WORLD TRADE  
ORGANIZATION  WT/REG205/1 
3 October 2005 
 (05-4397) 
Committee on Regional Trade Agreements Original:   English 
  
FREE TRADE AGREEMENT BETWEEN 
 CROATIA AND SERBIA AND MONTENEGRO 
 
Notification from Croatia
 
  
 The following communication, dated 20 September 2005, is being circulated at the request of 
the Delegation of Croatia.  
_______________ 
  
AGREEMENT BETWEEN THE REPUBLIC OF CROATIA AND SERBIA AND MONTENEGRO 
ON AMENDMENTS TO THE FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF 
CROATIA AND THE FEDERAL REPUBLIC OF YUGOSLAVIA
∗ 
 
  The Republic of Croatia and Serbia and Montenegro  (hereinafter referred to as “the 
Contracting Parties”) by this Agreement on Amendments to the Free Trade Agreement between the Republic of Croatia and the Federal Republic  of Yugoslavia, signed in Belgrade on 
December 23
rd, 2002 (hereinafter referred to as the “Agreement on Amendments”). 
 
Article 1 
 
 The name of the Contracting Party “Federal Republic of Yugoslavia” shall be amended throughout the Free Trade Agreement of December 23
rd 2002 (hereinafter referred to as “the 
Agreement”), as well as its Annexes, Protocols a nd Appendices being, in accordance with Article 36, 
their integral part, shall be amended and reads: “Serbia and Montenegro”. 
 
Article 2 
 
 Article 2, paragraph 1 of the Agre ement shall be amended and reads: 
 
 “For each product the basic duty to which the su ccessive reductions set out in this Agreement 
are to be applied shall be the Most Favoured Nation duty in force on August 15th 2003 or on the day 
of signing of this Agreement on Am endments, whichever being lower”.  
 
Article 3 
 
 Article 6, paragraph 2 of the Agre ement shall be amended and reads: 
 
                                                      
∗ The associated Annexes and Protocols have been  submitted to the Secretariat for consultation by 
interested Members (office 1174). 
 WT/REG205/1 
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  “All quantitative restrictions on imports and measures having equivalent effect shall be 
abolished on the date of the entry into force of th is Agreement, with the exception of the products 
listed in Appendix I and Appe ndix II of this Agreement”. 
 
Article 4 
 
 Article 7, paragraph 2 of the Agre ement shall be amended and reads: 
  “All quantitative restrictions on exports and measures having equivalent effect shall be 
abolished on the date of the entry into force of th is Agreement, with the exception of the products 
listed in Appendix III of this Agreement”. 
 
Article 5 
 
 Article 9, paragraph 2 of the Agre ement shall be amended and reads: 
 
 “As of the entering into force of this Agreemen t the duties to be applied to import of products 
originating in the Contracting Parties, listed in Annex I and Annex II of the Protocol 1 shall be 
successively reduced in accordance with the following schedule: 
  - as of the entry into force of this Agreem ent all duties shall be reduced to 60% of the 
  basic duty, 
  - as of January 1
st 2005 all duties shall be reduced to 40% of the basic duty, 
  - as of January 1
st 2006 all duties shall be reduced to 20% of the basic duty, 
 
 - as of January 1st 2007 the remaining duties shall be abolished.” 
 
Article 6 
 
 Annex I of the Agreement (from Article 6 para graph 2) shall be ame nded and the provisions 
of the amended Annex I shall be an integral part of the Agreement. 
 
Article 7 
 
 After the Annex I of the Agreement, in accordance with Article 3 of the Agreement on 
Amendments the Annex II of the Agreement shall be added, being an integral part of it.  
 
Article 8 
 
 Annex II from Article 7, paragraph 2 of the Ag reement, becomes, in accordance to Article 4 
of the Agreement on Amendments, Annex III of  Agreement, being its integral part. 
 
Article 9 
 
 Protocol 1 of Article 9, paragraph 2 of the Agreement shall be amended and the provisions of 
the amended Protocol 1 shall be an integral part of the Agreement. 
 
