WT/TPR/S/89 Trade Policy Review
Page 28
III. MARKET ACCESS IN GOODS
(1) CUSTOMS PROCEDURES
(i) Valuation, clearance, and inspection
1. The Czech Republic's legislation on customs valuation has been amended during the period
under review (1996-01), incorporating decisions of the WTO Customs Valuation Committee and
aligning the text with the regulation of the European Union.  Several trade facilitating measures havealso been implemented. The Czech Republic does not require preshipment inspection.
2. Under Act No. 13/1993 Coll. on Customs, the value of imported goods is determined on the
basis of the transaction value, i.e. the price actually paid or payable for the goods sold for importation,
adding certain expenses, such as the cost of containers, packing and agency fees, while deducting
some other items, such as transport cost incurred after arrival. This method can be rejected by customsif, inter alia , the buyer and seller are related.  In such a case, the following means to establish the
value may be used: (i) transaction value of identical or similar goods; (ii) deductive method (i.e. the
resale price less such costs as customs duties, taxes and commissions); or (iii) computed value,
utilizing costs of production, profit, and other expenses.
1 The decision of the Committee on Customs
Valuation on the treatment of interest charges has been applied by the Czech Republic since 1 January1989, while the decision on valuation of computer software has been applied since 1 January 1991.
2
The decisions were initially implemented by instructions of the Central Customs Administration, but
later incorporated by the implementing legislation in Act No. 13/1993 Coll. on Customs, as amended
by Act No. 113/1997.3  The amended Customs Act also reflects the Ministerial Decision regarding
cases where customs administration has reason to doubt the truth or accuracy of the declared value.4
The WTO Committee on Customs Valuation examined  the Czech legislation at its meeting on25 October 1996, and again on 12 November 1999 following some changes notified to theCommittee.
5
3. Under the amended law, the Czech legislation is, according to the authorities, in line with the
customs valuation regulation of the European Communities.6  In July 1996, the Czech Republic
became a contracting party to the EU Common Transit and the Single Administrative Document
Conventions, so that a single document, identical to  the European Union's, is used for the purpose of
customs clearance.7
4. A number of trade facilitating measures have been implemented during the period under
review.8  First, data submissions have been digitalized.  The initial steps to collect data in electronic
format were made in 1994, and this method has now become an important means of data collection.
Electronic forms for import, export and transit declarations have been devised and made publiclyavailable.  Second, since signing the European transit convention in 1996, the Czech Republic has
taken an active part in the New Computerised Transit System (NCTS) Project, which was introduced
by the European Communities in 1995 as an attempt to reduce fraud in the common transit regime.  In
                                                     
1 The provisions concerning the definition of members of the same family, determination of transport
costs and declaration of customs value data were incorporated by Ministry of Finance Regulation No. 92/1993.
2 The content of the Decisions is contained in WTO document G/VAL/5, 13 October 1995.
3 Ministry of Finance Decree No. 135/1998 Coll. of 4 June 1998, as amended.
4 WTO document G/VAL/M/12, 19 November 2000.
5 WTO documents G/VAL/M/4, 29 November 1996, and G/VAL/M/12, 19 January 2000.
6 WTO document G/VAL/M/12, 19 January 2000.
7 WTO (1997).
8 This section draws on WTO document G/C/W/247, 1 February 2001.Czech Republic WT/TPR/S/89
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June 2000, the Czech Republic passed conformity tests for connection to the system.  Third, in an
attempt to speed up customs procedures, the Czech Republic has introduced "simplified customs
procedures", access to which is reserved to authorized traders only.  Simplified procedures cover
about one quarter of procedures, and are expanding rapidly.9  Finally, an electronic customs clearance
(ECC) project has been introduced.  The ECC not only serves to speed up customs procedures but is
also less burdensome for all parties involved.  Moreover, with the new system in place, it is easier forCustoms to set up risk-analysis processes for the selection of goods for physical checks.  While the
intention is to apply it to all customs procedures, priority has been given, so far, to consignments
entering under the NCTS.
10
5. Notwithstanding the recent initiatives to modernize Customs and facilitate procedures, some
concerns appear to remain among private trading companies.  These concerns include the laxenforcement of customs regulations in some instances and the discretion of customs officials, which
could lead to abuse.
11  In this regard, the authorities have taken some steps to reinforce the ethics of
officials and implement a training system.
6. Appeals procedures against decisions of the Customs Office are laid down in Article 104
para. 6 of the Customs Act. It contains a righ t of appeal, but no provisions whereby a higher
administrative body could address the appeal.12  Data are not available on the use and the results of
administrative and judicial appeal of customs decisions.
(ii) Rules of origin
7. The Czech Republic's non-preferential rules of origin are based on the system used by the
European Community in 1993.  Non-preferential rule s assign the origin to the country where the
product has been wholly obtained or where it underwent its "last substantial, economically-justified
processing".  The criterion can be applied in two ways:  on a case-by-case basis to decide whether theproduct has changed its characteristics through an operation and thus has acquired new properties; or
when the first test proves difficult to implement, the criteria is based on a value-added approach.
13
8. Regarding preferential rules of origin, the Czech Republic applies the same criteria as the EU,
providing two sets of definition.  First, originating products are those wholly obtained in that country
(mainly consisting of mineral and agricultural products).  Second, the origin of products is defined interms of the location of the last major transformation of the product (i.e. a change in its four-digit
heading), or is expressed in terms of the share of imported content. To qualify for "originating status",
the local-content requirement amounts to 60% in most cases.
14 Transparent and straightforward rules
of origin apply to imports from GSP beneficiaries.  Processed products in which a maximum of 50%
of their value (based on customs value) consists of goods imported from ineligible countries, qualifyfor preferences under the GSP.
9. Since 1 January 1997 new rules of origin, based on the concept of pan-European cumulation,
have been applied in all the free-trade agreements to which the Czech Republic is a signatory, except
the agreement with Israel.  As a result, separate free-trade zones established under a number of
free-trade agreements have been merged into a Europe-wide network (EU, EFTA, CEEC countries,
                                                     
9 OECD (2001a).
10 Authorized traders are not required  to visit the customs offices personally.  The full advantages of the
new systems will materialize after 2002, when the last phase of the NCTS Project will take place.
