WORLD TRADE  
ORGANIZATION  WT/REG236/1 
15 April 2011 
 (11-1964) 
Committee on Regional Trade Agreements  
 
 
 
 
  
 
 
FACTUAL PRESENTATION 
 
Free Trade Agreement  
between the 
European Union and Montenegro 
(Goods and Services) 
 
Report by the Secretariat 
 
 
 
 
This report, prepared for the considerati on of the Free Trade Agreement between the 
European Union and Montenegro has been  drawn up by the WTO Secretariat on its 
own responsibility and in full consultation with the Parties.  The report has been 
drawn up in accordance with the rules and pr ocedures contained in the Decision for a 
Transparency Mechanism for Regiona l Trade Agreements (WT/L/671).  
 
Any technical questions arising from this re port may be addressed to Rohini Acharya 
(tel: +41 22 739 5874) and Jo-Ann Crawford (tel: +41 22 739 5422).  WT/REG236/1 
 Page iii 
 
 
  TABLE OF CONTENTS 
 
  Page 
 
I. TRADE ENVIRONMENT 1  
A. MERCHANDISE TRADE  2  
B. TRADE IN SERVICES AND INVESTMENT  6  
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 11  
A. BACKGROUND INFORMATION  11  
III. PROVISIONS ON TRADE IN GOODS 13  
A. IMPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  13  
1. General provisions 13  
(i) Liberalization of trade and tariff lines 14  
2. EU's liberalization Schedule 16  
3. Montenegro's liberalization schedule 19  
4. Tariff rate quotas 22  
5. Import restrictions 23  
B. RULES OF ORIGIN  23  
C. EXPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  26  
D. REGULATORY PROVISIONS ON TRADE IN GOODS  26  
1. Standards 26  
(a) Sanitary and phytosanitary measures 26  
(b) Technical barriers to trade 26  
2. Safeguard mechanisms 27  
(a) Global safeguards 27  
(b) Bilateral safeguards 27  
(c) Safeguards for balance of payments purposes 27  
(d) Special safeguards 28  
3. Anti-dumping and coun tervailing measures 28  
4. Subsidies and State-aid 29  
5. Customs-related procedures 29  
E. SECTOR -SPECIFIC PROVISIONS ON TRADE IN GOODS  30  
1. Steel 30  
IV. PROVISIONS ON TRADE IN SERVICES 31  
A. SCOPE AND DEFINITIONS  31  
B. DENIAL OF BENEFITS  32  
C. GENERAL PROVISIONS ON TRADE IN SERVICES  32  
1. Market access 32  
2. National and MFN treatment 33  
3. Cross-Border Trade in Services 33  
4. Establishment 33  WT/REG236/1 
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  5. Movement of natural persons 34  
D. LIBERALIZATION COMMITMENTS  36  
1. General Overview 36  
(a) The European Union 36  
(b) Montenegro 36  
2. Sector-specific Commitments 37  
(a) Business Services 37  
(b) Communication Services 37  
(c) Construction and Distribution Services 38  
(d) Educational Services 38  
(e) Environmental Services 38  
(f) Financial Services 39  
(g) Health Related and Social Services 39  
(h) Tourism and Travel Services and Recreational, Cultural and 
Sporting Services 39  
(i) Transport Services 40  
(j) Other Services 41  
E. REGULATORY PROVISIONS ON TRADE IN SERVICES  41  
1. Domestic regulation 41  
2. Recognition 41  
3. Approximation of Laws 41  
4. Subsidies and State-aid 41  
5. Safeguards 42  
V. GENERAL PROVISIONS OF THE AGREEMENT 42  
A. TRANSPARENCY  42  
B. CURRENT PAYMENTS AND CAPITAL MOVEMENTS  42  
C. EXCEPTIONS  43  
D. ACCESSION  43 
E. INSTITUTIONAL FRAMEWORK  43  
F. DISPUTE SETTLEMENT  45  
G. RELATIONSHIP WITH OTHER AGREEMENTS CONCLUDED BY THE PARTIES  48  
H. GOVERNMENT PROCUREMENT  50  
I. INTELLECTUAL PROPERTY RIGHTS  50  
J. OTHER  53 
1. Competition policy and approximation of laws 53  
2. Cooperation 53  
ANNEX I 55 
ANNEX II 59 
  WT/REG236/1 
 Page 1 
 
 
   
Key Facts 
 
Parties to the Agreement:  
The European Union (Austria;  Belgium;  Bulgaria;  Cyprus;  Czech Republic;  
Denmark;  Estonia; Finland;  France;  Germany;  Greece;  Hungary;  Ireland;  
Italy;  Latvia;  Lithuania;  Luxembourg; Malta;  Netherlands;  Poland;  
Portugal;  Romania;  Slovak Republic;  Slovenia;  Spain;  Sweden; United Kingdom), and Montenegro. 
 
Date of Signature:  15 October 2007 
 
Date of Entry into Force:  1 January 2008 (goods) and 1 May 2010 
    (services)  
Date of Notification:   16 January 2008 (goods) and 18 June 2010 
    (services) 
 
 
 I. TRADE ENVIRONMENT 
1. The Stabilization and Association Agreemen t (SAA) between the European Union and 
Montenegro is the fourth EU SAA notified to the WTO, following agreements with Albania, Croatia, 
and the Former Yugoslav Republic of Macedonia;  fr ee trade agreements (in goods) are also in force 
between the EU and Bosnia and He rzegovina and with Serbia.    
2. The economic and trade profiles of the Parties are considerably different.  The EU in 2008 
had a GDP of 12,462 billion Euros compared to 3 b illion Euros for Montenegro.  The EU's trade is 
dominated by manufactured products which form it s main imports and espec ially exports, and other 
commercial services.  Montenegro's exports and imports are also dominated by manufactures, but a 
significant share of imports and e xports of merchandise are made up of fuels and mining products and 
agriculture.  In services, its receipts are predominan tly travel related, while it imports mainly other 
commercial services and transportation services.  The EU's trade to GDP ratio is 29.3, compared to 
118.5 for Montenegro.  Economic indicators of the Parties are shown in Table I.1. 
Table I.1  Selected indicators, 2008 
GDP (2008) Country / entity Area ('000 km2) Population 2008 (million) 
Total (€ billion)a Per capita 
Montenegro 14 0.6 3 4,960 
EU (27)  4,187 496.8 12,462  25,086 
Austria 82 8.3  284  34,065 
Belgium 30 10.7  340  31,735 
Bulgaria 109 7.6  34  4,469 
Cyprus b 9 0.9  15  16,819 
Czech Republic 77 10.4  148  14,173 
Denmark 42 5.5  234  42,553 
Estonia 42 1.3  16  11,758 
Finland 305 5.3  185  34,859 
France 550 62.0 1,948  31,390 
Germany 349 82.1 2,494  30,359 
Greece 129 11.2  244  21,674 
Hungary 90 10.0  106  10,519 
Ireland 69 4.5  192  43,135 
Italy 294 59.9 1,565  26,153 
Latvia 62 2.3  23  10,178 
Lithuania 63 3.4  32  9,623 
Table I.1 (Cont'd)  WT/REG236/1 
Page 2 
 
 
  GDP (2008) Country / entity Area ('000 km2) Population 2008 (million) 
Total (€ billion)a Per capita 
Luxembourg 3 0.5  37  75,941 
Malta   0.3 0.4  5  12,359 
Netherlands 34 16.4  587  35,719 
Poland 306 38.1  360  9,436 
Portugal 92 10.6  166  15,594 
Romania 230 21.5  137  6,349 
Slovak Republic 48 5.4  65  11,991 
Slovenia 20 2.0  37  18,281 
Spain 499 45.6 1,095  24,033 
Sweden 410 9.2  328  35,538 
United Kingdom 242 61.4 1,806  29,415 
 
a Exchange rate:  Euros per US dollar in 2008:  0.68. 
b  GDP is based on 2007 data. 
 
Source:  WTO estimates based on World Bank.  
A. MERCHANDISE TRADE  
3. In 2009, the EU was the world's largest expor ter and importer of merchandise, accounting for 
16.2% of exports and 17.4% of imports, while Mont enegro was ranked 131st in terms of exports and 
122nd in terms of imports (e xcluding intra-EU trade).1  Data from the EU's Eurostat database on 
bilateral merchandise trade between the Parties are available only since 2006.  Chart I.1 below shows 
that in contrast to its widening trade deficit with  the world since 2004, the EU's trade surplus with 
Montenegro appears to have grown as a result of in creased exports and lower imports.  This trend in 
bilateral trade appears to be confirmed in Chart I. 2 showing Montenegro's trade with the EU and with 
the world, which shows a sharp increase in both its ov erall trade deficit up to 2008 as well as that with 
the EU between 2006 and 2008  both because of a sharp increase in imports but also declining exports.   
4. Chart I.3 below shows the structure of merchandise trade according to broad HS Sections 
during the period 2006-07 for which data are availabl e.  Montenegro's main exports both to the world 
as well as to the EU were base metals during this period (67.5% of total exports and 92.3% of the 
EU's imports from Montenegro).  In contrast, Monten egro imports a wide vari ety of products from the 
EU and globally.  Its four main categories of im ports, minerals, base metals, vehicles and machinery 
which accounted for 54.9% of its global imports on av erage in 2006-07, were also the four largest 
imports from the EU (60.2% of total im ports from the EU in the same period). 
                                                      
1 WTO Statistics Database—Trade Profiles (October 2010).  WT/REG236/1 
 Page 3 
 
 
  012345
05001,0001,5002,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010€ billion€ billionChart I.1 - EU: Merchandise import s from and exports to world and 
Montenegro, 2001-2010
Note: no trade data prior to 2006 and no data on EU's bilateral exports to Montenegro in 2006.
Source : EU authorities (2006-2007 imports from Montenegro) and Eurostat database (EU's global trade).Imports from Montenegro
Exports to MontenegroTotal imports
Total exportsLeft hand scale: Right hand scale:
 WT/REG236/1 
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  0.00.51.01.52.02.53.0
0.00.51.01.52.02.53.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010€ billion € billionChart I.2 - Montenegro: Merchandise  imports from and exports to 
world and EU, 2001-2010
Source : Montenegro authorities and UNSD, Comtrade database (2009-2010  data).Imports from EU
Exports to EUTotal imports
Total exportsLeft hand scale: Right hand scale:
  WT/REG236/1 
 Page 5 
 
 
  Chart I.3
EU and Montenegro: product composition of merchandise trad e, annual average 
(2006-2007)
EU's imports from Montenegro Montenegro's imports from EU
Source:  data submissions by EU and Montenegro authorities; Eurostat database.Per cent
Total:  €311 million Total:  €854 million
Total:  €1,395 billion Total: €1.6 billion
Total:  €1,212 billion Total:  €557 millionEU's global exportsMontenegro's global exportsEU's global imports Montenegro's global importsOther
2.7
Base metals
92.3Minerals 2.5Minerals
22.5Other 
6.3
Live animals 6.1
Chemicals 9.3
Other 
7.7Minerals
19.3
Articles of stone, plaster, cement 
4.2Vegetables 2.9Other
5.3
Base metals
7.8Vehicles 7.1Minerals
25.8Precious stones 2.5
Optical 3.5Vegetables 2.3
Miscellaneous 4.3Miscellaneous 2.5
Live animals 4.2
Other 
9.2Other 
3.5
Optical 4.5Plastics 3.9
Base metals 7.4Minerals 5.4Vegetables 2.6
Vehicles 3.4Machinery 2.6Prepared foods
8.8Plastics  3.3Articles of stone, plaster, cement 2.2
Chemicals 
7.3Textiles 3.3
Chemicals 14.1Machinery
30.1Textiles 3.1
Prepared foods 3.3Articles of wood 3.5Precious stones 2.5Wood pulp 2.2Vegetables 2.3Miscellaneous 2.1
Wood pulp 2.5Machinery 1.2
Articles of wood 1.3
Machinery 14.3
Vehicles 11.8
Base metals 9.5
Base metals
67.5
Prepared foods 9.1Minerals 5.3Machinery 
23.1Textiles 5.8Plastics 2.6Prepared foods 2.1
Vehicles 14.3Plastics 2.5
Chemicals 7.4Textiles 2.3Base metals
14.4
Vehicles
12.1 Machinery 11.2Prepared foods 5.6
Chemicals 2.3
 
 
 
  WT/REG236/1 
Page 6 
 
 
  B. TRADE IN SERVICES AND INVESTMENT  
5. In 2008, EU(27) ranked as the world's largest trader in commercial services, accounting for 
26.8% of world exports and 23.5% of wo rld imports, while Montenegro ranked 85h and 123rd in terms 
of global exports and imports, accounting for 0.03%  and 0.01% of global exports and imports.   
6. Chart I.4 shows the breakdown of commercial serv ices trade for the EU with the world in 
2000-2009.  The EU was a net exporter of commercial services over the period surveyed, running an 
increasing surplus.  Other business services, travel and transportation services account for the largest 
share of both imports and exports. 
0100200300400500600
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
Export
Import
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Note:   Data for 2000-2003 is for EC(15); 2004-2006 is for EC(25) and 2007-2009 is for EU(27).
Source: Eurostat database.Chart I.4
European Union, total commercial se rvices trade with  world, 2000-2009
€ billion
Transportation services
Travel
Communications servicesFinancial services
Computer and information services
Royalties and license feesOther business services
Personal, cultural and 
recreational services
ConstructionInsurance services
 
 
 
 
 
  
 
  WT/REG236/1 
 Page 7 
 
 
  7. The EU's global investment position for the peri od 2000-2009 is depicted in Chart I.5. Over 
the period surveyed, the EU is an increasing net provider of foreign investment to the world. 
05001,0001,5002,0002,5003,0003,5004,000
2000
2001
2002
200320042005200620072008200905001,0001,5002,0002,5003,0003,5004,000
2000
200120022003
2004
20052006200720082009Chart I.5
European Union , inward and outward foreign in vestment stock with world, 
2000-2009
Inward Outward€ billion € billion
Note:   Data for 2000-2003 is for EC(15); 2004-2006 is for EC(25) and 2007-2009 is for EU(27).
Source: Eurostat database. WT/REG236/1 
Page 8 
 
 
  8. The EU's bilateral FDI stock with Mont enegro is shown in Chart I.6.   
0200400600800
2007 2008Chart I.6
EU, bilateral outward foreign investment stock with Montenegro, 2007-2008
€ million
Note: no data on inward fdi in 2008.
Source: Eurostat database.outward inward
  WT/REG236/1 
 Page 9 
 
 
  9. Chart I.7 shows the breakdown of global comme rcial services trade for Montenegro in 
2007-2009.  Montenegro was a net exporter of co mmercial services over the period surveyed.  Travel 
services accounts for the lion's share of exports, while other business services followed by transportation services account for the largest share of imports of commercial services. 
0100200300400500600700800
Export Import Export Import Export Import
2007 2008 2009
Source: Montenegrin authorities.Chart I.7
Montenegro, total commercial services trade with world, 2007-2009
€ million
Transportation services
Travel
Communications servicesFinancial services
Computer and information services
Royalties and license feesOther business services
Personal, cultural and 
recreational services
ConstructionInsurance services
 
10. Chart I.8 shows the breakdown of Montenegro's  commercial services trade with the EU in 
2007-2009.  Over the period surveyed, Montenegro 's services trade has fluctuated moving from 
surplus to deficit.  Transportation, travel and other business services account for the largest share of 
Montenegro's exports of commercial services to the EU.  Montenegro's imports of services from the 
EU consist mainly of other business services, fo llowed by transportation services, insurance and 
construction services.  WT/REG236/1 
Page 10 
 
 
  04080120
Export Import Export Import Export Import
2007 2008 2009
Source: Montenegrin authorities.Chart I.8
Montenegro, bilateral commercial services trade with EU, 2007-2009
€ million
Transportation services
Travel
Communications servicesFinancial services
Computer and information services
Royalties and license feesOther business services
Personal, cultural and 
recreational services
ConstructionInsurance services
 
11. Montenegro's global investment position is depict ed in Chart I.9.  Montenegro remains a net 
recipient of FDI, with the stock of inward FDI remaining more or less steady over the period;  
outward investment declined considerably over the period.  WT/REG236/1 
 Page 11 
 
 
  0.00.51.01.5
2007 2008 20090.00.51.01.5
2007 2008 2009Chart I.9
Montenegro, foreign direct investment flows with world, 2007-2009
Inflow Outflow€ billion € billion
Source: Montenegrin authorities.
 
II. CHARACTERISTIC ELEMEN TS OF THE AGREEMENT 
A. BACKGROUND INFORMATION  
12. As part of the stabilization and association process launched by the EU with the Balkan 
countries in November 2000 at the Zagreb summi t, the Interim Agreement on Trade and Trade 
Related Matters was signed between the European  Union and Montenegro on 15 October 2007 and 
entered into force on 1 January 2008.  The Agreem ent was intended to implement provisions of the 
Stabilization and Association Agreement (hereinaft er "the Agreement") on Trade and Trade Related 
Matters between the Parties was also signed on 15 October 2007, subject to its conclusion at a later 
date.2  The Agreement entered into force on 1 May 2010.  
13. The goods aspect of the Agreement was notifie d by the Parties to the WTO on 16 January 
2008 under Article XXIV of the GATT, 1994 and the Understanding on the Interpretation of 
Article XXIV of GATT 1994 (WT/REG236/N/1).  The services aspect of the Agreement was notified 
by the Parties on 18 June 2010 under Article V:7(a) of the GATS.  The text of the Agreement, along 
with its schedules, annexes and protocols is  available on the Website of the EU at: 
 http://eur-lex.europa.eu/LexUriServ/LexUr iServ.do?uri=OJ:L:2010:108:0001:0002:EN:PDF  
                                                      
2 Stabilization and Association Agreements (S AAs) aim to promote economic development and 
political stabilization of, and to establish a close and long-term association between the EU and the Western 
Balkan nations.  In addition to the SAA with Montenegro, SAAs have entered into force with the former 
Yugoslav Republic of Macedonia and w ith Croatia (G/C/W/552, 5 May 2006) an d with Albania.  the goods part 
of SAAs with Albania entered into force in 2006 and w ith Bosnia and Herzegovina in 2007, while an SAA with 
Serbia has been signed (http://ec.europa.eu/trade/crea ting-opportunities/bilateral-relations/regions/balkans/). WT/REG236/1 
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  14. The Agreement is composed of 10 Titles, and eight Protocols along with their Annexes as 
described in Box II.1 below. 
Box II.1:  Composition of the Agreement 
Article I Preamble 
Title I  General Principles  
Title II  Political Dialogue  
Title III  Regional Cooperation  
Title IV  Free Movement of Goods 
Chapter I:  Industrial products 
Chapter II:  Agriculture and fisheries 
Chapter II:  Common provisions  
Title V  Movement of Workers, Establishmen t, Supply of Services, Capital 
Chapter I:  Movement of workers 
Chapter II:  Establishment 
Chapter III:  Supply of services 
Chapter IV:  Current payments and movement of capital 
Chapter V:  General provisions  
Title VI  Approximation of Laws, Law En forcement and Competition Rules  
Title VII  Justice, Freedom and Security  
Title VIII  Cooperation Policies  
Title IX  Financial Cooperation  
Title X  Institutional, General and Final Provisions  
  
Annex I.A and I.B  Montenegrin tariff concessions for Community industrial products  
Annex II  Definition of "baby beef" products  
Annex III (a) and 
III(b)  Montenegrin tariff concessions for agricultural primary products originating in the Community
 
Annex IV  Community concessions for Montenegrin fishery products  
Annex V  Montenegrin concessions for Community fishery products  
Annex VI  Establishment:  Financial Services  
Annex VII Intellectual, industrial and commercial property rights 
  
Protocol 1 Trade between the Community and Montenegro in processed agricultural products 
Protocol 2 Wine and spirit drinks  
Protocol 3 Definition of the concept of "originating products" and methods of administrative 
cooperation for the application of the pr ovisions of the Agreement between the 
Community and Montenegro  
 Joint declaration concerning the Principality of Andorra 
 Joint declaration concerning the Principality of San Marino 
Protocol 4 On land transport 
Protocol 5 State aid to the steel industry 
Protocol 6 Mutual administrative assistance in customs matters Montenegro 
Protocol 7 Dispute settlement 
Protocol 8 General principles for the participation of Montenegro in Community programmes 
Final Act  
Joint Declaration on Article 75  
Declaration by the 
Community  
 