Article 10 
 
 Protocol 2 from paragraph 1, Article 11 to  the Agreement shall be amended and the 
provisions of the amended Protocol shall be  an integral part of the Agreement.   WT/REG205/1 
 Page 3 
 
 
  
Article 11 
 
 As an integral part of the Agreem ent on Amendments shall be understood: 
 
 - Appendix I (from Article 6 paragraph 2) to  the Agreement – Quantitative restrictions 
on imports in Serbia and Montenegro, 
  - Appendix II (from Article 6, paragra ph 2) to the Agreement – Quantitative 
restrictions on imports in the Republic of Croatia, 
 
 - Appendix III (from Article 7, paragra ph 2) to the Agreement – Quantitative 
restrictions on exports from the Republic of Croatia, 
  - Protocol 1 Annex I (from Article 9) to the Agreement – List of sensitive industrial 
products originating in Serbia and Montenegro, 
  - Protocol 1 Annex II (from Article 9) to the Agreement – List of sensitive industrial 
products originating in the Republic of Croatia, 
  - Protocol 2 (from Article 11) to the Agr eement – Exchange of agricultural concessions 
between the Republic of Croatia  and Serbia and Montenegro, 
  - Annex A to the Protocol 2,   - Annex B to the Protocol 2, 
  
 - Annex C to the Protocol 2.  
Article 12 
 
 The Agreement on Amendments shall enter in to force on the first day of the second month 
following the date of the receipt of the last wr itten notification by which the Contracting Parties 
inform each other through diplomatic channels that the internal legal requirements for entry into force 
of this Agreement have been fulfilled.    
 Done at .................... ...................... on  ............................ ........... in two originals each in 
Croatian, Serbian and Eng lish languages, all three texts being equally authentic. In case of divergence 
in interpretation the English text shall prevail.    FOR THE REPUBLIC OF CROATIA  FOR SERBIA AND MONTENEGRO 
 
_______________ 
 
 WT/REG205/1 
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 FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF CROATIA AND 
THE FEDERAL REPUBLIC OF YUGOSLAVIA 
 
PREAMBLE
 
 
 The Republic of Croatia  and the Federal Republic of Yugoslavia  (hereinafter referred to as 
"the Contracting Parties"),   Reaffirming  their firm commitment to pluralistic democracy based on the rule of law, human 
rights and fundamental freedoms, 
 
 Recalling  their intention to participate actively in the process of economic integration in 
Europe and expressing their preparedness to co-opera te in seeking ways and means to strengthen this 
process,  
 Reaffirming their firm commitment to the principles of a market economy, which constitutes 
the basis for their relations,   Recalling  their firm commitment to the Final Act on Security and Co-operation in Europe, the 
Paris Charter for new Europe,  
 Resolved  to this end to eliminate progressively th e obstacles to mutual trade, in accordance 
with the provisions of the General Agreement on Ta riffs and Trade 1994 (hereinafter referred to as 
"GATT 1994") and the Agreement establishing the Worl d Trade Organisation (hereinafter referred to 
as "Agreement establishing WTO"),  
 Firmly  convinced that this Agreement will foster the intensification of mutually beneficial 
trade relations among them and contribute to the process of integration in Europe, 
  Considering  that no provision of this Agreemen t may be interpreted as exempting the 
Contracting Parties from their obligations  under other international agreements, 
 
 
 Have agreed  as follows: 
 
Article 1 
 
Objectives
 
1. The Contracting Parties shall gradually estab lish during a transitional period ending on 
1st  January 2007 a free trade area in accordance w ith the provisions of this Agreement and in 
conformity with Article XXIV of the GATT 1994 and the Agreement establishing the WTO on 
substantially all their bilateral trade. 
2. The objectives of this Agreement are: 
 - to promote through the expansion of trade, the harmonious development of economic 
relations between the Contracting Parties a nd thus to foster the advance of their 
economy, the improvement of living and employment conditions, and increase  financial stability in their countries, 
 
 
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  - to provide fair conditions of competition in trade between the Contracting Parties, 
  - to contribute by the removal of barriers to trade, to the harmonious development and 
expansion of the world trade. 
 
