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NON-TARIFF BARRIERS TO TRADE

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					NON-TARIFF BARRIERS TO TRADE

  IN THE CORE COUNTRIES OF

   THE STABILITY PACT FOR

   SOUTH EASTERN EUROPE




                  Study prepared by

                Dr. Hanspeter Tschäni
                Dr. Laurence Wiedmer




                    Bureau Arthur Dunkel
            56, rue du Stand – CH - 1204 Genève
      Tél : +41 22 312 48 35 – Fax : +41 22 312 48 71
                   E-mail : sti2@iprolink.ch
                                 2

ABBREVIATIONS


ASYCUDA         Automated System for Customs Data
BiH             Bosnia and Herzegovina
BSEC            Black Sea Economic Cooperation
CAFAO           Customs and Fiscal Office
CAM-A/CAM-ES    Customs Assistance Mission in Albania and Eastern
                Croatia
CEFTA           Central European Free Trade Agreement
CEI             Central European Initiative
CIF             Cost, Insurance, Freight
DEM             Deutsche Mark
EFTA            European Free Trade Association
EU              European Union
FIAS            Foreign Investment Advisory Service
FTAs            Free Trade Agreements
GATT            General Agreement on Tariffs and Trade
HS              Harmonized System (Harmonized Commodity Description
                and Coding System)
IDA             International Development Association
ISO             International Organisation for Standardization
MFN             Most-Favoured Nation
MoU             Memorandum of Understanding
NTB             Non-Tariff Barrier
OHR             Office of the High Representative
QR              Quantitative restriction
RS              Republic of Srpska
SAA             Stabilisation and Association Agreement
SECI            Southern European Cooperative Initiative
SEETI           South East Europe Trade Initiative
SPS             Sanitary and Phytosanitary (measures)
TBT             Technical Barriers to Trade
TIR             Transport International Routier
TTFSE           Trade and Transport Facilitation in Southeast Europe
UN-ECE          United Nations Economic Commission for Europe
UNMIK           United Nations Interim Administration Mission in Kosovo
VAT             Value Added Tax
WTO             World Trade Organization
                                          3

TABLE OF CONTENTS                                                  Page



I     Foreword                                                     4


II    The meaning and use of non-tariff barriers to
      trade in trade agreements                                    7


III   On-going efforts to deal with non-tariff barriers to trade   14
      in South Eastern Europe

IV    Findings and conclusions of the study                        19


V     Country sheets                                               25


      Albania                                                      26
      Bosnia and Herzegovina                                       33
      Croatia                                                      39
      Federal Republic of Yugoslavia                               44
      Kosovo                                                       50
      Montenegro                                                   54
      Former Yugoslav Republic of Macedonia                        59


VI    Annexes                                                      65


The authors                                                        71
                                                    4


I        FOREWORD


Upon taking up its work, the Working Group on Trade Liberalisation and
Facilitation (WG) set up under Working Table II of the Stability Pact singled out
the issue of non-tariff barriers to trade (NTBs) as being crucial for improving trade
relations among the countries of South Eastern Europe, and between them and
the rest of the world, and decided to devote special attention to it. In order to
enable the WG to propose actionable and concrete solutions to remove NTBs, a
study was commissioned whose terms of reference (TOR) were discussed and
agreed by the WG1. The Swiss Government declared its readiness to finance the
study and the implementation was entrusted to the Office A. Dunkel in Geneva.

According to the agreed TOR, the study on non-tariff barriers should achieve the
following objectives:

1.   to provide state-of-the-art information on the approach utilized in the World
Trade Organisation (WTO), the European Union (EU), the European Free Tr ade
Association (EFTA) and the Central European Free Trade Agreement (CEFTA)
and others towards defining NTBs and dealing with them;
2.   to provide information on efforts and projects already under way towards
exploring and dealing with NTBs and related problems of the countries of South
Eastern Europe;
3.   to single out and comment those NTBs not already dealt with elsewhere
and having an impact on regional trade and trade relations with the outside world,
paying particular attention to

         - obstacles to the trans-border flow of goods (as opposed to services,
           intellectual property rights and investment);
         - obstacles caused by measures which are controlled at the border:
           administrative procedures, licensing, quantitative restrictions (QRs),
           standards and related measures;
         - all obstacles of a given country, not just those vis-à-vis the regional
           partners;
         - those obstacles which most seriously impact trade if a selection has to be
           made or a priority to be established;

4.    to work out recommendations for the removal of NTBs and for further work
in exploring the topic.

It was agreed that the efforts should be concentrated on the four core parties of
the Stability Pact, i.e. Albania, Bosnia and Herzegovina (BiH), Croatia and
Macedonia. A first version of the study was presented and discussed at a Trade
Policy Forum held on 17/18 January 2001 in Geneva. On this occasion it was
decided to complete the study by adding the Federal Republic of Yugoslavia


1
    The full text has been included in the Stability Pact‟s website (www.stabilitypact.org)
                                        5

(FRY), including Montenegro, and to up-date the facts about the four core parties
on the basis of input to be provided by the countries concerned.

The present final report addresses all the objectives listed in the TOR. Following
a brief examination of the meaning of the term NTB and its handling in trade
agreements (chapter II) and a succinct presentation of the main efforts and
projects dealing with such measures in the region (chapter III), the main
emphasis of the report is on the findings and conclusions of the study (chapter
IV) and on the country sheets (chapter V). Chapter IV covers all the countries
examined and presents a summary assessment of relevant basic facts about
their economic and trade policy frameworks, general observations made during
the elaboration of the study, and findings concerning NTBs. This is followed by a
set of general conclusions and recommendations. The country sheets in chapter
V describe the situation in each of the countries separately and contain, in
addition to relevant facts, more detailed comments and recommendations by the
authors.

The study has been conducted by drawing on relevant written material that is
commonly available or could be obtained from organisations such as the WTO,
the World Bank or UN organisations. Moreover, the authors visited each of the
countries in order to verify the accuracy and completeness of the data collected
and to obtain first-hand opinions and comments from administrations, economic
operators, Chambers of Commerce as well as representatives of international
organisations or institutions active in the countries. This approach was inspired
by the desire to not only present the rules valid in the countries concerned but
also to consider, to the extent possible, their implementation.

As will be explained in more detail in the next chapter, the term NTB covers a
vast field. A selection of categories or types of non-tariff barriers is thus
necessary to make the task of examination manageable. For this study, the
criteria mentioned in the TOR (point 3) were meant as guidelines for making this
selection, which is presented in chapter II. Both import and export measures
have been looked at and the term “goods” in the TOR includes in principle both
agricultural and industrial products.

According to the TOR, NTBs in the countries concerned needed to be presented
and commentated. In addition, the study had to contain recommendations for
removing obstacles to trade. The task of the authors was thus not only of a fact-
finding nature but required an evaluation of individual measures and taking a
stand on them. While the authors used international trading rules and practices,
when applicable, as a point of reference for this evaluation, they are aware that
the ultimate assessment whether or not a given measure complies with those
rules is made according to the provisions and procedures set out in the
respective agreements. Furthermore, it cannot be pretended that the information
presented in the coming pages is complete with all the details of the areas
examined. In fields such as those examined which are subject to rapid changes
or cover a vast terrain the authors‟ more modest aim has to be to present and
                                        6

assess the main elements of the regime prevailing at the time of the visit in line
with the focus of this study.

Although the Swiss Government financed this study, it goes without saying that
the responsibility for its contents rests with the authors.




Geneva, October 2001




Hanspeter Tschäni

Laurence Wiedmer
                                                 7


II    THE MEANING AND USE OF NON-TARIFF BARRIERS TO
      TRADE IN TRADE AGREEMENTS


The meaning of the term

Although the term NTBs is widely used by experts and non-experts alike it
presents a number of challenges in the context of trade policy. Four of them are
highlighted here:

1.    The term denotes a residual category, i.e. all trade obstacles, which are not
due to import or export duties (tariffs) are non-tariff ones. Since the number of
measures dealt with in trade agreements has increased over time the list of NTBs
has been extended as well. Various attempts at categorizing or classifying them
have been made but there is no universally accepted solution. The example set
out in Table 1 is nonetheless illustrative because it gives an indication of the
types and diversity of measures subsumed under the term NTB.

In order to make the task of examination meaningful and manageable most
studies thus have to make a selection among non-tariff measures 2 or categories.
In the context of this report, the TOR provide the framework for making this
selection.

Table 1

                MAJOR CATEGORIES OF NON-TARIFF BARRIERS

A     Quantitative restrictions and similar specific limitations

1     Import quotas
2     Export limitations
3     Licensing (imports and exports)
4     Voluntary export restraints
5     Prohibitions (imports and exports)
6     Exchange and other financial controls
7     Domestic content and mixing requirements
8     Discriminatory bilateral agreements
9     Counter trade

2
  From an economist‟s point of view any of the terms most frequently used to denote such
measures– non-tariff measures, non-tariff barriers (NTBs) or non-tariff distortions – can be utilised
and they have the same meaning. However, the term “measure” appears to be more neutral as it
avoids some of the measurement and judgemental problems associated with the terms “barriers”
or “distortions”. In WTO and the United Nations Commission on Trade and Development
(UNCTAD) the term “measure” is most widely used because it is more neutral. This prudent
approach is particularly advisable in the context of the WTO where the sensitive question of
assessing the conformity of a measure with the WTO commitments of a country is in the final
resort the responsibility of the dispute settlement body.
                                                8

B     Non-tariff charges and related policies affecting imports

1     Variable levies
2     Advance deposit requirements
3     Antidumping duties
4     Countervailing duties
5     Border tax adjustment

C     Government participation in trade, restrictive practices and more
      general policies

1     Subsidies and other aids
2     Government procurement policies
3     State trading, government monopolies and exclusive franchises
4     Government industrial policy and regional development measures
5     Government financed research and development and other technology
      policies
6     National systems of taxation and insurance
7     Macroeconomic policies
8     Competition policies
9     Foreign corruption policies
10    Immigration policies

D     Customs procedures and administrative practices

1     Customs valuation procedures
2     Customs classification procedures
3     Customs clearance procedures

E     Technical barriers to trade

1     Health and sanitary regulations and quality standards
2     Safety and industrial standards and regulations
3     Packaging and labeling regulations, including trademarks
4     Advertising and media regulations


Source :
Deardorff, A.V. and Stern, R.M., Measurement of non-tariff barriers, Paris, OECD, 1997, Working
Paper N° 179 quoted in Non-tariff measures with potentially restrictive market access implications
emerging in a post-Uruguay Round context, Studies in Trade and Investment 40, New York,
United Nations, 2000.



2.    Contrary to tariff measures (duties) which are normally transparent, NTBs
are often more difficult to detect because they can be “hidden” in rules and
practices that have a perfectly legitimate objective. They also leave more
discretion to administrators in applying them. Furthermore, NTBs can have more
trade-restrictive effects than tariffs, which raise the cost of a given product, and
                                         9

go as far as excluding a good from a market altogether. Commentators thus
agree that the economic effect of NTBs is very substantial.

3.   NTBs are quite frequent and can be found all over the world. They became
more visible as a result of the lowering of tariffs following the multilateral trade
negotiations in the context of the General Agreement on Tariffs and Trade
(GATT) and the conclusion of free trade agreements (FTAs). It appears that in
some cases NTBs were also introduced in order to counter-balance the loss of
protection in the wake of lower tariffs.

Most commentators agree that the main reason for the frequent use of NTBs can
be found in the arena of internal politics of a country. Legislators and
governments seem to find it easier to conceive of non-tariff measures against
imports in times of economic difficulties or in the case of a struggling business
sector than taking less popular measures of a domestic nature. In the absence of
an effective domestic resistance against such decisions, which often hurt
consumers, harmonisation measures, the elimination of NTBs or outright counter
measures in the context of international agreements are often the most effective
ways of convincing governments to rescind such NTBs.

4.   Not all non-tariff measures impacting trade are necessarily illegal. Measures
and decisions leading to complications, slowdowns, price increases and even
prohibitions for imports and exports may be justified if they are needed to
preserve the health and safety of animals and humans or protect the
environment. For such cases, rules and guidelines had to be found that define
the conditions under which such trade-restrictive measures are allowed.

In the context of this study and in line with the TOR, the following measures or
practices were examined, both as regards imports and exports. The results are
summarized in chapter IV and presented in more detail in the country sheets in
chapter V:

   prohibitions
   quotas
   tariff quotas
   other charges (import surcharges and other import charges)
   licensing
   customs valuation
   rules of origin
   functioning of customs
   registration requirements for importers and exporters
   technical barriers to trade (TBT); sanitary and phytosanitary measures (SPS);
    quality control measures.

The primary difference between the selected measures is that quotas, tariff
quotas, other charges and licenses are normally introduced in order to restrict or
control the quantity of products imported into or exported from the country. The
primary objectives of the other measures mentioned are different but they may
                                        10

have a trade-restrictive effect nonetheless. TBT, SPS and quality control
measures, for instance, normally aim at protecting human, animal and plant
health, the environment or the consumer. Customs valuation rules, to give
another example, aim at defining the ways to calculate the import duty of a given
product. Through the formulation of the respective rules or their application in
practice these measures may, however, slow down, complicate, render more
expensive or otherwise hinder trade.

Of particular importance in all these fields, and thus also in this study, are
administrative practices and procedures set up to implement trade measures.
They are normally necessary to achieve the ends sought by trade measures but
by their sheer existence they complicate and slow down commercial exchanges.
To the degree that expenses and bureaucracy required to comply with them are
becoming overly burdensome such practices and procedures may constitute an
NTB by themselves. Rules and guidelines are thus needed to define what is
strictly necessary in terms of such practices and procedures.


Treatment of NTBs in international agreements

International cooperation in the trade field started after the second world war by
progressively lowering import duties. In GATT/WTO and through a host of
preferential trade agreements (customs unions and FTAs), a substantially lower
average level of tariffs has indeed been achieved over the past 50 years. More
recently, these efforts were complemented by addressing the issue of NTBs and
introducing disciplines and rules for handling them.

At the multilateral level, a first step in dealing with NTBs was taken in the Tokyo
Round of the GATT in the 1970s but agreement could only be reached in some
of the categories and several of the disciplines were laid down in the so-called
Codes whose membership was optional. The issue was tackled in earnest in the
the Uruguay Round (1986-1994) by increasing the number of agreements
dealing with NTBs, making them mandatory for all members and subjecting them
to the WTO dispute settlement mechanism. Today, the primary source for rules
and practices directed against trade-restrictive non-tariff measures is thus
certainly the WTO Agreement and the mechanisms agreed to implement and
enforce these rules in that organisation.

In the context of the non-tariff measures examined in this study the following
parts of the WTO Agreement are of particular importance:

    General Agreement on Tariffs and Trade 1994
    Agreement on the Application of Sanitary and Phytosanitary Measures
    Agreement on Technical Barriers to Trade
    Agreement on Implementation of Article VII of the General Agreement on
     Tariffs and Trade 1994 (Customs valuation)
    Agreement on Rules of Origin
    Agreement on Import Licensing Procedures.
                                        11



At the regional level, the EU provides the most ambitious model for dealing with
NTBs, in tune with its objective of achieving a unified internal market and a
political union. Such obstacles in internal trade were agressively pursued and the
corresponding articles in the Treaty of Rome belong to those which are most
frequently subject to judgements by the Court of Justice. The EFTA countries,
relying on an FTA with a more limited coverage, also have a different approach
towards NTBs. QRs and measures with equivalent effect are not permitted in
trade between the members but the organisation does not have a court or a
supranational entity like the EU Commission to pursue such obstacles. On the
other hand, both EU and EFTA have followed a similar line in the FTAs they
concluded with a growing number of countries in Central and Western Europe,
the Mediterranean Basin and beyond. These agreements contain less strict and
explicit requirements for handling NTBs than the EU in its internal trade and
follow more the practice established by the EFTA countries.

Both WTO and EU rules and practices are important for the countries of South
Eastern Europe and provided points of reference in carrying out this study. The
WTO provisions comprise a set of harmonised basic rules for the non-tariff
measures addressed that are compelling for the WTO members Albania and
Croatia and already now present a formidable challenge for the other countries
that are in the accession process. Adherence to these rules will thus set the
standard for trade both in the region and with the rest of the world. The EU rules
are of a preferential nature and thus at times more ambitious than those of the
WTO. The EU is not only the most important trading partner of the countries
examined but also an organisation to which they want to adhere eventually. The
EU rules and practices thus provide an important target in the process of
gradually improving domestic rules, especially as concerns the TBT and SPS
fields.

