Czech Republic WT/TPR/S/12
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IV. TRADE POLICIES AND PRACTICES BYMEASURE
(1) Overview
1. Trade policy isplaying akeyrôleintheCzech Republic 'sprogress fromacentrally planned
toamarket economy. Thischapter isprimarily concerned withthemaincomponents ofthetradepolicy
régime, including import policies, export policies, andregional trade agreements. Itisimportant,
however, thatthese policies beexamined together withthose domestic policies thatareclosely linked
totrade. Links inareas suchascompetition policy andprivatization areespecially important inthe
CzechRepublic,wherethelegalandinstitutionalinfrastructureofamarketeconomyisbeingcompleted.
Trade-related domestic policies arediscussed inthelastsection ofthischapter.
2. TheCzech Republic hasagenerally opentrading environment; however, therearetwomajor
areas ofconcern. ThefirstistheCzech Republic 'sregional trade relationships. Sixpreferential
agreements areinplace, andothers areunder consideration. These offerpotential economic andforeign
policy benefits totheCzech Republic, some ofwhich thecountry hasalready begun toenjoy. The
challenge fortheCzech Republic istoworktomaintain, andseektoimprove on,theoutward orientation
oftheregional arrangements ofwhich itisamember. TheCzech Republic willbenefit bybeing a
strong voice forreducing barriers tooutside countries andforshortening thetransition period leading
totheintegration ofpartner countries involved.
3. Thesecond major concern isthattheconstruction oftradeandtrade-related lawsandregulations
becompleted insuchawayastoensure theirlong-term effectiveness. Regardless ofthepositive attitude
towardtradedisplayedtodaybytheauthoritiesandthroughoutmuchoftheprivatesector,itisimperative
thatlegislation inareas suchasanti-dumping beskilfully designed toavoid anyfuture protectionist
bias. Therôleoftrade inpromoting effective economic competition -which isatthecoreofthe
economic transition -must continue tobestrengthened.
(2) Measures Directly Affecting Imports
4. TheCzech Republic 'simport régime ischaracterized bylowtomoderate tariffs and
comprehensivetariffbindings,withrelativelyfewnon-tariffimportbarriers.Czechfirmsandconsumers
areabletopurchase inputs andgoods fromabroad without, inmostcases, substantial taxesorrestrictions
being imposed bytheGovernment. Thisrelative openness tends tomake Czech firms morecompetitive
inbothdomestic andexport markets, yielding ahigher standard ofliving forthecountry.
5. Tariffs aretheprimary means ofimport protection intheCzech Republic. Tariffs, however,
areuneven intworespects. First, most-favoured-nation (m.f.n.) tariffs varyacross economic sectors,
withprocessed goods generally receiving greater protection. Thiscreates thepotential forlarge
differences ineffective ratesofprotection andthusforacostly misallocation ofresources.1Second,
tariffs varyacross import sources asaresult oftheCzech Republic 'ssixpreferential tradeagreements.
6. ReductionsintheCzech-SlovakcommonexternaltariffasaresultofUruguayRoundobligations
willpartially redress these problems. TheCzech Republic began toimplement itsUruguay Round
tariff commitments on1January 1995. Most ofthese reductions willbeineffect by1January 1999,
andalltariff commitments willbeineffect by2005. Themaximum tariff willbehalved, to
1Thesub-m.f.n.tariffsappliedunderthepreferentialagreemen tsmayeffectivelyreducethedifferencebetween
therates charged onprocessed goods andthose applied onunprocessed andsemi-processed goods.WT/TPR/S/12 Trade Policy Review
Page 32
125percent,andthemaximum tariffexcluding agriculture willfallfrom45to29percent. Theshare
oftariff lineswithm.f.n. tariff ratesexceeding 40percentwilldropfrom thecurrent 2.4percent
to1.2percent,while theshare ofthose atorbelow 5percentwillrisefrom49percentto62percent.
(i) Registration offoreign trade activity
7. Foreign trade wasaState monopoly during thecentrally planned period. In1989, lessthan
100companies intheCSFR hadtherighttocarry outforeign tradeactivities. Thenumber ofeconomic
entities engaged inforeign trade increased toabout 30,000 when theliberalization offoreign trade
began in1991. Presently, some27,000 companies areengaged inexporting andsome47,000 companies
areinvolved inimporting. By1992, theshare oftrade conducted byprivately-owned enterprises had
increased to48percentforexports and56percentforimports.2
8. Since 1991, noregistration oforauthority forafirmtoengage ininternational tradehasbeen
necessary. Theentry ofafirmintotheappropriate business register issufficient. Thebusiness register
isapublic listcontaining those dataonenterprises thatarestipulated bylaw. ItiskeptbyaRegister
Court, which makes allregistrations public intheOfficial Commercial Bulletin. Forexports ofarms
andammunition, aseparate permit isalsoneeded.
(ii) Tariffs andother price-based policies
(a) General features
9. TheCzech Republic applies theEuropean Union 'sCombined Nomenclature (CN) tariff
classification, consisting of10,446 eight-digit tariff lines. TheCNisconsistent with the
Harmonized System (HS), withaone-to-one correspondence uptothe6-digit level. Czechoslovakia
implemented theHarmonized System (HS)in1988 andtheCNin1992.
10. TheCzech Republic shares acommon external tariffwithSlovakia (Table IV.1). Thecommon
tariff structure ischaracterized byasimple average m.f.n. rateof8percent, including agriculture,
withastandard deviation of13.5percent. Tariffs, including out-of-quota ratesontariffied items under
theUruguay Round, range ashighas233percentontwoeight-digit agricultural items. TheCzech
Republic 'spresent tariffstructure haslargely beencarried overfromthecentral planning system, when
tariffsdidnotinfluenceimportflows,hadnoprotectiveintent,andwerenotchargedonmostcommerce.3
Alltariffsareadvalorem.BecauseofpreferentialagreementsandtheGeneralizedSystemofPreferences
(GSP) (section (k)below), onlysome 20percentofimports aresubject tom.f.n. rates.
11. From 1January 1996, further reductions inm.f.n. tariffs agreed intheUruguay Round, and
reductions inpreferential tariffs agreed invarious regional agreements, willtakeeffect.4Implementation
ofUruguay Round commitments isscheduled toreduce thesimple average m.f.n. tariff ratefrom
2GATT document, L/7284, 6August 1993. These dataarenolonger collected.
3In1991, theCzech andSlovak Federal Republic obtained awaiver fortherenegotiation ofitsschedule,
inviewofexceptional circumstances. Theresulting tariff negotiations increased theweighted average tariff from
5percentto6percent(GATT documents BOP/W/156 andL/6968).
4Most preferential tariffs areequal toafactor ofpreference times them.f.n. tariff, sothatanm.f.n. tariff
reduction leads toa(smaller) reduction inthepreferential tariff. Reductions inpreferential tariffs willalsotake
place asaresult ofchanges infactors ofpreference thatarebeing phased inunder thepreferential agreements.Czech Republic WT/TPR/S/12
Page 33
8.2percentin1994 to6.3percentupon fullimplementation oftheCzech Republic 'stariff
commitments.
Table IV.1
Summary ofCzech tariffs andtariff preferences, 1995
(Percent)
M.f.n. GSPEuropean
Free Trade
AreaEuropean
UnionHungary Poland Romania Slovenia
Simple average 8.0 6.8 5.7 5.5 5.6 6.0 5.9 3.3
Simple average (6-digit) 6.5 5.1 4.0 3.9 4.2 4.3 4.6 1.9
Weighted average (6-digit) 5.5a5.6 2.2 3.2 1.7 1.0 ... 0.7
No.oftariff linesatthe8-digit level: 10,446
Range ofm.f.n. tariffs: 0to232.7Standard deviation ofm.f.n. tariffs: 13.5
No.oftariff lineswithnon-ad valorem tariffs: 0
... Notavailable.
a Weighted byimports from non-preferential partners.
Note: "Simple average" indicates thatasimple average ofall8-digit tarifflineswastaken. Thismaynotbeappropriate forcomparison
withother countries because theHarmonized System extends onlytosixdigits. "Simple average (6-digit)" indicates that8-digit tarifflines
were firstaveraged within each6-digit category, thenasimple average ofall6-digit categories wastaken. Thisismore appropriate for
cross-country comparisons andforcomparison totheimport-weighted averages. "Weighted average (6-digit)" indicates that8-digit tariff
lineswerefirstaveraged within each6-digit category (tomatch import value data, which were available onlytothe6-digit level), thenan
import-weighted average ofall6-digit categories wastaken. Weighted averages arebased on1994 import values.
Source: WTO Secretariat calculations based ondataprovided bytheauthorities.
12. TheCzechRepublicgrantsatleastm.f.n.treatmenttoallWTOMembersandGATTcontracting
parties, tocountries withwhich ithasbilateral agreements calling form.f.n. treatment and,onan
autonomous basis, tomany other countries withwhich these agreements were notconcluded.5The
following countries andcustoms territories arenotgranted m.f.n. treatment; those marked (*)
nevertheless qualify forGSPtreatment oneligible products.6
Antarctic Territories Heard Islands Vanuatu
Bhutan (*) Nauru (*) Western Sahara
Bouvet Island Oman (*) Western Samoa (*)
Comores (*)
5These include Albania, Belarus, Bulgaria, Estonia, Kazakhstan, Latvia, Lithuania, Russia, Tadzhikistan,
Turkmenistan, Ukraine, andUzbekistan.
6Except forNauru andOman, thetrading partners eligible forGSP treatment qualify asleast-developed
countries; imports intotheCzech market from these sources enter dutyfree.WT/TPR/S/12 Trade Policy Review
Page 34
(b) Tariff escalation
13. Czech tariffs arehigher onfullyprocessed goods thanonsemi-processed goods orprimary
products (Table IV.2). Thesimple average tariffonfullyprocessed goods, acategory covering 5,984
tarifflines,is10percent.Importsofsemi-processedgoodsfaceanaveragetariffof6percent.Primary
products havethelowest tariffs ofthethree categories, withanaverage rateof4percent.7
Table IV.2
Simple average m.f.n. tariffs bystage ofprocessing, 1995
Stage ofprocessing
Primary products Semi-processed products Fully-processed products
Number oflines 1,357 3,105 5,984
Simple average m.f.n. tariff (percent) 4.2 6.0 10.0
Standard deviation ofm.f.n. tariffs 13.6 7.4 15.4
Source: WTO Secretariat calculations, based ondataprovided bytheauthorities.
(c) Tariff bindings
14. Before 1January 1995, bindings applied to97percentofallCzech tariff lines. Asaresult
oftheCzech Republic 'sUruguay Round commitments ontariffs, alleight-digit CNtariff linesare
nowbound. Alltariffrates, including those onagricultural products, arebound attheirapplied m.f.n.
rates.
(d) Duty drawback anddutyexemptions
15. TheCustoms Act(1992) defines theprovisions ofthedutydrawback scheme, under which
exporters areeligible forrefunds ofduties paidonimported inputs usedinmanufacturing orprocessing.
Thevalue ofimported goods usedintheexported product isbased onself-declaration. Theaccuracy
ofself-declaration ismonitored bythecustoms offices onthebasis ofprocedures stipulated inthe
Customs Act.Application forrefund canbemade uponexportation. Duties mustberefunded within
onemonth ofthedateofapplication, orasubstantial penalty ispayable bytheCustoms authorities
along withthedutyrefund.8According totheauthorities, refunds arealways made within onemonth.
16. JointventuresintheCzechRepublichavingforeignownershipequallingnotlessthan30percent
andequivalent tonotlessthanUS$1.7 million areallowed aone-year exemption fromcustoms duties
onrawmaterials orsemi-processed goods. Tobeeligible, these goods mustbeimported through the
foreign partner forfurther manufacturing andthevalue ofexports mustequal orexceed thevalue of
theimportedcomponents.Thisprovisionisexpectedtobeeliminatedattheendof1996(ChapterIII(2)).
7WTO Secretariat calculations based ondataprovided bytheauthorities.
8Thepenalty isequal to1.4times thecentral bank discount ratetimes theamount ofrefund due.Czech Republic WT/TPR/S/12
Page 35
(e) Customs valuation andclearance
17. Allgoods notexplicitly restricted maybeimported freely byregistered companies. Customs
procedures have been carried overfrom those oftheCSFR andthusaresimilar tothose ofthe
Slovak Republic; procedures arebeing harmonized withthose oftheEuropean Union (EU). Asingle
administrative document identical tothatoftheEUisusedforcustoms clearance. Customs values
arenormally self-declared. Theauthorities report thatcustoms clearance timeisnormally about
15minutes, ifpaperwork isproperly completed inadvance. According totheauthorities, theCustoms
Actisinconformity withtheAgreement onImplementation ofArticle VIIoftheGATT 1994. Upon
receipt ofacustoms declaration, acustoms office maydecide toverify theauthenticity andaccuracy
ofthedataneeded forthedetermination ofcustoms value.
18. Decisions made bycustoms offices maybeappealed totheregional customs office. Further
appeals, onlegalgrounds only, maybemade totheMinister ofFinance andtotheCourts. According
totheauthorities, 67appeals weremade in1994 toregional offices andnoappeals weremade tothe
Minister ortotheCourts.
(f) Tariff quotas
19. Tariff quotas areadministered bytheCzech Republic under three different régimes: (i)tariff
quotas resulting fromtheWTO Agreement onAgriculture andapplied onanm.f.n. basis; (ii)other
tariffquotas applied onanm.f.n. basis; and(iii)preferential tariffquotas agreed under regional trade
agreements. Despite theCzech customs union agreement withtheSlovak Republic, there existsome
differences between thetwocountries intheproducts covered under these three tariff quota regimes.
Tariff quota volumes normally differ between thetwocountries.
20. Asaresult oftheWTO Agreement onAgriculture minimum access commitments, tariffquotas
were established onsome 24groups ofproducts, including some meatproducts, dairy products and
wine. Table IV.3liststheproduct descriptions ofthese tariff quotas, theamount ofthequota, and
them.f.n. "in"and"out-of-quota" tariff rates. Thein-quota tariffs, which arefixed inadvalorem
terms andwillnotvaryasm.f.n. tariff ratesarereduced, areequal tothose oftheSlovak Republic.
21. Alsoindicated inthetablearetheregional trade agreements under which theCzech Republic
grants tariffpreferences fortheproduct groups listed. Thepreferential ratesmaybelessthanorgreater
thanthein-quota tariff rate,andthevolume ofimports under tariff preferences isusually unlimited.9
Them.f.n. tariff quotas areadministered suchthatpreferential imports arecounted toward thequota
limits and,insome cases, portions ofthem.f.n. tariff quota areactually reserved forpreferential
suppliers. Forexample, ofthe1,273-tonne tariffquota onmilkandcream, 1,000 tonnes arereserved
fortheEuropean Union. While theCzech tariff quotas havethesame overall product coverage as
those oftheSlovak Republic, theproduct groupings towhich thequotas areapplied sometimes differ.10
9Tariff quotas doexist under preferential agreements, however; these arereported inTable IV.5.
10Forexample, while theCzech Republic administers separate quotas forlivebovine animals andmeat of
bovine animals, Slovakia combines these intoonequota group.WT/TPR/S/12 Trade Policy Review
Page 36
Table IV.3
Tariff quotas established bytheCzech Republic under theUruguay Round Agreement onAgriculture
ProductHS
coverageNo.of
8-digit
linesTariff rates (%)Quota
(tonnes)Preferencesa
Out-of-quota In-quota
Livebovine animals; meat of
bovine animals0102.90
0201; 020226 40.2to112.3 30.0 7,500 None
Liveswine; meat ofswine 0103.92
020325 32.9to44.6 25.0
30.016,480 None
EU,Hungary (500), Romania
Livesheep; meat ofsheep 0104.10 ex;
0204.10 to
0204.4317 40.3to232.7 5.0
20.0370 Hungary (150)
Meat ofpoultry 0207.10 ex
0207.21
0207.39 ex
0207.4121 52.3 24.0
24.0
24.0
24.02,400 United States (400)
Meat andedible meat offal 0210.20
0210.90 ex637.3to230.0 30.0
24.0410 Hungary, Poland, Slovenia
Milk andcream 0402.10
0402.21
0402.2914 47.5 30.0
30.0
35.01,273 EU(1,000)
Yogurt 0403.10 18 30.0 10.0 6,670 EU,Hungary (100), Poland (200)
Butter 0405.00 3 79.3to80.1 32.0 1,854 EU(290)
Potatoes 0701.90 ex 2 155.0 50.0 26,894 EU(15,000), Hungary (2,000)
Fresh grapes 0806.10 ex 2 97.5 28.0 2,618 None
Starches 1108.11
1108.12
1108.133 73.8to94.0 53.2
55.6
63.43,217 None
Rape seeds 1205.00 ex 1 70.6 20.0 10,800 Poland (2,500)
Sunflower seeds 1206.00 3 47.0 10.0 1,701 None
Sunflower oil 1512.11
1512.196 30.6to30.8 18.0
19.08,000 EU
Rape oil 1514.10
1514.904 28.5 20.0
20.03,869 None
Margarine 1517.10
1517.906 42.2to51.7 20.0
10.017,181 EFTA, EU
Other sugars 1702.30
1702.407 107.6 50.0
50.01,422 None
Pasta 1902.11
1902.19
1902.20
1902.309 21.2to30.3 12.0
12.0
12.0
10.04,783 EFTA, EU,
Poland (50)
Icecream 2105.00 3 33.7 11.0 1,420 EFTA, EU
Waters withadded sugar 2202.10 1 48.6 11.0 450,946 hl. EFTA, EU,Poland (3,000)
Wine 2204.10 93 66.8to94.4 25.0 93,805 hl. Hungary (5,000),
2204.10
2204.21
2204.29Romania (6,000),
Slovenia (1,000)
Ethyl alcohol (>80%) 2207.10 1 88.4 70.0 17,670 hl. None
Spirits 2208.90 18 84.3 56.0 126,203 hl. EFTA, EU,Hungary (10,000),
Poland (2,000), Slovenia (1,000)
Dextrines andother modified
starches3505.10 361.8to102.8 52.0 3,212 EFTA, EU,Hungary, Poland,
Slovenia
a Exporters receiving preferences ontheproduct listed. Quantities refertotheportion ofthetotalquota thatisreserved forthe
exporter listed.
Note: EFTA -European FreeTrade Area; EU-European Union.
Source: WTO Secretariat, based oninformation provided bytheauthorities, WTO document G/AG/N/CZE/1.
22. Tariff quotas werealsoineffect atsome timeduring 1995formolasses, flax,potatoes, potato
starch andwine(Table IV.4). These quotas result fromthetemporary reduction oftariffs below theCzech Republic WT/TPR/S/12
Page 37
m.f.n. rateforalimited volume ofimports andnormally areintroduced when aproduct isinshort
supply onthedomestic market. Under theCustoms Union Agreement, these tariffquotas require the
concurrence oftheSlovak Republic. Onproducts forwhich bothSlovakia andtheCzech Republic
havetariff quotas thein-quota tariff rateisidentical.
