RESTRICTED
WORLD TRADE WT/REG11/9
16February 1998
ORGANIZATION(98-0550)
Original: English Committee onRegional Trade Agreements
CENTRAL EUROPEAN FREE TRADE AGREEMENT
Questions andReplies
Thisdocument reproduces questions addressed totheParties andthejointresponses provided
bythem. Thequestions andreplies setoutbelow areorganized inaccordance withdocument
WT/REG11/2.
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I. BACKGROUND INFORMATION ONTHE AGREEMENT
4. Scope andProduct Coverage
Wenotethatthere isnoreference tofreetrade inagricultural products. Isthisagoal
forCEFTA and,ifso,when doCEFTA Members envisage thatthismight beachieved?
Thegeneral goaloftheParties, expressed inthePreamble totheCEFTA, is"toeliminate
progressively theobstacles tosubstantially allthetrade" between theCEFTA Parties which corresponds
tothemeaning ofArticle XXIV:8(b). Chapter IIoftheAgreement contains provisions onexchange
ofconcessions onagricultural products falling within Chapters 1to24oftheHarmonized Commodity
Description andCoding System. Formore details onthepresent situation andonthefuture prospects,
seereply toQuestion 12.
What percentage oftrade between theCEFTA Parties isaccounted forbyproducts:
- falling within Chapters 1to24oftheHarmonized Commodity Description and
Coding System?
- falling within Chapters 25to97oftheHarmonized Commodity Description and
Coding System?
- listed asexcepted?
What aretheintentions oftheCEFTA Parties regarding theinclusion ofexempt products
within thescope oftheAgreement?
In1996, products falling within HSChapters 1-24and25-97, respectively, accounted forthe
following portions ofthetotalimports ofindividual CEFTA Parties fromtheremaining Parties ofthis
grouping (figures donotinclude trade withRomania since itacceded toCEFTA on1July1997):
theCzech Republic (8.0percent, 92.0percent), theRepublic ofHungary (3.0percent, 97.0per
cent),theRepublicofPoland(11.1percent,88.9percent),theSlovakRepublic(11.1percent,88.9per
cent), theRepublic ofSlovenia (11.5 percent, 88.5percent). ForRomania, therespective figures
are12.5percentand87.5percent.WT/REG11/9
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There isnothing intheAgreement which excludes anyproduct àpriori .
II. TRADE PROVISIONS
1. Industrial Products
1.1 Import restrictions
CantheCEFTA Parties detail their plans forremoving charges onimports having an
effect equivalent tocustoms duties asprovided forinAnnex II?
Asof1January 1998, nocharges onimports having aneffect equivalent tocustoms duties
areapplied intrade between theCEFTA Parties.
What quantitative restrictions andmeasures having equivalent effect arepresently applied
onimports bytheParties tothisAgreement?
Canthecontracting Parties tothisAgreement provide asummary ofthose products not
covered byArticle 8?What proportion ofthetrade between theParties isaccounted forbythe
products listed asexcepted (inAnnexes III/A, III/B andIII/C)? Would theyalsooutline their
plans forremoval ofquantitative restrictions andmeasures having equivalent effect onthese
excepted products?
Atpresent, thefollowing import restrictions andmeasures having equivalent effect, (whose
share intotaltradebetween theParties isnegligible), areapplied onimports totheindividual CEFTA
Parties:
TheCzech Republic andtheSlovak Republic -Thequantitative restrictions onimports on
uranium orthorium ores, natural orenriched uranium, waste andscrap ofpaper orpaperboard and
ferrous waste andscrap listed inAnnex IIIaareapplied currently. These restrictions which are
maintained forsecurity andenvironmental reasons shallbeprogressively abolished bytheendofthe
transition period.
TheRepublic ofHungary -Products onwhich import restrictions apply areenumerated in
Annex IIIb. These restrictions shall beprogressively abolished between 1January 1995 and
31December 2000. Restrictions onimports ofunderwear products have been abolished from
1January 1995. Annual ceilings areopen foranumber ofproducts originating inPoland, inthe
Czech Republic, inSlovakia andinRomania.
