Poland WT/TPR/S/71
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) OVERVIEW
1. Poland's goal of accession to the European Union (EU) has been the main factor shaping its
foreign trade policies and orientation in recent years.  This has presented a fresh opportunity for
economic reform and modernization of domestic institutions.  Poland signed an Association
Agreement in 1991, and formally applied for full membership in 1994;  negotiations on joining theEU commenced in 1998.  The accession process has already affected most aspects of Polish trade-
related policies and practices.  Legislation was enacted in several areas, aimed at taking on board the
body of EU laws and regulation, the acquis communautaire .  Poland also maintains close relations
with the Czech Republic, Hungary, and Slovakia through its membership in the Central European
Free Trade Agreement (CEFTA).  More recently, Slovenia, Romania, and Bulgaria have also joined.Poland has recently concluded bilateral free-trade agreements with the Baltic States (Estonia, Latvia,
and Lithuania), Israel, and Turkey. Poland's trade under free-trade agreements accounted for almost
three quarters of its merchandise trade in 1997;  the EU is by far its most important trading partner.
2. Legislation on foreign direct investment has been designed to fulfil European standards;  the
revised law provides for equal treatment of foreign and domestic investors.  The number of sectorssubject to restrictions has been reduced, and the restrictions on land acquisitions by foreigners
relaxed.  Capital flow restrictions have been eased, further enhancing Poland's investment
attractiveness.
3. While the thrust of Poland's trade policy is clearly towards greater liberalization, the trade and
trade-related regime has been characterized by frequent changes in its laws and regulations.  Recent
changes have introduced some trade restrictive measures, including substantive tariff increases.
Frequent changes of regulations can create an element of uncertainty for traders and investors, withpossible detrimental consequences on trade and investment.
(2) T
HE INSTITUTIONAL FRAMEWORK
(i) General framework
(a) Parliament and legislative powers
4. The Republic of Poland returned to parliamentary democracy in 1989, after decades of
socialism.  The 1952 Constitution was replaced by an interim Constitution in 1992 to facilitate
Poland's transition to a parliamentary democracy.  The current Constitution was adopted by
referendum in October 1997.1
5. Parliament is bicameral.  The legislative power in Poland is vested in the Sejm (the lower
house) and the Senate (the upper house).  The Sejm consists of 460 members and the Senate of 100members.  Members of both houses are elected in public elections for four-year terms.  The members
of the Sejm are elected by proportional representation at the national level or within regional
constituencies (requiring a minimum of 5% of votes to obtain seats), while the members of the Senate
are elected by simple majority within voivodships (regions).  In order to guarantee representation for
minorities in the Sejm, there is a provision exempting their lists from the 5% minimum rule.  The twohouses may be dissolved by a two-thirds majority vote in the Sejm.  The President has the power to
dissolve Parliament if it fails to approve the fo rmation of a new Government, or to adopt the Budget
within the prescribed time limit of four months.
                                                          
1 Government of Poland (1997).WT/TPR/S/71 Trade Policy Review
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6. The Constitution grants the Sejm the dominant role  in the legislative process.  The Sejm also
has responsibility over budgetary matters, and passes laws with the support of at least 50% of its
members.  Members of both parliamentary houses, the President, and the Council of Ministers can
introduce legislation, as can citizens through petition to Parliament with a minimum of 100,000
names.  Bills, once passed, must be signed by the President within 21 days and are promulgated in the
Journal of Laws of the Republic of Poland ( Dziennik Ustaw ).  The President may veto laws passed by
Parliament, although this may be overriden by a three-fifths majority in the Parliament. The National
Assembly – comprising both houses of parliament sitting jointly – must pass statutes involving
amendment to the Constitution.
(b) The Executive
7. The President is the supreme representative of the State in both domestic and foreign
relations.  The Constitution vests executive power in the President, elected by universal suffrage for a
five-year term, and the Council of Ministers.  The President designates the Prime Minister, who forms
and heads the Government, and appoints government members.  The Council of Ministers is the head
of the State administration and is responsible for domestic and foreign policy.  It is made up of the
President of the Council (the Prime Minister), vice-presidents, and ministers.
8. The process of approximation of the Polish legal system to EU law, as well as those of
international organizations, was reinforced by the 1997 Constitution.  This states that the Republic of
Poland may, by virtue of international agreements, delegate to an international organization or
international institution the competence of organs of State authority in relation to certain matters.
9. Local authorities have no direct role in trade policy formulation or implementation.  Regional
governments are organized on the basis of 16 voivodships (regions), in which the voivod or local
governor represents the Central Government.2
(c) The Judiciary
10. Judicial power is vested by the Constitution in the courts and tribunals.  Judges are appointed
for an indefinite period by the President on motion by the National Council of the Judiciary.  The
President may block an appointment nominated by the National Council, but cannot appoint as a
judge someone who has not been proposed by the Council.  Poland's highest court is the SupremeCourt.
11. Administrative measures are subject to a code of procedures and are handled by the chief
administrative court and lower administrative courts.  Decisions by these courts may be appealed to
higher courts, including the Supreme Court.  The Supreme Court has developed a body of case law to
safeguard citizens' rights.
12. The Constitutional Tribunal is responsible for ensuring that laws and other legislative Acts
conform to the Constitution.  It also issues legally binding interpretations of the laws.  The Sejm elects
tribunal members for a nine-year term.
                                                          
2 The voivodships are divided into 308 poviats (county-level governments) and 65 urban gminas (larger
towns).  The basic unit of local government is the gmina, of which there are 2,489.  Regional and localgovernments are elected by universal suffrage.Poland WT/TPR/S/71
Page 19
(ii) Economic and trade policy formulation and implementation
13. Poland's economic and trade policy formulation process has changed since the previous Trade
Policy Review in 1992.  The responsibilities of several ministries have been transferred to the
Ministry of Economy, which has become the main policy-setting body in Poland and is now
responsible for trade, economic, and industrial policies.  The scope of the activities of the Ministry of
Economy includes:
initiating the policy and decisions of the Council of Ministers on foreign economic relations,
including the inflow of foreign capital, agreemen ts on mutual protection of investment, tariff
and non-tariff policies, as well as regulating foreign trade;
cooperating with the Ministry of Foreign Affa irs in representing the Government in foreign
economic relations;
undertaking and developing bilateral and multilateral relations, securing improved access to
foreign markets, developing cooperation with appropriate organizations;
initiating and overseeing the implementation of industrial policy, including export policy;
preparing short- and medium-term economic programmes, as well as export-development
schemes and promotional programmes abroad; and
evaluating the economy's situation, including the trends in international trade and the
effectiveness of economic policies.
