RESTRICTED
WORLD TRADE WT/REG33/4/Add.1
WT/REG41/4/Add.1
ORGANIZATION WT/REG42/4/Add.1
20April 1998
(98-1551)
Original: English Committee onRegional Trade Agreements
FREE TRADE AGREEMENTS BETWEEN
THE CZECH REPUBLIC AND THE REPUBLIC OFBULGARIA,
THE SLOVAK REPUBLIC AND THE REPUBLIC OFBULGARIA AND
THE REPUBLIC OFSLOVENIA AND THE REPUBLIC OFBULGARIA
Questions andReplies
Addendum
ThisdocumentreproducesadditionalquestionsaddressedtothePartiestothesethreeagreements
andthejointresponses provided bythem. Thequestions andreplies setoutbelow areorganized in
accordancewithdocumentsWT/REG33/2(RepublicofSloveniaandRepublicofBulgaria),WT/REG41/2
(Czech Republic andRepublic ofBulgaria) andWT/REG42/3 (Slovak Republic andRepublic of
Bulgaria).
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I. BACKGROUND INFORMATION ONTHE AGREEMENT
3. Scope
From theinformation provided, itisnotobvious what thisagreement actually covers.
Could theParties clearly explain what theagreement covers, what isexcluded andwhat iscovered
bybetter thanMFN -greater thanzerotariff preferences, including percentage oftrade covered
andnumber oftariff linescovered ineachcategory. Please break-out agricultural trade separately.
Statistics willbeprovided later.
Itappears thattariffs ononlysome products included intheagreement willbeeliminated,
which others aresubject to"preferential" -lessthan MFN butgreater than zero tariffs.
Article XXIV provides fortheelimination oftariffs, notthereduction oftariffs. How dothe
parties justify thereduction, butnotelimination oftariffs onintra-trade?
Theagreements provide forthecomplete elimination ofanoverwhelming number oftariffs
covering byfarsubstantially allthetrade between theParties. TheParties do,therefore, believe that
preferences granted atzerolevelcover substantially allthetrade.
IntheParties ´view, inthenotion of"substantially allthetrade", thereduction tolessthan
MFN ratebutgreater than0isalsoincluded.WT/REG33/4/Add.1
WT/REG41/4/Add.1
WT/REG42/4/Add.1
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4. Trade Data
What portion ofeachoftheparties 'external trade isconducted withpreferential partners?
TABLE 1
Preferential Foreign Trade oftheRepublic ofBulgaria in1997*
(inmil.USD andinpercentage)
Imports Exports
Total, from which: 4,762.43 100.00 4,763.3 100.00
European Union 1,824.4 38.3 2,130.2 44.7
EFTA 86.8 1.8 44.4 0.9
Czech Republic 63.0 1.3 18.6 0.4
Slovak Republic 20.9 0.4 14.5 0.3
Slovenia 11.3 0..2 14.0 0.3
Sub-total (preferential trade) 2,000.4 42.1 2,221.7 46.6
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*Preliminary data.
TABLE 2
Preferential Foreign Trade oftheCzech Republic in1997
(inmil.USD andinpercentage)
Imports Exports
Total, from which: 26,735.00 100.00 22,334.00 100.00
European Union 16,749.90 62.70 13,570.20 60.80
EFTA 563.10 2.10 381.20 1.70
Slovak Republic 2,253.30 8.40 2,888.60 12.90
CEFTA 1,392.70 5.20 2,018.60 9.00
Bulgaria 22.00 0.08 60.50 0.27
Others* 61.50 0.20 179.50 0.80
Sub-total (preferential trade) 21,042.50 78.68 19,098.60 85.47
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*Estonia, Lithuania, Latvia andState ofIsraelWT/REG33/4/Add.1
WT/REG41/4/Add.1
WT/REG42/4/Add.1
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TABLE 3
Preferential Foreign Trade oftheSlovak Republic in1997
(inmil.USD andinpercentage)
Imports Exports
Total, from which: 10,264.40 100.00 8,792.60 100.00
European Union 4,054.70 39.50 3,953.20 44.96
EFTA 171.10 1.67 109.20 1.24
Czech Republic 2,360.09 22.99 2,343.55 26.66
CEFTA 607.25 5.92 1,061.43 12.07
Bulgaria 7.50 0.07 23.50 0.27
Others* 33.52 0.33 52.47 0.59
Sub-total (preferential trade) 7,234.16 70.48 7,543.35 85.79
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*Estonia, Lithuania, Latvia andState ofIsrael
TABLE 4
Preferential Foreign Trade ofSlovenia in1997
(inmil.USD andinpercentage)
Imports Exports
Total, from which: 9,358.30 100.00 8,372.40 100.00
European Union 6,309.20 67.40 5,326.10 63.60
EFTA 688.30 7.30 479.60 5.70
CEFTA 194.40 2.10 86.50 1.00
Bulgaria 14.90 0.16 12.60 0.15
Others* 61.40 0.66 169.00 2.00
Sub-total (preferential trade) 7,268.20 77.62 6,073.80 72.45
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*Estonia, Lithuania, Latvia andMacedoniaWT/REG33/4/Add.1
WT/REG41/4/Add.1
WT/REG42/4/Add.1
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Could theParties totheAgreement provide uswithdatawhich indicate trade creation
effects oftheAgreement onthird countries?