TheRepublic ofPoland -Current prohibition ofimports ofautomobiles of10years orolder
andchassis andbodies thereof, utility carsof6years orolder, twostroke engines forautomobiles and
automobiles withsuchengines listed inAnnex IIIcshallbeabolished by1January 2002.
TheRepublic ofSlovenia andRomania donotapply anyquantitative restrictions onimports.
Sofar,nonegotiations onaccelerated removal oftheremaining measures described above were
conducted.WT/REG11/9
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1.2 Export restrictions
What quantitative restrictions andmeasures having equivalent effect arepresently applied
onexports bytheParties tothisAgreement?
CantheContracting Parties tothisAgreement provide asummary ofthose products not
covered byArticle 9?What proportion ofthetrade between theParties isaccounted forbythe
products listed asexcepted (inAnnexes IV/A, IV/B andIV/C).
Export restrictions andmeasures having equivalent effect, (whose share intotaltradebetween
theParties isnegligible), arepresently applied onexports bythefollowing CEFTA Parties:
TheRepublic ofHungary applies quantitative restrictions onexport andmeasures having
equivalent effect onproducts listed inPart2ofAnnex IVb(metal andnon-metal wastes) andnodate
oftheirabolition wasagreed.
TheRepublicofPolandappliesquantitativerestrictionsonexportandmeasureshavingequivalent
effect onproducts listed inPart2ofAnnex IV/c (non-metal wastes) andnodateoftheirremoval
wasagreed. Inaddition, Poland applies quantitative restrictions onexports initstradewiththeRepublic
ofSlovenia, inaccordance withparagraph 2ofAnnex toArticle 7oftheAgreement onAccession
oftheRepublic ofSlovenia totheCEFTA. Thedateoftheirabolition wasnotagreed.
Asof1January 1998, Romania haseliminated allquantitative restrictions onexports.
TheCzech Republic, theSlovak Republic andtheRepublic ofSlovenia donotapply any
quantitative restrictions onexports.
2. Agricultural Products
Wewould begrateful iftheCEFTA Parties could provide asummary oftheconcessions
onagricultural products. AretheParties currently engaged in,ordotheyundertake, any
negotiations toextend further concessions ontheproducts covered bythese protocols?
Thegoals which weresetuporiginally toeliminate barriers intrade inagricultural products
between theCEFTA Parties havebeenprogressively strengthened.
Intheoriginal Agreement signed on21December 1992, theCEFTA Parties agreed toreduce
customs duties onimports inProtocols 4,5and6referred toinArticle 12oftheCEFTA. Concessions
hadaform oftariff reductions and,forselected items, preferential tariff quotas applied.
On29April 1994, theAdditional Protocol totheCEFTA wassigned. Theoriginal Protocols
4,5and6dealing withtrade inagricultural products wereabolished andreplaced withnewProtocols
4,5and6.Thescope ofconcessions hadbeenwiden, byinclusion ofthenewproducts andapplication
ofdeeper dutyreductions.
On21December 1995, theAdditional Protocol No.3totheCEFTA wassigned. According
toitsprovisions substantially alltheagricultural trade withCEFTA countries issubject tocustoms
concessions. Further newproducts aresubject topreferences. Concessions areexchanged inthenew
Protocols 4,5and6,which relate tothetrade between, respectively, Czech andSlovak Republics -
Hungary, Czech andSlovak Republics -Poland, Hungary -Poland.WT/REG11/9
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Annexes AandBtoProtocol 4,5and6contain thesame products. Thecustoms dutyrates
established at0level (Annex A)andatareduced level (Annex B)areapplied bythe4original
CEFTA Parties atthesame level. These preferences areresult ofthenegotiations heldbetween four
countries. Forother selected agricultural products preferences granted arecontained inAnnexes C
andDtoProtocols 4,5and6.Thescope ofthese concessions differs, depending onthetrade flows
between thecountries.
AsfarasSlovenia andRomania areconcerned thesame structure ofschedules ofconcessions
wasmaintained innegotiations ontheiraccession totheCEFTA, conditions oftheirCEFTA agricultural
trade areatpresent established inprotocols: No.11(Czech andSlovak Republics-Slovenia), No.12
(Hungary andSlovenia) No.14(Poland-Slovenia), No.18(Czech andSlovak Republics-Romania)
No.19(Hungary-Romania), No.20(Poland-Romania), No.21(Slovenia andRomania).
