WT/REG226/1/Rev.1
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World Trade
Organization
WT/REG226/1/Rev.1
29 April 2008
(08-2067)
Committee on Regional Trade Agreements
FACTUAL PRESENTATION
Interim Agreement on Trade and Traderelated Matters between the
European Communitiesand Albania
(Goods)
Report by the Secretariat
Revision

This report, prepared for the consideration of the Interim Agreement on Trade and Trade-related Matters between the European Communities and Albania has been drawn up by the WTO Secretariat on its own responsibility and in full consultation with the Parties. The report has been drawn up in accordance with the rules and procedures contained in the Decision for a Transparency Mechanism for Regional Trade Agreements (WT/L/671).

Any technical questions arising from this report may be addressed to Ms.Juneyoung Lee (tel: +41 22 739 6791).

WT/REG226/1/Rev.1
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TABLE OF CONTENTS

Page

I.Trade Environment

II.Treaty Characteristic Elements

A.background information

B.national treatment and market access provisions of the agreement

1.Import duties and charges, and quantitative restrictions

(a)General provisions

(b)Liberalization of trade and tariff lines

(c)The EC's liberalization schedule

(d)Albania's liberalization schedule

(e)Tariff-rate quotas

2.Rules of origin

3.Export duties and charges, and quantitative restrictions

C.Regulatory Provisions of the Agreement

1.Standards

(a)Sanitary and phytosanitary measures

(b)Technical barriers to trade

2.Safeguard mechanisms

(a)Global safeguards

(b)Bilateral safeguards

(c)Special safeguards

3.Anti-dumping and countervailing measures

4.Subsidies

5.Other regulations

(a)Customs-related procedures

(b)Competition policy and State-aid

(c)State monopolies

(d)Government procurement

(e)Intellectual property

(f)Shortage clause

(g)Transit traffic

D.Sector-Specific Provisions of the Agreement

1.Iron and steel products

2.Wines, spirits and aromatized wines

(a)Reciprocal and preferential trade concessions for certain wines

(b)Reciprocal recognition, protection and control of wine, spirits and aromatized wine names

E.General Provisions of the Agreement

1.Transparency

2.Exceptions

3.Accession

4.Institutional framework

5.Dispute settlement

6.Relationship with other agreements concluded by the Parties

ANNEX I

ANNEX II

WT/REG226/1/Rev.1

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INTERIM AGREEMENT ON TRADE AND TRADE-RELATED MATTERS BETWEEN

THE EUROPEAN COMMUNITIESAND ALBANIA (GOODS)

Factual Presentation by the Secretariat

I.Trade Environment

  1. The interim agreement on trade and trade-related matters between the European Communities (EC) and Albania (hereinafter referred to as 'the Agreement') is a step envisaged under the Stabilization and Association Process (SAP).[1] The Agreement is Albania's second free trade agreement after the Central European Free Trade Agreement (CEFTA).[2]
  2. The EC is Albania's first export destination accounting for 88.7 % of the total value of its exports, followed by the Former Yugoslav Republic of Macedonia(2.4%); Turkey(1.7%); and the United States(1.0%). The EC is also Albania's first import source with 63.6% of the total value of imports, followed by Turkey(7.5%); China(6.5%); the Russian Federation(4.0%); and Ukraine(2.9%).[3]
  3. The EC(25)'s GDP was estimated at €10,884 billion in 2005, while that of Albania reached €6,738 million in the same year.[4] With total merchandise exports of €1,072 billionand imports of €1,184 billion, the EC ranked in 2005 as the firstexporter and the secondimporter in the world (merchandise excluding intra-EC trade); with merchandise exports of €529millionand imports of €2,105 million, Albania ranked as the 147thexporter and the 117thimporter (merchandise including intra-EC trade) in that year.[5]
  4. Recent developments in global and intra-Party trade are presented in Charts I.1 and I.2. Over the period surveyed (1999-2006), Albania has run a consistent trade deficit with the EC.

