RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/98
15 April 2002
(02-1856)
Trade Policy Review Body
TRADE POLICY REVIEW
SLOVENIA
Report by the Secretariat
This report, prepared for the first Trade Policy Review of Slovenia, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from the Government of Slovenia on its trade
policies and practices.
Any technical questions arising from this report may be addressed to
Mr. Ricardo Barba (tel. 739 50 80) or Mr. Willy Alfaro (tel. 739 53 72).
Document WT/TPR/G/98 contains the policy statement submitted by the
Government of Slovenia.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Slovenia.Slovenia WT/TPR/S/98
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) R ECENT ECONOMIC PERFORMANCE AND OUTLOOK vii
(2) T RADE AND INVESTMENT POLICY FRAMEWORK vii
(3) D EVELOPMENTS IN TRADE AND TRADE -RELATED MEASURES viii
(4) S ECTORAL DEVELOPMENTS ix
I. ECONOMIC ENVIRONMENT 1
(1) B ACKGROUND 1
(2) R ECENT ECONOMIC DEVELOPMENTS 2
(i) Output and growth 2
(ii) Fiscal policy 4
(iii) Monetary developments 5(iv) Balance of payments 6
(3) T
RADE AND INVESTMENT PERFORMANCE 8
(i) General patterns 8(ii) Geographical and sectoral patterns of merchandise trade 8
(iii) Trade in services 11
(iv) Foreign direct investment 11
(4) O
UTLOOK 12
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 13
(1) O VERVIEW 13
(2) I NSTITUTIONAL FRAMEWORK 13
(i) Institutional structure 13
(ii) Policy formulation and implementation 14(iii) Main laws and regulations 16
(3) D
EVELOPMENTS IN INTERNATIONAL RELATIONS 17
(i) Trade policy objectives 17
(ii) Multilateral agreements 18
(iii) Regional agreements and arrangements 21
(4) D EVELOPMENTS IN THE FOREIGN INVESTMENT REGIME 26
(i) Domestic regime and incentives 26(ii) International initiatives and agreements 30
III. TRADE POLICIES AND PRACTICES BY MEASURE 31
(1) M
EASURES DIRECTLY AFFECTING IMPORTS 31
(i) Introduction 31(ii) Customs regime 31(iii) Tariffs and other charges affecting imports 33(iv) Import licensing, controls, and prohibitions 41(v) Contingency measures 42
(vi) Standards and technical regulations 45WT/TPR/S/98 Trade Policy Review
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(vii) Government procurement 47
(viii) Other measures affecting imports 48
(2) M EASURES DIRECTLY AFFECTING EXPORTS 48
(i) Export duties, taxes, and restraints (controls/prohibitions, licensing) 48(ii) Export promotion and assistance 49
(3) O
THER TRADE -RELATED MEASURES AFFECTING PRODUCTION AND TRADE 51
(i) State aid 51(ii) Competition policy 52(iii) Privatization 55(iv) Price controls and regulations 57
(v) Protection of intellectual property rights 57
IV. TRADE POLICIES AND PRACTICES IN SELECTED SECTORS 61
(1) A
GRICULTURE 61
(i) Background 61(ii) Policies 62
(2) M
ANUFACTURING 66
(3) S ERVICES 67
(i) Financial services 67(ii) Telecommunications services 71(iii) Transport 72(iv) Tourism 74
REFERENCES 77
APPENDIX TABLES 79Slovenia WT/TPR/S/98
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CHARTS
I. ECONOMIC ENVIRONMENT
I.1 Main indicators of macroeconomic performance, 1995-01 7
I.2 Direction of merchandise trade, 1992 and 2000 9I.3 Merchandise trade by sector, 1992 and 2000 10
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Applied MNF tariff distribution, 2001 35
III.2 Tariff escalation by 2-digit ISIC industry, 2001 37
IV. TRADE POLICIES AND PRACTICES IN SELECTED SECTORSIV.1 Tariffs on agricultural products by HS chapter, 2001 64
IV.2 Tariffs on manufactured products by HS chapter, 2001 68
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Slovenia at a glance, 1995-00 2
I.2 Selected economic indicators, 1995-00 3I.3 Foreign direct investment stock by country, end 2000 11
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
II.1 Slovenia's main legislation related to trade, December 2001 16
II.2 Selected notifications to the WTO, December 2001 19
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Key features of the Slovenian MFN tariff structure, 2001 34
III.2 MFN tariffs (simple average) by stage of processing, 2001 36
III.3 Excise duties by product, January 2002 40
III.4 State aid in Slovenia, 1998-00 51III.5 Main provisions of Slovenia's competition law 54III.6 Summary of intellectual property protection in Slovenia, 2001 57
IV. TRADE POLICIES AND PRACTICES IN SELECTED SECTORS
IV.1 Gross agricultural output, 1991-00 61
IV.2 Producer support estimate (PSE) by commodity, 1995-99 65
APPENDIX TABLES
I. ECONOMIC ENVIRONMENT
AI.1 Balance of payments, 1995-01 81
