FREE TRADE AGREEMENT

FREE TRADE AGREEMENT FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF CROATIA AND THE REPUBLIC OF LITHUANIA PREAMBLE Desirous to develop and strengthen friendly relations, especially in the fields of economic co-operation and trade, with an aim to contribute to the progress of economic co-operation between the two countries and to increase the scope of mutual trade exchange, The Republic of Croatia and the Republic of Lithuania (hereinafter “the Parties”) CONFIRMING their intention to participate actively in the process of economic integration in Europe and expressing their preparedness to co-operate in seeking ways and means to strengthen this process; DECLARING their readiness to undertake activities with a view of promoting harmonious development of their trade as well as expanding and diversifying their mutual co-operation in the fields of joint interest, including fields not covered by this Agreement, thus creating a framework and supportive environment based on equality, non discrimination, and a balance of rights and obligations; REFERRING to the mutual interest of the Parties in the continual reinforcement of the multilateral trading system and considering that the provisions and instruments of the General Agreement on Tariffs and Trade 1994 (hereinafter “GATT 1994”) and the World Trade Organization (hereinafter “WTO”) constitute a basis for their foreign trade policy; RESOLVED to lay down for this purpose provisions aimed at the progressive abolition of the obstacles to trade between the Parties in accordance with the provisions of these instruments, in particular those concerning the establishment of free trade areas; DETERMINED to implement this Free Trade Agreement with the objective to preserve and protect the environment and to ensure an optimal use of natural resources in accordance with the principle of sustainable growth; HAVE DECIDED, in pursuance of these objectives, to conclude the following Agreement (hereinafter referred to as "this Agreement"). ARTICLE 1 Objectives 1.  The Parties shall gradually establish a free trade area between them in accordance with the provisions of this Agreement and in conformity with Article XXIV of the GATT 1994 and the other multilateral agreements on trade in goods annexed to the Agreement establishing the WTO. 2.  The objectives of this Agreement are: a)   to increase and enhance the economic cooperation between the Parties and raise the living standard of the population of the two countries; b)   to gradually eliminate difficulties and restrictions on trade in goods, including also the agricultural products; c)   to promote, through the expansion of reciprocal trade, the harmonious development of the economic relations between the Parties; d)  to provide fair conditions of competition in trade between the Parties; e) to contribute by the removal of barriers to trade, to the harmonious development and expansion of world trade. ARTICLE 2 Classification of Goods 1.   Harmonized Commodity Description and Coding System (HS) shall be applied to the classification of goods. 2.   For the commercial exchanges covered by this Agreement, the Parties shall apply their respective Customs Tariffs to the classification of goods for imports into their customs teritory. CHAPTER I INDUSTRIAL PRODUCTS ARTICLE 3 Scope The provisions of this Chapter shall apply to products originating in the Parties  falling within Chapters 25 to 97 of Harmonized Commodity Description and Coding System with the exception of the products listed in Annex I to this Agreement. ARTICLE 4 Customs Duties on Imports and Charges Having Equivalent Effect 1.   From the date of entry into force of this Agreement no new customs duty on imports or charge having equivalent effect shall be introduced in trade between the Parties. 2.   Customs duties and charges having equivalent effect on imports shall be abolished on the date of entry into force of this Agreement. ARTICLE 5 Customs Duties of a Fiscal Nature The provisions of Article 4 shall also apply to customs duties of a fiscal nature. ARTICLE 6 Customs Duties on Exports and Charges Having Equivalent Effect 1.  From the date of entry into force of this Agreement no new customs duty on exports or charge having equivalent effect shall be introduced in trade between the Parties. 2.  All customs duties on exports and charges having equivalent effect shall be abolished between the Parties on the date of entry into force of this Agreement. ARTICLE 7 Quantitative Restrictions on Imports and Measures Having Equivalent Effect 1.  From the date of entry into force of this Agreement no new quantitative restriction on imports or measure having equivalent effect shall be introduced in trade between the Parties. 2.  All quantitative restrictions on imports and measures having equivalent effect shall be abolished between the Parties on the date of entry into force of this Agreement. ARTICLE 8 Quantitative Restrictions on Exports and Measures Having Equivalent Effect 1.  From the date of entry into force of this Agreement no new quantitative restriction on exports or measure having equivalent effect shall be introduced in trade between the Parties. 2.  All quantitative restrictions on exports and measures having equivalent effect shall be abolished between the Parties on the date of entry into force of this Agreement. ARTICLE  9 Technical Regulations 1.   The rights and obligations of the Parties relating to standards or technical regulations and related measures shall be governed by the WTO Agreement on Technical Barriers to Trade. 2.   Each Party, upon request of the other Party, shall provide information on particular individual cases of standards, technical regulations and related measures. 3.   The Parties shall endavour to reduce technical barriers to trade. To this end the Parties will enter where appropriate into negotiations for the conclusion of the agreements on the mutual recognition in the field of conformity assessment, in the spirit of the recommendations of the WTO Agreement on Technical Barriers to Trade. CHAPTER II AGRICULTURAL AND FISHERY PRODUCTS ARTICLE 10 Scope 1.  The provisions of this Chapter shall apply to agricultural and fishery products originating in the Parties. 2.  The term "agricultural and fishery products" means for the purpose of this Agreement the products falling within Chapters 1 to 24 of the Harmonized Commodity Description and Coding System and the products listed in Annex I to this Agreement.  ARTICLE 11 Exchange of Concessions 1.   The Parties declare their readiness to foster, in so far as their agricultural policies allow, the harmonious development of trade in agricultural and fishery products and to discuss this issue periodically within the Joint Committee. 2.   For the achievement of this objective, the Parties shall grant each other the concessions specified in Protocol I, providing measures to promote the trade in agricultural and fishery products, in accordance with the provisions of this Chapter and those laid down in Protocol I. 3.   