AGREEMENT ON IMPLEMENTATION OF ENTITY OBLIGATIONS SET FORTH BY THE FINAL ARBITRAL AWARD FOR BRCKO

The Government of the Brcko District of Bosnia and Herzegovina, represented by Mayor Sinisa Kisic

The Government of the Federation of Bosnia and Herzegovina (FED), represented by Prime Minister Edhem Bicakcic

The Government of the Republic of Srpska (RS), represented by Deputy Prime Minister Ostoja Kremenovic

Under the auspices of the Deputy High Representative and Supervisor of Brcko, Ambassador Gary Matthews

With a view to implementing the Final Award issued by the International Arbitration Tribunal for Brcko dated March 5, 1999 establishing the Brcko District of Bosnia and Herzegovina (hereinafter: the Brcko District) as a single administrative unit under the exclusive sovereignty of Bosnia and Herzegovina;

Agreeing that the Brcko District has fulfilled its obligations under the Addendum to the Supervisory Order on the Financial System of the Brcko District of Bosnia and Herzegovina dated June 21, 2000;

In furtherance of the Memorandum of Understanding dated September 19, 2000

Sign the following

1. District Revenues: With the exception of pension and health care contributions, which will be addressed in separate Agreements, the Governments of the Federation of Bosnia and Herzegovina and Republika Srpska (hereinafter: the Entities) agree that all public revenues, including but not limited to taxes, contributions, donations, fines, fees and rents from District owned property collected within the Brcko District or on behalf of the Brcko District - regardless of whether the aforementioned revenues have been currently identified by payment bureau accounts as revenues of the Brcko District - are the property of the Brcko District.
2. Harmonization of Payment Bureau Accounts: To insure that revenues due to the Brcko District are properly accounted for and deposited in the appropriate accounts of the Brcko District, the District Revenue Agency, in cooperation with the Entity payment bureaus, shall promptly harmonize payment bureau accounts.
3. Tax and Revenue Reform: The Entities recognize that meaningful reform of the District's current tax structure and methods for establishing and collecting other government revenues, (including fines, fees, contributions, rents, etc.) is essential in developing the area's economy and promoting the District's financial self-sufficiency. Further, the Entities acknowledge that the District must have considerable latitude in these areas based on its urgent need to generate revenues within the District. The District understands that tax and other revenue reforms must be generally compatible with reforms to be undertaken elsewhere in Bosnia and Herzegovina.
4. Abolishment of Payment Bureaus: Entities shall ensure that the branch offices of the payment bureaus located within the Brcko District are included in the overall dismantling plans for the payment bureaus and active assistance is provided to the Brcko District in the transition period. In particular, the Entities acknowledge that payment bureaus employees within the District are employees of the Entities and that said employees shall receive the same post-employment benefits (i.e.: severance, training and job placement) as all other employees of the payment bureau system.
5. Veterinary and Plant Inspections: The Entities agree that veterinary and plant inspections services at the Brcko border crossing shall be performed by employees of the Brcko District Government's Department of Agriculture and Forestry. The Brcko District Government shall abide by minimum inspection standards set by the Entities and shall have the authority to establish inspection fees and retain all revenues derived from the service.
6. District Owned Property: The Entities acknowledge that under the Brcko Arbitral Award, publicly owned property is owned by the Brcko District and that said property is a significant source of revenue. Accordingly, the Entities agree to give full cooperation to the Brcko District Government in helping the Brcko District to identify all properties rightfully owned by the Brcko District and insuring that any existing rental agreements are valid, competitive and paid to the District's unified account.
7. Public Employees of the Brcko District: The Entities acknowledge that a significant reduction in the workforce of the public sector in the Brcko District will occur upon adoption of the District's final staffing plan and annual budget. Accordingly the Entities agree to develop a plan on reassignment or post-employment benefits (i.e.: severance packages, early retirement schemes, training and job replacement) for laid off employees. In particular the Entities agree to fund a six-month severance package of 350 KM per month (plus customary social service benefits) for each laid off employee. The RS shall provide severance funding for laid off employees that previously worked under RS jurisdiction. The FED shall provide severance funding for laid off employees that previously worked under FED jurisdiction.
8. Reimbursement for Electric Utility Salary and Operational Expenses: The Entities acknowledge that the Brcko District has incurred salary and operational expenses for its administration of Electric utilities since the District was established and agree to reimburse without delay the District for these expenses.
9. Reimbursement for Health Care Salary and Operational Expenses: In addition to the Agreement on Health Care and Health Insurance the Entities acknowledge that the Brcko District government has incurred salary and operational expenses for its administration of heath care services since the District was established. Accordingly, the Entities agree to immediately reimburse the District Government for these expenses.
10. This Agreement shall be implemented at the same time at which the Brcko District Budget shall be adopted.

Brcko, 24 October 2000

For the Brcko District Government
Mayor Sinisa Kisic

For the Government of the Federation of Bosnia and Herzegovina
Prime Minister Edhem Bicakcic

For the Government of Republika Srpska
Deputy Prime Minister Ostoja Kremenovic

Deputy High Representative, Supervisor of Brcko
Ambassador Gary Matthews

Office of the High Representative