RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/HRV/39
3 August 1998
(98-3055)
Working Party on the
Accession of CroatiaOriginal:  English
ACCESSION OF CROATIA
Additional Questions and Replies to the
Memorandum on the Foreign Trade Régime (L/7466)
The following additional questions and replies to the Memorandum on the Foreign Trade
Régime have been received from the Republic of Croatia.
_______________
Table of Contents
Page Questio
n
II. ECONOMY AND FOREIGN TRADE
1 Economy
(b) Main directions of ongoing economic policies 1 1
(i) Privatization 4 2-7
(c) Current economic situation 6 8
2. Basic Features of Foreign Tr ade of the Republic of Croatia
(c) Foreign debt of the Republic of Croatia 9 9
III. INSTRUMENTS AND MEASURES OF THE FOREIGN
TRADE SYSTEM OF THE REPUBLIC OF CROATIA
2(c) Import charges and fees 9 10
2.(d) Taxation regime 9 11-13
2.(f) Non-tariff measures applied to imports and exports of goods 12 14
(i) Quotas 12 15
2.(g) Customs valuation 13 16
2.(h) Rules of origin 13 172.(j) Technical Barriers to Trade and Sanitary and Phytosanitary
Measures14 18-27
IV. OTHER POLICIES AFFECTING FOREIGN TRADE
1 Trade-related  Intellectual Property Protection 25 28-37
2. Agricultural Policy
(a) System of subsidies in agricultural production 30 38(c) Special fees on imports of agricultural and food
produce 30 39
6. Government Procurement 30 40-41
V. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC
RELATIONS WITH THIRD COUNTRIESWT/ACC/HRV/39
Page ii
1 Bilateral or Plurilateral Agreements Relating to Foreign
Trade in Goods and Trade in Services 32 42
VI. TRADE IN SERVICES 32 43-46WT/ACC/HRV/39
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II. ECONOMY AND FOREIGN TRADE
1. Economy
(b) Main Directions of Ongoing Economic Policies
Question 1.
Following the response to question 2 in WT/ACC/HRV/30, we seek further clarification on the
use of price controls. GATT Article III paragraph 9 recognizes that internal maximum price
control measures can have effects prejudicial to the interests of countries supplying imported
products. Accordingly, members ap plying such measures shall take account of the interests of
exporting countries with a view to avoiding to the fullest practicable extent such prejudicial
effects.
Please provide the Working Party with a copy of  the Law on the System of Price Controls. Does
Croatia intend to repeal the price control system or otherwise limit its scope prior to WTOaccession?
The answer to question 2 of WT/ACC/HRV/30 states that direct price controls are allowed in
order to prevent market disturbances with regar d to price fluctuations or to prevent monopoly
formation; direct price controls are set by the GOC, on the proposal of the Ministry of
Economy, and only last for a six-month period.
Has the GOC imposed any form of direct price cont rols during the past three years? If yes, for
each instance, please describe the price cont rol used, the product or service covered, the
purpose for the application of the control, and th e period that the control was effect. Were the
decisions to impose the direct price controls  published and were importers of the affected
products / services promptly notified.
Please list, by HS number or service sector and subcategory, the good and services whose prices
are regulated by government.
The answer to question 2 of WT/ACC/HRV/30 states that the Government of Croatia
undertakes price monitoring (reporting of prices) for certain goods and services established by
law and that while ministries do not determine th e method of price formation, they can object to
an increase in price.
What are the reasons used by ministries for the analysis of price, and in cases where ministries
object, are the reasons and objections published in a transparent manner and are importers of
the affected products and services notified?
The answer to question 2 of WT/ACC/HRV/30 also notes that local administrative bodies are
not allowed to change prices of products and services enterprises, which are owned by the
Republic of Croatia.
How are prices of products and services of such enterprises determined? Which products are
produced by such enterprises and are subject to price control. Is there a mechanism in this
procedure to take account of concerns related to trade and investment? What are the
procedures for announcing any proposed changes?WT/ACC/HRV/39
Page 2
Answer:
In the Republic of Croatia, companies determine prices of goods and services freely, without
any interference of government authorities into that process, i.e. in accordance with their own
business policy. The only exceptions are some goods and services that have a direct impact on cost of
living of Croatian population.
The Law on Exceptional Measures of Price Controls enacted by the Croatian Parliament on
27 June 1997, regulates the system of price controls as a mechanism which should be implemented
only in exceptional cases in order to prevent negative effects of price changes of certain goods and
services or in order to prevent monopolistic pricing, provided that those objectives could not be
achieved through other economic policy measures. The Law does not introduce any additional legal
restrictions, but limits the possibility of the Government to intervene on the market thus strengthening
the basic principles of the market economy.
The provisions of this Law point out the exceptional character of the direct price control
measures, which could only be implemented for a limited period of time and in case the negative
effects could not be removed by other economic policy measures.
In accordance with the Law, the Government can prescribe the following direct price controls
measures:
- maximum price control;
- fixing of prices to a certain level;
- reporting changes in prices prior to the application.
Those price control measures could be applied until the reasons for their introduction are
eliminated. But after the introduction of those measures the Government is obliged to take appropriateeconomic policy measures in order to eliminate the  reasons for direct price controls.
The only price control measure that the Republic of Croatia applies at the moment is the
reporting changes in prices prior to the application. In accordance with those measures, the legal
entities owned by the Republic of Croatia, namely: INA - Industrija nafte d.d. (the national oil
company), Hrvatska elektroprivreda d.d. (the national electricity industry), Hrvatska radio televizija(the national broadcasting company), HŽ – Hrvatske željeznice (the national railways), Hrvatske
šume (the national forestry exploitation company), Jadrolinija (the national maritime carrier), Narodne
novine d.d. (Official Gazette publisher), Hrvatske ceste (the national road construction and
maintenance company) and HPT (the national postal system and telecommunications company) are
obliged to report changes in prices of certain goods and services 15 days prior to the application (see
attached Decision on the Compulsory Reporting of the Price Lists and Tariffs of Certain Legal
Persons, Official Gazette no .77/96 –WT/ACC/HRV/36). Those companies are the only or main
producer or service provider of some specific goods and services in the Republic of Croatia.
The products and services concerned include engine gasoline, diesel fuels, heating oil,
primary gasoline, asphalt bitumen, jet fuel, liquid oil gas, natural gas, electricity, radio and television
licence fee, domestic railway transportation of passengers and goods, maritime/coastal transportation
of passengers and goods, standard letters and postcards, telephone charges for domestic calls,telephone charges, road tolls, bridge tolls and tunnel tolls, official forms, the use, content and form of
which are regulated by laws and other regulations, logs for veneer and barking, logs for planks,
roundwood for railroad sleepers, thin roundwood, ot her roundwood, panel wood, services for loading,
unloading and transporting timber assortments (see the attached Order on Identifying the Products andWT/ACC/HRV/39
Page 3
Services Requiring Reporting of Price List s or Tariffs; Official Gazette no. 78/96 –
WT/ACC/HRV/36).
Besides the above mentioned companies and products, the producers of fresh milk, fertilizers,
telephone calls, standardized letters and postcards in the domestic mail system, wheat flour and bread
type 850 are also obliged to report changes in pri ces 15 days prior to the application (see attached
Decision on Compulsory Reporting of Price Lists or  Tariffs of Certain Products and Services; Official
Gazette no. 45/93 –WT/ACC/HRV/36).
The obligatory price reporting prior to application does not apply to imported products and to
products that will be exported according to the said Regulation. The obligatory price reporting prior to
application applies only to the goods that are produced in the Republic of Croatia, or the services
provided by the Croatian companies and intended for the consumption in the Republic of Croatia.
Price reporting prior to application and informing of the government authorities on the
intended price changes enables certain public discussion and dialogue on the matter, includes
consumers as well as the Agency for the Protection of Competition in the discussion with regard to
the monopolistic character of those practices.
The Ministry of Economy can object within the period of 15 days, i.e. from the date the prices
were reported until their application. After the analysis of the reasons for price increase, includinganalysis and comparison with the prices on the world market or in the neighbouring countries,
analyzing costs of production and after the discussion with the companies interested, the Ministry can
request the company to reconsider the proposed prices. If the company changes the prices in spite of
the objections of the ministry within the 15 days period, the Law provides for the penalties amounting
to 5000-20000 kunas (US$800-3,000). It is possible al so that the Government adopts a Decision
prescribing that these prices should be lowered to the original level. If the company considers that it
suffered damage due to the fact that it could not apply the prices at a moment when it considered it
justifiable, it can institute a proceeding and request compensation for the damage incurred.
If the Ministry does not object within 15 days from the date of the reception of the
information concerning the intended price changes, the changed prices can be applied without anywritten approval. Also this period for the application of new prices or rates can be shortened upon the
request of the company concerned.
This Law also enables the monitoring of prices of goods and services as well as the providing
of the statistic data.
All regulations regarding price control measures are published in the “Official Gazette” of the
Republic of Croatia.
According to the Law on the Protection of Market Competition it is prohibited to take
decisions with the aim of restricting or preventing free market competition and especially decisions
resulting in the direct or indirect fixing of the pr ices of goods and services, or the fixing of the size
and time of price reductions or increases which result in consumers being in an unequal position
regarding prices. Also, according to the Law, intentional excessive direct or indirect high pricing with
the aim of taking over or preserving a dominant or monopolistic market position is considered theabuse of a monopolistic and dominant position of the entrepreneur. The role of the Agency for the
Protection of Market Competition is to perform the operations regarding issues to the protection of
competition including starting the proceedings in order to establish the facts concerning violations of
the Law and monopolistic behaviour. The proceeding carried out by the Agency requires certain
procedure and time before the final decision is made. If the Decision by the Agency is to stop theWT/ACC/HRV/39
Page 4
monopolistic practice, the administrative proceeding can be instituted against the measures and the
decision passed by the Director of the Agency.