Taking into account the role of agriculture in their respective economies; the development of trade in agricultural and fishery products between the Parties; the high sensitivity of agricultural products; the rules of their respective agricultural policies, the Parties shall examine in the Joint Committee the possibilities of granting to each other further concessions in trade in agricultural and fishery products. ARTICLE 12 Veterinary, Sanitary and Phytosanitary Measures The Parties shall apply their regulations in veterinary, sanitary and phytosanitary matters in a non-discriminatory manner and shall not introduce any new measure unduly obstructing trade or creating an arbitrary or unjustifiable discrimination or a disguised restriction on  trade between them. The Parties shall apply their veterinary,  sanitary and phytosanitary measures in conformity with the provisions of the relevant WTO agreements. ARTICLE 13 Specific Safeguards Notwithstanding other provisions of this Agreement, and in particular Article  22, given the particular sensitivity of the agricultural and fishery products, if imports of products originating in the Party, which are the subject to concessions granted under this Agreement, cause serious disturbance to the markets of the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such a solution, the Party concerned may take the measures it deems necessary. CHAPTER III SERVICES AND INVESTMENTS ARTICLE 14 Cooperation in the Field of Services and Investments 1.   The Parties recognize the growing importance of certain areas, such as services and investments. In their efforts to gradually develop and broaden their co-operation, in particular in the context of the European integration, they will co-operate with the aim of achieving a progressive liberalization and mutual opening of their markets for investments and trade in services, taking into account relevant provisions of the General Agreement on Trade in Services (GATS). 2.   The Parties will discuss in the Joint Committee the possibilities of developing and deepening their relations in conformity with this Article. CHAPTER IV GENERAL PROVISIONS ARTICLE 15 Internal Taxation 1.   The Parties shall refrain from any measure or practice of an internal fiscal nature establishing, whether directly or indirectly, discrimination between the products of one Party and like products originating in the other Party. 2.   Products exported to the territories of the Parties may not benefit from repayment of internal taxes in excess of the amount of direct or indirect taxes imposed on them. ARTICLE 16 Trade Relations Governed by Other Agreements 1.   This Agreement shall not prevent the maintenance or establishment of customs unions, free trade areas or arrangements for cross-border trade of the Parties with third countries to the extent that these do not negatively affect the trade regime and in particular the provisions concerning rules of origin provided for by this Agreement. 2.   Exchange of information shall take place, upon request of either Party, within the Joint Committee concerning agreements establishing such customs unions or free trade areas. ARTICLE 17 Structural Adjustment 1.   Exceptional measures of limited duration which derogate from the provisions of Article 4 may be taken by the Parties in the form of increased customs duties. 2.   These measures may only concern infant industries, or certain sectors undergoing restructuring or facing serious difficulties, particularly where these difficulties produce important social problems. 3.   Customs duties on imports applicable in the Party to products originating in the other Party introduced by these measures  may not exceed 25 % ad valorem and shall maintain an element of preference for products originating in the other Party. The total value of imports of the products which are subject to these measures may not exceed 15 % of total imports of industrial products from the other Party as defined in Article 3, during the last year for which statistics are available. 4.   These measures shall be applied for a period not exceeding five years unless a longer duration is authorized by the Joint Committee. 5.   No such measures can be introduced in respect of a product if more than three years have elapsed since the elimination of all duties and quantitative restrictions or charges or measures having an equivalent effect concerning that product. 6.   The Parties shall inform the Joint Committee of any exceptional measures  they intend to take and, at the request of the Party, consultations shall be held in the Joint Committee on such measures and the sectors to which they apply before they are applied. When taking such measures the Parties shall provide the Joint Committee with a schedule for the elimination of the customs duties introduced under this Article. This schedule shall provide for a phasing out of these duties starting at the latest two years after their introduction, at equal annual rates. The Joint Committee may decide on a different schedule. ARTICLE 18 Dumping If a Party finds that dumping, within the meaning of Article VI of GATT 1994 is taking place in trade relations governed by this Agreement, it may take appropriate measures against that practice in accordance with  Article VI of the GATT 1994 and the rules established by the WTO agreements related to that Article, under the conditions and in accordance with the procedures laid down in Article 22 of this Agreement. ARTICLE 19 Emergency Action on Imports of Particular Products Where any product is being imported in such increased quantities and under such conditions as to  cause, or threaten  to cause: a)   serious injury to domestic producers of like or directly competitive products, or b)   serious disturbances in any sector of the economy or difficulties which could bring about serious deterioration in the economic situation of a region, the Party concerned may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 22. ARTICLE 20 Re-export and Serious Shortage Where compliance with the provisions of Articles  6 and 8 leads to: a)   re-export towards a third country against which the exporting Party maintains for the product concerned quantitative export restrictions, export duties or measures or charges having equivalent effect; or b)   a serious shortage, or threat thereof, of a product essential to the exporting Party; and where the situations referred to above give rise or are likely to give rise to major difficulties for the exporting Party, that  Party may take appropriate measures under the conditions and in accordance with the procedures laid down in Article 22. The measures shall be non-discriminatory and shall be eliminated when conditions no longer justify their maintenance. ARTICLE 21 State Monopolies 1.   The Parties shall progressively adjust any state monopoly of a commercial character so as to ensure that by the end of the fourth year following the entry into force of this Agreement, no discrimination regarding the conditions under which goods are procured and marketed will exist between nationals of the Parties. 2.   The Joint Committee shall be informed about the measures adopted to implement this objective. ARTICLE 22 Procedure for the Application of Safeguard Measures 1.  