Custom dutyratesestablished fromthedateofaccession atthezerolevelinAnnex Aandat
areduced level setoutinAnnex BtoProtocols 4,5,6areapplied between theCzech Republic,
Hungary, Poland, Slovakia, Slovenia intheirtrade relations withRomania. Very fewtariff position
included inAnnexes AandBtoProtocols 18-21 havedifferent timetables. Customs dutyratesapplied
forthem aregradually reduced. They willreach thelevel established inAnnexes AandBon
1January 1999. Concessions inagricultural trade between Czech Republic, Hungary, Poland and
Slovakia ontheonesideandSlovenia ontheother sideareestablished intheformoftariff reductions
orpreferential quotas forselected products. Their scope inseparate bilateral relations between the
countries differs, depending ontrade flows. From 1April 1998 Additional Protocol No.6shallbe
applied. According toitsprovisions, preferences established inAnnexes AandBtoProtocols 4,5
and6shallbeapplied inrelations: Czech andSlovak Republics -Slovenia, Hungary -Slovenia, Poland -
Slovenia, Romania -Slovenia. AsinthecaseofRomania some products (about 30tariff positions)
contained inAnnexes AandBshall betreated astemporary exceptions. Until 1January 2000
preferences forthem aregranted intheform ofquotas withcustoms dutyratesgradually reduced.
Guided bythestipulations ofArticle 12CEFTA Parties willcontinue toexamine thepossibilities
ofgranting eachother further concessions.
4. Safeguards
4.1 Balance ofpayments difficulties
WillBOPmeasuresunderArticle32beappliedinanondiscriminatorymannerandwithout
prejudice totheinterests ofnon-Parties tothisAgreement?
Article 32provides thatanymeasures forbalance-of-payments purposes willbeapplied in
accordance withtheconditions established under theWTO, i.e.inanon-discriminatory manner and
without prejudice totheinterests ofthirdparties
4.4 Specific safeguards
What measures, pending solution, dothecontracting Parties envisage taking todealwith
market disturbance? Would such measures beWTO consistent? Canthecontracting Parties
giveassurancesthatsuchmeasureswouldnotprejudicetherightsofNon-PartiestothisAgreement?
What criteria aretobeusedtodetermine whether a"serious disturbance" toagriculture markets
(Article 14)isbeing caused?
AsregardsmeasureswhichtheCEFTAPartiesareentitledtotaketodealwithmarketdisturbance
theyshallbeselected onacase-by-case basis. Intheselection ofsuchmeasures, priority shallbegivenWT/REG11/9
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tothose which leastdisturb thefunctioning oftheCEFTA. Themeasures foreseen under Article 14
arenotconsidered asthirdcountry measures butmeasures relating strictly totheagricultural trade
between theParties. These measures arenotinconflict withtheWTO rulesandtheydonotprejudice
therights ofNon-Parties totheCEFTA.
5. Anti-Dumping Measures
CEFTA provides fortheapplication ofanti-dumping asoutlined inGATT Article VI.
Wenote, thatGATT Article XXIV:8(b) doesnotallow forthisexemption andthatthisclause
maynottherefore becompliant.
IntheviewofCEFTA Parties thismatter should beconsidered asasystemic issue.
Thesense ofArticle 26istoassure theCEFTA Parties aswellastheWTO Members that
anyanti-dumping measures tobetaken would befullyincompliance withtheWTO rules.
CantheParties explain whether there isanydifference inpractice between theobligations
under Articles 26,27and31andthemanner inwhich theywilloperate, andtheobligations of
theParties under theWTO?
Parties totheAgreement believe thatthere isnocontradiction between obligations under
Articles 26,27and31oftheCEFTA andthemanner inwhich theyoperate andtheParties ’appropriate
obligations under theWTO.
6. Subsidies andState-Aid
Given thatagricultural products areexempt from theprovisions stipulated inpara.1 of
Article 23,canthecontracting Parties give anassurance thatthere willbenoresultant
discrimination against theinterests ofnon-Parties?
