Commission Opinion on Poland's application for Membership of the European Union
Date: 1997-07-15
Institutions: DG IA – External Relations: Europe and the New Independent States, Common Foreign and Security Policy and External Missions, European Commission
Subjects: EU relations, Poland, accession to the European Union, convergence criteria, economic analysis, economic situation, political situation

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

Brussels,  15.07.1997 
COM(97)  2002  final 

Commission Opinion 

on Poland's Application 

for Membership of the European Union 

Contents 

A.  INTRODUCTION 

Page 

(a)  Preface 

The Application for Membership 
The Context of the Opinion 
The Contents of the Opinion 

(b)  Relations Between the European Union and Poland 

Historical and Geopolitical Context 
Poland's Position Concerning the European Union 
Contractual Relations 
The Pre-Accession strategy 
Trade Relations 
General Evaluation 

B.  CRITERIA FOR MEMBERSHIP 

1.  Political Criteria 

1.1  Democracy and the Rule of Law 

Parliament and Legislative Powers:  Structure 
Functioning of Parliament 
The Executive:  Structure 
Functioning of the Executive 
The Judiciary:  Structure 
Functioning of the judiciary 

1.2  Human Rights and the Protection of Minorities 

Civil and Political Rights 
Economic, Social and Cultural Rights 
Minority Rights and the Protection of Minorities 

1.3  General Evaluation 

2.  Economic Criteria 

2.1  The Economic Situation 

Background 
Liberalisation 
Stabilisation of the Economy 
Structural Change 
Financial Sector 
Economic and Social Development 

2.2  The Economy in the Perspective of Membership 

Introduction 

The Existence of a Functioning Market Economy 
The Capacity to Cope with Competitive Pressure and Market Forces 
Prospects and Priorities 

2.3  General Evaluation 

3.  Ability to Assume the Obligations of Membership 

3.1  Internal Market Withou_t Frontiers 

The Four Freedoms 

- General Framework 
- Free Movement of Goods 
- Free Movement of Capital 
- Free Movement of Services 
- Free Movement of Persons 
- General Evaluation 

Competition 
3.2  Innovation 

Information Society 
Education, Training and Youth 
Research and Technological Development 
Telecommunications 
Audio-visual 

3.3  Economic and Fiscal Affairs 

· Economic and Monetary Union 

Taxation 
Statistics 

3.4  Sectoral Policies 

Industry 
Agriculture 
Fisheries 
Energy 
Transport 
Small and Medium Enterprises 

3.5  Economic and Social Cohesion 
Employment and Social Affairs 
Regional Policy and Cohesion 
3.6  Quality of Life and  Environment 

Environment 
Consumer Protection 
3.7  Justice and Home Affairs 
3.8  External Policies 

Trade and International Economic Relations 
Development 
Customs 
Common Foreign and Security Policy 

3.9  Financial Questions 
Financial Control 
Budgetary Implications 

iii 

4.  Administrative Capacity to Apply the Acquis 

4.1  Administrative Structures 
4.2  Administrative and Judicial Capacity 
4.3  General Evaluation 

C.  SUMMARY AND CONCLUSION 

Annexes 

Composition of Parliament 
Single Market:  White Paper Measures 
Statistical Data 

iv 

SWEDEN 

GERMANY 

RUSSIA 

BELARUS 

UKRAINE 

FRY 

. 

. . . . .  

·: .BlJ~~.~~1.A. 

A. INTRODUCTION 

a)  Preface 

The Application for Membership 

Poland presented its application for membership of the European Union on 5 April  1994, 
and the Council of Ministers decided on  18  April  1995  to implement the procedure laid 
down in Article 0  of the Treafy, which provides for consultation of the Commission. 

That is the framework in which the Commission submits the present Opinion, responding 
to  the  request  of the  European  Council  in  Madrid  in  December  1995  to  present  the 
Opinion  as  soon  as  possible  after  the  conclusion  of the  Intergovernmental  Conference, 
which commenced in March 1996 and concluded in June  1997. 

The Context of the Opinion 

The  Polish  application  for  membership  is  being  examined  at  the  same  time  as 
applications  from  nine  other  associated  countries.  Poland's  accession  is  to  be  seen  as 
part  of  an  historic  process,  in  which  the  countries  of  Central  and  Eastern  Europe 
overcome the division of the continent which has lasted for more than 40 years,  and join 
the area of peace, stability and prosperity created by the Union.  · 

The European Council in Copenhagen in June 1993 concluded that: 

"The  associated  countries  in  Central  and  Eastern  Europe  that  so  desire  shall  become 
members of the Union.  Accession will take place as  soon as a country is able to assume 
the  obligations  of  membership  by  satisfying  the  economic  and  political  conditions. 
Membership requires: 

that  the  candidate  country  has  achieved  stability  of institutions  guaranteeing 
-
democracy,  the  rule  of  law,  human  rights  and  respect  for  and  protection  of 
minorities; 

the  existence  of a  functioning  market economy,  as  well  as  the  capacity  to  cope 

-
with competitive pressure and market forces within the Union; 

- the  ability to  take on the obligations of membership,  including adherence to  the 
aims of political, economic and monetary union. 

The  Union's  capacity  to  absorb  new  members,  while  maintaining  the  momentum  of 
European integration, is also an important consideration in the g~neral interest of both the 
Union and the candidate countries". 

This  declaration  spelled  out  the  political  and  economic  criteria  for  exammmg  the 
accession requests of the associated countries of Central and Eastern E~rope. 

The European Council in Madrid in December  1995  referred to the need,  in the  context 
of the  pre-accession  strategy,  "to  create  the  conditions  for  the  gradual,  harmonious 
integration of the applicant countries, particularly through: 

-

-

-

the development of the market economy, 

the adjustment of their administrative structure, 

the creation of a stable ec~momic and monetary environment". 

In  its  Opinion,  the  Commission  analyses  the  Polish  application  on  its  merits,  but 
according to the same criteria as the other applications, on which it is delivering Opinions 
at the same time.  This way of proceeding respects the  wish,  expressed by the European 
Council in Madrid, to ensure that the applicant countries are treated on an equal basis. 

In  addition  to  the  individual  Opinions  the  Commission  is  presenting  separately  to  the 
Council, in the framework of its communication "Agenda 2000", a general assessment of 
the  accession  requests,  and  its  recommendations  concerning  the  strategy  for  successful 
enlargement of the Union.  At the same time,  it is presenting an evaluation of the impact 
of enlargement on the Union's policies. 

The Contents of the Opinion 

The structure of the Opinion takes account of the conclusions of the European Council in 
Copenhagen. It: 

- describes the relations up  to  now between Poland and the Union,  particularly in 
the framework of the association agreement; 

- analyses  the  situation  in  respect  of the  political  conditions  mentioned  by  the 
European Council (democracy, rule oflaw, human rights, protection of minorities); 

- assesses  Poland's situation and  prospects  in respect  of the  economic  conditions 
mentioned  by  the  European  Council  (market  economy,  capacity  to  cope  with 
competitive pressure); 

addresses  the  question  of  Poland's  capacity  to  adopt  the  obligations  of 
membership,  that  is  the  acquis  of  the  Union  as  expressed  in  the  Treaty,  the 
secondary legislation, and the policies of the Union; 

- makes finally a general evaluation of Poland's situation and  prospects in respect 
of the conditions for  membership of the  Union,  and a recommendation concerning 
accession negotiations. 

In  assessing  Poland  in  respect  of the  economic  criteria  and  its  capacity  to  assume  the 
acquis,  the  Commission  has  included  a  prospective  assessment;  it  has  attempted  to 
evaluate  the  progress  which  can  reasonably  be  expected  on  the  part  of Poland  in  the 
coming  years,  before  accession,  taking  account  of the  fact  that  the· acquis  itself will 
continue  to  develop.  For  this  purpose,  and  without  prejudging  the  actual  date  of 

2 

accession,  the  Opinion  is  based  on  a  medium-term  time  horizon  of approximately  five 
years. 

During  the  preparation  of  the  Opinion,  the  Commission  has  obtained  a  wealth  of 
information on Poland's situation from the Polish authorities, and has utilised many other 
sources  of  information,  including  the  Member  States  and  numerous  international 
organisations. 

(b)  Relations Between the European Union and Poland 

Historical and Geopolitical Context 

Poland  runs  from  the  Baltic  Sea  to  the  Carpathian  Mountains,  with  an  area  of 
312 680 km2  (making  it  the  ninth  largest  country  in  Europe)  and  a  population  of 38.6 
million.  It  shares  frontiers  with  seven countries:  Slovakia,  Russia,  Lithuania,  Belarus, 
Ukraine, the Czech Republic. and Germany. 

· 

Tradition  dates  the  foundation  of Poland  to  966  when  the  Prince  of Polanie  (the  plain 
dwellers) converted to  Christianity.  In the  15th century  Poland became a royal  republic 
with  elected  monarchs.  During  the  following  centuries  it  developed  its  political  and 
cultural  links  with  western  Europe;  but  in  the  17th  and  18th  centuries  the  kingdom 
declined.  From  1795  onwards  Poland  was  divided  between  the  Russian,  Prussian  and 
Austrian Empires. 

After  the  First  World  War  the  Republic  of Poland  was  founded  as  a  parliamentary 
democracy.  In  1939  Poland  was  again  partitioned  and  annexed  by  Germany  and  the 
Soviet Union.  After the Second World War Poland again recovered its independence.  Its 
redrawn  borders  included  previously  German  territory.  Poland  came  under  the  Soviet 
Union's sphere of influence and control with a Communist constitution and government. 
During  the  Communist  regime  protests  at  the  loss  of political  and  economic  freedoms 
were violently suppressed, notably in 1956 and  1970. 

Opposition to  the  regime  grew  after  the  Gdansk  strikes  of 1979.  A  period  of political 
upheaval led to  declaration of martial law on 13  December 1981.  This remained in force 
until  June  1983.  Pressure  for  economic  and  political  change  continued  throughout  the 
1980s.  In  September  1989  Solidarity became the dominant force  in .. government for  the 
first  time,  under Prime  Minister Mazowiecki;  and  the  following  year Lech Walesa was 
elected  President.  Free  parliamentary  elections  were  held  in  1991  and  1993.  In  1995 
President Walesa was succeeded in office by President Kwasniewski. 

Poland's Position Concerning the European Union 

Integration  into  Western  political  and  security  structures  has  been  the  main  goal  of 
successive  Polish  governments  since  1989.  Membership  of  the  EU  remains,  as 
confirmed  again  by  the  government  on  30  April  1996,  a  strategic  objective  of Polish 
foreign policy.  Poland made its application for EU membership on 5 April  1994. 

Poland's commitment to  integration was  underlined in  President Kwasniewski' s address 
at the College of Europe in Natolin on 6 November  1996:  "the transformation in Poland 

3 

launched  after  the  historic  breakthrough  in  1989  consists  not  only  in  reform  of the 
economy  but  also  in  opening  up  to  the  world.  Openness  is  the  historical  tradition  of 
Poland.  Participation in the  natural  integrative processes  of our continent is  part of our 
understanding  of Polish  sovereignty.  For  us,  the  prospect  of European  integration  is  a 
historic challenge.  We are thinking not only of the benefits we will  gain from  accession 
to  the European Union.  We  are  also  aware  of the  obligations  incumbent upon  us  from 
our role in the unification of the continent". 

Contractual Relations 

Diplomatic  relations  between  the  EU  and  Poland  were  first  established  in  September 
1988.  A Trade and Cooperation Agreement was signed in September  1989.  This was a 
non-preferential  agreement  providing  for  reciprocal  Most  Favoured  Nation  treatment, 
which foresaw  the  gradual  abolition  by  1994  of quantitative  restrictions  applied  by  the 
Community on imports originating in Poland. 

An Association Agreement, to be known as  a Europe Agreement,  between the European 
Communities and  Poland was  signed on  16  December  1991  and  entered  into  force  on  1 
Its  trade  provisions  had  already  entered  into  force  on  1  March  1992 
February  1994. 
under  an  Interim  Agreement.  This  provided  for  the  consolidation  of  earlier  trade 
concessions  as  well  as  the  gradual  and  asymmetrical  establishment  of a  free  trade  area 
over ten years. 

The -Europe  Agreement  is  now  the  legal  basis  of Poland's  relations  with  the  European 
Union.  Its aim is to provide a framework for political dialogue, promote the expansion of 
trade  and  economic  relations  between  the  parties,  provide  a  basis  for  Community 
technical  and  financial  assistance  and  an  appropriate  framework  to  support  Poland's 
gradual  integration  into  the  Union.  The  institutional  framework  of  the  Agreement 
provides  a  mechanism  for  implementation,  management  and  monitoring  of all  areas  of 
relations.  Subcommittees  examine  questions  at  a  technical  level.  The  Association 
Committee,  at  senior  official  level,  provides  for  discussion  of issues  and  often  finds 
solutions  to  problems  arising  under  the  Agreement.  The  Association  Council,  at 
Ministerial level, examines the overall status of relations and provides the  opportunity to 
review Poland's progress in preparing for accession. 

To  improve  implementation  of the  Europe  Agreement  and  the  development  of pre 
accession  policy,  the  government  reorganised  its  structures  in  October  1996.  A 
Ministerial Committee of European Integration, chaired by the Prime Minister, has policy 
coordination  and  steering  functions  and  decision-making  powers  on  integration  issues. 
The  Office  of  the  Committee  for  European  Integration  now  screens  all  legislative 
proposals for compatibility with EU legislation. 

In  early  1997,  Poland  published  a  National  Integration  Strategy  setting  out  a  plan  for 
preparing for accession to the EU.  The document emphasises the importance of a number 
of key  pre-accession  policies  and  identifies,  in  particular,  some  five  sectors  in  which 
Poland  considered  that  it  would  need  to  benefit  from  transitional  periods  before  full 
application of the acquis. 

4 

The Pre-accession Strategy 

Imvlementatjon of the Eurove Agreement and the  White Paper 

The  institutional  framework  of  the  Europe  Agreement  is  fully  operational.  The 
Association  Council  has  met four  times.  There  have  also  been regular  meetings  of the 
Association Committee and a number of sectoral subcommittees and working groups.  A 
Parliamentary  Committee  has  met  seven  times  to  link  members  of the  European  and 
Polish parliaments.  Establishment of a Joint  Committee  dealing  with  issues  relating  to 
the Economic and Social Committee's responsibilities is being actively considered. 

Activity  under  the  Europe  Agreement  is  intense  in  all  areas  of cooperation  due  to  the 
volume  of  trade  flows  and  the  increasing  familiarisation  of  ministries  with  trade, 
economic  and  approximation requirements.  Pending  adoption  of an  additional  Protocol 
(which  has  been  initialled),  autonomous  measures  have  been  adopted  for  agricultural 
products,  textiles  and  fisheries  in  order  to  adapt  tµe  Europe  Agreement  to  the 
enlargement  of  the  Union  as  well  as  to  the  conclusions  of  the  Uruguay  Round. 
Implementing  rules  on undertakings  and  state  aid  have  been prepared.  A  new Protocol 
on rules of origin will allow for pan-European cumulation of rules of origin. 

There  have  been  a  number  of implementation  difficulties  in  the  trade  field,  notably 
regarding  the  Polish  import  surcharge,  certification,  steel  industry  restructuring,  motor 
vehicle  sector measures,  measures  in the  oil  sector  and  export restrictions  on hides  and 
skins.  Despite their sensitivity and complexity, solutions have been found or are pending 
to these problems.  In the case of hides and skins, the dispute settlement mechanism was 
initiated but a solution was found before arbitration was formally started. 

The  Commission's  White  Paper  of 1995  on  the  Internal  Market  set  out  the  legislation 
which the candidate countries  would need to  transpose  and  implement in order to  apply 
the acquis communautaire, and identified elements essential to  the implementation of the 
single market (known as  Stage  I measures)  which  would  need priority attention.  Poland 
has attached importance to this work.  Each Ministry has been required to  establish an EU 
Integration  Unit;  29  working  groups  have  been  set  up  to  work  on  pre-accession 
implementation;  and Poland published in  1996 a series of legal studies outlining its path 
to approximation. 

Annual  programmes  of  approximation  have  peen  prepared  since  1994,  and  a  first 
schedule  of  White-Paper-related  actions  was  presented  to  the  Commission  in  1996. 
Progress  has  been  achieved  in  the  areas  of agriculture,  transport,  banking,  securities, 
indirect taxation and excise. 

The  Europe  Agreement  is  being  implemented  for  the  most  part  according  to  the 
procedures  and  timetable  set  out  in  it.  Poland  shows  a  realistic,  open  and  constructive 
attitude  to  solving  problems  which  arise,  and  an  awareness  of  the  dangers  of 
protectionism and of the importance of tackling difficulties through negotiation. 

Structured Dialogue 

Poland  has  participated  in  the  Structured  Dialogue,  seeing  it  as  a  priority  in  its  foreign 
policy.  Poland  has  submitted  background  documents  for  a  number  of  Structured 

5 

Dialogue  meetings,  and  has  made  proposals  to  improve  the  dialogue  and  to  ensure 
continuity through a  sharper focus  on accession-related agenda items.  In the  context of 
the structured dialogue Poland has played a significant role in work to recreate stability in 
former Yugoslavia. 

Poland's allocation for  1996 was ECU 203  million, and for  1990-96 overall nearly ECU 
1.4  billion.  The  main  sectors  are:  agriculture,  restructuring  and  privatisation,  finance 
and  banking,  infrastructure,  social  programmes  and  environment.  For  cross-border 
programmes  PHARE  has  committed  a  total  of-ECU  165  million  to  support  projects  in 
transport,  environment,  utilities  and  economic  development  in  border  regions  with 
Germany, Denmark, Sweden and Finland. 

Initially,  PHARE  had  implementation· difficulties  in  Poland,  because  of organisational 
problems  in  the  responsible  ministries  and  a  lack  of  delivery  mechanisms.  But 
implementation improved considerably in  1995 and  1996, with an overall contracting rate 
of 75% achieved by April  1997. 

Particivation in Community Programmes 

An  additional  Protocol  to  the  Europe  Agreement  allows  for  Poland's  participation  in 
It  is  envisaged  that  Poland  will  participate  in  Leonardo, 
Community  programmes. 
Socrates and Youth for Europe as from  1997. 

Trade Relations 

Poland is the seventh trade partner of the Union.  Since  1989 EU exports to  Poland have 
increased  by  more  than  300%,  and  amounted  to  ECU  15  billion  in  1995.  EU  imports 
from  Poland increased by  more than 200% over this period,  and  amounted to  ECU  12.2 
billion in  1995.  The EU had a trade surplus of ECU 2.8  billion in  1995.  Machinery and 
electrical  goods  were  the  most  important  EU  exports,  providing  27%  of  the  total. 
Poland's  most substantial  export to  the  EU  was  base  metals,  which  represented  1 7%  of 
the total.  Poland's trade deficit with the EU reflects its re-equipment needs. 

In 1995  70% of Polish exports went to the EU and 65% of its imports came from the EU. 
After  an  initial  period of decline,  Polish trade  with  its  central  European  neighbours  has 
recovered and represented  more than 17% of exports and  15% of imports in  1995.  Trade 
with Russia represented  nearly  6%  of exports  and  almost 7%  of imports  in  1995;  there 
have  been  indications  that  Poland  may  consider  establishing  a  free  trade  arrangement 
with Russia, once Russia has joined the WTO. 

General Evaluation 

Since  1989 Poland has actively pursued a policy of strengthening links with the European 
Union  in  all  fielas.  The  Europe  Agreement  has  been  effectively  implemented  in  most 
sectors.  Poland  has  put  significant  effort  into  approximation  of its  legislation.  The 
number  of bilateral  trade  problems  has  tended  to  overshadow  the  general  perception  of 
the bilateral relationship.  But most of these problems have been resolved. 

6 

B. CRITERIA FOR MEMBERSHIP 

1. Political Criteria 

The European Council in Copenhagen decided on a number of "political" conditions for 
accession  to  be  met  by  the  candidate  countries  in  Central  and  Eastern  Europe.  These 
countries must have achieved "stability of institutions  guaranteeing democracy,  the  rule 
of law, human rights and respect for and protection of minorities". 

In carrying out the assessment required in this connection, the European Commission has 
drawn on numerous sources of information: answers given by the Polish authorities to the 
questionnaire sent to them by the Commission services in April  1996, bilateral follow-up 
meetings,  reports  from  Member  States'  embassies  and  the  Commission's  delegation, 
assessments  by  international.  organisations  (including  the  Council  of Europe  and  the 
OSCE), ref>orts produced by non-governmental organisations, etc. 

The following  assessment involves a systematic examination of the main ways  in which 
the public authorities are organised and operate,  and the steps they have taken to protect 
fundamental  rights.  It does not confine itself to  a formal  description but  seeks to assess 
the extent to which democracy and the rule of law actually operate. 

This  assessment relates to the  situation in  JUhe  1997.  It does  not examine in detail any 
changes  which  have  taken place  since  the  fall  of the  Communist regime  or which  may 
come  about  in  the  future,  though  it  generally  takes  account  of any  stated  intention  to 
reform  a  particular  sector.  The  situation  of the  government  is  mentioned  here  only  in 
passing: it will be examined in greater depth in Chapter 4. 

1.1 Democracy and the rule of Law 

The  1952  Constitution  was  amended  and  revised  in  October  1992  to  enable  Poland's 
transition to a parliamentary democracy. A new Constitution was adopted by referendum 
in  May  1997.  The  analysis  of  institutional  practice  below,  however,  refers  to  the 
application of the former Constitution as the new one is yet to enter into force.  This does 
not  detract from  the  following  evaluation as  the  changes  adopted  in May  1997  have  no 
far-reaching  effect  on the  previous  institutional  balance.  Thus  far  Poland's  institutions 
have worked smoothly, the various authorities being mindful of the limits of their powers 
and of the need for cooperation. 

Parliament and Legislative Powers: Structure 

Parliament  consists  of two  chambers  - the  Sejm,  whose  460  members  are  elected  by 
proportional representation at national level or within regional constituencies (requiring a 
minimum  5%  of votes to  obtain seats),  and the  Senate,  whose  100  members  are  elected 
by the simple-majority system within "voivodships". In order to  guarantee representation 
for  minorities  in  the  Sejm,  there  is  a  provision  exempting  their  lists  from  the  5% 

7 

minimum rule  by  virtue  of which  four  deputies  representing  the  German minority  have 
sat in Parliament since 1993. 

Under Article 98  of the new Constitution, the two chambers may be dissolved by a two 
thirds  majority  vote  in  the  Sejm.  The  President  of the  Republic  also  has  the  power  to 
dissolve Parliament if it fails to  approve the formation  of a new government or to  adopt 
the budget within the prescribed time limit of four months. 

Members of Parliament enjoy -a traditional array of immunities which can only be  lifted 
by  a  two-thirds  majority.  Although  its  role  and  involvement  in  the  workings  of the 
institutions is recognised, the opposition has on occasion complained of its limited means 
of  access  to  the  media.  The  chambers'  powers  include  setting  up  parliamentary 
commissions  of inquiry  on which  the  different  groups  are  represented  in  proportion  to 
their level of representation in the chamber concerned. 

The multiparty  system is  widely  ensured in Poland with  almost  400  political  groupings 
registered.  Approximately  150  parties  put up  candidates  in  the  last  general  elections  in 
1993.  Party  membership  is ·unrestricted  other  than  for  high-ranking  officials.  The  only 
funding received by parties from the national budget is to finance election campaigns. 

Legislative power is vested in the Parliament with the  Sejm having the final  say over the 
Senate  on  legislative  and  budgetary  matters.  Both  chambers  possess  the  power  of 
initiative which is likewise conferred on the President, the government and a minimum of 
100 OOO  citizens.  Regulatory  power  is  exercised  solely  for  the  purposes  of applying  the 
law or in matters  which the  law delegates  to  it.  The  President  possesses  a  right  of veto 
over laws voted by Parliament although the latter may override this by a majority of two 
thirds. Under the new Constitution of 1997, the majority was raised to three-fifths. 

Referendums may be organised at the  initiative of the  Sejm or of the  President following 
approval by the  Senate.  They may relate to  matters of particular importance to  the· State 
(Article  125(1)  of the  new  Constitution),  notably  the  ratification  of an  international 
agreement or budgetary legislation. 

Functioning of Parliament 

The general elections of 1991  and  1993  and the  Presidential election of 1995  took place 
in  free  and  fair  conditions.  They  resulted  in a handover of power  in  Parliament in  1993 
.(see Annex for the results of the  last general  elections) and  a new President in  1995.  On 
both occasions the handover was achieved smoothly. 

Parliament  functions  satisfactorily.  Its  powers  are  respected  and  the  opposition  plays  a 
full part in its activities. 

The Executive: Structure 

The President of the Republic is  elected for  a five-year term by  direct universal  suffrage 
on  the  basis  of a  simple-majority  two-ballot  system.  The  President  plays  an  important 
part in the functioning of the institutions and in Polish politics. 

The-President  designates  the  Prime  Minister,  who  forms  the  Governrnent.  Its  members 
are  likewise  appointed  by  the  President.  It  was  previously  the  Prime  Minister's 
responsibility  to  obtain  the  prior  approval  of the  President  to  the  appointment  of the 

8 

Ministers for  Foreign Affairs,  Defence and the  Interior,  but this  obligation was removed 
by the 1997 Constitution. The Government and Ministers, in their capacity as individuals, 
are accountable to the Sejm. 

Poland  has  recently  adopted  a  "lustration"  Act  applicable  to  all  executive  authorities. 
Under this, senior politicians and government officials must in future swear an oath to the 
effect that they did not work for the security services between 1944 and 1990. This would 
be  done  under  the  auspices  of a  special  court  answerable  to  the  Supreme  Court  wh~ch 
would check the  accuracy of their statements  using,  notably,  the  security  services'  own 
archives.  An admission of working for the security services would not automatically bar 
a person from consideration for a post. In contrast, a false declaration would result in that 
person being barred from the duties specified in the Act for a period of ten years. 

Government at regional level is organised on the basis of (49) voivodships,  in·which the 
voivod or local governor represents central government. 

There are  two  tiers  of local  authorities:  municipalities  (2468),  in which the councils  are 
elected by direct universal  suffrage every four years and regional  assemblies at the level 
of the  voivodships  ( 49)  whose  members  are  elected  by  the  municipal  councils.  The 
regional  assemblies have  limited means and  no  budget of their own.  The  municipalities 
have extensive powers but are  hamstrung by  virtue  of financial  dependency  in that 85% 
of their financial resources come from the State budget. 

Poland  has  possessed  a  Civil  Service  Act  since  July  1996.  Article  51  of the  new  1997 
Constitution recognises citizens'  right of access  to  administrative  documents concerning 
them. 

The  army,  police  and  secret  services  are  under  civilian control.  The  civilian  authorities 
have experienced occasional difficulties in connection with the  armed forces.  The police 
still  lack  adequate  resources  to  combat  effectively  the  rise  in  crime  and,  in  particular, 
organised crime. 

Functioning of the Executive 

The central institutions of the State function smoothly. 

Local authority autonomy continues to meet with obstacles on numerous fronts  and must 
be further  developed,  in particular as  far  as  resources  are  concerned.  The proposal to  set 
up an intermediate tier of decentralised administration between the municipalities and the 
voivodships  ("powiats")  has  been  the  subject  of fierce  debates  in  Poland  for  several 
years. 

Despite the adoption in July  1996 of a Civil Service Act,  Poland continues to  experience 
difficulties with the introduction of a career system. The use of contract workers recruited 
for  political reasons  is  still  rife  and  is  a bar to .establishing a degree  of continuity  in the 
operation  of the  administration.  Corruption  remains  a  source  of concern  despite  the 
Government's  efforts  to  curb  it,  notably  through  the  adoption  in  1995  of  detailed 
legislation on public procurement. 

Thanks  largely  to  the  vigilance  of Parliament,  the  secret  services  have  gradually  been 
brought under the control of the civilian authorities. 

9 

The Judician: Structure 

The  independence  of the  Polish  judiciary  vis-a-vis  other  institutions  appears  secured. 
Judges are appointed by the President of the Republic on motions of the National Council 
for the Judiciary,  a collegiate body set up in  1989 whose 24 members consist mainly of 
judges appointed by the jurisdictions to which they belong.  The President has the power 
to block an appointment put forward by the Council (he has not done so thus far)  but may 
not appoint a judge who has not been put forward by the Council.  Promotions follow the 
same  procedure  and  the  National  Council  has  sole  responsibility  in  the  matter  of 
transfers.  The  National  Council  for  the  Judicicµ-y  also  appoints  Justices  of the  Supreme 
Court. 

A  Tribunal  of State,  whose  members  are  elected  by  the  Sejm,  adjudicates  in  criminal 
proceedings against persons holding "supreme offices" within the State apparatus. 

The  Office  of Public  Prosecution  comes  under the  authority  of the  Minister  for  Justice 
who holds the office of "Prosecutor General" and appoints prosecutors. 

Administrative  measures  are  subject to  a  "Code  of Administrative  Procedure"  and  may 
be appealed against in the administrative High Court whose decisions can be contested in 
the administrative chamber of the Supreme Court. In recent years the Supreme Court has 
developed  a  body  of case-law  which  closely  safeguards  citizens'  rights.  The  Supreme 
Chamber  of Control  is  responsible  for  financial  and  administrative  monitoring  of all 
government bo~ies, other bodies financed from the State budget and local authorities.  All 
cases in which its intervention is justified may be referred to  it by the President, the Sejm 
or the Prime Minister or it may act ort its own initiative. 

Poland has  an  Ombudsman appointed by the  Sejm,  with the consent of the  Senate, for  a 
four-year term  of office.  His  task is  to  examine  complaints  submitted to  him  by  private 
citizens which he may refer to the Constitutional Tribunal. 

The  Constitutional  Tribunal  is  responsible  for  ensuring  that  laws  and  other  legislative 
acts  conform to  the  Constitution.  It may  also  issue:  legally  binding  interpretations  of the 
laws. Its members are elected by the Sejm for a nine-year, non-renewable term of office. 