Article 2 
 
Basic Duties
 
1. For each product the basic duty to which the su ccessive reductions set out in this Agreement 
are to be applied shall be the Most Favoured Nati on rate of duty in force on the date signing of this 
Agreement or the duty in force on 1st January 2003, whichever is lower.  
2. If, after entry into force of this Agreemen t, any tariff reduction is applied on an erga omnes  
basis, such reduced duties shall re place the basic duties referred to in paragraph 1 of this Article as 
from that date when such reductions are applied. 
3. The reduced duties, calculated in  accordance with paragraph 2 of this Article, shall be applied 
rounded to the one decimal place. 
4. The Contracting Parties shall communicate to  each other their respective customs duties. 
Article 3 
 
Customs Duties On Imports And Charges Having Equivalent Effect  
1. No new customs duties on imports or charges havi ng equivalent effect shall be introduced in 
trade between the Contracting Parties or the existing duties increased as from the date of the entry into 
force of this Agreement. 
2. All charges having equivalent effect as custom s duties shall be abolished on the date of the 
entry into force of this Agreement.  
Article 4 
 
Fiscal Duties  
1. The Contracting Parties agree that the provisions of Article 3 apply also to other import 
customs duties of a fiscal nature.  
2. The Contracting Parties shall abolish all import customs duties of a fiscal nature as from the 
date of the entry into force of this Agreement. 
Article 5 
 
Customs Duties On Exports And Charges Having Equivalent Effect  
1. No new customs duties on exports or charges havi ng equivalent effect shall be introduced in 
trade between the Contracting Parties as from the date  of the entry into force of this Agreement. 
2. All customs duties on export and charges having equivalent effect shall be abolished on the 
date of the entry into force of this Agreement. WT/REG205/1 
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 Article 6 
 
Quantitative Restrictions On Imports And Measures Having Equivalent Effect
 
1. No new quantitative restrictions on imports or measures having equivalent effect shall be 
introduced in trade between the Contracting Parties, as from the date of the entry into force of this 
Agreement. 
2. All quantitative restrictions on imports and measures having equivalent effect shall be 
abolished on the date of the entry into force of th is Agreement, with the exception of the products 
listed in Appendix I to this Agreement. 
Article 7 
 
Quantitative Restrictions On Exports And Measures Having Equivalent Effect  
1. No new quantitative restrictions on exports or measures having equivalent effect shall be 
introduced in trade between the Contracting Parties, as from the date of the entry into force of this 
Agreement. 
2. All quantitative restrictions on exports and me asures having equivalent effect shall be 
abolished on the date of the entry into force of th is Agreement, with the exception of the products 
listed in Appendix II to this Agreement. 
CHAPTER I:  INDUSTRIAL PRODUCTS 
 
Article 8 
 
Scope  
1. The provisions of this Chapter sh all apply to industrial products originating in the Contracting 
Parties. 
2. For the purpose of this Agreement the term “industrial products“ means the products falling 
within Chapters 25 to 97 of the Harmonised Co mmodity Description and Coding System, with the 
exception of the products listed in Annex I to this Agreement. 
Article 9 
 
Customs Duties On Imports  
1. With the entry into force of this Agreement, the customs duties and charges having equivalent 
effect are mutually abolished on imports of products originating in the Contracting Parties, except on 
imports of products listed in Annex I and Annex II of Protoc ol 1 of this Agreement.  
2. Customs duties on imports of products originatin g in the Contracting Parties which are listed 
in this Annex I and Annex II of Protocol 1 sha ll be progressively reduced in accordance with the 
following timetable: 
 - On the date of entry into force of the Agreement, duties shall be reduced to 70% of 
the basic duty, 
  - On 1 January 2004, duty shall be reduced to 50% of the basic duty,  WT/REG205/1 
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  - On 1 January 2005, duty shall be reduced to 30% of the basic duty, 
  - On 1 January 2006, duty shall be reduced to 15% of the basic duty,   - On 1 January 2007, the remaining duties shall be abolished. 
 
 
CHAPTER II:  AGRICULTURAL PRODUCTS 
 
Article 10 
 
Scope
 
1. The provisions of this Chapter shall apply to agricultural products originating in the 
Contracting Parties. 
2. The term "agricultural products " means for the purpose of this Agreement the products falling 
within Chapters 1 to 24 of the Harmonised Commodity Description and Coding System and the 
products listed in Annex I to this Agreement. 
Article 11 
 
Exchange Of Concessions  
1. The Contracting Parties shall grant each other the concessions specified in Protocol 2 to this 
Agreement (hereinafter referred to as "Protocol 2") as laid down in that Protocol and in accordance 
with the provisions of this Chapter.  2. Taking account of:  
 - the role of agriculture in their economies, 
  - the development of trade in agri cultural products between the Parties, 
  - the particular sensitivity of the agricultural products,  
 - the rules of their agricultural policies, 
  - the results of the multilateral trade negotiations under the WTO.  the Contracting Parties shall examine within th e framework of the Joint Committee referred in 
Article 33 of this Agreement (hereinafter refe rred to as “Joint Committe e”) the possibilities of 
granting each other further concessions in trade in agricultural products. 
 
