FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF ALBANIA AND THE REPUBLIC OF CROATIA

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 Albania and the Republic of Croatia (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;

HAVING regard to the experience gained from the co-operation developed between the Parties to this Agreement as well as between them and their main trading partners;

DECLARING their readiness to undertake activities with a view to promoting harmonious development of their trade as well as to 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 Organisation (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;

CONSIDERING that no provision of this Agreement may be interpreted as exempting the Contracting Parties from their obligations under other international agreements.

HAVE DECIDED, in pursuance of these objectives, to conclude the following Agreement (hereinafter referred to as "this Agreement").

ARTICLE 1Objectives

1. The Parties shall gradually establish a free trade area in a transitional period of six years, starting from the entry into force of this Agreement, in accordance with the provisions of this Agreement and in conformity with the definition, set out in Article XXIV of the GATT 1994 and the Agreement establishing WTO on substantially all their bilateral trade.

2. The objectives of this Agreement are:

a) to increase and enhance the economic co-operation between the Parties and to raise the standard of living of the population of the two countries,

b) to gradually eliminate restrictions on trade in goods,

c) to provide fair conditions of competition in trade between the Parties,

d) to contribute in this way, by the removal of barriers to trade, to the harmonious development and expansion of world trade,

e) to create conditions for further promotion of investments, particularly for the development of joint investment in both countries,

f) to promote trade and co-operation of the Parties on third countries’ markets.

ARTICLE 2Basic Duties

1. In the trade between the Parties covered by this Agreement, the Parties shall apply their respective Customs Tariffs on the classification of goods for imports into them.

2. For each product the basic duty to which successive reductions set out in this Agreement are to be applied shall be the Most Favoured Nation (MFN) rate of duty in force on the date of entry into force of this Agreement.

3. 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 basic duties referred to in paragraph 2 as from that date when such reductions are applied.

4. The reduced duties, calculated in accordance with paragraph 2, shall be rounded without decimal numbers, in accordance with arithmetical rules. This, decimal additions from 0.1 - 0.4 should be avoided, while decimal 0.5 - 0.9 shall increase the principal by 1.

5. The Parties shall communicate to each other their respective basic duties.

CHAPTER I INDUSTRIAL PRODUCTS

ARTICLE 3Scope

1. The provisions of this Chapter shall apply to industrial products, originating in one of the Parties.

2. For the purpose of this Agreement, the term “industrial products” means products, falling within Chapters 25 to 97 of Harmonised Commodity Description and Coding System with the exception of the products, listed in Annex I to this Agreement.

ARTICLE 4Customs Duties on Imports and Charges Having Equivalent Effect

1. From the date of entry into force of this Agreement no new customs duties on imports or charges having equivalent effect shall be introduced, nor shall those already applied be increased in trade between the Parties.

2. Customs duties on imports into the Republic of Albania of products originating in the Republic of Croatia other than those specified in Annex II shall be abolished upon the entry into force of this Agreement.

3. Customs duties on imports into the Republic of Croatia of products originating in the Republic of Albania other than those specified in Annex III shall be abolished upon the entry into force of this Agreement.

ARTICLE 5Fiscal Duties

The provisions of Article 4 shall also apply to customs duties of a fiscal nature.

ARTICLE 6Customs Duties on Exports and Charges Having Equivalent Effect

1. No new customs duties on exports or charges having equivalent effect shall be introduced in trade between the Parties as from the date of entry into force of this Agreement.

2. On the date of entry into force of this Agreement, the Parties shall abolish all customs duties on exports and charges having equivalent effect between them.

ARTICLE 7Quantitative Restrictions on Exports and Imports and Measures Having Equivalent Effect

1. No new quantitative restrictions on exports and imports or measures, having equivalent effect, shall be introduced nor shall the existing be made more restrictive in the trade between the Parties as from the date of entry into force of this Agreement.

2. All quantitative restrictions on exports and imports from the Parties and measures having equivalent effect shall be abolished on the date of entry into force of this Agreement.

ARTICLE 8Technical Barriers to Trade

1. The rights and obligations of the Parties, relating to technical barriers to trade (tehnical regulations, standards and conformity assessment procedures) and the respective measures, shall be governed by the WTO Agreement on Technical Barriers to Trade.

2. The Parties shall cooperate and exchange information in the field of standardisation, metrology, conformity assessment and accreditation, with the aim of eliminating technical barriers to trade.

3. Each Party, upon a request from the other Party, shall submit information on particular individual cases of standards, technical rules or similar measures.

4. The Parties will, where appropriate, enter into negotiations for the conclusion of agreements on 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 PRODUCTS

ARTICLE 9Scope

1. The provisions of this Chapter shall apply to agricultural products originating in the Parties.

2. For the purpose of this Agreement the term “agricultural products“ means the products falling within Chapters 1 to 24 of the Harmonised Commodity Description and Coding System, including the products listed in Annex I to this Agreement.

ARTICLE 10Exchange of Concessions

1. The Parties shall grant each other the concessions specified in Protocol 1 to this Agreement (hereinafter “Protocol 1") as laid down in that Protocol and in accordance with the provisions of this Chapter.

2. Taking account of: - the role of agriculture in their economies, - the development of trade in agricultural products between the Parties, - the particular sensitivity of the agricultural products, - the rules of their agricultural policies, - the results of the multilateral trade negotiations under the WTO. the Parties shall examine within the framework of the Joint Committee referred in Article 33 to this Agreement (hereinafter „Joint Committee”) the possibilities of granting each other further concessions in trade in agricultural products.

ARTICLE 11Quntitative Restrictions on Exports and Measures Having Equivalent Effect

1. No new quantitative restrictions on exports or measures, having equivalent effect, shall be introduced nor shall the existing be made more restrictive in the trade between the Parties from the date of entry into force of this Agreement.

2. All quantitative restrictions on exports from the Parties and measures, having equivalent effect, shall be abolished on the date of entry into force of this Agreement.

ARTICLE 12Concessions and Agricultural Policies

1. Without prejudice to the concessions granted under Article 10 to this Agreement the provisions of this Chapter shall not restrict in any way the pursuance of the respective agricultural policies of the Parties or the taking of any measures under such policies, including the implementation of the respective provisions under the WTO.

2. The Parties shall notify to the Joint Committee changes in their respective agricultural policies pursued or measures applied, which may affect the conditions of trade in agricultural products between them as provided for in this Agreement. On the request of any Party, prompt consultations shall be held to examine the situation.

ARTICLE 13Specific Safeguards

Notwithstanding other provisions of this Agreement, and in particular Article 19 to this Agreement, and given the particular sensitivity of the agricultural products, if imports of products originating in a Party, which are subject to concessions granted under this Agreement, cause serious disturbances to the markets of the other Party, the Party concerned shall immediately enter into consultations to find an appropriate solution.

Pending such solution, the Party concerned may take the measures it deems necessary.

The type and duration of the measure should not go beyond what is strictly necessary to remedy the situation.

ARTICLE 14Sanitary and Phytosanitary Measures

1. The Parties shall apply their regulations in sanitary and phytosanitary matters in a non-discriminatory fashion and shall not introduce any measures that have the effect of unduly obstructing trade.

