Title

FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF SERBIA （1）

Preamble

Iceland, the Principality of Liechtenstein, the Kingdom of Norway, the Swiss Confederation (hereinafter referred to as "the EFTA States"), on the one part,

and the Republic of Serbia (hereinafter referred to as "Serbia"), on the other,

hereinafter each individual State referred to as a "Party" or collectively referred to as the "Parties":

RECOGNISING the common wish to strengthen the links between the EFTA States on the one part and Serbia on the other by establishing close and lasting relations;

RECALLING their intention to participate actively in the process of Euro- Mediterranean economic integration and expressing their preparedness to co-operate in seeking ways and means to strengthen this process;

REAFFIRMING their commitment to democracy, human rights and fundamental freedoms, and to the political and economic freedoms, in accordance with their obligations under international law, including the United Nations Charter and the Universal Declaration of Human Rights;

REAFFIRMING their commitment to pursue the objective of sustainable development and recognising the importance of coherence and mutual supportiveness of trade, environment and labour policies in this respect;

REAFFIRMING their rights and obligations under multilateral environmental agreements to which they are a party and the respect for the fundamental rights of workers, including the principles set out in the relevant International Labour Organisation (ILO) Conventions to which they are a party;

AIMING to create new employment opportunities and improve health and living standards, along with high levels of protection of health and safety and of the environment in their respective territories;

DESIRING to create favourable conditions for the development and diversification of trade between them and for the promotion of commercial and economic co-operation in areas of common interest on the basis of equality, mutual benefit, non-discrimination and international law;

DETERMINED to promote and further strengthen the multilateral trading system, building on their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organisation (hereinafter referred to as "the WTO") and

2 As amended by the Protocol amending the Free Trade Agreement between the EFTA States and the Republic of Serbia, signed on 20 May 2015 and entered into force on 1 February 2017.

the other agreements negotiated thereunder, thereby contributing to the harmonious development and expansion of world trade;

CONSIDERING that no provision of this Agreement may be interpreted as exempting the Parties from their obligations under other international agreements, especially the Marrakesh Agreement establishing the WTO and the other agreements negotiated thereunder;

DETERMINED to implement this Agreement with the objectives to preserve and protect the environment through environmentally sound management and to ensure the optimal use of the world’s resources in accordance with the objective of sustainable development;

AFFIRMING their commitment to the rule of law, to prevent and combat corruption in international trade and investment and to promote the principles of transparency and good governance;

ACKNOWLEDGING the significance of responsible corporate conduct and its contribution to sustainable economic development and affirming their support to efforts for the promotion of relevant international standards;

DECLARING their readiness to examine the possibility of developing and deepening their economic relations in order to extend them to fields not covered by this Agreement;

CONVINCED that this Agreement will enhance the competitiveness of their firms in global markets and create conditions encouraging economic, trade and investment relations between them;

ACKNOWLEDGING the importance of good corporate governance and corporate social responsibility for sustainable development, and affirming their aim to encourage enterprises to observe, internationally recognised guidelines and principles in this respect, such as the OECD Guidelines for Multinational Enterprises, the OECD Principles of Corporate Governance and the UN Global Compact;

HAVE DECIDED, in pursuit of the above, to conclude the following Agreement (hereinafter referred to as "this Agreement"):

Body

Chapter 1. GENERAL PROVISIONS

Article 1. Objectives

1. The EFTA States and Serbia shall establish a free trade area by means of this Agreement and the complementary agreements on trade in agricultural products, concurrently concluded between each individual EFTA State and Serbia, with a view to spurring prosperity and sustainable development in their territories. (3) 

2. The objectives of this Agreement, which is based on trade relations between market economies and on the respect of democratic principles and human rights, are:

(a) to achieve the liberalisation of trade in goods, in conformity with Article XXIV of the General Agreement on Tariffs and Trade (hereinafter referred to as "the GATT 1994");

(b) to mutually increase investment opportunities between the Parties, and to gradually develop an environment conducive to enhanced trade in services;

(c) to provide fair conditions of competition for trade between the Parties and to ensure adequate and effective protection of intellectual property rights;

(d) to gradually achieve further liberalisation on a mutual basis of the government procurement markets of the Parties; and

(e) to develop international trade in such a way as to contribute to the objective of sustainable development and to ensure that this objective is integrated and reflected in the Parties' trade relationship; (4) and

(f) to contribute in this way to the harmonious development and expansion of world trade. (5)

Article 2. Trade Relations Governed by this Agreement

This Agreement shall apply to trade relations between, on the one side, the individual EFTA States and, on the other side, Serbia, but not to the trade relations between individual EFTA States, unless otherwise provided for in this Agreement.