Article 12 
 
Concessions And Agricultural Policies
 
1. Without prejudice to the concessions granted under Article 11 to this Agreement the 
provisions of this Chapter shall not restrict in any way the pursuance of th e respective agricultural 
policies of the Contracting Parties or the taking of any measures under such policies, including the implementation of the respective provisions under the WTO. WT/REG205/1 
Page 8  
 
 2. The Contracting Parties shall notify the Joint Committee about the changes in their respective 
agricultural policies pursued or measures applied,  which may affect the conditions of trade in 
agricultural products between them as provided for in this Agreement. On the request of any 
Contracting Party prompt consultations sh all be held to examine the situation. 
Article 13 
 
Specific Safeguards
 
 Notwithstanding other provisions of this Agreem ent, and in particular Article 26 to this 
Agreement, and given the particular sensitivity of  the agricultural products, if imports of products 
originating in a Contracting Party, which are subj ect to the concessions granted under this Agreement, 
cause serious disturbances to the markets of the other Contracting Party,  the Contracting Party 
concerned shall immediately enter into consultations  to find an appropriate solution. Pending such 
solution, the Contracting Party concerned may ta ke the measures it deems necessary. The type and 
duration of the measure should not go beyond what is strictly necessary to remedy the situation. 
 
Article 14 
 
Sanitary And Phytosanitary Measures  
 
1. The Contracting Parties shall apply their regula tions in veterinary and phytosanitary matters 
in a non-discriminatory fashion and shall not introduce any measures that have the effect of unduly 
obstructing trade. 
2. The veterinary and sanitary measures and the work of the veterinary services will be in 
accordance with international c onventions in this field. 
3. The phytosanitary measures and the work of the plant protection service will be in accordance 
with international conventions in this field. 
 
CHAPTER III:  GENERAL PROVISIONS 
 
Article 15 
 
Rules Of Origin And Co-operation In Customs Matters  
1. Protocol 3 to this Agreement (hereinafter referre d to as “the Protocol 3") lays down the rules 
of origin and related methods of administrative co-operation. 
2. The Contracting Parties shall take appropriate  measures, including regular reviews by the 
Joint Committee and arrangements for administrative co -operation, to ensure that the provisions of 
this Agreement are effectively and harmoniously applied, and to reduce, as far as possible, the 
formalities imposed on trade, and to achieve mutually  satisfactory solutions to any difficulties arising 
from the operation of those provisions. 
   WT/REG205/1 
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 Article 16 
 
Internal Taxation  
1. The Contracting Parties shall refrain from any meas ure or practice of an internal fiscal nature 
establishing, whether directly or indirectly, discr imination between the products originating in the 
Contracting Parties. 
2. Products exported to the territory of the Cont racting Parties may not benefit from repayment 
of internal taxes in excess of the amount of direct or indirect taxes imposed on them. 
Article 17 
 
General Exceptions  
 This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in 
transit justified on grounds of public morality, public  policy or public security; of the protection of 
health and life of humans, animals or plants; of the protection of national treasures possessing artistic, historic or archaeological value; of the protection of intellectual property or of the rules relating to 
trade in gold or silver or to the conservation of exha ustible natural resources, if such measures are 
made effective in conjunction with restricti ons on domestic production or consumption. Such 
prohibitions or restrictions shall not, however, c onstitute a means of arbitrary discrimination or a 
disguised restriction on trade between the Contracting Parties.  
Article 18 
 
Security Exceptions
 
 Nothing in this Agreement sh all prevent a Contracting Part y from taking any measure, which 
it considers necessary:  
1. to prevent the disclosure of information c ontrary to its essential security interests; 
2. for the protection of its essential security inter ests or for the implementation of international 
obligations or national policies relating to: 
 - the traffic in arms, ammunition and implem ents of war, provided that such measures 
do not impair the conditions of competition in respect of products not intended for 
specifically military purposes, and to such  traffic in other goods, materials and 
services as is carried on directly or indirectly for the purpose of supplying a military 
establishment;  or 
  - non-proliferation of biological and ch emical weapons, nuclear weapons or other 
nuclear explosive devices;  or 
 
 - measures taken in time of war or other serious international tension. 
 
