RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/91
24 October 2001
(01-5182)
Trade Policy Review Body
TRADE POLICY REVIEW
SLOV AK REPUBLIC
Report by the Secretariat
This report, prepared for the second Trade Policy Review of the
Slovak Republic, has been drawn up by the WTO Secretariat on its own
responsibility.  The Secretariat has, as required by the Agreement establishing
the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement
Establishing the World Trade Organization), sought clarification from the
Government of the Slovak Republic on its trade policies and practices.  Any
technical questions arising from this report may be addressed to
Mr. Willy Alfaro (tel.  739 53 72) or Mr. Clemens Boonekamp (tel.  739 52 26).
Document WT/TPR/G/91 contains the policy statement submitted by the
Government of the Slovak Republic.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on the Slovak Republic.Slovak Republic WT/TPR/S/91
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) R ECENT ECONOMIC PERFORMANCE AND OUTLOOK vii
(2) T RADE AND INVESTMENT POLICY FRAMEWORK vii
(3) D EVELOPMENTS TRADE AND TRADE -RELATED MEASURES ix
(4) S ECTORAL DEVELOPMENTS xi
I. ECONOMIC ENVIRONMENT 1
(1) B ACKGROUND 1
(2) R ECENT ECONOMIC PERFORMANCE 2
(i) Fiscal policies 4(ii) Exchange rate and monetary policies 4(iii) Foreign debt and capital flows 6(iv) Structural changes 6
(3) T
RADE PERFORMANCE 8
(i) Trade patterns 8
(4) O UTLOOK 11
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY 13
(1) O VERVIEW 13
(2) I NSTITUTIONAL FRAMEWORK 13
(i) Institutional structure 13(ii) Policy formulation and implementation 15(iii) Transparency and openness of decision making 16(iv) Main laws and regulations 18
(3) D
EVELOPMENTS IN INTERNATIONAL RELATIONS 19
(i) World Trade Organization 19
(ii) Regional agreements 20(iii) Bilateral agreements 26(iv) Unilateral tariff preferences 27
(4) D
EVELOPMENTS IN FOREIGN INVESTMENT 27
III. TRADE POLICIES AND PRACTICES BY MEASURE 31
(1) I NTRODUCTION 31
(2) M EASURES DIRECTLY AFFECTING IMPORTS 32
(i) Customs procedures 32(ii) Tariffs 35(iii) Import surcharge and balance-of-payments measures 43(iv) Indirect taxes, customs fees, and other charges 43
(v) Tariff quotas 44
(vi) Trade prohibitions and sanctions 46(vii) Import licensing and quantitative restrictions 46(viii) Anti-dumping and countervailing actions 47(ix) Safeguard actions 47
(x) Standards and other technical requirements 49WT/TPR/S/91 Trade Policy Review
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(xi) Government procurement 53
(xii) Performance and local-content requirements 54(xiii) State trading enterprises 54(xiv) Measures implemented in exporting countries 54
(xv) Other measures 54
(3) M EASURES DIRECTLY AFFECTING EXPORTS 55
(i) Duties, taxes, and minimum export prices 55
(ii) Export prohibitions, quotas, and licensing 55
(iii) Export subsidies 55(iv) Export finance, insurance, and guarantees 57(v) Export promotion and marketing assistance 58(vi) Customs-free zones 59(vii) Other measures 59
(4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE 59
(i) State aid 59(ii) State-owned enterprises and privatization 66(iii) Competition policy 69(iv) Price controls and price support marketing arrangements 70
(v) Protection of intellectual property rights 71
IV. TRADE POLICIES BY SECTOR 76
(1) O
VERVIEW 76
(2) A GRICULTURAL AND OTHER PRIMARY PRODUCTS 76
(i) Policy and assistance trends 78(ii) Sectoral policies and trade developments 86
(3) M
INING AND ENERGY 90
(i) Mining 90(ii) Energy 90
(4) M
ANUFACTURING 92
(i) Policy trends 92(ii) Sectoral policies and trade developments 93
(5) S
ERVICES 99
(i) Financial sector 100(ii) Telecommunications 104(iii) Transportation 106(iv) Tourism 108
REFERENCES 109
APPENDIX TABLES 111Slovak Republic WT/TPR/S/91
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Page
CHARTS
I. ECONOMIC ENVIRONMENT
I.1 Merchandise trade by partner, 1995 and 2000 9
I.2 Merchandise trade by commodity (SITC-1 digit), 1995 and 2000 10
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
II.1 Ministries responsible for trade in goods 17
II.2 Ministries responsible for trade in services 17II.3 Foreign direct investment, by sector 1999 29II.4 Foreign direct investment, by source 1999 29