With regard to the complexity and time required for the whole procedure, on the one side and
the current situation in the Croatian economy on the other side (certain number of companies still
have a large share of production and distribution of some products and services), the CroatianGovernment has decided to keep price control of a certain level for those companies and products, as
a transitional measure, which the Law on Exceptional Measures of Price control made possible. The
goal of the Government of Croatia is, to gradually abolish the above mentioned measures, along with
the process of privatization and the development of competition. The Law on Exceptional Measures
of Price Control will be adjusted to that principle.
The only price control measure that the Croatian Government has applied since l993 is the
already mentioned reporting of changes in prices prior to the application and the prices' follow-up.
The above-mentioned measures applied to the already mentioned products and services.  We attach to
this answer the translated regulations concerning goods and services, companies and procedures
obliged to report prices, which are in force from 1993 to 198, as well as the translated Law on
Exceptional Measures of Pri ce Control.  (WT/ACC/HRV/36)
(i) Privatization
Question 2.
The response of question 3 of WT/ACC/HRV/30 states that the GOC has no legal power to
control the investment decision of the Croatian Pension Funds, however, some members of the
GOC have been appointed to the Supervisory Board of the Pension Fund.
Please clarify what role the Supervisory Board plays in the administration of Croatian Pension
Funds, as well as the role of the Croatian Government Board members.
Answer:
According to the Law on Pension Insurance there is no Supervisory Board of Croatian
Pension Funds. The misunderstanding is due to translation reasons. According to the above-
mentioned Law, there is a Management Board in each of the Pension Funds nominated by theCroatian Government. The Management Boards ar e comprised of members of Parliament, and not
governmental officials. The supervision of the Croatian Pension Funds is done through regular
reviews by the Croatian Parliament. The Government has no influence, whatsoever on the investment
decisions of the Management Boards of the Croatian Pension Funds.
Question 3.
In the response to question 5 of WT/ACC/HRV/30, it is stated that both foreign and local
investors are treated equally and are permitted to tender offers for the shares in all enterprisesbeing privatized in the second stage by the Croatian Privatization Fund.  Are there any recent
statistics to indicate the extent to which foreign investors have participated in the privatization
of these enterprises?
Answer:
The latest available statistics are from January 1997, and are not detailed. According to this
data, 60 foreign investments in the privatization process have been recorded with a value of
DM460.37 million (approximately 35 per cent of the total value of FDI).  Foreign investors are fromWT/ACC/HRV/39
Page 5
14 countries with the biggest investors in terms of value originate from Austria (about DM110
million) followed by Switzerland, Sweden, Belgium and Germany.
Question 4.
Are there established any public documented guidelines that the Croatian Privatization Fund
uses to chose among the investment proposal s? Is the CFP required to provide information
about the winning proposals to any outside sources?
Answer:
Attached to this document is an English translation of the procedure for participation in
privatization tenders in Croatia (Tender documentation for purchase of the joint stock company).
(WT/ACC/HRV/36)
Question 5.
The response to question 7 of WT/ACC/HRV/30 states that although the secondary market for
frozen foreign exchange deposits (FFEDs) is not administered by the GOC, the government
allowed the purchase of apartm ents and shares with FFEDs.
This answer seems to indicate that there is some government oversight with respect to the use of
FFEDs. Please clarify the role of the governme nt in the secondary market for frozen foreign
exchange deposits.
Answer:
The Government role in regulating the use of FFED's was only related to determining the
legal framework for the possibilities of using FFED' s. Thus, the Government enabled citizens to use
FFED's for acquiring shares in privatization process and for buying housing facilities. This was done
in order to reduce the public debt. Once invested the FFED's could not be used for other purposes.The Government has no role whatsoever on the secondary FFED market. The selling and buying of
FFED's on the secondary market is determined by the supply and demand and is done by commercial
banks or directly on the market. Commercial banks have made conversion of FFED's into new foreign
exchange saving deposits.
Question 6.
Question 10 of WT/ACC/HRV/27 addresses areas under Ministry of Defense (MoD)
supervision.  This answer does not give the spec ifics of the procedure th at foreign investors must
follow to invest in these areas. It refers only to the internal “operational standards” of the MoD.
What are these operational standards?
Answer:
The internal operational standards referred to in the previous answer are those connected to
national security issues. The Ministry of Defense is evaluating possibilities of investing in this sector,observing the impacts on national security.WT/ACC/HRV/39
Page 6
Question 7.
In regard to foreign investment in the tourist sector.  Are there special laws or regulations
pertaining to foreign investment in the tourist se ctor, namely, in hotels and tourist facilities on
the coast? Are foreigners prohibited from investin g in any part of this sector? If so, when does
the government intend to liberalize investment in this sector?
Answer:
There are no special laws or regulations prohibiting foreign investment in the tourist sector in
any way.
(c) Current economic situation
Question 8.
The reply to question 16 of WT/ACC/HRV/30 states that the GOC is in process of modernizing
and arranging the border crossing with the Bosnian Federation. However, we noted in ourWorking Party presentation last year that a considerable quantity of goods has been arriving in
Croatia without payment of customs duties through this border.
Please confirm that the customs territory of Croatia confirms to the territorial boundaries of
Croatia, and that it is Croatia’s intent to enforce WTO provisions and the terms of its accession
package within these boundaries.
Please provide, prior to the next Working Party meeting, an update report on Croatian plans to
implement strict customs enforcement at its borders prior to WTO accession.
WTO members are expected to be able to defi ne their customs territory and to apply WTO
provisions and the terms of their accession packages at their customs borders. Departures from
MFN treatment at those borders should conform to WTO provisions, e.g., Article XXIV of theGATT 1994 and Article V of the GATT 1994 and Article V of the GATS.
Croatia’s lack of border control has implicatio ns for its enforcement responsibilities under the
WTO, e.g., in the area of IPR protection and MFN application of standards requirements.
It is critical to the progress of Croatia’s accession that it address the issue of uniform
application of its customs regime vis-a-vis other countries.
Answer:
Border control and customs regime on the border between the Republic of Croatia and Bosnia
and Herzegovina had been adversely effected by the war in Bosnia and Herzegovina, which caused a
lack of an efficient customs administration on the Bosnian side of the border during the whole period
of military operations in Bosnia and Herzegovina from 1992 till 1995. Having in mind that the border
regime and customs enforcement are always bilateral issues which could be effectively implemented
and improved only by common agreement and actions of the both neighbouring countries, it becomesobvious how difficult was a task to enforce strict customs regime under the war circumstances which
jeopardised functioning of a regular customs administration by diverting attention to some other
priorities at that troublesome time. Only in 1997, when decisive efforts were in place to establish
Bosnian customs administration, Croatia managed to start improving border control and customs
regime on its border with neighbouring Bosnia and Herzegovina, thus diminishing negative effects ofWT/ACC/HRV/39
Page 7
the flow of goods arriving in Croatia without payment of customs duties through its border with
Bosnia and Herzegovina.
Border crossing points towards Bosnia and Herzegovina have been determined in the
Agreement on the Establishment of Border Crossing Points between the Republic of Croatia and the
Republic of Bosnia and Herzegovina, signed in Sarajevo on 14 March 1996. Based on that Agreementand its Annex, the Croatian Government approved the establishment of 21 road border crossing points
for passengers and cargo crossing. Furthermore, 45 control points were established on existing roads
between the two countries for passengers crossing only. In accordance with Article 2 of the
Agreement, a Joint Commission was formed with the task to propose categorisation of border crossing
points and to determine the location for building of facilities on border crossing points for the purpose
of controlling traffic flows across the borderline. The Commission completed its tasks only on
25 May 1998, and an agreement was reached to determine seven road border crossing points of thefist category (police and customs surveillance on 24 hours basis, with compulsory veterinary, sanitary
and phytosanitary inspection, and exclusivity for crossing of heavily taxed commodities) and eleven
road border crossing points of the second category (police and customs surveillance on 24 hours basis,
with some elements of veterinary, sanitary or phytosanitary inspection). Also, six railways border
crossing points were established. Remaining control points are closed for cargo traffic and left forpassenger traffic that will be regulated by a bilateral agreement on frontier traffic of persons, which is
to be negotiated and signed very soon. The Joint Commission agreed on a common policy of
decreasing the number of border crossing points and improving customs infrastructure on all
remaining crossings. The Croatian side persists on establishing joint border crossing infrastructure
wherever possible, while Bosnian side is still reluctant to accept this proposal.
Measures of customs surveillance are the same for the whole territory of the Republic of
Croatia and they are prescribed by the Customs Code and accompanying regulations. However, the
categorisation of individual border crossing points, as agreed with the Bosnian side, determines the
number of required staff, infrastructure, border crossing points facilities and the equipment necessary
for the effective enforcement of the measures of customs surveillance. Therefore, the agreement on
border crossing points categorisation reached on 25 May 1998 represents a crucial element of
improving the customs regime, especially because it sets obligations for adequate arrangements on
both sides of Croatian-Bosnian border.
The Republic of Croatia attaches great importance to construction and equipping its border
crossings with Bosnia and Herzegovina. A large amount of financial resources have been allocated
from the State Budget, and sizeable human resources engaged to render operational all customs
offices at this border. For the construction of facilities, we have spent US$2,890,440 so far, and for1998 we are planning to spend an additional US$4,397,600. Border crossing points are mainly
equipped with the technical equipment donated to th e Customs Directorate of the Republic of Croatia
by the US Customs Service in 1996, and it consists of narcotic test kits, contraband detection kits,
including fibre optic scopes, density meters, electronic measuring tapes, camera kits, flashlights,
contraband probes, inspection mirrors and tool kits. The next phase of equipping during this year willinclude the necessary equipment for the control of  movement of nuclear and hazardous material,
vehicles for the field operations and a radio co mmunication system. Apart from this, the program of
computerisation of the Croatian Customs Service is currently in progress, with an aim of establishing
a computer network of all border-crossing points. Within the activities of the SECI Initiative (Project
on identifying bottle-necks on main transport corridors), the Government of the Republic of Croatiahas officially stated its willingness to candidate 12 border-crossings with the both entities in Bosnia
and Herzegovina to be reconstructed and equipped by using the World Bank financing.