Table IV.4
Temporary tariff quotas applied onanm.f.n. basis, 1995
HS
coverageNo.of8-digit
linesTariff rates (percent)
Quota (tonnes) Preferences
Out-of-quota In-quota
Cane molasses 1703.10 1 57.8 25.0 5,000 Poland
Sugar beetmolasses 1703.90 1 57.8 25.0 55,000 Poland
Flax5301.10
5301.21211.7
11.76.0
6.03,000EFTA, EU
Note: EFTA -European Free Trade Area; EU-European Union. Temporary tariff quotas were alsoinplace atsome time
during 1995 forpotatoes, potato starch andwine; however, nodetails onthese tariff quotas were available
Source: WTO Secretariat, based oninformation provided bytheauthorities.
23. Preferential tariff quotas under theCzech Republic 'sregional trade agreements arelisted in
Table IV.5; theaffected products include some meatproducts, some fruits andvegetables, beer, wine,
andmany processed foodproducts. Thein-quota tariff ratesusually areexpressed asapercentage
ofthem.f.n. tariff rateandthuswillbereduced asthem.f.n. ratedeclines overthecourse ofthe
Uruguay Round implementation period. Increases inthese quotas arenottypically called forinthe
agreements,althoughinAugust1995theCEFTAJointCommitteerecommendednegotiationstoeliminate
quota restrictions forCEFTA tariff preferences. Without further negotiations, thepreferential tariff
quotas would continue indefinitely.
(g) Variable import levies
24. TheCzech Republic hasnovariable import levies. Thevariable levies thatwereapplied on
some agricultural products beginning inJanuary 1992wereeliminated andreplaced withtariffs ortariff
quotas asaresult ofthetariffication provisions oftheWTO Agreement onAgriculture.11TheCustoms
Union Agreement withtheSlovak Republic prohibits theuseofvariable import levies byoneparty
against theother. Some regional agreements allow theCzech Republic tointroduce anagricultural
component totariffs onprocessed agricultural products toaccount forcostdifferences.
(h) Levies andother charges
25. There arenolevies oradditional charges imposed onimports thatarenotimposed ondomestic
products. Levies imposed include thevalue-added tax,onallgoods andmany services, andexcise
taxes onalcohol, tobacco andsome fuels(section 5(v)).
11Variable levies hadbeenapplied onsome 38tariff items, including some meats, dairy products, potatoes,
oilseeds, sugar, wine, alcoholic drinks andstarches.WT/TPR/S/12 Trade Policy Review
Page 38
Table IV.5
Tariff quotas under preferential agreements
HS
coverageNo.of
8-digit
linesTariff rates (percent)Quota
(tonnes)Country orregion
receiving
preference Out-of-quota In-quota
Livesheep 0104.10 ex 2 125.5 30.0 150 Hungary
Meat ofswine 0203 22 44.6 30.0 500 Hungary
Edible offal 0206 26
26
264.5to6.3
4.5to6.3
4.5to6.33.0to4.1
3.0to4.1
3.6to5.050
200Hungary,
Poland
Meat ofpoultry 0207 ... ... 25.0 400 United States
Dried meat andoffal 0210.20 2
2
237.3to44.4
37.3to44.4
37.3to44.426.1to31.1
26.1to31.1
18.6to22.2150
200
50Hungary
Poland
Slovenia
Livecarps 0301.93 1 11.6 8.1 50 Hungary
Yogurt 0403.10 18 30.0
30.021.0
21.0100
200Hungary
Poland
Butter 0405.00 6 79.3to80.1 18.8 290 European Union
Cheese 0406 ex 22
55
55
559.8
9.8
9.8
9.86.0
6.9
6.9
7.8725
100
200
150European Union
Hungary
Poland
Slovenia
Potatoes 0701.90 ex 2 155.0 108.5 2,000 Hungary
Garlic 0703.20 1 11.7 8.2 100 Hungary
Edible roots 0706.90 ex 3 14.5 10.2 100 Poland
Cucumbers 0707.00 ex 4 18.0 16.2 500 Romania
Grapes, fresh 0806.10 ex 5
428.0
28.019.6
3.6700
450Hungary
Romania
Apples 0808.10 ex 9 19.0 9.5 1,000 Slovenia
Pears, quince 0808.20 9 2.9to9.5 1.1to4.8 500 Slovenia
Apricots, peaches, plums 0809.10
0809.30
0809.40.10-20
0809.40.30
0809.40.40-907
10
2
1
29.8
9.7
2.5
9.5
2.5-3.39.0
9.0
0.0
9.0
0.0400 Romania
Maize 1005.90 1
119.5
19.56.2
13.664,350
16,000European Union
Hungary
Malt 1107 5 7.7to25.0 5.4to17.5 15,000 Poland
Rape seeds 1205.00.90 1 70.6 49.4 2,500 Poland
Prepared meats 1601 ex&1602 ex 11 19.7to28.0 12.0to18.0 330 European Union
Smoked sausage 1601 3
3
319.7
19.7
19.713.8
13.8
9.85200
250
200Hungary
Poland
Slovenia
Prepared orpreserved
meat1602 37
37
374.7to29.3
4.7to29.3
4.7to29.33.3to20.5
3.3to20.5
2.4to14.650
200
250Hungary
Poland
Slovenia
Molasses 1703 2 57.8 40.5 10,000 Poland
Sugar confectionery 1704 14
1414.6
14.610.2
10.250
350Hungary
Poland
Chocolate 1806 21
2114.6
14.610.2
10.250
500Hungary
Poland
Preps. offlour andmalt 1901 6 9.5to10.7 6.6to7.5 300 Poland
Pasta 1902 9 21.2to27.8 14.8to19.5 50 Poland
Prepared foods of
cereals1904 4
48.0to33.3
8.0to33.35.6to23.3
5.6to23.340
100Hungary
Poland
Bakers 'wares 1905 21 8.5to9.5 6.0to6.6 100 Poland
Prepared orpreserved
vegetables2001 and
200411
94.8to21.5
10.1to21.42.4to10.8
5.0to10.780 Slovenia
Jam 2007.10 &2007.99 15 4.8to24.2 3.4to16.9 100 Poland
Stewed fruit 2008 100 4.9to18.0 2.4to9.0 100 Slovenia
Stewed fruit 2008.70-80 21 9.7 6.8 100 Hungary
Table IV.5 (cont'd)Czech Republic WT/TPR/S/12
Page 39
HS
coverageNo.of
8-digit
linesTariff rates (percent)Quota
(tonnes)Country orregion
receiving
preference Out-of-quota In-quota
Fruit juice 2009.80 20 3.7 2.6 100 Hungary
Fruit juice 2009 ex 24 3.7to4.8 2.6to3.4 200 Poland
Extract, essence 2101 11 3.5to15.6 2.4to10.9 300 Poland
Yeast 2102 8 7.8to9.8 5.5to6.9 25 Poland
Yeast 2102.10 4 7.8to9.8 5.5to6.9 50 Hungary
Sauces 2103 4 8.7to9.7 6.1to6.8 100 Poland
Tomato ketchup 2103.20 1 9.7 6.8 25 Hungary
Mustard 2103.30.90 1 8.7 6.1 10 Hungary
Soup 2104 3 6.5to7.8 4.6to5.5 50 Poland
Food preparation, n.e.s. 2106 9 8.0 5.6 100 Poland
Water withadded sugar 2202.10 1 48.6 34.0 3,000 hl Poland
Beer 2203 9 23.3 16.3 5,000 hl Hungary
Wine 2204 94
94
9466.8to94.4
66.8to94.4
66.8to94.446.7to66.1
46.7to66.1
33.4to47.25,000 hl
6,000 hl
1,000 hlHungary
Romania
Slovenia
Spirits 2208.90 18
18
1884.3
84.3
84.359.0
59.0
59.010,000hl
2,000 hl
500hlHungary
Poland
Slovenia
... Notavailable.
Source: WTO Secretariat, based oninformation provided bytheauthorities.
(i) Minimum import prices
26. Domestic price controls onsuchitems aselectric power, telecommunications andmedical
products alsoapply toimports (section 5(vii)). There arenoother minimum import prices.
(j) Seasonal tariffs
27. Seasonal tariffs areapplied on12categories offruitandvegetables andoncutflowers, as
listed inTable IV.6. Tariff ratesonseasonal products arenormally quite lowduring thepartofthe
yearwhen local production isnotbeing marketed, andonmany iszeroduring much oftheyear.
However, tariffs during themarketing period ontheseproducts generally exceed thenational average.
Wheretariffpreferencesexistforimportsofseasonalproductsunderregionalagreements,thepreferences
typically apply during onlyaportion oftheyear.
Table IV.6
Tariff ranges onproducts subject toseasonal tariffs
(Percent)
Product HScodeSeasonal
tariff rangeProduct HScodeSeasonal
tariff range
Cutflowers 0603 4.7to19.5 Emperor grapes 0806.10 2.0to22.8
Potatoes notforthemfr.ofstarch 0701.90 0.0to155.0 Cider apples 0808.10 3.0to15.0
Tomatoes 0702.00 0.0to14.6 Perry pears 0808.20 2.9to9.5
Cauliflowers andheaded broccoli 0704.10 0.0to14.5 Sourcherries 0809.20 4.6to9.8
Cabbage, lettuce 0705.11 0.0to13.6 Plums 0809.40 2.5to9.5
Rooted orGerman celery 0706.90 0.0to14.5 Strawberries 0810.10 0.0to9.8
Cucumbers 0707.00 0.0to17.3
Source: WTO Secretariat, based oninformation provided bytheauthorities.WT/TPR/S/12 Trade Policy Review
Page 40
(k) TheGeneralized System ofPreferences (GSP)
28. TheCzech Republic offers preferential tariff ratesunder theGSPintwoways, depending
ontheclassification ofthecountry ofexport aseither a"Developing Country" (104countries) ora
"Least-Developed Developing Country" (47countries). Eligible countries andtheirclassification are
listed inTable IV.7. Thelistsofeligible countries include some countries (Bhutan, Comores, Nauru,
Oman andWestern Samoa) thatarenototherwise granted m.f.n. privileges (section (a)above).
Table IV.7
Countries granted GSPtreatment
COUNTRIES CLASSIFIED ASDEVELOPING
Albania Dominica Latvia Russian Federation
Algeria Dominican Republic Lebanon Saint Christopher
Angola Ecuador Libya Saint Lucia
Antigua andBarbuda Egypt Lithuania Saint Vincent andtheGrenadines
Argentina ElSalvador Macedonia Saudi Arabia
Armenia Estonia Malaysia Senegal
Azerbaijan Fiji Malta Seychelles
Bahamas Gabon Marshall Islands Singapore
Bahrain Georgia Mauritius South Africa
Barbados Ghana Mexico SriLanka
Belarus Grenada Micronesia, Federated States of Suriname
Belize Guatemala Moldova Swaziland
Bolivia Guyana Mongolia Syria
Bosnia-Herzegovina Honduras Morocco Tajikistan
Brazil India Namibia Thailand
Brunei Darussalam Indonesia Nauru Tonga
Cameroon Iran Nicaragua Trinidad andTobago
Chile Iraq Nigeria Tunisia
China Jamaica Oman Turkmenistan
Colombia Jordan Pakistan Ukraine
Congo Kazakhstan Panama United Arab Emirates
Costa Rica Kenya Papua NewGuinea Uruguay
Côted'Ivoire Korea, Peoples 'Dem. Rep. ofParaguay Uzbekistan
Croatia Korea, Republic of Peru Venezuela
Cuba Kuwait Philippines VietNam
Cyprus Kyrgyzstan Qatar Zimbabwe
COUNTRIES CLASSIFIED ASLEAST-DEVELOPED
Afghanistan Equatorial Guinea Malawi St.Thomas
Bangladesh Eritrea Maldives Sudan
Benin Ethiopia Mali Tanzania
Bhutan Gambia Mauritania Togo
Botswana Guinea Mozambique Tuvalu
Burkina Faso Guinea-Bissau Myanmar Uganda
Burundi Kampuchea Nepal Vanuatu
Cape Verde Kiribati Niger Western Samoa
Central African Republic Laos People 'sDem. Rep. Rwanda Yemen
Chad Lesotho Sierra Leone Zaïre
Comores Liberia Solomon Islands Zambia
Djibouti Madagascar Somalia
Source: Government oftheCzech Republic.Czech Republic WT/TPR/S/12
Page 41
29. Forthepurposes ofthescheme regarding developing countries, imported products areclassified
intothree categories. Non-sensitive products enterduty-free; lesssensitive products faceatariffequal
tohalfofthem.f.n.rate12;andsensitiveproductsreceivenopreference.TableIV.8providesinformation
ontheshare oftariff linesclassified asnon-sensitive andtheshare classified aslesssensitive ineach
HSchapter.13InHSChapters 47,67,83,86,89,91and93,preferences areoffered onalltarifflines.
FormostHSchapters pertaining toagriculture, veryfewGSPpreferences areoffered. Preferential
ratesforproducts from alldeveloping countries, including those thathavenotbeengranted m.f.n.
privileges bytheCzech Republic, arebased onthem.f.n. rateofduty.
30. Allproducts ofleast-developed developing countries aregranted duty-free access under the
Czech GSPscheme. Preferential imports under theGSPfromthese countries, likeGSPimports from
alleligible developing countries, arenotsubject toquantitative restrictions.
31. Therules oforigin usedunder theCzech Republic 'sGSPscheme areuncomplicated and
transparent.14Nomore than50percentofthevalue (based oncustoms value) oftheproduct may
consist ofthevalue ofgoods imported fromineligible countries. Activities suchaspacking, storing,
assembling, andmarking cannot, bythemselves, confer origin forGSPpurposes.
(iii) Import licensing
32. Import licences arerequired onlyforthose goods andservices contained inthenegative lists,
aspublished intheDecree onImport Licensing.15Non-automatic import licences arerequired for
some fuelitems (eg.,coalanduranium products), paper scrap, andpaper waste, aslisted inTable IV.9,
andlicence quantities forthese products arelimited totheamounts indicated.16TheGovernment will
consider abolishing thelicensing ofsome imports (including coal) onceanti-dumping legislation is
inplace. According totheauthorities, theimport demand forcoalnormally exceeds thelicence quota.
33. Applications fornon-automatic licences aretobesubmitted fromthetimetheopening ofquotas
isannounced bythelicensing authority, theMinistry ofIndustry andTrade. Thetimeforsubmissions
isnotlimited. Thetimeallowed bydecree foradecision ongranting alicence is15calendar days.
Licence allocations aregranted onafirst-come-first-served basis or,forcoal, areallocated among
importers inaccordance withtheirpastimports. There arenopublished guidelines fortheinternal
allocation ofthese licences. Thesource country, while partofthelicence application, isnotnormally
aconsideration inthedecision togrant alicence. After thegranting oflicences, imports maybemade
12Thisistrueregardless ofwhether thesource country receives m.f.n. treatment from theCzech Republic.
13According totheinformation received bytheSecretariat, several differences existed between thetariff lines
covered bytheCzech GSPrégime andtheSlovak régime, particularly inHSChapters 06,08,09and23(see
Table IV.8 oftheTrade Policy Review ofSlovakia). According totheauthorities, these were harmonized in
April 1995.
14Therules oforigin arecontained inUNCTAD Publication TD/B/GSP/CZECH/5 ofDecember 1989.
15Decree No.560of1991, asamended bytheDecrees oftheMinistry ofIndustry andTrade No.130/1993,
No.300/1993, No.88/1994 andNo.175/1994.
16Licencesforthesegoodsarenotrequiredwhenthegoodsarepartofinvestmentcomplexesoriftheyoriginate
intheSlovak Republic. Uranium products andother products usedfortheproduction ofnuclear energy are
limited forsafety andenvironmental reasons.WT/TPR/S/12 Trade Policy Review
Page 42
within theperiod ofvalidity ofthelicence, usually sixto12months. Thereasons underlying the
rejection ofanapplication must beexplained inwriting totheapplicant, andappeals maybemade
under theLawonAdministrative Proceedings (No.71/1967 Coll.) andapplicants mayeventually appeal
tothecourts. According totheauthorities, noappeals have been registered. Licences arenot
transferable.