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Frequency distribution of MFN tariffs, 1995 and 2001 37
III.2 Applied MFN tariffs 1995 and 2001 and bound rates 2001, by HS section 38III.3 Tariff escalation by 2-digit ISIC industry, 2001 39
IV. TRADE POLICIES BY SECTORIV.1 Sectoral composition of GDP, current prices, 1994 and 2000 77
IV.2 Mesures of agricultural support, 1986-88 and 1995-2000 82
IV.3 Components of agricultural assistance, 1986-88 and 1998-2000 83
IV.4 Agricultural assistance by commodity, 1995 and 1998-2000 85IV.5 Indicators of industrial activity, 1989-98 94
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Main economic and social indicators 1
I.2 Economic performance, 1995-2001 3
I.3 World Bank projections, 2001-05 11
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICYII.1 Main trade-related legislation 18III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Key features of the Slovak MFN tariff structure, 1995-2001 36
III.2 MFN tariffs (simple average) by stage of processing, 1995, 1998, and 2001 38III.3 Seasonal tariffs, 2001 40III.4 Slovak tariff preferences by agreement and import volumes, 2001 41III.5 Usage of agricultural tariff quotas, 1998-2000 45III.6 Usage of export subsidies, 1998 to 2000 56
III.7 State aid, 1999 61
III.8 Domestic support to agriculture, 1996-2000 64III.9 Privatization of natural monopolies, September 1999 68III.10 Summary of intellectual property protection in the Slovak Republic, 2001 72WT/TPR/S/91 Trade Policy Review
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Page
IV. TRADE POLICIES BY SECTORIV.1 Policy measures on agriculture 83
IV.2 Food industry capacity utilization rates, 1999 97
APPENDIX TABLES
II. DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
AII.1 Selected notifications to the WTO by the Slovak Republic, August 2001 113
AII.2 The Slovak Republic's preferential trade agreements 116
III. TRADE POLICIES AND PRACTICES BY MEASUREAIII.1 Average tariffs and bindings, by H.S. chapter 117
AIII.2 Tariff quotas, 2001 121
AIII.3 Import and export licensing, 2001 125
IV. TRADE POLICIES BY SECTORAIV.1 Tariff structure by 4-digit ISIC category, 2001 127Slovak Republic WT/TPR/S/91
Page vii
SUMMARY OBSERVATIONS
1. The Slovak Republic has made
impressive strides in its transformation to a
market economy since its previous Trade
Policy Review in 1995. Economic reform,
including trade and investment liberalization,regained momentum, especially after the late
1990s. Real GDP per capita increased to
US$3,500 in 2000, and social indicators have
improved.  However,  unemployment remains
high at 20%. Rural poverty and regionaldevelopment are still key policy priorities.
2. The restoration of macroeconomic
balance has also contributed to Slovakia's
recent development. Domestic reform,
including economic restructuring, hasimproved Slovakia's economic prospects.  The
private sector now accounts for over 80% of
GDP and has become the main source of
growth.
(1) R
ECENT ECONOMIC PERFORMANCE
AND OUTLOOK
3. Annual GDP growth in Slovakia
slowed to around 2% in 1999 and 2000.  The
previous high growth rates, averaging some
6% a year in 1995-98, had become
unsustainable as the fiscal and external
deficits widened, and monetary policy wastightened to support a fixed exchange rate.  A
currency crisis emerged in 1998, with
confidence in Slovakia's reform sagging, in
part because of the Russian financial crisis.
4. In late 1998, the Slovak authorities
acted by moving to a floating exchange rate
system, tightening fiscal policies, and by re-
emphasizing economic reform.  The budgetary
position remains frail, with the deficit expected
to be in the order of 3.9% in 2001.  Monetarypolicy now targets inflation directly, and
inflation is expected to fall to 6.9% in 2001
from 12% in 2000.
5. Slovakia's economic recovery now
looks promising.  GDP is expected to grow at
over 3% in 2001,  rising thereafter to 4-5% a
year.  Reflecting the improved economicenvironment, inflows of foreign investment
have risen sharply.  Export growth has also
strengthened and external reserves have
rebounded to an import cover level of three
months in 2001, and are expected to rise
further.  However, growth prospects hingecritically on continued successful stabilization
and structural reform, as well as on
favourable external developments.