  1. The commodity structure of trade among the Parties, as well as of their imports and exports to the world in the period 2004-2006, is shown in Chart I.3 on the basis of Harmonized System (HS)section.
  1. The EC’s four largest export product categories – machinery, vehicles, chemicals and base metals – made up 65.6% of its total exports in 2004-2006 and accounted for 41.4% of Albania’s imports from the EC. Albania’s four largest export product categories – textiles, footwear, base metals and minerals – made up 78.7% of its total exports in 2004-2006 and accounted for 77.2% of the EC’s imports from Albania.

II.Treaty Characteristic Elements

A.background information

  1. The Agreement was signed by the ECand Albania on 12 June 2006. The Agreement entered into force for all Parties on 1 December 2006.
  2. The Agreement was put into place to allow the EC and Albania to benefit from the trade and trade-related provisions of the Stabilization and Association Agreement[6] (hereinafter referred to 'SAA') which Albania and the EC signed on 12June 2006, but which is subject to ratification by the EU Member States and therefore not yet in force.[7]
  3. The goods aspects of the Agreement was notified to the WTO by the Parties on 1 March 2007 under Article XXIV of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of GATT 1994 (WT/REG226/N/1). The text of the Agreement is available, together with its related schedules, annexes and protocols, on the official website of the EC:
  1. The Agreementis composed of four Titles, three Chapters and has related Annexes, Protocols and Appendixes, as follows:

Box II.1: Composition of the Agreement
Preamble
Title I – General Principles
Title II – Free Movement of Goods
Chapter I – Industrial Products
Chapter II – Agriculture and fisheries
Chapter III – Common provisions
Title III – Other Trade and Trade-Related Provisions
Title IV– Institutional, General and Final Provisions
Annex I- Albanian Tariff Concessions for the EC Industrial Products (referred to in Article 6)
Annex II(a) – Albanian Tariff Concessions for Agricultural Primary Products Originating in the EC (referred to in Article 14(3)(a))
Annex II(b) – Albanian Tariff Concessions for Agricultural Primary Products Originating in the EC (referred to in Article 14(3)(b))
Annex II(c) – Albanian Tariff Concessions for Agricultural Primary Products Originating in the EC (referred to in Article 14(3)(c))
Annex III – EC Concessions for Albanian Fish and Fishery Products
Annex IV- Intellectual, Industrial and Commercial Property Rights
Box II.1 (Cont'd)
Protocol 1 – On Iron and Steel Products
Protocol 2 – On Trade between Albania and the EC in the Sector of Processed Agricultural Products
Annex I – Duties Applicable upon Imports into the EC of Processed Agricultural Products Originating in Albania
Annex II(a) – Duties Applicable upon Imports into Albania of Processed Agricultural Products Originating in the EC
Annex II(b) – Albanian Tariff Concessions for Processed Agricultural Products Originating in the EC (eliminated on the date of entry into force of the Agreement)
Annex II(c) – Albanian Tariff Concessions for Processed Agricultural Products Originating in the EC (reduced and eliminated following by the time schedule therein)
Annex II(d) – For Those that MFN Custom Duties Will Continue to Apply by Albania
Protocol 3 – On Reciprocal Preferential Concessions for Certain Wines, the Reciprocal Recognition, Protection and Control of Wine, Spirits and Aromatised Wine Names
Annex I – Agreement between the EC and Albania on Reciprocal Preferential Trade Concessions for Certain Wines
Annex II – Agreement between the EC and Albania on the Reciprocal Recognition, Protection and Control of Wine, Spirits and Aromatised Wine Names
Appendix 1 – List of Protected Names
Appendix 2 – List of Traditional Expressions and Quality Terms for Wine in the EC
Appendix 3 – List of Contact Points
Protocol 4 – Concerning the Definition of the Concept of 'Originating Products' and Methods of Administrative Cooperation
Annex I – Introductory Notes to the List in Annex II
Annex II – List of Working or Processing Required to be Carried Out on Non-Originating Materials in Order that the Product Manufactured Can Obtain Originating Status
Annex III – Specimens of Movement Certificate EUR.1 and Application for a Movement Certificate EUR.1
Annex IV – Text of the Invoice Declaration
Protocol 5 – On Mutual Administrative Assistance in Customs Matters
Final Act
Joint Declarations

Source:The Agreement.