We are in the process of drafting a new Customs Law which will be harmonised with the
European Customs Code and which we foresee to be enacted by the beginning of 1999. Work is also
being done on the alternation of customs documentation and we believe that by the beginning of 1999,WT/ACC/HRV/39
Page 8
we shall be capable of carrying out customs surveillance based on the Single Administrative
Document, as is the case in the customs proced ure of the European Union. The Croatian Customs
Service has employed a large number of customs officers and in cases specifically to satisfy the needs
of the border crossing points towards Bosnia and Herzegovina. In the training of officers we are
employing the following techniques: the passing on of experience of older colleagues, learning on thejob, and through specialised seminars organised by the help of foreign services, especially the United
States Customs Service, DG XXI, UNDCP, and the Customs Service of the United Kingdom. We are
aware of the need of further development of customs training courses, and therefore we plan to
establish a Centre for Basic Training and Specialisation of Customs Officers. This priority goal calls
for some additional international financial aid, due  to the present unavailability of sufficient local
funding. Improvement of the measures of customs surveillance through the enhancement of working
conditions, attainment of better equipment and increase of the professionalism of customs officers is alasting process which is not affiliated only with the Croatian-Bosnian border but is equally needed on
all Croatian borders in order to develop Customs Service to be at the level of European and world
standards. The only specific element of the Croa tian-Bosnian border compared to other Croatian
borders is the fact that the process of improving border and customs control on that particular border
line was delayed due to war operations on the both sides of the border.
The Government of the Republic of Croatia, the Government of the Republic of Bosnia and
Herzegovina and the Government of the Federation of Bosnia and Herzegovina signed the Agreement
on Economic Co-operation on 24 March 1995. According to the Agreement, all goods (industrial and
agricultural) originating in the Republic of Croatia and the Federation of Bosnia and Herzegovina, are
excluded from customs tariffs, and only 1 per cent of customs registration is levied. The origin ofgoods is determined according to the Pan European rules of origin, and an adequate certificate of
origin (EUR 1) is issued for each particular sh ipment by Customs Office in the Republic of Croatia
and by Chamber of Economy in the Federation of Bosnia and Herzegovina. Learning from the
experience in implementing the Agreement on Economic Co-operation, the Croatian Government has
undertaken serious steps in order to improve border control measures. Those steps are fullyco-ordinated with the Council of Ministers of Bo snia and Herzegovina and the Government of the
Federation of Bosnia and Herzegovina. Meetings were held in April 1998, and we agreed to work
together on building a proper border regime, which will encompass, among other measures, a
reduction of number of border crossings available for cargo transportation, customs administration
tight co-operation in computing export and import documentation, better equipment of the border
crossings selected for cargo transportation, tightening control of the certificates of origin and bringing
all other customs measures and procedures in line with common standards. Furthermore, the CroatianGovernment has proposed to start negotiations on concluding a Free Trade Agreement, which will be
valid for substantially all trade of products originating from the Republic of Croatia and the whole
territory of Bosnia and Herzegovina. That Agreement will be in line with similar FTA among CEFTA
countries and among these countries and the European Union.
Today it is possible to confirm that the Republic of Croatia is in a position to implement strict
customs enforcement on all its borders, including the border with Bosnia and Herzegovina. The
customs enforcement is and shall be in place in the customs territory of the Republic of Croatia,
which completely confirms to the territorial boundaries of the Republic of Croatia, as stipulated in
Article 1 of the Customs Law.
It is Croatia’s determination to enforce WTO provisions, rules and discipline and all the terms
and commitments encompassed in the Croatia’s WTO accession package within these boundaries in
order to ensure a proper implementation of all responsibilities under the WTO principles prior to its
accession to WTO, especially the principle of uniform application of its customs regime towards all
other countries according to the MFN clause. We are confident that measures taken already and those
to be improved or taken in near future, either unilaterally or in an agreement with the Council of
Ministers of Bosnia and Herzegovina and the Government of the Federation of Bosnia andWT/ACC/HRV/39
Page 9
Herzegovina, shall undoubtedly contribute to that end. Croatia’s determination to establish a normal
border regime on its borders with Bosnia and Herzegovina stems not only from the WTO rules and
principles, but at the same time it is an obligation confirmed and accepted by the Republic of Croatia
in Washington, Dayton and Paris Peace Agreements. Furthermore, due to a substantial difference in
the level of tariffs and taxation for imported items, which are lower in Bosnia and Herzegovina thanin the Republic of Croatia, it is a practical fiscal interest of the Croatian Government to prevent all
flows of goods to its territory from Bosnia a nd Herzegovina which does not comply with the
stipulations of the present and future Free Trade Agreement between the two countries.
2. Basic Features of Foreign Trade of the Republic of Croatia
(c) Foreign debt of the Republic of Croatia
Question 9.
The response to question 19 of WT/ACC/HRV/30 st ates that three World Bank loans are being
prepared with the aim of reforming the pens ion system, fostering private enterprise, and
reconstructing the infrastructure have not yet been  signed.  What is the current status of these
World Bank loans?
Answer:
Attached to this document is the list of all World Bank Projects in Croatia.
III. INSTRUMENTS AND MEASURES OF THE FOREIGN TRADE SYSTEM OF THE 
REPUBLIC OF CROATIA
2(c) Import charges and Fees
Question 10.
Does Croatia levy border-crossing fees on passe ngers or freight conveyed by air, sea and land?
If so, please describe the nature and amount of the border crossing fees. Please describe any
differences in the application of these fees to  foreign and domestic passengers and freight.
Answer:
Croatia confirms that it does not maintain any kind of border crossing fees on passengers
conveyed by air, sea or land.
2(d) Taxation Regime
Question 11.
According to the reply to question 39 of WT/ ACC/HRV/ 30, Croatia states that changes in the
Law on Special Taxes on Products (Coffee, petroleum products, beer, non-alcoholic drinks,
alcohol, new imported cars and tobacco products) are to be submitted to Parliament by 1
January 1998, and that the Law on Value Added Ta x, is to enter into force on 1 January 1998.
Please give a status report on the implementation of these revised taxes.WT/ACC/HRV/39
Page 10
Answer:
The Croatian Parliament has adopted a new legislation concerning taxation policy, namely
excise taxes (previously translated as "special taxes"). The following laws have been passed and came
into force in January 1998.
The Law on Excise Taxes on Automobiles and other Motor Vehicles, Vessels and Aircraft's;
the Law on Excise Tax on Coffee; the Law Amending  the Law on Excise Taxes on Soft Drinks; the
Law amending the Law on Excise Tax on Beer.
The main characteristic of this legislation is that it abolishes the difference between the excise
taxes for imported and domestically produced goods and thus brings it into conformity with Article III
of the GATT. The products concerned and the respective tax rates are enumerated in the following
table:
Product description Excise tax
Coffee:
Non –roasted  coffee 3,60 HRK/kg
Roasted coffee 9,00 HRK/kg
Coffee husks and skins 12,00 HRK/kg
Coffee substitues containing coffee 15,00 HRK/kg
Non-alcoholic beverages:
Domestic 40,00 HRK/HL
Imported 40,00 HRK/HL
Beer: alcoholic
Domestic 80,00/HRK/HL
Imported 80,00/HRK/HL
Non-alcoholic (max 0,5per cent vol/vol)
Domestic 40,00/HRK/HL
Imported 40,00 HRK/HL
Automobiles:*
Power 55 – 75 kW  - new 3000,00 HRK
- used 2000,00 HRK
75 – 90 kW  - new 7000,00 HRK
- used 5000,00 HRK
90 – 110 kW - new 15.000,00 HRK
- used 11.000,00 HRK
more than 110 kW - new 30.000,00 HRK
- used 22.000,00 HRK
* The new legislation introduces the excise taxes for new and used automobiles, motorcycles, vessels
(exceeding 8 meters in length) and aircraft’s for private usage, which are imported or produced and sold in theRepublic of Croatia.
As mentioned in previous documentation, excise tax (special tax) on oil derivatives from its
introduction on 1 July 1994 is paid per liter i.e. kilo of derivatives in equal amount for derivatives
produced in Croatia and imported.
With regard to the legislation on the system of excise taxation on alcoholic beverages,
tobacco and tobacco products the legislation is in preparation. Changes of the Law on special tax
(excise tax) on alcohol are already in the parliamentary procedure and have passed the first reading.The draft proposal of the changes of the Law on special taxes on tobacco products is expected to beWT/ACC/HRV/39
Page 11
adopted by the Government before August 1998, and will consequently be sent to the Parliament. This
new legislation shall be in conformity with the Article 3 of the GATT.
The Law on Value Added Tax entered into force as from 1 January 1998. As pointed out,
value added tax (VAT) reducing the total tax burden from an average tax incidence of 26.5 per cent to
22 per cent, being a single rate of value added tax which applies to all goods and services providedexcept those which are exempt from paying VAT.
Exempt from paying VAT in domestic trade according to Article 11 of the Law are:
- flats or parts of flats rented for living;
- banks, saving banks, credit and saving institutions as well as insurance and
reinsurance companies;
- medical services, dentist and similar if those services are provided as private practice;
- medical services in health institutions;
- services and goods delivered by pre-school, elementary school, secondary and high
school and similar institutions and social care institutions;
- services provided and goods delivered by religious communities and institutions,
cultural institutions and similar;
The deliveries of real estate, except new built; company shares; land; money and securities
transactions and deliveries are exempt from the value added tax.