The term NTB as such is normally not used in international trade agreements.
Rather, these agreements either explicitly address concrete measures that are
considered to be non-tariff trade obstacles or attempt to deal with them through
general clauses such as national treatment, measures with equivalent effect to
tariffs and QRs, etc.

The task of drawing the line between trade-relevant measures that are in line with
international trade rules and those which are not appears easier in the case of
policies and procedures having as their primary objective to restrict trade (quotas,
tariff quotas, other charges, licensing). As shown below, however, an outright
prohibition of such measures does not exist in international trade agreements.
The task is particularly difficult where internal measures are at stake that aim at
preserving health, safety, the environment, etc. and have an impact on trade.

Among the approaches employed and rules devised to draw the line in WTO and
the EU are the following:
                                       12


    Even for measures whose trade-restricting effect is evident (prohibitions,
quotas, tariff quotas, etc.) cases or circumstances had to be defined that render
such measures acceptable under the terms of an agreement. An example can be
found in Article XI of the GATT where exceptions are formulated for the use of
QRs. Or an attempt is made in some agreements to distinguish between illegal
and acceptable subsidies.

     In the case of internal measures aiming at preserving human and animal
health and safety, the environment, etc., which have an impact on trade, it is
normally stipulated that such measures should not be a disguised distortion of
trade – e.g. by favouring domestic producers - or bear heavier on trade than is
absolutely necessary to achieve the ends sought. Stating such a principle is
easier than enforcing it because the concrete facts of a case need to be gathered
and assessed in order to judge whether the rule has been adhered to or not. In
both WTO and EU these tasks are accomplished in the context of the dispute
settlement mechanism.

     Concerning administrative requirements and practices (e.g. licenses, but
also safeguard procedures, anti-dumping measures) agreed procedures are
normally defined and parameters set that need to be observed by members when
resorting to them. Often transparency requirements (e.g. notification of
administrative measures) are introduced in order to give the other parties an
opportunity to scrutinize and discuss the steps being taken.

    In order to remove the far-reaching effect of some NTBs (in particular
quotas and prohibitions) and still permit the country concerned to maintain a
protection for certain types of products, it can be agreed that such measures
should be replaced with tariffs. At the same time, a timetable can be set up to
reduce the duties over time. The most prominent example of this approach is the
so-called tariffication for agricultural products during the Uruguay Round.

In spite of all the solutions devised, there is often room for different
interpretations and thus of potential disputes between contracting partners. The
introduction of more efficient dispute settlement mechanisms in modern trade
agreements has ensured that existing rules are better enforced. New obstacles
appear, however, on the one hand through the inventiveness of governments, on
the other in new areas of economic activity created in a dynamic and global
environment. Furthermore, there are wide gaps between different agreements as
to the type and stringency of measures available to act against such obstacles. A
continued review of existing trade rules and periodic negotiations of new ones
are thus a must.

As already mentioned, regional agreements concluded by EU, EFTA, the Central
and East European countries, etc. in the form of FTAs normally do not offer as
comprehensive and detailed a framework for tackling NTBs as the WTO or the
EU in its internal affairs. As a rule, such agreements prohibit QRs, and measures
with equivalent effect to such restrictions, and include the commitment to
cooperate in the fields of TBTs and SPS. QRs and especially measures with
                                       13

equivalent effect are general terms that are often in need of interpretation in a
concrete case. Clarification on whether a measure is in fact a QR or a measure
with equivalent effect can either be achieved by raising the question in the Joint
Committee of the agreement or through a dispute settlement mechanism (ex
post). Alternatively, an indicative list of measures that are normally considered
QRs or measures with equivalent effect can be inserted in the agreement (ex
ante). In many cases the question remains, however, whether such preferential
agreements achieve more than the WTO rules in eliminating NTBs among the
contracting parties.
                                        14


III   ON-GOING EFFORTS TO DEAL WITH NON-TARIFF
      BARRIERS TO TRADE IN SOUTH EASTERN EUROPE


In commissioning this study and beginning to explore the field of NTBs in South
Eastern Europe, the Working Group on Trade Liberalisation and Facilitation was
keenly aware that it should not duplicate work already accomplished by others or
impose itself in on-going efforts to deal with non-tariff measures. This concern is
reflected in the TOR of this study where the authors are requested to examine
such efforts and include the results in their report.

Efforts or projects dealing with non-tariff measures can take different forms. On
the one hand, they may aim at examining such measures in a descriptive and
analytical way, be it on a regional basis or by focusing on individual countries.
Studies shedding light on NTBs, mainly in the context of a wider focus that looks
at the economy or the trade regime of an individual or a group of countries, do
indeed exist and they have been taken into consideration in this report (see the
introductory part of chapter V). More studies are under way, notably a series of
country studies commissioned by the World Bank. None of the existing or
planned works have the specialized focus of this report, however.

On the other hand, efforts can take the form of substantive cooperation in the
fields covered by the term NTBs. This aspect can include technical assistance
provided by outside sources (states, international organisations, non-
governmental organisations), or regional or sub-regional collaboration by
governments or non-governmental organisations. Several variations of this form
of cooperation, which have a bearing on the issues examined in this report, exist
in the region:

     Countries, or groups of countries, from outside the region have addressed
issues examined in this study in the context of their technical assistance
programmes. This is particularly the case for the EU, whose involvement has
been most visible in the context of its customs assistance programmes in several
countries here examined. As a result of concluding SAA‟s, which include a
sizeable technical assistance component, this involvement will be felt in other
areas as well and will also be deepened. Also the United States and individual
European countries are active in some fields. The assistance of these countries
can range from carrying out studies, organising and financing seminars, providing
expertise in technical matters to training officials and ensuring on-going
assistance in crucial subject matters.

     International Organisations with responsibilities and expertise in matters
examined in this study are another important source of support. The World Bank,
the UN-Economic Commission for Europe (UN-ECE), the WTO and others
participate in the Working Group on Trade Liberalisations and Facilitation,
prepare studies, engage in networking and coordination and extend the
assistance in their respective fields of expertise to governments and officials of
the countries of the Stability Pact.
                                                   15


       Institutions and organisations with a regional base – sometimes with the
active encouragement and support of an outside partner – have either sprung up
or expanded their activities and thus also begun to make their influence felt in the
subject matters examined in this report. Their members can be governments only
but may also include other participants. An example of a governmental
organisation that has begun to look into NTB-related problems is the Black Sea
Economic Cooperation (BSEC) while the Southern European Cooperative
Initiative (SECI) stands for a more recent institution that includes private sector
activities as well.

In the following, several of these actors are examined in more detail. The
purpose of this presentation is neither to give a complete picture of all projects
existing in the region nor to describe all the activities of the organisations or
countries in detail but rather to provide an impression of the types of activities
that exist. For more details, the websites of the organisations or countries should
be consulted or direct contacts established.


The EU

As the major economic partner for the region and the announced target for
accession of the countries examined in this study, the EU covers a broad range
of issues relevant to trade through various cooperation programmes, in particular
PHARE, OBNOVA and SIGMA and, starting next year, CARDS 3. As already
mentioned, the entry into force of the SAA will widen and deepen this
cooperation.

Of particular relevance for this study are the Customs Assistance Missions in
several countries of the Stability Pact (Albania, parts of Croatia and Kosovo) and
the Customs and Fiscal Assistance Office in BiH. Operating for several years
already and carried out by permanent representatives these projects assist the
governments in upgrading their customs infrastructure, services and legislation
and in making their revenue collecting systems more efficient.


The United States

Through its Southeast Europe Trade Liberalisation and Integration Program the
US government has been assisting the countries in the region through a series of
studies, seminars and other assistance in private sector projects and trade-
related policy and legislation. Following the adoption of the Memorandum of
Understanding on Trade Liberalisation and Facilitation in June 2001 (see chapter
IV, Basic facts) the US government decided to continue this programme for
issues relevant under the MoU.


3
  The CARDS programme, which consists of a regional envelope and national programmes and
disposes of a sum total of EUR 4.5 billion for a period of five years, will cover all the activities for
the countries examined in this study once it enters into force
                                       16

The World Bank

Aside from several background documents that are mentioned in this report the
impact of the World Bank on the topics examined in this study is most acutely felt
through the Trade and Transport Facilitation in Southeast Europe Programme
(TTFSE). The programme aims to pool the efforts of the governments concerned,
the EU, SECI and the World Bank for improving border crossings in the region.

In February 2000, six countries of the region (Albania, BiH, Bulgaria, Croatia,
Macedonia and Romania) signed a Memorandum of Understanding setting up a
Regional Steering Committee to facilitate the successful implementation of the
regional trade and transport facilitation programme. The total cost of the
programme is estimated at around US$ 100 million. The financing of the
programme will be shared between the International Bank for Reconstruction and
Development (loans), the International Development Association (credits), the US
government (grants), and the beneficiary governments. In addition, the EU is
providing assistance through on-going grants.

The objectives of the TTFSE programme are to reduce costs to trade and
transport while at the same time reducing smuggling and corruption at border
crossings in the region.

The programme provides for:

    physical improvements at border crossings;
    technical assistance to strengthen the customs administrations;
    computerization of procedures at the border crossings and electronic filing
     of customs declarations, and
    improved exchange of information between border control agencies and the
     business community through seminars and the development of internet
     websites.

The individual projects for the signatory countries of the Memorandum of
Understanding have been approved and their implementation has begun. An
extension of the programme to the FRY and Moldova is planned but has not yet
been adopted.


UN-ECE

Contributions by the UN-ECE relevant for the purposes of this study centre in
particular on trade facilitation and road transport where the countries of the
region can benefit from a long-standing expertise and on-going activities that are
open to all members. In the region under examination in this report the UN-ECE
has also played an active and coordinating role in the work of SECI (see below).
                                             17

Southern European Cooperative Initiative (SECI)

SECI was launched in December 1996 as a regional initiative with the aim to
encourage cooperation among the countries of the region and to facilitate the
integration of Southeast Europe into the other parts of Europe. SECI is a flexible
framework for launching and executing concrete programmes. It coordinates
region-wide planning, identifies needed missing links, provides for better
involvement of the private sector in regional economic and environmental efforts
and assists in harmonising trade laws and policies. SECI focuses on cross-
border projects in the areas of trade and transport, energy and environment.

SECI Participating States are: Albania, BiH, Bulgaria, Croatia, the FRY, Greece,
Hungary, Macedonia, Moldova, Romania, Slovenia, and Turkey.

The Supporting States and institutions are: Austria, Italy, Switzerland, the USA,
BSEC, the European Commission, the UN-ECE and the World Bank.

Of particular importance for the purposes of this study are the activities related to
road transport and of the so-called PRO 4 committees. Concerning the former, a
Memorandum of Understanding on the Facilitation of International Road
Transport of Goods in the SECI Region was signed in April 1999. The Regional
Road Transport Committee, which was established under Article 12 of the
Memorandum and whose secretariat is provided by the UN-ECE, is responsible
for the adequate coordination and the monitoring of the implementation of the
agreement. In carrying out a work programme adopted in 1999, the Committee
has achieved concrete results in several areas outlined in the Memorandum (e.g.
related to the identification of roads servicing international traffic, preparation of
an International Vehicle Weight Certificate, review of visa facilitation procedures
for drivers, etc.).

SECIPRO serves as the umbrella organisation of the PRO committees in the
region. The UN-ECE assists it by providing a Regional Advisor. SECIPRO
complements and facilitates the concrete work done in the field of trade
facilitation, trade procedures and related issues by the national PRO committees
whose potential strength is in the cooperation between the administration and the
private sectors. SECIPRO also encourages direct contacts between PRO
committees of neighbouring countries in order to sort out specific problems in
trade. In addition, it networks and cooperates with other projects and
organisations active in the field of facilitating cross-border trade, such as the
TTFSE.




4
  The SECIPRO website defines these bodies as follows : “A PRO committee is a body that seeks
to increase business and investment by simplifying and modernising procedures and information
exchange in administrations, commerce and transport”. PRO committees exist in all countries
examined in this study and are normally composed of representatives of the public and private
sectors.
                                       18

Black Sea Economic Cooperation (BSEC)

The Charter of the Organisation of the Black Sea Cooperation signed on 5 June
1998 transformed the existing intergovernmental mechanism into a full-fledged
regional economic organisation. Its objectives are to develop and diversify
bilateral and multilateral cooperation, improve the business environment, and
enhance mutual respect, confidence and cooperation among the Member States.

The member states of the BSEC are Albania, Armenia, Azerbaijan, Bulgaria,
Georgia, Greece, Moldova, Romania, the Russian Federation, Turkey and
Ukraine. The membership thus includes only one of the countries examined in
this report but covers several members of the Working Group on Trade
Liberalisation and Facilitation. For this reason the BSEC is included in this
survey.

At its meeting in December 2000 in Thessalonica, Greece, the Working Group on
Trade and Economic Development of the BSEC stressed the importance of
gradually establishing a BSEC Free Trade Area as a long-term objective. Trade
problems stemming from non-tariff barriers and border crossing procedures were
seen as a crucial issue in this context. At the most recent meeting, the Working
Group thus decided that, as a first step, an inventory of such measures should be
established. This is also in line with the BSEC Economic Agenda where it is
stated that “Tariffs and other barriers to trade, which adversely influence trade
volumes between the countries of the BSEC region, need first to be reduced with
a view to their eventual elimination”.

Furthermore, the agenda highlighted that “Necessary steps should be taken with
the aim of harmonizing existing standards and certification systems of the
members states, promoting whenever possible broader application of standards
of the ISO. To pursue a line towards mutual recognition of existing certificates
and their gradual harmonization it will be advisable to establish ad-hoc joint
certification centres. The BSEC member states should devote necessary
attention to harmonizing the existing cross-border and customs regulations with
the aim of facilitating the movement of goods and people.”
                                               19


IV       FINDINGS AND CONCLUSIONS OF THE STUDY


Chapters IV and V (country studies) present the outcome of the examinations
conducted in the countries under review. This chapter summarizes basic facts of
their economic and trade policy framework, followed by general observations
made during the visits to the countries and more technical findings concerning
NTBs. The chapter finishes with conclusions and recommendations. The content
of this chapter is based on the individual country sheets in chapter V which offer,
in addition, more detailed comments and recommendations that are valid only for
the country in question.


Basic facts

     The five countries examined in this study are either members of the WTO
or in the process of accession. Albania and Croatia were recently admitted 5.
Macedonia has submitted its Memorandum on the Foreign Trade Regime, which
has been subjected to questions by WTO members during two meetings of the
Working Party, whereas BiH has applied for membership and is about to submit
its Memorandum. The FRY has made its application in January 2001. One of the
questions to be clarified during the accession process will be the territorial
application of the FRY‟s membership because Kosovo and Montenegro today
form independent customs territories.

As a result, information on the trade regimes of Albania and Croatia and also
their trade policy framework are more complete and in line with WTO standards
than those of the applicant countries. Also the rules of the two members are more
stable than those of the others since the latter might need to adapt their domestic
regimes considerably as a result of the accession process to the WTO.

     All countries aspire to become members of the EU, which is already now
their most important trading partner. They benefit from substantial autonomous
trade concessions in the form of duty-free access to the EU market for nearly all
products. A differential treatment was introduced in April (for Macedonia) and in
July 2001 (Croatia) when the trade and trade-related aspects of the SAA‟s
entered into force between the EU and the two countries, pending the ratification
of the entire agreement. Under the SAA, also the partner countries will have to
remove duties for imports from the EU. Albania is the next country with which a
SAA will be negotiated.

     Currently, few trade agreements implying preferential access to each
other‟s markets exist between the countries of the region. This is bound to
change over the coming months as a result of the signing of a Memorandum of
Understanding between the parties examined in this study, Bulgaria and


5
    Albania : 8 septembre 2000, Croatia : 30 November 2000.
                                             20

Romania on 27 June 2001. Among other obligations, the signatory countries of
this MoU undertook to conclude FTAs between each other by the end of 2002.

    Apart from Albania and FRY, the countries in question are newly
independent states that had to establish their own administration, including
customs authorities, over the past few years.

     All countries are in transition to market economics but at different stages in
that process and at different levels of their economic development 6.