Functioning of the Judiciary 

The  main  problems  affecting  the  Polish justice  system  appear  to  be  the  time  taken  to 
process  cases,  in  particular  in  the  fields  of civil  or  commercial  law,  and  the  difficulty 
enforcing  decisions  taken  by  the  courts.  The  relatively  low  level  of judges'  salaries  is 
reflected  in  the  numbers  who  leave  to  join  the  private  sector,  which  serves  only  to 
diminish further the effectiveness of the judiciary. 

Until  the  entry  into  force  of the  new  Constitution  of  1997,  the  prerogatives  of the 
Constitutional Tribunal appeared limited to  say the least in that reference to  it by citizens 
or the  courts  was  not possible  and  its  decisions  on the  law could  be  overturned  if two 
thirds  of the  members  of the  Sejm  so  decided.  The  new  Constitution· does  away  with 
these  limits  (although  the  provision putting  an  end  to  the  Sejm's  power  to  overturn  its 
decisions does not enter into force for another two years). 

10 

1.2 Human Rights and the Protection of Minorities 

Poland has introduced various internal rules designed to  ensure respect for human rights 
and minorities'  rights.  Such respect may also  be  guaranteed by the application of certain 
international  conventions,  in the  forefront  of which  is  the  European Convention for  the 
Protection  of Human  Rights  and  its  main  additional  protocols.  Under  Article  F  of the 
Treaty on European Union,  observance of human rights  forms  part of the "acquis":  any 
State wishing to join the European Union must first have ratified the said texts. 

In  January  1993  Poland,  which  has  been  a  member  of the  Council  of Europe  since 
November  1991, ratified the  European Convention for  the  Protection of Human Rights. 
Most of the additional protocols (with the  exception of Protocols No  6,  7 and  11)  were 
ratified  between  May  1993  and  October  1994.  Poland  also  permits  individuals  to  take 
their case to the European Court if they consider that their rights  under this  Convention 
have been violated. 

Poland  has  ratified  the  convention  on  the  prevention  of torture,  but  only  signed  the 
framework convention on minorities and the European Social Charter (only the parts of it 
compatible with Polish law). It has ratified the main human rights conventions concluded 
in the framework of the United Nations. 

Under  Article  91  of the  new  Constitution  a  treaty  that  has  been  properly  ratified  is 
directly  applicable  in  domestic  legislation  and  takes  precedenc~  over  a, law  to  the 
contrary. 

Civil and Political Rights 

Access  to  the  courts  is  largely  unrestricted  in  Poland.  Under  its  legal  aid  system 
individuals  are  guaranteed the  services  of a lawyer  during  court proceedings.  However, 
appeals are  still not allowed in the case of disciplinary measures  against members of the 
armed forces, civil servants and medical staff. 

Capital punishment is in the process of being repealed.  The new Penal  Code adopted by 
the Sejm on its last reading on 6 June 1997 abolished the death penalty in Poland. 

The right not to  be arbitrarily arrested appears  secure as  the  period of custody is  limited 
to  48  hours  and,  under  the  reform  of August  1996,  may  not  be  extended  without  the 
intervention  of a judge.  However,  detainees  do  not  have  the  right  to  the  services  of a 
lawyer until the public prosecutor has  specified the charges against them.  The maximum 
period of remand is two years. 

All citizens of 18 years or more have the right to vote. 

Freedom  of association  is  guaranteed  in  Poland.  Associations  may  be  freely  established 
and the Supreme Court noted in  1993  that the requirement for them to  be registered with 
courts did not confer the power on the latter to judge the applications submitted to  them. 
There  is  a  very  dynamic  third  sector  (some  17 OOO  NGOs  currently  exist),  aespite  the 
financial  difficulties that associations  are  experiencing,  with the  result  that  they  become 
dependent  to  a  certain  extent  on  the  subsidies  they  receive  from.  public  bodies  or 
international organisations.  Polish tax  law does  not expressly  recognise  the  concept  of a 
non-profit making organisation and associations are allowed limited tax exemptions. 

11 

Freedom of assembly is guaranteed. 

Freedom of expression is secure despite certain outstanding problems.  Firstly, journalists 
are still subject to Article 270 of the Penal Code which penalises slander and abuse of the 
State  authorities  with  sentences  of  up  to  eight  years  imprisonment.  Similarly,  the 
jprotection of journalists'  sources appears to  be inadequately assured as  demonstrated by 
the  numerous  searches  carried  out  by  the  Public  Prosecutor's  Office  of the  homes  of 
journalists investigating "sensitive· matters".  A  further  cause  for  concern  is  the  decision 
of the  Supreme  Court  in  1995  which  requires journalists  to  reveal  their  sources  at  the 
request  of  a  tribunal  or  public  prosecutor.  However,  a  legislative  amendment 
guaranteeing professional secrecy for journalists is in the process of being adopted by the 
Sejm. 

In the television  sector,  public channels  continue to  play  an  important role  in Poland  (2 
national  channels,  11  local  stations)  despite  the  rapid  growth  of private  channels  ( 4 
private channels, including 2 at national level, 4 channels on the cable network and  10  on 
satellite)  thanks  largely  to  the financial  resources  at their  disposal.  Although the  public 
authorities  retain  a  considerable  degree  of influence  over  these  channels,  freedom  of 
expression is broadly speaking guaranteed. 

The right of ownership is nowadays assured in  Poland and expropriation is  allowed only 
in  the  public  interest  and  subject  to  prior  and  fair  compensation.  The  question  of 
compensation for persons dispossessed by the Nazis or Communists has yet to be settled. 
The Government did, however, adopt an act in February  1997 allowing the return to Jews 
of the  property  of the  Jewish  community  seized  by  the  Nazis,  although  no  similar 
provision exists for the property of private individuals.  A number of problems relating to 
administrative  organisation  have  so  far  prevented  the  introduction  of a  land  register 
containing up-to-date and coherent information. 

Certain difficulties persist with regard to respect for privacy and the right to  inviolability 
of the  home.  Although searches  should not  normally be  conducted without a  warrant to 
that  effect,  the  police  still  occasionally  dispense  with  that  formality  on  grounds  of 
urgency.  Telephone-tapping  can  be  ordered  by  the  Office  of Public  Prosecution  or  the 
Interior  and  Administration  Minister  without  judicial  control  although  the  code  of 
criminal  procedure  requires  a  prior decision  by  a  court  before  surveillance  of this  type 
can be carried out.  Similarly, the Tax Control Act adopted in November  1996 allows the 
tax  authorities  to  request  information  from  banks  about  their  clients'  accounts  without 
any prior legal procedure. 

The  situation  with  regard  to  asylum  seekers  is  satisfactory  - Poland  ratified  the  1951 
Geneva Convention in  1992 and has  introduced the  national procedures necessary for  its 
implementation.  The  main  problem  in  this  connection  is  the  time  taken  in  examining 
applications  for  refugee  status  which  is  twelve  months  on  average  despite  the  fact  that 
Polish law lays down a maximum of two months. 

No cases of inhuman and degrading treatment appear to  have been recorded in Poland. 

Economic. Social and Cultural Rights 

The right to a minimum means of subsistence is enshrined in the Constitution. 

12 

The  right  to  health  is  affirmed  by the  new Constitution of 1997,  which  also  establishes 
the principle of protection for the handicapped and destitute families. 

Tra~e union fre~dom. is  guaranteed in Poland with one exception which concerns public 
service managenal staff who do  not have the right to form a union.  318  trade unions are 
registered in Poland today. 

The  right  to  strike  is  recognised  by  the  law of 1991  except  for  what  are  known  as  the 
"essential services". On the whole the  1990s have seen a significant fall  in the number of 
strikes compared to the preceding period. 

Free access to education and freedom of religion are also  guaranteed.  On the latter front, 
the  Polish  authorities  are  striving  increasingly  to  combat  incidences  of anti-Semitism 
such as occurred several times during the election campaigns when so-called foreign (i.e. 
of actual  or supposed Jewish origin) candidates  were  discredited.  The  Polish authorities 
have  shown proof of their determination to  deal  with this  by taking  legal  action against 
those  making  anti-Semitic  statements.  The  new  1997  Constitution  affirms  freedom  of 
conscience  and  the  principle  of the  neutrality  of the  Polish  State  vis-a-vis  the  various 
religions. 

Minority Rights and the Protection of Minorities 

Minorities account for  a tiny  fraction of Poland"s  population (approx.  1.3%) and consist 
principally  of  Germans  ( 400 OOO),  Ukrainians  (300 OOO)  and  Belarusians  (250 OOO). 
There are an estimated 40 OOO  Roma (gypsies). 

Article 35  of the  Constitution guarantees the right of minorities to  preserve and develop 
their  language,  cultural  identity  and  traditions  and  to  have  their  own  cultural,  religious 
and  educational  institutions.  Minorities  also  benefit  from  special  electoral  rules  under 
which they  are  allowed to  have  their representative  candidates  elected to  the  Sejm with 
fewer  than  the  normally  required  number  of  votes.  Four  deputies  representing  the 
German minority benefited from this provision at the last elections in 1993. 

Minorities do not experience any specific difficulties in Poland. 

As  far  as  education  is  concerned,  Poland  has  tried  to  develop  teaching  in  minority 
languages  in  public  educational  establishments.  However,  progress  in this  direction  has 
been  blocked  as  a  result  of the  shortage  of financial  resources  which  has  grown  worse 
since  1996 when the municipalities took charge of the running costs of schools. 

The  Roma (or gypsies),  who  are  few  in  number in Poland,  are  sometimes the victims  of 
violence  or  discrimination.  They  frequently  live  in  situations  of  social  hardship 
(unemployment,  housing  conditions,  level  of  education,  health)  as  a  result  of  a 
combination  of sociological  factors  and  a  failure  by  the  authorities  to  take  sufficient 
account of the special nature of their situation. 

1.3 General Evaluation 

Poland's  political  institutions  function  properly  and  in  conditions  of stability.  They 
respect  the  limits  on  their  competences  and  cooperate  with  each  other.  Legislative 

13 

elections  in  1991  and  1993,  and  presidential  elections  in  1995,  were  free  and  fair.  In 
1993  and  1995, when they led to alternation of power, this was properly achieved.  The 
Opposition plays a normal part in the operation of the institutions.  Efforts to improve the 
operation of the judicial system and to  intensify the fight against corruption will need to 
be sustained. 

There  are  no  major problems  over respect  for  fundamental  rights.  There  are,  however, 
certain limitations to the freedom of the press.  Particular attention will be needed to how 
a·  new  law  limiting  access  to  public  service  for  certain  categories  of  persons  is 
implemented.  Poland  needs  to  comple~e procedures  for  compensating  those  whose 
property was seized by the Nazis or Communists. 

Poland presents the characteristics of a democracy,  with stable institutions  guaranteeing 
the rule of law, human rights and respect for and protection of minorities. 

14 

2. Economic Criteria 

~n e~ami~ing th~ economic  situatio~ and prospects thereof,  the  Commission's approach 
1s gmded m particular by the conclusions of the European Council in Copenhagen in June 
1993, which stated that membership of the Union requires "the existence~of a functioning 
market economy,  as  well  as  the  capacity to  cope  with  competitive  pressure  and  market 
forces within the Union". 

This part of the  Opinion therefore  gives  a concise survey of the economic situatfon and 
background,  followed  by  a  review  of Poland's  progress  in  key  areas  of economic 
transformation (liberalisation of the price and trade system, stabilisation of the economy, 
structural  change,  reform  of the  financial  sector)  as  well  as  its  economic  and  social 
development.  It concludes with  a general  evaluation of Poland in relation to  the criteria 
mentioned by the European Council  and a review of prospects  and priorities for  further 
reform. 

2.1 The Economic Situation 

Background 

Poland, with a population of 38.6 million, has a gross domestic product (GDP)  of about 
ECU __ 200  billion  (expressed  in  purchasing  power  parity);  the  size  of its  population  is 
close to  11 % of that of the Union, while the size of its economy is only 3% of that of the 
Union.  GDP per head is  about 31 % of the  EU  average,  in purchasing power terms.  The 
monthly wage is approximately ECU 250. 

Poland joined the  OECD  in  1996,  as  the  third  central  European  country  after  Hungary 
and the Czech Republic.  In  1995  Poland became a member of the  WTO, having acceded 
to GATT already in 1967. Poland was a founder member of CEFT A. 

Prog_ress inEeconomic Transformation 

When  Poland  started  with  its  "shock  therapy"  in  January  1990,  it  had  lived  through  a 
decade  of mounting  political  and  economic  problems,  in  which  it  failed  to  redress 
ongoing and past mismanagement. In 1980, food price increases led to  a series of strikes, 
inspired  by  the  Solidarity  movement.  Poland  defaulted  on  its  international  debt 
obligations.  The military authorities attempted in vain to  restore some form  of economic 
order and, by the end of the  1980s, the Polish economy was clearly heading for collapse. 
Unable to service one of the highest foreign debts in the world for over a decade, it could 
not borrow abroad any more.  Economic sanctions were imposed by the West, demanding 
that martial law and the ban on Solidarity should be lifted. The state-controlled part of the 
economy stagnated completely and acute shortages occurred, even of basic commodities. 
By the end of the decade, the country was heading for hyperinflation. 

Although  the  original  plan  with  which  Poland  started  its  transition  (the  "Balcerowicz 
plan")  was  drastic  and  quite  comprehensive,  its  implementation  did  not  suffer  major 
reversals  despite  several  changes  of government.  With  hindsight,  and.  in  comparison  to 
what  happened  in  other  transition  economies,  Poland  suffered  a  rather  limited  drop  in 
output and  was  the  first to  experience  recovery.  The  Polish economy  started to  grow in 

15 

1992, returned to  its pre-transition output level  in  1995  and  is  still  growing  strongly.  In 
November 1996 Poland became a member of the OECD. Fragmented land ownership is a 
problem for the restructuring of agriculture.  But some improvements have been made in 
the  legal  framework  to  facilitate  farmland  transactions  and attempts  have  been made  to 
overcome  some  of the  practical  consequences  of land  fragmentation,  for  instance  by 
allowing for informal renting and leasing arrangements. 

One  advantage  of the  Polish economy was  that,  even  under  Communism,  some  part  of 
the  economy  was  in private hands,  especially  in  agriculture.  On the  brink of change,  in 
1989, roughly one third of the labour force was employed in the private sector, producing 
one  quarter  of GDP.  This  is  one  explanation' why  private  sector  activity  expanded  so 
rapidly ·after  the  fall  of Communism.  The  number  of private  enterprises  has  increased 
quite  substantially.  This  has  happened  much  more  through the  birth  of new enterprises 
than through the formal  privatisation of state assets.  Close to  65% of the  labour force  is 
now employed in the private sector (which now represents 60% of GDP), mostly in small 
firms.  More  than  95%  of the  private  enterprises  consists  of firms  with  5  employees  or 
less. The total number of private enterprises. is already three times as  large as the number 
of state  enterprises,  and  the  growth  of the  private  sector  is  largely  responsible  for  the 
boost to exports and investment. 

Foreign Direct Investment 

In spite  of the  international  appreciation  for  the  Polish  shock therapy  approach,  foreign 
direct investment (FDI) was off to  a slow start during the initial stages of transition.  FDI 
inflows  have  begun to  pick up  considerably  since  1994.  In  1996,  the  inflow was  about 
1.8% of GDP.  The cumulative FDI inflow since  1989 reached a level  of ECU 4.0 billion 
(source:  EBRD),  which  corresponds  to  slightly  more  than  ECU  100  per  inhabitant  (the 
Polish Government Agency for Foreign Investment (PAIZ) reports that the FDI inflow in 
1996  alone  has  reached  more  than  ECU  4.0  billion.  The  PAIZ  estimates  that  the 
cumulative  inflow  of FDI  since  1990  has  been  about  ECU  11  billion).  Apart  from  the 
potential  of domestic  demand  - Poland  is  the  largest  national  market  in  the  region  in 
terms  of population  -
the  proximity  of the  German  market  is  a  major  argument  for 
foreign direct investment. 

Economic Structure 

In the period since  1989, the  share of agriculture  in Polish GDP  decreased  substantially. 
The  share  of agriculture in  total  gross  value  added  is  now  less  than  8%.  Nevertheless, 
the  much  higher  share  in  employment  suggests  that  the  restructuring  of the  agricultural 
sector  has  only  just  got  under  way.  The  necessary  adjustment  has 
important 
consequences  for  the  economy  as  a  whole.  During  transition,  agricultural  employment 
performs  a  buffer  function.  Today,  more  than  4  million  workers  - one  quarter  of the 
labour force  - still  depend  in  one  way  or another on  income  from  farming.  For some  of 
them this is not the only source of income. A major element of government support to the 
rural  population consists of social  security allowances provided  by  the  KRUS  fund.  In a 
situation  of persistently  high  unemployment,  in  which  the  main  impetus  to  economic 
growth comes  from  productivity  improvements,  it  is  difficult for  agricultural  workers to 
find a job elsewhere in rural areas. 

The disparity  between the  contribution of the  agricultural  sector to  GDP  and  its  share  in 
total  employment  indicates  that  agricultural  labour  productivity  is  much  lower  than 

16 

labour productivity for the economy as a whole. Agricultural production is generally on a 
small  scale  and  lacks  technology.  The  arable  land  per  farm  is  6.7  hectares,  but  this 
average obscures the dichotomy  between a. stable number of small  farnis  and a  growing 
number of units  over  15  hectares.  If formerly  state-owned  farms  are  included,  50%  of 
agricultural  land  is  cultivated  by  the  larger  farms.  They  are  located  mostly  in  northern 
Poland,  where  the  average  farm  size  exceeds  15  hectares.  In  the  south-eastern  part  of 
Poland,  the  average  farm  size  is  4.5  hectares.  The  immediate  prospects  for  farm 
restructuring are not good.  Whereas the number of people employed solely in agricultme 
has  increased  in  recent  years;  only  15  to  20%  of farms  generate  sufficient  financial 
resources of their own to invest in farm enlargement. 

The  prices  of most  agricultural  products  in Poland  are  significantly  below those  in the 
EU.  The  price-cost squeeze  caused  a  fall  in  production  in the  early  years  of transition, 
when  subsidies  to  the  agricultural  sector  were  largely  taken  away.  In  1993,  Poland's 
overall  trade  surplus  on  agricultural  products  turned  into  a  deficit,  in  spite  of  the 
considerable surplus which remained on the trade balance with eastern Europe. The main 
reason for the persistence of _the  trade deficit in agricultural products with the West is the 
difference  in the  quality  of the  goods.  Improving  the  quality  and  realising  the potential 
gains in prnductivity would require  important investments in infrastructure and a radical 
modernisation of farming. 

The Agricultural Market Agency (ARR) was set up by the Polish government in 1990 to 
stabilise agricultural and food  markets and protect farmers'  incomes, mirroring the  CAP 
to some extent. The share of consumption expenditure on food i's  high.  The ARR applies 
a  system  of minimum prices  for  wheat,  milk  and  grains,  but  state  intervention  has  not 
succeeded  in  bringing  price  stability.  The  share  of food  and  agricultural  products  in 
consumption may be declining due to the shift in the consumption patterns of households 
when  they  move  into  higher  income  brackets,  but  consumption  is  shifting  to  higher 
quality import goods. 

Industry,  which  accounts  for  over  30%  of domestic  output  and  about  25%  of total 
employment,  is  very  dynamic  and  has  been the  driving  force  behind the  recovery.  The 
manufacturing  sector experienced  strong  productivity  growth.  Between  1994 and  1996, 
manufacturing output grew by almost 10% per year, while employment remained roughly 
constant.  In January  1997, the  outr  .t  of the  food  processing  industry,  which constitutes 
one quarter of total  manufacturing  output,  was 25% higher than the monthly  average  of 
industries  show  similar  output  growth.  The 
1994.  . Most  other  manufacturing 
manufacturing  of motor  vehicles,  by  far  the  fastest-growing  industry,  nearly  doubled. 
Several  western  and  east  Asian  car  manufacturers  have  opened  assembly  operations  in 
the country.  The production of most primary products, on the other hand, has decreased. 
A  particularly  troubled  sector  is  coal  mining,  where  prices  and  wages  have  increased 
faster than in the rest of the economy. Coal will increasingly be substituted by imports of 
natural  gas  to  satisfy  the  future  needs  of the  economy.  The  Polish  gas  company  has 
signed a 25-year deal with Russia's Gazprom which in the long run is expected to satisfy 
40%  of Polish  energy  needs.  Important other s.ectors  which  need  restructuring  are  steel 
industry and shipbuilding. 

17 

Main indicators of economic structure 
(all data for 1996 unless otherwise indicated) 

Population 

million 

GDP per head 
as % of EU-15 average 

PPS-ECU (1995) 
per cent (1995) 

Share of Agriculture in: 
gross value added 
employment 

per cent (1995) 
per cent (1995) 

'Gross foreign debt/GDP 

per cent 

Exports of goods &  services/GDP  per cent 

Stock of foreign direct investment*  billion ECU 

ECUperhead 

38.6 

5300 
31 

6.6 
26.9 

32 

22 

4.0 
100 

* FDI stock converted at end-1996 exchange rate  of 1 ECU  = $1.25299 
Source:  Commission services.  national sources  EBRD 

The services sector has grown fairly rapidly.  Retail trade is almost exclusively in private 
hands.  Franchises  of  foreign  companies  have  entered  the  Polish  market.  However, 
increasingly  foreign  retailers  and  in  particular  large  food  chains  are  present  on  the 
market.  Although most cities are served by the  leading hotel and restaurant chains, there 
remains  scope  for  development in view of the  expected  increase  in  tourist and business 
activities.  Another sector with a  high potential  for  economic  growth. is  that of financial 
and banking services. 

Poland has a substantial informal sector. The integration of this part of the economy has 
received  considerable  attention  in consecutive  government  programmes.  In spite  of the 
buoyancy  of the  private  sector,  taxes  collected  from  enterprises  have  gone  down.  It is 
believed that many  small enterprises wait until they have reached a  sustainable basis for 
making profits before reporting to the tax authorities. Other evidence of underreporting of 
business activities can be found in the importance of unrecorded trade as measured by the 
currency  deposits  at  private  exchange  offices,  which  amounted  to  ECU  5.5  billion  in 
1996.  But  the  most  significant  indication  of the  existence  of a  substantial  grey  zone 
comes  from  the  Labour  Force  Survey,  which  identified  2.4  million  jobs  (almost 
exclusively  part-time)  which  are  not  picked  up  by  the  standard  employment  statistics 
based on data of registered companies. 

18 

Liberalisation 

Price Regime 

The reform programme began with price and trade liberalisation. Since January 1990, the 
great majority of prices has been determined by the market, though some important ones 
remain under administrative control: energy, public transport,  rents,  pharmaceuticals and 
spirits.  Since they are important items in household consumption, they play a significant 
part in inflation figures:  23% of the inflation index prices are administered. As mentioned 
above,  price  supports  apply  to  certain agricultural  products,  which  also  form  a  sizeable 
component of the consumption package. 

TradeRregime 

Foreign trade was liberalised to a very large extent at the start of transition, but since then 
there has been some backtracking. Most of the tariff and non-tariff barriers to trade were 
removed  in  1990,  and  many  of the  remaining  ones  have  been  made  more  transparent. 
Quantitative restrictions on agricultural  imports,  for  instance,  were  converted  into  tariffs 
in  May  1995.  However,  on occasions,  these  tariffs  were  increased  rather  than  reduced. 
One clear example is the 6% import surcharge which was introduced in  1992 and applied 
to  all  goods.  It has  since  been  reduced  in  steps,  and  the  government  has  completely 
removed the  surcharge  at the  beginning of 1997.  Nevertheless,  doubts  remain  about the 
government's  resolve  to  withstand  mounting  pressures  for  procedural  and  non-tariff 
protection.  These  pressures  are  particularly  strong  in  the  agricultural  sector,  but  there 
have  also  been  delays  in  the  scaling-down  of  tariffs  on  the  imports  of  steel  and 
petrochemicals with reference to the restructuring clause of the Europe Agreement. 

To  support  exporters  and  banks  financing  export  transactions,  the  Export  Credit 
Insurance  Corporation  was  established  in  1991;  it  is  mainly  owned  by  government 
departments and state-owned banks. Direct support to exports through credits is relatively 
limited. 

Foreign Exchange Regime 

As part of the liberalisation of trade, the zloty was made convertible for trade transactions 
in 1991, and it achieved full current-account convertibility in  199 5.  Some restrictions still 
exist on cross-border capital transactions. The zloty is fixed against a basket of currencies 
with a band of+/-7%, and the central rate is devalued every month by  1 %.  The exchange 
rate thus operates under a clear regime,  depreciating  in line with announced policy, with 
few  ad  hoe  adjustments.  In  1995,  because  of the  strength  of the  external  position,  the 
market exchange rate appreciated and the central rate had to be revalued. 

Exchange rate management became a problematic area of monetary policy in 1996 when 
short-term capital  inflows increased in response to  the  combination of high interest rates 
and  the  expectation  of further  revaluations.  In  response,  the  NBP  moved  from  direct 
interest rate targeting to  reserve money targeting.  The exchange rate was  also  allowed to 
fluctuate  more  freely  within  its  band, 
thereby 
discouraging  speculative  capital  inflows.  This  provides  the  monetary  authorities  with 
greater flexibility. 

increasing  uncertainty  and 

thus 

19 

Stabilisation of the Economy 

Domestic 

The costs of reform have not been negligible. The rapid inflation of 1989 and the decline 
in output in the f9llowing  two years were accompanied by a decline in real wages and a 
dramatic fall  in investment.  Living standards dropped.  Unempleyment rose sharply.  The 
budget deficit of the government increased. 

Main economic trends 

1994 

1995 

1996 

Real GDP growth rate 

Inflation rate 

December on December 

.. 

per cent 

per cent 
per cent 

Unemployment rate, end-year  per cent 

!LO definition 

5.2 

7.0 

6.0 

32.2 
29.4 

14.4 

27.8 
21.9 

19.9 
18.7 

13.3 

12.4 

General  government  budget 
balance 

per cent of GDP 

-2.4 

-1.9 

-2.6 

Current account balance 
-incl. unclassified transactions 

per cent of GDP 

-1.0 

-1.9 
4.6 

-1.0 

Debt/export ratio 

per cent 

249 

192 

146 

Foreign 

direct 

investment  per cent of GDP 

0.6 

1.1 

1.8 

Source:  Commission services  national sources.  EBRD 

The  situation has  improved  year  after  year.  Real' GDP  growth  rates  have  been  positive 
since  1992.  In  1995  the economy grew by a record  7% in real terms,  and it seems set to 
continue  broadly  at  this  pace.  Real  wages  have  been  rising  since  1994,  and  the 
unemployment  rate  began  to  decline  in  1996.  At  the  end  of April  1997,  registered 
unemployment  was  2.1  million,  which  is  lower  than  in  the  five  previous  years  and 
corresponds to  less than  13% of the  labour force.  Inflation,  which  lingered at  an annual 
rate of 20% during much of 1996, is now clearly on a downward track. By April inflation 
stood at  15.3%. The target of 13% for the end of 1997 is within reach. The budget deficit 
of  the  state  has  been  reduced  to  just  below  3%  of  nominal  GDP.  This  includes 
government  revenue  from  privatisations  and  refers  to  the  budget  of  the  central 
government only.  Without a  reform  of the  social  security  and  pension systems  which is 
actively  considered  in  Parliament,  the  general  government  balance  could  be  seriously 
affected  by  socjo-demographic  changes  in  the  longer  run.  The  ratio  of public  debt  to 
nominal GDP has declined and is now 54 %. 

· 

20 

External 

Poland is a large and increasingly open economy: exports account for roughly one quarter 
of GDP,  which  makes  the  openness  of the  Polish  economy  comparable  to  that  of EU 
Member  States  of  a  similar  size  in  terms  of  population.  The  official  trade  deficit 
amounted to ECU 1.4 billion in 1995. But with the inflows from unrecorded trade, which 
~e estimated  to  have  been  ECU  6.0  billion,  the  trade  balance  would  have  been  in 
considerable  surplus.  Estimates  of these  flows  are  included  in  the  current  account  data 
since January  1996. 

The official current account deficit grew throughout  1995  not only because of the deficit 
on visible and invisible trade but also because of the resumption of interest payments on 
foreign  debt.  The  current  account  deficit rose  to  ECU  1.8  billion  in  1995  compared  to 
ECU 0.8  billion in  1994.  Including the  balance on unrecorded trade,  the current account 
for  1995  would have  sh~wn a  4.2 billion surplus.  In  1996, this surplus has turned into a 
deficit  of ECU  1.41  billion,  which,  as  a percentage  of GDP,  is  still  a  moderate  deficit. 
The trade deficit has widened from ECU 1.4 billion in 19.95  to 6.5  billion in 1996, due to 
the  volume  of imports  rising  almost three  times  as  fast  as  the  volume  of exports.  Still, 
this  was  largely  offset  by  the  positive  balance  on  unclassified  transactions,  which 
decreased  from  ECU 6.0  billion in  1995  to  ECU  5.7  billion in  1996.  The  largest part of 
the  unrecorded  transactions,  which were  previously  included  in the  financial  account  as 
purchases  of foreign  currencies  by  private  banking  agencies,  is  thought  to  be  related  to 
tourism and trade transactions not covered by customs statistics at the Eastern frontier.  A 
smaller part is related to cross-border shopping at the Western frontier. 

In the  1980s,  Poland had the  fourth-highest foreign debt in the  world,  and  was  unable to 
service  it.  Debt reduction  and  rescheduling  agreements  were  reached  in  1991  and  1994 
with government and commercial creditors, making it possible for  Poland to  resume debt 
servicing payments. The debt-servicing burden has lessened and is being steadily reduced 
by  strong export growth:  only  10% of earnings from  exports  went on debt repayment in 
1995  compared to  70% (on a due basis) in  1991.  Poland has,  as  a result,  regained acces·s 
to international capital markets. 

The  external  position  is  strong.  Since  late  1993,  foreign  exchange  reserves  have  been 
growing  rapidly  because  of  steady  inflows  of  foreign  and  portfolio  investment.  In 
October  1996  reserves  stood at close to  ECU  14  billion,  which covers  6 to  7 months  of 
imports. 