AI.2 Merchandise exports by destination, 1992-00 82
AI.3 Merchandise imports by origin, 1992-00 83WT/TPR/S/98 Trade Policy Review
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AI.4 Product composition of exports, 1992-00 84
AI.5 Product composition of imports, 1992-00 85
III. TRADE POLICIES AND PRACTICES BY MEASUREAIII.1 Average tariffs, by HS chapter, 2001 86
AIII.2 Tariff statistics by ISIC Rev.2 categories, 2001 89
AIII.3 Tariff statistics, by group, 2001 92
AIII.4 MFN tariff lines subject to seasonal rates, 2001 93AIII.5 Categories of products subject to MFN tariff exemptions or reductions, 2001 94AIII.6 Illustrative list of goods subject to import and export licensing, 2001 96AIII.7 Textile and clothing products to be integrated under the ATC 99
AIII.8 Export taxes upon Slovenia's entry in the WTO applicable until 1997 100
AIII.9 International agreements on Intellectual property to which Slovenia is a party, 2001 101Slovenia WT/TPR/S/98
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SUMMARY OBSERVATIONS
1. After independence (1991), Slovenia
swiftly embarked on a reform programme
aimed at restoring macroeconomic stability
and establishing a fully functioning market
economy.  In less than a decade, Slovenia haslargely met these objectives, creating a
modern, stable, outward-oriented economy,
well integrated into the world economy.
Liberalization of trade and investment, driven
by commitments in the WTO and preparationsfor accession to the European Union (EU),
has been a major feature in this process.
(1) R
ECENT  ECONOMIC  PERFORMANCE
AND OUTLOOK
2. Except for a short-lived crisis in 1992,
throughout the transition Slovenia has
experienced robust economic growth of more
than 4% a year on average, sustained by
exports and investment flows. The consistent
pursuit of sound structural and
macroeconomic policies, reflected in a decade
of broadly balanced budgets, low externaldebt, and moderate inflation and external
current account deficits, increased the
resilience of the Slovenian economy to
external shocks. This was the case particularly
during the Russian financial crisis of 1997-98,and the current world economic slowdown.
GDP growth in 2001 is expected to be around
3.7%.
3. A gradual, but consistent process of
structural reforms, including the eliminationof price, exchange, and trade controls, and the
progressive privatization of "socially owned"
enterprises, contributed to the establishment of
market structures in the vast majority of
economic sectors.  Since 1998, the pace ofstructural reform has accelerated, including in
capital account liberalization.  Slovenia's
strong  economic performance has brought
substantial improvements in its social
indicators: the unemployment rate declined to
7% and per capita income (about US$10,000
in nominal terms) is not out of line with thelevel in EU countries. Yet, important
disparities in regional development remain.4. Slovenia's economy is highly
dependent on international trade.  The ratio of
merchandise trade (imports and exports) to
GDP is one of the highest in the region
(around 120%).  Early in the 1990s, Slovenia
faced with the loss of Yugoslav markets andthe breakdown of transport and
communications to south-east Europe,
reoriented trade towards the EU and
associated countries;  these now account for
over two thirds of Slovenia's trade. Pre-transition trade links have not disappeared
though, and by 2000, the decline of trade with
countries of former Yugoslavia and Russia had
come to a halt.  The product composition of
merchandise trade, still dominated by semi-finished and intermediate manufacturing
goods, is shifting gradually.  The shares of
textiles and clothing and steel in merchandise
exports are declining slightly, while those of
automotive products, electronics and
pharmaceuticals are increasing.
(2) T
RADE AND INVESTMENT POLICY
FRAMEWORK
5. Slovenia's efforts to further integrate
in the world economy is reflected in its
participation in various multilateral, regional
and bilateral trade initiatives.  Sloveniaapplied for membership of the GATT in 1992
soon after independence;  it was the last
contracting party to join GATT in 1994, and
became an original member of the WTO.
Slovenia grants MFN treatment to all its WTOtrading partners.  Slovenia has also signed
free-trade agreements with the European
Union (the Europe Agreement) and EU
associated countries (EFTA, CEFTA, Baltic
countries, Israel, Turkey), as well as withCroatia and the former Yugoslav Republic of
Macedonia.
