RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/HRV/59
29 June 2000
(00-2672)
Working Party on the
Accession of Croatia
REPORT OF THE WORKING PARTY ON
THE ACCESSION OF CROATIA TO THE
WORLD TRADE ORGANIZATION
INTRODUCTION
1.   The Government of Croatia applied for accession to the General Agreement on Tariffs and
Trade (GATT 1947) in September 1993.  At its meeting on 27 October 1993, the GATT 1947 Council
of Representatives established a Working Party to examine the application of the Government of
Croatia to accede to the General Agreement under Article XXXIII of the General Agreement.
Following the conclusion of the Uruguay Round, Croatia requested accession to the World TradeOrganization (WTO) under Article XII of the Marrakesh Agreement establishing the World Trade
Organization.  Having regard to the decision adopted by the WTO General Council on
31 January 1995, the existing GATT 1947 Accession Working Party was transformed into a WTO
Accession Working Party.  The terms of reference and the membership of the Working Party are
reproduced in document WT/ACC/HRV/8/Rev.6.
2.   The Working Party met on 1 April 1996;  23-24 January 1997;  21 January and 16 October 1998;
27 September 1999;  and 21 June 2000 under the Chairmanship of Ms. A.-M. Plate.
DOCUMENTATION PROVIDED3.   The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the
Foreign Trade Regime of Croatia (L/7466) and the questions submitted by Members on the foreign
trade regime of Croatia, together with the replies thereto (WT/ACC/HRV/3 and Corr.1,
WT/ACC/HRV/4 and Addenda 1 and 2, WT/ACC/ HRV/7 and Add.1, WT/ACC/HRV/11 and Add.1,
WT/ACC/HRV/27 and Addendum 1, WT/ACC/HRV/30, WT/ACC/HRV /39 and Addenda 1 and 2,
WT/ACC/HRV/45 and Corr.1 and 2, WT/ACC/HRV/48, WT/ACC/HRV /51, WT/ACC/HRV/54), and
other information provided by the Croati an authorities (WT/ACC/HRV/5 and Corr.1,
WT/ACC/HRV/6 and Rev.1 and Co rr.1, WT/ACC/HRV/9 and Corr .1, WT/ACC/HRV/12 and Corr.1,
WT/ACC/HRV/13, WT/ACC/H RV/14, WT/ACC/HRV/15, WT /ACC/HRV/16 and Rev.1,
WT/ACC/HRV/17, WT/ACC/H RV/18, WT/ACC/HRV/19, WT /ACC/HRV/20, WT/ACC/HRV/21,
WT/ACC/HRV/22, WT/ACC/H RV/23, WT/ACC/HRV/24, WT /ACC/HRV/25, WT/ACC/HRV/37
and Rev.1, WT/ACC/HRV/40, WT/ACC/HRV /43, WT/ACC/HRV/49, WT/ACC/HRV/55 and
WT/ACC/HRV/58 and Rev.1), including the legislat ive texts and other documentation listed in
Annex I.
INTRODUCTORY STATEMENTS4.   In his introductory statement, the representative of Croatia stressed that accession to the World
Trade Organization was among the main priorities of his Government.  Croatia was pursuing a
program  of thorough economic adjustment and reform, transforming its economy into one based fully
on market principles.  The efforts of the Government were underpinned by credits from the IMF, theWorld Bank and the European Bank for Reconstruction and Development.  Croatia was strengthening
institutional relations with the European Union and free-trade ties with countries in central and eastern
Europe.WT/ACC/HRV/59
Page 2
5.   The near-term goals of his Government were  to accelerate economic growth, privatization,
public enterprise restructuring and the rehabilitation of banks;  comprehensive reconstruction of war-
torn areas;  fight unemployment while maintaining lo w inflation and a stable exchange rate;  and to
continue to develop the legal and institutional framework.  An internationally compatible market
framework had been established with the enactment of the Company Law and the Law on Trade, forthe most part adjusted in accordance with the principles of the GATT and resulting in substantial
liberalization of foreign trade.  Croatia had also introduced a new Customs Tariff, incorporating the
1996 amendments to the International Convention on the Harmonized Commodity Description and
the Recommendation of the World Customs Organization Regarding Ozone Layer Depleters and the
Draft Recommendation on Drugs.  Some financial incentives and subsidies were provided to
agriculture in accordance with the Law on Fina ncial Incentives and Subsidies in Agriculture and
Fisheries (and its amendments).  The Government inte nded to maintain guaranteed prices for a small
group of agricultural products, while a system of variable levies had been abolished.  The
representative of Croatia assured members of the Working Party that Croatia would take all necessary
steps to continue to improve its legal and institutional framework, so that the accession process could
be accomplished as soon as reasonably possible.
6.   In their opening remarks many members of the Working Party welcomed the request from
Croatia to accede to the WTO.  Membership in the WTO would assist Croatia in its efforts to repair
the damage of war and underpin its continuous and systematic transformation towards a market
economy.  Several members declared their interest in working constructively together with Croatia in
establishing its terms of accession and ensuring that the mandate of the Working Party be concludedin a timely manner.
7.   The Working Party then proceeded to review the economic policies and foreign trade regime of
Croatia and the possible terms of a Draft Protocol of Accession to the WTO.  The views expressed by
members of the Working Party are summarized below in paragraphs 8 to 224.
ECONOMIC POLICIESMonetary and Fiscal Policy
8.   Some members of the Working Party requested information on taxation policies in Croatia, and
confirmation that the tax system did not differentiate between foreign and domestic ownership.
Noting certain problems regarding the collection of taxes, some members asked Croatia to elaborate
on the informal sector of the economy and measures taken to reduce tax evasion.
9.   The representative of Croatia provided an up-dated description of the internal taxation regime in
July 1996 (document WT/ACC /HRV/20).  The main elements of the tax system were the Law on
Profit Tax, the Law on Income Tax and the Law on Value Added Tax, replacing the Law on the
turnover tax of products and services on 1 January 1998.  Revenues from the profit tax and the income
tax were divided between the State, municipalities, townships and counties in fixed percentages in
accordance with Article 45 of the Law on Financing Local Self-Government and Local Government.
In addition, local self-government units and government units could also collect some local taxes inorder to fill their budgets.
10.   The representative of Croatia said that the size of the informal economy was unknown, but
studies based on employment data suggested that the informal sector might add some 16 to 21
per cent to the official gross domestic product.  Sectors with informal economic activity of somesignificance were trading, catering, construction, domestic appliance and car repair, commercial and
residential property rental, business services and household personal services, while the processing
industry and agriculture appeared to be less affected.  Steps taken to contain the informal sector
included the development of an effective tax system (in particular following the introduction of value-
added tax), lower taxes and improved labour relations within a stronger regulatory framework andWT/ACC/HRV/59
Page 3
more effective labour inspection.  The financial police was also stepping up operations to enforce the
tax laws.
Foreign Exchange and Payments
11.   The representative of Croatia noted that the legal basis for Croatia's foreign exchange regime
was the Law on the Foundations on the Foreign Exchange System, effective since 19 October 1993.
The Law regulated the foreign exchange market, in which all purchase and sale of foreign exchange
took place.  Croatia had opted for a floating exchange rate for its national currency - the Kuna, pegged
to the Deutsche Mark, and as from 1 January 1999 to the Euro - to enable the economy to adjust to
external shocks.  The National Bank of Croatia was authorized to intervene in the foreign currency
market to maintain a competitive exchange rate.  Exchange rates were published daily by authorized
banks and the National Bank of Croatia.
12.   A member of the Working Party asked whether Croatia differentiated between exporters and
other firms regarding the availability of foreign exchange or the rate of exchange and requested
further information on Croatia's relationship with the IMF, in particular whether any reservations had
been made under Article XIV (Transitional Arrangements).  The representative of Croatia said thatCroatia did not differentiate between exporters and other firms in currency exchange rates or in the
availability of foreign exchange.  Croatia had become member of the IMF in December 1992
following the model of partial succession.  As a member of the IMF Croatia maintained no reservation
under Article XIV.  Croatia had accepted the obligations of Article VIII, Sections 2, 3 and 4 of the
IMF Articles of Agreement with effect from 29 May 1995.  Thus, Croatia did not maintain anyrestriction on payments and transfers for current international transactions.
13.   A member of the Working Party inquired about the Law on Credit Relations with Foreign
Countries.  The representative of Croatia said that the Law regulated borrowing from international
financial institutions and lending or borrowing arrangements with foreign partners by authorizedbanks, companies or other legal entities, and guarantees issued for the account of domestic and
foreign entities.  A copy of the Law was provided to the Working Party.  Resident juridical persons,
including commercial banks, were allowed to borrow abroad, but were required to register loans,
including commercial credits, with the National Bank  of Croatia.  Resident legal or natural persons
could only extend credits to non-residents from profits or credits obtained abroad.  Natural personscould borrow from non-residents in domestic or foreign currency.  On the issue of assets and
liabilities of former Yugoslavia, the representative of Croatia said that negotiations were continuing.
He added that Croatia had accepted calculations of the International Monetary Fund and had assumed
28.49 per cent of the non-allocated debt of former Yugoslavia.
Investment Regime
14.   The representative of Croatia said that foreign investment was regulated under the Company
Law, entering into force on 1 January 1995.  The Law defined a foreign investor as any foreign
national or legal person with a registered seat outside the Republic of Croatia.  The new legal regime
had nullified a number of restrictions on foreign investment maintained under previous legislation (the
Law on Foreign Investments).  No particular sect or was closed to foreign investment.  However,
investments in the military industry and telecommunications were subject to a special procedure.
According to the Law on Telecommunications, foreign investment in radio and television concessions
was limited to 25 per cent of the capital of the concessionaire.  Inward portfolio investment was not
restricted, except for central bank short-term securities in the primary market.
15.   The representative of Croatia noted that foreign direct investment by non-residents could take
the form of joint venture or full ownership.  Registration with the commercial courts was required.
National treatment applied to foreign investment in principle, on condition of reciprocity.
Amendments to the Company Law, abolishing the condition of reciprocity and thus providing fullWT/ACC/HRV/59
Page 4
national treatment in respect of the establishment of commercial presence, had been adopted by
Parliament in March 1999, and would be valid from the date of Croatia's accession to the WTO.
16.   The representative of Croatia said that Croatian residents were required to report investments
abroad to the Ministry of Economy ex post for statistical purposes.  Acquisition of real estate in
Croatia by non-residents was granted on the basis of reciprocity.  However, foreign exchangerestrictions in practice prevented Croatian residents from purchasing real estate abroad.
State Ownership and Privatization
17.   Some members of the Working Party asked Croatia to provide information on its privatization
programme and outline future plans in this area, noting that the present Law on Privatization did not
concern public enterprises, banks, insurance companies, cooperatives, marinas, hospitals and schools.Croatia was requested to provide an update on the status of current privatization activities, and an
overview of plans concerning (i) privatization of  the Government's holdings in manufacturing and
services enterprises, and (ii) ownership changes fo r firms and enterprises termed "socially owned", the
form of ownership under the former Socialist Federal Republic of Yugoslavia.  The information
should indicate the type of firms privatized (e.g. retail services, manufacturing, agriculturalprocessing), the nature of the firms remaining in State or other non-private form of ownership, and the
portion of Croatia's trade and economic activity accounted for by these non-privatized holdings.
18.   The representative of Croatia said that the overall privatization process had begun with the
passage of the Law on Transformation of Socially-Owned Enterprises on 21 April 1991.  Privatizationinvolved the transformation of former "socially-owned " enterprises into joint-stock or limited liability
companies with defined ownership structures.  Foll owing independence, ten large infrastructure and
utilities companies had come under direct State ownership as "public enterprises" while the remaining
socially-owned enterprises were to be privatized in a two-stage process.  These enterprises submitted
requests for commercialization to the Croatian Privatization Fund and could request "autonomoustransformation", i.e. propose their own privatization plans, until 30 June 1992.  First-stage
privatization had been organized by the Croatian  Privatization Fund, seeking wide participation by
employees and the population at large by offering preferential rights for share subscription at
substantial discount, and payment by instalments.  A total of about 3,000 enterprises had begun the
process of "autonomous transformation".  By 30 June 1992, 2,444 enterprises had submittedproposals.  From April 1991 to October 1995, some 2,200 socially-owned enterprises, i.e. 75 per cent
of the initial number of enterprises subject to privatization, accounting for more than 30 per cent of
employment had been fully or almost entirely privatized.  A further 750 companies had been
privatized in this manner between October 1995 and May 1999.  Shares in enterprises not privatized
during the first stage had subsequently been transferred to the Croatian Pension Funds (one third) and
the Croatian Privatization Fund (two thirds).  Under the responsibility of the latter, shareholdings had
been reduced by various methods, including aucti ons at the Zagreb Stock Exchange, direct trade
deals, tenders open to foreign investors, as well as free distribution of shares to war veterans, widows
and their families.  Shares in some specific enterprises had been earmarked to be sold against frozen
foreign exchange deposits (FFED).  Asked about the conditions for foreigners to participate in
privatization tenders, the representative of Croatia said that the Company Law provided for national
treatment of foreign investment, including participation in privatization.
19.  Croatian citizens had participated actively in the privatization;  some 600,000 small investors
had acquired shares in a total of more than 2,500 enterprises.  The Government also encouraged the
establishment of Privatization Investment Funds (PIF's).  These were specialized funds collecting
vouchers and coupons in exchange for shares in companies put up for mass privatization.  Contrary toother investment funds, the PIF's were not allowed to exchange shares against frozen foreign
exchange deposits.
20.  The second phase of the privatization process had been implemented through mass voucher
privatization.  This privatization had, in effect, been a distribution of shares not sold in the first phaseWT/ACC/HRV/59
Page 5
of privatization.  Vouchers had been distributed to individuals affected by the hostilities such as
injured servicemen, war widows and their families, and other displaced persons and refugees.  The
shares to be represented by vouchers had been held in the portfolio of the CPF;  shares held by the
State pension funds had not been included in the process.  In total, more than 500 companies had their
shares sold through voucher privatization.  The first round of vouchers had been distributed in June
1998, and the process had been concluded by September 1998.  Voucher privatization had ensured theprivatization of 50 to 60 per cent of the residual portfolio of CPF, including shares in 30 to 50 top-
quality companies reserved for strategic investors or public offerings, constituting the final step in the
complete privatization of the residual portfolio.  With voucher privatization completed, the
privatization process had virtually reached the end, except for the small residual CPF portfolio and the
large State-owned enterprises.  The representative of Croatia provided detailed information on the
privatization process in documents WT /ACC/HRV/40, WT/ACC/HRV/ 51 (pp.5-26) and
WT/ACC/HRV/54 (pp.3-12).  Further in formation on progress in privatization in Croatia is provided
in Table 1(a)-(c).
Table 1(a):  Information on the privatization process in Croatia (as per May 1999)
100%
State
Owned50-99%
State
Owned25-50%
State
Ownedup to
25%
State
OwnedFully
PrivatizedTotal Total
(nc.
included)Total
(bank-
ruptcies
included)
No of Companies 44 53 146 502 1,856 2,601 2,726 2,950
Per cent of total 1.69 2.04 5.61 19.30 71.36 100
Per cent of total (incl.
non – commercialized)1.61 1.94 5.36 18.42 68.09
Per cent of total (incl.
non – commercializedand bankruptcies)1.49 1.80 4.95 17.02 62.92
Total equity (HRK
million)3,147.7 1,845.5 5,709.8 19,541.8 57,487.5 87,732.3
Per cent of total equity 3.9 2.10 6.51 22.27 65.53 100
Average equity per
company (HRKmillion)71.5 34.8 39.1 38.9 31.0
No of shareholders not
compar
able5,269 22,560 222,851 227,011
Average No of Sh. (per
Company)not
compar
able99.42 154.52 443.93 122.31
No. of Companies Covered by Transformation Law 2,950
- of which commercialized 2,825
- of which non commercialized 125Liquidations and Bankruptcies 224WT/ACC/HRV/59
Page 6
Table 1(b):  Information on the privatization process in Croatia (as per May 1999), by sector
Enterprises in privatization Privatized Enterprises Non -privatized Enterprises Enterprises in liquidation and
bankruptcies
Sector No. Equity (DEM) % of total
equity
included
in
privati-
zationNo. Equity (DEM) % of
sector's
EquityNo. Equity (DEM) % of
sector's
EquityNo. Equity (DEM) % of
sector's
Equity
Industry and mining 832 11,422,388,209 44.70 658 8,932 ,027,911 78.20 68 1,883,817,247 16.49 106 606,543,051 5.31
Agriculture and fishing 249 2,001,849,648 7.83 196 1,048,914,286 52.40 26 652,687,931 32.60 27 300,247,431 15.00
Construction 297 1,185,996,138 4.64 242 903,9 96,519 76.22 28 139,153,518 11.73 27 142,846,100 12.04
Trade 513 4,487,864,122 17.56 433 4,087,737,546 91.08 41 229,970,803 5.12 39 170,155,773 3.79
Tourism and catering 241 4,395,917,337 17.20 203 4,220,684,494 96.01 32 168,929,018 3.84 6 6,303,824 0.14
Housing construction and
utilities194 221,338,662 0.87 180 196,192,095 88.64 7 3,301,666 1.49 7 21,844,900 9.87
Communal utilities 36 34,612,220 0.14 33 32,882,020 95.00 3 1,730,200 5.00
Financial and other
services359 1,577,084,863 6.17 325 1,232,295,514 78.14 25 305,378,451 19.36 9 39,410,898 2.50
Education, culture and
publishing89 210,391,650 0.82 75 178,265,028 84.73 11 28,889,422 13.73 3 3,237,200 1.54
Health and social care 15 17,762,015 0.07 13 16,367,300 92.15 2 1,394,715 7.85
Total 2,825 25,555,204,865 100.00 2,358 20,849,362,71 4 81.59 243 3,415,252,973 13.36 224 1,290,589,177 5.05
Note: non-commercialized Enterprises are not included in table, No. of Enterprises covered by Transformation Law = 2,950
"Privatized enterprises" means companies in which State ownership does not exceed 50 per cent,  The percentage refers to the sh are of private ownership,  "Non-
privatized" means still government controlled, and the percentage refers to the share of private ownership, Liquidations and ba nkruptcies are stated in percentages in 
relation to each total activity,WT/ACC/HRV/59
Page 7
Table 1(c):  Net proceeds from privatization
DM million
1991 1992 1993 1994 1995 1996 1997 1998* Total
Cash 4.2 86.6 123.4 208.3 177 269.4 154.7 170.7 1194.3
Bonds for
Reconstruction**- 48.3 28.1 41.9 1.4 0.5 0.8 0.1 121.1
Swaps with FFCD's - 157.4 455.6 741.9 257.7 253.7 152.1 37.7 2056.1
Total 4.2 292.3 607.1 992.1 436.1 523.6 307.6 208.5 3371.5
* 1 January -31 July 1998, Cash proceeds include also earnings from the sale of PLIVA's shares on 
international market which were transferred through the CPF account
** High-yield bonds in hard currency issued by the Ministry of Finance, which can be swapped for shares 
at 30 per cent discount
21. The representative of Croatia added that the Law on Transformation and Privatization of
Socially Owned Enterprises had also applied to agriculture.  Former socially-owned farms which hadnot filed requests for "autonomous transformation" had been transferred to the Croatian Privatization
Fund.  These farms were currently organized as joint-stock or limited liability companies and
managed by their respective Management Boards.  Some 180 cooperative enterprises would also be
privatized under the Law on Farm Cooperatives.  In some cases agricultural enterprises had been
divided into smaller independent units.  All agricultural trading and processing enterprises had beenprivatized.  Croatia intended to privatize the entire food procurement and processing system.
22. Sectors not covered under the Law on Privatization were privatized under other provisions.
Shares in banks were sold by their founding institutions or, in case of financially troubled banks, with
the assistance of the Agency for Bank Rehabilitation.  The Law on Sea Ports provided for theprivatization of port services and the award of concessions;  the actual port was regulated by the port
administration.  Medical services and other activities within hospitals and clinics, but not the property
or infrastructure, could be privatized in accordance with the Statute of Conditions for the Lease of
Medical Facilities for Primary Medical Care and Hospitals.  Public educational facilities would be
privatized in the near future.  The Law on Privatization included a provision on the privatization ofpublic enterprises (Article 13, Paragraph 13).  Decisions had been taken to proceed with step-by-step
privatization of Croatian Railways (HZ), Hrvatske  Sume (Croatian Forests), the Official Gazette,
Croatian Petroleum Company (INA), Croatian Radi o and Television Broadcasting (HRT), Croatian
Electricity Company (HEP), Croatian Telecommunications (HT), the Coastal Shipping Company and
Plovput (a lighthouse company).  He indicated that the process of privatizing public utilities and largeState-owned enterprises had begun in 1999.  Each comp any would be privatized in accordance with a
special law to be adopted by Parliament.  The law would determine, for every enterprise, the share of
the company to be privatized, i.e, offered to fo reign and domestic investors.  Investors would be
chosen on the basis of public tender in a transparent and legally-based manner.  Prior to the adoption
of each law, and the initiation of the process of privatization, his Government would select a
privatization consultant in an international tendering procedure.  Consultants for Croatian Telecom
and banks (Privredna banka, Splitska banka and Rije čka banka) had already been selected.  He
envisaged that CPF ownership over companies woul d evaporate within the next two years, and the
privatization of large State-owned enterprises woul d be achieved over a period of some five years.
23. The representative of Croatia said that Croatia had also adopted a Law on Compensation for
Expropriated Assets.  The law foresaw the restitution of assets either in kind, through shares reservedin the Croatian Privatization Fund or by payment from the Croatian Compensation Fund.
24. A member held the view that information provided by the representative of Croatia, including
the information contained in document WT/A CC/HRV/40, was useful but not sufficiently
comprehensive to cover important aspects of State ownership and privatization in Croatia.  TheWorking Party should have been informed that, while agriculture was almost exclusively in private
hands, a significant number of industries and enterprises remained under State control or had been
transferred to private ownership through a non-transparent and non-competitive privatization process.WT/ACC/HRV/59
Page 8
This member stated that Croatia maintained legislation which prevented the privatization of important
assets in various forms to potential owners of non-Croatian origin.  The same legislation did not
recognize previously acquired property rights, and prevented the exercise of these rights.
25. In reply, the representative of Croatia said that Croatia had responded to questions and issues
raised by members of the Working Party, and its privatization process had been described in detail invarious accession documents.  Croatia's privatization process had been assessed by independent
sources to be one of the most successful among countries in transition.  Concerning legislation
regulating previously acquired property rights, the representative of Croatia said that Croatia did not
discriminate between Croatian or non-Croatian owners of property rights on assets acquired legally in
Croatia by legal persons.  The only specific limitation was a temporary ban on the exercise of
ownership rights on previously "socially-owned" assets located in Croatia by legal persons originating
in the other successor countries of the former Socialist Federal Republic of Yugoslavia (SFRY).  Thismeasure had been introduced to prevent privatization of assets acquired under the vague concept of
"social ownership" until the relevant legal ownership issues had been clarified in each particular case.
According to former Yugoslav legislation, socially-owned assets could have been acquired without a
payable legal transaction, for example, when assets were granted to a legal persons by decision of
local or higher authorities, or the enterprises themselves.  The key issue at hand was to determinewhich assets subject to former social ownership could now be considered in private ownership with
clear title based upon adequate payment for their acquisition,.  Croatia therefore suggested that strict
distinction should be maintained between universal property rights, where Croatia maintained no
restrictive or discriminatory practice which might divert from MFN practice, and property rights
based on the concept of social ownership in former SFRY.  The representative of Croatia called uponthe Member in question to accelerate ongoing bilateral negotiations outside the WTO to find a
mutually acceptable solution that would address the interests and concerns of both parties.
26. The representative of Croatia confirmed his country's readiness to ensure the transparency of
its ongoing privatization programme and to keep WTO Members informed of its progress in thereform of its transforming economic and trade regime.  He stated that his Government would provide
annual reports to WTO Members on developments in its programme of privatization as long as the
privatization programme would be in existence along the lines of that provided to the Working Party.
He also stated that his Government would provide annual reports on other issues related to its
economic reforms as relevant to its obligations under the WTO.  The Working Party took note ofthese commitments.
Pricing Policies
27. The representative of Croatia said that price controls had been liberalized in recent years.  In
general, companies determined prices freely withou t any government interference.  Existing controls
were applied in accordance with the Law on Exceptional Measures of Price Controls.  Direct pricecontrols could be prescribed to prevent negative effects of changes in prices for basic goods and
services which had a direct impact on the cost of living, or to prevent monopoly pricing (Article 4).
This provision underlined the exceptional character of direct price controls, which could only be
implemented for a limited period of time and only if the negative effects could not be eliminated by
other economic policy measures.  Having introduced such controls, the Government was also obligedto take appropriate measures which would eventually allow the elimination of the price controls.
28. The Government, upon a proposal by the Ministry of Economy, could implement direct price
controls either by fixing maximum prices;  orderi ng price reductions to a certain level;  or by
requiring economic agents to report price changes in advance.  In case of prior reporting of pricechanges, the Ministry of Economy could object to the new prices within 15 days from the date the
prices were reported, and request a company to reconsider the proposed prices.  The Law provided for
penalties amounting to HRK 5,000-20,000 (US$800-3,000) fo r companies changing prices against the
objections of the Ministry, and the Government could order the prices be brought back to the original
level.  A company objecting to such administrative action could institute proceedings and requestWT/ACC/HRV/59
Page 9
compensation for the damage incurred.  All regulations regarding price control measures were
published in the Official Gazette of the Republic of Croatia "Narodne Novine".
29. Government Regulations determined the goods and services subject to these measures.  At
present, the only direct price controls in force we re obligatory prior reporting of price changes for
milk for daily consumption;  fertilizers;  wheat flour;  bread type 850;  petroleum products;  naturalgas;  electric energy;  radio and television subscriptions;  transportation of passengers and freight by
local rail or maritime line traffic;  standard letters and postcards;  telephone impulse and telephone
subscription;  road, bridge and tunnel tolls;  official forms;  roundwood logs; cubic wood;  and the
services of loading and transportation of wood sortings.  The producers of goods and services subject
to current controls were mainly public utilities or State-owned legal entities.  Goods and services
currently subject to price control in Croatia are listed in Table 2.