      In two of the countries (BiH and FRY) the political and constitutional
situation presents an additional challenge for the country concerned, the region
and other trading partners. In BiH, the distribution of power in trade matters
between the central authority (legislative competence) and the two Entities
(implementation of trade laws and competence in some cases in matters relevant
for international trade) can cause confusion for traders and lead to different rules
and practices. The FRY, on the other hand, is a federal state in terms of
international public law but in reality consists of three customs territories: Serbia,
Kosovo and Montenegro. Some of the laws relevant for international trade are
the same in all territories because the authorities in Kosovo and Montenegro
have decided to continue to use FRY rules in some instances but the federal
authorities have no longer the decision-making power in the entire federal state.
In addition, the rules for the trade between the customs territories are not always
clear.


General observations

Both for reasons of professional credibility and to provide much needed
information on the countries examined which have been undergoing rapid
change, it has been a concern of the authors to base the findings and
conclusions on the most accurate data possible. It became soon clear, however,
that in some cases even documents very recently issued did not reflect reality
any longer. During the visits to the countries concerned a good part of the time
thus had to be spent to complete and update the factual basis.

Even so, the completeness, detailedness and comprehensiveness of the data
now presented in the country sheets vary from country to country and from topic
to topic. This is no coincidence. On the one hand, the “classic” potential
obstacles to trade such as quotas and licenses have often received more
attention than issues more indirectly involved such as TBTs and SPS controls
and are thus farther advanced in their legal and administrative treatment. On the
other hand, these shortcomings also reflect the fact that the number of people in
the administrations who are familiar with trade policy concepts and with the
6
  GDP per capita of the countries are as follows : Croatia US$ 4375; Macedonia US$ 1616; FRY:
Serbia US$ 1400, Montenegro US$ 1000; BiH US$ 920; Albania US$ 810. Source : EastWest
Institute, Task Force on Economic Strategy for South Eastern Europe. Final Report, New York et
al., June 2000.
                                        21

vocabulary used in WTO or the EU varies between the countries but needs to be
increased in all of them. The relevant knowledge and expertise tends to be
concentrated with a few people who are in high demand as a consequence. As a
result, the authors sometimes found themselves explaining the meaning of trade
policy terms only to find out that the counterparts in the local administrations had
a different understanding. This is true, for instance, for the term “licence”, which
is used in all the countries for a variety of circumstances, inter alia also for
denoting a certificate or another proof that a given product complies with
technical regulations.

Experience in other countries has demonstrated that the accession to WTO or
the conclusion of an important agreement with the EU cover a wide variety of
fields that fall into the competencies of several branches of the administration.
For both the negotiation and implementation of such agreements cooperation
and coordination among the departments and authorities concerned are thus of
primary importance. Also a constructive dialogue between the public and the
private sectors normally ensures that solutions are found which benefit the
country as a whole. It has been the observation of the authors that there is room
for improvement in the countries visited with regard to both of these aspects.

Anyone examining and presenting factual information about NTBs in the five
countries is confronted with a moving target. The two WTO members have put
the legal aspects of their trade policy framework in place but need to integrate the
new rules into their own system, to draft implementing measures, to train
administrators about using the new rules and practices, to inform the private
sector, etc. The situation is even more in flux in BiH, the FRY and Macedonia as
a result of the WTO accession process and the recent drastic domestic changes
in the FRY. Indeed, by the time the study is distributed some measures
mentioned in it are likely to have changed again.

There exists a sizeable gap between legislative rules and their implementation. In
some cases, the implementation rules are not yet in place, the infrastructure is
missing or people in charge of applying the rules have not been adequately
trained or seem to use their own discretion. The size of the gap varies from
country to country and from one NTB category to the other. In the context of this
study the gap was most visible in customs controls and the infrastructure
necessary for TBT measures and SPS controls. It goes, however, beyond these
fields and also reaches into other important sectors, which are outside the
confines of this study.

Findings concerning NTBs

As explained in chapter II non-tariff measures having an impact on trade can be
acceptable under certain conditions. Examples of such measures are import
prohibitions or restrictions for military equipment, poisonous substances, narcotic
drugs etc. which are permitted by most agreements. For information‟s sake, such
measures are nevertheless listed in several of the country sheets in chapter V.
On the other hand, the authors have resorted to comments and
                                        22

recommendations where they had doubts that such measures correspond to
international trade rules or are in the best interest of regional economic
development.

A look at the NTB categories examined in this study and presented in more detail
in chapter V reveals that in the areas of

    licensing
    customs valuation
    functioning of customs
    TBT / SPS measures

inadequacies have been found in all countries that restrict cross-border trade
and/or are not in line with international rules and practices. The seriousness,
nature and reason for these irregularities vary considerably from country to
country. In some cases the cause lies in the respective laws and provisions but in
many instances they are found in the practices employed to implement the rules,
in the lack of infrastructure, the inadequate training of officials, etc.

Less pervasive but still existing in more than one country are obstacles caused
by charges other than duties expressed as a percentage of the import value and
by quotas and tariff quotas. These measures have a direct effect for imports and
exports by reducing the quantities, making them more expensive and treating
them differently from domestically produced goods.

Finally, although not directly related to the NTBs examined in this paper, it is
worth mentioning that an inadequate banking system was highlighted in all the
countries as a major source of difficulties for imports and exports.

With the exception of a few problems, which are explicitly listed in the country
sheets these obstacles obstruct trade with all countries, regional neighbours and
others alike. However, it is evident that some of the difficulties affect neighbours
particularly strongly. Difficulties at border crossings can be mentioned as an
example, which are exacerbated if they are prevalent on both sides. Seen in this
light, problems due to customs valuation and the functioning of customs have a
particularly strong regional component.

It is not the aim of this study to classify the individual performance of the
countries examined in terms of their having more or less NTBs. However, this
should not prevent us from pointing out that constitutional and legal issues in BiH,
FRY, Kosovo and Montenegro certainly add yet another dimension to their
already onerous transition to a market economy and to their integration into the
global economy.
                                        23

Conclusions and recommendations

The above observations and findings indicate that both problems of a general
nature and difficulties of a more technical character exist in the region and often
combine to influence the conditions for the importer and exporter and, indeed, the
entire business climate. The following conclusions and rec ommendations for
solutions try to take this into consideration:

1.      Continued international efforts aimed at capacity building, improvement of
infrastructure, facilitating the enforcement of law, etc. in the countries of the
region will also have a beneficial effect in the fields covered in this study. Of
particular importance are evidently all efforts aimed at improving procedures and
facilities at borders and customs stations; ongoing or planned initiatives and
projects by the EU, SECI and the World Bank deserve full support. Technical
assistance in the TBT and SPS fields should be added to this list, in particular
concerning building up a modern infrastructure in testing, certification and
accreditation facilities.

2.    In several countries examined, increased efforts to improve cooperation
between the authorities involved in the negotiation and implementation of trade
agreements are necessary. Likewise, relations between the public and private
sectors need upgrading in order to formulate policy and negotiation positions that
benefit the country as a whole and to ensure that the economic operators have a
better chance to reap the benefits of trade liberalisation and facilitation.

3.    The attached country sheets contain a series of comments and
recommendations. In many cases, they are country-specific and the
representatives of the respective parties are invited to take them into
consideration. Some recommendations, however, are repeated in several or all
country sheets and they should be considered at the regional level. The recently
concluded MoU on Trade Liberalisation and Facilitation provides the political and
legal framework in which these efforts can be pursued. The recommendations
pertain to:

     - Cooperation and mutual assistance in customs matters by concluding
       agreements between the countries in the region. Such agreements could
       be based on a common model and contain all matters relevant for a
       smooth exchange of goods across the borders, including harmonisation
       measures where necessary, and for assisting each other in the
       enforcement of the respective customs, origin and tariff legislation.

     - Cooperation in TBT and SPS matters by exploring possibilities of
       harmonising trade-relevant legislation pertaining to plant, animal and
       human health as well as to safety and the environment. Harmonisation
       efforts should include substantive requirements and procedures for
       assessment of conformity and be in line with international rules and
       practices.
                                         24

        In this context, the countries should also explore possibilities of
        concluding mutual recognition agreements. As a first step, regular
        contacts between testing and approval institutes of the countries
        concerned should be held and test results by these bodies should be
        taken into account to the degree possible.

4.     A further common problem area – licensing – should also be looked at in
earnest and in line with the comments and recommendations in the country
sheets in chapter V by each of the countries examined. The countries engaged in
the process of acceding to the WTO are invited to bring their rules and practices
in line with WTO provisions already now.

5.     The countries should continue their efforts to become members of WTO,
where applicable, and to move closer to the EU because the rules and practices
of these two organisations have already now a strong harmonising influence for
the revision of their trade policy regimes, including the provisions dealing with
NTBs. Already on an MFN (most-favoured nations) and non-preferential level this
facilitates and promotes trade relations between the parties and makes the
region more attractive for investments.

6.    In concluding FTAs in line with the MoU of 27 June 2001 the countries
should include provisions that aim at removing NTBs. Even if, legally speaking,
such agreements only affect relations between the contracting parties, trade
liberalisation measures achieved by them often have also a beneficial effect for
trade vis-à-vis other countries.

7.     Pending the materialising of these harmonising effects and the conclusion
of FTAs, the five countries should adhere to a standstill undertaking that prevents
them from taking any new measures restricting trade in goods between them.
Such a commitment is included in the MoU of 27 June 2001. At the same time,
the “roll-back” mechanism that was also agreed in the MoU should be set in
motion and be utilized by all parties concerned. The mechanism takes the form of
a framework in which grievances concerning existing NTBs can be discussed
and removed bilaterally, with the possibility of calling on the support of the other
signatory countries of the MoU and the international community in case of
difficulties.

8.    It can be presumed that more important arguments than difficulties related
to NTBs are needed to solve the constitutional and political difficulties ment ioned
in BiH and between the FRY, Kosovo and Montenegro. The parties concerned
are nonetheless invited to find at least pragmatic solutions to the NTB problems
outlined in this study, which do not put in question the constitutional and political
status quo.
                                                25

V     COUNTRY SHEETS


To the degree possible these country sheets, covering relevant facts regarding
NTBs in the core countries of the Stability Pact of South Eastern Europe 7, are
structured in the same way and comprise information, comments and
recommendations. Following an introductory note that includes pertinent
information about the trade regime of the country or the customs territory, the
following issues are addressed:

     import and export prohibitions
     quotas and tariff quotas
     other charges
     import and export licenses
     customs valuation
     non-preferential rules of origin
     functioning of customs
     registration requirement
     TBT and SPS measures
     other problems
     problems with neighbouring countries

The information provided in the country sheets is based on data collected and
interviews conducted during visits in the countries concerned as well as by
drawing on relevant material generally available, in particular,

     WTO records,
     Trade Development Institute of Ireland, Study on Trade Policy in Southeast
      Europe, Dublin, September 1999,
     The World Bank, The Road to Stability and Prosperity in South Eastern
      Europe. A Regional Strategy Paper, Washington D.C, March 2000,
     EastWest Institute, Task Force on Economic Strategy for South Eastern
      Europe. Final Report, New York et al., June 2000,
     INFORMEST and Centro Studi Nord Est, Problems, Perceptions and
      Perspectives of Foreign Direct Investments in SECI Countries’ Transition
      Economies. The Point of View of Italian Entrepreneurs, 1999,

and from selected studies of other institutes and International Organisations.

The countries concerned were given an opportunity to comment on the facts. The
final responsibility for the text, including the comments and recommendations,
lies with the authors, however.



7
  In view of the fact that Montenegro and Kosovo form in reality a different customs territory within
the FRY, they are treated in a separate Annex each. In the case of Kosovo only facts, without
comments and recommendations, are presented.
                                         26



                                    ALBANIA

Relevant general information
On 8 September 2000, Albania became a member of WTO.
In 1992 Albania signed a Trade and Co-operation Agreement with the EU
through which it was granted MFN treatment. On 1 October 1999, the EU
introduced vis-à-vis Albania similar unilateral trade preferences to those given to
the other parties in the region, albeit in the form of country-specific preferences.
These trade concessions, which allow duty-free access to the EU market for
nearly all Albanian exports were further reinforced by additional preferences in
September 2000. In order to encourage Albania to promote regional trade,
preferential treatment granted to adjacent countries by Albania does not need to
be extended to the EU.
Following a positive assessment by the EU Commission, the EU is taking the
necessary formal steps to open negotiations of a SAA with Albania.

Import and export prohibitions
To protect human, plant and animal health and the environment, the import of
dangerous waste, military poisonous substances, chemical weapons, other
strong poisons, devices for the protection against such substances and
chemicals as well as certain narcotic drugs and psychotropic substances is
prohibited.
To protect the cultural integrity and heritage of the country, the export of works of
art and antiques is prohibited. The Ministry of Culture is working on a regulation
introducing a licensing system to protect these goods.
Export prohibitions for preparations of fish products, crustaceans, molluscs etc.
and residues and waste from prepared animal f ood are prompted by a decision
by the International Organisation for Epizootics to include Albania in a list of
countries with diseases (List A).

Quotas and tariff quotas
None

Other charges
None

Import and export licenses
In the context of its accession to WTO, Albania has adopted on 6 October 1999 a
“Decision of the Council of Ministers for the Approving of the Import Licensing
Agreement of the WTO”. The decision was a word-by-word reproduction of the
WTO Agreement on Import Licensing Procedures.
Albania maintains a system of import licensing on products like:
                                         27


      nuclear material to protect national security. The authority for granting the
licenses lies with the Ministry of Defence which has defined the procedures for
obtaining them;
      narcotic drugs, psychotropic substances and pharmaceutical products in
order to protect the life and health of people. The authority for granting the
licenses lies with the Ministry of Health. Applicants must demonstrate, inter alia,
certain professional qualifications in order to obtain the right to import;
      seeds, seedlings and pesticides in order to protect the environment and the
life and health of humans, animals and plants. The authority for granting the
licenses lies with the State Entity of Seeds and Seedlings and the Ministry of
Agriculture and Food, respectively. Applicants must demonstrate, inter alia,
certain professional qualifications in order to obtain the right to import;
      live animals and products, fish and seafood products to protect human
health and/or the environment. The authority for granting the licences lies with
the Ministry of Agriculture and Food;
      eggs, wool, unprocessed leather in order to protect the safety and health of
humans and animals against the spreading of contagious diseases. The authority
for granting the licenses lies with the Ministry of Agriculture and Food. Licenses
are valid for up to two months and must be renewed for each import;
      certain material not included in the list of dangerous waste but still posing a
potential danger to the life and health of humans and animals and to the
environment if not handled properly. The Ministry of Health or the Committee on
Environmental Protection must issue or refuse a license within 30 days after
submission of the application;
      used tyres to protect the environment. The authority for granting the
licenses lies with the Ministry of Public Economy and Privatisation. Since used
tyres serve as raw material for the production of plastic tyres only enterprises
entitled to exercise this kind of production can get a license to import them.
Albania requires export licenses for arms and munitions, weapons, explosives
and pyrotechnic products, and modern works of art. For modern works of art, the
license can be obtained from the Minister of Culture, Youth and Sports upon
presentation of certain information. For the other products mentioned, the
Ministry of Defence is authorized to issue the licenses. For armaments, Albanian
and foreign individuals and companies receive the export authorization upon
presentation of certain documents.

Comments
There appears to be some confusion about the use of the term “license”. In
several of the above cases, one might more appropriately speak of a permit to
import a given product, and one of the conditions for obtaining this permit is a
demonstrated skill to handle the products concerned in a professional way. The
permit is used in order to ensure that products comply with the respective
technical legislation. Once such a permit is given, they can be imported and do
not need an additional license.
Information received concerning the handling of the licensing procedure varied.
One important source (Chamber of Commerce) mentioned long and bureaucratic
procedures to obtain a license.
                                         28

Recommendations
1.    Albania may consider streamlining the use of the term “license” in line with
the comments made above.
2.   It is not evident in the eyes of the authors why import licenses or permits
should be needed for goods such as eggs, wool and unprocessed leather for
which there seems to be a substantial domestic production. The Albanian
authorities insist, however, that this licensing regime is necessary in order to
protect human and animal health. Albania may want to review this issue.

Customs valuation
The legislation on customs valuation is in line with WTO requirements. As part of
the new Customs Code, the transaction value was declared obligatory for
determining the import tariff and the practice of minimum pricing was abandoned.
In order to deal with under-invoicing, a list of reference prices has been
established for certain goods. Before resorting to this list, all efforts will be made
to ascertain a realistic price for the goods concerned. Various methods are used
in that context, including contacts with the domestic VAT offices and with
customs authorities of countries from where the imports originate. Requests for
assistance to other customs authorities are not always successful; in some cases
they are refused citing the absence of a corresponding agreement between
Albania and the country concerned.
In the context of its programme CAM-A (Customs Assistance Mission in Albania)
the EU provides technical assistance to help Albania to implement its customs
legislation, including valuation, by training customs officers and introducing
appraisal systems for customs personnel, improving infrastructure, introducing
the Single Administrative Document and computerized systems (Asycuda), etc.