Before initiating the procedure for the application of safeguard measures set out in this Article the Party shall inform the other Party. The Parties shall endeavor to solve any differences between them through direct consultations. 2.  In cases specified in Articles 13, 18, 19, 20, 25, 26 and 34 a Party which is considering to resort to safeguard measures shall promptly notify the Joint Committee thereof. The Party concerned shall provide the Joint Committee with all relevant information and the assistance required to examine the case. Consultations between the Parties shall take place without delay in the Joint Committee with a view to finding a commonly acceptable solution. 3.  If, within one month of the matter being referred to the Joint Committee, the Party in question fails to put an end to the practice objected  to or to the difficulties notified and in the absence of a decision by the Joint Committee on the matter, the concerned Party may adopt the safeguard measures it considers necessary to remedy the situation. 4.  The safeguard measures taken shall be notified immediately to the Joint Committee. They shall be restricted, with regard to their extent and  duration, to what is strictly necessary in order to rectify the situation giving rise to their application and shall not be in excess of the damage caused by the practice or the difficulty in question. Priority shall be given to such measures that will least disturb the functioning of this Agreement. 5.  The safeguard measures taken shall be the subject to regular consultations within the Joint Committee with a view to their relaxation, or abolition when conditions no longer justify their maintenance. 6.  Where exceptional circumstances requiring immediate action make prior examination impossible, the Party concerned may, in the cases of Articles 13, 18, 19, 20, 25, 26 and 34 apply forthwith the precautionary measures strictly necessary to remedy the situation. The measures shall be notified without delay to the Joint Committee and consultations between the Parties shall take place within the Joint Committee. ARTICLE 23 Rules of Origin and Cooperation between the Customs Administrations 1.   Protocol II lays down the rules of origin and methods of administrative cooperation. 2.   Protocol III determines the methods of assistance between the Parties in customs matters. ARTICLE 24 Payments 1.  Any payment in freely convertible currency, arising from commercial exchanges covered by this Agreement and the transfers of such payments to the territory of the Party where creditor resides, shall be free from any restrictions. 2.   The Parties shall refrain from any exchange or administrative restrictions on the grant, repayment or acceptance of short and medium-term credits, related to trade in goods in which a resident of a Party participates. ARTICLE 25 Rules of Competition Concerning Undertakings 1.    The following are incompatible with the proper functioning of this Agreement in so far as they may affect trade between the Parties: a)    all agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition; b)    abuse by one or more undertakings of a dominant position in the territory of a Party as a whole or in substantial part thereof. 2.    The provisions of paragraph 1 shall apply to the activities of all undertakings including public undertakings and undertakings to which the Parties grant special or exclusive rights. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly, shall be subject to provisions of paragraph 1 in so far as the application of these provisions does not obstruct the performance, in law or fact, of the particular public tasks assigned to them. 3.    With regard to products referred to in Chapter II the provisions stipulated in paragraph 1 (a) shall not apply to such agreements, decisions and practices which form an integral part of a national market organization. 4.    If a Party considers that a given practice is incompatible with paragraphs 1, 2 and 3 of this Article or if such practice causes or threatens to cause serious prejudice to the interest of that Party or material injury to its domestic industry, the Party concerned may take appropriate measures under the conditions and in accordance with the procedure laid down in Article 22. ARTICLE 26 State Aid 1.   Any aid granted by a Party or through state resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods shall, in so far as it may affect trade between the Parties, be incompatible with the proper functioning of this Agreement. 2.   The provisions of paragraph 1 shall not apply to products referred to in Chapter II. 3.   The Parties shall ensure transparency in the area of state aid, in accordance with the provisions of the Agreement on Subsidies and Countervailing Measures and the WTO/GATT 1994 and either Party, upon request of the other Party, will provide information on aid schemes and on particular individual cases of state aid. 4.   If a Party considers that a particular practice: -     is incompatible with the terms of paragraph 1, and -     causes or threatens to cause serious prejudice to the interest of that Party or material injury to its domestic industry, it may take appropriate measures under the conditions and in accordance with the provisions laid down in Article 22. Such appropriate measures may only be taken in conformity with the procedures and under the conditions laid down in the General Agreement on Tariffs and Trade 1994 and by the Agreement establishing the World Trade Organization, in particular by the Agreement on Subsidies and Countervailing measures, and any other relevant instrument negotiated under their auspices which are applicable between the Parties. ARTICLE 27 Balance of Payments Difficulties Where either Party is in a serious balance of payments difficulties or under threat thereof, the Party concerned may in accordance with the conditions laid down within the framework of WTO/GATT 1994 and with Article VIII of the Articles of Agreement of International Monetary Fund, adopt restrictive measures, which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The Party concerned shall inform the other Party forthwith of their introduction and present to the other Party, as soon as possible, a time schedule of their removal. ARTICLE 28 Intellectual, Industrial and Commercial Property 1.  The Parties shall provide suitable and effective protection of intellectual, industrial and commercial property rights in line with WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) and other international Agreements. This shall encompass effective means of enforcing such rights. 2.  Implementation of this Article shall be regularly assessed by the Parties. If difficulties which affect trade arise in connection with intellectual, industrial and commercial property rights, either Party may request urgent consultations to find mutually satisfactory solutions. ARTICLE 29 Public Procurement 1.  The Parties consider the opening up of the award of public contracts on the basis of non-discrimination and reciprocity, to be a desirable objective. 