2. The veterino-sanitary measures and the work of the veterinary services will be in accordance with international conventions in this field.

3. The phytosanitary measures and the work of the plant protection service will be in accordance with international conventions in this field.

CHAPTER III GENERAL PROVISIONS

ARTICLE 15Internal Taxation

1. The Parties shall refrain from any measures or practices of internal fiscal nature establishing, whether directly or indirectly, discrimination against products originating in the Parties.

2. Products exported to territory of the Parties shall not benefit from repayment of internal taxes in excess of the amount of indirect taxes imposed on them.

ARTICLE 16Customs Unions, Free Trade Areas and Frontier Trade

1. This Agreement shall not prevent the maintenance or establishment of customs unions, free trade areas or frontier trade arrangements to the extent that these do not negatively affect the trade regime of the Parties and in particular the provisions, concerning rules of origin, provided for in this Agreement.

2. Upon request the Parties shall inform each other of any agreement establishing customs union or free trade areas.

ARTICLE 17Structural Adjustment

1. Exceptional measures of limited duration, derogating from the provisions of Article 4, may be taken by any of 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 concerned 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 product, subject to these measures, may not exceed 15% of total imports of industrial products from the other Party, as defined in Article 4, during the last year for which statistical data is available.

4. The Party concerned shall inform the Joint Committee of any exceptional measures it intends to take and, upon request of the other Party, consultations shall be held within the Joint Committee on such measures and the sectors to which they apply, before they are applied. When taking such measures, the Party concerned 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 upon a different schedule.

ARTICLE 18Antidumping and Countervailing Measures

Nothing in this Agreement shall prejudice or affect in any way the taking, by either Party of anti-dumping or countervailing measures in accordance with the Agreement on Implementation of Article VI of the GATT 1994 and the Agreement on Subsides and Countervailing Measures.

ARTICLE 19General Safeguards

Where any product is being imported into either of the Parties in such increased quantities and under such conditions as to cause or threaten to cause:

a) serious injuries to domestic producers of a like or directly competitive products in the territory of the importing Party, or

b) serious disturbances to any related 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 procedure, laid down in Article 22.

ARTICLE 20Re-export and Serious Shortage

1. Where compliance with the provisions of Articles 6 and 7 leads to:

a) re-export towards a third country against which the exporting Parties 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.

2. Measures, taken as a result of the situation referred to in paragraph 1, shall be applied in a non-discriminatory manner and be eliminated when conditions no longer justify their maintenance.

ARTICLE 21State Monopolies

1. The Parties shall adjust progressively any state monopoly of a commercial character so as to ensure that by the date of entry into force of this Agreement, no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Parties.

2. The Joint Committee shall be informed about the measures adopted to implement this objective.

ARTICLE 22Procedure for the Application of Safeguard Measures

1. Before initiating the procedure for the application of safeguard measures, set out in the following paragraphs of this Article, the Parties shall endeavor to solve any differences between them through direct consultations.

2. If a Party subjects imports of products, liable to give rise to the situation, referred to in Article 19, to an administrative procedure, the purpose of which is the rapid provision of information on the trend of trade flows, it shall inform the other Party.

3. Without prejudice to paragraph 7 of this Article a Party which considers resorting to safeguard measures shall promptly notify the other Party thereof and supply all relevant information. Consultations between the Parties shall take place without delay in the Joint Committee with a view to finding a mutually acceptable solution.

4. (a) As regard Articles 18, 19 and 20 to this Agreement, the Joint Committee shall examine the case of the situation and may take any decision needed to put an end to the difficulties notified by the Party concerned. In the case of the absence of such decision within thirty days of the matter being referred to the Joint Committee, the Party concerned may adopt the measures necessary in order to remedy the situation,

(b) As regard Article 36 to this Agreement, the Party concerned may take appropriate measures after the consultations have been concluded or after a period of three months has elapsed from the date of the first notification to the other Party,

(c) As regards Article 27 and 28 to this Agreement, the Party concerned shall give the Joint Committee all the assistance required in order to examine the case and, where appropriate, eliminate the practice objected to. If the other Party fails to put an end to the practice objected to within the period fixed by the Joint Committee, or if the Joint Committee fails to reach an agreement within thirty working days on the matter, being referred to it, the Party concerned may adopt appropriate such measures to deal with the difficulties, resulting from the practice in question.

5. The safeguard measures taken shall be notified immediately to the Party. They shall be limited, with regard to their extent and to their duration, to what is strictly necessary to remedy the situation, giving rise to their application and shall not be in excess of the injury, 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.

6. The safeguard measures taken shall be an object of periodic consultations within the Joint Committee with a view to their relaxation or abolition when conditions no longer justify their maintenance.

7. Where exceptional circumstances, requiring immediate action, make prior examination impossible, the Party concerned may, in the cases of Articles 18, 19 and 20 to this Agreement, apply forthwith the provisional measures, strictly necessary to remedy the situation. The measures shall be notified without delay and consultations between the Parties shall take place as soon as possible within the Joint Committee.

ARTICLE 23General 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 and environment; the protection of national treasures possessing artistic, historic or archeological value; the protection of intellectual property or rules, relating to gold or silver or the conservation of exhaustible natural resources, if such measures are made effective in conjunction with restrictions on domestic production or consumption. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.

ARTICLE 24Rules of Origin and Co-operation in Customs Administration

1. Protocol 2 of this Agreement lays down the rules of origin and related methods of administrative co-operation.

2. The Parties shall take appropriate measures, including regular reviews in the Joint Committee, and arrangements for administrative co-operation, to ensure that the provisions of Protocol 2 and Articles 2 to 8, 12, 15 and paragraf 1 of Article 16 of this Agreement are effectively and harmoniously applied, and to reduce, as far as possible, the formalities, imposed on trade, and to achieve mutually satisfactory solutions to any difficulties, arising from the operation of those provision.

ARTICLE 25Restriction Authorised

Both Parties agree to co-operate to reduce the potential for fraud in the application of the trade provisions of this Agreement.

Notwithstanding other provisions of this Agreement, and in particular Articles 13, 19 and 25 Protocol 2, where one Party finds that there is sufficient evidence of fraud such as a significant increase in trade of products by one Party to the other Party, beyond the level reflecting economic conditions such as normal production and exports capacities, or failure to provide administrative co-operation as required for the verification of evidence of origin by the other Party, both Parties shall enter into consultations immediately to find an appropriate solution. Pending such solution, the Party concerned may take the appropriate measures it deems necessary. In the selection of the measures priority must be given to those which least disturb the functioning of the arrangements established in this Agreement.

ARTICLE 26Payments

Any payment arising from trade of goods, services and rights to non material goods between the Parties shall be made in convertible currency, in accordance with the respective national legislation of the Parties.

ARTICLE 27Rules 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 territories of the Parties 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 to this Agreement 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 of this Agreement.

ARTICLE 28State Aid

1. Any aid granted by a Party or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring 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 covered by Chapter II to this Agreement.