Table 2:  Goods and Services Subject to State price control
Classification (Harmonized
System or Common
Product Classification)Product or Sector
HS 0401 Milk and cream, not concentrated nor containing added sugar or other
sweetening matter,
HS 1101.00 Wheat or meslin flour,
HS 2710.0012 ---- lead-free motor petrol
HS 2710.0013 ---- other motor petrol
HS 2710.0016 ---- petrol for processing or mixing (primary or base)
HS 2710.0022 ---- kerosene type jet fuel
HS 2710.0031 ---- gas oils
HS 2710.0032 ---- extra light and light special fuel oil
HS 2710.0033 ---- fuel oils with low sulphur content
HS 2710.0034 ---- other fuel oils
HS 2711.11 --Natural gas
HS 2713.20 - Petroleum bitumen
HS 2716.00 Electrical energy
HS 3102 Mineral or chemical fertilisers, nitrogenous,
HS 3105 Mineral or chemical fertilisers containing two or three of the fertilising
elements nitrogen, phosphorus and potassium; other fertilisers; goods
of this Chapter in tablets or similar forms or in packages of a gross
weight not exceeding 10 kg,
HS 4401 Fuel wood, in logs, in billets, in  twigs, in faggots or in similar forms;
wood in chips or particles; sawdust and wood waste and scrap, whether
or not agglomerated in logs, briquettes, pellets or similar forms,
HS 4403 Wood in the rough, whether or not stripped of bark or sapwood, or
roughly squared,
CPC 9613 Radio and TV services
CPC 7111; 7112 Transportation of cargo and passengers by domestic railway
CPC 7442 Highway, bridge and tunnel operation services
CPC 7211; 7212 Domestic passenger transportation by coastal water ferries; domestic
freight transportation by coastal  water ferries
CPC 7511 Postal services: standardized letters and postcards in the domestic mail
system
CPC 7521 Public local telephone services
CPC 7123 Transportation of timber assortments
Local self-government bodies can prescribe price control (Article 11 of the Law on Exceptional
Measures of Price Controls) for :WT/ACC/HRV/59
Page 10
Classification (Harmonized
System or Common
Product Classification)Product or Sector
HS 2716.00 Heating energy
CPC 82101; 82102 Housing rents and residential services
CPC 71211 Urban and suburban regular transportation
CPC ex 18000 drinking water supply
CPC ex 94010 Waste water drainage and purification
CPC ex 887 Gas supply
CPC ex 94030 Public cleaning
CPC 94020 Municipal solid waste disposal
CPC 97090 Maintenance of public grounds
CPC 97090 Maintenance of not classified roads
CPC 97090 Management and maintenance of retail sale market places
CPC 97030 Maintenance of cemeteries and crematories and undertakers services
CPC 87409 Provision of chimney services
30. Local administrative bodies were responsible for direct and indirect price controls of public
utilities, i.e. central heating, water supply, sewage and other sanitary services, distribution of gas,
public transport, etc.  However, the Government could prescribe such measures to prevent marketdisturbance or monopoly behaviour if local administrative bodies did not take action.
31. Asked whether the Law on Exceptional Mesures of Price Controls could authorize the
application of price controls and reporting requirements on prices of imports and exports, the
representative of Croatia said that the Law itself did not include any specific article or provisionregarding price controls on imports or exports, but the Government had adopted a by-law regulation
which excluded imports and exports from price control measures.  Thus, the current requirement of
prior reporting of price changes for certain goods and services was not applied to imports or exports.
32. The representative of Croatia stated that the prices of goods and services in every sector of
Croatia were determined freely by market forces with the exception of those noted in Table 2.
33. The representative of Croatia stated that in the application of price controls or State guidance
now or in the future, Croatia would apply such measures in a WTO-consistent fashion, and take
account of the interests of exporting WTO members as provided for in Article III:9 of the GATT
1994.  Croatia would publish the list of goods and services subject to State controls any that are
introduced or re-introduced in the future in its Of ficial Journal, including any changes in the list
provided of current requirements in place.  The Working Party took note of this commitment.
Competition Policy
34. The representative of Croatia said that the Law on the Protection of Market Competition had
been adopted by Parliament on 27 June 1995.  Certain practices, including price fixing, market
sharing and tying-in arrangements, were generally or specifically prohibited, but the rule of reason
applied and group exemptions could be granted, for example for contracts related to specialization,
exclusive or selective distribution, exclusive purchasing, franchising and research and development.
The Law applied to all firms operating in Croatia regardless of the form of incorporation orownership.  An indicative list of State-owned or p ublic enterprises which could qualify for exemption
was found in an Annex to the Law on Public Purchasing.  However, until now no entities or legal
persons owned, managed or under the authority of the State had been specifically or explicitly
exempted from the Law on the Protection of Market Competition.  In response to specific questions
on the regulation of export cartels, he confirmed that Article 4 (2) of the Law limited its scope to anti-competitive practices affecting the home market provided international agreements signed by CroatiaWT/ACC/HRV/59
Page 11
did not stipulate otherwise.  Croatia had established a Competition Protection Agency to enforce
legislation.  Cases would be decided by its Council.
FRAMEWORK FOR MAKING AND ENFORCING POLICIES35. The representative of Croatia said that the central Government was responsible for a number
of functions including international relations, economic policy and customs matters.  Each Ministry
was responsible for proposing new or amended legislation within its area of competence.  Following
approval by the Government draft legislation woul d be forwarded to Parliament for adoption.  Most
international agreements were subject to ratifi cation by Parliament.  International agreements,
including the Protocol of Accession of Croatia to the WTO once ratified by the Croatian Parliament,
would become an integral part of the internal legislation and would have precedence over domestic
laws and other acts.  Although the possibility of direct application of international agreements inCroatia's legal system existed, the WTO provisions were contained in specific laws covering
particular areas stipulated in the WTO Agreements.
36. Concerning the right of appeal of administrative decisions, in particular in relation to the
"independent tribunal" provision of Article X of the GATT 1994, the representative of  Croatia saidthat the right of appeal was stipulated in the Law on Trade, the Customs Law, the Company Law and
other laws related to issues addressed in WTO Agreements.  He confirmed that Croatian legislation
provided an automatic right of appeal by traders and other natural and legal persons in all WTO
related matters.  An appeal by a trader could be lodged with the High Administrative Court (HAC),
which was an independent tribunal in accordan ce with Article X of the GATT 94.  The High
Administrative Court was part of Croatia's regular ju dicial system. Being part of the judicial branch,
the HAC was independent from State administrative bodies and the executive branch in general.  The
role of the HAC was to ensure legal protection of traders and other legal and natural persons in
matters related to rulings made by administrative bodies and agencies.  In doing so, the HAC,
following an appeal by the plaintiff party, ruled on whether a decision or act issued by theadministrative body had been made in accordance with the law and procedures set therein.  Rulings of
the HAC were final.  Appeals against decisions or acts of administrative bodies could be lodged
automatically with the HAC for all WTO issues, except customs and tax related matters.  In such
cases, the first complaint (or appeal) against an act or decision issued by the lower administrative
body (customs office or local tax authority) should be lodged with the central customs or taxauthorities (the Customs Directorate and the Tax Directorate of the Ministry of Finance).  If the trader
was not satisfied with the ruling made by the central authorities, he could file an automatic appeal
with the HAC.  This system provided traders a procedure of direct appeal of administrative rulings to
authorities not bureaucratically affiliated with the agency that had issued the ruling.
37. The representative of Croatia confirmed that from the date of accession Croatia’s laws would
provide for the right to appeal administrative ru lings on matters subject to WTO provisions to an
independent tribunal in conformity with WTO obligations, including Article X:3(b) of the
GATT 1994.  The Working Party took note of this commitment.
38. The representative of Croatia said that Croatia had established a system of local
self-government and administration based on the European Charter on Local Self-government.Within this system, Croatia was divided into 21 counties (including the City of Zagreb), subdivided
into 421 municipalities, 50 townships and two special self-governing districts.  The activities of local
government units were financed in part from local dues and fees and income from own assets, in part
from fixed percentage shares of revenue from the income tax, the profit tax, a tax on real estate
transactions and a tax on gambling.  Property taxes collected by the counties included taxes on motorvehicles and vessels, raised in fixed kuna amounts ranging from the equivalent of DM 30 to 200 per
year for cars, DM 20 to 100 for motorcycles, and DM 40 to 550 for vessels.
39. Some members noted that local authorities could levy taxes on certain goods and services and
asked what control the central government could exercise to ensure that the taxation practices of localWT/ACC/HRV/59
Page 12
authorities would be consistent with WTO obligations.  The representative of Croatia replied that only
the central authorities (the Government and Parliament) could propose and adopt legislation of any
kind, including in the area of taxation.  According to the Law on Funding Units of Local Government
and Administration, local units had the right to collect taxes, but not to prescribe or levy them.  Thus,
as local authorities could only collect taxes established by law, their practices would be in compliance
with WTO obligations.  Legal or natural persons providing catering services paid local and municipalconsumption tax in accordance with Article 32 of the Law on Funding Units of Local Government
and Administration.  The tax amounted to maximum 3 per cent of the retail price of beverages sold in
restaurants, bars, etc.
40. Decisions on concessional rights were subject to shared responsibility between central and
local governments.  Concessions were regulated by the Law on Concessions, unless special statutes
provided otherwise, and could be granted for up to 99 years to a domestic or foreign person.Decisions on the granting of concessions were taken by the House of Representatives (Parliament) on
the proposal of the Government, and upon the opinion of the local administrative body where the
concession would be exploited.  Parliament could delegate the authority to grant concessions to the
Government.  The decision to grant a concession was required to be based on public bidding or
soliciting of tenders to select the successful candidate.  Following the decision to grant a concessionby Parliament or the Government, the executive branch of the administrative body concluded a
contract with the concessionaire, regulating the conditions under which a concession could be
exploited or terminated.  Special laws could provide different conditions, as an exemption to this
general law, to obtain or exploit a concession.  For example, local road concessions were granted by
local authorities, and the Law on Sea Ports provided for concessions to be granted by the portauthority.
41. The representative of Croatia confirmed that sub-central administrative authorities and
entities, e.g. local administrative bodies, have no jurisdiction or authority to establish regulations over
issues of subsidies, taxation, trade policy or any other measures covered by WTO provisions inCroatia independent of the central authorities and that application of these measures are exclusively
the responsibilities of the executive and legislative branches of the central government.  He confirmed
that the provisions of the WTO Agreement, includi ng Croatia's Protocol, shall be applied uniformly
throughout its territory, including in regions engaging in border trade or frontier traffic, special
economic zones, and other areas where special regimes for tariffs, taxes and regulations areestablished.  He added that when apprised of a situation where WTO provisions were not being
applied or were applied in a non-uniform manner, central authorities would act to enforce WTO
provisions without requiring affected parties to petition through the courts, and will eliminate or
nullify measures taken by sub-central authorities in Croatia that are inconsistent with WTO provisions
from the date of accession.  The Working Party took note of these commitments.
POLICIES AFFECTING TRADE IN GOODSTrading Rights
42. The representative of Croatia said that Croatia had applied temporarily the Law on Foreign
Trade Operations of the former Yugoslavia since October 1991.  The Law laid down a number ofconditions regarding registration of companies, re porting requirements, restrictions on the right to
engage in foreign trade, and rules for special trade operations.  The Law on Foreign Trade Operations
had been superseded by the Company Law, entering into force on 1 January 1995, and the Law on
Trade, in effect since February 1996.  The Company Law contained exhaustive and precise provisions
concerning the establishment, incorporation and registration of stock corporations, limited liabilitycompanies, general or limited partnerships, and sole proprietorships.  The restrictions or special
conditions governing foreign trade operations under the former Law on Foreign Trade Operations had
been abolished with the new Law on Trade and the Company Law;  for example, companies engaging
in foreign trade were no longer required to register separately with the Commercial Court, andWT/ACC/HRV/59
Page 13
companies were now free to re-export, import or invest abroad without approval of the Ministry of
Economy.
43. The representative of Croatia added that although the former Law on Foreign Trade
Operations had limited or conditioned the freedom of trade, foreign trade had never been subject to
State monopoly.  The State did not restrict the right of persons or entities to import or export under
present legislation.  The registration criteria to be met by domestic or foreign enterprises and
individuals wishing to engage in foreign trade were set out in Article 4 of the Law on Trade,
providing for free trade and equal market conditions.
44. All natural and legal persons wishing to engage in business activities were required to
establish a company and register it with a Co mmercial Court before the commencement of their
business activity.  Once incorporated and entered in the Commercial Court registry, a company couldperform all business activity it had chosen to list in its application for a Commercial Court
registration.  Any company wishing to perform a trade activity, including importation and exportation,
was free to enter this activity in its incorporation act.  A company seeking incorporation to trade in
certain sensitive goods for reasons of health, safety or security - such as arms, explosives, medicines,
drugs, narcotics, and toxins – was required to submit to the Commercial Court an activity licenceissued by a competent authority before incorporat ion of the company.  Following the incorporation
with a commercial court, such a company would be eligible to apply for import and export licenses
for these products.  Thus, Croatia did not maintain any special registry of authorized trading
companies nor any special registry of authorized importers or exporters of goods subject to licensing.
In general, all companies incorporated for trade ac tivities were eligible to apply for an import license
each time they would wish to import goods subject to licensing.  First time applicants for import
licenses were required to submit a copy of their Commercial Court incorporation act to allow the
competent authority to ascertain, before issuing an  import license, that the company actually existed.
The company would not need to include the copy of  the incorporation act in case of any subsequent
application.
45. A member asked whether Croatia had an activity licensing regime and, if so, Croatia was
requested to describe the criteria applied to receive such a licence, and the procedures used to grant it,
with particular reference to (i) activities involving importation;  and (ii) the WTO Agreement on
Import Licensing Procedures.  In reply, the representative of Croatia said that Croatia maintained anactivity licensing regime of limited scope for products affecting public health and safety, covering
activities relating to arms and ammunition, explosive substances, medicines and pharmaceutical
products, toxins, and narcotics.  Companies wishing to do business in these areas should obtain an
activity licence prior to registration at the commercial court for such business.  Conditions and
requirements to be fulfilled by enterprises dealin g in such products were stipulated in the Law on
Arms, the Law on Explosive Substances, the Law on Medicines and Pharmaceutical Products, the
Law on Toxins, and the Law on Production and Activiti es with Narcotics.  Detailed information on
the activity licensing regime, including its scope, procedures, requirements and criteria applied was
provided in document WT/ACC/HRV/51, pp. 30-33.  He  added that Croatia did not charge licensing
fees for any business activity.  Information provided by Croatia on import licensing procedures
(document WT/ACC/HRV/25) indicated, in his view, that Croatia's regime was in full compliance
with the WTO Agreement on Import Licensing Procedures.
46. The representative of Croatia confirmed that no restrictions existed on the right of foreign and
domestic individuals and enterprises to import and export goods and services into Croatia's customs
territory, except as provided for in WTO Agreements.  He confirmed that individuals and firms were
not restricted in their ability to import or export based on their registered scope of business and thecriteria for registration of companies in Croatia were generally applicable and published in the official
journal of Croatia.
47. The representative of Croatia confirmed that from the date of accession Croatia would ensure
that its laws and regulations relating to the right to trade in goods and all fees, charges or taxes leviedWT/ACC/HRV/59
Page 14
on such rights would be in full conformity with  its WTO obligations, including Articles VIII:1(a),
XI:1 and III:2 and 4 of the GATT 1994 and that it would also implement such laws and regulations in
full conformity with these obligations.  The Working Party took note of this commitment.
A. IMPORT REGULATION
Customs Tariff
48. The representative of Croatia said that Croatia had been an active member of the World
Customs Organization since gaining full membership on 1 July 1993.  Croatia had joined the
International Convention on the Harmonized Co mmodity Description and Coding System on
26 September 1994.  The Customs Law, the Customs Tariff Law and the Law on Customs
Administration constituted the legal framework for the customs regime of Croatia.  The right ofappeal against decisions of Customs was ensured in Articles 242 to 244 of the Customs Law, and its
Articles 249 to 253 regulated the subsequent settlement of accounts, payment and refund of customs
duties.  The Customs Law had been applied with mi nor changes since 1991.  Parliament had passed a
new Customs Law on 30 June 1999.  The Law cont ained provisions on customs valuation and
customs procedures in full conformity with the relevant WTO Agreements.
Ordinary Customs Duties
49. A member asked Croatia to provide a description on how the current tariff had been formed
by incorporating miscellaneous border charges and import taxes in the original customs tariff, a charton the current structure of the tariff in terms of tariff lines and duty levels, information on the number
of lines subject to ad valorem , specific or mixed tariffs, as well as information on the weighted and
simple average of the current applied rates.
50. The representative of Croatia replied that the present Customs Tariff Law had been adopted
by Parliament in June 1996 and had entered into force on 1 July 1996.  According to the Law, the
nomenclature of the customs tariff was based on the International Convention on Harmonised
Commodity Description and Coding System.  The cust oms tariff consisted of 7,059 tariff lines.  All
tariff items were subject to ad valorem  tariffs, and 590 tariff items were subject to compound rates
(ad valorem  and specific duty).  The ad valorem  rates range from 0 to 25 per cent according to the
structure described in Table 3.  The simple average tariff rate was 12.1 per cent, and the weighted
average tariff amounted to 9 per cent based on 1998 import data.
Table 3:  Tariff structure
Tariff rate (per cent) Number of tariff items
0 505
0 – 5 3,038
5 – 10 828
10 – 15 883
15 – 20 1,260
20 and above 545
51. The Customs Tariff Law had abolished the application of non tariff measures, terminating the
Law on Special Levies on Import of Agriculture and Food Products, and Article 35 of the Customs
Law (prescribing a 1 per cent customs registration fee on imported goods), as well as a special import
levy of 10 per cent.  The tariff rates determined by the current Law were governed by the basiccriteria that (i) tariffs were the only trade policy measure applied to protect domestic industrial and
agriculture production;  (ii) tariffs were considered measures of trade policy, not fiscal measures;
(iii) tariffs were a function of economic development, in particular, the technological rehabilitation of
the economy;  (iv) the average tariff should be at the level applied in other countries in transition;WT/ACC/HRV/59
Page 15
(v) rates exceeding 15 per cent were applied only to protect industries and activities seriously
damaged by war;  (vi) minimum tariff rates were applied to imported raw materials;  and (vii) all
non-tariff measures applied to imports were no longer implemented with the entry into force of the
Customs Tariff Law.
Other Duties and Charges Levied on Imports but not on Domestic Production
52. The representative of Croatia said that all duties and charges other than ordinary customs
duties had been abolished with the introduction of the new customs tariff on 1 July 1996.  Among the
abolished duties and charges were a 10 per cent charge on imports, a 1 per cent customs registration
fee, and import levies affecting various agricultural and food products (a list was provided in
document WT/ACC/HRV/7/Add.1).  For the time being, imported cement was subject to an
administrative stamp tax of HRK 60 per customs declaration, a HRK 170 quality control fee, and aweight-based fee for sampling and testing of imported cement.  With the implementation of the new
Law on State Inspectorate (early October 1999) and the associated implementing regulations (end
October 1999), he confirmed that Croatia would remove the weight-based fee, and fees for quality
control would be based on the cost of the service rendered.  The representative of Croatia confirmed
that the authorities of Croatia and the Former Yugoslav Republic of Macedonia had agreed thatCroatia would eliminate its 1 per cent customs duty at the latest by the date of accession, and the
Former Yugoslav Republic of Macedonia would eliminate its 1 per cent customs evidence fee as from
1 January 2000.  He further confirmed that a 1 per cent customs evidence fee on imports from the
Federation of Bosnia and Herzegovina had been abolished on 15 May 1999 when MFN trade had
been reintroduced between Croatia and Bosnia and Herzegovina.
53. The representative of Croatia confirmed that Croatia levied no duties and charges on imports
other than ordinary customs duties.  Any such charges applied to imports after accession would be in
accordance with WTO provisions.  He confirmed that Croatia would not list in its schedules of
commitments for goods any other duties and charges within the meaning of Article II:1(b) of the
GATT 1994, binding all such duties and charges at "zero".
Tariff Rate Quotas, Tariff Exemptions
54. The representative of Croatia said that the Customs Law provided the legal framework for the
establishment of tariff rate quotas, on an MFN basis, in exceptional cases.  Tariff rate quotas were
introduced by special regulation adopted by the Government.  Croatia had implemented tariff rate
quotas as part of its free trade agreements with Slovenia and the Former Yugoslav Republic of
Macedonia.  These tariff rate quotas were applied for agricultural and food products.  Administration
and allocation of the tariff rate quotas were based on three criteria which were always combined;  (i)
allocation to traditional traders, with at least 10 per cent reserved for new entrants, (ii) regional
criteria (equal treatment of importers from all Croatia's regions), and (iii) the needs of the domesticprocessing industry.  In the future, the main criteria would be first come/first served.  On a further
point, the representative of Croatia confirmed that all MFN tariff rate quota access provided for under
Section I, Part I-B of Croatia's Schedule of Conc essions and Commitments on Goods will be strictly
in addition to any preferential tariff quota access that may be provided, where such MFN and
preferential access affect the same products.
55. The representative of Croatia said that exemptions from payment of customs duty could be
granted in accordance with the provisions and procedures of the Customs Law.  Article 18 of the
Customs Law established regulations for goods not subject to customs payment such as goods in
transit, international tender documents and other printed or recorded material related to culture,science, education, etc.  Further exemptions were outlined in Articles 24 to 33 for items imported by
foreign diplomatic and consular offices in Croatia in accordance with their needs and requirements for
official purposes;  articles for personal use when travelling abroad;  goods received for free from
abroad by legal or natural persons;  goods destined for disaster relief and humanitarian purposes;  and
importation of industrial and other equipment related to foreign investment (Article 29).  ExemptionsWT/ACC/HRV/59
Page 16
could also be granted under Article 54 - imports on the basis of tariff quotas - and Article 59
(commitments under international agreements).  He added that the tariff exemptions were non-
discriminatory and of a general nature.
Fees and Charges for Services Rendered
56. The representative of Croatia said that Croatia charged a stamp tax at a flat rate of HRK 60
per customs declaration (HRK 50 for the declaration, and HRK 10 for the registration document) in
accordance with the Law on Administrative Fees.  The stamp tax covered registration of the
consignment, documentation control, registration and certification of documents, inspection of the
vehicle and goods, data entry, calculation of duties and taxes, and issuance of the receipt.  In addition,
a 1 per cent ad valorem fee had been levied on the basis of Article 35 of the Customs Law.  The fee
represented the cost of record-keeping at customs.  The ad valorem customs registration fee had beenabolished in the new Customs Tariff Law on 1 July 1996.  He confirmed that Croatia did not require
consular authentication or registration of customs documents in the country of origin.
57. Asked to list by HS tariff line numbers products subject to taxes and administrative charges
for environmental purposes, the representative of Croatia said that imported waste was subject to anadministrative tax of HRK 20,000.  This tax was not levied on each consignment, but charged when a
licence, valid for one year or more, was issued by the State Directorate for Environment.  Domestic
enterprises dealing with waste and hazardous waste were subject to a stamp tax of HRK 1,000.
Imports classified as waste were determined in accordance with the Law on Waste and relevant
international conventions such as the Basle Convention.  Having considered comments by members,his Government had issued a new Decision on 24 June 1999, reducing the stamp tax for importation
and exportation of waste to HRK 2,000.  The representative of Croatia confirmed that all imported
industrial goods not classified as waste in regular customs clearance procedure were not, and would
not be, subject to administrative fees and additional taxes for environmental purposes.
58. The representative of Croatia confirmed that, from the date of accession, Croatia would
impose any fees or charges for services rendered related to importation or exportation only in
conformity with Article VIII of the GATT 1994.  Information regarding the application and level of
any such fees, revenues collected and their use, would be provided to WTO Members upon request.
The Working Party took note of these commitments.
Application of Internal Taxes to Imports
59. The representative of Croatia said that certain products - coffee, coffee husks and skins,
coffee substitutes containing coffee, alcoholic and non-alcoholic beverages, tobacco and tobacco
products, motor vehicles, motorcycles, vessels, aircraft for private use and petroleum products - were
subject to excise tax in accordance with the provisions of the Law on Special Taxes on Products and
the Law on Excise Duties on Automobiles and other Motor Vehicles, Vessels and Aircraft.  He
acknowledged that excise taxes on beer, non-alcoholic and alcoholic beverages, tobacco and tobacco
products had differentiated between imported and domestically-produced goods until January 1998.
Parliament had adopted the Law Amending the Law on Excise Taxes on Alcoholic Beverages in
October 1998, and the Law Amending the Law on Excise Taxes on Tobacco and Tobacco Products on18 June 1999.  The amended Law had been applied since 1 July 1999, thus bringing all excise taxes
into conformity with Article III of the GATT.  Th e products subject to excise taxes and the respective
tax rates per July 1999 are enumerated in Table 4.WT/ACC/HRV/59
Page 17
Table 4:  Excise Taxes in Croatia (rates applied in July 1999)
Product description Tax rate (in kuna)
Coffee, per kg:
Non-roasted coffee 3.60
Roasted coffee 9.00
Coffee husks and skins 12.00
Coffee substitutes containing coffee 15.00
Non-alcoholic beverages, per hl: 40.00
Beer (alcoholic), per hl: 80.00
Beer (non-alcohol – max 0,5 per cent vol), per hl: 40.00
Alcohol and alcoholic beverages, per litre absolute alcohol 40.00
Tobacco and tobacco products:
Tobacco, per kg 35.00
Cigarettes:
Group A*- Popular group 3.90
Group B*- Standard group 4.30
Group C *- Extra group 7.00
Cigars, per piece 1.00
Cigarillos, 20 pieces 4.00
Petroleum products:
Petrol, types such as MB-98, MB-86 2.10
Petrol, types such as BMB-98, BMB-95, BMB-91 1.80
Diesel, such as D-i, D-2, D-3 1.60
Heating oil - extra light and special light 0.30
Automobiles:
Power 55-75 kW
"
Power 75-90 kW
"-
-
-
-new
used
new
used3,000.00
2,000.00
7,000.00
5,000.00
Power 90-110 kW"
Power more than 110kW
"-
-
-
-new
used
new
used15,000.00
11,000.00
30,000.00
22,000.00
Motorcycles
engine power in kW
more than not exceeding
6 20 2,000.00
20 55 4,000.00
55 75 7,000.00
75 10,000.00
Vessel without cabin
length in meters
more than not exceeding
8 12 6,000.00
12 15 12,000.00
15 24,000.00
                                                     
* The characteristics of classification into the gr oups A, B and C are set according to the Law on 
TobaccoWT/ACC/HRV/59
Page 18
Product description Tax rate (in kuna)
Vessel with cabin
length in meters
more than not exceeding
8 12 15,000.00
12 15 45,000.00
15 90,000.00
Aircraft for private use
number of seats
more than not exceeding
1 4 7,000.00
5 12 35,000.00
13 50 75,000.00
50 150,000.00
60. Asked about the taxation of used automobiles, the representative of Croatia said that excise
duty on all products liable to such duty was paid when the product was distributed for the first time in
the Croatian market, any further resale was charged VAT only.