Source: WTO Secretariat based on the Agreement. 
15. The Parties agree to gradually implement a bilateral free trade areas over a maximum period 
of five years from the entry into force of the Agreement (Article 3.1) (2015).  WT/REG236/1 
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  III. PROVISIONS ON TRADE IN GOODS 
A. IMPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  
1. General provisions 
16. The Combined Nomenclature (CN) is applied to  the classification of goods by both Parties.  
The Agreement covers agriculture and fishery produc ts (Chapters 1-24 and products in Annex 1.1(ii) 
of the WTO Agreement on Agriculture  as well as fish and fish products)3 and "industrial products" 
originating in the Community or in Montenegro (Chapters 25-97 except products in Annex 1.1(ii) of 
the WTO Agreement on Agriculture.  Trade between the Parties in products covered by the Treaty 
establishing the European Atomic Energy Community shall be in accordance with the provisions of 
the Agreement. 
17. The Agreement has a standstill clause in Article  36, whereby the Parties may not impose any 
new customs duties or quantitative restrictions on im ports (or exports) having equivalent effect and 
not increase or make more restrictive those duties or restrictions already applied in bilateral trade.  
Furthermore, if after signing the Agreement, any tariff reductions are applied by the Parties on an 
erga omnes  basis, in particular those resulting from  WTO negotiations, from Montenegro's accession 
to the WTO, or any further duty reductions afte r it accedes to the WTO, the reduced duties shall 
replace the basic rate on which subsequent ta riff reductions under the Agreement are based 
(Article 18.5).  The basic rate of duty will be  the Community Common Customs Tariff established 
pursuant to Council Regulation (EEC) No. 2658/87 in force on the day the Agreement was signed 
(15 October 2007).  For industrial products, all cust oms duties on imports into the EU and charges 
having equivalent effect were  to be abolished upon entry into force of the Agreement.4  Montenegro's 
duties on imports from the EU for all industrial products except those in Annex IA and IB will also be 
eliminated upon entry into force.  Products in A nnex IA, which include items under Chapters 25, 36, 
38, 44, 64, 76, 84, 85, and 87 will be reduced to 80 % of the basic duty upon entry into force of the 
Agreement, followed by reductions to 50% and 25% of  the basic duty rate on 1 January of the first 
and second years following the year of entry into for ce of the Agreement, respectively.  On 1 January 
of the third year following the year of entry in to force (2011) all remaining duties on products in 
Annex IA will be abolished.  For products in Annex IB5, the transition period is longer with import 
duties being reduced to 85% of the basic duty at entry into force, followed by 70%, 55%, 40% and 
20% of the basic duty on 1 January of the first, second, third and fourth years, respectively, following 
the Agreement's entry into force.  On 1 January of the fifth year following the date of entry into force 
of the Agreement, the remaining import duties on th ese products will be abolished.  Montenegro will 
reduce its customs duties for imports from the EU at a faster rate if its general economic situation and 
the situation of the economic sector concerned so permits;  the determinati on of whether the economic 
situation permits a more rapid reduc tion in duties is to be made by the Stabilization and Association 
Council established under the Agreement (Article 23).  According to the Partie s there are thus far no 
plans for accelerated liberalization. 
                                                      
3 Article 24 of the Agreement defines fish and fish products as CN Chapter 3;  CN 1604 and 1605 as 
well as CN 051191, 230120 and ex 190220 (stuffed pasta containing more than 20% by weight of fish, 
crustaceans, molluscs or other aquatic vertebrates). 
4 Customs duties and charges having equivalent effect include any duty or charge of any kind imposed 
in connection with the import or export of a good, including any form of a surtax or surcharge in connection 
with import or export;  they do not include any charges eq uivalent to an internal tax consistently imposed with 
the provisions of Article III.2 of GA TT 1994, anti-dumping or countervailing measures, or fees or charges 
commensurate with the costs of serv ices rendered (Article 18.3). 
5 The list of products in Annex IB is longer, and includes products in Chapters 25, 33, 34, 39, 40, 42, 
44, 48-49, 51-52, 61-64, 68-69, 72-73, 76, 83-84, 87 and 94. WT/REG236/1 
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  18. Duties on processed agricultural products listed in  Annex I to Protocol 1 were eliminated by 
the EU at the Agreement's entry in to force.  The EU also committed  to eliminate tariffs and charges 
having equivalent effect on imports of primary agricultural products from Montenegro other than 
those under headings 0102, 0201, 0202, 1701, 17 02 and 2204 (bovine animals and their products, 
sugar and wine).  Moreover, for products in Chapte rs 7 and 8 (vegetables and fruit) subject to mixed 
rates of duty, only the ad valorem  part of the tariff will be eliminated.  "Baby beef" imports are 
subject to reduced rates of duty within a tariff ra te quota (see Section (d) below). Customs duties on 
fish and fish imports from Montenegro, except those listed in Annex IV of th e Agreement were to be 
eliminated upon entry into force of the Agreement;  A nnex IV contains products subject to tariff rate 
quotas (Section (d) below).  
19. Montenegro was to reduce tariffs on processed ag ricultural products listed in Annex II on an 
annual basis up to 2011, and eliminate tariffs on most  of these products in 2012.  Tariffs on primary 
agricultural products listed in Annex III(a) were to be eliminated upon the entry into force of the 
Agreement, while products in Annex III(b) are subj ect to a reduction to 80% of the base rate on the 
date of entry into force of the Agreement, follo wed by a reduction to 60%, 40% and 20% on 1 January 
of the second, third and fourth years after entry into force, respectively.  On 1 January of the fourth 
year following the date of entry into force of  the Agreement (2012), tariffs on products in 
Annex III(b) are also to be eliminated.  Finally,  for products listed in Annex III(c), principally 
products in Chapters 1, 2, 4, 7, 8, 15, and 16, tari ffs were to be reduced to 90% of the base rate on the 
date of entry into force of the Agreement, follo wed by a reduction to 80%, 70%, 60% and 50% of the 
base rate in the four years respectively, following the entry into force of the Agreement.  Customs 
duties on fish and fish imports from the EU, except th ose listed in Annex V of the Agreement were to 
be eliminated upon entry into force of the Agreemen t;  Annex V contains fish and fish products whose 
import is subject to TRQs (see Section (d) below). 
20. Agriculture and fisheries products are also subject to a safeguard provision given their 
particular sensitivities, if imports originating in one of the Parties and subject to the preferences 
granted by the Agreement, cause serious disturba nce in the markets or to domestic regulatory 
mechanisms;  in such in stances, the Parties will enter into co nsultations immediately to find an 
appropriate solution, pending which the Party concer ned may take the measures  it deems appropriate.  
There is also a review clause by which the Pa rties agree to examine in the Stabilization and 
Association Council no later than 3 years after the Ag reement's entry into force, "product by product, 
and by an orderly and appropriate reciprocal b asis, the opportunities for granting each other further 
concessions with a view to implementing greater liber alization of the trade in agricultural and fishery 
products" (Article 31). 
21. There are special arrangements for imports of wine and spirit drinks in Protocol 2 of the 
Agreement.  Annex I to the Protocol lists cert ain wines for which the Parties grant each other 
reciprocal preferential trade concessions subject to  a tariff rate quota (see Section (d) below).   
(i) Liberalization of trade and tariff lines  
22. For the purposes of liberalization of tariff lines, the EU's CN is used to classify goods in trade 
between the Parties (Article 18.2).  The basic duty to  which the successive tariff reductions are to be 
applied is the Community Common Customs Tariff es tablished pursuant to Council Regulation (EEC) 
No. 2658/87 applied erga omnes  on the day of signature of the Agreement, and for Montenegro the 
applied tariff as in the Official Gazette of Montenegro No. 17/07.  
23. Tariff and trade liberalization for both Parties is  detailed in Tables II.1A and II.1B below.  
Table II.1A details tariff and trade liberalization by  the EU for imports from Montenegro.  The EU's 
applied tariff in 2008 consisted of 9,699 lines at the HS 8-digit level.  Of these lines, 90% (8,727) 
were subject to ad valorem  rates.  Of the remaining 972 lines, 621 are subject to specific duties, 217  WT/REG236/1 
 Page 15 
 
 
  compound duties and 71 mixed duties.  In addition, 63 lines are subject to other forms of duty.  For 
lines with mixed or compound duties,  the Secretariat has used the ad valorem  part of the duty in its 
calculations.   
24. In 2008, when the Agreement entered into for ce, 2,371 lines or around a quarter of the EU's 
tariff, were already subject to duty free treatment on an MFN basis.  As a result of the Agreement an 
additional 7,070 lines (72.9% of the total), corresponding to 85.3% of the EU's imports from 
Montenegro during 2006-07, became duty free for imports from Montenegro in 2008.  Following 
implementation of the Agreement, 258 tariff lines, or  2.7% of the EU's tari ff will continue to be 
subject to duty for imports from Montenegro, corresponding to 0.1% of the EU's imports from 
Montenegro during 2006-07. 
Table II.1 
Tariff elimination commitments under the Agreement and corresponding average trade 
A. EU 
Duty phase-out 
period Number of lines % of total lines in EU's 
tariff schedule Value of EU's imports from 
Montenegro  
(2006-2007) 
in million Euros % of EU's total imports 
from Montenegro 
2006-2007 
MFN duty free 
(2008) 2,371 24.4 45.3 14.6 
2008 7,070 72.9 265.2 85.3 
Remain dutiable 258 2.7 0.5 0.1 
Total 9,699 100.0 311.0 100.0 
 
Note:  For tariff lines subject to TRQs only the out-of-qu ota duty is included in the tariff-related calculations  
Based on HS 2007 nomenclature. 
 
Source :  WTO estimates based on data provided by EU. 
 
25. Table II.1B shows tariff and trade liberalization by Montenegro for imports from the EU.  
Montenegro's applied tariff in 2008 consisted of 9,81 5 tariff lines at the HS 10-digit level.  Of these 
lines, 9,504 lines or 96.8% of the tariff are subject to ad valorem  rates of duty.  Of the 311 lines that 
are subject to non ad valorem  rates of duty, 14 have specific duties, while 297 have compound rates 
of duty.  The Secretariat has used the ad valorem  part of the duty for lines with compound rates in its 
calculations. 
26. In 2008 when the Agreement entered into force, 485 lines or 4.9% of the tariff, corresponding 
to 8% of Montenegro's imports from the EU during 2005-07 were already duty free.  As a result of the 
Agreement, Montenegro liberalized 7,830 lines, or an additional 79.8% of its tariff for imports from 
the EU in 2008.  These lines correspond to 72.4% of Montenegro's imports from the EU during 
2005-07.  Further liberalization is to take place in  2011, 2012 and 2013, when an additional 10.2% of 
the tariff is to become duty free, corresponding to 18.5% of imports from the EU during 2005-07.  
Once the Agreement is fully implemented in 2013, 50 0 tariff lines, corresponding to 5.1% of the tariff 
and 4.4% of imports from the EU are to remain subject to duty. WT/REG236/1 
Page 16 
 
 
  Table II.1 
Tariff elimination commitments under the Agreement and corresponding average trade 
A. Montenegro 
Duty phase-out period Number of lines % of total lines in 
Montenegro's tariff 
schedule Value of Montenegro's 
imports from EU  
(2005-2007) 
in million Euros % of Montenegro's 
total imports from EU 
2005-2007 
Applied rate duty free 
(2008) 485 4.9 55.2 8.0 
2008 7,830 79.8 497.6 72.4 
2011 36 0.4 49.0 7.1 
2012 727 7.4 48.2 7.0 
2013 237 2.4 30.1 4.4 
Remain dutiable 500 5.1 7.1 1.0 
Total 9,815 100.0 687.2 100.0 
 
Note: Based on HS 2007 nomenclature. 
 
Source : WTO estimates based on data provided by Montenegro. 
 
2. EU's liberalization Schedule 
27. Further details about the EU's liberalization are shown in Chart II.1 and Table II.2 below.  As 
Chart II.1 shows, most of the duties eliminated by the EU in 2008 for imports from Montenegro carry 
MFN tariff rates of between 10% and 20%.  Tariff's  for a number of lines carrying rates above 20% as 
well as non ad valorem  rates of duty were also eliminated for imports from Montenegro in 2008. 
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,0002008Chart II.1
EU's duty elimination under the Agreement
Year of duty free treatment   
Source: WTO Secretariat estimates, based on data provided by EU.Number of duty-free lines (cumulative)
Duty-free <10% <20% <30% MFN is: <40% <50% >50% non ad valorem
 
  WT/REG236/1 
 Page 17 
 
 
  28. Table II.2 presents the EU's tariff elimination under the Agreement by HS Section.  Tariff 
liberalization in 2008 for imports from Montenegro, c overs all Sections excep t X (pulp and paper) and 
XXI (works of art), which were already liberalized on an MFN basis.  The 25 8 tariff lines that are to 
remain subject to duty once the Agreement is fully  implemented are found in Sections IV (prepared 
foods), II (vegetable products) and I (live animals and animal products). 
Table II.2 
EU: Tariff elimination under the Agreement, by HS section 
Number of duty-free lines 
HS section  MFN 
avg.%  Total 
No of 
lines  MFN 
2008  Preferential 
2008 Remain 
dutiable  Avg. Final 
Tariff 
(Dutiable)  
I Live animals and animal products 10.3 796 78 659 59 9.3 a 
II Vegetable products 5.9 526 123 360 43 12.4 b 
III Animal or vegetable fats and oils 6.1 124 20 104   
IV Prepared foods etc. 13.7 816 93 567 156 14.1a 
V Minerals 0.9 244 157 87   
VI Chemicals and chemical products 4.2 1,279 339 940   
VII Plastics and rubber 4.7 351 67 284   
VIII Hides and skins 3.0 150 43 107   
IX Wood and articles 2.6 213 98 115   
X Pulp, paper etc. 0.0 220 220    
XI Textiles and textiles ar ticles 7.9 1,193 45 1,148   
XII Footwear, headgear 8.0 113 2 111   
XIII Articles of stone 4.0 258 34 224   
XIV Precious stones, etc. 0.7 63 48 15   
XV Base metals and base meta ls products 1.9 998 510 488   
XVI Machinery 2.5 1,477 305 1,172   
XVII Transport equipment 4.7 287 32 255   
XVIII Precision equipment 2.5 339 90 249   
XIX Arms and ammunition 2.2 27 5 22   
XX Misc. manufactured articles 2.6 218 55 163   
XXI Works of art, etc. 0.0 7 7    
Total 4.9 9,699 2,371 7,070 258 11.3 
 
a Average rate is based on combination of ad valorem  and ad valorem  part of alternate rates. 
b Average rate is based on ad valorem  part of alternate rates. 
 Note: For tariff lines subject to TRQs onl y the out-of-quota duty is included in th e tariff-related  calculations; for preferen tial tariffs 
with non ad valorem  components, only the ad valorem  part of the rate was included in th e calculation of the tariff averages.   
Based on the HS 2007 nomenclature. 
 
Source:  WTO estimates based on data provided by EU. 
 
29. Chart II.2 compares average preferential duti es for lines remaining subject to duty once the 
Agreement is fully implemented, with their corres ponding MFN average rates by HS Section.  Such 
lines are found in Sections I, II and IV.  While th e average preferential and MFN rates are at 12.4% 
for Section II, in Sections I and IV, the average pr eferential rates will be lo wer than the corresponding 
MFN average rates (9.3% compared to 11.8% in Section I and 14.1% and 18.3% in Section IV). WT/REG236/1 
Page 18 
 
 
  0 5 10 15 20XXIXXXIXXVIIIXVIIXVIXVXIVXIIIXIIXIXIXVIIIVIIVIVIVIIIIIIChart II.2
EU:  Average of dutiable rates, by HS Section
HS Section  
Note: For tariff lines subject to TRQs only the out-of-quota duty  is included in the tariff-related calculations; for preferenti al 
          tariffs with non ad valorem components, only the ad valorem part of the rate was included in the calculation of the t ariff 
          averages.
Source : WTO Secretariat estimates, based on data provided by EU.Average rate of duty (%)
MFN Preferential
 
30. Chart II.3 compares average dutiable rates in  HS Chapters where duties remain after 
implementation of the Agreement is complete, w ith the corresponding MFN av erage rates for these 
lines.  Where duties remain after the Agreement is im plemented (HS Chapters 1, 2, 7, 8, 17 and 22), 
the preferential and corresponding MFN average duties are different for Chapters 3 (7.6% and 11.9% 
for preferential and MFN average rates) and 16 (13.8% and 18.4% for preferential and MFN 
averages);  average MFN and preferential tariffs ar e the same for the remaining chapters and range 
from 9.2% for Chapter 7 (vegetables) to 32% for HS 22 (beverages, spirits and vinegar).  WT/REG236/1 
 Page 19 
 
 
  0 5 10 15 20 25 30 352217160807030201Chart II.3
EU:  Average of dutiable rates, by HS ChapterHS Chapter  
MFN PreferentialAverage rate of duty (%)
Note: For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related calculations; for preferenti al 
          tariffs with non ad valorem components, only the ad valorem part of the rate was included in the calculation of the t ariff 
          averages.
Source : WTO Secretariat estimates, based on data provided by EU. 
3. Montenegro's liberalization schedule 
31. Further details about Montenegro's tariff libera lization is provided in Chart II.4 and Table II.3 
below.  Most of the lines which were liberalized  by Montenegro for imports from the EU in 2008 
when the Agreement entered into force had applied rates of less than 10%.  Products subject to higher 
tariff rates, especially those above 30% and carrying sp ecific rates of duty are to be eliminated later in 
2012 and 2013. WT/REG236/1 
Page 20 
 
 
  0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000200820092010201120122013Chart II.4
Montenegro's duty elimin ation under the AgreementYear of duty free treatment   
Source: WTO Secretariat estimates, based on data provided by Montenegro.Number of duty-free lines (cumulative)
Duty-free <10% <20% <30% MFN is: <40% <50% >50%
 
32. As Table II.3 shows, most tariff lines were libera lized on the date of entry into force of the 
Agreement in 2008.  Liberalization of the remain ing agricultural and processed agricultural products 
(HS Sections I-IV) that are scheduled to be liberali zed under the Agreement is to take place in 2012 
while all other products are to be liberalized in 2013 at the end of implementation.  Once the 
Agreement is implemented, the 500 lines that will re main subject to duties are all in HS Sections I-IV. 
Table II.3 
Montenegro:  Tariff elimination un der the Agreement, by HS section 
Number of duty-free lines  
HS section  Appl 
avg.
% Total 
No of 
lines  Applied 
2008  2008  2011  2012  2013  Remain 
dutiable  Avg. Final 
Tariff 
(Dutiable)  
I Live animals and animal 
products 15.0 833 40 367  168  258 11.9 a 
II Vegetable products 8.7 552 115 238  146  53 11.4 a 
III Animal or vegetable 
fats and oils 2.4 125 75 45  1  4 13.1 b 
IV Prepared foods etc. 18.3 842 35 210  412  185 21.4 a 
V Minerals 1.9 249 9 233 6  1   
VI Chemicals and 
chemical products 2.0 1,272 18 1,242 4  8   
VII Plastics and rubber 4.2 353 61 286   6   
VIII Hides and skins 5.8 151 1 146   4   
IX Wood and articles 3.0 213  199 7  7   
X Pulp, paper etc. 4.1 226 3 206   17   
XI Textiles and textiles 
articles 5.4 1,192 44 1,081   67   
XII Footwear, headgear 5.6 113  1 103 5  4   
XIII Articles of stone 4.9 258  244   14   
XIV Precious stones, etc. 4.4 63  63      
XV Base metals and base 
metals products 5.3 1,000 36 881 3  80   
Table II.3 (Cont'd)   WT/REG236/1 
 Page 21 
 
 
  Number of duty-free lines  
HS section  Appl 
avg.
% Total 
No of 
lines  Applied 
2008  2008  2011  2012  2013  Remain 
dutiable  Avg. Final 
Tariff 
(Dutiable)  
XVI Machinery 2.7 1,479 4 1,459 3  13   
XVII Transport equipment 2.2 301 42 248 8  3   
XVIII Precision equipment 2.2 341  341      
XIX Arms and ammunition 25.0 27  27      
XX Misc. manufactured 
articles 8.8 218 1 204   13   
XXI Works of art, etc. 5.0 7  7      
Total 6.3 9,815 485 7,830 36 727 237 500 15.4 
 
a combination of ad valorem  and compound duties 
b  average rate is based on ad valorem  part of alternate rates. 
 Note: For tariff lines subject to TRQs only the out-of-quota duty  is included in the tariff-rela ted  calculations; for preferen tial tariffs with 
non ad valorem  components, only the ad valorem  part of the rate was included in th e calculation of the tariff averages.   
Based on the HS 2007 nomenclature. 
 