Table IV.8
Preferences under theGSP
HS No.of
Code Description linesShare oftariff lines
(percent)
GSP50aGSP100b
01 Liveanimals 45 0.0 6.7
02 Meat andedible meat offal 226 0.0 3.5
03 Fish&crustaceans, molluscs &other aquatic invertebrates 302 0.0 0.0
04 Dairy products; birds'eggs; natural honey; edible products n.e.s. 183 0.0 0.0
05 Products ofanimal origin, n.e.s. orincluded 23 0.0 0.0
06 Livetrees&other plants; bulbs, roots; cutflowers etc 48 0.0 31.3
07 Edible vegetables andcertain roots andtubers 136 0.0 5.9
08 Edible fruitandnuts; peelofcitrus fruitormelons 211 0.0 40.3
09 Coffee, tea,maté andspices 56 0.0 67.9
10 Cereals 55 0.0 0.0
11 Produce ofmillindustries; malt; starches; inulin; wheat gluten 84 0.0 1.2
12 Oilseed, oleagi fruits; miscellaneous grain, seed, fruit, etc. 83 0.0 4.8
13 Lac;gums, resins &other vegetable saps&extracts 18 0.0 0.0
14 Vegetable plaiting materials; vegetable products n.e.s. 13 0.0 0.0
15 Animal/vegetable fats&oils&theircleavage products; etc. 136 0.0 36.0
16 Preparations ofmeat, fishorcrustaceans, molluscs, etc. 88 0.0 0.0
17 Sugars andsugar confectionery 46 0.0 6.5
18 Cocoa andcocoa preparations 27 0.0 11.1
19 Preparations ofcereal, flour, starch/milk; pastrycooks 'products 44 0.0 6.8
20 Preparations ofvegetable, fruit, nutsorother parts ofplants 307 0.0 13.0
21 Miscellaneous edible preparations 41 0.0 0.0
22 Beverages, spirits andvinegar 174 0.0 0.0
23 Residues &waste from thefoodindustry; prep. animal fodder 66 0.0 40.9
24 Tobacco andmanufactured tobacco substitutes 37 0.0 0.0
25 Salt;sulphur; earth &stone; plastering materials; lime&cement 98 1.0 7.1
26 Ores, slagandash 51 2.0 0.0
27 Mineral fuels, oils&products oftheirdistillations, etc. 126 4.8 30.2
28 Inorganic chems; precious metal compnds, radio active elements 272 53.3 16.2
29 Organic chemicals 493 63.9 10.3
30 Pharmaceutical products 58 37.9 15.5
31 Fertilizers 39 0.0 0.0
32 Tanning/dyeing extracts; tannins &derivatives; pigments, etc. 64 54.7 14.1
33 Essential oils&resinoids; perfumes, cosmetic/toilet preparations 52 19.2 40.4
34 Soap, organic surface-active agents, washing preparations, etc. 33 27.3 27.3
35 Albuminoidal subs; modified starches; glues; enzymes 28 17.9 0.0
36 Explosives; pyrotechnic products; matches; pyrop alloy, etc. 10 20.0 60.0
37 Photographic orcinematographic goods 63 42.9 20.6
38 Miscellaneous chemical products 116 55.2 11.2
39 Plastics andarticles thereof 236 47.0 10.6
40 Rubber andarticles thereof 106 37.7 13.2
41 Rawhides andskins (other thanfurskins) andleather 56 1.8 60.7
42 Articles ofleather; saddlery/harness; travel goods, etc. 38 81.6 13.2
43 Furskins andartificial fur;manufactures thereof 44 9.1 61.4
44 Wood andarticles ofwood; wood charcoal 166 30.1 26.5
45 Cork andarticles thereof 13 7.7 76.9
46 Manufactures ofstraw, esparto/other plaiting materials, etc. 13 84.6 15.4
47 Pulpofwood/of other fibrous cellulosic mat;waste, etc. 22 0.0 0.0
48 Paper &paperboard; articles ofpaper pulp, paper/paperboard 200 41.5 10.0
49 Printed books, newspapers, pictures &other products, etc. 27 51.9 18.5
50 Silk 26 0.0 19.2Czech Republic WT/TPR/S/12
Page 43
HS No.of
Code Description linesShare oftariff lines
(percent)
GSP50aGSP100b
51 Wool, fine/coarse animal hair,horsehair yarn&fabric 79 0.0 21.5
52 Cotton 178 36.0 5.6
53 Other vegetable textile fibres; paper yarn&woven fabric 51 15.7 17.6
54 Man-made filaments 106 3.8 1.9
55 Man-made staple fibres 168 13.7 3.6
56 Wadding, felt&non-woven; yarns; twine, cordage, etc. 57 8.8 1.8
57 Carpets andother textile floor coverings 47 0.0 0.0
58 Special woven fabrics; tufted textile fabrics; lace; tapestries, etc. 57 36.8 0.0
59 Impregnated, coated, covered/laminated textile fabric, etc. 46 23.9 8.7
60 Knitted orcrocheted fabrics 55 14.5 0.0
61 Articles ofapparel &clothing accessories, knitted orcrocheted 174 1.7 0.0
62 Articles ofapparel &clothing accessories, notknitted/crocheted 204 0.0 1.5
63 Other made-up textile articles; sets;worn clothing, etc. 87 5.7 0.0
64 Footwear, gaiters andthelike;parts ofsucharticles 83 0.0 1.2
65 Headgear andparts thereof 15 0.0 20.0
66 Umbrellas, walking-sticks, seat-sticks, whips, etc. 9 0.0 0.0
67 Prep. feathers &down; artificial flowers; articles ofhuman hair 8 37.5 62.5
68 Articles ofstone, plaster, cement, asbestos, mica/sim. materials 78 46.2 26.9
69 Ceramic products 52 51.9 0.0
70 Glass andglassware 143 11.9 3.5
71 Natural/cultured pearls, precious stones &metals, coins etc. 68 10.3 17.6
72 Ironandsteel 506 0.0 0.0
73 Articles ofironorsteel 275 0.0 0.0
74 Copper andarticles thereof 72 5.6 0.0
75 Nickel andarticles thereof 18 0.0 50.0
76 Aluminium andarticles thereof 63 0.0 6.3
78 Lead andarticles thereof 14 0.0 0.0
79 Zincandarticles thereof 13 0.0 7.7
80 Tinandarticles thereof 9 0.0 44.4
81 Other basemetals; cermets; articles thereof 70 0.0 7.1
82 Tools, implements andcutlery ofbasemetals, etc. 118 55.9 28.0
83 Miscellaneous articles ofbasemetal 50 94.0 6.0
84 Nuclear reactors, boilers, mach. &mechanical appliances; parts 969 69.2 22.8
85 Electrical machinery andequipment; sound recorders, etc. 677 39.1 25.8
86 Railway/tramway locomotives, rolling-stock &parts thereof; etc. 41 92.7 7.3
87 Vehicles other thanrail/tramway rolling-stock, parts/accessories 184 50.0 11.4
88 Aircraft, spacecraft, andparts thereof 30 76.7 0.0
89 Ships, boats andfloating structures 40 97.5 2.5
90 Optical, photo, cine, measur., andother precision instruments 295 23.7 65.4
91 Clocks andwatches andparts thereof 68 14.7 85.3
92 Musical instruments; parts andaccessories ofsucharticles 35 31.4 57.1
93 Arms andammunition; parts andaccessories thereof 28 35.7 64.3
94 Furniture; bedding, mattress, mattress support, cushions, etc. 87 32.2 0.0
95 Toys, games &sports requisites; parts &accessories thereof 75 90.7 2.7
96 Miscellaneous manufactured articles 76 0.0 22.4
97 Works ofart,collectors pieces andantiques 7 14.3 0.0
a Share oftariff linesinthechapter withaGSPrateequal tohalfofthem.f.n. rate(lesssensitive products).
b Share oftariff linesinthechapter withaGSPrateequal tozero(non-sensitive products).
Source: WTO Secretariat calculations based ondataprovided bytheauthorities.WT/TPR/S/12 Trade Policy Review
Page 44
Table IV.9
Goods subject tonon-automatic import licensing
Product HS
categoryTonnes
peryearProduct HS
categoryTonnes
peryear
Uranium orthorium oresand
concentrates2612.10 1Uranium enriched inU235 andits
compounds2844.20 ...
Coal(black), briquettes and
similar solid fuels manufactured
from coal:
coalforcoke
coalenergetic2701
300,000
1,200,000Spent (irradiated) fuelelements
(cartridges) ofnuclear reactors2844.5000 1piece
Waste paper 4707 50,000
Lignite (from brown coal),
excluding jet2702 500,000 Fuelelements (cartridges), non-
irradiated8401.3000 5pieces
Natural uranium andrelated
products2844.1000 1
... Notavailable.
Source: Czech Republic, Ministry ofIndustry andTrade.
Table IV.10
Import andexport licensing requirements forhealth, safety andrelated reasons
CategoryApplied to:
(I)mports
(E)xportsHSchapters partially or
wholly coveredNo.of
tariff
linesResponsible Ministry
Weapons ormilitary goods I,E 93 16 Trade andIndustry; Defence;
Interior
Products covered under the
Washington Convention -
CITESI,E 01-06, 15-16, 21,23,41-44,
51,64-67, 71,90-93, 95-97337 Environment
(Export licence issued inState of
export; official permission
required from State ofimport)
Animal health I,E 01-05, 11-12, 15-17, 19,21,
23,30,41,43,50,51,67988 Veterinary authorities,
Ministry ofAgriculture
Breeding animals I 01 7 Agriculture
Waste I 05,09,15,18,23-24, 26,
38-41, 44-45, 47,50-51, 53,
55,63,72,74-76, 78,79-81138 Environment
Phyto-quarantine requirements I,E 06-12, 14,17-19, 23-24, 38,
41,43-47, 53,84,96964 ...
Animal feed I 10-12, 15-16, 19,23,51,67 259 Agriculture
Narcotics I,E 13,29 9 Health
Purespirits I 22 2 Agriculture
Tobacco I,E 24 4 Agriculture
Petroleum products I 27 32 ...
Unspecified I,E 28-29 32 Industry andTrade
Poisons I 28-29, 38 20 Health
Ozone-damaging materials I 29 3 ...
Veterinary medicine I 30,33 49 Agriculture
Medicines I 30 39 Health
Cultural monuments E 97 7 Culture
... Notavailable.
Source: WTO Secretariat based oninformation provided bytheCzech authorities.Czech Republic WT/TPR/S/12
Page 45
34. Non-automatic import (andexport) licensing requirements arealsoinplace onother goods
forhealth,safetyorrelatedreasons(TableIV.10).Theserestrictedproductsincludeweaponsormilitary
goods, tobacco, petroleum products, poisons, andmedicines. Theministry responsible forgranting
thelicence depends onthecategory oftherestricted product.
35. According totheauthorities, automatic licences areusedonlytomonitor imports ofsome
agricultural andindustrial rawandsemi-finished products. Licences fortheseitems arefreely granted
forallapplicants thatsatisfy thelegalrequirements.
(iv) Regional trade agreements
36. TheCzech Republic hasentered intosixtrade agreements withregional trading partners: the
Slovak Republic, theEuropean Union (EU), theCentral European FreeTrade Agreement (CEFTA),
theEuropean FreeTrade Area (EFTA), Slovenia, andRomania. Agreements withBulgaria, Israel
andTurkeyareundernegotiation.TradewithcountrieswithwhichtheCzechRepublichasapreferential
trade agreement comprised some 80percentoftotalmerchandise trade in1994. These agreements,
which include reciprocal preferential tariffs, arediscussed inthefollowing sub-sections. Information
onthetariff preferences granted bytheCzech Republic for1995under these agreements iscontained
inTable IV.11. Other agreements exist, particularly withcountries oftheformer Soviet Union, that,
interalia,implement thereciprocal granting ofm.f.n. tariff treatment.17
17These include Albania, Belarus, Bulgaria, Estonia, Kazakhstan, Latvia, Lithuania, Russia, Tadzhikistan,
Turkmenistan, Ukraine, andUzbekistan.WT/TPR/S/12 Trade Policy Review
Page 46
Table IV.11
Simple average m.f.n. andpreferential tariffs byHSChapter, 1995
(Percent)
No.of
HS lines Description
(6-digit)Tariff under theAgreement with:
M.f.n. EFTA EEC HUN POL ROM SVN
01 15 Liveanimals 19.5 19.5 19.5 17.6 19.3 19.5 18.9
02 50 Meat andedible meat offal 46.3 46.3 46.1 43.3 45.0 44.5 44.4
03 87 Fish, crustaceans, molluscs, other aquatic invertebrates 0.2 0.0 0.2 0.2 0.2 0.2 0.2
04 25 Dairy prods.; birds'eggs; nat.honey; edible prods. 29.1 29.1 24.8 27.2 28.1 29.1 28.7
05 17 Products ofanimal origin, n.e.s. orincluded 0.0 0.0 0.0 0.0 0.0 0.0 0.0
06 13 Livetrees&other plants; bulbs; roots; cutflowers 3.5 3.5 3.1 3.1 3.4 3.5 3.5
07 57 Edible vegetables andcertain roots andtubers 7.1 7.1 6.6 6.5 6.9 7.1 7.0
08 50 Edible fruitandnuts; peelofcitrus fruitormelons 3.2 3.2 2.6 3.1 3.1 3.0 2.9
09 33 Coffee, tea,maté andspices 4.2 4.2 4.1 4.2 4.2 4.2 4.2
10 16 Cereals 8.7 8.7 7.4 8.3 8.5 8.7 8.7
11 34 Millind.prods; malt; starches; inulin; wheat gluten 23.3 23.3 23.3 23.3 23.0 23.3 23.3
12 44 Oilseed, oleagi fruit; misc. grain, seed, fruit, etc. 3.6 3.6 3.5 3.4 3.3 3.6 3.6
13 12 Lac; gums, resins andother vegetable saps&extracts 1.0 1.0 1.0 1.0 1.0 1.0 1.0
14 11 Vegetable plaiting materials; vegetable prods., n.e.s. 0.0 0.0 0.0 0.0 0.0 0.0 0.0
15 52 Animal/veg. fats&oils&theircleavage prods.; etc. 8.1 7.7 6.3 8.1 8.1 8.1 8.1
16 25 Preps. ofmeat, fishorcrustaceans, molluscs, etc. 8.2 8.2 7.1 5.7 5.7 8.2 4.1
17 15 Sugar andsugar confectionery 50.8 50.8 50.8 50.2 47.9 50.8 50.8
18 11 Cocoa andcocoa preparations 8.7 8.7 8.7 6.7 6.7 8.7 8.7
19 16 Preps. cereal, flour, starch/milk; pastrycooks 'prods. 14.0 14.0 10.0 13.5 9.8 14.0 14.0
20 45 Preps. ofvegetable, fruit, nutsorother parts ofplants 10.6 10.6 9.6 10.5 10.3 10.6 8.5
21 15 Miscellaneous edible preparations 8.9 8.9 7.0 8.4 6.9 8.9 8.9
22 21 Beverages, spirits andvinegar 38.3 35.1 33.3 30.7 35.0 27.1 25.9
23 24 Food ind.residues &waste, preps. animal fodder 0.4 0.3 0.3 0.3 0.4 0.4 0.3
24 9Tobacco andmanufactured tobacco substitutes 30.6 30.6 29.4 30.6 22.1 30.6 20.8
25 77 Salt,sulphur, earth, stone, plastng. mats, lime, cement 0.7 0.2 0.2 0.2 0.4 0.3 0.0
26 34 Ores, slagandash 0.1 0.1 0.1 0.1 0.0 0.1 0.0
27 40 Mineral fuels, oils&prods. oftheirdistillation, etc. 1.7 0.4 0.4 0.6 0.4 1.3 0.0
28 190 Inorg chems, compds precmets, radioactive elements 1.7 1.5 1.5 1.4 1.3 1.7 0.1
29 297 Organic chemicals 4.8 1.9 1.9 2.0 0.5 3.1 0.0
30 30 Pharmaceutical products 3.7 1.1 1.1 0.2 0.2 1.6 0.0
31 26 Fertilizers 3.0 1.8 1.8 2.2 2.1 2.2 0.0
32 46 Tanning/dyeing extrs., tannin &derivatives, pigments 4.5 1.7 1.7 2.0 1.5 2.6 0.0
33 34 Ess.oils&resinoids, perfumes, cosmetic/toilet preps 6.5 2.2 2.2 0.0 3.1 4.6 0.0
34 23 Soap, organic surface-active agents, washing preps. 4.4 0.9 0.9 1.6 0.7 2.7 0.0
35 13 Albuminoidal substncs; mod. starches; glues; enzymes 10.9 4.1 4.1 6.6 5.8 10.4 0.2
36 8Explosives, pyrotechnic prods., matches, pyrop. alloy 5.0 1.7 1.7 2.3 2.2 2.5 0.2
37 36 Photographic orcinematographic goods 2.8 1.0 1.0 0.0 0.8 1.4 0.0
38 56 Miscellaneous chemical products 4.5 1.9 1.9 2.7 1.7 2.9 0.0
39 123 Plastics andarticles thereof 5.8 2.4 2.4 3.5 3.5 4.1 0.4
40 66 Rubber andarticles thereof 4.2 1.9 1.9 2.3 2.5 2.6 0.3
41 34 Rawhides andskins (other thanfurskins) andleather 0.9 0.1 0.1 0.1 0.1 0.6 0.1
42 22 Articles ofleather; saddlery/harness; travel goods, etc. 5.6 2.1 2.1 3.5 3.5 3.9 0.0
43 18 Furskins andartificial fur;manufactures thereof 1.3 0.5 0.5 0.8 0.8 0.9 0.0
44 66 Wood andarticles ofwood; wood charcoal 4.5 1.8 1.8 2.7 1.9 3.0 0.7
45 7Cork andarticles ofcork 2.1 0.3 0.3 0.0 0.5 0.0 0.0
46 6Manfs. ofstraw, esparto/other plaiting materials, etc. 4.8 1.8 1.8 3.0 2.4 3.4 0.0
47 19 Pulpofwood/fibrous cellulosic materials; waste, etc. 4.2 3.4 3.4 3.8 3.8 3.2 1.1
48 111 Paper/paperboard; arts.paper pulp, paper/paperboard 9.7 5.9 5.9 6.9 6.5 7.2 1.6
49 19 Printed books, newspapers, pictures andother prods. 3.3 1.2 1.2 2.0 1.6 2.5 0.5
50 10 Silk 3.2 1.1 1.1 0.9 1.9 2.4 0.0
Table IV.11 (cont'd)Czech Republic WT/TPR/S/12
Page 47
No.of
HS lines Description
(6-digit)Tariff under theAgreement with:
M.f.n. EFTA EEC HUN POL ROM SVN
51 36 Wool, fine/coarse animal hair,horsehair yarn&fabric 3.1 1.0 1.0 1.7 1.7 1.9 0.5
52 127 Cotton 7.1 3.2 3.2 5.9 4.7 5.3 1.6
53 31 Other veg.textile fibres, paper yarn&woven fabric 2.4 1.2 1.2 1.4 1.7 1.3 0.0
54 65 Man-made filaments 6.3 1.9 1.9 4.4 4.4 4.7 0.3
55 115 Man-made staple fibres 6.2 2.5 2.5 4.1 4.1 4.6 0.0
56 27 Wadding, felt&non-woven, yarn, twine, cordage 7.5 3.9 3.9 5.0 5.0 5.3 0.4
57 23 Carpets andother textile floor coverings 10.9 6.6 6.6 8.6 7.8 8.2 0.0
58 41 Spec. woven fabs., tufted textile fabs, lace, tapestries 7.2 3.6 3.6 5.2 5.0 2.2 0.0
59 25 Impregnated, coated, cover/laminated textile fabric 6.5 3.2 3.2 4.5 4.7 4.8 0.0
60 18 Knitted orcrocheted fabrics 7.4 3.0 3.0 4.9 3.8 3.8 0.0
61 114 Art.ofapparel &clothing accs, knitted orcrocheted 9.1 6.4 6.4 8.0 6.7 6.7 0.0
62 119 Art.ofapparel &clothing accs, notknitted/crocheted 10.4 7.1 7.1 9.1 7.6 7.7 0.0
63 58 Other made-up textile articles, sets,worn clothing 11.2 7.4 7.4 9.1 8.0 8.3 1.3
64 29 Footwear, gaiters andthelike,parts ofsucharticles 10.4 6.7 6.7 6.8 6.6 7.8 2.6
65 11 Headgear andparts thereof 5.1 1.8 1.8 3.0 3.0 3.3 0.0
66 7Umbrellas, walking sticks, seatsticks, whips, etc. 7.0 2.8 2.8 0.0 2.1 5.2 0.0
67 8Preps feathers &down, artif. flowers, artshuman hair 4.3 1.2 1.2 2.1 1.6 2.3 0.0
68 53 Arts. stone, plaster, cement, asbestos, mica/sim. mats. 6.7 2.4 2.4 4.1 3.9 4.6 0.0
69 28 Ceramic products 7.1 3.6 3.6 3.3 4.1 3.0 0.4
70 57 Glass andglassware 10.8 7.1 7.1 3.2 7.3 5.7 1.8
71 52 Natural/cultured pearls, prec. stones &metals, coins 2.2 1.3 1.3 1.2 1.3 1.2 0.3
72 194 Ironandsteel 5.0 3.5 3.5 3.8 3.6 3.7 0.9
73 118 Articles ofironorsteel 6.5 5.1 5.1 4.9 4.8 4.9 1.5
74 58 Copper andarticles thereof 3.9 2.6 2.6 2.8 2.5 2.9 0.7
75 16 Nickel andarticles thereof 1.9 0.5 0.5 0.5 0.5 0.5 0.2
76 34 Aluminium andarticles thereof 5.4 4.0 4.0 3.8 3.7 3.8 1.2
78 10 Lead andarticles thereof 3.6 2.2 2.2 2.1 1.9 2.1 0.7
79 11 Zincandarticles thereof 3.8 2.8 2.8 2.6 2.6 2.6 0.9
80 9Tinandarticles thereof 2.3 1.0 1.0 0.9 0.9 0.9 0.3
81 36 Other basemetals 0.3 0.0 0.0 0.0 0.0 0.0 0.0
82 65 Tools, implements andcutlery ofbasemetal, etc. 5.3 1.9 1.9 1.0 2.4 3.1 0.2
83 36 Miscellaneous articles ofbasemetal 5.6 2.2 2.2 3.6 3.6 4.1 0.0
84 498 Nuclear reactors, boilers, mach./mech. appl., parts 5.0 1.7 1.7 1.7 2.7 3.1 0.0
85 264 Elec. mach., equipment, parts thereof, sound recorder 5.3 2.1 2.1 2.9 3.0 3.3 0.3
86 24 Rail/tramway locomotives, rolling-stock, parts thereof 7.5 2.9 2.9 0.0 4.8 4.8 0.8
87 76 Vehicles o/trail/tramway rolling-stock, parts &accs 8.4 4.6 4.6 1.8 5.3 2.1 0.5
88 15 Aircraft, spacecraft, andparts thereof 5.9 2.1 2.1 0.0 3.4 0.0 0.0
89 17 Ships, boats andfloating structures 5.7 2.2 2.2 0.0 0.4 0.0 0.0
90 152 Optical, photo., cine., measuring, checking, precision 4.0 1.0 1.0 1.6 1.7 1.7 0.3
91 55 Clocks andwatches andparts thereof 3.1 0.3 0.3 0.3 2.0 0.4 0.0
92 23 Musical instruments; parts andaccess ofsucharticles 7.0 4.0 4.0 4.2 4.0 4.4 1.0
93 17 Arms andammunition, parts andaccessories thereof 3.7 0.9 0.9 1.6 2.4 1.7 0.4
94 37 Furniture, bedding, mattress, mattr.support, cushion 8.2 3.7 3.7 3.8 5.4 2.3 0.6
95 43 Toys, games &sports requisites, parts &accessories 7.6 3.0 3.0 4.7 3.8 5.1 0.0
96 51 Miscellaneous manufactured articles 5.0 1.7 1.7 2.1 2.5 2.3 0.0
97 7Works ofart,collectors pieces andantiques 1.4 0.6 0.6 0.0 0.9 0.0 0.0
98 n.a. Special Classification Provisions n.a. n.a. n.a. n.a. n.a. n.a. n.a.
