RESTRICTED
WORLD TRADE WT/REG13/2
5August 1996
ORGANIZATION(96-3100)
Original: English
EFTA -HUNGARY FREE TRADE AGREEMENT
Questions andReplies
Contracting parties totheGATT were invited inFebruary 1994 (GATT/AIR/3549) to
communicate totheSecretariat anyquestions theymight wish toputconcerning theFreeTrade
Agreement between theEFTA States andHungary. Inresponse tothisrequest, anumber ofquestions
werereceived andweretransmitted totheParties totheAgreement. Thequestions andreplies which
havebeenreceived aresetoutbelow.
I. OBJECTIVES AND SCOPE
1. CantheParties totheFreeTrade Agreement confirm thatitistheirintention toestablish
afullfreetrade area? Inthisregard cantheParties provide awritten summary detailing
their fullplanandschedule fortheelimination oftariffs andquantitative restrictions on
substantially allthetrade between theParties totheFreeTrade Agreement?
Theobjective oftheAgreement istoestablish afreetradeareainconformity withArticle XXIV
oftheGeneral Agreement. Thefullplans andschedules forthereduction tozerooftariffs on
substantially allthetrade between theParties arecontained intherelevant Articles oftheAgreement
aswellasintherelevant Annexes andProtocols oftheAgreement. Tofacilitate, asummary ofthe
plans andschedules isgiven below.
(a) TheEFTA States abolished, upon theentry intoforce oftheAgreement, allcustoms
duties onimports andanycharges having equivalent effect forproducts originating
inHungary, except forthefollowing products andcountries (contained inAnnex III
totheAgreement):
(i) forcertain plastics products ;
Norway reduced theduties to60%ofthebasic dutyontheentry intoforce ofthe
Agreement andto40%on1January 1994. Further reductions to20%andtozero
were made on1January 1995 and1996, respectively.
(ii) forcertain textile andclothing products ;
Norway reduced theduties to5/7ofthebasic dutyontheentry intoforce ofthe
Agreement, to4/7on1January 1994, to3/7on1January 1995andto2/7on1January
1996. Further reductions to1/7andtozeroshallbemade on1January 1997and1998,
respectively.WT/REG13/2
Page2
(b) Hungary:
(i) reduced toone-third ofthebasicdutyontheentry intoforce oftheAgreement
andtozeroon1January 1994, theduties onproducts originating inanEFTA State,
specified inAnnex IVtotheAgreement (coversawiderange ofproducts classified
inH.S.Chapters 25to96); aseparate print-out ofthelistofproducts inquestion
hasbeenprovided totheWTO Secretariat andisavailable there upon request.
(ii) foranother wide range ofproducts classified inH.S. Chapters 25to96,
originating inanEFTA State, specified inAnnex VtotheAgreement, theduties shall
bereduced to90%, 75%, 60%, 45%, 30%, 15%ofthebasic dutyandtozeroon1
January1995,1996,1997,1998,1999,2000and2001,respectively,aseparateprint-out
ofthelistofproducts inquestion hasbeenprovided totheWTO Secretariat andis
available there upon request.
(iii) forallother products ofH.S.Chapters 25to97,originating inanEFTA State,
theduties shallbereduced totwo-thirds andtoone-third ofthebasic dutyandtozero
on1January 1995, 1996 and1997, respectively.
2. Canasummary beprovided oftheproducts listed inProtocol Awhich willnotbefree
ofcustoms duties (orduties having equivalent effect) bytheendofthetransition period?
Aseparate print-out ofthelistofproducts inquestion hasbeenprovided totheWTO Secretariat
andisavailable there upon request.
Mostoftheproducts contained inTable VIII(Hungary) ofProtocol Awillnotbefreeofcustoms
dutybytheendofthetransitional period. However, itcanbementioned thatHungary doesnotapply
anyprice compensation measures, whereas theEFTA countries dosomostly. BothHungary andthe
EFTA States havereserved therighttoapply anycompensatory measures inrespect oftheproducts
listed intheirrespective Tables inProtocol A.Areview ofProtocol AbytheJoint Committee is
foreseen in1996.
