WORLD TRADE WT/REG32/2
19January 1998
ORGANIZATION(98-0166)
Original: English Committee onRegional Trade Agreements
INTERIM AGREEMENT BETWEEN SLOVENIA AND
THE EUROPEAN COMMUNITIES
Communication from theParties
I. BACKGROUND INFORMATION ONTHE AGREEMENT
1. Membership anddates ofsignature, ratification andentry intoforce
TheEurope Agreement with theRepublic ofSlovenia wassigned inLuxembourg on
10June1996. Pending itsratification bythenational parliaments, anInterim Agreement, signed on
11November 1996, applies thetrade andtrade-related provisions oftheEurope Agreement from
1January 1997 (OJL344 of31/12/1996).
TheInterim Agreement replaces thetrade related partsoftheCooperation Agreement signed
inApril 1993 andhasbeenconcluded foraperiod extending untiltheentry intoforce oftheEurope
Agreement.
2. Type ofAgreement
TheInterim Agreement aimsatcreating afree-trade areawithatransitional period lasting a
maximum ofsixyears starting from theapplication oftheInterim Agreement.
TheInterim Agreement aimsatthereduction tozerooftariffs onsubstantially alltradecovered
bytheHarmonized System (HS)between theparties. Provisions arecontained intherelevant articles
oftheagreement aswellasintheAnnexes andProtocols totheAgreement.
3. Scope
Inmore detail, allsectors (HSChapter 1-97) arecovered bytheAgreement withtextiles and
clothing, steelandcoalproducts andprocessed agricultural products being dealt withseparately in
Protocols totheAgreement.
Thetrade ofwineiscovered byaCouncil Regulation ontheEuropean Community ’s(EC)
autonomous import regime forCroatia, Bosnia-Herzegovina, theFederal Republic ofYugoslavia and
theFormer Yugoslav Republic ofMacedonia for1997. Theinclusion ofSlovenia intheglobal tariff
quota of545.000 hlisatransitional measure untilaseparate Wine andSpirit Agreement isconcluded
andentered intoforce.
4. Trade Data
Slovene imports from theEuropean Union (EU) reached 5.3billion ECU in1996. Exports
totheEUamounted to4.2billion ECU. About 65percentofSlovene external trade iswiththeEU.WT/REG32/2
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Electrical andtransport equipment constituted themost significant exports, while investment and
intermediate goods dominate imports. Tables onEUtrade withSlovenia aretobefound inAnnex I.
II. TRADE PROVISIONS
TheInterim Agreement isapreferential agreement, ofwhich thetrade-related provisions aim
atestablishing afree-trade areawithin amaximum of6years, onthebasis ofasymmetry bytheEC
(i.emore rapid liberalization onthesideoftheEC).Itprovides aframework forgradual integration
intotheEC.
1. Import Restrictions
Theprovisions onthegradual andasymmetric abolition ofimport restrictions forindustrial
products originating intheECorSlovenia relate toalmost allproducts covered byChapters 25-97
oftheCombined Nomenclature (some exceptions arelisted inAnnex ItotheInterim Agreement).
Forthese products thebasic trade instruments areapplied inthefollowing manner.
1.1 Duties andcharges
EC
- abolished on1/1/97
- Annex II:progressive reductions 1/1/97 -1/1/2000
Slovenia
- abolished on1/1/97
- Annex III:progressive reductions 1/1/97 -1/1/2000
- Annex IV:progressive reductions 1/1/97 -1/1/2001
1.2 Quantitative restrictions
EC: abolished on1/1/97
Slovenia: abolished on1/1/97
Asregards agricultural products, theECandSlovenia abolished allquantitative restrictions
andmeasures having equivalent effect on1January 1997.
TheECapplies toimports intoitsmarket ofagricultural products originating inSlovenia the
concessions listed inAnnex VItotheInterim Agreement. Slovenia applies toimports intoSlovenia
ofproducts originating intheECtheconcessions listed inAnnex VII.
1.3 Common External Tariff
There existnoprovision fortheestablishment oftheCommon External Tariff.