3. The Parties shall ensure transparency in the area of state aid, inter alia, by reporting annually to the Joint Committee on the total amount and the distribution of the aid given and by providing to the other Party, upon request, 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, or − 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 of and in accordance with the provisions laid down in Article 22 of this Agreement.

Such appropriate measures may only be taken in conformity with the procedures and under the conditions laid down by the Agreement establishing WTO, particularly the GATT 1994 and any other relevant instrument negotiated under their auspices, which are applicable between the Parties.

ARTICLE 29Balance of Payments Difficulties

Where one of the Parties is in serious balance of payments difficulties, or under imminent threat thereof, the Party concerned may, in accordance with the conditions established under the GATT 1994 and Article VIII of the Articles of Agreement of the International Monetary Fund, adopt restrictive measures, including measures related to imports, which shall be of limited duration and may not go beyond what is necessary to remedy the balance of payments situation. The measures shall be progressively relaxed as balance of payments conditions improve and they shall be eliminated when conditions no longer justify their maintenance. The Party concerned shall inform the other Party forthwith of their introduction and, whenever practicable, of a time schedule for their removal.

ARTICLE 30Intellectual Property Rights

1. The Parties shall grant and ensure adequate and effective protection of intellectual property rights on a non-discriminatory basis, including effective measures for enforcing such rights against infringement, and particularly against counterfeiting and piracy. Parties agree to comply with the substantive standards of the multilateral agreements listed in Annex IV.

2. For the purpose of this Agreement the term "intellectual property" refers to: protection of copyright and related rights, including computer programs and databases, the rights of inventors, design creators, the patent rights and inventions or utility models, trade marks, industrial designs and topographies of integrated circuits, geographical indications including mark of origin, as well as undisclosed information including “know-how”.

3. In fulfilment of their commitments under international agreements and legislation in the field of intellectual property rights, the Parties to this Agreement shall not grant to nationals of the state of the other Party treatment less favourable than that accorded to nationals of any third state.

4. The Parties shall co-operate in matters of intellectual property. Upon request of a Party, they shall hold expert consultations on these matters, in particular on activities relating to the existing or to future international conventions concerning the harmonisation, administration and enforcement of intellectual property and on activities in international organisations, such as the WTO, World Intellectual Property Organisation, as well as on the relations of the Parties with any third country on intellectual property matters.

5. The implementation of this article shall be regularly assessed by the Parties.

Upon difficulties in trade in relation with the rights of intellectual property, any of the Parties may request urgent consultations for finding mutually satisfactory solution.

ARTICLE 31Public Procurement

1. The Parties consider the liberalization of their respective public procurement markets as an objective of this Agreement. The Parties aim at opening up of the award of public procurement on the basis of non-discrimination and reciprocity.

2. The Parties will progressively develop their respective rules, conditions and practices on public procurement and shall grant suppliers of the other Party access to contract award procedures on their respective public procurement markets not less favourable than that accorded to companies of any third country.

3. The Joint Committee shall examine developments related to the achievement of the objectives of this Article and may recommend practical modalities of implementing the provisions of paragraph 2 so as to ensure free access, transparency and full balance of rights and obligations. During the examination referred to this paragraph from this article, the Joint Committee may consider, especially in the light of international regulations in this area, the possibility of extending the coverage and/or the degree of the market opening provided for in paragraph 2.

4. The Parties shall endeavour to accede to the relevant Agreements negotiated under the auspices of the GATT 1994 and the Agreement establishing the WTO.

ARTICLE 32Services and Investment

1. The Parties to this Agreement recognise 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 liberalisation and mutual opening of their markets for investments and trade in services, taking into account relevant provisions of the General Agreement on Trade and Services.

2. The Parties will discuss in the Joint Committee this co-operation with the aim of developing and deepening of their relations governed in this Article.

CHAPTER IV INSTITUTIONAL AND FINAL PROVISIONS

ARTICLE 33The Joint Committee

1. A Joint Committee is hereby established and shall be composed of representatives of the Parties.

2. The implementation of this Agreement shall be supervised and administered by the Joint Committee.

3. For the purpose of the proper implementation of this Agreement, the Parties shall exchange information and, at the request of any Party, shall hold consultations within the Joint Committee. The Committee shall keep under review the possibility of further removal of the obstacles to trade between the Parties.

4. The Joint Committee may take decisions in cases provided for in this Agreement. On other matters the Committee may make recommendations.

ARTICLE 34Procedures of the Joint Committee

1. For the proper implementation of this Agreement, the Joint Committee shall meet whenever necessary, but at least once a year. Each Party may request that a meeting to be held.

2. The Joint Committee shall act by consensus.

3. If a representative in the Joint Committee of a Party has accepted a decision, subject to the fulfilment of internal legal requirements, the decision shall enter into force, if no later date is contained therein, on the date of receipt of the written notification about the fulfilment of such requirements.

4. For the purpose of this Agreement the Joint Committee shall adopt its rules of procedure which shall, inter alia, contain provisions for convening meetings and for the designation of the Chair person and its term of office.

5. 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 35Security Exceptions

Nothing in this Agreement shall prevent a Party from taking any measures which it considers necessary:

a) to prevent the disclosure of information contrary to its essential security interests;

b) for the protection of its 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, provided that such measures do not impair the conditions of competition in respect of products not intended for specifically military purposes, 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) taken in time of war or other serious international tension, constituting threat of war.

ARTICLE 36Fulfillment of Obligations

1. The Parties shall take all necessary measures to ensure the achievement of the objectives and the fulfilment of the obligations under this Agreement.

2. If any Party considers that the other Party has failed to fulfil 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.

ARTICLE 37Evolutionary Clause

1. Where a Party considers that it would be useful in the interest of the economies of the Parties to develop and deepen 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 such 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 will be subject to ratification or approval by the Parties in accordance with their national legislation.

ARTICLE 38Amendments

Amendments to this Agreement other than those decided upon in accordance with paragraph 3 of Article 34, and which are approved by the Joint Committee, shall enter into force on the date of a receipt of the later diplomatic note, confirming that all procedures required by the national legislation of each Party for entry into force of the amendments have been completed.

ARTICLE 39Annexes and Protocols

1. Annexes and Protocols to this Agreement are an integral part of it.

2. The Joint Committee may decide to amend the Annexes and Protocols to this Agreement in accordance with the provisions of paragraph 2 of Article 34.

3. In this case the amendments shall enter into force on the date of a receipt of the last written notification through diplomatic channels confirming that the internal legal requirements for the entry into force of the amendments have been fulfilled.

ARTICLE 40Duration and Denounciation

1. This Agreement is concluded for an indefinite period of time.

2. Each Party may denounce this Agreement by a written notification through diplomatic channels to the other Party. The denunciation shall enter into force on the first day of the seventh month after the date of receipt the notification of denunciation.

3. The Parties agree that in the event of any Party becoming a member of the European Union, that Party will withdraw from this Agreement at the latest the day before membership takes effect and without any compensation to the other Party subject to the altered conditions of trade.

ARTICLE 41Entry into force

This Agreement is subject to ratification. It shall enter into force on the first day of the second month following the date of the receipt of the last written notification by which Parties inform each other through diplomatic channels that all necessary requirements foreseen by their internal legislation for the entry into force of this Agreement have been fulfilled.