Structural Change 

Foreign  Trade 

Since transition began, there has been a significant reorientation of trade towards Western 
markets,  and  in  particular  to  the  Union.  The  shift  in  trade  took  place  mainly  between 
1989 and  1993. In 1994 and  1995, the growth in central and east European markets led to 
an  increase  of their  shares  in  Polish  trade.  Moreover,  exports  to  central  and  eastern 
Europe recently  started to  grow faster than the Polish imports from  the same region.  The 
EU  remains  by  far  the  largest  trade  partner  of Poland,  accounting  for  two  thirds  of 
exports. Exports to Germany alone account for more than one third of total  exports. 

21 

Labour Market 

The initial  decline in output and the restructuring  of enterprises  resulted in a significant 
fall  in employme~t. Unemployment therefore  increased,  rising  from  negligible  levels in 
the  beginning  of 1990  to  more  than  14%  of the  labour  force  in  1994.  The  increase  in 
unemployment has  been particularly strong in areas  dependent on single  large plants or 
sectors. In  1996, registered unemployment has started to fall  and is now down to a  level 
of 12.4%  (April  1997).  However,  the  decrease  is  not  matched  by  a  similar  increase  in 
employment figures.  The official  figures  show that nearly 65%  of employment is  in the 
private sector. 

From  1992 onwards, the government was using an excess-wage tax and a lump sum tax 
on equity to control wages.  The excess-wage.. tax was abolished in April  1994, and a new 
and a more flexible  system of wage control was approved by the President in July  1994, 
after  having  been  vetoed  earlier on.  Within  the  new  system  of collective  bargaining,  a 
Tripartite Commission sets ceilings for the quarterly and  yearly  growth of real  wages  in 
firms  with  more  than  50  employees.  In  principle,  this  allows  the  authorities  some 
discretion in resisting full and automatic indexation. 

The government is also making attempts to defer the automatic indexation of government 
wages,  pensions  and  the  economy-wide  minimum  wage  to  quarterly  inflation.  The 
success up to now is limited, and the system is still very much one of de facto indexation. 

Public Finances 

Fiscal  reform  was  crucial  as  the  role  of government  was  redefined  and  the  revenue 
sources  changed.  The  reform  of the  tax  system  was  radical  and  rapid:  corporate  and 
income  tax  and VAT were  introduced  by  1993.  Changes  in  the  social  security  system 
have begun, but further reform is required as the deficits of social security funds  continue 
to  increase.  The main area in need of reform is the pension system, which is strained not 
only by the prospect of an ageing population but also by the low statutory retirement age 
and generous early retirement possibilities. 

Attempts  to  broaden  the  tax  base  have  repeatedly  run  into  problems.  There  is  little 
incentive  for  the  smaller firms  to  be  officially  registered,  except  when  they  are  offered 
tax  exemptions  or  tax  shelters  in  the  form  of free  enterprise  zones.  This  is  the  reason 
why,  despite  a  sharp  rise  in  enterprise  profits,  the  share  of  corporate  taxes  in  total 
government revenue dropped.  Tax evasion and  arrears create additional problems for  the 
tax-raising power of the government. 

Total  government  expenditure  is  about  50%  of GDP.  Subsidies  to  firms,  which  in  the 
1980s formed  a high percentage of government expenditure, still constituted 8% of GDP 
in 1990. Explicit subsidies in the government budget have since been reduced to less than 
2%  of GDP.  Enterprise  support  has  recently  re-emerged  in  the  context  of restructuring 
programs, mainly for the coal sector and for  toxic waste containment.  The importance of 
subsidies  to  enterprises  in  the  government  budget  should  therefore  be  expected  to  rise 
again.  Implicit subsidies in the form of tax and social security arrears have also  not been 
completely  eliminated  and  new  exemptions  are  created  by  the  establishment  of free 
economic zones. 

22 

Enterprise Sector:  Privatisation and Enterorise Restructuring . 

The  move to  a  market  economy  is  clearly  intimately  linked  with  privatisation of state 
owned  property  an~ the  restructuring  of production  processes.  For  the  economy  as  a 
whole,  it is  estimated that  60%  of GDP  is  generated  in the  private  sector.  The  "small 
scale"  pri~atisation of retail,  catering  and  service  sectors  was  more  or  less  completed 
between  1990 and  1992.  The "large-scale" privatisation, on the other hand,  was  slow to 
take  off:  to  date,  few  of the  large  enterprises  have  actually  completed  the  privatisation 
process.  The  private  sector's  share  in  the  creation  of industrial  output  reached  52%  in 
1996.  Privatisation is  also  slow in the  energy and  telecommunications sectors,  and  it  is 
strongly resisted in the area of postal and transport services. The process was given some 
impetus in 1995 with the launch of the mass privatisation programme through the sale of 
vouchers. 

The  relatively  slow  start  of large-scale  privatisation does  not  mean  that  changes  in the 
economy as a whole have not taken place; indeed some large enterprises have succeeded 
in  restructuring  to  a  certain. extent  while  being  state-owned.  But  the  expansion  of the 
private sector has to a large extent come from the birth of new enterprises. This was made 
possible  oy  the  liberal  rules  on  establishing  businesses,  modest  tax  incentives, 
decentralised  trade  policy  and  currency  convertibility.  All  this  meant  businesses  could 
start  up  with  only  small  amounts  of capital,  thus  side-stepping  the  problems  of high 
interest rates and the shortage of bank credits. 

The speed of restructuring depends in part on the access to financing for new investment. 
This  can be  accumulated through  retained  earnings  or borrowed  domestically,  acquired 
through sales  of shares  or brought in from  abroad.  Because of the  slow privatisation of 
large enterprises, the borrowing of enterprises abroad has been rather limited, but foreign 
direct~ investment  (FDI)  has  recently  begun  to  flow  into  Poland  as  opportunities  for 
investment expanded. 

Financial Sector 

The  monobank  system was  dismantled  in  1989:  the  central  bank and  commercial  bank 
functions  were  split.  The  banking sector has  since developed quite rapidly.  The banking 
density in Poland remains rather low and the transactions of the private sector in Poland 
are  still  largely cash-based,  but the  performance of banks  has  clearly improved.  In  1995 
the  banking  sector  as  a  whole  returned  to  profitability  after  two  consecutive  years  of 
negative results  owing mainly  to  reserves  put aside  for  bad debts.  The soundness of the 
banking· system was enhanced through the  recapitalisation of the  state-owned banks,  the 
improvement of the capital base of private banks and intensified supervision. 

A  large  number  of commercial  banks  operate  in  Poland  unde~ the  supervision  of the 
National  Bank  of  Poland  (NBP),  including  state-owned  and  foreign-owned  banks. 
Between  1991  and  the  end  of  1996  the  banking  system  underwent  widespread 
transformation.  The  number  of commercial  banks  increased  from  76  to  78  while  the 
number of cooperative banks decreased from  1665 to  1394. Total assets of banks reached 
198  billion zloty,  i.e.  around  57% of GDP.  At the end of 1996, the  state held just below 
50%  of the total  share capital  of the commercial banks.  At  the  same time,  foreign  share 
ownership had increased to just below 30%. The state controlled a majority of the shares 

23 

in  24  banks,  whereas  32  others  were  controlled  by  Polish  shareholders.  Foreign 
shareholders  owned  a  majority  in  24  banks.  The  government  policy  is  to  favour  the 
presence of foreign  banks through the creation of joint stock companies or by taking  up 
shares  in  Polish  banks.  The  rationale  behind  this  policy  is  that  it  supports  the 
privatisation process and also strengthens the capital base of the banking sector. 

Dwing  1993-1995,  only  four  of the  nine  state-owned,  so-called  regional  commercial 
banks which emerged from the break-up of the NBP have been privatised.  Currently one 
further  bank is  being  privatised,  ~hile the  remaining  four  are  to  be  privatised  in  1998. 
On the other hand, out of the 5 largest Polish banks operating at a national level only one 
has  been  fully  privatised  and  a  second  is  currently  under  privatisation.  The  deposits 
market  is  dominated  by  these  nine  regional  banks  and  the  big  five  banks.  The  loans 
market is less concentrated. 

One  indicator  of inadequate  competition  in  the  banking  sector  is  the  spread  between 
deposit and credit interest rates which remains quite large, as banks still have a bad loans 
problems. The total  share o~ bad loans stood just below 6% at the end of  1996.  Since it 
is estimated by the NBP that less than 4% of the new loans turns bad, the situation can be 
expected  to  improve.  Indeed,  the  spread  between  interest  rates  on  loans  and  deposits 
decreased from  12.5  percentage points in  1991  to  around  8 points  in  1996.  The  share of 
loans  to  private  firms  in  the  loan  portfolio  of banks  has  been  growing  but  it  remains 
lower than the lending to  state enterprises. Most bank loans have a maturity of up  to  one 
year. 

The  Warsaw Stock Exchange  opened in  1991.  Sessions are  held  five  times  a  week,  but 
the  number of companies that are  listed remains  rather limited.  At the  end of 1996,  106 
companies were traded with a market capitalisation of about ECU 6.8  billion. Another 25 
are  expected  to  gain  admission  during  1997.  Recently,  15  National  Investment  Funds 
have  been listed,  which control  512  formerly  state-owned  companies  privatised through 
the  mass  privatisation  programme.  The  development  of  an  over-the-counter  market, 
which  can  be  more  flexible  than  the  stock  exchange,  could  facilitate  the  secondary 
trading  of  share  certificates,  and  thereby  contribute  to  the  success  of  the  mass 
privatisation  programme.  This  scheme,  launched  in  August  1995,  has  met  with 
considerable  enthusiasm:  nearly  26  million vouchers  were  distributed  and  prices  on the 
secondary market have risen sharply. 

Treasury bonds dominate the activity in the  bond market,  while the market for corporate 
bonds  is  not  much  developed.  The  money  market  is  at  an  early  stage  of development 
although its size increased and its liquidity improved in recent years. 

Economic and Social Development 

Social Indicators 

Poland has a relatively young population with high literacy rates. During the 1970s, there 
was  a  significant  migration  from  rural  to  urban  areas.  Life  expectancy  rates  are 
improving, although they remain below the EU average. 

The  work  force  is  relatively  large  because  of a  high  participation  rate,  and  is  highly 
skilled.  More  than  one third  of the population,  and  65%  of the  working  population,  has 
24 

followed  at  least  secondary  education.  About  10%  of the  labour  force  has  a  university 
education.  At  present,  approximately  96%  of children  continue  their  education  at  the 
secondary school level. 

Regional and Sectoral Differences 

Regional  and  sectoral planning in Poland used to  be  such that the  interests  of powerful 
industries prevailed over regional  interests.  Industrial zones were  implarited close to  big 
cities that were already well equipped with infrastructure. After 1990, regional policy has 
remained weak in spite of the devolution of some authority and financial  responsibilities 
to  local  government,  including the  larger cities.  One  of the  problems  appears  to  be that 
the  structure  of 49  voivodships,  created  out  of larger  regions  under  the  Communist 
regime, does not fit regional identities very well. 

The  speed  of privatisation  was  highest  in  the  most  industrialised  regions,  where  the 
available  and  relatively  modem  capital  stock  constituted  a  critical  mass  and  where  the 
necessary infrastructure was in place. Privatisation was also successful in the large urban 
areas, where it proved to  be "relatively easy to  change the ownership of retail trade firms. 
The inflow of foreign capital originally concentrated upon the  big  urban centres  and the 
western part of the country. One third of all joint ventures were located in the voivodship 
of Warsaw and  more  than three  quarters  of the joint ventures  were  registered  in the  10 
leading voivodships. 

Unemployment  is  very  much  a  regional  issue.  In  some  areas  in  the  northern  part  of 
Poland,  unemployment  is  as  high  as  30%,  whereas  it  is  as  low  as  5%  in  the  area  of 
Warsaw.  The labour market is clearly tighter in the city regions of Warsaw, Katowice or 
Lodz.  This  applies  in  particular  to  the  part  of the  population  with  post-secondary  or 
secondary vocational training. In more rural areas, unemployment is still increasing. 

2.2 The Economy in the Perspective of Membership 

Introduction 

The European Council  in Copenhagen in  1993  defined the conditions that the  associated 
countries  in  central  and  eastern  Europe  need  to  satisfy  for  accession.  The  economic 
criteria are: 

• 

the existence of a functioning market economy; 

the  capacity  to  cope  with  competi~ive pressure  and  market  forces  within the 
Union. 

These  criteria  are  linked.  Firstly,  a  functioning  market  economy  will  be  better  able  to 
cope with competitive pressure.  Secondly, in the context of membership of the Union, the 
functioning  market  is  the  internal  market.  Without  integration  into  the  internal  market, 
EU membership would lose its economic meaning, both for Poland and for its partners. 

25 

The  adoption  of the  acquis,  and  in  particular  the  internal  market  acquis,  is  therefore 
essential for a candidate country, which must commit itself permanently to the economic 
obligations  of  membership.  This  irreversible  commitment  is  . needed  to  provide  the 
certainty that every part of the enlarged EU  market will continue to operate by common 
rules. 

The  capacity  to  take  on  the  acquis  has  several  dimensions.  On  the  one  hand,  Poland 
needs to be capable of taking on the economic obligations of membership, in such a way 
that  the  single  market  functions  smoothly  and  fairly.  On  the  other  hand,  Poland's 
capacity  to  benefit  fully  from  the  competitive' pressures  of the  internal  market  requires 
that the  underlying  economic  environment be  favourable,  and  that  the  Polish economy 
have  flexibility  and  a  sufficient  level  of  human  and  physical  capital,  especially 
infrastructure.  In  their  absence,  competitive  pressures  are  likely  to  be  considered  too 
intense  by  some  sections  of society,  and  there  will  be  a  call  for  protective  measures,  · 
which, if implemented, would undermine the single market. 

The capacity and determination of a candidate country to adopt and implement the acquis 
will  be  crucial,  since the  costs  and  benefits  of doing  so  may  be  unevenly  spread  across 
time,  industries  and  social  groups.  The  existence  of a  broad  based  consensus  about  the 
nature of the changes to economic policy which membership of the Union requires, and a 
sustained  record  of implementation  of economic  reforms  in  the  face  of interest  group 
pressure reduce the risk that a country will  be  unable to  maintain its commitment to  the 
economic obligations- of membership. 

At  the  level  of  the  public  authprities,  membership  of  the  Union  requires  the 
administrative and legal capacity to transpose and implement the wide range of technical 
legislation needed to remove obstacles to  freedom of movement within the Union and so 
ensure the working of the single market. These aspects are examined in later chapters. At 
the  level of individual  firms,  the  impact on their competitiveness of adopting the  acquis 
depends on their capacity to adapt to the new economic environment. 

The Existence of a Functioning Market Economy 

The  existence  of  a  market  economy  requires  that  equilibrium  between  supply  and 
demand  is  established  by  the  free  interplay  of market  forces.  A  market  economy  is 
functioning when the legal system, including the regulation of property rights, is in place 
and can be enforced.  The  performance of a market economy  is  facilitated  and  improved 
by  macroeconomic stability and a degree  of consensus  about the  essentials of economic 
policy. A well-developed financial sector and an absence of significant barriers to  market 
entry and exit help to improve the efficiency with which an economy works. 

The Polish economy is functioning as a market economy, although much scope exists for 
further  development.  In  particular,  the  housing  and  land  markets  are  underdeveloped. 
Even  under  the  Communist  regime,  part  of the  Polish  economy  was  functioning  as  a 
market  economy,  though  relying  primarily  on  a  form  of barter  trade.  The  agricultural 
sector was  never completely collectivised and  there  always  existed  an  informal  network 
of underground  businesses.  This  is  one  explanation  why  the  transition  process  has  been 
so dynamic. 

26 

The challenge for the Polish authorities is to bring this grey zone into the open, and make 
it part of the official economy. For legalisation to take place, there must be incentives for 
businesses to  register with the  authorities and to  pay taxes.  Enforcing the  system of tax 
collection and making it attractive to  firms  to register by  offering tax exemptions is  not 
sufficient.  The legal  framework  must be such that firms  have  an active  interest in being 
registered, for instance because that provides them with the necessary legal protection in 
case of commercial disputes,  or because it will enable them to  have easier access to the 
financial markets. 

With  the  exception  of some  energy  prices,  and  to  a  certain  extent  housing  rents  and 
medicine  prices,  most  prices  in  Poland  are  market-determined,  and  no  longer  publicly 
administered.  Price  setting  on  the  coal  market  is  distorted  because  coal  mines  are  still 
allowed  to  operate  on  a  loss-making  basis.  The  government  intervenes  actively  in  the 
markets for agricultural and food products, which form a substantial part of consumption. 
This intervention consists of price support and other guarantees. 

Tariffs  on foreign  trade  were  reduced  immediately  in  1990  and  non-tariff barriers  were 
largely eliminated, but the deterioration of the trade balance was used as a reason to raise 
import tariffs again at the end of 1991. The average tariff returned to the pre-reform level 
and  an  import surcharge  was  imposed  in  1993.  After  several  delays,  the  surcharge  was 
eliminated  at  the  start  of 1997.  This  is  illustrative  of a  tendency  to  find  ways  around 
the  Europe  Agreement.  A  consistent 
international 
implementation of the Europe Agreement - to  the  letter as  well  as_ in spirit - ,should help 
to counter such pressure. 

trade  commitments  and 

The  policy  framework  for  maintaining  macroeconomic  stability  in  Poland  is  largely  in 
place. Monetary policy is skilfully handled and fiscal restraint has r-eceived priority in the 
latest versions of government plans. One difficulty is that the composition of government 
revenues has  shifted dramatically from  corporate taxes to  VAT and personal income tax. 
Although this is very desirable in itself, such major shifts can lead to revenue loss during 
the  changeover.  Another  problem  is  that  the  outlays  on  pensions  and  benefits  have 
increased sharply due to  indexation mechanisms.  Performing the  double  act of reducing 
inflation and the budget deficit is difficult. The government is,  so far successfully, aiming 
at  an  adjustment  of inflationary  expectations  in  line.  with  its  targets.  It  has  also  put 
forward  proposals to  link the  capitalisation of new pension funds  to  the  privatisation of 
state  enterprises,  which  should  ease  pressure  on the  social  security  funds  in  the  longer 
term. 

The Capacity to Cope with Competitive Pressure and Market Forces 

It  is  difficult,  some  years  ahead  of prospective  membership,  and  before  Poland  has 
adopted  and  implemented  the  larger  part  of  Community  law,  to  form  a  definitive 
judgment  of the  country's  ability  to  fulfil  this  criterion.  Nevertheless,  it  is  possible  to 
identify a number of features of Poland's development which provide some indication of 
its  probable  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 
Union. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the  Union 
requires  a  stable  macroeconomic  framework  within  which  individual  economic  agents 

27 

can make decisions in a climate of a reasonable degree of predictability.  There must be a 
sufficient amount  of human  and  physical  capital  including  infrastructure  to  provide  the 
background  so  that  individual  firms  have  the  ability  to  adapt  to  face  increased 
competitive  pressures  in  the  single  market.  Firms  need  to  invest  to  improve  their 
efficiency,  so  that they  can both compete  at  home  and  take  advantage  of economies  of 
scale which flow from access to the single market. This capacity to adapt will be greater, 
the  more  firms  have  access  to  .investment  finance,  the  better  the  quality  of  their 
workforce, and the more successful they are at innovation. 

Moreover,  an economy will  be better able to  take  on the  obligations  of membership the 
higher the degree of economic integration it achieves with the Union ahead of accession. 
The more integrated a country already is with the Union, the less the further restructuring 
implied  by  membership.  The  level  of economic  integration  is  related  to  both the  range 
and volume of goods traded with member states. Direct benefits from access to the single 
market  may  also  be  greater  in  sectors  where  there  are  a  sizeable  proportion  of small 
firms,  since these are relatively more affected by impediments to trade. 

A  first  indicator  of Poland's  competitiveness  is  the  de~ree to  wbich  it  already  has 
achieved trade  jnte~ration with the fill. Two thirds  of Polish exports are  going to the  EU, 
and  the  corresponding percentage on the  import side is  similar.  The  largest part of both 
imports  and  exports  - again  roughly  two  thirds  in  both  cases  - concerns  manufactured 
goods.  Poland  has  a  positive  trade  balance  on  the  lighter  manufactured  goods.  The 
balance on machinery and transport equipment is negative, but exports as well as imports 
are sizeable components of overall trade. 

Another indicator of competitiveness is the ability of enterprises to adjust.  Here, it should 
first of all be noted that the Polish economy is characterised by a dichotomy between the 
performance  of  the  private  sector,  which  is  dominated  by  small  firms,  and  the 
performance  of the  larger  companies,  of which  the  majority  is  still  state-owned.  The 
private  sector  is  thriving.  For  some  of the  smaller  firms  it  may  be  difficult  to  survive 
foreign  competition,  but there will  be  new opportunities  for  firms  that are  specialised in 
trade and services. The privatisation process for the larger companies is slow. 

A  number of the  state-controlled  enterprises  are  generating  losses  and  many  more ~ 
enterprises  are  in  need  of restructurin~. The  problems  are  especially  severe  in  the  coal, 
steel and defence industries. Because of the regional importance of these industries, their 
transformation  has  painful  consequences  for  those  eastern  and  southern parts  of Poland 
which  depend  on  a  few  heavy  industries.  Other  companies  which  are  in  trouble  are 
chemical  plants  and  shipyards.  The  Gdansk  shipyard,  which  has  been  a  symbol  of 
political  change  in  Poland,  but  which  resisted  economic  adjustment,  went  into 
bankruptcy  in  1996  and  was  forced  to  dismiss  its  workers.  In  the  sharpest  possible 
contrast,  the  Szczecin  shipyard  engaged  in  deep  restructuring  early  on,  and  in  its 
privatised form became the sixth largest shipyard in the world. 

Altho:ugh Poland's workforce is  relatively hi2hly educated, the market for  skilled labour 
is  tight,  especially  in  the  larger  cities.  Improvements  in  infrastructure,  transport  and 
telecommunications could help to  spread economic development more equally across the 
country.  R&D  expenditure  stood  at  less  than  1 %  of GDP  in  1994,  which  may  be  partly 
due  to  the  rather  passive  role  of  the  larger  state  enterprises.  The  government  has 
established  a  pro~ram for  technolo~y transfer  to  small  and  medium-sized  enterprises, 
which has an explicit objective of regional distribution. Unemployment in Poland is high, 

28 

and  there  are  important  regional  differences  in  unemployment  rates.  The  share  of the 
labour force  employed in the airicultural sector is  large and the productivity per head is 
low.  But even if the number of farm  workers could be reduced, the  sector would overall 
continue to show low-productivity due to the small size of the average farm. 

Small  and  medium-sized  enterprises  gradually  find  their  way  to  the  banks  for  credit, 
helped  by  their  recent  track  record  in  operating  under  market  conditions.  The  banl<ini 
sector js stm lariely state-owned and there  is a lack of training of the  staff.  Banks have 
also  not  been  very  successfu~ in  attracting  household  savings.  As  a  consequence,  the 
success of Polish exporters on Western markets has on occasions been hampered by lack 
of funds. 

Foreiin direct investment in Poland has been relatively modest,  but recently has picked 
up  significantly.  Opinion  polls  reveal  that  this  is  not  the  result  of a  negative  attitude 
among  the  population  at  large,  although  the  public  is  concerned  about  the  competitive 
position of Polish producers.  As  the recent experience with car assembly  operations has 
illustrated,  pressures can also  be  exerted in the  interest of foreign  investors.  In  addition 
uncertainties  in  Poland's  taxation  regime  as  well  as  bureaucratic  obstacles  have  been 
impediments to higher levels of foreign direct investment.  There is a general tendency to 
bend national legislation and interpret international agreements in such a way that certain 
producers are favoured over others. 

Prospects and Priorities 

Successive Polish governments  have  made  seriOus  attempts  t~ improve  competiti.veness 
by framing policy in a comprehensive medium-term context,  integratillg macroeconomic 
and  structural  policies  as  well  as  preparations  for  EU  accession.  The  "Strategy  for 
Poland",  adopted  in  June  1994,  was  an  ambitious  medium-term  programme  aiming  at 
export- and  investment-led  growth,  continued  disinflation  and  sound  public  finance.  It 
envisaged a comprehensive reform,  ranging  from  the  reorganisation and decentralisation 
of public administration to  the  integration of the  shadow economy  into  the  official  one. 
"Package  2000"  is  a  more  recent  update  of the  programme,  which  focuses  on  the 
requirements  of  EU  accession,  and  more  specifically  on  the  need  for  greater  fiscal 
discipline and the channelling of national  savings  into_ invest~ent. The reinforcement of 
tax collection and the engagement of the informal part of the economy are recognised as 
priorities.  The  document  "Euro  2006"  was  added  to  this  package  in  January  1997.  It 
claims  that Poland  will  be  ready  to join the  single  currency  area  in  2006.  The National 
Strategy for Integration, drawn up by the Committee for European Integration, pays more 
attention  to  adjustment  costs.  In  April  1996,  the  Polish  Council  of Ministers  adopted  a 
longer-term view in their "Outline Concept of the  Strategy for  a Development of Poland 
up to 201 O". 

From a macroeconomic point of view, and within the context of Poland's crawling-band 
exchange  rate  system,  an  increase  in  real  wage  costs  exceeding  labour  productivity 
growth  could  be  particularly  harmful  to  the  economy.  The  initially  favourable  export 
position of Poland is  already partly eroded by the real  appreciation of the exohange  rate, 
and the volume of imports is rising much faster than the volume of exports.  A rise in real 
unit labour cost would make it less attractive for  foreign  investors to  invest in the export 
sector. 

29 

An  essential  element  of the  strategy  to  make  the  government  sector  both  leaner  and 
stronger is the privatisation of state-owned enterprises.  Poland has decided to restructure 
the larger enterprises prior to privatisation, and this has made the process very slow.  By 
the end of 1995, privatisation had started in less than half of the state-owned enterprises 
that existed in 1990 and had been completed for less than one in five of the enterprises. In 
June  1996,  the  Polish Parliament  finally  adopted  the  law on the  commercialisation and 
privatisation  of state-owned  enterprises,  of which  the  first  draft  had  been  produced  in 
1993  by the last Solidarity government. Under the new law,  state-owned enterprises first 
have  to. be  transformed  into  commercial  enterprises,  with  shareholders  and  a  board  of 
directors.  Shares and therefore power will be with the Treasury, leaving substantial scope 
for political influence on individual privatis·ation operations. 

The largest part of the banking sector is still in the hands of the state and does not offer a 
wide  range  of services.  Staffing  is  often  qualitatively  inadequate,  as  in  other  sectors 
where education is  good but not necessarily very market-oriented.  However information 
on  banking  operations  is  still  insufficient.  As  in  the  enterprise  sector,  much  of the 
attention  has  gone  to  consolidation  prior  to  ownership  transfer.  In the  autumn  of 1995 
some of the remaining state-owned banks and some of the already privatised banks were 
re-grouped into two holdings.  A large part of the  shares  in those new holdings are to  be 
used by the  state to  set up  and finance  pension funds,  and to  compensate pensioners for 
incomplete indexation. 

Pension reform has been high on the list of priorities, and as such was already included in 
the  Strategy  for  Poland.  Only  recently  concrete  steps  have  been  taken  and  the 
government  has  submitted  a  series  of legislative  proposals  which  is  currently  being 
examined. Meanwhile expenditures on pensions have soared in the past five  years,  when 
recourse  was  taken  to  early  retirement  and  disability  pensions  to  contain  the  rise  in 
unemployment. The generosity of pension adjustments caused pension outlays to rise to a 
level  of 16%  of GDP;  much  higher  than  the  EU  average  of about  I 0%.  Demographic 
pressures  will  rise  even  more  when the  baby  boom  generation born after  World  War II 
will reach retirement age after 2005. 

In  July  1996  the  Constitutional  Tribunal  ruled  that  the  government's  decision  to  stop 
adjusting  pensions  in  accordance  with  the  rise  in  average  wages  was  illegal.  Although 
this has been interpreted as meaning that some form of compensation should be provided, 
rather  than  that  automatic  indexation  should  be  reinstated,  it  illustrates  the  difficulty  of 
breaking  with  indexation  mechanisms.  At  present,  the  Tripartite  Commission  of 
government,  employers  and  employees  decides  on  a  normative  ceiling  for  wage  rises, 
which  is  based  on  the  inflation  target  of the  government  but  which  is  adjusted  when 
quarterly inflation turns out to  be much higher.  This ceiling is  in danger of turning into a 
floor for decentralised wage bargaining and wage bargaining in the smaller firms  that do 
not fall  under the Tripartite Commission. As  soon as the government succeeds in getting 
inflation down by more than was expected, there could be a considerable increase in real 
wages. 

2.3 General Evaluation 

Poland  can  be  regarded  as  a  functioning  market  economy.  Prices  and  trade  have  been 
liberalised to  a large extent. The economy has been successfully stabilised.  Commitment 

30 

to this policy line has been maintained through various changes in government. However, 
in order to guarantee longer-term stability, pension and social security systems need to be 
reformed.  Financial  services  are  underdeveloped.  The  banking  sector  needs  further 
reform.Poland  should be  well  able to  cope  with• competitive pressure  and  market forces 
within the Union in the medium term, provided it maintains the pace of restructuring and 
keeps the economy open.  Growth and  investment are  strong,  and the  rise  in unit labour 
costs in the manufacturing sector has been moderate.  Recently,  inflows  ~f foreign  direct 
investment  have  accelerated.  However,  the  main  problem  is  that  of larger  state-owned 
companies,  where  management  failures  in  the  face  of foreign  competition  could  have 
serious consequences for the economy as  a whole.  Agriculture needs to  be modernised, 
and there have been some reversals in trade policy. 

31 

3. Ability to Assume the Obligations of Membership 

The  European  Council  in  Copenhagen  included  among  the  criteria  for  accession  "the 
ability  to  take  on  the  obligations  of membership,  including  adherence  to  the  aims  of 
political, economic and monetary union". 

In  applying  for  membership  on  the  basis  of the  Treaty,  Poland  has  accepted  without 
reserve the basic aims of the Union,  including its policies and instruments.  This chapter 
examines Poland's capacity to-assume the  obligations of membership  - that is,  the  legal 
and institutional framework, known as the acqtfiS, by means of which the Union puts into 
effect its objectives. 