  1. The Parties will gradually establish a free trade area over a maximum period of ten years starting from the date of entry into force of the Agreement (Article 3.1).[8] No overall implementation period is explicitly stated in the Agreement. However, Albania's schedules of concessions on industrial productsforeseesimplementation up to the fifth year following the date of entry into force of the Agreement (1 January 2011). In addition, for a number of agricultural products,Albania's duty reduction and eliminationis to be completedon 1 January of the fourth year following the date of entry into force of the Agreement (1 January 2010).[9]
  2. The Combined Nomenclature (CN) of goods is applied to the classification of goods in trade between the Parties (Article 3.2).

B.national treatment and market access provisions of the agreement

1.Import duties and charges, and quantitative restrictions

(a)General provisions
  1. The Agreement covers agricultural and fish products(CN Chapters 1-24 and products listed in Annex 1,1,(ii) of the WTO Agreement on Agriculture as well as fish and fish products)[10] and industrial products (CNChapters 25-97 with the exception of the products listed in Annex 1,1,(ii) of the WTO Agreement on Agriculture).[11] Products covered by the Treaty establishing the European Atomic Energy Community shall be treated according to the provisions of that Treaty.
  2. The Parties cannot increase existing, or introducenew, customs duties on imports or charges having equivalent effect on their mutual trade in products covered by the Agreement. The Parties also cannot introduce any new or more restrictive quantitative restrictions on their mutual trade in products covered by the Agreement (Articles 20.1 and 20.2).
  3. The base rate used by the Parties for implementing tariff liberalization under the Agreement isthe applied MFN dutyon the day preceding the signature of the Agreement (11 June 2006) (Article3.3).
  4. As regards agriculture and fisheries, the Parties shall abolish all quantitative restrictions and measures having equivalent effect on imports on the date of entry into force of the Agreement (Article13). The EC shall abolish import duties and charges having equivalent effect on agricultural products originating in Albania from the date of entry into force of the Agreement with someexceptions (Article 14.1).[12] On fish and fish products, the EC shall eliminate import duties on the date of entry into force of the Agreement with the exception of some fish products that are subject to tariff-rate quotas under Annex III of the Agreement (Article 15.1). Albania shall abolish or reduce progressively import duties on agricultural products originating in the EC from the date of entry into force of the Agreement (Article 14.3 (a)(b), Annex II (a)(b), and Annex II(a)(b)(c) of Protocol 2). The Parties shall examine the possibilities of granting each other further concessions to implement greater liberalization of the trade in agricultural and fishery products. This shall be conducted in the Stabilization and Association Council[13], no later than six years after the date of entry into force of the Agreement, on a product by product and orderly and appropriate reciprocal basis (Article 16).
  5. The Parties abolish import duties, charges and quantitative restrictions on industrial productsupon entry into force of the Agreement, with the exception of some goods originating in the ECthat Albania will progressively reduce import duties on until 1 January of the fifth year following the date of entry into force of the Agreement, when the duties will be removed(Articles 5-7 and Annex I). The liberalization of import duties on industrial products may be accelerated by Albania if its general economic situation, and the situation of the economic sector concerned, allow. The Stabilization and Association Council will analyse the situation and make any relevant recommendations (Article 9).
(b)Liberalization of trade and tariff lines
  1. The EC'sMFN tariff schedule in 2006 comprised 9,843 tariff lines at the 8-digit level, out of which 989 held non ad valorem duties. Table II.1.A shows duty elimination in terms of tariff lines and trade, as applied by the EC to imports from Albania. 2,559 tariff lines (26% of the EC's tariff lines) were already duty-free on an MFN basis. As a result of the Agreement an additional 7,154 tariff lines (72.7% of its tariff lines) became duty free for imports from Albania; the EC eliminated duties on Albanian goods on 98.7% of its tariff lines and for 100% of the value of imports from Albania.
  2. Albania'sMFN tariff schedule in 2006 comprised 10,175 tariff lines at the 8-digit level, all consisting of ad valorem duties. Table II.1.B shows duty elimination in terms of tariff lines and trade, as applied by Albania to the EC. 3,377 tariff lines (33.2% of Albania's tariff lines) were already duty-free on an MFN basis. Upon entry into force of the Agreement, an additional 5,435 tariff lines (53.4% of tariff lines) became duty-free forimports from theEC; 86.6% of Albania's tariff lines became duty-free for products of EC origin and for 77.1% of the value of imports from the EC. A further 39, 576 and 105 tariff lines are to become duty-free in 2009, 2010 and 2011, respectively. By 2011, dutyfree tariff lines under the Agreement are expected to increase to 93.7%.

