29 November 1995
counts on trade to continue economic reforms and growth Back to top
After five years of economic and institutional
reform, Slovakia's economy is now experiencing robust growth. In the first half of 1995,
GDP increased by 6.2 per cent, following growth of 4.8 per cent in 1994, thereby sharply
reversing the steep declines in domestic production in the early 1990s. In efforts to
establish a market-based economy, Slovakia has decontrolled prices, opened the economy to
foreign investment and liberalized its foreign exchange regime. It has also relaxed or
eliminated foreign trade restrictions and privatized many of its state enterprises.
Slovak reforms began in 1990 under the Czech and
Slovak Federal Republic. They were continued after Slovakia became a sovereign state on 1
January 1993. According to the report, the reforms and the country's liberal trade rules
have been effective and are complemented by the country's generally open direct investment
regime. A concern noted in the report, however, is the pace of Slovakia's privatization
programme. The report questions to what extent privatization is leading to the effective
separation of newly privatized firms from state influence.
As a result of Slovakia's transition, the country's
trade pattern has changed fundamentally since 1989 when most trade was with the Soviet
Union and other central and eastern European countries. Excluding trade with the Czech
Republic, which is Slovakia's largest trading partner, the report notes that the share of
Slovakia's merchandise exports sold to industrialized countries in western Europe
increased from 19 per cent in 1989 to 71 per cent in 1994. As much as 91 per cent of all
merchandise imports and exports are exchanged with European countries, including Russia.
The Slovak Republic formally applied in June 1995 for European Union membership.
Slovakia and the Czech Republic are part of a
customs union and share a common external tariff averaging eight per cent. Goods from
third countries, however, do not circulate freely between the Czech and the Slovak
Republic. The report states that Slovakia's tariffs are currently applied at their bound
rates and that no specific or other non ad valorem tariffs are used, making the external
tariff very transparent. Average tariffs rise from four per cent on primary products to
six per cent on semi-processed products and 10 per cent on fully processed products.
Exceptions can be noted for agriculture, which, following the Uruguay Round, has
particularly high tariffs on a few items. Food products and beverages, for example, have
tariffs averaging 19 per cent, nearly triple the level elsewhere in the economy.
Preferential tariff rates are currently granted under the GSP scheme to imports from
developing and least-developed countries.
According to the report, Slovakia's merchandise
trade with preferential partners in six regional trade agreements accounts for 83 per cent
of exports and 70 per cent of imports. Except for Russia, preferential agreements
encompass all major Slovak trading partners. The countries with which Slovakia has
preferential agreements would likely be Slovakia's major trading partners even in the
absence of such agreements. The report states that this seems to limit the trade diversion
that results from preferential agreements and suggests that Slovakia's network of trade
agreements is, on balance, net trade-creating.
The report notes that final consumer products are
currently subject to a 10 per cent temporary import surcharge. The latter was introduced
for balance of payments reasons in March 1994 when Slovakia's official reserves stood at
the equivalent of less than one month's merchandise imports. There has since been a
substantial improvement in reserves.
Slovakia is an original member of the WTO and is
party to all major multilateral agreements in the field of intellectual property. It has
no anti-dumping, countervailing duty or safeguards legislation in force and has never
applied such measures. However, legislation is now being prepared in these areas for
implementation sometime in 1996. The report cautions that such legislation, if used at
all, should be designed so as to limit potential abuse by domestic firms trying to stifle
economic competition. Non-automatic import licensing requirements are used occasionally,
sometimes for environmental reasons.
Slovakia's services trade accounted for most of its
substantial current account balance in 1994, largely as a result of tourism receipts and
natural gas pipeline fees. Services accounted for 57 per cent of GDP in 1994. The report
states that Slovakia was a strong advocate for the introduction of multilateral rules for
services trade in the Uruguay Round and made a comparatively large number of commitments
in various service sectors. With few exceptions, these include allowing foreign companies
to establish commercial presence and become foreign-owned service providers.
The report concludes that Slovakia's size and its
high propensity to trade suggest its keen interest in the trade policies of partner
countries. The Uruguay Round results and the creation of the WTO should be very beneficial
for Slovakia, not only because of the reductions in trade distortions, but because of
strengthened and broadened multilateral rules.