Article 19 
 
State Monopolies
 
1. The Contracting Parties shall adjust pr ogressively any state monopoly of a commercial 
character so as to ensure that by  the end of the transitional period stipulated in Article 1 of this WT/REG205/1 
Page 10  
 
 Agreement, no discrimination regarding the conditio ns under which goods are procured and marketed 
exists between legal and natural pe rsons of the Contracting Parties. 
 2. The provisions of this Article shall apply to any body through which the competent authorities of the Contracting Parties, in law or in f act, directly or indirectly supervise, determine or 
appreciably influence imports or exports betwee n the Contracting Parties. These provisions shall 
likewise apply to monopolies delegated by the state to other bodies.   
Article 20 
 
Payments
 
1. Payments in convertible currencies relating to trade in goods between the Contracting Parties 
and the transfer of such payments to the territory of the Contracting Party, where the creditor resides, 
shall be free from any restrictions. 
2. The Contracting Parties shall refrain from any exchange or administrative restrictions on the 
grant, repayment or acceptance of short and medium term credits related to trade in goods in which a 
resident in one of the Contracting Parties participates. 
3. Notwithstanding the provisions of Paragraph 2 of this Article, any measures concerning 
current payments connected with the movement of goods shall be in conformity with the conditions 
laid down under Article VIII of the Articles of Agreement of the International Monetary Fund. 
Article 21 
 
Rules Of Competition Concerning Undertakings  
1. The following are incompatible with the proper functioning of this Agreement in so far as 
they may affect trade between the Contracting Parties: 
 - all agreements between lega l persons and undertakings ( hereinafter referred to as 
“undertakings”), decisions by associations of undertakings and concerted practices 
between undertakings which have as their object or effect the prevention, restriction or distortion of competition; 
  - abuse by one or more undertakings of a dominant position in the territories of the 
Contracting Parties as a whole or in substantial part thereof. 
 2. The provisions of paragraph 1 of this Article shall apply to the activities of all undertakings 
including public undertakings and undertakings to which the Contracting Parties grant special or exclusive rights. Undertakings entrusted with the op eration of services of general economic interest or 
having the character of a revenue-producing monopoly, shall be subject to provisions of paragraph 1 
of this Article in so far as the application of th ese provisions does not obstruct the performance, in law 
or fact, of the particular public tasks assigned to them. 
3. With regard to products referred to in Chapte r II to this Agreement the provisions stipulated 
first subparagraph of para graph 1 of this Article shall not appl y to such agreements, decisions and 
practices which form an integral part of a national market organisation. 
4. If a Contracting Party considers that a given prac tice is incompatible with  paragraphs 1, 2 and 
3 of this Article or if such practice causes or threat ens to cause serious prejudice to the interest of that  WT/REG205/1 
 Page 11 
 
 
 Contracting Party or material injury to its domest ic industry, the Contracting Party concerned may 
take appropriate measures under th e conditions and in accordance w ith the procedure laid down in 
Article 29 of this Agreement. 
Article 22 
 
State Aid  
1. Any aid granted by a Contracting Party or thro ugh state resources in any form whatsoever 
which distorts or threatens to distort competiti on by favouring certain undertakings or the production 
of certain goods shall, in so far as  it may affect trade between the Cont racting Parties, be incompatible 
with the proper functioning of this Agreement. 
2. The provisions of paragraph 1 of this Article sha ll not apply to products covered by Chapter II 
to this Agreement. 
3. The Joint Committee shall within the period of three years from enforcement of the 
Agreement adopt criteria for appraisal of activities be ing contrary to paragrap h 1 of this Article, as 
well as the corresponding implementation procedures. 
4. The Contracting Parties shall ensure tr ansparency in the area of state aid, inter alia , by 
reporting annually to the Joint Committee on the total amount and the distribution of the aid given and by providing to the other Contracting Party, upon request, information on aid schemes and on 
particular individual cases of state aid. 
5. If a Contracting Party considers that a particular practice: 
 - is incompatible with the terms of para graph 1 of this Article , or the appropriate 
procedure relating to rules laid down in pa ragraph 3 of this Article has not been 
applied, or 
  - in the absence of rules laid down in para graph 3 of this Article, causes or threatens to 
cause serious prejudice to the interest of that  Contracting Party or material injury to 
its domestic industry,  
 it may take appropriate measures under the conditions  of and in accordance with the provisions laid 
down in Article 29 of this Agreement.  6. Such appropriate measures may only be taken in conformity with the procedures and under 
the conditions laid down by the GATT 1994 and the Agreement establishing WTO and any other 
relevant instruments negotiated under their auspices,  which are applicable between the Contracting 
Parties. 
Article 23 
 