IN WITNESS WHEREOF the undersigned plenipotentiaries, being duly authorised thereto, have signed the present Agreement.

DONE atthisday of2002 in two originals each in the Albanian, Croatian and English languages, all three texts being equally authentic. In case of divergence in interpretation the English text shall prevail.

For the Republic of Albania For the Republic of Croatia

ANNEX IV

(referred to in paragraph 1 of Article 24) PROTECTION OF INTELLECTUAL PROPERTY

1. Paragraph 1 of Article 24 concerns the following multilateral conventions:

- WTO Agreement on Trade Related Aspects of Intellectual Property Rights of 15 April 1994 (TRIPS Agreement);

- International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations of 26 October 1961 (Rome Convention);

- Nice Agreement concerning the International Classification of Goods and Services for the purposes of the Registration of Marks (Geneva, 1977 and amended in 1979);

- Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the purpose of Patent Procedures (Budapest, 1977);

- International Convention for the Protection of New Varieties of Plants (UPOV, Geneva Act, 1991).

The Joint Committee may decide that the paragraph 1 of Article 24 shall apply to other multilateral conventions.

2. The Contracting Parties confirm the importance they attach to the obligations arising from the following multilateral conventions:

- Bern Convention for the Protection of Literary and Artistic Works of 9 September 1971 (Paris Act, 1971);

- Paris Convention for the Protection of Industrial Property of 20 March 1996 (Stockholm Act, 1967 and amended in 1979);

- Patent Co-operation Treaty (Washington, 1970, amended in 1979 and modified in 1984).

PROTOCOL 1

(referred to in Article 10) EXCHANGE OF AGRICULTURAL CONCESSIONS BETWEEN THE REPUBLIC OF CROATIA AND THE REPUBLIC OF ALBANIA

1. The products originating in the Republic of Croatia listed in Annex A to this Protocol shall be imported into the Republic of Albania at zero duty within the quotas specified in this Annex.

2. The products originating in the Republic of Albania listed in Annex B to this Protocol shall be imported into the Republic of Croatia at zero duty within the quotas specified in this Annex.

PROTOCOL 2

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 Bilateral cumulation

Article 4 (this Protocol does not contain Article 4)

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 (this Protocol does not contain TITLE IV)

Article 15 (this Protocol does not contain Article 15)

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 Sub-Committee on customs and origin matters

Article 37 Annexes

Article 38 Goods in transit and 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

Annex V: Continuation of the implementation of the harmonized preferential rules of origin

TITLE I GENERAL PROVISIONS

Article 1Definitions

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 1994 Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (WTO Agreement on customs valuation);

(f) "ex-works price" means the price paid for the product ex works to the manufacturer in the contracting Party 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 the contracting Party;

(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 contracting Party or, where the customs value is not known or cannot be ascertained, the first ascertainable price paid for the materials in one of the contracting Parties;

(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;

(n) “euro” means the single currency of the European Monetary Union.

TITLE II

DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS"

Article 2General requirements

For the purpose of implementing this Agreement, the following products shall be considered as originating in a contracting Party:

(a) products wholly obtained in a contracting Party within the meaning of Article 5;

(b) products obtained in a contracting Party incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in that contracting Party within the meaning of Article 6.

Article 3Bilateral cumulation of origin

Materials originating in an importing contracting Party shall be considered as materials originating in the exporting contracting Party when incorporated into a product obtained there. It shall not be necessary that such materials have undergone sufficient working or processing, provided that they have undergone working or processing going beyond that referred to in Article 7 (1).

Article 4(this Protocol does not contain Article 4)

Article 5Wholly obtained products

1. The following shall be considered as wholly obtained in the contracting Party:

(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 the contracting Party 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 a contracting Party;

(b) which sail under the flag of a contracting Party;

(c) which are owned to an extent of at least 50 per cent by nationals of the contracting Party, 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 the contracting Parties 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 the contracting Parties; and

(e) of which at least 75 per cent of the crew are nationals of the contracting Parties.

Article 6Sufficiently 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 7Insufficient 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 in a contracting Party 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 8Unit 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 9Accessories, 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 10Sets

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 11Neutral 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 12Principle of territoriality

1. Except as provided for in Article 3 and paragraph 3 of this Article, the conditions for acquiring originating status set out in Title II must be fulfilled without interruption in a contracting Party.

2. Except as provided for in Article 3, where originating goods exported from one of the contracting Parties 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 the contracting Parties on materials exported from one of the contracting Parties and subsequently re-imported there, provided:

(a) the said materials are wholly obtained in one of the contracting Parties 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 the contracting Parties 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 the contracting Parties. 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 the contracting Parties 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 the contracting Parties, 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 the contracting Parties shall be done under the outward processing arrangements, or similar arrangements.

Article 13Direct 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 the contracting Parties.

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 the contracting Parties.

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 14Exhibitions

1. Originating products, sent for exhibition in a country outside the contracting Parties and sold after the exhibition for importation in a contracting Party 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 a contracting Party 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 a contracting Party;

(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

(this Protocol does not contain TITLE IV)

Article 15(this Protocol does not contain Article 15)

TITLE V PROOF OF ORIGIN

Article 16General requirements

1. Products originating in a contracting Party shall, on importation into the other contracting Party benefit from the Agreement upon submission of either:

(a) a movement certificate EUR.1, a specimen of which appears in Annex III; or

(b) in the cases specified in Article 21(1), a declaration, subsequently referred to as the "invoice declaration", given by the exporter on an invoice, a delivery note or any other commercial document which describes the products concerned in sufficient detail to enable them to be identified; the text of the invoice declaration appears in Annex IV.

2. Notwithstanding paragraph 1, originating products within the meaning of this Protocol shall, in the cases specified in Article 26, benefit from the Agreement without it being necessary to submit any of the documents referred to above.

Article 17Procedure for the issue of a movement certificate EUR.1

1. A movement certificate EUR.1 shall be issued by the customs authorities of the exporting country on application having been made in writing by the exporter or, under the exporter's responsibility, by his authorised representative.

2. For this purpose, the exporter or his authorised representative shall fill out both the movement certificate EUR.1 and the application form, specimens of which appear in Annex III. These forms shall be completed in one of the languages in which this Agreement is drawn up and in accordance with the provisions of the domestic law of the exporting country. If they are hand-written, they shall be completed in ink in printed characters. The description of the products must be given in the box reserved for this purpose without leaving any blank lines. Where the box is not completely filled, a horizontal line must be drawn below the last line of the description, the empty space being crossed through.

3. The exporter applying for the issue of a movement certificate EUR.1 shall be prepared to submit at any time, at the request of the customs authorities of the exporting country where the movement certificate EUR.1 is issued, all appropriate documents proving the originating status of the products concerned as well as the fulfilment of the other requirements of this Protocol.

4. A movement certificate EUR.1 shall be issued by the customs authorities of a contracting Party if the products concerned can be considered as products originating in one of the contracting Parties and fulfil the other requirements of this Protocol.