11 OECD (2001a).
12 WTO document G/VAL/M/12, 19 January 2000.
13 GATT (1991).
14 OECD (1995).WT/TPR/S/89 Trade Policy Review
Page 30
Baltic States and Turkey).  The implementation of this new origin network has two major
consequences.  Firstly, semi-finished products originating in any country of the system and which are
further processed or assembled in any other partner country are considered as originating products.
Secondly, originating products can be traded between  any of the countries involved in the system. As
a result of the new system of cumulation of origin, the customs procedures have been simplified.
Once a product has been given "European origin" there is no need for the origin to be verified again.15
The rules of origin applied on trade with Israel are similar, but cumulation is only possible with the
Czech and Slovak Republics.
(2) TARIFFS AND OTHER CHARGES AFFECTING IMPORTS
(i) MFN tariffs (applied rates and bindings)
10. There are no specific, composite or other non- ad valorem  tariffs in the Czech MFN tariff
system.16  During the period under review, the Czech Republic has continued to lower its already
relatively moderate average MFN rate by two percentage points, to 6% in 2001 (Table III.1).
Moreover, the overall standard deviation, as well as the number of rates, has fallen since 1995.  As a
whole, the MFN rates are skewed towards rates between zero and 5%, covering 64% of the tariff lines
in 2001 compared with 50% in 1995 (Chart III.1).  Another feature of the Czech tariff system is thatall tariff lines are bound at the applied MFN rates, fostering a more predictable trading environment
for businesses (Table III.1 and Chart III.2).
17  Looking ahead, accession to the EU is likely to result in
a higher tariff structure for agricultural products as these tariffs are higher in the EU than in the Czech
Republic.
11. Most agricultural goods are protected by relatively high tariffs (Table III.1). The simple
average MFN tariff for agricultural products (WTO definition) in 2001 is more than three times that
for non-agricultural goods.  Even taking into account that a stipulated amount of agricultural itemsmay be imported at lower rates within tariff quotas (section (iii) below), there would still be a large
difference between tariffs applied to agricultural products versus non-agricultural products.
18  Under
an HS two-digit classification, the tariff profile shows peaks for some prepared food (HS 04) and live
animals and products (HS 01) (Chart III.2). In the case of live sheep (other than breeding) and live
bovine (other than breeding and all cows above 300 kg.), tariff duties increase the landed price in theCzech Republic by as much as 100% and 97.5%, respectively.
                                                     
15 WTO document WT/REG11/N/4, 20 August 1998.
16 As in 1996, imports from some non-WTO-member countries or territories are not granted MFN
treatment.  These are: Antarctic territories, Bhutan, Bouvet Island, Heard Islands, Comoros, Nauru, Samoa,
Vanuatu, and Western-Sahara.  A general customs tariff, which is higher than the MFN tariff, is applied toimports from these territories.  Five of these countries qualify, however, for GSP treatment on eligible goods.
  The Czech Republic employs the Combined Nomenclature of the European Union, consisting of
11,433 lines at the ten-digit level.
17 For a few lines (302 lines at the ten-digit level, covering mainly chemical, pharmaceutical, and
textile products) the applied MFN tariff is somewhat lower than the bound rate.  For prepared foodstuff, the
overall applied MFN rate is somewhat higher than the ov erall bound rate;  this is due to safeguard measures on
some sugar products.
18 The average MFN rate for agriculture (WTO definition) based on the in-quota rates is 10.3% in
2001, compared with 13.4% based on the out-of-quota rates.Czech Republic WT/TPR/S/89
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Table III.1
Key features of the Czech MFN tariff structure, 1995-2001
(Per cent)
1995 1998 2000 2001 2000
MFN U.R. EUa
Number of rates 254 241 193 205 198 521
Simple average tariff 8.0 6.9 6.1 6.1 6.0 6.7
Standard deviation (simple average) 13.5 11.2 9.9 10.0 9.6 12.7
Duty-free lines 14.8 15.9 18.7 17.8 18.8 21.3
Maximum tariff 232.7 168.1 125.0 148.0 125.0 462.9
Domestic tariff "spikes" (three times the overall tariff average) 4.8 4.5 4.8 4.6 5.0 4.8
Share of ad valorem  rates 100 100 100 100 100 90.3
Share of bound rates 100 100 100 100 100 100.0
Collection rate (c.i.f. customs duty revenue/imports) 4.0 1.5 1.1 1.05 1.05 ..
By sector:
By HS :    Agriculture (HS 01-24) 15.6 13.3 11.6 12.0 11.8 16.7
                Industry (HS 25-97) 5.7 5.0 4.5 4.5 4.4 4.1
                WTO Agricultureb17.4 15.1 13.1 13.4 13.2 16.7
                WTO non-agriculturec5.5 4.8 4.4 4.3 4.2 4.5
By ISIC :  Agriculture (ISIC 1) 6.7 6.1 5.3 5.5 5.5 8.9
                Mining and quarrying (ISIC 2) 0.3 0.2 0.2 0.3 0.3 0.2
                Industry (ISIC 3) 8.2 7.0 6.3 6.2 6.1 6.7
                Industry excluding processing (ISIC 3-31) 5.9 5.1 4.6 4.6 4.4 4.2
.. Not available.
Note: Tariff averages exclude the in-quota rates;  they are based on the out-of-quota rates.
a The data are based on the MFN ad valorem rates for 2000 and the ad valorem  equivalents (AVEs) for 1999, adjusted for the rates applied in 2000;
the adjustment has been made by proportionally scaling down the AVEs.
b HS chapters 01-24 less fish and fishery products (HS 0301-0307, 0509, 051191, 1504, 1603-1605 and 230120) plus some selected p roducts (HS
290543, 290544, 290545, 3301, 3501-3505, 380910, 382311-382319, 382360, 382370, 382460, 4101-4103, 4301, 5001-5003, 5105-5103, 5201-
5203, 5301 and 5302).
c Excluding petroleum.
Source : WTO Secretariat.
