WT/REG280/M/1  
 
26 June 2018 
(18-4029) Page: 1/4 
Committee on Regional Trade Agreements  
Eighty -ninth Session  
   
 
 
THE COOPERATION AND CUSTOM S UNION AGREEMENT BETW EEN  
THE EUROPEAN UNION A ND THE REPUBLIC OF S AN MARINO  
(GOODS)  
NOTE ON THE MEETING OF 19-20 JUNE 2018 
Chairman: Ambassador Julian BRAITHWAITE (United Kingdom)  
1.1.  The 8 9th Session of the Committee on Regional Trade Agreements (hereinafter 'CRTA' or the 
'Committee') was convened in Airgram WTO/AIR/RTA/1 4/Rev.1 dated 7  June 2018.  
1.2.  Under Agenda Item F.I of the Session, the CRTA considered the Cooperation and Customs  
Union Agreement between the European Union and Sa n Marino, goods, (hereinafter  "the 
Agreement").  
1.3.  The Chairman  recalled that during the CRTA meeting of 4 March 2009, Members had agreed 
to consider RTAs involving non -Members under the Transparency Mechanism's procedures and had 
agreed that those RTAs notif ied since 14 December 2006, including future notifications, should  be 
taken up before the others. Members had made it clear that consideration of such agreements by 
the Committee did not have any implication for the views or positions of any Member with re spect 
to the consistency of that RTA with WTO rules and would be without prejudice to the rights and 
obligations of Members under the WTO Agreements, as had been clearly stated in paragraphs 1 
and 5 of the Transparency Mechanism Decision. Members had also agreed that the consideration 
of such agreements in the CRTA would be organized under a separate agenda item.   
1.4.  The Chairman  said that t he Agreement had entered into force on 1 April 2002.  It had been  
notifie d to the WTO by the Parties on 24  February 2010 under Article  XXIV:7(a) of the GATT  1994 
and the Understanding on the Interpretation of Article  XXIV of GATT 1994 as an Agreement 
establishing a free trade area (document  WT/REG 280/N/1). The text of the Agreement was 
available, together with its Annexes, on the Parties' official websites.  The Factual Presentation on 
the goods aspect s (document  WT/REG 280/1 dated 9 February 2018 ) and questions and replies on 
the Agreement (document WT/REG280 /2 dated 16 April 2018) ha d been distributed.  
1.5.  The presentations of t he Agreement by the Parties were supported by a PowerPoint 
presentation.  
1.6.  The representative of the European Union  (EU) welcomed the CRTA 's consideration of the 
Custom s Union between the EU and the Republic of San Marino. He was grateful to the Secretariat 
for the preparation of the Factual Presentation. He also thank ed San Marino for its excellent 
cooperation and for giv ing the EU the possibility to present the Customs Union to WTO Members  as 
well as  China, Japan and Turkey for their interest and for the ir written questions.  
1.7.  The EU and San Marino had established diplomatic relations in 1983 and enjoyed excellent 
relations. The Republic of San Marino was one of the world 's oldest, independent republics and 
democracies. It was an enclaved small -sized State of just over 61 km2 surrounded by Italy, an EU 
Member State, situated on the Italian Peninsula on the north -eastern side of the Apennine 
Mountains.  San Marino was a natural ally linked by strong historical, cultural and economic ties to 
the EU and in particul ar to Italy, due to its geographical position. The EU assessed very positively 
the cooperation with San Marino that had been established through the Customs Union WT/REG280/M/1  
 