5. The customs authorities issuing movement certificates EUR.1 shall take any steps necessary to verify the originating status of the products and the fulfilment of the other requirements of this Protocol. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check considered appropriate. They shall also ensure that the forms referred to in paragraph 2 are duly completed. In particular, they shall check whether the space reserved for the description of the products has been completed in such a manner as to exclude all possibility of fraudulent additions.

6. The date of issue of the movement certificate EUR.1 shall be indicated in Box 11 of the certificate.

7. A movement certificate EUR.1 shall be issued by the customs authorities and made available to the exporter as soon as actual exportation has been effected or ensured.

Article 18Movement certificates EUR.1 issued retrospectively

1. Notwithstanding Article 17(7), a movement certificate EUR.1 may exceptionally be issued after exportation of the products to which it relates if:

(a) it was not issued at the time of exportation because of errors or involuntary omissions or special circumstances;

or

(b) it is demonstrated to the satisfaction of the customs authorities that a movement certificate EUR.1 was issued but was not accepted at importation for technical reasons.

2. For the implementation of paragraph 1, the exporter must indicate in his application the place and date of exportation of the products to which the movement certificate EUR.1 relates, and state the reasons for his request.

3. The customs authorities may issue a movement certificate EUR.1 retrospectively only after verifying that the information supplied in the exporter's application agrees with that in the corresponding file.

4. Movement certificates EUR.1 issued retrospectively must be endorsed with one of the following phrases:

EN "ISSUED RETROSPECTIVELY", HR "NAKNADNO IZDANO", SQ "LËSHUAR APOSTERIORI".

5. The endorsement referred to in paragraph 4 shall be inserted in the "Remarks" box of the movement certificate EUR.1.

Article 19Issue of a duplicate movement certificate EUR.1

1. In the event of theft, loss or destruction of a movement certificate EUR.1, the exporter may apply to the customs authorities, which issued it for a duplicate made out on the basis of the export documents in their possession.

2. The duplicate issued in this way must be endorsed with one of the following words:

EN "DUPLICATE"

HR "DUPLIKAT"

SQ "DUPLIKATË",

3. The endorsement referred to in paragraph 2 shall be inserted in the "Remarks" box of the duplicate movement certificate EUR.1.

4. The duplicate, which must bear the date of issue of the original movement certificate EUR.1, shall take effect as from that date.

Article 20Issue of movement certificates EUR.1 on the basis of a proof of origin issued or made out previously

When originating products are placed under the control of a customs office in a contracting Party, it shall be possible to replace the original proof of origin by one or more movement certificates EUR.1 for the purpose of sending all or some of these products elsewhere within a contracting Party. The replacement movement certificate(s) EUR.1 shall be issued by the customs office under whose control the products are placed.

Article 20aAccounting segregation

1. Where considerable cost or material difficulties arise in keeping separate stocks of originating and non-originating materials, which are identical and interchangeable, the customs authorities may, at the written request of those concerned, authorise the so-called "accounting segregation" method to be used for managing such stocks.

2. This method must be able to ensure that, for a specific reference-period, the number of products obtained which could be considered as "originating" is the same as that which would have been obtained if there had been physical segregation of the stocks.

3. The customs authorities may grant such authorisation, subject to any conditions deemed appropriate.

4. This method is recorded and applied on the basis of the general accounting principles applicable in the country where the product was manufactured.

5. The beneficiary of this facilitation may issue or apply for proofs of origin, as the case may be, for the quantity of products, which may be considered as originating. At the request of the customs authorities, the beneficiary shall provide a statement of how the quantities have been managed.

6. The customs authorities shall monitor the use made of the authorisation and may withdraw it at any time whenever the beneficiary makes improper use of the authorisation in any manner whatsoever or fails to fulfil any of the other conditions laid down in this Protocol.

Article 21Conditions for making out an invoice declaration

1. An invoice declaration as referred to in Article 16(1)(b) may be made out:

(a) by an approved exporter within the meaning of Article 22, or

(b) by any exporter for any consignment consisting of one or more packages containing originating products whose total value does not exceed EUR 6,000.

2. An invoice declaration may be made out if the products concerned can be considered as products originating in a contracting Party and fulfil the other requirements of this Protocol.

3. The exporter making out an invoice declaration shall be prepared to submit at any time, at the request of the customs authorities of the exporting country, all appropriate documents proving the originating status of the products concerned as well as the fulfilment of the other requirements of this

Protocol.

4. An invoice declaration shall be made out by the exporter by typing, stamping or printing on the invoice, the delivery note or another commercial document, the declaration, the text of which appears in Annex IV, using one of the linguistic versions set out in that Annex and in accordance with the provisions of the domestic law of the exporting country. If the declaration is hand-written, it shall be written in ink in printed characters.

5. Invoice declarations shall bear the original signature of the exporter in manuscript. However, an approved exporter within the meaning of Article 22 shall not be required to sign such declarations provided that he gives the customs authorities of the exporting country a written undertaking that he accepts full responsibility for any invoice declaration which identifies him as if it had been signed in manuscript by him.

6. An invoice declaration may be made out by the exporter when the products to which it relates are exported, or after exportation on condition that it is presented in the importing country no longer than two years after the importation of the products to which it relates.

Article 22Approved exporter

1. The customs authorities of the exporting country may authorise any exporter, hereinafter referred to as 'approved exporter', who makes frequent shipments of products under this Agreement to make out invoice declarations irrespective of the value of the products concerned. An exporter seeking such authorisation must offer to the satisfaction of the customs authorities all guarantees necessary to verify the originating status of the products as well as the fulfilment of the other requirements of this

Protocol.

2. The customs authorities may grant the status of approved exporter subject to any conditions, which they consider appropriate.

3. The customs authorities shall grant to the approved exporter a customs authorisation number, which shall appear on the invoice declaration.

4. The customs authorities shall monitor the use of the authorisation by the approved exporter.

5. The customs authorities may withdraw the authorisation at any time. They shall do so where the approved exporter no longer offers the guarantees referred to in paragraph 1, no longer fulfils the conditions referred to in paragraph 2 or otherwise makes an incorrect use of the authorisation.

Article 23Validity of proof of origin

1. A proof of origin shall be valid for four months from the date of issue in the exporting country, and must be submitted within the said period to the customs authorities of the importing country.

2. Proofs of origin which are submitted to the customs authorities of the importing country after the final date for presentation specified in paragraph 1 may be accepted for the purpose of applying preferential treatment, where the failure to submit these documents by the final date set is due to exceptional circumstances.

3. In other cases of belated presentation, the customs authorities of the importing country may accept the proofs of origin where the products have been submitted before the said final date.

Article 24Submission of proof of origin

Proofs of origin shall be submitted to the customs authorities of the importing country in accordance with the procedures applicable in that country. The said authorities may require a translation of a proof of origin and may also require the import declaration to be accompanied by a statement from the importer to the effect that the products meet the conditions required for the implementation of the Agreement.

Article 25Importation by instalments

Where, at the request of the importer and on the conditions laid down by the customs authorities of the importing country, dismantled or non-assembled products within the meaning of General Rule 2(a) of the Harmonized System falling within Sections XVI and XVII or headings 7308 and 9406 of the Harmonized System are imported by instalments, a single proof of origin for such products shall be submitted to the customs authorities upon importation of the first instalment.

