WTO Trade Policy Review of Croatia

Statement by Mr. David Shark,WTO-TPR
Chargé d’Affaires, a.i.

Geneva,
March 24, 2010

Thank you, Chair. The United States warmly welcomes the delegation of Croatia, led by Minister ?uro Popija?, on the occasion of the WTO’s first review of Croatia’s trade policy and practices. We want to commend both the WTO Secretariat, and the Government of the Republic of Croatia, for their diligent efforts in compiling a detailed analysis of Croatia’s key trade policy objectives and developments since joining the WTO on November 30, 2000. The reports provide a useful overview of Croatia’s trade policies and economic achievements. I would also like to thank our discussant, Ambassador Himanen, for his valuable contribution to this TPR. The United States looks forward to learning more about – and clarifying certain aspects of – Croatia’s trade policies during the course of this Review.

Croatia’s economic progress and steady pursuit of economic reform over the past decade – anchored in its drive to accede to both the WTO and the EU – have been impressive. GNI per capita has more than doubled from $5,170 since 2000, moving Croatia closer to its principal economic development objective: achieving 75% of the EU’s average per capita income by 2013. Remarkably, it currently stands within striking distance of this goal at around 63%. Notably, the World Bank classified Croatia as a high-income country, with a GNI per capita of $13,570 in 2008.

While this growth has narrowed recently, with GDP slowing to 2.4% in 2008 and shrinking by nearly 6 percent in 2009, these earlier reforms, as long as they are maintained and enhanced, should help position Croatia to resume steady growth by the end of 2010.

The United States and Croatia share a strong bilateral political and economic partnership. Bilateral trade amounted to $455 million in 2009; U.S. goods exports to Croatia were $203 million and U.S. goods imports were $252 million. The stock of U.S. FDI in Croatia is valued at $75 million. From 1992-2008, Croatia benefited from U.S. Agency for International Development technical assistance programs worth more than US$320 million.

This brings me to another indicator of Croatia’s progress. Croatia has been one of the heaviest users of the U.S. Generalized System of Preferences (GSP) program in the Southeastern European region, exporting $69.7 million in goods to the United States under the GSP program in 2008. However Croatia’s economic reforms and rapid development have resulted in the country’s graduation from the GSP program, effective January 1, 2011. We view this as immensely positive because it means that Croatia’s exports are able to compete effectively in the U.S. market. As a result, we are confident that our bilateral trade relations will remain strong and continue to mature.

Croatia’s WTO membership has helped pave the way for its successful integration into European and global markets – making it a regional economic success story. The country has pursued a strategy of trade liberalization at the bilateral and regional levels, as well, negotiating free trade agreements with Turkey, the European Free Trade Association (EFTA) countries and accession to the 2006 Central European Free Trade Agreement (CEFTA). These agreements have contributed to the expansion of export markets – and a concomitant increase in the efficiency and competitiveness of Croatian firms – with resultant positive impact on overall economic growth.

Furthermore, Croatia’s new political and economic dynamism is moving it into a leadership position in Southeastern Europe on development issues, as it transitions from an aid-recipient to a net donor country. The WTO Secretariat reports that Croatia has been “providing development assistance to Bosnia and Herzegovina in the areas of reconstruction, health, and education” and that Croatia also has made significant contributions to the UN, international organizations and peacekeeping operations, as well as civil society organizations.

We note that Croatia has entered into the final stage of its accession negotiations with the EU and could conceivably become an EU Member State by the beginning of 2012. The United States remains firm in its support of this process, which will reinforce Croatia’s political stability and economic growth.

While Croatia has demonstrated its serious commitment to open trade and economic liberalization, the United States continues to have some concerns. For example, we are seeking clarification of certain aspects of Croatian trade policies and legislation related to its EU accession, including issues regarding agriculture, intellectual property, anti-dumping and countervailing duties, safeguards, and subsidies, among others. The written questions that the United States submitted in the context of this TPR address these and other questions and concerns, and we will examine Croatia’s responses with great interest.

With respect to the EU accession process, the United States would appreciate more information on the extent to which Croatia has adopted or harmonized with EU technical and sanitary and phytosanitary regulations affecting imports, including whether Codex, OIE and IPPC standards have been fully taken into account.

Additionally, we have a decided interest in Croatia’s new Act on the Regulation of Agricultural Products Market that was adopted in December 2009. We understand that its purpose is to harmonize with EU requirements. Therefore, we look forward to an explanation of the impact the government expects the new Act to have on Croatia’s global trade in agriculture, including when the law will be implemented and how the government plans to factor in Croatia’s WTO obligations.

There are certain operational and implementation aspects of Croatia’s Free Zone Act and some programs maintained by the Croatian Bank for Reconstruction and Development which are of interest to us. We have asked Croatia to clarify these in light of its obligations under the WTO Subsidies Agreement.

And, while we have several questions regarding Croatia’s IPR regime, today, we would highlight the government’s treatment of pre-existing trademarks under the Act on Geographical Indications and Designations of Origin of Products and Services. In this regard, we have asked Croatia to clarify the conditions under which a trademark owner can oppose and cancel a geographical indication or designation of origin if it is likely to be confused with the prior trademark. We are also interested in how this issue is being treated in Croatia’s EU accession deliberations.

Come November 2010, as Croatia celebrates its decade of participation in the WTO, the government can look proudly upon the nation’s economic transformation and the role that its active participation in this organization has played. Opening the economy to trade and investment within the context of the WTO’s rules and obligations has contributed significantly to Croatia’s growth and global competitiveness. We would like to recognize Croatia for its support for initiating the Doha Round from the outset, and the work your government continues to undertake as an active WTO Member. I would like to emphasize that we continue to value our work with Croatia’s government and our WTO partners to strengthen and build on the WTO’s rules-based system and to achieve a market-opening conclusion to the Doha Round.

The United States appreciates this opportunity to comment on Croatia’s achievements in economic liberalization and trade policy. Croatia’s efforts to date to strengthen its domestic institutions, harmonize trade regulations, and facilitate regional and international trade are truly admirable. The United Sates fully supports Croatia’s continued progress.

Thank you for your attention.