US embassy cable - 03ZAGREB350

UNCLAS ZAGREB 000350 
 
SIPDIS 
 
STATE PASS USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, HR, WTO, Trade 
SUBJECT: CROATIA SEEKS "BREATHING SPACE" IN 
NON-AGRICULTURAL MARKET ACCESS NEGOTIATIONS AS NEWLY 
ACCEDING MEMBER OF WTO 
 
REF: A. 2002 STATE 243208 
 
     B. 2003 STATE 19378 
 
1.  IN RESPONSE TO OUR DEMARCHE LAST FALL (REF A), THE 
MINISTRY OF ECONOMY SHARED WITH US THE STATEMENT THAT IT 
SUBMITTED TO THE NEGOTIATING GROUP ON MARKET ACCESS (NOVEMBER 
                       UNCLASSIFIED 
 
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4-6, 2002), IN WHICH THE GOC ARGUED THAT CROATIA, ALONG WITH 
OTHER COUNTRIES WHICH HAD NEWLY ACCEDED TO THE WTO, NEEDED 
SOME "BREATHING ROOM" BEFORE IT COULD BE EXPECTED TO TAKE ON 
ANY ADDITIONAL REDUCTIONS IN TARIFFS. 
 
2.  REF B FOLLOW-UP WAS FORWARDED TO OLGICA SPEVEC, ASSISTANT 
MINISTER FOR TRADE AT THE MINISTRY OF ECONOMY ON JANUARY 
27TH, BUT SHE WAS UNABLE TO MEET WITH US UNTIL FEBRUARY 11. 
SPEVEC AND HER ASSISTANT FOR INTERNATIONAL TRADE, VESNA 
FOCHT, REITERATED THE POSITION LAID OUT IN CROATIA'S NOVEMBER 
STATEMENT.  SPEVEC REPORTED THAT IN THE PREVIOUS WEEK'S 
MEETINGS IN GENEVA, CROATIA HAD SPOKEN ON BEHALF OF A GROUP 
OF "NEWLY-ACCEDED" COUNTRIES, INCLUDING OTHER CENTRAL AND 
EASTERN EUROPEAN COUNTRIES AND JORDAN.  THESE COUNTRIES 
AGREED THAT THEY WERE BUSY ADJUSTING TO THE VERY AMBITIOUS 
COMMITMENTS THEY HAD TAKEN ON AND WERE NOT READY TO MOVE 
IMMEDIATELY TO THE VIRTUAL ELIMINATION OF TARIFFS. 
 
3.  SPEVEC ADDED THAT IN THE CASE OF CROATIA, IT WAS ALREADY 
AMONG THE MOST OPEN COUNTRIES IN THE WORLD, IN TERMS OF ITS 
COMPLETE BINDING OF TARIFF LEVELS.  ITS AVERAGE BOUND RATE 
TARIFFS LEVEL FOR NON-AGRICULTURAL PRODUCTS WAS 5 PERCENT, 
WITH OVER 99 PERCENT OF ITS TARIFFS BOUND BELOW OR AT 14 
PERCENT.  IT WAS TIME FOR THE REST OF THE WORLD TO CATCH UP 
WITH CROATIA.  SHE ALSO NOTED THAT MOST OF CROATIA'S 
NEIGHBORS, ASIDE FROM SLOVAKIA AND THE CZECH REPUBLIC, HAD 
HIGHER TARIFFS.  WHILE SHE RECOGNIZED THE MANY BENEFITS THAT 
LOWER TARIFFS HAD BROUGHT CROATIA (WHICH IS EXPERIENCING A 
CREDIT AND CONSUMER-LED BOOMLET), THERE WAS ALSO A CONCERN 
ABOUT BALLOONING TRADE DEFICITS. 
ROSSIN 
                       UNCLASSIFIED 
 
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