With the development of the Union, the acquis has become progressively more onerous, 
and presents a greater challenge for  future  accessions than was  the· case  in the  past.  The 
ability  of Poland  to  implement  the  acquis  will  be  central  to  its  capacity  to  function 
successfully within the Union. 

The following  sections examine,  for  each main field  of the Union's activity,  the  current 
and prospective situation of Poland. The starting-point of the description and analysis is a 
brief summary of the acquis,  with a mention of the provisions of the  Europe Agreement 
and the White Paper, where they are relevant.  Finally, for each field of activity there is a 
brief  assessment  of Poland's  ability  to  assume  the  obligations  of membership  on  a 
medium-term horizon. 

3.1 

Internal Market Without Frontiers 

Article 7a of the  Treaty  defines  the  Union's  internal  market as  an area without  internal 
frontiers  in which the free  movement of goods,  persons,  services  and  capital  is  ensured. 
This  internal  market,  central  to  the  integration  process,  is  based  on  an  open-market 
economy in which competition and economic and social cohesion must play a full part. 

Effective  implementation  of  the  liberties  enshrined  in  the  Treaty  requires  not  only 
compliance with such important principles as,  for example, non-discrimination or mutual 
recognition  of national  regulations  - as  clarified  by  Court  of Justice  rulings  - but  also 
concomitant, effective application of a series  of common specific provisions.  These are 
designed,  in  particular,  to  provide  safety,  public  health,  environmental  and  consumer 
protection,  public  confidence  in  the  services  sector,  appropriately  qualified  persons  to 
practise certain specialist occupations and,  where necessary,  introduction or coordination 
of  regulatory  and  monitoring  mechanisms; 
all  systematic  checks  and  inspections 
necessary to  ensure correct application of the rules are carried out within the market,  not 
at frontier crossings. 

It is  important to  incorporate Community legislation into national legislation effectively, 
but  even  more  important  to  implement  it  properly  in  the  field,  via  the  appropriate 
administrative  and  judicial  structures  set  up  in  the  Member  States  ·and  respected  by 
companies.  This  is  an essential precondition for  creating the  mutual  trust  indispensable 
for smooth operation of the internal market. 

32 

This  chapter must be  read  in  conjunction with,  inter alia,  the  chapters  on  social  policy, 
the environment, consumer· protection and sectoral policies. 

The Four Freedoms 

A  step-by.:step  approach  is  being  taken  to  absorption  of the  acquis  by  the  candidate 
countries: 

- The  Association Agreement between the  Community,  its  Member States  and  Poland 
entered  into  force  on  1  February  1994.  With  regard  to  the  four  freedoms  and 
approximation  of legislation',  the  Agreement  provides,  in  particular,  for  immediate  or 
gradual  application  of a  number  of obligations,  some  of them  reciprocal,  covering,  in 
particular,  freedom  of establishment,  national  treatment,  free  trade,  intellectual  property 
and public procurement. 

- The  Commission's  1995 .White  Paper  (COM  (95)  163  final),  guidelines  intended  to 
help  the  candidate  countries  prepare  for  integration  into  the  internal  market,  gives  a 
closer  definition  of the  legislation  concerned.  It identifies  the  "key  measures"  with  a 
direct  effect on the  free  movement of goods,  services,  capital  and  persons  and  outlines 
the  conditions  necessary  in  order  to  operate  the  legislation,  including  the  legal  and 
organisational  structures.  Twenty-three  areas  of  Community  activity  are  examined, 
dividing the measures into two stages, in order of priority, to  provide a work programme 
for the pre-accession phase.  The Technical Assistance and Information Exchange Office 
(T AIEX)  was  set  up  with  the  objective  of  providing  complementary  and  focused 
technical  assistance  in the  areas  of legislation covered in the  White  Paper.  A  legislative 
database has recently been established by the Office. 

- The  candidate  countries  will  have  to  transpose  and  implement  all  the  acquis.  The 
"Action plan for the single market" submitted to the Amsterdam European Council gives 
details of the priority measures necessary to  make the single market work better between 
the  Fifteen  in  preparation  for  introduction  of the  single  currency.  This  will  inevitably 
entail changes to the acquis. 

General Framework 

Whatever  their  field  of activity,  undertakings  must  be  able  to  operate  on  the  basis  of 
common  rules.  These  are  important  since  they  shape  the  general  framework  within 
which  economies  operate  and,  hence,  the  general  conditions  of competition.  They 
include  the  rules  on  competition  (on  undertakings  and  State  aid)  and  tax  measures 
discussed elsewhere in this  opinion, the  opening-up of public works,  supply and service 
contracts,  harmonisation  of the  rules  on  intellectual  property  (including  the  European 
patent),  harmoi;iisation  of the  rules  on  company  law  and  accountancy,  protection  of 
personal  data,  transfer  of proceedings  and  recognition  of judgments  (Article 220  EC 
Conventions). 

Descriptive Summary 

The  Polish  Act  on  public  procurement  was  enacted  in  1994  with  a  view  to  creating  a 
uniform system of public procurement based on the principles of openness, transparency 

33 

and  fair  competition.  Several 
implementing  texts  have  been  also  adopted.  An 
independent Office of Public Procurement is responsible for the various aspects of public 
procurement in Poland. 

In the area of intellectual and industrial property,  the Polish legislative system has been 
substantially  overhauled  as  part  of the  country's  transition  to  a  market  economy.  New 
laws have  been adopted in respect  of all  industrial  property  rights  (patents,  trademarks, 
designs and models) and in the area of intellectual property (1994 Act). 

The Polish authorities are planning to  codify the texts on industrial  property and  amend 
them at the same time so as to ensure that they are fully compatible with the Community 
legislation  on  industrial  property  and  the  agreement  on  the  trade  related  aspects  of 
intellectual property rights (TRIPs). The entry into force of the code, originally scheduled 
for  1997,  appears  to  have  been  put  back  until  1998.  Poland  is  a  party  to  the  TRIPs 
agreement which will begin to apply there from  1 January 2000. 

Polish company  law is  governed  by  a  number  of statutes,  principally  the  Commercial 
Code. A wide range of forms of company are recognised under Polish law.  These include 
private  and  public  limited  companies,  of  which  there  are  approximately  I 07 OOO 
currently  registered.  Public  limited  companies  may  issue  shares  to  raise  finance,  and 
there  are  basic  provisions  in  the  law  which  afford  shareholders  protection.  There  are 
minimum  capital  requirements  for  companies.  Creditors  benefit  from  a  basic  level  of 
protection.  The  district  court  keeps  a  commercial  register  in  which  key  information 
about each company is recorded. The register is open to anyone to consult. 

Regarding accountancy law,  Poland's Act on Accounting entered into force on  I  January 
1995.  Several  ordinances  and  regulations  have  been  issued.  Rules  for  consolidated 
accounts have been issued through a resolution.  An Act on Auditors exists (1995) and the 
National  Council of Qualified Auditors issues certificates on rights  of qualified auditors 
and is responsible for their supervision. 

As regards data protection, Article 51  of Poland's new Constitution adopted in May 1997 
contains basic provisions  guaranteeing the  protection  of personal  data.  It also  stipulates 
that the principles and procedures for the  collection and communication of personal data 
will be defined by law.  A bill  has  been under discussion by  Parliament for  several years 
in which provision is  made  for  the  setting-up  of an  independent control  authority  to  be 
responsible for supervising the correct application of the law. 

Current and Prospective Assessment 

In  the  area of public procurement,  the  objectives  of transparency  and  openness  seem  to 
have  been largely  achieved  in  practice,  as  shown  by  the  great  number  of notices  which 
have been published.  However,  the  Polish system needs  to  be  further  improved  to  meet 
all  the  requirements  of the  EC  legislation.  In  particular,  utilities  within  the  sense  of 
Directive 93/38  will need to be completely covered by the rules.  At present, Polish firms 
(or  EU  firms  with  subsidiaries  located  inside  Poland),  obtain  preferential  treatment  as 
regards the award of public procurement contracts. Firms located in the EU will get equal 
access only after the expiry of the transition period set out in the Europe  Agreement.  As 
regards  the  system  of remedies,  the  act  has  created  timely  review procedures,  although 
further  approximation  would  be  needed.  In  this  context,  it  is  expected  that  new 

34 

amendments  could  be  adopted  sometime  in  1997  in  order  to  incorporate  the  remaining 
White Paper measures. 

Regarding  industrial  and  intellectual  property,  Poland  has  already  made  a  substantial 
legislative effort with a view to  setting up a legal  system adapted to  a  market economy 
and  implementing  Article  66  of the  Europe  Agreement.  Although  many  aspects  of its 
legislation already comply with the substance of the directives, the duration of copyright 
protection poses a problem. The Polish authorities have yet to provide a timetable for full 
compliance. Poland envisages completing its current system by acceding to certain WIPO 
conventions.  A  system  of border  enforcement  is  due  to  enter  into  force  in  1997.  It  is 
difficult  at  the  present  stage  to  pass  judgment  on  the  practical  application  of  the 
legislation  adopted  owing  to  a  shortage  of staff and  the  need  for  further  training  of 
personnel assigned to that work. · 

With respect to company law, changes were introduced in 1995 with the aim of  bringing 
Poland's  legislation  largely  into  line  with  the  First  Dire.ctive.  Measures  to  achieve  full 
alignment are shortly to be adopted.  Second Directive provisions were partly reflected in 
a  law  introduced  in  1994,  but  some  harmonisation  is  still  required.  A  comprehensive 
reform  of the  law  in  this  area  which  will  result  in  full  compatibility  with  the  Second, 
Third, Eleventh and Twelfth Directives is intended to be completed by the end of 1997. 

All  legislative  acts  in  the  accounting  field  have  been  prepared  on  the  basis  of  the 
European  Directives  and  international  accounting  standards.  No  further  changes  are 
foreseen.  Certain transitional problems are  in evidence relating to  the  implementation in 
practice of the new rules  including a shortage of qualified accountants and auditors,  but 
these can be solved in the medium term. 

In  the  area  of  personal  data  protection,  it  is  likely  that  the  adoption  of  the  new 
Constitution will enable the  legislative work,  already  in progress for  several years,  to  be 
completed. 

The situation with regard to  civil law appears satisfactory:  a new code of civil procedure 
entered  into  force  on  1  July  1996.  In  addition,  Poland  has  been  invited  by  the  States 
parties to  the  Lugano  Convention on jurisdiction and  enforcement of judgments  in civil 
and commercial matters to accede to  that Convention. This provides a clear indication of 
confidence in Poland's judicial systems. 

Conclusion 

Poland has already taken on many important directives of the sectors indicated above.  In 
respect of the  latter,  implementation of the  provisions  of the  Europe  Agreement and  the 
White  Paper's recommendations  covering the  sectors reviewed,  which  began poorly  has 
improved and is now generally good. 

Regarding public procurement, whilst Poland appears to be moving in the right direction, 
efforts  remain  to  be  made  to  complete  the  approximation  process.  Poland  should  be 
capable of adopting the  intellectual and  industrial property acquis.  Special attention will 
be required to ensure that the measures adopted in this field are effectively implemented. 

35 

Company  law will  not provide an obstacle to  accession,  assuming that current plans  are 
fulfilled.  In accounting,  no  major problems are  foreseen.  As regards  data protection, an 
effort  is  needed  to  fill  the  legislative  gap,  which  should  be  realisable  now that  the  new 
Constitution is in place. 

Free Movement of Goods 

Free movement of goods can be achieved only by removing measures, which restrict trade 
- not only  customs duties  and quantitative restrictions  but all  measures  with equivalent, 
i.e.  protectionist,  effect,  irrespective  of whether  or  not  they  are  specifically  aimed  at 
domestic  or imported  products.  Where  technical  standards  are  not  harmonised,  the  free 
movement of goods must be ensured by  appi.ying  the  principle of mutual  recognition of 
national  rules  and  accepting  the  rule  that  national  specifications  should  be  no  more 
stringent than is required to  achieve their legitimate objectives.  This rule was established 
in the Cassis de  Dijon judgment. 

For  the  purpose  of harmonisation,  the  European  Community  has  developed  the  "New 
Approach"  which  introduces  an  approach  carefully  balanced  between  government  and 
private autonomous bodies and in which European Community legislation and European 
standards  play  a  distinct  complementary  role.  Thus,  instead  of  imposing  technical 
solutions,  European  Community  legislation  is  limited  to  establishing  the  essential 
requirements  which  products  must  meet.  Products  manufactured  in  accordance  with 
European  standards  are  presumed  to  meet  such  essential  requirements,  but  European 
standards are not the only way to prove such conformity.  The "New Approach" works  in 
conjunction  with  the  "Global  Approach"  on  product  certification  which  governs  the 
apposition of the "CE Mark" on the product.  For other products such as pharmaceuticals, 
chemicals,  motor  vehicles,  and  food  products,  European  Community  directives  follow 
the traditional regulatory pattern of providing fully detailed rules. 

The  free  movement  of goods  also  dictates  that  a  number  of Community  harmonisation 
measures  be  transposed  into  national  law.  Implementation  of  health  and  safety 
the  establishment  of 
is  particularly  important  and  requires 
harmonisation  rules 
appropriate mechanisms and organisations, both for businesses and the authorities. 

Two  of the  "horizontal"  directives  essential  to  smooth running  of the  single  market  are 
the  Directive  on  general  product  safety  and  the  Directive  on  liability  for  defective 
products.  The regulations concerning general product safety are covered in the section on 
consumer protection. 

The  rules  on  agricultural  products  (compliance  with  veterinary  and  plant-health 
standards) are explained in detail in the section on agriculture. 

Descriptive Summary 

Poland  has  made  some  progress  towards  establishing  the  conditions  for  the  free 
the  implementation  of  these 
movement  of  goods.  However,  Poland's  approach  to 
provisions for the free  movement of goods and of the Europe Agreement have given rise 
to  a significant number of trade issues in the years since the provisions entered into  force. 
It has already begun to  liberalise its price trade and foreign exchange regimes, and put in 

36 

place  legal  and  commercial  rules  ensuring  legal  security  and  transparency  for  private 
economic operators. 

In  the  field  of certification  of industrial  products,  a  Protocol  on  European  Conformity 
Assessment Agreement was  initialled  in  March  1997  between the  Commission and  the 
It  aims  at  accelerating  the  progress  of approximation  of  Polish 
Polish  authorities. 
legislation  to  the  relevant  EU  legislation  and  improving  the  quality  of the  product 
conformity  system  in  Poland  by  providing  for  the  acceptance,  in  the  EU,  of products 
certified to the "CE mark" in Poland. 

In this  context the  Polish  Government intends  to  propose  to  the  Parliament  in  1997  the 
adoption  of a  new  law  on  testing  and  certification  as  well  as  introducing  in  Polish 
legislation  the  Directives  on  liability  for  defective  products  and  on  general  safety  of 
products.  The Polish authorities also  intend to  introduce many sectoral  directives in this 
field  in  1997  and  1998.  Moreover,  the  list  of products  under  mandatory  certification 
when  imported  into  Poland  has  already  been  signifiqmtly  reduced  and  Poland  has 
undertaken to eliminate before the end of 1997 mandatory certification of products which 
are not regulated in the Community. 

Current and Prospective Assessment 

Steady progress is being made in a number of areas affecting circulation of goods. 

Poland  has  speeded  up  the  resolution  of a  number  of remaining  obstacles  to  trade  over 
the  last  year,  and  has  a  reasonable  track  record  for  meeting  the  deadlines  established 
under  the  Europe  Agreement.  Nonetheless,  further  efforts  are  required  for  the  full 
adoption and implementation of the acquis. 

With  regard  to  technical  barriers  to  trade,  Poland's  previous  divergence  from  the 
Community's certification regime gave rise to significant impairments.  In the meantime, 
solutions  have  been  determined  in  the  framework  of the  Europe  Agreement,  under  the 
form  of the above-mentioned Protocol on European Conformity Assessment Agreement, 
which will facilitate alignment to the acquis in the medium term. 

According  to  the  National  Strategy  for  Integration,  the  Polish  authorities  consider 
standardisation  and  adaptation  of  the  conformity  assessment  procedure  as  strategic 
direction of action to accelerate EU integration and economic growth. 

Concerning  alignment  of  technical  legislation,  the  revised  version  of  .the  Polish 
legislative  work  programme  casts  some  doubts  on  the  completeness  of the  process  of 
approximation  of laws.  Only  some  New  Approach  directives  are  mentioned  for  future 
alignment  without  any  details  on  timing  and  modalities.  Efforts  are  still  required,  in 
particular to accelerate, develop and complete the program of approximation in a number 
of key  sectors  in  which  current  progress  is  still  inadequate  including:  New  Approach 
Directives,  automotive  sector,  chemicals  (detergents  and  dangerous  substances), 
foodstuffs  and pharmaceuticals.  It should  be  borne  in  mind,  in  any  case,  that secondary 
legislation is often necessary in order to  implement the general legislative framework. 

With respect to  standardisation, the concept of voluntary standards, already introduced in 
1993  and  designed  to  replace  the  legally  binding  "branch  standards",  is  still  meeting 

37 

some resistance in the relevant quarters.  This is mainly due to the absence of an aligned 
legislative  framework  with  consequent  confusion  at  institutional  level  about  adopting 
(voluntary)  standards  and/or  legal  provisions,  as  well  as  to  a  limited  resources 
endowment and industry participation in the standardisation activity. 

Currently  the  responsible  institutions  in  the  fields  of metrology,  standardisation  and 
certification are  closely  linked to  the public  authorities,  whereas  full  implementation in 
these  fields  requires  the  establishment  of  authorities  with  a  greater  degree  of 
independence.  The  Polish Committee  for  Standardisation (PKN)  in an affiliate  member 
of the  Comite  Europeen  de  Normalisation  (CEN)  and  of the  Comite  Europeen  de 
Normalisation  Electrotechnique  (CENELEC). · The  creation  of  market  surveillance 
authorities and mechanisms is also necessary in order to  ensure cooperation between the 
relevant  institutions  and  effective  sanctions ... when  products  are  marketed  in  breach  of 
rules concerning conformity. 

Poland's  civil  code  contains  provisions  corresponding  to  fault  liability,  but  these  will 
need to  be  amended to  meet the  EC  requirements  concerning civil  liability for defective 
products. 

In the areas subject to national rules and not covered by Community harmonisation, there 
is  too  little  information  available  to  assess  whether  Community  legal  principles  on  the 
free movement of goods are properly applied in Poland. 

This situation is  explained,  in particular,  by  the  fact  that the reporting procedures which 
form part of the  internal-market machinery are not yet operational  and  so cannot be used 
in  the  pre-accession  period.  The  most  important  instruments  in  this  connection  are: 
Directive  83/189,  requiring  governments to  report  draft national  technical  standards  and 
regulations;  Decision  3052/95  on  measures  derogating  from  the  principle  of the  free 
movement  of  goods;  procedures  by  which  complaints  can  be  submitted  to  the 
Commission;  and  Article  177  of  the  Treaty,  enabling  Member  States  to  ask  for 
preliminary  rulings  from  the  Court  of Justice.  It is  also  hard  to  assess  whether  Poland 
complies  with  the  principle  of mutual  recognition;  more  information  is  required  on  its 
national rules, and on administrative practices, which can have an effect on product sales. 

Conclusion 

Poland  is  progressively  taking  on the  acquis related to  the  free  movement of goods  and 
implementation  of  the  provisions  of  the  Europe  Agreement  and  the  White  Paper's 
recommendations has significantly improved during the last year. 

However  efforts  will  be  needed  before  a  sufficiently  developed  situation  exists  for 
enabling  a  conclusion  to  the  effect  that  the  acquis  will  be  fully  and  effectively 
implemented by Poland. 

The  Polish  authorities  will  also  have  to  ensure  that  national  legislation  in  areas  not 
covered  by  Community  harmonisation  is  unlikely  to  pose  barriers  to  trade,  notably  by 
.verifying that the

measures in force are proportional to the objectives they pursue. 

4 

38 

Free moVement of Capital  · 

The Europe Agreement establishes the principle of the free movement of capital between 
Poland and the EU. This, as far as the obligations of Poland are concerned,  applies from 
the entry into  force of the  EA as  regards direct investments made  by  comp~es already 
established in Poland and as regards branches and agencies of Community companies (as 
well as the ·self-employed), gradually during the transitional period 

The  White  Paper highlights the  link between the  free  movement of capital  and the  free 
movement  of  financial  services.  It  suggests  a  sequence  of  capital  movements 
liberalisation starting from medium and long term control movements and those linked to 
commercial transactions, to short term capital. 

Descriptive Summary 

Poland's  ability  to  attract  Foreign  Direct  Investment  (FDI)  has  been  impressively 
enhanced in recent years. 

In  spite  of"the  international  appreciation for  the  Polish  shock therapy  approach,  foreign 
direct investment (FDI) was off to  a slow start during the initial stages of transition.  FDI 
inflows have  begun to  pick up  considerably since  1994.  In  1996,  the  inflow was  about 
1.8% of GDP.  The cumulative FDI inflow since  1989 reached a level of 4 billion ECU, 
which corresponds to about  100 ECU per inhabitant.  The recent increase has helped the 
restructuring, privatisation and modernisation of Polish industry. 

These developments have been in part due to Poland's liberalised policies concerning the 
free movement of capital in the context of its accession to the OECD in November 1996. 

Some restrictions  still exist on cross-border capital transactions.  However,  the  zloty was 
made  convertible  for  trade  transactions  in  1991,  and  it  achieved  full  current-account 
convertibility  in  1995.  The  zloty  is  fixed  against  a  basket  of currencies  with  a  band  of 
+/-7%,  and  the  central  rate  is  devalued  every  month  by  1 %.  The  exchange  rate  thus 
operates  under  a  clear  regime,  depreciating  in  line  with  announced  policy,  with  few  ad 
hoe  adjustments.  In  1995,  because  of the  strength  of the  external  position,  the  market 
exchange  rate  appreciated  and  the  central  rate  had  to  be  revalued.  Current  account 
convertibility  was  introduced  on  1  June  1995.  Poland  adopted  a  strategy  of gradual 
liberalisation of capital movements, starting from medium and long-term capital followed 
by the by the elimination of restrictions on short-term capital. 

Following  a  number  of  liberalisation  measures  taken  during  1996  the  following 
transactions  have  been  liberalised  or  partially  freed:  direct  investment,  commercial 
credits,  long-term  financial  credits  and  loans  and  personal  capital  movements.  Partial 
liberalisation W<:\S  introduced on investment in real estate, operations in securities and the 
admission of securities to domestic and foreign capital markets.  · 

Current and Prospective Assessment 

Given the increasing stabilisation of the  Polish economy it is  foreseen that foreign direct 
investment  inflows  will  increase in  the  medium  term.  The  settlement of trade disputes 

39 

and the  clarification  of an  investment policy  in  areas  such  as  the  motor  vehicle  sector, 
could help to increase foreign direct investment in the short run. 

Legislation  regarding  the  ownership  of land  and  related  assets  by  foreign  nationals 
remains inadequate and will require clarification and alignment in the medium term. 

The  Polish authorities  intend to  remove  remaining  restrictions  on capital  movements  in 
steps, as follows: 

- by the end of 1998: the rest of medium and long-term capital movements 

- by the end of 1999: all short-term capital movements. 

Investments in real estate in Poland, other than foreign direct investment, will be  the last 
item to be liberalised. 

Conclusion 

The  Polish  government's  efforts  to  liberalise  capital  movements  have  met  with 
considerable  success.  The  recommendations  of both  the  White  Paper  and  the  Europe 
Agreement have  largely  been  implemented.  The  application of the  acquis regarding  the 
ownership  of land  and  related  assets  by  foreign  nationals  may  present  a  significant 
problem in the medium term. 

Further efforts are still required with regard to the liberalisation of capital movements. 

Free Movement of Services 

The  basis  of the  free  movement  of services 
is  the  prohibition  of discrimination,  in 
particular  on  grounds  of nationality,  and  rules  on  the  alignment  of divergent  national 
legislation. These rules often concern both the right of establishment, which comes under 
the heading of the free  movement of persons,  and the freedom  to  provide services.  Their 
implementation  implies  the  establishment  of administrative  structures  (banking  control 
boards,  audio-visual  control  authorities,  regulatory  bodies)  and  greater  cooperation 
between Member States in the area of enforcement (mutual recognition arrangements). 

A  substantial  amount  of the  legislation  applicable  to  the  free  movement  of services 
relates to  financial  services.  It also  concerns the  problems relating to  the  opening-up of 
traditionally  dominated  by  monopolies,  e.g. 
national  markets 
telecommunications and, to  a certain extent, energy and transport. These subjects will be 
dealt with in the sections of the Opinion specifically referring to them. 

the  sectors 

in 

Descriptive Summary 

The five  largest banks, all Polish, represent just under half of the total assets and four of 
them  are  still  in  the  hands  of the  State.  The  banks  owned  or  controlled  by  the  State 
represent  about  50%  of total  assets,  which  highlights  the  fact  that the  privatisation 
process is  far  from  being completed,  even if the  Polish  Government has  announced  that 
two of the main Polish banks will  be privatised in  1997.  The supervising authority is  the 

40 

General  Inspectorate  for  Banking  Supervision,  a  Department  of the  National  Bank  of 
Poland. 

There  is  an  important  Stock  Exchange  in  Warsaw.  As  regards  derivatives,  the  legal 
framework  for trading  in derivatives has  been created;  the  beginning  of trading  in these 
instruments is scheduled to start in the second half of 1997. 

• 

Brokerage  houses  must  be  authorised  by  the  securities  supervisory  authority.  The 
provisions  in  force  forbid  natural  and  legal  persons  to  hold  shares  in  more  than  one 
brokerage house.  The above rule does  not apply to  holdings  in credit institutions, which 
can also  conduct brokerage activities  under approval  of the  securities .authority (e.g.  the 
Securities Commission which is a central body overseen by the Prime Minister). 

Insurance  Supervision  Office 

(PUNU)  examines  applications 

The  State 
for 
authorisations,  analysis  returns  and  balance-sheets  and  investigates  existing  companies. 
Two former State monopolies remain predominant in the life and non-life markets.  There 
are no subsidiaries of foreign insurance companies but around a third of Polish insurance 
companies have EU shareholders in their capital.  Full freedom  for  foreign  companies to 
conduct  insurance  services  and  uniform  licence  permits  for  the  activity  will  not  be 
introduced before 2000. 

41 

Current and Prospective Assessment 

The  banking  directives  of the  first  stage  are  largely  if not  totally  implemented.  The 
solvency  ratio  is  set  out  in  a  Regulation  7 /93  of the  National  Bank  of Poland.  The 
regulations  governing  the  Solvency  ratio  in  Poland  are  based  on  the  relevant  EU 
directives  and  the  recommendations  of the  Basle  Committee  for  Banking  Supervision. 
For obtaining authorisation to conduct banking activities a minimum equity capital of no 
less than ECU  5 million is required.  Credit institutions  applying  for  a  foreign  exchange 
license  must  fulfil  some  other  requirements  (higher  solvency  ratio,  a  capital  base 
amounting  to  not  less  than  120%  of  the  minimum  capital  requirements  for  credit 
institutions). 

As  regards  the  deposit  guarantee  scheme,  on  14  January  1994,  the  Act  on  the  Bank 
Guarantee Fund was adopted in Poland (as amended on 20 February  1997). This Act sets 
out the  principles  for  the  establishment  and  operations  of statutory  and  voluntary  bank 
deposit guarantee  schemes.  The  Act provides  protection to  deposits  in  Polish or foreign 
currency,  irrespective  of  the  number  of"  contractual  agreements  the  depositor  has 
concluded with the bank.  To align fully  on the  EC  requirements, the guarantee threshold 
would have to be gradually raised. 

As regards prevention of money  laundering,  banks  are  required  to  verify the  identity of 
customers and  identify transactions  which they perform in excess  of 20 OOO  zloty (ECU 
5 700)  and  to  notify  the  public  prosecutor's  office  if there  are  justified  grounds  for 
suspecting that' money laundering  is  being performed.  There  is  no  obligation to  identify 
all holders of bank accounts. 

With respect to the second stage directives, the situation is the following:  as regards large 
exposures,  two  separate  limits  are  specified  - one  of 10%  of a  credit  institution's  own 
funds  on  an  exposure  arising  from  a  single  client,  and  one  of  15%  on  the  bank's 
aggregate  exposure  to  a  group  of  related  clients;  as  regards  annual  accounts,  the 
requirements  are  basically  in  line  with  those  stipulated  in  the  relevant  EU  Directives. 
Credit  institutions  which  are  parent  companies  ~ere obliged  to  draw  up  consolidated 
accounts for the first time  in  1995  and this  has  been therefore  also  the  first time that the 
National Bank of Poland analysed the consolidated accounts of banking groups.  There is 
no general regulation concerning capital adequacy for risks other than credit risk. 

With  respect  to  the  treatment  of foreign  banks,  a  foreign  bank  can  open  a  branch  in 
Poland but this requires the consent of the President of the National Bank of Poland.  His 
ruling  may  specify  the  proportion  of the  bank's  foreign  capital.  Apart  from  that,  both 
prudential  regulations  and  the  manner  in  which  supervision  is  performed  apply  without 
discrimination to  foreign banks provided that the privatisation process is speeded up. 

Listed companies and brokerage houses are  subject to  periodic information requirements 
to  the  supervisory authority.  Price sensitive information has to  be  disclosed to  the public 
as  soon as  possible.  Foreign issuers  may  be  admitted  to  official  listing.  The  adaptation 
process of the Polish legal  system to  the  EU  standards  started in  1991  with the  adoption 
of the Act on public trading in securities and trust funds,  recently amended in  1994. This 
Act  is  intended  to  meet  the  fundamental  principles  laid  down  in  EU  Directives 
concerning  public  offers  of  transferable  securities,  insider  dealing,  acquisition  and 
disposal  of major  holdings,  collective  investment  undertakings  and  investment  firms. 

42 

Furthermore  it  established  the  Securities  Commission,  a  central  body  overseen  by  the 
Prime Minister, entrusted with supervisory responsibilities in the  securities sector.  Right 
of appeal is granted against any decision taken by the supervisory authority. 

On July  1996 Poland signed the OECD Accession Agreement which became effective in 
November. This has given an impetus to the liberalisation of securities market for foreign 
investors. A reform is in preparation to improve the present legislation in order to bring it 
into line with all the EU requirements. 