6. Slovenia is strongly committed to the
multilateral trading system.  It made extensive
commitments upon accession (binding 100%
of its tariff lines; dismantling non-tariff
barriers; and making specific commitments intwo thirds of activities covered by the GATS),
and has since joined the Information
Technology Agreement, participated in theWT/TPR/S/98 Trade Policy Review
Page viii
extended WTO negotiations on financial
services, and is in the process of acceding to
the Government Procurement Agreement.
Slovenia did not take any specific
commitments in the extended negotiations on
telecommunications services, and maintainssome GATS MFN exemptions. It has largely
met its regular WTO notification
requirements. Slovenia strongly favoured the
launch of a new round of trade negotiations at
the Fourth Ministerial Meeting in Doha.
7. The orientation of Slovenia's economic
and trade policies is, however, like that of
other central and eastern European countries,
largely driven by the goal of accession to the
EU.  Slovenia is included among the first waveof countries for accession to the EU.  The
harmonization of Slovenia's trade regime
involves not only the concordance of
Slovenia's tariff with that of the EU (the
Common External Tariff), but also extends to
regulations on customs, standards,
competition policy, subsidies, intellectualproperty, and other trade-related areas.
8. The foreign investment regime of
Slovenia is fairly liberal, with a priori no
general restrictions. All business activities are
open to domestic and foreign natural and legalpersons alike. There are, however, some
restrictions on foreign investment in certain
business operations, such as the military
supply industry, gaming, and budget-financed
pension and health insurance. In the financialsector (banking and insurance), until recently,
pervasive capital account and branching
restrictions had limited investment. In an
attempt to boost investment flows, Slovenia
has also recently decided to offer financialincentives (direct financial assistance and tax
incentives) to investment, regardless of origin
(foreign or national).
(3) D
EVELOPMENTS IN TRADE AND 
TRADE -RELATED  MEASURES
9. Participation in the WTO and the
process of accession to the EU provide thebasis and a strong anchor for continued trade
liberalization in Slovenia. Customs procedureshave been simplified.  The Slovenian tariff has
been rationalized, with the elimination of
surcharges, the incorporation of charges in its
WTO Schedule, and the concentration of tariff
lines in lower tariff rates.  Around 96% of
tariff lines are ad valorem; however,transparency is still undermined by the
existence of a relatively large number of tariff
exemptions and the use of mixed duties in
agriculture.
10. MFN tariffs have been reduced in
recent years, albeit less rapidly than
preferential rates.  In 2001, Slovenia's simple
average applied MFN rate was close to 11%,
with an average of 9.5% for non-agricultural
goods and 16% for agricultural products(WTO definition).  While efforts have been
made to reduce tariff dispersion, tariffs remain
escalatory, in particular in the food, wood,
and textiles and clothing industries.  A
relatively large gap exists between bound and
applied rates, as a result, on the one hand, of
the binding of a large number of lines at theuniform rate of 27%, and on the other hand, of
the relatively rapid reduction of applied rates.
This gap can undermine the predictability of
Slovenia's tariff regime: in 2001, the margin
was around 13 percentage points, leavingroom for the possibility of increases in applied
rates, as seem to have been the case in 1998
for some agricultural products. However, the
authorities aim to adopt the EU's bound rates
upon accession, which would eliminate thegap between applied and bound rates.
11. Given the large number of preferential
agreements of which Slovenia is a member
(15, counting the EU as one), exclusively MFN
rates apply to only 15% of imports.  Slovenia'strade with its largest trading partners is
virtually duty free:  for example, the average
tariff on industrial im ports from the EU is
0.5%, 9 percentage points lower than MFN
tariffs.  In agriculture, products considered as
sensitive are protected by tariff quotas
negotiated with each preferential partner,resulting in a wide variety of product- and
country-specific preferences.  As such access
is adjusted on an on going basis, the operation
of preferences in agriculture requires theSlovenia WT/TPR/S/98
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management of hundreds of tariff quotas
(carrying mixed duties), contained in 14
different lists, thereby hampering transparency
and the efficient use of Slovenia's scarce
administrative resources.