Source:  WTO estimates based on data provided by Montenegro. 
 
33. Chart II.5 compares the average of preferential duties remaining after implementation of the 
Agreement with their corresponding overall applied averages.  After implementation, Montenegro 
will continue to maintain tariffs on imports from the EU for products in HS Sections I-IV.  In all four 
Sections, the average preferential tariff applie d to imports from the EU is lower than the 
corresponding overall applied average for these produc ts.  The difference is greatest for Section I 
(around half the overall applied aver age) and smallest for Section IV  (5 percentage points below the 
overall applied average). 
0 1 02 03 04 0XXIXXXIXXVIIXVIIXVIXVXIVXIIIXIIXIXIXVIIIVIIVIVIVIIIIIIChart II.5
Montenegro:  Average of dutiable rates, by HS Section
HS Section  
Note: For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related calculations; for preferenti al 
          tariffs with non ad valorem components, only the ad valorem part of the rate was included in the calculation of the t ariff 
          averages.
Source : WTO Secretariat estimates, based on data provided by Montenegro.Average rate of duty (%)
MFN Preferential
 
 
 WT/REG236/1 
Page 22 
 
 
  34. Chart II.6 shows a comparison between remaining average preferential duties after 
implementation of the Agreement and the corres ponding applied average by HS Chapter.  Once 
implementation is complete, average preferential tari ffs for imports from the EU are to be lower than 
the overall applied average except for Chapter 20 wher e the average is the same.   For most of the 
Chapters where there are differences between average preferential and applied rates, the margin of 
preference will be around 50%. 
0 1 02 03 04 0201615080704030201Chart II.6
Montenegro:  Average of dutiable rates, by HS Chapter
HS Chapter  
MFN PreferentialAverage rate of duty (%)
Note: For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related calculations; for preferenti al 
          tariffs with non ad valorem components, only the ad valorem part of the rate was included in the calculation of the t ariff 
          averages.
Source : WTO Secretariat estimates, based on data provided by Montenegro. 
4. Tariff rate quotas 
35. Certain preferences are provided by the Parties to each other under tariff rate quotas (TRQs).  
The products concerned are "baby beef" products ( only for imports into the EU), fish and fish 
products, and wine. 
36. Under Article 26(3) of the Agreement, th e EU subjects imports from Montenegro of 
"baby beef" products listed in Annex II to preferentia l duties of 20% of the applied MFN tariff within 
an annual limit of 800 metric tonnes expressed in carcass weight.6   
37. Under Article 28 of the Agreement and Annex I of Protocol 2, the EU and Montenegro 
maintain an annual TRQ of 16,000 hl on imports of sparkling wine (CN 220410), and wine of fresh 
grapes (CN 220421) from Montenegro, provided that the products are not subj ect to export subsidies 
in Montenegro.  Montenegro also grants an annua l TRQ to imports of sparkling wine and wine of 
fresh grapes from the EU provided that they are not subject to an export subsidy in the EU.  The 
annual import quantity is set at 1,600 hl in the year  of the Agreement's entry into force and will be 
                                                      
6 The preference includes 20% of both ad valorem  and specific rates of duty.  The quota quantity is in 
addition to that applied on an MF N basis as notified to the WTO.  WT/REG236/1 
 Page 23 
 
 
  increased by 1,000 hl per year until the quota reaches a maximum of 3,500 hl per year.  Both Parties 
exempt imports of these products within the quota lim its from duties.  They also agreed to examine 
opportunities for granting each other further concessi ons, taking into account the development of 
bilateral trade in wine, no later than three year s after the entry into force of the Agreement.  
38. Under Article 29 of the Agreement and Anne x IV and V for the EU and Montenegro, 
respectively, certain fish and fish products (tr out, carp, sea bream, sea bass, and prepared and 
preserved sardines and anchovies) are subject to TR Qs.  The EU's quota quantity is 20 metric tonnes 
per year for trout, sea bream and sea bass, and 10 metric tonnes per year for carp;  imports within these quantities are exempt from customs duty.  Imports above these quantities are subject to a 
preferential rate of 90% of the MFN rate for trout  and carp and 80% of the MFN rate for sea bream 
and sea bass upon the Agreement's entry into force in 2008.  Subsequent reducti ons in the out of quota 
duty are:  80% of the MFN rate in 2009 and to 70% every year thereafter for trout and carp;  and 55% 
of the MFN rate in 2009 and 30% of the MFN rate in every subsequent year for imports of sea bream 
and sea bass.  For imports of prepared and preserved sardines and anchovies, the annual quota 
quantity is 200 metric tonnes and imports within th ese quantities are subject to a preferential duty of 
6% and 12.5% respectively for sardines and anchovies.  Above quota imports are subject to the full 
MFN duty. 
39. Montenegro's TRQs on these products are set at annual quantities of 20 metric tonnes except 
for imports of prepared or preserved anchovies (16041600 and 16042040) whic h are subject to an 
annual TRQ of 10 metric tonnes.  All in-quota im ports of these products except for prepared and 
preserved sardines and anchovies are exempt from customs duties;  prepared or preserved sardines 
and anchovies are subject to an in-quota duty of 50% of the applied rate.  Imports in excess of the 
quota quantity are subject to a preferential rate of 90% of the applied rate for trout and 80% for sea 
bream and sea bass in 2008.  Subsequent reductions in out of quota duties are foreseen: 80% of the 
applied rate for trout and 60% for sea bream and se a bass in 2009, followed by 70% of the applied 
rate for trout and 40% for sea bream and sea bass every year thereafter.  For prepared or preserved 
sardines and anchovies the out of quota rate will be  the applied rate of duty (Annex II below provides 
full details of the TRQs). 
5. Import restrictions 
40. Article 45 of the Agreement permits the use of prohibitions or restrictions on imports 
(or exports) or goods in transit on certain conditions (see section [exceptions] below).  Any measures 
used, however, shall not constitute a means of arbitr ary discrimination or a disguised restriction on 
trade between the Parties. 
B. R
ULES OF ORIGIN  
41. Protocol 3 to the Agreement lays down the app licable rules of origin, while customs issues 
are covered in Article 99.   
42. With regard to rules of origin, products are cons idered as originating in the Parties if they are 
wholly obtained in one of the Parties as  defined in Article 5 of Protocol 37, or products obtained in 
                                                      
7 Article 5 lists wholly obtained products as:  mineral products extracted from their soil or from their 
seabed;  vegetable products harvested th ere;  live animals born and raised there;  products from live animals 
raised there;  products obtained by hunting or fishing conducted there;  products of sea fishing and other 
products taken from the sea outside of the territorial waters of the Parties by their vessels and products made 
aboard their factory ships exclusively from such products;  used articles co llected fit only for the recovery of 
raw materials, including used tyres fit only for retreading or for use as waste;  waste and scrap resulting from 
manufacturing operations conducted th ere;  products extracted from marine soil or subsoil outside their 
territorial waters provided that they have sole rights to work that soil or subsoil;  and goods produced WT/REG236/1 
Page 24 
 
 
  one of the Parties incorporating materials which have  not been wholly obtained there, provided that 
such materials have undergone sufficient working or processing in that Party.  Sufficient working or 
processing in the Party is defined un der Article 6 of Protocol 3 as conditions listed in Annex II  to the 
Protocol.  Once a product has acquired originating st atus by fulfilling these conditions, the conditions 
applicable to the product in which it is incorporat ed no longer apply to it and no further account can 
be taken of the non-originating materials that  may have been used in its manufacture.8  
43. Article 6 of Protocol 3 also includes a de minimis  rule whereby non originating materials 
which cannot normally qualify for origin status, may be used provided that their total value does not 
exceed 10% of the ex works price of the product;  and that any of the percentages given in the list in 
Annex II for the maximum value of non-originating materials are not exceeded.  The rule does not 
apply to products in Chapters 50-63 (t extiles and clothing).  Regardless of the de minimis  rule, certain 
operations, as listed in Article 7 of  Protocol 3 are considered as in sufficient working or processing to 
confer the status of originating product.9 
44. The Agreement permits cumulation between the EU  and Montenegro and also any country or 
territory participating in the EU's Stabilization and Association process or products originating in 
Turkey to which Decision no. 1/95 of the EC-Turkey Association Council of 22 December 1995 
applies provided that the working or processing carri ed out in the EU and Montenegro goes beyond 
the operations referred to in Article 7 as insuffi cient to qualify for origin (Articles 3 and 4).10  
Products listed in Annex V of Protocol 3 (some sugar and prepared food products) and agricultural 
products (under HS Chapters 1-24) originating in Andorra do not qualify for the cumulation rule.11  
All other products originating in Andorra and all products from San Marino qualify for cumulation 
under the Agreement. 
45. Cumulation is only permitted provided that a pr eferential trade agreement in accordance with 
Article XXIV of GATT 1994 is applicable between the countries or territories involved in the 
acquisition of originating status and the country of destination;  that the rules of origin under the 
                                                                                                                                                                     
exclusively from the products specified in all of the above.  In addition, "their vessels" and "their factory ships" 
are further defined as vessels and factory ships which ar e registered or recorded in a Member State of the 
Parties, which sail under the flag of a Member State of the Parties;  and wh ich are owned up to at least 50% by 
nationals of a Member State of the Parties or by a compan y with its head office in on e of these States or which 
the manager or managers, Chairman of the Board of Directors or the Supervisory Board and the majority of the 
members of such boards are nationals of a Member State of the Parties.  The 50% ownership requirement 
applies also to partnerships or limited companies. 
8 Products originating in the terr itories of Ceuta and Melilla are s ubject to the special conditions 
provided in Article 38 of Protocol 3 of the Agreement.   
9 These are: preserving operations to ensure that the products remain in good condition during transport 
and storage;  breaking up and assembly of packages;  washing, cleaning, removal of dust, oxide, oil, paint or 
other coverings;  ironing or pressing of textiles;  simp le painting and polishing operat ions;  husking, partial or 
total bleaching, polishing and glazing of  cereals and rice;  operations to colour sugar or form sugar lumps;  
peeling, stoning and shelling or fruits, nuts and vegetables;  sharpening, simple grinding or simple cutting;  
sifting, screening, sorting, classify ing, grading, matching (including the making of set articles);  simple placing 
in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations;  
affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging;  
simple mixing or products, whether or not of different kinds, mixing of sugar with any other material;  simple 
assembly of parts of articles to constitute a complete article or disassembly of products into parts;  a 
combination of two or more operations speci fied above;  and slaughter of animals.   
10 Decision no. 1/95 applies to products other than:  agricultural products as defined in the Agreement 
establishing an Association between the EEC and Turkey; and coal and steel  products as defined between the 
European Coal and Steel Community a nd Turkey on trade in products cove red by the Treaty establishing the 
European Coal and Steel Community. 
11 These are specifically tariff lines: 17049099, 18061030, 18061090, 18062095, 19019099, 21011298, 
21012098, 21069059, 21069098 and 33021029 (Annex V of Protocol 3).  WT/REG236/1 
 Page 25 
 
 
  Agreement are applied to these materials and products  acquiring originating status;  and that notices 
indicating the fulfilment of the necessary require ments to apply cumulation have been published in 
the Official Journal of the EC (C series) and in Montenegro according to it s procedures.  In this 
regard, the Parties shall provide each other with de tails of the preferential agreements, including their 
dates of entry into force and the corresponding rules of origin. 
46. Preferences provided under the Agreement only a pply to goods directly shipped between the 
Parties or through the territories of the other c ountries and territories to which cumulation applies 
(see above).  However, transhipment and warehous ing in other territories is permitted for products 
that constitute one single consignment, subject to the surveillance of the customs authorities in the 
country of transit or warehousing and do not undergo operations other than unloading, reloading or 
any operation to keep them in good cond ition (Article 13(1) of Protocol 3).12  Originating products 
may be transported by pipeline across the territories of third parties.  Originating products that are 
used for exhibitions in a third country and sold s ubsequently for import into the Parties or the other 
countries or territories in Articles 3 and 4 of the Agreement may also benefit from the provisions of 
the Agreement provided that the exporter demonstrates the products have been sent from one of the 
Parties to the third country and ha ve been consigned in that country  during the exhibition and not used 
for any other purpose;  and that they have been sold  or otherwise disposed by the exporter to a person 
in one of the Parties (Article 14).  
47. Non-originating materials used in the manufactur e of products originating in the Parties or 
any of the other countries or territories referred to  in Articles 3 and 4 of the Agreement  are not 
entitled to drawback or exemption from customs duty of any kind (Article 15). 
48. Details about the information to be provided to  prove origin, including procedures to issue a 
movement certificate EUR.1, validity of and ex emptions from, proof of origin as well as other 
supporting documents required are provided under Title V (Articl es 16-31).  To facilitate these 
procedures, the customs authorities of the Parties will provide each other with specimen impressions 
of stamps used in their offices with the addresses of the customs authorities responsible for verifying 
certifications and invoice declarations.  In addition,  mutual assistance between  the Parties is to be 
provided through their competent customs admini strations in checking the authenticity of the 
movement certificates EUR.1 or the invoice declara tions and verifying the information provided is 
correct. 
49. Verification of proof of origin is to be carried out at random or when the customs authorities 
of the importing Party have reasonable doubts about the authenticity of the origin of the imported 
products or other requirements of the Protocol.  Th ey will have the right to call for any evidence 
required for verification and to inspect the exporter' s accounts or any other relevant information.  If 
while waiting for the verification to be complete th e customs authorities of a Party decide to suspend 
preferential treatment to the products  concerned, they will offer to re lease the products to the importer 
subject to any precautionary measures judged necessary.   
50. The results of the verification shall be given to the customs authorities requesting it as soon as 
possible and must indicate clearly whether the documen ts are authentic and if the products are to be 
considered as originating in the Parties or one of the other countries or territories mentioned in 
Articles 3 and 4 and fulfil other requirements of the Protocol.  If there is no response within 10 
months of the request for verification or if the info rmation contained in the response is insufficient to 
determine the authenticity of the document or th e origin of the products, the requesting customs 
authorities shall refuse entitlement to preferences, except in exceptional circ umstances (Article 33).  
Any disputes on the verification procedures under th e Protocol which cannot be settled between the 
                                                      
12 Documents supporting these conditions must be supplied to the customs authorities of the importing 
country as described in paragraph 2 of Article 13 of Protocol 3. WT/REG236/1 
Page 26 
 
 
  customs authorities requesting and those carrying out the verification shall be submitted to the 
Stabilization and Association Council.  The settle ment of disputes between the importer and the 
customs authorities of the importing country shall be resolved under the legislation of the importing country (Article 34).  Those who provide documents that contain incorrect information are subject to 
penalties under the Agreement (Article 35). 
51. Administrative cooperation is considered to be essential for the implementation and control of 
preferential treatment provided for the free movement  of goods, and failure to do so could lead to 
temporary suspension (up to six months, renewabl e) of relevant preferential treatment of the 
product(s) concerned in accordance with Article 46. 
C. E
XPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  
52. Under Article 22 of the Agreement, the Partie s to the Agreement shall abolish any customs 
duties and quantitative restrictions on exports and ch arges or measures having equivalent effect in 
trade between them upon the entry into force of the Ag reement.  In addition, from the entry into force 
of the Agreement no new customs duties or quantitativ e restrictions on exports (or imports) or charges 
or measures having equivalent effect shall be intr oduced, nor shall those al ready applied be increased 
on trade between the Parties (Article 36).  Restricti ons or prohibitions on exports can, nevertheless, be 
maintained on grounds of public morality, policy or  security;  protection of health and the lives of 
humans, animals or plants;  the protection of national treasures, historic or archaeological value or the 
protection of intellectual, industr ial and commercial property, or ru les relating to gold and silver 
(Article 45).  The measures must not, however, co nstitute an arbitrary means of protection or a 
disguised restriction on trade between the Parties. 
D. REGULATORY PROVISIONS  ON TRADE IN GOODS  
1. Standards 
(a) Sanitary and phytosanitary measures 
53. The Agreement does not make any specific refere nce to sanitary and phytosanitary measures.  
(b) Technical barriers to trade 
54. Articles 77 and 78 of the Agreement relate respectively to standardization, metrology, 
accreditation and conformity assessment;  and consumer  protection.  Article 77 requires Montenegro 
to take necessary measures to gradually achieve conformity with EU technical regulations and 
European standardization, metrology, accreditation and conformity assessment procedures.  To this 
end the Parties will promote the use of EU techni cal regulations, European standards and conformity 
assessment procedures;  provide assistance to fost ering the development of quality infrastructure, 
standardization, metrology, accreditation and confor mity assessment;  promote the participation of 
Montenegro in the work of standards and confor mity assessment related organizations;  and where 
appropriate conclude an Agreemen t on Conformity Assessment and Acceptance of Industrial Products 
once Montenegro's legislative framework and procedur es are sufficiently aligned with those of the EU 
and appropriate expertise is available. 
55. Under Article 78, the Parties agree to cooperate to align Montenegro's standards of consumer 
protection with those in the EU.  To this end, the Parties will ensure a policy of active consumer 
protection in accordance with EU law, including increased information and the development of 
independent organizations;  harmonizat ion of consumer protection legisl ation in Montenegro with that 
in force in the EU;  effective legal protection for consumers to improve the quality of consumer goods  WT/REG236/1 
 Page 27 
 
 
  and to maintain appropriate safety standards;  monitoring of rules by competent authorities and 
providing access to justice in case of disputes;  and exchange of informati on on dangerous products. 
2. Safeguard mechanisms 
(a) Global safeguards 
56. The provisions of Article XIX of GATT 1994 and the WTO Agreement on Safeguards are 
applicable between the Parties (Article 41(1)).  
(b) Bilateral safeguards 
57. Notwithstanding Article 41(1) above, where any product of one Party is being imported into 
the territory of the other Party in such increased  quantities and under such conditions as to cause or 
threaten to cause (a) serious injury to the domestic industry of like or directly competitive products in 
the territory of the importing Party or (b) serious disturbances in any sector of the economy or difficulties which could bring about serious deteriorat ion in the economic situation of a region of the 
importing Party, the importing Party may take ap propriate bilateral safe guard measures under the 
conditions and in accordance with the procedures laid down in Article 41 of the Agreement. 
58. Any such problems will be referred immediat ely to the Stabilization and Association Council 
which may take any decisions necessary to rectify the problem.  If the Council or the exporting Party 
has not taken such a decision or if not other satisfa ctory solution has been reached within 30 days of 
the matter being referred to the Council, the impo rting Party may adopt appropriate measures to 
remedy the problem.  Priority must be given to those safeguard measures which least disturb the 
functioning of the arrangements provided by the Ag reement.  Safeguards applied in accordance with 
Article XIX of GATT 1994 and the WTO Agreement on Safeguards shall preserve the level/margin of 
preference granted under the Agreement.   In ex ceptional and critical circumstances, which require 
immediate action, and make prior information or examination impossible, the Party concerned may, 
apply provisional measures necessary to deal with  the situation and shall inform the other Party 
immediately thereof. 
59. The safeguard shall not exceed that necessary to  remedy the problems defined above, arising 
from the application of the Agreement.  The measure  should suspend the increase or the reduction of 
the margins of preference provided for by the Ag reement for the product concerned up to the basic 
applied duty for that product.  The measures cannot exceed two years, extendable in very exceptional 
circumstances for a further maximum two years, and shall contain clear elements that progressively 
lead to their elimination at the end of the period at the latest;  no bilateral safeguard shall be applied to 
imports of a product that has previously been subject to a bilateral safeguard for at least 4 years after 
the expiry of the measure. 
60. Safeguards taken shall be notified immediately to the Stabilization and Association Council 
and shall be subject to periodic consultations in th e Council, particularly with a view to establishing a 
timetable for their abolition as soon as circumstances permit.  In the event of one of the Parties 
subjecting imports of products liable to give rise to the problems referred to in Article 41 on 
Safeguards, to an administrative procedure whose pur pose is the rapid provision of information on the 
trend of trade flows, it shall inform the other Party (Article 41(6)). 
(c) Safeguards for balance of payments purposes 
61. Although Article 69 of the Agreement encourages th e Parties, wherever possible, to avoid the 
imposition of restrictive measures, including measur es related to imports, for balance of payments 
purposes, such measures are permitted where one or mo re EU Member States, or Montenegro is in WT/REG236/1 
Page 28 
 