Theobjective oftherespective agreements istoenhance mutual economic andtrade relations
andtocontribute totheexpansion ofoverall world trade. Since theagreements ’entry intoforce, third
country trade ofeachParty increased.
Examination ofthetradecreation effect ofafreetradeagreement doesnot,intheParties 'view,
belong totheconformity testunder Article XXIV:5 (b).
II. TRADE PROVISIONS
1. Import Restrictions
How have Uruguay Round tariff reductions bytheParties totheAgreements affected
thelevelofpreferences granted? Willthelevelofpreference decline bytheendoftheliberalization
period orwilltheabsolute margin ofpreference bemaintained?
Thelevelofpreference willdecline bytheendoftheUruguay Round tariffreductions period.
CouldthePartiescommentonanynon-tariffmeasures(chargesandquantitativerestrictions)
thatareapplied tothird countries butnottointra-CEFTA trade?
TheCzech Republic, Slovak Republic, Slovenia andBulgaria presently donotmaintain any
nontariff-measures (charges andquantitative restrictions) intradewiththirdcountries, different from
those which areapplied totherespective Parties.
CantheParties confirm thattheyhave notraised duties tothird countries according to
GATT XXIV:5?
Yes. TheParties confirm that,inaccordance withArticle XXIV:5, theyhavenotraised duties
tothirdcountries.
3. Rules ofOrigin
Aretherules oforigin among theParties restrictive tothird countries? Could theParties
prove thattherules oforigin donotcreate restrictive, distorting ordisruptive effects onthird
countries 'trade andinvestment interest?
Wasthere adrawback rule? Hasano-drawback rulebeenintroduced? Iftheno-drawback
rulehasbeen introduced, doesitmean raising ofbarriers tothird countries?
Thepurpose oftherulesoforigin istodetermine whether aproduct iseligible tobenefit from
preferentialtreatment.Newrulesoforiginbasedontheconceptofpan-Europeancumulationandapplied
between theParties asof1997 areevenmore flexible withrespect toinput material ofthirdcountry
origin andserve better theinterest ofglobal trade liberalization.WT/REG33/4/Add.1
WT/REG41/4/Add.1
WT/REG42/4/Add.1
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Therefore, intheviewoftheParties totheagreements, these rulesarenotrestrictive tothird
countries.
Could theParties explain whytheybelieve therules oforigin willnotresult inhigher
tariff barriers tothird countries, particularly inviewoftherules oncumulation?
Thepurpose oftherulesoforigin istodetermine whether aproduct iseligible tobenefit from
preferentialtreatment.Newrulesoforiginbasedontheconceptofpan-Europeancumulationandapplied
between theParties asof1997 areevenmore flexible withrespect toinput material ofthirdcountry
origin andserve better theinterest ofglobal trade liberalization.
Therefore, intheviewoftheParties totheagreements, these rulesarenotrestrictive tothird
countries.
4. Standards
Doesthestandards regime create more obstacles totrade orrestrictions tothird countries,
compared withthefacilitated treatment among Parties?
Atpresent, thestandards regime between theParties isthesame asthatapplied inrelations
withthirdcountries. Noobstacles totradeordistortions tothirdcountries canbejustified onthegrounds
ofthenotification procedures ofdraftregulations.