Public Procurement
 
1. The Contracting Parties consider the liberalisation of their respective public procurement 
markets as an objective of this Agreement. 
  WT/REG205/1 
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 2. The Contracting Parties shall progressively de velop their respective regulations for public 
procurement with a view to granting suppliers of the other Contracting Party access to contract award 
procedures on their respective public procurement markets.  3. The Joint Committee shall examine developments related to the achievement of the objectives 
of this Article and may recommend practical modalities of implementing the provisions of 
paragraph 2 of this Article so as to ensure fre e access, transparency, full balance of rights and 
obligations and mutual opening of respective public  procurement markets the Contracting Parties. 
 
Article 24 
 
Protection Of Intellectual Property
 
1. The Contracting Parties shall ensure the pr otection of intellectual property rights on a 
non-discriminatory basis, including measures for granting and enforcing such rights. This protection shall be gradually improved to reach, before the end of the transitional period set out in Article 1 of 
this Agreement, the level corresponding to the s ubstantive standards of the multilateral agreements 
specified in Annex II to this Agreement. 
2. For the purpose of this Agreement the term "inte llectual property" refers in particularly to: 
protection of copyright and related right, including computer programs and databases, trade marks for goods and services, geographical indications including mark of origin, patents, industrial design, new 
plant varieties, topographies of integrated ci rcuits, as well as undisclosed information on 
“know-how”. 
3. The Contracting Parties shall co-operate in matte rs of intellectual property. They shall hold, 
upon request of any Contracting Party, expert cons ultations on these matters, in particular, on 
activities relating to the existing or to future  international conventions on harmonisation, 
administration or protection of the intellect ual property and on activ ities in international 
organizations, such as the WTO and the World Intell ectual Property Organisation, as well as relations 
of the Contracting Parties with any third count ry on matters concerning intellectual property. 
Article 25 
 
Dumping
 
 If a Contracting Party finds that dumping within the meaning of Article VI of the GATT 1994 
is taking place in trade relations governed by this  Agreement, it may take appropriate measures 
against that practice in accordance with the Ar ticle VI of the GATT 1994 and WTO Agreement on 
application of Article VI of the GATT 1994, un der the conditions and in accordance with the 
procedure laid down in Artic le 29 to this Agreement. 
 
Article 26 
 
General Safeguards  
 Where any product is being imported in such increased quantities and under such conditions 
as to cause or threaten to cause:  
 - serious injury to domestic producers of like or directly competitive products in the 
territory of the importing Contracting Party, or 
  WT/REG205/1 
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  - serious disturbances in any related sector of the economy or difficulties which could 
bring about serious deterioration in the economic situation of a region, 
 the Contracting Party concerned may take a ppropriate measures under the conditions and in 
accordance with the procedure laid down in Article 29 of this Agreement. 
 
Article 27 
 
Re-Export And Serious Shortage
 
 Where compliance with the provisions of Ar ticles 5 and 7 of this Agreement leads to: 
 
 - re-export towards a third country agains t which the exporting Contracting Party 
maintains for the product concerned quantita tive export restrictions, export duties or 
measures or charges having equivalent effect; or 
 
 - a serious shortage, or threat thereo f, of a product essential to the exporting 
Contracting Party; 
 and where the situations referred to above give rise or are likely to give rise to major difficulties for 
the exporting Contracting Party, that Contracti ng Party may take appropriate measures under the 
conditions and in accordance with the procedures laid down in Article 29 of this Agreement. 
 