Exempt from the value-added tax are also certain imported goods and goods in transit as
follows:
- temporary imports of goods whic h are exempt from customs duty;
- imports of humanitarian aid, except petroleum and petroleum products, tobacco,
tobacco products, alcohol and alcoholic beverages;
- imports of bullion done by the Croatian National Bank;
- imports of foreign legal means of payment, securities and company shares;
- transit of goods through customs territory of the Republic of Croatia.
All exports of goods are exempt from value added tax.
Question 12.
Please provide translated copies of these laws to the Working Party for review.
Answer:
The Government of the Republic of Croatia sha ll inform the WTO Secretariat, as well as the
countries members, on the amended legislation, and shall submit the translations of the laws
concerning excise taxation to WTO Secretariat as soon as possible.
Question 13.
Please confirm that these laws will provide th e same coverage and applied rates of tax to
domestic and imported products.
Answer:
As already stated above, this legislation (both the laws already in force and the ones under
preparation) will be in conformity  with Article III of the GATT 1994.WT/ACC/HRV/39
Page 12
2(f) Non-Tariff Measures applied to Imports and Exports
Question 14.
Croatia notes in its response to question 48 of WT/ACC/HRV/30 that its current Law on Trade
allows for the possibility of the use of quotas due to the necessity to reconstruct industries
destroyed by war.
Please indicate how the GOC plans to use this law after WTO accession, particularly in regard
to protection for industries whose production has been destroyed or reduced in the war.
Answer:
The Law on Trade contained provisions in Articles 40 to 43 regarding the imposition of
import quotas, including for the purpose of protecting in fant industries.  In view of Croatia's situation
in post-war period, and the level of economic development, the Croatian Government considered
itself entitled to recourse to GATT Article XVIII. Following the improvement of economic situationin Croatia, the Government decided not to recourse to GATT Article XVIII. Consequently, the
provisions of Law on Trade will be changed. The GOC had adopted a Decree on 12 July 1996,
abolishing all import quotas with immediate effect.  The abolition completed a process, begun in
1994, of reducing the number of products subject to import quotas.  Quantitative restrictions had been
imposed on certain agricultural products, some foodstuffs, textile fibres, cement, iron and steelproducts, and machinery to facilitate the establishment of a market economy and assist areas damaged
by war.
2(f)(i) Quotas
Question 15.
According to the answer to question 11 of WT/ACC /HRV/7, export quotas may be set to protect
non-renewable resources of the Republic of Croatia. Please provide an update on what steps, if
any, Croatia is taking to remove these restrictions.
Answer:
The Law on Trade allows the imposition of export quotas in exceptional cases, and on a
temporary basis, for the purpose of protecting non-renewable natural resources.  The main productssubject to export quotas were corn, crude oil, natural gas, wood, raw leather, glass, and newspaper
waste. The Government is obliged, by 1 November each year, to pass a regulation stipulating the
quantity allowed to be exported in the following year.
Continuing the policy of bringing the trade polic y measures in conformity with the principles
of GATT 1994, the Government of the Republic of  Croatia, following the previously adopted
program, has adopted at the end of 1997, a Decision according to which the export quotas regime has
been abolished for crude oil and gas (CN code 27.09 and 27.11) and in June 1998, a Decisionaccording to which the export quotas were abolished for corn and semi processed leather. The aim of
the Government is to bring the export quota regime in line with Articles XX and XXI of the
GATT 1994. The next revision of export quotas regime will take place by the end of 1998.WT/ACC/HRV/39
Page 13
2(g) Customs Valuation
Question 16.
In the response to question 66 of WT/ACC/HRV/ 30, Croatia notes that it is preparing the
correction of the Customs Law so that the Law a nd its regulations will be in conformity with
Article VII of the GATT and with the Agreement on the Implementation on Article VII of the
GATT 1994.
We require a full and translated copy of the Customs Law to complete our review. Please
identify those interpretative notes which not included in the statute. Does Croatia intend to
modify the Customs Act or applicable regulatory provisions to incorporate all the interpretative
notes to the Customs valuation Agreement?
Please provide specific information as to th e procedures hat will be invoked to ensure full
compliance with Article XIII of the Agreement on  Customs Valuation, which pertains to the
ability of importers to with draw good fr om customs even though the final valuation
determination has not been made.
We seek Croatia’s confirmation that it w ill fully implement the WTO Agreement on the
Implementation of Article VII of the GATT 1994 from the date of accession, and that all the
provisions of the Agreement, including the Interpretive Notes, are, or will be, incorporated inCroatian law and regulation prior to the time.
We request that Croatia directly address this point by proposing a plan for full implementation
as provided for above.
Answer:
After careful examination of the legislation on customs valuation and consultation with the
experts from the Customs Directorate of Croatia, we can undertake a commitment to fully apply the
WTO agreement on customs valuation, as of the date of Croatia's accession to the WTO. The new
legislation which will be in conformity with the Agreement on implementation of Article VII of the
GATT 1994, is currently under preparation, and will be forwarded to the Parliament for adoption in
early fall 1998. The legislation is expected to enter into force in the beginning of 1999, and after thatperiod, further few months are necessary in order to train the customs officers for implementing the
new procedures.
The Government of Croatia shall inform the WTO Secretariat, as well as the countries
members, on the amended legislation, and shall submit the English translation of the draft new
Customs Law as soon as possible.
2(h) Rules of origin
Question 17.The reply to question 70 of WT/ACC/HRV/30 indicates that Croatia is currently in process of
developing in law rules of origin in conformity with the WTO Agreement on Rules of Origin.
Please describe the rules of origin that will be used for any non-preferential and preferential
trade regimes.WT/ACC/HRV/39
Page 14
Please describe the method by which Croat ia will meet the obligations under the WTO
Agreement on Rules of Origin for issuing binding assessments of origin, both for non-
preferential and for preferential regimes, wi thin 150 days of requests by exporters and
importers, as provided under Article 2 (d) of the Agreement and annex II  (Common
Declaration with Regard to Preferential Rules of Origin).
Please describe the process under which determinations of origin may be appealed.
Answer:
At the moment, new regulation on rules of origin for non-preferential trade is under
preparation. This regulation will also contain criteria for rules of origin for preferential trade regime.
In this moment, while the regulation is in preparation we can confirm that it will be based on WTO
Agreement on Rules of Origin, as well as on its annexes. The adoption of this regulation by the
Croatian Government could be expected by the end of September of 1998. After the adoption ofabove-mentioned regulation, we will be able to explain all the details and to answer all the questions
concerning this regulation. Also we will provide the English translation of mentioned regulation to all
interesting parties.
(j) Technical Barriers to Trade and Sanitary and Phytosanitary Measures
Question 18.Please report on what steps Croatia is taking to implement the transparency and other
procedural requirements of the WTO Agreements on Technical Barriers to Trade and Sanitary
and Phytosanitary Measures.
Answer:
After careful examination of the legislation on technical barriers to trade and sanitary and
phytosanitary measures and consultation with the domestic experts, Croatia can undertake a
commitment to fully apply the WTO agreements on TBT and SPS, as of the date of Croatia's
accession to the WTO. A Statement by the Croatian delegation confirming such commitment is
attached to this document.  (WT/ACC/HRV/38).
With regard to the steps taken in order to  comply with the requirements of the TBT
Agreement:
- The Government of the Republic of Croatia has adopted a Decision on Setting Up of the
Enquiry Point concerning the TBT Agreement on 25 June
h 1998. The responsible
governmental body is the State Office fo r Standardization and Metrology. The State
Office for Standardization and Metrology has made corresponding organizational
preparations necessary for the work of the Enquiry point. The Enquiry point will be
ready for operation by 1 December 1998.
- The State Office for Standardization and Metrology will also inform the International
Organization for Standardization (ISO) during July this year about the acceptance of the
Code of Good Practice for Standardization.
With regard to the SPS Agreement see the information provided in the reply to question 21 of
this document.WT/ACC/HRV/39
Page 15
Question 19.
Croatia’s “quality control” certification process is covered by the requirements of, inter alia, the
WTO Agreements on Import Licensing Procedures, Technical Barriers to Trade and Sanitary
and Phytosanitary Measures.
We do not believe that this system, as de scribed in the response in WT/ACC/HRV/30, is
consistent with these requirements, in partic ular with the requirements for transparency,
enquiry point information, prior publication, MFN or national treatment.
The system is burdensome to imports and not applied in a similar fashion to domestic goods.
Croatia needs to review this system and revise it.
Answer:
Quality control of imported and domestic products is carried out by the State Inspectorate (ex
Market Inspectorate) prior to entering of those products to the market: Quality control of domesticproducts is performed at the production sites and quality control of imported goods is carried out at
the place of customs clearance and prior to customs clearance.
In the internal market, market inspection controls the quality of all products to which the
regulations governing basics requirements refer to and, as regards imported products, the only
products that are controlled are those that are imported by a large number of importers and those thatare widely dispersed in the Croatian market. The quality control of imported products does not apply
to products which are imported by legal and physical persons and which they subsequently use in
their registered activities (reproduction materials, spare parts, raw materials).
Although the control is applied in a same way to imported and domestic products, the fact that
legislation on quality control is divided in several laws and regulations (one of them being exclusivelyvalid for the control of imported products) might cause misunderstanding as to the way of application
of national treatment.
Therefore, the Government of Croatia will propose to the Parliament to regulate all quality
control issues in one comprehensive law to be valid for the quality control of all products from the list
of goods subject to quality control, regardless of their origin. This confirms Croatia's readiness toperform quality control measures in full conformity  with the rules and disciplines of the WTO. The
new Law and regulations would also ensure that quality control is based on scientific grounds and not
amounting to an unjustifiable trade restriction.
Question 20.