2. Export Restrictions
Theprovisions onexports restrictions forindustrial products originating intheECorSlovenia
relatetoalmostallproductscoveredbyChapters25-97oftheCombinedNomenclature(someexceptions
arelisted inAnnex ItotheInterim Agreement). Forthese products thebasic trade instruments are
applied inthefollowing manner.WT/REG32/2
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2.1 Duties andcharges
EC:abolished on1/1/97
Slovenia
- abolished on1/1/97
- Annex II:1/1/98
2.2 Quantitative restrictions
Abolished on1/1/97
3. Rules ofOrigin
TheECandSlovenia have negotiated anagreement forthecumulation oforigin among
themselves andwithotherCentral andEastern European Countries (CEECs) (Poland, Hungary, Czech
Republic, Slovak Republic, Bulgaria, Latvia, Lithuania, Estonia, Romania), andNorway, Iceland and
Switzerland linked byafree-trade areawiththeEC.
Thecriteria fordefining theoriginating status ofproducts intheframework oftheInterim
Agreement withSlovenia (rules oforigin) isdefined bytheprotocol 4tothisAgreement, asmentioned
inArticle 29oftheEUSlovenia Interim Agreement. ThenewProtocol 4isanintegral partofthe
Interim Agreement anditisapplied from 1.1.97.
Thenewrulesareessentially based upontheexisting rulescontained intheEuropean Economic
Area(EEA) Agreement, traditionally considered tobethemostadvanced rules inforce inEuropean
preferential trade.
Thenormal criteria fordefining theorigin ofproducts hasbeenretained andincludes provisions
fornon-originating materials thathavebeensufficiently transformed tobeconsidered originating. The
processing requirements arelisted onproduct-by-product basis andannex IItoProtocol 4.
Cumulation possibilities exist:manufacturers inaCEEC willbeabletousematerials from
theEC,anyother associated country oranEuropean FreeTrade Association (EFTA) country. On
theECside,manufacturers willalsobeabletousematerials from thesame countries.
The"no-drawback rule" hasbeenintroduced inorder toavoid circumvention ofthetariffs
andtoensure thatcustoms duties applicable tothird countries arepaidsomewhere within thezone
(EEA/EFTA/Associated countries).
Therules oforigin arecompletely inlinewiththeCommon Declaration withregard to
Preferential Rules ofOrigin contained inAnnex IItotheAgreement onRules ofOrigin assetoutin
theFinal ActoftheUruguay Round. Therules oforigin contained inProtocol 4oftheEurope
Agreements willnotresult inhigher tariff barriers tothirdcountries.
4. Standards
TheInterim Agreement doesnotprovide forcooperation toreduce differences inthefields
ofconformity assessment.WT/REG32/2
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4.1 Technical barriers totrade
None.
4.2 Sanitary andphytosanitary measures
TheInterim Agreement doesnotinclude anyprovisions inthisregard.
5. Safeguards
Under theInterim Agreement theParties cantakeemergency measures inthefollowing cases
(please notethefirstcaseonlyapplies toSlovenia):
(a) Exceptional measures concerning infant industries, orcertain sectors undergoing
restructuring orfacing serious difficulties, particularly where thesedifficulties produce
important social problems, maybeundertaken bySlovenia intheform ofincreased
customs duties foralimited duration (Article 23).
(b) Appropriatemeasures(prioritymustbegiventothosewhichleastdisturbthefunctioning
oftheAgreement) maybeundertaken when anyproduct isbeing imported insuch
increased quantities andunder suchconditions astocause orthreaten tocause:
- serious injury todomestic producers oflikeordirectly competitive products
intheterritory ofoneoftheContracting Parties, or
- serious disturbances inanysector oftheeconomy ordifficulties which could
bring about serious deterioration intheeconomic situation ofaregion
(Article 25).
(c) Appropriatemeasures(prioritymustbegiventothosewhichleastdisturbthefunctioning
oftheAgreement) maybeundertaken inthecaseof
- re-exporttowardsathirdcountryagainstwhichtheexportingPartymaintains,
fortheproduct concerned, quantitative export restrictions, export duties or
measures having equivalent effect,
- serious shortage ,orthreat thereof, ofaproduct essential totheexporting Party
(Article 26).