Table II.1

Tariff elimination commitments under the Agreement and corresponding average trade

A: The EC

Duty phase-out period / Number
of lines / % of total lines in the EC's Tariff Schedule / Value of EC imports from Albania
(€ million)
2004-2006 / % of total EC imports from Albania
2004-2006
MFN duty free / 2,559 / 26.0 / 79 / 37.6
1 December 2006 / 7,154 / 72.7 / 131 / 62.4
Remain dutiable / 130 / 1.3 / 0.1 / 0.0
Total / 9,843 / 100.0 / 210.1 / 100

B: Albania

Duty phase-out period / Number
of lines / % of total lines in Albania's Tariff Schedule / Value of Albania's imports from the EC
(€ million)
2004-2006 / % of total Albanian imports
from the EC
2004-2006
MFN duty free / 3,377 / 33.2 / 410 / 30.3
1 December 2006 / 5,435 / 53.4 / 632.5 / 46.8
2009 / 39 / 0.4 / 17.9 / 1.3
2010 / 576 / 5.7 / 105.6 / 7.8
2011 / 105 / 1.0 / 147.6 / 10.9
Remain dutiable / 643 / 6.3 / 37.5 / 2.8
Total / 10,175 / 100.0 / 1,351.2 / 100.0

Source:WTO Secretariat estimates based on data provided by the EC and Albanian authorities.

(c)The EC's liberalization schedule
  1. Table II.2 shows the EC tariff elimination commitments vis-à-visAlbania by HS section product categories. The 130 tariff lines which remain dutiable after entry into force of the Agreement (1.3% of ECtariff lines)are found in HS sections IV and I (prepared food and live animals and animal products).

Table II.2

The EC: Tariff elimination under the Agreement, by HS section

HS section and description / MFN
average
% / Total
No of lines / Number of duty-free lines
MFN
2006 / Under the Agreement on
1 December
2006 / Remain dutiable
I Live animals and animal products / 21.7 / 799 / 114 / 631 / 54
II Vegetable products / 15.3 / 543 / 137 / 406
III Animal or vegetable fats and oils / 9.2 / 125 / 22 / 103
IV Prepared food etc. / 17.9 / 834 / 93 / 665 / 76
V Minerals / 0.8 / 247 / 183 / 64
VI Chemicals and chemical products / 4.4 / 1,285 / 353 / 932
VII Plastics and rubber / 4.6 / 351 / 67 / 284
VIII Hides and skins / 2.9 / 155 / 47 / 108
IX Wood and articles / 2.7 / 188 / 85 / 103
X Pulp, paper etc. / 0.0 / 224 / 224
XI Textiles and textilesarticles / 7.9 / 1,228 / 52 / 1,176
XII Footwear, headgear / 7.9 / 111 / 2 / 109
XIII Articles of stone / 3.9 / 251 / 34 / 217
XIV Precious stones, etc. / 0.7 / 63 / 48 / 15
XV Base metals and base metals products / 1.9 / 1,000 / 508 / 492
XVI Machinery / 2.1 / 1,537 / 377 / 1,160
XVII Transport equipment / 4.7 / 280 / 32 / 248
XVIII Precision equipment / 2.2 / 357 / 103 / 254
XIX Arms and ammunition / 2.2 / 28 / 5 / 23
XX Misc. manufactured articles / 2.4 / 230 / 66 / 164
XXI Works of art, etc. / 0.0 / 7 / 7
Total / 6.9 / 9,843 / 2,559 / 7,154 / 130

Note:In-quota tariff lines are excluded.

Source: WTO estimates based on data provided by the EC authorities.

