WT/TPR/S/227 Trade Policy Review 
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II. TRADE AND INVESTMENT POLICY FRAMEWORK  
(1) GENERAL FRAMEWORK  
1. The Republic of Croatia's legal system is based on the Constitution of 1990 (as amended in 
2000 and 2001).  Under Article 4 of  the Constitution, state powers are divided into three branches:  
legislative (Parliament), executive (President  and Government), and judiciary (Courts),  but limited by 
the right to local and regional self-gove rnment guaranteed by the Constitution.1 
2. The amendments to the Constitution, inter alia , abolished the Chamber of Counties (Upper 
House), thereby switching from a bicameral to a unicameral Parliament ( Hrvatski sabor ).  The 
Parliament, inter alia , has control over the executive power,  decides on the enactment and amendment 
of the Constitution, passes acts, adopts the state budget, and decides on the strategies of national 
security and defence.2 
3. Executive power is vested in the President and the Government.  The President, elected for a 
term of five years (renewable only once), has br oad powers of supervisi on, appoints the Prime 
Minister3, and is responsible for the defence of the in dependence and territorial integrity of Croatia.4  
The Government (consisting of the Prime Minist er, one or more Deputy Prime Ministers, and 
Ministers), inter alia , proposes and implements acts and other decisions of the Parliament. 
4. Croatia has an autonomous and independent j udicial system.  The Supreme Court is the 
highest court5, followed by the Constitutional Court6, and other courts, such as the Administrative 
Court (AC).  Appeals against decisions or acts of  administrative bodies may be lodged with the AC 
for all WTO issues.  
5. In general, policies are formulated and implemen ted by means of acts (laws).  In the majority 
of cases, draft acts are presented, by the Government to the Parliament for adoption.7  Draft acts may 
also be presented to the Parliament by, inter alia , all deputies and parliamentary working bodies.  The 
President promulgates acts within eight days from the date they are passed in the Parliament.  However, if the President considers the act not to be in accordance with the Constitution, she/he may 
                                                     
 
1 Croatia has a system of local self-government and administration based on the European Charter on 
Local Self-government.  Within this system, Croatia is divided into 21 counties (including the City of Zagreb), 
subdivided into 429 municipalities, 127 townships, and 2 special self-governing districts. 
2 The Parliament can have no less than 100 and no more than 160 representatives (it currently has 153).   
Representatives are elected on the basis of direct universal and equal suffrage, by secret ballot, for four years.  
Elections are held not later than 60 days after the expiry of a mandate or the dissolution of the Parliament.  Government of Croatia online information.  Viewed at:  http://www.vlada.hr/en/about_croatia/ 
information/political_structure. 
3 The President issues an order appointing the Prim e Minister, counter-signed by the Chairman of the 
Parliament;  the order appointing other members of the Government is issued by the Prime Minister and 
counter-signed by the Chairman of the Parliament.  Government of Croatia online information.  Viewed at:  
http://www.vlada.hr/en/about_croa tia/information/political_structure. 
4 One of the amendments to the Constitution obliged  the President, after election, to resign from 
membership in a political party. 
5 Justices of the Supreme Court ar e appointed by the National Judicial  Council, a body of 11 members 
appointed by Parliament for life. 
6 The Constitutional Court consists of 13 judges, se lected by Parliament for 8 years, from among 
outstanding jurists, judges, public prosecutors, lawyers, and university professors of law .  Government of 
Croatia online information.  Viewed  at:  http://www.vlada.hr/en/about_croatia/information/political_structure. 
7 Unless otherwise specified by the Constitution, acts are passed by Parliament through a majority vote, 
provided that a majority of representatives are present. Croatia WT/TPR/S/227 
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initiate proceedings to review its  constitutionality before the Constitu tional Court.  Acts enter into 
force on the eighth day after publication in the Official Gazette  (OG) Narodne Novine , unless 
otherwise indicated in the act itself.  Acts relati ng to trade policy are proposed to the Government by 
the relevant Ministries.   
6. The Ministry of the Economy, Labour and Entrepreneurship (MELE) is responsible for 
formulating, administering, and coordinating Cr oatia's foreign trade policies.  MELE is also 
responsible, inter alia , for policies regarding employment and industry (except food, wood, and 
tobacco), shipbuilding, energy, mining, crafts, c ooperatives (except agricultural), small and medium-
sized enterprises (SMEs), public procurement, and trade and investment promotion.8  Depending on 
the nature of the issue, MELE consults with relevant  ministries and other institutions that also take 
part directly or indirectly in foreign trade policy formulation and/or implementation.  These include:  the Ministry of Agriculture, Fisheries, and Rural Development;  the Ministry of Regional Development, Forestry and Water Management, th e Ministry of Finance (including its Customs 
Administration);  the Ministry of Foreign Affairs and European Integration;  as well as other ministries, state administrative organizations, and the private sector.  
7. The private sector and NGOs provide inputs to trade-policy formulation by communicating 
their views either directly to MELE or throug h chambers and the business community (Croatian 
Chamber of Economy, Croatian Chamber of Trades and Crafts, Croatian Employers' Association, 
Croatian Exporters, and the National Competitiveness Council).
9  These associations participate, for 
example, in the activities of bilateral joint- commissions established under economic cooperation 
agreements, and in negotiations on free-trade agreem ents, by presenting their interests or concerns 
regarding the agreement under negotiation.  The views of the private sector, including NGOs, are 
usually taken into considerati on throughout the process, on an ad hoc  basis.   
8. In descending order of importance, the Constitu tion is followed by acts and implementing 
documents such as:  regulations, ordinances, decisi ons, and conclusions.  International agreements in 
force, including the WTO Agreements, concluded an d ratified in accordance with the Constitution and 
made public, carry the force of law in Croatia.10  
9. The WTO Agreements and Croatia's current and future trade relations with the European 
Union (EU) are the main factors influencing Croatia 's trading system.  Since its accession to the WTO 
(section (2) below), Croatia has continued to reform  its policies in trade and related areas with the 
objective of bringing domestic legislation into  line with the WTO Agreements, and the EU acquis 
communautaire .  This has required a considerable review  and updating of almost all trade-related 
legislation (Table II.1), which is still ongoing.  
                                                      