Notes to Editors:
The WTO Secretariat's report, together with a report
prepared by the Slovak Republic, will be discussed by the WTO Trade Policy Review Body
(TPRB) on 5 and 6 December 1995.
The WTO's TPRB conducts a collective evaluation of
the full range of trade policies and practices of each WTO member at regular periodic
intervals and monitors significant trends and developments which may have an impact on the
global trading system.
Two reports, together with a record of the TPRB's
discussion and of the Chairman's summing up, will be published in due course as the
complete Trade Policy Review of the Slovak Republic and will be available from the WTO
Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
The reports cover development of all aspects of the
Slovak Republic's trade policies, including domestic laws and regulations, the
institutional framework, trade practices by measure and by sector. Since the WTO came into
force, the "new areas" of services trade and trade-related aspects of
intellectual property rights are also covered. Attached are the summary observations from
the Secretariat and government reports. Full reports will be available for journalists
from the WTO Secretariat on request.
Since December 1989, the following reports have been
completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh
(1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994),
Chile (1991), Colombia (1990), Costa Rica (1995), Côte d'Ivoire (1995), Egypt (1992), the
European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong
(1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and
1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992),
Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco (1989), New
Zealand (1990), Nigeria (1991), Norway (1991), Pakistan (1995), Peru (1994), the
Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), South
Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991), Thailand
(1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uganda
(1995), Uruguay (1992) and Zimbabwe (1994).
Secretariats report: summary Back to top
TRADE POLICY REVIEW BODY: THE SLOVAK
Report by the Secretariat Summary Observations
Slovakia became a sovereign state on 1 January 1993
following the dissolution of the Czech and Slovak Federal Republic (CSFR). The dismantling
of the former central planning régime and movement toward a market economy were begun
under the CSFR in 1990 and have largely been continued by Slovakia. Market-oriented
reforms have encompassed the decontrol of prices, the privatization of many State
enterprises, the opening of the economy to foreign investment, the liberalization of the
foreign exchange régime, and the relaxation or elimination of foreign trade restrictions.
During the reform period the authorities' prudent
management of the macroeconomy has facilitated the implementation of reforms.
Nevertheless, the collapse of export demand from former key trading partners and the
initial effects of economic reforms combined to cause a severe economic contraction during
the early 1990s. This was temporarily aggravated by the disruption of marketing channels
and the discontinuation of financial transfers associated with the dissolution of the
Since Slovakia became a sovereign State, successive
Governments have built the institutions instrumental to a market economy and have
continued to implement many economic reforms. Although the private sector was responsible
for some 62 per cent of GDP in the first half of 1995, delayed privatization and the
abandonment of coupon privatization in favour of less transparent methods have fostered
uncertainty about this particular area of reform. This should not detract from the
successful reforms that have been made throughout much of the economy, particularly with
respect to international trade.
With the exception of the 10 per cent temporary
surcharge on imports of consumer goods, Slovakia has liberal and transparent international
trade policies. Its trade régime is characterized by m.f.n. tariffs applied at moderate
rates on an ad valorem basis and by the infrequent use of nontariff barriers. The
resulting openness has contributed to Slovakia's recent economic revitalization; the
multilateral obligations that Slovakia has accepted in many areas, such as its
comprehensive tariff bindings, help to ensure the continuation of this openness.
Slovakia in World Trade
Led by a 23 per cent increase in the value of
merchandise exports, Slovak real GDP grew by 4.8 per cent in 1994. Per capita income
increased to the equivalent of US$ 2,340. Robust growth, led by exports and investment,
continued in the first half of 1995, as GDP rose at an annual 6.1 per cent rate.
Slovakia's merchandise trade surplus and large services trade surplus were the main
factors in an overall 1994 current account surplus equivalent to 5.7 per cent of GDP. The
continued strong balance of payments performance generated increases in official reserves
to the equivalent of more than three months of imports of goods and services by July 1995,
undermining Slovakia's economic argument for the import surcharge it introduced for
balance-of-payments reasons in March 1994. Inflation was kept to 13.4 per cent in 1994 and
declined to an 11.2 per cent annual rate in the first half of 1995.
