PRESS/TPRB/20
8December 1995
TRADE POLICY REVIEW BODY
Review ofTheSlovak Republic
TPRB 'SEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itsreview
oftheSlovak Republic 'strade policies on5and6December 1995. ThetextoftheChairman 's
concluding remarks isattached asasummary ofthesalient points which emerged during thetwo-day
discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairman 'ssumming-up, together withthese tworeports,
willbepublished induecourse asthecomplete trade policy review oftheSlovak Republic andwill
beavailablefromtheWTOSecretariat,CentreWilliamRappard,154ruedeLausanne,1211Geneva21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995),
Canada (1990, 1992&1994), Chile (1991), Colombia (1990), Costa Rica(1995), Côted'Ivoire (1995),
Egypt (1992), theEuropean Communities (1991, 1993&1995), Finland (1992), Ghana (1992), Hong
Kong (1990 &1994), Hungary (1991), Iceland (1994), India(1993), Indonesia (1991 and1994), Israel
(1994), Japan (1990, 1992and1995), Kenya (1993), Korea, Rep.of(1992), Macau (1994), Malaysia
(1993),Mexico(1993),Morocco(1989),NewZealand(1990),Nigeria(1991),Norway(1991),Pakistan
(1995), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore
(1992), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden (1990 &1994),
Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), theUnited States (1989, 1992
&1994), Uganda (1995), Uruguay (1992) andZimbabwe (1994).
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REVIEW OFTHE TRADE POLICIES AND PRACTICES OFTHE SLOVAK REPUBLIC
Concluding remarks bytheChairman oftheTrade Policy Review Body
Thismeeting oftheTrade Policy Review Body hasnowcompleted thefirstreview oftheSlovak
Republic 'strade policies andpractices. These remarks, which aremade onmyownresponsibility,
summarize themain points ofthediscussion. They arenotintended tosubstitute forthecollective
evaluation andappreciation oftheSlovak Republic 'strade policies andpractices. Details ofthe
discussion willbereflected intheminutes ofthemeeting.
Thediscussion developed under twobroad themes: theeconomic transition; andinternational
trade policies.
TheEconomic Transition
Participants praised theSlovak Republic forthesignificant progress initstransition toamarket
economy. Structural reform hadbeenfacilitated byastable macroeconomic environment. Theprocess
ofreform hadalready begun toleadtostrong growth. Thefiscal accounts wereimproving; theexternal
current account wasinsurplus andinternational reserves were atareasonably comfortable level.
However, participants noted thatinflation washigher thaninpartner countries, although itseemed
tohavedeclined inrecent months. Alsoasmoothly functioning financial system wasnotyetfully
inplace, which might benegatively affecting savings. Questions wereraised onthecontribution of
theimport surcharge toareduction ofthefiscal deficit andonpolicy changes thatmight generate higher
savings.
Somemembersfeltthatanapparentslowdowninprivatization,togetherwithachangeinmethod,
mayhavecontributed touncertainty forforeign investors, andaffected investment flows. Members
asked howthecurrent approach toprivatization would leadtoaneffective separation ofenterprises
from State influence. Some members asked Slovakia tostatethereasons foritsdissatisfaction with
thevoucher method ofprivatization.
Members noted thattrade hadbeenimportant infostering competition inSlovakia. Inthis
context, Slovakia wasasked about itsplans forliberalization beyond thatagreed intheUruguay Round.
Further questions wereasked about plans toincrease theeffectiveness ofbankruptcy procedures and
toliberalize remaining price controls.
Much ofSlovakia 'srecent growth hadbeenexport-led; however, capacity constraints were
being encountered inmany sectors withincreased investment thusurgently needed inthese areas.
Clarification wassought onthecriteria usedbytheNational Bank ofSlovakia togrant approval for
foreign direct investment infinancial services andtelecommunications, andother areas vitaltothe
infrastructure.