14. A number of departments within the Ministry are concerned with trade policy. These include
the Department of European Integration and Intern ational Organizations; the Department of Foreign
Economic Relations (bilateral and CEFTA); the Depa rtment of Economic Policy Instruments (tariffs,
quotas, rules of origin); the Department of Goods and Services Turnover Administration (licensing);
the Department of Safeguard Procedures (anti-dumping, countervailing measures, safeguards); theDepartment for Economic Promotion; the Depart ment of Export Control (military and dual-use
products); and the Department of Trade in Services.
15. The Ministry of the Economy plays an important role in economic policy formulation through
the Economic Strategy Department and the Economic Analysis Department.  The Ministry also has
major responsibilities in industrial policy with its Industrial Policy Department and the Craft, Smalland Medium Size Enterprises Department. The En ergy and Environment Department sets guidelines
on energy policy, including prices for electricity and gas, and formulates policies regarding the
environmental impact of the energy sector.
16. Other important ministries in setting trade and economic policies include the Ministry of
Finance and the Ministry of Treasury, the latter having taken over the responsibility for theprivatization programme from Finance in 1997.  The independent central bank, the National Bank of
Poland, plays an important role in managing the country's monetary and exchange rate policies.  It has
the sole right to determine and implement monetary policy and for managing the exchange rate.  The
Bank's overriding statutory objectives are to maintain price stability, while supporting the
Government's economic policies insofar as they do not conflict with this objective. Policy isdetermined by the Monetary Policy Council and is submitted to Parliament annually as part of the
Bank's monetary policy guidelines.  The Council is chaired by the President of the Central Bank, andWT/TPR/S/71 Trade Policy Review
Page 20
consists of other members appointed by the President of Poland and Parliament. 3  Council resolutions
are implemented by the Bank's Management Board. The Bank's statutory responsibility for banking
supervision is handled by its Commission for Banking Supervision.  Its decisions are implemented by
the General Inspectorate of Banking Supervision.
17. Excise and trade taxes are set by the Ministry of Economy in consultation with the Ministry
of Finance, and implemented by the Central Board of Customs.  The Office of Competition andConsumer Protection is concerned with controll ing monopolistic behaviour and protecting consumer
rights.  The Foreign Investment Agency monitors and promotes inward investment.  Other important
bodies involved in formulating trade-related policies include sector-specific ministries, such as the
Ministries of Agriculture and Rural Development; Post and Telecommunications; Transport and
Maritime Economy; Environment; and Culture and National Heritage.
18. Poland has no independent statutory body to review or advise the Government on economic
policies, including the provision of government assistance to industry.  Public research into Poland's
foreign trade polices is conducted by the government-funded Foreign Trade Research Institute.  It
publishes research on Poland's trade policies, including analysis of trade forecasts and surveys of
economic activity.  Much of this material is published in the Institute's annual report.  The WorldEconomy Research Institute at the Warsaw School of Economics also regularly publishes economic
material on the Polish economy, including in its annual International Economic Report on Poland .
19. The Government interacts with the private sector mainly through regular consultations with
the Chamber of Commerce.
(iii) Main trade laws
20. Poland's main laws covering trade and trade-related policies are summarized in Table II.1.
Many laws and regulations have changed considerably since 1992, mainly as part of Poland's processof accession to the EU.  Most of its laws and regulations are being replaced with legislation that is
aligned to EU requirements.
21. The main recent legislative changes include the replacement of the Law on Customs of 1977
with the Customs Code of 1997.  A revised Law on Administering Foreign Trade of Goods and
Services was also introduced in 1997.
                                                          
3 The President of the National Bank of Poland is appointed for a six-year term by the Sejm and can
only be removed for criminal activity or if considered unworthy of occupying such position by the Tribunal ofState.Poland WT/TPR/S/71
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Table II.1
Poland's main legislation related to trade, 1999
Area Legislation
Main trade legislation on exports
and importsThe basic rules and regulations on foreign trade are laid down in the Law on Economic Activity of
1988; the Customs Code of 1977; the Law on Administering Foreign Trade of Goods and Services
and on Special Trade of 1997; the Law on Principles of Special Control of Foreign Turnover in
Goods and Technologies in Connection with International Agreements and Obligations of 1993; theLaw on State Standardization and Supervision of Food and Agricultural products in Foreign
Turnover of 1996.  The Customs Code provides the legal framework for the Polish tariff system,
including rules on the imposition of anti-dumping and countervailing duties, import bans, export
and import licensing, the establishment of export and import quotas and safeguard measures.
Anti-dumping and countervailing
duties and safeguard measuresLaw on Protection Against Importing Goods into the Polish Customs Territory at Dumped Prices of
1997; Law on Safeguards Against an Excessive Importation of Goods  into the Polish Customs
Territory of 1997.
Government procurement Law on Public Procurement of 1994.
Competition Law on Counteracting Monopolistic Practices of 1990;  Law on Preventing Unfair Competition of
1993.
Standards Law on Standardization of 1993.
Sanitary and phytosanitary
measuresLaw on Commercial Inspection of 1958; Law on Inspection of Purchase and Processing of
Agricultural Products of 1970; Law on Health Requirements Towards Food and Alimentation; Lawon Pharmaceuticals, Medical Materials, Pharmacies, Medical Wholesalers and Pharmaceutical
Inspection of 1991; Law on Testing and Certification of 1993.
Intellectual property rights Act on Copyright and Neighbouring Rights of 1994;  Law on the Protection of Topographies of
Integrated Circuits of 1992; Ordinance on the Prot ection of Topographies of Integrated Circuits of
1993;  Law on the Inventive Activity of 1972;  Law on Patent Office of the Republic of Poland of
1962;  Law on Patent Agents of 1993;  Law on Trademarks of 1985.
Special economic zones Law on Special Economic Zones of 1994.