Article 3. Territorial Application

1. Without prejudice to Protocol B, this Agreement shall apply:

(a) to the land territory, internal waters, and the territorial sea of a Party, and the air-space above the territory of a Party, in accordance with international law; as well as

(b) beyond the territorial sea, with respect to measures taken by a Party in the exercise of its sovereign right or jurisdiction in accordance with international law.

2. This Agreement shall not apply to the Norwegian territory of Svalbard, with the exception of trade in goods.

Article 4. Central, Regional and Local Government

Each Party shall ensure within its territory the observance of all obligations and commitments under this Agreement by its respective central, regional and local governments and authorities, and by non-governmental bodies in the exercise of governmental powers delegated to them by central, regional and local governments or authorities.

Article 5. Transparency

1. The Parties shall publish or otherwise make publicly available their laws, regulations, judicial decisions, administrative rulings of general application and their respective international agreements that may affect the operation of this Agreement.

2. The Parties shall promptly respond to specific questions and provide, upon request, information to each other on matters referred to in paragraph 1. They are not required to disclose confidential information.

Chapter 2. TRADE IN GOODS

Article 6. Scope

1. This Chapter applies to the following products originating in an EFTA State or in Serbia:

(a) all products classified under Chapters 25 to 97 of the Harmonized Commodity Description and Coding System (HS), excluding the products listed in Annex I;

(b) processed agricultural products specified in Protocol A, with due regard to the arrangements provided for in that Protocol; and

(c) fish and other marine products as provided for in Annex II. 2. Each EFTA State and Serbia have concluded agreements on trade in agricultural

products on a bilateral basis. These agreements form part of the instruments establishing a free trade area between the EFTA States and Serbia.

Article 7. Rules of Origin and Methods of Administrative Co-operation

The provisions on Rules of Origin and Methods of Administrative Co-operation are set out In Protocol B.

Article 8. Customs Duties

1. Upon entry into force of this Agreement, the Parties shall abolish all customs duties and charges having equivalent effect to customs duties on imports and exports of products originating in an EFTA State or in Serbia covered by subparagraph 1 (a) of Article 6, except as otherwise provided for in Annex III. No new customs duties shall be introduced.

2. Customs duties and charges having equivalent effect to customs duties include any duty or charge of any kind imposed in connection with the importation or exportation of a product, including any form of surtax or surcharge, but does not include any charge imposed in conformity with Articles III and VII of the GATT 1994.

Article 9. Basic Duties

1. The basic duty to which the successive reductions set out in this Agreement are to be applied for imports between the Parties shall be the most-favoured-nation rate of duty (MFN rate) applied by each Party on 1 February 2009.

2. If before, by or after entry into force of this Agreement, any tariff reduction is applied on an erga omnes basis, such reduced duties shall replace the basic duties referred to in paragraph 1 as from the date on which the reduction is applied, or from the entry into force of this Agreement, whichever is later.

3. Reduced duties shall be rounded to the first decimal place or, in the case of specific duties, to the second decimal place.

Article 10. Quantitative Restrictions

The rights and obligations of the Parties in respect of quantitative restrictions, except as provided for in Article XII of the GATT 1994, shall be governed by Article XI of the GATT 1994, which is hereby incorporated into and made part of this Agreement.

Article 11. Internal Taxation and Regulations

1. The Parties commit themselves to apply any internal taxes and other charges and regulations in accordance with Article III of the GATT 1994 and other relevant WTO Agreements.

2. Exporters may not benefit from repayment of internal taxes in excess of the amount of indirect taxation imposed on products exported to the territory of a Party.