6. External trade is vital to Slovakia's
recovery.  Export-led growth has beenencouraged by greater access to imported
inputs following trade liberalization.
Merchandise trade increased sharply from
47% of GDP in 1995 to 64% in 2000.  The
European Union (EU) has replaced CEFTAcountries, especially the Czech Republic, as
Slovakia's major trading partner.  In 2000, the
EU accounted for 59% of Slovakia's
merchandise exports and 49% of its imports.
Manufactured products, especially machinery
and transport equipment, accounted for some
two thirds of Slovakia’s exports and imports in2000.
(2) T
RADE AND INVESTMENT POLICY
FRAMEWORK
7. Slovakia's broad trade policy
orientation is towards greater liberalization.Its trade regime is relatively open, apart for
agriculture, which receives special treatment.
Its approach to trade liberalization combines
multilateral, regional and bilateral initiatives.
8. Slovakia is an original member of the
WTO and an observer to the plurilateral
Agreement on Government Procurement.
Slovakia grants at least MFN treatment to all
WTO Members and several other countries
with which it has bilateral agreements callingfor such treatment. All tariffs are bound,
virtually all at the applied rate, thereby
creating a more predictable trading regime.
During the period under review, Slovakia has
continued to undertake obligations within the
multilateral framework.  Tariffs on products
covered by the Information TechnologyAgreement (ITA) are to be phased out by 2002.
Slovakia is also to phase out tariffs (overWT/TPR/S/91 Trade Policy Review
Page viii
five years from 2000) on products covered by
the Pharmaceuticals Initiative.  It extended its
initial GATS commitments on services by
participating in the 1997 WTO negotiations on
basic telecommunications and on financial
services.  Slovakia has regularly notified tradepolicy developments to the WTO.
9. Slovakia's trade and economic reforms
are being driven overwhelmingly by the
objective of readiness for EU accession by
2004.  Trade and economic policies areincreasingly being harmonized with those of
the EU. Negotiations on EU accession
commenced in February 2000;  Slovakia aims
to complete them by end-2002.  Screening of
Slovakia's legislation was essentiallycompleted in 1999, and its third National
Programme for the Adoption of the Acquis was
submitted in May 2001.  As at mid-2001, 19 of
the 29 chapters opened had been provisionally
closed, but sensitive areas remained, such as
agriculture.  The European Commission views
Slovakia as a “functioning market economy”,in which further macro economic and
structural reforms are needed.
10. Liberalization at the regional level has
increasingly dominated Slovakia's trade
initiatives.  Preferential tariff cuts withinregional arrangements exceed multilateral
reductions.  EU industrial products receive
duty-free treatment, and preferential access is
given to agricultural products.  Slovakia's
customs union with the Czech Republicprovides for free trade, subject to certain
exceptions on foodstuffs. Slovakia also has a
free-trade agreement with EFTA member
States, other CEFTA parties, as well as
bilaterally with the Baltic States, Israel, andTurkey. Slovakia expects it will need to adopt
the EU's preferential agreements upon
accession.
11. In 2000 preferential duties averaged
about one third of Slovakia's MFN levels.
Preferential rates differ between products and
across trading partners. Only a small anddeclining share of Slovakia's imports (26% in
2000) originate exclusively in non-preferential
sources.12. EU accession will further deepen
Slovakia's European integration, and promote
economic development.  It offers renewed
opportunities for  comprehensive trade,
investment and other economic reforms. But
EU accession, and regional integration,should not detract from multilateral
liberalization, including of agriculture, which
will continue to be in Slovakia's economic
interests.  This would minimize any possible
trade diversion from EU accession shouldagricultural assistance rise substantially to
higher EU levels as  seems probable.  Any
such trade diversion could undermine
Slovakia's economic efficiency, especially if
sectoral disparities widened betweenmanufacturing and agricultural activities.  It
could also harm third countries, and reduce
the benefits to Slovakia from trade
liberalization by displacing imports from the
most efficient suppliers.
13. Slovakia's GSP scheme for developing
countries exempts many "sensitive" products,such as fertilizers, carpets, and most footwear,
equivalent to over half of tariff items.  Reduced
margins of preference (50%) apply to "less
sensitive" products, covering a further 29% of
tariff items. All least developed countryimports are duty free.  On average, Slovakia's
GSP tariffs are generally much higher than
preferential duties provided to its regional
trading partners.  Slovakia intends to adopt
the EU GSP scheme prior to accession.
