RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG49/4/Add.1
27 August 1999
(99-3558)
Committee on Regional Trade Agreements Original:  English
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF POLAND
AND THE REPUBLIC OF LITHUANIA
Communication from the Parties
Addendum
The following communication has been received from the Permanent Mission of the Republic
of Poland with the request that it be distributed to the WTO Members.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and Dates of Signature, Ratification and Entry into Force
We note that Poland is a member of CEFTA and that Lithuania is advanced in its
negotiations to become a member of CEFTA.  How will these negotiations affect the FTA
between Lithuania and Poland?  Are there plans to make changes to the FTA to bring it into
line with CEFTA provisions?
The negotiations on accession of Lithuania to CEFTA have not yet begun.  Negotiations are
expected to start after Lithuania becomes a WTO Member.  With Lithuania’s accession to theCEFTA, respective adhesion Protocols will replace the existing Poland-Lithuania FTA.
4. Trade Data
We would appreciate trade and tariff statistics on intra FTA-trade and MFN trade
according to major products and partners.
Data on intra FTA-trade according to 97 HS Chapters were given in document
WT/REG/49/4.
In 1998 Poland’s exports to Lithuania made for 429,406 thousand dollars and constituted
1.52 per cent of Poland’s global exports.  Lithuania is Poland’s 15th export market.
In 1998 Poland’s imports from Lithuania made for 139,069 thousand dollars and constituted
0.3 per cent of Poland’s global imports.  Lithuania is Poland’s 35th import market.
In 1998 Lithuania’s exports to Poland constituted 3 per cent of Lithuania’s global exports.
Poland is Lithuania’s 10th export market.
In 1998 Lithuania’s imports from Poland constituted 5.6 per cent of Lithuania’s global
imports.  Poland is Lithuania’s 3rd import market.WT/REG49/4/Add.1
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II. TRADE PROVISIONS
What percentage of FTA trade (both in tota l and by sector) between the Parties (for
each party):
• has the duties eliminated?
• has other regulations of commerce eliminated?
• is given concessions (rather than having duties etc. removed)?
• is excluded from the FTA (e.g. under Annex II)?
Industrial Products
In 1998 duty-free industrial imports of Lithuania from Poland accounted for
345,396 thousand dollars and constituted 97 per cent of Lithuania’s industrial imports from Poland.
The remaining industrial products in the trade between the Parties are subject to progressive
liberalization along the timetables as specified:
- with respect to imports from Lithuania to Poland in annexes B (automobiles), C and
C1 (fuels) and D (steel products), up to 1 January, 2002 at the latest,
- with respect to imports from Poland to Lithuania in annexes F (automobiles) and
G (fuels), up to 1 January, 2001 at the latest.
Agricultural Products
In 1998 duty-free agricultural imports from Lithuania to Poland accounted for
2,436 thousand dollars and constituted 29.94 per cent of Poland’s agricultural imports from Lithuania.
Imports on reduced customs duties (only ad valorem  rates) accounted for 6,409 thousand dollars and
constituted 65.6 per cent of Poland’s agricultural imports from Lithuania.  The rest of agricultural
imports was effected on MFN rates and accounted for 924 thousand dollars what constituted 9.5 percent of Poland’s agricultural imports from Lithuania.
In 1998 duty-free agricultural imports from Poland to Lithuania accounted for 20,521
thousand dollars and constituted 28 per cent of Lithuania’s agricultural imports from Poland.  Imports
on reduced tariff rates (only ad valorem ) accounted for 21.250 thousand dollars and constituted
29 per cent.  The rest of agricultural imports was effected on MFN rates and accounted for
21,250 thousand dollars what constituted 43 per cent of  Lithuania’s agricultural imports from Poland
Exceptions enumerated in Annex II,  paragraphs 1 and 2, are import prohibitions. It is not
possible to evaluate their trade impact.  Other import restrictions have not substantial impact onimports into Poland of goods originating in Lithuania which are covered by the Agreement.
Please confirm that when the Agreement is fully implemented, all tariff lines of
Chapters 25-97 will be duty free in respect of originating trade between the Parties.
When the Agreement is fully implemented, all tariff lines of HS Chapters 25-97 will be duty
free, except for seven 6-digit items from Chapter 35 which are treated as agricultural products (AnnexI) and are subject to MFN rates.WT/REG49/4/Add.1
Page 3
In respect of Chapters 1-24, please provide details on the concessions granted, that is the
percentage of trade (by value and tariff line) wh ich will be duty free and that will have tariff
preferences.
