WORLD TRADE WT/REG25/3
17February 1997
ORGANIZATION(97-0585)
Original: English Committee onRegional Trade Agreements
FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OFNORWAY
AND THE FAROE ISLANDS (GOVERNMENT OFDENMARK)
Inacommunication dated 12February 1997, theRoyal Ministry ofForeign Affairs ofNorway,
alsoonbehalf ofDenmark andtheFaroe Islands, hastransmitted thefollowing documentation for
thecirculation totheMembers oftheCommittee onRegional Trade Agreements.
_______________________
I. Background Information ontheAgreement
TheFaroe Islands, asaself-governing partofDenmark, wereearlier partoftheEFTA through
Denmark 'smembership ofthatorganization, butwerenotincluded inDenmark 'smembership ofthe
EC. After theconclusion ofamore extensive freetrade agreement between theFaroe Islands and
theEC,theFaroe Islands introduced theECexternal customs tariff towards third countries on
1February 1992. AtthesametimetheFaroe Islands invited theNordic countries andlaterSwitzerland
andAustria tonegotiate freetrade agreements toreestablish freetrade between theFaroe Islands and
theEFTA countries.1
1. Membership anddates ofsignature, ratification andentry intoforce
TheParties totheAgreement aretheNorwegian Government ononesideandtheGovernment
ofDenmark andtheHome Government oftheFaroe Islands ontheother. Asprescribed byArticle 27
oftheAgreement, theAgreement applies, ontheonehand, totheFaroe Islands, andontheother hand,
totheterritory ofNorway.
TheAgreement wassigned on28August 1992.
Itwassubsequently ratified byNorway andDenmark (alsoonbehalf oftheHome Government
oftheFaroe Islands) byexchange ofnotes dated 14May1993 and7June1993.
Itwasapplied provisionally on1September 1992, pending theratification bytheParties and
entered intoforce on1July1993.
1Theagreement between Austria andtheFaroe Islands didnotenter intoforce priortotheaccession ofAustria
totheEuropean Union.WT/REG25/3
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Itwasnotified totheWTO byDenmark, alsoonbehalf oftheHome Government oftheFaroe
Islands, andbyNorway on12February 1996 (WT/REG25/N/1 andWT/REG25/1), inaccordance
withArticle XXIV:7(a) ofGATT 1994.
2. Type ofagreement
TheAgreementcreatesafree-tradeareainconformitywiththedefinitionsetinArticleXXIV:8(b)
ofGATT 1994.
3. Scope
Asprescribed byArticle 2,theAgreement covers tradeinindustrial products (HSChapters 25
to97)excluding theproducts listed inAnnex 1oftheAgreement (HS35.01, 35.02, 35.05 -Casein,
Albumin 'sandDextrins), andfishandothermarine products (Annex 2).Trade inagricultural products
iscovered bytheagricultural protocol concluded between Norway andtheFaroe Islands (Annex C).
Theagricultural protocol forms partoftheinstruments creating thefreetrade area.
Theproducts covered areproducts originating intheFaroe Islands orNorway according to
therules oforigin laiddown inAnnex 3oftheAgreement.
Theproducts excluded fromthecoverage oftheAgreement (Annex 1)areproducts originally
falling within Chapters 1to24("agricultural products") inthenomenclature preceding theHarmonized
Description andCoding System (HS), butwhich were transferred atthetimeoftheintroduction of
theHarmonized System intoHSChapters 25to97("industrial products"). Theproducts listed in
Annex 1arethusproducts which areexcluded fromtheapplication oftheprovisions oftheAgreements
relating toindustrial products. Theproducts may, however, becovered bytheagricultural protocol.
Thesame system isapplied byNorway andtheother EFTA States intheirrelations withtheEuropean
Community.
TheAgriculturalProtocolprovidesdutyfreemarketaccessforproductscoveredbytheProtocol.