8 MELE online information.  Viewed at:  http://www.mingorp.hr/defaulteng.aspx?id=5. 
9 The National Competitiveness Council, founded as an independent advisory body in 2002, gathers 
together leading representatives from the public and pr ivate sectors (government, business, trade unions, and 
science and education). 
10 Their provisions may be changed or repealed only under the conditions an d the way specified in 
them, or in accordance with the general rules of international law. WT/TPR/S/227 Trade Policy Review 
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Table II.1 
Main trade-related laws, 2009 
Area Legislation 
Foreign trade Trade Act (OG 87/08, 116/08, and 76/09) 
Act on the Export of Dual-Use Goods (OG 100/04 and 84/08) Act on the Export and Import of Military and Non-Military Leth al Goods (OG 86/08) 
Act on International Restrictive Measures (OG 139/08) 
Regulation specifying goods subject to expor t and import licences (OG 6/09 and 73/09) 
Regulation on the List of Dual-Use It ems (OG 184/04, 62/07, 57/08 and 63/09) 
Regulation on Import and Export Control for Rough Diamonds  
 (OG 97/03, 142/03, 176/04, 
14/06, 90/07, 64/08, and 61/09) 
Customs Customs Act (OG 78/99, 94/99, 117/99, 73/00,  92/01, 47/03, 140/05, 138/06, 60/08 and 45/09) 
Regulation implementing the Customs Act (OG 161/03, 69/06, 5/07, 70/08 and 76/09) 
Rules on the use of forms for implementation of the Customs Act (OG 176/03) 
Customs Tariff Act (OG 61/00, 117/00, 119/00, and 146/08) Customs Service Act (OG 83/09) 
Performance of Agency in Customs Clearance Procedures Act (OG 92/01) 
Taxation Value Added Tax Ac t (OG. 47/95), as amended 
Profit Tax Act (OG 177/04), as amended 
Income Tax Act (OG 177/04), as amended Act on Excise Duty on Passenger Cars, other Moto r Vehicles, Vessels and Aircraft (OG 139/97) 
Act on Excise Duty on Coffee  (OG 87/05) 
Act on Excise Duty on Non-Alcoholic Beverages (OG 51/94), as amended 
Act on Excise Duty on Beer (OG 51/94), as amended Act on Excise Duty on Alc ohol (OG 51/94), as amended 
Act on Excise Duty on Mineral Oils (OG 55/00), as amended 
Act on Excise Duty on Luxury Products (OG 105/99), as amended Act on Excise Duty on Tobacco Products (OG 51/94), as amended 
Excise Duties Act (OG 83/09-in force as from 1 January 2010) 
Contingency trade remedies Trade Act (OG 87/08, 116/08, 76/09) 
Regulation on the manner and procedure of dete rmining anti-dumping a nd countervailing duties 
(OG 139/04) Regulation on safeguard m easures (OG 73/02, 33/03) 
Government procurement Public Proc urement Act (OG 110/07), as amended 
Public Private Partnerships Act (OG 129/08) 
Concessions Act (OG 125/08) 
State aid State Aid Act (OG 140/05) 
Regulation on State Aid (OG 50/06) 
Investment Companies Act (OG 111/93,  34/99, 118/03, 107/07, and 146/08) 
Investment Promotion Act (OG 138/06) 
Free zones Free Zone Act (OG 44/96 and 85/08 ) 
SPS and TBT Food Act (OG 46/07 and 155/08) 
Plant Health Act (OG 75/05), 
Veterinary Act (OG 41/07 and 155/08) 
Animal Protection Act (OG 135/06)  Sanitary Inspection Act (OG 113/08) Medicinal Products Act (OG 71/07) 
Privatization Privatization Act (OG 21/96, 71/97 and 73/00) 
HEP Privatization Act (OG 32/02) INA Privatization Act (OG 32/02) 
Act on Privatization of Croatian Telecommunications (OG 65/99 and 68/01) 
Competition Competition Act (OG 120/03)  
New Competition Act (OG 79/09, as from 1 October 2010) 
Intellectual property rights Trademarks Act (OG 173/03), as amended 
Geographical Indications Ac t (OG 173/03), as amended 
Act on the Protection of Topographies of Semiconductor Products (OG 173/03), as amended 
Patents Act (OG 173/03 ), as amended  
Copyright and Related Rights Act (OG 163/03), as amended 
Industrial Designs Act (OG 173/03), as amended 
Company establishment Companies Act  (OG 111/93, 34/99, 118/03, 107/07 and 146/08) 
Table II.1 (cont'd) Croatia WT/TPR/S/227 
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Area Legislation 
Agriculture and related activities Ag riculture Act (OG 66/01 and 83/02) 
Sea Fishery Act (OG 46/97 and 48/05) 
Food Act (OG 46/07 and 155/08) 
Forest Act (OG 140/05; 82/06 and 129/08) Forest Reproductive Material Act (OG 75/09) 
Mining Mining Act (OG 75/09) 
Petroleum and gas Petroleum Act (OG 238/04 and 57/06) 
Gas Market Act (OG 40/07, 152/08 and 83/09) 
Energy Energy Act (OG 68/01, 177/04, 76/07 and 152/08) 
Act for Regulating Energy Activitie s (OG 169/01, 177/04 and 76/07) 
Manufacturing Technical Requirements for Products and Conformity Assessment (OG 158/03 and 79/07) 
Standardization Act (OG 163/03) 
Accreditation Act (OG 158/03 and 75/09) 
Metrology Act (OG 163/03, 194/03 and 111/07) General Product Safety Act (OG 30/09) 
Small Business Encouragement Act (OG 29/02 and 63/27)  
Cooperatives Act (OG 36/95, 67/01 and 12/02) Trades and Crafts Act (OG 77/93, 90/96, 102/98, 64/01, 71/01, 49/03, 68/07, and 79/07) 
Chemicals Act (OG 150/05) 
Environmental Protection Act (OG 110/07) Building Act (OG 175/03 and 100/04)  
Telecommunications Electronic Communications Act (OG 73/08) 
Postal services Postal Services Act (OG 88/09) 
Financial services Act on the Croatian National Bank (OG 75/08) 
Credit Institutions Act (OG 117/08 and 74/09) 
Insurance Act (OG 151/05, 87/08 and 82/09) 
Capital Market Act (OG 88/08, 146/08 and 74/09) Foreign Exchange Act (OG 96/03, 140/05, 132/06 and 150/08) 
National Payment System Act (OG 117/01) 
Investments Funds Act (OG 150/05) 
Transport Public Roads Act (OG 180/04 and 146/08) 
Act on Inland Navigation and In land Ports (OG 109/07 and 132/07) 
Air Traffic Act (OG 132/98, 178/04 and 46/07), as amended 
Airport Act (OG 19/98) 
Maritime Code (OG 181/04, 76/07 and 146/08) Road Traffic Transport Act (OG 178/04 and 63/08) 
Tourism Act on the Provision of Tourism Services (OG 68/07) 
Hospitality and Catering Industry Act (OG 138/06, 158/08 and 43/09) 
Tourism Tax Act (OG 152/08 and 59/09) 
 