Article 28 
 
Fulfilment Of Obligations
 
1. The Contracting Parties shall take any general or specific measures required to fulfil their 
obligations under this Agreement. They shall ensure to it that the objectives set out in this Agreement 
are achieved. 
2. If a Contracting Party considers that the othe r Contracting Party has failed to fulfil an 
obligation under this Agreement, the Contracting Party concerned may take appropriate measures 
under the conditions and in accordance with the procedur e laid down in Article 29 of this Agreement. 
Article 29 
 
Procedure For The Application Of Safeguard Measures  
1. Before initiating the procedure for the appli cation of safeguard measures set out in the 
following paragraphs of this Article , the Contracting Parties shall endeavour to solve any differences 
between them through direct consultations. 
2. In the event of a Contracting Party subjecting imports of products liable to give rise to the 
situation referred to in Article 26 of this Agreement to an admini strative procedure having its purpose 
the rapid provision of information on the trend of tr ade flows, it shall inform the other Contracting 
Party. 
3. Without prejudice to paragraph 7 of this Ar ticle, a Contracting Party which considers 
resorting to safeguard measures shall promptly no tify the other Contracting Party thereof and supply 
all relevant information. Consulta tions between the Contracting Parties shall take place without delay, 
but not later than 30 days from submission of request , in the Joint Committee with a view to finding a 
solution acceptable to the Contracting Parties. WT/REG205/1 
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 4. With regards to: 
 1) Articles 25, 26 and 27 of this Agreemen t, the Joint Committee shall examine the case 
or situation and may take any decision needed to  put an end to the difficulties notified by the 
Contracting Party concerned. In case of absence of su ch decision within thirty days of the matter 
being referred to the Joint Committee, the Contr acting Party concerned may adopt the measures 
necessary in order to remedy the situation. 
  2) Article 28 of this Agreement, the Cont racting Party concerned may take appropriate 
measures after the consultations ha ve been concluded or a period of three months has elapsed from 
the date of the first written notification to the other Contracting Party. 
 
 3) Articles 20 and 21 of this Agreement, th e Contracting Party concerned shall give the 
Joint Committee all the assistance required in orde r to examine the case and, where appropriate to 
eliminate the practice objected to. If the other Contr acting Party fails to put an end to the practice 
objected to within the period fixed by the Joint Co mmittee or if the Joint Committee fails to reach an 
agreement within thirty days of the matter being referred to it, the Contracting Party concerned may 
adopt appropriate measures to deal with the di fficulties resulting from the practice in question. 
 5. The safeguard measures taken shall be notified immediately to the other Contracting Party. 
They shall be limited with regard to their extent and to their duration to what is strictly necessary in 
order to rectify the situation giving rise to their a pplication and shall not be in excess of the injury 
caused by the practice or the difficulty in question. Priority shall be given to such measures as will 
least disturb the functioning of this Agreement. 
6. The safeguard measures taken shall be the object of  periodic consultations with a view to their 
relaxation as soon as possible or abolition when cond itions no longer justify their maintenance. 
7. Where exceptional circumstances requiring immediate action make prior examination 
impossible, the Contracting Party concerned may,  in the cases of Articles 25, 26 and 27 of this 
Agreement, apply forthwith the pr ovisional measures strictly necessary to remedy the situation. The 
measures taken shall be notified without delay and co nsultations between the Contracting Parties shall 
take place as soon as possible within the Joint Committee. 
Article 30 
 
Balance Of Payments Difficulties
 
1. The Contracting Parties shall endeavour to avoid the imposition of restrictive measures 
including measures relating to imports for balance of payments purposes. 
2. Where one of the Contracting Parties is in ser ious balance of payments difficulties, or under 
imminent threat thereof, the Contracting Party concerned may, in accordance with the conditions 
established under the GATT 1994 and the WTO adopt  restrictive measures, including measures 
related to imports, which shall be  of limited duration and may not go beyond what is necessary to 
remedy the balance of payments situation. The me asures shall be progressively relaxed as balance of 
payments conditions improve and they shall be el iminated when conditions no longer justify their 
maintenance. The Contracting Party concerned shall inform the other Contracting Party forthwith of 
their introduction and, whenever practicab le, of a time schedule for their removal. 
 
  WT/REG205/1 
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 Article 31 
 
Evolutionary Clause  
1. Where a Contracting Party considers that it woul d be useful in the interests of the economies 
of the Contracting Parties to develop and deepen  the relations established by this Agreement by 
extending them to fields not covered thereby, it shall submit a reasoned request to the other 
Contracting Party. The Contracting Parties may instruct the Joint Committee to examine such a 
request and, where appropriate, may make recomme ndations, particularly with a view to opening 
negotiations. 
2. Agreements resulting from the pro cedure referred to in paragraph 1 of this Article will be 
subject to approval by the Contracting Parties in accordance with their internal legislation. 
 