Comments
Interlocutors in the country and documents generally available vary considerably
in their assessment of how these rules are applied in practice. There is
agreement that much progress has been achieved over the past three years in
improving customs procedures in general, including streamlining the rules on
valuation and enforcing them in a stricter manner. Statistics for imports and duty
collection forcefully confirm this fact. On the other hand, representatives of the
private sectors complained, for instance, about arbitrary application of the
reference price list (different according to customs office and importing
company). Customs people in turn point to the fact that importers are to be
blamed for frequent attempts to use false invoices.

Recommendations
1.   Sustained arguments like those mentioned under Comments are just one
sign of a still uneasy relationship between the private sector and the
administration that prevails in other areas as well. Such problems should thus
form part of a regular dialogue between representatives of the various interests in
order to inform each other about relevant developments and seek to iron out
rough spots in the implementation of the rules. This seems to be all the more
                                        29

important because the legislation of the country and the implementation rules
have undergone a rapid and drastic change as a result of joining the WTO.
2.     The Albanian government may seek to conclude agreements on customs
and administrative assistance with neighbouring governments that will facilitate,
inter alia, the enforcement of the respective customs and tariff legislation.

Non-preferential rules of origin
The rules and procedures for defining the origin of products being imported and
exported into and from Albania are laid down in the Customs Code of 27 January
1999 and its Implementing Provisions. Full compliance with WTO rules was
achieved with a Decision by the Council of Ministers entitled “For Approving the
Rules of Origin of the WTO” dated 9 September 1999. The Decision is a word-by-
word reproduction of the WTO Agreement on Rules of Origin.

Functioning of customs
Although a lot of progress has been made to improve the functioning of the
customs administration, there are still problems with customs procedures (lack of
transparency, corruption) both at the Albanian customs points and with the
checkpoints of neighbouring countries. Some of the problems have been raised
above but many more have been mentioned in documents issued by the EU, the
World Bank, SECI, etc. In order to avoid duplication they are not repeated here
nor were they a primary focus of attention during the visit to the country. On the
other hand, it cannot be denied that such problems can be very important and
damaging NTBs, which is the reason why they have to at least be mentioned in
the context of this paper.

Comments and recommendations
The presence and the effect of the EU CAM-A programme appear to have a
particularly beneficial impact in Albania. The approach taken by that programme
with a continued presence of experienced customs experts from EU countries
who assist in preparing legislative rules, train people and work with them side-by-
side has a lot to commend itself and is widely welcomed. Work will be continued
and expanded in the context of the World Bank TTFSE programme for which the
necessary funding has been approved.
What appears to be missing is the cooperation between neighbouring countries.
It is thus recommended that Albania seek agreements with its neighbours on
simplifying and harmonising customs procedures and documents, thus
complementing the cooperation in customs assistance as proposed above (see
valuation). To the degree possible, such agreements should follow the same
model for all neighbours and possibly even for all countries in the region.

Registration requirement
Only registered firms can import and export goods under a licence. A person or
enterprise has to be registered with the Court of First Instance to become a
natural or legal subject, and then to be registered with the proper Tax Office. The
registration process with the Tax Office is a one-time process and is applied to
                                         30

both foreign and domestic firms or individuals. If the company exercises activities
requiring a technical and professional qualification it should be registered with the
competent authority (e.g. Ministry of Health, Defence, etc).

Comments
The information received indicates that the registration procedure is handled in a
non-discriminatory and reasonably efficient way.

TBT and SPS measures
Upon becoming a member of WTO, Albania took the commitment to apply all
obligations under the TBT and SPS Agreements without recourse to any
transition periods. In its Law on Standardization of 11/3/99, Albania has changed
its former system of wide-ranging compulsory product requirements by
distinguishing between (optional) standards and (compulsory) technical
regulations and by setting out rules for conformity assessment procedures and
accreditation that are in line with the TBT Agreement. Efforts have been
increased to adopt international standards. The market is open for other third
party certification bodies in addition to the national standards body.
While the general legal parameters for this field have been set in the Law on
Standardization and in several Decrees, it is not known which products are
subject to mandatory technical regulations and what the content of these
regulations are. The following groups of products that are subject to mandatory
standards have been indicated:
machinery and equipment:
   boilers
   electrical power-driven machines
   metal-cutting and woodworking machines
   medical devices
   food-processing machines

consumer articles:
 cosmetic items
 synthetically composed detergents
 electrical household appliances
 television and video sets
 cars
 toys

chemical substances used in agriculture:
 fertilizers
 insecticides
 high-level risk chemicals.
Article 21 of Decree 371 for the Criteria and Competencies in the Fields of
Standardization, Certification and Accreditation, where these groups are listed,
                                               31

only refers to imported products being subject to mandatory standards. This
raises the question how domestically manufactured products are treated.
The content of the standards is not known but according to the Law on
Standardization it is not excluded that existing Albanian standards still prevail 8.
Also the rules and procedures for conformity assessment for these products are
not spelt out in detail although the general parameters are given in Decree 371 9.
Details concerning the implementation of the WTO SPS requirements are not
known.

Comments
Although no specific problems were reported during the visit regarding problems
with TBT and SPS matters, the above presentation and comments made by other
observers demonstrate that Albania faces difficulties in the implementation of the
relevant laws and rules in the TBT and SPS fields. It is our estimate that also the
technical infrastructure needs to be reviewed in this context. The infrastructure
has to be established, when necessary, or upgraded in order to implement the
rules, to support the local economy in its efforts towards quality control and to lay
the basis for international cooperation.

Recommendations
1.    To the degree not yet accomplished the rules detailing and implementing
the legislation need to be established. This concerns, inter alia, sufficiently
precise rules for products subject to mandatory requirements before being placed
on the Albanian market.
2.    To the degree that old Albanian standards are still valid for products
requiring mandatory testing and certification these should be reviewed and
adapted as a matter of priority.
3.    If needed with the help of outside expertise, the conformity assessment and
accreditation infrastructure in Albania should be examined with a view to
formulating an action plan to upgrade it or to create the necessary institutions.
4.    The Albanian government is encouraged to take up contacts with other
governments in the region in order to set in motion a process of cooperation in
the field of standardization, technical regulation, conformity assessment and
accreditation.

8
  Article 15 of the Law on Standardization stipulates that “Albanian standards in power may retain
their status until three years following the enactment of this Law”.
9
   “Only for products dealing with life and health security and the protection of environment, the
Ministries, according to technical regulations in force, determine those products that are subject
to compulsory certification, tests, measuring or inspection. These rules are the same for domestic
subjects and foreign ones. Ministries may allow market access for products, which are certified,
approved, measured or inspected by foreign bodies, if unilateral or multilateral agreements exist
for this. Wherever it is necessary to obtain samples for testing, the procedure that applies is the
same for domestic subjects and foreign ones. As concerns products considered being of low-level
risk, they are allowed to circulate across the market without having to put them through
certification process but only by carrying out a verification of their accompanying documents”.
Article 9 of Decree 371.
                                        32

5.    The state of affairs and possible needs for upgrading the SPS implementing
legislation as well as the technical infrastructure that is necessary to enforce it
should be clarified.

Other problems
     As a result of WTO accession, the necessary domestic laws have been
passed but the adoption of implementing rules and instruments seems to lag
behind. This creates a situation of uncertainty as to how rules will be applied in
practice and which laws are valid at a given moment that is felt by both
administrators and the private sector.

Comments and recommendations
This uncertainty is felt in other areas as well. While it is understandable that all
efforts of the administration were concentrated on meeting the legislative
requirements for WTO membership it is essential that the period of uncertainty
regarding their implementation is kept as short as possible. This requires that the
rules are drafted, the necessary infrastructure made available and the members
of the administration and the courts trained in the implementation and
enforcement of the new requirements. This has to go hand in hand with a
process of information and discussion between the administration and the private
sector where the latter is informed about the new developments and can in turn
make its views known when bottlenecks and difficulties arise in the
implementation process.
    It was repeatedly pointed out during our visit that the Albanian banking
system needs improvement. Since this is not a primary concern of this study but
nevertheless considerably influences trade exchanges in the region and
generally between Albania and the outside world, it is mentioned here.

Problems with neighbouring countries
Some of our interlocutors mentioned problems with the movement of people
caused by visa requirements and practices of some neighbouring countries.
                                        33



                      BOSNIA AND HERZEGOVINA

Relevant general information
Bosnia and Herzegovina (BiH) has applied to become a member of WTO in May
1999 and was granted the status of observer in July of that year. BiH is in the
process of drawing up its Memorandum on the Foreign Trade Regime as part of
the WTO application process.
The Dayton Peace Agreement assigns the central government of the State of BiH
only a set of defined legislative competencies (essentially foreign policy,
monetary policy, foreign trade, customs policy, external borrowing and debt
service, air traffic control, immigration, refugee and asylum policy, international
communications). The implementation of the corresponding laws as well as
competencies not granted to the State fall under the authority of the two Entities,
the Republic of Srpska (RS) and the Federation of Bosnia and Herzegovina. One
of these shared competencies between the State (legislation) and the Entities
(implementation) is the field of foreign trade relations.
The Dayton Agreement assigns considerable competencies in political and
administrative decisions, including economic affairs, to the Office of the High
Representative (OHR).
In several domains relevant for trade (agriculture, veterinary, human health and
safety, environment but also market inspection, control of prices, quality control,
tourism, free zones, stimulation and protective measures for domestic
production) the rules valid in each of the Entities differ. In addition to internal
difficulties these differences represent a considerable impediment for the outside
world because trading partners find it difficult to be confronted with two regimes,
or competing competencies between the State and the Entities, when exporting
to BiH.
The EU maintained its autonomous trade preferences for BiH goods after the
denunciation of the 1980 Cooperation Agreement with the former Yugoslavia in
November 1991. These preferences comprise: (1) exemption from customs
duties and abolition of QRs for industrial products, except for certain products
(especially textile products) that are subject to tariff ceilings; (2) special
concessions for various agricultural products, including wine. These concessions
apply on a yearly basis.
In November 1997 BiH signed an agreement on economic co-operation with
Slovenia. This is an asymmetric agreement offering MFN status to BiH for all of
its exports of industrial products to Slovenia. This agreement is now being
replaced by an FTA. BiH also recently signed an asymmetric FTA with Croatia.
Discussions on a bilateral FTA are also underway with Macedonia.

Import and export prohibitions
Cars older than 7 years and trucks older than 10 years cannot be imported.
                                              34

Quotas and tariff quotas
None

Other charges
A fee of 1 per cent of the customs value is charged on imports for customs record
keeping and import verification.
An additional import charge has to be paid on many agricultural goods and
foodstuffs (more than 250 tariff lines). The charge currently ranges from 0.10 to 6
DEM per unit/kg, with the majority being between 0.10 and 2.50 DEM. The main
commodity groups concerned include live animals, meat and meat products,
edible oils and fats, dairy products, agricultural products, processed foods and
some spirits. In addition, there appear to exist seasonal charges for some
products (such as fruits and vegetables). The Council of Ministers or the High
Representative can renew the additional import charge on a yearly basis. While
the duty is the same for all of BiH the implementation lies again with the Entities.
It appears that no real economic rational is behind the choice of products subject
to the surcharge. This may change when the additional charge will be
incorporated into the tariff, which will then become a compound tariff (ad valorem
duty plus specific duty for HS chapters 1-24). This step will be taken in view of
the accession to WTO.
A businessman referred to a county tax on imports of 0.5 per cent for the support
of sport activities.
An export ban on timber has been replaced by a stumpage tax.

Comments
According to Article VIII of the GATT any charge imposed on the import of goods
must correspond to the cost of a service rendered.
The additional import charge changes the otherwise simple tariff structure of
BiH 10. To answer the question of whether it is needed, and for which products,
goes beyond the limits of this study and requires a more in-depth examination of
the actual and future needs of the economy and the fiscal needs of the country.

Import and export licenses
The information received concerning the need to obtain import licenses on the
State level differed. The Law on Foreign Trade Policy makes no reference to the
topic but some of the interlocutors mentioned that licenses were required for
goods considered a danger for public health, the environment, national security
or the national economy.
In the RS, the import of certain commodities (which include coffee, spirits,
tobacco, oil and oil derivatives) that are important sources of customs revenues
require special permission. Such licenses are granted without undue delay.


10
  The customs tariff has four import tariff levels for goods of 0, 5, 10 and 15 per cent, with an
average of 6.8 per cent.
                                         35

Comments and recommendations
It would be helpful to obtain more clarity about the licensing systems at the level
of the State and the RS. Not least in view of the planned accession to the WTO it
would seem advisable to spell out at the State level in which cases licenses are
needed and how to obtain them; thus the rules would be binding for the Entities.
Customs valuation
The Law on Customs Policy of 1998, prepared with the assistance of the EU,
stipulates that the customs value of imported good is the transaction value. If
doubts arise concerning the accuracy of the declared price, reference prices exist
but more often attempts are made to piece together the real price, inter alia by
soliciting support from the customs authorities of the exporting country. While this
works in some cases, in others the request is refused by pointing to the lack of a
corresponding agreement between the two states. As a result of these
experiences a model agreement aimed at facilitating customs clearances,
improving cooperation between customs authorities and providing administrative
assistance to implement the customs legislation has been drawn up and
proposed to several countries in the region. An agreement with Croatia has
already been concluded while others are in various stages of preparation.

Recommendations
The BiH government should be encouraged to continue negotiating such
agreements with the countries of the region. It may make the model text available
to the regional partners as a contribution towards a coordinated text for such
agreements in the entire region. Complementary efforts undertaken in the context
of SECI and the World Bank (TTFSE) should be taken into consideration as well.

Rules of origin
The Law on Customs Policy sets out the rules of origin for non-preferential trade,
which appear to be in line with international practice. The Law further stipulates in
Article 22 that “Customs regulations may provide that a document must be
produced as proof of the origin of goods”. Certificates of origin are now only
issued by customs.
For preferential rules, the Law refers to the corresponding agreements, which
normally contain a section setting out the rules applicable in the case at hand.

Functioning of customs
It is recalled that the legislation concerning customs policy is a prerogative of the
State while the implementation falls on the Entities. Customs revenues are thus
revenues of the Entities. In 1998 the State adopted the Customs Tariff Law and
the Law on Customs Policy, both based on EU legislation. Effective border
control, which falls under the responsibility of the Customs Administration of the
two Entities, remains a serious problem, however. Only 35 out of 400 border
crossings are official crossing points for customs purposes. A BiH border police
has just been established, but it is only entitled to act at the official border
crossing points and 10 km inside from there. As a result illegal trade is quite
                                        36

easy. It has also been reported that bribery is still a problem although a system of
internal audits has helped to push back this practice.
An agreement between the directors of the Federation and the RS Customs
Administrations, which was signed in May 2000 and provides for cooperation and
mutual assistance, should help in achieving a uniform approach in customs
matters throughout BiH.

Comments
The EU has since 1996 provided technical assistance in this sector through the
Customs and Fiscal Assistance Office (CAFAO) by contributing to legislation,
training, computerization and customs enforcement activities. With its assistance
strong efforts have been made to establish a unified customs territory, to draft
identical Entity-level implementing legislation and regulations, and to develop a
customs system based on modern European standards. It is expected that the
World Bank TTFSE Project, which was approved on February 2001 for BiH, will
continue and complement this support.

Recommendations
See above the recommendation under customs valuation.

Registration requirement
Business registration seems to be a long and bureaucratic process although the
assessment of the interlocutors differed. Due to the constitutional structure of the
BiH an import/export company must register with the Ministry of Foreign Trade
and Economic Relations at the State level and with the Court of the Entity where
it is located. Furthermore, since it is not possible f or a company with a customs
registration number in one Entity to clear goods in the other, it should obtain a
customs registration number from the Entity where the good is cleared.
Unspecified references were made that registration in the case of foreign
investments and joint ventures is more complicated but that the revised law on
foreign direct investment would remedy that situation.
As part of the revision of the law on foreign direct investment that is currently
under way it is envisaged to provide for the possibility of using the same
documents for registration at the level of the State and the Entities. The objective
is to accomplish registration in maximum 15 days.

