PRESS RELEASE
PRESS/TPRB/20
8 December 1995TRADE
POLICY REVIEW BODY: REVIEW OF THE SLOVAK REPUBLIC
TPRB'S EVALUATION Back to top
The Trade Policy Review Body of the World Trade
Organization (WTO) conducted its review of the Slovak Republic's trade policies on 5 and 6
December 1995. The text of the Chairman's concluding remarks is attached as a summary of
the salient points which emerged during the two-day discussion.
The review enables the TPRB to conduct a collective
examination of the full range of trade policies and practices of each WTO member country
at regular periodic intervals to monitor significant trends and developments which may
have an impact on the global trading system.
The review is based on two reports which are
prepared respectively by the WTO Secretariat and the government under review and which
cover all aspects of the country's trade policies, including: its domestic laws and
regulations; the institutional framework; bilateral, regional and other preferential
agreements; the wider economic needs and the external environment.
A record of the discussions and the Chairman's
summing-up, together with these two reports, will be published in due course as the
complete trade policy review of the Slovak Republic and will be available from the WTO
Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been
completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh
(1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994),
Chile (1991), Colombia (1990), Costa Rica (1995), Côte d'Ivoire (1995), Egypt (1992), the
European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong
(1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and
1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992),
Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria
(1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland
(1993), Romania (1992), Senegal (1994), Singapore (1992), Slovak Republic (1995), South
Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991), Thailand
(1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uganda
(1995), Uruguay (1992) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF THE
SLOVAK REPUBLIC
CONCLUDING REMARKS BY THE CHAIRPERSON Back
to top
This meeting of the Trade Policy Review Body has now
completed the first review of the Slovak Republic's trade policies and practices. These
remarks, which are made on my own responsibility, summarize the main points of the
discussion. They are not intended to substitute for the collective evaluation and
appreciation of the Slovak Republic's trade policies and practices. Details of the
discussion will be reflected in the minutes of the meeting.
The discussion developed under two broad themes: the
economic transition; and international trade policies.
The Economic Transition
Participants praised the Slovak Republic for the
significant progress in its transition to a market economy. Structural reform had been
facilitated by a stable macroeconomic environment. The process of reform had already begun
to lead to strong growth. The fiscal accounts were improving; the external current account
was in surplus and international reserves were at a reasonably comfortable level. However,
participants noted that inflation was higher than in partner countries, although it seemed
to have declined in recent months. Also a smoothly functioning financial system was not
yet fully in place, which might be negatively affecting savings. Questions were raised on
the contribution of the import surcharge to a reduction of the fiscal deficit and on
policy changes that might generate higher savings.
Some members felt that an apparent slowdown in
privatization, together with a change in method, may have contributed to uncertainty for
foreign investors, and affected investment flows. Members asked how the current approach
to privatization would lead to an effective separation of enterprises from State
influence. Some members asked Slovakia to state the reasons for its dissatisfaction with
the voucher method of privatization.
Members noted that trade had been important in
fostering competition in Slovakia. In this context, Slovakia was asked about its plans for
liberalization beyond that agreed in the Uruguay Round. Further questions were asked about
plans to increase the effectiveness of bankruptcy procedures and to liberalize remaining
price controls.
Much of Slovakia's recent growth had been
export-led; however, capacity constraints were being encountered in many sectors with
increased investment thus urgently needed in these areas. Clarification was sought on the
criteria used by the National Bank of Slovakia to grant approval for foreign direct
investment in financial services and telecommunications, and other areas vital to the
infrastructure.
Slovakia's trade had been largely reoriented toward
the European Union and other European market economies, following the disintegration of
the CMEA; new regional agreements also played a rôle in this process. Comments were
sought on the relationship between Slovakia's obligations under regional agreements and
those under the WTO.
In response, the representative of Slovakia noted
that inflation had slowed in 1995, with a target of 6 to 8 per cent for 1996. Unemployment
remained high at some 13 per cent. The import surcharge had contributed 1.6 per cent of
budget revenue. Efforts were underway to improve Slovakia's financial system with the new
Act on Banks in preparation and expected to enter into force in 1996. The low level of
savings was influenced by the standard of living; increased savings would depend on
decreasing unemployment and the growth of incomes.
The authorities intended to accelerate and complete
the privatization process in the near future, with the second wave to be finished in late
1996. Voucher privatization had been replaced by bond privatization; privatization was
geared towards creating a competitive environment that would lead to company
restructuring. Trade was also important to fostering competition; in 1996 tariffs would be
eliminated on a number of lines, going beyond the commitments Slovakia had made in the
Uruguay Round. An amendment of the bankruptcy law was being prepared.
Slovakia's foreign investment régime was generally
open. Foreign investors were granted national treatment, no investment measures were
maintained that were not consistent with the TRIMs Agreement, and there were no
restrictions on current external payments related to investments. In the banking sector,
all investments, both domestic and foreign, required the approval of the National Bank,
but this was only for prudential reasons. The development of the telecommunications
infrastructure was a government priority, with plans to sharply increase the number of
telephones per inhabitant; however, the existing monopoly in voice telephony would remain
until 2003
Regional trade agreements were of great importance
to Slovakia. All such arrangements were based on the principles of GATT Article XXIV and
were therefore in conformity with Slovakia's obligations under the WTO.