3. What percentage oftrade between Parties totheAgreement isaccounted forbyproducts:
(a) Falling within Chapters 25to97oftheHarmonized Commodity Description and
Coding System;
(b) Listed inAnnex ItotheAgreement;
(c) Listed inAnnex IItotheAgreement;
(d) Specified inProtocol AtotheAgreement; and
(e) Notcovered byChapters 25-97, Annex I,Annex IIandProtocol A.
(a) Products falling within HSChapters 25to97account for84.4percentofthetotal
trade between theEFTA countries andHungary (1995);WT/REG13/2
Page3
(b) Products listed inannex Iaccount for0.0percentofimports from Hungary tothe
EFTA countries (1995);
(c) Products listed inAnnex IIaccount for0.2percentofthetotaltradebetween theEFTA
countries andHungary (1995);
(d) Products specified inProtocol Aaccount for2.5percentofthetotaltrade between
theEFTA countries andHungary (1995);
(e) Products notcovered byHSChapters 25to97,Annex I,Annex IIandProtocol A
account for9.1percentofthetotaltrade between theFTA countries andHungary
(1995).
4. What aretheintentions oftheParties totheAgreement forbringing products notcovered
byArticle 2intotheFreeTrade Agreement?
AlargenumberofthoseproductsnotcoveredbyArticle2oftheAgreementarebasicagricultural
products.Theseare,however,toaconsiderableextentcoveredinthebilateralagriculturalarrangements,
which havebeenconcluded within theframework oftheFAT toprovide formeasures tofacilitate
trade inagricultural products. These arrangements havebeenconcluded onabilateral basis, taking
intoaccount different agricultural policies andtrade regimes ofeachEFTA State. Thearrangements
alsocontain review clauses, thusallowing toreview thefunctioning andalsothecoverage ofthe
arrangements. Thefewproducts listed inAnnex 1areexcluded onpermanent basis.
II. IMPORT AND EXPORT RESTRICTIONS
5. What customs duties orduties having equivalent effect arepresently applied onimports
bytheParties tothisAgreement?
Seeanswer toQuestion 1.
6. Whatquantitativerestrictions,andmeasureshavingequivalenteffect,arecurrentlyapplied
toimports byParties tothisFreeTrade Agreement?
1. Quantitative import restrictions apply inNorway ontextile clothing .These restrictions
willbeabolished on31December 1997.
2. Hungary applies import restrictions onanumber ofproducts enumerated inAnnex
IXtotheAgreement. These restrictions shallbeprogressively abolished between 1
January 1995 and31December 2000. Restrictions onimports underwear products
havebeenabolished from 1January 1995.
3. Concerning agricultural products, allquantitative restrictions havebeenabolished by
theEFTA States andHungary, inlinewith their undertakings under theWTO
Agreement onAgriculture.WT/REG13/2
Page4
7. Whatquantitativerestrictions,andmeasureshavingequivalenteffect,arecurrentlyapplied
onexports byParties tothisFreeTrade Agreement?
1. Liechtenstein andSwitzerland apply export restrictions onferrous waste andscrap.
2. Hungary applies export restrictions onalimited number ofproducts contained in
Annex XIItotheAgreement.
8. Dotheprovisions ofArticle 9andArticle 10oftheAgreement regarding theelimination
ofquantitative import andexport restrictions andmeasures having equivalent effect apply
toallproducts (both agricultural andnon-agricultural)?
Theprovisions ofArticle 9andArticle 10apply totheproducts covered bytheFreeTrade
Agreement, asspecified byarticle 2oftheAgreement.
Asfarasimport restrictions areconcerned, specific provisions apply toagricultural products
covered bybilateral arrangements, toprocessed agricultural products referred toinProtocol Aorto
fishandother marine products referred toinAnnex IItotheAgreement. Under theWTO Agreement
onAgriculture, theEFTA States andHungary havetariffied allnon-tariff measures foragricultural
products.