2.  As of the entry into force of this Agreement, both Parties shall grant each other’s companies access to contract award procedures a treatment no less favorable than that accorded to companies of any other country. ARTICLE 30 Establishment of the Joint Committee 1.  A Joint Committee is hereby established in which the Parties shall be represented. The Joint Committee shall be responsible for the administration of this Agreement and shall ensure its proper implementation. 2.  For the purpose of the proper implementation of this Agreement, the Parties shall exchange information and, at the request of  either Party, shall hold consultations within the Joint Committee. The Joint Committee shall keep under review the possibility of further removal of the obstacles to trade between the Parties. 3.  The Joint Committee may, in accordance with the provisions of paragraph 3 of Article 31, take decisions in  cases provided for in this Agreement. On other matters the Joint Committee may make recommendations. ARTICLE 31 Procedures of the Joint Committee 1.  For the proper implementation of this Agreement, the Joint Committee shall meet at an appropriate level whenever necessary upon request but at least once a year. Either Party may request a meeting be held. 2.  The Joint Committee shall decide by concensus. 3.  If a representative  of a Party in the Joint Committee  has accepted a decision subject to reservation of the fulfillment of constitutional requirements the decision shall enter into force, if no later date  is contained therein, on the date of the receipt of the written notification stating that such requirements have been fulfilled. 4.  The Joint Committee may decide to set up such sub-committees and working groups as it considers necessary to assist it in accomplishing its tasks. ARTICLE 32 Security Exceptions Nothing in this Agreement shall prevent the Parties from taking any measures which they consider necessary: a)   to prevent the disclosure of information contrary to their essential security interests; b)   for the protection of their essential security interests or for the implementation of international obligations or national policies: i) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods, materials and services as is carried on directly or indirectly for the purpose of supplying a military establishment; or ii) relating to the non-proliferation of biological and chemical weapons, nuclear weapons or other nuclear explosive devices; or iii) in time of war or other serious international tension constituting threat of war. ARTICLE 33 General Exceptions This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; the protection of intellectual, industrial and commercial property. Such prohibitions or restrictions must not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties. ARTICLE 34 Fulfillment of Obligations 1.  The Parties shall take all necessary measures to ensure the achievement of the objectives of this Agreement and the fulfillment of their obligations under this Agreement. 2.  If either Party considers that the other Party has failed to fulfill an obligation under this Agreement, the Party concerned may take the appropriate measures under the conditions and in accordance with the procedures laid down in Article 22 of this Agreement. ARTICLE 35 Evolutionary Clause 1.  Where either Party considers that it would be useful and in the interest of the economies of the Parties to develop the relations established by this Agreement by extending them to fields not covered thereby, it shall submit a reasoned request to the other Party. The Parties may instruct the Joint Committee to examine this request and, where appropriate, to make recommendations to them, particularly with a view to opening negotiations. 2.  Agreements resulting from the procedure referred to in paragraph 1 shall be subject to ratification or approval by the Parties to this Agreement in accordance with their national legislation. ARTICLE 36 Amendments Amendments to this Agreement, as well as to its Annexes and Protocols, shall enter into force on the first day of the second month following the receipt of the later written notification through diplomatic channels, by which the Parties inform each other that all necessary requirements foreseen by their national legislation for the entry into force of this Agreement, have been fulfilled. ARTICLE 37 Protocols and Annexes Protocols and Annexes to this Agreement shall form an integral part thereof. The Joint Committee may decide to amend the Protocols and Annexes in accordance with the national legislation of the Parties. ARTICLE 38 Duration and Termination 1.   This Agreement is concluded for an indefinite period of time. 2.   Either party may denounce  this Agreement by a written notification to the other Party. The denunciation shall take effect on the first day of the seventh month following the date on which the other Party received the denunciation notice. 3.   The Parties agree that in case of accession of either Party to the European Union, the Agreement shall be terminated without compensation to the other Party. ARTICLE 39 Entry into Force This Agreement shall enter into force on the first day of the second month, following the date of the receipt of the later written notification through diplomatic channels, by which the Parties inform each other that all necessary requirements foreseen by their national legislation for the entry into force of this Agreement, have been fulfilled. DONE at Zagreb this 28 day of october 2002, in two originals each in the Croatian, Lithuanian, and English languages, all texts being equally authentic. In case of any divergence in the interpretation of this Agreement, the English text shall prevail. For the Republic of Croatia                                                 For the Republic of Lithuania ____________________ ANNEX  I (List of products referred to in Article 3 and Article 10) HS CODE BRIEF PRODUCT DESCRIPTION 2905.43.00 Mannitol 2905.44 D-glucitol (sorbitol) 3302.10.29 Mixtures of oderiferous substances and mixtures 3501 -Casein: 3501.10.10 --For the manufacture of regenerated textile fibres 3501.10.50 --For industrial uses, other than the manufacture of foodstuffs or fodder 3501.10.90 --Other -Other 3501.90.90 --Other 3502 Albumins (including concentrates of two or more whey proteins, containing by weight more than 80 % whey proteins, calculated on the dry matter), albuminates and other albumin derivatives: -Egg albumin: --Dried: 3502.11.10 ---Unfit, or to be rendered unfit, for human consumption 3502.11.90 ---Other --Other: 3502.19.10 ---Unfit, or to be rendered unfit, for human consumption 3502.19.90 ---Other -Milk albumin, including concentrates of two or more whey proteins: 3502.20.10 --Unfit, or to be rendered unfit, for human consumption --Other: 3502.20.91 ---Dried (for example, in sheets, scales, flakes, powder) 3502.20.99 --Other -Other: --Albumins, other than egg albumin and milk albumin (lactalbumin): 3502.90.20 ---Unfit, or to be rendered unfit, for human consumption 3502.90.70 ---Other 3502.90.90 --Albuminates and other albumin derivatives 