State aid Law on Corporate Income Tax of 1992;  Law on Public Finance of 1997;  Law on Financial
Restructuring of Enterprises and Banks of 1993;  Law on Restructuring of Cooperative Banks andFood Economy Bank 1994;  Laws on Sureties and Guarantees Granted by the State Treasury of
1997;  Law on Adjustment of Hard Coal Mining to Functioning in a market Economy and Special
Rights and tasks of Mining Districts of 1998;  Tax Ordinance of 1997;  Law on Export ContractsInsurance Guaranteed by the Treasury of 1994;  Law on Establishment of Agency for Agriculture
Restructuring and Modernization of 1993.
Privatization Law on Economic Activity of 1988; Law on Commercialization and Privatization of State
Enterprises of 1996;  Law on State-Owned Enterprises of 1981.
Price control The Law on Prices of 1982.
Foreign investment Law on Principles of Conducting Economic Activity in a Small Industry by Foreign Legal and
Natural Persons in the Territory of the Polish People’s Republic; Law on Companies with Foreign
Shareholdings of 1991.
Source : Polish authorities.
(3) TRADE AGREEMENTS AND ARRANGEMENTS
(i) Poland and the EU
22. The most important factor affecting the Polish trading system in recent years has been the
goal of EU membership by 2003.4  Integration within the EU should accelerate economic
development, promote further economic modernization, and increase the country's competitiveness.
Adapting Poland's legal and administrative system to the acquis communautaire  requires profound
changes to Poland's trade and related economic polices, as well as to its legal, administrative, and
institutional structures.  In this respect, Poland will need to adapt about 7,000 Acts and other
                                                          
4 The Polish authorities have set a date of readiness for accession  on 31 December 2002.  While the
EU has set no such date, it has indicated that new members that have fully complied with membershiprequirements may be accepted from 2002.WT/TPR/S/71 Trade Policy Review
Page 22
regulations.  While it has already made considerable progress in aligning many of its trade policies
and measures with those of the EU, major changes are still needed in key areas.  EU accession talks
commenced in March 1998 with the adoption of an Accession Partnership.  So far, Poland has
provisionally completed negotiations on nine legislative chapters of the EU, while six remain open.5
Areas still to be negotiated include agriculture, the environment and freedom of movement of people.
23. Membership of the EU requires comprehensive negotiations to ensure that Poland meets the
Copenhagen criteria for EU enlargement (Box II.1).  Screening of Poland's legislation to compare it
with EU law was completed in November 1999.  A revised National Programme of Preparation for
Membership in the European Union was adopted in May 1999.  The Programme is said to need
greater clarity in a number of areas, such as the free movement of goods, and on how the specific
priorities set out in the Accession Partnership are to be financed.6
24. The European Commission concluded that while Poland was considered to be a functioning
market economy, overall it had not progressed significantly in aligning further its legislation and in
adapting and strengthening the structures required in a large-sized country.  Areas of major concern
included corruption; certification and standardization; state aids, in particular regarding restructuring
of the steel and automobile industries; intellectual property protection, including data security;regional and agriculture policy where, although progress had been made in the veterinary and
phytosanitary acquis , the cost of implementation had not been adequately budgeted, and Poland still
needed to transform its agriculture and fishery policies
7; social fields; customs; and justice.8  The EC
also noted the need to accelerate the privatizat ion and restructuring of the many state-owned
enterprises, and that further alignment was required in public procurement and competition (anti-trust
and mergers) policies.
25. The reforms taking place within the framework of the Europe Agreement and the EU
accession process will continue to have a significant impact on the Polish economy.  Poland has
already achieved a considerable degree of integration with the EU.  Bilateral trade with the EU
already accounts for over two thirds of its trade, and about the same share of inward foreign
investment.  Removing barriers to the movement of goods, services, and factors should further benefit
Poland through increased domestic competition and improved access to the Single Market.
26. Poland's tendency to focus on preferential trade with the EU as well as other regional partners
could nevertheless divert Polish imports away from non-preferential sources.  MFN tariffs in 1999,
for example, were on average almost three times higher than preferential levels.  This could reduce
the economic gains to Poland from trade liberalization if, as a result, its imports are not sourced from
the most efficient world supplier.  The precise impact of EU accession on Poland's trade patternsremains unclear.  Adoption of the EU common external tariff, which would lower substantially
Poland's tariffs overall – falling by as much as two thirds based on 1999 levels – could be expected to
lessen the potential trade diversion induced by Poland's preferential arrangements.  On the other hand,
trade diversion of imports away from non-preferential sources is likely to increase in some important
                                                          
5 Chapters yet to be concluded are culture and audio-visual; company law; free movement of goods;
fisheries; customs union; and competition policy.  Those provisionally closed cover science and research;education and training; small and medium-sized enterprise s; statistics; industrial policy; telecommunications and
information technology; consumer protection and health; external relations; and common foreign and securitypolicy (CFSP).
6 EC (1999).
7 According to the EC, in view of the importance of these sectors to the Polish economy and the EU,
Poland needed to develop a strategy that would facilitate the necessary adjustments in these sectors prior toaccession.
8 EC (1999).Poland WT/TPR/S/71
Page 23
sectors, especially in agriculture, where EU membership would raise protection levels.  Thus,
although Poland's trade-related reforms will continue to benefit third-country traders and investors, its
emphasis on preferential trade liberalization is likely to skew these benefits in favour of regional
trading partners.
Box II.1:  Steps leading up to Poland's EU membership
EU steps towards Poland's membership:   at the 1993 European Council Summit in Copenhagen, Poland
and all other Europe Agreement partners were offered the possibility of EU membership.  The Summit
established broad membership requirements, the so-calle d Copenhagen criteria.  Apart from adopting EU laws
and requirements, the acquis communautaire,  these criteria include: (i) stability of institutions guaranteeing
democracy, rule of law, human rights, and respect for and protection of minorities; (ii) a functioning marketeconomy, as well as the capacity to cope with the competitive pressures and market forces within the EU; and(iii) adherence to the aims of political, economic and monetary union.  The Maastricht Treaty criteria ongovernment deficits, debt, inflation etc., for participation in the Economic and Monetary Union (EMU) are not
part of the Copenhagen criteria.