Source:  Information provided by the Croatian authorities.  
10. The main legislation relating to international trade in Croatia is the Trade Act (OG 87/08, 
116/08 and 76/09).  Nonetheless, upon EU membership, several provisions of the Trade Act will 
cease to apply as stipulated in Article 83.  To comp lement the Trade Act, four regulations have been 
adopted as a result of Croatia's obligations in the WTO.11  Investment for both nationals and 
foreigners is mainly regulated by the Compani es Act (OG 111/03, as amended) and the Investment 
Promotion Act (OG 138/06) (section (4) below).  
11. Since its independence in 1991, Croatia's overriding objective has been to complete the 
transition towards an open, market-driven economy,  well integrated at the regional and multilateral 
levels.  Croatia's efforts to integrate into the world economy are reflected in the dismantling of the 
restrictive trade regime inherited from the former So cialist Federal Republic of  Yugoslavia, and in its 
accession, participation in, or adherence to various multilateral, regional, and bilateral trade initiatives 
(sections (2) and (3) below).  
                                                      
11 Regulation on the manner and procedure of determining anti-dumping and countervailing duties;  
Regulation on safeguard measures;  Regulation specifying goods subject to export and import licences;  and Regulation on import and export control for rough diamonds. WT/TPR/S/227 Trade Policy Review 
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12. Croatia is strongly committed to the multilatera l trading system.  The orientation of its 
economic and trade policies, however, like that of other central and eastern European countries, is 
largely driven by the goal of accession to the EU, it s main trading partner (Chapter I(3)(i));  Croatia 
intends to conclude accession negotia tions during 2010.  The main factor in shaping Croatia's foreign 
trade policy is the Stabilization and Association Agreement (SAA) between Croatia and the EU 
(section (3)(i) below).    
13. Croatia's main strategic goal is to achieve soci al prosperity through "growth and employment 
in a competitive market economy acting within a Eu ropean welfare state of the 21st century".  To 
achieve this, on 4 August 2006, Croatia adopted its  Strategic Development Framework for 2006-13.  
Some of the main actions included are to:  (i) comp lete judicial and public administration reforms;  
(ii) finish the privatization process and seriously t ackle corruption;  (iii) intensify the development of 
SMEs, increase competitiveness, and pursue a balan ced development of all regions;  (iv) foster 
tourism with further development of infrastructur e;  (v) create a more business-friendly environment 
to attract larger foreign direct investment (FDI) inflows (Chapter I(3)(ii));  and (vi) promote a knowledge-based society.
12   
14. As part of its Strategic De velopment Framework, the Croa tian Export Offensive Strategy 
2007-10 is being implemented by MELE.  It aims, inter alia , to increase the number of exporting 
companies from around 11,000 to 13,800; change the structure of Croatia's exports so as to quadruple 
the number of value-added exports;  establish six "export-only" clusters13;  and increase the 
competitiveness of local companies.  In this  regard, the Competitiveness Strengthening and 
Internationalization Programme was launched in 2009 with the aim of supporting export-oriented 
companies and networking in export clusters. 
(2) PARTICIPATION IN THE WORLD TRADE ORGANIZATION  
15. Croatia applied for accession to the GATT in September 1993 and became the 140th member 
of the WTO on 30 November 2000.14  As part of its accession commitments, Croatia bound 100% of 
its tariff lines (Chapter III(1)(iv)(b)).  In additio n, Croatia made extensive commitments under the 
GATS (Chapter IV(3)).  Croatia accords at least MFN treatment to all its trading partners. 
16. Croatia is a signatory of the Information T echnology Agreement (ITA) and the Agreement on 
Trade in Civil Aircraft.  It is also an obser ver to the Plurilateral Agreement on Government 
Procurement (Table II.2).  At end June 2009, Croa tia had 17 notifications outstanding, mostly in 
agriculture.  
                                                      