There arenoother export restrictions applied inthetrade between theEFTA countries and
hungary thanthose referred toinananswer toQuestion 10.
9. What quantitative export measures would bemaintained orarebeing envisaged asapplied,
under Article 24?
Specific measures areneither maintained norenvisaged under Article 24.
III. TRADE REMEDIES
10. Annex IIItotheAgreement provides thatcertain Parties totheAgreement may, incase
ofserious disturbances onthedomestic market results from lower protection, reintroduce
duties ontheproducts listed intheAnnex. What istherelationship between thisprovision
andagreement 'sprovisions ontheapplication ofsafeguard measures?
Article 22oftheAgreement contains thegeneral provisions onsafeguard measures which may
beinvoked inrelation toanyproducts.
Theprovisions contained inparagraph 4ofAnnex IIIarespecific andmaybeinvolve only
inrelation toproducts which arecontained inthatAnnex, i.e.products originating inHungary inrelation
towhich certain EFTA States apply aprogressive reduction ofimport duties, while some other have
already eliminated allimport duties from theentry intoforce oftheAgreement.WT/REG13/2
Page5
11. CantheParties tothisFreeTrade Agreement giveassurance thatanyaction inrespect
ofdumping oremergency action (Articles 21and22)shallnotattribute tothird countries
anyinjury resulting from imports from States Parties totheFree Trade Agreements,
particularly where acommonly acceptable solution isagreed inaccordance withArticle
26oftheFreeTrade Agreement?
Noinjury isattributed tothirdcountries byanyaction inrespect ofdumping oremergency
actions (Articles 21and22),notevenincases where acommonly acceptable solution isagreed in
accordance withArticle 26oftheAgreement.
12. Willcommitments under Article 25onmeasures forbalance-of-payments purposes be
carried outinanon-discriminatory fashion andwithout prejudice totheinterest ofthese
countries?
Article 25provides thatanymeasures forbalance-of-payments purposes willbeapplied in
accordance withtheconditions established under theWTO.
IV. NON-TARIFF MEASURES
13. CanParties confirm thattherules oforigin provisions oftheAgreement andinthe
individual bilateral arrangements onagriculture areconsistent withtherules oforigin
setoutintheFinal ActoftheUruguay Round andwillnotresult inhigher trade barriers
tonon-parties totheAgreement?
Theprovisions onrulesoforigin laiddown inProtocol BtotheEFTA-Hungary Agreement
andintheindividual bilateral arrangements onagriculture areconceived forthepurpose ofthis
Agreement andthese arrangements. Furthermore, theyarecompletely inlinewiththeCommon
Declaration withRegard toPreferential Rules ofOrigin assetoutintheFinal ActoftheUruguay
Round. They willthusnotresult inhigher trade barriers tonon-parties totheAgreement.
14. WilltheHungarian licensing, customs clearance andstatistical feeslisted inAnnex VI
beabolished onanMFN basis?
According toitsobligations under theEFTA-Hungary hasstarted toreduce charges having
equivalent effect tocustoms duties outlined inAnnex VI.The1percentlicensing feehasbeen
abolished, thestatistical feeof3percenthadbeenreduced to1percentandthecustoms clearance
feeof2percenthadbeenreduced to1percentasfrom1January 1996 forallGATT/WTO member
countries. Allthese charges willbeaccordingly abolished from 1January 1997.
15. Willthetechnical regulations andamendments apply equally toallcountries andbenotified
under theTBT Agreement?
Thetechnical regulations andamendments willbeapplied equally toallcountries under the
provisions oftheTBTAgreement. Notification requirement under theTBTAgreement willbeobserved
bytheParties.WT/REG13/2
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V. OTHERS
16. What products arecurrently subject tostate monopolies?
TheAgreement doesnotcontain anylistsofstatemonopolies intheStates Parties, withthe
exception ofthose statemonopolies listed inProtocol Dandtowhich theprovisions ofArticle 12do
notapply. Since Protocol DispartoftheFreeTrade Agreement ithasbeennotified together with
theAgreement anditsAnnexes andProtocols. Foreasyreference, thetextofProtocol Disenclosed
inannex 1tothisdocument.
