RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG37/4
9 April 1999
(99-1416)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF SLOVENIA
AND THE REPUBLIC OF ESTONIA
Questions and Replies
This document reproduces questions addressed to the Parties and the joint responses provided
by them.  The questions and replies set out below are organized in accordance with document
WT/REG37/3.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Date of Signature, Ratification and Entry into Force
We note that Slovenia is a member of CEFTA and that Estonia is participating in
negotiations to become a member of CEFTA.  How will these negotiations affect the
Free-Trade Agreement (FTA) between Estonia and Slovenia?  Are there plans to make changes
to the FTA to bring it into line with CEFTA provisions?
Estonia never requested for a membership in CEFTA.  Thus, no negotiations on accession of
Estonia to CEFTA are expected.
3. Scope and Product Coverage
Article 1.1 (Objectives) states that the parties shall gradually establish a free-trade area
on substantially all their bilateral trade.  Could the parties provide information on the timeframe for the establishment of the free-trade area, and on the trade that is covered by the FTA
and the trade that is excluded?
The free trade area on substantially all their trade has been established on 1 January 1996.
According to data from 1997-99, 98 per cent of trade had eliminated duties
1.
What percentage of FTA trade  between the parties (for each party):
- has the duties eliminated?
- has other regulations of commerce eliminated?- is given concessions or excluded?
All data has been provided in Annex I to WT8REG37/3.
                                                     
1More detailed data has been provided in WT/REG37/3.WT/REG37/4
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What percentage of trade between the parties (for each party) is accounted for by
products listed in:
- Protocol 1, Annex A (AG products for which Slovenia removes import duties)
- Protocol 1, Annex B (AG products for which Slovenia provides MFN access
i.e. exempt from FTA)
All data has been provided in Annex I to WT/REG37/3.
Is there other agricultural trade for which duties and other regulations of commerce has
not been eliminated?
No, there is no other agricultural trade for which duties and other regulations of commerce
has not been eliminated.
Please confirm that all duties on goods of Chapters 25-97 (that is, all tariff lines) are
eliminated under the terms of this Agreement.  If this is not the case, please provide details on
the exclusions.
All duties on goods of Chapters 25-97 are eliminated under the terms of this Agreement.
Please provide details on the types of products of Chapters 1-24 which are included in
the  agreement.  Please provide details on the concessions granted, that is the percentage of
trade (by values and tariff line) which will be duty free and that which will have tariff
preferences.
Products originating in Estonia subject to zero  customs duty are listed in Annex A to the
Agreement and represent 99 per cent of agricultural imports.
Products originating in Estonia subject to MFN duty are listed in Annex B to the Agreement
and represent 1 per cent of agricultural products.
Estonia applies zero customs duties for all products of Chapters 1-24 originating in Slovenia.
More data is available in WT/REG37/3.
4. Trade Data
We would appreciate trade and tariff statistics on intra FTA-trade and MFN trade
according to major products and partners.
As it can be seen in annex II-B to WT/REG37/3, there has been only 179 USD of MFN
imports into Slovenia out of 901.474 USD of all imports in the year 1997.  Thus, the FTA imports
amounted to 901.295 USD in the year 1997.WT/REG37/4
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II. TRADE PROVISIONS
1. Import Restrictions
We would appreciate information on timetables for removing any restrictions that
remain in place under the agreement.
All restrictions to be eliminated  have been eliminated already.
5. Safeguards
Have any specific safeguards action been taken under Article 16 on agricultural
products?  If so, on which products and what was the nature of the measure taken?  What is the
procedure for utilising special safeguards, what criteria are to be used to determine whether a
"serious disturbance" to agricultural markets is being caused and what are the "appropriate
solutions" to be used?  Would such measures be WTO consistent?  Can the contracting parties
give assurance that such measures would not prejudice the rights of non-parties to thisagreement?  Has the specia l safeguard been succeed?
No specific safeguards action has been taken under Article 16.