(d) TheAgreement shallnotpreclude prohibitions orrestrictions onimports, exports or
goodsintransitjustifiedongroundsofpublicmorality,publicpolicyorpublicsecurity;
theprotection ofhealth andlifeofhumans, animals orplants; theprotection ofnational
treasures ofartistic, historic orarchaeological value ortheprotection ofintellectual,
industrialandcommercialpropertyorrulesrelatingtogoldandsilver.Suchprohibitions
orrestriction shallnot,however, constitute ameans ofarbitrary discrimination ora
disguised restriction ontrade between theParties (Article 30).
(e) When serious balance ofpayments difficulties ,orimminent threat thereof, occur,
restrictive measures maybeadopted inaccordance withtheconditions established under
theGeneral Agreement onTariffs andTrade (GATT), including measures relating to
imports, which shallbeoflimited duration andmaynotgobeyond whatisnecessaryWT/REG32/2
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toremedy thebalance ofpayments situation. Atimeschedule toremove themeasures
shallbepresented assoonaspossible (Article 34).
(f) If,given theparticular sensitivity oftheagricultural markets ,imports ofproducts
originating inoneParty, which arethesubject ofconcessions under theInterim
Agreement, cause serious disturbance tothemarkets intheother Party, bothParties
shallenterintoconsultations immediately tofindanappropriate solution. Pending such
solution, theParty concerned maytakethemeasures itdeems necessary.
(g) Without prejudice totheconcessions granted under theInterim Agreement concerning
agricultural products, thestand-still provisions inthesame agreement (Article 20.1
and20.2) shallnotrestrict inanywaythepursuance oftherespective agricultural
policies ofSlovenia andtheECorthetaking ofanymeasures under suchpolicies.
TheAgreement doesnotprovide fortheexclusion ofparties totheAgreement fromsafeguard
measures applied toimports from thirdparties.
6. Anti-dumping andCountervailing Measures
Theparties oftheInterim Agreement mayonlytakeanti-dumping measures inaccordance with
theAgreement onimplementation ofArticle VIoftheGATT 1994. TheInterim Agreement contains
anumberofrequirementsandprovisionsforproceduralstepsintheconductofanti-dumpingproceedings.
These canbesummarized asfollows:
(a) before initiation ofaninvestigation thecountry isinformed oftheexistence ofa
complaint andasubstantive summary oftheallegations inthecomplaint isprovided;
(b) oninitiation ofananti-dumping proceeding, theAssociation Council isinformed
immediately, sothatconsultation canbeheld, before theECdecides toimpose
provisional measures ortopropose definitive measures; and
(c) aclearpreference isgiven forpriceundertakings rather thanduties, astheyplace more
responsibility onexporters tomonitor theirownpricing behaviour. Forthis,itis
necessary topayparticular attention tomonitoring actions inorder tobeabletoreact
urgently byimposition ofanti-dumping duties when itisfound thattheundertaking
hasbeenviolated.
There arenotcountervailing measures accounted forintheInterim Agreement.
7. Subsidies andState-aid
Public aidthatmayaffect trade, withtheexception oftradeinagricultural products, fisheries
andEuropean CoalandSteelCommunity (ECSC) coalandsteelproducts, between theParties ofthe
Agreement shallberegulated onthebasisoftherelevant rulesoftheTreaty establishing theEuropean
Community. Slovenia hasbeengranted apossibility toapply flexible criteria forpublic aidduring
aspecially defined transition period. TheAgreement includes transparency provisions onpublic aid.
Incaseofpractices incompatible withthese rulesaParty totheAgreement mayunder certain
conditions takeappropriate measures. Suchappropriate measures may,where theGATT applies thereto,
onlybeadopted inaccordance withtheprocedures andunder theconditions laiddown bytheGATT
andanyotherrelevant instrument negotiated under itsauspices which areapplicable between theParties.WT/REG32/2
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Public aidinrelation toproducts covered bytheTreaty covering theEuropean CoalandSteel
Treaty shallberegulated bytherelevant provisions inthesame Treaty. Under atransitional period
andunder certain conditions, Slovenia mayexceptionally, asregards ECSC steelproducts, grant public
aidforrestructuring purposes. Transparency provisions forpublic aidalsoapply tothissector.
Incaseofpractices incompatible withthese rulesaParty totheAgreement mayunder certain
conditions takeappropriate measures. Such appropriate measures mayonlycover measures adopted
inconformity withtheprocedures andunder theconditions laiddown bytheGATT andanyother
relevant instrument negotiated under itsauspices which areapplicable between theParties.