12 Some of the main impediments faced by Croatia in its transition to a fully-fledged market economy 
are: insufficient level of education, rigid labour market, lack of social cohesion, and unevenly developed and insufficiently used infrastructure, in particular information and communication technologies (Government of 
Croatia, 2006). 
13 There are 20 clusters of companies in Croatia, but they are not only export oriented (MELE, 
undated). 
14 The Working Party for Croatia's accession process wa s established in 1995.  Seven official sessions 
and 20 rounds of bilateral negotiations were held with 19 WTO Members.  More than 100 acts and regulations were adopted and/or amended. Croatia WT/TPR/S/227 
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17. To date, Croatia has been involved in one case  under the WTO dispute settlement mechanism.  
On 9 July 2003, a consultation was requested by Hungary on Croatia's "Measures Affecting Imports 
of Live Animals and Meat Products"15;  a mutually agreed solution was reached on 30 January 2009.16  
Table II.2 
Selected notifications to the WTO, 2009 
WTO Agreement Document symb ol and date Main content 
General Agreement on Tariffs and Trade 
1994 Schedule CXLVII – Republic of Croa tia Schedule of tariff concessions 
General Agreement on Trade in services  
GATS/SC/130, 22 December 2000 Schedule of specific commitments in 
services; and Reference paper on basic telecommunications 
Agreement on Agriculture  
(Article 18.2)  
G/AG/N/HRV/8, 30 October 2009  
Export subsidies (Table ES:1) 
 G/AG/N/HRV/2, 8 July 2005 Administration of tariff quotas 
(Table MA:1) 
 G/AG/N/HRV/9, 30 October 2009 Impor ts under tariff quotas (Table MA:2) 
 
G/TBT/ENQ/35/Rev.2, 13 May 2009  
Croatian Standards Institute as the enquiry 
point Agreement on Technical Barriers to Trade  
(Article 15.2) 
G/TBT/CS/2/Rev.15, 2 March 2009 A cceptance of code of good practice 
 
 
IP/N/1/HRV/1, 29 October 2002  
 
TRIPS-related legislation Agreement on Trade-Related Aspects of 
Intellectual Property  
(Article 63.2) 
IP/Q-Q4/HRV/1, 7 May 2003 Review of legislation: responses from 
Croatia 
Agreement on Anti-Dumping Practices  
(Article 18.5)  
G/ADP/N/1/HRV/2, 24 November 2004  
Acts and regulations relevant to the 
Agreement 
(Article 16.4) G/ADP/N/180/Add.1, 27 April 2009 Semi-Annual Report on Anti-Dumping 
Actions 
Agreement on Rules of Origin  
(Article 5.1 and Annex II)  
G/RO/N/36/, 
12 March 2002  
Preferential and non-preferential rules of 
origin 
Agreement on Subsidies and Countervailing 
Measures  
(Article 32.6)  
 
G/SCM/N/1/HRV/2, 
24 November 2004  
 
Acts and regulations relevant to the 
Agreement 
(Article 25.11) G/SCM/N/185/Add.1, 
27 April 2009 Semi-Annual Report of countervailing 
duty actions 
Agreement on Import Licensing  
(Articles 1.4(a) and 8.2(b) and 5.2)  
G/LIC/N/1/HRV/4, 18 September 2009 
G/LIC/N/2/HRV/1, 9 October 2009 
  
Acts and regulations concerning import 
licensing procedures 
(Article 7.3) G/LIC/N/3/HRV/4, 27 October 2009 Replies to the questionnaire on import 
licensing procedures 
Agreement on Customs Valuation  
(Article 22.2)  
G/VAL/N/1/HRV/1, 16 January 2002  
Acts and regulations relevant to the 
Agreement 
 G/VAL/N/2/HRV/1, 16 January 2002 Implementation  and administration of the 
Agreement 
 G/VAL/N/3/HRV/1, 16 January 2002 Information on the application of 
Decisions A.3 and A.4 
Table II.2 (cont'd) 
                                                      
15 Consultations were requested under GATT Article XXIII;  Articles 1 and 4 of the Dispute Settlement 
Understanding;  and Article 11 of the SPS Agreement.  See WTO document WT/DS297/1, 14 July 2003. 
16 WTO document WT/DS297/2, 6 February 2009. WT/TPR/S/227 Trade Policy Review 
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WTO Agreement Document symb ol and date Main content 
Agreement on the Application of Sanitary 
and Phytosanitary Measures  
(Article 7, Annex B)  
 G/SPS/N/HRV/1, 31 July 2003  
 
Notification of prohibition of imports of 
live animals and products of animal origin 
due to spongiform encephalopathies 
(Paragraph 3 of Annex B) G/ SPS/ENQ/24, 1 October 2008 Notif ication of enquiry point 
Agreement on Safeguard Measures  
(Article 12.6)  
G/SG/N/1/HRV/2, 15 July 2002, and G/SG/N/1/HRV/2/Add.1, 23 November 2004  
  
Acts and regulations relative to safeguard 
measures 
State Trading Enterprises 
(Article XVII:4 (a)) 
and Understanding on the Interpretation  
of Article XVII:1  
G/STR/N/11/HRV G/STR/N/12/HRV, 9 June 2009  
New and full notification that Croatia does not maintain any state trading enterprises 
 
Source : WTO Secretariat.  
18. Croatia attaches great importance to the Doha Development Agenda (DDA), with particular 
interest in agriculture, non-agricultural products, and services.  Croatia participates in the recently 
acceded members (RAMs) group, and was its coordinator from November 2001 until mid-2007.  While active in the DDA negotiations , Croatia's general position relates to its already relatively liberal 
trade regime and its extensive commitments in  both goods and services undertaken during its 
accession process.  Croatia, therefore, calls for fu rther flexibilities in these negotiations, leading to 
reductions of imbalances in the rights and oblig ations between WTO Members, taking into account 
the particular situation of RAMs , developing and least-developed countries.  Moreover, as an EU 
candidate country, Croatia takes the EU's positio n into consideration in the DDA negotiations.   
(3) P
REFERENTIAL TRADE AGREEMENTS AND ARRANGEMENTS  
19. Over the past few years, accession to the EU has been a constant objective of Croatia's 
policies;  it submitted its application for EU me mbership on 21 February 2003.  The European 
Council granted Croatia the status of candidate co untry in June 2004;  accession negotiations were 
opened in October 2005.17  Croatia's accession to the EU is being evaluated against its ability to 
satisfy defined economic and political criteria laid out at the 1993 Copenhage n European Council, as 
well as to assume the obligations of membership.18  The EU provides guidance to Croatia on reform 
priorities through the Accession Partnership.  Croa tia adopts its national programme for EU accession 
each year, based on the Accession Partnership.19 
                                                      