 
  serious balance of payments difficulties, or under i mminent threat thereof.  The measures shall be 
taken in accordance with the conditions estab lished under the WTO Agreement and can include 
measures relating to imports.  They will be of a limited duration and may not go beyond what is 
strictly necessary to remedy the balance of paymen ts situation.  The Party taking the measures will 
inform the other Party forthwith and present a timetable for their removal as soon as possible. 
62. Balance of payments measures cannot be taken for transfers related to investment and in 
particular to the repatriation of investment or  reinvestments or any kind of revenue stemming 
therefrom. 
(d) Special safeguards 
63. Given the particular sensitivities in the agricu ltural and fisheries markets, notwithstanding the 
provisions on safeguards under Article 41, if imports of products originating in one Party, which are 
subject to concessions under Articles 25-30 (agricultu ral products, wines and spirits and fish and 
fishery products), cause serious disturbance to  the markets or to their domestic regulatory 
mechanisms, in the other Party, both Parties shall enter into consultations immediately to find an 
appropriate solution.  Pending such a solution, th e Party concerned may take the measures it deems 
necessary (Article 32). 
64. The Agreement also contains a shortage clause wh ereby a critical shortage or threat thereof, 
of foodstuffs or other products essential to the e xporting Party, or re-export to a third country of a 
product on which the exporting Party maintains qu antitative export restrictions, export duties or 
measures or charges having equivalent effect, and where a shortage gives rise, or is likely to give rise 
to major difficulties for the exporting Party, that Party may take appropriate measures under the 
conditions and in accordance with proc edures laid down in Article 42. 
65. Where exceptional and critical circumstances require immediate action and make prior 
information or examination impossible, the Part y affected may apply the precautionary measures 
necessary to deal with the situation and shall i mmediately inform the other Party of its actions. 
66. Before taking these measures, the Party taki ng the measure, must supply all relevant 
information to the Stabilization and Association Co uncil with a view to seeking a solution acceptable 
to the Parties.  If no agreement is reached within 30 days of the matter being referred to the Council, 
the exporting Party may apply measures under Article  42 on the export of the product concerned.  If 
there are exceptional and critical circumstances requiring immediate action, and making prior 
information or examination impossible, the Part y concerned may apply the precautionary measures 
necessary to deal with the situa tion and inform the other Party immediately.  Any measures applied 
under the Shortage Clause shall be notified imme diately to the Council and subject to periodic 
consultations, particularly with a view to establishi ng a timetable for the elimination of such measures 
as soon as circumstances permit.  
3. Anti-dumping and countervailing measures 
67. The Agreement permits the Parties to take trade defence measures.  If one of the Parties finds 
that dumping and/or subsidization is taking place in the other Party, it may take appropriate measures 
in accordance with the WTO Agreement on Implementation of Article VI of GATT 1994, or the 
WTO Agreement on Subsidies and Countervailing Measu res and its respective internal legislation 
(Article 40).  WT/REG236/1 
 Page 29 
 
 
  4. Subsidies and State-aid 
68. With regard to state monopolies of a commercia l characters, Article 43 commits Montenegro 
to removing, upon the entry into force of the Agre ement, any discrimination regarding the conditions 
under which goods are procured and marketed be tween nationals of the two Parties.    
69. Article 73, which deals with competition and other economic provisions, furthermore, notes 
that any State aid which distorts or threatens to distort competition by favouring certain undertakings 
or certain products, is incompatible with the prope r functioning of the Agreement (Article 73(1)(iii));  
Article 73(1)(iii) does not apply to agriculture a nd fisheries products covered in Chapter II of the 
Agreement which includes products in Chapters 1-24 of the CN and the products in Annex I, 
paragraph I, (ii) of the WTO Agreement on Agricultu re.  To ensure the compatibility of its State aid 
with the provisions of the Agreement, Monteneg ro must establish an operationally independent 
authority, entrusted with the powers necessary to appl y the provisions of Article 73(1)(iii), within one 
year of the date of entry into force of the Ag reement.  It shall also establish a comprehensive 
inventory of aid schemes instituted before the establi shment of this authority and align the schemes 
with criteria based on EU competition rules (in particular Articles 81, 82, 86 and 87 of the EC Treaty) 
no more than four years from the Agreement's entr y into force (Article 73(6)).  To apply the 
provisions of Article 73(1)(iii), the Parties recognize that for the first five years following entry into 
force of the Agreement, any public aid provided by Montenegro shall be assessed taking into account 
that Montenegro shall be regarded as an area identical to those describ ed in Article 87(3)(a) of the EC 
Treaty.13  To assess regional aid and to draw up a regional aid map on the basis of relevant 
Community guidelines, the independent authority a nd the European Commission shall jointly evaluate 
the eligibility of the regions of Montenegro and maximum aid intensities in relation thereto.14  
70. Article 73 also requires that the Parties ensure tr ansparency in the area of State aid, including 
providing each other regular annual reports or equi valent, following the methodology and presentation 
used in the Community survey on State aid.  The Parties will also provide each other information on 
particular individual cases of public aid, upon request.  
71. Protocol 4 to the Agreement establishes rules on state aid for the steel industry in the event 
restructuring aid is granted (see Section C below).  
5. Customs-related procedures 
72. The Parties believe that administrative coope ration is essential for the implementation and 
control of preferential treatment in goods and underline their commitment to combat irregularities and 
fraud in customs and related matters (A rticle 46).  They agree to coopera te in the area of customs with 
a view to guaranteeing compliance with the Agreement's trade provisions and achieving an 
"approximation" of Montenegro's customs procedures with those of the EU (Article 99).  Cooperation 
will take account of priority areas related to the acquis Communautaire  in customs.  Protocol 6 lays 
out the rules on mutual administrative assistance in customs matters for Montenegro.  It assures 
mutual assistance by the Parties in areas within their competence to en sure that customs legislation is 
applied correctly.  Upon request from the designated ad ministrative authority ("applicant authority"), 
the requested authority must provide all relevant information to enable it to ensure that customs 
legislation is correctly applied.  If the applicant authority so requests, the requested authority shall 
take necessary steps to ensure surveillance of natural or legal persons, places where goods are 
                                                      
13 Article 87(3)(a) of the EC Tr eaty (ex Article 92(3)(a)) lists the following as compatible with the 
common market:  aid to promote the economic development of areas where the standard of living is abnormally 
low or where there is serious underemployment. 
14 The evaluation will be based on Montenegro's GDP pe r capita which it will provide within four years 
to the European Commission. WT/REG236/1 
Page 30 
 
 
  stocked, goods being trans ported, or means of transport, if ther e are reasonable grounds to believe that 
they are being used to, or are involved in, operations in breach of customs legislation.  Spontaneous 
assistance can also be provided on the Parties' ow n initiatives if they believe that they have 
information indicating a breach in customs legislati on.  The information to be provided includes any 
documents or decisions emanating from the applican t authority and falling within the scope of the 
Protocol, to an addressee residing or established in th e territory of the requested authority.  Requests 
are to be made in writing and accompanied by docu ments required for compliance with the request.   
73. The results of the enquiry by the requested au thority are also to be provided in writing, 
together with relevant documents , certified copies or other items.  Any information communicated 
between the authorities relating to the investigation is to remain confidential, depending on the rules 
applied by the Parties.  Where there are judicial or administrative proceedings instituted in cases of a 
breach of customs legislation, information obta ined and documents cons ulted may be used upon 
notifying the competent authority which provided the information.  If a Party wishes to use the 
information for any purpose other than the Protoc ol, it must obtain the prior written consent of the 
authority providing the information and use of the in formation will be subject to any restriction laid 
down by that authority. 
74. Under Article 9, assistance may be refused or  may be provided under certain conditions in 
cases where a Party believes that it is likely to pr ejudice the sovereignty of Montenegro or the EU 
Member State that has been requested to provide assistance;  or be likely to prejudice public policy, 
security or other essential interests, in particular those involving the provision of personal data;  or 
violate an industrial, commercial or professional secret.  Assistance may also be postponed on the 
grounds that it would interfere with an ongoing inv estigation, prosecution or proceeding.  In such 
cases, the authorities will consult to determine if the assistance can be provided under terms and 
conditions laid down by the assisting authority. 
75. The Protocol is to be implemented by the Parties' respective customs authorities who will 
decide on all practical measures and arrangements necessary for its application, taking into 
consideration the rules in force, particularly with re gard to data protection.  The Parties will consult 
and keep each other informed of the detailed ru les and implementation pr ocedures adopted.  The 
provisions of the Protocol will not affect their ob ligations under any other in ternational agreement or 
convention;  be deemed complementary to any mutu al assistance agreements that have been or may 
be concluded between Montenegro and indivi dual EU Member States although in cases of 
incompatibility of provisions, the Protocol will ta ke precedence;  and not affect EU provisions on the 
communication of any information under the Protocol, which could be of inter est to the EU, between 
the competent services of the European Commission and Member States. 
E. SECTOR -SPECIFIC PROVISIONS ON TRADE IN GOODS  
1. Steel 
76. Recognizing Montenegro's need to assess promptly  any structural weaknesses in its steel 
industry to ensure its competitiveness, the Agreem ent permits Montenegro to exceptionally grant 
State aid for restructuring purposes to steel producing firms facing difficulties during the first five 
years following the entry into for ce of the Agreement.  The conditi ons attached to the granting of 
State aid are that:  (i) it leads to the long-term  viability of the firms benefiting from the aid under 
normal market conditions at the end of  the period of restructuring;  (ii)  the amount and intensity of the 
aid is strictly limited to that absolutely necessar y to restore viability of the firms and progressively 
reduced, where appropriate;  and (iii) Montenegro presents restructuring programmes that are linked 
to a global rationalization of the industry, including the closure of inefficient capacity and that beneficiary firms provide compensatory measures as far as possible, balancing the distortion to 
competition caused by the aid (Protocol 4, paragraph 3).    WT/REG236/1 
 Page 31 
 
 
  77. Protocol 4 also requires Montenegro to submit a National Restructuring Programme to the 
European Commission for assessment and individu al business plans for each company benefiting 
from restructuring aid which demonstrates that the conditions above are being met.  Compliance of 
these business plans with the conditions should have been assessed and agreed by Montenegro's State 
aid monitoring authority and the European Commiss ion must confirm that the National Restructuring 
Programme is in compliance with these require ments.  The European Commission shall monitor 
implementation of the plans in close cooperation with  the national authorities and in particular with 
Montenegro's State aid monitoring authority.  Mo ntenegro's State aid monitoring authority should 
ensure that any aid deemed to have been provi ded following the signing of the Agreement to steel 
firms not identified in the National Restructuri ng Programme is reimbursed.  Upon request, the EU 
will provide technical assistance to Montenegro for the preparation of the Restructuring Programme 
and individual plans.  Full transparency will be ensured by the Parties in the provision of State aid, 
including through the full and continuous exchange  of information on State aid, and the 
implementation of the restructuring programme and business plans. 
78. Implementation of these requirements will be m onitored by the Stabilization and Association 
Council which may draft implementing rules.  If one of  the Parties considers that a particular practice 
by the other Party is incompatible with the term s of the Protocol, and if that practice causes or 
threatens to cause prejudice to the interests of the first Party or material injury to its domestic 
industry, it may take appropriate measures after c onsultations within the S ub-Committee dealing with 
competition matters or after 30 working days foll owing referral for consultations (Protocol 4, 
paragraph 10). 
IV. PROVISIONS ON TRADE IN SERVICES 
A. SCOPE AND DEFINITIONS  
79. The aspects of the Agreement related to trade in  services are contained in Title V, which is 
divided into five chapters.  Chapter I contains di sciplines on movement of workers;  Chapter II relates 
to establishment;  Chapter III compri ses specific rules on supply of services;  Chapter IV deals with 
current payments and movement of capital;  and Chapter V sets out general provisions.  
80. The provisions of Title V do not apply to activiti es that in the territory of either Party are 
connected, even occasionally, with the exercise of official authority (Article 65.2).   This provision is 
connected to Article 45 of the EC Treaty that stat es that the provisions of the right of establishment 
chapter shall not apply, so far as any given Member  State is concerned, to activities which in that 
State are connected, even occasionally, with the exercise of official authority. "Official authority" is 
not defined in the Treaty, but there is a case law of the European Court of Justice ("the ECJ") in this 
respect. There is also Article 39(4) of the Treaty that provides for an exemption from the freedom of 
movement for workers regarding employment in the public service.  In addition, the Parties remain 
free to apply their laws and regulations regardi ng entry and stay, employment, working conditions, 
establishment of natural persons and supply of servi ces, provided that, in so doing, they do not apply 
them in such a manner as to nullify or impair th e benefits accruing to any Party under the terms of 
Agreement (Article 66). 
81. Under the Agreement, a "company" is defined as an EU or Montenegrin company set up in 
accordance with the laws of an EU Member St ate or Montenegro, respectively and having its 
registered office or central administration or princi pal place of business in the territory of the EU or 
Montenegro respectively.15  Companies which are controlled and exclusively owned jointly by 
                                                      
15 A "subsidiary" of a company is one which is effectively controlled by the first company 
(Article 52(b)). A "branch" of a company is a place of  business not having legal personality which has the 
appearance of permanency, such as the extension of a parent body, has management and is materially equipped WT/REG236/1 
Page 32 
 
 
  Montenegrin companies or nationals and EU compani es or nationals are covered by the provisions of 
Title V (Article 67).  An EU or Montenegrin nationa l is defined as a natura l person who is a national 
of an EU Member State or Montenegro.  Thus, un like in the GATS, the definition of natural persons 
does not extend to permanent residents. 
82. The structure of Agreement follows neither a ty pical "negative" nor "positive" approach.  Its 
structure reflects one of its main objectives, that is  the approximation of Montenegro's legislation to 
that of the EU, in view of eventual EU membership .  Thus, certain parts of the Agreement, such as 
Title V, mirror some elements of the EU's primary law.16   
83. Chapters II and III of Title V address different m odes of supply.  Chapter II, on establishment, 
covers mode 3 but also applies to trade in goods .  Through Article 52, it provides for full MFN and 
national treatments upon entry into force, while also maintaining some exceptions and/or restrictions 
in Articles 53 to 55.  Without prejudice to any provision to the contrary contained in the Multilateral 
Agreement on the Establishment of a European Common Aviation Area , the Agreement's provisions 
on establishment do not apply to air transport se rvices, inland waterways transport services and 
maritime cabotage services.  The Stabilization and Association Council may make recommendations 
for improving establishment and operations of these sectors (Article 55).    Chapter III, on the supply 
of services covering modes 1, 2 and 4, contains a standstill obligation.  It does not provide for 
immediate liberalisation of services but rather establishes a progressive process. 
B. DENIAL OF BENEFITS  
84. A Party may deny the benefits of Title V to a company having only its registered office in the 
EU or Montenegro unless its operations possess "a real  and continuous link" w ith the economy of one 
of the EU Member States or of Montenegro (Article 52(a)).   
C. GENERAL PROVISIONS ON TRADE IN SERVICES  
1. Market access 
85. Title V does not contain any explicit market ac cess limitation comparable to the provisions in 
GATS Article XVI. However, as regards establishment, services may be provided as from the entry 
into force of the Agreement for EU and Montenegrin companies (Article 53).  In relation to the supply 
of services (covering modes 1, 2 and, to a certain extent, mode 4), the right to provide services is 
granted progressively in accordance with the provis ions of Chapter III of Title V (Article 59). 17  
 
                                                                                                                                                                     
to negotiate business with third Parties so that the latter,  although knowing that there will if necessary be a legal 
link with the parent body, the head office of which is abroad, do not have to deal directly with such parent body 
but may transact business at the place of busi ness constituting the extension (Article 52(c)). 
16 i.e. the Treaty establishing the European Community (TEC), as am ended, and notably the Internal 
Market freedoms.  The freedom of establishment and the freedom to provide services across border are 
enshrined in Articles 43 and 49 of the TEC (Articles 49 and 56 of the Treaty on the Functioning of the EU – 
TFU).  The Agreement's approach to  regulating bilateral and preferen tial relations between the EU and 
Montenegro in trade in services is therefore influenced by these Articles as  well as by the principles that the 
European Court of Justice (ECJ) has developed on the basis of their application. 
17 The concept of mode 2 (supply of a service in th e territory of one Member to the consumer of any 
other Member) does not as such exist in the TCU.  However, insofar as EU citizens (i.e. nationals of one 
member state) have the right to move and reside freely wi thin the territory of the EU  (Article 18 of the TEC), 
nationals may not be prohibited from consuming services in any EU member state.  Once the approximation of 
laws between the EU and Montenegro is completed, this would become applicable to Montenegrin companies 
and nationals.    WT/REG236/1 
 Page 33 
 
 
  2. National and MFN treatment  
86. As of the entry into force of the Agreement,  the Parties agree to grant MFN and national 
treatment as regards the establishment of EU and Montenegrin companies and the operation of their 
subsidiaries and branches (Article 53).  There is no corresponding provision in the Agreement to grant 
MFN and national treatment for the supply of services. 
3. Cross-Border Trade in Services 
87. The Parties agree to take the necessary steps to allow progressively the supply of services by 
EU or Montenegrin companies or their nationals whic h are established in a Party other than that of the 
person for whom the services are intended (Article 59 .1). The supply of services therefore essentially 
covers modes 1, 2, and 4. 
88. After four years (i.e. by May 2014), the Stab ilization and Association Council shall take the 
measures necessary to implement progressively this liberalization of trade in services between the 
Parties.18 In that context, account shall be taken of the progress achieved by the Parties in the 
approximation of their laws (Article 59.3).  
89. The Agreement contains a standstill clause in which the Parties commit not to take any 
measures or actions which render the conditions fo r the supply of services by EU and Montenegrin 
nationals or companies significantly more restrict ive as compared to the situation on the date 
preceding the day of entry into force of the Agreem ent (Article 60).  If one Party believes that the 
other has introduced such restrictive measures it ma y request consultations with the other Party. 
90. Special provisions apply to the supply of transpor t services, in particular inland transport and 
international maritime transport, as described below.19 
4. Establishment 
91. Chapter II of Title V contains the disciplines gr anting the right of establishment.  As regards 
EU or Montenegrin companies, establishment means the right to take up economic activities by means 
of the setting up of subsidiaries and branches in th e other Party (Article 52(d)(ii)).  As regards 
nationals from EU Member States and Montenegro, establishment means the right to take up 
economic activities as self-employed persons, and to  set up undertakings, in particular companies, 
which they effectively control (Article 52(d)(i )). Self-employment and business undertakings by 
nationals shall not extend to seeking or taking up employ ment in the labour market or confer a right of 
access to the labour market of another Party.  Th e provisions on establishment do not apply to those 
who are not exclusively self-employed.  The Agreement's provisions on establishment go beyond the GATS definition of mode 3, as it also covers the establishment of companies producing goods.    
92. Four years after the entry into force of the Agreement (i.e. by May 2014), the Stabilization 
and Association Council is to establish the moda lities to extend the provisions on establishment to 
nationals of both Parties to take up economic activities as self-employed persons (Article 53.4).
20  
                                                      
18 Montenegro is currently preparing an Action Plan related to the progressive liberalization of trade in 
services between the Parties. 
19 Within the EU internal legal framework, the freed om to provide transport services is governed by 
specific provisions.  See Title VI of TFU (ex Articles 70-80 of TEC). 
20 According to the Parties, no progress has yet been made. WT/REG236/1 
Page 34 
 