Itistheintention oftheCEFTA Parties toimplement thisArticle withrespect totheagricultural
products inconformity withtheParties obligations under theWTO Agreement onAgriculture. Up
tonow, noexperience withtheapplication ofthisArticle isavailable.
III. GENERAL PROVISIONS OFTHE AGREEMENT
1. Exceptions andReservations
What istheprecise interpretation tobeplaced ontheterm "Public Policy" inArticle 18?
Theterm"public policy" should beunderstood inthesense oftheGATT 1994 Article XX.
IV. OTHER PROVISIONS
Inwhat manner dotheobligations ofArticle 10differ from those oftheTechnical Barriers
toTrade Agreement?
IntheviewoftheCEFTA Parties, Article 10isnotcontradicting theirobligations under the
TBTAgreement. Presently, theTBTrulesareapplied among theCEFTA Parties because Article 10
oftheAgreement isnotoperational yet.WT/REG11/9
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Arethere anymeasures orpractices ofaninternal fiscal nature establishing (directly or
indirectly) discrimination against other countries notParty totheAgreement? Ifso,what are
they? Dotheprovisions ofpara 1ofArticle 17differ ifanywayfrom theprovisions ofGATT
Article III?
TheCEFTA Parties apply nomeasures orpractices ofaninternal fiscal nature establishing
discrimination against thirdcountries. Theprovisions oftheCEFTA onmeasures orpractices ofan
internalfiscalnaturedonotestablishpreferentialtreatmentinthatareaanddonotconstitutecommitments
between theCEFTA Parties which would gobeyond those arising from Article III.
Which products arecurrently subject tostate monopolies? What proportion oftrade
inproducts subject tostate monopolies iscovered bythisAgreement? Article 20suggests that
state monopolies currently discriminate intheir commercial decisions -cantheParties confirm
thatsuchmonopolies operate inamanner consistent withGATT Article XVII intheirpurchases
from andsales tothird countries?
Article 20isofageneric nature andapplies toallstatemonopolies ofacommercial character,
ifany. Itaimstoensure thattheabolition ofgovernmental restrictions ontrade between theParties
isnotnullifiedbydiscriminatorybehaviourinthepurchasingandmarketingactivitiesofstatemonopolies
ofacommercial character. Inthisrespect, Article 20issimilar totheprovisions ofArticle XVII
GATT 1994 andallCEFTA Parties confirm theirintention tocomply withobligations embodied in
Article XVII GATT 1994.
TheAgreement itselfdoesnotcontain anylistsofstatemonopolies orproducts subject tostate
monopolies intheCEFTA Parties. TheCEFTA Parties fulfilled theirnotification obligations insense
ofArticle XVII GATT 1994.
IntheviewoftheCEFTA Parties nothing inArticle 20oftheAgreement would contradict
theobligations oftheParties under Article XVII oftheGATT 1994, asitisreflected intherespective
notifications under thesame Article.
What criteria aretobeapplied inassessing whether actions prevent, restrict ordistort
competition, orwhether actions bydominant undertakings constitute anabuse oftheir position?
Arethese considerations subject tospecific legally based processes within theCEFTA states?
Can theCEFTA Parties giveassurance thatimplementation ofArticle 22does not
discriminate against theinterests ofnon-Parties totheAgreement (particularly given thatitexempts
agricultural products which "form anintegral partofanational market organization" from the
provisions stipulated inpara.1(a) ofthisArticle)?
Itshould benoted thatcompetition rules issues gobeyond thescope ofexamination within
themeaning ofArticle XXIV.
TheCEFTAPartiesintheirnationallegislationhavebeenguidedbycompetitionruleselaborated
intheframework oftheAssociation (Europe) Agreements withtheEU(Article 85and86).
Nofurther criteria havebeendefined yetbyParties under theArticle 22oftheAgreement.WT/REG11/9
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TheCEFTA Parties legislation oncounteracting monopolistic practices grants equal rights to
business entities regardless theirnationality andconsequently doesnotdiscriminate against theinterest
ofnon-parties totheAgreement.
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