In the response to question 85 of WT/ACC /HRV/30, Croatia states that a new law on
Standardization entered into force on 10 July 1996 , and that the new law will be provided to the
WTO Secretariat after its translation into English.  Has this law been submitted to the WTOSecretariat for review by  interested Members?
Answer:
The Law on Standardization entered into force on 10 July 1996. This law has been already
provided to the WTO Secretariat.WT/ACC/HRV/39
Page 16
Question 21.
Would Croatia please revise the information provided in response to the questionnaire on
standards based on these new provisions? Has Croatia provided similar information on SPS
regulations?
Answer:
1. The situation with regard to the TBT regulations in Croatia is as follows:
According to the provisions of the Law on Standardization the new Croatian system of technical
regulations, standards and conformity assessment procedures is as follows:
− Croatian standards are being prepared in technical committees with interested parties
participation mostly by adoption of international standards ISO/IEC, then the European
standards (EN);
− Croatian standards are voluntary since 1 January 1997;
− technical regulations on product requirements are being prepared in terms of
performance characteristics; safety, health, environmental and consumer protection isbeing stressed;
− conformity assessment system is being prepared in compliance with the international
rules (ISO/IEC Guides, European standards, recommendations and guides);
− domestic and foreign origin products are being treated equally;
− accreditation system for testing laboratories has been set up according to the ISO/IEC
Guides (EN standards) and accreditation system for certification bodies is being
established as well (Cooperation with foreign institutions);
− training and education center for accreditation and certification was established in
January 1998 and laboratory staff from 170 testing and calibration laboratories wentthrough the program in compliance with the ISO/IEC Guides and EN 45000 series of
standards that have been adopted and published as Croatian standards;
− the Regulation on establishing and publishing of Croatian standards was published in
the Official Journal of the Republic of Croatia in July 1997 (Official Gazette 74/97);
translation into English of this regulation is enclosed (WT/ACC/HRV/36);
− the Regulation on procedures for establishing and functioning of technical committees
was published in the Official Journal of the Republic of Croatia in June 1998 (OfficialGazette 86/98); translation of this regulati on into English will be provided to the WTO
Secretariat soon;
− the Regulation on general criteria to be fulfilled by accredited laboratories and
accredited legal entities operating certifications and on the manner in which the
accreditation procedure functions was published in the Official Journal of the Republic
of Croatia in June 1998 (Official Gazette 83/98). The translation of this regulation into
English will be provided to the Secretariat soon;WT/ACC/HRV/39
Page 17
− technical competence of conformity assessment bodies performing mandatory testing
and certification has been assessed and periodically surveyed. Testing laboratoriesoperating mandatory certification in compliance with the technical regulations in force
are bound to fulfil the requirements of the above mentioned regulations on
accreditation by 31 December 2000 at the latest;
− the Regulation on conditions and procedures for recognition of test reports issued
abroad and issuance of certificates of conformity was published in the Official Journal
of the Republic of Croatia in June 1997 (Official Gazette 69/97) and has been
implemented since 1 September 1997. The translation of this regulation will be
provided to the WTO Secretariat.
2. The situation with regard to the SPS regulations in Croatia, is as follows:
Phytosanitary regulations:
The Border Phytosanitary Inspection is a part of the Department of Border Phytosanitary
Inspection. This Department is organised within th e Agricultural and Food Industry Division of the
Ministry of Agriculture and Forestry.
Currently, this Department consists of five border stations for plant protection (Zagreb,
Rijeka, Gori čan, Split, Osijek) which are in charge of 29 borders for phytosanitary inspection.
The main job of the phytosanitary inspection is the health control of imported and exported
plants, sorts of plants as well as the control of imported plant protection chemicals in traffic across thestate border.
The plants intended for exports are controlled by the authorised experts of the Institute for
Protection of Plants in Agriculture and Forestry in addition to the border phytosanitary inspection.
The Institute for Plant Protection also performs the other activities in the field of plant
protection (co-operation with the border phytosanitary inspection in identifying the presence ofquarantine pests on imported and exported plants, sanitary supervision of plants in the course of
vegetation, risk assessment of pests and application of appropriate procedures in order to prevent the
spread of pests, etc.).
The jobs and tasks of the Border Phytosanitary Inspection and the obligations of the officials
of the Institute for Plant Protection as well as other entities in plant protection are fulfilled inaccordance with the Law of Plant Protection ("Official Gazette", No. 10/94). A great number of
regulations and rules have been passed on the basis of this Law, regulating the jobs in this field.
This Law is completely in co mpliance with the basic principles and requirements of the
International Plant Protection Convention (IPPC).
Also, the Regulation on the Sanitary Inspection of Plants and Plant Protection Chemicals in
the Traffic Across the State Border (published in th e "Official Gazette", No. 12/95) applies, as far as
possible, the measures and recommendations which are equivalent to the measures applied by the
other members trading in similar products (plants and plant products). The Croatian measures are not
stricter than those internationally recommended and they do not make any discrimination between
imported and domestic products.WT/ACC/HRV/39
Page 18
As already stated before, the Republic of Croatia demanded technical assistance in order to
organize the plant protection in the most appropriate way and to get acquainted with the procedures in
adopting the EU regulations and standards.
In parallel, we take measures and other activities in order to adjust the organization and
structure of plant protection with the existing international standards.
For instance, the proposal for the reorganization of some parts of the existing plant protection
department including the proposal for the personnel in need within this department and the defining of
their internal organization in order to accomplish th e duties of plant protection (within the Ministry of
Agriculture and Forestry and the Institute for the Protection of Plants in Agriculture and Forestry) is
being drafted.
In addition, the proposal to the Government of the Republic of Croatia has been prepared for
providing additional funds for the introduction of information system in the course of this year. Thenext step (in 1999) shall be the request for the funds necessary for the purchase of technical
equipment (laboratory equipment and other facilities needed for the proper functioning of the
phytosanitary inspection).
Immediately after the plant protection department  is reorganized and the necessary financial
funds acquired (in our opinion until the end of the current year), the amending of those regulationsand rules which have to be in compliance with international standards and requirements will begin.
Those standards have not been applied due to the lack of technical equipment. "
Attached to this document is the Regulation on Phytosanitary Inspection of Plants and Control
of Plant Protection Products in the National Cross-Boundary Transportation, published in Official
Gazette nos. 12/1995 and 96/1995 which clearly states the procedures in this area.(WT/ACC/HRV/36)
Sanitary regulations
The health control of foodstuffs and goods of general usage as well as providing of the
sanitary, technical and hygienic conditions for their production and distribution is the measures whose
aim is to prevent and fight against contagious diseases according to Article 11 of the Law ofProtection of Citizens from Contagious Diseases  ("Official Gazette", No. 60/92, 26/93, 29/94).
The Law on Health Safety and Controls of Foodstuffs and Goods of General Usage ("Official
Gazette" No. 1/97 - final draft) stipulates the conditions related to the health safety that foodstuffs and
goods of general usage, imported or produced, have to comply with in order to be distributed on the
domestic market. In addition to this, the Law provides for the health control of the production and
distribution of foodstuffs and goods of general usage in order to ensure their health and safety. The
provisions of this Law also apply to raw materials for the production of foodstuffs and goods ofgeneral usage, spices, additives and substances used for enriching foodstuffs.
The foodstuffs include all that is used as food or drink, in processed or non-processed,
including drinking water.
The goods of general usage include tableware, accessories, equipment and apparatus for the
production of foodstuffs and goods of general usage and containers, toys, perfumery, cosmetic andtoilet preparations for body and face, washing preparations, tobacco, tobacco products and smoking
accessories as well as certain goods and instruments that come into close contact with skin or mucous
membrane while they are used.WT/ACC/HRV/39
Page 19
According to the provisions of Article 5, paragraph 1, point 3 of the Law on Health Safety
and Controls of Foodstuffs and Goods of General Usag e ("Official Gazette" No. 1/97 - final draft) the
foodstuffs or goods are considered as unsafe for human health:
− if their sensory characteristics have changed;
− if they contain pathogenic micro-organism or pathogenic parasite;
− if they contain bacteria toxin; micro toxin; histamine; and similar substances in such
quantities which exceed those determined by the regulations;
− if they contain natural toxin or other natural toxic substances in the quantities which are
noxious for human health;
− if they contain pesticides; metals; non-metals; veterinary medicaments residue and
other noxious substances in quantities which are harmful for human health;
− if they contain additives which are not allowed for the production of foodstuffs and
other goods of general usage or if they contain additives in such quantities which
special regulations stipulate as inadmissible;
− if they contain radio nuclides in quantities exceeding those regulated or if radiated over
the limit regulated by the law;
− mechanically damaged admixtures which can be noxious for human health or cause
aversion;
− originating from dead animals or animals suffering from disease which are noxious for
human health;
− if they contain other micro organism; parasites or substances in quantities; which are
harmful for human health;
The health control of production and distribution of foodstuffs and other goods is performed
by the government authority in charge of sanitary inspection and the health control of foodstuffs of
animal origin is also done by the government aut hority in charge of veterinary inspection according to
Article 26 of the Law. In order to control the health safety, the competent authority has a right to take
samples in the course of production and distribution. Authorized laboratories test those samples,
which have to be properly sealed up and labelled. The samples for analyses and super analyses are
taken at the same time.
The health control of imported foodstuffs and other goods is done by the border sanitary
inspector and if the foodstuffs are of animal origin also by border veterinary inspector in accordance
with Article 32 of the Law. The costs of controls and health safety inspection of foodstuffs and other
goods of general usage are borne by the importer according to the provisions of Article 35 of the Law.
The importer is not allowed to distribute or process the imported goods before he receives the official
decision that the goods are health safe in accordance with Article 34 of the Law.
