RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG46/4
WT/REG48/4
21 June 1999
(99-2511)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN THE CZECH REPUBLIC AND LITHUANIA
FREE TRADE AGREEMENT BETWEEN THE SLOVAK REPUBLIC AND LITHUANIA
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 documents WT/REG46/2
and WT/REG48/2.
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I. BACKGROUND INFORMATION ON THE AGREEMENTS
4. Trade Data
We would appreciate trade and tariff statistics or intra-FTA trade and MFN trade
according to major products and partners.
Statistics to be submitted at a later stage.
What percentage of FTA trade (both in tota l and by sector) between the Parties (for
each party):
- has the duties eliminated?
- has other regulations of commerce eliminated?
- is given concessions (rather than having duties etc. removed)?
- is excluded from the FTA?
See Table 2 in Annex.
In respect of Chapters 1-24, please provide details on the concessions granted, that is the
percentage of trade (by value and tariff line) wh ich will be duty free and that which will have
tariff preferences.
See Table 1in Annex.WT/REG46/4
WT/REG48/4
Page 2
II. TRADE PROVISIONS
1. Import Restrictions
1.1 Duties and charges
Do the Parties intend to remove the duties on products listed in Protocol 3 Annexes B, C,
E and F at some stage in the future, and if so when might that be?  Is there a consultative
mechanism to discuss further concessions on agricultural products?  Are there any agricultural
products not covered by Protocol 3?
Possibilities of further liberalisation are foreseen in paragraph 3 of Articles 34 and in
paragraph 4 of Records of Understanding.
All agricultural products are covered by Protocol 3.
Is there other agricultural trade which is not covered by the above statistics?
Protocol 3 of the Agreements cover all agricultural items classified under chapters 1-24 of
HS CN.
Please confirm that when these two agreeme nts are fully implemented, all originating
trade under Chapters 25-97 will be duty free.
Yes.  All originating trade in industrial products under Chapters 25-97 will be duty free.
5. Safeguards
Have any specific safeguards actions been taken under Article 14 on agricultural
products?  If so, on which products and what was the nature of the measures taken?  What is
the procedure for utilising special safeguards, what criteria are to be used to determine whether
a “serious disturbance” to agriculture markets is being caused and what are the “appropriate
solutions” to be used?  Would such measures be WTO consistent?  Can the Parties give
assurances that such measures would not prejud ice the rights of non-parties to the Agreements?
No specific safeguard measures have been taken.
As regards to the measures which the Parties to  the FTAs are entitled to take to deal with
market disturbance, they shall be selected on a case-by-case basis.  In the selection of such measures,
priority shall be given to those which least disturb the functioning of these FTAs.  The measures
foreseen under Articles 14 of the respective FTAs are not considered as third-country measures but
measures relating strictly to the agricultural trade between the Parties.  These measures are not in
conflict with the WTO rules and they do not prejudice the rights of non-parties to these FTAs.WT/REG46/4
WT/REG48/4
Page 3
Can the Parties explain whether there is  any difference in practice between the
obligations under Articles 27, 28, 29 and 31 (general safeguards/structural adjustments/re-
export and serious shortage/safeguard procedu res) and the manner in which they will operate,
and the obligations of the Parties under the WTO?  Has any safeguard action been taken underthese articles?  If so, on what products, what was the measure for and for what duration?
Parties to these FTAs believe that there is no contradiction between obligations under
Articles 27, 28, 29 and 31 of these FTAs and the manner in which they operate and the Parties’
appropriate obligations under the WTO.
No safeguard actions have been taken so far.
Article 28 on Structural Adjustments makes provision for exceptional measures to be
taken concerning infant industries, or sector s undergoing restructuring or facing serious
difficulties.  How is it decided that exceptional measures can be taken?
No exceptional measures under Article 28 concerning infant industries, or sectors undergoing
restructuring or facing serious difficulties have been taken so far.
Will balance-of-payments (BOP) measures under Article 32 be applied in a non-
discriminatory manner and without prejudice to the interests of non-parties to the Agreements?
Yes, the BOP measures under Articles 32 will be applied in a non-discriminatory manner and
without prejudice to the interests of non-parties to these FTAs, in compliance with provisions of
Article XII of GATT 1994.
Are the safeguard measures on intra-trade (i.e. between the Parties to the Agreement)
transitional in nature or can they be applied at any time and left in place for any period of time?
Safeguard measures concerning infant industries, or certain sectors undergoing restructuring
or facing serious difficulties according to Art. 28 are transitional.  There are no such measures in force
at present.  Any possible measure shall cease to apply on January1, 2001 at the latest.
Other safeguards provided for in the FTAs (Art. 27 – General Safeguards, Art.29 – Re-Export
and Serious Shortage) can be applied at any time on condition all requirements set up in respective
Articles of the FTAs have been met.
7. Subsidies and State-Aid
7.1 State aid
We note that the provisions of Article 23 on State Aid do not apply to agriculture
products, and that therefore there is no limitation under the Agreements on the use of state aidfor agriculture.  What is the reason that agriculture is excluded from the provisions of
Article 23?
Relations in connection with the state aid in agriculture are subject to rules and objectives of
the WTO Agreement on Agriculture and, therefore, the use of state aid in agriculture is limited by theWTO commitments of individual Parties to the Agreement.WT/REG46/4
WT/REG48/4
Page 4
7.2 State monopolies
Which products are currently subject to state monopolies (Article 20)?  This article
suggests that state monopolies might currently dis criminate in their commercial decisions – can
the Parties confirm that such monopolies operate in a manner consistent with GATT
Article XVII in their purchase from and sales to third countries?