Services accounted for 57 per cent of GDP in 1994,
while industry and construction accounted for 36 per cent, and agriculture and forestry
for 7 per cent. Slovakia is a net importer of fuels and related products (which comprise
one fifth of total merchandise imports) and machinery and transport equipment. It is a net
exporter of intermediate manufactured products (two fifths of exports) and miscellaneous
Slovakia's geographic pattern of trade has changed
fundamentally since 1989, when most trade was with the Soviet Union and other central and
eastern European countries. Excluding trade with the Czech Republic, the share of
Slovakia's merchandise exports sold to (western) industrial countries increased from 19
per cent in 1989 to 71 per cent in 1994. Slovak trade is concentrated in Europe, with 91
per cent of both merchandise imports and exports exchanged with European countries,
including Russia. The largest shares of imports are from the Czech Republic, the European
Union (EU) and Russia, while the largest shares of exports go to the Czech Republic and
Trade Policy Framework
A liberal trade policy is seen by the Slovak
authorities as central to achieving efficient resource allocation, particularly in the
context of Slovakia's overriding economic objective to attain, by 2010, a standard of
living comparable to that of the advanced European countries. Slovakia aims for a balanced
geographic expansion of trade underpinned by its own trade liberalization and by that of
its partners. Whether bilateral or multilateral, Slovakia has emphasized its commitment to
undertake such liberalization in compliance with WTO rules.
Czechoslovakia was an original member of the GATT,
and Slovakia acceded to the GATT in 1993 with no lapse in its application of the General
Agreement. Slovakia ratified the Uruguay Round package in December 1994 and is an original
member of the WTO. All WTO members and GATT contracting parties receive at least m.f.n.
treatment from Slovakia, as do several other countries with which Slovakia has bilateral
agreements calling for m.f.n. treatment.
Slovakia's merchandise trade with preferential
partners in six regional trade agreements accounts for 83 per cent of exports and 70 per
cent of imports. The six agreements are the Czech-Slovak Customs Union, the EU Association
Agreement, the Central European Free Trade Agreement (CEFTA, which includes the Czech
Republic, Hungary and Poland), and free trade agreements with Romania, Slovenia, and the
countries of the European Free Trade Area (EFTA). Except for Russia, preferential
agreements encompass all major Slovak trading partners. Russia provides some 18 per cent
of Slovak imports, mostly raw materials on which Slovakia's m.f.n. tariffs are zero.
Agreements with other countries are being considered or are under negotiation.
Slovakia's customs union with the Czech Republic
took effect on 1 January 1993, upon the dissolution of the CSFR. The countries share a
common external tariff, though goods from third countries do not circulate freely between
them. Most other trade-related policies, such as import licensing and preferences under
the Generalized System of Preferences (GSP), are harmonized. A payments clearance
agreement took effect when monetary union ended in February 1993 but was eliminated on 30
September 1995. The Slovak koruna is now fully convertible for current account purposes.
Slovakia applied for EU membership in June 1995.
Much of its trade-related legislation has already been harmonized to that of the EU, and
this process of harmonization continues. The Czech-Slovak common external tariff, with a
simple average of 8 per cent, averages some 2 percentage points less than the EU tariff.
The countries with which Slovakia has preferential
agreements would likely be Slovakia's major trading partners even in the absence of such
agreements. This, together with Slovakia's relatively low m.f.n. tariffs, limits trade
diversion and suggests that Slovakia's network of trade agreements is, on balance, net
trade-creating. So long as tariffs on products from third countries are not raised, these
features increase the likelihood that Slovakia's network of trade agreements is
economically beneficial from a global perspective.
Slovakia's liberal trade rules are complemented by
its generally open direct investment régime. Foreign direct investment is encouraged, and
investments in Slovakia under most circumstances are not subject to approval requirements.
Following registration, foreign firms and individuals may conduct business in Slovakia
under the same conditions and to the same extent as domestic firms, with few exceptions.
Foreign investors may transfer their share of after-tax profits to their country of
origin, and foreign-owned capital may be fully repatriated in the event of the dissolution
of an enterprise. Under the General Agreement on Trade in Services (GATS), Slovakia has
undertaken horizontal and specific commitments that help to ensure that foreign firms are
able to establish a commercial presence in Slovakia in order to provide many types of
Profit-seeking firms that respond to market forces
and are free from State influence are essential to the effectiveness of a market economy.
The Slovak Government officially recognizes the central role that privatization must play
in the process of economic transformation and placed the "continuation and
acceleration" of privatization among the stated priorities of its 1995 programme.
