RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG64/3
10 March 2000
(00-0913)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN ESTONIA AND THE
FAROE ISLANDS (GOVERNMENT OF DENMARK)
Communication from the Parties
The following communication has been received from the Permanent Mission of Denmark, on
behalf of the Faroe Islands, with the request that it be distributed to WTO Members.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
The overall foreign trade policy objective of the Faroe Islands is to create favourable
conditions for the development and diversification of trade and to be a part of the harmonious
development of free trade within Europe.  As an impetus to this, the Faroese Government has decidedto conclude Free Trade Agreements with the Central and Eastern European Countries.  The Free
Trade Agreements are at the same time a contribu tion to the integration in Europe and to the
strengthening of the multilateral trading system, as they are elaborated with the principles of the
Agreement Establishing the World Trade Organization.
Annex 1 contains a summary of the structure of the Agreement.
1. Membership and Dates of Signature, Ratification and Entry into Force
The Parties to the Agreement are the Government of Denmark and the Home Government of
the Faroe Islands, of the one part, and the Government of the Republic of Estonia, of the other part.
As prescribed by Article 1 of the Agreement, the Agreement applies, on the one hand, to the FaroeIslands, and, on the other hand, to the Republic of Estonia.
The Agreement was signed on 27 November 1997 in Tórshavn.  It was subsequently ratified
by Estonia and Denmark (also on behalf of the Ho me Government of the Faroe Islands) by exchange
of Notes dated 17 November 1998.  It entered into force on 1 December 1998.
2. Type of Agreement
The Agreement created a free-trade area in conformity with the definition set in
Article XXIV:8(b) of the GATT 1994.
3. Scope
As prescribed by Article 2, the Agreement applie s to products falling within Chapters 1 to 97
of the Harmonized Commodity Description and Co ding System. Protocol 1 to the Agreement
provides for the conditions on custom duties in trade in certain agricultural products. The productsWT/REG64/3
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covered by the Agreement are products originating in the Faroe Islands or in the Republic of Estonia.
As prescribed by Article 9 the rules of origin and methods of administrative co-operation are laid
down in Protocol 2 to the Agreement.
4. Trade Data
There are some statistical limitations in the export figures from the Faroe Islands as the
custom authorities on the Faroe Islands only register exports in the fisheries sector. The fisheries
sector accounts for about 99 per cent of the total export.  Total export value in 1998 was 2.904 billion
DDK, while total import value in 1998 was 2.591 billion DDK.
Data on intra-trade are presented in Annex 2 to this note.
II. TRADE PROVISIONS
1. Import Restrictions &
2. Export Restrictions
1.1 & Duties and charges
2.1
As prescribed by Article 3, customs duties on imports and exports and charges having
equivalent effect were abolished upon the entry into force of the Agreement.  No new customs duties
on imports and exports or charges having equivalent effect may be introduced.  All import duties of a
fiscal nature have been abolished, in keeping with the provisions of Article 3.  In line with Article 10
of the Agreement, there are no measures or practices of an internal fiscal nature establishing, whether
directly or indirectly, discrimination between products originating in the Faroe Islands and likeproducts originating in Estonia.
1.2 & Quantitative restrictions
2.2
As prescribed by Article 5 of the Agreement, quantitative restrictions on imports and exports
and measures having equivalent effect were abolis hed upon the entry into force of the Agreement.  No
new quantitative restrictions on imports and exports or measures having equivalent effect may be
introduced.
3. Rules of Origin
Protocol 2 of the Agreement lays down the rules of origin applicable between the Parties to
the Agreement.
The origin rules are in line with the Common Declaration with Regard to Preferential Rules of
Origin contained in Annex II to the Agreement on Ru les of Origin as set out in the Final Act of the
Uruguay Round.  The relevant provisions on the definition of the concept “originating products” are
contained in Title II of Protocol 2.  The origin provisions allow for bilateral cumulation between the
parties to the Agreement.WT/REG64/3
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4. Standards
The Agreement does not contain any specific provisions concerning “Technical barriers to
trade” and/or “Sanitary and phytosanitary measures”.  Article 8 stipulates, however, that the
Contracting Parties shall apply their regulations in veterinary, health and plant health matters in a
non-discriminatory fashion and shall not introduce any new measures that have the effect of unduly
obstructing trade.
5. Safeguards
The Agreement contains provisions relating to special safeguards on imports of particular
products (Article 7), general safeguards (Article 19), re-export and serious shortage (Article 20) andbalance-of-payments difficulties (Article 21). The procedures for the application of safeguard
measures are laid down in Article 24.
Article 21 of the Agreement stipulates that where one of the Contracting Parties is in serious
balance of payments difficulties, or under imminent threat thereof, the Contracting Party concernedmay, in accordance with the relevant provisions of the General Agreement on Tariffs and Trade 1994
adopt restrictive measures, including measures related to imports which shall be of limited duration
and may not go beyond what is necessary to remedy the balance of payments situation.