17 EC online information.  Viewed at:  http://ec.europa.eu/enlargement/pdf/st2004_05_hr_framedoc_ 
en.pdf. 
18 The political and economic criteria for accession to th e EU are:  stability of institutions guaranteeing 
democracy, the rule of law, human rights, and respect for and protection of minorities;  the existence of a 
functioning market economy, as well as the ability to c ope with competitive pressure and market forces within 
the EU;  the ability to take on the obligations of membership, including adherence to the aims of political, 
economic and monetary union.  The candidate country's ability to assume the obligations of EU membership, 
i.e. the legal and institutional framework, is known as the acquis.   EU online information.  Viewed at:  
http://ec.europa.eu/enlarg ement/enlargement_process/ accession_process/how_does_a_country_join_the_eu/neg
otiations_croatia_turkey/index_en.htm#5. 
19 Up to November 2009, accession negotiations had been opened on 28 out of 35 chapters and, 
according to the Croatian authorities, pr ovisionally closed on 15:  free moveme nt of workers;  company law;  
intellectual property;  financial services;  information society and media;  economic and monetary policy;  
statistics;  trans-european networks;  science and rese arch;  education and culture;  energy;  enterprise and 
industrial policy;  customs union;  consumer and health protection;  and external relations.  Some of the key areas still pending relate to judiciary and fundamental rights, and competition policy. Croatia WT/TPR/S/227 
 Page 19 
 
 
20. Croatia also participates in the Central Eu ropean Free Trade Agreement (CEFTA 2006) with 
seven other parties;  has a free-trade agreement with the four European Free Trade Association 
(EFTA) states;  and a bilateral free-trade agreement w ith Turkey.  In 2008, Cr oatia's total preferential 
trade with its 39 partners amounted to US$34,448 m illion (76.9% of Croatia's total trade), of which 
82.2% was with the EU, 14.2% with CEFTA 2 006, 2% with EFTA, and 1.6% with Turkey 
(Table II.3). 
Table II.3 
Trade under preferential agreements, 2008 
(US$ million) 
FTA Exports Imports Total Percentage of total 
FTAs Percentage of total 
trade 
EU 8,594 19,709 28,303 82.2 63.1 
CEFTA 2006 3,332 1,547 4,879 14.2 10.9 
EFTA 171 530 701 2.0 1.6 
Turkey 88 477 565 1.6 1.3 
Total preferential agreements 12,185 22,263 34,448 100.0 76.9 
Croatia's total trade 14,112 30,728 44,840 n.a. 100.0 
 n.a. Not applicable. 
 
Source:  Information provided by the Croatian Central Bureau of Statistics. 
(i) Stabilization and Association Agreement (SAA) 
21. The SAA between Croatia and the EU was signe d in October 2001 and entered into force in 
February 2005.  The SAA defines the political and economic re lationship between the two parties.20  It 
is a preferential agreement aimed at establishing a close and lasting relationship based on reciprocity 
and mutual interest, allowing Croatia to formaliz e and strengthen the existing relationship with the 
EU.  
22. The trade part of the SAA – the Interim Agreement on Trade and Trade Related Matters 
(Interim Agreement) was signed on 29 October 2001 and entered into force on 1 March 2002.21  It 
established a free-trade area in goods between the tw o parties; liberalization has been carried out 
asymmetrically, with the EU liberalizing at a faster  rate.  Accordingly, all tariffs and quantitative 
restrictions on Croatian exports of industrial pr oducts to the EU were abolished from the outset.  
Croatia completed the elimination of its tariffs applicable to EU  exports of industrial goods on 
1 January 2007;  special arrangements existed for Cr oatia's textiles and clothing and steel industries.22  
The SAA also includes provisions on trade in ser vices, intellectual property rights, competition, 
investment, customs and trade remedies, and standards. 
                                                      
20 The SAA was strengthened at the Thessaloniki Summit in 2003, taking over elements of the 
accession process:  (i) contractual rela tionships by means of bilateral SAAs , the conclusion of which depends on 
the progress made by the countries within the process;  in this connection, the evaluation of their application for 
membership is now based on the results concerning their compliance with the provisions , particularly on trade;  
(ii) trade relations at regional level and with the EU ;  granting of EU trade preferences to Western Balkans 
countries;  and (iii) the In strument for Pre-Accession As sistance 2007-13.  After the EU enlargements in 2004 
and 2007, the SAA was extended to cover all 27 EU Member States.  EU online information.  Viewed at:  
http://ec.europa.eu/enlarg ement/enlargement_process/ accession_process/how_does_a_country_join_the_eu/sap/
thessaloniki_agenda_en.htm. 
21 The Interim Agreement was provisionaly applied fr om 1 January 2002.  It was notified to the WTO 
and examined by the WTO Committee on Region al Trade Agreements (WT/REG142/-series).  
22 Protocols I (textiles and clothing) and II (steel) of the Interim Agreement. WT/TPR/S/227 Trade Policy Review 
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23. The Interim Agreement al so includes tariff preferences for ag ricultural goods and for fish and 
fish products.  The EU grants Croatia unlimited dut y-free access for most agri cultural products with 
some exceptions, such as baby beef, fisheries, wine , and sugar (this last one since 1 January 2007) for 
which tariff quotas apply.23  Croatia progressively liberalized certain agricultural products based on a 
positive list.24  Special conditions related to processed ag ricultural products for both Croatia and the 
EU are set out in Protocol III of the Agreement.   
24. According to the EU, implementation of the S AA has been uneven.  There have been positive 
developments regarding state aid granted to the shipbuilding industry (Chapter III(3)(iii)(b)) and the 
excise duty regime for cigarettes (Chapter III(1)(iv)(d))25;  but recently, certain measures have 
resulted in increased import duties on a number of  products exported from the EU.  Discussions are 
ongoing to address these issues in the framework of the SAA. 
25. On 8 December 2000, a waiver was granted until 2006 regarding Article I(1) of the GATT 
1994, to permit the EU to afford duty-free or preferen tial treatment to eligible products originating in 
Croatia and other Western Balkans countries, without  being required to extend the same treatment to 
like products of any other WTO Member.26  The waiver was extended until 31 December 2011.27  
(ii) Central European Free Trade Area (CEFTA 2006)28 
26. The CEFTA 2006 is a preferential trade agreement between non-EU countries in central and 
south eastern Europe.29  It entered into force on 26 July 2007 for five parties (Albania, FYR of 
Macedonia, Moldova, Montenegro, and UNMIK/Kosovo), on 22 August 2007 for Croatia, on 24 October 2007 for Serbia, and on 22 November 2007 for Bosnia and Herzegovina.  Thus, full 
implementation of CEFTA 2006 started at the e nd of 2007.  The Agreement substituted all the 
bilateral agreements previously applied in the re gion and ended the original CEFTA when its parties 
joined the EU (with the exception of Croatia and the FYR of Macedonia).
30.  
                                                      