Thenumber ofagricultural products covered bytheProtocol reflects theexport interests oftheParties
tothisAgreement. Inthisrespect itshould benoted thattheFaroe Islands, duetoitsproduction
structure, onlyhavedemanded dutyfreeaccess foralimited number ofproducts. Requests fromthe
Faroe Islands forextending theproduct coverage foragricultural products willbeconsidered favourably
byNorway, cf.Annex C.
TheParties express theirreadiness todiscuss theextension oftheAgreement tothefields not
currently covered (Article 25).
Thedataontrade coverage arepresented inAnnex 1tothisnote.
4. Trade data
Dataonintra-trade arepresented inAnnex 2tothisnote.WT/REG25/3
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II. Trade Provisions
1.&
2. Import andexport restrictions
(a) Duties andcharges
Asprescribed byArticle 4oftheAgreement, customs duties onimports andexports, andany
charges having equivalent effect, areprohibited between theParties totheAgreement. Annex 5contains
provisions fortheabolition ofcustom duties ofafiscal nature intheFaroe Islands from1January 1993.
TheParties shallalsorefrain from anymeasure orpractice ofaninternal fiscal nature establishing
whether directly ofindirectly, discrimination between theproducts ofoneParty totheAgreement and
likeproducts originating intheterritory oftheother Party totheAgreement (Article 9).
(b) Quantitative restrictions
Asprescribed byArticle 5oftheAgreement, quantitative restrictions onimports andexports
andallmeasures having equivalent effect areprohibited between theParties totheAgreement except
those provided forinAnnex 6(ferrous waste andscrap). These restrictions were abolished ona
MFN-basis byNorway from 1January 1994.
3. Rules oforigin
Annex 3oftheAgreement laysdown therulesoforigin applicable between theParties tothe
Agreement.
Theorigin rules areinlinewiththeCommon Declaration withRegard toPreferential Rules
ofOrigin contained inAnnex IItotheAgreement onRules ofOrigin assetoutintheFinal Actof
theUruguay Round. Therelevant provisions onthedefinition oftheconcept "originating products"
arecontained inTitleIIofAnnex 3.Theorigin provisions allow forcumulation withmaterials from
allEFTA States.
Therulesoforigin forthetradeinagricultural products covered bytheAgricultural protocol,
arelaiddown inaseparate annex tothatprotocol.
4. Standards
TheAgreementdoesnotcontainanyspecificprovisionsconcerning"Technicalbarrierstotrade"
or"Sanitary andphytosanitary measures" except forArticle 7which stipulates thattheParties shall
apply theirregulations inveterinary, health andplant health matters inanon-discriminatory manner
andshallnotintroduce anynewmeasures thathavetheeffect ofunduly obstructing trade.
5. Safeguards
TheAgreementcontainsprovisionsonapplicationofemergencyactionsonimports(Article20),
onre-export andserious shortage (Article 21)andonbalance ofpayment difficulties (Article 22).
Procedures forconsultations andimplementation ofsafeguard measures tobetaken aredescribed in
Article 23.WT/REG25/3
Page4
6. Anti-dumping andcountervailing measures
ThePartiestotheAgreementsmaytakeanti-dumpingmeasuresinaccordancewiththeAgreement
onImplementation ofArticle VIoftheGATT 1994 (Article 19)andtheprocedures laiddown in
Article 23.
7. Subsidies andState-aid
Anypublic aidgranted which threatens todistort competition intrade between theParties,
isconsidered incompatible withtheproper functioning oftheAgreement (Article 16). Criteria for
assessing suchpractices arefound inAnnex 7.Appropriate measures against practices contrary to
Article 16maybetaken inaccordance withtheprocedures forimplementation ofappropriate measures
against suchpractices laiddown inArticle 23.
8. Public Monopolies
According toArticle 15,theContracting Parties shallensure thatanypublic monopoly ofa
commercial character intheFaroe Island andinNorway beadjusted sothatnodiscrimination regarding
theconditions under which goods areprocured andmarketed willexistbetween residents oftheFaroe
Islands andofNorway. TheAgreement doesnotcontain anylistofpublic monopolies. TheParties
totheAgreement arebound bytheircommitments under Article XVII andtheUnderstanding onthe
Interpretation ofArticle XVII oftheGATT 1994.
