1. With the support of the European Commission 1 FREE TRADE AGREEMENTS REPUBLIC OF CROATIA Goran Marijanović Ekonomski fakultet,Osijek With the support of the European Commission

2. 2 Economic profile of the Republic of Croatia AREA 87,661 square kilometers 56,594 square kilometers of land 31,067 square kilometers of territorial sea Coast: 1,778 km Islands: 1,185 (66 inhabited) Capital city: Zagreb (779,000 inhabitants)

3. With the support of the European Commission 3 POPULATION 2001.000 TOTAL 4.437,460 WOMEN 52,00% MEN 48,00%

4. With the support of the European Commission 4 ECONOMIC INDICATORS 2004 GDP, billion USD 34,3* GDP, per capita. USD7.730** Population, millions (census)4,4 Industrial production, %3,7 Inflation rate%2,1 Unemployment rate %18,2***

5. With the support of the European Commission 5 ECONOMIC INDICATORS 2004 Export, millions USD8.022,5 Import, millions USD16.583,2 Balance of payments account, millions USD -366,7 Government budget balance (% of GDP)-2,2** Average monthly gross salary, USD991,6*** Exchange rate HRK/USD6,0355

6. With the support of the European Commission 6 ECONOMIC INDICATORS 2004 Exchange rate HRK/EUR7,4952 Discount rate of Croatian National Bank (HNB), %, end of peroid 4,5 Foreign exchange reserves of HNB, millions USD, end of period 8.759 Number of companies61.643 Number of banks39 No. of employees in corporate bodies1.085.159***

7. With the support of the European Commission 7 ECONOMICS INDICATORS *estimate of Central Bureau of Statistics (DZS) **estimate of Ministry of Finance (MF) ***provisional data Sources: HNB, DZS, MF, FINA (Central Finance Agency)

8. With the support of the European Commission 8 TRADE IN GOODS 2004. 000 USD% EXPORT TOTAL8,022.452100,0 EUROPEAN COUNTRIES7,077.54788,2 EU countries5,177.75564,5 CEFTA countries97.6201,2 OTHERS944.90511,8

9. With the support of the European Commission 9 TRADE IN GOODS 2004. 000 USD% IMPORT TOTAL16,583.152100,0 EUROPEAN COUNTRIES13,947.51184,1 EU countries11,526.21269,5 CEFTA countries240.7141,5 OTHERS2,635.64115,9 Source: Central Bureau of Statistics (DZS) Data processing: Croatian Chamber of Economy

10. With the support of the European Commission 10 MAJOR TRADE PARTNERS 2004. EXPORT000 USD% Italy1,831.23722,8 Bosnia and Herzegowina1,154,06514,4 Germany895.13411,2 Austria756.5709,4 Slovenia601.0107,5 Serbia and Montenegro294.0653,7 Total presented export 5,535.49169,0 Total exports of Croatia 8,022.452100,0

11. With the support of the European Commission 11 MAJOR TRADE PARTNERS 2004. IMPORT000 USD% Italy2,842.14517,1 Germany2,567.62915,5 Russia1,205.2587,3 Slovenia1,179.4967,1 Austria731.7526,8 France731.7524,4 Total presented import 9,651.39458,2 Total imports 16,583.152100,0

12. With the support of the European Commission 12 LEGAL FRAMEWORK FOR FOREIGN TRADE Completely harmonized with the WTO’s regulations Trade Law have contributed to trade liberalization Import and export of goods are free

13. With the support of the European Commission 13 LEGAL FRAMEWORK FOR FOREIGN TRADE Exceptions are: - quotas or protective tariffs, in accordance with WTO regulations - antidumping duty- to prevent harmful damping - EUR 1- certificate of origin - certificates of sanitary, veterinary, phytopathological correctness (for food, animals, medicines etc.)