23 EC online information.  Viewed  at:  http://ec.europa.eu/agriculture/enlargement/countries/croatia/ 
profile_en.pdf. 
24 Annex IV (a-f) of the SAA. 
25 The shipbuilding issue was largely resolved with the publication of tenders for the six shipyards in 
difficulty with a view to their restructuring through priva tization, and Croatia introduced a single rate of excise 
duty for cigarettes as from 1 June 2009 (European Commission, 2009). 
26 WTO documents WT/L/380, 13 December 2000 ;  and WT/L/380/Corr. 1, 8 January 2001. 
27 WTO document WT/L/654, 2 August 2006.  Under the terms of this waiver, the EU is required to 
submit an annual report to the WTO General Council.  Fo r the most recent report, s ee WT/L/763, 21 July 2009. 
28 The original CEFTA, established in 1991, was signed by Poland, Hungary, and the former 
Czechoslovakia.  When it entered into force on 1 March 1993, it was then an association of four countries:  Poland, Hungary, the C zech Republic, and Slovakia.  In 1996, Sloven ia joined CEFTA, followed by Romania in 
1997, and Bulgaria in 1998.  In 20 02, Croatia became the eighth (and last ) country to accede to CEFTA.  On 
1 May 2004, Poland, the Czech Republic, Hungary, Slovakia , and Slovenia joined the EU, followed by Bulgaria 
and Romania on 1 January 2007, thus ending their CEFTA membership.  See Ministry of Economy, Labour and 
Entrepreneurship online information.  Viewed at:  http://www.mingorp.hr/ UserDocsImages/zakoniugovorieng/ CEFTA-aboutIt.pdf. 
29 The eight parties of CEFTA 2006 are Albania, Bosnia and Herzegovina, Croatia, FYR of Macedonia, 
UNMIK/Kosovo, Moldova, Montenegro, and Serbia. 
30 Before the establishment of the CEFTA 2006, Croa tia had separate bilateral free-trade agreements 
with the other parties.  In July 2007, CEFTA parties notified the WTO of the termination of the bilateral  
free-trade agreements among south- east European countries upon entry into force of the Agreement on 
Amendment of and Accession to the CEFTA (WTO document WT/REG/GEN/N/5, 7 August 2007). Croatia WT/TPR/S/227 
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27. The CEFTA 2006 Agreement aims to progressively establish a free-trade area among its 
parties by 31 December 2010 at the latest.  It covers  trade in agricultural and industrial products as 
well as services.  Trade in industrial products w as liberalized on 31 December 2008.  For agricultural 
goods, special preferential concessions are granted by each of the eight parties.  Further concessions 
in agriculture were negotiated in 2009, includ ing tariff quotas.  Other issues covered by the 
Agreement include:  sanitary and phytosanitary me asures; technical barriers to trade;  customs 
cooperation;  competition policy;  trade remedi es;  investment; government procurement and 
intellectual property rights.  Moreover, the parties have  agreed that in the even t of any eligible party 
becoming a member of the EU, that party will w ithdraw from the Agreement.  Croatia has been 
designated as depositary.31  
(iii) Free-trade agreement with the European Free Trade Association (EFTA) 
28. The EFTA-Croatia Free Trade Agreement was signe d on 21 June 2001 and entered into force 
with Norway on 1 April 2002, Iceland on 1 Augu st 2002, and Liechtenstein and Switzerland on 
1 September 2002.32  The Agreement covers trade in indus trial products, including fish and other 
marine products, although bilateral agricultural ag reements have also b een concluded between 
individual EFTA states and Croatia.33  Imports into Croatia for all industrial products originating in 
the EFTA states were fully liberalized after the expiry  of the transitional period on 1 January 2007.  
The agreement also contains provisions on sanitary a nd phytosanitary measures;  technical barriers to 
trade;  trade remedies;  services;  protection of intellectual property rights;  government procurement;  competition;  and investment.
34  
(iv) Free-trade agreement with Turkey 
29. Croatia signed a free-trade agreement with Turkey  on 13 March 2002;  it entered into force on 
1 July 2003 with a transitional period until 1 January  2007.  The liberalization has been carried out 
asymmetrically, with Turkey liberalizing at a faster rate.  The agreement covers both agricultural and 
non-agricultural goods;  about 87% of all tariff lin es for both parties;  and 86% of total Turkish 
exports to Croatia and 99% of to tal Croatian exports to Turkey.35  For agricultural goods, special 
preferential concessions are granted by both parties in the form of tariff quotas.  For non-agricultural 
goods, Turkey eliminated tariffs on Croatian expor ts from the outset, while Croatia completed the 
elimination of its tariffs on Turkish exports in 2007.  Moreover, the agreement includes provisions, 
inter alia , related to standards, state monopolies, safeguard measures, competition policy, public 
procurement, trade in services, and intellectual property rights.36 
                                                      