99 n.a. Special Transaction Trade n.a. n.a. n.a. n.a. n.a. n.a. n.a.
n.a. Notapplicable.
EFTA -European FreeTrade Area; EEC -European Union; HUN -Hungary; POL-Poland; ROM -Romania; SVN -Slovenia.
Note: Tariff averages arefrom 6-digit data, asdescribed inTable IV.1.
Source: WTO Secretariat, based ondataprovided bytheauthorities.WT/TPR/S/12 Trade Policy Review
Page 48
(a) TheCzech andSlovak Customs Union
37. TheCzech andSlovak Customs Union came intoeffect atthetimeofdissolution oftheCzech
andSlovak Federal Republic (CSFR), on1January 1993.18Itplayed anintegral rôleintheorderly
dissolution oftheCSFR bymaintaining freetrade, withfewexceptions, between thetwonewcountries
andbyimplementing theCSFR tariff structure andcustoms nomenclature astheCommon Customs
Tariff forbothcountries.19Freetradebetween theparties isthegeneral rule,butthere areexceptions
resulting from Slovakia 'simposition oftheimport surcharge under Article XIIoftheGATT andby
some other deviations fromtheprinciple ofacustoms union. In1994 Slovakia accounted for16per
centofCzech exports and14percentofCzech imports. In1993 these shares were equal to21per
centand17percent, respectively.
38. TheCustoms Union applies toallproducts inHSChapters 1-97.20Since notariffornon-tariff
barriers existed between thecountries priorto1993, theAgreement didnotrequire ascheme toeliminate
suchbarriers. Instead, itprohibits theirfuture introduction, bothwithrespect toimports andexports,
except inparticular circumstances, asdiscussed below.21TheAgreement requires that,bytheend
of1997, State enterprises andState-granted monopolies donotdiscriminate intheirprocurement or
marketing between thetwocountries. National treatment andm.f.n. treatment areapplied withrespect
topublic procurement, andthetwoparties areto"endeavour toaccede" totheWTO Plurilateral
AgreementonGovernmentProcurement.Anti-competitivepracticesandtheabuseofmonopolypositions
(asdefined bynational legislation) areconsidered incompatible withtheAgreement, andnational
treatment andm.f.n. treatment areestablished intheareaofintellectual property protection. Thesame
legal norms aretobeadopted withregard tocustoms procedures andstatistics, import andexport
licensing, intellectual property, andanti-dumping andcountervailing duties. Regulations aretobe
co-ordinated intheareasofforeign exchange, economic competition, Stateaidandpublic procurement.
Agricultural policies, including export subsidies, prices, anddomestic supports arealsotobe
co-ordinated, andthere aretobeuniform systems ofimport andexport licensing andofnon-tariff
protection.22Theparties aretopursue conforming commercial policy toward thirdcountries, including
notonlyintheareaoftariffs (where identical m.f.n. andpreferential ratesalready prevail) butalso
non-tariff barriers, export policy, andaction against dumping andsubsidies. Services trade between
18TheAgreement Establishing theCustoms Union between theCzech Republic andtheSlovak Republic and
theAgreement onCooperation inAgriculture were communicated totheGATT bythetwoParties inGATT
document L/7212, April 1993 andL/7212/Add. 1,May 1993. Questions andreplies regarding theCustoms
Union arecontained inGATT document L/7415, March 1994. Thereport oftheWorking Party ontheCustoms
Union iscontained inGATT document L/7501, July1994.
19Tariff revenue isretained bytheGovernment ofthecountry intowhich thegood enters.
20Article 19onaidandArticle 26onexport promotion donotapply toagricultural products; provisions
onthese issues arecontained inthecompanion agreement onagriculture.
21Theinstitutional arrangements oftheCustoms Union andofother regional trading agreements arediscussed
inChapter II(5).
22See"The Agreement Between theGovernment oftheCzech Republic andtheGovernment oftheSlovak
Republic onMutual Relations andPrinciples ofCooperation inAgriculture, Food Processing, Forestry andWater
Management Within theFramework oftheCustoms Union," inGATT document L/7212/Add. 1,May 1993.Czech Republic WT/TPR/S/12
Page 49
thetwoparties istoremain free,witheachgranting tonationals oftheother thetreatment itgrants
toitsownnationals. Proposed changes tothecustoms tariff made byeither party areconsidered by
ateamofexperts representing ministries ofbothcountries; thisprocess isco-ordinated bythePermanent
Secretariat oftheCustoms Union Council. Oneparty may, afterconsultation withtheother, reduce
itstariffonalimited volume ofimports ofaparticular product; however, thereisnoscope foraparty
tounilaterally increase acustoms tariff from thecommon rate.
39. TheCzech andSlovak Customs Union doesnotcallforthefreeflowbetween theparties of
goods originating inthirdcountries, andrulesoforigin aretherefore necessary. TheAgreement applies
thesame rulesoforigin thatareusedbytheparties intheiragreements withtheEFTA States: origin
isconferred onacountry ifthegoods arewholly obtained orproduced inthatcountry, orifthegoods
underwent asubstantial transformation (change oftariffheading) inthatcountry. TheAgreement leaves
openthepossibility offurther defining rules oforigin forsome types ofgoods.
40. Several deviations fromacustoms union exist. Czech exports ofconsumer goods toSlovakia
faceatemporary import surcharge thatisimposed atarateof10percentonmostconsumer goods.23
TheCzech Republic doesnotplace alimitonthevalue ofimports fromdeveloping countries (other
thanleast-developed developing countries) thatmayenterattheGSPrate,asSlovakia does. Although
bothcountries charge thesamein-quota andout-of-quota tariffratesonproducts forwhich tariffquotas
exist(particularlyundertheWTOAgreementonAgriculture),thevolumeofimportseligibleforin-quota
ratesvaries between thetwo. Them.f.n. tariff quota volumes wereestablished during theUruguay
Round, while bilateral tariffquotas under regional agreements werethesubject ofnegotiation between
thecountries rather thanhaving beendetermined according toanypreset formula. Import limits on
products subject tonon-automatic import licensing alsovaryinthetwocountries. These features can
affect actual tradebecause third-country goods donotmove freely within thecustoms union. Potential
deviations from bilateral freetrade include theuseofanti-dumping duties andsafeguards measures
byoneparty against theexports oftheother; suchpolicies areexplicitly allowed bytheagreement
buthavenotbeenused.
41. TheCzech Republic andSlovakia separated theircurrencies inFebruary 1993. Aclearing
arrangement wasthenestablished inaccordance withthebilateral payments agreement, under which
transactions were converted from thecontract currency intoclearing ECUs attheratesetbythe
respective National Bank (Chapter II). Theclearing arrangement waseliminated attheendof
September 1995 andbothcountries introduced fullcurrent account convertibility fortheirrespective
currencies andadopted Article VIIIoftheInternational Monetary Fund.
(b) TheAssociation Agreement withtheEuropean Union (EU)
42. TheCSFR signed anAssociation Agreement withtheECinDecember 1991. Pending its
ratification, anInterim Agreement, including themainprovisions relevant tomerchandise trade, entered
intoeffectbetweentheCSFRandtheECinMarch1992.24TheCzechRepublicandtheSlovakRepublic
23TheSlovak Government removed small automobiles from thelistofproducts covered bythesurcharge
inSeptember 1995, when iteliminated thecustoms dutyonthem.
24Thedateofentryintoforceforpurposesoftheprogramme offuturephasedtariffreductionsis1January1992
(GATT document L/7377, response toquestion 2.2.2).WT/TPR/S/12 Trade Policy Review
Page 50
eachsucceeded tothese Agreements atthetimeofdissolution inJanuary 1993.25TheAssociation
Agreement istoleadtoafree-trade areainindustrial products between theparties within tenyears
from theentry intoforce oftheInterim Agreement; trade inagricultural products isbeing partially
liberalized.26Theharmonization oftheCzech Republic legalsystem withEUlawiswellunder way
innumerous areas, including customs procedures, standards andcompetition law. TheEUaccounts
forsome 46percentofCzech merchandise trade.
43. Rules oforigin intheAssociation Agreements arebased onachange ofthefour-digit CNtariff
heading, withadditional requirements spelled outforawiderange ofgoods.27Cumulation oforigin
ispossible within theAssociation Agreement area(i.e., among theEUandtheCEFTA countries that
haveEUAssociation Agreements) butnotwithother preferential trading partners oftheEU. The
rulesoforigindonotcontainano-drawbackprovision,whichwoulddisallowdutydrawbacksonimports
ofinputs from thirdcountries when thefinalproduct isexported toapreferential partner.28
44. EUtariffs onimports ofindustrial products from theCzech Republic arebeing phased out
according tofourschedules, withalltariffs tobeeliminated bytheendof1996.29Duties onmost
tariff lineswere eliminated upon entry intoforce.30Duties onabout 1percentoftariff lineswere
eliminated attheendof1992, following a50percentreduction upon entry intoforce.31Duties on
threetarifflinescovering certain ferro-alloys arebeing reduced infiveequal stepsandeliminated from
1January 1996. Transitional tariffquotas wereintroduced onsome 5percentoftarifflinescovering
products suchascement, chemicals, fertilizer, tyres, leather products, footwear, glassandglassware,
ironandsteel, vehicles, andfurniture; thesetariffquotas havebeenprogressively liberalized andCzech
exports ofthese products intotheEUaredutyfreefrom 1January 1995. Inaddition, EUduties on
25Features oftheAssociation Agreements, or"Europe Agreements," aredescribed inGATT (1993).
26Services trade andcapital movements arealsotobeliberalized (Chapter II(5)(ii)). Provisions onservices
containedintheAssociationAgreemen tincludeachapteronestablishmentandachapteronthesupplyofservices.
(GATT document L/7377, p.59.) TheEurope Agreement hasnotyetbeen notified totheWTO.
27Exceptional rules oforigin apply to,among others, many food, beverage andtobacco products, minerals,
industrialandconsumerchemicals,pharmaceu ticals,plastics,rubber,textiles,clothingandaccessories,footwear,
glass, metals andmetal products, engines, machines, machine tools, office machines, industrial andconsumer
electronics,vehicles,opticalandotherinstruments,andclocksandwatches;AnnexII,ProtocolNo.4Concerning
theDefinition of"Originating Products" oftheInterim Agreement; andGATT (1993).
28Theintroduction ofsuchaprovision intheInterim Agreements isacomponent ofthedraft strategy for
theunificationofpreferentialrulesoforigininEurope;thisdraftstrategywasadoptedbytheEuropeanCommission
inNovember 1994 (Euro-East, 12December 1994). Thepossibility ofintroducing ano-drawback provision
wasarguedforparticularlyintheareasofconsumerelectronics,textilesandautomobiles.Regardingthispossibility
inconsumer electronics, itwasnoted thatthis"would encourage theuseofCEEC orECparts." Thisdraft
strategy isaimed attheEU,EFTA andtheAssociation Agreement countries.
29Some ofthese products aresubject toprogressively more liberal tariff quotas until theendof1996.
30Asnoted inGATT (1993), inmany areas theEUcommitments replace preferences under theGSP.
31Productscoveredincludedsalt,sulphurandgranite,somechemicals,leather,ironandsteel,andbasemetals.Czech Republic WT/TPR/S/12
Page 51
imports ofEuropean CoalandSteelCommunity (ECSC) steelproducts wereplaced onafifthreduction
schedule, leading totheirelimination attheendof1995. Duties onECSC coalproducts wereremoved
attheendof1992. Commitments undertaken bytheEUintheareaofindustrial products arefurther
described inGATT (1993).
45. TheInterim Agreement called fortheelimination ofquantitative import andexport measures
bytheEUwithrespect totheCzech Republic fromMarch 1992. Exceptions wereallowed fortextiles
andclothing products untilJanuary 1998andforECSC coalproducts untilJanuary 1994. Quantitative
restrictions onexports from theEUtotheCzech Republic arenotallowed under theAgreement.
46. Customs duties onCzech Republic exports oftextiles andclothing products totheEUarebeing
reduced inseven annual instalments leading totheirelimination by1January 1997.32EUquantitative
import restrictions hadtobeeliminated inhalftheperiod called forunder theWTO Agreement on
Textiles andClothing. Inaccordance withtheAdditional Protocol totheEurope Agreement ontrade
intextile products signed in1993, thesequantitative restrictions willbeeliminated by1January 1998.
These quota levels were renegotiated inAutumn 1994 toaccount forEUenlargement.33
47. Czech exports ofmany steelproducts thatreceive EUtariff preferences aresubject toquotas
untiltheendof1995.34Thetariffs, currently setat20percentofthebasic duty, aretoberemoved
inJanuary 1996. However, additional duties inexcess ofthose called forintheagreement, andequal
to30percentoftheimport value, havebeenapplied bytheEUonsome ofthese products; these
were scheduled tobeinplace untiltheendof1995.35
48. Czech tariffs onimports ofindustrial products from theEUarebeing eliminated under four
programmes (Table IV.12); thephasing ofthiselimination isslower thanthatofEUduties onCzech
products. Themajority oftariff linesarecovered under Annex V,leading toduty-free trade from
1January 1997. Duties ontariff lineslisted inAnnex IV,covering about onefifthofalllines, were
abolished inMarch 1992 withtheentry intoforce oftheagreement. Examples ofproducts included
inAnnexes IVandVare:rawmaterials formetallurgy, rawwood, rawskins andfurs,some chemical
products, jewels, antiques andart.Duties ontariff lineslisted inAnnex VI,alsocovering some one
fifthoftarifflines, arebeing progressively reduced andwillbeeliminated attheendof2000. Examples
ofproducts included are:some chemical products, some plastics, textiles andclothing, some glass
products, andsome paper products. Annex VIIcovers alimited number oflinesthatpertain tonew
cars; these duties arebeing reduced according totheirownprogramme butarealltobeeliminated
attheendof2000.
32Duties onre-imports intotheEUfrom theCzech Republic were eliminated in1992 forlimited quantities.
33Renegotiation ledtoanaverage increase of27percentfordirect exports andanaverage increase of
10percentforoutward-processing exports (re-imports).
34Quotas onsteel products under tariff preferences were renegotiated in1993, leading toaverage annual
increases of10.7 percentfor1993 and11.6 percentfor1994. Inearly 1995, these quotas were further
renegotiated toaccount forEUenlargement, withanaverage annual increase of19.7 percentfor1995.
35Euro-East, 17October 1994.WT/TPR/S/12 Trade Policy Review
Page 52
Table IV.12
Schedules ofCzech Republic preferential tariff reductions onEUindustrial products
(Percentofm.f.n. rate)
Annex of
AgreementMar
1992Jan
1993Jan
1994Jan
1995Jan
1996Jan
1997Jan
1998Jan
1999Jan
2000Jan
2001
IV 0 0 0 0 0 0 0 0 0 0
V 80 80 80 40 40 0 0 0 0 0
VI 100 100 100 80 80 60 60 40 40 0
VII 80 80 80 60 60 40 40 20 20 0
Source: Based oninformation intheInterim Agreement.
49. TheInterim Agreement callsfortheelimination ofquantitative import andexport measures
bytheCzech Republic fromthedateofentryintoforce. Exceptions wereallowed forimport restrictions
onuranium oresandconcentrates, natural andenriched uranium, waste andscrap ofpaper, andferrous
andother waste andscrap, which mayberetained until2001.
50. TheInterim Agreement provides foreither partial orfullliberalization ofbilateral trade in
someagricultural products, through avariety ofmethods.36These include thefollowing methods applied
bytheEUonCzech exports: (i)tariff quotas withvolumes increasing overtimetoasetmaximum;37
(ii)tariff preferences thatarenotprogressively reduced andtowhich certain other conditions are
attached;38(iii)minimum import prices;39and(iv)tariff quotas where thequota isvariable andis
enforced onaplurilateral basis (applying tothesumofimports from theCzech Republic, the
Slovak Republic, Hungary andPoland).40TheCzech Republic hasinturngranted preferential rates
ofduty, some culminating inzeroratesofduty, andpreferential tariff quotas toimports fromtheEU
(Table IV.5). According totheauthorities, negotiations toadjust theEurope Agreement totheresults
oftheUruguay Round andtheenlargement oftheEUhavenotyetbeenconcluded.