12. The Slovenian import regime has few
non-tariff barriers.  Slovenia maintains non-
automatic licensing requirements to regulate
certain imports affecting public security,
safety, health, and the environment; and to
administer tariff quotas in agriculture.  Theonly remaining quantitative restrictions per se
are those on textiles and clothing, which are to
be phased-out under the WTO Agreement on
Textiles and Clothing.  Steady progress has
been achieved in harmonizing nationalstandards and technical regulations with
international and EU standards.  Recent
amendments to the gov ernment procurement
legislation provide for enhanced transparency
and the removal of a 10% preference for
domestic bidders.  In 2001, Slovenia initiated
the required procedures for accession to thePlurilateral Agreement on Government
Procurement. Slovenia has enacted legislation
on trade remedy measures (anti-dumping,
countervailing, and safeguard measures), but
to date has made little use of it.
13. Slovenia does not impose duties, taxes
or any other charges on exported goods;
export taxes were removed by late 1990s.  No
explicit export subsidies, either on industrial
products or on agricultural products, areprovided by the Government.  Indirect export
support in the form of export finance,
guarantees, and promotion assistance is
available to Slovenian exporters through a
number of programmes and agencies.
14. Conditions of access to Slovenian
markets have also been eased by the complete
overhaul of "behind-the-border" legislation in
areas such as investment, competition, state
aid, and intellectual property rights, as a
result of implementation of WTO obligations
and EU accession requirements.  Competitionlegislation predated the privatization
programme, and is written into the
Constitution. Policies and impediments thatcontributed, in the early 1990s, to limited
foreign participation in the economy,
including the privatization of companies
through internal buyouts instead of stock
market operations, pervasive capital controls,
investment limits in the financial sector, andadministrative barriers, were removed in the
late 1990s, or are currently under revision.
15. Despite these efforts, the ratio of FDI
to GDP remains well below the average in the
region.  Experience indicates that an openprivatization policy and a stable regulatory
environment are more important for foreign
investors than financial incentives.  The strict
application of competition and state-aid rules,
which help to level the playing field, is also animportant factor for attracting investment.
Real efforts in this respect are being made by
relevant agencies in Slovenia.  Notable
progress has also been achieved in bringing
domestic legislation on intellectual property
rights in line with international standards, and
in enforcement.
(4) S
ECTORAL DEVELOPMENTS
16. While Slovenia's sectoral policies have
moved towards greater market orientation, the
level of government assistance in agriculture
has been increasing. The share of agricultureto GDP has been decreasing over the last few
years (from 5% a decade ago to around 3% in
2000), but there has been an increase in
budgetary allocations to the sector. Recent
OECD calculations indicate that the averageproducer support estimate (PSE) in Slovenia is
higher than the OECD average and similar to
that of the EU. Since 1998, Slovenia's
agricultural policies have been aimed at
harmonizing support systems with the EU'sCommon Agricultural Policy.  This entails a
gradual shift from price support to direct
payments, and from direct market intervention
to structural reform. The agriculture sector,
comprising a large proportion of small farms
located in mountainous areas, is also shielded
from international competition by acombination of specific border measures (high
tariffs and relatively restrictive tariff quotas).WT/TPR/S/98 Trade Policy Review
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17. Slovenia's manufacturing sector
(which accounts for about one third of GDP)
resisted well the loss of Yugoslav markets and
the exposure to international competition.
Aided by the liberalization of trade and the
relatively modern industrial base inheritedfrom the socialist period, Slovenia's
manufacturing sector has been able to
integrate in, and compete with, neighbouring
industrial clusters in the EU.  The
reorientation of trade flows posed majorchallenges to Slovenian enterprises, in
particular the need to upgrade facilities and
increase productivity.  This process was
particularly successful in the pharmaceutical,
mechanical engineering, and paper and woodindustries due to a combination of high
investment and privatization.  In other sectors,
such as textiles and clothing and food
processing, restructuring efforts have been
slower and performance weaker.
18. The services sector accounts for more
than 50% of Slovenia's GDP. The Governmenthas taken steps to reduce state involvement  in
the sector and encourage private investment in several activities. Liberalization in the main
services activities, such as financial and basic
telecommunications services, began in the late
1990s.  After the financial crisis in 1992,
priorities in the sector focused on restoring the
safety and soundness of the system, under theshelter created by restrictions on foreign
presence, possibly at the cost of reduced
competition.  Since 1999-00, however, the
focus has shifted towards increased
competition and foreign presence. Thefinancial sector stands to benefit from greater
openness and competition resulting from
capital account liberalization;  further reforms
would improve its efficiency.  A new
telecommunications law, enacted in 2001,ended the monopoly rights in the fixed
telephony market. Major modernization of the
transport and tourism networks is under way.
In general, the process of modernization in
services industries could benefit from
increased foreign presence, in terms of
increased transfers of capital, technology andknow-how, and hence from enhanced market-
access commitments in the WTO.