MOREPRESS RELEASE
EMBARGO:  NOT FOR PUBLICATION UNTIL
1300 GMT 15 MAY 2002
PRESS/TPRB/192
15 May 2002
(02-2688)
SLOVENIA'S REFORM PROGRAMME HAS CREATED A MODERN,
STABLE AND OUTWARD-ORIENTED ECONOMY
The reform programme in which Slovenia embarked since independence in 1991, aimed at
restoring macroeconomic stability and establishing a functional market economy, has created a
modern, stable, outward-oriented economy, well integrated into the world economy, according to a
WTO Secretariat report on the trade policies and practices of Slovenia.  Liberalization of trade and
investment, driven by commitments in the WTO and preparations for accession to the EU, has been amajor feature in this process.
The WTO Secretariat report, along with the policy statement by the Government of Slovenia,
will serve as a basis for the First Trade  Policy Review (TPR) of Slovenia by the Trade Policy Review
Body of the WTO on 13 and 15 May 2002.
The report says that 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 external debt, and moderate inflation and external current
account deficits, increased the resilience of the Slovenian economy to external shocks.
A gradual, but consistent process of structural reforms, including the elimination of 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, the
report adds.  Since 1998, the pace of structural 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 innominal terms) is not out of line with the level in EU countries. Yet, important disparities in regional
development remain.PRESS/TPRB/192
Page 2
MOREThe report also highlights that Slovenia's economy is highly dependent on international trade
and the country is strongly committed to the multilateral trading system.  Slovenia made extensive
commitments upon accession to the WTO (binding 100% of its tariff lines; dismantling non-tariff
barriers; and making specific commitments in two th irds of activities covered by the GATS). 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.  The foreign investment regimeof Slovenia is fairly liberal, with a priori no general restrictions.
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. The report
notes that this gap can undermine the predictability of Slovenia's tariff regime.  Given the largenumber of preferential agreements signed by Slovenia, exclusively MFN rates apply to only 15% of
its imports.
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.  The only remaining quantitativerestrictions per se are those on textiles and clothing, which are to be phased-out under the WTO
Agreement on Textiles and Clothing.
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.While Slovenia's sectoral policies have moved towards greater market orientation, the level of
government assistance in agriculture has been increasing. The share of agriculture to GDP has been
decreasing over the last years (from 5% a decade ago to around 3% in 2000), but there has been an
increase in budgetary allocations to the sector.  Since 1998, Slovenia's agricultural policies have been
aimed at harmonizing support systems with the EU's CAP.
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 inherited from the socialist period, Slovenia's
manufacturing sector has been able to integrate in, and compete with, neighbouring industrial clusters
in the EU. The services sector accounts for more than 50% of Slovenia's GDP. The Government hastaken 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, had began in the late 1990s.PRESS/TPRB/192
Page 3
MORENote to Editors
Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member
countries’ trade and related policies are examined and evaluated at regular intervals. Significant
developments which may have an impact on the global trading system are also monitored. For each
review, two documents are prepared: a policy stat ement by the government of the member under
review, and a detailed report written independently by the WTO Secretariat. These two documents are
then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These
documents and the proceedings of the TPRB’s meet ings are published shortly afterwards. Since 1995,
when the WTO came into force, services and trade- related aspects of intellectual property rights have
also been covered.
For this review, the WTO’s Secretariat report, together with a policy statement prepared by
the Government of Slovenia, will be discussed by the Trade Policy Review Body on 13 and 15 May
2002. The Secretariat report covers the development of all aspects of Slovenia trade policies,
including domestic laws and regulations, the institutional framework, trade policies and practices by
measure, and developments in selected  sectors.