31 Recognizing its contribution towards European membership and integration, CEFTA 2006 extended 
its membership to cover the rest of the Balkan states, which had already completed a matrix of bilateral  free-trade agreements in the framework of the Stability Pa ct for South Eastern Europe.  Membership criteria in 
CEFTA 2006 is:  (i) WTO membership or commitment to respect all WTO regulations;  (ii) any EC Association 
Agreement;  and (iii) free-trade agr eements with the current CEFTA me mber states (CEFTA 2006 online 
information.  Viewed at:  http://www.s tabilitypact.org/wt2/TradeCEFTA2006.asp). 
32 The EFTA States are:  Icelan d, Liechtenstein, Norway, and Swit zerland.  The EFTA-Croatia Free 
Trade Agreement was provisionally applied with Liecht enstein and Switzerland as from 1 January 2002. 
33 The bilateral agricultural agreements cover trade concessions in the form of reduced MFN duties for 
unlimited quantities or trade concessions in the form of tariff quotas. 
34 EFTA online information.  Viewed at:  http:// www.efta.int/content/free-trade/fta-countries/croatia. 
35 WTO document WT/REG156/5, 13 March 2006. 
36 Article 14 of the agreement calls for progressive liberalization and mutual opening of the markets for 
investments and trade in services, taking in to account relevant pr ovisions of the GATS. WT/TPR/S/227 Trade Policy Review 
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(v) Other preferential trade arrangements 
30. Croatia does not grant autonomous preferences, but goods originating in Croatia benefit from 
the Generalized System of Preferences (GSP) in:  Australia, Belarus, Canada, Japan, Kazakhstan, New Zealand, Russian Federation, Ukraine, and the United States.   
31. Croatia is not a member of the Agreement on the Global System of Trade Preferences (GSTP) 
among developing countries. 
(4) I
NVESTMENT REGIME  
32. The investment regime in Croatia is main ly regulated under the Companies Act (OG 111 /93, 
as amended), and the Investment Promotion Act (OG 138/06) in force since 2007.  The Companies 
Act sets out the prerequisites and status of foreign investors.37  
33. In 2002, the Trade and Investment Promo tion Agency (APIU) was established as the 
government agency responsible for assisti ng both foreign and domestic investors.38  In order to speed 
up and simplify the procedures of establishing a co mpany and to eliminate red tape, the government 
service HITRO.HR was established in May 2005.  HITRO.HR has more than 60 offices and enables 
an investor to establish a company in less than eight working days.39  In addition, the Investment and 
Export Promotion Directorate in MELE is involved in developing investment promotion and export 
strategies in, inter alia , free zones and industrial zones, and technological parks with the aim of 
improving the business environment (Chapter I(3)( ii)), and increasing in domestic and foreign 
investments to foster regional devel opment and growth of Croatia's economy. 
34. Foreign legal entities and persons may invest capital on a contractual basis;  in a company;  in 
a bank or insurance business;  start a craft business or act as sole traders;  obtain a concession to 
exploit natural resources to perform works or to pr ovide services;  and participate in build-operate-
transfer (BOT) and build-own-operate-transfer (BOOT)  deals.  According to the authorities, at end 
October 2009 there were 148,611 companies registered in Croatia, 7.7% (11,401) of which were 100% owned by foreign investors. 
35. Under Croatian legislation, a foreign investor  is defined as any foreign national or legal 
person with a registered seat outside Croatia.  He/s he may establish, or participate in the establishment 
of a company and may acquire rights and/or  obligations like any domestic investor.
40  In addition, the 
Constitution provides several guarantees for foreign investors, including that all rights acquired by the investment of capital cannot be restricted by law or  any other legal act, and that foreign investors are 
guaranteed free transfer and repatriati on of the profit and invested capital.
41  Inward portfolio 
investment is not restricted, except for central bank short-term securities in the primary market.  On 
                                                      
37 The umbrella regulation for establishing compan ies is the Companies Act.   Sector-specific acts 
include:  the Credit Institutions Act;  Electronic Money Institutions Act;  Insurance Act;  Institutions Act;  and 
Cooperatives Act.  Investment issues are also regulate d by the Act on Ownership and Other Proprietary Rights. 
38 A company with limited responsibility can be established within 24 hours (APIU online information.  
Viewed at:  http://www.apiu.hr/H ome.aspx?PageID=1&gohome=true). 
39 HITRO online information.  Viewed a t:  http://www.hitro.hr /Default.aspx?sec=18. 
40 Croatia provides equal treatment to national and foreign legal and natural persons with respect to 
their business operations, and no barriers exist for star ting economic activities.  For particular registration 
entities (both national and foreign), certain limitations ar e regulated by special acts regarding prior consent for 
establishing or ceasing operations, as well as equity requirements. 
41 Article 49 of the Constitution. Croatia WT/TPR/S/227 
 Page 23 
 
 
real estate property rights, foreign investors have the same rights, obligations, and legal status as 
domestic investors, provided the condition of reci procity is met (except for EU Member States).42 
36. Some activities are subject to specific requirement s, such as a special certificate of approval, 
licence or other document issued by the relevant government body or institution.43  These activities 
include:  banking, insurance, air and road trans port, production of and trade in tobacco and tobacco 
products, most energy activities, and telecommunica tion services (Table AII.1).  Moreover, some 
state-owned enterprises (SOEs) operate under de jure  monopoly or hold exclusive rights, including 
Hrvatske sume (Croatian State Forests), Croatian Railways  Hrvatske Zeljeznice (HŽ), and Hravatska 
posta (Croatian Post), while some recently privatized companies still operate as de facto  monopolies, 
such as the electricity company Hrvatska elek troprivreda (HEP) and the oil and gas company 
Industrija nafte (INA) (Chapter I(1)).  
37. Under the Investment Promotion Act, vari ous investment incentive schemes benefit both 
foreign and domestic investors and include tariff an d tax concessions (Chapter III(4)(i)).  No special 
incentives are available only to foreign or national investors. 
38. Croatia has signed 57 bilateral investment agreements44, and 50 treaties on double taxation.45  
39. Croatia participates in several investment -related conventions, including those under the 
International Centre for Settlement of Investment  Disputes (ICSID), and the Multilateral Investment 
Guarantee Agency (MIGA).  
(5) AID FOR TRADE  
40. Croatia received average annual trade-relate d aid flows of US$54.2 million during 2002-05.46  
Most of this aid has benefited the economic infrast ructure, particularly transport and storage;  
communications and energy supply and generation;  as well as tourism.47  
                                                      