Comments and recommendations
There are nuances in the way in which different commentators describe the
registration process. There is agreement, however, that the procedure is overly
complicated and needs to be simplified.

TBT and SPS measures
Six new laws on standardisation, accreditation, metrology, measuring units and
establishing the Institute for Accreditation and the Institute for Standardisation,
Metrology and Intellectual Property have been adopted at the State level at he
                                         37

end of 2000. Their goal is to adopt EU practice. The new law on standardisation
provides, inter alia, for a separation between (voluntary) standards and
(mandatory) technical regulations, thus departing from the old system of
compulsory standards. A lot of detailed and technical work is still required in
order to fully adopt the EU system of technical regulations and to replace the old
Yugoslav standards with modern ones based on international or regional models.
Pending the introduction of new standards and technical regulations but at the
latest until the end of 2003, the existing product requirements based on old
Yugoslav standards continue to be the valid law in BiH.
The implementation of the various laws creates a complex maze of State and
Entity responsibilities. For instance, products falling under the law on legal
metrology have to be type-approved by the national metrology institute while
checking of individual imports in line with the type approval is done by the
Entities. No testing is required for electrical appliances; at the borders, a check of
the documents accompanying the products is considered sufficient. On the other
hand, electrical appliances for use in hazardous environment (mining, oil refining,
etc.) are not only type-approved but each product has to be tested. Relevant
rules for the latter category were adopted at the State level but they do not seem
to be recognized by the RS. Likewise, imports of pharmaceutical and chemical
products have to comply with the relevant State legislation but the checking is
done by the Entities. Laboratories in the Entities exist but they have to comply
with different regulations and practices. The new State law on accreditation will
eventually ensure a common minimal standard among the laboratories and
testing institutions but only after a State conformity assessment law has been
drafted which requires that products subject to technical regulations can only be
tested by an approved testing or verification body.
Human, animal and plant health is part of the Entities‟ competence and they
issue their own laws. Different veterinary and sanitary conditions and criteria are
applied for the import of goods of animal origin. Not least at the pressure of the
EU, plans are discussed to create a common office that would be entitled to
provide veterinary and plant health certificates valid for all of BiH.

Comments and recommendations
SPS and TBT measures are clearly areas where different competencies between
the State and the Entities as well as the remains of an outdated approach based
on compulsory standards create a combination that is a serious obstacle to a
quick integration of BiH into the modern international trading system. Modernizing
and harmonizing legislation, implementing measures and the technical
infrastructure are essential and outside assistance and insistence probably
unavoidable to bring about the necessary changes in the foreseeable future.
Contacts and cooperation with neighbouring countries that are often confronted
with similar problems would also be useful.

Other problems
     Although BiH ratified the TIR Convention the TIR carnet system cannot
operate in the country because the necessary administrative instructions are not
available and the customs staff is not trained. Furthermore, there is no
                                        38

functioning international insurance coverage system in BiH. This is a problem for
the domestic transporters because international shipments have to be made by
foreign companies. Attempts have been undertaken to set the necessary steps in
motion but no concrete result has come of them. The issue has also been
introduced in the Working Group on Trade Liberalisation and Facilitation of the
Stability Pact.

Comments
Both in the light of the importance of imports and exports for BiH and for its
function as a transit country a functioning TIR carnet system is important. With
international assistance, contacts are under way with the responsible
international organisations to remove the remaining obstacles. At the same time
the customs administrations of the Entities should prepare all the necessary
administrative instructions for the implementation of the TIR Convention
provisions and train their customs staff accordingly. Assistance could be provided
by relevant international bodies.
    The banking system is in need of reform.

Comments
This issue, which falls outside the terms of reference of this study but is relevant
for international trade, is merely mentioned for completeness‟ sake and because
it was mentioned on several occasions during our visit to Sarajevo, in particular
by the EU and the OHR.

Problems with neighbouring countries
Difficulties were reported concerning exports of cigarettes and tobacco to Croatia
and generally in trade with Slovenia with whom BiH has a large trade deficit.
                                         39



                                    CROATIA

Relevant general information
On 30 November 2000, Croatia became a member of WTO.
The EU maintained vis-à-vis Croatia autonomous trade preferences after the
denunciation of the 1980 Cooperation Agreement with former Yugoslavia in
November 1991. These measures comprise: (1) exemption from customs duties
and the abolition of QRs for industrial products, except for certain products
(especially textile products) that are subject to tariff ceilings; (2) special
concessions for various agricultural products, including wine. These concessions
apply on a yearly basis. In May 2001, a SAA was initialled between the two sides.
The trade and trade-related provisions of the Agreement will be applied from 1
January 2002 while the remaining parts will become effective following ratification
on both sides.
In June 2001, Croatia also signed an FTA with the EFTA countries.
FTAs with countries of Central and Eastern Europe are at various stages of
completion. Agreements are concluded with BiH, Hungary, Macedonia and
Slovenia. The Agreement with BiH is an asymmetric one, requiring Croatia to
eliminate duties on all imports upon entry into force while BiH will gradually
reduce its import charges over a three-year period. Croatia finished negotiations
of a FTA with Poland and the Czech and Slovak Republics. Negotiations with
Bulgaria, Romania and Turkey have started.

Import and export prohibitions
None

Import and export quotas
None

Import and export tariff quotas
Croatia applies tariff rate quotas on a MFN basis for the following agricultural
products: meat, wheat, sugar, and chocolate. These measures are included in
the schedule of concessions and commitments on goods negotiated during
Croatia‟ s accession process to the WTO.
Tariff quotas are also applied to selected agricultural and food products in the
FTAs with Slovenia, Macedonia and Hungary.
The tariff rate quotas are administered and allocated on the basis of certain
criteria that are publicly known: 1. traditional traders, with at least 10 per cent
reserved for new entrants; 2. needs of the domestic processing industry; 3.
regional criteria. A group comprising ministries and private sector representatives
is responsible for allocating tariff quotas in line with and combining these criteria.

Other charges
None.
                                        40

Import and export licenses
According to lists provided in the context of the WTO accession, Croatia requires
import licenses for a sizeable number of goods, ranging from chapters 26.12
(uranium) of the HS nomenclature to 93.07 (swords). Most of them fall into the
category of goods usually covered by Articles XX and XXI of the GATT (national
security; human, animal and plant health; protection of the environment; control
of trade in works of art; precious metal). Applications only have to be submitted to
one licensing authority even if a given product is in the competence of several
ministries. The relevant authorities issue licenses on an automatic basis for a
limited period of time (usually six months); they can be extended upon request.
Licenses are not transferable. A reasonably modest fee is charged for each
import license.
Licenses are also applied for imports of iron tubes and bars from non-WTO
members.
Export licenses are still required for a number of tariff positions (96 according to
documents submitted to WTO) for statistical and monitoring purposes. Products
covered range from radioactive material, acids, and explosive material to certain
metals, weapons, arts and antiques.
The decision on goods subject to the import and export licence regime has been
amended on several occasions with a view to shortening the list of goods
concerned and to ensuring that licences are issued on an automatic basis.

Comments
From the users‟ side, no specific problems were reported concerning the granting
of licenses.
According to the Croatian authorities, the main non-WTO member exporters of
iron bars and tubes to Croatia are BiH and Ukraine.
There appears to be some confusion about the use of the term “license”. Many of
the products contained in the lists provided to WTO, especially those for which
the State Bureau of Standards and Measurement, the Ministry of Health or
Ministry of Agriculture and Forestry are licensing authorities, need to undergo a
verification procedure, the purpose of which is to demonstrate that the imported
goods correspond to the Croatian laws for the product in question. Once this is
established, the product can be imported and does not need an additional
license. Furthermore, the range of products indicated in these lists is often too
wide because the entire product range of a four or six-digit HS chapter is listed,
even if only some of the products need to undergo the mandatory procedures.
Such inconsistencies can create confusion and additional work to investors and
economic operators that are unnecessary.

Recommendations
1.   Croatia should review the reasons for import licences for iron tubes and
bars originating in BiH with a view to removing them as a contribution to regional
cooperation.
                                                41

2.    The different ministries and authorities in the Croatian administration should
agree on the use of the term “license” and review the relevant documents with a
view to removing the inconsistencies referred to.

Customs valuation
The WTO agreement on customs valuation has been applied since 1 January
2000.

Rules of origin
The Customs Law sets out the rules of origin in non-preferential trade while
referring to the text of the preferential agreements for origin rules required in that
context.

Comments
Rules of origin for non-preferential trade are in line with international practice.

Registration requirement
Natural and legal persons wishing to engage in business activities, including
trade, are required to establish a company and register with a Commercial Court.
Any company whishing to engage in trade of sensitive goods for reasons of
health, safety or security (arms, explosives, medicines, drugs, narcotics and
toxins) has to submit to the Commercial Court an activity license issued by the
competent authority before incorporation of the company.

Functioning of customs
Since many efforts by international institutions (SECI, EU, World Bank, etc.) have
been directed at identifying and removing problems connected with customs
clearance, this study has not concentrated on this issue. This is not to say,
however, that such problems cannot be very serious NTBs and, indeed, such
issues were raised by interlocutors during our visit to Zagreb. In a survey by the
Croatian Chamber of Economy in autumn 1998, long waiting periods at the
Croatian border were the second-most cited problem encountered in international
trade by Croatian firms, followed by long waiting periods at borders of SECI and
of other European countries. A further item on the list referred to insufficient
working hours of sanitary, veterinary and phytosanitary services at the Croatian
border. It is therefore not surprising that proposals to improve the situation at the
border are among the most important in the list of proposed improvements by the
Chamber 11. Also other sources confirmed that infrastructure, antiquated

11
     The following proposals were made for the improvement of the present situation:
     simplifying Croatian customs procedures (using the model of EU countries)
     involving computer processing data and establishing computer connections with other border
      points in order to speed up customs procedures
     involvement of “home” – firm located – customs procedure
     24-hour working time of sanitary, veterinary and phytosanitary services at borders
     sufficient number of Austrian and Italian permits for road transport
     higher value of the TIR carnet, tip to value of cargo of US$ 300.000
                                              42

equipment, complicated procedures, short opening hours and insufficiently
trained personnel constitute a problem at the Croatian customs. Difficulties
caused by smuggling, bribery, etc. were reported for exchanges at the border
with BiH. Great hopes are therefore set in assistance programmes like the
TTFSE project by the World Bank, which are expected to improve the situation.
In that context it is also noteworthy that a new Law on the Customs
Administration entered into force on 23 August 2001.

Recommendations
1.    The EU has supported the control of customs at Croatia‟s eastern borders
as part of the CAM-ES programme. It could be considered to what degree the
experiences acquired by the EU in these provinces as well as in its customs
assistance programmes in Albania and BiH could be made available to Croatia
as a whole, either as a part of the TTFSE project or complementing it but in any
case in a coordinated fashion.
2.    Cooperation with neighbouring countries in customs matters seems to be
missing. It is thus recommended that Croatia seek agreements with its
neighbours on simplifying and harmonising customs procedures and documents
as well as on granting each other administrative assistance in enforcing the
respective customs legislation. To the degree possible, such agreements should
follow the same model for all neighbours and possibly even for all countries in the
region.

TBT and SPS measures; quality controls
Croatia took the commitment to apply all obligations under the WTO Agreements
on TBT and SPS from the date of accession without recourse to any transition
period. It appears that the corresponding domestic legal framework has been
completed.
According to the Standardisation Act, which entered into force on 10 July 1996,
the application of Croatian standards is no longer mandatory since 1 January
1997. The new Croatian standards have to be based on international (ISO, IEC)
or European standards.
A list of products that are subject to mandatory certification according to the
Standardization Act is attached at Annex 1.
Croatia has provided for the possibility of recognizing test reports issued abroad
and laid down the rules in a regulation and a set of instructions.
According to the new Law on State Inspectorate passed on 30 June 1999, the
quality controls aim at ensuring consumer protection whereas the public policy
objective of SPS controls is to address risks to public health. Quality controls on


   adequate working time of customs in the afternoons and on Saturdays
   subsidising cost of trucks transportation on rail
   better working conditions for police officers and employees which work on passenger control
    in Croatian ports
   involvement of employees who are engaged in international road transportation in the state
    commissions and ministerial bodies.
                                          43

imported items as part of customs clearance were abolished. The control is
performed on designated imported and domestic products at the wholesale and
retail levels. The currently valid list of products subject to quality control contains
20 groups of products, ranging from meat and meat products, dairy products over
coffee, teas, sugar and honey to alcoholic beverages, fuel and fuel oils. All
regulations regarding quality control are under review. It is intended to make
them compliant with EU rules. The lists of goods subject to mandatory SPS
controls are attached at Annexes 2 (sanitary measures) and 3 (phytosanitary
measures).

Recommendations
1.    While the review of quality control measures is under way, several laws still
in force are old and need to be urgently updated. It is recommended that this
process be undertaken without delay. To the degree necessary and not yet done,
the SPS and quality control requirements for the same product category should
be streamlined.
2.    The limited working hours of officials in charge of sanitary, veterinary and
phytosanitary controls at the Croatian borders were mentioned as a problem for
international trade in the survey conducted by the Croatian Chamber of Economy
(see above). It is recommended that Croatia remedy this situation in the context
of the overall upgrading of customs clearance services.

Other problems
      The judicial system has been reported as being overburdened, slow and
politically influenced. Businesses complain that disputes linger for years and
decisions are blocked. Increasingly, they resort to out-of-court settlements in
order to avoid delays.

Comments
This issue evidently falls outside the scope of our study but is mentioned here for
information and completeness‟ sake because it is a problem that effects imports
and exports as well. Possible solutions might entail creation of a commercial
court or more frequent resorting to arbitration – a practice widely used in other
countries.
     Several interlocutors pointed to problems caused by a deficient local
banking system. Just as in the case above and with other countries examined in
this study, this issue is mentioned for information and completeness‟ sake.

Problems with neighbouring countries
As problems were mentioned :
    An import ban during the past two years of crude oil and derivatives from
     Macedonia (safeguard measure under the FTA).
     An SPS certificate is required by BiH for certain products such as wine in
      bottles.
                                                 44



                    FEDERAL REPUBLIC OF YUGOSLAVIA

Relevant general information
On 24 January 2001 the Federal Republic of Yugoslavia (FRY) applied for WTO
membership “as a new country and not as the successor state” of former
Yugoslavia. WTO set up a working group and granted the FRY observer status.
The FRY was constituted in April 1992 as a federation of the Republics of Serbia
and Montenegro (Vojvodina and Kosovo are provinces of Serbia). The FRY
constitution limits federal responsibilities to foreign relations, defence,
monetary/exchange rate policy, and customs. At present, the federal government
exercises these authorities only over the territory of Serbia proper and Vojvodina,
as Kosovo is under UN administration (UN Interim Administration Mission in
Kosovo UNMIK) and Montenegro has effectively taken over the responsibilities
for foreign relations, monetary/exchange rate policy, and customs 12. One of the
main questions of the WTO accession process will therefore be to clarify the
territory on which the FRY‟s rights and obligations will apply.
The FRY Federal Customs Administration has established customs checkpoints
at the borders with Montenegro and Kosovo. As customs offices at the external
borders of the Federation are still electronically connected, it appears to be
possible for the Federal Customs Administration to monitor the circulation of
foreign goods entering via Montenegro for destinations in the Republic of Serbia.
At the checkpoint between the two Republics, these goods will be charged again
the federal customs duty even if customs duties have already been paid at
Montenegro‟s external borders since the latter duties are not transferred to the
federal budget.
The Government of the Republic of Serbia has also assumed some
competencies in foreign trade, especially regarding import of fuel. It only allows
import of raw petrol to refineries. Furthermore, the Ministry of Agriculture has
restricted the export of some agricultural products.
A new Tariff Law entered into force on 1 June 2001 and introduced a tariff
schedule with rates ranging from 1 to 30 per cent. The overall simple average
rate is 11 per cent. More than half of the imported goods are charged tariffs of 1
or 5 percent whereas 8 per cent of goods, mainly luxury goods, are subject to a
duty of 30 per cent. These rates apply to goods originating in countries applying
MFN treatment to Serbian exports. For other countries the Law on Customs Tariff
foresees an increase of 70 per cent. It seems, however, that this provision is only
applied to one country.
Since December 2000, the FRY is a full participant in the EU Stabilisation and
Association process and is included in the recently liberalised EU preferential

12
   There are uncertainties concerning the commercial relations with Montenegro that has enacted
its own tariff structure, although foreign trade policy is a “federal” responsibility according to the
constitution. The FRY government is engaged in negotiations with Montenegro in order to reach
an understanding facilitating trade. In this context, an agreement was reached in March 2001
between the two sides regarding the mechanics of trade with the EU, as required by the EU.
                                         45

trade regime. Many of the industrial products enter the EU duty-free but
agricultural products are more restricted.
The FRY has signed FTAs with Macedonia and the Russian Federation. FTAs
are under negotiation with BiH, Croatia and Slovenia. Goods imported from the
Republica Srpska of BiH enjoy a special regime: the lower rate from the Customs
Tariff of the FRY and BiH is used.