 
  93. The Agreement contains a standstill clause in wh ich the Parties commit not to adopt any new 
regulations or measures which introduce discrim ination against the establishment of EU or 
Montenegrin companies on their territory or in  respect of their operation (Article 53.3). 
94. Notwithstanding these commitments on establishmen t, a Party may apply particular rules 
concerning the establishment and operation in its resp ective territory of branches of companies of the 
other Party not incorporated in the territory of the fi rst Party, if such rules are justified by legal or 
technical differences between such branches compared  to branches of companies incorporated in its 
territory or, as regards financial services, for pr udential reasons.  The difference in treatment shall 
however not go beyond what is strictly necessary (Article 56). 
5. Movement of natural persons 
95. Chapter I of Title V contains provisions on the movement of workers.21  The provisions of 
Chapter I provide for non-discrimination based on na tionality for EU or Montenegrin nationals legally 
employed in the other Party, as regards working co nditions, remuneration or di smissal (Article 49).  
The provisions also provide for access to the labou r markets for the legally resident spouse and 
children of a worker legally employed in the othe r Party.  Existing facilities for access to employment 
for Montenegrin workers accorded by EU Member States under bilateral agreements should be 
preserved and if possible improved (Article 50).  Other EU Member States shall examine the possibility of concluding such bilateral agreements.  The Agreement also provides for rules to be laid 
down for the coordination of social security sy stems for Montenegrin workers and their family 
members adding together all periods of insurance, employment or residence completed in various EU 
Member States are added together for the purpose of  pensions and annuities in respect of old age, 
invalidity and death and for medical care for work ers and family members and that pensions and 
annuities are to be freely transferable. 
96. Chapter II of Title V on "Establishment" contains provisions (akin to the GATS) on the right 
granted to EU and Montenegrin companies established in  the territory of the other Party to employ, or 
have employed by one of its subsidiaries or branches,  in accordance with the legi slation in force in the 
host country of establishment, employees who are EU a nd Montenegrin nationals (Article 58).  To be 
eligible, employees must be "key personnel" excl usively employed by companies, subsidiaries or 
branches.  The residence and work permits of su ch employees shall only cover the period of such 
employment.  No time limits on residence and work permits are laid down in the Agreement.  Key 
personnel are considered eligible "intra-corporate transferees"
22 as long as the organization employing 
them is a legal person and they have been employed by it or have been partners in it for at least the 
year immediately preceding the transfer.  The covere d intra-corporate transferees are persons working 
in a senior position within an organization, who prim arily direct the management of the establishment, 
receive general supervision or direction principa lly from the board of directors or stockholders23, as 
well as the persons working within a compan y who possess uncommon knowledge essential to the 
establishment's service, research equipment, techniques or management.  
                                                      
21 Such provisions are distinct from the GATS provisions on the movement of natural persons 
supplying services. 
22 An "intra-corporate transferee" is defined as a natural person working within an organization in the 
territory of a Party, and being temporarily transferred in  the context of pursuit of economic activities in the 
territory of the other Party;  the or ganization concerned must have its prin cipal place of business in the territory 
of a Party and the transfer be to an establishment (branch, subsidiary) of that organization, effectively pursuing 
like economic activities in the territory of the other Party.   
23 Including directing the establishment of a departme nt or sub-division; supervising and controlling the 
work of other supervisory, professional or managerial employees;  and having the authority personally to recruit 
and dismiss staff.  WT/REG236/1 
 Page 35 
 
 
  97. The entry into and the temporary presence, within  the territory of the EU or Montenegro, of 
EU or Montenegrin nationals, is permitted for pe rsons working in a senior position and responsible 
for the setting up of a subsidiary or a branch of a co mpany in one of the Parties.  Such permission is 
subject to the condition that those representatives ar e not engaged in making direct sales or supplying 
services, and do not receive remuneration from a source located within the host territory of 
establishment, and in case the company has its principal place of business outside the EU or 
Montenegro and has no other representative office, br anch or subsidiary in the EU or Montenegro. 
98. Chapter III of Title V on "Supply of services" pr ovides for the Parties to take the necessary 
steps to allow progressively the supply of services by EU companies, Montenegrin companies or their 
nationals who are established in the territory of a Party other than that of the person for whom the 
services are intended.  The measures necessary to progressively implement such provisions are to be taken by the Stabilization and Association Council four years after the entry into force of the 
Agreement, i.e. by 2014. Account  shall be taken of the progress achieved by the Parties in the 
approximation of their laws.
24  It also contains provisions permitting the temporary movement of 
natural persons providing the service or who are employed by the service provider as key personnel 
and who seek temporary entry for the purpose of ne gotiating the sale of services or entering into 
agreements to sell services, but are not engaged in  making direct sales to the general public or in 
supplying services themselves (Article 59.2).   
99. In its horizontal commitments in its GATS sche dule, the EU has made commitments for intra-
corporate transfers (ICTs), business visitors (BV) and contractual service suppliers (CSS) subject to conditions which vary for individual EU Member Stat es.  For a majority of EU Member States, in the 
case of ICTs, the natural person must work within a juridical person, other than a non-profit making 
organization, established in the territory of a WT O Member and have been employed or been a 
partner in it for at least the year immediately preced ing the date of admission.  The natural person is 
temporarily transferred to provide a service throug h commercial presence in the territory of the EU 
member state concerned.  For three EU Member States an economic needs test is required.  The 
duration of temporary stay for ICTs is defined by  individual EU Member States.  The category of 
business visitor applies to i) service sellers seeking temporary entry to negotiate the sale of services 
and ii)  those in a senior position, within a juri dical person, responsible for the setting up of a 
commercial presence of a service provider (but no t engaged in making direct sales or supplying 
services).  The duration of temporary stay of BVs is defined by individual EU Member States.  Seventeen EU Member States have scheduled horiz ontal commitments on CSS which apply to natural 
persons engaged in the supply of a service on a te mporary basis as employees of a juridical person, 
who has no commercial presence in any EU member state.  The temporary entry and stay is for a period of three months in any 12 month period (in the case of most EU Member States which have 
scheduled commitments on CSS).  The services contr act has to be obtained in a predefined list of 
activities.
25   
                                                      
24 According to Montenegro, the  Ministry of Labour and Social Welfare is planning amendments of 
the Law on Employment and Work of Aliens which will in clude approximation with the Article 59.1 of the 
Agreement, with particular reference to the category of work permits for cr oss-border services.  The provisions 
of the Law on Employment and Work of Aliens include a non-discriminatory principle for aliens employed or 
working in Montenegro. 
25 These are legal services;  accounting services;  taxa tion advisory services;  architectural services,  
urban planning and landscape architectural services;  en gineering services, integrated engineering services:  
computer and related services;  research and developm ent services;  advertising;  management consulting 
services;  services related to management consulting;  te chnical testing and analysis services;  related scientific 
and technical consulting services;  translation services;  construction services, site investigation work;  higher 
education services;  travel agencies and tour operator  services;  entertainment services;  services related to the 
sale of equipment or to the assignment of a patent. WT/REG236/1 
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  100. As Montenegro is not yet a WTO Member, it has not scheduled commitments under the 
GATS. 
D. LIBERALIZATION COMMITMENTS  
101.  The approach taken in this Section is to co mpare the sector-specific commitments taken by 
the EU in its GATS schedule with the liberali zation offered under the Agreement.  No such 
comparison was made for Montenegro as it does not have a schedule of specific commitments in the 
WTO. 
1. General Overview 
(a) The European Union 
102. In its GATS schedule, the EU has made co mmitments in 115 of 155 services sectors. 26  It has 
scheduled extensive commitments, including on fina ncial services, telecommunications, transport, 
tourism and professional services, subject to individual EU member state limitations.  The EU did not 
commit postal and audiovisual services and space transport services.  The EU scheduled MFN 
exemptions in a number of sectors including audiovisual services, transport services, and publishing.27  
103. In its GATS schedule the EU maintains a horiz ontal "public utilities carve-out", while under 
the Agreement "activities that in the territory of either Party are connected, even occasionally, with 
the exercise of official authority" are excluded from its scope (Article 62.2).   
104. Individual EU Member States maintain a number of horizontal reservations concerning 
conditions for commercial presence (mode 3) in the EU GATS schedule, particularly with regard to 
the composition of the board of directors or permitted type of legal entity.  In all EU Member States 
except Hungary and Poland, eligibility for subsidies fr om the EU may be limited to juridical persons 
established within the territory of an EU member state or a particular geographical sub-division 
thereof.  Subsidies for research and developmen t are unbound.  Such reservations have not been 
scheduled under the Agreement.    
105. With regard to investment, horizontal limitati ons are listed by about half the EU Member 
States in their EU GATS services sched ule.  Such reservations are not indicated under the Agreement.   
106. In the EU GATS schedule, a number of Member States have scheduled reservations on real 
estate purchases while there ar e none in the Agreement. 
(b) Montenegro 
107. Under the Agreement, subsidiaries and branches of EU companies have the right, as from the 
date of entry into force of the Agreement to use a nd rent real property in Montenegro (Article 53).  
Subsidiaries and branches of EU companies have the right to acquire and enjoy real estate in 
Montenegro where such rights are necessary for the conduct of economic  activities for which they are 
established.   
                                                      
26 The GATS EU-25 schedule was certified on 18 December 2006 (S/L/286) and is contained in 
document S/C/W/273, and Add.1 and Suppl.1.  For ease of reference, comparisons made between the EU's 
commitments under the Agreement and its GATS schedule  are based on the EU(25) GATS schedule.  This 
consolidated schedule has not yet entered into force because the ratification process has not been completed in a 
number of EU Member States.  The GATS EU-27 schedule has not yet been certified.   
27 Based on the EU(12) list of MFN exemptions.  MFN exemptions have also been scheduled by the 
15 countries which acceded to the EU since 1995.  WT/REG236/1 
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  108. As from the entry into force of the Agreement,  Montenegro grants national treatment to EU 
nationals acquiring real estate on its territory (Article 63.3). 
2. Sector-specific Commitments 
(a) Business Services 
109. The EU's GATS schedule contains commitments in all 11 sub-sectors of the professional 
services category.28  In legal services, more than half of EU Member States have reservations, 
particularly for mode 3 in the form of type of legal entity or nationality requirements.  Accounting, 
auditing and bookkeeping services are also subject to  reservations in the EU GATS schedule, again 
for mode 3.  Architectural services are subject to  nationality and residence requirements in some EU 
Member States under the GATS.  Medical and dent al services, veterinary services and services 
provided by midwives, nurses, physiotherapists a nd para-medical personnel are in some cases 
unbound for mode 3 under the GATS, are subject to nati onality requirements or ac cess is restricted to 
natural persons.  Computer and Related Services is  for the most part fully committed for modes 1-3 
under the GATS for all EU Member States (except Cyprus, Malta, Poland and the Slovak Republic).  
Research and development on natural sciences a nd interdisciplinary R&D services are uncommitted 
for most EU Member States in modes 1-3, while real estate services is unbound in modes 1-3 for 
about half EU Member States.  For rental/l easing services without operators, modes 1-3 are unbound 
for some EU Member States, principally in the case of the recently acceded members.  Under other 
business services, all sub-sectors are committed by the majority of EU Member States, though 
restrictions remain, in particular, in services incidental to manufacturing, placement and supply, 
investigation and security services, where modes 1-3 remain unbound for a number of EU Member 
States.  The provision of business services through mode 4 for ICTs and BV s (where not unbound), is 
subject to nationality and residency requirement s, prescribed minimum professional qualifications, 
(and, particularly for medical personnel, quotas) in a number of EU Member States.  For a number of 
sub-sectors, CSS is unbound (except for those sub-sect ors positively listed in the EU's horizontal 
commitments). 
110. Under the Agreement, there are no national treatment restrictions on professional services for 
mode 3 ("establishment" under the Agreement).  Furt her, the provision of such services through other 
modes of supply was bound at the existing level of restrictiveness and will be progressively 
liberalized within the prescribed transition period.   
(b) Communication Services 
111. Postal and audiovisual services are uncommitted under the EU GATS schedule.  For courier 
services, modes 1-3 remain unbound for the majority of EU Member States.  For telecommunication 
services, the EU's commitments under the GATS include "all services consisting of the transmission and reception of signals by any electromagnetic m eans, excluding broadcasting".  Telecommunication 
services is, for the most part, fully committed by the majority of EU Member States;  mode 1 is 
unbound for Cyprus and Malta and eq uity ceilings on mode 3 exist fo r a small number of EU Member 
States.  The EU GATS schedule also incorporat es the Reference Paper obligations for basic 
telecommunications services. For mode 4, ICT and BV are, for most EU Member States, unbound 
except as indicated in the horizontal section of the EU's schedule.  CSS is unbound for all EU Member States in communications services. 
                                                     
 
28 The EC schedule contains 13 speci fic entries; architecture and en gineering services, as well as 
auditing and bookkeeping services have been split into separate categories; the schedule includes "related 
scientific and technical consulting services " as an "other" professional service. WT/REG236/1 
Page 38 
 
 
  112. Under the Agreement, there are no national treatment restrictions on communication services 
for mode 3 ("establishment" under the Agreement).  Further, the provision of such services through 
other modes of supply was bound at the existing le vel of restrictiveness and will be progressively 
liberalized within the prescribed transition period.  
(c) Construction and Distribution Services 
113. The EU GATS schedule shows variations in the sector scope for the Czech Republic, the 
Slovak Republic, and Sweden (which exclude CPC 515 and 518 from their GATS commitments), 
Finland (which excludes CPC 511, 515, 517, and 5 18), Latvia (excludes 511) , and Slovenia (excludes 
518).29  In the GATS schedule, five newly acceded EU Member States have no commitments in 
mode 3.  Commission agents' services is uncommitt ed in modes 1-3 for the majority of the newly 
acceded EU members in the EU's GATS schedule including mode 1 limitations for France and Italy.  For wholesale trade services, market access limitations  in certain products are registered in France 
(for pharmacies, tobacco and matches), and Estonia, Italy, and Portugal (for tobacco) for modes 1 and 
3.  Retailing is limited in scope for some EU Me mber States and remains subject to an economic 
needs test in some EU Member States, while fra nchising is unbound in modes 1-3 for three newly 
acceded EU Member States and Sweden.  For m ode 4, ICTs and BVs are unbound except as indicated 
in the horizontal part of the EU's schedule with additional commercial presence or nationality 
conditions for a few EU Member States.  For CSS,  defined professional qualif ications and experience 
are required in the case of construction services in so me EU Member States.  In distribution services, 
CSS is unbound for all EU Member States. 
114. Under the Agreement, there are no national treatme nt restrictions on construction and related 
engineering services, and distribution services for mode 3 ("establishment" under the Agreement).  
Further, the provision of such services through ot her modes of supply was bound at the existing level 
of restrictiveness and will be progressively libe ralized in accordance with  the defined transition 
period.   
(d) Educational Services 
115. In the EU's GATS schedule, the provision of educational services is limited to privately 
funded services.  In some EU Member States, the provision of such services is dependent on nationality or licensing approval, mainly for mode 3.   For ICTs and BVs under mode 4, the nationality 
condition is applied by some EU Member States.  CSS is uncommitted for the majority of EU 
Member States in higher education services.   
116. Under the Agreement, there are no national treatment restrictions on educational services for 
mode 3 ("establishment" under the Agreement).  Furt her, the provision of such services through other 
modes of supply was bound at the existing level of restrictiveness and will be progressively 
liberalized in accordance with  the transition period.   
(e) Environmental Services 
117. In the EU GATS schedule, modes 2-3 of all sub-sectors of environmental services are 
unbound for a handful of EU Member States, princi pally the recently acceded members.  For mode 1 
in all sub-sectors, some of the recently acceded EU Member States have not registered limitations, 
                                                     
 
29 Specifications of the services activities are:  CPC 511 - pre-erecti on work at construction sites; 
CPC 512 - construction work for buildings;  CPC 513 - construction work for civil engineering;  CPC 514 - 
assembly and erection of pre-fabricated constructions; CPC 515 - special trade construction work;  CPC 516 - 
installation work;  CPC 517 – building completion and finishing work;  CPC 518 - renting services related to 
equipment for construction or demolition of buildings  or civil engineering works, with operator.  WT/REG236/1 
 Page 39 
 
 
  particularly Estonia, which has consistently sche duled no limitations in all sub-sectors.  Mode 4 for 
ICTs and BVs is unbound except as indicated in the horizontal section for most EU Member States 
(and unbound for the rest).  CSS is unbound for all EU Member States. 
118. There are no national treatment restrictions  on environmental services for mode 3 
("establishment" under the Agreement).  Further, the provision of such services through other modes 
of supply was bound at the existing level of restri ctiveness and will be progressively liberalized in 
accordance with the transition period.   
(f) Financial Services 
119. In the EU GATS schedule, 18 Member Stat es took commitments in accordance with the 
provisions of the "Understanding on Commitments in Financial Services" (hereinafter the 
Understanding), while the remaining Member States made commitments on the basis of the traditional scheduling approach.  For those EU Member St ates which scheduled their GATS commitments in 
accordance with the Understanding, in insurance and insurance-related services, a number of 
countries scheduled reservations allowing only EU est ablished companies to offer insurance services 
or requiring a specific legal form.  In banking and ot her financial services, mode 3 in particular is 
subject to a number of reservations, regarding form s of establishment or licensing requirements.  For 
ICTs and BVs under mode 4, natio nality and/or residency conditions are applied by some EU 
Member States.  CSS is unbound for those 18 EU Member States under the Understanding.    
120. Under the Agreement, the Parties may take meas ures for prudential reasons, including for the 
protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owned by a 
financial service supplier, or to ensure the integrity and stability of the financial system (Article 50.2). 
(g) Health Related and Social Services 
121. In the EU's GATS schedule, mode 3 for hospital services is unbound for six EU Member 
States and subject to authorization or economic need s tests in a number of other EU Member States.  
Modes 1-3 of other human health and other health  related services are unbound for most EU Member 
States.  For social services, mode 3 is unbound for eight EU Member States.  Mode 4 is unbound for 
some EU Member States for ICTs and BVs and subj ect to nationality condition or prior authorization 
in others.  CSS is unbound in all EU Member States. 
122. Under the Agreement, there are no national treatme nt restrictions on health related and social 
services for mode 3 ("establishment" under in the Ag reement).  Further, the provision of such services 
through other modes of supply was bound at the existing level of restrictiveness and will be 
progressively liberalized in accordan ce with the transition period.   
(h) Tourism and Travel Services and Recrea tional, Cultural and Sporting Services 
123. In the EU's GATS schedule, for hotels, restaurants and catering, mode 1 is unbound except 
for catering for a number of EU Member States.  For mode 3, seven EU Member States have 
scheduled reservations on market access, e.g., requ iring authorization in or der to protect areas of 
particular historic and artistic interest  For trav el agencies and tour operators services, mode 1 is 
unbound for a handful of EU Member States, while mode 3 is subject to licensing or economic needs 
tests for five EU Member States.  In addition, fo r a few EU Member States, cross-border provision of 
such services requires establishment.  Tourist gui des services is unbound in modes 1-3 for a majority 
of the newly acceded EU Member States, while mod es 1-3 of other tourism and travel related services 
are unbound for all EU Member States except Latv ia.  For mode 4, ICTs and BVs are unbound for 
some EU Member States, while CSS is unbound for all EU Member States except for travel agencies WT/REG236/1 
Page 40 
 
 
  and tour operators services which has been committ ed by a number of EU Member States subject to 
limitations indicated in the horizontal section.   
124. In the EU's GATS schedule, for entertainment services, mode 1 is unbound for all but three 
EU Member States, while mode 3 is unbound for seven.  Modes 1-3 of news and press agency 
services is unbound for most recently acceded EU Member States, while in France, Italy and Portugal 
foreign participation in companies publishing publications  is subject to an equity ceiling.  For almost 
all EU Member States, modes 1-3 of libraries, archives, museums and other cultural services is 
uncommitted.  In the case of sporting and other r ecreational services, modes 1-3 are uncommitted for 
a number of the recently acceded EU Member States.  As regards mode 4, ICTs, BVs and CSS are 
unbound for a number of EU Member States. 
125. Under the Agreement, there are no national tr eatment restrictions on tourism and travel 
services, and recreational, cultural and sporting services for mode 3 ("establishment" under the 
Agreement).  Further, the provision of such servi ces through other modes of supply was bound at the 
existing level of restrictiveness and will be progressi vely liberalized in accordance with the transition 
period.   
(i) Transport Services 
126. In the EU's GATS schedule, maritime transport and inland waterways transport services are 
uncommitted in modes 1-3 for most EU Member St ates (exceptions are some of the newly acceded 
EU Member States which have in some cases, with the exception of rental of vessels with crew which 
is not listed in the EU's schedule, made full commitmen ts in this sub-sector).  In air transport services, 
rental of aircraft with crew is unbound in mod es 1-3 for all EU Member States except Poland. 
Maintenance and repair of aircraft and parts thereo f, sales and marketing and computer reservations 
systems are fully committed in modes 2-3 in most EU Member States (for the most part, the newly acceded Member States have not bound these sub-sect ors).  Space transport is not committed in the 
EU GATS schedule.  For rail transport services, pass enger and freight transportation and rail freight 
agency and forwarding services are not committed for most EU Member States.  Modes 2-3 of 
maintenance and repair of rail tran sport equipment is fully committed for the majority of EU Member 
States, while pushing and towing services under rail tr ansport services has not been scheduled.  In 
road transport services, mode 3 of passenger and frei ght transportation is either unbound or subject to 
reservations in the form of authorization or econom ic needs tests, while maintenance and repair of 
road transport equipment and supporting services for road transport equipment are unbound in modes 
1-3 for a number of EU Member States.  Rental of commercial vehicles with operator under road 
transport services has not been scheduled.  With the exception of Hungary and Lithuania, pipeline 
transport is unbound for all EU Member States.  Serv ices auxiliary to all modes of transport and other 
transport services are uncommitted for a number of EU Member States.  For mode 4, ICTs, BVs and 
CSS are for the most part unbound for most EU Me mber States except some  of the newly acceded 
Member States which have made commitments subject to horizontal limitations. 
127. Under the Agreement, Article 55 specifies that  the provisions on establishment do not apply 
to air transport services, inland waterways transport services and maritime cabotage services.  The 
supply of land transport services is governed by Protocol 4 which seeks to ensure unrestricted road transit traffic across Montenegro and the EU, the application of the principle of non discrimination 
and progressive harmonization of Montenegrin tran sport legislation with that of the EU.   
128. With regard to international ma ritime transport the Parties undertake to apply effectively the 
principle of unrestricted access to the market and traffic on a commercial basis (Article 61.2).  The 
Parties agree not to introduce cargo-sharing clauses in future bilateral Agreements with third 
countries.  The Parties agree to grant national treatment for the ships operated by nationals or 
companies of the other Party with regard to  access to ports open to international trade.  WT/REG236/1 
 Page 41 
 