The regulations adopted on the basis of Article 50 of the Law on Health Safety and Health
Control of Foodstuffs and Goods, were publi shed in the “Official Gazette”, No. 46/94:WT/ACC/HRV/39
Page 20
− the Rule of Health Safety of the Drinking Water;
− the Rule on Micro-biological Standards of Foodstuffs;
− the Rule on Quantities of Pesticides, Toxins, Micro-toxins, Metals and Histamine and
Similar Substances that Foodstuffs May Contain and Other Conditions in Relation toHealth Safety or Foodstuffs and Other Goods;
− the Rule on the Conditions of Preserving Food and other Goods by Ionizing Radiation;
− the Rule on Health Safety of Dietetic Food;
− the Rule on Conditions related to the Health Safety that the Goods of General Usage
have to Comply with in Order to be Distributed on the Market;
− the Rule on Preparation and Sale of Foodstuffs Outdoors;
− the Rule on Micro-biological Cleanness Norms and Methods of their Defining;
− the Rule on Special Working Cloths and Shoes for Workers who in Production and
Distribution Come into Close Contact with Foodstuffs, Cosmetic and Toilet
Preparations for Body and Face.
We would like to stress that the other implementation rules and regulations based on
Article 50 of the Law on Health Safety of Foodstuffs and Goods of General Usage (“Official
Gazette”, No. 1/97 - final draft) are being adopted.
Veterinary and sanitary inspection and control of animals and animal products, animal offal
substances, semen, embryo, and other goods that may transmit contagious diseases or affect human or
animal life when imported, exported or in transit are done by border veterinary inspection.
The veterinary inspection means the control of animals and products of animal origin in order
to protect animals as well as animal and human life, the control of vehicles, buildings and goods that
may transmit contagious diseases.
The obligation of the Republic of Croatia to organise the border veterinary inspection is based
on:
− Codex of the International Office for Contagious Diseases with its headquarters in
Paris, whose member is the Republic of Croatia;
− International bilateral agreements on veterinary co-operation;
− Veterinary Law ("Official Gazette", No. 70/97);
− International Conventions on the Harmonisation of Border Inspection of Products;WT/ACC/HRV/39
Page 21
Organisation Of The Border Veterinary Inspection
Border veterinary inspection is organised within the Department for Border Veterinary
Inspection of the Ministry of Agriculture and Fore stry - Veterinary Directorate. The organisational
units of the Department are veterinary stations that are organised for few borders covering a certain
territory.
The border veterinary stations are established, unified or closed down by the Government of
the Republic of Croatia, while the minister of forestry and agriculture determines the borders where
the veterinary inspection is carried out.
Five border veterinary stations, in Zagreb, Gori čan, Osijek, Rijeka and Split were established
by the Decision of the Government of the Republic  of Croatia of 7 January 1991 ("Official Gazette",
No. 58/91). The borders where the veterinary inspection is carried out are determined by the Decree
of the Minister of Agriculture and Forestry on Borders of 6 January 1995.
Border veterinary inspectors are independent in carrying out their duties and as far as the
veterinary control is concerned they have special permissions.
The work of veterinary inspectors, especially its volume, depends on how frequent the transit
route is. The number of shipments controlled at different borders varies significantly.
The organisation, scope of activities and conditions related to the work of border veterinary
inspections are regulated by the following:
(i.) Veterinary Law ("Official Gazette", No. 70/97) - regulates the organisation, rights and
obligations of the border inspectors. With regard to the inspection, the Decisions are
issued in accordance with the Law on General Administrative Procedure;
(ii.) The Regulation on the handling operations of animals, animal products, raw materials
and animal origin offal shipments, on the conditions that vehicles have to comply with,
hygiene and technical conditions of the shipments, and health report form of the
imported, exported or shipment in transit and the way the border inspection is done;
(iii.) The Decision on the establishment of border veterinary inspections ("Official gazette",
No. 58/91);
(iv.) Decree on borders where the border veterinary stations are established ("Official
Gazette", No. 3/95);
(v.) Regulation on Border Veterinary Inspector Identification and Sign ("Official Gazette",
No. 69/91, 60/93);
(vi.) Decision on Prices Charged for Veterinary and Sanitary Inspection at the Republic of
Croatia Border ("Official Gazette", No. 63/94);
(vii.) Regulation on Conditions that the Buildings for Animals and Warehouses for Products
of Animal Origin  and Offal Animal Substances on State Borders have to Comply With
("Official Gazette", No. 52/93);
(viii.)  Regulation on Conditions that Railroad Stations and Harbours for Handling Operations
of Animals have to Comply With ("Official Gazette", No. 52/93);WT/ACC/HRV/39
Page 22
(ix.) Regulation on Shipments of Products of Animal Origin that are not Subject to
Veterinary and Sanitary Inspection When Imported or in Transit ("Official Gazette", No.
86/93);
(x.) There are also other regulations concerning the border veterinary inspection, notably
the Law on Health Safety and Controls of Foodstuffs and Goods of General Usage("Official Gazette", No. 69/92), the Decr ee on Ban of Imports and Transit, various
Recommendations, Decisions, and Directives by the European Union, etc.
The border veterinary inspection has totally 60 employees. Those are: one head of
department, five deputies - the chiefs of border veterinary stations, 52 border veterinary inspectors,
two other employees.
The number of employees really needed for different borders is not determined as yet. It
depends on the working hours of the neighbouring countries' veterinary stations as well as thefrequency of shipments subject to veterinary inspection.
The borders, with regard to location, professional skills of inspectors, equipment, sorts, scope
and sequence of controls, have to comply with adopted standards and are subject to international
inspection.
The work and procedure of the border veterinary inspector is determined by the Veterinary
Law and other regulations and it also complies with the Codex of the International Office for
Contagious Diseases and International Bilateral Agreements
The border veterinary inspection means the veterinary and sanitary control of animal and
products of animal origin when imported, exported or in transit, that is the control of health state and
health safety, control of accompanying documentation (certificates - attested by veterinary authoritiesof the exporting countries).
The veterinary and sanitary inspection of the mentioned shipments is the same for the
shipments by domestic producers and the producers from the other exporting countries.
The border veterinary inspection of the Republic of Croatia has harmonised its work
completely with the requirements of the European Union.
Question 22.
Croatia also notes that presently about 100 sta ndards are being prepared based on international
and regional standards.  What is the current status of the adoption of these standards?
Answer:
The number of new Croatian Standards – adopted international and European Standards as at
31 May 1998 is 495, as follows:WT/ACC/HRV/39
Page 23
Croatian Standards adopted by translation and published:
- adopted International Standards (ISO, IEC) 47 (+10)
- adopted European Standards (EN) 35
   (adopted International Standards EN ISO; EN 6XXXX - 10)
Croatian Standards adopted by endorsement:
- adopted International Standards (ISO, IEC) 223 (+60)
- adopted European Standards (EN) 142
(adopted International Standards EN ISO; EN 6XXXX - about 60)
- adopted German Standards (DIN) 43
Croatian Standards adopted by Croatian cover-page;
- adopted International Standards (IEC) 3
Croatian standards (national) published 2
Question 23.
What criteria does Croatia apply in deciding wh ether to base its measures on regional, rather
than international standards?
Answer:
The adoption of International Standards has been the first priority.In some cases European Standards have been adopted in conection with the technologies in
place and because of the fact that the Croatian producers are at present mainly oriented towards the
European market.
Question 24.
We would be interested in a list of the reg ional standards being considered for adoption.
Answer:
The list of Croatian Standards – adopted European Standards ( as of 31 May 1998) is attached
to this document.  (WT/ACC/HRV/36)
The list of European Standards being considered for adoption is in preparation.
The harmonized European Standards supporting the European legislation would be included.WT/ACC/HRV/39
Page 24
Question 25.
In the reply to question 1 of WT/ACC/HRV/Add.1, Croatia states that “Article 3 of the Law on
the control of Quality of Specific Products on Imports and Exports stipulates that quality
control determines whether imported and export ed products meet the market conditions in
Croatia which conform to the national standa rds, regulations, international agreement and
certificates binding the Republic of Croatia.”  Is there similar legislation, which requires
domestic goods to meet these same regulations?
Answer:
Quality control of imported and domestic products is carried out by the State Inspectorate (ex
Market Inspectorate) prior to entering of those products to the market: Quality control of domestic
products is performed at the production sites and quality control of imported goods is carried out at
the place of customs clearance and prior to customs clearance.
In the internal market, market inspection controls the quality of all products to which the
regulations governing basics requirements refer to and, as regards imported products, the only
products that are controlled are those that are imported by a large number of importers and those that
are widely dispersed in the Croatian market. The quality control of imported products does not apply
to products which are imported by legal and physical persons and which they subsequently use intheir registered activities (reproduction materials, spare parts, and raw materials).
Although the control is applied in a same way to imported and domestic products, the fact that
legislation on quality control is divided in several laws and regulations (one of them being exclusively
valid for the control of imported products) might cause misunderstanding as to the way of application
of national treatment.
Therefore, the Government of Croatia will propose to the Parliament to regulate all quality
control issues in one comprehensive law to be valid for the quality control of all products from the list
of goods subject to quality control, regardless of their origin. This confirms Croatia's readiness to
perform quality control measures in full conformity  with the rules and disciplines of the WTO. The
new Law and regulations would also ensure that quality control is based on scientific grounds and notamounting to an unjustifiable trade restriction.
Question 26.
In the reply to question 74 of WT/ACC/HRV/30, Croatia notes that a number of agricultural
products are subject to quality control/standards. We are a bit confused as to whether these
quality standards are actual SPS regulations or just consumer preferences. Some of the
products included on the list are processed products and we do not understand why these
products are subject to SPS testing (i.e. mustard, biscuits, pasta, soup, baking powder,condiments, margarine, and mayonnaise).
Please explain the public policy objective of each of these measures, and specifically whether
they are intended to address known risks to publi c health or safety. Additionally, please explain
exactly what type of testing is required. It would be helpful to provide a step-by-step account of
the entire testing process and an assessment of how long this process should take.