In April 1994, Poland submitted its formal application for full membership to the EU, and in December 1994,
at the European Council Summit in Essen, a strategy for preparing Central European countries was launched.A White Paper on the internal market, prepared by the European Commission in 1995, identifies the highpriority items in the acquis communautaire  that allow the internal market to function.  The White Paper
proposed a logical sequence for adapting the national legi slation within selected sectors, and highlighted the
requirements of a proper implementation and monitoring of legislation to ensure compliance with EU law.
Moreover, the EU decided to allow for diagonal accumul ation of rules of origin across EFTA, the EU, and the
Europe Agreement countries from 1 January 1997, allowing traders to use originating material from anycountry within the zone to produce an originating product while retaining preferential origin. Poland joinedthis system on 1 July 1997; the delay resulted from the necessity to adjust legislation.  The EU accession talksstarted in March 1998; its final stage, involving the screening of Poland's legislation in order to compare it
with the EU law was completed in November 1999.
Poland's steps toward EU membership:   in January 1997, the Polish Government adopted the National
Strategy for Integration, summarizing the integration measures to be implemented and formulating theadjustment tasks preceding accession.  In June 1998, the Council of Ministers accepted a National Programme
of Preparation for Membership in the European Union (NPPM); an amended version was subsequently
accepted by the Council in May 1999. The NPPM sets the direction of adjustment measures and provides a
schedule for their implementation over the period 1998-2002 within the context of Poland's accession to theEU.  Some of these priorities are of a horizontal nature as they are prerequisites for efficient functioning of theeconomy (e.g. macroeconomic priorities, adjustments in  competition rules, public orders, intellectual and
industrial property law, and company law), whereas others re late to separate sectors (i.e. agriculture, transport,
and fisheries).
Source: EC (1997), Agenda 2000: For a Stronger and Wider Europe, Commission's Opinion on Poland's
Application for Membership of the European Union , Press Release IP/97/660 of 16 July 1997,
Brussels; Foreign Trade Research Institute (1997a), Poland's Foreign Trade Policy 1996-1997 ,
Warsaw; Government of Poland (1999a), Poland - National Programme of Preparation for
Membership in the European Union , modified version, Warsaw, May.
(ii) Poland and the WTO
27. Poland joined the GATT in 1967 and became a founding member of the WTO on
1 July 1995.  The Uruguay Round Agreements were ratified by the President of Poland underWT/TPR/S/71 Trade Policy Review
Page 24
legislative authority granted by Parliament.9  They are part of Poland's domestic legislation, and take
precedence over domestic laws where they do not conform.
28. Poland's main commitments on trade in goods in the Uruguay Round were to:  (i) bind, for the
first time, close to 94% of its tariffs;  (ii) reduce tariffs by 38% on industrial products and 36% on
agricultural goods over six years; and (iii) limit domestic support to agriculture by 20% in value terms
by the year 2000, and cut agricultural export subsidies by 36% in value and 21% in volume.
29. In services, Poland made a number of commitments under the General Agreement on Trade in
Services (GATS).  Its Schedule covers 54 activities (out of a total of 161).10  It made commitments in
ten sectors: business services, communications, construction, distribution, education, environment,
financial services, health care services, tourism, and transport services.11   Poland primarily bound its
existing policy framework for allowing market acces s, rather than making liberalizing commitments
per se .  It subsequently participated in the WTO agreements on basic telecommunications (1997) and
financial services (1997), where it agreed to open its long-distance and international telephone
markets by 1 January 2003, and to improve market access for foreign insurance companies by
allowing them to operate branches as from 1 January 1999.  Foreign banks had been previously
permitted to operate branches in Poland.
30. Poland also participated in the 1997 Informa tion Technology Agreement (ITA); it agreed to
eliminate tariffs by 1 January 2002 on a range of imported information technology products covering
346 (nine-digit) tariff lines, including computers, telecommunications equipment, semiconductors,
software, and scientific instruments.12  Poland is an observer to the plurilateral WTO Agreement on
Government Procurement.
31. The status of Poland's WTO notification obligations is presented in Table AII.1.  As regards
dispute settlement in the WTO, India had requested consultations in April 1996 regarding Poland'spreferential treatment of EU automobiles.  These were concluded on 16 July 1996 when both parties
notified a mutually agreed solution to the WTO Dispute Settlement Body.
13  As a complainant, Poland
is currently involved in two cases:  one concerns the imposition of final anti-dumping duties by
Thailand (a Panel was established in November 1999)14;  and the other, in which Poland is a third
party, concerns patent protection of pharmaceuticals by Canada (a Panel was established in February1999).
15
(iii) Regional agreements
(a) Relations with the European Union
32. Poland signed an Association (Europe) Agr eement with the EU in December 1991, which
became fully effective in February 1994 (Table II.2).16  An Interim Agreement had operated since
                                                          
9 The WTO Agreement was ratified by Parliament in February 1995.  The full text of the Agreement
was published in the Journal of Laws ( Dziennik Ustaw ) No. 98/1995 dated 24 August 1995, pos. 483 (WTO
document G/TBT/2/Add.31, February 1997; and Foreign Trade Research Institute (1996a).
10 GATT (1994).
11 WTO document GATS/SC/71, 15 April 1994.
12 Poland participated in the ITA negotiations as an observer, and signed the ITA in May 1997.
13 WTO document WT/DS19/2, 11 September 1996.
14 WTO document WT/DS122/1, 15 April 1998.
15 WTO document WT/DS114/6, 29 March 1999.
16 A first agreement signed in September 1989, the Trade and Economic Cooperation Agreement,
provided for reciprocal MFN treatment and foresaw the gradual abolition by 1994 of the EC's quantitative
restrictions on imports of Polish origin.Poland WT/TPR/S/71
Page 25
March 1992.  The Europe Agreement aims to establish a free-trade area over a maximum period of
ten years, on the basis of reciprocity by Poland and asymmetry by the EU (i.e. requiring more rapid
liberalization by the EU).  Polish industrial expor ts to the EU have benefited from duty-free treatment
since 1 January 1995, except for coal and steel, and textiles, which have been duty free since 1996 and
1997, respectively.  Poland eliminated tariffs on EU imports of industrial products from
1 January 1999, except for steel, and petroleum products, abolished in 2000, and automobiles, whichare to be removed on 1 January 2002.  Tariffs on some non-industrial products have also been
lowered.  In addition to trade, the agreement covers movement of capital and workers, and the
alignment of Polish legislation and processes to the EU acquis communautaire.