51. TheAssociation Agreement includes stepstoward theprogressive liberalization ofcross-border
supplies ofservices (Chapter II(5)(ii)). These include thegranting ofnational treatment forrights of
establishment (although intheCzech Republic thisissubject toatemporary derogation forfinancial
services foruptotenyears) andsome general exemptions, suchasforairandinland-waterway
36Table IV.11 indicates theextent oftariff preferences granted in1995 ineach HSchapter.
37Forexample, products inAnnexes XIaandXIIIb, including fresh, chilled orfrozen meatofbovine animals;
chicken; milk powder; butter; eggs; andwheat flour.
38Annex 11b, including natural honey; cucumbers; andcutflowers.
39Annex toAnnex 11b, including raspberries andstrawberries.
40Annex XIIIa, applying tolivebovine animals.Czech Republic WT/TPR/S/12
Page 53
transport.41Foreign-based firms aregiven therighttoemploy nationals ofthehome country as"key
personnel" inthehostcountry. Steps arealsobeing taken toward liberalizing thetemporary movement
ofpersonnel among theparties. According totheauthorities, theissue ofwhether theAssociation
Agreement willbenotified totheWTO Council forTrade inServices isbeing discussed withtheEU.
52. Anti-dumping actions byoneparty against products oftheother areexplicitly allowed under
theAssociation Agreement,42asareimport safeguard measures andmeasures tosafeguard domestic
supply intheevent ofaserious shortage. Inselecting measures tocounteract dumping, import surges,
ordomestic shortages, "priority must begiven tothose which leastdisturb thefunctioning ofthe
[Association] Agreement"43and"trade relations between theParties tothe[Association] Agreements
willprimarily begoverned bytheterms ofthese [Association] Agreements".44
(c) TheCentral European FreeTrade Agreement
53. TheCzech Republic 'spartners intheCentral European FreeTrade Agreement (CEFTA) are
theSlovak Republic, Hungary, andPoland.45These partners account forabout 20percentof
Czech merchandise trade, including theSlovak Republic 'sshare ofsome 15percent. TheAgreement
entered intoeffect inMarch 1993, withinitial tariff reductions atthattime. AnAdditional Protocol
wassigned inApril 1994 withtheaimofaccelerating theliberalization process. TheCEFTA, which
wassigned inDecember 1992, callsforthegradual establishment ofafree-trade areainindustrial
products among theparties byJanuary 2001, thedatebywhich thefourStates agreed toeliminate
duties onnearly allnon-agricultural products. InAugust 1995, representatives oftheParties signed
Additional Protocol No.2,shortening thetransition period byoneyear, withsome exceptions.46
54. DutiesonCzechimportsofsomeagriculturalproducts,includingmanyprocessedfoodproducts,
fromHungary andPoland arebeing reduced byeither 20or50percent,butnoteliminated, andthese
imports oftenaresubject totariffquotas onabilateral basis(Table IV.5); imports ofmostagricultural
products receive nopreferential treatment. TheCEFTA JointCommittee, meeting inAugust 1995,
41Duringspecifiedtransitionperiods,theCzech Republicmaysuspendthisrightinindustriesthatareundergoing
restructuring; facing serious difficulties; facing theelimination ordrastic reduction oftheir market share; or
newly emerging. Whenever possible, theCzech Republic iscommitted insuchcases togranting preferential
treatment toEUcompanies andnationals.
42Hoekman andMavroidis (1994) explore thepossibility thattheuseofanti-dumping measures bytheEU
against producers incentral andeastern European countries could bephased outandreplaced withEUcompetition
law.
43Article 27.
44GATT document L/7377, "Interim Agreements Between theCzech andSlovak Federal Republic andthe
European Communities, Hungary andtheEuropean Communities, andPoland andtheEuropean Communities:
Questions andReplies," February 1994.
45These countries areoften referred toastheVisegrad Group. Theagreement wasnotified toGATT in
document L/7495, June 1994.
46Intrade withPoland, exceptions apply topassenger cars,motor vehicles forthetransport ofgoods, tractors,
fertilizers, andsome chemical andtechnical products. Intrade withHungary, exceptions apply onlytosome
chemical andtechnical products.WT/TPR/S/12 Trade Policy Review
Page 54
recommended thatfurther negotiations takeplace toincorporate allagricultural products intothe
Agreement andthatagricultural tariff preferences notbelimited byquotas.
55. Quantitative restrictions ontrade among theparties were abolished onthedateofentry into
effect, withsome exceptions. These restrictions maybemaintained onimports fromtheparties into
theCzech Republic ofuranium orthorium ores,coal,waste andscrap paper orpaperboard, andferrous
waste andscrap untiltheendofthetransition period. Czech quantitative restrictions (intheformof
export licences) mayberetained untilJanuary 1997 forparticular mining products, ironandsteel,
electricalenergy,medicaments,fertilizers,hidesandskins,wood,andmusicalinstruments.Theabolition
ofexport restrictions under theAgreement doesnotapply towaste andscrap ofcopper, aluminum,
leadandzinc.
56. Theliberalization ofgovernment procurement markets isanobjective oftheAgreement, and
parties are,bytheendofthetransition period, togrant suppliers intheother parties access tocontract
awardproceduresaccordingtotheprovisionsofthePlurilateralAgreementonGovernmentProcurement,
towhich theparties "shall endeavour toaccede." TheCzech-CEFTA Agreement allows forthe
imposition ofmeasures relating todumping, import surges, andbalance-of-payments difficulties and
states that"priority shall begiven tosuch measures aswillleast disturb thefunctioning ofthe
Agreement." Exceptional measures maybeintroduced incasesof"infant" industries: increased import
duties ofupto25percentmaybeapplied onasmuch as15percentofindustrial product imports,
solongastheduration ofsuchameasure doesnotexceed fiveyears andthemeasure isintroduced
within threeyears oftheelimination ofallduties andquantitative restrictions ontheproduct. Provisions
oftheAgreement restricting theuseofState aiddonotapply toagricultural products.
57. Rules oforigin among CEFTA Parties arebased onachange of(four-digit) tariff heading
criterion. Cumulation oforigin isallowed within theCEFTA areaonabilateral basis (cumulation
within allCEFTA countries isnotallowed).47TheAgreement contains ano-drawback provision with
regard toinputs imported fromtheEU,butaderogation tothisprovision iscurrently inforce.48Special
rules pertain tomany products. AtitsAugust 1995 meeting, theCEFTA Joint Committee stressed
theimportance ofrules oforigin fortrade among CEFTA countries andbetween CEFTA countries
andtheEU.Negotiations aretobegin ontheharmonization ofprovisions, based onthose oftheEU,
andperhaps toallow thediagonal cumulation oforigin (seetheprevious sub-section). Negotiations
were concluded inOctober 1995 toharmonize rules oforigin andallow thediagonal cumulation of
origin among theEU,EFTA, andAssociation Agreement countries. These rules areexpected tobe
implemented in1996.
(d) TheFree Trade Agreement between theCzech Republic andtheEuropean Free Trade
Association (EFTA)
58. TheFreeTrade Agreement between theEFTA States andtheCSFR came intoforce on
1July1992;theCzechRepublicandSlovakiaeachsucceededtotheAgreementfollowingthedissolution
47Forpurposes ofrules oforigin within theCEFTA, theCzech Republic andSlovakia areconsidered as
oneregion.
48Protocol 7,Article 23andAnnex VIII. TheJoint Committee mayterminate thederogation, after taking
intoaccount thepractices applied between theCEFTA countries, theEU,andtheEFTA countries.Czech Republic WT/TPR/S/12
Page 55
oftheCSFR.49Trade in1994withEFTA countries, including Austria, Finland andSweden, accounted
for12percentofCzech trade. Thefree-trade areainindustrial products istobeestablished during
atransition period ending on30June2002.50TheAgreement covers products inHSChapters 25to
97(excluding some products imported intoparticular EFTA States51),those agricultural products listed
inProtocol A52,andthefishandother marine products listed inAnnex II.53Some other agricultural
products arecovered inbilaterally-negotiated agreements, which donotformpartoftheAgreement.54
59. TheEFTA States eliminated customs duties onimports fromtheCzech Republic withtheentry
intoforce oftheAgreement, withtheexception ofthose products listed inAnnex III,forwhich duties
arebeing progressively abolished55andwithexceptions forduties ofafiscal nature.56TheCzech
49Theentry intoforce dateapplies toSweden, Norway and(provisionally) Switzerland. Theentry intoforce
dateforAustria, Finland and(definitively) Switzerland is1December 1992 andforIceland is1January 1993.
50Theagreement wasnotified toGATT indocument L/7041. Questions andreplies arecontained inGATT
documents L/7379 andAdd.1. GATT document L/7570, December 1994, contains thereport oftheWorking
Party.
51Exceptionsincludethefollowing:caseinotherthancaseinglues(HSex3501.90)importedintoLiechtenstein
andSwitzerland; corkproducts (HS45.01) when imported intoIceland; raworprocessed flax(HS53.01) and
raworprocessed truehemp (HS53.02) when imported intoLiechtenstein orSwitzerland; andeggandmilk
albumin other thanthatwhich isunfit forhuman consumption (HSex3502.10 andex3502.90) imported into
anyEFTA State.
52Theprovisions oftheagreement apply tothose products listed inTable IofProtocol A,covering alarge
number ofprocessed agricultural products.
53Theproducts covered byAnnex IIarewhale meat(HSex0208.90); crustaceans, molluscs andother aquatic
invertebrates inChapter 3oftheHS;fatsandoils(HS1504 andHSex1516.10); extracts andjuices (HSex
1603.00); caviar andcaviar substitutes (HS1604); crustaceans, molluscs andother aquatic invertebrates, prepared
orpreserved (HS1605); flours, meals andpellets (HSex2301.10 andHS2301.20); andfishsolubles foruse
inanimal feeding (HSex2309.90). Exceptions, which allow Liechtenstein andSwitzerland tomaintain customs
dutiesonimportsofsomeoftheseproductsoriginatingintheCzech RepublicortheSlovakRepublic,arecontained
inArticles 3-6ofAnnex II.Exceptions forimports intotheCzech Republic andtheSlovak Republic ofsome
ofthese products originating inSwitzerland arefound inArticle 7.
54Bilateral agreements onagriculture werenegotiated between theCSFR andeachoftheEFTA States. These
bilateral agreements arereferred toin,butformally aredistinct from, theAgreements. Formostproducts covered
byabilateral agreement, import duties were eliminated. Yetforsome products apartial reduction, atariff quota,
orother arrangements areused. Rules oforigin inthese agreements areverysimilar andnormally require that
theagricultural product hasbeen "wholly obtained" inthepartner country.
55Duties onsome polymers inHS39imported intoNorway from theCzech Republic arebeing reduced and
willbeabolished on1January 1996. Duties onmany textile andclothing products imported intoNorway from
theCzech Republic arebeing reduced andwillbeabolished on1January 1998. Aspecial safeguards facility
exists regarding Liechtenstein andSwitzerland for"serious disturbances onthedomestic market resulting from
lower protection" onproducts inAnnex III.
56TheseareappliedbyIcelandandbyLiechtensteinandSwitzerland;productsaffectedarelistedinProtocolC
oftheagreement andinclude petroleum oils,spark-ignition engines, andmotor carsandpartsfrom Liechtenstein
andSwitzerland, andmany products from Iceland.WT/TPR/S/12 Trade Policy Review
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Republic iseliminating itscustoms duties onimports ofproducts specified inAnnex IVoriginating
inanEFTA State.57Allexport taxes among theparties havebeeneliminated.
60. Quantitative restrictions onimports intoEFTA States58andintotheCzech Republic,59andon
exports fromEFTA States60andtheCzech Republic61wereabolished onthedateofentry intoforce.
Exceptions, such asfortheprotection ofhealth andlifeofhumans, animals orplants andthe
environment,theconservationofexhaustiblenaturalresources,andtheprotectionofintellectualproperty,
arepossible under Article 10.
61. State aidthat"distorts orthreatens todistort competition byfavouring certain undertakings
ortheproduction ofcertain goods" isconsidered tobeincompatible withtheAgreement. Interpretation
ofthisprovision isgiven, specifying examples ofaidmeasures considered tobeconsistent andexamples
ofmeasures considered tobeinconsistent.62Transparency isrequired where suchaidisgranted: the
totalamount andthedistribution ofaidmustbereported annually andnewaidschemes mustbenotified.
Until July1997 theCzech Republic may"grant aidwithahigher intensity thanwould betolerated
forEFTA States according tothecriteria setout". Anti-dumping andsafeguard actions areallowed
byoneparty against another inaccordance withthenotification andother transparency provisions of
Article 25oftheAgreement andwithArticle VIoftheGATT.
62. ThepartiestotheAgreementhaveagreedtoco-operatewiththeobjectiveofgraduallyliberalizing
investment rules andtrade inservices, "taking intoaccount relevant GATT work".
57Some ofthese duties were eliminated withtheentry intoeffect oftheagreement. Others arebeing reduced,
according tooneoftwodifferent schedules, andwillbeeliminated 1January 2001.
58With exceptions, contained inAnnex VI,forbrooms andbrushes imported intoIceland (tobephased out
bytheendofthetransition period) andsome categories oftextiles imported intoNorway (tobeeliminated by
31December 1997).
59With thefollowing exceptions contained inAnnex VII:uranium orthorium oresandconcentrates; natural
orenriched uranium anditscompounds, alloys, andproducts; waste andscrap ofpaper orpaperboard; andferrous
waste andscrap andremelting scrap ingots ofironorsteel, tobeabolished bytheendofthetransition period.
60With some exceptions asnoted inAnnex VIII. These include allferrous waste andscrap andremelting
scrap ingots ofironorsteel (HS7204) exported from Liechtenstein andSwitzerland.
61Exceptions, listed inAnnex IX,aretobephased outby1July1997. Included among theexceptions are
many minerals andmining products, hides andskins, wood products, andmusical instruments.
62Among thelatter examples areaid,ortheinjection ofequity capital, tooffset operating losses; aidtosectors
orenterprises suffering from structural overcapacity, where thisaidisnotstrictly limited induration and
accompanied byanadjustment programme; andaidtoexports ofgoods informs described intheAppendix to
Annex XII. Included inthelatter category arecurrency retention schemes thatinvolve abonus onexports;
theexport-based remission ofdirect taxes; andthegovernment provision ofexport credit atrates below those
thattheGovernment pays toobtain thefunds.Czech Republic WT/TPR/S/12
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(e) TheFreeTrade Agreement between theCzech Republic andSlovenia
63. TheFreeTrade Agreement between theCzech Republic andtheRepublic ofSlovenia hasbeen
applied, originally onaprovisional basis, since January 1994.63Slovenia accounted for1percent
ofCzech merchandise tradein1994. TheAgreement, which applies totheproducts ofallHSchapters
andexcludes services, callsfortherapid establishment ofafree-trade areabetween thetwoparties,
withthetransition lasting onlyuntil1January 1996. Czech tariffs onimports ofmostindustrial goods
from Slovenia wereabolished immediately upon theAgreement 'staking effect; forother industrial
goods thetariff elimination isfront-loaded, witha50percentreduction fromthem.f.n. rateineffect
during 1994 anda75percentreduction during 1995.64Czech tariffs onsome agricultural products
havebeen, orarebeing, reduced tohalfthem.f.n. rateforimports fromSlovenia, either immediately
onimplementation orinfivesteps of10percentforeachyear, 1994-98; these preferences areoften
subject totariffquotas. TheCzech Republic andtheother parties toCEFTA reached agreement with
Slovenia inearly 1995 forthefurther reduction oftariffs onsome agricultural products; further
negotiations tookplace among Ministers ofAgriculture from CEFTA countries andSlovenia in
August 1995. TheCEFTA Joint Committee hasagreed tobegin preparations fortheaccession of
Slovenia.
64. Rules oforigin intheCzech Republic -Slovenia FreeTrade Agreement arebased onachange
offour-digit tariffheading criterion. Some products arecovered bydifferent rulesoforigin onaproduct-
specific basis. Forproducts inHSChapters 84to91,alternative rules oforigin maybeapplied, at
thediscretion oftheexporter. Cumulation oforigin ispossible withrespect toSlovakia.
(f) TheFreeTrade Agreement between theCzech Republic andRomania
65. TheFreeTrade Agreement between theCzech Republic andRomania, signed inOctober 1994
andeffective from January 1995, callsfortheestablishment offreetrade inindustrial products ina
transitional period ending notlaterthanJanuary 1998. Romania accounted forlessthan1percent
ofCzech merchandise trade in1994. Theproducts ofallHSchapters arecovered bytheAgreement,
which excludes services. Tariffs applied bytheCzech Republic onimports ofmany industrial products
fromRomania wereabolished uponentry intoforce oftheAgreement. Onthesame day,mostother
tariffs werereduced to75percentofthem.f.n. rate. Further reductions to30percent, 25percent
andzeroshallbemade on1January 1996, 1January 1997 and1July1998, withtheexception of
afewproducts inHSChapter 87forwhich tariffs shallbeeliminated by1January 2001. Thisschedule,
which wasagreed toinAugust 1995, represents anacceleration oftheoriginal schedule. Foragricultural
products, thetwoparties granteachothertariffpreferences, which sometimes aresubject totariffquotas
(wine, andsome fruitandvegetables). Rules oforigin areonachange of(four-digit) tariff heading
criterion, subject tospecial rulesforsome products. Cumulation oforigin isallowed among thetwo
parties andSlovakia. TheAgreement callsforthegeneral abolition ofquantitative trade restrictions
between theparties butallows theCzech Republic tomaintain quantitative import restrictions onmany
products forwhich itcurrently requires non-automatic import licences, suchascoal,lignite, andwaste
andscrap ofpaper orpaper board.
63TheAgreement wasnotified totheGATT indocuments L/7447 andAdd.1.
64Thesame paths toward theelimination ofSlovenia 'sduties withrespect toimports from theCzech Republic
areinplace,althoughtheproductscoveredmaybedifferent.ThereisalsoamuchslowereliminationofSlovenia's
tariffs onpassenger carsproduced intheCzech Republic, withthese tariffs being abolished byJanuary 1999
oratthetimethatpassengercarsproducedinSloveniaandimportedintotheCzech Republicmeet theagreemen t's
rules oforigin, whichever isearlier.WT/TPR/S/12 Trade Policy Review
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(v) State-trading
66. According totheauthorities, theStateFund forMarket Regulation (SFMR) istheonlyState
trading enterprise intheCzech Republic. Itsactivities havebeennotified under Article XVII ofthe
GATT.65
67. TheSFMR wasestablished in1992 asanindependent economic body. Itspredecessor, the
Federal Fund forMarket Regulation, ceased toexistonthedissolution oftheCSFR. Themainpurpose
oftheSFMR istoregulate themarkets ofselected agricultural products (Chapter V(2)). Commodities
subject toregulation bytheSFMR in1995 were: grain, malt, livecattle andbeefmeat, porkmeat,
butter, skimmed milkpowder, cheeses, sugar, potatoes andpotato starch.