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  Agreement. It had facilitated trade between the EU and San Marino as the absence of customs 
duties between  the two Parties ensured the smooth flow of trade between San Marino and the rest 
of the world.  
1.8.  As reflected in the Factual Presentation, the EU and San Marino differed very substantially in 
the size of their economies and their participation  in world trade. The EU was the world's largest 
economy with a GDP  per capita  (EU-28) of approximately 36,000€ and the 2nd largest trading 
block with EU trade representing 16.5% of the world GDP in 2017. In comparison , San Marino and 
its participation in global trade were very small. Considering the differences of volume and scale 
between the EU and San Marino, it was difficult to extrapolate a measurable economic impact of 
the Customs Union. Generally speaking, the econo my of San Marino was characteriz ed by strong 
interdependence with Italy and with the EU Member States.  
1.9.  He then turned to more specific aspects of the Agreement. In 1991 the EU and San Marino 
had concluded the Cooperation and Customs Union Agreement that had entered into force in its 
comple te form ( Customs Union and Cooperation) in 2002. Until 2002, the Customs Union had been 
implemented through an Interim Agreement. As illustrated in the Factual Presentation, the 1991 
Agreement established a Customs Union between the Parties, by abolishing import and export 
duties and charges having equivalent effect between San Marino and the EU for all products except 
coal and steel. Given that the Customs Union required a common commercial policy, th e EU and 
San Marino had harmoniz ed external tariffs and the rules of origin. Goods circulat ed freely  
between the EU and San Marino. Proof of this  was the use of the internal Union transit procedure : 
San Marino had  authori zed the EU – and in particular certain Italian customs offices - to carry out 
customs clear ance formalities for the free circulation of products sent from non -EU count ries to 
San Marino. This implied  deep economic integration with the EU. In addition  any agreement 
negotiated by the EU 's Customs Union par tners with a third country needed  to be in  line with those 
provisions of the EU trade agreement with that third country. In the  case of San Marino, the EU 
aimed  to ensure that preferential trade agreements negotiated by the EU with a given third 
country were extended to trade in goods between that  third country and San Marino. For its 
implementation, a Customs Cooperation Committee had  been established to ensure the correct 
and uniform application of the Agreement 's customs provisions. For example, specific rules were in 
place for the collection of  import duties and related administrative procedures for the movement of 
goods. Beyond the Custom s Union, the Agreement also laid  down the basis for extensive 
cooperation in various fields such as industry, environment, tourism, culture and information and  
academic exchanges.  
1.10.   The EU and San Marino had  been negotiating since 2015 an Association Agreement with the 
aim to further strengthen their ties and ensure San Marino 's participation in the Internal Market of 
the EU. The negotiations were expected to be technically concluded by the end of 2018 or early 
2019. The new agreement would  extend and deepen the existing Agreement.  He concluded by 
stating that the EU looked  forward to a fruitful discussion and would  endeavour to reply to 
Members' questions in addition to the written answers already provided.  
1.11.   The representative of San Marino  also welcomed the CRTA 's consideration of the Customs 
Union Agreement between the EU and the Republic of San Marino as well as t he EU statement and 
was grateful to have the opportunity t o address this important Organiz ation.   
1.12.   She recalled that San Marino and the EU had established diplomatic relations in 1983. 
Although San Marino was a third country with respect to the EU, it had s trong historical, cultural 
and economic ties to the EU, thanks also to its geographical position of being completely 
landlocked in Italy.  
1.13.   She presented a brief history of th e Agreement referring to the fact that since 1939 
San Marino and Italy had establi shed a Customs Union . The important evolution of European 
integration taking place  around San Marino, thus changing competences of the Italian Republic in 
certain matters, had however, in the late 80s, made it necessary to frame directly the relations 
between San Marino and the European Economic Community ( EEC), especially in trade in goods. 
For this reason, in 1991, the EEC and the Republic of San Marino had concluded an Agreement on 
Customs Union and Cooperation, which had allowed San Marino to enlarge it s customs union with 
Italy, by virtue of the 1939 bilateral Agreement, to the other Member States of the EU. With a 
view to the creation of the European Single Market on 1 January 1993 and the consequent 
abolition of customs barriers among Member States, i t had become imperative to immediately WT/REG280/M/1  
 