Trade Policies
Participants appreciated the openness of Slovakia's
trade régime and congratulated Slovakia for having ratified the Uruguay Round package and
becoming an original WTO member. Questions were asked about the trade policy making
process, including the rôles of consumer groups and the private sector.
Participants sought information on legislative
changes required to implement the WTO Agreements, particularly in the areas of TRIPs and
customs procedures. Information was also sought on the extent to which Slovakia had
satisfied its notification obligations under the WTO.
While tariffs were low in comparison to many other
transition economies and developed countries, they were seen as escalatory, with possibly
adverse effects on export growth and diversification. It was noted that Slovakia had
retained its import surcharge despite favourable economic progress and a strong balance of
payments; participants urged Slovakia to remove the surcharge in line with its commitments
in the BOP Committee. The basis of Slovakia's value added tax (VAT) as applied to imported
goods was queried and the authorities were asked whether a new tax law, to be introduced
in 1996, would ensure that VAT would be calculated on the basis of the actual
duty-inclusive price, even for goods under preferential arrangements. In-quota tariff
rates on agricultural products covered by tariff quotas were expected to remain fixed in
ad valorem terms, while the out-of-quota tariff declined in line with Uruguay Round
commitments; confirmation of the convergence of the two rates was sought from the
authorities.
Some participants noted that free movement of
third-country goods was not a feature of the Czech-Slovak Customs Union and asked whether
changes were envisaged. Clarification was sought on the effects of Slovakia's m.f.n.
tariff reduction on automobiles. Questions were also asked about Slovakia's GSP programme;
its potential accession to the European Union; the preparation of legislation on
anti-dumping, countervailing duties and safeguards; and the need to avoid a built-in
protectionist bias; the automaticity of import licensing and government procurement
preferences and Slovakia's intention to accede to the Plurilateral Agreement.
Several participants noted that government policy
was relatively more active in agriculture than in other sectors. Slovakia was asked about
its seed subsidy programme and other subsidies; the operation of the State Fund for Market
Regulation; import allocations under tariff quotas; health certification requirements on
food and beverages; and the preferential tariff quota for imports of poultry meat from the
United States.
The importance of the services sector in generating
Slovakia's current account surplus was noted. Slovakia was asked whether it would consider
soon eliminating its six m.f.n. GATS exemptions; it was hoped that the reciprocity
provision on financial services would be removed on implementation of the new Act on
Banks.
In reply, the representative of Slovakia responded
that the Ministry of the Economy was responsible for foreign trade and prepared policy in
this area. New legislation was being prepared on trademarks to bring it into full
conformity with the TRIPS Agreement. In addition, a new Customs Act was under preparation,
as was legislation on anti-dumping, countervailing duties and safeguards; these would all
be in conformity with the WTO Agreements. The Slovak Government had already submitted
notifications in several areas, including agriculture, textiles and customs valuation, and
was preparing procedures to meet the notification requirements under other WTO Agreements.
The representative did not agree that the Slovak
tariff showed escalation, with the weighted average m.f.n. rate on industrial imports
slightly less than 2 per cent. Slovakia intended to meet its commitments made in the BOP
Committee on the withdrawal by 30 June 1996 of the import surcharge. Under the new Tax Law
to be introduced in 1996, the basis for the VAT on imported products would include the
actual duty. Slovakia did not have any commitments to reduce in-quota tariff rates.
The representative continued that at present the
free movement of third-country goods was not under consideration in the Customs Union. The
unilateral elimination by Slovakia of tariffs on certain automobiles was a temporary
measure taken for environmental reasons. Slovakia's new GSP scheme entered into force on 1
January 1995, providing zero tariffs for all imports from least-developed countries; the
limit of US$2 million on preferential imports from each developing country reflected
Slovakia's economic situation. Import licensing was transparent and automatic, being
maintained only for monitoring purposes. On government procurement, no distinction was
made between domestic and foreign bidders; Slovakia intended to accede to the Government
Procurement Agreement in 1998. Consultations would be held before any negotiations for
membership to the European Union, but it was too early to provide concrete information on
this subject.
The representative said that no change was foreseen
in the operation of the State Fund for Market Regulation, which had been notified to the
WTO. Support for agriculture was in line with national priorities, which included
employment for the rural population. In accord with Slovakia's notification of its Uruguay
Round commitments in agriculture, it maintained certain country-specific allocations for
its tariff quotas. The Slovak Republic had established an Inquiry Point in accord with the
TBT Agreement; this Point was ready to provide any information that might be needed about
certification requirements and procedures. The preferential quota of imports of poultry
meat from the United States was the result of bilateral negotiations in the framework of
the Uruguay Round.
The representative concluded that Slovakia's m.f.n.
exemptions in services would be removed in accordance with its GATS obligations. The new
Act on Banks would eliminate the reciprocity requirement upon its expected introduction in
1996. Back to top |