WORLD TRADE  
ORGANIZATION  G/C/W/552 
5 May 2006 
 
 (06-2163) 
Council for Trade in Goods Original:   English 
  
 
EUROPEAN COMMUNITIES - REQUEST FOR AN EXTENSION OF THE WAIVER FOR 
THE APPLICATION OF AUTONOMOUS PREFERENTIAL TREATMENT  
TO THE COUNTRIES OF THE WESTERN BALKANS 
 
  The following communication, dated 4 May 2006, is being circulated at the request of the 
delegation of the European Communities.  
_______________ 
 
 
A. I
NTRODUCTION  
  Since the year 2000, the European Commun ities grant an autonomous preferential trade 
regime to the countries of the Western Balkans (Albania, Bosnia  and Herzegovina, Croatia, the 
customs territories of Mont enegro, Serbia or Kosovo,1 and the former Yugoslav Republic of 
Macedonia).  These autonomous trade preferences were  granted for an initial period of five years, 
until 31 December 2005 and covered by a specific waiv er from the obligations under paragraph 1 of 
Article I of the GATT 1994, valid until 31 December 2006.    On 14 November 2005, the EC extended the peri od of application of the existing preferential 
regime for a further period of five years, expi ring on 31 December 2010.  he main reason for this 
extension was that the beneficiary countries con tinue to need market opening from the EC, to 
contribute to the process of political and economic st abilisation in the region.  he extension of the 
validity of this preferential regime did not lead to any substantive changes to the existing regime. 
  This regime, which currently applies to  both WTO and non-WTO members, constitutes a 
departure from the provisions of Article I GAT T 1994.  The European Communities therefore 
consider it necessary to seek a waiver from its WTO obligations. 
  This paper outlines the political and economic c onditions behind the application of the current 
regime for the Western Balkans and explains briefly the characteristic of such regime. 
 
B. E
VOLUTION OF THE EC TRADE RELATIONS WITH THE COUNTRIES OF THE WESTERN 
BALKANS  
 The EC trade regime vis-à-vis  these countries is currently regulated by the granting of 
autonomous trade preferences and by the conclusion of Stabilization and Association Agreements.  
 Before 2000, the European Communities alread y had a liberal trade regime towards the 
Western Balkans, allowing more than 80 per cent  of regional exports to enter the European 
Communities duty-free.  On 1 December 2000 th e European Communities extended the duty-free 
access to the EC market for products originating from this area even further. 
                                                      
1 Kosovo as defined by the Resolution of the United Nations Security Council 1244. G/C/W/552 
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   The European Communities are by far the firs t trading partner of these countries, accounting 
for, overall, some 70 per cent of their total trade.   At the same time, the level of imports from the 
Western Balkans countries into the European Comm unities remains very low, being less than 0.5 per 
cent of all EC imports.  
The Stabilization and Association Agreements, which the EU is progressively concluding 
with the countries of the Western Balkans, are tools  which provide, much as the Europe Agreements 
did for the candidate countries in Central Euro pe, for the economic development and political 
stabilisation of the countries in the region, and to establish a close, long-term association between the 
EU and the Western Balkans. 
Two agreements of this kind ha ve been concluded so far.  One with the former Yugoslav 
Republic of Macedonia and one with Croatia.  The trade provisions of these two agreements entered 
into force on, respectively, 1 June 2001 for the former Yugoslav Republic of Macedonia and 
1 March 2002 for Croatia, by means of interim agr eements.  Both agreements establish a free trade 
area with the concerned country in line with th e obligations foreseen in Article XXIV of the 
GATT 1994. At the same time they allow the contin uation of the autonomous preferences where these 
provide more favourable conditions for the export of the goods orig inating in Croatia and in the 
former Yugoslav Republic of Macedonia.  
The whole Stabilisation and Association Agreem ent with the former Yugoslav Republic of 
Macedonia entered into force on 1 April 2004.  That  with Croatia entered in force on 1 February 
2005. 
Negotiations on a Stabilisation and Associati on Agreement with Albania are concluded. 
Negotiations with Bosnia and Herzegovina and Serbia and Montenegro are ongoing.  
C. EC
 TRADE WITH THE COUNTRIES OF THE WESTERN BALKANS  
In the year 2004, EC imports from the West ern Balkans concentrated primarily on 
agricultural and textile products.  However, the tr ade balance for the countries of the Western Balkans 
remained negative for all sectors.  Total trade with the Western Balkan s remained also low, at 1.3 per 
cent of total EC trade with the rest of the world.   The stabilization of the area and the new export 
opportunities described in the precedent paragraphs  should help the Western Balkans countries to 
diversify their economies and to ameliorate such a trade balance.  Detailed statistics on trade between 
the European Communities and the Western Balkan s have been provided annually to the General 
Council under the reports required by the current waiver.2 
D. GENERAL CHARACTERISTICS OF THE PREFERENTIAL TREATMENT APPLIED TO THE 
WESTERN BALKANS  
 The preferential treatment is pr ovided by Council Regulation No 2007/20003.  As a general 
rule, all products originating in the beneficiary countries and territories shall be admitted for import 
into the Community without quantitative restrictions  or measures having equiva lent effect and with 
exemption from customs duties and charges having equivalent effect. 
 