Answer:
Please refer to the previous answer and information on SPS in the reply to question 21 of this
document.WT/ACC/HRV/39
Page 25
Question 27.
In the reply to question 76 of WT/ACC/HRV/30, Croatia states that the names of the products
on the quality control list are determined by quality regulations and not HS numbers.  We
understand that the products are included on the list based on quality regulations. However, in
order to more accurately which products are subject  to this control, it would be helpful to have
the products listed by their entire HS number (for example, some product categories have a
number of HS tariff line. We need to be sure we understand which ones of those are subject to
quality control).
Answer:
The list of products subject to quality control on import is attached to this document.  (see
WT/ACC/HRV/36)
IV. OTHER POLICIES AFFECTING FOREIGN TRADE
1. Trade-related Intellectual Property Protection
Question 28.
In the reply to question 100 of WT/ACC/HRV/30, Cr oatia states that it plans to implement fully
the TRIPS Agreement in January 2000 in compli ance with the transition period set forth in
Article 65 para 3 of the TRIPS Agreement.
− It is our policy that acceding countries  be in full conformity with the TRIPS
Agreement on the date of accession, with no transition permitted. Article 65.2, 3and 4 were included to provide a period of transition for those countries that were
already members of the GATT and were entitled to be Members of the WTO
without additional accession negotiations. The transition provisions in 65.2, 3 and
4 were part of the balance achieved between developed and developing countriesregarding intellectual property, recognizin g that most developing and non-market
economy countries had further to go than did developed countries to bring their
laws and practices into conformity with TRIPS. Newly acceding countries should
have no such need since they can maki ng the necessary changes during the course
of accession negotiations, to become affective on the date of accession, if notbefore.
− Croatia should report to the Working Part y on its specific plans to alter its
current legislation to be in a position to fully implement the TRIPS Agreement by
the date of accession.
In earlier documents, the Government of Croatia had indicated that it expected the Patent Law,
the Trademark Law, and the Law on Industrial Designs and Models to be enacted in 1996 andto come into force at the beginning of 1997. In WT/ACC/HRV/30, however, the Government of
Croatia states that it plans that these laws and the Law on Copyright and Neighbouring Rights
will be enacted in the middle of 1998.
− Please provide an update on the status of each of these laws, indicating whether
final drafts have been introduced to the legislature and what procedures must be
followed before the measures are enacted.WT/ACC/HRV/39
Page 26
Answer:
The Patent Law, the Trademark Law, and th e Law on Industrial Designs and Models have
been drafted and the drafts are now in discussion pr ocedure which is open to all interested parties in
the Republic of Croatia.  After the discussion is over they will be sent for review to relevant
international organization  (e.g. Max Planck Institute). Any suggestion made by such internationalorganization will be taken into consideration. Such drafts that include suggestions made by domestic
parties and by international subjects should be, by the end of 1998, introduced to the Croatian
Parliament.
The process of drafting new Law on Copyright and Neighbouring Rights shall take place in
course of 1998, after the Amending the Copyright Law fulfills the TRIPS requirements concerning the
copyright and neighbouring rights.
Question 29.
The response to question 100 of WT/ACC/HRV/30 states that the new Penal Code was under
consideration by the Parliament.  What is the status of the legislation?
Answer:
The Penal Code was enacted on 19 September 1997 (Official Gazette No. 110/97) and came
into force on 1 January 1998.
Question 30.
The same answer indicates that a Law on Topographies of Integrated Circuits needs to be
passed in 1998/1999. Has that law been drafted yet? If not, what agency is responsible for
drafting the document; when is it planned to be drafted; when, enacted and with what effective
date?
Answer:
The Law on Topographies of Integrated Circuits has been in drafting process before the State
Intellectual Property Office of the Republic of Croatia, which is responsible for draft of said law. The
draft should be finished by the end of 1998. The Law is expected to be enacted in course of 1998, and
to come into force by 30 June 1999.
Question 31.
In several documents, the Government of Croatia has indicated that it will introduce legislation
providing for border enforcement at least directed to willfull trademark counterfeiting and
copyright piracy on a commercial scale.
What agency is responsible for drafting  the Law on Border Control on Imports of
Counterfeited and Pirated Goods; when is it planned to be drafted; when, enacted and with
what effective date?
Answer:
Trademark counterfeiting will be governed by the new Trademark Law and the Amending the
Copyright Law (Article 27) contains provision that regulates copyright piracy.WT/ACC/HRV/39
Page 27
Detailed procedural provisions concerning undertaking border measures will be prescribed,
after entering into force of the Trademark Law and the Amending the Copyright Law, in the Custom
Regulations. The Customs Directorate is responsible for drafting the Customs Regulations.
This legislative work will be finished by 30 June 1999, at the latest.
Question 32.
In response to question 109 of WT/ACC/HRV/30, the GOC notes that Croatia’s Law on the
Protection of Market Competition (NN RH no . 48/95) and the Law on the Protection of Data
Secrecy ( NN RH no 108/96 ) provide protectio n for undisclosed information in a manner
consistent with TRIPS Article 39.
Please provide definitions of the nature of th e undisclosed information protected by each of
these provisions; describe the nature of the protection provided, and the remedies available
against those which disclose, use. or trade in such information.
Answer:
The Law on the Protection of Market Competition prescribes only general principles of the
honest commercial practices and does not in particular regulate matters concerning the protection of
the undisclosed information.
The Law on the Protection of Data Secrecy in its Article 19 defines a trade secret
(undisclosed information) as information which is as such specified by the law or by a statute of
enterprise and which concerns a secret method of operation or is result of innovative work, disclosure
of which would be injury for that enterprise.
A legal entity is obliged to undertake measures to keep such information secret, and a natural
person employed within that legal entity is obliged to keep such information secret while employed aswell as one year after the expiration of his employment.
The Penal Code provides that the disclosure of a trade secret is a criminal offense punishable
with the imprisonment up to ten years.
The Penal Code in its Article 295 provides that anyone who discloses, acquires or uses
somebody’s trade secret will be punished by imprisonment from one to five years. If such person doesso in order to use a trade secret abroad will be punished from one to ten years.
Question 33.
The GOC indicated that a Law on the Protection of New Plant Varieties was under
consideration in the Parliament.  Has this law been enacted and, if so, when does it become
effective? When will Croatia adhere to the Co nvention for the Protection of New Varieties of
Plants?
Answer:
The Law on the Protection of Agricultural Plants that, inter alia, regulates the protection for
the new plant varieties has been enacted on November 21, 1997 (Official Gazette “Narodne novine”
No. 131/97) and has become effective on 13 December 1997.WT/ACC/HRV/39
Page 28
Adherence of the Republic of Croatia to the Convention for the Protection of New Varieties
of Plants is expecting to take place by the end of 1998.
Question 34.
In past documents, the GOC noted that the Ministry of the Interior’s Department for
Preventing Economic Crime, the Market Inspecto rate of the Ministry of Economic Affairs and
the Financial Police of the Ministry of Finance take measures aimed at preventing infringement
of intellectual property, particularly copyright. Some statistics have been provided regarding
seizures of infringing audio and videotapes and CDs during 1994-1995.  Please update that
information for the years 1996. and 1997.
Answer:
In 1996, 12,899 videotapes, 9,646 audiotapes and 4,873 CDs that had been result of copyright
piracy had been seized.
In 1997, 14,405 videotapes, 11,986 audiotapes and 2,920 CDs that had been result of
copyright piracy had been seized.
In 1997, the Ministry of the Interior’s Department for Preventing Economic Crime destroyed
11,014 videotapes and 615 audiotapes that had been result of copyright piracy (based on the court
decisions having the force of res judicata) and that had been seized in 1995.
Question 35.
Croatia has indicated that it plans to accede to  the Patent Cooperation Treaty.  When is it
expected that such accession will take place?
Answer:
The Republic of Croatia deposited the instrument of accession to the Patent Cooperation
Treaty with the Director General of the World Intellectual Property Organization on 30 April 1997.
The date of entry into force of the Patent Cooperation Treaty in the Republic of Croatia will
be, as stated in the instrument of accession, July 1, 1998.
Question 36.
The GOC has stated several times that, althou gh its laws contain provisions permitting
compulsory licensing of patents, no such license has ever been issued.  Please verify that this is
still the case or, if such a license has been issued, indicate the nature of the license, the
conditions under which it was issued, and the royalty acquired to be paid the patentee.
Answer:
The issuance of the compulsory licenses of patents is within the competence of the State
Intellectual Property Office of the Republic of Croatia. It has been established in 1991 and during its
existence no compulsory license of patent has been issued. It is not likely that the Intellectual PropertyOffice will issue such license in the near future.WT/ACC/HRV/39
Page 29
Question 37.
In an earlier document, the GOC indicted that only four Commercial Courts of first instance
had dealt with intellectual property matters.  Please describe briefly any cases that have been
handled by the Commercial Courts in 1996 an d 1997, identifying the nature of the right
involved and the results of the action, including any remedies imposed.
Answer:
The following are brief descriptions of some cases that are now before the High Commercial
Court of the Republic of Croatia (except the fourth case made by the Commercial Court of Zagreb
which had not been appealed). The High Commercial Court of the Republic of Croatia is the court of
appeal for matters concerning infringement of the intellectual property rights.