8. Sector-specific Provisions
(a) Textiles
Customs duties
EC
- abolished 1/1/97
- Annex I:31/12/97
Slovenia
- abolished 1/1/97
- Annex IIaandIIb:progressive reduction
Quantitative restrictions andmeasures having equivalent effect
EC:abolished 1/1/98
Slovenia: seeadditional protocol
(b) Products covered bytheTreaty establishing theECSC
Customs duties
EC:abolished 1/1/97
Slovenia
- steel:
- abolished 1/1/97
- Annex I:progressive reduction 1/1/97 -1/1/2000
- coal: abolished 1/1/97
Quantitative restrictions
EC:abolished 1/1/97
Slovenia: abolished 1/1/97WT/REG32/2
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(c) Agricultural, processed agricultural andfishery products
Agricultural products
EC
- quantitative restrictions andmeasures having equivalent effect wereabolished on1/1/97
- Annex VI:concessions
Thepreferential traderegime foragricultural products istheusual onewhich iscurrently being
applied intheformofarange ofautonomous measures, (until theendof1997) asforallother associated
countries. Themajor instruments arepreferential tariffquotas (forthemostoftheagricultural products
different leveloftheapplied MFN ratereductions havebeenagreed upon; the20percentreduction
oftheMFN rateisapplied tothequantities listed inthefirstcolumns).
(AstheAgreement onlyentered intoforce on1January 1997, thereisasyetnodataavailable
onwhatpercentage ofEUimports ofagricultural products arefreeorpreferential)
Slovenia
- quantitative restrictions andmeasures having equivalent effect wereabolished on1/1/97
- Annex VII: concessions
Imports intoSlovenia oftheproducts originating intheEClisted inAnnex VIIshallbesubject
to50percentreduction oftheapplying duty.
Processed agricultural products
Annex IandIItoProtocol IIIliststheduties theECandSlovenia apply toprocessed agricultural
products.
Fisheries
- Annex VIIIa andVIIIb: concessions.
- Annex VIIIa liststheproducts originating inSlovenia forwhich theECgrants tariff quotas.
- Annex VIIIb liststheproducts originating intheECforwhich Slovenia grants tariff quotas.
(d) Automotive sector
Foranumber ofproducts within theautomotive sector, theduties onimports from theEC
willnotbeabolished untilthe1January 2001.
9. Other
(a) Cooperation incustoms administration
TheInterim Agreement doesnotcontain specific provisions oncustoms cooperation. However,
mutual assistance between administrative authorities incustoms matters oftheParties shalltakeplace
inaccordance withtheprovisions ofProtocol 5(Article 37).WT/REG32/2
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(b) FreeTrade Zones
TheInterim Agreement shallnotpreclude themaintenance orestablishment ofcustoms unions,
free-trade areas orarrangements forfrontier tradeexcept insofarastheyalterthetradearrangements
provided forintheAgreement. Consultations between theParties shalltakeplace concerning such
customs unions orfree-trade areas (Article 22).
III. GENERAL PROVISIONS OFTHE AGREEMENT
1. Exceptions andReservations
Articles 30and42contain standard exceptions related toessential security interest anddefense
industries,publicmorality,lawandorderandpublicsecurity,theprotectionoflifeandhealthofhumans,
animals orplants, national treasures, industrial andcommercial property andgoldandsilver. Other
thansecurity anddefense, these exceptions mustnotbeusedsoastoconstitute ameans ofarbitrary
discrimination oradisguised restriction ontrade between theparties.
2. Accession
EachParty maydenounce thisAgreement bynotifying theother Party. TheInterim Agreement
shallcease toapply sixmonths afterthedateofsuchnotification. However, theInterim Agreement
isonlyapplicable untiltheentry intoforce oftheEurope Agreement andtheEurope Agreement
recognises thefactthatSlovenia ’sultimate objective istoaccede totheEuropean Union, andthatthis
Association, inviewoftheparties, willhelpSlovenia toachieve thisobjective.
3. Dispute Settlement Procedures
Theparties mayrefer totheCooperation Council anydispute relating totheapplication or
interpretation oftheInterim Agreement (Article 40oftheInterim Agreement) andthedispute settled
bymeans ofadecision. Intheevent ofitnotbeing possible tosettle thedispute, either party maynotify
theother oftheappointment ofanarbitrator.