6. Anti-Dumping and Countervailing Measures
According to the provisions of Article 18, the Contracting Parties may only take anti-dumping
measures in accordance with the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade and with the procedures laid down in Article 24.
7. Subsidies and State-Aid
Any public aid granted which threatens to distort competition in trade between the Parties is
considered incompatible with the proper functioning of the Agreement (Article 22). Appropriate
measures against practices contrary to Article 22 may be taken in accordance with the procedures for
implementation of appropriate measures against such practices laid down in Article 24.  Such
appropriate measures may only be taken in conformity with the procedures and under the conditionsof the World Trade Organization and any other relevant instrument negotiated under its auspices
which are applicable between the Contracting Parties.
8. Sector-Specific Provisions
In Article 6 of the Agreement, the Contracting Parties declare their readiness to foster, in so
far as their agricultural policies allow, harmonious development of trade in agricultural products.
In this connection Protocol 1 of the Agreement takes into account that the Faroe Islands have
maintained tariffs and duties on imports of certain agricultural products. It also takes into account theEstonian customs structure on the date of entry into force of the Agreement and Estonia may,
according to the provisions layed down in Protocol 1, pursuant to the implementation of its
agricultural policy introduce customs duties on a limited number of agricultural products originating
in the Faroe Islands.
The Arrangement forms part of the instruments creating the free trade area and contributes to
the development of closer integration between the economies of the Contracting Parties.  According
Protocol 1, the Contracting Parties shall continue in their efforts with a view to achieve furtherWT/REG64/3
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liberalization of trade in agricultural products within the framework of their respective agricultural
policies and their international commitments.
9. Other
According to Article 14, the Contracting Parties shall ensure that any public monopoly of a
commercial character in the Faroe Islands and in Estonia be adjusted so that no discrimination
regarding the conditions under which goods are procured and marketed will exist between residents of
the Faroe Islands and of Estonia.  The Agreement does not contain any list of public monopolies.  The
Parties to the Agreement are bound by their commitments under Article XVII and the Understanding
on the Interpretation of Article XVII of the GATT 1994.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and Reservations
Article 12 (General Exceptions) prescribes that the Agreement shall not preclude prohibitions
or restrictions on imports, exports or goods in transit justified on grounds of public morality, public
policy or public security; the protection of health and life of humans, animals or plants and the
environment; the protection of national treasures possessing artistic, historic or archaeological value;
the protection of intellectual property; or rules relating to gold or silver; or conservation of exhaustible
natural resources, if such measures are made effective in conjunction with restrictions on domesticproduction or consumption.  Such prohibitions or restrictions shall not, however, constitute a means of
arbitrary discrimination or a disguised restriction on trade between the Contracting Parties.
Article 13 (Security Exceptions) stipulates th at nothing in the Agreement shall prevent a
Contracting Party from taking any measures which it considers necessary to prevent the disclosure ofinformation contrary to its essential security interests, or to the protection of its essential security
interests or for the implementation of international obligations or national policies as specified
therein.
2. Accession/Withdrawal
There are no specific provisions in the Agreement relating to accession.  According to
Article 31, either Contracting Party may denounce the Agreement by notification to the other
Contracting Party.  The Agreement shall cease to be in force twelve months after the date of which
such notification was received.
3. Dispute Settlement Procedures
There are no dispute settlement provisions contained in the Agreement. However, Article 26
(The Joint Committee) and Article 27 (Procedures of the Joint Committee) stipulate that a Joint
Committee is established for the purpose to supervise and administer the proper implementation of the
Agreement. The Contracting Parties shall, whenever necessary, exchange information and, at therequest of either Contracting Party, hold consultations.
4. Relation with Other Trade Agreements
As explicitly mentioned in the Preamble of the Agreement, the Contracting Parties have
decided to conclude the Agreement considering that none of its provisions may be interpreted as
exempting the Contracting Parties from the ob ligations under other international agreements.WT/REG64/3
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Furthermore, the Preamble of the Agreement refers explicitly to the General Agreement of
Tariffs and Trade.  In concluding the Agreement, the Parties were resolved to eliminate the obstacles
to substantially all their trade, in accordance with the provisions of the GATT concerning the
establishment of free trade areas.
By concluding the Agreement, the Contracting Parties were desiring to consolidate and to
extend the economic relations existing between them and to ensure, with due regard for fair
conditions of competition, the harmonious development of their mutual trade in the context of
European cooperation.  They also declared their r eadiness to examine, in the light of any relevant
factor, and in particular of developments in European cooperation, the possibility of developing and
deepening their relations in order to extend th em to fields not covered by the Agreement.