Article 26Exemptions from proof of origin

1. Products sent as small packages from private persons to private persons or forming part of travellers' personal luggage shall be admitted as originating products without requiring the submission of a proof of origin, provided that such products are not imported by way of trade and have been declared as meeting the requirements of this Protocol and where there is no doubt as to the veracity of such a declaration. In the case of products sent by post, this declaration can be made on the customs declaration CN22/CN23 or on a sheet of paper annexed to that document.

2. Imports which are occasional and consist solely of products for the personal use of the recipients or travellers or their families shall not be considered as imports by way of trade if it is evident from the nature and quantity of the products that no commercial purpose is in view.

3. Furthermore, the total value of these products shall not exceed EUR 500 in the case of small packages or EUR 1,200 in the case of products forming part of travellers' personal luggage.

Article 27Supporting documents

The documents referred to in Articles 17(3) and 21(3) used for the purpose of proving that products covered by a movement certificate EUR.1 or an invoice declaration can be considered as products originating in one of the contracting Party and fulfil the other requirements of this Protocol may consist inter alia of the following:

(a) direct evidence of the processes carried out by the exporter or supplier to obtain the goods concerned, contained for example in his accounts or internal book-keeping;

(b) documents proving the originating status of materials used, issued or made out in one of the contracting Party where these documents are used in accordance with domestic law;

(c) documents proving the working or processing of materials in one of the contracting Party, issued or made out in that contracting Party, where these documents are used in accordance with domestic law;

(d) movement certificates EUR.1 or invoice declarations proving the originating status of materials used, issued or made out in a contracting Party in accordance with this Protocol.

Article 28Preservation of proof of origin and supporting documents

1. The exporter applying for the issue of a movement certificate EUR.1 shall keep for at least three years the documents referred to in Article 17(3).

2. The exporter making out an invoice declaration shall keep for at least three years a copy of this invoice declaration as well as the documents referred to in Article 21(3).

3. The customs authorities of the exporting country issuing a movement certificate EUR.1 shall keep for at least three years the application form referred to in Article 17(2).

4. The customs authorities of the importing country shall keep for at least three years the movement certificates EUR.1 and the invoice declarations submitted to them.

Article 29Discrepancies and formal errors

1. The discovery of slight discrepancies between the statements made in the proof of origin and those made in the documents submitted to the customs office for the purpose of carrying out the formalities for importing the products shall not ipso facto render the proof of origin null and void if it is duly established that this document does correspond to the products submitted.

2. Obvious formal errors such as typing errors on a proof of origin should not cause this document to be rejected if these errors are not such as to create doubts concerning the correctness of the statements made in this document.

Article 30Amounts expressed in euro

1. For the application of the provisions of Article 21(1)(b) and Article 26(3) in cases where products are invoiced in a currency other than euro, amounts in the national currencies of the contracting Parties equivalent to the amounts expressed in euro shall be fixed annually by each of the contracting Parties concerned.

2. A consignment shall benefit from the provisions of Article 21(1)(b) or Article 26(3) by reference to the currency in which the invoice is drawn up, according to the amount fixed by the country concerned.

3. The amounts to be used in any given national currency shall be the equivalent in that currency of the amounts expressed in euro as at the first working day of October and shall apply from 1 January the following year. For the purposes of implementing the provisions of paragraph 2 on importation the contracting Parties shall recognize the relevant amounts notified by the country concerned or the European Commission.

4. A contracting Party may round up or down the amount resulting from the conversion into its national currency of an amount expressed in euro. The rounded-off amount may not differ from the amount resulting from the conversion by more than 5 per cent. A contracting Party may retain unchanged its national currency equivalent of an amount expressed in euro if, at the time of the annual adjustment provided for in paragraph 3, the conversion of that amount, prior to any rounding-off, results in an increase of less than 15 per cent in the national currency equivalent. The national currency equivalent may be retained unchanged if the conversion would result in a decrease in that equivalent value.

5. The amounts expressed in euro shall be reviewed by the Joint Committee at the request of any of the contracting Parties. When carrying out this review, the Joint Committee shall consider the desirability of preserving the effects of the limits concerned in real terms. For this purpose, it may decide to modify the amounts expressed in euro.

TITLE VI ARRANGEMENTS FOR ADMINISTRATIVE CO-OPERATION

Article 31Mutual assistance

1. The customs authorities of the contracting Parties shall provide each other with specimen impressions of stamps used in their customs offices for the issue of movement certificates EUR.1 and with the addresses of the customs authorities responsible for verifying those certificates and invoice declarations.

2. In order to ensure the proper application of this Protocol, the contracting Parties shall assist each other, through the competent customs administrations, in checking the authenticity of the movement certificates EUR.1 or the invoice declarations and the correctness of the information given in these documents.

Article 32Verification of proofs of origin

1. Subsequent verifications of proofs of origin shall be carried out at random or whenever the customs authorities of the importing country have reasonable doubts as to the authenticity of such documents, the originating status of the products concerned or the fulfilment of the other requirements of this Protocol.

2. For the purposes of implementing the provisions of paragraph 1, the customs authorities of the importing country shall return the movement certificate EUR.1 and the invoice, if it has been submitted, the invoice declaration, or a copy of these documents, to the customs authorities of the exporting country giving, where appropriate, the reasons for the enquiry. Any documents and information obtained suggesting that the information given on the proof of origin is incorrect shall be forwarded in support of the request for verification.

3. The verification shall be carried out by the customs authorities of the exporting country. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check considered appropriate.

4. If the customs authorities of the importing country decide to suspend the granting of preferential treatment to the products concerned while awaiting the results of the verification, release of the products shall be offered to the importer subject to any precautionary measures judged necessary.

5. The customs authorities requesting the verification shall be informed of the results of this verification as soon as possible. These results must indicate clearly whether the documents are authentic and whether the products concerned can be considered as products originating in one of the contracting Parties and fulfil the other requirements of this Protocol.

6. If in cases of reasonable doubt there is no reply within ten months of the date of the verification request or if the reply does not contain sufficient information to determine the authenticity of the document in question or the real origin of the products, the requesting customs authorities shall, except in exceptional circumstances, refuse entitlement to the preferences.

Article 33Dispute settlement

Where disputes arise in relation to the verification procedures of Article 32, which cannot be settled between the customs authorities requesting a verification and the customs authorities responsible for carrying out this verification or where they raise a question as to the interpretation of this Protocol, they shall be submitted to the Joint Committee.

In all cases the settlement of disputes between the importer and the customs authorities of the importing country shall be under the legislation of the said country.

Article 34Penalties

Penalties shall be imposed on any person who draws up, or causes to be drawn up, a document, which contains incorrect information for the purpose of obtaining a preferential treatment for products.

Article 35Free zones

1. The contracting Parties shall take all necessary steps to ensure that products traded under cover of a proof of origin which in the course of transport use a free zone situated in their territory, are not substituted by other goods and do not undergo handling other than normal operations designed to prevent their deterioration.