Privatization has consisted of a combination of standard methods, such as direct sales,
and voucher (coupon) privatization. The first wave of privatization was largely complete
by the time of the dissolution of the CSFR at the end of 1992. All small-scale enterprises
that are to be privatized were included in the first wave, along with some large-scale
The second wave of privatization has been a major
political issue in Slovakia. Successive Governments have changed policy and even
overturned privatization decisions. The result has been persistent delay in implementing
the second wave. As a result of legislation recently reaffirmed by the National Council
after having been returned by the President, voucher privatization will be abandoned,
unless an expected challenge to the Constitutional Court succeeds in overturning the
legislation. It is not clear to what extent privatization, as now applied in Slovakia, is
leading to the effective separation of newly privatized firms from State influence.
Criticism of the way in which standard privatization methods are being applied has centred
on the lack of transparency in selection of new owners and management and on whether
domestic investors are being preferred over foreign investors.
Trade Policy Features and Trends
Type and incidence of policy instruments
Overall, the Slovak import régime has relatively
few non-tariff import barriers or export measures. Non-automatic import licensing
requirements are used occasionally, sometimes for environmental reasons. Automatic
licensing requirements, apparently motivated by health and safety considerations, exist
for the exporting or importing of many products. In some cases, such as for textiles and
clothing, exports are restricted or monitored in accordance with bilateral trade
agreements. Export subsidies are limited to those in the agriculture sector.
Slovakia applies the EU's Combined Nomenclature (CN)
tariff classification, consisting of 10,446 eight-digit tariff lines. Only 3 per cent of
tariff lines in the Czech-Slovak common external tariff were unbound as of the end of
1994. All remaining unbound tariffs were bound upon the beginning of the implementation of
the Uruguay Round, on 1 January 1995.
All tariffs are currently applied at their bound
rates and no specific, composite or other non ad valorem tariffs are used, making the
external tariff very transparent. While the simple average m.f.n. tariff rate is
relatively moderate, Slovakia's m.f.n. tariffs are escalatory: average tariffs rise from 4
per cent on primary products to 6 per cent on semi-processed products and 10 per cent on
fully processed products. The simple average tariff applied on imports from preferential
trading partners ranges from 1.9 per cent for Slovenia to 4.7 per cent for Romania, and
equals 4.0 per cent for the EU. Slovakia has low duties on the products that it tends to
import from non-preferential partners: when weighted by imports from non-preferential
partners, the average m.f.n. tariff is only 1.7 per cent.
Slovakia is a party to all major multilateral
agreements in the field of intellectual property. Foreign rightholders receive the same
treatment as Slovak legal or natural persons, except that in the areas of industrial
designs and patents Slovakia grants national treatment only on a reciprocal basis. The
authorities believe that acceptance by other parties of the TRIPS Agreement will be
considered to satisfy the reciprocity requirement.
In March 1994 Slovakia's official reserves stood at
the equivalent of less than one month's merchandise imports. Slovakia then introduced a
temporary 10 per cent import surcharge on imported goods from all sources for balance of
payments reasons. While the basis for the surcharge is broad, covering most chapters in
the Harmonized System, in practice it is charged only on consumer goods, which comprised
13 per cent of Slovak imports in 1994. As a result, average import surcharge rates (based
on surcharge revenue data) vary widely across product categories: 2 per cent or less for
products in 56 HS chapters, but 5 per cent or more in 27 chapters. The application of the
import surcharge only to consumer goods, which tend to be highly processed, worsens the
tariff escalation already noted. The surcharge has a substantial protective effect on
Slovakia's consumer goods industries. The GATT and WTO Committees on Balance-of-Payments
Restrictions have requested that Slovakia eliminate the surcharge by the end of 1995, if
possible, but in any case before 30 June 1996.
Slovakia's import surcharge could begin to damage
the economy. First, the surcharge-based protection of import-competing consumer goods
industries pulls resources from exporting industries and from those import-competing
industries that do not receive surcharge protection. With fewer resources devoted to the
production of their goods, exporting industries reduce exports, while imports of the
products made by import-competing industries unprotected by the surcharge increase. Other
than perhaps for a short period of several months, trade-restrictive measures will not
improve the balance of payments. Second, as time goes on, the protection that the
surcharge provides to domestic consumer goods industries will become more and more
difficult to eliminate. If the surcharge remains in place for long, its removal could lead
to new adjustment pressures, the threat of which would generate opposition to the removal.