Import and export prohibitions
None.

Import and export quotas
Amendments to the Foreign Trade Law together with the respective government
decisions entered into force on 1 June 2001 and abolished import quotas which
were imposed on agricultural and foodstuff products as well as for so-called
strategic products, mainly manufactured products and consumer goods (e.g.
textile, footwear, fertilizers, iron and steel, leather processing, electric household
appliances, machine industries, etc).
Export quotas were retained for some “strategic agricultural products” such as
wheat, maize, sugar, flour, soya, raw skin. For exports under a quota regime,
enterprises have to address the Federal Ministry for Foreign Economic Relations.
The criteria for distributing quotas are set in a government decision.

Comments
Although the recent amendments to the Federal Trade Law introduced many
liberalisation measures, an export quota system was maintained. Quotas are one
of the most obvious trade-restrictive non-tariff measures and the government of
the FRY may consider replacing them with export taxes or an appropriate
safeguard measure.

Import and export tariff quotas
None.

Other charges
There is a special import levy (prelevmanes) for agricultural products and
foodstuffs expressed as a specific duty (dinars per unit of product). The level of
the “prelevmanes” can be changed over the year depending on market conditions
and import prices through a decision taken by the government at the proposal of
the Ministry of Agriculture. Changes are published in the Federal Gazette.
A special seasonal charge of 20 per cent exists for agricultural products; it is
added to the regular duty. The charge is applied by a decision of the Federal
Government.
A levy of 0.5 per cent of the CIF import value of goods is charged for customs
recording. This fee is not paid for imports of goods exempt from payment of
customs duties and other import dues.
                                       46

According to the Federal Administration Law there is an administrative tax (called
collateral tax) for customs procedures expressed in specific terms. The tax is 50
dinars up to 100 kg of imported or exported goods, 70 dinars from 100 to 10‟000
kg and then 10 dinars more for every additional 1000 kg over 10‟000 kg. For
products whose quantity cannot be expressed in kilogrammes, a tax of 6 dinars is
paid per unit of measure. This tax is not paid for imports of goods exempt from
paying customs duties and other import dues.
The Government of the Republic of Serbia has the right to apply excise taxes to
certain imported products like fuel, cigarettes, liquors, some luxury goods, salt,
non-alcoholic beverages, etc. Thus some foreign goods bear a higher excise tax
than domestic ones.

Comments
The system of other charges is rather complicated and creates problems of
transparency. Quite evidently, these charges which are added to customs duties
increase the cost of imports.
It should be recalled that according to Article VIII of the GATT any charge
imposed on the import of goods must correspond to the cost of a service
rendered and can therefore not be expressed on an ad valorem basis. Moreover,
one of the fundamental principles of the multilateral trading system is that
national treatment also applies to internal taxes.

Import and export licences
Import licences have been retained for a limited number of commodities to fulfil
requirements of international conventions (explosives, hazardous and toxic
substances, radioactive substances, etc.) and for about 40 tariff lines covering
steel products from HS chapter 72. The Federal Ministry for Foreign Economic
Relations is entitled to issue import licenses.
On the export side, license requirements exist but the authors received no
indication regarding the products implied and the reasons for them.

Recommendations
The government of the FRY may consider taking steps to abolish the licensing
requirements except as required by international agreements.

Customs valuation
As a former member of the GATT, the FRY applies the same principles as set out
in Article VII of the GATT. A list of reference prices has been drawn up to help
customs officers to assess the value of goods in cases where a false declaration
or under-invoicing is suspected. The list is based on world market prices. No
minimal price is applied.

Comments
Importers complain that customs valuation can be based on an arbitrary decision
by customs officers. In case of suspected under-invoicing the burden of proof is
                                         47

on the importer. Goods are put in customs warehouses and the storage costs fall
on the importer. If the latter wants to clear goods immediately, for instance in the
case of perishable products, duties have to be paid according to the value
decided by the customs officer. However, if importers can prove the invoice was
correct the difference of customs duty paid in excess is not reimbursed.

Rules of origin
A federal regulation on issuing certificates and verification of documentation
accompanying imported and exported goods, dated 1992 and amended in 1994
and 1996, stipulates that the value of a product has to be increased by 51 per
cent in a country in order for the product to be considered as originating there or
that the last substantial transformation changes the tariff line of the product. The
Yugoslav Chamber of Commerce issues certificates of origin.
The FRY applies EU rules of origin for trade with EU member countries.
Under a preferential trade regime, customs officers issue certificates of origin.

Functioning of the customs
Problems due to corruption and smuggling are often reported. It is estimated that
in 2000 more than 20 per cent of customs duty revenues were lost due to such
practices.

Comments and recommendations
There is a need to reform customs and related rules and procedures. An efficient
and transparent customs administration is crucial for the conduct of international
trade.
Discussions are under way with the World Bank to include the FRY in the TTFSE
project.

Registration requirement
Since 1 January 2001, a foreign trade company needs only to be registered at a
commercial court. All the previous burdensome requirements have been
abolished.

TBT and SPS measures; quality control
The Federal Law on Standardisation (1996) regulates the adoption and
application of standards, technical and other regulations, conformity assessment
procedures as well as “products and services with technical and other
regulations”. Article 2 of the law stipulates: “Standards and technical and other
regulations anticipated by this law cannot be adopted or applied for the creation
of trade barriers for goods and services”. The law also clearly marks the
distinction between (voluntary) standards and (compulsory) technical regulations.
The Federal Institute for Standardisation in the Ministry of Economy develops
standards and carries out activities in certification. Standards developed since
1996 have been voluntary and were harmonised with those of the EU. The
                                        48

Institute represents the FRY in international and regional organisations for
standardisation and certification.
There were 13‟248 national standards in December 1999 covering the following
sectors:
infrastructure and sciences                                      (461)
health, safety and environment                                   (548)
engineering technologies                                         (3‟469)
electronics, information technology and telecommunications       (779)
transport and distribution of goods                              (1201)
agriculture and food technology                                  (770)
materials technologies                                           (4‟784)
construction                                                     (1046)
special technologies                                             (190).
33 per cent of the national standards were voluntary and 67 per cent mandatory.
Products subject to obligatory certification are listed in Annex 4. In addition to
electrical devices and construction material the list also contains items such as
wool, jute and cotton.
On 31 December 1999, 1290 international standards were adopted as national
standards.
The federal law on the quality of agricultural and foodstuff products is of a
general nature. Internal regulations define the quality of specific goods. Domestic
products and imported goods are subject to the same requirements but quality
controls for domestic goods are made once the product is on the market whereas
for imports they take place at the border or at the warehouse by the federal
market inspection, which is part of the Ministry of the Economy.
On the basis of federal laws on plant and animal protection, the relevant
ministries (agriculture, health) elaborate veterinary as well as phytosanitary
measures. Importers have to apply for a permit to the relevant ministries to obtain
an authorisation to import stating that the requirements are fulfilled. There are
veterinary offices at every border point.

Comments
With the Federal Law on Standardisation of 1996, the FRY has clearly broken
with its past and adopted a law that is more in keeping with modern thinking and
practice. It is not quite clear, however, to what degree the old practice of
mandatory standardisation has in fact been eliminated; the high percentage of
mandatory standards still existing in 1999 leaves some doubts. Likewise, the fact
that items such as wool, jute and cotton are subject to mandatory certification
may indicate that some of the old thinking still prevails.
The visit did not permit to obtain information on the existence and functioning of
the testing and certification infrastructure and on the practice of handling import
rules for veterinary and phytosanitary controls.
                                          49

Other problems
The FRY is facing both transition and post-conflict problems. The banking system
has been bankrupt since the early nineties, the enterprise sector is also highly
illiquid, and black market activity is quite large. The country is in default on all its
foreign obligations (external debt stands at about US$ 12 billion). Domestic fiscal
liabilities are also very large. Total public debt is at least 150 per cent of GDP.

Comments
This list of problems illustrates the formidable challenges that face the new
government in the FRY. They are mentioned for completeness‟ sake because
they are likely to affect the trade policy and the related practices as well.

Problems with neighbouring countries
None reported.

Additional source
The World Bank, Federal Republic of Yugoslavia. Breaking With The Past: The
Path To Stability And Growth. Volume I: The Economic, Social and Institutional
Reform Agenda, Washington D.C., June 2001.
                                              50



                                          KOSOVO
                                     13
Relevant general information
While recognising the sovereignty and territorial integrity of the FRY, the UN
Security Council Resolution 1244 granted Kosovo substantial autonomy and s elf-
government. Accordingly, Kosovo is run by an interim civil administration led by
the United Nations (UNMIK). The Province is aid-dependent and most of the
economic activities are related to the large international presence.
Within the framework of Resolution 1244, UNMIK has issued two general
regulations (Regulations 1 and 24 14) clarifying that FRY laws applicable in
Kosovo until the suspension of the autonomy of the Province in 1989 continue to
apply unless invalidated on human rights grounds or superseded by UNMIK
regulations. Certain laws passed after 1989 will also be enforced on a case-by-
case basis if they are considered to be consistent with standards of human rights
and in the interests of the Province.
UNMIK has taken an equally pragmatic approach in economic matters.
Regarding the trade and customs regime the following is the case:
The relevant regulation 15 defines the applicable law in Kosovo as
     the regulations promulgated by the Special Representative of the
      Secretary-General and the subsidiary instruments issued thereunder,
     the law in force in Kosovo on 22 March 1989, and
    in the event that a subject matter or a situation is not covered by the
aforementioned laws but by another FRY law in force in Kosovo after 22 March
1989, which is not discriminatory, this legislation is also applicable.
Hence, it appears that those provisions of the Customs Law of the FRY which
have not been touched or suspended by UNMIK legislation, i.e. the provisions
concerning the value of goods for customs purposes, customs offences,
declaration of customs goods, etc, are applicable in Kosovo.
The Central Fiscal Authority was established by Regulation 1999/16 at the end of
1999. Its main divisions for the budget, the treasury, tax policy and tax
administration are performing important functions, including preparation and
monitoring of the budget, formulating a tax policy and the management of tax and
customs revenues. In the absence of an adequate administrative structure to


13
   This sub-chapter does not contain comments and recommendations. Its primary purpose is to
relate relevant information. The facts are based on relevant UNMIK regulations, information
provided by UNMIK and drawn from Kosovo, Federal Republic of Yugoslavia. Economic and
Social Reforms for Peace and Reconciliation, Report prepared by the World Bank, 1 February
2001. No visit to Kosovo took place as was the case for the other parties examined.
14
   The texts of UNMIK regulations, decisions and related documents are available at the following
website: www.un.org/peace/Kosovo/pages/Kosovo1.shtml.
15
   UNMIK Regulation N° 1999/24 of 12 December 1999, as last amended by UNMIK Regulation
N° 2000/59 of 27 October 2000.
                                        51

collect taxes on consumption and income, the UNMIK considered the introduction
of customs duties as a major source of revenue for Kosovo.
Concerning customs duties and related charges, the following UNMIK interim
legislation currently applies within the territory of Kosovo:
     Customs duties: UNMIK Regulation N° 1999/3 of 31 August 1999
(implemented by UNMIK Administrative Direction N° 1999/1 of 31 August 1999),
as last amended by UNMIK Regulation N° 2000/55 of 6 October 2000,
establishes a customs duty with a flat rate of 10 per cent.
     Excise tax: UNMIK Regulation N° 2000/2 of 22 January 2000
(implemented by UNMIK Administrative Direction N° 2000/1 of 22 January 2000),
as last amended by UNMIK Regulation N° 2000/56 of 6 October 2000,
establishes „ad valorem’ and specific excise taxes on certain products.
    Sales tax: UNMIK Regulation N° 2000/3 of 22 January 2000 (implemented
by UNMIK Administrative Direction N° 2000/2 of 22 January 2000), as last
amended by UNMIK Administrative Direction N° 2000/24 of 27 September 2000,
establishes a sales tax with a flat rate of 15 per cent.
     VAT: a value-added tax of 15 per cent has been introduced in Kosovo with
effect of 1 July 2001, which should replace the sales tax regime.
UNMIK was considering to abolish the customs duty at the moment of the
introduction of the VAT, starting with the tariffs on raw material and capital goods
by 1 July 2001 while the other tariffs should be phased out later. At present, sales
and excise taxes are applied to imported goods only. The imposition of the VAT
on domestic goods, which should be set at a rate to ensure revenue neutrality,
will level the playing field between them and imports and diminish the incentives
for evasion.
Since its establishment in August 1999, the UNMIK Customs Service had to fulfil
three basic roles:
    a fiscal role: taxation of goods to raise revenue for the consolidated budget
     of Kosovo;
    a regulatory role: administering and supervising the provisions in force; and
    a protection role: giving an incentive to local production.
The activities of the UNMIK Customs Service include the collection of customs
duties and taxes, the facilitation of legitimate trade, the application of specific
trade policies such as the management of preferences and rules of origin, and
the protection of the population through the enforcement of prohibitions and
restrictions.
Currently, the UNMIK Customs Service collects almost 90 per cent of Kosovo‟s
domestically generated revenue. Furthermore, the UNMIK Customs Service set
up the conditions and rules for the collection of revenue.
Section 6 of UNMIK Administrative Direction N° 1999/1 of 31 August 1999
temporarily suspended the customs transit procedure, the customs warehousing
rules, and the inward and outward processing procedures. The Director-General
                                           52

of UNMIK Customs may derogate from this suspension in accordance with the
provisions in force.
The European Union has granted certain tariff concessions to Kosovo in the
context of exceptional trade measures for countries and territories participating in
or linked to the EU‟s stabilisation and association process (September and
November 2000). This means in fact that almost all products originating in
Kosovo can be imported into the EU exempt from customs duties. For certain
products, e.g. wine, the duty exemption applies within the framework of a tariff
quota, which is administered by the competent services of the European
Commission.
In accordance with the FTA concluded between the FRY and Macedonia in May
1996, goods originating in Kosovo or Macedonia have to pay a 1 per cent
evidence tax upon entering each other‟s territory.
Non-governmental organisations can import goods exempt from duties and
taxes, if certain administrative conditions established by UNMIK are fulfilled 16.

Import and export prohibitions
Import and export prohibitions apply to the usual list of narcotic and psychotropic
substances as well as to weapons, explosives, ammunitions and endangered
species.

Quotas and tariff quotas
None.

Other charges
There is a 1 per cent fee for customs recording.

Import and export licenses
Licensing is non-discriminatory and transparent; all licenses are automatic. For
the following products an import license has to be presented:
     live animals: the UNMIK Department of Agriculture is in charge of granting
      the licence;
     pharmaceutical products: responsible authorities for issuing the licences
      are the UNMIK Department of Health and the Kosovo Drug Regulatory
      Authority.
The following products are subject to the presentation of an export license:
     scrap metals: the UNMIK Public Utilities Department is responsible for
      granting it.

Customs valuation
As the Customs Law of the FRY appears not to conflict with the UNMIK
regulation defining the applicable law it remains valid for Kosovo as well.
16
   Regulation N° 1999/22 of 15 November 1999 and UNMIK Administrative Direction N° 2000/10
of 9 May 2000.
                                         53

The provisions concerning customs valuation are set out in articles 32 to 43 of
the FRY Customs Law. They appear to be in accordance and in conformity with
Article VII of the GATT.
In addition, a reference price system has been established in order to prevent
and avoid under-valuation of goods. The reference prices are monitored
continuously, kept in line with world market prices and applied only if there is
evident under-invoicing.

Rules of origin
There are no non-preferential rules of origin.

Functioning of the customs
At present no measures normally associated with trade policy apply to products
imported into Kosovo, except certain surveillance practices for pharmaceutical
products and livestock. The Single Administrative Document, identical to that in
use in the EU, serves as the form for the customs declaration.
Customs clearance of goods takes place at the international borders with
Macedonia and Albania and at the Administrative Boundary Line with the FRY.
Under certain circumstances, customs clearance can also be carried out at
designated Tax Collection Offices. Eight such offices have been named.
The customs service remains understaffed. In March 2000, 90 officers were
employed whereas it is estimated that at least 30 more would be needed. The
absence of in-land customs clearance facilities and warehouses has often
created disorderly conditions at the border crossing points.