17  The agreement
provides a framework for Poland's integration into the EU.
Table II.2
Poland's preferential trade agreements, 1999
CountryDate of signing
agreementMajor Polish exports and imports covered by the
agreementOther major areas of co-
operation (excluding WTO
commitments)
European Union
(EU)a16 December 1991
(entry into force
1 February 1994)bImports   - phased reduction of duties on industrial
products; duty free by 1 January 1999 (except steeland petroleum products from 2000, and vehicles by
1 January 2002)
Exports  - duty free on industrial products by 1 January
1995; duty free on coal and steel by 1 January 1996;
duty free on textiles by 1 January 1997
Tariff rate quotas on some agricultural productsCompetition; intellectual,
industrial and commercialproperty; movement of
workers; procurement;
standstill and services
European Free Trade
Agreement (EFTA)c10 December 1992
(provisionally
15 November 1993,
entry into force
1 September 1994)Imports  - phased reduction of duties on industrial
products; duty free on industrial products by 1 January
1999 (except steel, petroleum products and
automobiles by 2002)d
Exports  – duty free on industrial products by
1November 1993 (except chemical products to
Norway by the beginning of 1996, tariffs and quotas
on textiles and clothing to Norway by the end of 1997,
and tariffs on oil products to Iceland)
Duty free on some fish, marine and processedagricultural products (bilateral arrangements covering
some agricultural products)Competition, intellectual
property, investment,
monopolies, procurement and
services
Central European
Free Trade
Agreement
(CEFTA)e21 December 1992
(provisionally
1 March 1993, entryinto force
1 July 1994)Phased reduction of duties on industrial products; duty
free on industrial products since 1 January 1999
(except cars by 1 January 2002)dCompetition, intellectual
property, monopolies, and
procurement
Estonia 5 November 1998
(provisionally
1 January 1999)Phased removal of duties on industrial products by
1 January 2002; duty free; tariff quotas on some
agricultural products on exports to Poland (except fishexports – free from 1 January 2000); Polish exports of
agricultural products duty free immediatelyCompetition, intellectual
property, monopolies and
procurement
Latvia 28 April 1997
(provisionally
1 April 1998, entryinto force
1 June 1999)Phased removal of tariffs on industrial products by
1 January 2001 (except cars by 1 January 2002); tariff
concessions on certain agricultural products; forcertain fish products duty free in mutual trade from
1 January 2000.Competition, intellectual
property, monopolies and
procurement
Table II.2 (cont'd)
                                                          
17 Some 30% of the acquis communautaire  is incorporated into the Europe Agreement (Lippert and
Becker, 1998).WT/TPR/S/71 Trade Policy Review
Page 26
CountryDate of signing
agreementMajor Polish exports and imports covered by the
agreementOther major areas of co-
operation (excluding WTOcommitments)
Lithuania 27 June 1996
(entry into force
1 January 1997)Phased removal of duties on industrial products by
1 January 2001 (except cars by 1 January 2002)
Tariff rate quotas on some agricultural productsCompetition, intellectual
property, monopolies and
procurement
Israel 1 July1997
(provisionally1 March 1998,
 entry into force
1 May 1999)Phased reduction on industrial products; complete
elimination by 1 January 2001 (except cars by1 January 2002); tariff rate quotas on some agricultural
productsCompetition, intellectual
property, monopolies andprocurement
Turkey 4 October 1999 Phased removal of duties on industrial goods by
1 January 2002; tariff concessions on some
agricultural productsCompetition, intellectual
property, monopolies and
procurement
a A free-trade agreement with Finland, which became a member of the EU in 1995, has been in place since 1985.b The trade accord replaced a trade agreement from September 1989, the Trade and Economic Co-operation Agreement.  The
agreement provided for reciprocal MFN treatment and foresaw the gradual abolition by 1994 of quantitative restrictions applied
by the Community on imports of Polish origin.
c Member countries are Iceland, Liechtenstein, Norway, and Switzerland.
d Products excluded are products originally falling within Chapters 1-24 in the nomenclature preceding the Harmonized
Description and Coding System (HS), but which were transferred at the time of the introduction of the Harmonized System intoHS Chapters 25-97.  However, the products may be covered by bilateral agricultural arrangements or by the provisions relating t o
processed agricultural products.
e Member countries are the Czech Republic, Hungary and the Slovak Republic (in 1994 as the founding members), Slovenia (since
1 January 1996) and Romania (since 1 July 1997).
Source : WTO Secretariat, based on information provided by the Polish authorities.
33. The Europe Agreement covers a broad range of areas, including18:
on industrial products:  elimination of Polish customs duties on EU imports on 1 January
1999, and by 1 January 2002 for vehicles; elimination of EU tariffs and quantitative
restrictions on imports from Poland on 1 January 1995, except for coal and steel imports,
which became duty free from 1 January 1996 and for textiles from 1 January 1997
(quantitative restrictions were terminated on textiles from 1 January 1998);
on agricultural products:  reciprocal concessions in the form of reduced tariffs on a number of
products and increased quotas; veterinary and phytosanitary protocols being negotiated;
exemptions from the standstill clause for both parties (safeguard, anti-dumping, shortage,
agricultural policy, and balance-of-payments measures) and only for Poland in cases of
protecting infant industries, restructuring or for overcoming social problems;
progressive liberalization in services;
establishment and movement of workers:  since 1 February 1994, national treatment by EU
Member States of Polish enterprises and their operations and gradual national treatment by
Poland of EU enterprises by the end of the transition period (10 years);
public procurement:  since 1 February 1994, Polish companies have had access to public
procurement award procedures in the EU under the same conditions as EU companies; Polish
reciprocity is to be extended during the transition period;
                                                          
18 EU (1998).Poland WT/TPR/S/71
Page 27
competition rules: (agreements between undertakings, practices and abuse of a dominant
position leading to a distortion of competition, as well as state-aid distorting competition)
based on Rome Treaty rules; implementing rules were introduced by the end of 1994;
intellectual, industrial, commercial property:  legislation giving the same protection as in the
EU as of the end of 1996, and adherence to international conventions;
approximation of legislation:  Poland to approximate its legislation to EU legislation with the
EU's assistance; and
cooperation:  economic cooperation covering 23 areas of mutual interest; cultural
cooperation; and financial cooperation, including support through PHARE (Polish-Hungarian
Assistance for Restructuring of Economies).