14. With the support of the European Commission 14 FREE TRADE AGREEMENTS Agreements of free trade between two or more countries are signed with the aim of: - removing customs and non-customs trade barriers - to boost the trade beetween the contract parties - to increase direct investment - to achieve better transparency in trade policies

15. With the support of the European Commission 15 PROGRAM OF CROATIAN GOVERNMENT 2000.-2004. Points: - enter new markets with Croatian products - export is the driving force behind economic growth - create the conditions within two years in which more than 80% of total foreign trade will be carried out under free trade principles

16. With the support of the European Commission 16 PROGRAM OF CROATIAN GOVERNMENT 2000.-2004. As a result of Program preferential trade arrangements have been made on the basis of free trade agreement with: - EU - CEFTA - EFTA - other European countries

17. With the support of the European Commission 17 SIGNED FREE TRADE AGREEMENTS CountryStarting DateNote Macedonia9. 6. 1997. - Bosnia and Herzegowina 1. 1. 2001 - European Union (25 countries) 1. 1. 2002. (for the new 10 EU member states from 1. 5. 2004.) Changes related to EU enlargement are defined by Protocol 7. of SAA EFTA Switzerland Liechtenstein Norway Island 1. 1. 2002. 1. 4. 2002. 1. 8. 2002. -

18. With the support of the European Commission 18 SIGNED FREE TRADE AGREEMENTS CountryStarting DateNote Turkey1. 7. 2003. - Serbia and Montenegro1. 7. 2004. - Albania1. 6. 2003 - CEFTA Bulgaria Romania 1. 3. 2003. - Moldova 1. 10. 2004. -

19. With the support of the European Commission 19 SIGNED FREE TRADE AGREEMENTS Number of countries with which Croatia has signed and is applying free trade agreements: 37

20. With the support of the European Commission 20 Free trade agreements with countries of West Balkans Albania STATUS: Signed on 27 September 2002 in Zagreb IN FORCE: since 1 April 2003 MAIN CHARACTERISTICS: MILDLY ASSYMETRICAL CERTIFICATE OF ORIGIN Form EUR 1 – issued by customs offices according to regulations on the origin of goods defined in the Protocol of the Agreement.

21. With the support of the European Commission 21 Free trade agreements with countries of West Balkans Albania industrial products (HS 25 – 97)* For products from Annex II of the Agreement, phasing out of customs duties over several years for the EXPORT of all products of Croatian origin into Albania: Year2003.2004.2005.2006.2007.1.1.2008. Reduction of MFN duties to 80%to 65%to 50%to 35%to 20%abolished

22. With the support of the European Commission 22 Free trade agreements with countries of West Balkans  Albania  For products from Annex III of the Agreement, phasing out of customs duties over several years for the IMPORT of all products of Albanian origin into Croatia: Year2003.2004.2005.2006.2007.1.1.2008. Reduction of MFN duties to 70%to 55%to 40%to 30%to 15%abolished

23. With the support of the European Commission 23 Free trade agreements with countries of West Balkans Albania Agricultural and food products (HS 1 – 24) For products from ANNEX A of the Protocol 1. of the Agreement 0% of customs duties for EXPORT of products of Croatian origin into Albania. For products from ANNEX B of the Protocol 1. of the Agreement 0% of customs duties for IMPORT of products of Albanian origin into Croatia.

24. With the support of the European Commission 24 Free trade agreements with countries of West Balkans TRADE IN GOODS CROATIA – ALBANIA - 000 USD Year EXPORT IMPORT TOTAL 2002 17.470 265 17,735 2003 27.486 672 28,158 2004 27.322 726 28,048 Indeks 2002./2004. 156,39 273,96 158,15 Source: Central Bureau of Statistics,Zagreb Data processing: Croatian Chamber of Economy, SMO

25. With the support of the European Commission 25 Free trade agreements with countries of West Balkans Bosnia and Herzegowina STATUS: Signed on 19 December 2000 in Zagreb Ratified: since 1 January 2001 – temporarily implemented Published: Official Gazzette – International agreements (Narodne novine No. 9/01) In force: 1 February 2005 (NN-MU No. 2/2005) MAIN CHARACTERISTICS : ASSYMETRICAL CERTIFICATE OF ORIGIN Form EUR 1 – issued by customs offices according to regulations on the origin of goods defined in the Protocol of the Agreement. LIBERALIZATION 0% of customs duties on IMPORT of all products of Bosnia-Herzegowina origin into Croatia Reduction of customs duties over several years for EXPORT of all goods of Croatian origin into Bosnia and Herzegowina

26. With the support of the European Commission 26 Free trade agreements with countries of West Balkans Trade in goods between Croatia and Bosnia and Herzegowina - mil. USD Export into B.-H.Import from B.-H.Total 2003 892,4 231,2 1.123,6 2004 1.154,1 348,71.502,8 index 129,3 150,8133,7