61. The representative of Croatia said that goods and services had been subject to turnover tax
pursuant to the provisions of the Law on the Turnover Tax of Products and Services until the end of1997.  The turnover tax had been replaced by value added tax, levied at a single rate of 22 per cent,
with the entry into force of the Law on Value Added Tax on 1 January 1998.  The Law on Value
Added Tax provided full national treatment.  Busi nesses, whose turnover did not exceed HRK 85,000
(in the previous year, after certain deductions), could opt to be exempt from paying VAT.
62. Exempt from payment of VAT in domestic trade (Article 11) were house rents (residential);
banks, saving banks, credit and saving institutions as well as insurance and reinsurance companies;
medical services, dentist and similar services 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;  and services provided and goods deliveredby religious communities and institutions, and cultural and similar institutions.  He confirmed that
VAT exemptions for services such as medical and educational services were applied equally to
domestic and foreign service suppliers in all four modes of delivery.
63. Real estate transactions, except new construction;  company shares;  land;  and money and
securities transactions and deliveries were exempt from the value added tax.  Also exempt from VAT
were certain imported goods and goods in transit, namely temporary imports of goods exempt from
customs duty;  imports of humanitarian aid, ex cept petroleum and petroleum products, tobacco,
tobacco products, alcohol and alcoholic beverages;  imports of bullion by the Croatian National Bank;
imports of foreign legal means of payment, securities and company shares; and transit of goods
through the customs territory of the Republic of Croatia.  All exported goods were exempt from value
added tax.  The representative of Croatia confirmed that Croatia levied only customs tariffs, VAT andexcise taxes on imports.
64. The representative of Croatia stated that, from the date of accession, Croatia will apply its
domestic taxes, including those on products listed in Table 4, in compliance with Articles I and III of
the GATT 1994.  The Working Party took note of this commitment.
Quantitative Import Restrictions, including Prohibitions, Quotas and Licensing Systems.
65. The representative of Croatia said that the Law on Trade contained provisions in Articles 40
to 43 regarding the imposition of import quotas, including for the purpose of protecting infantindustries.  In view of Croatia's situation in the post-war period, and the level of economicWT/ACC/HRV/59
Page 19
development, the Croatian Government had considered itself entitled to recourse to GATT
Article XVIII, but as the economic situation had im proved the Government had decided not to invoke
GATT Article XVIII, and the provisions of the Law on Trade had been changed accordingly.  The
provisions in Article 40, which had authorized the Government to introduce quantitative import
restrictions for the protection of infant industries , had been abolished through the Law Amending the
Law on Trade (Article 15), adopted on 30 June 1999.
66. A number of members agreed that it would be both appropriate and useful for Croatia to
consider its industry development needs in the process of negotiating its accession to the WTO.
Planned policies to develop industries through trade measures should be made known prior to
accession, and industry protection needs should be taken into account during the market access/tariff
negotiation phase of an accession.  However, it would be neither appropriate nor useful for an
applicant for WTO accession to seek accession on the basis that it expected to have recourse to importquotas under the infant industry provisions under the GATT 1994.  The Multilateral Trading System
allows for industry protection through tariffs rather than through quantitative restrictions, and this
should be reflected in Croatia's accession commitments.
67. The representative of Croatia added that his Government 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
steel products, and machinery to facilitate the establishment of a market economy and assist areas
damaged by war.  Asked about a temporary limitation/ban on sugar imports, the representative ofCroatia said that the import ban on sugar was lifted on 2 May 1998 (Official Gazette No. 60/1998).
68. The representative of Croatia provided information on import licensing procedures in
document WT/ACC/HRV/25.  The most  recent decision on goods subject to import licences had been
passed by the Government on 12 July 1996 in accordance with Article 46 of the Law on Trade(Table 5 - see Annex).  The licensing system c ould not be abolished without legislative approval
under Croatia's legal system.  He added that import licences applied to the usual products allowed by
Articles XX and XXI of the GATT 1994.  In accordance with the Law on Trade, licences could be
prescribed for the purpose of fulfilling international agreements, ensuring State security, the
protection of human, animal and plant health and protection of the environment, maintenance ofpublic morals, and to control trade in works of art and precious metals.  Import licences were
compulsory for tanks, war vessels, military arms, revolvers, pistols, guns, parts and equipment for
arms, ammunition, swords and sabres, nuclear reactors, radioactive materials, isotopes, derivatives,
hydrocarbons, mint postage stamps, gold, coins, iron tubes and bars, and tractors (more than five
years of age).  The licences were issued by the Ministry of Economy, which was also the licensing
authority for imports of substances affecting the ozone layer (Montreal Convention).  In addition,
drugs and medical products, glands and other organs, vaccines, drugs, pharmaceutical goods, dialysisappliances, and narcotics were subject to licences issued by the Ministry of Health;  imports of
veterinary drugs and vaccines were licensed by the Ministry of Agriculture and Forestry;  and the
State Office for Standardization and Metrology issued import licences for certain scales and
measuring instruments.  The Ministry of Maritime Affairs, Transport and Telecommunications was
the licensing authority for imports of telecomm unications instruments and appliances such as
transmitters, radars, radio remote controls and radio navigation equipment.  Licences for imports of
armaments and military equipment for the Croatian Army and Croatian Police were issued by the
Ministry of Defence and the Ministry of Internal Affairs.  The licensing regime applied equally to
imports from all countries.
69. The purpose of the licensing regime was to monitor and control import and export of goods
which for various reasons were classified as sensitive, and Croatia had no intention to limit the
quantity and value of imports, except as provided for in international conventions such as the
Montreal and Basel Conventions.  The Decision on goods subject to the import and export licence
regime had been amended on several occasions over the past threeyears (Official Gazette Nos. 58/96,WT/ACC/HRV/59
Page 20
67/96, 15/97, 95/97, 132/98, 8/99, 15/ 99 and 79/99) with a view to minimizing the volume of goods
subject to licensing and to ensure that licences were  issued on an automatic basis.  Import licences for
combine harvesters had been abolished in 1997.  The Government had reviewed the import situation
for other products in 1998, and had decided to abolish import licences for iron tubes and bars as from
1 January 1999.  He added that the import licences for iron tubes and bars had been temporary
surveillance licences, issued to gather trade data.  Import licences for precious metals and coins weregranted automatically and immediately upon request.  The most recent Decision, adopted on 22 July
1999, had removed import licences for dishwashers and machinery for cleaning and drying bottles.
70. Licence applications were submitted to no more than one administrative body.  The amount
and type of information to be submitted was stipulated in the Decision on goods subject to import and
export licences.  As the licences carried no limitation on the quantity or value of imports, applications
could be submitted until the very moment of importation.  The validity of a licence could be extendedupon request of the licence holder.  An administrative fee of HRK 125.00 was charged for each
import licence. Licences were not transferable between importers.  Applications could only be
rejected if the importer did not fulfil the conditions stipulated in international conventions for specific
goods or did not meet standard criteria for the transportation of certain goods.  An importer denied an
import licence could file an administrative lawsuit with the Administrative Court of the Republic ofCroatia.
71. A member was concerned about reports that  Croatia had banned importation of certain
products (pork, wheat, flour, sugar, etc,), and imposed additional restrictions on steel, particularly as
these appeared to be recent measures.  Acceding countries were expected to observe WTO provisionsfrom the time of application, and Croatia would need to demonstrate tangibly that previous measures
for trade regulation had been permanently discarded.  The representative of Croatia replied that
temporary import bans on pork, wheat, flour and sugar had been abolished.  He confirmed that all
previous restrictive measures for import regulation had been permanently discarded, and that there
were no bans, quantitative restrictions, or restrictive licensing requirements on imports at present.Licences were still applied on iron tubes and bars imported from non-WTO members.
72. The representative of Croatia confirmed that, after accession, Croatia would take recourse to
quantitative import restrictions only in situations envisaged in WTO Agreements, including Article
XII of the GATT and according to the WTO Agreement on Safeguards.
73. The representative of Croatia confirmed that Croatia would, from the date of accession,
eliminate and shall not introduce, re-introduce or apply quantitative restrictions on imports, or other
non-tariff measures such as licensing, quotas, bans, permits, prior authorization requirements,
licensing requirements and other restrictions having equivalent effect that cannot be justified under
the provisions of the WTO Agreement.  He further confirmed that the legal authority of the
Government of Croatia to suspend imports and exports or to apply licensing requirements that couldbe used to suspend, ban, or otherwise restrict the quantity of trade will be applied from the date of
accession in conformity with the requirements of the WTO, in particular Articles XI, XII, XIII, XVIII,
XIX, XX and XXI of the GATT 1994, and the Mu ltilateral Trade Agreements on Agriculture,
Application of Sanitary and Phytosanitary Measures, Import Licensing Procedures, Safeguards and
Technical Barriers to Trade.  The Working Party took note of these commitments.
Customs Valuation
74. The representative of Croatia provided information on the implementation and administration
of the customs valuation agreement in documen t WT/ACC/HRV/19.  Rules on customs valuation
were laid down in Articles 36 to 48 of the Customs Law of the Republic of Croatia and implemented
through the Statute on the Conditions and Method of Determining Tariff Bases (the Statute).  Both
regulations had been assumed from the former Yugoslavia (which had joined the GATT in 1973).
Article 36 (1) of the Customs Law stipulated customs valuation based on transaction values.WT/ACC/HRV/59
Page 21
75. A member stated that Croatia's legislation was not fully consistent with the Agreement on the
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (the Customs
Valuation Agreement), in particular with respect to (i) Article 2 - the use of transaction value of
identical merchandise when customs value could not be determined under the provisions of Article 1
of the Agreement;  (ii) the prohibitions in the Agreement regarding the determination of customs
value based on the acceptance of the higher of two alternative values or minimum customs values;and (iii) a system of reference prices established under Article 44 of the Customs Law.  The
representative of Croatia replied that the first point of apparent non-conformity with WTO rules was
due to a translation error.  He acknowledged that the Customs Act did not explicitly prohibit the
acceptance of the higher of two alternative values, however, in practice the lowest value was chosen.
The Customs Law would be amended to include all prohibitions contained in Article 7.2 of the
Agreement, including a ban on minimum customs valu es.  In his view, Article 44 of the Customs Law
did not provide for a reference price system.  A valuation list had been intended for informationpurposes and to facilitate the work of Customs in its fight against fraud, however, no such list had
been established.
76. On a further point of clarification he stated that according to Article 10 of the Customs Law,
test values would only be used in transactions betw een related parties at the request of the importer, as
provided for in Article 2.1(b) of the Customs Valuation Agreement and the corresponding
Interpretative Note of the Customs Valuation Agreement.  He therefore considered Croatian
legislation to be in full conformity with the WTO.  His authorities were not familiar with the 1984
Decision on the Treatment of Interest Charges in the Customs Value of Imported Goods.  The
Customs Law would be revised to include the operative Interpretative Notes to the Customs ValuationAgreement and to align its Article 36 (5) and 41 more closely with Article 8 of the Agreement.
77. Some members sought a commitment from Croatia to apply fully Article VII and the WTO
Agreement on the Implementation of the Article VII,  including the Interpretive Notes, from the time
of its accession to the WTO.  In their view, Croatia should accede to the WTO without recourse to anyspecial and differential treatment provisions of Article 20 and Annex III of the Customs Valuation
Agreement.  Croatia was also asked to provide specific information on the procedures invoked to
ensure full compliance with Article 13 of the Agreement on Customs Valuation pertaining to the
ability of importers to withdraw goods from customs even though the final valuation determination
had not been made.
78. The representative of Croatia confirmed that Croatia would be implementing fully the WTO
Agreement on the Implementation of Article VII of the GATT 1994 from the date of accession.
Croatia would appreciate technical assistance form WTO members in changing its legislation related
to customs valuation.
79. A member commended Croatia for its efforts to implement fully the WTO Customs Valuation
Agreement upon accession, and looked forward to reviewing draft legislation at the earliest
opportunity.  Croatia was specifically requested to incorporate in its new legislation the provisions of
Decision 4.1, of the Committee on Customs Valuati on concerning the "Valuation of Carrier Media
Bearing Software for Data Processing Equipmen t" and the "Decision on the Treatment of Interest
Charges in the Customs Value of Imported Goods'';  provisions covering currency conversion,confidentiality, the right of appeal and transparency (Articles 9-12 of the Agreement);  the text of the
"Interpretative Notes to the Valuation Agreement";  and to ensure that all the prohibited forms of
valuation were explicitly listed in the text of the new law.
80. In reply, the representative of Croatia said that the customs valuation provisions in the new
Customs Law were in conformity with Article VII of the GATT and the Agreement on
Implementation of the Article VII of the GATT 1994.  Although the new Customs Law, passed by
Parliament on 30 June 1999, was set to enter into force on 1 January 2000, its provisions relating to
customs valuation would be applied as of 24 September 1999.  The Law incorporated provisions
covering currency conversion, confidentiality, the right of appeal and transparency, as well as theWT/ACC/HRV/59
Page 22
Decision of the Committee on Customs Valuation concerning the treatment of interest charges in the
customs value of imported goods (in Article 39, paragraph 1(c)), and the Decision concerning
valuation of carrier media bearing software for data processing equipment (in Article 43).  The "sale
for exportation value" for cinematographic films did not include royalties or licensing fees for the
right to reproduce or distribute the films, as provided for in Croatia's relevant legislation amending
Article 38 and 43 of the Customs Law.  Articles 9 and 10 of the Agreement had been incorporated inArticles 47 and 45, respectively, of the new Law.  Article 44, paragraph 4 of the Law incorporated
Article 11 of the Valuation Agreement, and Article 12 of the Valuation Agreement was incorporated
in Article 44, paragraph 5 of the Law.  The prohibited forms of valuation were explicitly listed in
Article 37 of the new Customs Law.  The text of the "Interpretative Notes to the Valuation
Agreement" would be incorporated in a Regulation, which would be adopted following the entry into
force of the customs valuation part of new Customs Law (in October 1999).  This regulation would
stipulate further detailed conditions and procedures for determining customs valuation.
81. Having examined the draft Customs Law in view of the requirements of the Customs
Valuation Agreement, a member pointed out that provisions providing for the right of appeal without
penalty to a judicial authority were unclear, and that the draft Law did not indicate how Croatia would
implement its transparency obligations.  Croatia had also failed to implement fully the Interpretative
Notes set forth in Annex 1 of the Agreement.  Article 46 of the draft Law - which allowed the
establishment of "special rules for determining the customs value of goods" - was unacceptable, and
Article 41.1 of the draft Law, in particular the term "counter-value", needed further clarification.  A
statement in Article 44.1 regarding transaction value was not technically accurate, and should be
deleted.
82. The representative of Croatia replied that Article 44 of the draft Customs Law had been
revised to provide for the right of appeal in acco rdance with Article 11 of the Customs Valuation
Agreement.  Article 12 of the Agreement (transparency) was included in Article 44.5 of the new
Customs Law.  Articles 44.1 and 46 of the draft Law had been deleted, and the language inArticle 41.1 had been revised.  He confirmed that currency rates used in determining customs value
were duly published as provided for in Article 46 of the Customs Law.  Currency rates were fixed in
accordance with the provisions of the Law on Foreign Exchange Operations, and set and published by
the Croatian National Bank (the central bank).  The currency rates were published in the daily
newspapers, the Croatian National Bank official news letter, and were available on the Internet.  On a
further point raised by a member, he confirmed that the Regulations had been amended to comply
with Article 38 of the Customs Law, which stated clearly that royalties and license fees related to the
goods being valued were added to the price actually paid or payable in determining the transaction
value.  Such charges for the right to reproduce or distribute cinematographic films were not included,
however, when determining the "sale for exportation value" for cinematographic films, nor added
toward the dutiable value as provided for in Croati a's relevant legislation amending Article 38 and 43
of the Customs Law.  He also confirmed that Article 37 of the Customs Law stipulated that no
customs value would be determined on the basis of minimum customs values, and that Croatia would
not use any form of price lists to value imports after accession.  With regard to the use of a
Declaration on the customs value (DCV) or declaration on the customs value, he said that the DCV
was fully in compliance with the WTO Valuation Ag reement and was similar to the one used in the
European Union and other WCO members.  The DCV had been communicated to the TechnicalCommittee for the evaluation of the customs value of the WCO, and had been published and
transmitted to other WCO members.  He also confirmed that, if and when the Technical Committee
might decide that the DCV would cease to be used, Croatia would accordingly accept such a decision.
Croatia would include the Interpretative Notes set forth in Annex 1 of the Customs Valuation
Agreement in its implementing regulations, to be enforced as from October 1999.
83. The representative of Croatia confirmed that Croatia would fully apply the WTO provisions
concerning customs valuation from the date of accession without recourse to a transition period,
including the Agreement on the Implementation of Article VII of the GATT 1994.  In this regard,
minimum import valuation provisions had been eliminated and the new Law and its implementingWT/ACC/HRV/59
Page 23
regulations incorporated Annex I (Interpretative Notes) and provisions for the Valuation of Carrier
Media Bearing Software for Data Processing Equipment (Decision 4.1).  He further confirmed that
the Customs Law had been amended so that the "sale for exportation value" of cinematographic films
imported in Croatia would not include royalties and licence fees for the right to reproduce or
distribute them, nor would such charges be added toward their dutiable value.  The Working Party
took note of these commitments.
Rules of Origin
84. A member noted that Croatia was developing rule s of origin to ensure conformity with the
WTO Agreement on Rules of Origin and requested a description of the rules to be used for non-
preferential and preferential trade.  Croatia was also asked to describe how it would 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, within 150 days of requests by exporters and
importers, as provided under Article 2 (d) of the Agreement and Annex II, and outline the process of
appeal against determinations of origin.
85. The representative of Croatia said that the basic principles of rules of origin were regulated
under Articles 25 and 26 of the Law on Trade.  The Government had adopted a new Regulation on
Rules of Origin on 24 June 1999.  The new regulation, taking into account achievements within the
World Customs Organization on harmonization as well as the regulations and experience of WTO
Members, complied fully with the relevant WTO provisions.  The rules of origin were described and
explained in detail in the new regulations, notably the criteria for determining "essential change".  Thelast essential changes conferring origin according to the present regulation involved either a change of
tariff heading in relation to the non-originating materials used in the production of finished products,
or non-originating materials not exceeding 50 per cent of the total value of the finished product.
Fulfilment of one or the other criterion was sufficient in conferring origin.  A regulation including
company headquarters location among the requirements in determining product origin was valid onlyin the context of preferential duty treatment, and had not been applied since 1993.
86. Asked to provide further details on Croatia's preferential and non-preferential rules of origin
contained in new regulations in preparation, the representative of Croatia said that his Government
was waiting for harmonized rules of origin to be worked out in the WTO and WCO so thatarrangements worked out at the international level could be included in Croatia's regulations.  Croatia
submitted a translated copy of its regulations concerning rules of origin to the Working Party.
87. The representative of Croatia confirmed that Croatia would remedy any departures from full
conformity with the WTO Agreement on Rules of Origin prior to its accession, and that by that time,
Croatia's application of rules of origin for both MFN and preferential trade would be administered in
conformity with the provisions of the Agreement.  Croatia would adopt the Harmonized Rules ofOrigin once finalized by the WTO in co-operation with the World Customs Organization.
88. The representative of Croatia confirmed that from the date of accession its laws and
regulations on rules of origin would be in conformity with the provisions of the Agreement.  In this
regard, the requirements of Article 2(h) and Annex II, paragraph 3(d), i.e., that for non-preferentialand preferential rules of origin, respectively, its customs authority or preshipment inspection authority
acting on its behalf will provide upon request an assessment of the origin of the import and outline the
terms under which it will be provided.  The Working Party took note of this commitment.
Other Customs Formalities
89. The representative of Croatia said that goods submitted for customs clearance were at the
disposal of the importer upon payment of customs duty.  An importer could be allowed a five-day
period to pay the duty provided a Customs Guarantee was submitted to the customs office.WT/ACC/HRV/59
Page 24
90. A member, referring to press reports indicating that a considerable quantity of goods had been
arriving in Croatia without payment of customs duties through the border with the Bosnian
Federation, stated that it was critical for the accession process that Croatia address the issue of
uniform application of its customs regime vis-à-vis other countries.  This member requested a report
from Croatia on how it planned to implement strict customs enforcement at its borders prior to WTO
accession.  In reply, the representative of Croatia said that his Government had taken concrete stepsdirected towards enforcing strict implementation of rules of origin in trade with Bosnia and
Herzegovina under the bilateral Free Trade Agreement, in spite of protests and border crossing
blockades on the Bosnian side of the border by farmers from Bosnia and Herzegovina.  Furthermore,
steps had been taken to improve co-operation and th e exchange of electronic information between the
customs offices of Croatia and Bosnia and Herzegovina.  Together with Bosnia and Herzegovina, and
with World Bank Funding, Croatia was preparin g measures aimed at improving border-crossing
infrastructure, decreasing the number of border crossings and bringing the bilateral free tradelegislation in line with WTO standards and national legislation.  He therefore concluded that the
Croatian authorities had regained full customs and security control of the border with Bosnia and
Herzegovina.  The border and customs regime with Bosnia and Herzegovina now resembled closely
the regime prevailing at Croatia's borders with other countries.
91. A member commended Croatia for recognizing that its current customs control with the
Federation of Bosnia and Herzegovina was inadequate and inconsistent with WTO provisions, and
Croatia's intention to enforce WTO provisions and the terms of its accession package within its
customs territory.  This member requested Croatia to report on specific steps taken to regularize the
current WTO-inconsistent customs regime in place.  Croatia was urged to strictly define its customsterritory vis-à-vis the Federation of Bosnia and Herzegovina and reminded that Croatia's inability to
do so would bring into question its ability to enforc e WTO Agreements in area such as taxes, charges,
non-tariff requirements, intellectual property protection and MFN application of standards and
sanitary requirements, and would also put into question the value of MFN commitments undertaken in
market access negotiations.
92. Another member drew the attention of the Working Party to the question of current practices
in the application of rules of origin in customs procedures on the border between Croatia and Bosnia
and Herzegovina.  Preferential rules of origin applied to goods originating in one part of the territory
of Bosnia and Herzegovina, and to goods regarded as originating in Croatia and exported to that partof the territory of Bosnia and Herzegovina.  In the view of this member, this practice resulted in
different customs treatment of goods in trade between Croatia and Bosnia and Herzegovina.
93. The representative of Croatia acknowledged that the Free Trade Agreement and the
accompanying preferential rules of origin covering trade with one part of Bosnia and Herzegovina did
not meet the requirements of Article XXIV of GATT 1994.  The 1995 Agreement on Economic
Cooperation had been abolished on 15 May 1999, thereby reintroducing MFN-based trade until a newFree Trade Agreement would be concluded with Bosnia and Herzegovina as a whole.  His
Government had proposed to the Council of Ministers of Bosnia and Herzegovina to negotiate a Free
Trade Agreement covering substantially all trade between Croatia and the whole territory of Bosnia
and Herzegovina.  His Government expected the new FTA to be signed and implemented prior to
Croatia’s accession to the WTO.  He confirmed that, irrespective of whether or not Croatia andBosnia conclude an FTA, Croatia's treatment of imports from all parts of Bosnia and Herzegovina
would correspond to its WTO obligations, and that imports would receive equal treatment as provided
for in Article I of the GATT.
94. The representative of Croatia confirmed that Croatia was in a position to implement strict
customs enforcement on all its borders, including the border with Bosnia and Herzegovina.  The
customs territory of the Republic of Croatia, within which the customs regulations and controls were
enforced, corresponded exactly to the territorial boundaries of the Republic of Croatia.  He confirmed
Croatia's determination to enforce WTO provisions, rules and disciplines and the terms of Croatia’s
WTO accession package within these boundaries to ensure proper implementation of all WTOWT/ACC/HRV/59
Page 25
principles, in particular the principle of uniform application of Croatia's customs regime towards all
countries according to the MFN clause, prior to the accession to the WTO.
Anti-Dumping, Countervailing Duties, Safeguard Regimes
95. The representative of Croatia said that the new Law on Trade contained provisions on anti-
dumping measures (Articles 48 and 49), countervailing duties (Article 50) and safeguard measures
(Articles 38 and 39).  Moreover, Article 40 of the Law on Trade authorized the Government to
introduce import quotas inter alia as safeguard measures.  Article 55 of the Customs Law, intended as
a safeguard clause allowing the imposition of a 15 per cent special customs protection duty, had never
been applied, and had been deleted in the new Customs Law.  He confirmed that no other provisions
in existing or draft legislation dealt with trade remedy measures.
96. A member noted that Croatia's legislation in the anti-dumping area was not fully consistent
with WTO requirements, notably regarding the determination of dumping.  The representative of
Croatia acknowledged that Article 48 of the Law on Trade was not compatible with Article 2 of the
Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
(the Anti-Dumping Agreement) with respect to the definition of the substantive criteria for assessingdumping.  Article 48 would accordingly be revised to ensure WTO conformity.  He added that
Article 49 would also be amended to bring it into conformity with the "standing requirement" of
Articles 4 and 5 of the Anti-dumping Agreement.  He  stressed that the anti-dumping provisions in the
Law on Trade could not be applied in the absence of a special implementing regulation.  This
regulation, covering the anti-dumping procedure and the conditions for the application of theadditional duty, would be in compliance with the Anti-Dumping Agreement.
97. Regarding the imposition of countervailing measures, a member noted that the Law on Trade
did not provide for an injury requirement, nor did it appear to differentiate between so-called
actionable and non-actionable subsidies within the meaning of Article 8 of the Agreement onSubsidies and Countervailing Measures.  The representative of Croatia replied that an injury criterion
and a provision relating to the treatment of non-actionable subsidies had been inserted in the Law
Amending the Law on Trade, adopted by Parliament on 30 June 1999.
98. Noting that Croatia planned to introduce detailed regulations for the application of safeguard,
anti-dumping and countervailing measures, a member asked that legislation authorizing Croatia's use
of trade remedies be submitted to the Working Party for review and comment.  This review should
take place prior to the completion of Croatia's accession to ensure the conformity of the legislation
with WTO provisions.  In reply, the representative  of Croatia said that the Law Amending the Law on
Trade would harmonize provisions regarding the application of safeguard, anti-dumping and
countervailing measures to incorporate fully the basic and key provisions of the WTO Agreements to
ensure the conformity of Croatian legislation with these Agreements.  After adoption of this Law byParliament, his Government would issue regulations laying down detailed rules of procedure and
determining other technical issues related to the application of such measures.