 The following exceptions apply:  
                                                     
 
2 WT/L/435, WT/L/503, WT/L/551, WT/L/596, and WT/L/635. 
3 OJ L 240, 23.9.2000, p. 1. Regulation as last amended by Council Regulation (EC) No 1946/2005 of 
14 November 2005 (OJ L 312, 29.11.2005, p.6) 
  G/C/W/552 
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  • The customs duties applicable to imports into the Community of ‘baby-beef’ products defined 
in Annex II of the Regulation (falling unde r headings Nos 0102, 0201 and 0202 of the 
Combined Nomenclature) are reduced to 20% of the ad valorem  duty and 20 per cent of the 
specific duty as laid down in the Common Customs Ta riff, within the limit of an annual tariff 
quota of 11 475 tonnes expressed in carcase weight, distributed as follows: 
(a) 1 500 tonnes (carcase weight) for ‘baby-beef’ products originating in Bosnia and 
Herzegovina; 
(b) 9 975 tonnes (carcase weight) for ‘baby-beef’ products originating in the customs 
territories of Montenegro, Serbia or Kosovo. 
• Imports into the Community of ‘baby-beef’ pr oducts defined originating in Albania do not 
benefit from a tariff concession. 
• Imports of sugar products under heading Nos 170 1 and 1702 of the Combined Nomenclature 
originating in Albania , Bosnia and Herzegovina and in the customs territories of Montenegro, 
Serbia or Kosovo are subject to the following annual duty-free tariff quotas: 
(a) 1 000 tonnes (net weight) for sugar products originating in Albania; 
(b) 12 000 tonnes (net weight) for sugar produc ts originating in Bosnia and Herzegovina; 
(c) 180 000 tonnes (net weight) for sugar products originating in the customs territories 
of Montenegro, Serbia or Kosovo. 
• For textile products originating in the cust oms territories of Montenegro or Kosovo and 
indicated in Annex III B of Council Regulation (EC) No 517/944, the exemption from 
customs duties and charges having equivalent e ffect is limited to the Community annual 
quantities set out in that Regulation. 
• For certain fishery products and wine, the cu stoms duties applicable to imports into the 
Community shall be suspended during the periods , at the levels, within the limits of the 
Community tariff quotas and under the specific c onditions indicated in the above-mentioned 
Regulation EC No 2007/2000. 
 
 The entitlement to benefit from the preferen tial arrangements is subject to the following 
conditions: 
(a) compliance with the definition of the con cept of ‘originating products’ provided for in 
Title IV, Chapter 2, section 2 of  Regulation (EEC) No 2454/93; 
(b) abstention of the beneficiaries from introducing new duties or charges having 
equivalent effect and new quantitative rest rictions or measures having equivalent 
effect from imports originating in the Co mmunity or from increasing existing levels 
of duties or charges or from introducing any other restrictions from the day of the entry into force of the preferential regime; 
(c) involvement of the beneficiaries in ef fective administrative co-operation with the 
Community in order to prevent any risk of fraud. 
                                                     
 
4OJ L 67, 10.3.1994, p. 1. G/C/W/552 
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   In addition, the entitlement to the preferential arrangement is subject to the readiness of the 
beneficiary countries to engage in effective economic  reforms and in regional co-operation with other 
countries concerned by the European Union's Stab ilisation and Association process, in particular 
through the establishment of free trade areas in c onformity with Article XXIV of the GATT 1994 and 
other relevant WTO provisions. 
E. C
ONCLUSIONS  
 This approach has proven to offer a conc rete and important support to the economic 
development efforts undertaken by the Western Balkan countries.  Yet, the beneficiary countries and territories continue to need help:  their economic tran sition is not complete and not all of them already 
benefit from Stabilisation and Association Agreements .  We consider it appropriate to request the 
WTO General Council that the provisions of para graph 1 of Article I of the GATT 1994 should be 
waived for a further period until 31 December 2011 to  the extent necessary to permit the European 
Communities to afford duty-free or preferential treat ment to eligible products originating in the 
Western Balkan countries, without being require d to extend the same duty-free or preferential 
treatment to like products of any other WTO Member. 
 