27. With the support of the European Commission 27 Free trade agreements with countries of West Balkans CEFTA countries: Croatia, Bulgaria, Romania STATUS: Signed on 6 December 2002 in Zagreb IN FORCE: since 1 March 2003 (temporary implementation) Official Gazzette – International Agreements No. 4/03 MAIN CHARACTERISTICS: SYMETRICAL CERTIFICATE OF ORIGIN Form EUR 1 – issued by customs offices according to regulations on the origin of goods defined in the Protocol of the Agreement No import tax refund – drawback (Article 15 of Protocol 7a.) Partial pan-European compound duty and intra-CEFTA compound duty (Article 4 of Protocol 7a.) LIBERALIZATION industrial products (HS 25 – 97) 0% customs duty for all industrial products in both directions

28. With the support of the European Commission 28 Free trade agreements with countries of West Balkans Trade in goods Croatia - Bulgaria - 000 USD YearEXPORT IMPORT TOTAL 2002.11.76315.38127,144 2003.23.44342.24765,690 2004.28.22150.55278,773

29. With the support of the European Commission 29 Free trade agreements with countries of West Balkans Macedonia STATUS: Signed on 9 May 1997 in Skopje IN FORCE: since 9 June 1997, - amendments on 1 July 2002. Official Gazzette – International Agreements No. 16/97 MAIN CHARACTERISTICS: SYMETRICAL CERTIFICATE OF ORIGIN Form EUR 1 – issued by customs offices according to regulations on the origin of goods defined in the Protocol of the Agreement No import tax refund – drawback (Article 15 of Protocol 2.) LIBERALIZATION Industrial products (HS 25 – 97) 0% customs duty for all industrial products in both directions

30. With the support of the European Commission 30 Free trade agreements with countries of West Balkans Trade between Croatia and Macedonia mil USDEXPORTIMPORT Total 2003. 70,574,5145,0 2004. 74,1116,7190,8 index 105,2156,7131,6

31. With the support of the European Commission 31 Free trade agreements with countries of West Balkans Serbia and Montenegro STATUS: Free Trade Agreement between Croatia and Yugoslavia signed on 23 December 2002. Agreement between Croatia and Serbia and Montenegro on amendments of the above FTA signed on 14 January 2004. Published: Official Gazzette-International Agreements No. 4/2004 Came into force: 1 July 2004 (NN-MU 5/2004) MAIN CHARACTERISTICS SYMETRICAL CERTIFICATE OF ORIGIN Form EUR 1 – issued by customs offices according to regulations on the origin of goods defined in the Protocol of the Agreement LIBERALIZATION Industrial products (HS 25 – 97) Gradual reduction of customs duties over several years for industrial products in both directions (except for import of products listed in Annex I and Annex II of Protocol 1. of the Agreement within quantity restrictions ( QUOTAS )

32. With the support of the European Commission 32 Free trade agreements with countries of West Balkans Trade between Croatia and Serbia and Montenegro - mil. USD ExportImportTotal 2003. 190,7 76,7267,4 2004. 294,1 140,7434,8 index 154,1 183,4162,5

33. With the support of the European Commission 33 Free trade agreements with countries of West Balkans Overview of trade in goods between Croatia and countries of western Balkans (2004) mil. USD AlbaniaBosnia&HBulgaria MacedoniaSerbia&MTotal Croatia Export27,321.154,1028,2274,10294,101.577,848.022,45 Import0,726348,750,55116,7140,7657,3816.583,15

34. With the support of the European Commission 34 CONCLUSION Problems of Croatian economy: - high external debt - balance of payments deficit

35. With the support of the European Commission 35 CONCLUSION -Bilateral Free Trade Agreements with the countries in the region have increased trade, but the possibilities are far from exhausted -Croatian trade with other countries in the region is for the most part insufficient or disproportional -These countries account for 19,7% of exports, but only 3,96% of Croatian imports

36. With the support of the European Commission 36 CONCLUSION Trade in goods with old EU members has remained at the level of about 60% for the past ten years, which is lower than in 1990.

37. With the support of the European Commission 37 CONCLUSION Solution to these problems lie in: increase of production increase of export promoting trade integrations and competitiveness by: - continuation and acceleration of reforms - strengthening the rule of law - decreasing the role of state in economic operations