2. By means of an exemption to the provisions contained in paragraph 1, when products originating in a contracting Party are imported into a free zone under cover of a proof of origin and undergo treatment or processing, the authorities concerned shall issue a new movement certificate EUR.1 at the exporter's request, if the treatment or processing undergone is in conformity with the provisions of this

Protocol.

TITLE VII FINAL PROVISIONS

Article 36Sub-Committee on customs and origin matters

1. A Sub-Committee on customs and origin matters shall be set up under the Joint Committee in accordance with Article 35(5) of the Agreement to assist it in carrying out its duties and to ensure a continuous information and consultations process between experts.

2. It shall be composed of experts from the contracting Parties responsible for questions related to customs and origin matters.

Article 37Annexes

Annexes I, II, III, IV and V and Joint Declaration to this Protocol shall form an integral part thereof.

Article 38Goods in transit and storage

Goods which conform to the provisions of Title II and which on the date of entry into force of the Agreement are either being transported or are being held in a contracting Party in temporary storage, in bonded warehouses or in free zones, may be accepted as originating products subject to the submission, within four months from that date, to the customs authorities of the importing contracting Party of proof of origin, drawn up retrospectively, and of any documents that provide supporting evidence of the conditions of transport.

ANNEX I TO PROTOCOL 2 Introductory notes to the list in Annex II

Note 1:

The list sets out the conditions required for all products to be considered as sufficiently worked or processed within the meaning of Article 6 of the Protocol.

Note 2:

2.1 The first two columns in the list describe the product obtained. The first column gives the heading number or chapter number used in the Harmonized System and the second column gives the description of goods used in that system for that heading or chapter. For each entry in the first two columns, a rule is specified in column 3 or 4. Where, in some cases, the entry in the first column is preceded by an 'ex', this signifies that the rules in column 3 or 4 apply only to the part of that heading as described in column 2.

2.2 Where several heading numbers are grouped together in column 1 or a chapter number is given and the description of products in column 2 is therefore given in general terms, the adjacent rules in column 3 or 4 apply to all products which, under the Harmonized System, are classified in headings of the chapter or in any of the headings grouped together in column 1.

2.3 Where there are different rules in the list applying to different products within a heading, each indent contains the description of that part of the heading covered by the adjacent rules in column 3 or 4.

2.4 Where, for an entry in the first two columns, a rule is specified in both columns 3 and 4, the exporter may opt, as an alternative, to apply either the rule set out in column 3 or that set out in column 4. If no origin rule is given in column 4, the rule set out in column 3 has to be applied.

Note 3:

3.1 The provisions of Article 6 of the Protocol, concerning products having acquired originating status which are used in the manufacture of other products, shall apply, regardless of whether this status has been acquired inside the factory where these products are used or in another factory in a contracting Party.

Example:

An engine of heading 8407, for which the rule states that the value of the non-originating materials which may be incorporated may not exceed 40 per cent of the ex-works price, is made from "other alloy steel roughly shaped by forging" of heading ex 7224.

If this forging has been forged in the contracting Party concerned from a non-originating ingot, it has already acquired originating status by virtue of the rule for heading ex 7224 in the list. The forging can then count as originating in the value-calculation for the engine, regardless of whether it was produced in the same factory or in another factory in the contracting Party concerned.

The value of the non-originating ingot is thus not taken into account when adding up the value of the non-originating materials used.

3.2 The rule in the list represents the minimum amount of working or processing required, and the carrying-out of more working or processing also confers originating status; conversely, the carrying-out of less working or processing cannot confer originating status. Thus, if a rule provides that non-originating material, at a certain level of manufacture, may be used, the use of such material at an earlier stage of manufacture is allowed, and the use of such material at a later stage is not.

3.3 Without prejudice to Note 3.2, where a rule uses the expression "Manufacture from materials of any heading", then materials of any heading(s) (even materials of the same description and heading as the product) may be used, subject, however, to any specific limitations which may also be contained in the rule.

However, the expression "Manufacture from materials of any heading, including other materials of heading..." or "Manufacture from materials of any heading, including other materials of the same heading as the product" means that materials of any heading(s) may be used, except those of the same description as the product as given in column 2 of the list.

3.4 When a rule in the list specifies that a product may be manufactured from more than one material, this means that one or more materials may be used. It does not require that all be used.

Example:

The rule for fabrics of headings 5208 to 5212 provides that natural fibres may be used and that chemical materials, among other materials, may also be used.

This does not mean that both have to be used; it is possible to use one or the other, or both.

3.5 Where a rule in the list specifies that a product must be manufactured from a particular material, the condition obviously does not prevent the use of other materials which, because of their inherent nature, cannot satisfy the rule. (See also Note 6.2 below in relation to textiles).

Example:

The rule for prepared foods of heading 1904, which specifically excludes the use of cereals and their derivatives, does not prevent the use of mineral salts, chemicals and other additives which are not products from cereals.

However, this does not apply to products which, although they cannot be manufactured from the particular materials specified in the list, can be produced from a material of the same nature at an earlier stage of manufacture.

Example:

In the case of an article of apparel of ex Chapter 62 made from non-woven materials, if the use of only non-originating yarn is allowed for this class of article, it is not possible to start from non-woven cloth - even if non-woven cloths cannot normally be made from yarn. In such cases, the starting material would normally be at the stage before yarn - that is, the fibre stage.

3.6 Where, in a rule in the list, two percentages are given for the maximum value of non-originating materials that can be used, then these percentages may not be added together. In other words, the maximum value of all the non-originating materials used may never exceed the higher of the percentages given. Furthermore, the individual percentages must not be exceeded, in relation to the particular materials to which they apply.

Note 4:

4.1 The term "natural fibres" is used in the list to refer to fibres other than artificial or synthetic fibres. It is restricted to the stages before spinning takes place, including waste, and, unless otherwise specified, includes fibres that have been carded, combed or otherwise processed but not spun.

4.2 The term "natural fibres" includes horsehair of heading 0503, silk of headings 5002 and 5003 as well as the wool-fibres and fine or coarse animal hair of headings 5101 to 5105, the cotton fibres of headings 5201 to 5203, and the other vegetable fibres of headings 5301 to 5305.

4.3 The terms "textile pulp", "chemical materials" and "paper-making materials" are used in the list to describe the materials, not classified in Chapters 50 to 63, which can be used to manufacture artificial, synthetic or paper fibres or yarns.

4.4 The term "man-made staple fibres" is used in the list to refer to synthetic or artificial filament tow, staple fibres or waste, of headings 5501 to 5507.

Note 5:

5.1 Where, for a given product in the list, a reference is made to this Note, the conditions set out in column 3 shall not be applied to any basic textile materials used in the manufacture of this product and which, taken together, represent 10 per cent or less of the total weight of all the basic textile materials used. (See also Notes 5.3 and 5.4 below).

5.2 However, the tolerance mentioned in Note 5.1 may be applied only to mixed products which have been made from two or more basic textile materials.

