Croatia and Bosnia and Herzegovina will soon begin negotiations on a trade protocol to cushion the effects of Croatia's accession to the European Union next year and its exit from the Central European Free Trade Agreement, the Bosnian Foreign Trade Ministry has said.

Tuesday's Nezavisne Novine daily quoted Assistant Minister Dragisa Mekic as saying that documentation was being gathered and preparations were under way to sign the protocol.

He said the negotiations on the protocol were initiated by Croatia, because EU accession would impose a new trade regime, including payment of customs duties on some food products exported to Bosnia.

Under the EU-Bosnia Stabilisation and Association Agreement, as of 1 January 2013 Bosnia should revoke payment of customs duties on most products coming from EU countries. However, in order to protect domestic production, Bosnia was given the possibility to retain duties on imports such as milk, dairy and animal products.

"We will revoke most customs duties, but until we become an EU member, the duties on some products of dairy and animal origin will stay," Mekic said, adding that many of those products were from Croatia and that Croatia, therefore, was "panicking."

Annually, Croatia exports more than EUR 750 million worth of food products to Bosnia.