14. Foreign investment jumped in 2000 to
10% of GDP (3.5% in 1999).  As an OECD
member, Slovakia provides, with few
exceptions and transitional provisions, equal
treatment of foreign and domestic investors.Only foreign branches in the energy sector are
restricted.  No screening procedures or
foreign equity limits apply, except in a few
service industries, such as air transportation.
Slovakia has progressively extended
incentives, such as tax holidays, to attract
foreign direct investment.  The latest changeswere approved in May 2001.  It is unclear
whether the benefits of such incentives
outweigh their costs.Slovak Republic WT/TPR/S/91
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(3) D EVELOPMENTS IN TRADE AND 
TRADE -RELATED  MEASURES
15. The simple average MFN tariff was
6.1%  in 2001, down from 8% in 1995.  Tariff
dispersion also narrowed.  In 2001,
preferential tariffs (excluding GSP) averaged2%, (the average rate on EU imports was
2.4%).  Tariff surcharges have been applied
widely several times since 1995 for balance-
of-payments reasons, the latest - from mid-
1999 - initially at a rate of 7% butprogressively lowered to 3%, and eliminated
from 2001.  Indirect taxes do not discriminate
against imports.
16. Substantial tariff escalation exists,
especially on "food, beverages and tobacco"and "textile and clothing", with relatively high
tariffs of up to over 100% applying to
foodstuffs.  Most agricultural goods are
protected by relatively high tariffs.  The MFN
average tariff on these goods was 13%,
around three times that for non-agricultural
products (WTO definitions).
17. All tariffs are ad valorem.  However,
tariff transparency is undermined by duty
exemptions, higher seasonal rates on certain
flowers, fruits and vegetables, as well as by
the existence of many different rates, ofteninvolving fractional duties.
18. The new Customs Law of 2001,
aligning Slovakia's customs procedures with
those of the EU, improved customs efficiency,
aided by further computerization usingASYCUDA and the introduction of a
comprehensive risk analysis control system.
19. Remaining formal non-tariff barriers
are relatively few.  Import quotas exist only on
some products, such as shoes (imported fromChina) and sugar, including from the Czech
Republic until end-2002.  Quotas on beer and
non-alcoholic beverages are expected to be
eliminated at end-2001.  Quotas were also
removed on coal, fuels and other products.
The coverage of automatic import licences
was reduced to certain products for statisticaland monitoring purposes, such as foodstuffsand tobacco products,  or for security reasons,
like on explosives and firearms.  Imported cars
older than ten years are prohibited for health
and environmental reasons.
20. Tariff quotas apply on many goods,
especially foodstuffs, beverages and tobacco."First-come, first-served" global MFN tariff
quotas apply to 24 agricultural product
categories to provid e "minimum and current”
market access following tariffication of non-
tariff measures. High in-quota and out-of-quota rates apply on many products, of up to
70% and 125%, respectively.  Many quotas
are substantially under-utilized; average
utilization rates fell from 45% in 1998 to 34%
in 2000.   Temporary MFN tariff quotas withzero in-quota rates also apply on products
considered in short supply.  Preferential tariff
quotas exist in regional trading agreements.
On overlapping products, MFN agricultural
tariff quotas include preferential quota
imports.
21. Many "sensitive" agricultural imports
from the Czech Republic are monitored jointly
under the customs union arrangements.  On
foodstuffs, auto-limitation agreements also
exist between respective producer
associations.
22. Slovakia is harmonizing standards,
technical regulations, and conformity testing
procedures with mainly the EU. Testing and
standardization processes have been
simplified. From 2001, Slovakia's standardsbecame voluntary, unless specified in a
technical regulation.  At end-May 2001, there
were 23,199 standards; 62% were national
standards, 27% European standards, and the
rest international, mainly ISO and IEC.Slovakia intends to have harmonized 80% of
standards with EU norms by 2002.  EU
requirements are applied where different from
international norms. Self-declared
certification by manufacturers and importers
has been introduced.  Several mutual
recognition agreements exist, including withthe Czech Republic and Poland, and between
CEFTA members.WT/TPR/S/91 Trade Policy Review
Page x
23. Slovakia maintains strict quarantine
and other SPS regulations affecting food
imports.  For example, imports of potatoes,
and fruits such as apples and pears, are
subject to rigorous surveillance, based on pest
risk assessments.  Imports of GMO food andmeat treated with growth-promoting hormones
are banned.