Slovakia 'strade hadbeenlargely reoriented toward theEuropean Union andother European
market economies, following thedisintegration oftheCMEA; newregional agreements alsoplayed
arôleinthisprocess. Comments weresought ontherelationship between Slovakia 'sobligations under
regional agreements andthose under theWTO.
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Inresponse, therepresentative ofSlovakia noted thatinflation hadslowed in1995, withatarget
of6to8percentfor1996. Unemployment remained highatsome 13percent. Theimport surcharge
hadcontributed 1.6percentofbudget revenue. Efforts wereunderway toimprove Slovakia 'sfinancial
system withthenewActonBanks inpreparation andexpected toenter intoforce in1996. Thelow
levelofsavings wasinfluenced bythestandard ofliving; increased savings would depend ondecreasing
unemployment andthegrowth ofincomes.
Theauthorities intended toaccelerate andcomplete theprivatization process inthenearfuture,
withthesecond wave tobefinished inlate1996. Voucher privatization hadbeenreplaced bybond
privatization; privatization wasgeared towards creating acompetitive environment thatwould lead
tocompany restructuring. Trade wasalsoimportant tofostering competition; in1996 tariffs would
beeliminated onanumber oflines, going beyond thecommitments Slovakia hadmade intheUruguay
Round. Anamendment ofthebankruptcy lawwasbeing prepared.
Slovakia 'sforeign investment régime wasgenerally open. Foreign investors were granted
national treatment, noinvestment measures weremaintained thatwerenotconsistent withtheTRIMs
Agreement, andthere were norestrictions oncurrent external payments related toinvestments. In
thebanking sector, allinvestments, bothdomestic andforeign, required theapproval oftheNational
Bank,butthiswasonlyforprudentialreasons.Thedevelopmentofthetelecommunicationsinfrastructure
wasagovernment priority, withplans tosharply increase thenumber oftelephones perinhabitant;
however, theexisting monopoly invoice telephony would remain until2003
Regional tradeagreements wereofgreatimportance toSlovakia. Allsucharrangements were
based ontheprinciples ofGATT Article XXIV andwere therefore inconformity withSlovakia 's
obligations under theWTO.
Trade Policies
Participants appreciated theopenness ofSlovakia 'strade régime andcongratulated Slovakia
forhaving ratified theUruguay Round package andbecoming anoriginal WTO member. Questions
were asked about thetrade policy making process, including therôles ofconsumer groups andthe
private sector.
Participants sought information onlegislative changes required toimplement theWTO
Agreements, particularly intheareas ofTRIPs andcustoms procedures. Information wasalsosought
ontheextent towhich Slovakia hadsatisfied itsnotification obligations under theWTO.
Whiletariffswerelowincomparisontomanyothertransitioneconomiesanddevelopedcountries,
theywereseenasescalatory, withpossibly adverse effects onexport growth anddiversification. It
wasnoted thatSlovakia hadretained itsimport surcharge despite favourable economic progress and
astrong balance ofpayments; participants urged Slovakia toremove thesurcharge inlinewithits
commitments intheBOPCommittee. Thebasis ofSlovakia 'svalue added tax(VAT) asapplied to
imported goods wasqueried andtheauthorities wereasked whether anewtaxlaw,tobeintroduced
in1996, would ensure thatVAT would becalculated onthebasis oftheactual duty-inclusive price,
evenforgoods under preferential arrangements. In-quota tariffratesonagricultural products covered
bytariffquotas wereexpected toremain fixedinadvalorem terms, while theout-of-quota tariffdeclined
inlinewithUruguay Round commitments; confirmation oftheconvergence ofthetworateswassought
from theauthorities.