99. The representative of Croatia said that Croatia would not apply any anti-dumping,
countervailing or safeguard measure until it had notified and implemented appropriate laws inconformity with the provisions of the WTO Agreements on the Implementation of Article VI, on
Subsidies and Countervailing Measures, and on Safeguards.  In the elaboration of any legislation
concerning anti-dumping duties, countervailing duties and safeguards, Croatia would ensure their full
conformity with the relevant WTO provisions, including Article VI and XIX of the GATT 1994 and
the Agreement on the Implementation of Article VI, the Agreement on Subsidies and CountervailingMeasures and the Agreement on Safeguards.  After such legislation was implemented, Croatia would
only apply any anti-dumping duties, countervailing duties and safeguard measures in full conformity
with the relevant WTO provisions.  The Working Party took note of these commitments.WT/ACC/HRV/59
Page 26
B. EXPORT REGULATIONS
Customs Tariffs, Fees and Charges for Services Rendered, Application of Internal Taxes to Exports
100. The representative of Croatia said that Croatia had eliminated export duties, which had been
levied temporarily on certain items (metal scrap and wood timber).  The Government Regulationstipulating export duties for these items had been abolished in 1996.  However, by abolishing that
particular Regulation, Croatia had not eliminated the authority to apply export tariffs as stipulated in
Article 34 (2) of the Customs Law, enabling his Government to impose export tariffs in exceptional
cases for the protection of exhaustible natural resources, or to ensure essential materials to the
domestic industry and to prevent shortages in domestic supply.  He added that, at the moment, Croatia
did not apply any export tariffs or taxes.
101. The representative of Croatia confirmed that after accession to the WTO, Croatia would apply
export duties only in accordance with the provisions of the WTO Agreement and published in the
Official Gazette "Narodne Novine".  Changes in th e application of such measures, their level and
scope would also be published in the Official Gazette "Narodne Novine".  The Working Party took
note of this commitment.
Export Restrictions
102. The representative of Croatia said that the Law on Trade allowed the imposition of export
quotas in exceptional cases for the purpose of protecting non-renewable natural resources.
Accordingly, the main products subject to export quotas in accordance with Government Decision of12 July 1996 had been corn, crude oil, natural gas, wood, raw leather, glass, and newspaper waste.
Quotas had been set for a maximum period of one year, and by 1 November each year, the
Government had been obliged to pass a regulation stipulating the quantity allowed to be exported in
the following year.  The criteria and conditions applied in the allocation of the quotas - predominantly
public tendering - had been laid down by the Government.  The invitation to tender had beenpublished in newspapers at least eight days prior to the auction.  Minimum 10 per cent of the quota
had been set aside for new producers, the remaining 90 per cent were allocated on the basis of best
offer.  Quotas had been allocated twice a year, in  principle, and any domestic or foreign natural or
legal person duly registered in the Republic of Croatia could apply for the quotas.  Those not
registered with the Commercial Court needed to apply for a quota through a registered exporter.
103. A member reminded Croatia that all quantitative restrictions not justified under specific WTO
provisions had to be eliminated or otherwise brou ght into conformity with WTO rules upon accession.
The representative of Croatia replied that his Government, continuing the policy of bringing Croatia's
trade policy measures into conformity with the principles of the GATT 1994, had adopted decisions
abolishing the export quotas for crude oil, gas, corn and semi-processed leather at the end of 1997 and
in mid-1998.  A Government Decision to abolish all remaining export quotas, effective 1 January1999, had been passed on 8 October 1998.  After accession Croatia would, if necessary, consider the
use of other, WTO-consistent trade policy measures (such as export duties) to ensure supplies of
essential raw materials for the domestic market.
104. The representative of Croatia said that Croatia licensed exports of certain items (96 tariff
positions) for statistical and monitoring purposes.  The products concerned are listed in Table 6 (see
Annex).  The Ministry of Economic Affairs issued licences automatically within 14 days upon receipt
of the application.  He confirmed that Croatia had eliminated all export quotas, bans and other forms
of export restrictions as of 1 January 1999.
105. The representative of Croatia confirmed that Croatia had eliminated all export quotas, bans
and other forms of export restrictions as of 1 January 1999, and said that from the date of accessionWT/ACC/HRV/59
Page 27
export restrictions would only be imposed in conformity with relevant provisions of WTO
Agreements, including Article XI of the GATT.  The Working party took note of this commitment.
Export Subsidies
106. The representative of Croatia said export incentives had been allowed under the old Foreign
Trade Operations Act, but no support had been provided for the export of goods.  Croatia thus did not
apply any export subsidies.  He added that the new Law on Trade contained no provisions on export
subsidies.  The Croatian Bank for Reconstr uction and Development (HBOR) – a State-owned
investment bank – had been established and an export financing and guarantee system had come into
operation in late 1998.  The system was based on the Berne Union and OECD consensus criteria.  The
bank was funded through the Government budget, bond issues and external sources (World Bank,
EBRD, KfW, etc,).
107. Import duty was not charged on imports used in the production of goods to be exported and
which remained under customs control, provided such importation was reported in advance.  Re-
export transactions were also not subject to payment of duties, provided the imported goods would be
declared in accordance with the principles of temporary admission, and the customs authorities weresatisfied that the goods imported in this manner would leave Croatia.  Exported goods and re-export
transactions were also exempt from VAT.
108. The representative of Croatia confirmed that Croatia did not maintain subsidies including
export subsidies which met the definition of a prohibited subsidy, within the meaning of Article 3 ofthe Agreement on Subsidies and Countervailing Measures and that it would not introduce such
prohibited subsidies in the future.  The Working Party took note of this commitment.
C. INTERNAL POLICIES AFFECTING FOREIGN TRADE IN GOODS
Industrial Policy, including Subsidies
109. The representative of Croatia provided information on subsidy programmes in relation to
Article 25 of the Agreement on Subsidies and Countervailing Measures (circulated in document
WT/ACC/HRV/12).  Croatia did not have a subsidy programme per se, but rather an industryrehabilitation and reorganization programme.  The Government had assisted an area heavily
devastated during the war by financing the payroll of seven enterprises located there and involved in
the production of steel (Sisak Steel and TPK-EPO Zagreb), steel refining (Valjaonica Kumrovec), and
textiles (Dalmatinca, Diokom, Pazinka and Velebit)  at an accumulated cost of approximately US$3.2
million by mid-1996.  Croatian Railways had also been subsidized in the post-war period to the level
of some US$400 million by the end of 1996.  The Government also subsidized sea transport of
tourists by paying the difference between revenues and expenditure on popular tourist lines andconnections (about US$31 million in 1995 and US$35 million in 1996).
110. Requesting specific information on subsidies to shipbuilding, a member stated that Croatia
had generally not provided sufficiently detailed information on its subsidization policies, in particular
with regard to policy objectives, levels of subsidization, effects, and the duration of such policies.  Inreply, the representative of Croatia said that the shipbuilding industry had not been subsidized since
1991 to date.  A restructuring programme for shipyards was under way, but the form and scope of
subsidization had not yet been determined.  Asked about plans to harmonize subsidies to fisheries and
the canning industry to WTO requirements, he said that Croatia had provided data on subsidies which
were in accordance with WTO rules.  Information on subsidies and other forms of governmentsupport to industry and agriculture for 1997 and 1998 had been submitted to the Working Party in
December 1998.  The representative of Croatia provided detailed information on non-agricultural
subsidies in 1998 and 1999 in document WT/ACC/HRV /49.  He confirmed that Croatia maintained
no subsidies which met the definition of a prohibited subsidy within the meaning of Article 3 of the
Agreement on Subsidies and Countervailing Measures.WT/ACC/HRV/59
Page 28
111. The representative of Croatia confirmed that Croatia would not maintain, and from the date of
accession would not introduce, subsidies including export subsidies which met the definition of a
prohibited subsidy, within the meaning of Article 3 of the Agreement on Subsidies and Countervailing
Measures and would therefore not seek a transitional period for the elimination of such measures.  In
addition, he confirmed that all subsidy programmes would be administered in line with the Agreementon Subsidies and Countervailing Measures and that all necessary information on programmes to be
notified, if such exist, would be provided to the Committee on Subsidies and Countervailing Measures
in accordance with Article 25 of the Agreement upon entry into force of Croatia's Protocol of
Accession.  The Working Party took note of these commitments.
Technical Barriers to Trade, Standards and Certification
112. The representative of Croatia said that Croatia was implementing the requirements of the TBT
and SPS Agreements in laws and regulations which would be in force prior to accession to the WTO.
Among the laws and regulations already in force were the Law on Standardisation;  the Law on
Health Safety and Health Control of Foodstuffs and Goods of Personal Usage;  the Veterinary Law;
the Law on Plant Protection;  the Law on Pharmaceuticals and Medical Products;  the Regulation onPhytosanitary Inspection of Plants and Control of Plant Protection Products in the National Cross-
Boundary Transportation;  and technical regulations on quality and health requirements for each
product subject to quality and SPS control.  By end July 1999, Croatia planned to adopt a Law on
State Inspectorates (adopted on 30 June 1999) and issue Regulations related to the implementation of
the TBT and SPS Agreements, i.e. on the Procedure for the Adoption of regulations on BasicRequirements for Goods, Processes and Services (adopted on 27 May 1999);  on Methods and
Procedures of Quality Control;  on the List of Items Subject to Quality Control;  and on the Bearing of
Costs of Quality Control.  His Government was examining all existing regulations and, where
necessary, completing them with new provisions to ensure full conformity with the procedures for
preparing, adopting and applying new technical regulations and standards established in the TBT andSPS Agreements.  Croatia's implementing regulations would include a checklist of points addressing
the issues regulated in the TBT and SPS Agreements, including the Code of Good Practice for the
Preparation, Adoption and Application of Standards.
113. The representative of Croatia said Croatian state bodies were members of international and
European standardization organizations, including the ISO, IEC, ITU, EOQ, ETSI, CEN and
CENELEC.  The Law on Standardization (Standardization Act) had entered into force on 10 July
1996, and the application of Croatian standards was no longer obligatory as from 1 January 1997.
The new Law mandated new Croatian standards to be based also on international (ISO, IEC) or
regional/European standards, or where these did not exist, on the standards of other countries.  A large
number of Croatian standards would be prepared by accepting international and European standards.
A TBT enquiry point had been established in the State Office for Standardization and Metrology andhad been fully functional since 1 March 1999.  Draft standards were published in the State Office
Journal, allowing at least 30 days for comments and remarks from the public. New technical
regulation or national standards would be prepared only when the regulatory authorities considered
international standards to be ineffective or inappr opriate in Croatia due to climatic, geographical, or
technological factors.  In such cases, the regulatory authority would publish a notice in the OfficialGazette of the State Office for Standardisation and Metrology about the draft technical regulation or
standard, and supply a copy of the draft to the WTO Secretariat.  Copies of draft technical regulations
or standards would be provided to other WTO Members upon request.  The regulatory authority
would allow all interested parties 90 days to comment on draft technical regulations or standards.
Any comments would be duly considered and part ies making comments would be informed, and an
explanation would be provided, if their comments could not be accepted.  The final technical
regulation or standard would be published in the Official Gazette of the Republic of Croatia, with
copies submitted to the WTO Secretariat, and become applicable three months after publication in the
Official Gazette.  The State Office for Standardization and Metrology had informed the InternationalWT/ACC/HRV/59
Page 29
Organization for Standardization (ISO) about th e acceptance of the Code of Good Practice for
Standardization in October 1998.
114. A number of products were subject to quality control, based on 55 regulations on mandatory
testing and certification.  The rules on quality c ontrol applied equally to domestically-produced and
imported goods.  Border controls were carried out by market inspectors, who were officials of theState Inspection, in accordance with Article 6 of the Law on Import and Export Quality Control of
Goods.  Croatian goods were controlled during th e production process and when leaving the factory.
In addition, spot-checks took place at the retail level.  The list of affected products had been reduced
gradually to 29 items.  The products concerned and the relevant regulations are listed in Table 7 (see
Annex).
115. A list of legal persons authorized to perform mandatory product attestation was provided to
the Working Party in document WT/ACC/HRV/22.  Prior examination of expert institutions, as
opposed to sensor (visual) inspection, was required for agricultural products, alcoholic beverages, oil
derivatives and textiles.  Following a sensor inspection, an inspector could issue certificates without
preliminary tests for repeat shipments.  Manufacturers' self-declarations were not accepted under the
present system.  The fees associated with quality control were enumerated in the Decision onAmounts to be Paid for Covering the Costs of Qu ality Control of Products Upon Export and Import
(Official Gazette No. 42/96), which was provided to the Working Party.
116. Croatia was asked to justify the mandatory quality inspections at the border, particularly on
furniture and textiles, and a member reminded the representative of Croatia that Article 2.2 of theTBT Agreement stipulated that technical regulations should not be more trade-restrictive than
necessary to fulfil a legitimate objective, and that international standards should be used where these
existed (Article 2.4).  Croatia’s "quality control" certification process was covered by the
requirements of  inter alia the WTO Agreements on Import Licensing Procedures, Technical Barriers
to Trade and Sanitary and Phytosanitary Measures.  Croatia's system did not seem consistent with
these requirements, in particular with the requir ements for transparency, enquiry point information,
prior publication, MFN or national treatment.  The system was burdensome to imports and was not
applied in a similar fashion to domestic goods.  Croatia should review and revise the system.
117. In response, the representative of Croatia said that quality controls were required to prevent
deceptive practices or to protect human health and safety, animal or plant life and health, or the
environment.  The only products controlled were those imported by a large number of importers and
those widely dispersed in the Croatian market.  The respective government regulations were mostly
former Yugoslav standards, based on international standards or national standards of other countries,
or more recently adopted regulations based on international or regional (European) standards.  The
Law on Standardization envisaged acceptance of international standards, European standards, or
standards of other countries, including recognition of foreign laboratory tests and documents issuedabroad.  Croatian standards had been voluntary since 1 January 1997.
118. Various technical regulations had been adopted, and others would be prepared, to determine
the essential requirements for products (safety, health, environmental protection, user protection) by
harmonizing them with international rules and European directives.  It was also foreseen to regulatethe acceptance of suppliers' declaration of conformity.  Conformity assessment procedures would be
performed by testing laboratories and certification bodies accredited according to the new Croatian
accreditation scheme, which was in compliance with international guides and recommendations.  The
new accreditation system had been established by the State Office for Standardization and Metrology
(DZNM) in September 1997.  DZNM was affiliate to EAL (European Co-operation for Accreditationof Laboratories).  A Regulation on recognition of foreign test reports issued by internationally-
recognized testing organizations had been published in July 1997, and had been in force since
1 September 1997.WT/ACC/HRV/59
Page 30
119. A member stated that Croatia's efforts to unify its legislation on quality control were
encouraging, but Croatia's responses did not address the fundamental issue of application of the
requirements to imports in a manner no less favorable than to similar domestic goods.  This member
considered the current system demonstrably burdensome to imports and noted that it was applied, if at
all, in manner more convenient for domestic goods than for imports.  Croatia was requested to provide
additional detail on how "quality control" operated vis-à-vis the requirements of the TBT and SPSAgreements, indicating whether the controls were standards or sanitary requirements, and to (i) clarify
whether any domestic regulations stipulated the collection of specific fees for quality control
inspection of domestic goods;  (ii) list the fees charged for quality control inspection for imports and
exports, indicating how these fees were consistent with the national treatment provisions of Article III
of the GATT and the provisions on fees applied to imports of Article VIII of the GATT;  (iii) describe
how the import quality control process worked in practice for goods such as petrol, liquefied gas,
paraffin, diesel fuels, jet fuels, antifreeze and oils, in particular, whether certificates were issued onrepeat shipments without repeating preliminary tests;  (iv) identify laws or regulations applying
quality requirements to domestic goods and provide the text of provisions stating such requirements to
the Working Party;  and (v) provide further information on how new legislation would eliminate
discrimination, for example at what point of sale such requirements would be applied to imports and
domestic goods.  This member also noted that pharmaceuticals were not included in the qualitycontrol list, but understood that the Croatian Ministry of Health required repeated batch testing of
pharmaceuticals, but not for domestic producers.  This procedural discrimination thus added costs to
imports.  Croatia was asked to describe the current approval process for pharmaceuticals.
120. The representative of Croatia admitted that cert ain inconsistencies existed in currently applied
quality and SPS control.  Croatia was therefore focusing on steps to address the issue of non-
discrimination under Article III of the GATT, a nd meeting the requirements of the TBT and SPS
Agreements.  Concerning quality controls, standardised products such as fuels would continue to
receive certificates issued on repeat shipments of the same producer without repeating preliminary
tests.  Quality controls on pharmaceuticals were performed by the Pharmaceutical Inspection of theMinistry of Health in accordance with the special Law on Pharmaceuticals and Medical Products and
therefore not listed in the general quality control list.  Each consignment of domestically-produced
and imported pharmaceutials was subject to repeated batch testing by the Pharmaceutical Inspection.
The fees charged for quality control and SPS control inspections were equal for domestic products
and imported products.
121. The representative of Croatia added that having reviewed all comments, remarks and requests
of Working Party members, Croatia had conclude d that the main outstanding problem had been
related to the mandatory quality control system applied to imported products.  His Government had
accordingly decided to change legislation and practice in this area.  Parliament had passed new
legislation on 30 June 1999, to be enforced as from early October 1999.  The new Law on State
Inspectorate would incorporate the following changes in relation to present practice.
(a) Quality control would be based on ensuring  consumer protection.  Quality controls on
imported items prior to customs clearance would be abolished.  The State
Inspectorate would perform quality controls on designated imported and domestic
products at the wholesale and retail level.  The State Inspectorate would checkwhether products were covered by proper quality conformity documentation issued
by authorised institutions in Croatia or abroad, and whether labelling and packaging
requirements had been met.  The State Inspectorate would also be entitled to check
product content against declared values by analyzing samples;
(b) Controls of domestic products would be conducted either at the production site or at
the wholesale and retail level;WT/ACC/HRV/59
Page 31
(c) A Government Regulation could be issued, defining a list of items subject to control
of documentation relevant to conformity with quality requirements.  The list would
be shorter than the list applied at present;  and
(d) A Government Regulation could be issued defining the structure of inspection fees,
equalizing fees for the inspection of imported and domestically produced items, andabolishing present practice of charging fees in proportion to the inspected quantity,
Having passed the new Law on State Inspectorate and a Government Regulation on methods and
procedures for issuing technical regulations prescribing quality and health requirements, Croatia
considered its legal framework on TBT and SPS issues to have been completed, thus ensuring
consistency with national treatment, MFN treatmen t, transparency requirements and other provisions
of the GATT and the Agreements on TBT and SPS.
122. The representative of Croatia confirmed that Croatia would apply all obligations under the
WTO Agreement on Technical Barriers to Trade from the date of accession without recourse to any
transition period.  The Working Party took note of this commitment.
Sanitary and Phytosanitary Measures
123. The representative of Croatia said that Croatia's sanitary regime was based on the Law on
Animal Health Protection and Veterinary Medicine (Official Gazette NN 52/91).  A large number of
other legal provisions (rules, decrees, instructions) had been adopted in accordance with this Law, inparticular concerning the prevention and eradication of contagious diseases, the control of animal
breeding and trade in animals and products of animal origin.  Recent examples included regulations
relating to proteins in the feed of ruminants, and imports of pigs and wild boars from certain countries
(Official Gazette 28/1997).  Sanitary measures were implemented on the basis of the Veterinary Law,
the Law on Veterinary Drugs and Veterinary-Medical Products and the Act on the Safety and SanitaryInspection of Foodstuffs and Articles for General Use.  Imported products were subject to sanitary
controls at the customs clearance houses, prior to customs clearance, as well as at the point of sale at
the retail level.  Sanitary controls of domestic products took place at the production site and at the
point of (retail) sale.  Croatia was harmonizing its veterinary legislation with European Community
requirements.
124. Croatia participated in the activities of the FAO/WHO Codex Alimentarius Commission
(FAO/WHO - CAC) and the International Office of Epizootics (IOE).  Croatia's sanitary measures
were based on the standards, guidelines or recommendations of these two organizations, as well as on
the regulations, decisions or directives in force in the European Union.  According to the general or
specific requirements of the FAO/WHO - CAC and IO E, Croatia reported to these organizations on a
monthly or annual basis, or as appropriate.  As from 10 October 1998, the State Office for
Standardization and Metrology served as the enquiry point responsible for the provisions of responses
or relevant documentation regarding the SPS Agreement.  All adopted regulations related to sanitary
measures were published in the Official Gazette of the Republic of Croatia (Narodne Novine), and
submitted for comment and discussion to professional and scientific bodies and involved institutions
prior to adoption.  Concerning risk assessment, the methods used to analyze the risks associated withimportation of animals, animal products, animal genetic material and foodstuffs were in accordance
with the relevant models developed by the IOE.  Where such models did not exist, the Ministry of
Agriculture and Forestry would determine the measures to be applied in cooperation with the Croatian
Veterinary Institute and the Veterinary Faculty.  In  such instances, the Croatian authorities took into
account available scientific evidence as well as other relevant data in accordance with the provisionsof the SPS Agreement.
125. Veterinary legislation was continuously adjusted to international standards, particularly to
those established by the International Agency for Epizootic Diseases (Paris) and Codex Alimentarius,
Croatian requirements, i.e. veterinary and sanitary conditions for importation of live animals andWT/ACC/HRV/59
Page 32
animal products, were in accordance with IOE recommendations.  Imported products were
accompanied by certificates issued by the veterinary authorities of the exporting country as part of the
import licenses issued by the Ministry of Agriculture and Forestry – Veterinary Directorate.  Import
certificates were issued centrally by the State Veterinary Agency.  The border veterinary inspection
controlled and inspected animals and animal products, animal offal substances, semen, embryo, and
other goods that could transmit contagious diseases or affect human or animal life when imported,exported or in transit.  The product coverage of Croatia's sanitary measures is outlined in Table 8.
The veterinary inspection at the border was based on the Codex of the International Agency for
Epizootic Diseases (Paris);  international bilateral agreements on veterinary co-operation;  the
Veterinary Law ("Official Gazette" No. 70/97);  and International Conventions on the Harmonisation
of Border Inspection of Products.  Croatia's veteri nary inspection at the border was organised within
the Department for Border Veterinary Inspection of the Ministry of Agriculture and Forestry -
Veterinary Directorate.  Five border veterinary stations - in Zagreb, Gorican, Osijek, Rijeka and Split– had been established by the Government Decision of 7 January 1991 ("Official Gazette" No. 58/91).
The borders where veterinary inspection was carried out were determined by the Decree of the
Minister of Agriculture and Forestry on Borders of 6 January 1995.  The veterinary and sanitary
inspection requirements were identical for shipments by domestic producers and producers from
exporting countries.  Croatia had harmonized its border veterinary inspection system completely withthe requirements of the European Union.  Veterinary inspectors were trained on a regular basis to
improve the standards of control, inspection and approval procedures in accordance with the SPS
Agreement.
126. Concerning phytosanitary regulations, the representative of Croatia said that the basic law in
this area was the Law on Plant Protection ("Official Gazette" No. 10/94 and 19/94), drafted in
compliance with the basic principles and requirements of international standards, instructions and
recommendations (the International Plant Protec tion Convention and European and Mediterranean
Organisations for Plant Protection).  Based on this Law, Croatia had issued the Regulation on
Phytosanitary Inspection of Plants and Control of Plant Protection Products in the National Cross-Boundary Transportation ("Official Gazette" 12/95 and 96/95).  This regulation was under revision (to
be completed in Spring 1999) to harmonize it with international standards, measures, and procedures
and to meet the requirements of SPS Agreement.  He expected Croatia would be able to apply fully
the Agreement on Sanitary and Phytosanitary Measures with regard to phytosanitary measures by the
end of 1999.  Croatia had been member of the European and Mediterranean Plant ProtectionOrganization since 1994, and had joined the International Plant Protection Convention on
12 May 1999.  Croatia reported regularly to EPPO on all issues concerning plant protection.  Products
subject to phytosanitary measures are listed in Table 9.
127. The Regulation on the Sanitary Inspection of Plants and Plant Protection Chemicals in the
Traffic Across the State Border ("Official Gazette" No. 12/95) applied, as far as possible, measures
and recommendations equivalent to measures applied by other members trading in similar products(plants and plant products).  Trade bans could be imposed on seeds and planting materials to prevent
the spreading of pests, but Croatian measures were not stricter than those internationally
recommended and did not make any distinction between imported and domestic products.  The
Government had provided funds for the introducti on of information systems in 1998, and would seek
funds necessary for the purchase of technical equipment (laboratory equipment and other facilitiesneeded for the proper functioning of the phytosanitary inspection) in 1999.  He added that Croatia
accepted that the establishment and effective functioning of such facilities were an essential basis for
ensuring that border inspections and import approvals were soundly based on scientific evidence, as
required under the SPS Agreement.  Any trade bans, including those on seeds and planting materials,
needed to be based on scientific evidence.  Concerning risk assessment, among its many activities inthe plant protection field (systematic survey and monitoring of harmful organisms, phytosanitary
supervision of seed and propagating material, diagnostics, testing, information and advisory activities,
etc,) the National Institute for Plant Protection in Agriculture and Forestry was responsible for
activities in assessment of risk of plant pests (both quarantine and non-quarantine).WT/ACC/HRV/59
Page 33
128. The plant protection administration within the Ministry of Agriculture and Forestry was in the
process of reorganization.  Plant protection inspection services at the border were organized within a
special section of the Ministry of Agriculture and Forestry (the Department for Agriculture, Food and
Tobacco Industries).  Operating in five units, the inspection services controlled a total of 19 plant
border crossings where plants imported or transported through Croatia were subject to mandatory
examination.  The Institute for Plant Protection in Agriculture and Forestry examined plants forexport.  The border inspection service cooperated with the Institute in organizing quarantine-related
activities and maintaining quarantine facilities.
129. Food products were subject to various laws and regulations, notably the Law on Food Quality
and Food Quality Control, regulations on additives, admissible levels of pesticides, toxins,
mycotoxin, metals and like substances, and regulations concerning microbiotic quality control.  The
Law on Health Safety and Controls of Foodstuffs and Goods of General Usage ("Official Gazette"No. 1/97) stipulated the health and safety conditions for imported or domestically-produced foodstuffs
and goods of general usage.  In addition, the Law provided for health control of the production and
distribution of foodstuffs and goods of general usage.   The provisions of the Law also applied to raw
materials, spices, additives and substances used for enriching foodstuffs.  Regulations adopted on the
basis of Article 50 of the Law on Health Safety and Health Control of Foodstuffs and Goods had beenpublished in the "Official Gazette" No. 46/94 and included Rules on Health Safety of the Drinking
Water;  Micro-biological Standards of Foodstuffs;  Quantities of Pesticides, Toxins, Micro-toxins,
Metals and Histamine and Similar Substances that Foodstuffs May Contain and Other Conditions in
Relation to Health Safety or Foodstuffs and Other Goods;  Conditions of Preserving Food and other
Goods by Ionising Radiation;  Health Safety of Dietetic Food;  Conditions related to the Health Safetythat the Goods of General Usage have to Comply with in Order to be Distributed on the Market;
Preparation and Sale of Foodstuffs Outdoors;  Micro-biological Cleanness Norms and Methods of
their Defining;  and Special Working Cloths and Shoes for Workers who in Production and
Distribution Come into Close Contact with Foodst uffs, Cosmetic and Toilet Preparations for Body
and Face.  Croatia was also preparing and adopting other implementation rules and regulations basedon Article 50 of the Law.