3505.10 Dextrins and other modified starches 3505.10.10 Dextrins 3505.10.90 Other 3505.20 Glues 3809 Finishing agents, dye carriers to accelerate the dyeing or fixing of dyestuffs and other products and preparations (for example, dressings and mordants), of a kind used in the textile, paper, leather or like industries, not elsewhere specified or included 3809.10 -With a basis of amylaceous substances -Other 3809.91.00 --Of a kind used in the textile or like industries (excluding 3809.91.00.90.11.19) 3809.92.00 --Of a kind used in the paper or like industries (excluding 3809.92.00.90.00) 3809.93.00 --Of a kind used in the leather or like industries (excluding 3809.93.00.90.00) 3824.60 Sorbitol, other than that of subheading 2905.44 4501 Natural cork, raw or simply prepared; waste cork: crushed, granulated or ground cork: 4501.10.00 -Natural cork, raw or simply prepared 4501.90.00 -Other 5201.00 Cotton, not carded or combed 5301 Flax, raw or processed but not spun; flax tow and waste (incl. yarn waste and garnetted stock) 5302 Ture hemp (Cannabis sativa L.), raw or processed but not spun: tow and waste of true hemp (incl. yarn waste and garnetted stock) ____________________ PROTOCOL I (referred to in paragraph 2 of Article 11) EXCHANGE OF AGRICULTURAL CONCESSIONS Article 1 The products originating in the Republic of Croatia listed in Annex 1 to this Protocol shall be imported into the Republic of Lithuania according to the conditions stated in that Annex. Article 2 The products originating in the Republic of Lithuania listed in Annex 2 to this Protocol shall be imported into the Republic of Croatia according to the conditions stated in that Annex. Article 3 For each product the customs duties to which reductions set out in this Protocol are applied shall be the Most Favoured Nation (MFN) duties that were in force on the date of entry into force of this Agreement. Article 4 If after entry into force of this Agreement, any tariff reduction is applied on an erga omnes basis, in particular reductions resulting from the tariff negotiations in the WTO, such reduced duties shall replace the duties referred to in Article 3 as from the date when such reductions are applied. ANNEX 1 TO PROTOCOL I (Exports of Croatia to Lithuania) CN Code Description Quota (tonnes) Preferential duty within quota (%) 0403 Buttermilk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream 100 60% of MFN 0406 Cheese and curd 250 60% of MFN 10 Cereals 1000 50% of MFN 1107 Malt, whether or not roasted 300 50% of MFN 1517 Margarine 150 50% of MFN 1601 Sausages and similar products 100 70% of MFN 1602 Other prepared or preserved meat 100 70% of MFN 1604 Prepared or preserved fish unlimited 0% 1704 Sugar confectionary, not containing cocoa 50 50% of MFN 1806.31 1806.32 1806.90 Chocolate: -- filled -- not filled - other 50 50% of MFN 1901.90 - Other products 100 50% of MFN 1905 Bread, pastry, cakes, biscuits and other bakers' wares 100 50% of MFN 2007 Jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes (excluding from apple) 100 2% 2102 Yeasts 50 50% of MFN ex.2103.90.90.8 Sauces and preparations thereof, other - Vegeta 500 1% 2104 Soups and broths and preparations thereof 200 1% 2105 Ice cream 50 50% of MFN 2204 Wine, excluding 220410 and wines with an alcohol content higher than 22% 100 50% of MFN ANNEX 2 TO PROTOCOL I (Exports of Lithuania to Croatia) CN Code Description Quota (tonnes) Preferential duty within quota (%) 03 Fish 350 1% 0402 Milk and cream, concentrated or contaning added sugar or other sweetening matter 100 60% of MFN 0406 Cheese and curd 350 60% of MFN 0701.10.00 Seed potatoes 100 1% 0704.90.10 0706.10.00 0706.90 Vegetables (cabbage, carrots and turnips, other vegetables) 100 50% of MFN 0709.51 0709.59 Mushrooms 50 50% of MFN 10 Cereals 1000 50% of MFN 1601 Sausages and similar products 100 70% of MFN 1602 Other prepared or preserved meat 100 70% of MFN 1604 Prepared or preserved fish unlimited 0% 1704 Sugar confectionary, not containing cocoa 50 50% of MFN 1806.32 1806.90 Chocolate: -- not filled - other 50 50% of MFN 1905 Bread, pastry, cakes, biscuits and other bakers' wares 100 50% of MFN 2105 Ice cream 50 50% of MFN ___________________ PROTOCOL II CONCERNING THE DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS" AND METHODS OF ADMINISTRATIVE CO-OPERATION TABLE OF CONTENTS TITLE I               GENERAL PROVISIONS Article 1                Definitions TITLE II                                                   DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS" Article 2                General requirements Article 3                Cumulation in Croatia Article 4                Cumulation in Lithuania Article 5                Wholly obtained products Article 6                Sufficiently worked or processed products Article 7                Insufficient working or processing Article 8                Unit of qualification Article 9                Accessories, spare parts and tools Article 10              Sets Article 11              Neutral elements TITLE III            TERRITORIAL REQUIREMENTS Article 12              Principle of territoriality Article 13              Direct transport Article 14              Exhibitions TITLE IV             DRAWBACK OR EXEMPTION Article 15              Prohibition of drawback of, or exemption from, customs duties TITLE V              PROOF OF ORIGIN Article 16              General requirements Article 17              Procedure for the issue of a movement certificate EUR.1 Article 18              Movement certificates EUR.1 issued retrospectively Article 19              Issue of a duplicate movement certificate EUR.1 Article 20             Issue of movement certificates EUR.1 on the basis of a proof of origin issued or made out previously Article 20a            Accounting segregation Article 21              Conditions for making out an invoice declaration Article 22              Approved exporter Article 23              Validity of proof of origin Article 24              Submission of proof of origin Article 25              Importation by instalments Article 26              Exemptions from proof of origin Article 27              Supporting documents Article 28              Preservation of proof of origin and supporting documents Article 29              Discrepancies and formal errors Article 30              Amounts expressed in euro TITLE VI             ARRANGEMENTS FOR ADMINISTRATIVE  CO-OPERATION Article 31              Mutual assistance Article 32              Verification of proofs of origin Article 33              Dispute settlement Article 34              Penalties Article 35              Free zones TITLE VII           FINAL PROVISIONS Article 36              Annexes Article 37              Goods in transit or storage List of Annexes 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 TITLE I GENERAL PROVISIONS Article 1 Definitions For the purposes of this Protocol: (a)   "manufacture" means any kind of working or processing including assembly or specific operations; (b)   "material" means any ingredient, raw material, component or part, etc., used in the manufacture of the product; (c)   "product" means