This may already be happening, because Slovakia's relatively sound external reserves
position (which has increased to the equivalent of more than three months of imports) and
strong balance of payments situation imply that the initial motivation behind the
surcharge no longer exists. Moreover, tariff reductions for preferential partners have
been implemented as scheduled even while the surcharge has been in place; this suggests
that current conditions provide an excellent opportunity to eliminate the surcharge with a
minimum of adjustment being necessary.
Slovakia has no anti-dumping (AD), countervailing
duty (CVD) or safeguards legislation in force and has never applied such measures.
Legislation is being prepared in these areas and is expected to be implemented sometime in
1996. Slovakia, like other WTO members that choose to include such provisions in domestic
law, faces the problem of designing rules so to minimize the possibility that established
domestic firms can abuse them to stifle economic competition. Slovakia has sometimes found
itself on the other end of such practice and has adopted export monitoring (export license
requirements) partly to avoid AD or CVD actions being taken against Slovak exporters. To
help protect effective economic competition, a principle enshrined in the Slovak
Constitution, Slovakia could consider including two provisions in its legislation. First,
the use of anti-dumping measures could be restricted to those occasions when foreign firms
can be shown to engage in predatory pricing with the intent of establishing a monopoly
position in the Slovak market; similar standards are sometimes used in domestic
competition law. Second, a public interest clause requiring that the economic effects of
potential AD and CVD measures on consumers and downstream industries be considered in the
decision process could be included in the legislation.
Sectoral policy patterns
Slovakia's m.f.n. tariffs are fairly uniform across
economic sectors. Exceptions are agriculture, which, following Uruguay Round
tariffication, has particularly high tariffs on a few items, and food products and
beverages, which have tariffs averaging 19 per cent, nearly triple the level elsewhere in
the economy. In contrast to the relative uniformity across sectors, a pattern of tariff
escalation is present within most sectors of the economy, as tariffs increase with the
level of processing. This is most noticeable in sectors such as food processing, and
textiles and clothing, and is worsened by the 10 per cent temporary import surcharge on
final consumer goods. Tariffs and the surcharge combine to provide substantial import
protection to higher-level processing activities in manufacturing sectors.
Active industrial policy is limited to the
agriculture sector. The State is involved through setting intervention prices and granting
export subsidies for some commodities and by providing concessionary loans and credit
guarantees. Many measures, such as tariff quotas and seasonal tariffs, are applied to
agricultural imports, as in many other countries; some of these replaced variable import
levies as a result of the Uruguay Round. Notably, Slovakia counts imports made at
preferential tariff rates against the m.f.n. tariff quota levels established as a result
of the Uruguay Round minimum market access provisions; this reduces the market access for
Services trade generated most of Slovakia's
substantial current account balance in 1994, largely as a result of tourism receipts and
natural gas pipeline fees. Slovakia was a strong advocate for the introduction of
multilateral rules for services trade in the Uruguay Round and made a comparatively large
number of commitments under the General Agreement on Trade in Services (GATS). These
include a horizontal commitment (with some sectors excepted) not to limit the ability of
foreign firms to establish a commercial presence, thus providing a more secure environment
for the establishment in Slovakia of foreign-owned service providers. Slovakia has listed
six measures inconsistent with m.f.n. treatment. These measures affect five different
services sectors and, under the GATS, should not be applied for more than ten years. They
are subject to future negotiations.
Trade Policies and Trading Partners
International trade is extremely important to
Slovakia, with the ratio of merchandise and services trade to GDP equal to some 138 per
cent in 1994. Recognizing this importance, Slovakia has constructed a relatively open
trading régime that underpins its transition to a full market economy. Trade promotes
effective economic competition, which lies at the heart of the economic transition. Able
to purchase inputs from abroad without, in most cases, substantial taxes or restrictions
being imposed, Slovak firms are becoming more competitive, both in domestic and foreign
markets. This is being reflected in the high export (and, to some extent, import) growth
and strong GDP growth of 1994 and early 1995.
Slovakia's size and its high propensity to trade
suggest its keen interest in the trade policies of partner countries. The Uruguay Round
results and the creation of the World Trade Organization should be very beneficial for
Slovakia because of the reductions in trade distortions that were negotiated and because
of strengthened and broadened multilateral rules. During the Round, Slovakia was
particularly concerned with such issues as increasing the effectiveness of the dispute
settlement system and introducing multilateral rules for services trade.