Polish  insurance  law  has  in  principle  been  created  according  to  the  European 
Community's  directives  on  insurance  and  conforms  with  Stage  1  requirements. 
Problems  exist  regarding  the  establishment  of  adequate  supervision  and  controls. 
Financial requirements are aligned with EU  criteria and  the  solvency margin calculation 
is  in  line  with  the  1 st  Generation  Directives.  The  access  and  investment  aspects  of the 
Polish  market  are  more  restrictive  than  EU  stage  2  legislation  allows.  The  current 
investment restrictions on insurance companies  do  not seem compatible with the  Treaty 
of European Union provisions  on the  free  movement  of capital  (Articles  73(b),  (d)  and 
104(a)) and will have to be amended prior to accession. 

Conclusion 

A  significant  improvement  in  the  domain  of banking  privatisation  remains·  a  major 
priority for  accession.  Significant progress has  been achieved in the  banking' sector.  The 
First  Banking  Directive,  Solvency  Ratio  Directive,  Directive  on  Prevention  of Money 
Laundering,  all  stipulated in the  White  Paper as  stage  1 measures,  are already totally  or 
partially incorporated into existing Polish legislation.  However, the banking sector needs 
further  reform.  Problems  are  mainly  in  the  field  of capital  adequacy  for  market  risks, 
consolidated  supervision  and  special  requirements  regarding  establishment  of foreign 
branches.  However,  provided  harmonisation  and  privatisation  proceed  as  planned,  no 
major difficulties are foreseen in achieving full  approximation in the banking area. 

As  regards  the  capital  market  and  the  insurance  sector,  one  can  have  the  same 
assessment,  even  if not  all  the  relevant  directives  have  been  incorporated  in  the  Polish 
legislation. But both the organised markets and the insurance market are functioning well 
and developing quickly. 

Taken  as  a  whole  the  Polish  financial  sector  is  supervised  in  a  satisfactory  way  by  the 
competent  authorities,  and  one  can  expect  significant  improvement  before  2000,  which 
would facilitate the accession process. 

Free Movement of Persons 

The  free  movement  of  persons  encompasses  two  concepts  with  different  logical 
implications  in  the  Treaty.  On  the  one  hand,  Article 7a  in  Part  One  of the,. Treaty  on 
'Principles'  mentions  the  concept  in  connection  with  the  establishment  of the  internal 
market  and  implies  that  persons  are  not  to  be  subject  to  controls  when  crossing  the 
internal  frontiers  between the  Member States.  On  the  other hand,  Article 8a  in  Part Two 
of  the  Treaty  on  'Citizenship  of  the  Union'  gives  every  citizen  of  the  Union  the 

43 

individual  right  to  move  and  reside  freely  within  the  territory  of the  Member  States, 
subject to certain conditions. 

The abolition of frontier  checks  must apply  to  all  persons,  whatever their nationality,  if 
Article 7a is not to be meaningless.  While the rights deriving from Article 8a apply in all 
Member  States,  those  stemming  from  Article 7a  have  not  yet  been  fully  applied 
throughout the Union. 

(a) Free Movement of Union Citizens.  Freedom of Establishment and Mutual Recognition 
ofDivlomas and Qualifications 

The Europe Agreem~nt provides for the non-discriminatory treatment of workers that are 
legally  employed  (as  well  as  their  families).  It covers  the  possibility  of cumulating  or 
transferring  social  security  rights,  and  encourages  member  states  to  conclude  bilateral 
agreements  with  Poland  on  access  to  labour  markets.  During  the  second  phase  of the 
transitional period,  the Association Council  will  examine  further  ways  of improving the 
movement of workers. 

The White Paper considers the legislative requirements in order to  achieve a harmonious 
development  of  the  labour  market,  whilst  simultaneously  preventing  distortions  of 
competition. 

The  free  movement  of workers  is  one  of the  fundamental  freedoms  enshrined  in  the 
Treaty;  freedom  to  practise certain professions  (e.g.  in  the  legal  and  health  fields)  may, 
however, be subject to  certain conditions,  such as  qualifications.  Depending on the  case, 
these  may  be  dealt  with  through  coordination  or  by  applying  the  principle  of mutual 
recognition. Freedom of establishment is also guaranteed under the Treaty and covers the 
economic activity of self-employed natural persons and companies. 

The  free  choice  of place  of residence  may  thus  be  subject to  minimum  conditions  as  to 
resources  and  health  insurance  where  the  person  does  not  exercise  a  profession  in  the 
country concerned. 

Descriptive Summary 

From  an  early  stage  of the  reform  process  Poland  has  maintained  a  relatively  open 
approach to  the  movement of persons onto  its territory with visa requirements abolished 
for  EU citizens.  Right of residence is  granted by  the visa or a residence  card  equivalent 
to  a residence  permit.  A  residence  permit  is  a pre-condition  for  a work  permit.  Work 
permits  are  granted  depending  on  the  local  labour  market  conditions  and  further 
alignment  will  be  required  to  improve  access  to  employment  for  non-Polish  nationals. 
Whilst  nationality  is  not  a  sufficient  reason  to  refuse  work  permits  to  EU citizens,  the 
equal  treatment  of EU  citizens  will  require  further  amendments  to  existing  national 
legislation. 

Current and Prospective Assessment 

Concerning  the  mutual  recognition  of diplomas  and  qualifications,  the  acquis  is  only 
partly  and  formally  achieved.  Ministries  and  public  bodies  are  in  place  for  many 
professions,  but  will  probably  need  to  be  reinforced.  Integration  with  EU  professional 

44 

associations  is  developing  well,  for  example  engineering  diplomas  already  meet  the 
minimum European standards. 

Conclusion 

Concerning the mutual recognition of qualifications and diplomas, the task of compliance 
should be achievable in the medium term if current efforts are intensified. 

Significant  efforts  are  required  to  resolve  outstanding  issues  regarding  the  free 
movement of persons in the medium term. 

(b)  Abolition of Checks on Persons at Internal Frontiers 

The free movement of persons within the meaning of Article 7a of the EC Treaty, i.e. the 
abolition of checks on all persons, whatever their nationality, at the internal frontiers  has 
not  yet  been  fully  implemented  in  the  Union.  Doing  away  with  checks  on  persons  is 
conditional  on  the  introduction  of a  large  number  of accompanying  measures,  some  of 
which  have  yet  to  be  approved  and  implemented  by  the  Member  States  (see  separate 
section  on Justice  and  Home  Affairs).  However,  that  objective  has  been  achieved  by  a 
limited number of Member States  in accordance  with the  Schengen Convention  (seven 
Member States already apply it and another six are working towards implementation). 

The  draft  Treaty  aims  to  make  that  objective  easier  to  achieve within  the  Union  by 
including a new chapter on an "area of freedom,  security and'justice" and  incorporating 
the Schengen acquis into the EU. 

Poland has stated its desire and readiness to  fulfil  the provisions of the Schengen acquis. 
It has  begun  preparations  to  this  end and  has  sought  assistance  in  this  connection  from 
Member States, notably in regard to the strengthening of border controls. 

General Evaluation 

I.  Poland's progress  in  the  implementation of legislation  relating  to  the  White  Paper  is 
summarised in the annex.  According to  the table,  Poland considers that by 30 June  1997 
it will  have adopted national  implementing legislation for  405  of the  899 directives and 
regulations in the White Paper. That figure  covers provisions for which Poland considers 
it  will  have  adopted  implementing  legislation  or  which  it  will  have  checked  for 
compatibility with Community rules  and does  not prejudge actual  compatibility as  such, 
on which the Commission is not able at this stage to state an opinion. 

2.  Poland  has  made  substantial  progress  with the  alignment  of its  legislation in  most of 
the areas covered in this chapter, with the result that large parts of the acquis are already 
in  place.  Legislation  has  been  adopted  in  full  or  in  part  to  implement  many  of the 
measures according to  the Polish authorities'  assessment, though the Commission cannot 
at  this  stage  express  a  position  on  its  total  compatibility  with  Community  law.  Still,  a 
considerable amount of legislative work remains  to  be  done,  not all  of which appears  at 
this  stage  in  the  legislative  programme.  Public  procurement,  data  protection  and 
liberalisation  of capital  movements  are  areas  in  which  a  particular  effort  remains  to  be 
made. 

45 

3.  Despite  the  efforts  made,  practical  measures  still  need  to  be  implemented  and  an 
efficient administrative structure  set up  to  back up  the  genuine  progress  made  in taking 
over the most recently adopted texts. A substantial effort in that direction is still required 
in  some  areas,  notably 
the  field  of  technical  regulations  and  standards.  The 
implementation of the Protocol on European Conformity Assessment Agreement should 
help  speed  up  the  process  of  approximation  in  this  field.  The  development  of the 
infrastructure required  in order to  implement and enforce Community legislation is  also 
linked to a certain extent to the rate of approximation of legislation in the various sectors 
of the internal market. 

As things currently s~and, the Commission cannot yet express an opinion on the capacity 
of companies, particularly small ·and medium-sized businesses, to implement the acquis. 

4.  Leaving  aside  certain  specific  aspects  relating  to  agriculture,  checks  at  the  internal 
frontiers of the Union can only be abolished once sufficient legislative harmonisation has 
been  achieved.  This  calls  for  mutual  confidence,  based  in  particular  on  sound 
administration  (e.g.  the  importance  of safety  checks  on  some  products  at  the  place  of 
departure).  As  far  as  goods  are  concerned,  the  completion  of the  internal  market  on 
1 January  1993  was  only  achieved  by  doing  away  with  all  the  formalities  and  checks 
performed by the Member States at the  internal borders of the Union.  In particular these 
checks  covered  technical  points  (product  safety),  veterinary,  animal-health  and  plant 
health  matters,  economic  and  commercial  matters  (e.g.  prevention  of counterfeiting  of 
goods),  security  (weapons,  etc.)  and  environmental  aspects  (waste,  etc.).  In  most cases, 
the  abolition  of checks  was  only  made  possible  by  the  adoption  and  application  of 
Community measures harmonising the rules  on movement and placement on the market 
(particularly as regards product safety) and, where applicable, by shifting the place where 
controls  and formalities within the Member States or on their markets  are  conducted (in 
particular as  regards  VAT and excise duties,  veterinary and plant-health checks,  and the 
collection  of statistics).  A  section of Poland's present borders  will  become the  Union's 
external  frontier  and this  means  border checks  will  need to  be  stepped  up  (see  separate 
section on customs). 

In view of the overall assessment that can be  made of progress achieved to  date  and the 
rate  at  which  work  is  advancing  in  the  various  areas  concerned,  there  is  currently  no 
reason to doubt that Poland will be able, in the medium term, to take over and implement 
all the instruments required to abolish internal border checks and to transfer those checks 
to the Union's external frontier. 

5.  Poland  has  already  adopted  a  substantial  part  of the  acquis  relating  to  the  single 
market.  However,  the  Commission  is  not  yet  able  to  take  a  position  on every  measure 
whose  transposition  has  been  reported  by  Poland.  In  any  case,  further  efforts  will  be 
needed  with  regard  notably  to  public  procurement  and  liberalisation  of  capital 
movements,  areas  where  progress  has  been  less  advanced.  In  many  areas,  enforcement 
needs ·to  be  strengthened.  However,  in  the  medium  term,  provided  that  current  efforts 
continue,  or are  stepped  up  in  areas  where  progress  is  lagging,  it  can  be  expected  that 
Poland  will  have  adopted  and  implemented  the  Single  Market  acquis  and  made  the 
necessary progress on the mechanisms for  enforcement, in order to  be ·able to  participate 
fully in the internal market. 

46 

Competition 

European  Community  competition  policy  derives  from  Article  3(g)  of  the  Treaty 
providing  that  the  Community  shall  have  a  system  ensuring  that  cdmpetition  in  the 
internal market is not distorted.  The main areas of application are anti-trust and state aid. 

• 

The Europe Agreement provides for a competition regime to  be applied in trade relations 
between the Community and Poland based on the criteria of Articles 85  and 86 of the EC 
Treaty (agreements between undertakings/abuses of dominant position) and in Article 92 
(State aid)  and for implementing rules in these fields  to be adopted within three years of 
the entry into force of the Agreement. 

· 

' 

Furthermore, it provides that Poland will make its legislation compatible with that of the 
Community in the field of competition. 

The  White Paper refers to  the progressive application of the  above  provisions and those 
of the  Merger  Regulation  ( 4064/89)  and  of Art.  3 7  and  90  (Monopolies  and  Special 
Rights). 

Descriptive Summary 

The Act of 24February 1990 on  "Counteracting Monopolistic Practices" as amended by 
the Act of 3 February  1995, provides for  a general  prohibition of monopolistic  practices 
and  indicates  examples  of prohibited  agreements;  it  contains  a  general  prohibition,  sets 
out a list of abuses of a dominant position, and provides for merger control. 

The Polish  Office for Competition  and Consumer Protection, founded in April  1990, is 
responsible  for  the  enforcement  of  competition  law. 
Its  duties  include  registering 
businesses which have a monopolistic position, counteracting anti-competitive practices, 
researching concentrations in the economy, and monitoring prices in markets with limited 
companies.  There  is  also  an Antimonopoly Court which has  already  gained experienced 
in the competition field. 

Exclusive  rights  have  been  granted  to  the  state-owned  Polish  telecommunications 
company.  In the  area  of voice  telephony,  this  state  operator  has  the  exclusive  right to 
provide  international  services.  Moreover,  a  number  of public  and  private  companies 
enjoy special rights in sectors where business activities require the acquisition of permits 
or  licenses.  Such  companies  operate  in  particular  in  the  fields  of prospecting,  mining, 
shipping,  air  transport,  harbour  and  airport  management,  pharmaceuticals,  spirits  and 
tobacco  product  manufacturing,  beer  wine  and  vodka  trading,  non-ferrous  metal 
processing,  sound  and  image  recording,  trading  in  pesticides  and  export/import  of a 
number of products. 

The monitoring  authority on state aid  is  a department within the Ministry of Economic 
Affairs.  It took up its functions  only on  1 January  1997 and the legislation necessary for 
it to  control the  granting of state aid  in  Poland still  needs to  be  established.  A draft law 
on  the  monitoring  of state / aid  is  under  preparation,  but  currently  no  information  is 
available on when it will be adopted. 

47 

As  regards  transparency  in the  granting  of state  aid  in  Poland  a  first  aid  inventory  was 
made covering the year  1994.  However, this aid inventory includes aid granted by local 
authorities and indirect forms of aid, in particular aid granted by the Ministry of Finance. 
A new aid inventory on state aid granted through the Ministry of Finance is  about to  be 
established and the monitoring authority  on state aid is  about to  establish a  database  on 
existing aid in cooperation with the Ministry of Finance .. 

A  number  of export  aid  schemes  exist  which  are  incompatible  with  the  Community 
acquis. 

Current and Prospective Assessment 

In the field  of anti-trust a  legislative  framework  based on the principles  of Community 
competition  law  is  in  place.  However,  important  adjustments  are  still  needed,  in 
particular  in  the  field  of merger  control,  the  powers  to  conduct  inspections  on  the 
premises of companies suspected of having infringed the law and as regards the adoption 
of block exemptions.  Moreover, further adjustments are needed as regards the provisions 
in the law concerning abuse of dominant position and in respect of procedures. 

As  regards  special  or  exclusive  rights  certain  adjustments  are  needed 
in  the 
telecommunication  sector  to  comply  with  the  Community  acquis  on  liberalisation  of 
terminal  equipment,  voice 'telephony  and  mobile  telephony.  Further  clarifications  are 
needed as regards the provision of postal services.  Furthermore, it seems that the system 
for  granting  licences  in  the  sector  for  oil,  tobacco  and  alcoholic  beverages  need  to  be 
amended to comply with the Community acquis. 

In the field  of state aid much work still lies ahead.  The rules  for  the monitoring of state 
aid  still  need  to  be  established,  in  particular  the  power  of the  monitoring  authority  to 
collect all  information necessary  to  examine  the  compatibility  of any  aid  measure  with 
the Europe Agreement and the obligation to await the opinion of the monitoring authority 
before the aid is granted. 

Transparency  in the granting  of state  aid  has  not reached  a  satisfactory  level.  Work is 
underway to  establish a second and improved aid inventory, but currently no  information 
is  available  on  when this  will  be  finalised  and  whether credible  monitoring  of state  aid 
will then be implemented. 

Certain aid measures seem to  be contingent upon export performance which is clearly not 
compatible with the Europe Agreement.  Moreover, an important part of state aid seems 
to be granted through indirect forms of state aid, such as tax relief, debt write-offs and tax 
arrears.  These  aid  measures  constitute operating aid which are  only allowed under very 
strict  conditions.  Due  to  the  lack  of transparency  it  is  as  yet  unclear  whether  the 
conditions  for  granting  operating  aid  are  complied  with.  The  future  inventory  should 
cover  all  measures  granted  by  the  State,  regional  or  local  authorities  or  through  State 
resources. 

In  addition  to  the  adoption  of legislation  sufficiently  approximate  to  that  of the  EC, 
credible e11forceme11t of competition law requires the establishment of effective anti-trust 
and  state  aid  monitoring  authorities.  It requires  moreover  that  the  judicial  system,  the 

48 

public administration and the  relevant economic operators have sufficient understanding 
of competition law and policy. 

Conclusion 

Approximation in the area of anti-trust is progressing, although efforts are indispensable 
to  adapt the  existing  legislation.  The  Office  for  Competition and  Consumer  Protection 
seems to  function rather well  and  seems sufficiently equipped and  skilled to  enforce the 
law. 

In the field  of state aid progress has been somewhat limited.  Considerable effort will be 
necessary to fulfil the requirements in the field of state aid control over the medium term, 
in particular as  regards  the  rules  for  the  functioning  of the  monitoring authority  and the 
establishment of the necessary degree of transparency.  Further support to  the monitoring 
authority  to  carry  out  its  activities  will  be  necessary  to  ensure  the  compatibility  of aid 
granted. 

J.2 

Innovation 

Information Society 

Present Situation 

The  economic  and  social  effects  made  possible  by  the  combination  of  information 
technology  and  telecommunications  are  great. 
In  Poland  these  possibilities  were 
neglected before  1989 although education generally was not.  The result seems to  be that 
demand  for  computers  has  spurted  beyond  normal  expectation  deduced  from  GDP  per 
capita.  The number of PCs was said to be 7 .3  per 100 inhabitants in 1994.  The existence 
of host  computers  on  the  Internet  (1.4  per  1000  inhabitants),  as  a  relative  measure  of 
development towards the Information  Society,  suggests that  Poland has  not reached the 
average for the CEECs.  This result is not commensurate with the above average level of 
interest taken by Polish bodies in 
..-~C research programmes and it may be because of the 
enduring shortage of telephone  lines coupled with poor quality of service.  As the effect 
of the main public operator's network modernisation comes to be felt,  the growth of data 
traffic can be  expected to accelerate.  If Internet hosts follow the same pattern of growth 
found  elsewhere  in analogous countries, the  telecommunications infrastructure,  which is 
at  present  but  ten  years  behind  the  EU  average,  may  remain  a  brake  on  information 
society developments. 

Conclusion 

Although  interest  has  been  shown  in  the  country  to  developments  in  the  information 
society,  increase  in access  to  networks  has  been  slowed down by  the  slow development 
of advanced communications. 

49 

Education. Training and Youth 

Articles 126 and 127 of the EC Treaty provide that the Community shall contribute to the 
development of quality  education  and  implement  a  vocational  training  pelicy aimed  at 
promoting the  European dimension  in education  and  at  enhancing  industrial  adaptation 
and the responsiveness of the labour market through vocational training policies. 

The  Europe  Agreement  provides  for  cooperation  in  raising  the  level  of education  and 
professional qualifications.  The White Paper includes no measures in this field. 

Descriptive Summary 

Poland's spending on education· amounts to  6.2% of GDP.  It takes  up  16% of the  state 
budget. 

There  are  11  universities,  8 700 OOO  pupils,  800 OOO  students  and  540 OOO  teachers  in 
Poland. 

The  quality  of Polish  education  suffered  in  the  years  before  1989  from  the  country's 
isolation.  Overall  standards  were  high,  but  the  education  system  was  under  political 
control.  Since  1989,  an educational  reform  programme  has  liberalised  curricula,  given 
headmasters  greater  autonomy  and  sought  to  address  more  flexible  employers'  needs. 
Responsibilities for  management and direction of schools  was  given to  the  voivodships, 
which report to the Ministries of National Education. 

The  Ministry's  'education  offensive'  strategy, ·aimed  at  the  upgrading  of the  level  of 
education in Poland to  European  educational  standards  over the  next  15  years,  lists  the 
main challenges for the Polish education and training system which are:  (i) the reform of 
the vocational education system with the aim of reducing training in the basic vocational 
schools;  (ii)  an  increase  in the  number  of pupils  in  secondary  education  leading  to  the 
'matura' examination; (iii) an increase in the student population of 20% of the 20-24 age 
group  by  1997;  (iv)  diversification  and  expansion  of post-matura  professional  training 
possibilities through, among other things, the introduction of professional higher learning 
institutions offering the  license degree;  (v)  development of continuing education for  the 
purpose of training and retraining, and makin~ it accessible to all age groups. 

The  Tempus  programme  has  contributed  to  the  achievement  of the  goals  of higher 
education  reform  and  created  the  basis  for  cooperation  with  the  EU higher  education 
institutions. 

Polish youth organisations have  been involved  in European  youth  activities  since  1990. 
From  1995,  youth  cooperation  with  Poland  was  included  in  the  Youth  for  Europe 
programme. 

Current and Prospective Assessment 

Poland  has  made  considerable  progress  during  recent  years  in  the  fields  of education. 
Further  efforts  will  be  needed,  especially  to  meet  the  requirements  of  the  market 
economy. 

50 

In the vocational training field significant efforts have been undertaken which had mainly 
an  impact  on  regional,  local  and  institutional  levels.  Reforms  at  national  level  are  to 
follow these developments. 

It  is  foreseen  that  Poland  will  participate  in  the  Community's  human  resource 
programmes and this will contribute further to the preparation for integration. 

Conclusion 

In the perspective of accession, no major problems should be expected in these fields. 

Research and Technological Development 

Research and technological  development activities  at  Community  level,  as  provided  for 
by the Treaty and in the Framework Programme, aim at improving the competitiveness of 
European  industry,  the  quality  of life,  as  well  as  supporting  sustainable  development, 
environmental protection, and other common policies. 

The  Europe  Agreement  and  its  additional  Protocol  provides  for  cooperation  in  these 
areas,  notably  through  participation  in  the  Framework  Programme.  The  White  Paper 
includes no direct measures in this field. 

Descriptive Summary 

The  Committee  for  Scientific  Research  is  the  main  Polish  Science  and  Technology 
institution,  established  in  January  1991  and  responsible  for  implementing  science  and 
technology  policy,  managing  strategic  government  programmes  and  planning, 
coordinating  and  financing  all  state  funded  activities  in  this  field.  Competitive 
mechanisms for  research funding  are  introduced.  Current science  expenditure  represents 
0.8% of GDP since 1992. 

Priority areas for  1994-97 are:  health and environmental protection;  agriculture and food 
processing;  modern 
including  defence;  development  of 
infrastructure for science, education and technology. 

technology 

industries, 

Regular  cooperation  with  the  European  Community  started  in  1992  with  the  3rd 
Research and Technology Development Framework Programme.  So  far,  cooperation has 
(Specific  Programme  for  Cooperation  with 
mainly  concentrated  on  COPERNICUS 
CECs  and  NIS)  and  remains  rather  low  for  participation  in  the  4th  Framework 
Programme. Poland is a member of COST (European cooperation in the field of scientific 
and technical research) and EUREKA (European Research Coordination Agency). 

From 1994 data and statistics in this sector are compatible with OECD standards. 

Current and Prospective Assessment 

the  research  and 

In 
important  changes  and 
technological  development  sector 
improvements have already taken place.  A big effort has  been made  in the  improvement 

51 

of the internal structure, liberalisation, financial  support.  Human resources and potential 
remain strong despite the cutbacks. 

Nevertheless,  it  is  necessary  to  improve  the  level  of innovativeness  in  the  economy 
generally and in industry in particular and to  enforce the links of research institutes with 
industry and small and medium enterprises. 

Poland  is  prepared  to  play  an  active  role  in  the  European  research  and  technological 
development and allocate the necessary funds to its activity.  A part of the Committee for 
Scientific Research's  budget was  allocated to  cover the  participation of Polish scientists 
in  the  programmes  of the  4th  Framework  Programme,  Eureka  and  COST.  Poland  has 
declared its interest in full association with the Sth Framework Programme. 

Conclusion 

In the  perspective  of accession no  major problems  are  expected  in this  field.  Accession 
would be of mutual benefit.  . 

Telecommunications 

The  objectives  of EU telecommunications policy  are  the  elimination of obstacles  to  the 
effective  operation of the  Single Market in telecommunications equipment, services  and 
networks,  the  opening  of foreign  markets  to  EU  companies  and  the  achievement  of 
universally  available  modem  services  for  EU  residents  and  businesses.  These  are 
achieved through harmonisation of the  standards and conditions for service offerings the 
liberalisation  of the  markets  for  terminals,  services  ~d networks  and  the  adoption  of 
necessary regulatory instruments. The Directives and policies needed to achieve this have 
now been  established,  but the  liberalisation of public  voice  telephony  and  operation of 
related  infrastructure  will  be  deferred  for  a  year  or  two  after  1998  in  certain  member 
states. 

The  Europe  Agreement  provides  for  cooperation  aimed  at  enhancing  standards  and 
practices  towards  EU  levels  in  telecommunication  and  postal  policies,  standardisation, 
regulatory approaches and the modernisation of infrastructure.  The  White Paper focuses 
on  the  approximation  of regulation,  networks  and  services,  followed  by  further  steps 
ensuring gradual sector liberalisation. 

Descriptive Summary 

In  the  late  1980s  Poland's  penetration  rate  of telephone  lines  was  one  of the  lowest  in 
Europe  and  the  network  consisted  of obsolete  equipment.  Telecommunications  wereO 
especially weak in rural areas. 

A  new  telecommunications  law  enacted  in  1990  created  a  new  legal  personality 
(Telekomunikacja  Polska  - Spolka  Akcyjna)  for  the  national  operator  and  introduced 
liberalisation  go1ng  beyond  the  minimum  required  within  the  EU  at  that  time.  The 
ministry  issued  many  licences  to  companies  wishing  to  become  new  local  operators. 
After  the  change  of  government  in  1993,  the  policy  for  the  sector  reverted  to 

52 

monopolistic  practices  and  other  operators  have  only  recently  managed  to  become 
operational in face of poorly regulated behaviour by TPSA. 

TPSA had expanded telephone penetration of the sector to  19 per 100 at the end of 1995. 
The  government's  relatively  modest  aim  of having  27  lines  by  the  year  2000,  for  the 
moment  seems  achievable  if  the  independent  operators  become  effective. 
The 
government has  yet to  devise  a policy  for  assuring  universal  access  to  services  in  rural 
areas, where the penetration rate still remains very low. 

The  1990  law  still  stands  with  the  addition  of some  new  ministerial  powers  in  1995 
resulting in a more rational licensing policy for local operators.  Last year,  licences were 
granted  to  two  competing  mobile  telephone  networks  using  the  pan-European  digital 
standard (GSM). 

Current and Prospective Assessment 

Degree ofLiberalisation 

The  1990  law  introduced  liberalisation going  beyond the  minimum  required  within  the 
EU at the time by allowing competition in all parts of the sector except for  international 
services.  This  bold step was not followed through and TPSA,  incorporated in  1992,  still 
has a monopoly of both long distance and international traffic and has  98. 7%  of all  local 
lines.  After  several  lost  years,  the  Ministry  has,  since  1995,  adopted  a  more  measured 
licensing policy.  However,  delays,  often related to  problems with interconnection,  have 
resulted  in  local  operators  only  recently  becoming  operational  so  that  they  have 
contributed  less  than  3%  of the  3  million  lines  added  since  the  1990  law  was  enacted. 
Restrictions on the extent of foreign ownership, limitations on non-Polish participation in 
Boards of Directors and the difficulty of dealing with TPSA both for interconnection and 
as  a competitor,  act as  a barrier to  foreign  investment in  many  cases.  Alternative  fixed 
infrastructures can be licensed to provide competing telecommunications services but this 
has so far been permitted only on a very restricted basis. 

By  contrast,  the  mobile  sector  is  highly  competitive  with  one  NMT  450  licence,  two 
GSM licences granted in 1996 and a further one expected before the end of 1997. 

- Poland's  regulatory  policy  for  the  sector  must  become  considerably  more 
equitable as between TPSA and other operators in order to comply with the acquis. 

Avvroximation to  EC Law 

The  1990 Polish Communications Act was amended in  1995.  The regulatory framework 
also  contains  two  other  important  laws.  The  first,  the  Law  on  Economic  Activity  with 
Participation of Foreign Parties,  regulates  investment.  The  second,  the  State  Enterprise 
Privatisation Act, concerns the privatisation of State enterprises.  The spirit of these laws 
generally  is  to  accelerate  development  by  permitting  privatisation  and  investment  by 
foreign  companies in Poland.  However,  the  Communications Act sets  limits  on foreign 
ownership  in  some  parts  of the  sector  and  this  is  contrary  to  the  acquis  in  so  far  as  it 
applies to EU companies and nationals. 

53 

It is  not entirely clear that all  operational  functions  were effectively transferred from  the 
ministry  when  TPSA,  the  main  public  telecommunications  operator,  was  set  up.  As 
regulatory  functions  remained  in  the  ministry, · further  measures  will  be  needed  to 
demonstrate the separation required by the acquis.  TPSA holds a statutory monopoly for 
international  traffic.  TPSA' s  monopoly  of  long  distance  traffic  arises  because  the 
government has decided not to license additional entrants.  About 24% ·by number of EU 
legal documents have been incorporated into Polish law. 

Polish legislation permits the  government to  allow competition in all  parts  of the  sector 
except  international  services.  Equitable  regulatory  policies  are  needed  where  services 
have already been liberalised to set rules for interconnection which encourage investment 
and  which  promote  achievement  of  universal  service.  Poland  probably  has  the 
administrative  capacity  to  comply  with  Community  legislation  and  a  new  law  is  in 
preparation  that  is  intended  to  complete  the  task.  However,  stronger  policy  initiatives 
will also be needed to comply with the acquis by 2003. 