the product being manufactured, even if it is intended for later use in another manufacturing operation; (d)   "goods" means both materials and products; (e)   "customs value" means the value as determined in accordance with the Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (WTO Agreement on customs valuation); (f)    "ex-works price" means the price paid for the product ex works to the manufacturer in Croatia or in Lithuania in whose undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any internal taxes which are, or may be, repaid when the product obtained is exported; (g)   "value of materials" means the customs value at the time of importation of the non‑originating materials used, or, if this is not known and cannot be ascertained, the first ascertainable price paid for the materials in Croatia or in Lithuania; (h)   "value of originating materials" means the value of such materials as defined in (g) applied mutatis mutandis; (i)      "value added" shall be taken to be the ex-works price minus the customs value of each of the materials incorporated which originate in the other countries referred to in Articles 3 and 4 or, where the customs value is not known or cannot be ascertained, the first ascertainable price paid for the materials in Croatia or in Lithuania; (j)    "chapters" and "headings" mean the chapters and the headings (four‑digit codes) used in the nomenclature which makes up the Harmonized Commodity Description and Coding System, referred to in this Protocol as "the Harmonized System" or "HS"; (k)     "classified" refers to the classification of a product or material under a particular heading; (l)      "consignment" means products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice; (m)  "territories" includes territorial waters. TITLE II DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS" Article 2 General requirements 1.     For the purpose of implementing this Agreement, the following products shall be considered as originating in Croatia: (a)   products wholly obtained in Croatia within the meaning of Article 5; (b)   products obtained in Croatia incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in Croatia within the meaning of Article 6; 2.     For the purpose of implementing this Agreement, the following products shall be considered as originating in Lithuania: (a)   products wholly obtained in Lithuania within the meaning of Article 5; (b)   products obtained in Lithuania incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in Lithuania within the meaning of Article 6. Article 3 Cumulation in Croatia 1.    Without prejudice to the provisions of Article 2 (1), products shall be considered as originating in Croatia if such products are obtained there, incorporating materials originating in Lithuania, Bulgaria, Switzerland (including Liechtenstein)1, the Czech Republic, Estonia, Hungary, Iceland, Croatia, Latvia, Norway, Poland, Romania, Slovenia, the Slovak Republic, Turkey or in the European Community in accordance with the provisions of the Protocol on rules of origin annexed to the Agreements between Croatia and each of these countries, provided that the working or processing carried out in Croatia goes beyond the operations referred to in Article 7. It shall not be necessary that such materials have undergone sufficient working or processing. 2.    Where the working or processing carried out in Croatia does not go beyond the operations referred to in Article 7, the product obtained shall be considered as originating in Croatia only where the value added there is greater than the value of the materials used originating in any one of the other countries referred to in paragraph 1.  If this is not so, the product obtained shall be considered as originating in the country which accounts for the highest value of originating materials used in the manufacture in Croatia. 3.     Products, originating in one of the countries referred to in paragraph 1, which do not undergo any working or processing in Croatia, retain their origin if exported into Lithuania. 4.     The cumulation provided for in this Article may only be applied to materials and products, which have acquired originating status by the application of rules of origin identical to those given in this Protocol. Croatia shall provide Lithuania with details of the Agreements and their corresponding rules of origin, which are applied with the other countries referred to in paragraph 1. Article 4 Cumulation in Lithuania 1.    Without prejudice to the provisions of Article 2(2), products shall be considered as originating in Lithuania if such products are obtained there, incorporating materials originating in Croatia, Bulgaria, Switzerland (including Liechtenstein)1, the Czech Republic, Estonia, Hungary, Iceland, Lithuania, Latvia, Norway, Poland, Romania, Slovenia, the Slovak Republic, Turkey or in the European Community in accordance with the provisions of the Protocol on rules of origin annexed to the Agreements between Lithuania and each of these countries, provided that the working or processing carried out in Lithuania goes beyond the operations referred to in Article 7.  It shall not be necessary that such materials have undergone sufficient working or processing. 2.     Where the working or processing carried out in Lithuania does not go beyond the operations referred to in Article 7, the product obtained shall be considered as originating in Lithuania only where the value added there is greater than the value of the materials used originating in any one of the other countries referred to in paragraph 1.  If this is not so, the product obtained shall be considered as originating in the country which accounts for the highest value of originating materials used in the manufacture in Lithuania. 3.     Products, originating in one of the countries referred to in paragraph 1, which do not undergo any working or processing in Lithuania, retain their origin if exported into Croatia. 4.     The cumulation provided for in this Article may only be applied to materials and products, which have acquired originating status by the application of rules of origin identical to those given in this Protocol. Lithuania shall provide Croatia with details of the Agreements and their corresponding rules of origin, which are applied with the other countries referred to in paragraph 1. Article 5 Wholly obtained products 1.     The following shall be considered as wholly obtained in Croatia or in Lithuania: (a)   mineral products extracted from their soil or from their seabed; (b)   vegetable products harvested there; (c)   live animals born and raised there; (d)   products from live animals raised there; (e)   products obtained by hunting or fishing conducted there; (f)   products of sea fishing and other products taken from the sea outside the territorial waters of  Croatia or of Lithuania by their vessels; (g)   products made aboard their factory ships exclusively from products referred to in (f); (h)   used articles collected there fit only for the recovery of raw materials, including used tyres fit only for retreading or for use as waste; (i)    waste and scrap resulting from manufacturing operations conducted there; (j)    products extracted from marine soil or subsoil outside their territorial waters provided that they have sole rights to work that soil or subsoil; (k)   goods produced there exclusively from the products specified in (a) to (j). 