01020304050
0 0 - 5 5 - 10 10 - 15 15 - 20 20 - 25 25 - 30 30 - 35 35 - 40 40 - 45 45 - 50 >50Note:
Source :0 - 5 should be interpreted as tariff is larger than zero and less or equal to five.
WTO Secretariat calculations, based on data provided b y the Czech authorities.Chart III.1
Frequency distribution of MFN tariffs, 1995 and 2001
Percentage share of tariff lines
Tariff range ( per cent)2001
1995
MFN average 1995
(8.0%)MFN average 2001
(6.1%)WT/TPR/S/89 Trade Policy Review
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0510152025Chart III.2
Applied MFN tariffs 1995 and 2001 and bound rates 2001, by HS section
1995 MFN rates
2001 MFN rates
Bound rates 2001Average 
1995 Average 
2001Per cent
Source : WTO Secretariat calculations, based on data provided b y the Czech authorities.
12. While the simple average MFN tariff rate is re latively moderate, MFN tariffs are escalatory
(Table III.2 and Chart III.3).  The Czech Republic continues to apply a system with lower rates on raw
materials than on intermediate products or processed goods, thereby providing higher levels of
effective protection to the manufacturing sector than that reflected by the nominal rates.  The 2001
average MFN rate for processed goods is about two and a half times that for raw materials.  Byfunction, the Czech tariff system shows the same pattern.
Table III.2
MFN tariffs (simple average) by stage of processing, 1995, 1998 and 2001
(Per cent)
1995 1998 2001
All products 8.0  (13.5) 6.9  (11.2) 6.1 (10.0)
By stage of processing:
        Raw materials 4.2  (13.6) 3.5  (12.6) 3.1(11.0)
        Intermediate goods 6.0  (7.4) 5.3  (6.2) 4.9 (7.4)
        Processed goods 10.0  (15.4) 8.4  (12.6) 7.4 (10.9)
By function:
       Consumer goods 5.5  (3.0) 4.7  (2.8) 3.9 (2.7)
       Intermediate goods 6.0  (8.9) 5.1  (7.5) 4.6 (7.2)
       Capital goods 12.6  (20.0) 10.9  (16.7) 9.7 (14.7)
Note: Tariff averages exclude the in-quota rates and are based on the out-of-quota rates.  Data in parenthesis show standard dev iation.
Source : WTO Secretariat.Czech Republic WT/TPR/S/89
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02468101214161820Chart III.3
Tariff escalation by 2-digit ISIC industry, 2001
Per cent
Source: WTO Secretariat calculations, based on data provided b y the Czech authorities.
Unprocessed
Semi-processed
Fully processed
(ii) Regional, bilateral and unilateral tariff preferences
13. During the period under review, the coverage of tariff preferences has continued to increase,
from an already high level.  As discussed in Chapter II, the Czech Republic has concluded several
preferential trade agreements during the period under review (the Baltic States, Israel, and Turkey),
while continuing liberalization within the framework of agreements already concluded.  Also,preferences continue to be extended to imports from developing countries under the GSP.  Thus, the
share of imports from preferential sources increased from 76% in 1995 to 78% in 1999.  Another
indication of the increased importance of preferential trade is the difference between the collection
rate (i.e. customs duty revenue divided by imports) and the average MFN rate.  The collection rate
was 50% of the average MFN rate in 1995, while the same ratio had dropped to 18% in 2000; thecollection rate was 1.1% in 2000 (Table III.1).
14. Apart from Slovakia, CEFTA member countries are granted the lowest overall import duty
(Table III.3). Preferences cover mainly industrial products.  Preferential tariffs show higher overall
rates on raw products than on intermediate goods, but lower rates on intermediate goods than on
processed goods.WT/TPR/S/89 Trade Policy Review
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Table III.3
Czech tariff preferences by agreement and import volume, 2001
(Per cent)
Trading partner Share of
total
imports
(1999)Simple
average
tariff rateAgricultural
products
(HS01-24)Industrial
products
(HS25-97)Raw
materialIntermediate
goodsProcessed
goods
Total imports 100.0
MFN trading partners .. 6.1 12.0 (9.2) 4.5 3.1 4.9 7.4
LDC 0.06 0.0 0.0 0.0 0.0 0.0 0.0
GSP .. 5.1 11.8 (9.0) 3.3 3.0 3.8 6.4
EU 64.0 2.3 11.0 (6.9) 0.0 2.7 0.8 3.1
EFTA 2.4 2.4 11.3 (8.6) 0.0 2.9 0.8 3.2
CEFTA
   - Bulgaria 0.1 2.1 9.8 (7.8) 0.0 1.9 0.8 2.9
   - Hungary 1.6 2.0 9.6 (7.3) 0.0 1.8 0.7 2.8
   - Poland 3.5 1.9 8.7 (7.0) 0.0 1.2 0.7 2.6
   - Romania 0.1 2.1 9.9 (8.2) 0.0 1.9 0.8 2.9
   - Slovakia 6.1 0.0 0.0 0.0 0.0 0.0 0.0
   - Slovenia 0.6 2.0 9.6 (7.6) 0.0 1.8 0.8 2.8
Estonia 0.1 2.4 11.3 (8.6) 0.0 2.6 0.8 3.3
Israel 0.2 2.5 11.9 (8.7) 0.0 2.9 0.8 3.4
Latvia 0.0 2.2 10.4 (8.4) 0.0 1.9 0.8 3.1
Lithuania 0.0 2.2 10.4 (8.4) 0.0 2.1 0.7 3.1
Turkey 0.3 2.5 12.0 (8.8) 0.0 2.9 0.8 3.5
.. Not available.
Note: Tariff averages in parenthesis are based on the in-quota rates.  All other tariff averages exclude the in-quota rates and are based
on the out-of-quota rates.
Source: WTO Secretariat, based on information provided by the Czech authorities.