Seventy-five per cent of agricultural trade is covered by preferential treatment, out of which
60 per cent is duty free (Chapters 1, 5 , 7 , 8 ,12 and 15).
Grateful if the Parties could explain the reason for the exceptions under Articles 8-9 on
quantitative restrictions for Poland.
When the Agreement was signed, Poland applied erga omnes  on a number of products import
restrictions based on various provisions of Polish legislation.  Most of them have already beenabolished.  Those still being applied are linked to the legislation for protection of environment and
safety reasons.  They constitute also exceptions under Poland’s other FTA agreements.  They mainly
refer to the import prohibition of used motor cars (on the basis of GATT Article XX(b)), to be
eliminated by the year 2001, and import licensing for various tariff lines under HS 2710
(Petroleum oils) and under HS 2711 (Petroleum gases) twinned with the system of permits issued for
distribution of oils and gases,  until reasons justifying their existence cease to exist.
Export restrictions maintained by Poland, as enumerated in annex III, referred to in Article 9
of the Agreement, comprise at present:  7404 (copper waste and scrap), 7503 (nickel waste and scrap),
7602 ( aluminium waste and scrap), 7802 (lead wast e and scrap), 7902 ( zinc waste and scrap),
8002 (tin waste and scrap); measures applied erga omnes  annual quotas (GATT justification:
Article XI 2 (a)).
5. Safeguards
Can the Parties explain whether there is  any difference in practice between the
obligations under Articles 27, 28, 29 and 31 ( general safeguards/ structural adjustment/ re-
export and serious shortage/ safeguard procedu res) and the manner in which they will operate,
and the obligations of the Parties under the WTO?  Have any safeguard measures been taken
under these Articles?  If so, on what products, what was the measure for and for what duration?
Article 27 is foreseen to deal with situations arising from imports in such increased quantities
and under such conditions as to cause or threaten to cause serious injury to domestic producers or
serious disturbances in sectors of the economy or in the economic situation of a region.  Those
measures have no impact on the relations of the Parties to the Agreement with third-parties.
Article 28 foresees exceptional measures of limited duration which derogate from the
provisions concerning the elimination of customs duties between the Parties and may be applied with
respect to infant industries or sectors undergoing restructuring or facing serious difficulties,
particularly where these difficulties produce important social problems.  Those measures have no
impact on the relations of the Parties to the Agreement with third-parties.
Article 29 concerns measures which usually are applied on an erga omnes  basis.
Article 31 offers procedures to deal with problems specific to the FTA.The above mentioned Articles are not  in conflict with the provisions of the respective WTO
Agreements.  No measures under the above-mentioned Articles have been so far applied between the
Parties to the Agreement.WT/REG49/4/Add.1
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5.1 Balance of payments difficulties (Article 32)
Will BOP measures under Article 32 be applied in a non-discriminatory manner and
without prejudice to the interests of non-parties to this Agreement ?
The measures under Article 32, if applied, will be in conformity with the respective
provisions of the WTO Agreements.
5.2 Structural adjustment (Article 28)
Article 28 on structural adjustment makes provision for exceptional measures to be
taken concerning infant industries, or sector s undergoing restructuring or facing serious
difficulties.  How is it decided that exceptional measures can be taken?
Application of measures resulting from that Article is justified by the existence of the
situations referred to in it.
It is up to the Party facing such situation to decide on the implementation of measures along
the conditions set in that Article.  However such Pa rty is obliged to inform the Joint Committee of its
intentions and, at the request of the other Party, to hold consultations in the Joint Committee before
application of the measures.
5.4 Specific safeguards (Article 14)
The Agreement provides for "specific safeguards".  Are such safeguard measures
transitional in nature?  Specifically, can the Pa rties take such safeguard action at any time
(e. g., in the next 20 years) and is there any limit on how long such measures remain in force
(i.e. forever)?  Can such action be taken in respect of any agricultural product
(i.e. Chapters 1 24)?  What is the exact nature of the measure which Parties can take?  Can
similar measures be taken for industrial goods?
Until now no specific safeguards have been applied in the framework of the Agreement.
The Agreement does not set any limitation as for the duration of the measures taken.  It makes
reference to "serious disturbances" and "appropriate solution".  Pending such solution, the Party
concerned may take the measures it deems necessary.  It is not conclusive to speculate about any time
limits now.
Such safeguards are applied only to Parties to the Agreement.  Action may be taken with
respect to any agricultural product covered by the concessions granted under the Agreement.
They may take the form, for example, of a temporary suspension of preferential treatment.