   G/C/W/552 
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DRAFT DECISION  
 
EUROPEAN COMMUNITIES PREFERENCES FOR ALBANIA, BOSNIA-HERZEGOVINA, 
CROATIA, THE STATE UNION OF SERBIA AND MONTENEGRO,  
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA  
 
Decision of […] 20065 
  Taking Note  of the request of the European Comm unities for a waiver from its obligations 
under paragraph 1 of Article I of the GATT 1994 to the extent necessary to permit the European 
Community to afford duty-free or preferential treatme nt to eligible products originating in Albania, 
Bosnia-Herzegovina, Croatia, the customs terr itories of Montenegro, Serbia or Kosovo
6, and the 
former Yugoslav Republic of Macedonia, without be ing required to extend the same duty-free or 
preferential treatment to like products of any other WTO Member: 
 
 Taking account  of the 1979 Decision of Differen tial and More Favourable Treatment, 
Reciprocity and Fuller Participation of Devel oping Countries and the 1994 Decision on Measures in 
favour of Least-Developed Countries;   Taking into account  the Decision of the General Council of 8 December 2000
7 by which 
WTO Members granted the European Communities a waiver of obligations under paragraph 1 
Article I of the GATT 1994 for the period through 31 December 2006.   Considering  the exceptional situation in Albania,  Bosnia-Herzegovina, Croatia, the State 
Union of Serbia and Montenegro and the former  Yugoslav Republic of Macedonia and the efforts 
being made by WTO Members to provide for the preservation of peace and for economic 
reconstruction;   Considering  that the duty-free and preferential treatme nt to eligible products the European 
Community affords to these countries is intended to  promote economic expansion and recovery in a 
manner consistent with the objectives of the GATT 1994 and not to create barriers for the trade of 
other WTO Members; 
  Noting  that Albania, Croatia, the former Yugoslav Republic of Macedonia are WTO 
Members, whereas Bosnia and Herzegovina, Montenegro  and Serbia have yet to accede to the WTO;  
 
Members, acting pursuant to the provisions of pa ragraph 3 of Article IX of the WTO Agreement. 
 
Decide that: 
 
1. Subject to the conditions set out in this Decisi on, the provisions of paragraph 1 of Article I of 
the GATT 1994 shall be waived until 31 December  2011 to the extent necessary to permit the 
European Communities to afford duty-free or preferen tial treatment to eligible products originating in 
Albania, Bosnia-Herzegovina, Croatia, the customs territories of Montenegro, Serbia or Kosovo and 
the former Yugoslav Republic of Macedonia, withou t being required to extend the same duty-free or 
preferential treatment to like products of any other WTO Member.  
                                                     
 
5 Adopted in accordance with the Procedures on WTO Decision-Making under Articles IX and XII of 
the WTO Agreement agreed by the General Council (WT/L.93). 
6 Kosovo as defined by the United Nations Security Council Resolution N° 1244. 
7 WT/L/380 G/C/W/552 
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  2. Such duty-free or preferential treatment shall not raise new barriers for the trade of other 
members.  The European Communities shall consult promptly with any member on the operation of 
its preferential or duty-free concessions in respect of the countries listed in paragraph 1 of this Decision, or on any other matter arising in respect of this Decision.  Where a member considers that its benefits under the GATT 1994 are or may be im paired unduly as a result of measures put in place 
by the European Community and covered by this Decision, the European Communities shall examine 
the possibility of a satisfactory adjustment of the matter.  This Decision does not affect members’ 
rights as set out in the Understanding in respect of Waivers of Obligations under the GATT 1994.  3. The European Communities shall report annuall y to the General Council on the preferences 
and duty-free treatment afforded to products from the countries listed in paragraph 1, including the 
extent to which such preferences and duty-fr ee treatment is different from the European 
Communities’ MFN and GSP concessions, with a view  to facilitating the annual review provided for 
in paragraph 4 of Article IX of the WTO Agreement.  
4. Accession to the WTO by Bosnia and Herzegovi na, Montenegro or Serbia will not affect the 
application of this Decision.  
__________