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With the support of the European Commission
1
FREE TRADE AGREEMENTSREPUBLIC OF CROATIA
Goran MarijanovićEkonomski fakultet ,Osijek
With the support of the European Commission
With the support of the European Commission 2
• Economic profile of the Republic of Croatia • AREA• 87,661 square kilometers
56,594 square kilometers of land31,067 square kilometers of territorial seaCoast: 1,778 kmIslands: 1,185 (66 inhabited)Capital city: Zagreb (779,000 inhabitants)
With the support of the European Commission 3
POPULATION
48,00%MEN
52,00%WOMEN
4.437,460TOTAL
.0002001
With the support of the European Commission 4
ECONOMIC INDICATORS
18,2***Unemployment rate %
2,1Inflation rate%
3,7Industrial production, %
4,4Population, millions (census)
7.730**GDP, per capita. USD
34,3* GDP, billion USD2004
With the support of the European Commission 5
ECONOMIC INDICATORS
6,0355Exchange rate HRK/USD991,6***Average monthly gross salary, USD-2,2**Government budget balance (% of GDP)
-366,7Balance of payments account, millionsUSD
16.583,2Import, millions USD8.022,5Export, millions USD2004
With the support of the European Commission 6
ECONOMIC INDICATORS
1.085.159***No. of employees in corporate bodies39Number of banks61.643Number of companies
8.759Foreign exchange reserves of HNB, millions USD, end of period
4,5Discount rate of Croatian National Bank(HNB), %, end of peroid
7,4952Exchange rate HRK/EUR2004
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 FinanceAgency)
With the support of the European Commission 8
TRADE IN GOODS 2004.
11,8 944.905 OTHERS
1,2 97.620 CEFTA countries
64,5 5,177.755 EU countries
88,2 7,077.547 EUROPEAN COUNTRIES
100,08,022.452EXPORT TOTAL
%000 USD
With the support of the European Commission 9
TRADE IN GOODS 2004.
Source: Central Bureau of Statistics (DZS)Data processing: Croatian Chamber of Economy
15,9 2,635.641 OTHERS
1,5 240.714 CEFTA countries
69,5 11,526.212 EU countries
84,1 13,947.511 EUROPEAN COUNTRIES
100,016,583.152IMPORT TOTAL
% 000 USD
With the support of the European Commission 10
MAJOR TRADE PARTNERS 2004.
100,08,022.452Total exports of Croatia69,05,535.491Total presented export3,7 294.065 Serbia and Montenegro7,5 601.010 Slovenia9,4 756.570 Austria11,2 895.134 Germany14,4 1,154,065 Bosnia and Herzegowina22,8 1,831.237 Italy%000 USDEXPORT
With the support of the European Commission 11
MAJOR TRADE PARTNERS 2004.
100,016,583.152Total imports58,29,651.394Total presented import4,4 731.752 France6,8 731.752 Austria7,1 1,179.496 Slovenia7,3 1,205.258 Russia15,5 2,567.629 Germany17,1 2,842.145 Italy%000 USDIMPORT
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
With the support of the European Commission 13
LEGAL FRAMEWORK FOR FOREIGN TRADE
• Exceptions are:- quotas or protective tariffs, in accordance withWTO regulations
- antidumping duty- to prevent harmful damping- EUR 1- certificate of origin- certificates of sanitary, veterinary,
phytopathological correctness (for food, animals, medicines etc.)
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
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 economicgrowth- create the conditions within two years in whichmore than 80% of total foreign trade will be carriedout under free trade principles
With the support of the European Commission 16
PROGRAM OF CROATIAN GOVERNMENT 2000.-2004.
As a result of Program preferential tradearrangements have been made on the basis offree trade agreement with:- EU- CEFTA- EFTA- other European countries
With the support of the European Commission 17
SIGNED FREE TRADE AGREEMENTS
-1. 1. 2002. 1. 1. 2002. 1. 4. 2002. 1. 8. 2002.
EFTASwitzerland LiechtensteinNorwayIsland
Changes related to EU enlargement are definedby Protocol 7. of SAA
1. 1. 2002. (for the new 10 EU member statesfrom 1. 5. 2004.)