(iii) Tariff quotas and seasonal tariffs in agriculture
15. Tariff quotas are managed by the Czech Republic under three different regimes: (i) tariff
quotas resulting from the WTO Agreement on Agriculture and applied on an MFN basis; (ii) other
temporary tariff quotas applied on an MFN basis; and (iii) preferential tariff quotas agreed under
preferential trade agreements. Tariff quotas resulting from the Uruguay Round apply to 24 product
categories of agricultural and processed agricultural goods (Table AIII.2).  The in-quota rates, allexpressed in ad valorem  rates, are fixed;  they are not lowered in parallel with the annual lowering of
the MFN rates.  Thus, the preferential margin of in-quota tariff rates is being reduced over time.
Under an HS-two digit classification, temporary MFN tariff quotas apply mainly to beverages, spirits,
and vinegar (HS 22).
19  The Czech Republic has introduced a number of preferential tariff quotas as a
result of recently signed preferential trade agreements (Estonia, Latvia, Lithuania, Israel, and Turkey).Preferential tariff quotas cover a larger number of  tariff lines than MFN tariff quotas (Table AIII.2).
The preferential margin (difference between the MFN rate and the lowest possible preferential rate) is
largest for meat and edible meat (HS 02) and live animals (HS 01).
16. The Czech Republic applies a system of seasonal tariffs on 13 categories of agricultural
products.
20  While the product coverage is the same as in 1996, the seasonal tariff range has fallen for
all products in tandem with the overall lowering of the MFN tariff regime.  During the marketing
                                                     
19 However, temporary tariff quotas, resulting from the short-term tariff reductions below the MFN rate
for a limited amount of imports, are not currently in place.
20 Cut flowers; potatoes; tomatoes; cauliflowers and headed broccoli; cabbage and lettuce; rooted or
German celery; cucumbers; emperor grapes; cider apples; perry pears; sour cherries; plums; and strawberries.Czech Republic WT/TPR/S/89
Page 35
period of the year, the seasonal tariff takes on the higher values in the tariff range, while the lower
values apply during the period when local production is not being marketed.
(iv) Tariff concessions and exemptions
17. Under Act No. 13/1993 on Customs, and Ministry of Finance Decree No. 136/1998, the
Czech Republic provides concessional entry within the framework of seven schemes:
− duty-drawback scheme : based on industry-average rates, exporters are eligible for refunds of
duties and domestic taxes paid on imported inpu ts used in manufacturing or processing;
− end-use provision schemes : relief from duty is granted for goods on the grounds of the public
interest of their end use;
− inward processing suspension system :  full relief from import duty is granted for foreign
goods which are to be re-exported after having been processed in the Czech Republic;
− outward processing : the scheme allows full or partial relief from import duty on the imported
products containing Czech goods temporarily exported for the purposes of undergoingprocessing operations;
− other suspensive arrangements : full relief from import duty for foreign goods earmarked for
re-export covering the following procedures: (i) transit, (ii) customs warehousing,
(iii) processing under customs supervision, and (iv) goods that are to be re-exported within a
period of two years in an unaltered state (temporary admission);
− customs-free zone : goods may be placed in the customs-free zones and customs-free
warehouses, regardless of their quantity, origin or destination, including goods subject toprohibitions and restrictions (except those restricted because of veterinary and phytosanitary
reasons, protection of public moral, health, environment, etc.). Any kind of industrial or tradeactivities are permitted in these zones;  and
− other : duty-free imports for foreign country representations, and others enjoying privileges
and immunities under international law (such as international organizations).
21
18. Investors may take advantage of Ministry of  Finance Decree No. 313/1998 Coll., on relief of
machines, machinery equipment, instruments and tools (Chapters 84 and 85 of the Customs Tariff)
from paying customs duty. Importers are eligible for the relief of customs duties and VAT, if theinvestment amounts to more than CZK 10 million, the goods are released for free circulation at least
one year after the date of their production, and a good with comparable characteristics (i.e. the same
eight-digit tariff heading) may not be produced locally.
(v) Balance-of-payments measures
19. Except for a short period in 1997 (21 April to 21 August), when the non-interest-bearing
import deposit equivalent to 20% of the invoiced price of imports was in effect, no measures under
GATT Article XVIII:B have been taken during the review period.  The import deposit scheme was an
integral part of a wide-ranging set of monetary, fiscal, and income-policy measures adopted by the
Government to address the economic situation.
22  During the period under review, the Czech Republic
                                                     
21 Since the previous Review, the customs-free-zone scheme has been introduced and the joint-venture
scheme has been eliminated.  Under the joint-venture scheme, foreign joint ventures with not less than 30% (andnot less than US$1.7 million) foreign ownership were granted a one-year exemption from customs duties on rawmaterials and semi-processed goods.
22 WTO documents WT/BOP/N/19, 29 April 1997 and WT/BOP/N/29, 15 September 1997.WT/TPR/S/89 Trade Policy Review
Page 36
has not imposed any other additional levies or charges on imports that are not imposed on
domestically produced goods.
(vi) Indirect taxation
20. Most imports are subject to ad valorem  value-added tax (VAT), like domestically produced
goods and services, while certain items (such as fuel, tobacco, and alcohol) are subject to additional
excise taxes (Table III.4).  All taxes are applied uniformly on foreign and domestically producedgoods. The VAT system, which is based on the main principles of the VAT legislation of the EU,
provides for a basic rate of 22% levied on most supplies of goods and certain services, while a rate of
5% is levied on most services and some goods. Exported goods and services are zero-rated, while
small firms, financial and social-security services are exempted from VAT (i.e. without the right to
claim the input credit on such supplies).
23  Since January 1998, VAT refunds to foreign taxable
persons are in place as regards international transport (petrol and repairs of motor vehicles),
exhibitions and trade fairs.  Since April 2000, refund schemes have been established for tourists, for
armed forces of NATO member States, as well as foreign taxable persons not established within the
Czech Republic (for the latter only in respect of certain goods). The current system of excise duties
(which are specific rates) in the Czech Republic was introduced at the same time as the VAT system.