24. Slovakia is strengthening competition
legislation along EU lines, with greater
independence given to the AntimonopolyOffice.  Anti-competitive agreements, such as
fixing prices, are banned, as is abuse of a
dominant market position by suppliers not
subject to "substantial" competition.  Mergers
are prohibited if they create or strengthen afirm’s dominant market position which may
reduce competition.
25. The State Aid Office was established
in 2000 to monitor and control state aid to
manufacturing.   State aid that restricts
competition is prohibited, subject to sectoral
exemptions - steel, shipbuilding, automotive,man-made fibre and mining industries - where
it is allowed for certain purposes, such as
industrial restructuring, within set limits.
State aid was estimated by the Office at
Sk 15.2 billion in 1999 (up from Sk 6.8 billionin 1998).  The main beneficiary sectors were
transport and communications.
26. Anti-dumping and countervailing
legislation, administered by the Ministries of
Finance and Economy, respectively, wasadopted in mid-1997.  So far, no actions have
been taken.  Each ministry must request the
Antimonopoly Office's opinion on the effects
on competition of such action.  This explicitly
recognises the anti-competitive effects of anti-dumping and countervailing actions, and may
help limit their misuse.  However, the Office's
exact role on these issues is unclear.
27. Safeguard legislation, also introduced
in 1997 and administered by the Ministry of
Economy, has been used twice.  Additional
tariffs on imported pig meat, applied in May1999, were terminated on schedule within
200 days.  A four-year quota  applies to sugar.Although the Antimonopoly Office must
provide an opinion to the Ministry, its precise
role is ambiguous.  Of 17 requests provided,
ten were on industrial products.  No safeguard
action has been taken on industrial products,
even  on flat rolled iron products from Russiaand the Ukraine where the Office
recommended additional duties.
28. An independent Office of Public
Procurement was established in 2000 to
administer and supervise public procurement,thereby improving transparency.  No price
preferences apply to domestic suppliers.
Tender methods are stipulated in the
legislation.  In 2000, 46% of procurement
contracts were let by open tender.Procurement decisions may be appealed to the
Office, including by foreign firms, and to the
courts.
29. Slovakia has comprehensive
legislation protecting intellectual property
rights and belongs to all major related
multilateral agreements.  It recently ratifiedthe WIPO treaties on Internet Protection and
joined the Patent Law Treaty.  New copyright
legislation, effective August 2000, is to comply
with EU requirements and provide added
protection for digital technologies anddatabases.  Parallel imports are not restricted.
30. Patents, industrial designs, and utility
models are protected.  New legislation is to
apply from end-2001.  Semi-conductor
topographies are protected by separatelegislation, effective June 2000.  Revised trade
mark legislation is due from 2002. Stronger
protection of geographical indications,
including for alcoholic beverages, is expected
from 2003.  Greater powers for customs toseize and destroy illegal imports have
strengthened enforcement, seen as inadequate
by some trading partners.
31. Slovakia does not levy taxes, charges
or other fees on its exports.  It maintains
export quotas on mainly agricultural and iron
and steel products to stabilize the domesticmarket. Automatic export licences apply for
statistical and monitoring purposes to certainSlovak Republic WT/TPR/S/91
Page xi
products, such as raw leather and
pharmaceuticals.
32. Export subsidies, especially on dairy
products and malt, totalled Sk 535 million in
2000, up from Sk 491 million in 1999.
Slovakia’s multilateral export subsidycommitments provide only limited constraint
on their use;  subsidies paid in 2000
represented 65%  of its committed levels.
33. Exporters benefit from finance,
insurance, and guarantees provided by thestate-owned Eximbank in accordance with
OECD rules. Soft "green loans" also assist
exports of agricultural produce, such as fruit
and vegetables.  Several schemes  assist export
promotion and marketing. Exporters maybenefit from tariff suspensions and duty
drawback schemes, as well as from six
customs-free zones.
(4) S
ECTORAL DEVELOPMENTS
34. Agricultural policy is heavily
influenced by EU accession requirements as
Slovakia strives to introduce CAP-consistentmeasures. Agricultural support is a high
government priority for food self-sufficiency.
Agricultural assistance (measured on a PSE
basis) fell substantially to 1% in 1996, before
surging to 27% in 1998, and 22% in 2000.Transfers to farmers totalled Sk 15.6 billion in
2000, mainly funded by taxpayers and
consumers.