 
  129. The Parties agree that mutual market access in ai r transport will be dealt with by the European 
Common Aviation Area (ECAA).  Prior to the conclusi on of the ECAA, the Parties agree not to take 
any measures or actions which are more restrictiv e or discriminatory as compared with the situation 
existing prior to the entry into fo rce of the Agreement.  Montenegro agrees to adapt its legislation, 
including administrative, technical and other rules, to that of the Community existing at any time in 
the field of air, maritime, inland waterway a nd land transport insofar as it serves liberalization 
purposes and mutual access to markets of the Partie s and facilitates the movement of passengers and 
goods (Article 61.6). 
(j) Other Services 
130. Under its GATS schedule, the EU has listed so me beauty related services (i.e. hairdressing 
services, cosmetic treatment, manicure and pedicu re services, other beauty treatment services, and 
services related to the sale of equipment or to th e assignment of a patent) though with many unbound 
commitments in the four modes for most EU Member States.  Under the Agreement, no limitations on 
these sub-sectors have been listed. 
E. REGULATORY PROVISIONS ON TRADE IN SERVICES  
1. Domestic regulation 
131. There is no provision per se  in the Agreement on domestic regulation in line with 
GATS Article VI.  However, the approximation process also covers measures governed by GATS 
Article VI.  
2. Recognition 
132. In order to make it easier for EU and Monteneg rin nationals to take up regulated professional 
activities in the territory of the Parties, the Stab ilization and Association Council shall examine and 
take the steps necessary for the mutual re cognition of qualifications (Article 57).30   
3. Approximation of Laws 
133. The Parties recognize the importance of the approximation of Montenegro's existing 
legislation with that of the EU.  Montenegro will gradually make its existing and future legislation 
compatible with the EU acquis .  Approximation was to begin on the date of signature of the 
Agreement and extend to all elements of the EU acquis  mentioned in the Agreement by five years 
after the entry into force of the Ag reement, i.e. by 2014 (Article 72).31   
4. Subsidies and State-aid 
134. The Agreement has no specific provisions on subsidies in trade in services. 
                                                      
30 According to Montenegro, a commission has been formed to work on the Law on Regulated 
Professions in accordance with Direc tive EC/36/2005. The members of th e commission include representatives 
of the Ministry of Education and Science, Ministry of Labour and Social Affairs, Chamber of Commerce, Union 
of Employers of Montenegro, Federation of Free Trade Unions, Association of Trade Unions of Montenegro. 
The work on the Law is currently underway. In accord ance with the Programme of Government Agenda, the 
adoption of this Law is planned for the fourth quarter of the year. 
31 According to Montenegro, it continues to fulfil its  obligations in accordance with Article 72 of the 
Agreement, which refers to conformity of national legi slation with the EU acquis,  in the area of competition 
(Art 73), intellectual, a nd industrial property  rights (Art 75), st andardization, metr ology, accreditation and 
conformity assessment (Art 75), consumer protection and goods safety standards (Art 78). WT/REG236/1 
Page 42 
 
 
  5. Safeguards 
135. The Agreement has no specific provisions on safeguards in trade in services. 
V. GENERAL PROVISIONS OF THE AGREEMENT 
A. TRANSPARENCY  
136. There are no provisions per se  on transparency.  However, several chapters call for closer 
cooperation between the Parties:  Article 46 refers to the conseque nces of a failure to provide 
administrative cooperation to prevent fraud and irregu larities in customs and related matters.  Title II 
deals with political dialogue between the Parties in cluding through meetings of senior officials from 
the Parties, other diplomatic channels such as the United Nations, the OSCE, the Council of Europe 
etc. and at the parliamentary level under the St abilization and Associati on Parliamentary Committee 
established under Article 125.  Cooperation issues in  a wide range of areas are also covered under 
Title VIII (Cooperation Policies), Title IX (financ ial cooperation) as well as under Title VII which 
deals with Justice, Freedom and Security. 
137. Efforts to ensure transparency  in the area of State Aid are also specified in Article 73 inter 
alia by providing the other Party with a regular a nnual report or equivalent based on the methodology 
and presentation of the Community survey on State Aid.   In addition, upon request by the other Party, 
a Party must provide information on particular indi vidual cases of public aid (Article 73(5)).  With 
respect to the specific case of state aid to the steel  industry by Montenegro, moreover, Protocol 5 to 
the Agreement calls for assessment of Monteneg ro's National Restructuring Programme and 
individual business plans for each company benefiti ng from state aid to ensure that they are in 
compliance with paragraph 3 of the Protocol.  Each Party will ensure full transparency with respect to 
state aid and a continuous exchange of information will take place with regard to the implementation 
of Montenegro's restructuring plan and the individual business plans. 
B. CURRENT PAYMENTS AND CAPITAL MOVEMENTS  
138. Any payments and transfers on the current account  of the balance of payments between the 
Parties are to be authorized in freely convertib le currency in accordance with the provisions of 
Article VIII of the Articles of Agreement of the IMF.   
139. With respect to transactions on the capital and financial account, from the date of entry into 
force of the Agreement, the Parties will ensure the free movement of capital relating to direct 
investment in companies formed in accordance with  the laws of the host country and in accordance 
with the provisions of Chapter II of Title V (Estab lishment), and the liquidatio n or repatriation of the 
investment and of any profit stemming from it.  The Parties will also ensure the free movement of 
capital relating to credits from commercial transactions or to the provision of services in which a 
resident of one of the Parties is participating, a nd to financial loans and credit with maturity of over 
one year.  The Parties also ensure, from the entry in to force of the Agreement, the free movement of 
capital relating to portfolio investme nt and financial loans and credit with maturity of less than one 
year. 
140. Montenegro agreed, from the date  of entry into force of the Agreement, to grant national 
treatment to EU nationals acquiring real estate in  its territory.  The Parties also commit to not 
introducing any new restrictions on the movement of  capital and current paym ents between residents 
of the EU and Montenegro and to not making the exis ting arrangements more restrictive.  Nothing in 
the Agreement will prevent economic operators of the Parties from benefiting from any more 
favourable treatment provided in any existing bilate ral or multilateral agreement involving the Parties 
to the Agreement.   WT/REG236/1 
 Page 43 
 
 
  141. During the first year of entry into force of the Agreement, the Parties shall take measures 
permitting the creation of conditions necessary for the further gradual application of EU rules on the 
free movement of capital.  By the end of the second y ear following the date of entry into force of the 
Agreement, the Stabilization and Association Council will determine the modalities for full 
application of EU rules on the movement of capital in Montenegro. 
C. EXCEPTIONS  
142. Within the scope of the Agreement, the Parties undertake to ensure that their natural and legal 
persons have non-discriminatory access in relation to their own nationals, to the competent courts and 
administrative organs of the Parties to defend th eir individual and property rights (Article 126).  
However, the Agreement does not prevent the Par ties from taking any measures considered necessary 
to prevent the disclosure of information contrary to  their essential security interests;  which relate to 
the production of, or trade in arms, munitions or war materials or to research, development or 
production indispensable for defence purposes, provi des that the measures do not impair competition 
conditions for products not intended specifically for military purposes;  and measures considered 
essential to security in the event of serious internal  disturbances affecting the maintenance of law and 
order, in times of war or serious international te nsions constituting a threat of war or to fulfil 
international obligations for maintaining p eace and international security (Article 127). 
143. Article 45 also authorizes restrictions and prohi bitions on imports, exports or goods in transit 
grounds of public morality, pub lic policy or public security;  the protection of health and life of 
humans, animals or plants;  the protection of nationa l treasures of artistic, historical or archaeological 
value or the protection of intellectual, industrial a nd commercial property, or rules relating to gold and 
silver.  The restrictions are not to constitute an arbitrary discrimination or disguised restriction on 
trade between the Parties. 
D. ACCESSION  
144. There are no provisions in the Agreement for accession by third parties.  The Agreement, 
which is of indefinite duration may be terminated within six months of either Party denouncing the 
Agreement through a written notification to the othe r Party.  The Agreement may also be suspended 
by either Party, with immediate effect, in the case of non-compliance by the other Party of one of the 
essential elements of this Agreement (Article 133).  
E. INSTITUTIONAL FRAMEWORK  
145. Supervision of the application and implementati on of the Agreement is to be carried out by 
the Stabilization and Association Council, established unde r Title X of the Agreement.  It will meet at 
an appropriate level at regular intervals and as re quired, to examine any major issues arising under the 
framework of the Agreement and an y other bilateral or international issues of mutual interest. 
146. The Council will be composed of members of  the Council of the European Union, the 
European Commission and of the Government of M ontenegro who may arrange to be represented in 
accordance with the conditions  laid down in the Counc il's rules of procedure.  It shall be chaired in 
turn by a representative of each Pa rty, in accordance with provisions in its rules of procedure.  In 
addition, in matters that concern it, the European In vestment Bank shall take part in the work of the 
Council as an observer. 
147. The Council has the power to take decisions a nd make appropriate recommendations within 
the scope of the Agreement in the cases provided for therein.  Its decisions are binding on the Parties 
which shall take the measures necessary to im plement the decisions.  Its decisions and 
recommendations are to be drawn up by agreement between the Parties (Article 121).  The Council WT/REG236/1 
Page 44 
 
 
  will be assisted in the performance of its duti es by a Stabilization and Association Committee, 
composed of representatives of the Council of th e European Union and of representatives of the 
European Commission and the Government of Monten egro (Article 122).  The Council will determine 
the duties of the Stabilization and Association Comm ittee in its rules of procedure and shall include 
the preparation of meetings of the Council and how the Committee will function.  The Council may 
delegate to the Committee any of its powers.  In such cases, the Committee w ill take its decisions in 
accordance with the conditions laid down for the Stabilization Council in Article 121.  The Council 
may also set up other special committees or bodies to assist it in carrying out its duties.  The composition and duties of such committees or bodies will be determined in the Council's rules of 
procedures (Article 124). 
148. The Stabilization and Association Committee ma y create sub-committees which shall be set 
up before the end of the first year after the date of entry into force of the Agreement.  In this regard 
the following sub-committees have been created: Trad e, Industry, Customs and Taxes to monitor the 
free movement of goods, taxation, entrepreneurship  and industrial policy, customs union and external 
relations;  Agriculture and Fisheries for agriculture and rural development, food safety, veterinary and 
phytosanitary policy and fisheries;  Internal Ma rket and Competition for the right of establishment 
and freedom to provide services, public procur ement, commercial law, intellectual property, 
competition policy, financial services, and health and consumer protection;  Economic and Financial 
Affairs and Statistics for the free movement of ca pital, economic and moneta ry policy, statistics, 
financial control, and financial and budget issues;  Transport, E nvironment, Energy and Regional 
Development for transport policy, energy, regional po licy and coordination of structural instruments, 
environment, and trans-European network;  Jus tice, Freedom and Security (including issues on 
migration) on judicial and fundamental rights, justice, freedom and security, foreign, security and defence policy and institutions;  a nd Innovation, Technical developmen t and Social Policy for the free 
movement of workers, information society and the media, social affairs and employment, science and 
research and education and culture.
32  The last two of these sub-committees were established once the 
SAA entered into force;  pending entry into for ce they functioned in the form of an enhanced 
permanent dialogue.  In addition, a sub-committ ee to address migration issues is still to be 
established.   
 
149. A Stabilization and Association Parliamentar y Committee was also established by the 
Agreement and is the forum for Members of the Mo ntenegro and European Parliaments to meet and 
exchange views (Article 125).  It will monitor th e implementation of the SAA.  It shall meet at 
intervals as it determines and shall consist of memb ers of the Montenegro and European Parliaments.  
It will establish its rules of procedure and shall be chaired in turn by a memb er of the European and 
Montenegro Parliaments in accordance with these rul es of procedure.  At its first session in Brussels 
on 27 and 28 September 2010, the SAA Parliame ntary Committee welcomed the development of 
inter-Parliamentary relations between the Parties, improvements in the functioning of the Parliament 
of Montenegro and continued work  on strengthening political consensus, in particular on European 
integration issues.  The Government's continued efforts to align its economic legislation with 
European standards and pursue structural refo rms were also welcomed and the Montenegrin 
authorities were called upon to strengthen environmen tal protection in line with the Constitution as 
well as budgetary reforms in line with the Maastricht criteria. 
                                                      
32 Pending entry into force of the SAA, in accordan ce with Article 45 of the Interim Agreement, the 
Interim Committee at its first meeting in Brussels on 22 January 2008, adopted rules of procedure, including 
rules on the operation of these five temporary s ubcommittees.  The Sub-Comm ittees are composed of 
representatives of the European Commission and Government of Montenegro chaired alternately by both, 
pursuant to Article 1 of the rules.  WT/REG236/1 
 Page 45 
 
 
  F. DISPUTE SETTLEMENT  
150. Any dispute between the Parties relating to the application of interpretation of the Agreement 
must be referred to the Stabilization and Associ ation Council.  In addition, the SAA Committee can 
be involved in consultations between the Parties. 
151. The procedures for resolving disputes is set out in Article 130 while Protocol 7 of the 
Agreement contains provisions on arbitration.  Under Article 130, where a Party considers that a 
measure adopted by the other Party or a failure by the other Party to act, constitutes a breach of its 
obligations under the Agreement, the formal request  to the Stabilization and Association Council shall 
give the reasons for this opinion and indicate any "appropriate measures" that it would adopt as 
provided for in Article 129 (4) of the Agreement.33  The measures shall be notified immediately to the 
Stabilization and Association Council and consultations shall be held if the other Party so requests 
with a view to seeking a solution acceptable to the Parties (Article 129(4)).  Following consultations 
with the Council, to which the Parties will provide all relevant information required for a thorough 
examination of the situation, the Council takes a binding decision or declares the end of the dispute. 
152. The objective of Protocol 7 is to avoid and settle  disputes between the Parties with a view to 
arrive at mutually acceptable solutions.  It app lies only to differences in the interpretation and 
application of provisions on the free movement of  goods (Title IV except Articles 33; 40;  41(1), 
41(4) and 41(5);  and 47); and other trade and tr ade related provisions (Articles 76(1), 76(2), and 
76(3)-76(6). 
153. Where the Parties fail to resolve a dispute, the complaining Party may submit a request in 
writing for the establishment of an arbitral panel to the Party complained against and the Council.  Its 
request must include the subject of the dispute an d the measure adopted by the other Party or the 
failure to act, which it considers to be in breach of these provisions.  The Parties will consult within 
10 days of the request for the establishment of a panel to agree on its composition which will consist 
of three arbitrators.  The Panel is established on the date on which the chair of the panel is informed of 
the appointment of the panellists as agreed by the Parties, or the date of their selection. 
154. The Panel will notify the Parties and the Council of its ruling within 90 days (or at the latest 
120 days) of its establishment.34  In cases involving perishable prod ucts, every effort should be made 
to issue a ruling within 45 days of establishm ent of the panel and an y delay should not exceed 
100 days.35  The ruling shall set out the findings of fact, the applicability of the relevant provisions of 
the Agreement and the rationale behind the find ings and conclusions.  It may also contain 
recommendations on the measures to be adopted to co mply with the ruling (Article 5.3).  The Party 
complained against shall notify the complaining Part y no later than 30 days after the notification of 
the Panel ruling, of the reasonable period of time for compliance with the ruling.  If the Parties 
disagree on this reasonable period of time, the co mplaining Party may request the Council within 
20 days of the Panel's ruling to reconvene the Pane l to determine the reasona ble period of time.  The 
Panel shall notify its ruling within 20 days  from the date of submission of the request. 
 