5. Institutional Framework
The implementation of the Agreement shall be supervised and administered by a Joint
Committee consisting of representatives of the Contracting Parties.  The Joint Committee can set up
sub-committees and working parties and may decide to amend the Protocols and Annexes to thisAgreement.  The Joint Committee acts by common Agreement and meets whenever necessary
(Article 27).WT/REG64/3
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ANNEX 1
Structure of the Agreement
Preamble
Objectives Article 1
Scope Article 2 and Protocol 1
Customs duties on imports and exports
  and charges having equivalent effect Article 3 and Protocol 1
Fiscal duties Article 4
Quantitative Restrictions on imports and exports  and measures having equivalent effect Article 5
Concessions and agricultural policies Article 6
Special safeguards Article 7
Veterinary, Health and Phytosanitary measures Article 8
Rules of Origin and Administrative Co-operation Article 9 and Protocol 2Internal Taxation Article 10
Payments Article 11
General Exceptions Article 12
Security Exceptions Article 13
Public Monopolies Article 14Rules of competition concerning undertakings Article 15
Protection of Intellectual Property Article 16
Public Procurement Article 17
Dumping Article 18
General Safeguards Article 19Re-export and Serious Shortage Article 20
Balance-of-Payments Difficulties Article 21
State aid Article 22
Fulfilment of obligations  Article 23
Procedures for the Application of Safeguard Measures Article 24
Customs Unions, Free-Trade Areas and Frontiers Trade Article 25
The Joint Committee Article 26Procedures of the Joint Committee Article 27
Evolutionary clause Article 28
Annexes and Protocols Article 29
Entry into Force Article 30
Validity and termination Article 31WT/REG64/3
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ANNEX 2
Faroe Imports from Estonia, 19981
Value HS Code Quantity
(Kg) (DKK) (US$)
0306.13.19 127,626.0 1,830,803.20 254,278.22
2009.30.00 3.0 42.24 5.87
3005.90.00 4.0 2,097.00 291.25
3926.10.00 44.0 6,883.00 955.97
4016.10.00 0.2 594.66 82.59
4016.99.00 3.0 329.30 45.74
4407.10.00 1,334,709.2 2,604,916.96 361,794.02
4409.10.00 10,897.0 22,124.59 3,072.86
4410.19.00 2,893.0 5,307.90 737.21
4411.11.00 8,046.0 18,497.49 2.569,10
5209.59.00 125.0 7,559.32 1,049.91
5705.00.90 10.0 1,692.64 235.09
5806.20.00 1.0 66.00 9.17
5806.31.00 2.0 191.92 26.66
6107.19.00 4.0 1,584.00 220.00
6117.80.00 2.2 951.40 132.14
6117.90.00 2.0 1,947.00 270.42
6202.92.00 0.0 0.00 0.00
6307.90.00 9.1 4,347.80 603.86
7318.15.00 3.0 499.40 69.36
7321.83.00 3,087.0 35,555.93 4,938.32
7321.83.00 70.0 916.55 127.30
7412.20.00 1.0 53.17 7.38
7615.10.00 6.0 226.59 31.47
8407.21.91 53.0 12,862.00 1,786.39
8525.20.00 8.5 8,378.00 1,163.61
9401.61.00 378.0 9,844.08 1,367.23
9401.61.00 210.0 3,850.85 534.84
9401.69.00 1,338.0 27,334.00 3,796.39
9401.71.00 1,076.0 21,211.00 2,945.97
9401.80.00 180.0 1,078.95 149.85
9403.60.00 457.0 9,703.00 1,347.64
9403.60.00 128.0 2,611.48 362.71
9403.90.00 112.0 5,104.00 708.89
9506.99.00 4.6 1,535.60 213.28
9615.90.00 3.0 536.66 74.54
9911.00.00 68.6 28,367.55 3,939.94
9914.00.00 0.1 54.00 7.50
9915.00.00 2.2 641.70 89.13
9917.00.00 7.3 723.18 100.44
9918.00.00 3.6 955.60 132.72
Total 1,491,582.5 4,661,979.71 650,274.96
Source: Faroese authorities.
                                                     
1 The figures include the goods that have Estonian origin, but have been re-exported to the
Faroe Islands via Denmark (by Danish middlemen).WT/REG64/3
Page 8
Estonian Imports from the Faroe Islands,1998
Value
HS CodeQuantity
(kg) (EEK) (USD)Unit cost
(EEK)
220 600 390 144.0 5563.00 386.32 38.63
392 610 000 200.0 3,316.00 230.28 16.58
590 320 900 86.0 11,933.00 828.68 138.76
851 750 900 2.0 15,340.00 1,065.28 7.67
871 690 900 230.0 77496.00 5,381.67 336.94
940 421 900 30.0 4,920.00 341.67 164
Total 692.0 118,568.00 8,233.89 702.58
Source:   Estonian authorities.
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