130. Foodstuffs were defined as all products used as  food or drink, processed or non-processed,
including drinking water.  Goods of general us age included tableware, accessories, equipment and
apparatus for production of foodstuffs and goods of general usage and containers, toys, perfumery,cosmetic and toilet preparations for body and face, washing preparations, tobacco, tobacco products
and smoking accessories as well as certain goods and instruments coming into close contact with skin
or mucous membrane when used.  The list of imported products subject to quality control and the
relevant regulations (Table 7 - see Annex) included 27 categories of food products.  Prior examination
was required for Croatian exports of canned meat, wine and plum brandy.
131. According to Article 5, paragraph 1, point 3 of the Law, foodstuffs or goods were considered
unsafe for human health if their sensory characteristics had changed or if they contained pathogenic
micro-organism or pathogenic parasite;  bacteria toxin, micro toxin, histamine, and similar substances
in quantities exceeding those determined by the re gulations;  natural toxin or other natural toxic
substances in quantities noxious for human health;  pesticides, metals, non-metals, veterinary
medicaments residue and other noxious substances in quantities harmful to human health;  additivesnot allowed for the production of foodstuffs and other goods of general usage or additives in
quantities determined inadmissible by special regulations;  radio nuclides in quantities exceeding the
limit regulated by the Law;  mechanically damaged admixtures noxious for human health or causing
aversion;  materials originating from dead animals or animals suffering from disease noxious to
human health; or if they contained other micro-organisms, parasites or substances in quantitiesharmful to human health.
132. Five inspectorates were in charge of quality and SPS control in Croatia;  the State
Inspectorate (quality control), the Sanitary Inspectorate (health control of goods of general use), the
Veterinary Inspectorate (health control of foodstuffs of animal origin), the Phytosanitary InspectorateWT/ACC/HRV/59
Page 34
(plant health control), and the Pharmaceutical inspectorate (quality control of pharmaceuticals).  The
competent authority had the right to take samples to  be tested by authorised laboratories.  Health
control of imported foodstuffs and other goods were effected by the border sanitary inspector and by
the border veterinary inspector (products of animal origin) in accordance with Article 32 of the Law.
The costs of controls and health safety inspections were borne by the importer (Article 35).  The
importer was not allowed to distribute or process the imported goods until he received the officialdecision that the goods were safe.
133. A member noted that various agricultural products were subject to quality control standards,
and requested Croatia to clarify whether these quality standards were actual SPS regulations or just
consumer preferences.  This member could not und erstand why processed products such as mustard,
biscuits, pasta, soup, baking powder, condiments, margarine, and mayonnaise required SPS testing
and asked Croatia to explain the public policy objective of each of these measures and whether theywere intended to address known risks to public health or safety.  Information such as a step-by-step
account of the entire testing process and an assessment of the time-frame involved would also be
welcomed.
134. In reply, the representative of Croatia said that quality controls had been established for the
protection of consumers' rights, and the public policy objective of SPS controls was to address risks to
public health.  For example, a processed product subject to control - such as fruit juice - was
examined by a Sanitary Inspector assessing the im pact of its ingredients on public health (applying
regulations prescribed in accordance with the SPS Agreement), and by a State Inspector assessing the
conformity of the declared ingredients with the actual content, as well as the conformity with
prescribed quality, packaging and labeling requirements (applying regulations prescribed in
accordance with the TBT Agreement).  When needed, inspectors would take samples which were sent
to authorised laboratories.  The shipment was released to the warehouse of the importer or producer
when the analyses had been completed, which would normally take no more than 3 to 4 days.
Technical products such as electrical or mechanical appliances were not subject to sampling, as theinspectors recognised tests and certificates issued by authorised domestic or foreign institutions.
Quality controls on imported products were performed at the customs clearance houses prior to
customs clearance, and at the retail sale outlet.  Domestic products were subject to quality control at
the production site and at the retail sale outlet.  His Government was considering the possibility of
rationalizing the operational structure of its inspectorates.  Quality controls on imported items prior tocustoms clearance would cease with the implementation of the new Law on State Inspectorate in
October 1999.  As from that time, the State Insp ectorate would be performing quality controls on
designated imported and domestic products at the wholesale and retail level.
135. The representative of Croatia confirmed that Croatia's sanitary and phytosanitary standards
system would be in compliance with WTO provis ions under the Agreement on the Application of
Sanitary and Phytosanitary Measures as of the date of accession to the WTO, and that Croatia wouldapply the Agreement on the Application of Sanitary and Phytosanitary Measures from the date of
accession without recourse to any transition period.  The Working Party took note of this
commitment.
Trade-Related Investment Measures
136. The representative of Croatia said that Croatia had no trade-related investment measures in
place at the present time, nor did it intend to introduce any such measures in the future.  Croatia
accordingly did not seek to notify any measures for elimination under the provisions of the WTO
Agreement on TRIMs.
137. The representative of Croatia said that Croatia would not maintain any measures inconsistent
with the TRIMs Agreement and would apply the TRIMs Agreement from the date of accession
without recourse to any transition period.  The Working Party took note of this commitment.WT/ACC/HRV/59
Page 35
State Trading Entities
138. Referring to the definition of State trading enterprises contained in paragraph 1 of the
Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade
1994, the representative of Croatia stated that Croatia did not have or maintained any enterprise
covered by the provisions of Article XVII.  Ten large enterprises were under direct State ownership,but none of these public enterprises were granted exclusive or special rights or privileges which could
influence, through their purchases or sales, the level and direction of imports and exports.  Upon
accession to the WTO, his Government would notify any State-trading enterprise, monopoly or
exclusive service supplier, existing at the time, in accordance with Article XVII of the GATT and
Article VIII of the GATS.
139. A member pointed out that the representative of Croatia interpreted Article XVII of the
GATT 1994 narrowly.  For transparency purposes, it would be useful to inform the Working Party
about a number of private monopolies supported and influenced by State and local authorities.  These
existed in various sectors such as transport services, distribution services, tourism, financial services,
procurement, etc.
140. In reply, the representative of Croatia said that this member's statement was not supported by
facts.  The Law on the Protection of Market Competition regulated the activities of monopolies in
Croatia, and the Agency on the Protection of Market Competition had been established in 1995.  The
Agency was entrusted with the task of detecting monopolistic practices.  In its three years of
existence, the Agency had examined the market conditions in all sectors, and not found any privatemonopolistic behaviour allowing monopolies or oligopolies to exploit their market share to the
detriment of competitors or consumers.  Moreover, in his view, the State trading issue did not arise
unless direct ownership relations, accompanied by granted trading preferences, existed between the
State and a private sector monopoly, and this was not the case in Croatia.  He confirmed that his
Government did not grant monopolistic trading rights in goods and services to any firm other thanthose mentioned in paragraph 145, which would be notified to the WTO upon accession.
141. Responding to specific questions from members,  he said that a State-owned company (Astra
International) engaged in foreign trade with the same rights and obligation as any other Croatian
foreign trade company.  Most petroleum and petrochemical products were produced and distributedby the State-owned enterprise INA, which competed with more than 20 smaller companies in the
distribution and trade in crude oil and oil products.  He stated that Hrvatske sume (Croatian Forests)
was a public utility company operating in full conformity with Article XVII of the GATT.  Other
public enterprises included Hrvatske ceste (Croatian Roads), Hrvatska vodoprivreda (Croatian Water
Utilities), Hrvatska posta i telekomunikacija (Croatian Post and Telecommunications, from 1 January
1999 divided into two companies - Hrvatska pošta (Croatian Post) and Hrvatske telekomunikacije
(Croatian Telecommunications)), Hrvatska elektroprivreda (Croatian Electricity), Hrvatske zeljeznice(Croatian Railways), Hrvatska radio televizija (Croatian Radio and Television), Jadrolinija
(Adriatic Line), and Narodne novine (Official Gazette).  Alcohol and tobacco products were produced
and distributed by a large number of companies, none of which were State-owned or State-mandated.
Former socially-owned farms had been transformed in to joint-stock companies, and most of them had
been privatized.
142. The Law on Commodity Reserves (Official Gazette 68/1997) stipulated public stockholding
of some agricultural and non-agricultural products.  Commodity reserves had been established to
ensure essential supplies in case of war, threat of war, or natural disaster.  This function of commodity
reserves as permanent reserves was ensured by determining the goods needed for those situations.The main function of commodity reserves would be  ensured within the framework and appropriate
manner for the set objectives.  The Directorate for Commodity Reserves (formerly the State
Directorate for Commodity Reserves) - a non-profit governmental body within the Ministry of
Economy - intervened in the market only upon order by the Government.  In certain circumstances the
Directorate could intervene to prevent domestic price increases on agricultural and food products, butWT/ACC/HRV/59
Page 36
only upon a decision of the Government.  Purchases would be made by tender, and the Directorate
would select the most favourable bid on the basis of purely commercial considerations in line with the
non-discrimination principle of Article XVII of  the GATT.  The Directorate could export goods
bought through intervention in the domestic market by government decision only, in which case
goods were exported through a commercial company chosen on the basis of public tender.
143. Some members noted that the Law on Commodity Reserves appeared to provide for both
public stockholding and commodity intervention functions.  Although the Directorate for Commodity
Reserves appeared to make purchases on a commercial basis through a tender system, it was also
noted that the Directorate could export products, purchased through intervention in the domestic
market, by government decision.  Croatia was therefore requested to explain under what
circumstances the Government could decide to instruct the Directorate to export products, the system
for exporting products, and whether the Directorate used established guaranteed prices whenpurchasing commodities from domestic producers.  This information was necessary to determine
whether the Directorate for Commodity Reserves was a State trading enterprise in the context of
GATT Article XVII.
144. The representative of Croatia replied that his Government could adopt a Decision to export
products purchased through intervention in the domestic market at guaranteed prices and held at the
Directorate for Commodity Reserves only when estimates indicated that these were surplus products
exceeding the needs of the domestic market.  The Directorate for Commodity Reserves was obliged to
sell such products through a tender system where all interested exporters were subject to equal
conditions.  Tenders and selection procedures were carried out in accordance with the Law onProcurement of Goods and Services and Sub-contracting.  The Directorate for Commodity Reserves
used guaranteed prices for purchases of products when such prices had been prescribed (i.e. for wheat,
sugar beet, soyabeans, sunflower, rapeseed oil and tobacco);  the strategic commodity reserves of
other products were purchased at market prices.
145. The representative of Croatia agreed that Hrvatske sume (Croatian Forests) and the
Directorate for State Commodity Reserves were State-trading entities within the meaning of
Article XVII of the GATT.  He confirmed that Croatia would notify these entities to the WTO upon
accession.
146. The representative of Croatia confirmed that his Government would apply its laws and
regulations governing the trading activities of State-owned enterprises and other enterprises with
special or exclusive privileges and would act in full conformity with the provisions of the WTO
Agreement, in particular Article XVII of the GATT 1994 and the Understanding on that Article and
Article VIII of the GATS.  He further confirmed that Croatia would notify any enterprise falling
within the scope of Article XVII.  The Working Party took note of these commitments.
Free Zones, Special Economic Areas
147. The representative of Croatia said that nine customs zones were operating in Croatia
following the entry into force of the new Law on Free Zones (13 June 1996).  These were situated in
Zagreb, Krapina, Kukuljanovo, the port of Rije ka, Šibenik and Osijek.  A free zone could be
established by one or more domestic legal person.  The user of the zone could be its founder, or any
other foreign or domestic legal or natural person.  Activities carried out in a free zone included goods
production and processing, goods assembly, wholesale trade warehousing, and repackaging.  Banking
and other payment transaction activities such as insurance and reinsurance could take place in a free
zone subject to approval by the Ministry of Finance.  Operators paid no customs duties or other taxeson imported goods intended for production and consumption in the customs zone.  Companies located
in the zones were not obliged to export any minimum portion of their output.  Goods processed in the
zone for the domestic market would be subject to customs and other duties on the raw materials and
other imported inputs used in the production process.  Users engaged in or participating in
infrastructure construction within the zone, in projects with a value exceeding HRK 1 million, wereWT/ACC/HRV/59
Page 37
exempt from paying profit tax during the first five years of business activities.  Other users paid profit
tax equal to 50 per cent of the standard rate.
148. The representative of Croatia stated that the free zones authorized by the legislation described
in paragraph 147 would be fully subject to the coverage of Croatia's commitments taken in its
Protocol of Accession to the WTO Agreement, and that Croatia would ensure enforcement of itsWTO obligations in those zones.  In addition, goods produced in these areas under tax and tariff
provisions that exempt imports and imported inputs from tariffs and certain taxes will be subject to
normal customs formalities when entering the rest of Croatia, including the application of tariffs and
taxes.  The Working Party took note of these commitments.
Government-mandated Countertrade and Barter
149. The representative of Croatia said that the State did not conclude compensation deals in its
own name and did not in any way participate in the conclusion of compensation deals.  All laws and
trade policy measures, including customs duties, licences, etc, applied to goods exchanged in
compensation deals.  Such deals were concluded by natural or legal persons, and the contracts were
registered with the Ministry of Economy for statistical purposes.   In 1995, the Ministry had recorded930 compensation contracts, accounting for around 5 per cent of Croatia's foreign trade.  In 1996, the
number of contracts registered in the Ministry of Economy fell to around 600, and the decline had
continued in 1997.  The number of such contracts was expected to fall as the economy was
consolidating and stabilizing in Croatia and in neighbouring countries.
150. The previous Law on Foreign Trade Operations  had also regulated a system of long-term
production cooperation.  Long-term production cooperation referred to a continuous exchange of
goods in so called tie-in trade for a period of not less than three years (the legal minimum).  The
parties to such arrangements could agree that no payment would be exchanged for each transaction,
but the balance might be paid to a bank account.  In 1995, 90 contracts were in force on long-termmanufacturing cooperation between Croatian firms and their partners, mostly from Germany, Italy
and the Russian Federation.  Goods exchanged in long-term production transactions were subject to
the normal trade policy instruments, including customs duties and licensing requirements.  The new
Law on Trade, which had entered into force in February 1996, did not specifically regulate these types
of contracts.  Companies were free to enter into  such arrangements if they found it in their own
interest.
Government Procurement
151. The representative of Croatia said that Parliament had passed the Law on Procurement of
Goods and Services and Sub-contracting in mid-December 1997.  The Law replaced the
Government’s Regulation on the Procedure for Procurement of Goods and Services and Sub-contracting.  The Law had entered in force in March 1998.
152. Entities under obligation to apply the Law on Procurement of Goods and Services and
Sub-contracting were Government authorities and other State authority bodies;  bodies of the local
government and self-government units;  legal persons owned by the State or legal persons using fundsfrom the State budget for their regular activities and capital investments;  legal persons using budget
guarantees or other insurance 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 Insurance Fund, Employment Fund and other extrabudgetary
funds established by the Government).
153. The Law applied to all public procurements with the total value of goods, services and works
exceeding HRK 200,000 (US$32,000) in a fiscal year.  Bidders, regardless of their residence and
headquarters, except when the purchaser would limit the participation in tenders to domestic suppliers
(i.e. apply national preference), were allowed to participate in tenders.  The Law stipulated conditionsWT/ACC/HRV/59
Page 38
and liabilities of the purchaser with regard to application of national preference, as well as other
conditions concerning government procurement including procurement implementation, pre-
procurement, international tendering (obligator y for works and goods with total invoice value
exceeding HRK 12 million (US$2 million), or HRK 6 million (US$1 million) for services), the
procurement procedure, conditions for tendering, evaluation and comparison of offers, and
implementation and monitoring of the implementation of the Law.
154. A member expected Croatia to become member of the Agreement on Government
Procurement by tabling a schedule of commitments to the GPA Committee no later than three months
after the date of accession to the WTO.  In reply, the representative of Croatia stated that, mindful of
the rather limited and selective present membersh ip of the Agreement on Government Procurement
and that no major obstacles for international bidders were experienced in enforcement of the national
law on government procurements, his Government woul d apply officially for observer status to the
Agreement on Government Procurement.  This would enable Croatia to get more acquainted with the
practical aspects of the Agreement's disciplines and determine an adequate coverage and staging, in
order for Croatia to start negotiations on accession to the Agreement at an appropriate stage.
155. The representative of Croatia confirmed that his Government had applied officially for
observer status in the Committee on Government Proc urement on 14  June 1999.  This step would
enable Croatia to get more acquainted with the practical aspects of the disciplines of the Agreement
and determine the adequate coverage and staging of Croatia's commitments.
156. The representative of Croatia confirmed that Croatia will initiate negotiations for membership
in the Agreement on Government Procurement upon accession by tabling an entity offer at that time.
He also confirmed that, if the results of the negotiations are satisfactory to Croatia and the other
members of the Agreement, Croatia will complete negotiations for membership in the Agreement by
31 December 2001.  The Working Party took note of this commitment.
Transit
157. The representative of Croatia said that transit of goods through the customs territory of the
Republic of Croatia was regulated by Articles 275 to 283 of the Customs Law.  In addition, provisions
concerning transit transport were included in the Articles dealing specifically with rail, road, sea,waterways and air transport, as well as in the Articles concerning despatch of goods to another
customs office for customs clearance.  The carrier submitted transit documents to the customs office
at the point of entry.  Customs charged a stamp tax at a flat rate of HRK 10 per customs declaration
for the services rendered.  The customs office would inspect the goods and transit vehicles, and
provide an escort to the customs office at the point of exit.  The carrier was responsible for the
carriage of goods and the transit documents within the customs territory.  The customs office of exit
would check the transit documents and customs marks and, if necessary, inspect the goods andvehicles.  Goods prohibited to import into Croatia could not be carried in transit through the customs
territory.
158. Croatia made no distinction on the basis of the flag of the carrier, the place of origin,
departure, entry, exit or destination, or on any circumstances relating to the ownership of the goods orthe means of transportation.  Based on a Decision on special measures of customs surveillance on
import, export and transit of certain goods (petroleum, petroleum derivatives, tobacco and tobacco
products, coffee, alcohol, alcohol drinks, beer, movable cultural artifacts - archeological and
ethnological artifacts, old furniture, old paintings and sculptures, old musical instruments, etc,), such
goods were only allowed to enter or exit Croatia at designated border crossing points, determined incoordination with Slovenia (5), Bosnia and Herzegovina (7), and the former Republic of
Yugoslavia (1), or through 4 marine ports.  The Decision was not applicable to air and rail transport.
159. A member noted reports that Croatia was blocking transit trade from the Bosnian Serb
Republic, and would appreciate Croatia's views and assurances on this point.  The representative ofWT/ACC/HRV/59
Page 39
Croatia replied that Croatia had not blocked transit trade from the Bosnian Serb Republic.  The
reconstruction of bridges across the river Sava (border crossings Slavonski Brod - Bosanski Brod,
Gradiška - Bosanska Gradiška, Hrvatska Dubica - Bosanska Dubica) had caused difficulties and the
closing of some border crossings.  At the same  time, other temporary border crossings had been
established to enable transit.  Freedom of transit was assured by Croatia's Customs Law and
International Agreements.  Croatia was obliged to ensure freedom of transit according to severalinternational conventions, including the Convention on the contract for the international road transport
(CMR), the Customs convention on international tr ansport of goods based on the TIR carnet, the ATA
Convention, and the Convention on temporary admission .  He assured the Working Party that Croatia
provided, and would continue to provide, freedom of transit to the Bosnian Serb Republic as well as
to all other countries in accordance with Article V of the GATT 1994.
160. The representative of Croatia confirmed that his Government would apply its laws and
regulations governing transit operations and would act in full conformity with the provisions of the
WTO Agreement, in particular Article V of the GATT 1994.  In this regard, he stated that Croatia
would not deny right of transit to exports from any country.  The Working Party took note of this
commitment.
Agricultural Policies
161. The representative of Croatia said that all quantitative restrictions and supplementary fees and
charges for imported agricultural products, including special compensatory fees and variable levies,
had been abolished with the introduction of the new customs tariff on 1 July 1996.  The new tariffswere compound rates, consisting of an ad valorem  and a specific duty element, for several products.
162. The Government guaranteed prices for the following commodities:  wheat, sugar beet,
sunflower, soybeans, rapeseed and tobacco.  The guaranteed prices applicable in 1998 are listed in
document WT/ACC/HRV/39/Add.2, reply 22.  The syst em of guaranteed prices was implemented
through the Directorate for Commodity Reserves.  The price for milk was also guaranteed, but the
guarantee had not been enforced recently as the domestic price had exceeded the intervention level.
The abolition of the system of guaranteed prices was a long-term policy objective.  A recent step
towards this objective had been a significant decrease of guaranteed prices for the year 1999,
especially for wheat (down 32 per cent).
163. The budget expenditures for production and input subsidies to the agricultural sector
amounted to HRK 599.3 million (average 1996-1998), representing 4.2 per cent of the value of total
agricultural output in the period 1996-1998.  Production subsidies had been provided for milk, sugar
beet, sunflower, soybeans, rapeseed, tobacco, original-breed livestock, meat and bone flour, milk,
semen, grape on island vineyards, honey and olives.  Major input subsidy items were mineral
fertilizers and certified agricultural seeds.  Croatia did not provide export subsidies for agriculturaland food products, as reflected in its schedule of commitments annexed to Croatia's Protocol of
Accession.
164. Croatia was reforming its system of agricultural subsidies.  This was a lengthy process as it
required the establishment of a land registry to allow the Government and the Ministry of Agricultureand Forestry to define "less favoured areas" and other factors determining subsidy payments.  The
new system, which would be implemented following Parliament's approval of the State budget for
1999, would correspond to the requirements of the Agreement on Agriculture.  This budget increased
allocations for measures in line with Annex 2 of Agreement on Agriculture, while reducing the budget
share of price support measures.  Croatia was al so introducing area payments in crop production,
selective payments (per head) in livestock production and investment aids for vineyards and orchards
within the framework of the new system, approved by  Parliament in March 1999.  Input subsidies for
mineral fertilizers and fuel, as well as production subsidies for sugar beet, soybean, sunflower seed
and rapeseed had been abolished.  He confirmed that Croatia would not apply any kind of subsidy to
agro-processing industries.WT/ACC/HRV/59
Page 40
165. The representative of Croatia said that Croatia takes a commitment to decrease the AMS
ceiling relating to the 1996-1998 base period by 20 per cent in equal annual instalments within a
period of five years from the date of accession.  The AMS calculations are presented in the revised
consolidated technical document on domestic support and export subsidies in agriculture (document
WT/ACC/SPEC/HRV/1/Rev.2).
166. Croatia's commitments on agricultural tariffs, on domestic support and export subsidies for
agricultural products are in the Schedule of Concessions and Commitments on Goods annexed to
Croatia's Protocol of Accession to the WTO.
Trade in Civil Aircraft
167. A member sought a commitment from Croatia to adhere to the WTO Agreement on Trade in
Civil Aircraft from the date of accession.  The repr esentative of Croatia confirmed that Croatia would
become a party to the Agreement on Trade in Civil Aircraft.
168. The representative of Croatia confirmed that Croatia would implement the Agreement on
Trade in Civil Aircraft without exceptions or transitional period from the date of accession.  The
representative of Croatia confirmed that Croatia would become a signatory to the Agreement on Trade
in Civil Aircraft upon accession to the WTO.  The Working Party took note of this commitment.
Trade-Related Intellectual Property Regime
1. General
(a) Intellectual property policy
169. The representative of Croatia said that Croatia had adopted the former Federal (Yugoslav)
Law on the Protection of Inventions, Technical Impr ovements and Distinctive signs (NN 53/91).  The
Law had been changed and amended in April 1992, and the title changed to Industrial Property Law,
governing patents, trade and service marks, and industrial designs.  The system of industrial property
protection was under revision, and as part of the reforms each area of industrial property would be
governed by a separate law.  Current legislation included a technical advance criterion which would
not be included in future legislation.
170. A member was concerned about the pace of drafting and ratification of intellectual property
laws in Croatia, and encouraged the Government to  strengthen its efforts to enact legislation and
establish the necessary administrative framework for effective implementation prior to WTO
accession.  Asked whether Croatia would seek transitional arrangements, the representative of Croatiareplied that Croatia would respect the provisions of Article 65.3 of the TRIPS Agreement.  A member
stated its policy that acceding countries be in fu ll conformity with the TRIPS Agreement on the date
of accession, with no transition permitted.  Article 65.2, 3 and 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 Article65.2, 3 and 4 were part of the balance achieved between developed and developing countries
regarding intellectual property, recognizing 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 could make the necessary
changes during the course of accession negotiations, to become affective on the date of accession, ifnot before.  Croatia should report to the Working Party 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.
171. The representative of Croatia said that harmonization of Croatia's legislation with the
requirements of the TRIPS Agreement had been accomplished with the introduction a new TrademarkWT/ACC/HRV/59
Page 41
Law, a new Law on Geographical Indications, a new Patent Law, a new Law on Industrial Design,
and a Law on the Topographies of Integrated Circuits.  In the area of copyright, Croatia intended to
introduce a new Law on Copyright and Neighbouring Rights, but would in the interim ensure
compliance with the TRIPS Agreement by amending the existing Copyright Law.  Parliament had
passed the new laws on 30 June 1999.  In addition, Croatia would apply the provisions relating to the
enforcement of intellectual property rights in the new Customs Law, also passed by Parliament on30 June 1999.  An overview of Croatia's intellectual property legislation is provided in Table 10.
(b) Responsible agencies for policy formulation and implementation172. The representative of Croatia said that the State Intellectual Property Office of the Republic
of Croatia had been the competent authority for industrial property since its establishment, and for
copyright and neighbouring rights since November 1996.  The Ministry of Agriculture and Forestrywas the competent authority for the protection of new plant varieties.
(c) Participation in international intellectual property agreements173. The representative of Croatia said that Croatia was a party to the Convention Establishing the
World Intellectual Property Organization;  the Paris Convention for the Protection of Industrial
Property;  the Madrid Agreement Concerning the International Registration of Marks;  the Nice
Agreement Concerning the International Classification of Goods and Services for the Purposes of the
Registration of Marks;  the Locarno Agreement Establishing an International Classification for
Industrial Designs;  the Berne Convention for the Protection of Literary and Artistic Works, Paris Act1971;  the Brussels Convention Relating to the Distribution of Programme - Carrying Signals
Transmitted by Satellite;  and the Universal Copyright Convention, 1952 and 1971.  Croatia intended
to seek membership of the Rome Convention upon enactment of legal provisions granting protection
for phonogram producers  and broadcasting organizations in compliance with the Convention.  This
was likely to happen in 1998.  Croatia had deposited the instrument of accession to the PatentCooperation Treaty with the Director-General of the World Intellectual Property Organization on
30 April 1997.  As stated in the instrument of accession, the Patent Cooperation Treaty entered into
force in Croatia on 1 July 1998.  Croatia also intended to accede to the Hague Agreement Concerning
Deposit of Industrial Designs in the near future.