Attached to this press release are the Summary Observations of the Secretariat report and
parts of the government policy statement. The Secretariat and the government reports are available
under the country name in the full list of trade policy reviews at
http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm . These two documents and the minutes of the
TPRB’s discussion and the Chairman’s summing up, will be published in hardback in due course and
will be available from the Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211
Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992 and
1999), Australia (1989, 1994 and 1998), Austria (19 92), Bahrain (2000) Bangladesh (1992 and 2000),
Benin (1997), Bolivia (1993 and 1999), Botswa na (1998), Brazil (1992, 1996 and 2000), Brunei
Darussalam (2001), Burkina Faso (1998), Cameroon (1995 and 2001), Canada (1990, 1992, 1994,
1996, 1998 and 2000), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995 and
2001), Côte d’Ivoire (1995), Cyprus (1997), th e Czech Republic (1996 and 2001), the Dominican
Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991,1993, 1995, 1997 and 2000), Fiji (1997), Finland (1992), Gabon (2001), Ghana (1992 and 2001),
Guatemala (2002), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998),
Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and
1999), Jamaica (1998), Japan (1990, 1992, 1995,1998 and 2000), Kenya (1993 and 2000), Korea,
Rep. of (1992, 1996 and 2001), Lesotho (1998), Macao (1994 and 2001), Madagascar (2001),
Malaysia (1993, 1997 and 2001), Malawi (2002), Mali (1998), Mauritius (1995 and 2001), Mexico
(1993, 1997 and 2002), Morocco (1989 and 1996), Mozambique (2001), New Zealand (1990 and
1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000),
OECS (2001), Pakistan (1995 and 2002), Papua New Guinea (1999), Paraguay (1997), Peru (1994
and 2000), the Philippines (1993 and 1999), Poland (1993 and 2000), Romania (1992 and 1999),
Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995 and 2001), Slovenia
(2002), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka (1995), Swaziland(1998), Sweden (1990 and 1994), Switzerland (1991, 1996 and 2000 (jointly with Liechtenstein)),
Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia
(1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996, 1999 and 2001), Uganda
(1995 and 2001), Uruguay (1992 and 1998), Venezuel a (1996), Zambia (1996) and Zimbabwe (1994).PRESS/TPRB/192
Page 4
MORETRADE POLICY REVIEW BODY
SLOVENIA
Report by the Secretariat – Summary Observations
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 has largely met these objectives, creating a modern, stable, outward-orientedeconomy, well integrated into the world economy.  Liberalization of trade and investment, driven by
commitments in the WTO and preparations for accession to the European Union (EU), has been a
major feature in this process.
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 external debt, and moderate inflation and external current accountdeficits, 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%.
A gradual, but consistent process of structural reforms, including the elimination of 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 of structural 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 the level in EU countries. Yet, important disparities in regionaldevelopment remain.
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 and the 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, electronicsand pharmaceuticals are increasing.
Slovenia's efforts to further integrate in the world economy is reflected in its participation in
various multilateral, regional and bilateral trade initiatives.  Slovenia applied 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 WTO trading
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 aswith Croatia and the former Yugoslav Republic of Macedonia.
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 in two thirds of activities covered by the GATS), and has since joinedPRESS/TPRB/192
Page 5
MOREthe Information Technology Agreement, participated  in the extended WTO negotiations on financial
services, and is in the process of acceding to th e Government Procurement Agreement. Slovenia did
not take any specific commitments in the extended negotiations on telecommunications services, and
maintains some 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.
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 wave of 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,
intellectual property, and other trade-related areas.
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 legal persons alike.
There are, however, some restrictions on foreign inve stment in certain business operations, such as the
military supply industry, gaming, and budget-financed pension and health insurance. In the financial
sector (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 tooffer financial incentives (direct financial assistance and tax incentives) to investment, regardless of
origin (foreign or national).
Participation in the WTO and the process of accession to the EU provide the basis and a
strong anchor for continued trade liberalization in Slovenia. Customs procedures have been
simplified.  The Slovenian tariff has been rationalized, with the elimination of surcharges, theincorporation 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.
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% fornon-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 the uniform rate of 27%, and on the other
hand, of the relatively rapid reduction of applied rates.  This gap can undermine the predictability ofSlovenia's tariff regime: in 2001, the margin was around 13 percentage points, leaving room 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 the gap between applied and bound rates.
Given the large number of preferential agreements of which Slovenia is a member (15,
counting the EU as one), exclusively MFN rates appl y to only 15% of imports.  Slovenia's trade with
its largest trading partners is virtually duty free:  for example, the average tariff on industrial imports
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 the management of hundreds of tariff quotas
(carrying mixed duties), contained in 14 different lists, thereby hampering transparency and theefficient use of Slovenia's scarce administrative resources.PRESS/TPRB/192
Page 6
MOREThe 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.  The only 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 national
standards and technical regulations with internatio nal and EU standards.  Recent amendments to the
government 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
the Plurilateral 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.
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 onagricultural products, are provided 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.
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 intellectualproperty rights, as a result of implementation of WTO obligations and EU accession requirements.
Competition legislation predated the privatization programme, and is written into the Constitution.
Policies and impediments that contributed, 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, and administrativebarriers, were removed in the late 1990s, or are currently under revision.