European Union(25 countries)
-1. 1. 2001Bosnia and Herzegowina
-9. 6. 1997. Macedonia
NoteStarting DateCountry
With the support of the European Commission 18
SIGNED FREE TRADE AGREEMENTS
-1. 10. 2004.Moldova
-1. 3. 2003.CEFTABulgariaRomania
-1. 6. 2003 Albania
-1. 7. 2004.Serbia and Montenegro
-1. 7. 2003.Turkey
NoteStarting DateCountry
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
With the support of the European Commission 20
Free trade agreements withcountries 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 regulationson the origin of goods defined in the Protocol of the Agreement.
With the support of the European Commission 21
Free trade agreements withcountries 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 origininto Albania:
abolishedto 20%to 35%to 50%to 65%to 80%Reduction of MFN duties
1.1.2008.2007.2006.2005.2004.2003.Year
With the support of the European Commission 22
Free trade agreements withcountries 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 origininto Croatia:
abolishedto 15%to 30%to 40%to 55%to 70%Reduction ofMFN duties
1.1.2008.2007.2006.2005.2004.2003.Year
With the support of the European Commission 23
Free trade agreements withcountries 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 origininto Albania.
• For products from ANNEX B of the Protocol 1. of the Agreement0% of customs duties for IMPORT of products of Albanian origininto Croatia.
With the support of the European Commission 24
Free trade agreements withcountries of West Balkans
TRADE IN GOODS CROATIA – ALBANIA - 000 USD
158,15273,96156,39Indeks 2002./2004.
28,04872627.322200428,15867227.4862003
17,73526517.4702002
TOTALIMPORTEXPORTYear
Source: Central Bureau of Statistics,ZagrebData processing: Croatian Chamber of Economy, SMO
With the support of the European Commission 25
Free trade agreements withcountries of West Balkans
Bosnia and Herzegowina• STATUS: Signed on 19 December 2000 in Zagreb
Ratified: since 1 January 2001 – temporarily implementedPublished: 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 goodsdefined in the Protocol of the Agreement.
• LIBERALIZATION0% of customs duties on IMPORT of all products of Bosnia-Herzegowina origin intoCroatia Reduction of customs duties over several years for EXPORT of all goods of Croatianorigin into Bosnia and Herzegowina
With the support of the European Commission 26
Free trade agreements withcountries of West Balkans
Trade in goods between Croatia and Bosnia and Herzegowina - mil. USD
133,7150,8129,3index
1.502,8348,71.154,12004
1.123,6231,2892,42003
TotalImport from B.-H.Export into B.-H.
With the support of the European Commission 27
Free trade agreements withcountries 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 theorigin 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
With the support of the European Commission 28
Free trade agreements withcountries of West Balkans
Trade in goods Croatia - Bulgaria - 000 USD
78,77350.55228.2212004.
65,69042.24723.4432003.
27,14415.38111.7632002.
TOTALIMPORTEXPORTYear
With the support of the European Commission 29
Free trade agreements withcountries 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 theorigin 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
With the support of the European Commission 30
Free trade agreements withcountries of West Balkans
Trade between Croatia and Macedonia
131,6 156,7 105,2 index190,8 116,7 74,1 2004.
145,0 74,5 70,5 2003.
TotalIMPORTEXPORTmil USD
With the support of the European Commission 31
Free trade agreements withcountries 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. 4/2004Came 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 ofgoods 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. ofthe Agreement within quantity restrictions (QUOTAS)
With the support of the European Commission 32
Free trade agreements withcountries of West Balkans
Trade between Croatia and Serbia and Montenegro - mil. USD
162,5183,4154,1index
434,8140,7294,12004.
267,476,7190,72003.
TotalImportExport
With the support of the European Commission 33
Free trade agreements withcountries of West Balkans
Overview of trade in goods between Croatia and countries ofwestern Balkans (2004) mil. USD
16.583,15657,38140,7116,750,55348,70,726Import
8.022,451.577,84294,1074,1028,221.154,1027,32Export
Total Croatia
TotalSerbia&MMacedoniaBulgariaBosnia&HAlbania
With the support of the European Commission 34
CONCLUSION
Problems of Croatian economy:- high external debt- balance of payments deficit
With the support of the European Commission 35
CONCLUSION
- Bilateral Free Trade Agreements with the countriesin the region have increased trade, but thepossibilities are far from exhausted
- Croatian trade with other countries in the region isfor the most part insufficient or disproportional
- These countries account for 19,7% of exports, but only 3,96% of Croatian imports
With the support of the European Commission 36
CONCLUSION
Trade in goods with old EU members has remainedat the level of about 60% for the past ten years, which is lower than in 1990.
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