Article 12. Sanitary and Phytosanitary Measures

1. The rights and obligations of the Parties in respect of sanitary and phytosanitary measures shall be governed by the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.

2. The Parties shall exchange names and addresses of contact points with sanitary and phytosanitary expertise in order to facilitate communication and the exchange of information.

Article 13. Technical Regulations

1. The rights and obligations of the Parties in respect of technical regulations, standards and conformity assessment shall be governed by the WTO Agreement on Technical Barriers to Trade.

2. The Parties shall strengthen their co-operation in the field of technical regulations, standards and conformity assessment, with a view to increasing the mutual understanding of their respective systems and facilitating access to their respective markets.

Article 14. Trade Facilitation

The Parties, in accordance with the provisions set out in Annex IV, with the aim to facilitate trade between the EFTA States and Serbia, shall:

(a) simplify, to the greatest extent possible, procedures for trade in goods and related services;

(b) promote co-operation among them in order to enhance their participation in the development and implementation of international conventions and recommendations on trade facilitation; and

(c) co-operate on trade facilitation within the framework of the Joint Committee.

Article 15. Sub-Committee on Rules of Origin, Customs Procedures and Trade Facilitation

1. With reference to Articles 7 and 14, a Sub-Committee of the Joint Committee on Rules of Origin, Customs Procedures and Trade Facilitation (hereinafter referred to as “the Sub-Committee”) is hereby established.

2. The mandate of the Sub-Committee is set out in Annex V.

Article 16. State Trading Enterprises

The rights and obligations of the Parties in respect of state trading enterprises shall be governed by Article XVII of the GATT 1994 and the Understanding on the Interpretation of Article XVII of the GATT 1994, which are hereby incorporated into and made part of this Agreement.

Article 17. Subsidies and Countervailing Measures

1. The rights and obligations of the Parties relating to subsidies and countervailing measures shall be governed by Articles VI and XVI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures, except as provided for in paragraph 2.

2. Before an EFTA State or Serbia, as the case may be, initiates an investigation to determine the existence, degree and effect of any alleged subsidy in an EFTA State or in Serbia, as provided for in Article 11 of the WTO Agreement on Subsidies and Countervailing Measures, the Party considering initiating an investigation shall notify in writing the Party whose goods are subject to investigation and allow for a 45 day period with a view to finding a mutually acceptable solution. The consultations shall take place in the Joint Committee if any Party so requests within 20 days from the receipt of the notification.

Article 18. Anti-dumping

1. A Party shall not apply anti-dumping measures as provided for under Article VI of the GATT 1994 and the WTO Agreement on Implementation of Article VI of the GATT 1994 in relation to products originating in another Party.

2. The Parties recognise that the effective implementation of competition rules may address economic causes leading to dumping.

Article 19. Rules of Competition Concerning Undertakings

1. The following are incompatible with the proper functioning of this Agreement in so far as they may affect trade between an EFTA State and Serbia:

(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; and

(b) abuse by one or more undertakings of a dominant position in the territory ofa Party as a whole or in a substantial part thereof.

2. The provisions of paragraph 1 shall apply to the activities of public undertakings and undertakings for which the Parties grant special or exclusive rights, in so far as the application of these provisions does not obstruct the performance, in law or in fact, of the particular public tasks assigned to them.

3. The provisions of paragraphs 1 and 2 shall not be construed to create any direct obligations for undertakings.

4. If a Party considers that a given practice is incompatible with the provisions of paragraphs 1 and 2, the Parties concerned shall give to the Joint Committee all the assistance required in order to examine the case and, where appropriate, eliminate the practice objected to. If the Party concerned fails to put an end to the practice objected to within the period set by the Joint Committee, or if the Joint Committee fails to reach an agreement after consultations, or after thirty days following referral for such consultations, the other Party may adopt appropriate measures to deal with the difficulties resulting from the practice in question.

Article 20. Global Safeguard Measures

1. The rights and obligations of the Parties in respect of global safeguards shall be governed by Article XIX of GATT 1994 and the WTO Agreement on Safeguards.