(b) European Free Trade Agreement (EFTA)
34. Poland and the EFTA member States concluded a free-trade agreement in December 1992.
EFTA countries, comprising Iceland, Liechtenste in, Norway, and Switzerland, account for a small
share of Poland's trade.
35. The Agreement covers mainly trade in industrial products as well as some marine and
processed agricultural products (Table II.2).  EF TA members eliminated most obstacles to Polish
imports upon entry into force of the agreement in November 1993.19  Under Poland's transitional
period, tariff duties and quantitative restrictions on EFTA imports were phased out by 1 January 1999
(except for steel, petroleum products, and automobiles).  In addition, Poland has bilateral
arrangements with individual EFTA members that either remove or lower tariffs on certain
agricultural products.  All export duties were abolished upon entry into force of the agreement.
(c) Central European Free Trade Agreement (CEFTA)
36. Poland, along with the Czech Republic, Hungary and the Slovak Republic, is a founding
member of CEFTA, established in 1992.  Slovenia joined on 1 January 1996; Romania on 1 July
1997; and Bulgaria on 1 January 1999 (Table II.2).  The primary objective of CEFTA is to establish a
free-trade area by 2001, based on a system of bilateral liberalization schedules between members thatadopt a framework of common rules.
37. CEFTA covers all goods (HS Chapters 1-97), except for a few agricultural products.  Some
95% of Poland's total tariff lines are covered by concessions under CEFTA.
20  By 1996, almost 80%
of CEFTA trade in industrial products were free of tariffs.21  By 1 January 1999, tariffs had been
abolished on almost all industrial products, except mainly for certain cars, which are due to beremoved by 1 January 2002.
22  Import quotas on industrial goods are also being phased out.  Poland
undertook to abolish quantitative restrictions on all industrial products by 1997, except for
automobiles and related products, on which quotas will be removed by 2002.
                                                          
19The main exceptions were tariffs maintained by Norway on chemical products until 1996 and, along
with quotas, on textiles and clothing until end-1997; and tariffs on oil products imposed by Iceland.
20 WTO document WT/REG11/9/Add.3, 5 August 1998.
21 WTO document WT/REG11/2, 30 October 1997.
22 Automobiles of 10 years or older and chassis and bodies thereof, utility cars of six years and older,
two-stroke engines for automobiles, and certain automobiles with two-stroke engines (WTO documentWT/REG11/9, 16 February 1998).WT/TPR/S/71 Trade Policy Review
Page 28
38. Although CEFTA does not specifically provide for free trade in agricultural products, parties
have negotiated tariff concessions, subject to quotas, on such goods.  Two tariff reduction schemes
have been applied on agricultural products.  In 1997 tariff preferences applied to four fifths of trade in
agricultural products between the Czech Republic, Hungary, Poland, Romania, and the Slovak
Republic.
39. Poland has been engaged in several disputes under CEFTA since 1997, with Hungary and the
Czech and Slovak Republics, mainly concerning agricultural trade.  Products affected include wheat,
maize, pork, poultry, sugar, certain starch products, and tomato paste.  Poland has invoked safeguard
provisions of CEFTA to temporarily suspend preferential tariffs on these imports in order to protect
domestic producers.
40. The CEFTA countries have also embarked on activities extending the scope of their
cooperation to other issues, including mainly trade in services and capital movements.
(iv) Bilateral agreements
41. Since 1992, Poland has signed bilateral free-trade agreements with the Baltic States (Estonia,
Latvia and Lithuania), Israel, and Turkey.  An agreement has also been negotiated with Croatia, but is
yet to be signed.  These agreements provide for phased reductions of tariff duties on industrial goods,coupled with tariff rate quotas on a number of agricultural products (Table II.2).  In addition, the
agreements include provisions on trade-related areas, including competition, intellectual property,
monopolies, and government procurement.
(v) Generalized System of Preferences (GSP)
42. Poland extends GSP preferences to 45 developing countries with a lower per capita GDP than
itself, and to the 49 least developed countries (LDCs).  Except for certain sensitive items, imports
from developing countries are dutiable at tariff rates equivalent to 70% of the MFN level.  Importsfrom LDCs are duty free.  Sensitive products excluded from the concessional schemes are certain
agricultural, textile, and electronic products; tobacco; cosmetics; cars; and precious metals.  GSP
sources represent a relatively minor share of Poland's imports.
43. Polish exports receive preferential treatment under the GSP schemes of Australia, Canada,
Japan, New Zealand, and the United States.  Although Poland's exports to the EU are eligible forGSP, they enter in accordance with the preferential trade agreement.
(4) F
OREIGN DIRECT INVESTMENT POLICIES
(i) Domestic regime and incentives
(a) Domestic regulatory regime
44. Poland's capacity to attract foreign direct investment has improved considerably in recent
years.  One contributing factor has been the liberalization of policies controlling capital movements as
part of Poland's accession to the OECD in November 1996.  Since 1997, inward foreign direct
investment (FDI) has increased substantially.  Th e stock of FDI in Poland amounted to US$39 billion
at end-1999.  Some 90% is sourced from OECD count ries;  EU members alone account for two thirds
of inward FDI.  Germany is the largest single source, followed by the United States, France, theNetherlands, and Italy.Poland WT/TPR/S/71
Page 29
45. The Polish Agency for Foreign Investment (PAIZ), established in 1992, is responsible for
promoting and monitoring foreign investment in Poland.  It provides foreign investors with
information; matches Polish and foreign partners; organizes meetings of investors; and carries out
promotional activities.
46. The main law on foreign direct investment, the 1991 Law on Companies with Foreign
Shareholders, was amended to fulfil European standards.  Foreign companies are also subject to theCommercial Code of 1934.  The amended law generally provides for equal treatment of foreign and
domestic investors.  Foreign participation by way of limited liability or a joint-stock company is
allowed.  Until 1996, a joint-stock company was required for the operation of sea ports and airports;
dealing in real estate or acting as an intermediary in real estate transactions; in parts of the defence
industry not covered by licensing requirements; for wholesale trading in imported consumer goods;and in providing legal services.  A limited liability company is to exclusively carry out economic
activity, while the establishment of a joint-stock company allows the foreign investor to perform other
activities, including non-profit making activities.
