RESTRICTED WT/TPR/S/390 11 June 2019 (19-3978) Page: 1/127 Trade Policy Review Body TRADE POLICY REVIEW REPORT BY THE SECRETARIAT THE REPUBLIC OF NORTH MACEDONIA This report, prepared for the second Trade Policy Review of the Republic of North Macedonia, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from the Republic of North Macedonia on its trade policies and practices. Any technical questions arising from this report may be addressed to Mr. Mark Koulen (tel: 022 739 5224); Ms. Martha Lara Fernandez (tel: 022 739 6033); and Mr. Pierre Latrille (tel: 022 739 5266). Document WT/TPR/G/390 contains the policy statement submitted by the Republic of North Macedonia. 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 the Republic of North Macedonia. This report was drafted in English. WT/TPR/S/390 • The Republic of North Macedonia - 2 - CONTENTS SUMMARY ........................................................................................................................ 7 1 ECONOMIC ENVIRONMENT ........................................................................................ 13 1.1 Main Features of the Economy .....................................................................................13 1.2 Recent Economic Developments ...................................................................................13 1.2.1 Monetary and exchange rate policy ............................................................................16 1.2.2 Fiscal policy ............................................................................................................16 1.2.3 Structural issues ......................................................................................................16 1.2.3.1 Tax and public financial management reform ............................................................17 1.2.3.2 Labour market ......................................................................................................17 1.2.3.3 Business environment ...........................................................................................17 1.2.4 Balance of payments ................................................................................................18 1.3 Developments in Trade and Investment ........................................................................20 1.3.1 Trends and patterns in merchandise trade ..................................................................20 1.3.2 Trends and patterns in FDI .......................................................................................23 2 TRADE AND INVESTMENT REGIMES........................................................................... 24 2.1 General Framework ....................................................................................................24 2.2 Trade Policy Formulation and Objectives ........................................................................24 2.3 Trade Agreements and Arrangements ...........................................................................25 2.3.1 WTO ......................................................................................................................25 2.3.2 Regional and preferential agreements ........................................................................26 Stabilization and Association Agreement (SAA) with the European Union .....................27 2.3.2.2 Free Trade Agreement with the European Free Trade Association (EFTA) .....................28 2.3.2.3 The Central European Free Trade Agreement (CEFTA) ...............................................28 2.3.2.4 Free Trade Agreement with Turkey .........................................................................29 2.3.2.5 Free Trade Agreement with Ukraine ........................................................................29 2.3.3 Other agreements and arrangements .........................................................................29 2.4 Investment Regime ....................................................................................................30 3 TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 33 3.1 Measures Directly Affecting Imports ..............................................................................33 3.1.1 Customs procedures, valuation, and requirements .......................................................33 3.1.1.1 Customs procedures and requirements ....................................................................33 3.1.1.2 Customs valuation ................................................................................................35 3.1.1.3 Pre-shipment inspection ........................................................................................36 3.1.1.4 Special customs regimes ........................................................................................36 3.1.2 Rules of origin .........................................................................................................37 3.1.3 Tariffs ....................................................................................................................38 3.1.3.1 Tariff rate quotas ..................................................................................................41 3.1.3.2 WTO bindings .......................................................................................................42 3.1.3.3 Preferential tariffs .................................................................................................43 WT/TPR/S/390 • The Republic of North Macedonia - 3 - 3.1.4 Other charges affecting imports .................................................................................44 3.1.5 Import prohibitions, restrictions, and licensing ............................................................44 3.1.6 Anti-dumping, countervailing, and safeguard measures ................................................45 3.2 Measures Directly Affecting Exports ..............................................................................46 3.2.1 Customs procedures and requirements .......................................................................46 3.2.2 Taxes, charges, and levies ........................................................................................46 3.2.3 Export prohibitions, restrictions, and licensing .............................................................46 3.2.4 Export support and promotion ...................................................................................46 3.2.5 Export finance, insurance, and guarantees ..................................................................48 3.3 Measures Affecting Production and Trade .......................................................................49 3.3.1 Taxation .................................................................................................................49 3.3.2 Incentives ...............................................................................................................50 3.3.3 Standards and other technical requirements ...............................................................53 3.3.4 Sanitary and phytosanitary measures .........................................................................55 3.3.4.1 Sanitary regulations ..............................................................................................57 3.3.4.2 Veterinary regulations ...........................................................................................57 3.3.4.3 Phytosanitary regulations .......................................................................................58 3.3.5 Competition policy, state aid and price controls ...........................................................60 3.3.5.1 Competition policy ................................................................................................60 3.3.5.2 State aid ..............................................................................................................62 3.3.5.3 Price controls........................................................................................................63 3.3.6 State trading, state-owned enterprises, and privatization .............................................63 3.3.7 Government procurement .........................................................................................64 3.3.8 Intellectual property rights ........................................................................................70 4 TRADE POLICIES BY SECTOR ..................................................................................... 75 4.1 Agriculture, Forestry, and Fisheries ...............................................................................75 4.1.1 Features and market development .............................................................................75 4.1.2 Policy objectives and administration ...........................................................................79 4.1.3 Policy instruments ...................................................................................................81 4.1.3.1 Border measures ..................................................................................................81 4.1.3.1.1 Measures affecting imports ..................................................................................81