2. In taking global safeguard measures, a Party shall exclude imports of an originating product from one or several Parties if such imports do not in and of themselves cause or threaten to cause serious injury. The Party taking the measure shall demonstrate that such exclusion is in accordance with WTO rules and practice.

Article 21. Bilateral Safeguard Measures

1. Where, as a result of the reduction or elimination of a customs duty under this Agreement, any product originating in a Party is being imported into the territory of another Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to constitute a substantial cause of serious injury or threat thereof to the domestic industry of like or directly competitive products in the territory of the importing Party, the importing Party may take bilateral safeguard measures to the minimum extent necessary to remedy or prevent the injury, subject to the provisions of paragraphs 2 to 10.

2. Bilateral safeguard measures shall only be taken upon clear evidence that increased imports have caused or are threatening to cause serious injury pursuant to an investigation in accordance with the procedures laid down in the WTO Agreement on Safeguards.

3. The Party intending to take a bilateral safeguard measure under this Article shall immediately, and in any case before taking a measure, make notification to the other Parties and the Joint Committee. The notification shall contain all pertinent information, which shall include evidence of serious injury or threat thereof caused by increased imports, a precise description of the product involved and the proposed measure, as well as the proposed date of introduction, expected duration and timetable for the progressive removal of the measure.

4. If the conditions set out in paragraph 1 are met, the importing Party may take measures consisting in:

(a) suspending the further reduction of any rate of duty provided for under this Agreement for the product; or

(b) increasing the rate of customs duty for the product to a level not to exceed the lesser of:

(i) the MEN rate of duty applied at the time the action is taken; or

(ii) the MFN rate of duty applied on the day immediately preceding the date of the entry into force of this Agreement.

5. Bilateral safeguard measures shall be taken for a period not exceeding two years. In very exceptional circumstances, after review by the Joint Committee, measures may be taken up to a total maximum period of three years. No measure shall be applied to the import of a product which has previously been subject to such a measure.

6. The Joint Committee shall, within 30 days from the date of notification referred to in paragraph 3, examine the information provided in order to facilitate a mutually acceptable resolution of the matter. In the absence of such resolution, the importing Party may adopt a measure pursuant to paragraph 4 to remedy the problem. In the selection of the bilateral safeguard measure, priority must be given to the measure which least disturbs the functioning of this Agreement. The bilateral safeguard measure shall be immediately notified to the other Parties and the Joint Committee and shall be the subject of periodic consultations in the Joint Committee, particularly with a view to establishing a timetable for their abolition as soon as circumstances permit.

7. Upon the termination of the measure, the rate of customs duty shall be the rate which would have been in effect but for the measure.

8. In critical circumstances, where delay would cause damage which would be difficult to repair, a Party may take a provisional bilateral safeguard measure pursuant to a preliminary determination that there is clear evidence that increased imports constitute a substantial cause of serious injury, or threat thereof, to the domestic industry. The Party intending to take such a measure shall immediately notify the other Parties and the Joint Committee thereof. Within 30 days of the date of the notification, the procedures set out in paragraphs 2 to 6 shall be initiated.

9. Any provisional measure shall be terminated within 200 days at the latest. The period of application of any such provisional measure shall be counted as part of the duration of the measure set out in paragraph 5 and any extension thereof. Any tariff increases shall be promptly refunded if the investigation described in paragraph 2 does not result in a finding that the conditions of paragraph 1 are met.

10. Five years after the date of entry into force of this Agreement, the Parties shall review in the Joint Committee whether there is need to maintain the possibility to take bilateral safeguard measures between them. If the Parties decide, after the first review, to maintain such possibility, they shall thereafter conduct biennial reviews of this matter in the Joint Committee. ARTICLE 22 General Exceptions The rights and obligations of the Parties in respect of general exceptions shall be governed by Article XX of the GATT 1994, which is hereby incorporated into and made part of this Agreement. ARTICLE 23 Security Exceptions The rights and obligations of the Parties in respect of security exceptions shall be governed by Article XXI of the GATT 1994, which is hereby incorporated into and made part of this Agreement.