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  implement the rules of the Agreement focusing on commercial matters, to allow San Marino's  
goods to freely move within the territory of the entire Community. Therefore, in 1992 the Interim 
Agreement on Trade and Custo ms Union had been  signed and managed by the Cooperation 
Committee, which made decisions , in order to fully implement the trade aspects of the Agreement.  
1.14.   The Agreement had entered into force in its co mplete form (Customs Union and 
Cooperation) in 2002, afte r a long ratification process by EU Member States. Meanwhile, the 
Customs Union had been  implemented through the Interim Agreement, which had ceased to have 
effect in 2002.  The Customs Union with the EU, abolishing import and export duties and charges 
having equivalent effect for all products except coal and steel, was a very important step forward 
for San Marino's  economy. In fact, the manufactu ring sector  of the country had  always been one 
of the main sectors of its economy: in 2017 it accounted for 41.6%  of its GDP and employed more 
than 5, 300 cross -border workers from the European Union.  
1.15.   In terms of trade in goods with the European Union, in 2017 San Marino had imported 
goods of around 1.5 billion euros and had exported goods  of around 1.6 billion euros. Among EU 
member states, Italy was the main trade partner of San Marino , followed by Germany, Poland and 
the Netherlands. As for the trade in goods with the rest of the world, in 2017 San Marino had 
imported goods of about 141 mil lion euros and had exported goods of  about 139 million euros. 
San Marino's  main trade partners outside the European Union were China and Switzerland.   
1.16.   On the basis of a decision of the Cooperation Committee, which manag ed the 
implementation of the Agreemen t, customs formalities concerning imports and exports between 
San Marino  and third countries were carried out by Italian customs offices (representing the EU) 
listed in the decision. In particular, they collect ed customs duties on behalf of San Marino and paid 
back to the R epublic 75% of these duties, holding 25% to cover administrative costs. There were 
no physical customs offices between San Marino  and Italy, but San Marino had  a central customs 
office on its territory, which was in charge of the daily ap plication of the Agreement.  Based on the 
Agreement, San Marino applied  the common customs tariff of the EU to goods coming from third 
countries, as well as the common  commercial policy, which allowed  it to benefit from the EU's 
preferential agreements  with third countries, when  the third countries accepted  to give to San 
Marino's  goods the same status as to EU goods.  
1.17.   In April 2010, the "Omnibus " Decision no. 1/2010 had been  adopted by the EU -San Marino 
Cooperation C ommittee. This decision included  all decis ions previously made by the Cooperation 
Committee on the basis of the Interim Agreement on Trade and  Customs Union and it reiterated  
the full effectiveness thereof in the framework of the Agreement on Cooperation and Customs 
Union. The Decision introduced  new issues , including the enforcement of legislation protecting 
endangered species of wild fauna and flora (CITES), by virtue of which the territory of the Republic 
of San Marino was to be considered a Community territory, thus leading to a simplification of 
administrative procedures  on imports and exports between San Marino and the EU in this field.  
1.18.   She underlined that, c onsidering its geographical situation and the historical ties between 
San Marino and the EU, European  integration  for San Marino had been the natural path for its 
development. This was  why San Marino was  negotiating an Association Agreement with the EU in 
order to have full access to the single European market and to enjoy the four freedoms, abolishing 
also technical barriers, which  constituted, currently , a major obstacle in its trade with the EU . The 
Cooperation a nd Customs Union Agreement dated  back to the beginning of the 1990s and was no 
longer fit  for the current economic situation  to allow San Marino's  economic operators to be  fully 
competitive compared to EU operators. The future Association Agreement  would  also constitute a 
broad framework for the Agreements between San Marino  and the EU in other fields.  
1.19.   The representative of Japan  thanked the Parties for their presentation s and their replies to 
the questions that had been sent in advance of the meeting. Japan did not have follow -up 
questions.  
1.20.   The Chairman  said that consideration of the Goods Aspects of the Cooperation and Customs 
Union Agreement between the European Union and  the Republic of San Marino (hereinafter San 
Marino)  had allowed the Committee to clarify a number of questions and it could now conclude oral 
discussion of the RTA in accordance with paragraph 11 of the Transparency Mechanism. If any 
delegations wished to  ask follow -up questions they were invited to forward submissions in writing WT/REG280/M/1  
 
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  to the Secretariat by 26 June 2018 and Parties were asked to submit replies in writing by no later 
than 10 July 2018. In accordance with paragraph 13 of the Transparency Mechanism  all written 
submissions, as well as minutes of the meeting would be circulated promptly, in all WTO official 
languages, and would be made available on the WTO website.  
1.21.   The Committee took note .  
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