2.     The terms "their vessels" and "their factory ships" in  paragraph 1(f) and (g) shall apply only to vessels and factory ships: (a)   which are registered or recorded in Croatia or in Lithuania; (b)   which sail under the flag of Croatia or of Lithuania; (c)   which are owned to an extent of at least 50 per cent by nationals of Croatia or of Lithuania, or by a company with its head office in one of these States, of which the manager or managers, Chairman of the Board of Directors or the Supervisory Board, and the majority of the members of such boards are nationals of Croatia or of Lithuania and of which, in addition, in the case of partnerships or limited companies, at least half the capital belongs to those States or to public bodies or nationals of the said States; (d)   of which the master and officers are nationals of Croatia or of Lithuania; and (e)   of which at least 75 per cent of the crew are nationals of Croatia or of Lithuania. Article 6 Sufficiently worked or processed products 1.     For the purposes of Article 2, products, which are not wholly obtained are considered to be sufficiently worked or processed when the conditions set out in the list in Annex II are fulfilled. The conditions referred to above indicate, for all products covered by the Agreement, the working or processing, which must be carried out on non‑originating materials used in manufacturing and apply only in relation to such materials.  It follows that if a product which has acquired originating status by fulfilling the conditions set out in the list is used in the manufacture of another product, the conditions applicable to the product in which it is incorporated do not apply to it, and no account shall be taken of the non-originating materials which may have been used in its manufacture. 2.     Notwithstanding paragraph 1, non‑originating materials which, according to the conditions set out in the list, should not be used in the manufacture of a product may nevertheless be used, provided that: (a)   their total value does not exceed 10 per cent of the ex‑works price of the product; (b)   any of the percentages given in the list for the maximum value of non‑originating materials are not exceeded through the application of this paragraph. This paragraph shall not apply to products falling within Chapters 50 to 63 of the Harmonized System. 3.     Paragraphs 1 and 2 shall apply subject to the provisions of Article 7. Article 7 Insufficient working or processing 1.    Without prejudice to paragraph 2, the following operations shall be considered as insufficient working or processing to confer the status of originating products, whether or not the requirements of Article 6 are satisfied: (a)   preserving operations to ensure that the products remain in good condition during transport and storage; (b)   breaking-up and assembly of packages; (c)   washing, cleaning; removal of dust, oxide, oil, paint or other coverings; (d)   ironing or pressing of textiles; (e)   simple painting and polishing operations; (f)   husking, partial or total bleaching, polishing, and glazing of cereals and rice; (g)   operations to colour sugar or form sugar lumps; (h)   peeling, stoning and shelling, of fruits, nuts and vegetables; (i)    sharpening, simple grinding or simple cutting; (j)    sifting, screening, sorting, classifying, grading, matching; (including the making-up of sets of articles); (k)   simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations; (l)    affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging; (m)  simple mixing of products, whether or not of different kinds, (n)   simple assembly of parts of articles to constitute a complete article or disassembly of products into parts; (o)   a combination of two or more operations specified in (a) to (n); (p)   slaughter of animals. 2.    All operations carried out either in Croatia or in Lithuania on a given product shall be considered together when determining whether the working or processing undergone by that product is to be regarded as insufficient within the meaning of paragraph 1. Article 8 Unit of qualification 1.     The unit of qualification for the application of the provisions of this Protocol shall be the particular product, which is considered as the basic unit when determining classification using the nomenclature of the Harmonized System. It follows that: (a)   when a product composed of a group or assembly of articles is classified under the terms of the Harmonized System in a single heading, the whole constitutes the unit of qualification; (b)   when a consignment consists of a number of identical products classified under the same heading of the Harmonized System, each product must be taken individually when applying the provisions of this Protocol. 2.     Where, under General Rule 5 of the Harmonized System, packaging is included with the product for classification purposes, it shall be included for the purposes of determining origin. Article 9 Accessories, spare parts and tools Accessories, spare parts and tools dispatched with a piece of equipment, machine, apparatus or vehicle, which are part of the normal equipment and included in the price thereof or which are not separately invoiced, shall be regarded as one with the piece of equipment, machine, apparatus or vehicle in question. Article 10 Sets Sets, as defined in General Rule 3 of the Harmonized System, shall be regarded as originating when all component products are originating. Nevertheless, when a set is composed of originating and non-originating products, the set as a whole shall be regarded as originating, provided that the value of the non-originating products does not exceed 15 per cent of the ex-works price of the set. Article 11 Neutral elements In order to determine whether a product originates, it shall not be necessary to determine the origin of the following, which might be used in its manufacture: (a)   energy and fuel; (b)   plant and equipment; (c)   machines and tools; (d)   goods which do not enter and which are not intended to enter into the final composition of the product. TITLE III TERRITORIAL REQUIREMENTS Article 12 Principle of territoriality 1.     Except as provided for in Articles 3 and 4 and paragraph 3 of this Article, the conditions for acquiring originating status set out in Title II must be fulfilled without interruption in Croatia or in Lithuania. 2.     Except as provided for in Articles 3 and 4, where originating goods exported from Croatia or from Lithuania to another country return, they must be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that: (a)   the returning goods are the same as those exported; and (b)   they have not undergone any operation beyond that necessary to preserve them in good condition while in that country or while being exported. 3.     