(d) Application of national and MFN treatment to foreign nationals
174. The representative of Croatia said that Croatian legislation granted national treatment to
foreign nationals, while MFN treatment was not applied for the time being.  Foreigners and nationals
enjoyed equal treatment in civil and criminal procedures.
2. Substantive standards of protection, incl uding procedures for the acquisition and 
maintenance of intellectual property rights
175. Regarding acquisition of intellectual property right and know-how, the representative of
Croatia said that the Law on Foreign Trade Operations, Chapter VIII, had contained certain restrictive
clauses on acquisition of know-how from foreigners, but this legislation had been abolished(January 1996).
(a) Copyright protection176. The representative of Croatia said that the basic provisions on copyright and neighbouring
rights were contained in the Chapter on basic freedom and rights of men and citizens in the 1990
Constitution.  In accordance with a 1991 Law on adoption of Yugoslav federal laws in the areas of
education and culture, Croatia had adopted the Copyright Law of 1978 as amended in 1986 and 1990,
with further changes and amendments under Croatian Law of 1993.  Croatian legislation protected
performers only, but also regarding the fixation of a picture or pictures in combination with sound.WT/ACC/HRV/59
Page 42
An Amended Copyright Law, ensuring prot ection for phonogram producers and broadcasting
organizations in accordance with the requirements of the TRIPS Agreement, had been submitted to
the legislative procedure.  According to Article 39 of the Modified and Amended Copyright Law, the
Law was applicable to phonograms and performances lawfully fixed up to fifty years prior to the year
of entry into force of the amended Law (July 1999 ).  Croatia intended to introduce a new Law on
Copyrights and Neighbouring Rights to harmonize its legislation with all aspects of existinginternational standards.  This Law would be dr afted after the entry into force of the amended
Copyright Law.  The Modified and Amended Copyright Law, passed by Parliament on 30 June 1999,
had been in force and implemented since mid-July 1999.
177. Copyright covered economic rights and moral rights.  Economic rights were transferable inter
vivos and mortis causa;  moral rights were only transferable mortis causa.  The general term of
duration of economic rights was the life of the author and 50 years after his/her death.  Special termsof protection of anonymous and pseudonymous works were 50 years from the day the work had
become available to the public, and 25 years for photographic films, photographic works and works of
applied art.  The duration of moral rights was not limited.  Computer programmes were protected as
literary, scientific and artistic works, and databases could be protected as collections of works.
Persons could become owners of copyright by virtue of law in the course of employment or
organization of collective works such as the creation of databases or encyclopaedias.  Copyright
legislation provided for exclusive distribution rights, including rental and lending rights, for artists
and performers.  Croatia had adopted the Berne Convention, ratified by the former Yugoslavia, with a
reservation relating to the right of translation.  However, the Copyright Law granted the author of a
work published in a foreign language and enjoying protection under the provisions of the BerneConvention, the right to remuneration for the tr anslation.  The said reservation on the Berne
Convention had been removed in the Amended Copyright Law submitted to the legislative procedure
on 24 March 1998.
178. Limitations to the exclusive right were regulated under the Law.  Free use (exploitation) of
works was allowed for personal use, public information or for educational or scientific purposes.
(b) Trademarks, including service marks179. The representative of Croatia said that the protection of trade and service marks was regulated
on the basis of the Industrial Property Law, Regulations for the Procedure for the Grant of Trademark
Rights, and the Law Governing Administrative Fees for the Establishment of Rights of Industrial
Property.  The acquisition of trademark rights was based on registration;  the procedure was instituted
by filing an application with the State Intellectual Property Office of the Republic of Croatia.  A
granted right was entered in the trademark register and published in the official gazette.  A mark was
valid for a period of ten years from the day the trademark application was filed.  The validity could be
extended an unlimited number of times provided the trademark was used and maintained throughpayment of the prescribed administrative fees.  The State Intellectual Property Office could decide to
terminate a trademark not used by the owner for any unjustified reason for more than five years.
180. The representative of Croatia said that Parliament had passed a new Trademark Law on
30 June 1999.  The Law had entered into force in mid-July 1999, however, due to the time need for allpreparations required under the new system established by the Law, the Law would be implemented
from 30 November 1999.
(c) Geographical indications, including appellations of origin
181. The representative of Croatia said that the present system of protection was based on
Articles 37 to 43 of the Industrial Property Law.  The area was also regulated under the Law on Wine
and Regulations on the Quality of Wine and the Quality of Spirits.  An appellation of origin was
established by entering the geographical name and its related product in a register kept by the State
Intellectual Property Office.  Entries into the register were made ex officio upon proposals from theWT/ACC/HRV/59
Page 43
Croatian Chamber of Commerce.  According to Article 40 of the Industrial Property Law, the
Croatian Chamber of Commerce determined the geographical names to be protected by an appellation
of origin;  the products which could be put in circulation with the specified appellation of origin;  the
place or territory a product was originating from;  how products should be marked;  and detailed
requirements on the granting of rights to use certain  marks.  For wines, these matters were regulated
by the Law on Wines and the Regulations Concerni ng Wines (NN 34/95 and 96/96).  Wines meeting
the requirements of controlled origin could be entered in the register of protected appellations of
origin by the State Office upon a proposal by from the Croatian Chamber of Commerce and prior
examination of the request by the Ministry of Agriculture and Forestry.  The appellation of origin of a
product could be established in favour of a foreign person on the basis of reciprocity under
international agreements concluded or acceded to by the Republic of Croatia.
182. Croatia had introduced a new separate Law on Geographical Indications based on Articles 22
to 24 of the TRIPS Agreement.  Parliament had passed the Law on 30 June 1999 and it had entered
into force in mid-July 1999.  However, due to the time needed for all preparations required under the
new system established by the new Law, the La w would be implemented from 30 November 1999.  A
provision to refuse or invalidate the registration of a trademark containing or consisting of a
geographical indication for wines and spirits not having this origin would be included in the new(draft) Trademark Law (Article 5).
(d) Industrial designs183. The representative of Croatia said that industrial designs were regulated under the Industrial
Property Law and Regulations on the Procedure for the Grant of Rights to Models or Designs.
Parliament had passed a new Law on Industrial Design in conformity with the TRIPS Agreement, in
particular its Articles 25 and 26, on 30 June 1999 and it had entered into force in mid-July 1999.
However, due to the time needed for all preparations required under the new system established by the
new Law, the Law would be implemented from 30 November 1999.
184. A right to a model or a design was granted for a period of ten years as from the date of filing
the application with the State Intellectual Property Office.  The right was non-renewable.  Textile
designs were protected cumulatively by the Copyright Act, as a work of applied art and industrial
design, and by the Industrial Property Law as a model or design.  In the latter case, the applicantwould need to indicate whether protection was sought for three-dimensional (model) or two-
dimensional design (design).
(e) Patents185. The representative of Croatia said that a first draft of a new Patent Law, based on the WIPO
model law and Austrian legislation, remained under discussion within his Government.  Parliamenthad passed the new Patent Law on 30 June 1999 and it had entered into force in mid-July 1999.
However, due to the time needed for all preparations required under the new system established by the
new Law, the Law would be implemented from 30 November 1999.  Other legislation relevant to the
Law would also be adopted, including the Law on Agents, the Law on Fees, the Regulation on
Expenses, the Law on Inventions by Employees, and the Law on Confidential Inventions.
186. A patent was valid for a period of 20 years counting from the date of filing the application.
Microorganisms and microbiological processes were patentable under the Rules on Procedure for
Patent Grant.
187. Provisions on compulsory licensing could be found in the Industrial Property Law
(Article 139).  A request for the grant of a compulsory licence could not be submitted earlier than four
years after the filing date of the patent application, or three years after the date of the patent grant if
this term expired earlier.  According to the Law,  the patent owner would be considered not using or
insufficiently using the patent if, inter alia, domestic demand was satisfied by importation to a greatWT/ACC/HRV/59
Page 44
extent, or the importation of the products manufactured according to the protected invention
hampered or obstructed the industrial application in the country.  No compulsory licence had been
issued thus far.  Croatian legislation on compul sory licensing would be harmonized with Article 31 of
the TRIPS Agreement in the new Law on Patents.
188. The fees and charges involved in granting a patent were established in accordance with the
Law on Administrative Fees in the Field of Industrial Property and the Decision on the Procedure
Special Charges and Information Service Charges of the State Intellectual Property Office.
(f) Plant variety protection189. The representative of Croatia said that this area was regulated by the Law on the Protection of
Agricultural Plants.  The Law, which regulated the protection of new plant varieties, had been enactedin November 1997 and became effective on 13 December 1997.  The Law was in compliance with the
UPOV Convention, which Croatia intended to join.  National treatment was accorded on the condition
of reciprocity, as provided by the UPOV Convention.
(g) Layout designs of integrated circuits190. The representative of Croatia said that Croatia had introduced a Law on the Topographies of
Integrated Circuits in compliance with the provisions of Articles 35 to 38 of the TRIPS Agreement.
Parliament had passed the Law on 30 June 1999 and it had entered into force in mid-July 1999.
However, due to the time needed for all preparations required under the new system established by thenew Law, the Law would be implemented from 30 November 1999.
(h) Requirements on undisclosed information, including trade secrets and test data.191. The representative of Croatia said that a Law on the Protection of Data Secrecy had entered
into force at the end of 1996.  Clauses regulating the protection of information within government
administration or by enterprises themselves could be found in the Law on General Administrative
Procedure (Article 150), the Law on Government Of ficials and Employees (Article 32), the Penal
Law (Article 295), the Labour Law (Articles 89, 92 (paragraph 4), 93 and 155), the Trade Law
(Article 58) and the Company Law (Articles 248, 273 and 629).  Test data and other information
supplied in the context of approving the marketing of pharmaceutical and of agricultural chemical
products were protected by special regulations (by-laws) applied by the Ministry of Health and the
Ministry of Agriculture and Forestry.  The rules did not differ from the normal provisions applied in
other countries.  Article 16 of the Law on Medicines and Medical Products stipulated that documents
received on pharmaceuticals or medical products should be treated as trade secrets.
3. Measures to control abuse of intellectual property rights
192. The representative of Croatia said that mechanisms for the protection of intellectual property
rights existed in administrative, civil and penal law.  Abuse of copyright and the right of performers
was controlled by agents of the organization of authors or the organization for performers' rights.
Representatives registered with the State Intellectual Property Office could act on behalf of foreignand domestic legal and natural persons in the procedure for protection of industrial property rights.  A
new Law on Enforcement included compulsory meas ures (fines, arrest and imprisonment) which
could be applied in an expedite procedure.
193. Punishment - fines or imprisonment - for the infringement of copyright was set out in the
Penal Law as well as in the Amended Copyright Law.  Fines for infringement of the rights of authors
or performers could amount to (maximum) HRK 60,000.WT/ACC/HRV/59
Page 45
4. Enforcement
194. The representative of Croatia said that the Law on Enforcement, relating to the enforcement
of court decisions, had entered into force on 12 August 1996.  Articles 298 and 299 of the Law
contained provisions on provisional measures.  A court could also order provisional measures at the
request of the infringed party in accordance with Article 442 of the Law on Legal Proceedings.  In hisview, Croatian legislation fulfilled the requirement of Article 44 of the TRIPS Agreement regarding
the right of a party to ask for injunctions.  He also noted that the Law on the Protection of Market
Competition could be invoked in disputes over the infringement of intellectual property before a
commercial court in Croatia.
195. In the combat against illegally produced phonograms, the authorities in Croatia had seized
12,899 video tapes, 9,646 audio tapes and 4,873 compact discs in 1996.  During 1997, 14,405 videotapes, 11,986 audio tapes and 2,920 compact discs had been seized.  During 1998 and the first quarter
of 1999, the Department for Economic Crime Preventi on of Ministry of Interiors (police) had brought
149 criminal charges for video piracy, 138 criminal charges for audio piracy and 47 criminal charges
for trademark counterfeiting.  In the same period, the Department had seized temporarily 16,051 video
tapes, 34,442 audio tapes, 6,618 CDs and 6,390 products bearing counterfeited trademark.  Criminalproceedings relating to these charges were under way.
(a) Civil judicial procedures and remedies196. The Commercial Courts seated in Zagreb, Osijek, Rijeka and Split had initial jurisdiction over
intellectual property matters.  The High Commercial Court (in Zagreb) was the competent second-
instance body for the protection of intellectual property.  Decisions of the High Commercial Court
could be appealed to the Supreme Court of the Republic of Croatia, which could also decide on the
infringement of procedural rights.  The procedures in a case of infringement before a court were laid
down in the Law on Civil Procedure, which also contained provisions on the right to obtaininformation to develop the case of a right holder.  Depending on the complexities of the case, the time
between the initiation of the case before the court, and the court's decision, could take from two to
three months to more than one year.  Court decisions were set out in writing and substantiated in
accordance with Article 338 of the Law on Legal Proceedings.
197. The dissatisfied party to a dispute could invoke regular legal remedies (appeal and objection)
or extraordinary legal remedies (request for the protection of legality, review or repetition of the
procedure).  For example, a request for review of a decision of the High Commercial Court should be
filed with the Supreme Court within 30 days of receipt of the decision of the appellate court.  A
request for the protection of legality should be filed with the Supreme Court by the Croatian State
Attorney if the law or a treaty had been violated by a final decision.
(b) Provisional measures
198. The representative of Croatia said that the Law on Enforcement contained provisions on
provisional measures.  In respect of infringement of copyright, a court could order provisional seizure
or prohibit the continued use of the disputed objects or works.  The competent police administrationcould prohibit cultural or artistic performances at the request of the author or a professional
association.  The financial police could temporarily seize objects, documentation or financial means
utilized in a criminal or economic offence or infringement.  As a general rule, courts did not have the
authority to introduce provisional measures inaudita altera parte, but could do so if the rights of the
infringed party were seriously threatened, and against security for any damage inflicted on the otherparty as a result of the provisional measure.  In addition, Article 442 of the Law on Civil Procedure
stipulated that judicial authorities could introduce provisional measures inaudita altera parte for the
purpose of eliminating an immediate threat of unla wful damage, removing irreparable damage, or to
prevent violence.WT/ACC/HRV/59
Page 46
(c) Administrative procedures and remedies
199. Administrative procedures in the area of industrial property were carried out by the State
Intellectual Property Office.  An administrative lawsuit against an act of the Office could be initiated
before the Administrative Court.  The administrative procedure itself was governed by the Law on
Industrial Property, the Law on General Administrative Procedure and the Law on AdministrativeLawsuits.
(d) Special border measures200. The representative of Croatia said that Croatia had recently adopted the Law on the
Ratification of International Convention on the Harmonization of Border Controls of Goods.  Croatia
planned to introduce a border control system concerning the infringement of intellectual propertyrights, with due consideration to Articles 51 to 60  of the TRIPS Agreement, through the new Customs
Law which Parliament had passed on 30 June 1999.
(e) Criminal procedures
201. The representative of Croatia said that action in cases of copyright piracy and trademark
counterfeiting could be instituted ex officio by the State attorney on the basis of criminal charges
brought by the author or other copyright holder, the trademark holder, the police or any other
government body (financial police, market inspectorate) which, in the course of its activity, had
detected a committed criminal act.  Remedies - including seizure, forfeiture and destruction of theinfringing goods - were available in the Penal Law, notably in Chapters XVII and XXI, as well as in
the Amended Copyright Law.  The procedural criminal provisions were contained in the new Law on
Criminal Procedure in force since January 1998.
202. The representative of Croatia that his Government would apply fully the provisions of the
Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) by the date of its
accession to the WTO without recourse to a transitional period.  The Working Party took note of this
commitment.
Policies Affecting Trade in Services
203. The representative of Croatia said that, as a market-oriented country in transition, Croatia was
adjusting its legislation according to the principles of liberalization advocated by the WTO.
Accepting fully the rules and principles of the General Agreement on Trade in Services, Croatia was
strongly committed to the rules preventing discriminatory measures and restrictions related to market
access and national treatment in all modes of supply.  He noted that Croatia would seek MFN
exemptions in the road transport area, audiovisual services and concerning acquisition of real estate(reciprocity requirement).  These exemptions would apply to all countries.
204. On a further point raised by a member, the representative of Croatia confirmed that Croatia
would accord national treatment to foreign persons who have acquired assets on whatever legal basis
in respect of their ownership rights and obligations, in accordance with GATS Article XVII.  TheWorking Party took note of this commitment.
205. Regulation of services activities was within the competence of various institutions, including
the Ministries of Science and Technology;  Finance, Economy, Maritime Affairs, Transport and
Communications;  Health;  Education and Sports;  Urban Planning, Construction and Housing;Labour and Social Welfare;  and the Croatian Se curities Commission, etc.  Several new laws and
amendments were in preparation (listed in do cument WT/ACC/HRV/30, re ply 163).  Work permits
were issued in accordance with the Law on Empl oyment of Foreign Persons.  The Law did not make
any distinction between short-term or long-term em ployment, and stipulated that work permits wereWT/ACC/HRV/59
Page 47
issued in concordance with the length of employment contracts, with validity up to two years
(renewable).
206. The Company Law, the basic act for commencing business activity in Croatia, stipulated the
conditions for establishing commercial presence in Croatia.  He confirmed that commercial presence
could take the form of a fully new company, subsidiary, branch and/or any kind of joint-venture, andthat commercial presence with respect to the degree of foreign ownership was not limited.  In
response to a specific question, he replied that the Law defined a branch office as serving the purpose
of carrying out business activities of a company or an individual merchant outside the place of the
registered office.  A branch office was not a separate legal entity;  its rights and obligations were
vested in the parent company.  Branch offices were registered with the appropriate registration court.
Applications should be accompanied by (i) an excer pt from the home court register of the founder or a
valid document indicating the legal form of the founder and the date of establishment;  (ii) thedecision of the founder to set up a branch office;  (iii) a certified copy of the foundation statement,
articles of association or memorandum of assocition of the founder;  and (iv) a certified abbreviated
(most recent) annual balance sheet of the founder.  A foreign person could have several branch offices
in Croatia.  The founder was required to designate a person (or persons), residing in Croatia,
authorized to represent the branch office in Croatia.  The scope of activities allowed to be carried out
by a representative office was regulated by the Law on Trade.  A representative office could not be
used to carry out regular business activities.  Before opening a representative office foreign persons
were required to register it in the Register of Representative Offices, kept by the Ministry of the
Economy.  The procedure for opening and registration of representative offices was regulated by the
Decree on conditions for Establishment and Operation of Foreign Representative Offices in theRepublic of Croatia (published in the Official Gazette on 24 January 1997).
207. The representative of Croatia provided information on the establishment of a bank, branch
and representative office (circulated in document WT/ACC/HRV/17 of 29 July 1996).  Foreign banks
were admitted in Croatia on the basis of reciprocity.  The reciprocity requirement had been removedthrough Amendments on the Banking Law, which had entered into force on 29 June 1998.  The
appropriate bank licence was issued by the National Bank of Croatia.  The minimum capital
requirement for the establishment of a bank amounted to DM 5 million in local currency, or DM 15
million for banks registered for transactions with foreign countries.  Savings banks could be
established with a minimum capital equivalent to DM 1 million, but these banks were not allowed toaccept deposits from, or extend credits to, legal persons or make transactions with foreign countries.
A representative office of a foreign bank could only engage in market research, promotion or
representational activities.  Parliament had adopted a new Banking Law on 18 December 1998
(Official Gazette No. 161/98).  Its main features related to the provisions reinforcing the competence
and the supervisory rôle of the Croatian National Bank (Central Bank) in securing the stability of the
banking system in Croatia.  The reciprocity requirement for establishment had been abolished
definitely in the new Law.  According to the new Law, the minimum capital requirement for the
establishment of a bank amounted to HRK 20 million, or HRK 60 million for banks registered for
transactions with foreign countries.  Regarding brokerages and securities houses, foreign operators
would need a local intermediary.  Foreign compan ies with operating presence in Croatia could
manage and underwrite share issues, otherwise a local partner would be required.  Non-residents were
not allowed portfolio investment in short-term securities.
208. The insurance sector was governed by the Law on Insurance.  Foreign insurance companies
were not permitted to operate through branch offices in Croatia, but would need to establish either a
wholly-owned or a joint-stock company, only as a s ubsidiary.  This limitation would be abolished and
branching in the insurance industry allowed for non-residents upon accession to the WTO.  Croatiahad introduced certain restrictions on cross-border provision of insurance and re-insurance to reduce
capital outflows and encourage the development of a domestic insurance market.  Restrictions on
modes 1 and 2 in reinsurance and retrocession would be removed upon accession to the WTO.
Companies not headquartered in Croatia were, for example, only allowed to provide life and non-life
insurance against risks not covered by Croatian companies.  From the date of accession, cross-borderWT/ACC/HRV/59
Page 48
provision of MAT insurance services and a number of other insurance services would be allowed.
However, full opening of Croatria's insurance sector to direct foreign competition, particularly in all
aspects of direct life and non-life insurance on a cross-border basis, would put the domestic sector in
unequal position with insurance industries in neighbouring countries whose national markets were not
yet fully liberalised.
209. The telecommunications sector was currently regulated by the Ministry of Maritime Affairs,
Transport and Communications.  Competition was allo wed in all telecommunication services sectors
except basic services in fixed networks (voice telephony and telex) and leased lines.  Foreign
companies could only provide basic telecommunication services through, and in agreement with,
Croatian Post and Telecommunications (HPT).  Other services, such as mobile telecommunication
networks, electronic mail, on-line information, electronic data interchange and value-added services
could be provided by a Croatian subsidiary ope rating with a concession from the Telecommunications
Council.  The "Law on the separation of the Croatian Post and Telecommunications into the Croatian
Post and the Croatian Telecommunications" had been adopted on 10 July 1998.  The Law stipulated
the actual separation into two joint-stock companies - one for postal services, the other for
telecommunications - to take effect as from 1 January 1999.  According to the Law on
Telecommunication, foreign entities could hold up to 25 per cent of the capital of the radio andtelevision concessionaire in radio, television and cable television concessions.  Until 1 January 2003,
HT (Croatian Telecommunication) would be the sole supplier of fixed network infrastructure and
provider of basic telecommunication services.  From that date, the market would be opened to other
providers.  The situation was similar for enhanced telecom services and other telecom services, where
the market would be opened for other providers as of 1 January 2001.
210. The State-owned Croatian Railways (HZ) he ld a monopoly on transportation of passengers
and goods by rail, but was exposed to heavy competition from other modes of carriage, in particular
road transport.  Foreign companies could provide public transportation through a registered Croatian
subsidiary licensed by the authorities concerned.  The Maritime Code required foreign-flag carrierstransporting passengers and goods between Croatian ports to hold a licence for cabotage.  Croatia was
requesting an MFN exemption on road passenger and freight transportation because of the
commercial characteristics of road transport services in the region.  These services were regulated
through bilateral or plurilateral agreements on road transport, which reserved or limited the supply of
road transport services and specified operating conditions, including transit permits quotas and/orpreferential road taxes of transport services into, in, across and out of the territories of the parties
concerned.  The MFN exemption was therefore essentially of commercial nature, and was related to
the issue of competitiveness on the European road passenger and freight transport market.
211. Concerning professional services, he said that legal services and legal assistance could only
be provided by lawyers and lawyers' associations registered with the Bar Council of the Republic of
Croatia.  Registration in the Bar Council required Croatian citizenship, a degree from the Faculty ofLaw, passing of the bar examination in Croatia, and high proficiency in the Croatian language.  The
citizenship requirement applied only for legal procedures relating to Croatian Law, and not for legal
consultancy on foreign and international law (through consultancy firms).  Parties could be
represented by lawyers registered in other countries in disputes before selected (arbitration) courts in
matters involving international issues.  Foreign audi ting companies - not established in Croatia - could
access the Croatian market only in joint operation with a local partner.
212. A new Law on the Tourist Industry had entered into force at the end of 1996, harmonizing
Croatian legislation with regulations applicable in European Communities' countries.  The new
legislation provided a framework for upgrading catering and tourism services in Croatia.  The war hadaffected the tourist industry significantly, and the Croatian Tourism Association was implementing a
promotion programme to regain lost markets.  The Government had assisted the revival of the
industry by allocating about HRK 30 million (US $4.6 million) in its 1997 budget and HRK 30 million
in the 1998 budget for the promotion of tourism (studies of markets overseas, participation in
international fairs, printing of catalogues, etc,), and HRK 45 million (US$6.9 million) in 1997 andWT/ACC/HRV/59
Page 49
HRK 43 million in 1998 in subsidies to air, road and sea transport to promote tourist visits, tour
operators, travel and tourist agencies.  A budget allocation of HRK 70 million for the tourism industry
was foreseen for 1999.
213. Croatia's Schedule of Specific Commitments on Services is annexed to its draft Protocol of
Accession reproduced in the Appendix to this Report (see paragraph 226 below).  This Schedule ofSpecific Commitments on Services contains the legally binding market access commitments of
Croatia in respect of services.
Transparency
Publication of Information on Trade
214. The representative of Croatia stated that the transparency of Croatia's laws and other
regulations was ensured through obligatory publication of all laws and regulations in Croatia's Official
Gazette "Narodne Novine".  A Law granted that no measure could be applied before being published.
A Law entered into force eight days after its publication in the Official Gazette.  All amendments and
changes in laws and regulations were also published in Official Gazette to enable all interestedpersons (companies) to get acquainted with them.  Furthermore, TBT measures including draft
standards were published in the Official Journal of the State Office for Standardisation and Metrology
allowing the public 30 days to provide comments and remarks.  The competent authorities in Croatia
were drafting a Regulation on methods and procedures for issuing technical regulations prescribing
quality and health requirements as a referral point for SPS controls on these item.  He added that theOfficial Gazette "Narodne novine" was available on the internet (www.nn.hr).
215. The representative of Croatia said that, at the latest from the date of accession, all laws and
regulations related to trade would be published in the Official Gazette "Narodne novine" promptly and
that no law or regulation related to international trade would become effective prior to suchpublication.  He further stated that Croatia would implement fully Article X of the GATT 1994 and
the other transparency requirements in WTO Agreements requiring notification and publication.
Notification
216. The representative of Croatia said that, at the latest upon entry into force of the Protocol of
Accession, Croatia would submit all initial notifications required by any Agreement constituting part
of the WTO Agreement.  Any regulations subsequently enacted by Croatia which gave effect to the
laws enacted to implement any Agreement cons tituting part of the WTO Agreement would also
conform to the requirements of that Agreement.  The Working Party took note of this commitment.