23
47. Foreign investment in some activities is restrict ed or controlled (Table II.3).  Permits from the
relevant authority are required for mineral exploration and processing, as well as for certainmanufacturing activities, including production of alcoholic beverages, tobacco, and pharmaceuticals.
These are granted under the Economic Activity Act.  Special provisions also require foreign investors
to obtain a permit in some other activities, including radio and television broadcasting, brokerage,
buses, and taxis.  Restrictions on land acquisition have been relaxed to allow foreigners to purchase
small parcels of land without needing governmental approval (up to 0.4 hectares within cities or one
hectare within villages). Applications for permits are considered within two months of submission.
The relevant Minister may deny a permit to protect Poland's interests or security, or to protectconfidential material.
48. The only areas closed to foreign investors by law are those concerned with gambling and
lotteries; international telecommunication services of a universal nature for the use of radio and
television broadcasting equipment; telecommunication lines and networks connected directly by
cable, wireless equipment or international satellites to equipment or networks outside Poland; andfishing on inland as well as territorial sea waters.
49. Polish law permits foreign ownership up to 100% of most corporations, but certain controls
remain.  For example, broadcasting legislation restricts foreign ownership to 33%, foreign stakes in
air and maritime transport are capped at 49%, and foreign ownership in telecommunications is limited
to 49% for international and domestic long-distance services (including cellular).
50. Foreign partners in companies based in Poland have a legal right to transfer their profits
abroad.  Until December 1999, this was based on the condition that they presented to their Polish bank
a certificate issued by the authorized auditors of the company's annual financial report.  Similarly,
foreign partners can immediately transfer sums acquired from the sale or annulment of equity or stock
owned, profits from the liquidation of a company, or damages acquired as a result of expropriation orother such measures.
24  The Law on Companies with Foreign Participation guarantees payment of
                                                          
23 A limited liability company may be established by one or more parties and be active in any economic
activities (except banks, insurance companies, and investment funds) with a minimum capital of Zl 4,000, and
must be fully paid up on the incorporation.  The establishment of a joint-stock company requires a minimum ofthree founding members.  The minimum capital requirement is Zl 100,000 and at least 25% of the cash capitalmust be paid up on incorporation (Polish Agency for Foreign Investment, 1999a).
24 Foreign Trade Research Institute (1996b).WT/TPR/S/71 Trade Policy Review
Page 30
compensation to foreign investors, up to the extent of their participation in the assets of a company,
for losses resulting from the nationalization or expropriation of their assets.
Table II.3
Sectors subject to foreign direct investment restrictions, 1999
Sectors Legal source
A. Up to 49% equity participation
1. Air and maritime transport Maritime Code of 1969 and Law of Air of 1962
2. International and domestic long-distance telecommunication services
(including cellular)Law on Communications of 1990
B. Up to 33% equity participation
1. Broadcasting (radio and television)  Law on Communications of 1990
C. Special permit
1. Banking The Banking Law of 1997 The Act on Mortgage Bonds
and Mortgage Banks of 1997(Commission for Banking
Supervision)
2. Insurance Law on Insurance of 1990 (Minister of Finance)
3. Management of seaports and airports Law on Companies with Foreign Participation of 1991
(Minister of Privatization)
4. Arms industry Law on Companies with Foreign Participation of 1991
(Minister of Foreign Economic Relations)
5. Tourism Regulations of the Council of Ministers of 6 February
1976 (Minister of Foreign Economic Relations)
6. Legal counselling Law on Companies with Foreign Participation of 1991
(Minister of Privatization)
7. Trade in wholesale of imported consumer goods As above
8. Culture Regulation of the Council of Ministers of 6 February
1976 (Minister of Foreign Economic Relations)
D. Licensinga
1. Exploration, prospecting for and extraction of common minerals and
mineral raw materials found in waste minerals after mining works and
after mineral dressing processesLaw on Economic Activity of 1988
(Voivode with jurisdiction over the location)
2. Exploration, prospecting for and extraction of basic minerals, bulk
storage of substances in rock mass and storage of waste materials in
mining workshopsLaw on Economic Activity of 1988
(Minister of Environmental Protection, Natural Resources
and Forestry)
3. Manufacturing of and trading in explosives, arms and ammunition Law on Economic Activity of 1988
(Minister of Internal Affairs and Administration)
4. Manufacturing and bottling of wine products Law on Economic Activity of 1988
(Minister of Agriculture and Food Economy)
5. Manufacturing of tobacco products Law on Economic Activity of 1988
(Minister of Agriculture and Food Economy)
6. Air transport and other air services Law on Economic Activity of 1988
(Minister of Transport and Maritime Economy)
7. Maritime transport and management of sea ports As above
8. Railway transport services As above
9. Operation of pharmacies Law on Economic Activity of 1988
(Voivodship Inspector of Pharmaceutical Inspection)
10. Wholesale trading in ready-made medications and pharmaceutical raw
materials intended for production or preparation of medications in
pharmacies; wholesale trading in sanitary articlesLaw on Economic Activity of 1988
(Minister of Health and Social Welfare, Minister of
Agriculture and Food Economy)
11. Packing of and trading in pesticides Law on Economic Activity of 1988
(Voivodship Inspector of State Inspection of Plant
Protection)
Table II.3 (cont'd)Poland WT/TPR/S/71
Page 31
Sectors Legal source
12. Foreign trade in goods and services specified by the Minister of
EconomyLaw on Economic Activity of 1988
(Minister of Economy)
13. Trade in cultural goods created before 9 May 1945 Law on Economic Activity of 1988
(Minister of Culture and Art, Office of the General
Conservator of Monuments)
14. Services in the field of protection of persons and their belongings,
detective services and passport mattersLaw on Economic Activity of 1988
(Minister of Internal Affairs and Administration)
15. Courier services, common postal services consisting of transport and
delivery, in domestic and foreign trading, of letters above 2,000 gr.