Table III.4
Taxes levied on imported and domestic goods and services, May 2001
Base
Tax Product Rate (%) Imports Domestic
Value-added tax
(VAT)Most goods and some services (including
tourism, advertising, intermediary services inwholesale and retail, marketing research, some
production-related services)22% Value of goods for
customs purpose pluscustoms duties, port
and stevedoring fee
(if applicable), levy(if applicable) plus
excise duty (if
applicable)Value of transaction
plus excise duty (ifapplicable)
Foodstuffs, pharmaceuticals, books, newspapers,telecommunications, heating, catering,construction and most services5%
Exported goods and services 0%
Goods and services produced by small firms,
financial and insurance services, goods exempt
from customs dutiesExempt
Excise taxes Petroleum products (hydrocarbon fuels and
lubricants)CZK 8,150-
10,840 per
1,000 litresaRetail price before
VATRetail price before
VAT
Alcohol, wine, beerCZK 24-234
per litre
TobaccoCZK 0.67-
0.79 per
cigaretteb
a CZK 2,850 per tonne of LPG for transportation.
b CZK 855 per kg. of cigarette tobacco for production and CZK 44 per kg. of pipe, snuff, chewing tobacco, and tobacco refuse.
Source : Information supplied by the Czech authorities;  and OECD (2000a), OECD Economic Surveys 1999-2000 Czech
Republic.
                                                     
23 OECD (2000a).Czech Republic WT/TPR/S/89
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(3) IMPORT LICENSING AND CONTROL
(i) Trade prohibitions
21. Under Act No. 62/2000, Coll. (on Some Measures in the Export or Import of Products and on
the Licensing Procedures), imports may be prohibited for a variety of reasons, such as environment,
security, health, public morals or the fulfilment of international obligations.
22. Based on U.N. Security Council Resolutions, the Czech Republic currently maintains trade
embargoes on Afghanistan (air embargo and financial sanctions), Angola (air embargo, oil embargo,
and financial restrictions towards UNITA), Sierra Leone (oil embargo and diamond imports from
non-State source), and Iraq (trade embargo, air embargo, financial embargo, and adjustment of Iraqi
oil trade).  Import bans in the form of safeguard, sanitary and phytosanitary measures are described in
sections (4) and (5), respectively.
23. It has been noted that the import of second-hand cars is contingent upon their compliance
with EU requirements concerning noise and em issions (EURO 1 and EURO 2). Models that do not
comply with those requirements cannot be imported. On the domestic market, only non-complying
second-hand cars that had been previously registered in the Czech Republic may be resold.24  This
measure is applied for environmental and safety purposes.
(ii) Licensing – with and without volume limits
24. The Czech Republic's licensing system has been liberalized during the review period.  As a
result of Act No. 62/2000, Coll. (on Some Measures in the Export or Import of Products and on the
Licensing Procedures), some items have been removed from the list of automatic licensing.  Examples
of these items are:  certain uranium lignite, fuel items of nuclear reactors, wastepaper, and fuel items.
25. Import licences are required for products (of commercial nature) contained in the negative
lists (as published in Government Regulation No. 185/2000 Coll., as amended).  Automatic licensingrequirements exist for imports of a wide range of agricultural and food products, raw materials, semi-
manufactured goods, and industrial products, equivale nt to 73 items at the HS-four digit level
(Table AIII.3).
25 According to the authorities, these rest rictions are for monitoring purposes.  Non-
automatic import licensing requirements (with volume  limits) apply to certain sugar (from Slovakia),
isoglucose (Slovakia), coal, briquettes and similar solid fuels made from coal (Poland and Ukraine).These licences result from safeguard measures or are in place to protect the domestic industry.  Non-
automatic import licences (without volume limits) are also required for the importation of propellant
powders, prepared explosives, safety fuses, detonating fuses, percussion, other telescopic sights,
revolvers and pistols, other firearms, arms, parts and accessories.  These latter restrictions are
motivated by security concerns.
26. Applications for non-automatic licences are to be  submitted to the Ministry of Industry and
Trade; the time allowed for granting a licence is 14 days.  Licences (with volume limits) are granted
on a first-come-first-served basis or allocated among importers taking into account their past imports.
Licences are not transferable.  After the granting of licences, in most cases, imports may be made
within the calendar year.  The reasons for rejection of an application must be explained in writing.Appeals may be made under the Law on Administrative Proceedings (No. 71/1967 Coll.) and
applicants may eventually appeal to the courts.
                                                     
24 European Commission (undated).
25 In most instances, the restriction applies to only part of the four-digit level group.WT/TPR/S/89 Trade Policy Review
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27. Other restrictions apply to trade in military material or reflect international commitments.
Under Act No. 38/1994 (To Regulate Trade in Milita ry Material with Foreign Countries), items such
as certain firearms, ammunition, bombs, torpedoes, rockets, missiles, and fire controls designed for
military use may only be imported against a licence issued by the Ministry of Industry and Trade.
Licences are not issued if this may endanger the foreign policy, trade or security interest of the Czech
Republic.  Under Act No. 21/1997 (on the Control of Export and Import of Goods and Technological
Products Subjected to International Control), impor ts of nuclear, chemical, and biological weapons,
and toxic substances are restricted.
(4) CONTINGENCY MEASURES
(i) Anti-dumping and countervailing measures
28. During the period under review, the Czech Republic has enacted legislation on anti-dumping
(Act No. 152/1997 Coll. on the Protection Agains t Imports of Dumped Products) and countervailing
measures (Act No. 63/2000 on Protection against Subsidized Imports and Amending some Other
Acts).  The key provisions of the procedures related to anti-dumping and countervailing measures are
presented in Box III.1.  The legislation on anti-dumping measures was reviewed in the WTO
Committee on Anti-Dumping Practices in April 1999.26  The recently enacted countervailing
legislation is yet to be reviewed.
29. It remains to be seen whether the Czech Republic will be an active user of its legislation
pertaining to anti-dumping and countervailing m easures.  Since the anti-dumping legislation was
enacted in July 1997, the Czech Republic has initiated two cases. The first investigation was
terminated without final measures (concerning infant milk from Denmark and the Netherlands). The
only measure in force affects imports of salt from Germany.  As at May 2001, the Czech Republic had
neither imposed nor initiated any countervailing measure.