(i) The first case here is an appeal against the decision of the Commercial Court of Zagreb
No. XXIX P-472/94 dated on December 10, 1996. The Commercial Court of Zagreb decided thatdefendant had infringed plaintiff’s moral right when publishing his book with changed cover sheet
and thus, had violated Article 28 of the Copyright Law, which prescribed, inter alia, that “the author’s
moral rights consist of the right to (..) object to any distortion, mutilation or other modification of the
work”. The Court decided that defendant, in order to assure better marketing of plaintiff’s book, had
changed cover sheet of the book, and therefore should pay 3,500.00 kunas to plaintiff for theindemnification. The plaintiff appealed the decision st ating that the sum is not appropriate for suffered
injury and should be 21,521.52 kunas.  The Commercial Court of Zagreb reasoned its decision with
the fact that the book had been sold in insignificant number of copies and that the editor – plaintiff
gained very small profit. Based on that fact, the High Commercial Court confirmed the decision of the
Commercial Court of Zagreb stating that awarded sum had been appropriate.
(ii) The second case is an appeal against the decision of the Commercial Court of Zagreb No. III
P-6058/95 dated on 18 January 1996. The Commercial Court of Zagreb decided that defendant  -
editor infringed plaintiff’s moral rights using without author’s permission a translation of the book
“The Last of the Mohicans” failing to mention him as the translator, and thus, violated Article 27 of
the Copyright Law, which prescribed, inter alia, that ”(..) exploitation of a copyright work by anotherperson may take place only with the authorization of the author” and Article 28 of the Copyright Law
in part which said that “the author’s moral rights  shall consist of the right to be recognized and
indicated as the author of the work (..)”. The Commercial Court of Zagreb decided that defendant
published plaintiff’s translation of the book, without his authorization failing to mention him as the
author of translation, and therefore should pay 121,000.00 kunas (the sum had been based on the
number of copies sold) to the plaintiff for the indemnification. The defendant appealed stating that,
when publishing said book, he had believed that he had been using translation of another author. TheCommercial Court of Zagreb found that the defendant should have known the fact that plaintiff had
made the translation and that awarded sum has not been appropriate. The High Commercial Court
confirmed the decision of the Commercial Court of Zagreb and rejected defendant’s appeal.
(iii) The third case concerns trademark infringement. Defendant appealed a decision of the
Commercial Court of Rijeka No. VP-927/96 dated on June 7, 1996. In said case the Court decided
that plaintiff who is the owner of the trademark “ACIDOFIL” is entitled to exclusive right to use said
trademark in commerce and therefore, defendant who has used identical name (not protected as
trademark) for identical products has violated the Industrial Property Law and is forbidden to use that
name further. The defendant appealed stating that the plaintiff’s trademark is a generic name for
certain types of diary products and therefore according to Article 30 of the Industrial Property Lawcould not be protected as a trademark. The Commercial Court of Rijeka decided that the plaintiff had
registered trademark and consequently, all rights covered by trademark protection.  The HighWT/ACC/HRV/39
Page 30
Commercial Court had annulled the decision made by the first instance court confirming that reason
claimed by the defendant that the trademark is generic. In sum, defendant’s appeal has been accepted
and the case is now, for the second time before the Commercial Court of Rijeka.
(iv) The fourth case concerns model infr ingement. A decision No. XXI P-4894/95 dated on
2 April 1997 made by Commercial Court of Zagreb, has not been appealed. In said case theCommercial Court of Zagreb found that a plaintiff is an owner of the model of bottle registered in the
Register of the State Intellectual Property Office of the Republic of Croatia, under the name “Bottle”.
The Court also found that a defendant who was producer of similar bottles did not infringe plaintiff’s
model of bottle, and therefore did not violate the Industrial Property Law. The Court decided that
defendant’s bottle was not a copy of the plaintiff’s bottle and the only common elements of them were
those concerning the functionality of both bottles (i.e. material and certain shape) but that other
distinctive elements (i.e. size of the bottom part of the bottle) are sufficiently different. The decisionof the Commercial Court of Zagreb has not been appealed and therefore has had a force of res
judicata.
Among disputes concerning the infringement of intellectual property rights, the most often are
those concerning copyright infringement.
2. Agricultural Policy
(a) System of Subsidies in Agricultural Production
Question 38.
The Secretariat’s factual summary of the most recent Working Party which Croatia potentially
creates confusion by not distinguishing between agricultural domestic support programs and
agricultural export subsidies. This confusion is particularly apparent in paragraphs 87 and 87.It is not clear if Croatia shares this confusion. If Croatia appears to be mixing the two types of
programs in its discussion of agriculture, we  suggest that Croatia review the provisions of the
Agreement on Agriculture, which clearly distinguishes between the two types of agricultural
programs.
(c) Special Fees on Imports of Agricultural and Food Produce
Question 39.
In question 136 of WT/ACC/HRV/30, the United States commended Croatia for eliminating
variable levies on agricultural products.  While commend this action, we remain concerned
about the extremely high mixed tariffs on choc olate and other confectionery products. We will
address our specific concerns during the bilateral the market access negotiations.
6. Government Procurement
Question 40.As a part of its protocol accession commitments, we expect Croatia to become a member of the
Government Procurement agreement, with a schedule of commitments to be submitted to the
GPA Committee no later than three months after the date of accession to the WTO.WT/ACC/HRV/39
Page 31
Answer:
In mid-December 1997, the Croatian Parliament passed the Law on Procurement of Goods
and Services and Sub-contracting, which replaced the Government’s Regulation on the Procedure for
Procurement of Goods and Services and Sub-contracting. The Law entered in force in March 1998.
The entities under obligation to apply this Law are:
− Government authorities and other state authority bodies;
− bodies of the local government and self-government units
− legal person owned by the state or legal persons using funds from state budget for their
regular activities and capital investments; legal persons using budget guarantees or otherinsurance concerning the procurement contract or other support related to commitments
assumed under that contract and legal persons using financing from extrabudgetary funds
- Pension Fund, Croatian Health Insu rance Fund, Employment Fund and other
extrabudgetary funds established by the Government of the Republic of Croatia, etc.
The Law applies to all public procurements with the total value of goods, services and works
exceeding 200,000 kunas (US$32.000) in a fiscal year. Bidders regardless of their residence and
headquarters, except in cases when the purchaser limits the participation in tender to domestic
suppliers, i.e. applies national preference, are allowed to participate in tenders. The Law stipulated
conditions and liabilities of the purchaser with regard to application of the national preference, as well
as other conditions concerning government procur ement, beginning with procurement implementation,
pre-procurement, international tendering (obligat ory for works and goods whose total invoice value
exceeds 12 million kunas (US$2 million) or 6 million kunas (US$1 million) for services, the
procurement procedure, conditions for tendering, estimations and comparisons of offers,
implementation and monitoring of the implementation of the Law.
Having in mind that the present membership of the Agreement on Government Procurement is
rather limited and selective, and that no major obstacles for international bidders are experienced inenforcement of the national law on government procurements, the Government of the Republic of
Croatia will officially apply for an observer status to the Agreement on Government Procurement. That
would enable Croatia to get more acquainted with practical aspects of the Agreement's discipline and
determine an adequate coverage and staging, in order to start negotiations on its accession to the
Agreement at an appropriate stage.
Question 41.
In the response to question 37 of WT/ACC/HRV/ 27/Add.1, Croatia indicates that a New Law on
Public procurement is currently in parliame ntary procedure.  Has the WTO Secretariat
received the new English – language law on public procurement?
Answer:
The new Law on Public Procurement was submitted to the WTO Secretariat earlier this year.
(WT/ACC/HRV/34)WT/ACC/HRV/39
Page 32
V. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH 
THIRD COUNTRIES
1. Bilateral or Plurilateral Agreements Relating to Foreign Trade in Goods and Trade in 
Services
Question 42.We seek a commitment from the Republic of Croatia that it will adhere to the WTO Agreement
on Trade in Civil Aircraft from the date of accession.
Answer:
The Government of the Republic of Croatia hereby confirms that the Republic of Croatia
shall apply to become a party to the Agreement on Trade in Civil Aircraft. An official application
shall be submitted to the WTO Secretariat by 1 October 1998, together with a proposal of tariffs
schedule to be a basis for accession negotiations.
VI. TRADE IN SERVICES
Question 43.
In regard to question 153 of  WT/ACC/HRV/30:  we  are interested in further clarification of
year reasons for not permitting cross-border provision of insurance services.
Answer:
The cross-border provision of insurance services is not permitted due to the reason of current
Republic of Croatia's balance of payments position. To permit cross-border provision of insurance
services will cause additional capital outflows. Theref ore, for the time being, we can not accept this
obligation.
Question 44.
In regard to the insurance sector:  does Croatian  legislation on Investment Income identify a
particular tax for the insurance sector?
Answer:
There are not any specific taxes related to insurance sector. Croatian legislation on Investment
Income specifies uniform tax rate (35 er cent) for all companies regardless of their business activity.All companies, including insurance companies, ar e allowed to transfer their investment income
(return on investment) without any restrictions, or to reinvest it.
Question 45.
In regard to question 158 of WT/ACC/HRV/30:  do you intend to expand the areas in which
foreign lawyers may practice?
Answer:
As already explained during bilateral negotiations, foreign lawyers can provide legal advice
(consultancy) on the matters of international law and their national law.  In order to clarify theWT/ACC/HRV/39
Page 33
situation, we have included the reference to international law and third countries home law in the
description of legal services (see revised Croatian Offer from May 1998 –
WT/ACC/SPECC/HRV/4/Rev.1).
However, foreign lawyers cannot provide legal services related to Croatian law, they are not
allowed to provide legal assistance to parties or representing parties before Croatian courts.
Consequently foreign lawyers cannot be partners in law firms and can not be entered in the
Register of Lawyers because of the citizenship requirement for membership in the Bar Council of
Croatia.
Question 46.
In the response to question 161 of WT/ACC/HRV/30, Croatia states that it has adopted national
treatment of foreign investments.  Please de scribe process required to participate in the
privatization tenders. Are there established and publicly documented guidelines for theseprivatization tenders? Is information provided about the winning proposal to outside sources?
Answer:
Attached to this document is an English translation of the procedure for participation in
privatization tenders in Cr oatia.  (WT/ACC/HRV/36)
__________