9. Payments
Article 10oftheAgreement stipulates thatpayments relating totrade andthetransfer ofsuch
payments totheFaroe Islands ortoNorway, depending onwhere thecreditor resides, shallbefree
from anyrestrictions.
III. General Provisions oftheAgreement
1. Exceptions andreservations
Article 11oftheAgreement prescribes thattheAgreement shallnotpreclude prohibitions or
restrictions onimports, exports orgoods intransit justified ongrounds ofpublic morality, public policy
orpublic security; theprotection ofhealth andlifeofhumans, animals orplants andtheenvironment;
theprotection ofnational treasure possessing artistic, historic orarchaeological value; theprotection
ofintellectual property; orrules relating togoldorsilver; orconservation ofexhaustible natural
resources, ifsuchmeasures aremade effective inconjunction withrestrictions ondomestic production
orconsumption.Suchprohibitionsorrestrictionsshallnot,however,constituteameansofdiscrimination
oradisguised restriction ontrade between theContracting Parties.
Article 12onsecurity exceptions states thatmeasures canbetaken tosafeguard security interests
orfortheimplementation ofinternational obligations ornational policies.
2. Accession/Withdrawal
There arenospecific provisions intheAgreement relating toaccession.WT/REG25/3
Page5
EachParty totheAgreement maydenounce theAgreement bynotification totheother Party.
TheAgreement shallcease tobeinforce twelve months afterthedateofwhich suchnotification has
beenreceived bytheother Party.
3. Dispute settlement procedures
TheAgreement doesnotcontain anyprovisions forDispute settlement procedures but,for
thepurpose oftheproper implementation oftheAgreement, theParties shall, whenever necessary,
exchange information and,atrequest ofeither Party, holdconsultations, asprescribed byArticle 24
oftheAgreement.
4. Relation withother trade agreements
AsexplicitlymentionedinthePreambleoftheAgreement,thePartiesconsiderthatnoprovisions
oftheAgreement maybeinterpreted asexempting theParties from their obligations under other
international agreements.
Furthermore, thePreamble oftheAgreement refers explicitly totheGATT. Inconcluding
theAgreement, theParties wereresolved toeliminate theobstacles tosubstantially alltheirtrade, in
accordance withtheprovisions oftheGATT concerning theestablishment offreetrade areas.
Byconcluding theAgreement, theParties weredesiring toconsolidate andextend theeconomic
relations existing between them andtoensure theharmonious development oftheirmutual trade in
thecontext ofEuropean cooperation. Theydeclare theirreadiness toexamine, inthelightofanyrelevant
factor andinparticular ofdevelopments inEuropean cooperation, thepossibility ofdeveloping and
deepening theirrelations inorder toextend them tofields notcovered bytheAgreement.
5. Institutional framework
TheimplementationoftheAgreementshallbesupervisedandadministeredbyaJointCommittee
consisting ofrepresentatives oftheContracting Parties. TheJointCommittee cansetupsub-committees
andworking parties andmaydecide toamend theAnnexes. TheJoint Committee actsbycommon
Agreement andmeets whenever necessary (Article 24).WT/REG25/3
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STRUCTURE OFTHE AGREEMENT
Article Annex
Preamble