Infrastructure 

In the late  1980s the penetration rate of telephone  lines was  one of the  lowest in Europe 
and  the  network  was  both  obsolete  and  poorly  designed.  The  initial  aim  of  the 
government  in  1990  was  to  expand  and  to  modernise  the  public  telecommunications 
infrastructure  and to  improve  the  quality  of services  available  as  soon as  possible.  The 
measures  taken recognised that Polish circumstances were  not comparable with those  in 
even the EU' s least developed states and that relying solely on the growth achievable by 
the  existing  monopoly  operator  would  not  be  sufficient.  Between  1991  and  1995  the 
network grew from  9 .3  lines per 100 inhabitants to  17 .1  (but the penetration rate remains 
very low in rural areas) and the government aims to  h~ve 30  lines per 100  inhabitants by 
the  year 2000  (to  be  compared to  44  lines per  100  inhabitants presently as  an average in 
Ireland-Portugal-Greece).  There  is  a  large  number  of unsatisfied  requests  for  lines.  The 
number of subscribers  for  mobile  telephony  service currently  is  about  1.3  lines per  100 
inhabitants.  Digitisation  of the  network  reached  20%  in  1995  (compared  to  62.4%  in 
Ireland-Portugal-Greece as an average) and a nation-wide digital SDH backbone network 
is  being  implemented  by  TPSA,  including  a  few  digital  metropolitan  area  networks 
(MANs).  TPSA is among the leaders among the applicant countries in preparing to offer 
ISDN  service  as  widely  as  possible.  700  CATV  networks  in  operation  offer  their 
services to 2 million subscribers. 

The target of 30 lines per 100 inhabitants by the year 2000 is modest taking into account 
the  level  of unsatisfied  demand,  but  it  could  be  achievable  if the  independent  local 
operators  become  more  effective.  Considerable  investment  is  required  to  complete  the 
modernisation of the public network. 

Comvetitiveness o.fthe Sector 

The productivity of TPSA as  measured by the number of employees/1000  lines (12.9)  is 
one of the lowest of the applicant countries.  However, the revenue per line (ECU 288  in 
1995)  should,  if sustained,  be  sufficient  to  provide  effective  public  services  and  to 
modernise.  TPSA has begun to  reform its  management structure and practices, and tariff 
rebalancing has progressed well.  These improvements should release funds  for  reducing 
the  waiting  list  for  connections  and  make  the  company  more  attractive  for  foreign 

54 

investment.  Because of the supply situation and the poor quality of service the  sector is 
probably  acting  as  a  brake  on  the  economy  generally.  Completion  of the  new  trunk 
network will  do  much to· improve  this  aspect  and  to  make  advanced  services  available, 
especially in cities. 

Conclusion 

Polish  policy  for  the  sector  since  1990  has,  so  far,  failed  to  deliver  the  degree  of 
expansion  in  the  basic  public  infrastructure  that  has  been  achieved  in  some  other 
applicant countries.  This was caused by insufficient demonopolisation and privatisation 
which  resulted  in  poor  investment  and  service  performance.  Recent,  pre-competitive 
policy measures for licensing and interconnection of local network operators will need to 
be  substantially  strengthened  if Poland  is  to  show  compliance  with  the  acquis  and  to 
achieve its undoubted potential in the medium term. 

Audio-yisual 

The audio-visual acquis aims, in the context of the Internal Market, for the provision and 
free  movement  of audio-visual  services  within  the  EU  as  well  as  the  promotion  of the 
European  programme  industry.  The  Television  Without  Frontiers  Directive,  which  is 
applicable  to  all  broadcasters  regardless  of  the  modes  of  transmission  (terrestrial, 
satellite, cable) or their private or public nature,  contains this acquis,  setting down basic 
rules  concerning  transfrontier  broadcasting.  The  main  points  are:  to  ensure  the  free 
movement of television broadcasts throughout member states; to  promote the production 
and distribution of European audio-visual works (by laying down a minimum proportion 
of broadcasting  time  for  European  works  and  those  by  independent  producers);  to  set 
basic  standards  in  the  field  of television  advertising;  to  provide  for  the  protection  of 
minors and to allow for the right of reply. 

The  Europe  Agreement provides  for  cooperation in the  promotion and modernisation of 
the  audio-visual  industry,  and  the  harmonisation  of  regulatory  aspects  of audio-visual 
policy. 

The Television Without Frontiers Directives is a Stage I measure in the White Paper. 

Descriptive Summary 

The  legal  framework  for  the  audio-visual  sector  is  determined  by  the  1992  Radio  and 
Television Act of 1992, which establishes the status of public broadcasters, the licensing 
of commercial  broadcasters,  the  programming  obligations  of public  and  commercial 
broadcasters,  advertising  and  sponsorship,  the  registration  and  retransmission  of 
programme  services  by  cable  operators,  and  the  collection  and  distribution  of 
broadcasting fe~s. 

The  main  television  broadcaster  is  Polish  Television,  the  public  service  broadcaster, 
which  is  financed  by  advertising  revenues  and  a  licence  fee.  The  rest  of the  market  is 
divided  between  a  number  of Polish  (sometimes  part  foreign-owned)  terrestrial  and 
satellite channels, and perhaps 1 OOO  cable systems, offering up to  30 channels. 

55 

Film  production  in  Poland  is  in  the  hands  of film  production  companies  and  studios, 
including  independent  producers.  Overall  Government  subsidy  for  the  industry  was 
planned  at  ECU  9.4  million  in  1996.  American  distributors  control  nearly  the  entire 
Polish film distribution market. 

Current and Prospective Assessment 

The audio-visual sector in Poland is attempting to re-establish itself after major upheavals 
in  recent  years,  and  is  characterised  by  rapid  growth  and  constant  change.  Its  ability 
properly  to  adhere  to  the  acquis  presupposes  an  upgrading  of  the  capacity  of  the 
programme-making  industry to  meet  the  important  challenges  of an  adapted  regulatory 
framework. 

While  some  progress  has  been  made,  Polish  audio-visual  legislation  is  not  fully 
compatible  with  EU  requirements;  deficiencies  remain  over  freedom  of reception,  the 
promotion of European works, recent works, and certain advertising provisions. 

Conclusion 

Provided  that  a  sustained  effort  to  adapt  the  legal  framework  is  made,  and  that  is 
accompanied  by  the  necessary  structural  adaptation  of the  industry,  Poland  should  be 
able to meet EU requirements in the audio-visual sector in the medium term. 

3.3 Economic and Fiscal Affairs 

Economic and Monetary Union 

By the  time  of Poland's accession,  the third  stage  of EMU  will  have  commenced.  This 
will mark important changes for all Member states, including those that do  not participate 
in the  euro  area.  All  Member states,  including the  new ones,  will  participate fully  in the 
economic  and  monetary  union.  Their  economic  policies  will  be  a  matter  of common 
concern  and  they  will  be  involved  in  the  coordination  of economic  policies  (national 
convergence programmes, broad economic guidelines, multilateral surveillance, excessive 
deficit  procedure).  They  will  be  required  to  respect  the  stability  and  growth  pact,  to 
renounce  any  direct  central  bank  financing  of the  public  sector  deficit  and  privileged 
access  of  public  authorities  to  financial  institutions,  and  to  have  completed  the 
liberalisation of capital movements. 

Accession  means  closer  monetary  and  exchange  rate  cooperation  with  the  European 
Union.  This  will  require  strengthening  structural  reforms  in  the  area  of monetary  and 
exchange  rate  policies.  Member  states  not  participating  in  the  euro  area will  be  able  to 
conduct  an  autonomous  monetary  policy  and  participate  in  the  European  System  of 
Central Banks (ESCB) on a restricted basis.  Their central  banks have to  be independent 
and have price stability as  their primary objective.  Monetary policy has to  be  conducted 
with market-based instruments and has to  be "efficient" in transmitting its impulses to the 
real  economy.  Therefore,  reforms  need  to  be  pursued  to  tackle  factors  that  hinder  the 
efficiency of monetary policy,  such as  the  lack of competition in the  banking sector,  the 
lack of development of financial  markets  and the  problem of "bad loans"  in the  banking 
sector.  Finally  all  Member  states  shall  treat  their  exchange  rate  policy  as  a  matter  of 

56 

common interest and be in a position to  stabilise their exchange rates in a mechanism yet 
to  be decided. 

As  membership  of the  European  Union  implies  acceptance  of the  goal  of EMU,  the 
convergence  criteria  will  have  to  be  fulfilled  by  Poland,  although  not  necessarily  on 
accession.  While the  fulfilment  of the  convergence  criteria is  not a  precondition for  EU 
membership,  they  remain  key  points  of reference  for  stability  oriented  macroeconomic 
policies,  and  must  in  time  be  fulfilled  by  new  member  states  on  a  permanent  b~is. 
Hence  the  successful  conclusion  of  systematic  transformation  and  market  oriented 
structural reforms is essential.  Poland's economic situation and progress has already been 
analysed in preceding chapters of this Opinion. 

Current and Prospective Asses.sment 

The Polish Central Bank is independent from the government in terms of the appointment 
procedure  of the  Governor.  However,  the  Act  on  the  Central  Bank  does  not  explicitly 
provide the Central Bank with formal  independence from  the  government in the  conduct 
of monetary policy.  The formal  objective of the  Central  Bank is  the  strengthening of the 
currency.  Finally,  the  Law  is  still  far  from  being  compatible  with  the  Treaty  provision 
about  complete  prohibition  of  central  bank  budget  deficit  financing.  Moreover,  the 
already loose provisions of the Law are suspended every year by the Annual Budget Law. 
At  present,  the  Polish  authorities  are  discussing  the  reform  of the  Act  on  the  Central 
Bank. As a result, it should become compatible with the Maastricht Treaty requirements. 

Broadly  speaking,  monetary  policy  in  Poland  has  been  successful  in  reducing  the 
inflation  rate.  In  1995,  the  country  experienced  a  massive  capital  inflow,  mostly  in  the 
form  of  speculative  portfolio  investment.  The  reason  was  not  only  the  improved 
perspective  of the  transition  process  in  Poland,  but  also  a  monetary  policy  fuelling  real 
exchange  rate  appreciation  expectations.  The  1995 
inflation  outcome  was  quite 
disappointing, with the inflation rate  at about the  same  level  as  it was  in  1994.  In  1996, 
the Central Bank abandoned its policy of interest rate targeting  and  let the  exchange rate 
move  more  freely  within  a  wider  band.  Speculative  capital  inflows  have  almost 
disappeared, money supply growth has been brought under control and the  1996 inflation 
rate  dropped  significantly.  The  efficiency  of  monetary  policy  is  still  hindered  by  a 
segmented,  state  dominated  banking  sector  and  bankruptcy  procedures  are  difficult  to 
implement.  On  the  other  hand,  Poland  has  been  able  to  successfully  launch  a  10-year 
floating  rate  bond  issue  in  1995,  and  financial  markets  are  quite  developed.  Finally,  the 
restructuring  policy  of the  banking  sector  seems  to  have  been  successful  in  gradually 
reducing the bad loans problem. 

The exchange rate regime in Poland is  a crawling peg,  with fluctuation bands aFound  the 
central parity.  In a first phase (October  1991  - March  1995), the  exchange rate was  used 
as the nominal anchor of the system. Occasional devaluation episodes aimed at preserving 
or restoring competitiveness occurred in this p~riod. After March  1995, the exchange rate 
policy  had  to  face  a  different  challenge:  the  improving  perspectives  of the  transition 
process  were  putting  appreciating  pressures  on  the  exctiange  rate.  The  exchange  rate 
regime  became  more  flexible  by  introducing  bands  around  the  crawling  central  parity. 
The width of the  bands has  been increasingly widened until  January  1997 and it appears 
that the  increased  flexibility  of the  exchange  rate  has  helped  to  stop  ~peculative capital 
inflows and the  ensuing inflationary pressures.  Since March  1995, the  exchange rate has 
been stable and remained within the targeted band. 

57 

Conclusion 

It is premature to judge whether Poland will be in a position, by the time of its accession, 
to  participate  in  the  euro  area;  that  will  depend  on  the  success  of  its  structural 
transformation permitting to attain and to adhere permanently to the convergence criteria, 
which are not however a condition of accession. 

Following  the  clear  switch  in  the  monetary  policy  regime  which  occurred  in  1996, 
Poland's  participation  in  the  ~ird stage  of EMU  as  a  non-participant  in  the  Euro-area 
should pose no problems in the medium term.  However,  it is  important that central bank 
legislation is  made  fully  compatible  with  EC  rules  and  that  the  stability  orientation  of 
current monetary and exchange rate  policies is  maintained.  In addition,  the restructuring 
of the banking sector should be completed. 

Taxation 

The  acquis  in  the  area  of direct  taxation  mainly  concerns  some  aspects  of corporation 
taxes  and  capital  duty.  The  four  freedoms  of the  EC  Treaty  have  a  wider  impact  on 
national tax systems. 

The  indirect taxation acquis  consists  primarily  of harmonised  legislation  in  the  field  of 
Value Added Tax and excise duties.  This  includes  the  application of  a non-cumulative 
general  tax  on  consumption  01 AT)  which  is  levied  on  all  stages  of production  and 
distribution of  goods and services.  This implies an equal tax treatment of domestic and 
The  VAT  acquis  also  contains  transitional 
non-domestic  (import)  transactions. 
arrangements for the taxation of transactions within the European Union between taxable 
persons.  In the field  of excise duties the acquis  contains harmonised tax  structures  and 
minimum  rates  of duty  together  with  common  rules  on  the  holding  and  movement  of 
harmonised excisable goods (including the  use  of fiscal  warehouses).  As  a result of the 
introduction of the Single Market, all fiscal  controls at the Community's internal frontiers 
were abolished in January  1993. 

The  mutual  assistance  between  Member  State  taX  authorities  is  an  important  feature  of 
administrative  cooperation  in  the  Internal  Market;  the  respective  Directive  covers  both 
direct and indirect taxation. 

The Europe Agreement contains provisions on approximation of legislation in the area of 
indirect taxation. 

The  White  Paper  contains  as  Stage  I  measures  those  which  make  up  the  main 
requirements  of the  indirect  taxation  acquis  (essentially,  those  measures  applied  in  the 
Community up  to  1993 ),  and as  ~tage II  measures those which are  in addition necessary 
to  implement the full  indirect taxation acquis. 

58 

Descriptive Summary 

Direct Taxation 

The  two  company  taxation  Directives  and  the  Arbitration  Convention  provide  for  a 
mechanism  which  applies  on  the  basis  of  reciprocity.  Respective  provisions  can 
therefore by definition not be expected to exist before accession. 

Indirect Taxation 

The overall contribution of VAT ana excise duty revenue to the  Polish state budget was 
about  25%  and  15%  respectively  in  1995.  This  is  expected  to  continue  on  an  upward 
trend. 

Value Added Tax 

The  current  Polish  VAT  system  was  introduced  in  July  1993  replacing  the  previous 
Turnover Tax.  Poland applies a dual VAT rate system:  a standard VAT rate of 22% and 
a  reduced  VAT  rate  of 7%. 
In  addition  zero-rating  is  applied  to  some  extent  as  a 
transitional measure till the end of 1998.  The reduced rate  and the  zero-rate  are  applied 
to  the  supply  of certain specific goods  and  services.  All  other  supplies  are  taxed  at the 
standard rate.  In principle imported goods are subject to the same level of VAT as similar 
domestically produced products.  However,  certain national  produced products  are  zero 
rated,  whereas  similar imported products  are  taxed  at  either the reduced  or the  standard 
VAT rate. 

Certain  activities  are  exempt  from  VAT  without  the  right  to  claim  the  input  credit  on 
such  supplies.  These  exemptions  relate  mainly  to  activities  in the  health  and  welfare 
sector, the agricultural sector and the financial and insurance sector.  Taxable persons are 
in principle entitled to  deduct VAT incurred on their purchases for  business purposes of 
goods  and  services.  However,  unlike  services  provided  by  domestic  entities,  the  tax on 
imported services  is  not deductible.  As  a result such services bear an  additional  cost of 
22% compared to  similar domestically provided services.  The Polish VAT Act does not 
contain  any  provisions  enabling  tax  to  be  refunded  to  taxable  persons  not  established 
within the country. 

In addition to the VAT, a further lump sum VAT is charged on the transport of goods and 
non-regular passenger transport services by vehicles not registered in Poland.  The lump 
sum VAT is levied exclusively on foreign hauliers. 

Excise 

The current system of excise duty in Poland was  introduced at the same time as the VAT 
system.  Excise  duties  are  levied  on a  wide  range  of products  including  products  other 
than those  subject to  common excise duties within the Community (mineral oils,  alcohol 
and alcoholic beverages and manufactured tobacco).  For each product category, the duty 
is  specific  in  nature,  except  for  certain  mineral  oils  and  tobacco  products  which  are 
chargeable on an ad valorem basis 

59 

Mutual Assistance 

The tax administration has not yet had to develop its capacity for mutual assistance with 
the tax authorities  of Member States,  since  mutual  assistance  is  a  feature  which would 
only become applicable on accession. 

Current and Prospective Assessment 

Value Added Tax 

The  current VAT  system  in  Poland has  b~en based  on the  main principles  of the  VAT 
legislation of the Community.  It is a  solid starting point in its future  alignment with the 
Community VAT acquis.  How~ver, it is in some respects discriminatory against imports. 

Although  foreign  entrepreneurs  have  a  legal  right  to  register  for  VAT  in  Poland,  in 
practice  this  is  a  complicated  procedure. 
Since  Poland  does  not  operate  any 
arrangements  for  the  refund  of VAT  to  non-registered  foreign  taxable  persons,  VAT 
represents  an  increased  cost to  such traders.  The  Polish treatment  of imports  is  not  in 
conformity with Community rules  and  is  severely discriminatory  when compared to  the 
rules for similar domestically produced supplies.  The Polish approach regarding exempt 
transactions  deviates  to  a  large  extent  from  that  of the  Community  legislation  both  in 
term of scope and substance.  The application of the reduced VAT rate is notably broader 
in scope compared to the Community approach. 

Despite its name, the lump sum VAT has no similarities to VAT.  It is neither refundable 
nor has the Polish contractor the right to  deduct this levy as  input VAT.  It increases the 
costs of transport services provided by non-Polish hauliers; the charge cannot be avoided 
by  being  registered  for  VAT  in  Poland.  A  similar  levy  on  transport  services  does  not 
exist within the Community with regard to vehicles registered in Poland. 

Poland's membership of the European Union would require adjustments to do away with 
the current discrimination against imports and to bring the VAT legislation into line with 
the requirements of the Community acquis in particular as regards the system of taxation 
necessary in a Community with no internal frontier controls. 

The  Polish  national  strategy  plan  for  implementing  the  recommendations  of the  White 
Paper regarding VAT plans to give priority to the application of rates, including for citrus 
fruits  as  of 1 January  1998, during the period  1998  - 2000.  The broad scope  of exempt 
transactions,  other than unprocessed agricultural products,  are to  be reviewed.  A  refund 
scheme  for  foreign  taxable  persons  is  planned  to  be  in  place  from  1999.  Initiatives  to 
eliminate the  current discrimination against  imports,  including  the  lump  sum  VAT,  are 
also envisaged; the present system as it is applied to vehicles entering Poland has caused 
considerable difficulties at the frontiers. 

Excise 

There  are  significant  discrepancies  between  the  Polish  excise  regime  and  EU 
requirements. 

60 

Firstly,  there  exists  no  excise  suspension  system  where  goods  can  move  between 
authorised tax  warehouses without payment of duty.  Also  the registration of traders  for 
excise purposes needs to be reviewed. 

Secondly, there are separate tariffs for domestic and imported products which provide for 
a  higher  level  of taxation  on  imported  products  than  that  imposed  on  similar domestic 
products. 

In  the  event  of accession,  excise  duties  on  products  not  belonging  to  the  harmonised 
excise duties within the Community could continue to apply provided, however, that they 
would  not  give  rise  to  border-crossing  formalities  in  trade  between  member states  and 
that they  complied with  the  principles  of non-discrimination  between  national  products 
and products originating from other member states. 

In order to ensure a correct application of the Community excise legislation it is essential 
that  Poland  sets  up  a  warehousing  system  based  on  the  Community  model  as  soon  as 
possible,  strengthens  control  procedures  and  adapts  the  structure  and  level  of its  excise 
rates in such a way that they comply with the Community principle of non-discrimination 
between national products and those originating from other member states. 

The  Polish  national  strategy  plan  for  implementing  the  provisions  of the  White  Paper 
does  not  provide  a  clear and  detailed  timetable  for  future  adjustments  of Polish  excise 
legislation.  It  is  planned to  incorporate an identification number on fiscal  s,tamps  which 
will  show  the  manufacturer  or  importer  (this  is,  however,  p.ot  part  of the  Community 
acquis).  There is also a longer term policy to  have two groups only of cigarettes. for tax 
purposes - long and short - and to  adapt excise rates on motor fuels  to. the EU minimum 
rates.  However no  full harmonisation of legislation is planned. 

Mutual assistance 

There would aiso be a need, on accession, to  implement the appropriate arrangements for 
administrative  cooperation  and  mutual  assistance  between  Member  States.  These 
requirements are essential for the functioning of the Internal Market. 

Conclusion 

The acquis in respect of direct taxation should present no significant difficulties. 

As regards indirect taxation, provided a sustained effort is made, Poland should be able to 
comply with the acquis concerning VAT and excise duties in the medium term. 

It  should  be  possible to  start participating  in  mutual  assistance  as  the  tax  administration 
· 
develops its expertise in this respect. 

Statistics 

The  main  principles  of  the  Community  acquis  relate  to  the  impartiality,  reliability, 
transparency,  confidentiality  (of  individual  information)  and  dissemination  of official 
In  addition  there  exists  an  important  body  of  principles  and  practices 
statistics. 

61 

concerning  the  use  of European  and  international  classifications,  systems  of national 
accounts, business registers, and various categories of statistics. 

The  Europe  Agreement  provides  for  cooperation  to  develop  effective  and  reliable 
statistics, in harmony with international standards and classifications. 

The White Paper includes no provisions in this field. 

Descriptive Summary 

The Central  Statistical Office (GUS)  is  advi_sed  by  a National  Statistical  Council  (NSC) 
composed  of representatives  of various  admini.strations  and  organisations.  The  GUS  is 
currently  being  re-organised  to. establish  a  new  sharing  of responsibility  between  the 
headquarters and regional offices.  The GUS  cooperates with a large number of bodies in 
the EU.  It also plays an important role in transferring knowledge to other countries in the 
region. 

The legal basis for Polish official statistics consists of the 1995 Law. 

Current and Prospective Assessment 

Polish  legislation  is  fully  compatible  with  the  current  standards  applied  within  the 
European Union. 

Improvements  in  statistics  are  still  necessary  in  some  fields.  One  of the  main  aspects 
requiring development in the statistical system concerns the reconstruction of registers. 

Conclusion 

Poland  should  be  able  to  comply with  EU  requirements  for  official  statistics within the 
next few years. 

3.4 Sectoral Policies 

Industry 

EC  industrial  policy  seeks  to  enhance  competitiveness,  thus  achieving  rising  living 
standards  and high rates  of employment.  It aims  at  speeding  up  adjustment to  structural 
change,  encouraging  an  environment  favourable  to  initiative,  to  the  development  of 
undertakings  throughout  the  Community,  and  to  industrial  cooperation,  and  fostering 
better  exploitation  of the  industrial  potential  of policies  of  innovation,  research  and 
EC  industrial  policy  is  horizontal  by  nature.  Sectoral 
technological  development. 
EC 
communications  aim  at  transposing  horizontal  concepts  into  specific  sectors. 
industrial policy results from an articulation of instruments from a number of Community 
policies·;  it  includes  both  instruments  related  to  the  operation  of  markets  (product 
specification  and  market  access,  trade  policy,  state  aids  and  competitions  policy)  and 
measures  related  to  industry's  capacity  to  adapt  to  change  (stable  macro-economic 
environment, technology, training etc.). 

62 

In  order  to  cope  with  competitive  pressure  and  market  forces  within  the  Union,  the 
industry of applicant countries needs to have achieved a certain level of competitiveness 
by the  time  of accession.  The  applicant counttjes  need to  be  seen  as  pursuing  policies 
aimed at open and competitive markets along the lines set out in Article  130 ("Industry") 
of the Treaty.  Cooperation between the  EC  and the candidate countries in the  fields  of 
industrial cooperation,  investment,  industrial  standardisation and  conformity assessment 
as provided for  in the Europe Agreement  is  also  an important indicator of development 
in the right direction. 

Descriptive Summary 

. 

Polish industry produced a total  output of around ECU 27  billion in· 1995, equivalent to 
four-fifths  the  industrial  production  of Sweden,  and  accounts  for  about  one-third  of 
GDP.  Employment in industry is at a level of approximately 3 .2 million persons (25% of 
the  Polish  workforce).  Due  to  growth  rates  of  5-7%  in  1995  and  1996,  industrial 
production is now exceeding the pre-reform levels of the late 80s. 

The  transition  process  was  launched  in  1989  with  a  comprehensive  reform  programme 
aimed  at  replacing  a  centrally  planned  economy  by  an  open  market  economy.  The 
transition  toward  an  open  demand-led  market  economy  caused  strong  pressures  on 
industry  to  adjust  to 
The  resulting  economic 
transformation was  accompanied by  a collapse  in industrial  production  and  major  shifts 
in  industrial  structure,  and  the  share  of industrial  output  in  GDP  dropped  continuously 
from  1990 onward to reach 40% by 1995. 

the  rapidly  changing  situation. 

Polish industry, main production sectors in  1995 

Sectors 

Food products 
Mechanical  electrical  engineering  (including  pressure 
equipment, medical devices, measuring instruments) 
Chemical industry, pharmaceuticals 
Construction 
Metallurgy  (steel and non ferrous metals) 
Textiles, footwear and furniture 
of which: -furniture 

-leather 

Cement, glass, ceramics, wood and paper 
Automotive industry 

Shar~ in industrial 
employment 
% 
12.9 
5.7 

Share in 
industrial 
production % 
18.5 
16.8 

7.6 
5.5 
5.2 
10 
3 
1 
4.9 
3.25 

10.1 
6 
5 
4 
n.a. 
0.5 
n.a. 
4 

Share of industry (excluding construction) 

33 

in total GDP 

Mainly based on the Polish questionnaire response 

Agri-food  is  an  important  industrial  sector  in  Poland.  Production  is  rapidly  increasing 
and  investment  in the  sector has  doubled  in  93-95.  The  food  industry  features  Poland's 
biggest  companies;  ninety  agri-food  enterprises  are  amongst  the·  top  500  Polish 
companies,  most  in  public  ownership.  The  privatisation  programme  is  due  to  be 

63 

completed within the  next three  years.  The  sector is  one  of the  most dynamic  of Polish 
industry, attracting considerable interest through FDI. 

The metal product and mechanical engineering industries are comparable in size to the 
industries  in  Portugal.  Production  is  growing  rapidly  and  is  mainly  destined  for  the 
domestic market.  Compared to the EU these sectors are more dispersed, the equipment is 
older  and  labour  productivity  is  very  low.  However,  size  and  growth  potential  of the 
domestic  market  is  large  enough  to  sustain  production  of a  relatively  wide  range  of 
products although fewer than currently produced. Although Poland's competitive edge in 
metal  products  is  thin,  the  industry would  probably  be  able  to  maintain and  develop  its 
production. Similarly, mechanical engineering can be expected to  be able to  adapt to EU 
membership  by  shedding  medium-technology  products  and  further  specialising  in  low 
range, labour-intensive equipment, its future prosperity depending inter alia on how long 
it can keep wages low and how fast it can upgrade production. 

The  chemical  industry  consists  largely  of large  state  companies  of which  some  may 
come  up  for  privatisation  in  1997.  The · situation  varies  in  the  different  chemicals 
subsectors.  Given that privatisation has  not been completed and  regulatory requirements 
shelter  the  industry  from  imports  to  a  certain  extent  it  is  difficult  to  further  assess  the 
competitiveness  of the  sector.  In  order  to  successfully  adapt  to  the  conditions  of the 
Internal  Market,  significant legislative and  administrative efforts  for  the  chemical  sector 
will be required. 

The  pharmaceutical  industry  is  a  key  sector  in  Polish  industry  and  before  transition 
Poland  was  exporting  pharmaceuticals  to  most  CMEA  countries.  The  pace  of 
privatisation in this sector is  slow and the weaknesses of producers primarily consist of a 
lack of effective  marketing  policies,  poor drugs,  and  low appeal.  Their limited  financial 
resources  have  led  to  low  investment  in  R&D,  leading  to  widespread  dependence  on 
genencs. 

However,  competition  is  fierce  in  the  generics  market  and  both  Indian  and  Eastern 
European  producers  are  threatening  Poland's  export  markets.  Foreign  pharmaceutical 
companies  spotted  the  long-term  attractiveness  of the  Polish  market  at  an  early  stage. 
Their presence now extends into a significant part of the market. 

Out  of the  around  40  steel  mills  in  the  CEECs,  23  are  located  in  Poland.  Polish  steel 
production  and  capacity  dropped  significantly  between  1986  and  1995  but  a  further 
capacity  decline  is  not  expected.  The  Polish  government  intends  to  engage  in  an 
ambitious  modernisation  programme,  involving  the  closure  of obsolete  plants  and  new 
investments. However, so  far only $0.6 billion have been invested and there is  no  sign of 
strong interest from  potential investors and prospects for the  steel  industry are  uncertain. 
Technical,  commercial,  and  management deficiencies  will  take  time  to  be  solved  while 
environmental  problems  are  abundant.  Regional  and  social  problems  for  any  further 
adjustment complicate further restructuring. 

The textiles and clothing sectors provide a relatively large contribution to  the economy. 
By  1999 both sectors should be  completely privatised.  Among the CEECs,  Poland is  the 
major  trade  partner  for  EU  industry  in  outward  processing  trade  (OPT).  Geographical 
closeness,  low wage  levels,  high quality  raw materials  demanded by  the  EU  market and 

64 

non-availability  of foreign  currency  in the  CEECs  to  import such material  favoured  the 
development of OPT oper~tions. 