Despite these efforts, the ratio of FDI to GDP remains well below the average in the region.
Experience indicates that an open privatization 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 an important factor for attractinginvestment. 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.
While Slovenia's sectoral policies have moved towards greater market orientation, the level of
government assistance in agriculture has been increasing. The share of agriculture to GDP has beendecreasing 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 average
producer support estimate (PSE) in Slovenia is high er 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's Common 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 internationalcompetition by a combination of specific border measures (high tariffs and relatively restrictive tariff
quotas).
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 inherited from the socialist period, Slovenia'smanufacturing sector has been able to integrate in, and compete with, neighbouring industrial clusters
in the EU.  The reorientation of trade flows posed major challenges to Slovenian enterprises, inPRESS/TPRB/192
Page 7
MOREparticular the need to upgrade facilities and increase productivity.  This process was particularly
successful in the pharmaceutical, mechanical engineering, and paper and wood industries 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.
The services sector accounts for more than 50% of Slovenia's GDP. The Government has
taken steps to reduce state involvement  in the sector and encourage private investment in severalactivities. 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 the shelter 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. The financial 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 themonopoly 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 and know-how,
and hence from enhanced market-access commitments in the WTO.PRESS/TPRB/192
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MORETRADE POLICY REVIEW BODY
SLOVENIA
Report by the Government of Slovenia – Part IV
Future policy directions and objectives
Slovenia is aiming at becoming an active and successful competitor in the global economy,
whose competitive strengths will be based on high value-added manufacturing and services, quality,innovation and entrepreneurship. Greater international competitiveness, however, is not a goal in
itself. It ensures high economic growth, which in re turn ensures a strong and prosperous country with
high quality of life and social welfare.
The Government is aiming at achieving the above goals with a systematic combination of
structural reforms and short-term macroeconomic policy measures, thus encouraging long-term
development factors. The long-term strategic directions are encompassed in the "Strategy of
Economic Development in Slovenia", "Na tional Programme for the Adoption of the  Acquis " and
"National Development Programme 2001-2006".
Completion of the main structural reforms  is based on: (i) wide-ranging stimulation of
domestic and foreign investment; (ii) increased labour market flexibility; (iii) state aid system in the
direction of incentives for enhancing competitivene ss, promoting small and medium size enterprises
and transfer of modern technology; (iv) streamlining and greater transparency of administrativeprocedures; (v) more effective use of public resources; (vi) increasing the role of the private sector on
a concession basis through an adapted allocation structure.
The Government will continue its efforts to re duce inflation rates. The targeted inflation rate
for 2002 is 6.4 per cent. The aim of the public finance policy is to preserve the share of revenues at
about 42 per cent of the GDP. Through a variety of measures, government spending are to be lower
and more effective. By keeping the government deficit within sustainable limits, public finance policy
will supplement the efforts of other policies striving for stabilisation.
Slovenia is promoting a pro-active industrial policy, which is being implemented through two
interrelated programmes. The "Programme for Entrepreneurship and Competitiveness Promotion
2001 – 2006" consists of horizontal measures to enhance productivity growth, competitiveness at thecompany level, internationalisation of Slovenian en terprises, investment promotion, inter-company
co-operation and cluster development. The "Programme Supporting Structural Adjustment and
Restructuring" of traditional industries is aiming at supporting selected industries in meeting single
market criteria and requirements.
The positive reorientation towards FDIs is reflected in the renewed "Programme for the
Promotion of FDI for the period 2001 – 2004".  This Programme identifies three basic priorities: (i)
lifting of administrative barriers to investment, (ii)  improvement of the supply of industrial sites and
(iii) creation of an internationally comparable system of non-refundable incentives.
The affirmation of Slovenia as a springboard for doing business in the successor countries of
the former Yugoslavia does provide an opportunity of increasing future FDI inflows into Slovenia as
south-east Europe is gradually integrating into the European integration process and Slovenia is
already an important investor in the region.PRESS/TPRB/192
Page 9
The Government has primarily a role of a "catalyst" in enhancing development process. State
policies are to maintain competitive and open markets. Responsibility of the structural adjustment
remains with the enterprises. State interventions ar e organised in integral approaches and carried out
in a cost effective manner.
Accession to the EU is perceived not only as a process of regional integration but also an
important step forward in the globalisation of Slovenian economy.  Slovenia expects to complete theaccession negotiations by the end of 2002 and to become a full member of the EU in the year 2004.
END