Trade Agreements
217. The representative of Croatia submitted an updated list of bilateral trade and economic
agreements, and international organizations in which Croatia was participating (circulated in
document WT/ACC/HRV/6/Rev.1 on 9 October 1996).  The trade and economic cooperation
agreements were based on the principle of most fav oured nation treatment.  He added that Croatia was
fully committed to the MFN principle in market access and in other areas covered by the WTO.  His
Government intended to conclude free-trade agreements with CEFTA countries and in due course join
the European Communities, and would ensure that any such agreements would meet the requirements
of GATT Article XXIV.
218. Trade preferences for goods originating in Tunisia, Turkey, Uruguay, Spain, Former
Yugoslav Republic of Macedonia and Slovenia had been abolished at the end of 1993.  At present, the
only preferential trading agreements in force were a Free Trade Agreement with the Former Yugoslav
Republic of Macedonia, and an FTA with the Republic of Slovenia concluded in 1997.  These FTA's
were based on the CEFTA model and covered substantially all trade between Croatia, Slovenia andWT/ACC/HRV/59
Page 50
the Former Yugoslav Republic of Macedonia.  Preferential market access on agricultural products was
granted through tariff rate quotas.  None of these Agreements covered trade in services.  Copies of the
trade agreements were provided to the Working Party.
219. The Trieste and Gorizia Agreement of 1955 included provisions regulating border trade
between the municipalities of Buje, Novigrad and Umag in Croatia and border areas in Slovenia.  Theexchange of trade was based on indication lists "A" (exports) and "B" (imports), and duty-free lists
"C" (exports) and "D" (imports).  Products imported under list "D" (reproduced in document
WT/ACC/HRV/30, pp,78-80) were duty-fr ee provided they were designated for usage in the border
area determined by the Trieste Agreement.  Local export-import trade could be carried out by a
company located in the border area and registered with the Court register for such activities.
220. In response to a request by a member, the representative of Croatia confirmed that Croatia
would notify the Free Trade Agreement between the Republic of Croatia and the Former Yugoslav
Republic of Macedonia to the Committee on Regional Trade Agreements no later than upon Croatia's
accession to the WTO.
221. A member noted provisions regarding a 1 per cent customs evidence fee in Croatia's Free
Trade Agreement with the Former Yugoslav Republic of Macedonia, and questioned the consistency
of such a fee with Articles XXIV and VIII of the GATT.  The representative of Croatia replied that
Croatia applied 1 per cent customs duty on im ports from the Former Yugoslav Republic of
Macedonia, while the latter applied a 1 per cent customs evidence fee on Croatian exports.  Croatia
recognized that such provisions in its Free Trade Agreement with the Former Yugoslav Republic ofMacedonia were not in compliance with Article XXIV of the GATT.  The authorities of Croatia and
the Former Yugoslav Republic of Macedonia had accordingly agreed that Croatia would eliminate the
1 per cent customs duty, thereby applying zero duty in accordance with the Free Trade Agreement, at
the latest by the date of accession, and the Former Yugoslav Republic of Macedonia would eliminate
the 1 per cent customs evidence fee as from 1 January 2000.
222. A member requested Croatia to report on the specific steps taken to date to pursue a
WTO-consistent FTA with Bosnia and Herzegovina.  In reply, the representative of Croatia said that
the Agreement on Economic Cooperation between the Government of the Republic of Croatia and the
Governments of the Republic and Federation of Bosnia and Herzegovina had been negotiated andsigned in 1995.  At that time, Bosnia and Herzegovina was not organized under the Dayton Peace
Agreement provisions, thus there were two customs territories in Bosnia and Herzegovina (Federation
and Republic Srpska).  Having in mind the special relations envisaged between the Republic of
Croatia and the Federation of Bosnia and Herzegovina in the Washington Agreement, Croatia's
Government had opted for a Free Trade Agreement wi th the federal customs territory in Bosnia and
Herzegovina.  New political developments arising from the Dayton Peace Agreement signed in
December 1995, which also introduced a single customs territory of Bosnia and Herzegovina with twocustoms administrations, had underscored the necessity of changing the scope of the Agreement on
Economic Cooperation.  Therefore, Croatia's Government had passed a decision in May 1998 to
negotiate a draft Trade Agreement with the Council of Ministers of Bosnia and Herzegovina,
introducing a free trade arrangemen t with the whole territory of Bosnia and Herzegovina.  The
negotiations had been delayed due to the preparation of elections in Bosnia and Herzegovina inSeptember 1998.  The draft new Free Trade Agreement proposed by Croatia envisaged completely
free trade in industrial goods (without a 1 per cent customs fee) and exchange of concessions in trade
in agricultural goods, thus bringing the provisions of that Agreement in line with WTO rules and
disciplines.
223. Negotiations between the Government of Croatia and the Council of Ministers of Bosnia and
Herzegovina on concluding a Free Trade Agreement, covering substantially all trade in products
originating in the Republic of Croatia and the whole territory of Bosnia and Herzegovina, had begun
in March 1999.  The Agreement on Economic Cooperation between the Republic of Croatia and the
Federation of Bosnia and Herzegovina had been abolished on 15 May 1999, thus reintroducing MFNWT/ACC/HRV/59
Page 51
based trade between Croatia and the whole territory of Bosnia and Herzegovina.  This regime would
remain in place until the conclusion of a Free Trade Agreement between Croatia and Bosnia and
Herzegovina as a whole.  The Government of Croatia expected the new FTA to be signed and
implemented prior to Croatia’s accession to the WTO.
224. The representative of Croatia stated that his Government would observe the provisions of the
WTO including Article XXIV of the GATT 1994 and Article V of the GATS in its trade agreements,
and would ensure that the provisions of these WTO Agreements for notification, consultation and
other requirements concerning free trade areas a nd customs unions of which Croatia was a member
were met from the date of accession.  The Working Party took note of these commitments.
Conclusions
225. The Working Party took note of the explanations and statements of Croatia concerning its
foreign trade regime, as reflected in this report .  The Working Party took note of the commitments
given by Croatia in relation to certain specific matters which are reproduced in paragraphs 26, 33, 37,
41, 47, 58, 64, 73, 83, 88, 99, 101, 105, 108, 111, 122, 135, 137, 146, 148, 156, 160, 168, 202, 204,
216 and 224 in this Report.  The Working Party took note that these commitments had beenincorporated in paragraph 2 of the Protocol of Accession of Croatia to the WTO.
226. Having carried out the examination of the foreign trade regime of Croatia and in the light of
the explanations, commitments and concessions made by the representative of Croatia, the Working
Party reached the conclusion that Croatia should be invited to accede to the Marrakesh AgreementEstablishing the WTO pursuant to the provisions of Article XII.  For this purpose the Working Party
has prepared the Draft Decision and Protocol of Accession reproduced in the Appendix to this report,
and takes note of Croatia's Schedule of Specific Commitments on Services (document
WT/ACC/HRV/59/Add.2) and its Schedules of Con cessions and Commitments on Agriculture and
Goods (document WT/ACC/HRV/59/Add.1)  that are attached to the Protocol of Accession.  It is
proposed that these texts be approved by the General Council when it adopts the Report.  When the
Decision is adopted, the Protocol of Accession woul d be open for acceptance by Croatia which would
become a Member thirty days after it accepts the said Protocol.  The Working Party agreed, therefore,
that it had completed its work concerning the negotiations for the accession of Croatia to the
Marrakesh Agreement Establishing the WTO.WT/ACC/HRV/59
Page 52
ANNEX 1
Laws, regulations and other information provided to the Working Party by Croatia
- The Law on the Foreign Exchange System, Foreign Exchange Operations and Gold
Transactions;
- Transformation of Socially-Owned Enterprises Act;
- The Privatization Act of 1 March 1996;- Annual Report of the Croatian Privatization Fund for 1994;
- Financial Statements of the Croa tian Privatization Fund for 1993 and 1994;
- Privatization in the Republic of Croatia;
- Results of Voucher Privatization in Croatia;
- List of Public Enterprises;
- Electric Power Supply Act with Explan ations and Restructuring Programme;
- Restructuring Programme and the new Croatian Railways Act;- Law on Exceptional Measures of Price Control;
- Decision Promulgating the Law on Exceptional M easures of Price Controls of 8 July 1997;
- Decision on the Compulsory Repor ting of Price Lists and Tariffs  of Certain Legal Persons;
- Order on Identifying Products Requiring Reportin g of Prices and Margins for the Purpose of
Control;
- Decision on Compulsory Reporting of the Price Lists or Tari ffs of Certain Products and
Services;
- Order on Identifying the Products and Servi ces Requiring the Repor ting of Price Lists of
Tariffs;
- List of Products and Services which are subj ect to the Obliged Notification of Prices;
- The Croatian Competition Protection Act;
- The Croatian Company Law;
- Law on Trade;
- Law Amending the Law on Trade (adopted on 30 June 1999);
- The Croatian Customs Law;- Customs Law (adopted on 30 June 1999);
- The Croatian Customs Service Act;
- Diskette containing the new customs ta riff (in force as from 1 July 1996);
- Decree on the Criteria for Tariff Quota;
- Decree Amending the Law on Administrative Taxes;- Decree of 24 June 1999 Amending the Administrative Taxes Amounts of the Law on
Administrative Taxes (equalizing administrative fees on import and export of waste);
- Tax System of the Republic of Croatia:  Pr ofit Tax Act, Income Tax Act and VAT Act;
- Law on Excise Tax on Oil Derivatives;
- Law on Excise Tax on Beer;
- Law on Excise Taxes on Automobiles, Othe r Motor Vehicles, Vessels and Aircraft;
- Law on Excise Tax on Non Alcoholic Beverages;- Law on Excise Tax on Coffee;
- Law on Excise Taxes on Spirits;
- Law on Excise Tax on Spirits;
- Law amending the Law on Special Taxes on Tobacco Products (adopted on 18 June 1999);
- Export/Import Quotas for the Years 1991, 1992 and 1993;- Export/Import Quotas for the Year 1995;
- Export/Import Quotas for 1996;
- List of Goods Imported and Expor ted on the Basis of 1995 Licences;
- Export/Import Licences in 1996;
- Decision Amending the Decision Determining the Goods Imported and Exported on Basis of
Licences;
- Decision Amending the Decision Determining the Goods Imported and Exported on the Basis
of Licences;WT/ACC/HRV/59
Page 53
- Extract of the Draft Customs Law rela ted to the issue of Customs Valuation;
- Statute of the Republic of Croatia on the Conditions and Method of Determining Tariff Bases;
- Customs Regulations for Determining the Customs Value According to the Customs Law of
the Republic of Croatia (Articles 29 to 48);
- Law on Waste;
- Law on Environmental Protection;- Decree on Rules of Origin and Procedure for Issue of Certificate of Origin (as of
24 June 1999);
- Attachment to the Decree on Rules of Origin;
- Certificate of Origin;
- Decision on Determining the Goods Expor ted on Basis of Quota of 12 July 1996;
- Decision on Termination of the Decision on Determining the Goods Exported on Basis of
Quota;
- Decision on Termination of the Decision on Determining the Goods Exported on the Basis of
Quota;
- Subsidies and Supports from State Budget Gran ted in the Republic of Croatia in 1997 and 1998;
- War Damage to the Agricultural Sector of the Republic of Croatia;
- Basic Data on the Fishing Sect or of the Republic of Croatia;
- Government Decision on Establishing the TBT and SPS Enquiry Point;
- The Standardization Act of 2 July 1996;
- Standardization Act;
- State Office for Standardization and Metrology:   Rules for Preparation, Adopting and Issuing of
Croatian Standards;
- List of Croatian Standards;
- Law on State Inspectorat e (adopted on 30 June 1999);
- Extract of the draft Law on State Inspectorates in Economy and Labour Area Related to the
Quality Control System;
- Products Subject to Quality C ontrol on Imports (HS Numbers);
- Decision on Amounts to be Paid for Covering th e Costs of Quality Control of Products Upon
Export and Import;
- Decision on Amounts to be Paid for Covering th e Costs of Quality Control of Products Upon
Export and Import of 23 May 1995;
- Regulation on the Procedure for the Adoption of Regulations on Basic Requirements for
Goods, Processes and Services;
- Regulation Amending the Regulation on Standard Quality of Liquid Fuels (as of
24 June 1999);
- Law Concerning the H ealthiness and Health Control of F oodstuffs and General Use Articles;
- Law concerning the Healthiness and Health Control of Foodstuffs and General Use Articles
(1996);
- Drugs and Medical Products Law;- Plant Protection Act;
- Phytosanitary Certificate;
- Regulation on Phytosanitary Inspection of Plants and Control of Plant Protection Products in the
National Cross-Boundary Transportation;
- Regulation on Phytosanitary Inspection of Plants and Control of Plant Protection Products in
National Cross-Boundary Transportation (to be revised by 1 June);
- Draft Regulation on the Amendments of the Regulation on Phytosanitary Inspection of Plants
and Control of Plant – Protection Products in the National Cross – Boundary Transportation;
- List of Quarantine Plant Pests;
- Norms for the Establishment of Health Conditions of Crops, Nurseries, Seed and Planting
Material;
- Law on State Commodity Reserves;
- The Croatian Free Zones Act;
- Decree on Procurement of Goods, Works and Services;
- Law on Procurement of Goods, Services and Works;WT/ACC/HRV/59
Page 54
- Agricultural Strategy of the Republic of Croatia;
- List of Protection Measures on Agricultural and Food Products;
- Import Prices for Agricultural Products in 1997;
- The Tobacco Law of 5 July 1999;
- Agreement on Trade-related Aspects of Intellectual Property Rights;
- Copyright Law (unofficial consolidated integral version);- Law on the Amendments of the Copyright Law (adopted on 30 June 1999);
- Trademark Law (adopted on 30 June 1999);
- Patent Law (adopted on 30 June 1999);
- Industrial Design Law (adopted on 30 June 1999);
- Law on the Protection of Layout-Designs on Integrated Circuits (adopted on 30 June 1999);
- Law on the Protection of Geographical Indications of Products and Services (adopted on
30 June 1999);
- The Croatian Banking Act;
- Law Amending the Law on Banks and Sa vings Banks (Official Gazette No.89 of
30 June 1998);
- Credit Relations with Foreign Countries Act;
- Insurance Law;- Law on Insurance and Sale of Securities of 1 January 1996;
- Decision Promulgating the Law on Inve stment Funds of 14 December 1995;
- Law on Telecommunications;
- The Agreement on the Economic Co-operation between the Government of the Republic of
Croatia and the Government of the Republic and Federation of Bosnia and Herzegovina;
- Free Trade Agreement between the Republic of Croatia and the Former Yugoslav Republic of
Macedonia;
- Free Trade Agreement between the Republic of Croatia and the Republic of Slovenia;
- Reasons for requesting developing country treat ment for the Republic of Croatia within the
WTO;
- Tender Documentation for the Purchase of Joint Stock Companies;
- World Bank Project Portfolio in Croatia;
- List of IBRD, EBRD and CEF Project Loans;  and
- Imports to Croatia 1998.WT/ACC/HRV/59
Page 55
Table 5
Products Subject to Import Licensing1
HS code Produce description Licensing authority
26.12 Uranium or thorium ores and concentrates
2612.10 Uranium ores and concentrates
2612.20 Thorium ores and concentrates
28.44 Radioactive chemical elements and radioactive
isotopes (including the fissile or fertile chemical
elements and isotopes) and their compounds;
mixture and residues cont aining those products:
2844.10 - Natural uranium and its compounds:  alloys,
dispersions (including cermets), ceramic
products and mixtures c ontaining these products
2844.20 - Uranium enriched in U 235 and its compounds;
plutonium and its compounds;  alloys,
dispersions (including cermets), ceramic
products and mixtures containing uranium
enriched U 235, plutonium or compounds ofthese products
2844.30 - Uranium depleted in U 235 and its compounds;
alloys, dispersions (including cermets), ceramic
products and mixtures containing uranium
depleted in U 235, thorium or compounds of
these productsMinistry of Economy
2844.40 Radioactive elements and isotopes and
compounds other than those of subheading No.
2844.10, 2844.20 or 2844.30; alloys,
dispersions ( including cermets ), ceramic
products and mixtures containing theseelements, isotopes or compounds; radioactive
residues
2844.50 - Spent (irradiated) fuel elements (cartridges) of
nuclear reactors
28.45 Isotopes other than those of heading No.2844;
compounds, inorganic or organic, of such
isotopes, whether or not chemically defined
2845.10 - Heavy water (deuterium oxide)
2845.90 - Other
2845.901 - Deuterium
29.04 Sulphonated, nitrated or nitrated derivatives of
hydrocarbons, whether or not halogenated
2904.201 - Nitrobenzene
2904.202 - Dinitrobenzene
2904.203 - Di and trinitrotoluene
29.20 Esters of other inorganic acids (excluding esters
of hydrogen halide) and their salts;  their
halogenated, sulphonated, nitrated or nitrosalted
derivatives:
                                                     
1 In addition, Croatia applies licensing to narcotics and substances damaging the ozone layerWT/ACC/HRV/59
Page 56
HS code Produce description Licensing authority
2920.90 - Other:
2920.9003 - Nitroglycerin
2920.9004 - Other esters of nitrate acid
2920.9006 - Salts from other acids
30.01 Glands and other organs for organo-therapeutic
uses, dried, whether or not powdered;  extracts
of glands or other organs or of their secretions
for organo-therapeutic uses;  heparin and itssalts;  other human or animal substances
prepared for therapeutic or prophylactic uses, not
elsewhere specified or included
3001.10 - Glands and other orga ns, dried, whether or not
powdered
3001.90 - Other
3001.909 - Other
30.02 Human blood;  animal  blood prepared for
therapeutic, prophylactic or diagnostic uses;
antisera and other blood fractions and modified
immunological products , whether or not
obtained by means of biotechnological
processes; vaccines, toxins, cultures of micro-
organisms (excluding yeasts) and similar
products
3002.10 - Antisera and other blood fractions and
modified immunological  products, whether or
not obtained by mean s of biotechnological
processesMinistry of Health or
Ministry of Agriculture and
Forestry
3002.20 - Vaccines for human medicine
3002.30 - Vaccines for veterinary medicine
3002.90 - Other
3002.909 - Other
30.03 Medicaments (excluding goods of heading
No.3002, 3005 or 3006) consisting of two or
more constituents which have been mixed
together for therapeutic or prophylactic uses, not
put up in measured doses or in forms or packingsfor retail sale:
3003.10 - Containing penicillin or derivatives thereof,
with a penicillanic acid structure, or
streptomycin or their derivatives
3003.20 - Containing other antibiotics
3003.201 - Containing rolitetracyclin
3003.209 - Other
3003.30 - Containing hormone s or other products of
heading No.2937 but not containing antibiotics
3003.31 - Containing insulin
3003.39 - Other
3003.40 - Containing alkaloids or derivatives thereof but
not containing hormone s or other products of
heading No.2937 or antibiotics
3003.90 - Other
3003.901 Polimaltic complex with iron ( III) hydroxideWT/ACC/HRV/59
Page 57
HS code Produce description Licensing authority
3003.902 - Saccharine complex with iron (III) hydroxide
3003.909 - Other
30.04 Medicaments (excluding goods of heading
No.3002, 3005 or 3006) consisting of mixed orunmixed products for therapeutic or prophylactic
uses, put up in measured doses or in forms or
packings for retail sale:
3004.10 - Containing penicillin or derivatives thereof,
with a penicillanic acid structure, or
streptomycin or their derivatives:
3004.101 - Ready made medicaments for retail sale
3004.109 - Medicaments in doses in bulk
3004.20 - Containing other antibiotics
3004.201 - Ready made medicaments for retail sale
3004.209 - Medicaments in doses in bulk
3004.3 - Containing hormone s or other products of
heading No.2937 but not containing antibiotics
3004.31 - Containing insulin
3004.301 - Ready made medicaments for retail sale
3004.319 - Medicaments in doses in bulk
3004.32 - Containing adrenal cortical hormones
3004.321 - Ready made medicaments for retail sale
3004.329 - Medicaments in doses in bulk
3004.39 - Other
3004.391 - Ready made medicaments for retail sale Ministry of Health or
Ministry of Agriculture and
Forestry
3004.399 - Medicaments in doses in bulk
3004.40 - Containing alkaloids or derivatives thereof but
not containing hormones, other products of
heading No.2937 or antibiotics
3004.401 - Ready made medicaments for retail use
3004.402 - Oncovin doses in bulk
3004.409 - Other medicaments in doses in bulk
3004.50 - Other medicaments c ontaining vitamins or
other products of heading No.2936
3004.501 - Ready made medicaments for retail sale
3004.509 - medicaments in doses in bulk
3004.90 - Other
3004.902 - Other medicaments for retail sale
3004.903 - Medicaments in doses in bulk
3004.909 - Other
30.06 Pharmaceutical goods specified in note 4 to this
chapter
3006.20 - Blood grouping reagents
3006.30 - Opacifying preparations for x-ray
examinations; diagnostic reagents designed to beadministered to the patient
3006.60 - Chemical contraceptive preparations based on
hormones or spermicides
36.01 3601.00 Propellant powdersWT/ACC/HRV/59
Page 58
HS code Produce description Licensing authority
3601.001 - Propellant powders with no smoke
3601.002 - Black propellant powder for hunters
3601.003 - Black propellant powder for miners
3601.009 - Other Black propellant powder
36.02 3602.00 Prepared explosive, other than propellant
powders
3602.001 - On the basis of ammonium nitrate
3602.002 - On the basis of chlorate and perchlorate
3602.003 - On the basis of nitroglycerine
3602.004 - On the basis of nitrate esters
3602.009 - Others
36.03 3603.00 Safety fuses; detonating fuses; percussion or
detonating caps; igniters;  electric detonators:
3603.001 - Detonating fuses
3603.002 - Safety fuses
3603.003 - Caps
3603.004 - Igniters
3603.009 -Detonators
36.04 Fireworks, signalling flares, rain rockets, fog
signals and other pyrotechnic articles
3604.90 - Other
3604.901 - Rain rockets
38.01 Artificial graphite; colloidal or semi-colloidal
graphite; preparations based on graphite or other
carbon in the form of pastes, plates or other
semi-manufactures
3801.10 - Artificial graphite
3801.101 -Of nuclear grade
48.08 Paper and paperboard, corrugated (with or
without glued flat surface sheets), creped,
crinkled, embossed or perforated, in rolls or
sheets, other than paper of the kind described in
heading No.48,03Ministry of Economy
4808.10 - Corrugated paper and paperboard, whether or
not perforated
48.19 Cartons, boxes, cases, bags and other packing
containers, of paper, paperboard, cellulose
wadding or webs of cellulose fibres;  box files,
letter trays, and similar articles, of paper orpaperboard of a kind used in offices, shops or the
like
4819.10 - Cartons, boxes and cases, of corrugated paper
or paperboard
49.07 4907.00 Unused postage, revenue or similar stamps of
current or new issue in the country to which they
are destined;  stamp-impressed paper;
banknotes;  cheque forms;  stock;  share or bond
certificates and similar documents of title:
4907.002 - Securities (stocks, cheque forms, etc,)
4907.003 - Banknotes which are not legal tender in any
countryWT/ACC/HRV/59
Page 59
HS code Produce description Licensing authority
4907.009 - Other
68.15 Articles of stone or of other mineral substances
(including carbon fibres, articles of carbon fibres
and articles of peat) not elsewhere specified orincluded.