 
                                                      
33 In the selection of these appropriate measures, which must be communicated to the Stabilization and 
Association Council in advance, priority must be given to those "which least disturb the functioning of the 
Agreement."  
34 In case there is a request for a delay beyond 90 days, the reasons for any delay must be given in 
writing by the Chairman of the Panel to the Council. 
35 The Panel may give a preliminary ruling within 10 days of its establishment whether or not it deems 
the case to be urgent. WT/REG236/1 
Page 46 
 
 
  155. The Party complained against shall notify the other Party and the Council before the end of 
the reasonable period of time of any measures it has ta ken to comply with the ruling (Article 8.1).  If 
it fails to do so, or if the arbitration panel rules that  the measure is not in conformity with the Party's 
obligations under the Agreement, the Party complained  against shall, if requested by the complaining 
Party, present an offer for temporary compensation (Article 9.1).  If the Parties disagree about the 
compatibility of the measure with the Panel ruling,  the complaining Party may request the original 
Panel to rule on the matter.  The Panel will issu e a ruling within 45 days of the date of its 
re-establishment (Article 8.2).   
156. In the event of non-compliance by the Party compla ined against, Article 9 requires that Party, 
if requested by the complaining Party, to presen t an offer of temporary compensation.  If no 
agreement on compensation is reached within 30 days of  the end of the reasonable period of time or if 
the Panel rules that the measures taken by the Pa rty complained against does not conform with the 
Agreement, the complaining Party is entitled to notif y the other Party and the Council, of its intention 
to suspend the application of bene fits granted under Article 2 of the Protocol (see scope of coverage 
above) at a level equivalent to th e adverse economic impact caused by the violation (Article 9.2).  The 
benefits may be suspended 10 days after notific ation, unless the Party complained against has 
requested arbitration.  If the Party complained ag ainst believes that the suspended benefits are not 
equivalent to the adverse economic impact of the violation, it may request the chairperson of the 
original Panel in writing, within 10 days of th e notification of suspension of benefits, for its 
reconvening (Article 9.3).  The Panel will notify its ru ling on the level of suspension of benefits to the 
Council within 30 days of submission of the request.  During this time, benefits cannot be suspended.  
Any suspension of benefits following the report by th e Panel will be consistent  with its ruling.  In 
general, the suspension of benefits will be tem porary and be applied only until any measure found to 
violate the Agreement has been withdrawn or amended so as to bring it into conformity with the 
Agreement or until the Parties have agreed to settle the dispute (Article 9.4).  Chart V.1 contains a 
synopsis of the dispute settlement process.  WT/REG236/1 
 Page 47 
 
 
  Chart V.1 – Synopsis of dispute settlement process 
 
157. If following implementation and notification of any measure taken by the Party complained 
against to comply with the ruling of the arbitr ation panel, the Parties do not agree with the 
compatibility of the measure with the Agreement with in 30 days of the notification, the complaining 
Party may request the chairman of the original Pa nel to reconvene the Panel and inform the other 
Party and the Council at the same time.  The Panel w ill notify a ruling within 45 days of the request.  
If it rules that any measure taken to comply is not in conformity with the Agreement, it will determine 
whether the complaining Party can continue the susp ension of benefits at the original or different 
level.  The suspension of benefits will be terminat ed if it rules that the measures comply with its 
original ruling (Article 10.1).   
158. The meetings of the Arbitral Panel shall be  open to the public under rules of procedure 
established by the Council, unless the Panel decides otherwise on its own or upon request from the 
Parties.  The rules of procedure as well as a comp lementary code of conduct are to be established by 
the Council no later than six months after the entry into  force of the Protocol (Article 11).  At its first Request for consultations   
Request for Arbitral Panel  
Notification of reasonable 
period of time and measures 
to comply with ruling by 
Party complained against  Panel ruling in 90 days from 
composition (45 days for perishable 
agricultural goods) Max 10 days for composition of panel Request to reconvene Arbitral Panel if no 
agreement 
Arbitral Panel reconvened Parties to agree on reasonable period and 
measures to comp ly with ruling 
Stabilization and Association Council 
binding decision or dismissal 
Request by Party 
complained against to 
reconvene Arbitral 
Panel 
Panel ruling Stabilization and Association Council binding decision or dismissal 
If no resolution 
30 days 20 days 45 days 
Ruling on 
reasonable period Ruling on 
compatibility of 
measures 
30 days after end of 
reasonable period
If no agreement on compensation, 
notification of suspension of 
benefits
10 days 
Suspension of benefits 
30 days WT/REG236/1 
Page 48 
 
 
  meeting the Stabilization and Association council adop ted Rules of Procedure for its work.  The Panel 
may also, at the request of a Party or on its own initiative, seek information from any source or the 
opinion of experts as it believes to be appropriate for its work.  The information obtained in this 
manner must be shared with the Parties and open to comment.  Interested parties are also permitted to 
submit amicus curiae  briefs to the Panel according to ru les of procedure established for its 
proceedings by the Council (Article 12).  The Pane l shall apply and interpret the provisions of the 
Agreement in accordance with the customary rules of interpretation of public international law, 
including the Vienna Convention on the Law of Trea ties, rather than an interpretation of the 
acquis Communautaire  (Article 13).  All Panel decisions will be  taken by majority vote and shall be 
binding on the Parties.  They will be notified to the Parties and to the Council which will make them 
public unless it decides by consensu s not to do so (Article 14). 
159. Finally, once Montenegro accedes to  the WTO, arbitral panels set up under the Protocol shall 
not rule on disputes on the Parties' rights and oblig ations under the Agreement establishing the WTO.  
Furthermore, while the Parties have the right to  bring disputes either under the WTO's DSU or under 
the Protocol, once Montenegro accedes to the WTO,  where a Party has instituted a dispute either 
under Article 3(1) of the Protocol or the WTO Agre ement, it may not institute a dispute regarding the 
same measure in the other forum until the first pr oceeding has ended.  The Agreement also does not 
preclude the implementation by either Party of the suspension of obligations authorized by a 
WTO dispute panel (Article 16). 
G. RELATIONSHIP WITH OTHER AGREEMENTS CONCLUDED BY THE PARTIES  
160. The Agreement does not preclude the maintenance or establishment of customs unions, free 
trade areas or arrangements for frontier trade except if they alter the trade arrangements provided for 
by the Agreement.  During the transition period of 5 years, the Agreement will not affect the implementation of preferential agre ements in goods concluded betw een one or more Member States 
of the EU and Serbia and Montenegro, or resu lting from the bilateral agreements mentioned in 
Title III of the Agreement (Articles 14-17) concl uded by Montenegro to promote regional trade. 
161. Under Title III of the Agreement, Monteneg ro commits to actively promote regional 
cooperation.  The EU's assistance programmes may support projects having a regional or cross-border 
dimension to assist in meeting this commitment.  Montenegro agrees to fully implement its existing 
bilateral agreements negotiated pursuant to th e Memorandum of Understanding on Trade Facilitation 
and Liberalization signed in Brussels on 27 June 20 01 with Serbia, and the Central European Free 
Trade Agreement (CEFTA) signed in Bucharest on 19 December 2006.  Montenegro will begin 
negotiations with other countries in the region that  have already signed SAAs with the EU, with a 
view to concluding bilateral c onventions on regional cooperation, including the establishment of free 
trade areas, consistent with the relevant WTO pr ovisions (Article 15).  The conventions are to be 
concluded within two years of entry into force of th e Agreement.  According to the Parties there have 
been no developments in this regard.  Once these S AAs have been signed, Montenegro shall initiate 
negotiations with the remaining countries in the region.  Montenegro will also pursue regional 
cooperation in other areas covered by the Agreemen t of common interest with the other States 
covered by the SAA process (Article 16).  Such cooperation will always be compatible with the 
principles and objectives of the Agreement. 
162. Montenegro should also foster cooperation and conclude a convention with any country 
candidate for EU accession in any of the fields of cooperation covered by the Ag reement.  It will also 
start negotiations with Turkey which has a customs un ion with the EU, with a view to concluding, on 
a mutually advantageous basis, an Agreement estab lishing a free trade area between the two Parties in 
accordance with Article XXIV of the GATT 1994 (Artic le 53, SAA 17).  The agreement with Turkey 
entered into force on 1 March 2010 and was notified to the WTO under GATT Article XXIV 
(Article 17).  The status of this and other regional trade agreements currently in force for both Parties,  WT/REG236/1 
 Page 49 
 
 
  both notified and not notified to the WTO as at 1 September 2010 is presented in Table V.1 below.  
With regard to the Agreement with Papua New Guinea, which entered into force on 20 December 
2009, the EU has indicated that the Parties are curre ntly completing procedures to make a notification 
to the WTO. 
Table V.1 
European Union and Montenegro :  Participation in other RTAs (notified and non-notified in force), as of April 2011  
GATT/WTO Notification 
Partner / Agreement Date of entry  
into force Type of 
agreement Year WTO Provision 
EUROPEAN UNION  
Serbia 01.02.10 Goods 2010 GATT Art. XXIV 
Cameroon 01.10.09 Goods 2009 GATT Art. XXIV 
Albania  01.04.09 Services 2009 GATS Art. V 
Côte d'Ivoire 01.01.09 Goods 2008 GATT Art. XXIV 
CARIFORUM States 01.11.08 Goods & Servi ces 2008 GATT Art. XXIV & GATS Art. V 
Bosnia and Herzegovina 01.07. 08 Goods 2008 GATT Art. XXIV 
Albania 01.12.06 Goods 2007 GATT Art. XXIV 
Algeria 01.09.05 Goods 2006 GATT Art. XXIV 
Chile 01.03.05 Services 2005 GATS Art. V 
Croatia 01.02.05 Services 2009 GATS Art. V 
Egypt 01.06.04 Goods 2004 GATT Art. XXIV 
FYROM 01.04.04 Services 2009 GATS Art. V 
Lebanon 01.03.03 Goods 2003 GATT Art. XXIV 
Chile 01.02.03 Goods 2004 GATT Art. XXIV 
Jordan 01.05.02 Goods 2002 GATT Art. XXIV 
San Marino 01.04.02 Goods 2010 GATT Art. XXIV 
Croatia 01.03.02 Goods 2002 GATT Art. XXIV 
FYROM 01.06.01 Goods 2001 GATT Art. XXIV 
Mexico 01.10.00 Services 2002 GATS Art. V 
Mexico 01.07.00 Goods 2000 GATT Art. XXIV 
Israel 01.06.00 Goods 2000 GATT Art. XXIV 
Morocco 01.03.00 Goods 2000 GATT Art. XXIV 
South Africa 01.01.00 Goods 2000 GATT Art. XXIV 
Tunisia 01.03.98 Goods 1999 GATT Art. XXIV 
Palestinian Authority 01.07.97 Goods 1997 GATT Art. XXIV 
Faeroe Islands 01.01.97 Goods 1997 GATT Art. XXIV 
Turkey 01.01.96 Goods 1995 GATT Art. XXIV 
European Economic Area 01.01.94 Services 1996 GATS Art. V 
Andorra 01.07.91 Goods 1998 GATT Art. XXIV 
Syria 01.07.77 Goods 1977 GATT Art. XXIV 
Norway 01.07.73 Goods 1973 GATT Art. XXIV 
Iceland 01.04.73 Goods 1972 GATT Art. XXIV 
Switzerland – Liechtenstein 01. 01.73 Goods 1972 GATT Art. XXIV 
Overseas Countries and Territories 01.01.71 Goods 1970 GATT Art. XXIV 
Papua New Guinea 20.12.2009 Goods Not notified 
Table V.1 (Cont'd)WT/REG236/1 
Page 50 
 
 
  GATT/WTO Notification 
Partner / Agreement Date of entry  
into force Type of 
agreement Year WTO Provision 
MONTENEGRO 
Turkey 01.03.10 Goods 2010 GATT Art. XXIV 
CEFTA 01.05.07 Goods 2007 GATT Art. XXIV 
 
CEFTA: Central European Free Trade Agreemen t. Members are Albania, Bosnia and Her zegovina, Croatia, Former Yugoslav Republic of  
Macedonia (FYROM), Moldova, Montenegro, Serbia and the Un ited Nations Interim Administration in Kosovo (UNMIK). 
 
Source: WTO Secretariat.  
 
H. GOVERNMENT PROCUREMENT  
163. The Parties consider the application of non-di scrimination and reciprocity in the award of 
public procurement, following in particular the WTO ru les, to be desirable (Article 76).  Each Party 
will grant access to contract award procedures for companies from the other Party, whether 
established or not in the Party according to its pr ocurement rules, under treatment no less favourable 
than that provided to its owns co mpanies, from the entry into force of the Agreement.  The EU will 
also provide such treatment to contracts in the utilities sector once Montenegro has adopted legislation 
introducing Community rules.  According to Mont enegro, such harmonization will occur with the 
adoption of a new Public Procurement Law,  the process for which commenced in 2011. 
164. The Stabilization and Association Council sha ll periodically examine whether Montenegro 
can extend contract award procedures in Monteneg ro for all companies from the EU.  Montenegro 
will report annually to the Interim Committee on me asures taken to enhance transparency and to 
provide for judicial review of deci sions taken in public procurement. 
I. INTELLECTUAL PROPERTY RIGHTS  
165. The Parties confirm the importance they attach to ensuring adequate and effective protection 
and enforcement of intellectual, industrial and co mmercial property rights pursuant to the provisions 
in Article 75 of the Agreement and Annex VII.  They agree that from the date of  entry into force they 
shall grant to each others' companies and nationals , in respect of the recognition and protection of 
intellectual, industrial and commercial property, tr eatment no less favourable than that granted by 
them to third parties under bilateral agreements.  Montenegro furthermore undertakes to take any 
necessary measures to guarantee no later than five  years following the entry into force of the 
Agreement, a level of protection for intellectual, industrial and commercial property rights similar to 
that existing in the EU, including effective means for enforcement.  Montenegro also committed to 
accede during this time frame to the multilatera l conventions on intell ectual, industrial and 
commercial property rights referred to  in Annex VII.  It acceded to all but five of these conventions 
on 3 June 2006 and the European Patent Convention became effective on 1 March 2010.36  Despite 
not yet being a Member of the WTO, Montenegro states that it applies its laws on intellectual property 
in accordance with the TRIPS Agre ement.  The Stabilization and Association Council may also oblige 
Montenegro to accede to specific multilateral conventi ons in this area.  This appears not to have 
happened thus far. 
166. If problems relating to intellectual, industrial and commercial property rights affect trading 
conditions they shall be referred urgently to the St abilization and Association Council at the request of 
either Party, with a view to reaching a mutually satisfactory solution (Article 75(5)). 
                                                      
36 Montenegro is not yet a party to the Patent Law Treaty, the UPOV Convention for which it plans to 
start accession procedures soon;  the St rasbourg and Vienna Agreements are e xpected to be ratified in 2011.    WT/REG236/1 
 Page 51 
 
 
  167. Under Article 33, Montenegro shall provide pr otection for the geographical indications (GIs) 
of the EU registered in the EU under Council Regul ation (EC) No. 510/2006 of 20 March 2006 on the 
protection of GIs and designations of origin for agri cultural products and foodstuffs (other than wine 
and spirits).  It shall prohibit any use in its territo ry of, or registration of a trademark for, the names 
protected in the EU for comparable products not complying with the GIs specification.  This will 
apply even where the true GI of the good is indicated  or is used in translation or if the name is 
accompanied by terms such as "kind", "type", "style", "imitation", "method" or expressions of the 
sort.  Such trademarks, if registered in Monten egro or established by use, except for trademarks 
registered or established by use in Montenegro whic h are owned by nationals of third countries, shall 
no longer be used after 1 January 2009.  Any GIs protected in accordance with terms customary in 
common language as the common name for such good s in Montenegro shall also cease on 1 January 
2009.   
168. In addition to Article 33, Protocol 2 to the Agreement includes an agreement in Annex II to 
the Protocol, on reciprocal recognition, protection an d control of wine, spirits drinks and aromatised 
wine names.  The Protocol provides for the prot ection of names, geographi cal indications (GIs), 
traditional expressions and trademarks.  Under Article  4 of the Protocol pr otection is extended to 
references to the name of the Member State of the EU in which the wine, spirit drink and aromatised wine originates or other names to indicate the Member State, GIs listed in Appendix 1, Part A of the 
Protocol and traditional expressions lis ted in Appendix 2, Part A of the Protocol are to be protected.   
For Montenegro, references to the EU Member St ates and other names used to indicate a Member 
State for identifying the origin of wine, spirit drinks and aromatised wine are to be restricted to such 
products originating in the EU Member States concer ns and shall not be used by the EU other than 
under the conditions provided for by its laws and re gulations.  For the EU, references to Montenegro 
and other names used to indicate Montenegro for the purpose of identifying wine, spirit drinks and 
aromatised wine are to be restricted to such produc ts originating in Montenegro and shall not be used 
by Montenegro other than under the conditions provide d for by its laws and re gulations (Article 5). 
169. With regard to GIs, both Parties have liste d wines, spirit drinks and aromatised wines 
originating in their territories in Appendix I (Part A for the EU and Part B for Montenegro) that are to 
be protected and not be used other than under the conditions provided for by their laws and 
regulations.  All measures are to be taken for the r eciprocal protection of the names referred to in the 
Appendix and to that end the Parties are to make use of the appropriate le gal means under Article 23 
of the WTO TRIPS Agreement to ensure effective protection and prevent GIs being used to identify 
wines, spirit drinks and aromatised wines not covere d by the descriptions in the Agreement.  Article 
6(5) of the Protocol provides the same protection for registered GIs as those available under Article 
23.1 of the TRIPS Agreement even when the true origin  of the wine, spirit drink or aromatised wine is 
indicated;  the GI in question is used in translation;   the name is accompanied by terms such as "kind", 
"type", "style", "imitation", "method" or other expressi ons of the sort;  and the protected name is used 
for products under HS 20.09 (Article 6(5)). 
170. For GIs homonymous with those in Appendix 1 the provisions in the Agreement are identical 
to those provided under Article 23.3 of the TRIPS Agreement (Articles 6(6) and 6(7)). 
171. The Agreement does not prevent a Party to pr otect a GI of the other Party listed in 
Appendix 1 which is not, or ceases to be, protected in  its country of origin or which has fallen into 
disuse in that country.  As foreseen under Article 24(6) of the TRIPS Agreement, once the Agreement 
enters into force, the Parties shall no longer deem that the protected GI name s listed in Appendix 1 are 
customary in the common languages of the Parti es as a common name for wines, spirit drinks and 
aromatised wines (Article 6(10)). 
 WT/REG236/1 
Page 52 
 
 
  172. Article 7 of the Protocol ensures that the traditional expressions for the EU listed in 
Appendix 2 to the Protocol shall not be used for the description or presentation of wine in 
Montenegro;  or for the description or presentation of wine originating in the EU other than in relation 
to wines of the origin and the category and in  the language listed in Appendix 2 and under the 
conditions provided for by the laws and regulations  of the EU.  Montenegro shall take necessary 
measures to protect traditional expressions mentioned in  Article 4 of the Protocol (protected names) 
and used for the description and presentation of wines originating in the EU.  To that end Montenegro 
shall provide appropriate legal means to ensu re effective protection and prevent traditional 
expressions from being used to describe wines not entitled to such expressions, even where 
accompanied by expressions such as "kind", "type",  "style", "imitation", "method" or the like. 
173. As provided for in Article 22.3 of the TRIPS Agre ement, Article 8 of the Protocol permits the 
Parties to refuse the registration of a trademark for a wine, spirit drink or aromatised wine, which is 
identical with or similar to or contains or consists  of a reference to a GI protected under Article 4 of 
the Protocol, with wine, spirit drink or aromatised wi ne not having this origin and not complying with 
the relevant rules governing its use.  The Parties ma y also refuse the registration of a trademark for a 
wine which contains or consists of a traditional expression protected under the Agreement, if the wine 
is not one to which the traditional expressi on is reserved as indicated in Appendix 2. 
174. Montenegro committed to adopting the necessar y measures to amend trademarks so as to 
remove all references to EU GIs protected under Article 4 of the Protocol at the latest by 
31 December 2008.  In this regard, and following an analysis of the system of intellectual property 
protection, it was decided to transfer the competen ce for GIs for agricultural and food products from 
the Office for Intellectual Property to the Ministry of Agriculture.  To harmonize national legislation 
with that of the EU, the Ministry of Agriculture  formed a Working Group for the development of a 
draft Law on Designations of Origin, Geographical  Indications and Indications for Traditional 
Specialities Guaranteed for Agricultural and Food Products.  The Draft Law has been harmonized 
with the relevant legislation of the EU and includes procedures for registration of GIs and 
designations of origin, recognition of the specific ch aracter of agricultural and food products, keeping 
of registers, relationships betw een GIs and trademarks, internati onal registration and protection under 
civil law as well as the possibility for lodging an  exception to the application for registration.37   
175. With regard to exports, the Parties commit to take all steps necessary to ensure that for 
exports of wines spirit drinks and aromatised wine s that originated in the Party the protected GIs 
referred to in Articles 4(a) and 4(b) and traditional expressions in Article 4(a) are not used to describe 
and present such products which origin ate in the other Party (Article 9). 
176. To ensure the proper functioning of these pr ovisions, the Agreement established a Working 
Group under the auspices of the Sub-Committ ee on Agriculture under the Stabilization and 
Association Committee established under Ar ticle 122 of the Agreement.  At the 1st meeting of the 
EC-Montenegro joint subcommittee and the Enha nced Permanent Dialogue Sector meeting on 
Agriculture and Fisheries on 16 and 17 April 2008, th e Parties agreed to forgo the immediate setting 
up of a working group;  instead all matters con cerning the implementation and functioning of the 
Wine Protocol will be discussed directly in th e framework of the sub-co mmittee on Agriculture and 
Fisheries. 
                                                      
37 The Draft Law has been harmonized with Council Regulation (EC) No 510/2006 of 20 March 2006 
on the protection of GIs and designations of origin for agricultural products and foodstuffs;  and Council 
Regulation (EC) No 509/2006 of 20 March 2006 on agricultural products as traditional specialities guaranteed.  WT/REG236/1 
 Page 53 
 