The  furniture industry  is  one  of the  more  dynamic  sectors  in  Polish  industry.  Foreign 
capital  participates  in  nearly  one-third  of firms.  Three-quarters  of the  production  is 
exported,  most  of which  to  the  EU.  The  Polish  furniture  industry  has  a  considerable 
production  potential  with  a  relatively  good  manufacturing  technology  and  can . be 
considered one of the most promising industrial sectors in the economy. 

Since the transition, Poland has further developed its traditional dominant position in the 
region  for  the  automotive  industry.  The  transition  process  has  been characterised  by  a 
large  number  of different  cooperative  ventures  between  EU  and  Polish  manufacturers. 
Considerable investment has also taken place in the components sector.  With the further 
arrival  of  Korean  and  US  car  manufacturers  the  risk  of  over-capacity  will  further 
increase,  while present capacity utilisation rates  are  already  low.  A considerable part of 
production  will  be  targeted  toward  the  EU,  which  accounts  for  most  of exports.  With 
limited  growth  prospects  in  EU  and  Eastern  European  markets,  competitive  pressures 
will increase throughout the EU. 

The Polish shipbuilding industry was hit hard by  the  collapse of exports  to  the  former 
USSR  Production  has  a  3  per  cent  share  in  world  shipbuilding.  Productivity  is 
significantly  lower  than  in  the  EU,  and  only  one  shipyard  has  productivity  levels 
comparable  to  those  of other  European  yards.  However,  the  i!ldustry  is  internationally 
competitive,  especially  due  to  low  wages,  and  competes  directly  with  the  ship  repair 
industry in the  EU.  Restructuring started in  ~ 993  and the  shipyards are working on their 
own restructuring programs. 

The  Polish  Information  Technology  industry  is  small  but  growing.  It  produces  a 
diversified  range  of electronic  equipment and  components.  The  sector has  been able  to 
attract  a  considerable  amount  of Foreign  Direct  Investment.  Sparked  by  the  continuing 
need for restructuring in nearly all industrial sectors, strong demand growth is expected. 

Cement,  glass,  ceramics,  wood  and  paper:  Despite  over-capacity  in  some  of  the 
sectors,  market  growth  prospects  and  the  fact  that  they  have  attracted  foreign 
participation  and  have  so  far  ada1  ..!d  to  (limited)  import  competition  seem  to  indicate 
that these  sectors  are  viable  in  more  open markets.  Notably  for  ceramics  and  the  paper 
sector,  however,  a  number  of regulatory  import  restrictions  still  exist  that  prevent  EU 
firms from freely entering the market. 

The  number  of public  sector  firms  dropped,  through  privatisation  or  liquidation,  from 
67  OOO  in  1990  to  49 OOO  by  end-1995.  At  the  same  time,  the  number  of private 
enterprises  (excluding  very  small  enterprises)  increased  more  than twofold,  to  160 OOO. 
Most private  sector firms  are  small  and  medium-sized  enterprises  (SME).  In  1995,  the 
Polish  government  started  the  long-delayed  mass  privatisation  programme  that  gives 
participating Polish citizens a stake in each of the newly established National Investment 
Funds which control more than 500 enterprises through tradable vouchers. 

Some sectors of the Polish industry like construction,  building materials,  furniture,  agro 
food,  pharmaceuticals  and  cars,  have  been  mostly  privatised  and  often with the  help  of 
foreign  investment  have  been  modernised  and  restructured;  these  sectors  have  already 
achieved  international  competitiveness,  or  will  do  so,  in  the  mid-term,  thus  allowing 

65 

them to participate successfully in the internal market.  Yet other industrial sectors - such 
as  chemicals,  mining,  and  steel,  - are  still  dominated  by  state-owned  large  companies 
which  still  await  privatisation  and  restructuring.  Unless  this  transformation  is 
undertaken,  there  is  little prospect for  the  successful  participation of these· re-structured 
industries in the Single Market. 

Current and Prospective· Assessment 

The distinguishing  feature  of Polish industry  is  the  importance  of new firms  which are 
behind  the  dynamism  evident  over  the  last  years  despite  a  slow  pace  of privatisation. 
Labour productivity in industry has  increased by more than  10%  p.  a.  over the  last five 
years  and unit labour costs expressed  in ecu have  fallen.  But it  is  questionable  whether 
growth can continue at this rate .. Investment is only moderate (about the EU average) and 
FDI, while high in absolute terms, is rather small if measured in terms of its contribution 
to overall investment (about 6%, one of the lowest ratios among applicant countries). 

Polish  industry  is  much  less  open  to  trade  than  that  of other  applicants.  While  the 
openness  indicator  for  Poland  is  not  unusually  low  (exports  account  for  about  22%  of 
GDP,  equal  to  the  value  for  Italy),  other  applicants  are  on  a  considerably  higher  level, 
thereby  indicating  that  one  cannot  rely  to  the  same  extent  as  in  other  applicants  on 
international competitive pressures to correct policy induced distortions. 

The  need  for  restructuring  and  modernisation  is  exemplified  by  the  steel  sector,  as 
recognised  by  the  Polish  authorities  and  reflected  in  the  measures  envisaged  in  the 
context  of ongoing  intensive  dialogue  on  this  sector.  Several  other  sectors,  including 
notably  pharmaceuticals,  face  the  need  for  fJrther  restructuring..  In  the  automobile 
sector,  the  transition  from  -assembly  lines  to  a  fully  fledged  auto  industry  will  also 
require an effort.  Privatisation and  FDI  will  play a key  role  in restructuring,  even more 
so  in the  sectors  with dominant state owned enterprises  (chemical,  oil,  mining,  telecom, 
and  metallurgy).  The  Polish  government  has  so  far  been  less  willing  than  others  to 
address  the  serious  regional  and  social  problems  that  restructuring  will  cause.  The 
administrative  tightening  that  has .been  launched  to. make  government  control  of state 
enterprises  more  effective  is  desirable,  but  may,  at  least  on  the  short  run,  slow  down 
privatisation. 

In  its  1997  .National  Strategy  for  Integration,  the  Polish  government  provides  a 
comprehensive  picture  of factors  influencing  and  measures  needed  for,  preparation  of 
Polish industry for accession to the EU. 

Conclusion on Industrial Competitiveness 

Polish  industry  is  characterised  by  the  existence  of both  a  vibrant  and  expanding  new 
private sector which should be able to compete in the Single Market in the medium term, 
and other sizeable segments of industry, most of them state-owned, which face the urgent 
need for restructuring  in order to be able to compete. 

An  evaluation  of the  acquis  specific  to  the  free  circulation  of industrial  goods  is  to  be 
found in the separate section on the internal market. 

66 

Agriculture 

The  Common Agricultural  Policy  aims  to  maintain  and  develop  a  modem  agricultural 
system ensuring a fair standard of living for the agricultural community and the supply of 
food  at  a  reasonable  price  for  consumers,'  and  ensuring  the  free  movement  of goods 
within  the  EC.  Special  attention  is  given  to  the  environment  and  rural  development. 
Common market organisations exist to administer the CAP.  These are complemented by 
regulations  on  veterinary  health,  plant  health  and  animal  nutrition  and  by  regulations 
t.egislation  also  exists  in  the  area  of  structural  policy, 
concerning  food  hygiene. 
originally  developed  primarily to  modernise  and  enlarge  agriculture,  but  more  recently 
with an increasing  emphasis  on the  environment  and  the  regional  differentiation of the 
policy.  Since reforms  in  1992  increasing  contribution to  farm  support have  come from 
direct aid payments compensating for reduced agricultural support prices. 

The Europe Agreement provides the  basis for agricultural trade  between Poland and the 
Community  and  aims  to  promote  cooperation  on  the  modernisation,  restructuring  and 
privatisation  of Poland's  agricultur.e  sector  as  well  as· the  agro-industrial  sector  and 
phytosanitary standards. The White Paper covers the fields of veterinary, plant health and 
animal nutrition controls, as well as marketing requirements for  individual commodities. 
The purpose  of such legislation is to protect consumers, public health and  the health of 
animals and plants. 

Descriptive Summary 

Agricultural Situation 

The  value  of agricultural  production  in  1995  was  approximately  5.39%  of that  of the 
Union. 

In  1995  agriculture 
The  economic  importance  of agriculture  is  still  relatively  high. 
contributed 6.6% to the GDP, down from  12.9% in  1989.  There were approximately 4.7 
million  people  working  in  the  agricultural  sector  in  1995.  Out  of these,  4.3  million 
worked full-time  in agriculture corresponding to 27% of total  employment.  Although it 
fluctuates, the number of people employed in agriculture is decreasing slowly:  from  1989 
to  1995 employment in agriculture fell by 4.5%. 

Out of a total land area of 31  million ha, about 28% is covered by forest.  The agricultural 
area,  19  million  ha,  represents  60%  of the  total  area.  More  than  three-quarters  of the 
agricultural  area  is  arable  land.  The  most  important  arable  crops  are  cereals  ( 60%  of 
arable land) and potatoes (11 %). 

Agricultural  production,  with  the  exception  of  pork  and  poultry,  has  declined 
substantially since transition as  a result of the drastic shift in input/output price relations, 
which  in  particular  hurt  the  livestock  industry.  The  relative  importance  of crop  and 
livestock production has  shifted towards  crop  production  which  represented  about  58% 
of agricultural production in 1995. 

Unlike  other  CEECs,  the  process  of  collectivisation  of  individual  farms  was  never 
completed in Poland.  There are more than two million private farms  in Poland of which 
only  20%  are  considered  to  derive  their  income  exclusively  from  farming.  Fam1 
structures are mainly small-sized.  The average arable land occupied per farm was 6.7 ha, 

67 

the  average cattle herd was 4  pieces of cattle (of which two  cows)  and the  average pigs 
herd was 8 pigs.  More than 50% of these farms  have less than 5 ha and occupy 20% of 
the total agricultural area, while only 3% have more than 20 ha and also occupying 20% 
of the agricultural area - the farm size in this category averaging 63  ha. 

In addition,  former  large  state-owned farms  and  cooperatives  occupy about 20%  of the 
arable land.  Around 10% of the land of the former state farms  has been privatised.  The 
process of selling state property to private investors is  hampered by the  lack of sufficient 
investment  capital,  and  a  large  parts  of the  assets,  including  2.8  million  ha  have  been 
leased.  In December  1995,  around  one  million  ha remained  to  be  disposed  of.  In the 
long-term,  average farm  size  is  expected to  increase,  although the number of very small 
farms (less than 2 ha) is not expected to decrease substantially. 

Despite the  general  downward trend  in  agricultural  production,  Poland  is  self-sufficient 
for  the  main  products,  partly  due  to  reduced  levels  of consumption. 
In  1996  the 
production  of cereals  was  25.4  million  tonnes,  while  the  production  of milk  was  11.7 
million tonnes,  and the  production of pork 2  million tonnes (beef:  0.41  million tonnes). 
In  1995, 56.5% of the total fruit harvest and 8.7% of the vegetable harvest was exported. 
Poland  is  a  major potato  producer with  an  average  production  in the  last three  years  of 
28.1  million tonnes (about 4.6% of EU production). 

The  food  processing  industry  accounts  for  more  than  one-fifth  of the  Polish  industrial 
output.  However, the technological  standard and integration is  less advanced than in the 
EU.  In  the  first  stage  processing  industry  productivity  is  rather  low which  means  that 
food producers do not fully benefit from increased consumer spending on food. 

The agricultural trade balance has sharply deteriorated during the period of transition.  In 
1995,  Poland's agricultural trade  represented  10.3%  of total  exports  and  9.5%  of total 
imports.  Although exports have increased each year since  1993  to  reach ECU 2.1  billion 
in  1996, imports have continued to  increase and have exceeded exports over this period. 
Agricultural  trade  with  the  EU-15  represents  about  47%  of Polish  exports  and  46%  of 
imports.  States  of the  former  Soviet  Union  account  for  30%  of Polish  agricultural 
exports and 4% of imports.  Trade  with these  countries  is  increasing rapidly.  The  main 
imported products  were  fresh  fruit  and vegetables  (32%),  processed fruit  and  vegetables 
(24.2%),  and  non-staple  products  (e.g.  coffee,  tobacco,  spirits)  at  17.9  %.  The  main 
exported products  were processed fruit  and  vegetables  (34. 7% ),  meat and  milk products 
(26%) and fresh fruit and vegetables (8.8%). 

Agricultural Policv 

The PSE (producer subsidy equivalent) for Poland, calculated by the OECD, was 21 % in 
1995 compared to 49% for the EU. 

In  1989,  Poland  went through  a  major transition  in  agricultural  and  food  policies.  The 
former  policies  of input  subsidies  and  consumer subsidies  were  discontinued  leading  to 
substantial  price  increases  for  agricultural  products  with  a  consequent  acceleration  of 
inflation during  the transitional  period.  During  the  years  following  the  liberalisation  of 
the  agriculture  markets,  stabilisation measures  were  gradually  implemented to  achieve  a 
better market balance and to  stabilise prices.  The general level of support is less than half 
the level in the EU. 

68 

Policy  instruments  include  guaranteed  prices,  as  well  as  import and  export  mechanisms 
for  key  commodities,  notably  cereals,  milk  products,  pork  and  beef,  and,  as  such,  are 
similar to EU market policy instruments.  The Agricultural Market Agency (ARR), under 
the  supervision  of the  Ministry  of Agriculture  and  Food  Economy,  carries  out  a  broad 
range  of intervention policies  (purchase  and  sale  of agricultural  products,  accumulating 
and  managing  state  reserves  of  agricultural  products,  granting  credit  guarantees  and 
support for the development of wholesale markets). 

For crop products, minimum prices are fixed for wheat and rye for  human consumption. 
Intervention  prices  are  fixed  at  a  higher  level  - i.e.  10%  more  in  1995/96.  If market 
prices  fall  below  minimum  prices,  intervention  purchases  are  carried  out  by  the  ARR, 
which also  purchases  grain for  security  stocks.  · Sales  out of intervent~on can take  place 
on the  domestic  market or for  export  on conditions  similar to  EU  arrangements.  Since 
1994, the  sugar sector has  been subject to  market arrangement  similar to  the  EU market 
Intervention  arrangements  also  apply  to  the  dairy  sector.  A 
organisation  for  sugar. 
minimum  price  is  established  for  milk.  The  ARR  cap  intervene  in  the  market  by 
purchasing  butter  and  skimmed-milk  powder  at  fixed  intervention  prices  from  dairy 
plants paying the minimum price to farmers.  As market prices for milk have been above 
the  minimum  price  in  recent  years,  market  intervention  has  been  limited  to  seasonal 
purchases. 

Intervention  activities  in the  meat  sector have  in  general  been  limited  to  pork  which  is 
traditionally the  main meat product.  Intervention arrangements  are  also  provided  for  in 
the  beef  sector  where  purchases  are  currently  limited  to  maintaining  state  reserves. 
Market arrangements  for  other  agricultural  products  are  generally  limited  to  import  and 
export arrangements.  However the  ARR can  also  apply  intervention measures  for  these 
products in case of serious market imbalance. 

Market  and  support  prices  in  Poland  (with  the  exception  of wheat  and  pigmeat)  are 
significantly  lower than  EC  prices.  Cereal  prices  in  Poland  are  stabilised closer to  the 
world market price than the  EC.  The intervention price of wheat and pigmeat was  79% 
of the  EC  intervention  price  in  1995-96,  and  pigmeat  prices  were  on  average  83%  of 
those  of the  EC  between  1993  and  1995.  On  the  other  hand  the  target  price  for 
standardised cow's milk was  only  50% of the EU  in  1995/96,  and  beef prices were  still 
only 46% of the  EC price in 1995. 

The  budget expenditure for  the  agricultural  sector amounted  to  ECU  2.3  billion in  1994 
representing 9% of the total government budget. 

By far  the biggest share of the agricultural  budget (72%  in  1994 increasing from  48% in 
1990) is destined for the farmers'  social security system,  8.1 % for the reduction of inputs 
costs,  while  only  4%  of the  budget  was  spent  on  price  and  income  support.  With 
continuing  structural employment problems and  an  ageing  rural  population (8.6%  of the 
rural population received social support in  1995, as against 4.5%  in  1988), this  emp~asis 
is likely to remain for the foreseeable future. 

Currently,  a  wide  range  of  activities  relating  to  rural,  structural  and  environmental 
development  are  being  undertaken  (support  for  land  privatisation  and  ownership 
transformation in agriculture, integrated rural  development and development of technical 
infrastructure  in  rural  areas,  creation  of  a  modem  system  of  financial  services  to 
agriculture,  modernisation  of farms  and  companies  supplying  inputs  to  agriculture  and 

69 

food processing plants,  development of agricultural market infrastructure, harmonisation 
of rural and agricultural policy with environmental protection requirements). 

A  number  of measures,  such  as  assistance  to  modernisation,  structural  improvements, 
establishment of young farmers, farming in less favoured areas, early retirement etc. have 
been,  or are  being implemented.  These measures are  generally similar· to EU measures. 
Structural measures  also  include support to  reduce production costs such as  preferential 
operating  credits,  improved  use  of fertilisers  and  plant  protection  products,  improved 
livestock  breeds  and  tax  relief.  The  funding  and  consequently  the  impact  of these 
policies is, however, limited. 

In  1990,  the state  monopoly  of foreign  trade  was  abolished  and  state-owned enterprises 
were no  longer privileged by specific trade advantages.  Poland removed most of its non 
tariff protection  measures  in  1990,  maintaining  relatively  low  customs  tariffs.  As  a 
result, Poland had one of the most liberal customs systems in Europe in the early  1990s. 
Tariffs  for  food  and  agricultural  goods  were  between  5  and  25%.  As  a  response  to 
difficulties  in  food  and  agricultural  trade,  and  of deteriorating  farm  incomes,  the  Polish 
government  gradually  increased  border protection  and  introduced  a  new tariff schedule 
levies  on  agricultural 
including  variable 
for  agricultural  commodities, 
commodities, along mechanisms similar to the former EU import regime. 

import 

With  the  implementation  of the  Uruguay  Round  Agreement  the  variable  levies  were 
transformed  into  fixed  tariffs.  Poland  has  made  its  commitments  in  US  dollars.  The 
main part of domestic  support  is  the  Aggregate  Measurement of Support (AMS)  which 
will  be  limited  to  $3.3  billion  by  the  year  2000.  Poland  has  adopted  the  EU  tariff 
nomenclature.  Poland  has  established  minimum  access  quotas  with tariff varying  from 
10-60%, with tariffs  outside quotas  at significantly higher levels.  Poland's commitment 
is  made  in  such  a  way  that  it  ensures  that  no  final  bound  duty  rate  is  lower  than  the 
corresponding EU rate.  The export subsidy commitments amount to  $672 million in the 
base year.  The most important outlays are foreseen for processed fruit and vegetables. 

For fresh and processed meat, subsidised quantities (each 50,000 t)  exported were small, 
but had a very high per unit subsidy.  Export subsidies for cereals are not permitted· under 
the Commitment. 

The trade arrangements under the Europe Agreement, providing in agriculture for mutual 
import tariff preferences,  have  been  in  force  since  1992.  In  the  framework  of CEFT A 
(Central  European Free Trade Agreement),  Poland now has  zero tariffs on nearly half of 
its  agri-food  imports  (non-sensitive  products)  from  Hungary,  the  Czech  Republic, 
Slovakia and Slovenia. 

Poland  is  in  the  process  of harmonising  its  legislation  in  accordance  with  the  White 
Paper. 

Poland  has  an  institutional  infrastructure  with  a  certain  number  of agencies  managing 
different  aspects  of Polish  agricultural  policies  under  the  central  responsibility  of the 
Ministry  of Agriculture,  and  an  emerging  structure  of farmers  organisations  which  are 
assisting  farmer~ in  various  ways  and  playing  an  increasing  role  in  agricultural  policy 
formulation and implementation. 

70 

Chambers  of Agriculture  have  been established  at provincial  (voivodship)  and  national 
level under the Act of Chambers of Agriculture (April  1996). 

There  are  more  than  twenty  producer  associations  representing  various  production 
sectors.  These  assriciations  provide  members  with  information  and  advice  on  matters 
pertinent to  the  sector concerned,  carry  out promotion  activities  and  participates  in the 
formulation of sector specific policies. 

Current and Prospective Assessment 

Provided its competitiveness will improve over time, Poland has a substantial potential to 
increase production from  current levels, in particular in sectors where the EU is already 
self-sufficient or an  important  exporter.  Although domestic  consumption,  in  particular 
for animal feed,  is expected to  absorb most of the increase in production for cereals and 
oilseeds, Polish export of these products is  also  expected to  become significant.  Poland 
may  become  a  small  net  exporter_ of cereals  in  the  medium-term.  Production  is  also 
expected  to  increase  substantially  in  the  livestock  sector,  although  by  the  year  2000 
production levels for milk and beef  would still be lower than in 1990. Pigmeat is forecast 
tQ  have  recovered to  a similar level  while the production of poultry meat is expected to 
increase about a third to a level well above 1990. 

With  about  a  quarter  of  the  work  force  employed  in  agriculture  and  high  rural 
unemployment  in  some  regions,  Poland  faces  a  huge  task  in  formulating  and 
implementing  a  sustainable  rural  and  structural  development  policy.  Privatisation  and 
ownership  transformation  of land  present  a  major  challenge.  Disease  and  pollution 
damage exists to Polish forests and, in certain areas of the country, groundwater pollution 
as a result of nitrate run-off is a major problem. 

The Polish food processing industry will face  strong competition not only in their export 
markets but also  on the domestic market.  Some development is also  needed to  increase 
the  efficiency  of the  food  producer/first processor  interface,  for  example  through  better 
marketing  channels  and  enhancing  price  and  quality  information.  Considerable 
investment  is  also  needed  to  bring  these  facilities  (for  example  abattoirs)  up  to  EU 
standards.  The further processing part of the sector has undergone a considerable amount 
of  privatisation  and  rationalisation  making  it  a  relatively  dynamic  sector.  Further 
privatisation  of  certain  sectors  (such  as  sugar  and  fertilisers)  would  contribute  to 
increased competitiveness. 

Poland has  the  clear policy  objective  of adapting  to  EU  legislation and  new  legislation 
passed  in  recent  years  reflects  the  main  elements  of the  CAP.  The  administrative 
institutions carry out tasks similar to  some of the tasks carried out by the member states 
administrations  such  as  intervention,  management  of reserves,  social  and  retirement 
payments,  etc.  Nevertheless  major  differences  still  remain  between  Polish  and  EU 
policies related to agriculture. 

The  state  intervention  agency  (ARR)  appears  to  have  active  commercial  and  financial 
activities  in  the  agricultural  markets  that  go  beyond  the  intended  passive  roll  of 
intervention agencies under the CAP, notably  state reserve procurement, credit financing 
and  a relatively high degree  of flexibility  in deciding  when market intervention shall  be 
activated. 

71 

The market support measure  in  the  pigmeat  sector,  in particular the  public  intervention 
measure,  would  need  to  be  adopted  to  Community policies.  With  regard  to  marketing 
requirements,  Poland  is  in  the  process  of adapting  quality  standards  for  most  fruit  and 
vegetables.  Classification  schemes  and  marketing  standards  in  the  beef,'  pigmeat  and 
poultry  sectors  would  need  to  be  harmonised  to  EC  standards.  Producer  organisations 
exist but may need to  be more effectively co-ordinated and  wholesale  market structures 
in the fruit and vegetable sector require development. 

Certain  market  policy  instrunients  applied  in  the  EC  are  not  applied  in  Poland.  This 
includes  key  instruments  such  as  dairy  quotas,  key  features  of the  arable  crop  scheme 
(base  area,  set-aside,  compensatory payments  and  premiums  in  the  livestock  sector),  as 
well as  certain rural  and structural development programmes.  Management and control 
of  these  measures  would  require  relatively  sophisticated  administrative  systems, 
including  an  appropriate  land  register and  cattle  identification  and  registration  systems, 
given the large number of small farmers. 

It is  clear  that  the  administrative  capacity  would  need  to  be  further  developed  in  these 
areas if these measures were to be applied in Poland. 

It is difficult to  foresee at this stage what will be the development of agricultural support 
prices in Poland in the period before accession;  this will  depend  on a number of factors 
including the domestic economy, the situation on export markets, and the development of 
price support levels in the Union. 

Although  progress  has  been  made  in adapting  rural  and  structural  policies,  some  of the 
support measures aimed at reducing the costs of production, in particular input subsidies, 
appears to be inconsistent with Community policies. 

In general,  despite a number of trade  issues,  Poland is  correctly applying  the  provisions 
of the Europe Agreement concerning trade with the Union in agricultural products. 

Poland  is  making  progress  in  introducing  the  legislation  identified  in  the  White  Paper. 
However,  most  areas  still  require  adjustments  to  comply  with  EU legislation.  In  the 
veterinary field,  primary legislation (the new Veterinary Act) is  in the legislative process. 
Secondary  legislation  which  can  be  promulgated  by  the  Government  is  in  preparation 
independently  of the  primary  legislation  but  cannot  be  introduced  until  the  new  law  is 
enacted. 

The Polish government is  in the process of preparing legislation in the  fields  of national 
veterinary supervision, animal protection, breeding and reproduction of farm  animals and 
supervision  over  feeding  stuffs,  that  should  bring  the  legi~lation  in  these  areas  into 
conformity with the acquis. 

Negotiations  on  an  equivalency  agreement  in  the  veterinary  and  phytosanitary  sectors 
were formally  started in  1995  but progress has  been slow while the  Polish services have 
been concentrating on the approximation process. 

Poland has a relatively elaborate infrastructure for veterinary control and inspection, both 
at the  borders  and  internally.  The  services  are  undergoing  structural  changes,  including 
some  decentralisation  of  the  services  accompanied  by  a  large  reduction  of  official 
veterinarians,  in  particular  at  head  offices  and  the  emergence  of a  private  veterinarian 
sector.  Furthermore  the  increased  fragmentation  of the  livestock's  units  may  make 
72 

inspection  and  overall  disease  control  more  difficult.  The  new  veterinary  Act,  when 
adopted, will establish the legal base for both the private and public veterinary services . 

• 

The  facilities  at  border  inspection  posts  are  still  inadequate  for  Community  veterinary 
control.  Complete facilities for the inspection of live animals and animal products at the 
border  inspection  posts  are  not  yet  available  and  most  border  checks  are  limited  to 
controls on certificates and other documents, with the majority of physical checks being 
undertaken at destination.  Currently, the Polish situation does  not appear to  completely 
comply with the EU import rules from third countries. 

· 

As regards internal measures there is a need for the Polish authorities tp ensure Poland's 
animal health status in respect of certain EU requirements.  The system of registration of 
holdings  and identification of animals  will  need to  be  adjusted to  the  EU  systems.  The 
concept  of  regionalisation  appearsto  be  only  partly  applied.  Eradication  practices 
regarding  notifiable  diseases  need  further  exchange  of information  to  establish  if they 
conform to EU legislation. 

There will  be a need  to  upgrade  certain food  processing establishments  in particular for 
the  national  market to  develop  acceptable  veterinary  audit  and  certification  procedures, 
also  for  both  imports  and  exports  c:µld  to  maintain  an  adequately  structured,  resourced, 
staffed and trained veterinary sector. 

Polish legislation is well  developed regarding seed and propagation material and Poland 
enjoys  Community equivalence under Community legislation for  a  number of products. 
Poland will need, however, to  approximate its  legislation to  EC  requirements for  species 
where  equivalency  has  not  been  established.  A  new  law on crop  protection  came  into 
force in July  1995.  However, a certain adaptation to EU requirements is still necessary. 

In the  field  of animal  nutrition,  new  legislation is  foreseen  in  1997, which should adapt 
Polish legislation to  EC  requirements.  The approximation of legislation  in the  field  of 
plant health should not create major obstacles, although proper implementation will need 
to  be  enforced.  The  control  and  inspection  arrangements  appears  to  be  inadequate  to 
ensure  the  appropriate  level  of  protection.  The  above  mentioned  concerns  about 
enforcement of external border control and disease control in the veterinary field  are also 
largely  valid  in  the  plant  health  sector.  However  it  will  be  necessary  to  verify  if the 
institutions are able to implement the new legislation. 

Concerning  pesticide  residues  and  plant  protection  products,  there  is  a  high  level  of 
compliance  with 
EC  requirements,  though  proper  implementation  will  need  to  be 
assured.  In  the  area  of organic  farming,  legislation  is  under  development  with  draft 
legislation expected by the end of 1998. 

Conclusion 

Important  efforts  of alignment  to  the  acquis  are  still  necessary,  although  significant 
progress has been made in adopting the measures mentioned in the White Paper. 

Particular efforts are needed in relation to  : 

- establishment  of a  coherent  structural  and  rural  development  policy  to  deal  with  the 

problem of Poland's agricultural structure; 

73 

-

implementation  and  enforcement  of veterinary  and  phytosanitary  requirements  and 
upgrading of establishments to  meet EC  standards;  this  is particularly important with 
regard  to  the  inspection  and  control  arrangements  for  protecting  the  EU  external 
borders; 

..  strengthening  of the  administrative  structures  to  ensure  the  necessary  capacity  to 

implement and enforce the policy instruments of the CAP; 

-

further restructuring of the agro-food sector to improve its competitive capacity. 

If such  progress  is  accomplished,  accession  in  the  medium  term  should  not  be 
accompanied by  significant problems  in applying  the  common agricultural  policy  in  an 
appropriate  manner  although  a  solution  to  Poland's  structural  prpblems  will  require  a 
long-term approach. 

Fisheries 

The Common Fisheries Policy includes common market organisations,  structural policy, 
agreements  with  third  countries,  management  and  conservation  of fish  resources,  and 
scientific research in support of these activities. 

The  Europe  Agreement  includes  provisions  concerning  trade  in  fisheries  products  with 
the Union.  The White Paper includes no measures in this field. 