The Uruguay Round and the international trading
system have helped provide greater economic security for Slovakia. Slovakia's firm
commitment to multilateral rules, displayed, for example, through its comprehensive tariff
bindings, will help ensure that Slovakia provides a secure trading environment. The prompt
removal of the import surcharge would reaffirm Slovakia's commitment to a transparent
system of import protection based on bound tariffs.
report Back to top
TRADE POLICY REVIEW BODY: THE SLOVAK REPUBLIC
Report by the Government - Summary Observations
The Slovak Republic became a sovereign State on 1
January 1993 after the dissolution of the Czech and Slovak Federal Republic. As one of the
two successor States the Slovak Republic continued the process of the economic
transformation, the basis of which was laid down in 1989 for the common Czech and Slovak
economic space. Basic pillars of economic reform introduced in 1991 were: privatization
and de-monopolization of State-owned companies, restructuring of the economy, price
liberalization, foreign trade liberalization, introduction of internal convertibility of
the currency, support of the private sector in the framework of macroeconomic measures and
creating new conditions for economic development in an international competitive
The fast implementation of the economic reform, the
disintegration of the COMECON with the consequent collapse of the Eastern European markets
as well as the global economic recession of the world economy together had some negative
consequences. These elements caused major disruption to economic and trade relations and
processes, and to traditional trade flows and changes in the system of payments. They also
led to the deepening of the Slovak economic recession: decline in production; low level of
production capacity utilization; obsolete technological equipment; high growth of
unemployment; increase of inflation rate mainly caused by price liberalization; decline in
currency and foreign exchange reserves; and decline of exports with the consequent decline
of domestic production. In 1991 GDP decreased by 14.5 per cent, in 1992 by 7 per cent and
in 1993 by 4.1 per cent.
This situation required substantial changes in the
structure of industry, trade and services; continuous solutions to the consequences of the
fast conversion in the machinery industry (armament industry); creation of a new economic,
financial, and monetary policy; and the adoption of fundamental legislation measures to
overcome the economic transformation process.
Economic transformation necessarily needs to be
structured to diminish, to the extent possible, its negative effects on the living
standards of the population and to preserve social harmony.
In spite of the unfavourable start in 1993 and the
beginning of 1994, the Slovak Republic is continuing the process of economic
transformation and the results of 1994 and the first half of 1995 illustrate the gradual
revival of the Slovak economy. The positive impact of the measures adopted by the
Government and the recovery from the world economic recession can be proven by the low
rate of inflation, the stable level of the unemployment rate, the growth of GDP and
The GDP in constant prices as of 1 January 1994 was
US$5.88 billion and in comparison with 1993 increased by 4.8 per cent. The openness of the
Slovak economy (the share of exports in GDP in current prices) reached 53.8 per cent in
1994, while in 1993 it was 49.3 per cent. In 1994 in comparison to 1993 Slovak exports
increased by 27.8 per cent and imports by 8.6 per cent. The rate of inflation declined
from 23.2 per cent in 1993 to 13.4 per cent in 1994. The rate of unemployment reached 12.2
per cent in 1993 and 13.3 per cent in 1994.
In the first half of 1995 the Slovak Republic
continued economic development; GDP increased by 6.2 per cent in comparison to the first
half of 1994. This growth was due to increased domestic demand. The rate of inflation
reached 11 per cent and the slowdown in the growth of the rate of inflation was due to the
positive relationship between the increase of labour productivity and the increase of the
average nominal salary, the small increase of loans in domestic currency and by the stable
level of foreign exchange stocks. In the first half of 1995 the rate of unemployment
reached 13.7 per cent, exports increased by 22.8 per cent and imports by 24.6 per cent
resulting in a balance of US$18.75 million, and openness of the Slovak economy reached
54.5 per cent.
Foreign Trade and Macroeconomic Linkages
Foreign trade plays a vital rôle in the economic
development of the Slovak Republic. Consequently trade policy forms an integral part of
the global economic strategy of the Slovak Republic, having regard to the fact that
economic growth can be achieved only if Slovak exports are competitive. Measures serving
this aim are being taken in the macroeconomic environment and in the microeconomic
environment, including measures for the intensification of exports, promotion of foreign
investment, etc. The Slovak Republic has played an active rôle in the liberalization
process and supported international efforts to liberalize global trade in the framework of
the Uruguay Round of GATT on a multilateral basis. This process is being further supported
by regional agreements.