The following are the basic textile materials: - silk, - wool, - coarse animal hair, - fine animal hair, - horsehair, - cotton, - paper-making materials and paper, - flax, - true hemp, - jute and other textile bast fibres, - sisal and other textile fibres of the genus Agave, - coconut, abaca, ramie and other vegetable textile fibres, - synthetic man-made filaments, - artificial man-made filaments, - current-conducting filaments, - synthetic man-made staple fibres of polypropylene, - synthetic man-made staple fibres of polyester, - synthetic man-made staple fibres of polyamide, - synthetic man-made staple fibres of polyacrylonitrile, - synthetic man-made staple fibres of polyimide, - synthetic man-made staple fibres of polytetrafluoroethylene, - synthetic man-made staple fibres of poly(phenylene sulphide), - synthetic man-made staple fibres of poly(vinyl chloride), - other synthetic man-made staple fibres, - artificial man-made staple fibres of viscose, - other artificial man-made staple fibres, - yarn made of polyurethane segmented with flexible segments of polyether, whether or not gimped, - yarn made of polyurethane segmented with flexible segments of polyester, whether or not gimped, - products of heading 5605 (metallised yarn) incorporating strip consisting of a core of aluminium foil or of a core of plastic film whether or not coated with aluminium powder, of a width not exceeding 5 mm, sandwiched by means of a transparent or coloured adhesive between two layers of plastic film, - other products of heading 5605.

Example:

A yarn, of heading 5205, made from cotton fibres of heading 5203 and synthetic staple fibres of heading 5506, is a mixed yarn. Therefore, non-originating synthetic staple fibres which do not satisfy the origin-rules (which require manufacture from chemical materials or textile pulp) may be used, provided that their total weight does not exceed 10 per cent of the weight of the yarn.

Example:

A woollen fabric, of heading 5112, made from woollen yarn of heading 5107 and synthetic yarn of staple fibres of heading 5509, is a mixed fabric.

Therefore, synthetic yarn which does not satisfy the origin rules (which require manufacture from chemical materials or textile pulp), or woollen yarn which does not satisfy the origin rules (which require manufacture from natural fibres, not carded or combed or otherwise prepared for spinning), or a combination of the two, may be used, provided their total weight does not exceed 10 per cent of the weight of the fabric.

Example:

Tufted textile fabric, of heading 5802, made from cotton yarn of heading 5205 and cotton fabric of heading 5210, is only mixed product if the cotton fabric is itself a mixed fabric made from yarns classified in two separate headings, or if the cotton yarns used are themselves mixtures.

Example:

If the tufted textile fabric concerned had been made from cotton yarn of heading 5205 and synthetic fabric of heading 5407, then, obviously, the yarns used are two separate basic textile materials and the tufted textile fabric is, accordingly, a mixed product.

5.3 In the case of products incorporating "yarn made of polyurethane segmented with flexible segments of polyether, whether or not gimped", this tolerance is 20 per cent in respect of this yarn.

5.4 In the case of products incorporating "strip consisting of a core of aluminium foil or of a core of plastic film whether or not coated with aluminium powder, of a width not exceeding 5 mm, sandwiched by means of a transparent or coloured adhesive between two layers of plastic film", this tolerance is 30 per cent in respect of this strip.

Note 6:

6.1 Where, in the list, reference is made to this Note, textile materials (with the exception of linings and interlinings), which do not satisfy the rule set out in the list in column 3 for the made-up product concerned, may be used, provided that they are classified in a heading other than that of the product and that their value does not exceed 8 per cent of the ex-works price of the product.

6.2 Without prejudice to Note 6.3, materials, which are not classified within Chapters 50 to 63, may be used freely in the manufacture of textile products, whether or not they contain textiles.

Example:

If a rule in the list provides that, for a particular textile item (such as trousers), yarn must be used, this does not prevent the use of metal items, such as buttons, because buttons are not classified within Chapters 50 to 63. For the same reason, it does not prevent the use of slide-fasteners, even though slide-fasteners normally contain textiles.

6.3 Where a percentage-rule applies, the value of materials which are not classified within Chapters 50 to 63 must be taken into account when calculating the value of the non-originating materials incorporated.

Note 7

7.1 For the purposes of headings ex 2707, 2713 to 2715, ex 2901, ex 2902 and ex 3403, the "specific processes" are the following:

(a) vacuum distillation;

(b) redistillation by a very thorough fractionation process;

(c) cracking;

(d) reforming;

(e) extraction by means of selective solvents;

(f) the process comprising all the following operations: processing with concentrated sulphuric acid, oleum or sulphuric anhydride; neutralisation with alkaline agents; decolorisation and purification with naturally active earth, activated earth, activated charcoal or bauxite;

(g) polymerisation;

(h) alkylation;

(i) isomerisation.

7.2 For the purposes of headings 2710, 2711 and 2712, the "specific processes" are the following:

(a) vacuum distillation;

(b) redistillation by a very thorough fractionation process;

(c) cracking;

(d) reforming;

(e) extraction by means of selective solvents;

(f) the process comprising all the following operations: processing with concentrated sulphuric acid, oleum or sulphuric anhydride; neutralisation with alkaline agents; decolorisation and purification with naturally-active earth, activated earth, activated charcoal or bauxite;

(g) polymerisation;

(h) alkylation;

(ij) isomerisation;

(k) in respect of heavy oils of heading ex 2710 only, desulphurisation with hydrogen, resulting in a reduction of at least 85 per cent of the sulphur-content of the products processed (ASTM D 1266-59 T method);

(l) in respect of products of heading 2710 only, deparaffining by a process other than filtering;

(m) in respect of heavy oils of heading ex 2710 only, treatment with hydrogen, at a pressure of more than 20 bar and a temperature of more than 250°C, with the use of a catalyst, other than to effect desulphurisation, when the hydrogen constitutes an active element in a chemical reaction. The further treatment, with hydrogen, of lubricating oils of heading ex 2710 (e.g. hydrofinishing or decolourisation), in order, more especially, to improve colour or stability shall not, however, be deemed to be a specific process;

(n) in respect of fuel oils of heading ex 2710 only, atmospheric distillation, on condition that less than 30 per cent of these products distils, by volume, including losses, at 300°C by the ASTM D 86 method;

(o) in respect of heavy oils other than gas oils and fuel oils of heading ex 2710 only, treatment by means of a high-frequency electrical brush- discharge;

(p) in respect of crude products (other than petroleum jelly, ozokerite, lignite wax or peat wax, paraffin wax containing by weight less than

0.75 per cent of oil) of heading ex 2712 only, de-oiling by fractional crystallisation.

7.3 For the purposes of headings ex 2707, 2713 to 2715, ex 2901, ex 2902 and ex 3403, simple operations, such as cleaning, decanting, desalting, water-separation, filtering, colouring, marking, obtaining a sulphur-content as a result of mixing products with different sulphur contents, any combination of these operations or like operations, do not confer origin.

ANNEX II TO PROTOCOL 2 List of working or processing required to be carried out on non-originating materials in order that the product manufactured can obtain originating status

The products mentioned in the list may not all be covered by the Agreement. It is therefore necessary to consult the other parts of the Agreement.

FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF ALBANIA AND THE REPUBLIC OF CROATIA