The main aim of these Articles is to ensure that the abolition of governmental restrictions on
trade between the Parties is not nullified by discriminatory behaviour in the purchasing and marketing
activities of state monopolies of a commercial character, therefore there is no contradiction with the
provisions and obligations of Article XVII of the GATT 1994.
In present time there are no state monopolies of trading character (with exclusive rights) in
Parties to the FTAs.
7.3 Rules of competition concerning undertakings
We acknowledge that competition policy (Art icle 22) is not covered 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 questions:
- What criteria are to be applied in asse ssing 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?
Can the Parties give assurances that implementation of this provision does not
discriminate against the interests of non-parties to the Agreements (particularly given that it
exempts agricultural products which “form an integral part of a national market organisation”
from the provisions stipulated in para 1 (a) of this Article)?
At the outset it should be noted that, in our opinion, competition rules issues go beyond the
scope of examination within the meaning of Article XXIV.
Competition policy in the Czech Republic is regulated by the Act No. 63/1991 Coll. on
Protection of Competition amended by the Act No. 286/1993 Coll. and in the Slovak Republic by the
Act No. 188/ 1994 Coll. on Protection of Competition.  These Acts are applicable to all entrepreneurs,as well as associations of these entrepreneurs, performing economic activities and are aimed at
protection of the competition on market relating to the trade in goods and services. They also prohibit
conclusion of agreements and integration procedures of entrepreneurs aimed at limitation of
competition.  Antimonopoly Offices, both in Czech Republic and in the Slovak Republic, responsible
for surveillance of competition policy, prohibit agreements limiting competition by issuing ofa decisions, based on provisions and conditions set out in above mentioned Acts.  Consequently,
agreements to which such decisions apply are considered to be invalid.  These Acts apply to
horizontal as well as vertical limitations and they generally prohibit abusing of dominant position of
any undertaking and do not allow any exceptions.
Competition policy in Lithuania is regulated by the Law No. V III-1999 on Compe tition.  The
aim of this Law is to protect freedom of the conscientious competition in the Republic of Lithuania.
This Law regulates activities of the entities of th e State and Municipal institutions and commercial
entities, and determines the legal aspects of their rights, duties and responsibilities.  This LawWT/REG46/4
WT/REG48/4
Page 5
prohibits actions taken by commercial entities, which restrict or which can restrict competition, with
no difference in the nature of their commercial activities.  This Law also applies to activities of the
commercial entities which are not registered in the Republic of Lithuania if, due to their activities, the
competition in Lithuanian market is restricted.  If  the international agreements concluded by Lithuania
provide other requirements on protection of competition, provisions of these agreements prevail.  This
Law provides some common and special exceptions; according to the agreements, they promote
investments or technical and economic progress and improve the distribution of goods and,
consequently, as the result of that, the possibilities to gain are created for the consumers.
III. GENERAL PROVISIONS OF THE AGREEMENTS
4. Relations with Other Trade Agreements
We note that the Slovak Republic is a member of CEFTA and that Lithuania is
advanced in its negotiations to become a member of CEFTA.  How will these negotiations affectthe FTA between Lithuania and the Slovak Republic?  Are there plans to make changes to the
FTA to bring it into line with CEFTA provisions?
In 1997, the Chairman of the CEFTA Joint Committee received an official application for
accession to the CEFTA from the Republic of Lithuania.  It was agreed that the Joint Committeewould decide on this question after fulfilment of all accession requirements ( inter alia  to be the
member of the WTO) by this country.  The Czech/Slovak-Lithuanian FTAs were negotiated with the
aim to facilitate the negotiations of Lithuania’s accession to the CEFTA.  In this case, the FTAs
between Lithuania and the Czech Republic, resp. Lithuania and the Slovak Republic, would expire
upon the date of Lithuania’s accession to the CEFTA.  Further liberalisation of trade in agriculturalproducts can be agreed and included in respective bilateral protocols in the framework of the CEFTA.WT/REG46/4
WT/REG48/4
Page 6
ANNEX
Table 1
Tariff Treatment of Trade under HS Chapters 1-24 between the Parties in 1998
(Value and percentage shares)
With concessions MFN rate
Total Zero import duties Reduced duties
import
value
(Thousand
US$)Import
value
(Thousand
US$)Share
in total
HS 1-24
imports
(%)Import
value
(Thousand
US$)Share
in total
HS 1-24
imports
(%)Import
value
(Thousand
US$)Share
in total
HS 1-24
imports
(%)
Imports from
Lithuania into:
- Czech Rep. 1,098 643 59 0 0 455 79
- Slovak Rep. 59.4 59.4 100 0 0 0 0
Imports into
Lithuania from :
- Czech Rep. 8,432 3,613 42.8 901 10.7 3,918 46.5
- Slovak Rep. 916 190 20.7 480 52.4 246 26.9
Table 2
Tariff Treatment of Trade in Agricultural Products and Industrial Goods
between the Parties in 1998
(Percentage shares in corresponding total imports)
With concessions MFN rate
Zero import duties Reduced duties
Agricultural
productsIndustrial
goodsAgricultural
productsIndustrial
goodsAgricultural
productsIndustrial
goods
Imports from  Lithuania
into:
- Czech Rep. 6.9 88.2 0 0 4.9 0
- Slovak Rep. 2.2 97.8 0 0 0 0
Imports into Lithuania
from :
- Czech Rep. 3.7 91.3 0.9 0 4.03 0.02
- Slovak Rep. 0.8 96.2 2.0 0 1.02 0
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