Box III.1:    Key features of the procedures related to anti-dumping and countervailing measures
According to the Czech legislation, an  anti-dumping duty  may be imposed when products are imported at
dumped prices and when such imports are liable to cause injury to the domestic industry.  A dumped
product is considered to be a product with an export price less than the "normal" value of the like product
in the exporting country; the normal value is based on the price paid or payable for the like productintended for domestic consumption in the exporting country.
The Ministry of Industry and Trade (MIT) is in charge of initiating and conducting investigations. It maystart an investigation on the basis of a written complaint or on its own initiative, following an examinationof the degree of support for and opposition to the complaint and written inputs from other relevant bodiesof the state administration. The case is published in the Commercial Bulletin .  An investigation is normally
concluded within one year of initiation (1½ years in special circumstances) and the decision is published in
the Commercial Bulletin .  Interested parties have the right to be heard during the period of investigation.
The duty shall not be higher than the dumping margin found and shall be applied for a maximum period offive years.  However, the MIT may renew the duty for a further period of five years if it is believed thatthere will be continued dumping or injury.  The duty can be less than the dumping margin if such lesserduty would be adequate to remove the injury. A provisional duty can be imposed if certain conditions have
been met (those contained in Article 7 of the “Anti-Dumping Agreement”).  Provisional duties may not
exceed the margin of dumping and shall not be imposed sooner than 60 days after the public noticeindicating initiation of the investigation.  As with definitive duties, decisions on the imposition ofprovisional duties are published in the Commercial Bulletin .  Provisional duties may remain in force for
four months; they are extendable to six or nine months in exceptional circumstances.
Box III.1 (cont'd)
                                                     
26 WTO document G/ADP/M/14, 12 August 1999.Czech Republic WT/TPR/S/89
Page 39
A countervailing duty  may be imposed by the Ministry of Finance (MF) if it has been ascertained that the
subsidized imports cause injury or represent a thr eat to the domestic industry.  The MF may start an
investigation on its own initiative or based on a complaint, following an examination of the degree ofsupport for and opposition to the complaint.   In its investigation, the MF invites written inputs from all
interested parties, including relevant authorities. The MF consults with the competent authorities in thesubsidizing country.  If a mutually agreed solution is not achieved, proceedings are initiated.  The decision
to initiate a proceeding is published in the Commercial Bulletin  and an investigation is to be concluded
within 9 months of initiation (15 months for special cases).  Interested parties have the right to be heardduring the period of investigation. The duty shall not exceed the subsidy provided and the amount that issufficient for eliminating the injury or its threat. The countervailing duty may be applied for a maximumperiod of five years.  If it has been ascertained that the termination of the countervailing duty would lead to
continued injury, the duty will remain in place. Countervailing duties may be either provisional or
definitive.  Provisional duties may be imposed if ther e has been a preliminary finding that the subsidized
imports caused injury, or are a threat to the domestic industry.  The duties may be imposed no sooner than60 days from the initiation of the investigation and for a maximum period of four months.
Appeals  against anti-dumping duties can be made to the MIT.  The appeals for a review must be filed
within 15 days of the publication of decisions in the Commercial Bulletin ;  they do not have a suspensive
effect.  The case may also be brought to the courts.  As at February 2001, one appeal had been made, and
was still under consideration.  Appeals against countervailing duties can be made to the MF.
Source : WTO Secretariat, based on information provided by the Czech authorities;  WTO documents
G/ADP/N/1/CZE/2, 17 September 1998, and G/SG/N/1/CZE/2/Corr.1, 3 May 1999;  and Act
No. 63/2000 on Protection against Subsidized Imports and Amending some Other Acts.
(ii) Safeguard measures
30. The Czech Republic's legislation on safeguard measures (Act No. 62/2000 Coll. on Some
Measures in the Export or Import of Products and on the Licensing Procedures) entered into force in
July 2000.  The legislation was reviewed in the WTO Committee on Safeguards in April 2001.  An
earlier law on safeguards (Act No. 252/1997 Coll. on Ag riculture), which applied only to agriculture,
was also reviewed in October 1999.27  With the enactment of Act No. 62/2000 Coll., paragraph 3 of
Act No. 252/1997 Coll. was repealed.
31. Under the law, a safeguard measure may be imposed if it has been ascertained that a product
is imported in such increased quantities and under such conditions as to cause or threaten to cause
serious injury to the domestic industry that produces the like or directly competitive products or
serious disturbances in any sector of the economy.  Special procedures apply to the imposition of
safeguard measures on textile and clothing products28, and agricultural goods.  A safeguard measure
may also be imposed to protect a developing or "infant" industry against imports of similarcompetitive products.  Furthermore, a measure may be applied if a foreign trade barrier, which is not
in accordance with international trade rules (s uch as the WTO), causes detriment to the domestic
industry or the Czech economy.  The law provides for special treatment of developing countries in the
application of safeguard measures.  Imports from developing countries are exempt from safeguard
measures if their share in the imports of the product concerned into the country taking the measures isless than 3%.  This exemption does not apply if developing countries with individual shares in imports
smaller than 3% collectively account for more than 9% of the imports.  The key provisions of the
procedures related to safeguard measures are presented in Box III.2.
                                                     
27 WTO document G/SG/M/14, 11 February 2000.
28 The Czech Republic retains the right to use the transitional safeguard mechanism of Article 6 of the
WTO Agreement on Textiles and Clothing.WT/TPR/S/89 Trade Policy Review
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32. The Czech Republic has initiated three cases since the enactment of the safeguard legislation.
In 1999, to protect its sugar industry, the Czech Republic introduced a four-year tariff quota for sugar
under the WTO Agreement on Safeguards.  On 1 November 2000, it initiated a safeguard proceeding
on footwear, and on 10 January 2001, some additional sugar products became subject to provisional
safeguard measures.29
Box III.2:  Key features of the procedures related to safeguard measures
A safeguard measure  may be imposed  by the Government upon recommendation by the investigating
authority (Ministry of Industry and Trade – MIT) when a product is being imported into the Czech
Republic in such increased quantities and under such conditions as to cause or threaten to cause a seriousinjury to the domestic industry.  The MIT may start an investigation on its own initiative or based on acomplaint.  In its investigation, the Ministry invite s written inputs from all interested parties, including
relevant authorities.  The initiation of an investigation is published in the Commercial Bulletin .  If the
Government does not decide on the imposition of a safeguard measure within twelve months of its
initiation, the investigation shall be considered to be terminated and a notice shall be published in the
Commercial Bulletin.  Interested parties have the right to be heard during the period of investigation.  The
measure may be applied for a period of four years, extendable to eight years in total.  A provisional dutynot exceeding 200 days can be imposed.