For now it is not possible to foresee exact measures the parties will take when imports from
one party cause serious disturbance to the other party as those provisions had been intended to deal
with situations that are unexpected or unforeseen; however such measures will be WTO-consistent.
As those measure will be taken to eliminate disturbance to the market caused by the concessions
granted under the FTA to the party of the agreement, such measure will be directed toward such
imports.  One of the measures could be provisional suspension of "disturbing" concessions that weregiven to the party of the agreement.  When one party will judge that imports from other party caused
serious disturbance to its market then the parties shall enter into consultations immediately.  They will
decide, on a case-by-case basis, if such imports really caused serious disturbance to the market of that
particular party and will try to find an appropriate decision.  The party will be requested to show all
available data showing the serious disturbance.
The parties give assurance that such measures would not prejudice the rights of non-parties to
this agreement and that they would be WTO-consistent.
Under Article 29 (General Safeguards), it is  stated that the party concerned may take
appropriate measures.  What would be  considered appropriate measures?
The safeguard measures taken shall be restricted with regard to their extent and to their
duration to what is strictly necessary in order to re ctify the situation giving rise to their application
and shall not be in excess of the injury caused by the practice or the difficulty in question.  Priorityshall be given to such measures which will least disturb the functioning of this Agreement.WT/REG37/4
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Under Article 30.2 (Structural Adjustment), exceptional measures of limited duration
concerning infant industries, or where certain sectors are undergoing restructuring or facing
serious difficulties, can be undertaken.  Have any exceptional  measures been taken?  If so on
what products?  What is the procedure to put in place exceptional measures?  Have any
measures of longer duration than three ye ars been authorised by the Joint Committee?
 
No exceptional measures have been taken. No such measure can be introduced since more
than two years have elapsed from the application of the Agreement and elimination of all customs
duties.
 
Can the parties explain whether there is  any difference in practice between the
obligations under Articles 29, 30, 31 and 33 (General Safeguards/StructuralAdjustment/Re-export and Serious Shortage/Safeguards Procedures) and the manner in which
they will operate, and the obliga tions of the parties under the WTO?
The parties have no experience in introduction of measures based on Articles 29, 30, 31
and 33, however, they obliged themselves to respect provisions of WTO and GATT 1994.
- General safeguards: any suspension of obligation in whole or in part or withdrawal or
modification of the concessions under these provisions shall be applied in the sense of
requirements of Article XIX of the GATT 1994 particularly the Agreement on
Safeguards unless they are based on Article XX.
- Structural adjustment: the measures under the provisions applying to structural
adjustment may concern infant industries or sectors undergoing restructuring or
facing serious difficulties, particularly where these difficulties might lead to
important social problems.  The maximum coverage of trade represented by productson which structural adjustment measures may be applied is defined in the relevant
Article.
The Parties introduced this Article into the Agr eement to be in line with the provisions of
European Union's association agreements where the countries undergoing restructuring have
possibility to temporarily protect mentioned sectors.
No such measure can be introduced any more.
- Re-export: any export restrictions introduced under these provisions shall be applied
in the sense of the requirements of Article XI of GATT 1994 unless they are based on
Article XX.
In general there are no big differences between FTA and WTO provisions regarding
procedure for the application of such measures.  However, the differences that exist are reflection of
the fact that FTA is a bilateral agreement.  Thus, the procedures had to be modified to support the
bilateral relations between contracting parties.
The provisions of Article 33 follow in principle the relevant WTO provisions regarding the
application of such measures.  In addition the Joint Committee, which is responsible for the
supervision and administration of the Agreement, has the authority to examine such cases.
Measures taken under the provisions of the agreement can be applied only toward the party to
the agreement.  However, measures taken under the provisions of GATT 1994 have to be taken
toward all contracting parties.  The party to the bilateral agreement is no exemption.WT/REG37/4
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Will balance-of-payments (BOP) measures under Article 34 be applied in a
non-discriminatory manner and without prejudice to the interests of non-parties to this
agreement?