4. Relations withOther Trade Agreements
According toArticle 47,theInterim Agreement willonlybeapplicable untiltheentry into
forceoftheEurope Agreement. Articles 14to34oftheCooperation Agreement between theEuropean
Economic Community andtheRepublic ofSlovenia (signed inLuxembourg on5April) weresuspended
upontheentry intoforce oftheInterim Agreement. Other provisions (i.e.TitleI,TitleIIIandTitleIV
shallcease toapply upon theentry intoforce oftheEurope Agreement).
TheInterim Agreement doesnotpreclude themaintenance orestablishment ofcustoms unions,
free-trade areas orarrangements forfrontier trade except insofarastheyalterthetrade arrangements
provided forinthisAgreement. TheOsimo Agreement concerning economic cooperation between
Slovenia andItalyremain alsoapplicable afterentry intoforce oftheInterim Agreement.
5. Institutional Framework
According toArticle 38oftheInterim Agreement, theCooperation Council setupbythe
Cooperation Agreement havethepower totakedecisions andmake recommendations inthecases
provided forintheAgreement. TheCooperation Council isassisted intheperformance ofitsdutiesWT/REG32/2
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byaJointCommittee composed ofrepresentatives oftheECandofrepresentatives oftheGovernment
ofSlovenia. TheCooperation Council maydelegate totheJoint Committee anyofitspowers.WT/REG32/2
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ANNEX I
EUTrade withSlovenia: 1992-1997 (January-June)
Table 1
Overall developments 1992-1997 (January-June)
Billion ECU Exp./
imp.Annual RateofChange Share ofSlovenia in
extra EUTrade
EUexp. EUimp. balance % EUexp.% EUimp.% exp.% imp.%
1992 1.4 1.6 -0.2 87 ... ... 0.32 0.33
1993 3.1 2.9 +0.2 107 122 81 0.62 0.59
1994 3.7 3.4 +0.3 107 19 17 0.68 0.63
1995 /EU(12) 4.4 3.8 +0.6 116 19 11 0.74 0.66
1995 /EU(15) 5.2 4.2 +0.9 122 19* 12* 0.91 0.78
1996 /EU(15) 5.3 4.2 +1.0 126 4 0 0.86 0.73
J-J1996 2.7 2.1 +0.6 128 0.90 0.74
J-J1997 3.0 2.3 +0.7 130 11 9 0.91 0.72
*Compared to1994 EU(12) figure added to3newMember States 'trade withSlovenia.
Table 2
Most important EU(15) exports: January-June 96/97
Sector bySection of
Common Customs TariffJ-J1996 J-J1997
MECU Share ofTotal
%MECU Share ofTable
%Change over1996
%
1.Machinery &electrical (XVI) 582 22 699 23 20
2.Transport equipment (XVII) 494 18 491 16 -0.6
3.Textiles (XI) 274 10 296 10 8
4.Basemetals &articles (XV) 235 8.7 293 10 24
5.Chemical products (VI) 207 7.7 253 8 22
6.Agriculture, incl.processed
(I-IV)190 7 191 6 0.5
7.Plastic products (VII) 176 6.5 202 6 15
SUB-TOTAL 2,158 80 2,425 79 12
ALL SECTORS 2,681 100 3,048 100 13WT/REG32/2
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Table 3
Most import EU(15) imports: January-June 96/97
Sector bySection of
Common Customs TariffJ-J1996 J-J1997
MECU Share ofTotal
%MECU Share ofTable
%Change over1996
%
1.Machinery &electrical (XVI) 449 21 489 21 9
2.Transport equipment (XVII) 373 17.5 362 16 -3
3.Textiles (XI) 288 13.5 300 13 4
4.Basemetals &articles (XV) 262 12 284 12 8
5.Misc. manufactures (XX) 179 8 217 9 21
6.Wood ...(IX) 97 4.5 99 4 2
7.Paper, pulp(X) 89 4 97 4 9
SUB-TOTAL 1,737 81.5 1,848 81 6
ALL SECTORS 2,130 100 2,276 100 7
Source: Eurostat (Comext)