weight and registered letters above 2,000 gr.Law on Economic Activity of 1988
(Minister of Communication)
16. Transfer of sound recording or s ound and picture recording onto tapes,
records, cassettes, video cassettes and video recordsLaw on Economic Activity of 1988
(Minister of Culture and Art)
17. Telecommunication services Law on Economic Activity of 1988
(Minister of Telecommunication)
18. Domestic and foreign trading in live game and carcass of slaughtered
animals and their parts; sale of tourist services including hunting
services for foreigners in the country and hunting abroadLaw on Economic Activity of 1988
(Minister of Environmental Protection, Natural Resources
and Forestry)
19. Customs Agency Law on Economic Activity of 1988
(President of the Central Customs Office)
20. International road transport Law on Economic Activity of 1988
(Minister of Transport and Maritime Economy)
21. Manufacturing, processing, storing, distributing, and trading in fuel
and energyEnergy Law of 1997
(President of the Energy regulation Office)
22. Production and distribution of registration plates Law on Economic Activity of 1988
(Minister of Transport and Maritime Economy)
23. Tourist services Law on Economic Activity of 1988
(President of the State Sports and Tourism
Administration)
E. Closed to foreign investors
1. Games of fortune and mutual wagers Law on Games of Fortune and Mutual Wagers of 1992
2. International telecommunications services of universal nature for the
use of radio and television broadcasting equipment, as well as
telecommunications lines and networks connected directly by cable,
wireless equipment or international satellites to equipment or networks
outside PolandLaw on Communications of 1990
3. Fishing on inland waters and territorial sea waters (unless international
agreements provide otherwise)Law on Sea Fishing of 1963
a According to the Government, the majority of licensing requirements are applied to both foreign and Polish investors.
Note: The issuing authority is provided in parenthesis.
Source : WTO Secretariat, based on information provided by the Polish authorities;  Polish Agency for Foreign Investment
(1999b), Concessions and Permits to Carry Out Activity of 1 April 1998, No. 5  [online]. Available at:
www.paiz.gov.pl/07ULGI.htm; and Polish Agency for Foreign Investment (1995), Foreign Investment in Poland ,
Warsaw.
(b) Incentives
51. Poland provides a wide range of investment incentives, such as grants, concessional loans,
loan guarantees, full or partial corporate income tax exemptions, accelerated depreciation, and
exemptions from payment of duties.  Eligibility for investment incentives is at the discretion of the
Minister of Finance.  Foreign investors generally receive the same incentives afforded domestic
investors.  Investment incentives, apart from being fiscally costly, may have the potential to distortWT/TPR/S/71 Trade Policy Review
Page 32
resource allocation and undermine the economy's efficiency by favouring more capital-intensive
activities.  Moreover, frequent changes in the incentives regime may create investor uncertainty.25
52. While most incentives are generally available, specific incentives apply to exporting firms
and to the pharmaceuticals industry.  To qualify for investment incentives, companies must record
profits of 8% of total revenue, or 4% for firms engaged in food processing, construction, fishing, and
tourism, and 2% for waste recycling.
53. Partial corporate income tax exemptions were commonly used to provide investment relief.
These enabled a prescribed amount of investment expenses to be deducted from revenue.  The rates
generally ranged between 10% and 30% of income (Table II.4).  For example, a firm that derived
more than 50% of its profits from exports, or earned export receipts above ECU 8 million, could
deduct investment expenses of 30% of income.  Such exemptions were terminated from1 January 2000, but continue to apply to previously allowed investments until 31 December 2002.
Special incentives are also provided to companies locating in special economic zones.  At a minimum,
foreign investors locating in such zones are offered a tax holiday for ten years (with 50% tax relief for
a further ten years) and accelerated depreciation.  Currently there are 17 such zones.
Table II.4
Reduced corporate income tax exemptions available to foreign investors, 1999
Type of activity Condition Amount to be deducted from revenue
Revenue earned The income/revenue ratio in previous year is not lower
than 8% (2% on procurement of waste; 4% on agricultural
processing, construction, fishery and tourism)Investment expenses up to 10% of income
Investment The subject is commencing his/her activity and the amount
of investment is at least ECU 2 millionInvestment expenses up to 10% of income per
year (beginning in the year of investment)
Export Revenue from export exceeds 50% of the total amount of
revenue in the tax year;  or revenue from export in the tax
year in which the tax payer acquired the right to apply
deductions exceeds ECU 8 millionInvestment expenses up to 30% of income
Licence Purchase and assembly of machinery and equipment
pertinent to the implementation of licenses, patents and
results of domestic research projectsInvestment expenses up to 30% of income
Pharmaceutical industry Purchase and assembly of machinery or equipment
pertinent to starting of production of pharmaceuticalsInvestment expenses up to 30% of income
Waste usage If waste constitutes at least 10% of total raw materials
used in production in a previous yearInvestment expenses up to 30% of income
ISO 9000 Purchase and assembly of measuring-and-control
equipment essential for introduction of ISO 9000 Quality
SystemInvestment expenses up to 10% of income
Employment of
handicapped personsMinimum employment level of 50% and minimum 7% of
handicapped persons employment rateRate varies with the number of employed
handicapped (up to complete  tax exemption)
Note: The total amount of deductions from tax under the first six items may not exceed 30% (25%) in calendar year 1999 (2000).
These tax exemptions were terminated from 1 January 2000 but continue to apply to existing investments until
31 December 2002.
Source : Polish Agency for Foreign Investment (1999), Investment Relieves of 1 January 1999, No. 7  [online]. Available at:
www.paiz.gov.pl/07ULGI.htm.
                                                          
25 According to the Government, at the end of 1999, the incentives system was replaced by a new tax
system.Poland WT/TPR/S/71
Page 33
(ii) International initiatives and agreements
54. Poland has recently concluded many bilateral agreements aimed at protecting foreign
investors.  They generally provide for symmetrical obligations and include such provisions as national
treatment, expropriation and compensation rights, transfer of capital, intellectual property rights, and
settlement of disputes.26
55. In most cases, these agreements are complemented with double taxation agreements, further
enhancing the private sector investment environment.  Poland has concluded agreements with
numerous countries on avoiding double taxation, most of them styled on the OECD model agreement.
All these agreements recognize the principle that the profits of a company are taxed only in thecountry in which the company is based, unless it has a branch located in the country of the partner, in
which case profits earned in that country are taxed there.  Also, profits obtained from international
transport are exempt from taxation "at source".
27
                                                          
26 WTO document WT/WGTI/W/13, 3 December 1997.
27 Foreign Trade Research Institute (1997b).