Yes, BOP measures under Article 32 will be applied in a non-discriminatory manner and
without prejudice to the interests of non-parties to this agreement.
The Agreement provides for "specific safeguards".  Are such safeguard measures
transitional in nature?  Specifically, can the Pa rties take such safeguard action at any time
(e.g. in the next 20 years) and is there any limit on how long such measures remain in force
(i.e. forever)?  Can such action be taken in resp ect of any agricultural product?  What is the
exact nature of the measure which the Parties can take?  Can similar measure be taken forindustrial goods?
All specific safeguards are of transitional nature and can be applied only when serious
disturbance on the market occurs.  Such action can be only taken toward concessions granted under
the FTA.  The nature of the measure is decided case-by-case.  No measures can be taken for industrialproducts.
7. State-Aid and Countervailing Measures
We acknowledge that competition policy (Artic le 24) 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 question.
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?Are these considerations subject to specific legally based processes?
No further criteria have been defined in Article 24 of the agreement.  The assessment of
conduct of undertakings is made on a case-by-case basis, taking into consideration the effects of
competition and trade between the parties.
Can the parties give assurance that implementation of Article 24 does not discriminate
against the interests of non-parties to the agreement (particularly given that it exempts
agricultural products which "form an integral part of a national market organization" from the
provisions stipulated in para 1 (a) of this article)?
Parties can give assurance that implementation of this provision does not discriminate against
interests of non-parties to the agreement.
We note that the provisions of Article 25 on State Aid do not apply to agriculture
products, and that therefore there is no limitation under the agreement on the use of State Aid
for agriculture.  What is the reason that agriculture is excluded from the provisions of
Article 23?
This exemption reflects the policy objectives and principles followed by Slovenia and Estonia
in their respective agricultural and fisheries policies.  Both parties concluded the European Agreement
and therefore undertook common principled of the EU agricultural and fisheries policy which doesnot explicitly exclude subsidiary control in these sectors.  Subsidies granted under the provisions of
the agreement must be WTO consistent.WT/REG37/4
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Article 25.3 (Sate Aid) says that a Joint Comm ittee will establish criteria on State Aid.
Has a Joint Committee been set up, and if so has it developed criteria and rules on their
implementation?
The Joint Committee has not been set up and no criteria and rules on State Aid have been
developed between the parties.
8. Sector-Specific Provisions
We understand from Protocol 1 that Estonia eliminates duties on all agricultural
imports from Slovenia, but note that under Article 15:3, the Agreement leaves provision for
Estonia to introduce customs tariffs on agricultural products (there is no similar provision forindustrial products).  We are concerned about th is different treatment of agriculture, and of
leaving open  the option to introduce tariffs on agricultural products.  We would also note that
Estonia is in the process of accession to the WTO, and would remind them of the expectations
on standstill.  Does Estonia intend to apply this provision?
Under Article 15:4 no customs duties on imports on agricultural products may be introduced
by Estonia after two years of the application of the agreement.  Two years have expired.
Article 15:5 makes provision for ensuring a sizeable margin of preference for
agricultural products from Slovenia.  We seek information on what is meant by a sizeablemargin of preference. Article XXIV:8(b) allows only for the elimination of duties under an FTA,
it does not make any provision for margins of preference.
There is no possibility of introduction of tariffs on agricultural products any more.
On what specific agricultural products can Estonia increase rates of duty under the
provisions of Article 10 of the Agreement?
Since two years have elapsed no customs duties can be increased.
IV. OTHER
2. State Monopolies
Which products are currently subject to state monopolies (Article 22)?  This Article
suggests that state monopolies might currently dis criminate in their commercial decisions.  Can
the parties confirm that such monopoli es operate in a manner consistent with
GATT Article XVII in their purchases from and sales to third countries?
There are no products currently subject to state monopolies in Slovenia.  The objective of the
Article has been to clearly ensure that there would be no discrimination.  Slovenia is bound by theexisting provisions and obligations of Article XVII.
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