Textile and clothing  products :  A safeguard measure may be imposed on textile and clothing products if it
has been ascertained that the increas ed imports cause serious injury to the domestic industry that produces
similar or directly competitive products.  Such measures can be taken only in respect of textile andclothing products originating in a WTO Member that are not yet integrated into GATT.  If the measure isin the form of a quantitative restriction, the quota shall not be lower than the level of imports during the12-month period terminating two months preceding initiation of an investigation.  The measure may be
applied for three years or until the product has been incorporated, whichever is shorter.
Agricultural and food products:   A special safeguard measure in the form of an additional customs duty
may be imposed on agricultural goods if: (i) the volume  exceeds the "trigger level";  the calculation of the
trigger level is linked to the average of the three preceeding years of imports for which data are available;
or (ii) the price of the imports falls more than 10% below the "trigger price";  the trigger price is
determined as an average of the import price of the agricultural product for the period established by theWTO Agreement on Agriculture.  If the measure has been adopted as a result of the volume exceeding thetrigger level, the additional duty shall not exceed one third of the customs duty in force in the year whenthe additional duty is imposed.  In the case of trigger price, the additional duty shall be set according to the
schedule contained in the Agreement  on Agriculture and may remain in force as long as it is required for
the purpose specified above.
Protection of infant industries:  A temporary defence measure in the form of an increased duty may also
be imposed against preferential imports under region al trade agreements, to protect infant industries or
certain sectors undergoing restructuring or facing serious difficulties.  The duty may not exceed 25% of
the customs value or be applied beyond a transitional period as set by an agreement.
Protection against illicit obstacles to trade:  A measure may be applied if a country maintains a trade
barrier that is not in accordance with international tr ade rules.  The measure, to be taken in accordance
with the WTO rules (if applicable), may be applied to the extent necessary to remove adverse effects
resulting from an illicit trade barrier or the injury caused by it to the domestic industry and for such aperiod as the barrier is maintained.
Source: WTO Secretariat, based on information provided by the Czech authorities;  Act No. 62/2000
Coll. on Some Measures in the Export or Import of Products and on the Licensing Procedures,
and WTO document G/SG/N/1/CZE/3, 3 January 2001.
                                                     
29 WTO document G/SG/N/7/CZE/2, 10 January 2001.Czech Republic WT/TPR/S/89
Page 41
(5) STANDARDS AND TECHNICAL REGULATIONS
Introduction
33. The Czech Republic is harmonizing its standards and technical regulations with those of the
EU.  Towards that end, several new laws have been enacted during the period under review.  As a
result, the testing and standardization process has been simplified.30  Testing is no longer mandatory
for most products.  Instead, the Czech Trade Inspection conducts spot-checks to ensure compliance ofgoods with requirements established either in regu lations or in standards.  Testing remains mandatory
for certain goods, particularly those for which safety is an important issue.  Food products are now
under the regime of voluntary testing, except for infant formula and novel foods, for which prior
approval from the health authority is required.  In its move to harmonize its practices with those of the
EU, the Czech Republic has continued, during the review period, to replace national standards withEuropean standards.  According to the authoritie s, the laws apply equally to domestically produced
and imported goods.
Czech standards and technical regulations
34. The Czech Republic has continued to harmonize its standards and technical regulations with
international standards and regulations, notably those of the EU (Table III.5).   Act No. 22/1997 Coll.
on Technical Requirements for Products (as amended by Act No.71/2000 Coll.) stipulates the
procedures for development and publication of Czech standards, which are voluntary. The Act also
provides for a framework for setting mandatory technical requirements for specific sectors (via
government orders) and for conformity assessment. The development and publication of standards is
under the responsibility of the Czech Standards Ins titute (CSI), while the Czech Office for Standards,
Meteorology and Testing (COSMT) is the coordinating state body in the area of technical
harmonization. By the end of 2000, the Czech Republic had 24,645 standards.  During the periodunder review, the number of standards has increased every year, reflecting the large number of
European standards adopted. By November 2000, the transposition level of standards amounted to
about 90% of the total European standards.  During the same period, the number of national standards
adopted has not kept the same pace.  By December 2000, the number of purely national standards was
the equivalent to 45% of the total number of standards, down from 54% in December 1999.
31  It can
also be noted that the International Organization for Standardisation (ISO) 9000 series is being used
increasingly as evidence of product quality.  For the pu rpose of this review, the authorities carried out
a survey of the mandatory technical regulations in force:  by the end of 2000, 135 were in force, up
from about 100 at the end of 1999.
Quality control35. Quality control in the Czech Republic is regulated under a number of laws, inter alia , Act
No. 634/1992 Coll. on Protection of Consumers;  Act No. 64/1986 on Czech Trade Inspection;  Act
No. 22/1997 Coll. on Technical Requirements for Products (as amended);  and Act No. 59/1998 Coll.
on Liability for Damages Caused by Product Defects.
32   The laws have been amended several times
during the period under review with the aim of linking them with EU Council Directive 84/450/EEC
concerning liability for defective products.
                                                     
30 Bureau of National Affairs (2000a).
31 OECD (2001a).
32 Ministry of Industry and Trade (2000).WT/TPR/S/89 Trade Policy Review
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Table III.5
Czech  technical regulations and standards, 1991-2000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Standards 15,286 15,510 15,789 16,688 17,753 18,685 20,506 21,992 23,636 24,645
- equivalent to ISO/IEC 
standardsa8 241 697 1,448 1,852 2,258 2,556 2,820 3,002 3,296
- equivalent to 
European standards5 10 60 465 1,215 2,279 4,233 5,872 7,805 9,456
T e c h n i c a l  r e g u l a t i o n s . .. .. .. .. .. .. .. . 1 0 0 1 3 5
WTO notifications of
technical regulations.. .. .. .. 14 17 1 8 27 52
.. Not available.
a Not yet transposed at the European level.