Objectives 1
Scope 2
- Protocol 1and2
Rules oforigin andadministrative cooperation 3
- Protocol 3and4
Customs duties andcharges having equivalent effect 4
- Protocol 5
QRsandmeasures having equivalent effect 5
- Protocol 6
Trade inPetroleum products 6
Trade inagricultural products 7
Customs unions, Free-Trade Areas andfrontier trade 8
Internal taxation 9
Payments 10
General exceptions 11
Security exceptions 12
Fulfilment ofobligations 13
Rules ofcompetition 14
Public monopolies 15
Public aid 16
- Protocol 7
Protection ofintellectual property 17
Public procurement 18
Dumping 19
Emergency action onimports ofparticular products 20
Re-export andserious shortage 21
Balance ofpayments difficulties 22
Procedures forapplication ofsafeguard measures 23
Consultation mechanisms 24
Evolutionary clause 25
Annexes 26
Territorial application 27
Denunciation 28
Entry intoforce 29WT/REG25/3
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ANNEX 1
Trade Coverage
Trade Coverage
(in1000 nkr) 1992 1993 1994 1995 1996
Trade covered 444,149 291,781 362,035 371,332 480,248
Total trade 456,032 305,626 377,585 398,371 486,432
Inpercent 97.4 95.5 95.9 93.2 98.7WT/REG25/3
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ANNEX 2
Intra-Trade
IMPORTS
Unspecified
NotcoveredHS 1992 1993 1994 1995 1996
0 169,352 0 494,158 24,224 108,690
5 2,654,353 19,171 681,836 33,422 0
15 8,723,076 9,973,910 6,096,877 7,429,745 3,932,864
23 326,735 3,852,062 6,275,648 17,237,817 2,139,400
24 0 0 0 0 558
11,873,516 13,845,143 13,548,519 24,725,208 6,183,512
Covered 3 13,756,902 20,280,472 31,832,407 68,795,783 88,557,593
16 3,208,511 4,436,635 2,770,201 6,016,922 6,457,373
30 0 0 455,122 0 0
32 0 27,951 0 0 0
34 38,983 38,434 103,219 10,616 0
36 250,675 0 0 0 0
37 0 0 1,636 0 0
38 0 0 27,162 0 0
39 35,968 0 229,198 609,232 124,191
40 21,592 13,591 0 1,799 7,770
41 0 0 157,348 142,119 0
42 0 0 2,788 0 0
48 14,924 84,015 1,832 0 0
49 3,930 27,174 9,230 19,961 22,420
51 0 0 1,123 1,294 0
55 0 0 54,686 0 0
56 35,601 41,568 403,256 43,965 37,306
62 0 4,502 0 0 0
71 0 4,589 0 3,606 1,314
72 0 37,000 13,436 0 163,671
82 0 0 0 1,500 2,283
84 218,920 181,738 436,119 543,226 255,225
85 10,095 36,123 0 0 8,890
87 11,846 168,144 0 0 0
89 55,000,000 641,350 20,813,786 14,755,000 39,820,879
90 0 3,113 918,897 28,6012 111,378
94 0 3,831 0 0 0
95 0 35,094 28,192 16,989 12,730
97 122,099 0 0 20,000 0
72,730,046 26,065,324 58,259,638 91,268,024 135,583,023
Notcovered/unspecified 11,873,516 13,845,143 13,548,519 24,725,208 6,183,512
Covered 72,730,046 26,065,324 58,259,638 91,268,024 135,583,023
Total import 84,603,562 39,910,467 71,808,157 115,993,232 141,766,535
Coverage inpercent 86.0 65.3 81.1 78.7 95.6WT/REG25/3
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EXPORTS
UnspecifiedHS 1992 1993 1994 1995 1996
0 9,522 0 0 356,329 0
99 2,001,416 1,957,864
9,522 0 2,001,416 2,314,193
Covered 3 10,583,463 8,968,997 11,072,090 15,290,379 12,176,607
5 90,000 90,000 95,210 79,700 3,034,334
6 13,495 0 13,725 0 4,450
8 19,700 9,150 14,921 0 11,880
9 0 0 0 82799 1208
10 18,308 16,980 5,040 4,154 0
12 43,749 16,287 33,750 94,404 16,799
15 9,950 22,548 42,688 30,470 59,763
16 14,652 0 285,584 90,087 119,838