(d)Albania's liberalization schedule
  1. Table II.3 shows Albania's tariff elimination commitments vis-à-vis the EC by HS section. Of the remaining 1,363 tariff lines subject to dutyafter entry into force of the Agreement, 39 lines are to be fully liberalized by 2009; they include mostly base metals and base metal products. The additional 576tariff lines to be fully liberalized by 2010 are all agricultural products whileall remaining industrial tariffs (105 tariff lines) are to be fully liberalized by2011. Those that will continue to remain dutiable after implementation of the Agreement (643 tariff lines or 6.3% of Albania's tariff lines) are prepared food; live animals and animal products; and vegetable products.

Table II.3

Albania: Tariff elimination under the Agreement, by HS section

HS section and description / MFN
average
% / Total
No of lines / MFN 2006 duty-free lines / Number of lines duty-free under the Agreement in: / Remain dutiable*
1. Dec. 2006 / 2009 / 2010 / 2011
I Live animals and animal products / 5.5 / 805 / 328 / 63 / 130 / 284
II Vegetable products / 8.2 / 560 / 32 / 253 / 218 / 57
III Animal or vegetable fats and oils / 2.2 / 125 / 92 / 22 / 8 / 3
IV Prepared food etc. / 10.5 / 843 / 65 / 259 / 220 / 299
V Minerals / 4.4 / 248 / 28 / 204 / 1 / 15
VI Chemicals and chemical products / 1.6 / 1,284 / 633 / 630 / 4 / 17
VII Plastics and rubber / 6.3 / 368 / 48 / 299 / 21
VIII Hides and skins / 8.6 / 155 / 155
IX Wood and articles / 2.0 / 189 / 128 / 61
X Pulp, paper etc. / 1.6 / 226 / 165 / 61
XI Textiles and textilesarticles / 9.7 / 1,288 / 1,288
XII Footwear, headgear / 14.3 / 111 / 92 / 19
XIII Articles of stone / 10.1 / 255 / 6 / 230 / 19
XIV Precious stones, etc. / 6.1 / 63 / 63
XV Base metals and base metals products / 7.4 / 1,020 / 226 / 763 / 27 / 4
Table II.3 (Cont'd)
XVI Machinery / 1.3 / 1,679 / 1,339 / 330 / 10
XVII Transport equipment / 4.0 / 292 / 79 / 213
XVIII Precision equipment / 3.5 / 392 / 191 / 201
XIX Arms and ammunition / 15.0 / 28 / 28
XX Misc. manufactured articles / 12.1 / 237 / 10 / 220 / 7
XXI Works of art, etc. / 0.0 / 7 / 7
Total / 5.7 / 10,175 / 3,377 / 5,435 / 39 / 576 / 105 / 643

*:as of 1 January 2011.

Note:In-quota tariff lines are excluded.

Source: WTO estimates based on data provided by the Albanian authorities.

(e)Tariff-rate quotas
(i)Maintained by the EC
  1. The EC maintains tariff-rate quotas on products of cane and beet sugar and chemically pure sucrose, in solid form, and other sugars; wine; and some fish and fish products. See Annex II for a more detailed description of the tariff-rate quotas under the Agreement.
  2. On cane and beet sugar and chemically pure sucrose, in solid form (CN 1701), and other sugars (CN1702)originating in Albania, the EC applies duty-free access within the limit of an annual tariff-rate quota of 1,000 tonnes from the date of entry into force of the Agreement; above this quota volume, the full MFN rate of duty is applicable (Article 14.2). Further liberalization of the tariff-rate quota on these products is not mentioned.
  3. On wine, the EC grants duty-free access for quality sparkling wine (CN ex 220410) and wine of fresh grapes (CN ex 220421) originating in Albania up to 5,000 hl from the date of entry into force of the Agreement; above this quota volume, the full MFN rate of duty is applicable. In addition, wine of fresh grapes (CN ex 220429) is entitled to duty-free access up to 2,000 hl from the date of entry into force of the Agreement; above this quota volume, the full MFN rate of duty is applicable. At the request of one of the Parties, consultations may be held to adapt the quotas by transferring quantities from the quotas applying to CN ex 220429 to CN ex 220410 and ex 220421 (Article 1, Annex I of Protocol 3).