Registration requirement
Registration procedures for traders (exporters, importers and forwarding agents)
are non-discriminatory and transparent; the existing system offers limited, if any,
opportunity for bureaucratic micro-management of foreign trade.

TBT and SPS measures; quality control
Technical standards and requirements should be established, in principle, in
accordance with the existing laws and regulations of the FRY.
Sanitary, phytosanitary and veterinary checks are carried out by the UNMIK
Department of Health and Agriculture in accordance with the UNMIK provisions
in force, prior to the release of the goods for home use.

Other problems
None reported.

Problems with neighbouring countries
None reported.
                                             54



                                    MONTENEGRO

Relevant general information
Montenegro has its own foreign trade policy since 1 August 1998. It retained the
FRY Federal Foreign Trade Law and the Federal Customs Law in their 1997
versions and disregarded the subsequent amendments to thes e laws 17. A new
Foreign Trade Law and a Customs Law are under preparation and expected to
be adopted by mid- 2001. On 12 February 2001, the FRY Federal Customs
Administration has set up checkpoints on the administrative border with
Montenegro. At these checkpoints, customs duties on goods are levied or the
goods are forwarded to designated customs offices.
Montenegro set its own customs tariff according to the HS nomenclature and
covering approximately 9000 tariff lines on 1 July 1999. The tariff consists of 6
levels of duties ranging from 0, 1, 3, 5, 10 to 15 per cent. Only a small number of
products is subject to a customs duty of 15 per cent; they comprise mainly luxury
goods, jewellery, alcohol and some agricultural and basic foodstuff products.
Customs duties from 0 to 3 per cent cover approximately two-thirds of the tariff
lines; they include primarily products not produced in Montenegro or only in
insufficient quantities. The average customs rate is below 3 per cent. All tariffs
are calculated on the DEM value of goods.
About 2 and 3.5 per cent, respectively, of the tariff lines are under some kind of
restriction on the export and import side (quota and license regime).
Montenegro has stopped contributing to the federal budget. Customs duties
collected at the borders and sales and excise taxes in Montenegro are not
transferred to the federal budget. These charges constitute the revenues of
Montenegro.
Montenegro and Albania aim at concluding an agreement on cross-border trade.
Drafts have already been prepared by Montenegro. Such an agreement has
already been signed with Croatia.

Import and export prohibitions
None.

Comments
According to the laws in force, it is possible to prohibit the import of certain
agricultural products in order to protect the health of the population and to shield
the livestock from the foot and mouth disease in other countries.
There is an import ban on animals and animal products originating in Kosovo
because its veterinary controls are not considered to function at a satisfactory
level.

17
   There are uncertainties in the commercial relations with the FRY. Both governments have
engaged in negotiations in order to reach an understanding that would facilitate trade. In this
context, an agreement was reached in March 2001 regarding the mechanics of trade with the EU,
as required by the EU.
                                       55

Representatives of the business community complained that the import of certain
agricultural products could be prohibited for reasons that are not always clear.

Import and export quotas
There are import quotas (contingents) to protect the domestic industry, which
cover mainly agricultural products and foodstuffs (vegetables, fruit, raw tobacco,
some fish, cheese, eggs, yoghurt) but also iron and some electric household
appliances like refrigerators. 3 per cent of imported goods are subject to quotas.
In order to support the development of domestic leather and wood-processing
industries, leather and wood as well as some agricultural products (candulia,
wheat flour) are subject to export quotas (contingents). These quotas apply to 1.2
per cent of the goods.
An interministerial group of the government decides which goods will be subject
to quotas and determines their volume on a yearly basis. The decision is
published in the Official Gazette. Requests to trade under a quota have to be
submitted to the Ministry of Trade. A commission of the Ministry of Trade
allocates the quotas on a quarterly basis according to the number of requests
submitted. Thus, all quotas cannot be allocated to one importer or exporter only.

Comments and recommendations
The quota system is the most obvious trade-restrictive non-tariff measure. Most
of the products under the quota regime, in particular foodstuffs and agricultural
products, are also subject to additional taxes (prelevmanes) and seasonal duties
(see below). The first question is, therefore, whether all these protective
measures are necessary for the domestic industry and production. If the answer
should be in the affirmative, Montenegro should at least replace the quota regime
with customs duties.

Import and export tariff quotas
None.

Other charges
Some agricultural products and foodstuffs are charged with a special import levy
(prelevmanes) expressed as a specific duty (DEM by unit of product). The list of
products includes the following:
lamb              0.50 DEM/kg
yogurt            0.15 DEM/lit.
potatoes          0.15 DEM/kg.
cabbage           0.15 DEM/kg.
green salad       0.15 DEM/kg.
grapes            0.15 DEM/kg.
melons            0.15 DEM/kg.
wine              0.50 DEM/lit.
grape brandy      2.00 DEM/lit.
A seasonal customs duty at the rate of 20 per cent is levied on 6 agricultural
products during the harvesting period in addition to the regular customs duty:
                                         56

tomatoes          from 1 April to 31 August
cabbage           from 1 February to 30 June
cucumbers         from 1 April to 30 June and from 1 September to 30 November
mandarins         from 1 November to 31 December
grapes            from 1 July to 30 September
watermelons       from 1 June to 30 August.
The three mechanisms of protection (quota, specific duty and seasonal duty) can
be applied to the same product.
A 1 per cent fee is levied for customs recording.

Comments and recommendations
See the “comments and recommendations” made under “Import and export
quotas”.

Import and export licences
Montenegro maintains a system of import and export licenses for arms and
munitions, poisons, narcotic drugs, dangerous products and nuclear products for
security and environmental reasons. It appears that the term “licence” is used
instead of permit to denote an administrative control mechanism ensuring that
the products comply with specific (technical or sanitary and phytosanitary)
requirements.

Customs valuation
Montenegro applies the principles of Article VII of the GATT and the WTO
Agreement on customs valuation. There are no minimal prices and no reference
price list exists.

Comments
Complaints were heard about criteria used to determine the value of the goods
that could be seen as discretionary decisions by customs officers. The authorities
of Montenegro are of the opinion that if problems with customs valuation exist
they are due to the lack of a computerised system of controls and data
processing, insufficient training of customs officers and, generally, the absence of
modern relevant techniques.

Rules of origin
There are no non-preferential rules of origin.
Montenegro has taken over the FTA concluded between the FRY and
Macedonia. On an autonomous basis, Montenegro applies the most favourable
tariff duty to products originating in the countries of former Yugoslavia. This
means that if the import duty for a given product applied by the exporting country
is lower than that of Montenegro, it will apply the former.
Montenegro follows the EU rules for issuing certificates of origin (EUR1) for
preferential trade.
                                       57

Functioning of the customs
Problems caused by long delays, corruption and smuggling have been reported.
Complaints were also heard regarding the working time of sanitary and
phytosanitary services and the lack of harmonisation of working hours at the
borders. Other technical problems regarding customs formalities create long
delays at the borders.

Comments and recommendations
As in the case of other countries in the region, the functioning of the customs
gives rise to complaints, restricts trade and therefore needs to be attended to as
a matter of high priority.

Registration requirement
Natural and legal persons wishing to engage in foreign trade operations have to
be registered at a commercial court. In addition, they have to submit all the
necessary documentation to the Central Bank, which has control over all foreign
trade operations. This requirement is a leftover from the old Yugoslav period.

Comments
The requirement to submit all the necessary documentation to the Central Bank
will be abolished, according to the new Law on the Central Bank as well as
according to the Law on Foreign Trade and the Customs Law that are in the
process of being adopted.

TBT and SPS measures; quality control
Federal technical regulations and standards apply to Montenegro. The remarks
made in the FRY country sheet thus also apply here to the degree they are
relevant.
The relevant federal legislation regarding the sanitary, phytosanitary and
veterinary policy and related measures have been taken over by Montenegro.
Sanitary and health issues are under the competence of the Ministry of Health
whereas veterinary and phytosanitary matters fall under the responsibility of the
Ministry of Agriculture. Whenever appropriate and possible inspectors of these
services act together as a team. There are several laboratories in Podgorica
authorised to conduct testing.
There appear to be different veterinary and phytosanitary requirements for
imported and domestically produced goods. The justification given for this
different treatment is that the entire production of domestic goods can be
monitored whereas the conditions of production of foreign products are not
known.

Comments
No comments were received about the functioning of the implementation of TBT
and SPS measures in Montenegro.
                                       58

More details are needed concerning the practice of setting up different
requirements for imported and domestically produced goods referred to above. It
appears that such problems can be resolved through international cooperation
and it would seem that the domestic legislation should at least provide for this
possibility.

Other problems
In 1992 the FRY established a computerised customs system. It allows the
Federal Customs Administration to monitor imports in the whole territory. Since
12 February 2001 five checkpoints have been established from the Serbian side
at the border between the two Republics.
According to the Montenegro Customs Directorate goods whose final destination
is in the Republic of Serbia do not pay customs duties upon entering Montenegro
and are escorted to the Serbian territory where the federal customs duties are
levied. When the goods imported into Montenegro are intended for both
Republics, importers have to clear them at the Montenegro border and to decide
what part should be escorted to Serbia and on what part Montenegro customs
duties have to be paid. If the Republic customs duty is paid and the importer
wants to sell goods in Serbia, he will have to pay federal customs duties; goods
are subject to double taxation.
On the other hand, goods imported into the territory of the Republic of Serbia and
intended for Montenegro pay the federal customs duties; when entering into
Montenegro these goods are not subject to the Republic customs duties in order
to avoid double taxation. Since 12 February 2001 raw material and equipment
entering at the Serbian border do not pay the federal customs duties but that of
Montenegro.

Comments and recommendations
The above information was received from the Montenegro Customs Directorate.
It indicates that a considerable number of open questions exist concerning the
handling of imports and transit between Montenegro and the FRY. Even if the
constitutional problems between the two sides persist, it would seem to be in
both sides‟ interest to find technical solutions to avoid problems of double
taxation and related matters.

Problems with neighbouring countries
None.
                                         59



         FORMER YUGOSLAV REPUBLIC OF MACEDONIA

Relevant general information
Macedonia applied for WTO membership on 8 December 1994 and currently has
the status of observer. It has submitted its Memorandum on the Foreign Trade
Regime as part of the WTO application process. The WTO Working Party held its
first meeting in July 2000 and the second in March 2001.
Macedonia signed a SAA with the EU in April 2001. It was the first country of
South Eastern Europe to complete the negotiations for such an Agreement. An
interim agreement that entered immediately into force permits to implement the
trade and trade-related provisions of the Agreement already prior to its ratification
by both sides.
Macedonia has concluded FTAs with Slovenia (1996), the FRY (1996), Croatia
(1997), Turkey (1999) and Bulgaria (2000). FTAs are under negotiation with
Albania, BiH and Romania.
In March 2001, the Tariff Law was amended. Tariff rates range from 0 to 60 per
cent with a simple average rate of 14.7 per cent.

Import and export prohibitions
None.
Croatian sources informed us that, as a safeguard measure under the bilateral
FTA, an import ban has been in existence for the past two years in Macedonia for
Croatian crude oil and derivatives (see country sheet on Croatia). The
Macedonian side views the situation differently. The Ministry of Ec onomy issues
licenses for quantities in excess of the needs of derivatives on the Macedonian
market. The licenses depend on the market supply and the possibilities to obtain
such quantities from domestic sources and are granted regardless of the import
direction. Therefore, a reduction of the import of crude oil and derivatives from
Croatia should not be treated as a ban, but as a result of the oversupply of the
domestic market.

Comments and recommendations
The practice of the Macedonian Ministry of Economy seems to amount to a
safeguard measure in case of oversupply of the domestic market. What makes
the practice somewhat doubtful under international trade rules is the fact that
domestic suppliers appear to receive a more favourable treatment than foreign
ones. In order to give a more informed assessment additional information would
be needed on, inter alia, how the domestic market needs are ascertained, how
domestic and foreign suppliers are treated, and under which conditions licenses
for quantities in excess of domestic needs are issued. Although Macedonia is not
yet a member of WTO the authorities may consider whether the corresponding
rules of the WTO could not be applied in this case.
                                          60

Import and export quotas
None.

Import and export tariff quotas
Under bilateral preferential agreements with Bulgaria, Croatia, the FRY, Slovenia
and Turkey, Macedonia maintains tariff quotas on agricultural products and
foodstuffs on the basis of reciprocity. With the FRY tariff quotas are also applied
to steel and steel products.
The allocation of tariff quotas is based on the “first come first served” principle
under the agreements with Bulgaria and Turkey. Macedonia unilaterally applies
this principle also on the imports from the FRY and Croatia. The allocation of
tariff quotas under the agreement with Slovenia is based on the fulfilment of
certain conditions, which are listed in a decision for each country that is part of
the agreement. The size of the tariff quotas is determined on a yearly basis. The
Ministry of Economy in consultation with other relevant Ministries allocates the
quotas.

Comments
It has been reported that tariff quotas in Macedonia apply not only in the context
of FTAs but also under MFN treatment. The latter relate to certain kinds of
products such as raw material, equipment and spare parts, which are not
produced in the domestic economy but are necessary for production.
According to information obtained from the Chamber of Economy, Macedonia
does not make recourse to licensing to monitor the use of tariff quotas but relies
entirely on the customs administration for statistics. According to the Chamber,
the method lacks transparency and predictability. Importers never know precisely
whether their goods fall under the preferential duty rates when arriving at the
border or whether the quotas are already filled and the products have to pay the
full MFN duty.
In contrast to these statements, in documents submitted to WTO it is stated that
“procedures concerning allocation of tariff quotas under bilateral agreements and
formalities for licensing are published in the Official Gazette [...] During the period
in which applications for licences are filed, some daily newspapers are informed
on the allocation of tariff quotas so as to make the information available to all
interested parties”.

Other charges
Plans to cancel a 0.1 per cent charge applicable to all imports and exports and
used for export promotion activities in the beginning of 2001 have apparently
been postponed.
Likewise, an import charge of 1 per cent for processing customs documentation
should be maintained until 1 January 2002.
                                              61

Comments
According to Article VIII of the GATT any charge imposed on the import of goods
must correspond to the cost of a service rendered.

Import and export licenses
Macedonia maintains a non-automatic licensing regime for some imports. The
Ministries of Trade, Agriculture, Health, Environment, Internal Affairs and
Defence issue the licenses.
For some goods several ministries are authorised to grant a license. In such a
case, the importer has to submit an application to each ministry concerned 18.
Licenses are issued for the following reasons:
     protection of infant industries;
     difficulties in the balance of payments;
     protection of the environment;
     enforcement of safeguard measures;
     protection of human and animal health and of plants;
     control over the circulation of poisons, narcotic drugs, weapons and
      explosives;
     under bilateral agreements.
Several lists of products subject to licensing requirements have been submitted
to the WTO19. They cover a very broad range of goods, including agricultural
products, fertilizers, petroleum, fuel, iron and other metals, armaments,
explosives, pharmaceuticals, chemicals, narcotic drugs, refrigerators, paper, TV
set, etc.
The import licence is valid for six months and cannot be extended upon request
by the recipient.
As already referred to above (see import and export prohibitions), the Ministry of
Economy issues import licenses for crude oil and derivatives regardless of the
import direction for quantities “in excess of the needs on the Macedonian
market”. In issuing the license, the market supply and the possibility to obtain
such quantities from domestic sources are taken into consideration.
A licence is necessary for the export of certain products such as commercial
explosives, ammunitions, arms, narcotic drugs, and artistic works and “other
products in conformity with international conventions”. Licenses are also required
for some exports to the EU in line with bilateral agreements (Cooperation
Agreement, Protocol an steel products, Agreement on Trade in Textiles). For the
export of certain agricultural products and foodstuffs, seed material and “other


18
   This has been the experience of representatives of the private sector. On the other hand, in a
submission to the WTO it is stated that “Applications for import licenses are considered by a
committee consisting of representatives of five ministries…while applications are filed with one
ministry, i.e. the importer approaches only one administrative body”. WT/ACC/807/5/Add.1, p. 14.
19
   WT/ACC/807/5/Add.1, 9 June 2000; WT/ACC/807/5/Add. 3, 12 July 2000; WT/ACC/807/5/Add.
4, 20 December 2000.
                                        62

products” it is necessary to obtain the approval or permission of the competent
authorities.