68. TheaimoftheSFMR istoprovide pricestability andpredictability inthemarket oftheselected
commodities. Forthispurpose, theSFMR isauthorized tomake interventions onthedomestic
agriculturalmarket.TheprincipalactivitiesoftheSFMRarefinancedfromtheannualbudgetallocations
approved bytheGovernment. In1994, theSFMR received aStatebudget allocation ofKc1.9billion
(about US$72 million).66
69. TheSFMR decides onthequantity ofthecommodity subject toregulation andtheguaranteed
(minimum reference) priceatwhich goods arepurchased fromproducers. TheSFMR doesnotperform
thepurchasing itself, butcontracts withtraders tomake theactual intervention purchases andrequires
thatthepurchased commodities bestored. According totheauthorities, thebidprocess isopen to
alleligible traders, andbidconditions arepublished. Storage costsarefinanced bytheSFMR. When
demand exceeds supply, stocks arereleased tothedomestic market, oninstructions bytheSFMR,
withtheobjective ofstabilizing consumer prices. Intervention purchases in1994, allofwhich were
onfoodwheat, were valued atKc2.4billion (Table IV.13).
70. Surplus quantities ofcommodities subject toregulation areexported. In1994, theSFMR was
amajor exporter ofbeefmeat, porkmeat, butter, cheese, potatoes andpotato starch. Export subsidies
totalled Kc1.3billion, primarily ondairy products (Table IV.13).
65GATT document L/7374/Add.5, May 1994 andWTO document G/STR/N/1/CZE, September 1995.
66In1992 and1993 disbursements amounted toKc3.1billion andKc2.1billion respectively.Czech Republic WT/TPR/S/12
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Table IV.13
Overview ofthescope ofmarket regulation intheCzech Republic, 1994
Quantity (tonnes) Subsidies ('000crowns)
Total export subsidies andintervention purchases
bytheState Fund forMarket Regulation3,773,034
Subsidized exports: 1,336,369
Dairy products 1,146,196
-Butter 17,986 673,969
-Whole fatmilkpowder 20,051 312,076
-Evaporated milk 2,017 5,766
-White cheese 6,823 45,959
-Cheese 3,086 31,462
-Other dairy products 2,290 76,964
Slaughter bulls andheifers 4,681 29,985
Food potatoes 25,114 10,191
Potato starch 13,293 105,756
Syrup from potato starch 92 690
Barley malt 73,700 43,542
Intervention purchases:
-Food wheat 656,385 2,436,665
Source: Dataprovided bytheCzech authorities.
71. TheSFMR hasnomonopolistic orexclusive position inthemarket since other traders arefree
toexport orimport allproducts subject toregulation oncompetitive terms andunder normal market
conditions.
(vi) Import cartels
72. According totheauthorities, theCheck Republic hasnolegislated import monopolies.
(vii) Countertrade
73. According totheauthorities, theGovernment doesnotconclude countertrade contracts.
(viii) Standards andtechnical regulations
74. TheCzech Republic accepted theTokyo Round Agreement onTechnical Barriers toTrade,
effective May1993, under thesame terms ashadapplied totheCSFR; itisnowamember ofthe
corresponding WTO Agreement. Inaccordance withArticle 75oftheEurope Agreement, theCzech
Republic shallachieve fullconformity withEUtechnical regulations, andEuropean standardization
andconformity assessment procedures. Allapproved European standards should beimplemented by
theendof1996. TheCzech Republic co-operates withSlovakia onstandards andtesting, based on
theAgreement onCo-operation inStandardization, Metrology, Testing andRelated Activities, signed
inDecember 1992. ThisAgreement provides forco-operation intheareas ofinformation procedure,
technical standardization, testing andcertification, accreditation andmetrology. TheCEFTA includes
aprocedure fortheexchange ofnotifications ondrafts oftechnical regulations, butthese procedures
arenotyetinoperation. TheCzech Republic 'smain goalinthefieldofstandards andtechnical
regulations istoachieve fullcompatibility withtheEU.WT/TPR/S/12 Trade Policy Review
Page 60
75. ProceduresforsettingstandardsarebasedonAct142/1991.Undercentralplanning,(mandatory)
technical regulations, rather than(voluntary) standards, wereusedinallcases. TheCzech Republic
nowprimarilyreliesonstandards,exceptthatsome250technicalregulationsareappliedforatransitional
period.67Allstandards, technical regulations, andconformity assessment procedures apply equally
todomesticallyproducedandimportedgoodsandservices.InaccordancewiththeConstitution,technical
regulations mayonlybeadopted intheform ofalaw,government ordinance orministerial decree
andmustbepublished intheCollection ofLaws oftheCzech Republic. Newlegislation onthetechnical
requirements forproducts, including provisions onstandards, technical regulations andconformity
assessment procedures, isbeing prepared. Thislegislation willreflect EUpolicy concerning these
areas; itisexpected tobeadopted inthefirsthalfof1996 andtoenter intoforce laterintheyear.
76. Outofthe18,000 Czech Standards intheCSSystem, 2,000 areidentical withInternational
Organization forStandardization (ISO) standards andother international standards. According tothe
authorities, about 5,000 Czech Standards deviate onlytoasmall extent frominternational standards.
Thenumber ofEuropean Standards implemented intoCzech standards was1,300 attheendof1994,
andsome 600-700 additional European Standards areimplemented eachyear. Theauthorities prepared
atwo-year plantocomplete theintroduction ofEuropean Standards bytheendof1996. TheCzech
authorities responsible forstandardization andtesting co-operate closely withthecorresponding EU
bodies.
77. According toLawNo.30/1968, asamended, certain products (dangerous tolife,health, the
environment, etc.)require approval byaStateTesting Laboratory before entering circulation. These
products arepublished intheOfficial Journal oftheCzech Office ofStandards, Metrology andTesting
(COSMT). Thisobligation applies tobothdomestic andimported products. StateTesting Laboratories
enforce compliance withthetechnical regulations andstandards. Testresults ofanindependent foreign
testing authority arenotautomatically accepted bytherespective StateTesting Offices unless theTesting
Office hasconcluded abilateral agreement withtheforeign testing house ontherecognition oftest
results. Suchanagreement hasbeensigned withRussia andothers arebeing negotiated withPoland,
Slovenia andIsrael. Results ofSlovak testing offices areaccepted. According totheauthorities, no
differentiation ismade inthetesting procedure between foreign anddomestic products.
78. Aslaiddown inAct20/1966, alldomestic andimported products whose usecanhaveadverse
effects onhuman health aresubject toapproval bythePublic Health Service. Thefollowing agencies
areinvolved intheinspection andcertification procedures: thePublic Health Service ofthe
CzechRepublic,theCzechTradeInspectorate,theCzechAgriculturalandFoodInspectorateandvarious
StateTestingOffices.Accordingtotheauthorities,nodistinctionismadebetweenimportedanddomestic
products intheinspection andcertification procedure.
79. TheCOSMT isthenational standards body andapproves Czech Standards. Thepreparation
andpublication ofstandards isassigned totheCzech Standards Institute (CSI), apublic body
(Chart IV.1). Allinterested parties maycomment ondraftstandards. Standardization hasbeenfinanced
throughtheStatebudget,CSIfees,andsupportfromindustry.Underthenewlegislation,standardization
willbeprivatized.
67Atthebeginning of1995 there were some 18,000 CSstandards.Czech Republic WT/TPR/S/12
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80. In1993, CZECHOLAB wasadmitted asanassociate member totheEUROLAB testing
organization. Testing authorities co-operate withtheirEuropean partners; however, results ofEU
testing laboratories arenotautomatically accepted.
81. Since 1993, theAssociation forQuality Prize oftheCzech Republic hastheright toaward
themark "CZECH MADE" totested products meeting therequirements andcriteria laiddown by
theregulations. According tothese, themark maybeawarded toproducts thatmeetconsumers 'tastes,
comply withtherequirements ofgenerally binding regulations andarecomparable inquality toproducts
offered byforeign andother domestic producers onthemarket.
82. Marking, labelling andpackaging ofproducts arecovered byCzech standards, which areoften
identical tothose oftheComité Européen deNormalisation (CEN) andtheISO. Thepackaging and
transportation ofdangerous goods iscovered bytheregulations ofrespective international bodies, such
astheInternational AirTransport Association (IATA).WT/TPR/S/12 Trade Policy Review
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(ix) Government procurement
83. TheCzechRepublicisnotamemberofthePlurilateralAgreementonGovernmentProcurement.
TheGovernment intends toapply formembership intheAgreement by1998, andmembership is
expressed asagoalinseveral oftheregional tradeagreements towhich theCzech Republic isaparty.68
84. AnewPublic Procurement Lawcame intoforce on1January 1995. TheLawrequires that
thepublic procurement ofgoods andservices valued inexcess ofKc500,000 andrealestate worth
more thanKc5million mustbeputupforpublic tender. Thelawapplies topurchases made bycentral
governmentbodies,self-governments,theSupremeControlOffice(theindependentauthorityresponsible
forthemanagement ofState property andfunds), courts andother public organizations.69Thelaw
doesnotapply toState enterprises. These organizations implement theprocurement process, under
thesupervision oftheCzech Ministry ofEconomic Competition.
85. Theperiod forintroducing bidsmustbeatleast36days. Thetendering process maybeof
oneortworounds. Two-round tendering takes place intheevent ofanextensive, complicated,
technically sophisticated andchallenging public order requiring astep-by-step clarification of
technological aspects. Ifthereisaforeign tenderer, theorganizer ofthetender mustspecify thatboth
theoffer price andthesecurity deposit bemade inCzech currency.
86. According totheLaw, noadvantage maybeprovided toanyofthetenderers during the
procedure. However, when foreigners participate intenders, theorganizer maysetanadvantageous
offer price fordomestic tenderers, which maynotbemore than10percentabove thelowest offer
price oftheforeign tenderers.70Ifanofferissubmitted jointly bybothdomestic andforeign persons,
theirofferisconsidered asifsubmitted byaforeign person. Iftheofferissubmitted byadomestic
tenderer over60percentofwhose employees arehandicapped, itsofferprice mustbevalued asthe
lowest one,provided itisnothigher bymore than20percentthanthelowest offerprice ofanother
domestic tenderer. Iftheshare ofemployed handicapped people exceeds 60percent,theofferofthis
tenderermaybeaccepted,providedthatthisfacthasbeensupportedbyacertificateissuedbytherelevant
employment office. Foreign companies registered intheCzech Republic arealsoabletotakeadvantage
ofthese preferences.
87. Within 30daysoftheexpiry ofthedeadline ofthetender, theorganizer mustconclude awritten
contract withthetenderer whose offer hasbeenaccepted asthemost advantageous.
68TheCustoms Union Agreement withSlovakia includes national treatment andm.f.n. provisions regarding
public procurement inArticle 21:"The Contracting Parties shall grant tothenational oftheother Contracting
Party access tocontract award procedures ontheirpublic procurement markets andtreatment nolessfavourable
thanthetreatment granted totheir ownnationals andnationals ofthird countries."
69TheActdoesnotapply totask-oriented financial support toscience andtechnology projects provided from
theState budget, procurement forgoods orservices protected bytheActonAuthorship, orthepurchase orsale
of(agricultural) goods organized bytheState Fund forMarket Regulation.
70Under thetermoftheEurope Agreement, EUcompanies shall, bytheendoftheten-year transition period,
begranted access tocontract award procedures intheCzech Republic under treatment notlessfavourable than
thatgiven toCzech companies.Czech Republic WT/TPR/S/12
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(x) Local-content requirements
88. According totheauthorities, theCzech Republic hasnolocal-content requirements thataffect
manufacturing.
(xi) Anti-dumping andcountervailing dutyactions
89. TheWTOAgreementsonAnti-dumpingProceduresandSubsidiesandCountervailingMeasures
areinforce intheCzech Republic. Theauthorities arepreparing alawonanti-dumping and
countervailing measures, andhaveindicated thatthislegislation andCzech practice willbeconsistent
withtheAgreements.Principlesfortheanti-dumpinglegislationwereagreedwithSlovakiainJune1995;
principles forthecountervailing dutylegislation hadnot,asatDecember 1995, beenagreed.71The
institutional arrangements forinjury determination areunder consideration.
90. Noanti-dumping orcountervailing dutyorders areineffect andtheCzech Republic hasnever
initiated anyinvestigations. Asnoted, theCzech Republic 'spreferential agreements explicitly allow
foranti-dumping actions tobetaken against producers located inother countries thatareparties to
these agreements.
(xii) Safeguard actions
91. TheCzech Republic doesnothavesafeguard legislation inthesense ofArticle XIXofthe
GATT1994,andhasnevertakenanysuchsafeguardactions.Safeguardslegislationisunderpreparation.
Each oftheCzech Republic 'spreferential regional agreements allows safeguard actions tobetaken
against imports originating inother parties totheagreements.
(3) Measures Directly Affecting Exports
(i) Export taxes andsubsidies
92. TheCzech Republic hasnoexport taxes. Export subsidies arelimited tosome agricultural
products under theStateFundforMarket Regulation. In1994, subsidies granted equalled Kc1.3billion
andapplied tobutter, whole-fat milkpowder, evaporated milk, white cheese, cheese, slaughter bulls
andheifers, seedpotatoes, potato starch, syrup from potato starch andbarley malt. In1995, export
subsides wereusedforwhole-fat milkpowder, evaporated milk, cream, white cheese, processed cheese,
cheese, andfoodwheat.
(ii) Policies implemented inother countries
93. TheCzech Republic receives preferences under theGeneralized System ofPreferences (GSP)
schemes ofAustralia, Canada, Japan, NewZealand andtheUnited States. According totheauthorities,
itisgenerally recognized thatthesepreferences improve market access opportunities forCzech products.
94. TheCzech Republic 'sexports oftextiles andclothing arerestricted byCanada, Norway and
theUnited States under bilateral agreements concluded under theaegisoftheMulti Fibre Arrangement,
71Article 23oftheCzech-Slovak Customs Union Agreement requires theparties toadopt andapply thesame
legal norms intheareas ofanti-dumping andcountervailing duties. Thisrequirement alsoextends tocustoms
procedures andstatistics, import andexport licensing procedures andintellectual property protection.WT/TPR/S/12 Trade Policy Review
Page 64
andbytheEuropean Union under aseparate agreement (seethefollowing sub-section and
Chapter V(4)(ii)).72These agreements arenowsubject tothedisciplines oftheWTO Agreement on
Textiles andClothing.
95. Safeguard measures taken bytheEUagainst Czech steelexports wereeliminated in1993and
replaced withpreferential tariff quotas. These tariff quotas areexpected tobeeliminated attheend
of1995. Beginning in1996, duty-free Czech steelexports totheEUwillbeunrestricted unless
safeguards, anti-dumping orother suchfeatures oftheAssociation Agreement areinvoked.
96. Anti-dumpingactionshaverecentlybeeninforceonCzechproductsexportedtoseveralcountries
(Table IV.14).
Table IV.14
Anti-dumping actions inplace onCzech exporters, 1995
Product Importer Type ofaction Estimated margin
(percent)HScode
Cold-rolled sheet (steel) Argentina ADprice undertaking ... ...
Waterproof rubber footwear Canada ADduty ... ...
Carbon steelplate Canada ADduty ... ...
12-gauge shatshells Canada ADduty 32.0 ...
Potassium permanganate EU ADduty 19.6 2841.60
Artificial corundum EU ADprice undertaking 25.7 2818.10
Methenamine EU ADprice undertaking 22.2 2933.90
Urea EU ADprice undertaking 10.0 3102.80
Lathe chucks Turkey ADduty ... ...
... Notavailable.
Note: Theestimated margin forpriceundertakings istheSecretariat estimate ofthepercentage bywhich exporters would needtoincrease
theirprice inorder tofullyavoid duty, based onprices usedintheinvestigation.
Source: WTO Secretariat, based onEUOfficial Journal notices andsemi-annual notifications totheCommittee onAnti-Dumping Practices.
97. TheAssociationAgreementbetweentheCzechRepublicandtheEUcontainsaminimumimport
pricearrangement forcertain softfruitforprocessing.73Minimum import prices arefixed bytheEU,
inconsultation withtheCzech Republic, foreachmarketing year. Theproducts covered areraspberries,
blackcurrants, redcurrants, strawberries, andother berries.74According tothisarrangement, during
eachthree-month period ofthemarketing yeartheaverage unitvalue foreachoftheseproducts imported
72Exports totheEUarerestricted under theAdditional Protocol totheEurope Agreement onTrade inTextile
Products.
73This arrangement iscontained intheAnnex toAnnex XIboftheInterim Agreement.
74These products areclassified under CNcodes 08102010, 08103010, 08103030, 08103090, 08111090,
08112019, 08112031, 08112039, and08112051. Theproducts concerned receive preferential tariff treatment
butstillfacetariffs ranging from 9to18percent.Czech Republic WT/TPR/S/12
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intotheEUmaynotbelower thantheminimum import price, andduring anytwo-week period the
average unitvalue maynotbelower than90percentoftheminimum import price. Ifthese criteria
arenotmetforaproduct, theEUmayintroduce measures ensuring thattheminimum import price
isrespected foreachconsignment oftheproduct. Minimum import prices fixedbytheEUfor1994/95
wereECU653pertonne forraspberries (oftariffline08012010), ECU399pertonne forblackcurrants
(oftariff line08103010) andECU 241pertoneforredcurrents (oftariff line08103030).
98. Czech exports totheEUoflivesheep, lambs andgoats andmutton andgoatmeataresubject
tolicensing requirements because ofanexport self-limitation agreement.
(iii) Export licensing andexport permit requirements
99. TheCzech Republic usesexport licensing measures forseveral reasons, including asexport
monitoring measures, toimplement bilateral export limitation agreements negotiated withimporting
countries, andtomeetitsobligations under international treaties regarding tradeinhazardous substances
orenvironmentally sensitive products. According totheauthorities, export licence decisions aretaken
within 15calendar days. Theadministrative dutyamounts to0.5percentofthevalue ofthelicence
granted, except forapplications fortheexport ofrestricted textiles, where theadministrative coststake
theformofadutystamp inthevalue ofKc500. According totheauthorities, licences areallocated
totraditional exporters based onpastperformance; some licences arereserved fornewexporters.
Theauctioning ofexport licences isnotunder consideration. Export licensing procedures aregoverned
byDecree No.560/1991 Coll.
100. Themajorproductgroupssubjecttoexportlicensingincludelivestockandotheranimalproducts,
foodproducts, softdrinks andspirits, mineral rawmaterials andproducts, fertilizers, fresh hideand
leather, wood andwooden products, basemetal andproducts from basemetal. According tothe
authorities, licence requirements areinplace inorder toensure supplies todomestic industries, to
conserve exhaustible natural resources, andforenvironmental protection.