42 Under Article 3 of the Act on Amendments to th e Act on Ownership and Other Proprietary Rights 
(OG 146/08), which entered into force on 1 February 2009, the provisions on reciprocity exclude citizens or 
legal persons from EU Member States.  Such persons acquire the right over real property under conditions 
applicable to Croatian citizens and legal persons with seat  in Croatia with respect to acquiring property rights 
(except for real estate in excepted areas, i.e. agricultural la nd provided for by the sp ecial act and protected 
natural areas provided for by the special act).  For other foreigners, reciprocity is required. 
43 Without the approval/licence, it is not possible to establish a company in the relevant court register 
and, consequently, to commence activity (Croatian Chamber of Economy, 2007). 
44 Albania, Argentina, Austria, Azerbaijan, Belarus, Belgium-Luxembourg, Bosnia and Herzegovina, 
Bulgaria, Cambodia, Canada, Chile, China, Cuba, Czech Republic, Denmar k, Egypt, Finland, France, Germany, 
Greece, Hungary, India, Indones ia, Iran, Israel, Italy, Jordan, Republic of Korea, Kuwait, Latvia, Libyan Arab 
Jamahiriya, Lithuania, FYR of M acedonia, Malaysia, Malta, Moldova, Morocco, the Netherlands, Oman, 
Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, 
Switzerland, Thailand, Turkey, Ukraine, United Kingd om, United States, and Zimbabwe.  See MELE online 
information.  Viewed at:  http://www.mfa.hr/MVP.asp?pcpid=1622. 
45 Albania, Austria, Belgium, Belarus, Bosnia and Herzegovina, Bulgaria, Ca nada, Chile, China, Czech 
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,  Iran, Ireland, Israel, Italy, Jordan, 
Republic of Korea, Kuwait, Latvia, Lithuania, FY R of Macedonia, Malaysia, Malta, Mauritius, Moldova, 
Montenegro, the Netherlands, Norway, Poland, Qatar, Romania, Russian Federation, San Marino, Serbia, 
Slovakia, Slovenia, South Africa, Spain, Syria, Sweden, Switzerland, Turkey, Ukraine, and United Kingdom.  See Ministry of Finance  online information.  Viewed at:  http ://www.porezna-uprava.hr/en/propisi/double 
Taxation.asp?id=b02d2.  
46 OECD Creditor Reporting System (CRS) Database.  Viewed at:  http://www.oecd.org/dataoecd/40/ 
43/39875646.pdf. WT/TPR/S/227 Trade Policy Review 
Page 24 
 
 
41. As an EU candidate country, Croatia received EU financial aid of €13 8.5 million in 2007 and 
€146 million in 2008, under the Instrument for Pre- accession Assistance (IPA).   It is implemented 
under decentralized management according to the five IPA components available to candidate 
countries: institution building; cross-border coope ration;  regional development;  human resources 
development;  and agriculture and rural development48.  Croatia also receives bilateral development 
assistance from Belgium49, Denmark50, France, Germany51, Italy52, the Netherlands, Norway, Sweden, 
and the United Kingdom.53 
42. During 1992-2008, Croatia benefited from t echnical assistance programmes provided by 
USAID, worth more than US$320 million.  These programmes, inter alia , facilitated economic and 
fiscal reform;  strengthened democratic institutions ;  created agribusiness programmes;  established a 
wide range of professional traini ng;  and supported Croatia's pr ocess of negotiations for EU and 
NATO membership.  Croatia has also received assistance from Japan.54  
43. Croatia is currently transforming itself from an aid-recipient country to a donor country.  
During the past decade, Croatia has been pr oviding development assistance to Bosnia and 
Herzegovina in the areas of reconstruction, health , and education.  Croatia has also made voluntary 
contributions to the UN, international organiza tion and peacekeeping operations, including training 
and development projects, as well as contributions to civil society organizations.  In the future, Croatia's trade-related technical assistance will be main ly directed to south eastern Europe, to transfer 
its experience in areas such as economic transition (creation of conditions for a market economy) and 
accession to the EU.
55 Croatia will also try to help countries mo st in need, such as LDCs, in attaining 
their Millennium Development Goals.  
                                                                                                                                                                     
47 The Aid-for-Trade Initiative was launched at the WTO Hong Kong Ministerial Conference in 2005, 
where Ministers agreed that aid for trade should aim to help developing countries, particularly LDCs, to build 
the supply-side capacity and trade-related infrastructure that they need to help them to implement and benefit 
from WTO Agreements and more broadly to expand trade. 
48 EC online information.  Viewed at:  http://ec. europa.eu/enlargement/candi date-countries/croatia/ 
financial_en.htm. 
49 The programme of pre-accession aid to Croatia amount ed to €700,000 in 2008 and was implemented 
through six projects in cooperation with state institutions. 
50 One project was completed in 20 08 at the Central State Office fo r Development Strategy and Fund 
Coordination in the second phase of the Programme for 2008-10. 
51 In 2008, €3 million were allocated to fund four projects aimed at reforming the vocational education 
system, stimulating the economy and employment, and introducing integrated management of coastal areas. 
52 The project "Creating and provid ing technical assistance to the pu blic administration in Balkan 
countries in the field of SME internationalization" is conducted by the Italian Foreign Trade Institute. 
53 In 2008, three control and cooperation improvement projects were funded at Croatia's border 
crossings with Bosnia and Herzegovina, Montenegro, an d Serbia through the "Europ e Unification Programme". 
54 The Programme of bilateral cooperation between Croatia and Japan started in 1997 and includes 
Japan's technical aid as well as donations (human security/cultural). 
55 Government of Croatia (2009).