Trade policy is formulated in accordance with the
possibilities of economic growth. The legislation creatingthe framework for this policy is
the most important instrument along with the responsible ministries and institutions that
participate in the implementation of this policy according to their powers.
The basic objective of the trade policy of the
Slovak Republic is to promote the economic growth of Slovakia and to promote the creation
of new jobs based on the development of exports. These objectives can be realized only in
an open international trading system without barriers and any form of discrimination. The
fundamentals of the foreign-trade policy of the Slovak Republic and the starting points
for further development of foreign trade in the next few years were established
considering the above-mentioned facts and in the context of the continued process of
liberalization and demonopolization of all activities, particularly in foreign trade.
The fact that the stability of conditions in the
foreign trade environment influences to a high degree the formation of export-import
proportions and relations has been confirmed especially in the first two years of the
existence of the sovereign Slovak Republic. In 1993 GDP declined by 4.1 per cent compared
with 1992, and industrial production by 3.8 per cent compared with 1992, but unlike in
1992 this decline was mainly due to the reduction in exports. The influence of unstable
conditions in foreign trade was reflected in structural, territorial and global
The creation of stable relations in foreign trade
and the establishment of new export-import proportions is a long-term process. The Slovak
Republic is strongly committed to the creation and development of such relations with all
countries of the world. The defined trade relations of the Slovak Republic with individual
territories, written down in Agreements, increase the rate of stability in the area of
Considering the needs of the Slovak economy for the
next two years, the trade policy aims at maintaining a positive balance in foreign trade;
maintaining the degree of openness of the Slovak economy at the level of approximately 55
per cent and the improvement of the commodity structure of the exports in favour of the
commodity groups with higher value added; and the creation of new jobs by means of the
export promotion in those branches with existing capacities and competitive products.
These aims are declared in the conception of the foreign trade, including the instruments
to achieve them.
The concept of the foreign trade of the Slovak
Republic is based on and corresponds with foreign policy and complies with its priorities.
The first priority is the intensification of the existing policy of closer relations with
the European Union. The aim is the integration of the Slovak Republic to the EU and the
intensification of relations with all neighbouring countries, i.e. the Czech Republic,
Poland, Hungary, Austria and Ukraine and development of economic relations based on mutual
benefit with almost all countries of the world.
The industrial policy of the Slovak Republic
contributes to the achievement of these aims. It is based on the identification of
internal and external problems, it determines the principles of creation of the basic
conditions for successful development of the industry and private enterprises. At the same
time measures are taken to ensure the realization of the policy.
As the industrial policy is interrelated with the
foreign trade policy it is important that these two policies are co-ordinated in order to
create a competitive environment through the liberalization of the trade policy. This will
contribute to developing the competitiveness of domestic products.
The concept of the foreign-trade policy of the
agricultural sector is oriented towards the implementation of instruments typical for this
specific trade complying with the Agreement on Agriculture in the framework of the WTO.
Other objectives are to increase the rate of liberalization of trade and to remove
barriers to trade in agricultural products, to improve the exploitation of the concessions
based on regional and bilateral agreements and to increase the exports of those
commodities where domestic production will exceed demand on the domestic market.
The trade policy is also co-ordinated with the
anti-monopoly policy as they are closely interrelated and directly influence trade.
Judgement of restrictive trade practices is considered in accordance with the legislation,
which corresponds to anti-monopoly legislation in developed market economies. Special
attention is given to export and import cartel agreements, voluntary export restraints,
market access barriers, supranational mergers and strategic dumping, where they have a
direct influence on the trade structure of the Slovak Republic and its competition
The Policy of Transport Infrastructure
The acceleration and rationalization of the
transport of goods plays an important rôle in foreign trade. Therefore the concept of the
policy of transport infrastructure aims to accelerate the development of the
infrastructure with the parallel adaptation of the transport sector to the conditions of a
free market and the harmonization of technical and economic conditions with those of the
EU. The concept proceeds on the assumption that comparable conditions for the Slovak
forwarders will be established based on mutual benefit. When creating infrastructure
connections to the continental and regional European transport networks it is necessary to
increase the technical standards and the state of means of transport, to modernize the
equipment of stations and transit points to neighbouring countries and to complete and
connect the international motorway network.