Chapter 3. PROTECTION OF INTELLECTUAL PROPERTY

Article 24. Protection of Intellectual Property

1. The Parties shall grant and ensure adequate, effective and non-discriminatory protection of intellectual property rights, and provide for measures for the enforcement of such rights against infringement thereof, counterfeiting and piracy, in accordance with the provisions of this Article, Annex VI and the international agreements referred to therein.

2. The Parties shall accord to each other's nationals treatment no less favourable than that they accord to their own nationals. Exemptions from this obligation must be in accordance with the substantive provisions of Articles 3 and 5 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (hereinafter referred to as "the TRIPS Agreement").

3. The Parties shall grant to each other's nationals treatment no less favourable than that accorded to nationals of any other State. Exemptions from this obligation must be in accordance with the substantive provisions of the TRIPS Agreement, in particular Articles 4 and 5 thereof.

4. The Parties agree, upon request of any Party to the Joint Committee, to review the provisions on the protection of intellectual property rights contained in the present Article and in Annex VI, with a view to further improving the level of protection and to avoiding or remedying trade distortions caused by actual levels of protection of intellectual property rights.

Chapter 4. INVESTMENT, SERVICES AND GOVERNMENT PROCUREMENT

Article 25. Investment

1. The Parties shall endeavour to provide in their territories stable, equitable and transparent investment conditions for investors of the other Parties that are making or seeking to make investments in their territories.

2. The Parties shall admit investments by investors of the other Parties in accordance with their laws and regulations. They recognise that it is inappropriate to encourage investment by relaxing health, safety or environmental standards.

3. The Parties recognise the importance of promoting investment and technology flows as a means for achieving economic growth and development. Co-operation in this respect may include:

(a) appropriate means of identifying investment opportunities and information channels on investment regulations;

(b) exchange of information on measures to promote investment abroad; and

(c) the furthering of a legal environment conducive to increased investment flows.

4. The Parties affirm their commitment to review issues related to investment in the Joint Committee no later than five years after the entry into force of this Agreement, including the right of establishment of investors of one Party in the territory of another Party.

5. Iceland, the Principality of Liechtenstein and the Swiss Confederation, on the one part, and Serbia, on the other, shall refrain from arbitrary or discriminatory measures regarding investments by investors of another Party mentioned in this paragraph and shall observe obligations they have entered into with regard to specific investments by an investor of another Party mentioned in this paragraph.

Article 26. Trade In Services

1. The Parties shall aim at achieving gradual liberalisation and the opening of their markets for trade in services in accordance with the provisions of the General Agreement on Trade in Services (hereinafter referred to as "the GATS"), taking into account ongoing work under the auspices of the WTO.

2. If a Party grants to a non-Party, after the entry into force of this Agreement, additional benefits with regard to the access to its services markets, it shall afford adequate opportunities for negotiations with a view to extending these benefits to another Party on a reciprocal basis.

3. The Parties undertake to keep under review paragraphs 1 and 2 with a view to establishing an agreement liberalising trade in services between them in accordance with Article V of the GATS.

Article 27. Government Procurement

1. The Parties shall enhance their mutual understanding of their government procurement laws and regulations with a view to progressively liberalising their respective procurement markets on the basis of non-discrimination and reciprocity.

2. In order to improve transparency, the Parties shall publish their laws, or otherwise make publicly available their laws, regulations and administrative rulings of general application as well as their respective international agreements that may affect their procurement markets. The Parties shall promptly respond to specific questions and provide, upon request, information to each other on such matters.

3. If a Party grants to a non-Party, after the entry into force of this Agreement, additional benefits with regard to the access to its procurement markets, it shall agree to enter into negotiations with a view to extending these benefits to another Party on a reciprocal basis.

Chapter 5. PAYMENTS AND CAPITAL MOVEMENTS

Article 28. Payments for Current Transactions

Subject to the provisions of Article 30, the Parties undertake to allow all payments for current transactions to be made ina freely convertible currency.

Article 29. Capital Movements

1. The Parties shall ensure that capital for investments made in companies formed in accordance with their respective laws, any returns stemming therefrom, and the amounts resulting from liquidations of investments are freely transferable.

2. The Parties shall hold consultations with a view to facilitating the movement of capital between the EFTA States and Serbia and achieve its complete liberalisation as soon as conditions permit.