35. Farm assistance is increasingly being
delivered by direct support payments (about90% in 2000), mainly related to inputs, area
planted/animal numbers or farm income.
Although Slovakia’s has met its committed
levels of domestic support,  its agricultural
PSE assistance - as measured by the OECD -substantially exceeds its AMS levels.
36. Farm assistance is delivered by way of
tariffs, price support, supply control measures,
credit and input subsidies as well as direct
outlays, including export subsidies.  Assisted
products include sugar, dairying, poultry, and
pigmeat. The Government believes thatagriculture should be fully integrated into the
EU's CAP at similar support levels.  However,
increased agricultural assistance may
undermine economic efficiency by  widening
disparities in Slovakia's assistance structure.
It may also increase Slovakia's agriculturalsurpluses and subsidized exports.
37. Unlike agriculture, Slovakia's
industrial sector is restructuring  due to
greater import competition from trade
liberalization.  Several industries, such asmotor vehicles and primary plastics, have
improved performance based on new export
markets and foreign investment.
38. Privatization remains a key policy
objective to achieve a more competitiveeconomy, including in essential services.
Since 1999, the privatization programme has
been revitalized and made more  transparent.
Natural (or strategic) state-owned monopolies
are no longer excluded from privatization,
except for posts, railways, forestry, and water
supply.  Maximum private ownership limitsapply to a few state-owned enterprises, such
as of 34% in telecommunication, banking, and
insurance markets. Weak institutions, poor
commercial regulations and corporate
governance, hampered restructuring as didnon-commercial privatizations subject to
political interference.  Improved commercial
laws, including revised bankruptcy and
securities regulation, now facilitate more
efficient enterprise restructuring, althoughcommercial courts remain overburdened.
39. Priority areas for divestment have
included financial and telecommunication
services and key utilities, such as electricity
and gas.   The banking sector has beenrestructured, including through capital
injections of Sk 18.9 billion into the three
largest state-owned banks, and a state carve
out of their non-performing loans totalling
Sk 105 billion.  Privatization of these banks is
to be completed by end-2001.  Bank
supervision by the National Bank has alsobeen strengthened, and compliance improved.WT/TPR/S/91 Trade Policy Review
Page xii
40. Foreign bank and, since April 2000,
insurance branches are allowed.  The state-
owned insurance company is to be privatized.
Compulsory third party motor vehicle
insurance is to be de-monopolized from 2002.
New insurance companies can no longer offerboth life and non-life policies from April 2000.
41. Regulatory authorities are being
established in key services to facilitate
privatization, and safeguard competition.
51% of  Slovakia Telecom was recentlydivested overseas, and  a new independent
regulatory body, the Telecommunications
Office, created in July 2000. The sector is to
be further liberalized from 2003 when the state
monopoly over basic telecommunicationsusing the public fixed network is due to end.
The Telecommunications Act of 2000 provides
licensed entrants from 2003 with non-
discriminatory access to the public network
within a reasonable time at a price based on
justified costs.  Universal services are also
stipulated.
42. The transport sector is also being
reformed.  Bus subsidies on routes over
100 kilometres are being terminated.  The
heavily indebted state-owned Slovak Railways
is being restructured into two enterprises in2001.  Freight and passenger services are to
be privatized by 2005.  Passenger subsidies
are to be progressively reduced and
rationalised for loss-making routes.  The
policy to establish a state-owned national aircarrier ceased in January 1999.Cabotage rights, extended on reciprocity
grounds, apply to shipping services in
Slovakia.
(5) T
RADE POLICY AND FOREIGN 
TRADING PARTNERS
43. Slovakia's accelerated economic
transition has intensified its preparations for
EU accession.  This will provide renewed
opportunities and benefits to Slovakia and its
trading partners.
44. Nevertheless, Slovakia will need to
continue balancing the requirements of EU
accession with its participation in the
multilateral trading system.  Liberalization
efforts offer most economic benefits to
Slovakia and its trading partners when theyare mutually reinforcing, and regional
initiatives, like EU accession, do not
undermine MFN  liberalisation.  The most
effective means of ensuring this would be for
Slovakia to extend regional preferences on a
non-discriminatory basis and to secure them
multilaterally.
45. Vigorous pursuit of multilateral trade
liberalization will continue to be in Slovakia's
longer term economic interests, including
post-EU accession when the likelihood of
increased agricultural assistance maygenerate trade diversion concerns.  Slovakia's
trading partners could also facilitate its
successful transition by ensuring non-
discriminatory access to their markets.