17. Inwhat manner dothebilateral arrangements between theEFTA States andHungary
facilitate trade inagricultural products?
Thebilateral arrangements abolish orreduce customs duties andcharges having equivalent
effect onalarge number ofagricultural products providing therefore forbetter access conditions to
those products.
Theagricultural policy considerations prevailing ineachcountry havebeendecisive when
formulating theproduct specific solutions foritems included inthebilateral arrangements. These
considerations alsodetermine thepossibilities tofacilitate trade inagricultural products.
18. Arequotas oranyother quantitative restrictions applied ontrade inagricultural products
between theParties intheir separate bilateral arrangements? Ifso,what form dothese
quantitativerestrictionstakeandaretheytobeabolishedunderthebilateralarrangements?
Ifthebilateral arrangements onlyreduce (under lineone)duties andcharges, howwill
freetrade beachieved?
Nospecific quotas oranyother quantitative restrictions areapplied under thebilateral
arrangements.
Whiletradeinprocessedagriculturalproducts(ProtocolA)andinfishandothermarineproducts
(Annex II)isliberalised, thebilateral arrangements improve market access conditions either by
eliminating orsignificantly reducing tariff barriers onproducts covered bythese arrangements. The
Parties havedeclared theirreadiness tofoster, insofarastheiragricultural policies allow, harmonious
development oftrade inagricultural products (Article 13oftheAgreement). Inmostofthebilateral
arrangements areference isalsomade tothecommitment tocontinue theefforts byrelevant Parties
withaviewtoachieving progressive liberalization ofagricultural trade, within theframework oftheir
respective agricultural policies andtheirinternational commitments, inparticular under theWTO
Agreement onAgriculture.
Although thebilateral arrangements concluded within theframework oftheFree Trade
Agreement, provide mainly fordutyreductions orelimination, suchmeasures contribute nevertheless
tothedevelopment ofcloser integration between theeconomies oftheParties tothefreetrade area
without raising barriers tothetradeofother WTO Members withtheParties tothisarea. Furthermore,
within thisfreetrade area, duties andother restrictive regulations ofcommerce areeliminated on
substantially allthetrade between theParties inproducts originating intheirterritories.WT/REG13/2
Page7
19. Arethere anymeasures orpractices ofaninternal fiscal nature establishing, directly or
indirectly, discrimination against other countries? Ifsowhat arethey?
There arenomeasures ofpractices ofaninternal fiscal nature establishing discrimination against
other countries.
20. What criteria aretobeapplied inassessing whether actions prevent, restrict ordistort
competition, orwhether actions bydominant undertakings constitute anabuse oftheir
position? Arethese considerations subject tospecific legally based processes within the
States Parties tothisFreeTrade Agreement?
Nofurther criteria havebeendefined inarticle 19oftheAgreement. Theassessment ofthe
conduct ofundertakings ismade onacase-by-case basis, taking intoconsideration theeffects of
competition andtrade between Parties.
21. CantheParties tothisAgreement confirm thatanyaction taken inaccordance withArticle
20willbeinaccordance withtherelevant provisions oftheGATT?
Yes.WT/REG13/2
Page8
ANNEX 1
PROTOCOL D
REFERRED TOINARTICLE 12,PARAGRAPH 1
Article 12oftheAgreement shallapply toSwitzerland andLiechtenstein withregard toState
monopolies concerning saltandgunpowder andtotheIcelandic monopoly onfertilizers onlytothe
extent thatthese States willhavetofulfilcorresponding obligations under theAgreement between the
EFTA States andtheEuropean Communities anditsMember States onaEuropean Economic Area.
Article 12shallbeapplicable atthelatest form 1January 1995 inthecaseoftheAustrian
monopoly onsalt.