With regard to the objectives of the foreign trade
policy, the priority task of the financial policy is to create conditions for investment
promotion, the development of science and technology and to ensure a positive trade
balance. The main financial instruments are taxation, tax exemptions and tariff
reductions. The activities for the promotion of the capital market, prepared in the
framework of new legislation, and the continuous transformation of the banking sector,
enhanced by the prepared amendment to the Law on the National Bank of the Slovak Republic
and Act on Banks, should contribute to a revival of the economy.
After comprehensive liberalization of prices in 1991
and further deregulation of prices in the following years only approximately 5 per cent of
the prices of goods and services is regulated in retail trade. These are prices for public
services, prices of energy, gas, heat and electricity, which are regulated for private
consumers. These prices do not cover the costs. The government is preparing a progressive
adaptation of prices of natural gas and electricity in order to cover the costs. These
adaptations are prepared very carefully in relation to the social programme.
The establishment of an independent monetary system
in the Slovak Republic after separation from the Czechoslovak currency required an
independent monetary policy. The basic aims were to stabilize the national currency, to
minimize the inflationary tendencies, to maintain the balance of payments, to strengthen
the foreign exchange reserves and to maintain the internal convertibility of the currency.
The internal convertibility of the currency was
introduced from 1 January 1991 in the former Czech and Slovak Federal Republic. This was
maintained also in the Slovak Republic until 1 October 1995. The internal convertibility
régime of the Slovak Crown made it possible for entrepreneurs to make their payments to
their foreign partners in foreign currencies. These currencies could be purchased from the
commercial banks in the Slovak Republic for Slovak Crowns. On the other hand the
entrepreneurs were obliged to sell to the bank all foreign currency reserves, except for
the capital share of a foreign subject in a joint-venture, or donations, inheritance or
Following the gradual programme to achieve the full
convertibility of the Slovak Crown, the fact that Foreign Exchange Act No. 528/1990 has
not fully reflected the stage of economic transformation of the Slovak Republic, and to
continue the liberalization of foreign economic relations, a new Foreign Exchange Act came
into force on 1 October 1995. This new Act brings into effect the convertibility of the
Slovak Crown on the current account of the balance of payments. Transactions on capital
account are subject to NBS's foreign exchange permission. The new Foreign Exchange Act
allows non-residents to carry out financial transfers pertaining to current account
transactions and also allows residents to carry out payments abroad. The Foreign Exchange
Act equalizes the position of legal and natural persons, who are residents, in executing
transactions on current account. Trading in foreign securities, purchase of foreign
exchange in cash, granting financial credits and guarantee instruments for non-residents,
acceptance of financial credits from abroad, export/import of domestic and foreign
currency and opening bank accounts in foreign currency (except certain exemptions) is,
according to the new Foreign Exchange Act, subject to foreign exchange permission. The
Foreign Exchange Act concerns the following:
- rights and duties of residents and non-residents:
trading in foreign exchange assets, acquisition of real estate for non-residents,
acceptance of financial credits from abroad, investment abroad, reporting and surrender
requirements, duty to transfer financial funds, duty to deposit, operations on capital and
money markets and other foreign exchange relations;
- sphere of activity of foreign exchange
- sphere of activity of customs authorities
according to this Act;
- foreign exchange control.
The new Foreign Exchange Act fulfils the provisions
of Article VIII of the IMF Articles of Agreement.
Protection of the Intellectual Property
The Industrial Property Office has been established
to protect intellectual property rights. The Slovak Republic has signed all important
multilateral agreements concerning the protection of intellectual property. These
agreements include the Paris, Bern and Rome Conventions (with their revised and amended
wordings), as well as the Madrid, Lisbon and Locarno Agreements and other bilateral and
multilateral agreements setting the rules for the protection of intellectual property in
the framework of the World Intellectual Property Organization (WIPO).
The legislation of the Slovak Republic is fully
compatible with those agreements and with the agreements concluded in the framework of the
WIPO and the WTO. The Slovak Republic guarantees efficient protection of intellectual
property. In the Slovak legislation covering the sector of intellectual property no
regulations are included which would not comply with the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). Back to top