Comments and recommendations
1.   Macedonia is invited to ensure that importers only need to apply with one
authority in order to obtain the necessary license.
2.    There appears to be some confusion or at least an unclear situation
concerning the use of the term license. The above list indicates the great variety
of reasons for which licenses are needed. In some cases, e.g. concerning the
protection of the environment, human and animal health and plants, it can be
presumed that the conformity with product requirements is the aim of the
legislator and no extra license is needed once this goal has been achieved. The
Macedonian authorities are invited to review the use of the term. Special
attention should be given to a substantial “List of Products Subject to Licence,
Issued by the Bureau for Standardization and Metrology” which was submitted to
WTO with tariff lines in HS chapters 84 to 91.
3.    In order to make the current situation more transparent Macedonia should
consider establishing a detailed list of products by HS number that are subject to
a licensing regime. In the list, the reason for licensing, the authority responsible
to issue the license and the procedure to follow by the applicant should be stated.
This list should also include products covered by bilateral preferential
agreements.

Customs valuation
Macedonia does not apply minimum prices and the customs value is the
transaction value whenever feasible.
According to the Chamber of Economy the value of imports is determined on a
case-by-case basis or according to a list of reference prices. A representative of
the Ministry of Finance confirmed that problems existed in handling customs
valuation but also as regards under-invoicing and that more work and assistance
was necessary to remedy the situation.

Comments
Judging by comments from several sides problems do exist in this field that need
to be attended to. Technical assistance from outside experts is probably
inevitable but the complaints concerning the discretionary case-by-case handling
of imports have to be tackled in the wider context of upgrading customs services
(see below).

Rules of origin
The rules and procedures for defining the origin of products being imported into
Macedonia are laid down in the Law on Customs, the Decision on the Manner of
Determining Origin and the Protocols on the Rules of Origin annexed to bilateral
free trade agreements. According to the Decision (dealing with non-preferential
origin rules), the value of the product has to be increased by 51 per cent in a
country in order for goods to be considered as originating from there. In the case
                                         63

of imported machines the place of production of the “component defining the
character of the imported machine” is decisive for attributing the quality of origin,
provided that the value of the component is not less than 51 per cent of the total
value.
The origin of goods is documented by a certificate of origin issued by the
authorities in charge in the country from where goods are imported.

Comments
Macedonia may need to verify whether the processing percentages in the non-
preferential rules of origin correspond to international practice.

Functioning of customs
A series of comments referred to problems related to customs clearances; many
customs officials seem to lack training, procedures are not efficient enough, long
queues were reported, although border stations are open 24 hours a day,
problems with smuggling and bribery were mentioned, etc.

Comments and recommendations
The comments also revealed that great hopes are put in the World Bank‟s
technical assistance to customs administrations through the TTFSE project. The
EU does not seem to have a project in Macedonia that can be compared to those
in Albania or in BiH. It may be considered whether the experiences acquired in
these countries could not also be put to use in Macedonia as well, especially in
the light of the recent conclusion of the SAA between the EU and Macedonia.

Registration requirement
In order to start import and/or export operations, a trading company must be
listed in the Trade Registry in one of the three lower courts according to their
territorial jurisdiction. A company can perform only the activities registered with
the court. Due to the lack of modern equipment, the courts are overloaded with
cases of business registration and the procedure can take about four weeks.

Comments
The time period of four weeks seems quite long in comparison with international
practice.

TBT and SPS measures; quality control
The whole corpus of TBT and SPS legislation is under examination in order t o
cope with WTO requirements in these fields. About 12‟000 standards have been
inherited from former Yugoslavia, of which about 9‟000 are mandatory and 3‟000
voluntary. Macedonia intends to make all standards voluntary under a new Law
on Standardization.
In some cases, the term licenses is used in the context of product safety and
quality (see comments under licensing).
                                        64

A list of products subject to compulsory licences, which are issued at the border
by the Bureau for Standardisation and Metrology covers approximately 400
products out of the 9000 mandatory standards mentioned above. Products falling
under the remaining 8600 compulsory standards are checked by the Market
Inspection after being put in free circulation and can be prohibited if they do not
comply with the prescribed standards.

Comments and recommendations
1.    Doubts concerning the use of the term “license” in the context of product
requirements have already been expressed above.
2.    It appears that the entire field of standardization, technical requirements
and conformity assessment is undergoing a radical change but detailed
information could not be obtained during our visit to Macedonia. The same is the
case for the field of veterinary and phytosanitary controls. It is clear that these
sectors are very relevant for the subject matter examined in this study. It is thus
of the utmost importance that the planned changes lead to a situation where the
legislation and the implementation measures are in line with international (WTO
and EU) requirements and the necessary infrastructure is put in place to lend
credibility to the system. Contacts and cooperation with neighbouring countries,
which are confronted with similar challenges, would also be useful.

Other problems
     Several comments received during our visit to Macedonia lead us to the
conclusion that contacts and transparency between the administrative agencies
in charge of economic questions – in particular the customs administration – and
private operators need to be improved and intensified. The problems related to
the implementation of tariff quotas have already been mentioned. A similar
problem seems to exist in the case of exports under preferential agreements.
Exporters reported that they are informed by the EU customs and not by the
Macedonians whether the export tariff quotas have been filled.
     The local banking system is described as being deficient. Just as in the
case of other countries examined in this study this information is merely given for
completeness‟ sake as the topic falls outside the terms of reference but has
certainly consequences for trade.

Problems with neighbouring countries
     Economic operators reported problems related to the use of the tariff rate
quotas for exports of Macedonian wine and beer to Slovenia. It is recalled that
there is a considerable deficit in trade with that country. Some also alleged that
certain products (chicken, meat, milk and dairy) exported by Slovenia to
Macedonia did not seem to have Slovenian origin; however, these remarks were
not further substantiated.
    Some economic operators talked of difficulties in getting visas from Greece
and complained about the costs for obtaining them. They regretted this all the
more because a considerable part of imports and exports of Macedonia take
place with and through that country.
                                        65


VI    ANNEXES


Annex 1


                                    CROATIA

        LIST OF PRODUCTS THAT ARE SUBJECT TO MANDATORY
     CERTIFICATION AND CORRESPONDING ORDER OR REGULATION

       (According to the Act on Standardization (Official Gazette no. 55/96)


Equipment and protective systems in potentially explosive atmospheres
(ex-equipment)
Regulation on the essential requirements for equipment, security systems and
components intended for explosive gas, vapour and dust atmospheres.

Electrical engineering
Order on the mandatory certification of electronic household appliances and
electronic devices for similar use.
Order on the mandatory certification of electric household appliances.
Order on the mandatory certification of hand-held electric motor-operated tools.
Order on the mandatory certification of isolating transformers and safety-isolating
transformers.
Order on the mandatory certification of insulated electric power conductors and
cables.
Order on the mandatory certification of switches for household appliances.
Order on the mandatory certification of Edison screw lamp holders.

Electromagnetic compatibility
Regulation on the mandatory certification of products causing radio-frequency
disturbances.

Bomb shelters, multifunctional facilities, ventilation and air-conditioning
devices
Order on the mandatory certification of steel devices for the closure of doorways
in bomb shelters and multifunctional facilities.
Order on the mandatory certification of ventilation systems of bomb shelters and
multifunctional facilities.
Order on the mandatory certification of sealing rubber bands for doors, shutters,
and movable shelter partitions with hermetic door leaves closure.
Order on the mandatory certification of safety valves for bomb shelters and
multifunctional facilities.
Order on the mandatory certification of reinforced concrete devices for the
closure of doorways in bomb shelters and multifunctional facilities.
                                        66

Lifts
Regulation on the mandatory certification of electrically operated lifts for the
vertical transport of passengers and freight.
Regulation on the mandatory certification of electrically operated lifts for the
vertical transport of freight with a lift cab inaccessible to people.
Regulation on the mandatory certification of lift-clutching devices.
Regulation on the mandatory certification of the lift limit switches.
Regulation on the mandatory certification of lift shaft door locks.
Regulation on the mandatory certification of buffers used with lifts.

Gas appliances and accessories
Order on the mandatory certification of mobile gas furnaces for heating without
chimney attachment.
Regulation on the mandatory certification of gas kitchen stoves, cookers, ovens
and grills.
Regulation on the mandatory certification of gas appliances for large-scale
kitchens and for camping.
Order on the mandatory certification of gas pressure steel containers with valve
for propane-butane gas.
Order on the mandatory certification of pressure regulators for propane-butane
liquid gas.

Construction materials and elements
Order on the mandatory certification of fractionated stone aggregate for concrete
and asphalt.
Order on the mandatory certification of cement.
Regulation on the mandatory certification of façade bricks and clay blocks.
Regulation on the mandatory certification of clay roofing tiles.
Order on the mandatory certification of admixtures for concrete.
Order on the mandatory certification of hydro-insulating materials impregnated
with bitumen and bitumen bands.
Order on the mandatory certification of pre-manufactured elements of auto-
clawed aerated concrete.
Order on the mandatory certification of concrete tubes for sewage longer than 1
meter.

Fire resistance
Regulation on the mandatory certification to fire resistance of standardized
elements of buildings structures.
Guidance on the test procedure and classification of fire resistance of fire
dampers in ventilation and air-conditioning shafts.
Regulation on the mandatory certification of file cabinets to fire resistance.

Metal products
Order on the mandatory certification of roller bearings.
Order on the mandatory certification of ropes for mine-hoisting plants.
                                        67

Order on the mandatory certification of screws, nuts and studs for joints of
supporting steel structures.
Regulation on the mandatory certification of brake linings of automotive vehicles
and trailers.
Order on the mandatory certification of steel ropes for general use.
Order on the mandatory certification of chains and parts of chains.

Personal protective equipment, protective devices and other equipment
Order on the mandatory certification of safety helmets for industrial use.
Order on the mandatory certification of portable and conveyable fire
extinguishers.
Order on the mandatory certification of fire hats.
Regulation on the mandatory certification of safety belts.
Regulation on the mandatory certification of climbing spurs for wooden poles.
Order on the mandatory certification of respiratory protective devices.

Wood technology
Order on the mandatory certification of fibre building boards for general use and
in the construction industry.

Meat and other edible animal produce
Regulation on the categorization and classification of pork halves.

Furniture
Regulation on the mandatory testing of furniture and parts of furniture.

Beverages – spring and table water, including natural mineral water
Regulation on the basic requirements of natural mineral water, spring and table
water.
Regulation regarding the design and use of the certification mark (Official
Gazette no. 88/98, 165/98).

The list of authorised certification bodies is published in DZNM – Publication. All
data are available on the web site: www.dznm.hr in Croatian and English.
                                             68

Annex 2


                                       CROATIA

               PRODUCTS SUBJECT TO SANITARY MEASURES




      Tariff                  Product description                               Measure
     Number
01              Live animals; animal products                               Veterinary
                                                                            regulations
                                                                            Health regulations
02              Meat and edible meat offal                                  Veterinary
                                                                            regulations
                                                                            Health regulations
03              Fish, crustaceans,    molluscs    and   other     aquatic   Veterinary
                invertebrates                                               regulations
                                                                            Health regulations
04              Dairy products, honey, eggs                                 Veterinary
                                                                            regulations
                                                                            Health regulations
05              Products of animal origin                                   Veterinary
                                                                            regulations
                                                                            Health regulations
15              Animal fats, prepared edible fats, animal waxes             Veterinary
                                                                            regulations
                                                                            Health regulations
16              Preparations of meat, fish, crustaceans, molluscs           Veterinary
                or other aquatic invertebrates                              regulations
                                                                            Health regulations
21              Miscellaneous edible preparations                           Veterinary
                                                                            regulations
                                                                            Health regulations
23              Chemical residues                                           Veterinary
                                                                            regulations
                                                                            Health regulations
                Animal feed                                                 Veterinary
                                                                            regulations
                                                                            Livestock
                                                                            regulations
                                            69

Annex 3


                                        CROATIA

            PRODUCTS SUBJECT TO PHYTOSANITARY MEASURES




    Tariff                       Plants and Plant Product Description
   Number
06.01 – 06.04   Living trees and other plants, bulbs, roots and similar, cut flowers
                and ornamental leaves
07.01 – 07.14   Edible vegetables and certain root and tubers fresh or dried
                (excluded frozen and conserved)
08.01 – 08.14   Edible fruits and nuts, peel of citrus fruit or melons fresh or dried
                (excluded frozen, conserved, boiled)
09.01 – 09.10   Coffee unroasted, tea, mate and spices – unpacked
                and unprocessed
10.01 – 10.08   Cereals
11.01 – 11.06   Products of milling industry – excluded malt, starch, inulin and
                gluten
12.01 – 12.14   Oil seeds and fruits, miscellaneous grains, seeds and fruits,
                industrial and medicinal plants, straw and fodder
14.01 – 14.04   Vegetable planting materials, vegetable products not elsewhere
                specified or included
18.01 – 18.02   Cocoa beans, whole or broken, unroasted
23.00 – 23.09   Residues and waste from the food industries, prepared animal
                fodder
24.01           Unmanufactured tobacco, tobacco refuse
27.03           Peat (including peat litter)
31.01           Vegetable fertilizers, fertilizer produced by the mixing of animal
                and vegetable products
38.08           Insecticides, rodenticides, fungicides, herbicides, anti-sprouting
                products and plant-growth regulators, disinfectants and similar
                products, put up in forms or packing for retail sale
44.01 – 44.18   Wood and wood products – excluded wood chemically or
                heat treated
45.01           Natural cork, raw or simply prepared, waste cork, crushed,
                granulated or ground cork
50.01           Silk – worm cocoons suitable for reeling
50.03           Silk waste (including cocoons unsuitable for reeling, yarn waste
                and garneted stock)
52.01 – 52.02   Cotton, not carded or combed, cotton waste
53.01           Flax raw or processed but not spun, tow and waste (including
                yarn waste and garneted stock)
53.02           True hemp, raw or processed but not spun, taw and waste of true
                hemp
53.03           Jute and other bast, raw or processed but not spun, tow and waste of these
                fibres
53.04           Sisal and other textile fibres of the genus Agave raw or processed but not spun
                                      70



Annex 4


              FEDERAL REPUBLIC OF YUGOSLAVIA

 PRODUCTS WHICH ARE SUBJECT TO OBLIGATORY CERTIFICATION IN
YUGOSLAVIA IN ACCORDANCE WITH THE TECHNICAL REGULATIONS ON
                 OBLIGATORY CERTIFICATION
                   (Situation as of March 2001)


   apparatus for protection of respiratory system
   electric lifts
   electric service lifts
   shelter ventilation systems
   products causing radio interferences
   electronic household appliances
   hand-held motor-operated electric tools
   assemblies and devices
   electrical household appliances
   domestic cooking appliances burning gas, grills
   steel ropes for haulage plants in mining
   additives for concrete
   pre-fabricated cell concrete elements
   cement
   concrete tubes for drainage
   aggregate for concrete and asphalt
   climbing-irons for wooden poles
   safety belts
   bituminous material for waterproofing
   screws, nuts and washers for joints of load-bearing constructions
   chains and chain components
   clay bricks
   clay tiles
   steel ropes for general use
   insulated conductors and cables
   steel propane/butane commercial mixture cylinders with valve
   wool
   jute
   cotton
   rolling bearings
   particle boards for general use
                                      71


The authors


Mr HANSPETER TSCHAENI was from 1986 to 1994 Director of the Trade Policy
Department of the EFTA Secretariat in Geneva. Prior to that and subsequently,
he worked on several assignments for the Swiss Integration Office – the body in
charge of coordinating Switzerland‟s relations with the EU and EFTA. He is
currently Project Manager in the office headed by Mr Arthur Dunkel in Geneva,
consulting governments on trade policy issues. Mr Tschäni holds academic
degrees in Political Science (Master of Arts, USA) and Law (Doctorate,
Switzerland).


Ms LAURENCE WIEDMER worked from 1991 to 1995 on several assignments at
the Swiss Federal Office for Foreign Economic Affairs in Bern. For the next four
years, she was counsellor at the Swiss Mission to the World Trade Organisation
(WTO) in Geneva. During this assignment, she served as a panellist in a dispute
involving the European Community against Argentina in the footwear sector
(safeguard). Since May 1999, she is working as Senior Advisor in the consulting
office headed by Mr Arthur Dunkel in Geneva. Ms Wiedmer holds an academic
degree in Economic and Social Sciences (Doctorate, Switzerland).