CHAPTER IV:  TRANSITIONAL AND FINAL PROVISIONS 
 
Article 32 
 
The Joint Committee  
1. A Joint Committee is hereby established and sh all be composed of representatives of the 
Contracting Parties. 
2. The implementation of this Agreement shall be administered by the Joint Committee. 
3. For the purpose of the proper implementation of this Agreement, the Contracting Parties shall 
exchange information and, at the request of any C ontracting Party, shall hold consultations within the 
Joint Committee. The Comm ittee shall keep under review the possibility of further removal of the 
obstacles to trade between the Contracting Parties. 
4. The Joint Committee may take d ecisions in cases provided for in  this Agreement. On other 
matters the Committee may make recommendations. 
5. The decisions of the Joint Committee shall be s ubject to approval by the Contracting Parties 
in accordance with their internal legislation. The decision shall enter into force on the day of receipt 
of the second written notification that such requirements have been fulfilled.  
Article 33 
 
Procedures Of The Joint Committee  
1. For the proper implementation of this Agreem ent the Joint Committee shall meet whenever 
necessary but at least once a year. Each Contracting Party may request that a meeting be held. 
2. The Joint Committee shal l act by consensus. 
3. For the purpose of this Agreement the Joint Committee shall adopt its rules of procedure 
which shall, inter alia , contain provisions for convening meetings  and for the designation of the Chair 
person and its term of office. 
4. The Joint Committee may decide to set up s ubcommittees and working groups it considers 
necessary for assistance in accomplishing of its tasks. WT/REG205/1 
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 Article 34 
 
Services And Investment
 
1. The Contracting Parties recognise the growing importance of certain areas, such as services 
and investments. In their efforts to gradually devel op and broaden their co-operation, in particular in 
the context of the European integra tion, they will co-ope rate with the aim of achieving a progressive 
liberalisation and mutual opening of their markets fo r investments and trade in services, taking into 
account relevant provisions of the General Agreement on Trade in Services. 
2. The Contracting Parties will discuss in the Jo int Committee the possibilities to extend their 
trade relations to the fields of foreign direct investment and trade in services. 
Article 35 
 
Customs Unions, Free Trade Areas And Frontier Trade  
 This Agreement shall not prevent the mainte nance or establishment of customs unions, free 
trade areas or arrangements for frontier trade to the extent that these do not negatively affect the trade 
regime of the Contracting Parties and in particular  the provisions concerning rules of origin provided 
for by this Agreement.  
Article 36 
 
Annexes, Protocols And Appendices
 
1. The Annexes, Protocols and Appendices to this Agreement are an integral part of it. 
2. The Joint Committee may decide to amend the Annexes, Protocols and Appendices to this 
Agreement.  
Article 37 
 
Amendments  
 Amendments to this Agreement shall enter into  force in accordance with  procedure stipulated 
in Article 38 of this Agreement.  
Article 38 
 
Entry Into Force
 
 This Agreement shall enter into force on the first day of the second month following the date 
of the receipt of the last written notification by wh ich Contracting Parties inform each other through 
diplomatic channels that the internal legal require ments for the entry into force of this Agreement 
have been fulfilled. 
 
Article 39 
 
Duration And Termination  
1. This Agreement is concluded for an indefinite period of time.  WT/REG205/1 
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 2. Each Contracting Party may denounce this Ag reement through diplom atic channels by a 
written notification to the other Contracting Party. The denunciation shall become effective on the first day of the seventh month after the da te on which the notification was received. 
3. In the event of any Contracting Party become s a member of the European Union, that 
Contracting Party will withdraw from this Agreement at the latest the day before membership takes 
effect.  
 Done at .......... this.............day of............ 200__ in two originals each in the Croatian, Serbian 
and English languages, all three texts being equally authentic. In case of dive rgence in interpretation 
the English text shall prevail.  
 
 For the Republic of Croatia   Fo r the Federal Republic of Yugoslavia 
 
_______________ 
  
RECORD OF UNDERSTANDING
 
 
1. The Contracting Parties agree to apply the rules and provisions set out in Annex 1 A of the 
Agreement establishing WTO. 
2. The Contracting Parties agree that they shall endeavour to abolish all the non-customs related 
obstacles restraining mutual trade by the entry into force of this Agreement.  
3. Pursuant to Article 39 of this Agreement, in the event of any Contracting Party becoming a 
member of the European Union and withdrawing fr om this Agreement, the other Contracting Party 
shall waive its claim to compensation to the Cont racting Party becoming a member of the European 
Union.  
__________