 
  J. OTHER  
1. Competition policy and approximation of laws 
177. Article 73 of the Agreement recognizes that th e following are incompatible with its proper 
functioning:  (i) all agreements between undertaki ngs, decisions by associations of undertakings and 
concerted practices between undert akings, which have as their object or effect, the prevention, 
restriction or distortion of competition;  (ii) abu se by one or more undertakings of a dominant position 
in the territories of the Parties as a whole or in a subs tantial part thereof;  and (iii) any State aid which 
distorts or threatens to distort competition by favouring certain undertakings or products.  Such practices are to be assessed on the basis of comp etition criteria applicable in the EU, particularly 
Articles 81, 82, 86 and 87 of the EC Treaty and interpretive instruments adopted by the EU 
institutions. 
178. An operationally independent authority to ensure  application of (i) and (ii) above must be 
assured by both Parties, regarding private and public  undertakings and undertakings to which special 
rights have been granted. The Law on Amendmen ts to the Law on the Protection of Competition 
(Official Gazette no. 37/07) create d the legal framework for the esta blishment and functioning of the 
Directorate on Protection of Competition.  The Directorate was established as a legal entity by the 
Decree on Amendments of the Decree on the Manner and Organization of Governmental Administration (Official Gazette No. 37/07).  Its decisions are final and may not be appealed and any 
administrative disputes may only be addressed in the Administrative Court.  Article 74 further 
requires that following three years of entry into fo rce of the Agreement, Montenegro shall apply to 
such undertakings the principles set out in the EC Treaty with particular reference to Article 86.  
During the first three years following the Agreement's entry into force, these special rights for public 
undertakings will not include the possibility to impo se quantitative restrictions or measures having an 
equivalent effect on imports from the EU by Montenegro.
38  The application of (iii) is discussed above 
in Section III.B.4. 
179. The approximation of the existing legislation in M ontenegro to that of the EU and its effective 
implementation is seen as an important goal by the Pa rties.  In this regard, Article 72 requires this 
approximation to start on the date of signature of  the Agreement and gradually extend to all the 
elements of the EU's acquis  by the end of the transition period (2015).  At an early stage, 
approximation shall concentrate on the fundamental elements of the EU's acquis  including financial 
sector legislation, freedom and security and trade related areas, followed by the remaining parts of the acquis.   Approximation shall be based on a programme to be agreed between the EU and Montenegro 
with Montenegro defining the modalities for monitoring and implementation.  
2. Cooperation 
180. Title VIII of the Agreement cove rs cooperation on a range of i ssues aimed at contributing to 
the development and growth of Montenegro.  They  include issues related to trade such as economic 
and trade policy, statistics, financial services, investment promotion and protection, tourism, 
industrial, agricultural and fisheries cooperation but al so internal control and external audit, taxation, 
education, social and cultural cooperation.  Special at tention will have to be paid to measures that can 
foster cooperation between Montenegro and its ne ighbours, including EU Member States, thus 
contributing to regional stability.  The Stabilizati on and Association Council will define priorities 
between and within the cooperation policies described  in the Agreement.  At its meeting on 14 June 
2010, the Council discussed the opportunities and cha llenges faced by Montenegro in its accession 
                                                     
 
38 According to the Parties, the special rights are granted according to current laws, which regulate 
areas of public interest.  The subject, scope, date and du ration of the special rights are defined in special laws 
and by laws as there is no umbrella law which regulates this area. WT/REG236/1 
Page 54 
 
 
  process and stressed the importance of regional co-operation as a key element of the SAA process.  It 
also analysed progress on the political criteria with an emphasis on judicial reform.  The Council also 
welcomed progress in other areas including effort s to strengthen the legal and administrative 
framework to combat corruption and organized crime,  legislative alignment and capacity with regard 
to European standards and the implementation of cont ractual obligations, particularly in areas such as 
customs and trade liberalization and efforts to beco me a functioning market economy.  Montenegro is 
currently preparing a National Programme for Integr ation for 2011-2015, whic h will precisely define 
further steps for assuming all obligations stemmi ng from the SAA, especially with regard to 
cooperation. 
  WT/REG236/1 
 Page 55 
 
 
  ANNEX I 
 
 
1. A comparison between the scheduled elimination of tariffs applied to the Parties' mutual 
imports and the MFN and standard ra tes applied by the EU and Monten egro respectively, is shown in 
Table AI.1 (EU) and AI.2 (Montenegro) below, by total products, agricultural products and 
non-agricultural products. 
Table AI.1 
EU: Indicators of MFN tariff rates and pref erential rates for imports from Montenegro 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2008 4.9 6.7 24.4 9.0 12.2 18.1 4.2 5.8 26.2 
Montenegro 2008 0.2 13.2 97.3 0.3 12.4 90.5 0.1 13.7 99.1 
 2009 0.1 12.3 97.3 0.3 12.4 90.5 0.1 12.2 99.1 
 2010 0.1 11.3 97.3 0.3 12.4 90.5 0.1 10.7 99.1 
 a WTO Definition. 
 
Note: For tariff lines subject to TRQs onl y the out-of-quota duty is included in th e tariff-related  calculations; for preferen tial tariffs 
with non ad valorem  components, only the ad valorem  part of the rate was included in th e calculation of the tariff averages.   
Based on HS 2007 nomenclature. 
 
Source : WT 
O Secretariat estimates based on data provided by EU. 
 
2. In 2008, the EU's overall average MFN rate was 4. 9% with 24.4% of the tariff being duty free 
on an MFN basis.  As a result of the Agreement, 97.3% of the tariff became duty free immediately for 
imports from Montenegro.  This corresponds to 99. 1% of tariff lines for non-agricultural products and 
90.5% of agricultural products.  As a result of im plementation of the Agreement, the average applied 
tariff for imports from Montenegro fell to 0.2% overall, 0.1% for non-agriculture, and 0.3% for 
agricultural products giving Montenegrin exporters an  average margin of preference of 95.9% for all 
goods, of which 93.9% for agricultural products. 
Table AI.2 
Montenegro: Indicators of MF N tariff rates and preferential rates for imports from EU 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
Applied 2008 6.3 6.6 4.9 14.1 16.4 13.6 4.2 4.3 2.5 
EU 2008 2.5 16.8 84.7 10.5 19.0 44.5 0.4 9.3 95.6 
 2009 2.1 13.9 84.7 8.7 15.8 44.5 0.3 7.7 95.6 
 2010 1.7 11.1 84.7 7.0 12.6 44.5 0.3 6.1 95.6 
 2011 1.3 8.5 85.1 5.2 9.4 44.5 0.2 5.3 96.0 
 2012 0.8 11.1 92.5 3.4 16.4 79.2 0.1 3.6 96.1 
 2013 0.8 15.4 94.9 3.4 16.4 79.2 0.1 8.6 99.2 
 a WTO Definition.  Note: For tariff lines subject to TRQs only the out-of-quota duty  is included in the tariff-rela ted  calculations; for preferen tial tariffs with 
non ad valorem  components, only the ad valorem  part of the rate was included in th e calculation of the tariff averages.   
Based on HS 2007 nomenclature. 
 
Source : WTO Secretariat estimates based on data provided by Montenegro. 
 
  WT/REG236/1 
Page 56 
 
 
   
3. Table A1.2 shows Montenegro's liberalization for imports from the EU, compared to imports 
from the rest of the world.  In 2008, its average a pplied tariff was 6.3%, with 4.9% of all tariff lines 
free of duty.  In 2008, when the Agreement entered into force, an additional 84.7% of its tariff for 
imports from the EU was liberalized, corresponding  to 95.6% of non-agricultural tariff lines and 
44.5% of agricultural lines.  As a result the overall average tariff applied to imports from the EU fell 
to 1.5%, giving EU exporters an average margin of preference of 60.3%, 90.5% for non-agriculture and 25.5% for agriculture.  Once the Agreement is  fully implemented in 2013, Montenegro would 
have liberalized 94.9% of its tariff for imports from the EU, with 99.2% of tariffs being eliminated in 
non-agricultural products, and 79.2% for agriculture.   
4. Tables AI.3 and AI.4 show market access oppor tunities respectively for Montenegro's top 25 
global exports in the EU and for the EU's top 25 global exports in the Montenegrin market.  
Table AI.3 shows that when the Agreement entered in to force, of Montenegro's 25 largest exports to 
the world, covered by 165 tariff lines at the HS 6 di git level, 16 products covering 60 tariff lines were 
already duty free on an MFN basis.  Once the Agreement was implemented by the EU, another 53 
tariff lines became duty free, while 52 tariff lines including 51 relating to wines in containers holding 2 litres or less, and one line relati ng to bananas, will remain subject  to duty after the Agreement is 
implemented. 
5. Table AI.4 shows that when the Agreement ente red into force, of the EU's 25 largest global 
exports, four products, covered by eight tariff lines  at the HS 6 digit level were duty free and 121 
tariff lines were dutiable.  In 2008, when the Agre ement entered into force, 114 of the 121 lines 
became duty free for imports from the EU.  The remaining 7 tariff lines are to become duty free in 
2011 and 2013, giving the EU's 25 largest global expo rts duty free market access to the Montenegrin 
market once the Agreement is fully implemented. 
Table AI.3 – EU: Market access opportunities under the ag reement for Montenegro's to p 25 exports to the world 
Access Conditions to EU's import markets  Montenegro's top export products in 2005-2007  MFN (2008)  
No. of tariff lines  
HS number and description of the product  Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) Duty-free Dutiable Duty-
free in 
2008  
Remain 
dutiable  
760110 - Aluminium, not alloyed 51.5 6.0  1 1  
721391 -- Of circular cross-section measuring less 
than 14 mm in diameter 4.6 0.0 6    
220421 -- In containers holding 2 l or less 2.8 -  51  51 
080300 Bananas, including plantains, fresh or 
dried. 2.3 16.0  3 2 1 
890190 - Other vessels for the transport of goods 
and other vessels for the transport of both persons and goods 2.3 1.1 1 2 2  
271019 -- Other 2.0 3.8  25 25  
440710 - Coniferous 2.0 0.0 7    
240220 - Cigarettes containing tobacco 1.7 33.8  2 2  
220300 Beer made from malt. 1.5 0.0 3    
300490 - Other 1.5 0.0 4    
721499 -- Other 1.4 0.0 7    
730630 - Other, welded, of circular cross-section, 
of iron or non-alloy steel 1.3 0.0 7    
240290 - Other 1.1 57.6  1 1  
271011 -- Light oils and preparations 0.9 4.7  12 12  
722490 - Other 0.9 0.0 9    
740400 Copper waste and scrap. 0.9 0.0 3    
760200 Aluminium waste and scrap. 0.8 0.0 3    
721190 - Other 0.7 0.0 2    
260600 Aluminium ores and concentrates. 0.6 0.0 1    
270210 - Lignite, whether or  not pulverised, but 
not agglomerated 0.6 0.0 1    
Table AI.3 (Cont'd)   WT/REG236/1 
 Page 57 
 
 
  Access Conditions to EU's import markets  Montenegro's top export products in 2005-2007  MFN (2008)  
No. of tariff lines  
HS number and description of the product  Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) Duty-free Dutiable Duty-
free in 
2008  
Remain 
dutiable  
440792 -- Of beech (Fagus spp.) 0.6 0.0 1    
721420 - Containing indenta tions, ribs, grooves or 
other deformations produced during the 
rolling process or twisted after rolling 0.6 0.0 1    
848330 - Bearing housings, not incorporating ball 
or roller bearings; plain shaft bearings 0.6 4.2  3 3  
410120 - Whole hides and skins, of a weight per 
skin not exceeding 8 kg when simply 
dried, 10 kg when dry-salted, or 16 kg when fresh, wet-salted or otherwise preserved 0.5 0.0 4    
930630 - Other cartridges and parts thereof 0.4 2.5  5 5  
Total of above 84.0 60 105 53 52 
 
- Specific duty.  
Source : WTO estimates based on data provided by  the EU and Montenegro authorities. WT/REG236/1 
Page 58 
 
 
  Table AI.4 – Montenegro: Market  access opportunities under the ag reement for EU's top 25 exports 
Access Conditions to Montenegro's import markets 
Applied (2008) EU's top export products in 2005-2007 Number of tariff 
lines Duty-free in 
HS number and description of the product  Share in global 
exports (%)  Avg. 
applied 
rate 
(%) Duty-
free Dutiable  2008 2011 2013 
300490 - Other 3.4 2.0  4 4   
870323 -- Of a cylinder capacity exceeding 
1,500 cc but not exceeding 3,000 cc 2.7 4.2 1 4 2 2  
870324 -- Of a cylinder capacity exceeding 
3,000 cc 2.3 7.5 1 3 1  2 
271019 -- Other 2.0 1.3 5 24 24   
271011 -- Light oils and preparations 1.8 2.5  13 13   
880240 - Aeroplanes and other aircraft, of an 
unladen weight exceeding 15,000 kg 1.8 1.0  1 1   
710231 -- Unworked or simply sawn, cleaved 
or bruted 1.0 3.0  1 1   
847330 - Parts and accessories of the machines 
of heading 84.71 0.9 1.0  2 2   
870899 -- Other 0.9 1.0  3 3   
841191 -- Of turbo-jets or turbo-propellers 0.7 1.0  1 1   
851712 -- Telephones for cellular networks or 
for other wireless networks 0.6 3.0  1  1  
851762 -- Machines for the reception, 
conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus 0.6 3.0  1 1   
870332 -- Of a cylinder capacity exceeding 
1,500 cc but not exceeding 2,500 cc 0.6 3.8 1 4 2 2  
270900 Petroleum oils and oils obtained from 
bituminous minerals, crude. 0.5 1.0  2 2   
293399 -- Other 0.5 1.0  6 6   
293499 -- Other 0.5 1.0  6 6   
711319 -- Of other precious metal, whether or 
not plated or clad with precious metal 0.5 20.0  1 1   
841112 -- Of a thrust exceeding 25 kN 0.5 1.0  3 3   
847989 -- Other 0.5 1.0  4 4   
848180 - Other appliances 0.5 3.1  17 17   
851761 -- Base stations 0.5 3.0  1 1   
854231 -- Processors and controllers, whether 
or not combined with memories, converters, logic circuits, amplifiers, 
clock and timing circuits, or other 
circuits 0.5 1.0  2 2   
710239 -- Other 0.4 3.0  1 1   
852990 - Other 0.4 1.7  6 6   
901890 - Other instruments and appliances 0.4 1.4  10 10   
Total of above  25.0  8 121 114 5 2 
 
Note: Based on HS 2007 nomenclature. 
 
Source : WTO estimates based on data provided by  Montenegro and Eurostat database.  WT/REG236/1 
 Page 59 
 
 
  ANNEX II 
 
Tariff rate quotas under the Agreement  
 
 
Table AII.1 
Tariff rate quotas for EU imports from Montenegro 
Tariff rate quota 
Product 
Quantity In-quota duty Out of quota duty 
at entry into force 
(2008) Liberalization programme 
Baby beef products 20% of the MFN 
applied rate of duty MFN rate 
HS 01029051, 
01029059, 01029071, 
01029079 2.04% + 
€18.62/100kg/net 10.2% + €93.1/100 
kg/net 
HS 02011000, 02012020,  2.56% + 
€35.36/100kg/net 12.8% + €176.8/100 
kg/net 
HS02012030,  2.56% + 
€28.28/100 kg/net 12.8% + €141.4/100 
kg/net 
HS02012050 800 metric tonnes 
per year 
2.56% + 
€42.44/100 kg/net 12.8% + €212.2/100 
kg/net None 
Fish     
- Trout 20 metric tonnes 
per year zero 90% of MFN rate 
- Carp 20 metric tonnes 
per year zero 90% of MFN rate 
HS 03019110, 
03019300, 
03021110, 03026911, 03037911, 03041991, 
03049921   7.2% 
HS 03032110, 
03041919, 03042919   8.1% 
HS 03019190, 
03021120, 
03021180, 03032120, 03032180, 03041915, 
03041917, 
03042915, 03042917, 03055980, 03056980   10.8% 
HS 03051000   11.7% 
HS 03054945, 
03054980   12.6% 
HS 03053090   14.4% Duties on out of quota imports to be 
reduced from 90% of MFN rate in 2008, to 80% of the MFN rate in 2009 and 70% of the MFN rate in subsequent years. 
- Sea bream 20 metric tonnes 
per year zero 80% of MFN rate 
- Sea bass 20 metric tonnes 
per year zero 80% of MFN rate 
HS 03049999   6% 
HS 03055980, 
03056980   10.8% 
HS 03051000   11.7% 
HS 03054980   12.6% 
HS 03026994, 
03026961, 
03037770, 03037971, 03041999,    12% Duties on out of quota imports to be 
reduced from 80% of MFN rate in 2008 to 
55% of the MFN rate in 2009 and 30% of the MFN rate in subsequent years. WT/REG236/1 
Page 60 
 
 
  Tariff rate quota 
Product 
Quantity In-quota duty Out of quota duty 
at entry into force 
(2008) Liberalization programme 
HS 03019980, 
03053090   12.8% 
HS 03041939   14.4%  
- Prepared and 
preserved sardines 200 metric tonnes 6% MFN rate 
HS 16041311, 
16041319, 16042050    
- Prepared and 
preserved anchovies 200 metric tonnes 12.5% MFN rate 
HS 16041600, 
16042040    From 1 January of the fourth year 
following the entry into force of the Agreement, the quota volume shall be increased to 250 metric tonnes per year provided that at least 80% of the total 
amount of the previous quota has been 
used by 31 December of that year.  The increased quota volume, if applied, will continue to apply until such time as the parties agree other arrangements. 
Wine   
HS 220410  zero €32/Hl 
HS 220421 16,000 Hl per year 
zero €13.1/Hl The Parties agree to examine opportunities 
for granting each other further concessions taking into account developments in bilateral trade within 3 years of the Agreement entering into force. 
 
Source: WTO Secretariat based on Annexes II, IV and Annex I to Protocol 2 of the Agreement.  WT/REG236/1 
 Page 61 
 
 
  Table AII.2 
Tariff rate quotas for imports by Montenegro from the EU 
Tariff rate quota 
Product 
Quantity In-quota duty Out of quota duty 
at entry into force 
(2008) Liberalization programme 
Fish     
- Trout 20 metric tonnes 
per year zero 90% of MFN rate 
HS 03019110, 
03019190, 03021110, 
03021120, 
03021180, 03032110, 03032120, 03032180   zero 27% 
HS 03041915, 
03041917, 03041919    13.5% 
HS 03041991    9% 
HS 03042915, 
03042917, 
03042919    13.5% 
HS 03049921, 
03051000, 03053090, 
03054945, 
03055980, 03056980   9% Duties on out of quota imports are to be 
reduced from 90% of the MFN rate in 2008 to 70% of the MFN rate in all subsequent years. 
- Sea bream 20 metric tonnes 
per year zero 80% of MFN rate 
- Sea bass 20 metric tonnes 
per year zero 80% of MFN rate 
HS 03019980, 
03026961   4% 
HS 03026994, 
03037700, 
03037971, 03041939, 03041999, 03042999, 
03049999, 
03051000, 03053090, 03054980, 03055980, 
03056980   8% Duties on out of quota imports are to be 
reduced to 80% of th e MFN rate in 2008 
to 60% of the MFN rate in subsequent 
years. 
- Prepared and preserved sardines 20 metric tonnes 50% of the MFN 
rate MFN rate 
HS 16041311, 
16041319, 
16042050  7.5% +€0.15/kg 15% + €0.30/kg 
- Prepared and 
preserved anchovies 10 metric tonnes  MFN rate 
HS 16041600, 
16042040  5% 10% None 
Wine   
HS 220410  zero 30% 
HS 220421 1,500 Hl in 2008 
increasing to 2,500 in 2009 and 3,500 
in following years zero 30% + €0.2/kg The Parties agree to examine opportunities 
for granting each other further concessions taking into account developments in 
bilateral trade within 3 years of the 
Agreement entering into force. 
 
Source : WTO Secretariat based on Annex V;  and Annex I of Protocol 2 of the Agreement. 
 
__________