Specific safeguards concern exclusively agricultural products falling under Chapter II of the
Agreement and cannot be applied to industrial goods.
Have any specific safeguards actions been taken under Article 14 on agricultural
products?
No actions of such nature have been taken so far.WT/REG49/4/Add.1
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7. Subsidies and State Aid
Under Article 23 on State Aid, have any measures been taken, and if so on which
products and what were the measures?  We note that the provisions of Article 23 do not apply
to agriculture products, and that therefore there is no limitation under the Agreement on the
use of state aid for agriculture.  What is th e reason that agriculture is excluded from the
provision of Article 23?
No measure has been taken under Article 23 until now.
Agriculture is excluded from the provision of Article 23 similarly to the respective article of
Europe Agreements.
Article 23 should be read however also in the context of:- Paragraph 1 of Article 13, which stipulates that the Agreement shall not restrict in any
way the pursuance of the respective agricultural policies of the Parties or theapplication of any measures under such policies, including the implementation of the
results of the Uruguay Round Agreements; and
- Article 14, on specific safeguards.
8. Sector-Specific Provisions
Under Article 12, the Parties shall examine the possibilities of granting further
concessions on agricultural products.  Do th e Parties have any plans for bringing further
agricultural products under FTA and reducing the rates to zero of those that are included intothe Agreement?
For the time being Poland does not have such plans.
Article 13 provides that the Joint Committee wi ll be notified of changes in agricultural
policies of the Parties, and that at the request of a Party consultations will be held to examine
the situation.  Have any consultations been held under this Article?
So far no such consultations have been held.
IV. OTHER PROVISIONS
Which products are currently subject to state monopolies (Article 20)?  This article
suggests that state monopolies might currently dis criminate in their commercial decisions.  Can
the Parties confirm that such monopolies operate in a manner consistent with GATT
Article XVII in their purchases from and sales to third countries?
There are no state monopolies of a commercial nature in Poland.
We acknowledge that competition policy (Article 22) is not covered in explicitly by
WTO rules.  However, certain aspects of competition are captured by various WTO rules andwe therefore would be grateful for comments on the following questions:
• What criteria are to be applied in asse ssing whether actions prevent, restrict or
distort competition?WT/REG49/4/Add.1
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• Whether actions by dominant undertakings constitute an abuse of their position.
• Are these considerations subject to specific legally-based processes?
Rules of competition referred to in Article 22 have been based on respective provisions of the
Europe Agreements.
Both Poland and Lithuania are associated with the EU on the basis of those Agreements.
When signing their Europe Agreements, both countries undertook to harmonize their respective
legislation with the acquis communautaire , in particular with the provisions set up by the Treaty of
Rome (in the case of anti-trust issues, Articles 85 and 86 thereof).
By virtue of the Act of 24 February 1990 (as further amended), "On counteracting
monopolistic practices", Polish competition law achieved a high level of approximation to the
provisions adopted by the European Community.  On 16 July 1996, the Association Council adopted"Implementing rules for the application of the co mpetition provisions applicable to undertakings" by
way of the Decision No. 1/96.
The criteria for assessing monopolistic practices, in line with the EU approach, are based on
the provisions of the said Act which also defines competence of the competition authority andprocedural rules for its actions and decisions.  The Act contains a list of prohibited competition
restricting agreements, defines cases of the abuse of a dominant market position and provides for
merger control.
The antimonopoly proceedings can be instituted ex officio  or upon a motion of the interested
Party.
The implementation of Article 22 does not discriminate the interests of non-parties to the
Agreement.  The Act is aimed at counteracting monopolistic practices and abuses of consumer
interests performed by entrepreneurs which cause or may cause effects within the territory of theRepublic of Poland.  Taking into consideration that the provisions of the Polish competition law do
not differentiate entrepreneurs depending on their nationality, any entrepreneur adversely affected by
their infringement is entitled to apply to the competition authority and its case will be assessed
pursuant to the provisions of the Polish competition law.
In case of Poland and Lithuania, their respective competition authorities, which are the Office
for Competition and Consumer Protection (in Po land) and the State Competition and Consumer
Protection Office of the Republic of Lithuania, have signed in 1996 an agreement defining rules of
their co-operation in competition and consumer protection issues.
Can the Parties give assurances that implementation of Article 22 does not discriminate
against interest of non-parties to the Agreement (p articularly given that it exempts agricultural
products which "form an integral part of a national market organization" from the provisions
stipulated in paragraph 1 (a) of this Article)?
The assurance is provided by Poland’s commitm ent to respect rules of competition developed
in the EU.
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