101. Products subject toexport licensing requirements forthepurpose ofmonitoring themovement
ofgoods andtheactivity ofexporters include certain animal andfoodproducts, uranium andwaste,
pharmaceutical andchemical products, precious metals, machines, apparatus andtoolsforagriculture,
tools andinstruments andworks ofart,collections andantiquities. Thequantity ofthese products
exported isnotrestricted. According totheauthorities, theriskofshortages onthedomestic market
andthethreat ofanti-dumping actions bypartner countries havemotivated theuseofexport licensing
onthese products.
102. Certain textile products require licences when exported toparticular destinations (Canada, the
EU,Norway andtheUnited States). Thepurpose ofthelicensing obligation istheimplementation
ofthebilateral agreements concluded bytheauthorities withthese importers. Noexport licence is
required forexports toother countries. Exports totheEUoflivesheep, lambs andgoats andmutton
andgoatmeatrequire licences because oftheexport self-limitation agreement noted inthepreceding
sub-section.
103. Theexport(andimport)ofspecifieddangerouschemicals(poisons),narcoticdrugs,psychotropic
substances,precursors,auxiliarychemicalsubstances,radio-activesubstancesandpharmaceuticalproducts
aresubject tolicensing requirements. Exports ofthese products aresubject totheapproval ofthe
competent ministry. Thecriteria aresetbythese ministries.WT/TPR/S/12 Trade Policy Review
Page 66
104. Trade inmilitary material issubject toageneral permit andaseparate licensing procedure
forallexport (andimport) transactions (ActNo.38/1994). Similar rulesareapplied toexports (and
imports) ofweapons, ammunition andexplosives fornon-military purposes andmaterial fordualuse.
TheCzech Republic wasexcluded fromtheCoordinating Committee forEast-West Trade (COCOM)
listofprohibited countries on1January 1994andnowapplies successor restrictions against countries
ontheprohibited list.
(iv) Export monopolies
105. TheCzech Republic hasnolegislated export monopolies.
(v) Export incentives andfinance
106. TheCzechGovernmentbelievesthattheStateshouldinterveneintheeconomyaslittleaspossible
andthatspecial pro-export policies areneither efficient nornecessary. Since theintroduction ofreforms
leading toamarket economy, theGovernment hastaken theposition thatexports arebestpromoted
through thecreation ofafavourable environment fordeveloping economic entities ingeneral, including
those involved inforeign trade. Thus, theyconsider thatapro-export policy hasbeenputintoeffect
intheform ofgeneral deregulation measures, namely foreign trade demonopolization, liberalization
offoreign trade, theexchange ratepolicy andprivatization. Theconclusion ofmultilateral andbilateral
international agreements thatremove tariff andnon-tariff barriers, andthereby helpCzech exports,
isalsoconsidered bytheGovernment asapriority.
107. The"non-interference" position oftheGovernment hasbeenputunder increasing internal
pressure. Reports indicate thattheprice-competitiveness ofCzech exports hasstarted toerode, perhaps
asaconsequence oftherealeffective appreciation ofthecurrency. Themerchandise trade deficit
increased during thefirsthalfof1995. Against thisbackground, therehavebeenmorecallsforincreased
government involvement inexport support.75
108. Inorder toprovide abasic financial infrastructure forCzech exports comparable, according
totheauthorities, tothatinmarket economies, theCzech Parliament adopted anewlawonExport
Insurance andFinancing withState Support (No.58/1995 Coll.) inApril 1995. Thelawprovides
export credit insurance against territorial (political) risksforforeign buyers 'unpaid balances andexport
creditfinancingonterms(durationandinterestrates)morefavourablethanmarketconditions.According
totheauthorities, theprovisions forexport credit riskinsurance comply withtheBerne Convention.
109. TheExport Guarantee andInsurance Cooperation (EGIC) subsidizes theinsurance ofexport
credits against commercial andpolitical risksatapremium rateof1.5percentto7.5percentofthe
insured amount.76Italsoprovides export subsidies tocompensate forupto70percentoftheexcess
ofdomestic interest ratesoverforeign rates. AllCzech-based enterprises areeligible, subject tothe
conditions thatdomestic supplies account foratleast60percentoftheexport value. Theduration
ofthesesubsidies varies according totheindividual case. In1994, thetotalamount ofsubsidies under
theseprogrammes wasKc926million, consisting ofKc800million ofequity provided totheinsurance
75ThePrague Post, 28June 1995.
76Twothirds oftheshares oftheEGIC must beowned bytheState andatleasttwothirds ofallpositions
ontheBoard ofDirectors andontheSupervisory Board must beheldbyState officials.Czech Republic WT/TPR/S/12
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fundandKc126million ininterest ratecompensation. Thevalue ofinsured exports in1994 was
Kc14.7billion.77
110. Concessional financing isprovided bytheCzech Export Bankbyproviding credits tothebanks
ofexporters, ordirectly toexporters orforeign persons, from resources obtained onthemoney and
capital markets. Theprovision ofconcessional financing isconditioned onexport credit riskinsurance
being provided bytheEGIC. Concessional financing iscarried outbytheCzech Export Bank in
accordance withitsGeneral Business Conditions; thesemustcontain themaximum leveloftheinterest
ratemargin theBankcancharge above thecostoftherefinancing obtained fromtheCzech Export Bank.
TheGeneral Business Conditions mustbeapproved bytheMinistry ofFinance inagreement withthe
Czech National Bank. According totheauthorities, theprovisions forconcessional financing meet
theOECD Consensus.78
(vi) Export promotion andmarketing assistance
111. TheINFOCENTRUM, located intheMinistry ofTrade andIndustry 'sCentre forForeign
Economic Relations, wasestablished toprovide export promotion andmarketing assistance toCzech
firms. Itisexpected thatINFOCENTRUM, inco-operation withtheCzech Centres 'Administration
oftheMinistry ofForeign Affairs, willsupport Czech exporters.79Participation ofCzech companies
ininternational trade fairsissupported bytheMinistry ofIndustry andTrade mainly intheform of
contributions tothecostsofparticipation. According totheauthorities, Statesupport forthisprogramme
wasKc100million in1994.
(4) Intellectual Property Protection
112. TheCzech Republic isaparty toallmajor multilateral agreements inthefieldofintellectual
property andis,byvirtue ofhaving ratified theWTO Agreements, amember oftheAgreement on
TRIPS (Table IV.15). TheCzech Republic provides legalprotection forthefollowing:
inventions utility models
industrial designs topographies ofsemi-conductors
trademarks appellations oforigin
literary, scientific andartistic works artistic performances
phonogram newplant specimens
newbreeds ofanimals broadcast programmes
copyrights
77Data provided intheCzech Republic 'snotification ofsubsidies, WTO Document G/SCM/N/3/CZE,
December 1995.
78Further information isavailable inKvacek(1995).
79TheEUPHARE programme, together withaconsortium ofCzech andU.K. companies, isalsooffering
export marketing andfinance training to150Czech companies.WT/TPR/S/12 Trade Policy Review
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TheCzech Republic intends toapply theprovisions oftheTRIPS Agreement fromJanuary 1996and
nottoseekspecial transitional provisions.80
Table IV.15
Intellectual-property-related international agreements towhich theCzech Republic isparty
Name ofAgreement Comments
Multilateral
agreementsBerne Convention fortheProtection ofLiterary andArtistic Works
Budapest Treaty ontheInternational Recognition oftheDeposit of
Micro-Organisms forthePurposes ofPatent Procedure
Convention fortheProtection ofProducers ofPhonograms Against
Unauthorized Duplicatzion oftheirPhonograms (Phonograms
Convention)
International Convention fortheProtection ofPerformers, Producers
ofPhonograms andBroadcasting Organizations (Rome Convention)
Lisbon Agreement fortheProtection ofAppellations ofOrigin and
theirInternational Registration
Locarno Agreement Establishing anInternational Classification for
Industrial Designs
Madrid Agreement fortheRepression ofFalse orDeceptive
Indications ofSource ofGoods
Madrid Agreement Concerning theInternational Registration of
Marks
NiceAgreement Concerning theInternational Classification ofGoods
andServices forthePurpose oftheRegistration ofMarks
Paris Convention fortheProtection ofIndustrial Property
Patent Cooperation Treaty
Strasbourg Agreement Concerning theInternational Patent
Classification
Treaty ontheInternational Registration ofAudiovisual Works (Film
Register Treaty)
Convention Establishing theWorld Intellectual Property Organization
WTO Agreement onTrade-Related Intellectual Property Rights
Bilateral
agreementsAustria :Treaty ontheProtection ofIndications relating toOrigin,
Appellations ofOrigin andother Indications ofAgricultural and
Industrial ProductsObligations alsounder theProtocol
totheTreaty andtheAgreement
Concerning Implementation ofthe
Treaty. Dates from 1981.
Portugal :Agreement ontheProtection ofIndications relating to
Origin, Appellations ofOrigin andother Geographical andSimilar
IndicationsDates from 1987.
Spain :Agreement ontheProtection ofAppellations ofOrigin,
Indications relating toOrigin andother Geographical IndicationsDates from 1988.
Switzerland :Protocol ontheProtection ofIndications relating to
Origin, Appellations ofOrigin andother Geographical IndicationsDates from 1976.
United States :Agreement ontheExchange ofPatents andPatent
LiteratureDates from 1964.
Source: Government oftheCzech Republic.
80AMember thatisintheprocess oftransition from acentrally-planned toamarket economy may, ifitis
undertaking structural reform ofitsintellectual property system andfacing special problems inthepreparation
andimplementation ofintellectual property laws andregulations, delay application byafurther fouryears;
application ofthenational treatment andm.f.n. provisions, however, maynotbedelayed.Czech Republic WT/TPR/S/12
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113. Under theterms ofitsAssociation Agreement withtheEU,theCzech Republic isrequired
toachieve fullcompatibility withtheEUwithrespect topatent protection. Itisrequired torequest
accessiontotheEuropeanPatentsConvention,whichtheauthoritiesbelievesetsmorestringentstandards
thantheTRIPS Agreement, bytheendof1996. Theprocess ofharmonizing allintellectual property
laws, regulations andpractices withthose oftheEUiswelladvanced.
114. TheIndustrial Property Office (IPO) oftheCzech Republic, created on1January 1993, is
thecentral administration forindustrial property. Foreign rightholders receive thesamelegalprotection
asCzech legalornatural persons, except thatareciprocity provision, asdiscussed below, exists for
industrial designs andpatents. Intellectual property protection intheCzech Republic issummarized
inTable IV.16. Forintellectual property rights under itscompetence, theIPOdecides onapplications
andmaintains registers oflegal rightholders. Foreign applicants must normally actthrough patent
agents licensed bytheIPO. TheIPOwillnotregister protection forintellectual property thatisdeemed
tobecontrary tothepublic interest, particularly theprinciples ofhumanity andmorality. Dataon
registrations arepresented inTable IV.17.
Table IV.16
Summary ofintellectual property protection intheCzech Republic corresponding toTRIPS obligations
Form Main legislation DurationTRIPS minimum
duration of
protectionSelected
exclusionsComments
Copyrights
andrelated
rightsCopyright Act Lifeofauthor plus
50years.Lifeofauthor
plus50years;
50years from
yearof
performance or
fixation;
20years from
yearofbroadcast.
Geographical
indicationsProtection of
Appellations of
Origin,
Act159(1973)Unlimited. Unlimited.
Industrial
designsInventions,
Industrial Designs
andRationalization
Proposals;
Law527(1990)5years;
twofive-year
extensions possible.10years. Public interest;
humanitarian
principles;
morality.
Patents Inventions,
Industrial Designs
andRationalization
Proposals;
Law527(1990)20years from
filing date.20years from
filing date.Public interest;
plant oranimal
varieties;
biological
processes.Compulsory licences
maybedecided by
theIPO, based on
public interest or
non-use.
Topographies
ofintegrated
circuitsProtection of
Topographies of
Semiconductor
Products; Law529
(1991)10years from
filing date(or,if
earlier, from first
use).10years from
filing date(or,if
earlier, from first
use).Compulsory licences
maybedecided by
theIPO, based on
thepublic interest or
non-use.
Trademarks Trademarks;
Law174(1988)10years from
filing date; maybe
renewed
indefinitely for
10-year periods.7-year protection,
renewable
indefinitely.Userequirement of
5years.
Utility
modelsLawonUtility
Models;
Law478(1992)4years from filing
date; two3-year
extensions possible.Notcovered by
TRIPS
Agreement.Plant varieties,
animal breeds,
biological repro-
duction materials;
production
processes orwork
activities.
Source: World Intellectual Property Organisation; Government oftheCzech Republic; andWTO Agreement onTrade-Related Intellectual
Property Rights.WT/TPR/S/12 Trade Policy Review
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Table IV.17
Applications andregistrations ofintellectual property, 1989, 1991 and1993
Patents granted Registered utility models Registered industrial designs Registered trademarks
Year Domestic Foreign Total Domestic Foreign Total Domestic Foreign Total Domestic Foreign Total
1989a5,179b811 5,990 n.a. n.a. n.a. 826 2 828 96 264 360
1991b1,053 366 1,401 n.a. n.a. n.a. 1,102 16 1,118 341 476 817
1993 599 261 860 1,076 101 1,177 512 115 627 2,561 4,920 7,481
n.a. Notapplicable.
aCzechoslovakia
bIncluding Authors Certificate Applications.
Source: Czech Intellectual Property Office.
115. Theauthorities haveunder consideration changes tolegislation intheareas oftrademarks,
industrial designs andcopyrights inorder tobring Czech intellectual property lawintofullconformity
withtheWTO Agreement onTRIPS. Legislation onTrademarks isbeing prepared thatwillmake
iteasier tosuccessfully oppose thegranting ofatrademark andwillrequire thepublication, before
registration, oftrademark applications. Thisnewlawisexpected toalsobring theCzech Republic
fullyintoharmony withtheEuropean Trademark System andtheTrademark LawTreaty oftheWorld
Intellectual Property Organization (WIPO). With regard toindustrial designs, theauthorities expect
tochange fromanexamination system toaregistration system. Industrial design registration isinitially
forfiveyears. Itmaybeextended bytheIPOforuptotwoadditional five-year periods. However,
applications forextension maynotbeplaced untilthefinalyearoftheregistration.81According to
theauthorities, theprocess ofdetermining theappropriate method ofimplementing theWTO Agreement
onTRIPS within thelegalsystem andpractice oftheCzech Republic hasnotyetbeenfullycompleted.
Anamendment totheCopyright Actintheareaofcomputer programs, lending rights andrental rights
hasbeenprepared bytheMinistry ofCulture. These amendments havebeenconsidered necessary
forbringing Czech intellectual property lawintoconformity withtherelevant EUdirectives, andare
expected tobeadopted bytheParliament soon.
116. While theauthorities believe thatthecurrent Czech system ofpatent protection iscompatible
withtheTRIPSAgreement,theyexpectchangestobemadeinconnectionwithpreparationsforaccession
totheEuropean Patents Convention.
117. Under current practice intheareaofpatents, compulsory licences maybegranted bytheIPO
ifnoagreement canbereached onalicence contract between therightholder andpotential licensees.
Acompulsory licence canbegranted onlyiftheowner ofthepatent isconsidered towork thepatent
insufficiently, andmaynotbegranted within theperiod specified intheParis Convention, i.e.three
years from thedatethepatent wasgranted orfouryears from thedateofapplication. Compulsory
licences mayalsobegranted where animportant public interest isendangered. Theability ofapatent
owner toobtain compensation inrespect ofthevalue ofthelicence isnotaffected bythegranting of
acompulsory licence. TheIPOhasnotgranted anysuchlicences andthere arenoneoutstanding.
81Section 54(2) states that"The termofanindustrial design registration maybeextended bytheOffice for
amaximum oftwofive-year periods" [emphasis added]. Theauthorities havetaken notethataninitial five-year
period followed byone(ormore) five- yearextension would appear tobeconsistent withtheTRIPS Agreement
onlyiftheextension isautomatically granted upon application oftherightholder.Czech Republic WT/TPR/S/12
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118. Arequirement ofuseprovision exists allowing theIPOtocancel atrademark registration if
thetrademark hasnotbeenuseddomestically (either bytheowner orbyalicensee) during thepreceding
fiveyears andtheowner hasnotgiven good reason forthefailure ofuse.82
119. Intheareas ofindustrial designs andpatents, theCzech Republic grants national treatment
onlyonareciprocal basis. ThelawonInventions, Industrial Designs andRationalization Proposals
states that"Persons having neither domicile norheadquarters ontheterritory oftheCzech Republic
shallenjoy thesame rights andobligations astheCzech Republic citizens inthose cases where there
isreciprocity." Theauthorities believe thatacountry 'sacceptance oftheTRIPS Agreement, a
requirement ofWTO membership, willsatisfy thereciprocity requirement ofdomestic legislation and
thusthatallWTO members willbegranted national treatment.
120. InfringementofrightsundertheTrademarkLawmayresultinanordertoceasetheinfringement
andincompensation fordamages. Upon presentation oftherelevant extract oftheTrademark Register
byatrademark owner, customs authorities shallnotcleargoods whose markings infringe therights
ofthetrademark owner. Rightholders ofpatents, utility models andtopographies mayrequest that
theauthorities prohibit theinfringement andareeligible toreceive damages. Rightholders inallareas
ofprotected intellectual property canalsoinitiate criminal procedures against infringing persons.
121. Czech competition lawvoids anyrestrictions ofcompetition thatareimposed onaperson
acquiringintellectualpropertyrights(forexample,throughalicensingarrangement)whensuchrestriction
exceeds thatnecessary tosafeguard theexistence oftheproperty right.
(5) Measures Affecting Trade andProduction
(i) Privatization
122. PrivatizationhasbeenasignificantaspectoftheeconomictransformationoftheCzechRepublic.
Before thestartofthetransformation period only4percentofGDP wasprivately produced. Asof
mid-1995, theauthorities estimate thatover60percentofGDP isaccounted forbytheprivate sector
andthatatthestartof1995 some 80percentoftheeconomy 'sassets were privately owned.
123. Theprivatization ofsmall enterprises (small factories, realestate, shops, restaurants, hotels,
repair shops, etc.)intheCzech Republic wasconducted under the1990ActonSmall-scale Privatization
(ActNo.427/1990) andwasnearly completed bytheendof1992. Asaresult, more than20,000
unitsthroughout theCzech Republic weresoldatauction formore thanKc30billion. Public auctions
were usedtoprivatize small enterprises.
124. Theprivatization oflarge-scale enterprises isbeing conducted according tothe1991 Acton
Large-scale Privatization (ActNo.92/1991), andcovers allStateenterprises notexplicitly excluded.