DotheParties haveplans tonegotiate anyprovisions ontechnical barriers totrade (TBT)
orsanitary andphytosanitary measures (SPS)?
TheParties havenotyetagreed tonegotiate anyprovision onTBTandSPS. Anyeventual
action inthisfieldshallbeincompliance withtheWTO principles.
5. Safeguards
With respect tosafeguard provisions oftheAgreement, aretheinterests ofthird countries
protected? When injury iscaused byproducts originating inaParty totheAgreement, willthe
Parties impose safeguards against products from third countries?
Interests andrights ofthirdcountries areprotected asnomeasures against themcanbebased
onanyprovision oftheagreements which isapplied onlytotrade between theParties.
Could theParties explain theprovision onstructural adjustment? Hasthisprovision ever
been used?
Article 28provides foraderogation from theprovisions ofArticle 3foralimited duration
(atmaximum until theendofthetransitional period) inexceptional cases forsector undergoing
restructuring orfacing serious difficulties, orconcerning infant industries.
Article 28isinfullconformity withtheGATT 1994. Itisrecalled that"anelement of
preference" referred toinArticle 28oftheagreements would notbecreated bytheapplication ofthe
saidArticle, sincethepreference itselfwould havebeenalready created pursuant toArticle 3,asrequiredWT/REG33/4/Add.1
WT/REG41/4/Add.1
WT/REG42/4/Add.1
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byArticle XXIV:8. Indeed, theexceptional measures mustbeeliminated bytheendofthetransitional
period. After thisperiod, anymeasures based onArticle 28shallcease toapply.
During thetransitional period, measures maynotexceed acertain threshold orsurpass five
years (inthelatter caseauthorization oftheJoint Committee isnecessary). TheParties concerned
mayrequest consultations intheJoint Committee before anymeasure istaken. Allmeasures must
beaccompanied byaschedule forphasing out.Measures cannot beapplied onproducts benefitting
fromfullliberalization formore thanthree years. Finally, itisforeseen thatmeasures mayonlytake
theform ofincreased customs duties andmust, insodoing, maintain anelement ofpreference for
theParties concerned, thuspreserving thepreferential character oftheagreements.
Itshould benoted thatnomeasures against third countries could bebased onArticle 28of
theagreements.
Measures based onArticle 28havenotbeenuseduntilnowintrade between theparties to
therespective agreements.
Could theParties explain howbalance-of-payments measures would beapplied toward
theother Parties totheAgreement?
Please, seereply toquestion II.5(WT/REG41/4, WT/REG42/4 andWT/REG33/4).
6. Anti-Dumping (AD) andCountervailing Measures
CantheParties confirm thattheywillnotimpose ADmeasures justbecause other Parties
impose theADmeasures against third party products?
Yes. Parties totheagreements arecommitted tocomplying withtheirobligations under anti-
dumping related WTO instruments.
7. Subsidies andState-Aid
Could theParties explain therationale forexempting trade inagricultural products and
fisheries from these provisions? Doother rules apply tothese sectors?
Exempting tradeinagricultural products andfisheries fromtheprovision oftheparagraph 23:1
doesnotexempt agricultural products from themeasures thatcould betaken under Article 23:5.
8. Sector-Specific Provisions
Could theParties explain thespecific rules applying toagriculture inthisAgreement?
Please, seerespective partofthedocuments WT/REG41/2, WT/REG42/3, WT/REG33/2 and
replies tothecorresponding questions (WT/REG41/4, WT/REG42/4 andWT/REG33/4).WT/REG33/4/Add.1
WT/REG41/4/Add.1
WT/REG42/4/Add.1
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Does anyParty totheAgreements provide bilateral preferential treatment toagricultural
products under MFN tariff ratequotas (TRQs)? Please specify hownon-MFN bilateral TRQs
areadministered -bytypeofpreference onaproduct specific basis.
Nobilateral preferential treatment toagricultural products isprovided under MFN tariff rate
quotas. Consequently, preferential bilateral TRQs arecountry andproduct specific ones.
Does anyParty totheAgreement provide bilateral preferential treatment toagricultural
products forsanitary/phytosanitary reasons? Please specify byproduct andhealth measure.
Intheirtrade witheachother, noneoftheParties provides bilateral preferential treatment to
agricultural products forsanitary/phytosanitary reasons.
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