the custom  duties on imports by the Republic of Poland
of certain processed agricultural products originating in the Faroe Islands.  The Faroe Islands
abolished all customs duties and other charges of equivalent effect on imports of processed
agricultural products originating in the Republic of Poland with the exceptions mentioned inProtocol 1, Article 2.
Protocol 3 of the Agreement defines the custom  duties on imports by the Republic of Poland
of certain marine products originating in the Faroe Islands.  It also defines how these shall beWT/REG78/3
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abolished.  All products mentioned in Protocol 3 originating in the Republic of Poland, shall be free of
customs duties and any charges having equivalent when they are imported by the Farce Islands.
Annex I to the Agreement describes certain agricultural products which are referred to by
Articles 2 and 6 of the Agreement.
Annex II to the Agreement provides for the customs duties on imports applicable in the
Republic of Poland to certain products originating in the Faroe Islands and the progressive elimination
of those.  The customs duties described in Annex II shall all be abolished on 1 January 2002.
Annex III (a) and (b), as referred to in Article 5, describe the quantitative export and import
restrictions on certain industrial products and measures having equivalent applied by the Republic ofPoland.
The Arrangement forms part of the instruments creating the free trade area and contributes to
the development of closer integration between the economies of the Contracting Parties.  The
Agreement also contributes this way, by the removal of barriers to trade, to the harmoniousdevelopment and expansion of world trade.
Exceptional measures of limited duration which derogate from the provisions of Article 3
may be taken by the Republic of Poland in the form of increased customs duties.  This may only
concern infant industries, or certain sectors undergo ing restructuring or facing serious difficulties,
particularly where these difficulties produce important social problems.  However, they shall cease to
apply at the latest at the expiration of the transitional period.
9. Other
9.1 Public Monopolies
According to Article 15, the Contracting Parties shall ensure that any public monopoly of a
commercial character in the Faroe Islands and in the Republic of Poland be adjusted so that no
discrimination regarding the conditions under which goods are procured and marketed will exist
between residents of the Faroe Islands and of the Republic of Poland.  The Agreement does not
contain any list of public monopolies.  The Contracting Parties to the Agreement are bound by theircommitments under Article XVII and the Understanding on the Interpretation of Article XVII of the
GATT 1994.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and Reservations
Article 13 (General Exceptions) prescribes that the Agreement shall not preclude prohibitions
or restrictions on imports, exports or goods in transit justified on grounds of public morality, public
policy or public security;  the protection of health and life of humans, animals or plants and theenvironment; the protection of national treasures possessing artistic, historic or archaeological value;
the protection of intellectual property;  or rules relating to gold or silver;  or conservation of
exhaustible natural resources, if such measures are made effective in conjunction with restrictions on
domestic production or consumption.  Such prohibiti ons or restrictions shall not, however, constitute a
means of arbitrary discrimination or a disguised restriction on trade between the Contracting Parties.
Article 14 (Security Exceptions) stipulates th at nothing in the Agreement shall prevent a
Contracting Party from taking any measures which it considers necessary to prevent the disclosure ofWT/REG78/3
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information contrary to its essential security interests, or to the protection of its essential security
interests or for the implementation of international obligations or national policies as specified
therein.
2. Accession / Withdrawal
There are no specific provisions in the Agreement relating to accession.  According to
Article 33, either Contracting Party may denounce the Agreement by notification to the other
Contracting Party.  The Agreement shall cease to be in force twelve months after the date of which
such notification was received.
3. Dispute Settlement Procedures
There are no dispute settlement provisions contained in the Agreement.  However, Article 28
(The Joint Committee) and Article 29 (Procedures of the Joint Committee) stipulate that a Joint
Committee is established for the purpose to supervise and administer the proper implementation of the
Agreement.  The Contracting Parties shall, when ever necessary, exchange information and, at the
request of either Contracting Party, hold consultations.
4. Relation with Other Trade Agreements
As explicitly mentioned in the Preamble of the Agreement, the Contracting Parties have
decided to conclude the Agreement considering that none of its provisions may be interpreted as
exempting the Contracting Parties from the ob ligations under other international agreements.
Furthermore, the Preamble of the Agreement refers explicitly to the General Agreement of
Tariffs and Trade.  In concluding the Agreement, the Contracting Parties were resolved to eliminate
the obstacles to substantially all their trade, in accordance with the provisions of the GATT
concerning the establishment of free-trade areas.
By concluding the Agreement, the Contracting Parties were desiring to consolidate and to
extend the economic relations existing between them and to ensure, with due regard for fair
conditions of competition, the harmonious development of their mutual trade in the context of
European co-operation.  They also declared their r eadiness to examine, in the light of any relevant
factor, and in particular of developments in European co-operation, the possibility of developing and
deepening their relations in order to extend th em to fields not covered by the Agreement.
5. Institutional Framework
The implementation of the Agreement shall be supervised and administered by a Joint
Committee consisting of representatives of the Contracting Parties.  The Joint Committee can set up
sub-committees and working parties and may decide to amend the Protocols and Annexes to this
Agreement.  The Joint Committee acts by common Agreement and meets whenever necessary
(Article 29).WT/REG78/3
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ANNEX
Structure of the Agreement
Article
Preamble
Objectives 1
Scope Art. 2,  Annex I and Protocols 1-3
Customs Duties on Imports and Exports and Charges having
Equivalent Effect (Industrial Products)Art. 3 and Annex II
Fiscal Duties 4
Quantitative Restrictions on Imports and Exports and Measures
having Equivalent EffectArt. 5 and Annex III
Agricultural Products Art. 6, Annex I and Protocols 1-2
Exchange of Concessions 7Special Safeguards 8
Fish and other Marine Products Art. 9 and Protocol 3
Rules of Origin and Administrative Co-operation Art.10 and Protocol 4
Internal Taxation 11
Payments 12General Exceptions 13
Security Exceptions 14
Public Monopolies 15
Rules of Competition Concerning Undertakings 16
Protection of Intellectual Property 17Public Procurement 18
Structural Adjustment 19
Dumping 20
General Safeguards 21
Re-export and Serious Shortage 22
Balance-of-Payments Difficulties 23
State Aid 24Fulfilment of Obligations 25
Procedures for the Application of Safeguard Measures 26
Customs Unions, Free-Trade Areas and Frontier Trade 27
The Joint Committee 28
Procedures of the Joint Committee 29Evolutionary Clause 30
Annexes and Protocols 31
Entry into Force 32
Validity and Termination 33
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