The acquisition of originating status in accordance with the conditions set out in Title II shall not be affected by working or processing done outside Croatia or Lithuania on materials exported from Croatia or from Lithuania and subsequently re-imported there, provided: (a)   the said materials are wholly obtained in Croatia or in Lithuania or have undergone working or processing beyond the operations referred to in Article 7 prior to being exported; and (b)   it can be demonstrated to the satisfaction of the customs authorities that: i) the re-imported goods have been obtained by working or processing the exported materials; and ii) the total added value acquired outside Croatia or Lithuania by applying the provisions of this Article does not exceed 10 per cent of the ex-works price of the end product for which originating status is claimed. 4.     For the purposes of paragraph 3, the conditions for acquiring originating status set out in Title II shall not apply to working or processing done outside Croatia or Lithuania.  But where, in the list in Annex II, a rule setting a maximum value for all the non-originating materials incorporated is applied in determining the originating status of the end product, the total value of the non-originating materials incorporated in the territory of the party concerned, taken together with the total added value acquired outside Croatia or Lithuania by applying the provisions of this Article, shall not exceed the stated percentage. 5.     For the purposes of applying the provisions of paragraphs 3 and 4, 'total added value' shall be taken to mean all costs arising outside Croatia or Lithuania, including the value of the materials incorporated there. 6.     The provisions of paragraphs 3 and 4 shall not apply to products which do not fulfil the conditions set out in the list in Annex II or which can be considered sufficiently worked or processed only if the general tolerance fixed in Article 6(2) is applied. 7.     The provisions of paragraphs 3 and 4 shall not apply to products of Chapters 50 to 63 of the Harmonized System 8.     Any working or processing of the kind covered by the provisions of this Article and done outside Croatia or Lithuania shall be done under the outward processing arrangements, or similar arrangements. Article 13 Direct transport 1.     The preferential treatment provided for under the Agreement applies only to products, satisfying the requirements of this Protocol, which are transported directly between Croatia and Lithuania or through the territories of the other countries referred to in Articles 3 and 4.  However, products constituting one single consignment may be transported through other territories with, should the occasion arise, trans‑shipment or temporary warehousing in such territories, provided that they remain under the surveillance of the customs authorities in the country of transit or warehousing and do not undergo operations other than unloading, reloading or any operation designed to preserve them in good condition. Originating products may be transported by pipeline across territory other than that of Croatia or Lithuania. 2.     Evidence that the conditions set out in paragraph 1 have been fulfilled shall be supplied to the customs authorities of the importing country by the production of: (a)   a single transport document covering the passage from the exporting country through the country of transit; or (b)   a certificate issued by the customs authorities of the country of transit: (i)      giving an exact description of the products; (ii)     stating the dates of unloading and reloading of the products and, where applicable, the names of the ships, or the other means of transport used; and (iii)    certifying the conditions under which the products remained in the transit country; or (c)   failing these, any substantiating documents. Article 14 Exhibitions 1.     Originating products, sent for exhibition in a country other than Croatia and Lithuania and sold after the exhibition for importation in Croatia or in Lithuania shall benefit on importation from the provisions of the Agreement provided it is shown to the satisfaction of the customs authorities that: (a)   an exporter has consigned these products from Croatia or from Lithuania to the country in which the exhibition is held and has exhibited them there; (b)   the products have been sold or otherwise disposed of by that exporter to a person in Croatia or in Lithuania; (c)   the products have been consigned during the exhibition or immediately thereafter in the state in which they were sent for exhibition; and (d)   the products have not, since they were consigned for exhibition, been used for any purpose other than demonstration at the exhibition. 2.     A proof of origin must be issued or made out in accordance with the provisions of Title V and submitted to the customs authorities of the importing country in the normal manner.  The name and address of the exhibition must be indicated thereon.  Where necessary, additional documentary evidence of the conditions under which they have been exhibited may be required. 3.     Paragraph 1 shall apply to any trade, industrial, agricultural or crafts exhibition, fair or similar public show or display which is not organised for private purposes in shops or business premises with a view to the sale of foreign products, and during which the products remain under customs control. TITLE IV DRAWBACK OR EXEMPTION Article 15 Prohibition of drawback of, or exemption from, customs duties 1.                1. Non‑originating materials used in the manufacture of products originating in Croatia or in Lithuania for which a proof of origin is issued or made out in accordance with the provisions of Title V shall not be subject in Croatia or in Lithuania to drawback of, or exemption from, customs duties of whatever kind. 2.     The prohibition in paragraph 1 shall apply to any arrangement for refund, remission or non-payment, partial or complete, of customs duties or charges having an equivalent effect, applicable in Croatia or in Lithuania to materials used in the manufacture, where such refund, remission or non-payment applies, expressly or in effect, when products obtained from the said materials are exported and not when they are retained for home use there. 3.     The exporter of products covered by a proof of origin shall be prepared to submit at any time, upon request from the customs authorities, all appropriate documents proving that no drawback has been obtained in respect of the non-originating materials used in the manufacture of the products concerned and that all customs duties or charges having equivalent effect applicable to such materials have actually been paid. 4.     The provisions of paragraphs 1 to 3 shall also apply in respect of packaging within the meaning of Article 8(2), accessories, spare parts and tools within the meaning of Article 9 and products in a set within the meaning of Article 10 when such items are non-originating. 5.     The provisions of paragraphs 1 to 4 shall apply only in respect of materials, which are of the kind to which the Agreement applies.  Furt …