Exclusions weretheproperty oftheStateAdministration, natural resources, some cultural institutions,
certain health careandsocial institutions, post,andrailways. TheLawhasenabled theuseofawide
spectrum ofprivatization methods, including thevoucher method aswellasstandard methods such
asauction, public tender, direct sale,andtransfer without consideration. BytheendofJune1995,
27,628 privatization proposals hadbeensubmitted concerning 4,737 large-scale entities, andproperty
valued atKc950billion hadbeenprivatized.
125. Large-scale privatization hastaken place intwowaves. Ineachwave, thelistofenterprises
tobeprivatizedwaspublished.Basedonthispublishedlist,anyonecouldsubmitaprivatizationproposal
82Article 23.WT/TPR/S/12 Trade Policy Review
Page 72
stating, interalia,therecommended method ofprivatization totheministry responsible fortheState
enterprise. These proposals werethenreviewed bytheMinistry fortheAdministration ofNational
Property andPrivatization, which selected thebestproposal.83Voucher privatization under thesecond
wavewasofficiallycompletedinDecember1994.However,someindustrialandpublicutilityenterprises
hadnotbeenfullyprivatized asatOctober 1995; according totheauthorities, privatization isexpected
tobecompleted withthesaleofthese enterprises through standard methods inthefuture.
126. Thefirstwave ofvoucher privatization, completed inJanuary 1993, included property with
anestimated value ofKc300billion insome 1,491 joint-stock companies, ofwhich some 943were
Czech companies valued atKc200billion, while theothers wereSlovak andfederal companies. The
second wave, begun in1993 andcompleted inDecember 1994, covered anestimated Kc155billion
inassets heldinsome 861jointstock companies.84
127. Accordingtotheconditionsestablishedforvoucherprivatization,allpermanentlyresidentcitizens
overtheageof18wereentitled tobuyabooklet of1,000 voucher points forafeeofKc1,035 (about
US$34) inthefirstwave orKc1,050 inthesecond wave. Voucher points could beconverted through
abidding procedure directly intoshares ofanenterprise being privatized, orintoshares ofanInvestment
Privatization Fund (IPF).85Shareholders ofanIPFbenefit from itsportfolio through dividends and
capital gains. Thetenlargest IPFsobtained approximately halfoftheshares received byfunds. Nine
ofthese tenarecontrolled byabank orinsurance company. Asaresult, many Czech commercial
bankshavebecomeco-ownersofprivatizedcompaniesthoughtheirIPFs.Thismayinfluencecommercial
banks 'credit policies andmake them lesswilling toinitiate bankruptcy procedures against insolvent
companies inwhich theyhavesubstantial interest. Ifso,thiswould alsoslowtheprocess ofindustrial
restructuring.
128. TheCzech voucher privatization constituted anoriginal approach. Aspractically allcitizens
were involved intheprivatization process, theopposition toprivatization thatcould beobserved in
some other countries wasabsent intheCzech Republic. Another positive feature ofthevoucher
privatization wasitsrapid paceincomparison totraditional privatization methods. However, an
important aspect ofvoucher privatization isthatitwasimplemented without theprior restructuring
ofState-owned enterprises, which mayhavedelayed therestructuring process attheenterprise level.
Itremains tobeseenhowthenewowners, including thebanks andinsurance companies thatcontrol
most IPFs, willcarry outtheneeded restructuring.86
83Criteria forthisselection arecontained intheDecision oftheGovernment No.568/93, asamended, and
include thebusiness plan, thebidder 'sexperience intheindustry, andpayment conditions.
84Some 125companies withassets ofKc24billion thathadbeenoffered inthefirstwave were offered again
inthesecond wave.
85Thelatter usedthevoucher points tobidforshares infirms being privatized. Bylaw,anIPRislimited
toa20percentholding inanyonecompany. During thefirstwave ofvoucher privatization, 429IPFs were
established, 265ofthese intheCzech Republic. Inthesecond wave, 196IPFs were registered inthe
Czech Republic, along with120open-ended mutual funds and37closed-ended funds.
86K.Kouba (1994), pp.381-388.Czech Republic WT/TPR/S/12
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(ii) Bankruptcy lawandpractice
129. TheBankruptcy andSettlement Act(No.328/1991) entered intoforce on1October 1991.
Itwasamended twice in1993inorder toadapt thelegislation totheneeds ofthetransformation period.
Theauthorities feared thatachain ofbankruptcies might ensue under the1991 Actandthatsuch
bankruptcies could result injoblosses, perhaps withasubstantial social impact. Theauthorities feel
thatmassbankruptcies areanunnecessarily disruptive waytosolve theproblem ofinsolvent companies.
130. Under Czech lawadebtor isbankrupt ifithasanumber ofcreditors towhich itisunable to
meetpayment obligations foralongperiod, which isnotfurther defined inCzech law.Abankruptcy
court mayinstitute abankruptcy proceeding orasettlement proceeding against abankrupt debtor.
Application forabankruptcy proceeding maybefiledbythedebtor, anyofitscreditors, or,ifaspecial
legal provision soprovides, byanyother person. Intheevent ofexcessive indebtedness ofaState
enterprise inliquidation, theliquidator must fileforbankruptcy. A1993 amendment totheAct
introduced aprotection period of15daysfromthedatethecourt notifies thedebtor ofanapplication
toinstitute bankruptcy inorder tofacilitate outofcourt settlement.
131. Thefirstbankruptcy proceedings werestarted inJune1992against 24State-owned enterprises.
In1993,therewere60bankruptcies,whilein1994thisnumberincreasedto288.Throughthebeginning
of1995, 3,000 bankruptcy applications hadbeenfiled. However, about 2,000 ofthese hadnotyet
beensettled, duetodelays inthecourt system. Thenumber ofunsettled applications hasincreased
byabout 80amonth, resulting fromanoverload ofwork onthecourts, suggesting thatanimprovement
inprocedures might beneeded. Inthisrespect, ithasbeennoted that"The smooth functioning of
theemerging market system maybeinhibited more bythecurrent lackofbankruptcies thanbythe
feared avalanche ofthem....Insolvent enterprises keepdraining scarce resources which could bebetter
usedelsewhere."87
(iii) Competition lawandpractice
132. The1991ActontheProtectionofEconomicCompetitionlaysdownthebasicrulesforeconomic
competitionintheCzechRepublic.Amendmentsmadein1993servedtoapproximateCzechcompetition
lawtotherules oftheEU. Implementing rules fortheapplication ofthecompetition provisions
applicable inArticle 64oftheAssociation Agreement were agreed withtheEUinFebruary 1995;
however, these rules willbeputinforce onlyupon thedecision oftheAssociation Council, which
isexpected tomeetinearly1996. Therulesprovide fornotification, mutual information, consultations
andco-operation insolving cases thatmayhaveanunfavourable impact bothontheCzech Republic
andEUmarkets.
133. Economic competition isprotected andpromoted intheCzech Republic bytheMinistry of
Economic Competition (MEC). MEC activities arefocused onthreemainareas: agreements disturbing
competition88;theabuse ofdominant ormonopoly position89;andmergers.90TheMEC mayallow
87OECD (1994).
88According toparagraph 3(1)oftheAct,"Allagreements between competitors, decisions ofassociations
ofentrepreneursandbehaviourofcompetitorsinmutualagreemen twhichlead,orcanleadtoabreachofeconomic
competition onthemarket forgoods, areprohibited andinvalid, unless theMEC hasallowed anexception."
89Acompetitorisconsideredtohaveadominantpositionifitsshareamountstoatleast30percentofdeliveries
ofidentical, comparable ormutually replaceable goods.WT/TPR/S/12 Trade Policy Review
Page 74
amerger thatresults inamarket share exceeding 30percentifitisdemonstrated thatanydetriment
arising from impairing competition willbeoutweighed byanyeconomic advantages resulting from
themerger. Amonopoly ordominant position maynotbeabused tothedetriment ofconsumers, the
public interest, orcompetitors.
134. TheMEC evaluates thequality ofthecompetitive environment intheindividual markets based
oncriteria similar tothose usedbytheEUandtheUnited States.91According toMEC evaluations,
markets withasatisfactory competition levelinclude electrical engineering, foodindustries, coffee,
tobacco, building construction, haulage, textile andleather (withtheexception ofunderwear andthread)
andglassware. Ontheother hand, markets forpower generation andpower distribution, distribution
ofnatural gas,heatsupplies, mailandtelecommunication andrailway traffic (theso-called natural
monopolies), drugstores andpharmacies, passenger carsandairtraffic havebeenidentified asmarkets
withalowlevelofcompetition.
135. Based onArticle 19oftheAct,theMEC actively participates intheprivatization process, as
privatization provides theopportunity toeliminate orweaken anydominant positions ofcompanies
andtoprevent theestablishment ofnewdominant positions. Before adecision istaken onaspecific
privatization case, areport should beprepared bytheStateadministration onthecompetition-related
impacts oftheprivatization. Ifthereisadisagreement between theStateadministration andtheMEC,
thematter should bereferred fordecision totheGovernment. According totheauthorities, therehave
beennosuchdisagreements.
(iv) Forms ofdomestic support
136. Statesubsidies havebeenrapidly reduced intheCzech Republic. While subsidies equivalent
toupto16percentofGDP were provided under theCSFR, in1994 State subsidies inthe
Czech Republic wereequivalent tosome 4percentofGDP. According totheauthorities, thesectors
thatreceive subsidies haveremained constant throughout thetransition process, withmostsubsidies
going toagriculture, mining, public transportation, andheating. Theauthorities haveattempted to
targetsubsidiesmoredirectlyattheirsocialobjectivesandtoincreasetheproportionofindirectsubsidies,
suchasinterest subsidies andloanguarantees.
137. Inagriculture, theSupport andGuarantee Fund forFarmers andForestry, established in
July1993, provides guarantees onloans andgrants subsidies ontheinterest tobepaidonFund-
guaranteed loans. In1994, Kc2.6billion wasallocated forthese purposes from theState budget.
Decisions onloans aremade bycommercial banks onthebasisofbusiness considerations; however,
aguarantee provided bytheFund reduces repayment riskandincreases thechance thatabankwill
approve loans foragricultural entrepreneurs.
138. TheFund provides support, intheformofcredit guarantees andinterest subsidies, within three
basic programmes. TheProvoz (Operation) programme provides temporary support (uptotwoyears)
tocover theoperating costsofanundertaking. TheZemedelec (Farmer) programme provides support
forprojects aimed atincreasing effectiveness andmaking structural changes inagricultural andforestry
enterprises. TheSluzby (Services) programme supports thedevelopment ofservices fortheproduction
90(...continued)90Mergers areregarded asdisturbing competition ifthemarket share ofthenewcompany created byamerger
exceeds 30percentofthetotal turnover ontherelevant geographic market foragiven product.
91Thefollowing fivecriteria areused: degree ofmarket concentration; residual component oftherelevant
market, capital requirements ofmarket entry; innovation dynamism ofthemarket andtheoccurrence ofvertical
integration.Czech Republic WT/TPR/S/12
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ofagricultural primary products. There areanumber ofothersmaller programmes inplacethatprovide
supportforspecificpurposesorgroupsofentrepreneurs.Accordingtotheauthorities,theseprogrammes
areopentonewly established orprivatized enterprises forwhich agricultural activity represents atleast
halfoftotalincome.
139. Between 1March and31December 1994, 2,605 applications wereregistered andmore than
90percentofthem wereapproved.92Thesuccessful applications involved loans amounting tomore
thanKc6.2billion; about 25percentofwhich wasguaranteed bytheFund; thetotalinterest subsidy
provided bytheFund amounts toKc1.1billion. According toFund practice, theminimal interest
ratetobepaidbythefarmer is1percent. Theweighted average ofinterest ratescharged bycommercial
banks onloans supported bytheFund is14.31 percent, while theweighted average oftheinterest
subsidy provided bytheFund is11.66 percent, indicating thattheaverage interest ratepaidbythe
farmers is2.66percent.
140. TheMinistry ofAgriculture provides subsidies andreturnable financial assistance forprojects
toalter(modernize) production andmarketing structures, resolve ecological andwater management
problems anddevelop entrepreneurial activities inforestry. In1994, thetotalamount ofapproved
subsidies andreturnable financial assistance amounted toKc2.6billion (Table V.18).
Table IV.18
Support forprivatization, restructuring andresearch inagriculture, 1994
Description ofthesubsidy item No.of
received
applicationAmount
applied for
'000crownsApproved
'000crownsNo.of
approved
applications
Change ofstructure ofcropproduction bygrassing 1,038 210,212 200,695 991
Change ofstructure ofcropproduction byforestation 270 14,449 13,368 235
Renewal ofvineyards andhopgardens 98 19,642 18,344 91
Preservation oflandscape incultural state 7,419 457,616 438,190 7,258
Change ofstructure offinaluseofagricultural production
(e.g., production ofbio-oil) 18 336,174 264,329 8
Support forbeekeeping 1 35,000 35,000 1
Preservation andimprovement ofgenetic potential oflivestock 2,702 771,284 619,454 1,594
Preservation ofgenetic potential ofseeds 60 147,591 133,022 42
Support forhealth improvement oflivestock 183 259,458 165,404 91
Support forhealth improvement ofcrops 85 12,751 11,473 77
Support forinformatics inagriculture, foodprocessing,
forestry andwater management17 57,874 50,076 8
Support forextension inagriculture, foodprocessing, forestry
andwater management95 56,512 18,167 48
Exceptions 5 165,389 165,389 5
Subtotal 11,991 2,543,952 2,132,911 10,449
Support toreduce theimport ofemissions offorestry (new
forests protection grant) 268 444,624 383,460 253
Support forselected forestry activities byusers offorests
below 250ha.6,187 123,593 110,193 6,052
Support forwater management problems 719 1,803,707 249,999 204
Total 19,165 4,915,875 2,876,563 16,958
Source: Ministry ofAgriculture, andWTO Document G/SCM/N/3/CZE, December 1995.
92More than70percentoftheapplications were made under theFarmer programme; 27percentunder
theOperation programme and2.5percentwithin theServices programme.WT/TPR/S/12 Trade Policy Review
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141. In1993, thetotalvalue ofState aidamounted toKc30.5billion, equivalent to3.3percent
ofGDP and8.5percentoftotalgovernment spending. More than70percentofthesupport was
provided toindustry. Under special schemes, guaranteed loans areavailable incertain areas of
infrastructural development, environmental improvement andindustry.
142. Grants andsubsidies areavailable forresearch anddevelopment activities through theGrant
Agency (agovernment agency under thesupervision oftheGovernment Council forResearch and
Development) andthrough various ministries. In1994, Kc4.08billion wasprovided inthree-year
grants, andinterest subsidies ofKc0.2billion were made. In1993, 7,000 recipients were assisted
bythisscheme.
143. Support intheform ofgrants andinterest subsidies isgiven bytheEnergy Agency, acting
ontheauthorization oftheMinistry ofIndustry andTrade, fortherenovation andconstruction of
alternative energy sources, theimprovement ofenergy efficiency forbuildings, andforenergy advisory
services. Thetotalsubsidy forthese programmes in1994 ofKc408million consisted ofgrants
(61percent) andinterest subsidies (39percent).
144. Thecentral Government provides grants andinterest subsidies fortheoperating losses ofthe
State railway, subsidies tobuscompanies inrespect ofconcessionary fareschemes, andsubsidies to
thenational airline covering interest costs oftheleasing oftechnical equipment. These subsidies
amounted toKc5.77billion forrailtransport, Kc1.24billion forroadtransport andKc0.16billion
forairtransport. Some ofthese subsidies willbegradually eliminated, inaccordance withprice
deregulation, andtheairtransport subsidies areexpected tobeeliminated attheendof1997. Inaddition,
special investment grants aregiven forrailways, withthisamount totalling Kc2.41billion in1994.
145. Subsidies areprovided fromthebudget toassist theliquidation ofmining activities, including
thecompensation ofdismissed employees, compensation forenvironmental damage, andenvironmental
cleanup. These subsidies totalled Kc4.42billion in1994.
146. Aid,intheformofinterest subsidies, loanguarantees, andgrants toward consulting services,
isprovidedtosmallandmedium-sizedenterprisesemployingamaximumof500people.Thesesubsidies
arelimited tofouryears (eight years inthehealth andpharmaceuticals sectors) andtotalled
Kc1.30billion in1994. Special aidisprovided forwater supply andpurification. TheState
Environmental Fund provides grants andsoftloans toimprove water quality andreduce harmful
atmospheric emissions. In1994, these subsidies consisted ofKc2.10billion ingrants, andinterest
subsidies ofKc0.11billion onseven-year preferential-interest loans ofKc1.45billion.93
(v) Indirect taxation
147. Rules ontheCzech value-added tax(VAT) areinLawNo.588/1992, asamended. According
totheauthorities, theCzech legislation onVAT basically complies withthethatoftheEU.The1995
standard rateisfixedat22percentwhile thereduced rate,which applies tofoodstuffs andmostservices,
is5percent. TheVAT treatment ofimported goods andservices isidentical tothatofdomestic goods
andservices.
93WTO Document G/SCM/N/3/CZE, December 1995.Czech Republic WT/TPR/S/12
Page 77
148. Theexcise taxisregulated bytheExcise TaxAct,LawNo.587/1992, asamended. Itapplies
tothefollowing product groups: hydrocarbon fuelsandlubricants; alcohol andalcoholic beverages;
beer; wineandtobacco products. Excise taxes areapplied equally todomestic andimported products.
(vi) Direct taxation
149. For1995,thetaxrateoncorporateincomewasreducedfrom42to41percentandthemaximum
rateofpersonal income taxwasreduced from 44to43percent.
(vii) Price controls
150. In1991, mostStatepricecontrols wereeliminated andmarket prices wereintroduced. Under
thePrice Act(Law No.526/1990), theMinistry ofFinance and,insome cases, localadministrative
bodies, retain theauthority toregulate prices when thefunctioning ofthemarket isendangered by
theeffects ofrestricted economic competition orinthecaseofanextraordinary market situation. At
present, theMinistry ofFinance regulates theprices ofgas,thermal energy, electricity, medicaments,
freight railway andpassenger bustransport, petrol, fuels, communication services, water, andhousing
rents. Inagriculture, minimum purchase prices arefixed forwheat forconsumption, rawmilk, bulls
forslaughter andheifers. Local governments regulate prices suchasmunicipal passenger transport,
rents fortheuseofnon-residential space orcertain localservices.
151. Controlled prices taketheformoffixing maximum orminimum prices orthesetting offormulas
forthecalculation ofprices. Generally, regulated prices reflect economically justified costsandadequate
profit forproducers andsuppliers. Heatsupplies tohouseholds aresubsidized fromtheStatebudget.
According totheauthorities, electricity prices forindustrial consumers approximate costs, while prices
forhouseholds are,forsocial reasons, setatlessthanhalfthecosts. Theauthorities intend toeliminate
thisprice differential forhouseholds inthenextthree years.
152. According totheauthorities, items covered bypriceregulation account forapproximately 10per
centofhousehold expenses and5percentofGDP. Price controls areapplied equally todomestic
andimported products.