17 227,607 198,691 278,464 368,712 549,085
18 524,242 362,935 288,703 1,135,096 629,437
19 872,893 583,073 827,626 900,073 1,121,208
20 102,761 109,708 148,160 194,029 210,141
21 677,865 547,590 606,325 763,339 669,223
23 9,4687,300 53,654,843 81,229,624 59,937,868 111,824,829
24 23,402 22,535 17,055 38,280 25,191
25 269,165 330,369 383,191 715,133 1,028,202
27 189,290,106 168,576,270 165,743,945 147,531,535 163,286,540
28 49,720 6,800 12,550 36,420 15,400
29 55,350 0 8,550 74,800 13,800
30 5,445,231 1,639,796 3,232,950 471,253 1,777,023
31 217,588 265,425 53,042 0 155,504
32 534,242 139,727 235,202 325,091 630,424
33 131,965 98,241 77,009 94,937 56,860
34 16,019 178,162 50,336 141,375 28,270
35 4,728 0 0
36 752,844 1,093,060 196,923 137,134 910,584
37 20,000 0 0
38 498,733 432,800 700,433 457,866 76,295
39 2,752,068 1,691,114 2,181,693 3,202,393 4,368,568
40 273,446 31,2081 371,904 433,157 128,850
41 0 0 22,391 0
42 12,284 0 1,023 10,699 49,996
43 31,531 0 7,718 0 14,545
44 9,236,818 3,270,528 1,329,105 3,019,026 3,345,330
48 2687,295 938,415 1,171,310 1,116,269 1,795,115
49 127,679 145,060 148,743 15,3557 87,438
51 256,666 506,364 521,002 704,416 568,717
52 62,829 112,106 33,862 160,049 82,378
54 6,280 5,141 23,034 0 0
55 223,834 63,470 379,753 622,462 690,180
56 3,056,835 3,663,272 4,022,338 5,759,569 3,937,417
57 0 1,000 0 6,546 0
59 101,516 66,388 261,269 258,962 265,963
60 28,190 18,059 0
61 93,283 67,069 232,497 141,926 34,380
62 139,683 120,901 96,310 202,158 12,879
63 37,044 50,898 12,031 189,220 18,952
64 0 36,454 70,242 55,039 42,479
65 2,940 0 5,400 33,885 32,454
67 0 0 0 3,938 0WT/REG25/3
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Exports (contd.)
Covered 68 576,365 413,479 458,076 168,817 318,725
69 134,261 27,939 49,585 227,068 122,626
70 176,542 134,939 198,165 54,091 139,013
71 13,224 6,187 4,202 0 0
72 1,296,813 394,420 134,730 923,904 1,389,068
73 4,576,117 2,188,600 3,159,531 4,462,671 4,202,055
74 22,189 34,208 244,726 206,793 348,692
76 200,461 66,372 215,851 178,979 188,698
78 0 0 0 0 4,692
79 377,284 347,752 248,253 253,040 144,664
80 0 3,626 11,264 32,066 17,958
82 65,774 16,806 156,957 192,279 141,454
83 1,006,318 492,883 220,827 468,788 334,339
84 18,262,828 9,220,424 12,703,039 16,407,249 13,464,462
85 5,068,378 1,736,104 1,591,078 5,185,326 5,078,094
87 1,320,112 133,141 947,804 1,419,525 554,639
88 0 0 0 0 9,100
89 10,729,650 104,409 2,346,604 1,032,197 666,235
90 931,853 565,433 3,284,597 2,245,286 911,598
91 0 0 0 0 3,231
92 8,250 15,700 10,064 0 30,120
94 798,052 385,660 520,205 1,151,269 1,307,005
95 1,520,882 861,889 718,243 356,112 1,329,548
96 8,598 11,312 6,478 30,274 50,710
97 0 122,000 0 0 0
371,419,250 265,715,590 303,775,000 280,063,939 34,466,5262
Unspecified 9,522 0 2,001,416 2,314,193 0
Covered 371,419,250 265,715,590 303,775,000 280,063,939 344,665,262
Total export 371,428,772 265,715,590 305,776,416 282,378,132 344,665,262
Coverage inpercent 100.00 100.00 99.35 99.18 100.00WT/REG25/3
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TRADE BETWEEN NORWAY AND THE FAROE ISLANDS
1992 1993 1994 1995 1996
Import 84,603,562 39,910,467 71,808,157 115,993,232 141,766,535
Export 371,428,772 265,715,590 305,776,416 282,378,132 344,665,262