6815.10 - Non –electrical article s of graphite or other
carbon
6815.101 - Of nuclear grade graphite
70.17 Laboratory, hygienic or pharmaceutical
glassware, whether or not graduated or
calibrated
7017.10 - Of fused quartz or other fused silica
7017.20 - Of other glass having a linear coefficient of
expansion not exceeding 5x10 -6 per Kelvin
within a temperature range of 0 c to 300 cState Bureau of Standards
and Measurements
7017.90 - Other
71.08 Gold (including gold plated with platinum)
unwrought or in semi-manufactured forms, or in
powder form:
7108.1 - Non-monetary
7108.11 --- Powder Ministry of Economy
7108.12 --- Unwrought
7108.13 -- Semi-manufactured
7108.20 - Monetary
71.18 Coin
7118.10 - Coins (other than gold coin), not being legal
tender
7118.90 - Other
73.10 Tanks, casks, drums, cans, boxes and similar
containers, for any material (other than
compressed or liquefied gas), of iron or steel, of
a capacity not exceeding 300 l, whether or not
lined or heat-insulated, but not fitted with
mechanical or thermal equipment.State Bureau of Standards
and Measurements
7310.10 - Of a capacity of 50 l or more
7310.2 - Of a capacity of less than 50 l :
7310.29 - Other
84.01 Nuclear reactors;  fuel elements (cartridges),
non-irradiated, for nuclear reactors, machineryand apparatus for isotopic separation:
8401.10 - Nuclear reactors
8401.20 Machinery and apparatus for isotopic separation,
and their partsMinistry of Economy
8401.30 - Fuel elements (car tridges), non-irradiated
8401.40 - Parts of nuclear reactor
84.13 Pumps for liquids, whether or not fitted with a
measuring device;  liquid elevators
8413.1 - Pumps fitted or designed to be fitted with a
measuring device
8413.11 -- Pumps for dispersing fuel or lubricants, of the
type used in filling-stations or in garagesWT/ACC/HRV/59
Page 60
HS code Produce description Licensing authority
84.23 Weighing machinery (excluding balances of a
sensitivity of 5cg or better) including weight
operated counting or checking machines;weighing machine weights of all kinds
8423.10 - Personal weighing machines, including baby
scales;  household scales
8423.20 - Scales for continuous weighing of goods on
conveyors
8423.30 - Constant weight scales and scales for
discharging a predetermined weight of material
into a bag or container, including hopper scale
8423.8 - Other State Bureau of Standards
and Measurements
8423.81 -- Having a maximum weighing capacity not
exceeding 30kg,
8423.82 -- Having a maximum weighing capacity
exceeding 30kg but not exceeding 5,000kg
8423.89 -- Other
8423.891 --- Weighbridge (railway and road)
8423.899 --- Other
8423.90 - Weighing machine weights of all kinds;  parts
of weighing machinery
8423.901 --- Weight
85.25 Transmission apparatus for radio-telephony,
radio-telegraphy, radio-broadcasting ortelevision, whether or not incorporating
reception apparatus or sound recording or
reproducing apparatus;  television cameras; still
image video cameras and other video camera
recorders:
8525.10 - Transmission apparatus
8525.101 - Radio transmission
8525.109 -- Other
8525.20 - Transmission apparatus incorporating reception
apparatusMinistry of Economy
8525.201 - Repeater for radio
8525.209 -- Other
85.26 Radio apparatus, radio navigational aid
apparatus and radio remote control apparatus
8526.10 - Radar apparatus
8526.91 - Radio navigational apparatus
8526.92 - Radio remote control apparatus
87.01 Tractors (other than tractors of heading
No.8709)
8701.90 - Other
8701.9021 ---- Over 5 years old
87.10 8710.00 Tanks and other armoured fighting vehicles,
motorised, whether or not fitted with weapons
and parts of such vehiclesMinistry of Economy,
Ministry of Defense or
Ministry of Interior
89.06 8906.00 Other vessels, including warships and lifeboats
other than rowing boats:
8906.001 --- Warships of all sortsWT/ACC/HRV/59
Page 61
HS code Produce description Licensing authority
90.15 Surveying (including photogrammetrical
surveying), hydrographic, oceanographic,
hydrological, meteorol ogical or geophysical
instruments and appliances, excluding
compasses;  rangefinders
9015.10 - Rangefinders
9015.20 - Theodolites and tacheometers
9015.30 - Levels
90.16 Balances of a sensivity of 5 cg or better, with or
without wights
90.18 Instruments and appliances used in medical,
surgical, dental or veterinary sciences, includingscintigraphic apparatus, other electromedical
apparatus and sight testing instruments
9018.3 - Syringes, needles, catheters, cannulae and the
like
9018.31 - Syringes, with or without needles
9018.90 - Other apparatus and instruments
9018.901 --- Apparatus for dialysis
90.25 Hydrometers, and similar floating instruments,
thermometers, pyrometers, barometers,
hygrometers and psychrometers, recording or
not, and any combination of these instruments
9025.1 - Thermometers and pyrometers, not combined
with other instruments
9025.11 -- Liquid-filled or direct reading
9025.19 -- Other State Bureau of Standards
and Measurements
90.26Instruments and apparatus for measuring or
checking the flow, level, pressure or other
variables of liquids or gases (for example, flowmeters, level gauges, manometers, heat meters),
excluding instruments and apparatus of heading
Nos,9014, 9015, 9028 or 9032:
9026.10 - For measuring or checking the flow or level of
liquids:
9026.101 --- Electronic
9026.102 --- Electric
9026.109 --- Other
9026.20 - For measuring or checking pressure:
9026.201 --- Electronic
9026.202 --- Electric
9026.203 --- Manometers (non-e lectronic, non-electric)
9026.209 --- Other
9026.80 - Other instruments or apparatus:
9026.801 --- Electronic
9026.802 --- Electric
9026.803 --- Flow meters of ga ses (non-electronic and
non-electric)
9026.809 -- OtherWT/ACC/HRV/59
Page 62
HS code Produce description Licensing authority
90.27 Instruments and apparatus for physical or
chemical analysis (for example, polarimeters,
refactometers, spectrometers, gas or smokeanalysis apparatus); instruments and apparatus
for measuring or checking viscosity, porosity,
expansion, surface tension or the like;
instruments and apparatus for measuring or
checking quantities of hear, sound or light(including exposure meters); microtomes:
9027.10 - Gas and smoke analysis apparatus:
9027.101 --- Electronic
. 9027.102 --- Electrical
9027.109 --- Other
9027.80 --- Other instruments and apparatus:
9027.801 ---Electronic
9027.802 ---Electrical
9027.809 --- Other
90.28 Gas, liquid or electri city supply or production
meters, including calibrating meters therefore:
9028.10 - Gas meters
9028.20 - Liquid meters
9028.201 --- For fuel
9028.202 --- Water meters
9028.209 --- Other
9028.30 - Electricity meters
90.29 Revolution counters, production counters,
taximeters, mileometers, pedometers and the
like;  speed indicators and tachometers, other
than those of heading Nos, 9014 or 9015;
stroboscopesState Bureau of Standards
and Measurements
9029.10 - Revolution counters,  production counters,
taximeters, mileometers, pedometers and thelike:
9029.101 --- Electronic
9029.102 --- Electric
9029.109 --- Other
9029.20 Speed indicators and tachometers; str oboscopes
9029.201 --- Electronic
9029.202 --- Electric
9029.209 --- Other
90.30 Oscilloscopes, spectrum analyzers and other
instruments and apparatus for measuring or
checking electrical quantities, excluding metersof heading No.9028; instruments and apparatus
for measuring or detecting alpha, beta gamma, x-
ray, cosmic or other ionising radiations:
9030.10 - Instruments and apparatus for measuring or
detecting ionising radiations;WT/ACC/HRV/59
Page 63
HS code Produce description Licensing authority
91.06 Time of day recording apparatus and apparatus
for measuring, recording or otherwise indicating
intervals of time, with clock or watchesmovement or with synchronous motor (for
example, time-registers, time-recorders):
9106.20 - Parking meters
93.01 9301.00 Military weapons, other than revolvers, pistols
and the arms of heading No.9307
93.02 9302.00 Revolvers and pistol s, other than those of
heading No.9303 or 9304
93.03 Other firearms and similar devices which
operate by firing of an explosive charge (for
example, sporting shotguns and rifles, muzzle-loading firearms, very pistols and other devices
designed to project only signal flares, pistols and
revolvers for firing blank ammunition, captive-
bolt humane killers, line-throwing guns):
9303.10 - Muzzle-loading firearms
9303.20 - Other sporting, hunting or target-shooting
shotguns, including comb ination shotgun-rifles:
9303.30 - Other sporting hunting or target-shooting rifles
9303.90 - Other
9303.901 --- Starting rifles
9303.909 --- Other
93.04 9304.00 Other arms (for example, spring, air or gas guns
and pistols, truncheons ), excluding those of
heading No.9307Ministry of Economy,
Ministry of Defense or
Ministry of Interior
9304.001 --- Shotguns for spear-fishing
9304.009 --- Other
93.05 Parts and accessories of articles of heading
Nos,9302 to 9304
9305.10 -- Of revolvers or pistols
9305.101 --- Shotguns for spear-fishing
9305.109 --- Other
9305.2 - For rifled barrels, hunting and sporting rifles
from heading No.9303
9305.21 --- Tubes for rifle barrels
9305.29 -- Other
9305.90 - Other
9305.901 --- Products from heading No. 9301
9305.909 --- Other
93.06 Bombs, grenades, torpedoes, mines, missiles and
similar munitions of war and parts thereof;
cartridges and other ammunition and projectiles
and parts thereof, including shot and cartridge
wads:
9306.10 - Cartridges for riveting or similar tools or for
captive-bolt humane killers and parts thereof
9306.2 - Cartridges for rifled barrels and their parts;
cartridges for air guns
9306.21 --- Patrons
9306.29 -- OtherWT/ACC/HRV/59
Page 64
HS code Produce description Licensing authority
9306.30 - Other cartridges and parts thereof
9306.90 - Other
93.07 9307.00 Swords, cutlasses, bayonets, lances and similar
arms and parts thereof and scabbards and sheathsthereofWT/ACC/HRV/59
Page 65
Table 6
Products Subject to Export Licences2
HS code Product description Licensing authority
28.44 Radioactive chemical element and radioactive
isotopes (including the fissile or fertile chemical
elements and isotopes) and other compounds;
mixtures and residues co ntaining those products:
2844.10 - Natural uranium and its compounds:  alloys,
dispersions (including cermets), ceramic products
and mixture containing natural uranium or
natural uranium compounds;
2844.20 - Uranium enriched in U 235 and its compound;
plutonium and its compounds;  alloys,
dispersions (including cermets), ceramic products
and mixtures containing  uranium enriched U 235,
plutonium or compounds of these products;
2844.30 - Uranium depleted in U 235 and its compounds,
thorium and its compounds;  alloys, dispersions
(including cermets) ceramic products and
mixtures containing ur anium depleted in U 235,
thorium or compounds of these products
2844.50 - Spent (irradiated) fuel elements (cartridges) of
nuclear reactor
28.45 Isotopes other than those of heading No.2844;
compounds, inorganic or organic, of such
isotopes, whether or not chemically definedMinistry of Economy
2845.10 - Heavy water (deuterium oxide)
29.04 Sulphonated, nitrated or nitrated derivatives of
hydrocarbons, whether or not halogenated
2904.201 --- Nitrobenzene
2904.202 --- Dinitrobenzene
2904.203 --- Di and trinitrotoluene
2920 Esters of other inorganic acids (excluding esters
of hydrogen halide) and their salts;  theirhalogenated, sulphonated, nitrated or nitrosalted
derivatives:
2920.90 Other:
2920.9003 Nitroglycerin
2920.9004 Other esters of ,,,, acids
49.07 4907.00 Unused postage, revenue or similar stamps of
current or new issue in the country to which they
are destined;  stamp-impressed paper;  banknotes;cheque forms;  stock;  share or bond certificates
and similar documents of title:
. 4907.002 --- Securities (actions, cheque books, etc,)
4907.003 --- Banknotes which are not legal means of
payment in any of the countries
                                                     
2 In addition, Croatia applies licensing to narcotics and substances damaging the ozone layerWT/ACC/HRV/59
Page 66
HS code Product description Licensing authority
4907.009 --- Other
71.08 Gold including gold plated with platinum
unwrought semi-manufactured forms, or in
powder form:
7108.1 - Non-monetary
7108.11 --- Powder
7108.12 --- Other unwrought forms
7108.13 -- Other semi-manufactured forms:
7108.20 - Monetary
71.09 7109.00 Base metals or silver, clad with gold, not further
worked than semi-manufactured
71.10 Platinum, unwrought or  in semi-manufactured
forms, or in powder form
7110.1 Platinum
7120.11 Unwrought or in powder form
7110.19 -- Other
7110.2 Palladium Ministry of Economy
7110.21 -- Unwrought or in powder form
7110.29 -- Other
7110.3 Rhodium
7110.31 - Unwrought or in powder form
7110.39 -- Other
7110.4 Iridium, osmium and ruthenium
7110.41 -- Unwrought or in powder form
7110.49 -- Other
71.11 7111.00 Base metals, silver or gold, clad with platinum,
not further worked than semi-manufactured
71.18 Coin
7118.10 - Coin (other than gold coin), not being legal
tender
7118.90 - Other
84.01 Nuclear reactors;  fuel elements (cartridges), non-
irradiated, for nuclear reactors, machinery and
apparatus for isotopic separation:
8401.10 - Nuclear reactors
8401.20 Machinery and apparatus for isotopic separation,
and parts thereof
8401.30- Fuel elements (cartridges), non-irradiated
8401.40 Parts of nuclear reactor
87.10 8710.00 Tanks and other armoured fighting vehicles,
motorised, whether or not fitted with weaponsand parts of such vehiclesMinistry of Economy,
Ministry of Defence or
Ministry of Interior
89.06 8906.00 Other vessels, including warships and lifeboats
other than rowing boats:
8906.001 --- Warships of all sorts
93.01 9301.00 Military weapons, other than revolvers, pistols
and the arms of heading No.9307
93.02 9302.00 Revolvers and pistol s, other than those of
heading No.9303 or 9304WT/ACC/HRV/59
Page 67
HS code Product description Licensing authority
93.03 Other firearms and similar devices which operate
by firing of an explosive charge (for example,
sporting shotguns and rifles, muzzle-loadingfirearms, very pistols and other devices designed
to project only signal flares, pistols and revolvers
for firing blank ammunition, captive-bolt humane
killers, line-throwing guns):
9303.10 - Muzzle-loading firearms
93.05 Parts and accessories of articles of heading
Nos,9301 to 9394
9305.10 -- Of revolvers or pistols
9305.101 --- Shotguns for spear-fishing
9305-109 --- Other
9305.90 - Other
9305.901 --- Products falling within heading No. 9301
9305.909 --- Other
93.06 Bombs, grenades, torpedoes, mines, missiles and
similar munitions of was and parts thereof;
cartridges and other ammunition and projectiles
and parts thereof, including shot and cartridge
wads:Ministry of Economy,
Ministry of Defence or
Ministry of Interior
9306.10 - Cartridges for riveting or similar tools or for
captive-bolt humane killers and parts thereof
9306.2 Cartridges for shotguns and parts thereof;  air gun
pellets
9306.21 --- Cartridges
9306.29 -- Other
9306.30 - Other cartridges and parts thereof
9306.90 - Other
93.07 9307.00 Swords, cutlasses, bayonets, lances and similar
arms and parts thereof and scabbards and sheaths
thereof
97.01 Paintings, drawings and pastels, executed entirely
by hand, other than drawings on heading No.
4906 and other than hand-painted or hand-
decorated manufactured articles;  collages and
similar decorative plaques
9701.10 - Paintings (for example, oils, aquarelles and
pastels) and drawings
9701.90 - Other Ministry of Culture
97.02 9702.00 Other engravings, prints and lithographs
97.03 9703.00 Original sculptures a nd statuary, in any material
97.05 9705.00 Collections and collect or's pieces of zoological
botanical, mineralogical, anatomical, historical,
archaeological, palaeotological, ethnographic ornumismatic interest
97.06 9706.00 Antiques of an age exceeding 100 yearsWT/ACC/HRV/59
Page 68
Table 7
Products Subject to Quality Control and
Regulations for the Control of These Products (applicable from October 1999)
Product Description
1. Meat and Meat Products
The regulation on the quality of meat of beef  cattle and venison (Narodne Novine, No. 53/91);
The regulation on the quality of meat products (Official Gazette, No. 53/91);
The regulation on the quality of pork and its categorization (Official Gazette No. 53/91).
2. Fish, Cray-Fish, Mussels, Sea-Urchins, Frogs, Turtles, Snails, and Related Products
The regulation on the quality of fish, cray-fish, mussels, sea-urchins, frogs, turtles, snail, andrelated products (Official Gazette, No. 53/91).
3. Milk, Dairy Products, and Pure Cultures
The regulation on the quality of milk, dairy products, and pure cultures (Official Gazette,
No. 53/91).
4. Ice-Cream, Ice-Cream Products, and Frozen Desserts
The regulation on the quality of milk, dairy products, and pure cultures (Official Gazette,
No. 53/91.
5. Fruit, Vegetables, Mushrooms and Related Products
The regulation of the quality of fruit, vegetables, mushrooms and related products (Official
Gazette, No. 53/91).
6. Coffee, Coffee Products, and Products Made of Coffee Substitutes
The regulation of the quality of coffee, coffee products, and products made of coffee substitutes
(Official Gazette, No. 53/91).
7. Teas
The regulation of the quality of coffee, coffee products, and products made of coffee substitutes,tea, condiments, leaven, baking powder, puddi ng powder and low-caloric products (Official
Gazette, No. 53/91).
8. Common Salt and Brining Salt
The regulation of the quality of salt used as food (Official Gazette, No. 53/91).
9. Soups, Soup Concentrates, Sauce Concentrates and Food Supplements
The regulation of the quality of soups, soup concentrates, sauce concentrates and food
supplements (Official Gazette, No. 53/91).
10. Gain, Baking Products, Past a, and Deep Frozen Pasta
The regulation of the quality of grain, baking products, pasta, and deep frozen pasta (Official
Gazette, No. 53/91).
11. Biscuits and Biscuit-Related Products
The regulation of the quality of biscuits and biscuit-related products (Official Gazette,
No. 53/91).
12. Food Oils and Vegetable Fats, Margarine, Mayonnaise and Other Related Products
The regulation of the quality of oils and vegetable fats, margarine, mayonnaise and other relatedproducts (Official Gazette, No. 53/91);
The regulation of the quality of olive oil and blended olive oil (Official Gazette, No. 53/91).
13. Sugar and Related Products
The regulation of the quality of oils and vegetable fats, margarine, mayonnaise, sugar, honey and
sugar-related products (Official Gazette, No. 53/91).
14. Honey and Other Apiary Products
The regulation of the quality of honey and other apiary products and regulations on methods of
quality control of honey and other apiary products (Official Gazette, No. 53/91).WT/ACC/HRV/59
Page 69
Product Description
15. Cacao Products, Creams, Ca ndies and Related Products
The regulation of the quality of cacao products, chocolate-related products, candies (Official
Gazette, No. 53/91).
16. Alcoholic Beverages
The regulation of the quality of alcoholic beverages (Official Gazette, No. 53/91).
17. Non-Alcoholic Beverages
The regulation of the quality of non-alcoholic beverages and soda-water (Official Gazette,No. 23/97).
18. Fodder and Pet-Food
The regulation of the quality of fodder (Official Gazette, No 53/91).
19. Fuel Oils
The rules regulating the quality of fuel oils (Official Gazette No. 53/91).
20. Jet Engine Fuels
The rules regulating the quality of jet en gine fuels (Official Gazette No. 79/95);WT/ACC/HRV/59
Page 70
Table 8
Products subject to sanitary measures
Tariff
No.Product description Measure
01 Live animals; animal products Veterinary regulations
Health regulations
02 Meat and edible meat offal Veterinary regulations
Health regulations
03 Fish, crustaceans, molluscs and other aquatic
invertebratesVeterinary regulations
Health regulations
04 Dairy products, honey, eggs Veterinary regulations
Health regulations
05 Products of animal origin Veterinary regulations
Health regulations
15 Animal fats, prepared edible fats, animal waxes Veterinary regulations
Health regulations
16 Preparations of meat, fish, crustaceans, molluscs or
other aquatic invertebratesVeterinary regulations
Health regulations
21 Miscellaneous edible preparations Veterinary regulations
Health regulations
23 Chemical Residues Veterinary regulations
Health regulations
Animal feed Veterinary regulations
Livestock  regulationsWT/ACC/HRV/59
Page 71
Table 9
Products subject to phytosanitary measures
Tariff Number Plants and Plant Product Description
06.01 - 06.04 Living trees and other plants, bulbs, roots and similar, cut flowers and
ornamental leaves
07.01 - 07.14 Edible vegetables and certain root and tubers fresh or dried (excluded
frozen and conserved)
08.01 - 08.14 Edible fruits and nuts, peel of citrus fruit or melons fresh or dried
(excluded  frozen, conserved, boiled)
09.01 - 09.10 Coffee unroasted, tea, mate and spices -  unpacked and unprocessed
10.01 - 10.08 Cereals
11.01 - 11.06 Products of milling industry – excluded malt, starch, inulin and gluten
12.01 - 12.14 Oil seeds and fruits, miscellaneous grains, seeds and fruits, industrial and
medicinal plants, straw and fodder
14.01 - 14.04 Vegetable planting materials, vegetable products not elsewhere specified
or included
18.01 - 18.02 Cocoa beans, whole or broken, unroasted
23.00 - 23.09 Residues and waste from the food industries, prepared animal fodder
24.01 Unmanufactured tobacco, tobacco refuse
27.03 Peat (including peat litter)
31.01 Vegetable fertilizers, fertilizer produced by the mixing of animal and
vegetable products
38.08 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products
and plant-growth regulators, disinfectants and similar products, put up in
forms or packing for retail sale
44.01- 44.18 Wood and wood products – excluded  wood chemically or heat treated
45.01 Natural cork, raw or simply prepared, waste cork, crushed, granulated or
ground cork
50.01 Silk - worm cocoons suitable for reeling
50.03 Silk waste (including cocoons unsuitable for reeling, yarn waste and
garnetted stock)
52.01 - 52.02 Cotton, not carded or combed, cotton waste
53.01 Flax raw or processed but not spun, tow and waste  (including yarn
waste and garnetted stock)
53.02 True hemp, raw or processed but not spun, taw and waste of true hemp
53.03 Jute and other bast, raw or processed but not spun, tow and waste of
these fibres
53.04 Sisal and other textile fibres of the genus Agave  raw or processed but
not spun
.WT/ACC/HRV/59
Page 72
Table 10:  Status of Legislation on Intellec tual Property Rights in Croatia (July 1999)
Parts Sections Articles Full compliance already existing
pursuant to the laws being
previously in forceFull compliance achieved pursuant to:
laws adopted on
30 June 1999the pertaining
Regulations
12 3 4 5 6
Agreement on Trade-RelatedAspects of Intellectual
Property Rights
Part I
General Provisions and BasicPrinciplesArticles 1-8 MACL, PL,TL,IDL, LGI,
LPLDIC
Part II Section 1:
Standards Copyright And Related Articles 9-14 CL & MACL
Concerning the Rights
Availability,
Scope and Use Section 2:
of Trademarks Articles 15-21 TL RuTL
Intellectual
Property Rights
Section 3:Geographical Indications Articles 22-24 LGI RuLGI
Section 4:
Industrial Designs Articles 25-26 IDL RuIDL
Section 5:
Patents Articles 27-34 LPPV PL RuPL
Section 6:
Layout-Designs
(Topographies)Articles 35-38 LPLDIC RuLPLDICWT/ACC/HRV/59
Page 73Section 7:
Protection of Undisclosed
InformationArticle 39 LT, LPDS, LPP, LMMP
Section 8:
Control of Anti-Competitive
Practices in ContractualLicencesArticle 40 LOR
Part III Section 1:
Enforcement General Obligations Article 41 LCP
of
Intellectual Section 2:
Property
RightsCivil and Administrative
Procedures and RemediesArticles 42-49 LCP, LO, LE, PL, TL, IDL, LGI,
LPLDIC
Section 3:
Provisional Measures Article 50 LE, PL, TL, IDL, LGI, LPLDIC
Section 4:
Special RequirementsRelated to Border MeasuresArticles 51-60 CL RuCL
Section 5:
Criminal Procedures Article 61 PL, LPP
Part IV
Acquisition and Maintenance
of Intellectual Property RightsArticle 62 LGAP, LAD PL, LPPV, TL, IDL,LIG,
LPLDICWT/ACC/HRV/59
Page 74
LEGEND (KEY)
CL Copyright Law  NN 9/99
LPPV   Law on the Protection of Plant Varieties NN 131/97
LT Law on Trade NN 11/96, 75/99
LPDS Law on the Protection of Data Secrecy NN 108/96
LPP Law on the Protection of Plants NN 10/94
LMMP Law on Medicines and Medical Products NN 124/97
LOR Law on Obligatory Relations  NN 53/91; 73/91;
111/93; 3/94;107/95; 7/96
LCP Law on Civil Procedure NN 53/91; 91/92
LE Law on Enforcement  NN 57/96
LPP Law on Penal Procedure NN 110/97
PL Penal Law NN 110/97
LAP Law on General Administrative Procedure NN 53/91
LAD Law on Administrative Disputes NN 53/91; 9/92; 77/92MACL Modified and Amended Copyright Law
TL Trademark Law
LGI Law on Geographical Indications
IDL Industrial Design Law
PL Patent Law
LPLDIC  Law on the Protection of Layout-Designs of Integrated Circuits
CL Customs Law
RuTL Regulations under the Trademark Law
RuGI Regulations under the Law on Geographical Indications
RuIDL Regulations under the Industrial Design Law
RuPL Regulations under the Patent Law
RuLPLDIC  Regulations under the Law on the Protection of Layout.
RuCL Regulations under the Customs Law
NN Official Gazette of the Republic of CroatiaWT/ACC/HRV/59
Page 75
APPENDIX
ACCESSION OF CROATIA
Draft Decision
The General Council,
Having regard to the results of the negotiations directed towards the establishment of the terms
of accession of the Republic of Croatia to the Marrakesh Agreement Establishing the World Trade
Organization and having prepared a Pr otocol for the Accession of Croatia,
Decides, in accordance with Article XII of th e Marrakesh Agreement Establishing the World
Trade Organization, that the Republic of Croatia may accede to the Marrakesh Agreement Establishing
the World Trade Organization on the te rms set out in the said Protocol.WT/ACC/HRV/59
Page 76
PROTOCOL OF ACCESSION OF CROATIA
TO THE MARRAKESH AGREEMENT ESTABLISHING
THE WORLD TRADE ORGANIZATION
DRAFT
The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the approval
of the General Council of the WTO accorded under Article XII of the Marrakesh Agreement
Establishing the World Trade Organization (hereinaft er referred to as "WTO Agreement"), and the
Republic of Croatia (hereinafter referred to as "Croatia"),
Taking note of the Report of the Working Pa rty on the Accession of Croatia to the WTO in
document WT/ACC/HRV/59. (hereinafter referre d to as the "Working Party Report"),
Having regard to the results of the negotiations on the accession of Croatia to the WTO,
Agree as follows:
Part I – General
1. Upon entry into force of this Protocol, Cr oatia accedes to the WTO Agreement pursuant to
Article XII of that Agreement and thereby becomes a Member of the WTO.
2. The WTO Agreement to which Croatia accedes shall be the WTO Agreement as rectified,
amended or otherwise modified by such legal instrume nts as may have entered into force before the date
of entry into force of this Protocol.  This Protoc ol, which shall include the commitments referred to in
paragraph 225 of the Working Party Report, shall be an integral part of the WTO Agreement.
3. Except as otherwise provided for in the paragr aphs referred to in paragraph 225 of the Working
Party Report, those obligations in the Multilatera l Trade Agreements annexed to the WTO Agreement
that are to be implemented over a period of time star ting with the entry into force of that Agreement
shall be implemented by Croatia as if it had accepted that Agreement on the date of its entry into force.
4. Croatia may maintain a measure inconsistent with paragraph 1 of Article II of the GATS
provided that such a measure is recorded in the list of Article II Exemptions annexed to this Protocol and
meets the conditions of the Annex to  the GATS on Article II Exemptions.
Part II – Schedules.
5. The Schedules annexed to this Protocol sh all become the schedule of Concessions and
Commitments annexed to the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as
the "GATT 1994") and the Schedule of Specific Comm itments annexed to the General Agreement on
Trade in Services (hereinafter referred to as "GAT S") relating to Croatia.  The staging of concessions
and commitments listed in the Schedules shall be impl emented as specified in the relevant parts of the
respective Schedules.
6. For the purpose of the reference in paragraph 6(a) of Article II of the GATT 1994 to the date of
that Agreement, the applicable date in respect of the Schedules of Concessions and Commitments
annexed to this Protocol shall be the date of entry into force of this Protocol.WT/ACC/HRV/59
Page 77
Part III - Final Provisions
7. This Protocol shall be open for acceptance, by signature or otherwise, by Croatia until
31 October 2000.
8. This Protocol shall enter into force on the thirtieth day following the day of its acceptance.
9. This Protocol shall be deposited with the Dire ctor-General of the WTO.  The Director-General
of the WTO shall promptly furnish a certified copy of this Protocol and a notification of acceptance
thereto pursuant to paragraph 7 to each member of the WTO and Croatia.
10. This Protocol shall be registered in accordance with the provisions of Article 102 of the Charter
of the United Nations.
11. Done at Geneva this … day of  … two thousand … in a single copy in the English, French and
Spanish languages each text being authentic, except that a Schedule annexed hereto may specify that it
is authentic in only one or more of these languages.WT/ACC/HRV/59
Page 78
ANNEX
SCHEDULE - CROATIA
Part I - Goods
[Schedule CXLVII – Document WT/ACC/HRV/59/Add.1]
Part II - Services
[Schedule GATS/SC/130 – Document WT/ACC/HRV/59/Add.2]
__________