Source : WTO Secretariat, based on information supplied by the Czech authorities.
36. Both importers and exporters may market only sa fe products.  The definition of a safe product
is based on the definition provided in EU Council Directive 92/59 EEC. 33  Distributors may not
distribute products that they know do not comply with the safety regulations.
Conformity assessment
37. The majority of products are subject to self-assessment procedures (i.e, performed by the
producers or importers). A number of specified products which "represent a higher degree of danger"to consumers, may be introduced into the Czech market only after conformity assessment performed
by a third party designated by the authorities. The products for which conformity assessment is
mandatory are certain:  simple-pressure vessels, construction products, electromagnetic compatibility
machinery, personal protective equipment, non-automatic weighing instruments, gas appliances, hot-
water boilers, medical devices, potentially explosive atmospheres, lifts, pressure equipment, and radio
and telecommunications terminal equipment.  The Cz ech Trade Inspection is in charge of inspection
for conformity of the manufactured or sold products with the respective standards.
38. The COSMT may recognize foreign documents or foreign marks as a proof of the conformity
assessment, usually based on the principle of reciprocity. In this regard, the Czech Republic has
concluded the Protocol to the Europe Agreement on the Conformity Assessment and Acceptance of
Industrial Products, which was expected to enter into force in July 2001. During the period under
review, mutual recognition agreements (MRAs) for the results of conformity assessments have beenconcluded with five countries – Poland, Russia, Slovakia, Slovenia, and Ukraine – covering
acceptance of test results (all countries) and recognition of certificates (Slovakia).
34
Sanitary and phytosanitary measures
39. Act No. 258/2000 Coll. on Public Health Protection establishes, in alignment with EU
legislation, requirements for products that are subject to hygienic and health testing procedures andapproval by the Ministry of Health.  Currently, only products that may have an impact on health and
that are not regulated by Community law are subject to approval by the Ministry of Health.  These
products are anti-algaecides, disinfectants, insecticides, and foodstuffs for children up to three years
of age.
                                                     
33 A safe product is defined as "any product which,  under normal or reasonably foreseeable conditions
of use for the period of specified or usual serviceability, does not represent any danger, or only a minimumdanger compatible with the use of the product and cons idered acceptable with regard  to the appropriately high
level of protection of the justified concern" (Article 8 of Act on Technical Requirements on Products).
34 OECD (2001a).Czech Republic WT/TPR/S/89
Page 43
40. The main legislation governing phytosanitary measures is Act No. 147/1996 Coll. on
Phytosanitary Care, and for sanitary measures, Act No. 166/1999 Coll. on Veterinary Care.  The State
Phytosanitary Administration (SPA), established on 1 January 1997 under the Act on Phytosanitary
Care, is the main supervising body for quarantine requirements on plants and plant products.  The
SPA replaces the former Plant Protection Administration, and the Division of Means and Methods of
Plant Protection (both within the Central Control and Testing Institute of Agriculture).  The Czech
Agricultural and Food Inspection (and its seven regional offices) supervises the safety and quality of
food.  The testing laboratories of the regional offices are accredited in accordance with European
Standards.35
41. The Czech Republic may impose sanitary and phytosanitary measures in the form of import
bans. Imports bans apply to plants and plant products on which listed quarantine pests occur (insects,mites, and nematodes; bacteria; fungi; viruses and viruses-like organisms; and parasitic plants).
Certain goods have to fulfil special quarantine requirements in order to be allowed entry.
Phytosanitary certificates are required for the importation of certain products such as: living plants
intended for planting; citrus fruits;  potato tubers; isolated bark of specified plants; certain wood; soil
growing medium; seeds and grain of wheat, triticale and rye; certain cut flowers; and other parts ofplants including of maize.  A veterinary certificate is required for the importation of animals,
foodstuffs, and raw materials of animal origin.
42. As of 14 February 2001, the Czech Republic had notified the WTO of a total of 23 measures
– with a peak of 11 in 1996 – for which an international standard, guideline, or recommendation does
not exist or is not substantially the same as the content of the international standard, guideline or
recommendation.
36  Of these measures, four are currently in force. Among them are the import bans
on cattle and certain products originating from cattle (from Belgium, Denmark, France, Germany,Ireland, Luxembourg, Netherlands, Portugal, Spain, and only cattle from Switzerland) and certain
products of mammal origin (EU Member States and Switzerland) taken in relation to bovine
spongiform encephalopathy (BSE).
37  
(6) OTHER MEASURES AFFECTING MARKET ACCESS IN GOODS
43. According to the authorities, the Government does not maintain countertrade arrangements,
has no legislation on local-content or performance requirements that affect manufacturing, and no
longer has state-trading enterprises within the meaning on the Understanding on the Interpretation of
GATT Article XVII.38  At the time of the previous Review of the Czech Republic, the State Fund for
Market Regulation (SFMR) was notified under the aforementioned Article.39  However, after having
reviewed the situation, the author ities came to the conclusion that the SFMR had not fallen under the
working definition of state trading enterprises.  The SFMR regulated the markets of selected products
(such as grain, live cattle, beef and pork meat, butter, and sugar).  In order to achieve price stability,
the SFRM intervened through, inter alia , the setting of the guaranteed (minimum reference) price at
which goods were purchased from producers.  However, the SFMR had no monopolistic or exclusive
position on the market, since other traders remained free to export or import on competitive termsunder normal market conditions.
                                                     
35 European Commission (2000).
36 WTO documents G/SPS/N/CZE/1 through 23.
37 WTO documents G/SPS/N/CZE/14/Rev.1, 8 January 2001, G/SPS/N/CZE/22/Rev.1, 8 January 2001,
and G/SPS/N/CZE/23/Rev.1, 8 January 2001.
38 WTO document G/STR/N/7/CZE, 19 March 2001.
39 WTO document G/STR/N/1/CZE, 12 September 1995.