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RESTRICTED WT/TPR/G/369 7 March 2018

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RESTRICTED WT/TPR/G/369 7 March 2018 RESTRICTED WT/TPR/G/369 7 March 2018 (18-1403) Page: 1/35 Trade Policy Review Body Original: English TRADE POLICY REVIEW REPORT BY MONTENEGRO Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), the policy statement by Montenegro is attached. Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on Montenegro. WT/TPR/G/369 • Montenegro - 2 - Contents 1 INTRODUCTION .......................................................................................................... 4 2 ECONOMIC POLICIES .................................................................................................. 4 2.1 Macroeconomic developments in the Montenegrin economy in the period 2012-2016 ........... 4 2.1.1 Latest economic developments ................................................................................... 4 2.1.2 Projections of macroeconomic trends for the period 2018-2020 (real sector) .................... 5 2.2 Tax system ................................................................................................................. 6 2.3 Structural reforms ....................................................................................................... 7 2.4 Justice reform system .................................................................................................10 2.5 Privatization ...............................................................................................................10 2.6 Investment policy .......................................................................................................11 2.6.1 Incentive programmes available to investors ...............................................................12 2.7 Competition policy ......................................................................................................13 2.8 Public Procurement .....................................................................................................14 3 TRADE POLICY .......................................................................................................... 14 3.1 Small and medium enterprises (SMEs) ..........................................................................14 3.2 Trade in goods ...........................................................................................................15 3.3 Industry – Manufacturing industry ................................................................................15 3.4 Energy ......................................................................................................................16 3.5 Mineral resources of Montenegro ..................................................................................17 3.5.1 Exploration and Production of Hydrocarbons (Oil & Gas) ...............................................18 3.6 Agriculture, fishery and forestry ...................................................................................18 3.6.1 Agriculture ..............................................................................................................18 3.6.2 Fishery ...................................................................................................................20 3.6.3 Forestry ..................................................................................................................21 3.7 Customs system .........................................................................................................21 3.8 Sanitary and Phytosanitary Measures ............................................................................23 3.9 Technical regulations and standards ..............................................................................24 3.10 Trade in services ......................................................................................................24 3.10.1 Tourism ................................................................................................................25 3.10.2 Transport ..............................................................................................................26 3.10.3 Banking sector .......................................................................................................28 3.10.4 Insurance .............................................................................................................29 3.10.5 Electronic communications ......................................................................................30 3.10.6 Postal services .......................................................................................................31 3.11 Intellectual property rights .........................................................................................31 4 OBJECTIVES AND DEVELOPMENT OF TRADE POLICY ................................................. 32 4.1 WTO negotiations .......................................................................................................32 4.1.1 Agreement on Trade Facilitation (TFA) ........................................................................32 4.2 Process of Montenegro's accession to the EU ..................................................................32 WT/TPR/G/369 • Montenegro - 3 - 4.3 Regional integration ....................................................................................................35 4.3.1 Agreement on Amendment of and Accession to the Central European Free Trade Agreement – CEFTA 2006 ...................................................................................................35 WT/TPR/G/369 • Montenegro - 4 - 1 INTRODUCTION 1.1. Government of Montenegro applied for membership of the WTO on 23 December 2004, in line with Article XII of the Marrakesh Agreement Establishing the WTO. The General Council established Working Party (WP) on accession of Montenegro on 15 February 2005. The WP adopted the Report on its work and made the recommendation on accession of Montenegro to the WTO on 5 December 2011 after eight meetings had been held, and finished the work under its mandate. Accession of Montenegro was approved by the Ministerial Conference during its eight meeting. The Protocol on accession was signed on 17 December 2011 in Geneva. Montenegro became a full-fledged WTO Member on 29 April 2012. 1.2. The first review of trade policies and practices of Montenegro was initiated in order to implement commitments undertaken by WTO membership. Report of the Government aims to provide short descriptions of the most important economic and monetary policies (by sectors and measures), as well as descriptions of the priorities of the foreign policy as regards Euro-Atlantic integration. The Report describes key activities of the Government – current and future, as well as development projects in different sectors. It covers the period from 2012 to 2017, in line with the envisaged dynamics of reporting. In addition to the Introduction the Report contains 3 parts – main information related to the economic and trade policies, as well as the objectives and development of trade policies in the context of the ongoing accession negotiation to the EU and regional integration. 2 ECONOMIC POLICIES 2.1 Macroeconomic developments in the Montenegrin economy in the period 2012-2016 2.1. During the reporting period, the average annual real growth rate of gross domestic product (GDP) was 1.8%, with a recession of 2.7% in the first year as a result of the spillover of the crisis in the Eurozone, with the average growth from 2013 to 2016, 2.9%. The growth of the economy in these years would be considerably faster, but the lack of diversification on the supply side, which caused the high import dependence, reduced the growth rates of GDP. However, strong investment activity will increase the available capital in the area of infrastructure, energy, tourism and agriculture, increasing the potential for growth of the Montenegrin economy, whose effects will positively affect the overall economic activity in the medium and long term. Such dynamics will affect the reduction of obstacles to accelerated growth and will create an even more favourable investment climate, as a prerequisite for further FDI inflows. Likewise, increasing capital through investment activity involves the introduction of new technologies and knowledge both in the investment phase and in the operational phase. This dynamics affects the increase in total factor productivity, which is the most important driver of GDP growth in the long term. 2.2. Although growth is expected to accelerate in the coming period, there are risks, but also the potential for economic development. Further implementation of the Fiscal Strategy, continuous monitoring of the financial sector, labour market reforms and improvements in the business environment are crucial for achieving sustainable and inclusive growth of the Montenegrin economy. According to the IMF, the acceleration of global growth, especially in EU, could have a positive impact on the Montenegrin economy. Montenegro uses the euro as a domestic currency, the country has been a candidate for EU membership since 2008, while accession negotiations officially began in June 2012. 2.3. Trends in international trade and foreign direct investment (FDI) reflect the importance of Europe as the main market of Montenegro. The most important partners remain the EU, Serbia, Bosnia and Herzegovina, China and the Russian
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