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Some participants noted thatfreemovement ofthird-country goods wasnotafeature ofthe
Czech-Slovak Customs Union andasked whether changes wereenvisaged. Clarification wassought
ontheeffects ofSlovakia 'sm.f.n. tariff reduction onautomobiles. Questions werealsoasked about
Slovakia'sGSPprogramme;itspotentialaccessiontotheEuropeanUnion;thepreparationoflegislation
onanti-dumping, countervailing duties andsafeguards; andtheneedtoavoid abuilt-in protectionist
bias; theautomaticity ofimport licensing andgovernment procurement preferences andSlovakia 's
intention toaccede tothePlurilateral Agreement.
Several participants noted thatgovernment policy wasrelatively more active inagriculture
thaninother sectors. Slovakia wasasked about itsseedsubsidy programme andother subsidies; the
operation oftheState Fund forMarket Regulation; import allocations under tariff quotas; health
certification requirements onfoodandbeverages; andthepreferential tariffquota forimports ofpoultry
meatfrom theUnited States.
Theimportance oftheservices sector ingenerating Slovakia 'scurrent account surplus was
noted. Slovakia wasasked whether itwould consider sooneliminating itssixm.f.n. GATS exemptions;
itwashoped thatthereciprocity provision onfinancial services would beremoved onimplementation
ofthenewActonBanks.
Inreply, therepresentative ofSlovakia responded thattheMinistry oftheEconomy was
responsible forforeign trade andprepared policy inthisarea. Newlegislation wasbeing prepared
ontrademarks tobring itintofullconformity withtheTRIPS Agreement. Inaddition, anewCustoms
Actwasunder preparation, aswaslegislation onanti-dumping, countervailing duties andsafeguards;
these would allbeinconformity withtheWTO Agreements. TheSlovak Government hadalready
submitted notifications inseveral areas, including agriculture, textiles andcustoms valuation, andwas
preparing procedures tomeetthenotification requirements under other WTO Agreements.
Therepresentative didnotagree thattheSlovak tariff showed escalation, withtheweighted
average m.f.n. rateonindustrial imports slightly lessthan2percent. Slovakia intended tomeetits
commitments made intheBOPCommittee onthewithdrawal by30June1996oftheimport surcharge.
Under thenewTaxLawtobeintroduced in1996, thebasisfortheVAT onimported products would
include theactual duty. Slovakia didnothaveanycommitments toreduce in-quota tariff rates.
Therepresentative continued thatatpresent thefreemovement ofthird-country goods was
notunder consideration intheCustoms Union. Theunilateral elimination bySlovakia oftariffs on
certain automobiles wasatemporary measure taken forenvironmental reasons. Slovakia 'snewGSP
scheme entered intoforceon1January 1995, providing zerotariffs forallimports fromleast-developed
countries; thelimitofUS$2 million onpreferential imports from eachdeveloping country reflected
Slovakia 'seconomic situation. Import licensing wastransparent andautomatic, being maintained only
formonitoring purposes. Ongovernment procurement, nodistinction wasmade between domestic
andforeign bidders; Slovakia intended toaccede totheGovernment Procurement Agreement in1998.
Consultations would beheldbefore anynegotiations formembership totheEuropean Union, butit
wastooearly toprovide concrete information onthissubject.
Therepresentative saidthatnochange wasforeseen intheoperation oftheStateFundforMarket
Regulation, which hadbeennotified totheWTO. Support foragriculture wasinlinewithnational
priorities, which included employment fortheruralpopulation. Inaccord withSlovakia 'snotification
ofitsUruguay Round commitments inagriculture, itmaintained certain country-specific allocations
foritstariff quotas. TheSlovak Republic hadestablished anInquiry Point inaccord withtheTBT
Agreement; thisPoint wasready toprovide anyinformation thatmight beneeded about certification
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requirements andprocedures. Thepreferential quota ofimports ofpoultry meatfromtheUnited States
wastheresult ofbilateral negotiations intheframework oftheUruguay Round.
Therepresentative concluded thatSlovakia 'sm.f.n. exemptions inservices would beremoved
inaccordance withitsGATS obligations. ThenewActonBanks would eliminate thereciprocity
requirement upon itsexpected introduction in1996.
END