Descriptive Summary 

In  1995,  Poland's  fisheries  sector employed 40,000  people  and  contributed  0.4%  to  the 
GDP.  Approximately 450,000t of fish valued at ECU 350 million was caught.  A total of 
3 6  high-seas  factory  trawlers  (down  from  51  in  1993)  accounted  for  61 %  of the  total 
catch of the  Polish fleet  by  volume  and  90%  by  value.  Most of the  catch was  Alaskan 
pollack and depends to  a great extent on fishing  rights  agreed with Russia in the  Bering 
Sea.  The  high-seas  fleet  is  being  run-down  dtie  to  age  and  limited  access  to  other 
countries'  fishing  zones.  The 403  cutter vessels  in the  Baltic fleet  and the  870  boats  of 
the  coastal  fleet  catch,  subject  to  quota,  mainly  cod,  sprat  and  herring  - although  the 
quotas  of the  last  two  species  are  under-utilised.  85%  of the  Baltic  fleet  is  at  least  15 
years old and generally outdated and under-powered. 

The  processing  sector  is  in  a  restructuring  phase.  About  40%  of the  3 77  enterprises 
currently still active in this  sector in  1995, have  less than ten employees.  The high-seas 
catch  is  processed  on-board  and  exported  directly,  making  a  major  contribution  to  the 
positive balance of the fisheries sector. 

Production of the main inland fishery species, carp and trout, has increased in value from 
ECU  30  million (27 OOO  t)  in  1993  to  ECU  52  million (36 OOO  t)  in  1995.  Fish-farming 
takes  place  in  available  ponds  and  lakes  belonging  to  agricultural  and  other  private 
holdings rather than in purpose-built units. 

Poland's fish production and foreign trade data, when compared to  the ·corresponding EU 
figures,  show  that  it  can  be  placed  in  the  averag,e  category  of EU  countries.  In  1995, 
Poland produced 4.85% of EU production value and has a positive trade balance (in value 

74 

terms)  with  the  EU.  As  a  trading  partner,  Poland  represents  1.75%  of EU  total  fish 
imports and 70% of EU imports of fisheries products from  the candidate countries alone 
(in terms of value).  ~s regards EU exports, Poland receives 3. 72% of our total exports of 
fisheries products and 44.8% of our exports of these products to  the candidate countries 
(in terms of value). 

Notwithstanding the Community's and Poland's mutual interest in negotiating reciprocal 
trading  concessions  regarding  fisheries  products,  these  have  not  yet  been  negotiated  in 
the framework of the Europe Agreement due  to  the fact  that on-going negotiations  on a 
fishing  agreement  on access  to  resources  are  not  yet  finalised.  Poland  had  concluded 
fisheries agreements with Russia, the USA, Canada, Mauritania and Norway. 

Current and Prospective Assessment 

Management of the  resources  in the  Baltic  is  currently  accomplished  between  the  EC 
and  Poland  in  the  framework  of  the  International  Baltic  Sea  Fishery  Commission 
(IBSFC).  According to  the _data  available,  no  major problems  should be  expected  with 
regards  to  fisheries  agreements  concluded  and  Poland's  membership  to  international  or 
regional fisheries organisations. 

Poland  replaced  the  former  centralised  state  system  by  a  free  market  system  and  the 
privatisation  of  enterprises.  There  is  however  still  a  lack  of  auctions  and  market 
structures.  The  majority  of existing  processing  plants  do  not  conform  with  the  EU' s 
hygiene and sanitary regulations. 

" 

It will be necessary for Poland to establish a fisheries  administration which is  capable of 
implementing the Common Fisheries Policy - in particular, the management of resources, 
the keeping  of a  fishing  fleet  register,  the  application of structural  policy  for  the  sector, 
the management of the market scheme and the collection of all statistical data - as well as 
the EU' s policies on health, hygiene and environmental matters. 

Efforts  are  being  undertaken  with  a  view  to  adapting  the  sector  for  accession.  Polish 
fishermen,  already experiencing more limited opportunities to fish  in distant waters, will 
probably depend more and more  on Baltic  Sea stocks,  for  which a certain over-capacity 
exists.  This  will  lead  to  a  reduction  of the  whole  fleet  with  effects  on  the  processing 
industry  and  accompanying  socio-economic  problems,  and  the  remaining  fleet  will 
require  a  modernisation programme to  make  it competitive and  respect  the  EU's  multi 
annual guidance policy as well as  EC regulations covering hygiene and safety. 

Conclusion 

In the medium term, Poland needs to make further progress in modernising the sector and · 
creating structures which correspond to the features  of the EU  fishery  industry.  Once the 
problems  of access  to  resources  and  mutual  trading  concessions  are  solved,  no  major 
problems should be expected. 

Energy 

Main  EU  energy  policy  objectives,  as  reflected  in  the  Commission  White  Paper  "An 
energy  policy  for  the  EU"  include  enhancement  of competitiveness,  security  of energy 

75 

supplies and protection of the environment.  Key elements of the energy acquis comprise 
of Treaty  provisions  and  secondary  legislation  particularly  concerning  competition  and 
state aids,  internal  energy market (including directives on electricity, price transparency, 
gas and electricity transit, hydrocarbons licensing, emergency response including security 
stock  obligations,  etc.),  nuclear energy,  as  well  as  energy  efficiency  and  environmental 
rules.  Development of Trans-European Energy Networks  and  support  for  energy  R&D 
are  other  important  elements  of  energy  policy.  Ongoing  developments  include 
liberalisation of the gas sector, energy efficiency acquis and the Auto-oil programme. 

In the field of nuclear energy, the  Community acquis has evolved substantially from  the 
original  EAEC  Treaty  to  a  framework  of  legal  and  political  instruments,  including 
international  agreements.  At present,  it addresses  issues  of health and  safety,  including 
radiation  protection,  safety  of nuclear  installations,  management  of radioactive  waste, 
investment  including  EURA TOM  financial  instruments,  promotion  of research,  nuclear 
common market, supplies, safeguards, and international relations. 

The Europe Agreement provides for cooperation to develop the progressive integration of 
the  energy  markets  in  Europe  and  includes  provisions  on  assistance  within  the  related 
policy  areas.  The  White  Paper  preparing  CEECs  for  the  internal  energy  market 
underlines the need for  full  application of key  internal  market directives  in combination 
with  EC  competition law.  As  to  the  nuclear sector,  the  White  Paper refers  to  nuclear 
supply, safeguards and shipments of nuclear waste. 

Descriptive Summary 

·Poland's  energy  economy  is  dominated  by  domestic  solid  fuels  (hard  coal,  but  also 
lignite), representing three-quarters of the energy balance.  Oil represents only 15% of the 
country's energy  needs.  Poland is the seventh world producer of hard  coal  (reserves  of 
124 billion tons, 4% of world production) producing a quantity equalling total EU levels. 
Lignite  production  (68  million  tons  per  annum)  is  economically  viable  and  is 
progressively  concentrated  at  one  deposit  in  Central  Poland  (Belchatow).  Due  to  its 
economic, social and regional importance (9% of GDP, a large number of workers,  close 
link of coal to the steel sector, concentration of coal in one region), the energy sector is a 
key issue in the restructuring process. 

Poland does not use nuclear power for the production of electricity and does not intend to 
do  so  at  least  before  2010.  One  state  owned  Materials  Testing  Reactor  is  used  for  the 
production of isotopes with fuel procured from Russia. 

Energy efficiency is two to three times lower than the EU average, which combined with 
pollution  from 
the  coal  sector  or  oil  refineries,  cause  serious  environmental 
consequences. 

Poland  is  integrating  increasingly  its  networks  with  those  of  the  EU.  The  test 
synchronous  electricity  connection  since  1995  with  the  Western  European  UCPTE 
system should  be  noted  and  the  future  completion  of the  gas  pipeline  Russia-Belarus 
Poland-EU,  will  ensure  a  strategic  second  inlet  for  the  EU  for  Russian  gas,  thus 
improving the Union's security of gas supply.  The Baltic ports could increasingly play a 
role for oil and gas imports. 

76 

Current and Prospective Assessment 

Restructuring  of the  energy  sector  has  been  delayed  by  the  late  adoption  of an  overall 
Polish  Energy  Policy  (1996),  which  however  is  in  line  with  EU-energy  policy. 
Objectives  of  this  policy  include:  introduction  of  more  competition  in  the  sector; 
ensuring security of energy supplies and protection of the environment.  The competition 
framework in the energy sector is  progressively approximating with the directives of the 
internal energy market in combination with the application of EU competition law.  Here 
the anti-monopoly laws which- is  partly applicable to the energy sector, and the recently 
adopted Energy Law (expected to enter into force end  1997) are to be noted.  The energy 
law foresees  such matters as  the establishment of a regulator on  licences, tariffs,  access 
to  networks,  separation  of  accounts  of  production,  transmission  and  distribution 
activities.  Most  energy  companies  are  State  owned  monopolies,  although  oil  trade  has 
been  liberalised.  The  Polish Government has  recently  introduced  import  tariffs  for  oil 
products  in order to  protect its  oil refineries,  being restructured,  which in the  future  will 
however have to  compete on the saturated European market.  The import barriers should 
progressively be dismantled in the near future. 

· 

' 

As  demonopolisation  or  privatisation  plans  are  being  prepared,  it  appears  that  in  the 
electricity sector,  new structures will  be  based on privatised distribution,  generation and 
third party access to grids. There is also a clear link between coal sector restructuring and 
price setting.  In the oil  sector prices have been recently  liberalised.  Energy p·rices  have 
been increased but particularly those for  households (for social r~sons) do  not yet cover 
costs. 

Domestic solid fuel  will  also  in the future  play an  important role in the Polish economy. 
The  government's  restructuring  plan  foresees,  with  the  necessary  mine  closures,  a 
reduction  of  production  and  redundancies  until  2000. 
This  requires  significant 
redundancies until 2000, whereas productivity should increase by 25%.  According to the 
plan, remaining mines should become profitable by  1998 and debt repayment could start. 
However,  some  questions  remain  unsolved  such  as  the  financing  of the  environmental 
measures  needed  to  remedy  the  severe  problems  related  to  the  use  of  solid  fuels 
particularly affecting the Katowice Voivodship.  In this context equally, the  state system 
for restructuring will have to  be assessed against EC competition rules as well as  specific 
ECSC state aid rules. 

Poland has  adopted an "Act on the  State stock reserves  and  obligatory stock reserves  of 
fuel",  whereas  present  oil  stocks  are  estimated  at  30-35  days  of consumption.  These 
elements  constitute  a  basis  for  future  compliance  with  EU  acquis  on  emergency 
preparedness  including  the  obligation to  hold  ninety  days  of oil  stocks,  which however 
still  requires  sizeable  investments.  The  energy  law,  which  needs  to  be  implemented,. 
foresees  such matters as the establishment of a regulator, rules on licences, tariffs,  access 
to  networks,  separation  of  accounts  of  production,  transmission  and  distribution 
activities. 

Poland  has  started  the  development  of EU-conform  energy  efficiency  (e.g.  labelling 
appliances,  minimum efficiency  standards)  and  environmental  norms,  but  more  remains 
to  be  done.  Particularly  the  adaptation of the  Polish refineries  to  Community  standards 
need considerable investments. 

77 

Nuclear  fuel  for  the  material  testing  reactor  is  procured  from  Russia  in  manufactured 
form.  There is no uranium production or fuel  fabrication facility in Poland and spent fuel 
from  the  testing  reactor  is  stored  in  ponds  at  the  reactor  site.  On  the  longer  term  dry 
storage  is  under  investigation  inside  the  building  of the  former  EWA  research  reactor, 
which is under decommissioning. 

Although  Poland  has  no  nuclear  power  programme  it  needs  to  comply  with  the 
provisions  of  the  Euratom  Treat}r,  in  particular  those  related  to  supply  of  nuclear 
material,  the  nuclear  common  market,  safeguards,  health  and  safety  and  international 
agreements. 
In  these  fields,  Poland  is  party  to  all  the  international  regimes  and  has 
bilateral  agreements  with  Russia  and  the  US.  Poland  has  a  full-scope  safeguards 
agreement with the IAEA,  so  in this  and the other areas  above  no  major difficulties  are 
expected  in  applying·  Community  legislation,  or  in  integrating  Poland  into  Euratom's 
international nuclear policies. 

Conclusion 

Provided  that  current  efforts  are  maintained,  Poland  should  be  in  a  position to  comply 
with most of the  EU energy  legislation in the  medium term.  However,  matters  such as 
the  adjustment  of monopolies  including  import  and  export  issues,  access  to  adjustment 
networks,  import  barriers  for  oil  products,  energy  pricing,  emergency  preparedness 
including the  building up  of mandatory oil  stocks,  state  interventions  in the  coal  sector, 
and  the  development  of energy  efficiency  and  fuel  quality  standards  need  to  be  closely 
followed. 

No major difficulties are foreseen for compliance with Euratom provisions. 

Transport 

Community transport policy consist of policies and initiatives in three fundamental areas: 

-

-

Improving  quality  by  developing  integrated  and  competitive transport  systems  based 
on  advanced  technologies  which  also  contribute  to  environmental  and  safety 
objectives. 

Improving the functioning  of the  single market in order to  promote efficiency,  choice 
and user-friendly provision of transport services while safeguarding social standards; 

- Broadening the  external  dimension by  improving  transport  links  with  third  countries 
and  fostering  the  access  of EU  operators  to  other  transport  markets(  The  Common 
Transport Policy Action programme,  1995-2000) 1 

The  Europe  Agreement provides  for  approximation  of legislation  with  Community  law 
and  c9operation  aiming  to  restructure  and  modernise  transport,  the  improvement  of 
access to the transport market, the facilitation of transit and the achievement of operating 
standards comparable to those in the Community.  The White Paper focuses  on measures 

78 

for  the  accomplishment of Internal  Market  conditions  in  the  transport  sector,  including 
such aspects as competition, legislative harmonisation and standards. 

Descriptive Summary 

. Poland  is  a  transit  country  between  Western  Europe  and  the  CIS  as  well  as  between 
Northern  and  Southern  Europe  and  is  crossed  by  four  Trans-European  Corridors, 
identified  at  the  Pan-European  Transport  Conference  in  Crete.  As  a  consequence,  a 
substantial increase in traffic has taken place since  1990, mostly using road infrastrucnire 
which  was  not  built  for  such  heavy  traffic.  Poland  has  had  to  invest  in  significant 
improvements  to  its  road  network,  many  of which  are  still  under  way,  and  to  develop 
border crossing infrastructures. 

This  geographical  situation,  together  with  the  general  improvement  of  the  Polish 
economy,  led  (after  the  opening  of the  CEECs)  to  a  change  in  the  modal  split  in  the 
transport sector, with road transport_ of goods increasing its share, while inland waterways 
lost more than a third of traffic,  and railways  more  than a half between  1990  and  1995. 
There has been a slight increase in air traffic in the last five years. 

Current and Prospective Assessment 

As  regards  completion  of the  internal  market,  Poland  has  made  considerable  efforts  to 
adopt  the  acquis.  Poland's  international  transport  sector  already  broadly  applies  rules 
similar  to  the  Union's,  in  particular  in  the  maritime,  inland  waterways,  combined 
transport and road passenger transport fields.  Poland should not meet with any difficulty 
in  adopting  and  implementing  the  measures  - planned  for  1998  - required  in  the  air 
transport sector to  bring itself into  line with the acquis.  In the rail  sector,  care should be 
taken  to  ensure  that  the  acquis  is  effectively  applied;  the  public  service  aspects  and 
standardisation of accounts  will  have  to  be  monitored  over  the  coming  years.  The  road 
haulage sector complies with most of the provisions of the acquis relating to international 
traffic but the operation of its domestic arm poses greater potential risks.  This aspect will 
require  close  attention  and  is  of particular  importance  in  the  context of a  future  Union 
without internal borders when road haulage cabotage will be totally unrestricted. If it is to 
be  in a position to  enter the  Union's internal transport market,  Poland will have to  make 
an  early  start  on  putting  its  domestic  haulage  sector  in  order  both  as  regards  market 
access conditions and compliance ·with the safety and social rules.  There must also be an 
end to discrimination against Community hauliers, which is still being applied directly or 
indirectly by means of the road tax or VAT systems. 

The  development  of an  integrated  and  competitive  transport  system  is  an  objective  of 
which  the  Polish  authorities  are  aware;  achieving  an  acceptable  level  of  safety  and 
optimal  use  of the  transport  system  are  probably  going  to  be  the  two  main  difficulties. 
Poland's  progress  on  safety  is  satisfactory  on  the  whole.  In  contrast,  the  objective  of 
coherence  in  the  transport  system  appears  harder  to  attain.  Poland  is  likely  to  face  a 
steady rise  in the  share of road  transport and will  have  to  focus  its  efforts  on the  use  of 
railways and inland waterways. 

In order to  improve  links with the  Member States and its neighbours,  Poland is  planning 
to  invest  about  ECU  5  billion  of its  own  budget  over  the  period  1995-99  in  transport 
infrastructure  used  by  international  traffic,  primarily  on  trans-European  corridors.  This 
sum amounts to  about  1.2% of GNP, a respectable enough figure  but not necessarily one 

79 

that will cover needs, in particular as  Poland had no  motorway  infrastructure until  1990. 
Any  reduction  in  this  amount  as  a  result  of budgetary  constraints  might  only  serve  to 
exacerbate this relative shortcoming. 

Conclusion 

Poland has  made  notable  progress  in the  adoption  of the  acquis  in  the  transport  sector. 
Provided  that  it  moves  swiftly  and  decisively  on  the  operation  of its  domestic  road 
haulage  market  (in  particular -on  market  access,  safety  rules  and  tax)  and  clarifies  the 
procedures for  implementing the acquis in the rail  sector, the transport sector is  unlikely 
to pose major problems as regards adoption of the internal market acquis. 

It will  be  necessary  to  make  sure,  however,  that  the  resources  are  available  which  are 
needed to lay the foundations for the future trans-European transport network extended to 
the  candidate  countries,  including  transhipment  centres  such  as  sea  ports  and  crossing 
points  on the  borders  with the  CIS  countries,  if these  are  to  become  the  future  external 
borders  of the  Union.  It would  also  be  advisable  for  Poland's administrative  structures, 
and in particular bodies supervising areas such as safety, to be rapidly reinforced. 

Small and Medium Enterprises 

EU enterprise policy aims at encouraging a favourable  environment for  the development 
of SMEs  throughout the  EU,  at  improving  their  competitiveness  and  encouraging  their 
It  is  characterised  by  a  high  degree  of 
Europeanisation  and  internationalisation. 
subsidiarity.  The  complementary  role  of the  Community  is  defined  and  implemented 
through  a  Multiannual  Programme  for  SMEs  in  the  EU.  This  programme  provides  the 
legal and budgetary basis for  the Community's specific SME policy actions.  The acquis 
has  so  far  been  limited  to  recommendations  on  specific  areas,  although  legislation  in 
other sectors also affects SMEs (e.g. competition, environment, company law). 

The  Europe  Agreement  provides  for  cooperation  to  develop  and  strengthen  SMEs,  in 
particular in the private sector, inter alia through provision of information and assistance 
on  legal,  administrative  and  tax  conditions.  The  White  Paper  contains  no  specific 
measures. 

Descriptive Summary 

Polish SMEs play an important role in the economy.  The figures for  1995 show that 29% 
of the  workforce  in  industry,  construction and  services are  employed  in  SMEs with  less 
than  50  employees,  23%  in  SMEs  with  50-250  employees.  The  number  of people 
employed  in  SMEs  has  increased  in  recent  years  and  is  expected  to  grow  as  the 
privatisation  process  is  carried  further.  The  number  of enterprises  officially  registered 
amount to 2.1  million, about almost all of which belong to  the private sector.  Small scale 
privatisation  has  globally  been  rather  successful.  More  than  98%  of the  retail  and 
wholesale businesses and 95% of small companies have been privatised. 

Current and Prospective Assessment 

There  is  to  date  no  SME  specific regulatory  framework.  SMEs,  are  created and  operate 
according  to  general  legislation  regarding  economic  activity.  A  draft  law  is  being 
worked  out  cont~ining the  official  definition  of SMEs.  There  are  specific  regulations 
regarding cooperatives, trust funds  and  foundations.  For the  self-employed or for  a civil 
80 

corporation,  whose  income  is  below ECU  400 OOO  simplified procedures  of accounting 
are permitted. 

A  specific  SME  policy  programme  was  adopted  by  the  Polish  Government  in  1995, 
aiming  at  the  development  of  SMEs,  and  recognising  that  SMEs  have  a  positive 
influence  on the  industrial  structure.  The  document proposes  new  legal,  financial  and 
organisational support for  SMEs and the extension of institutional aid with regard to the 
access  to  information  and  education.  While  there  is  a  basic  commitment  to  an  SME 
policy  in Poland,  there  are  still  some  problems  with the  cooperation  between  different 
ministries and structures involved in this policy.  While the basic structures are in place, 
there  is  a  need  for  better  and  clearer  co-ordination  of efforts  directed  towards  SMEs, 
measures  aimed  at  simplifying  legislation  to  make  it  more  SME  friendly,  as  well  as 
strengthening  of the  support  infrastructure,  improvement  of the  tax  environment,  and 
development of SMEs' access to financing. 

The on-going efforts to  strengthen the SMEs during the pre-accession period will therefore 
need to be continued. 

<;onclusion 

No particular problems are foreseen for Polish accession with respect to SME policy. 

3.5  Economic and Social Cohesion 

Employment and Social Affairs 

Community  social  policy  has  been developed  through  a  variety  of instruments  such  as 
legal  provisions,  the  European  Social  Fund  and  actions  focused  on  specific  issues, 
including  public  health,  poverty  and  the  disabled.  The  legal  acquis  covers  health  and 
safety  at  work,  labour  law  and  working  conditions,  equal  opportunities  for  men  and 
women,  social  security  co-ordination  for  migrant  workers  and  tobacco  products.  Social 
legislation in the  Union has  been '"'haracterised  by  laying down minimum standards.  In 
addition, the social dialogue at European level is enshrined in the Treaty (Article  l l 8B), 
and  the  Protocol  on  social  policy  refers  to  consultation  of the  social  partners  and 
measures to facilitate the social dialogue. 

The  Europe  Agreement  provides  for  approximation  of  legislation  with  EC  law  and 
cooperation on improving standards of health and safety at work,  labour market policies 
and  the  modernisation  of the  social  security  system.  It also  provides  for  Community 
workers  legally  employed in Poland to  be  treated  without discrimination on grounds  of 
nationality  as  regards  their working  conditions.  The  White  Paper provides for  measures 
for approximation in all the areas of the acquis .. 

Descriptive Summary 

Based on a legal framework agreed in 1991, Poland has developed a social dialogue with 
the  participation  of the  government,  employers'  and  employees'  organisations.  For 
employees,  Solidarnosc  and  OPZZ  are  the  key  players,  while  the  main  employers' 

81 

organisation  is  the  Confederation  of Polish  Employers,  a  member  of the  Union  of 
Industrial  and  Employers'  Confederation  of  Europe  (UNICE)  and  the  International 
Organisation. of Employers.  Tripartite negotiations tend to  be the norm.  There is not yet 
a clear division of labour between the social partners and the government.  Employers are 
often  represented  by  representatives  from  public  companies  which  are  not  privatised. 
Genuine private collective negotiations are. rare. 

A decrease in agricultural workers (still a main sector with 27% of active population) and 
industrial employment, which was only partially offset by  increased private employment 
in the  service  sector,  led to  an unemployment rate  of 12.4%  in  1996  according  to  ILO 
methodology.  Regional disparities in unemployment are substantial. 

On  employment  policy,  Poland  has  developed  a  regionalised  employment  service 
structure to handle active labour market policy.  This process of creating modem labour 
market institutions needs to be continued. 

New social security schemes are being developed in difficult conditions of fiscal restraint, 
including the task of modifying the indexation of pensions.  The Sejm has recently voted 
through  pension  reform  bills  which  means  that  pensions  would  come  from  the  present 
form  of insurance,  from  compulsory and  voluntary capital  insurance and  from  additional 
insurance.  Presently,  the  Labour  Fund  is  the  main  source  of financing  unemployment 
benefits  and  active  labour  market  measures  through  the  state  budget  (about  62% ), 
compulsory  contributions  (36%)  and  other  revenue.  In  1995,  Poland  spent  18%  of its 
GDP  on social  security.  Continued  efforts  are  required  to  ensure  that  measures  of social 
protection are developed. 

Problematic  areas  like  communicable  diseases  and  blood  safety  indicate  that  Poland 
needs to significantly improve its health system. 

Current and Prospective Assessment 

In Poland, there is a Labour Code setting out the principles and organisational matters for 
the  protection  of safety  and  health  at  work.  The  Ministry  for  Labour  is  planning  to 
readapt  this  Code  in  the  light  of a  further  approximation  to  the  Community  acquis. 
Poland has inspection services which are in accordance with ILO Convention N° 81.  For 
a  series  of  specific  areas  work  needs  to  be  continued  and  completed  in  order  to 
approximate the standards to the Community acquis. 

The measures introduced by Poland in the area of labour law nearly bring their legislative 
situation  in  line  with the  EU.  There  appear to  be  minor  shortcomings,  such  as  Labour 
offices which do  not fulfil  their obligations in cases of collective redundancies and in the 
field  of working time,  where the  minimum annual  paid leave  appears  different from  EU 
requirements.  These  points,  including  adjustments  to  be  made  to  the  Polish  Labour 
Code,  are  likely  to  be  solved  without  major  difficulties.  The  information  and 
consultation  of workers  through  democratic  and  efficient  workers'  representation  on 
company level as requested by a number of EC Directives should be further developed. 

On  equal  opportunity,  the  basic  provisions  of  EC  non  discrimination  law  between 
women and men are covered by Polish legislation, but the non discrimination principle is 
not always  respected  in  areas  such  as  equal  pay  for  equal  work.  The  difference  in  pay 

62 

between women and men is  considerable.  Legal  adaptation is  also  necessary for parental 
leave. 

Concerning  the  right  to  the  free  movement  of workers,  there  would  appear  to  be  no 
· obstacles to prevent Poland from being able to  implement the provisions of the acquis in 
this area. The introduction of the right to free movement will however require changes in 
the national law, particularly as regards access to  employment and a treatment free  from 
discrimination on grounds of nationality. 

In the field of social security for  migrant workers,  accession does  not,  in principle,  pose 
major problems although some technical adaptations will be  necessary.  More important 
is the administrative capacity to apply the detailed co-ordination rules in cooperation with 
other countries.  Poland appears to have many of the administrative structures required to 
carry  out  these  tasks,  but  further  preparation  and  training  will  be  necessary  before 
accession. 

The two tobacco directives on warning labelling and maximum tar content have not been 
transposed into  national  law.  But the  1995  Polish Act on Protection of Health provides 
indications on labelling, a health warning as well as maximum tar and nicotine content. 

Conclusion 

Many legislative adjustments are  still needed in the  field  of health and  safety at work to 
ensure alignment with EU  standards, and efforts to  implement the acquis effectively will 
need  to  be  continued.  Provided  Poland  pursues  its  efforts,  in  terms  of adoption  and  of 
application of the  EC  acquis,  Poland is  likely to  be  able to  take  on the  social  acquis  in 
the medium term. 

Regional Policy and Cohesion 

In accordance with Title XIV of the Treaty, the Community supports the strengthening of 
cohesion,  mainly  through  the  Structural  Funds.  Poland  will  have  to  implement  these 
instruments effectively whilst respecting the  principles,  objectives and procedures  which 
will be in place at the time of its accession. 

The  Europe  Agreement  provides  for  cooperation  on  regional  development  and  spatial 
planning,  notably  through  the  exchange  of  information  between  local,  regional  and 
national  authorities  and  the  exchange  of civil  servants  and  experts.  The  White  Paper 
contains no  specific provisions. 

Descriptive Summary 

In  1995,  Poland  was  at  some  of  31 %  of  EU  GDP/cap  average.  The  current 
unemployment  rate  is  most  likely  to  be  slightly  below  14%.  Polish  Labour  Force 
Surveys  indicate  lower  rates  than  suggested  by  registered  figures  and  Poland's  real 
unemployment  rate  most  likely  ranges  between  12  and  14%.  Regional  disparities  as 
regards  unemployment  rates  are  large  ranging  from  5%  in  Warsaw .to  above  28%  in 
Slupsk. 

83 

Although  a  legal  basis  for  regional  policy  does  not  yet  exist,  current  thinking  is  in  the 
direction  of  a  modernised  regional  policy  closer  to  that  of  the  EU,  according  to 
recommendations of a Task Force for Regional Policy adopted by the Polish government 
at the end of 1996. 

The  institutional  structure  of Polish  regional  policy  is  constituted  of a  wide  range  of 
bodies.  A  Governmental  sub-committee  for  regional  policy  and  rural  development 
(KERM),  is  in  charge  of drafting  proposals  and  co-ordinating  regional  development 
initiatives from  the central  level.  The Ministries of Economy deals with regional policy 
through their general  responsibility  for  economic  issues.  Finally,  the  Polish Agency  for 
Regional  Development  (P ARD),  created  in  1993,  administers  foreign  assistance  within 
the field of regional policy. 

The role  of the  49  voivodship  administrations  is  confined to  the  overall  implementation 
and  co-ordination  of regional  development  initiatives  from  sectoral  ministries  within 
their  territory.  The  municipalities,  granted  rights  of self-government  in  1990,  enjoy  a 
wide  range  of competence  including  the  formulation  of local  development  programmes 
partly financed by their semi~autonomous budgets. 

Poland's  financial  instruments  at  the  disposal  of regional  development  initiatives  are 
limited.  However,  the  share of devel_opment  related expenditures  which could constitute 
potential counterpart funds  to  EU  structural policy cannot yet be determined.  Therefore, 
Poland's co-financing capacity cannot presently be evaluated with sufficient reliability. 

Funds  are  granted  for  infrastructure  investments  in  municipalities  threatened  by  high 
employment  rates  and  for  local  restructuring  programmes  chosen  by  the  Government. 
Existing  funds  at  regional  or  local  level  cannot  be  c~nsidered as  regional  expenditures 
although voivods  are  taking  a growing part in  the  preparation of plans  which give them 
an influence in the selection of the projects. 

Current and Prospective Assessment 

Poland  has  made  some  progress  and  gained  operational  experience  with  EU  Structural 
Funds  type  policies.  Through  their  participation  in  mainly  foreign  donor  financed 
programmes,  notably  the  EU  financed  Phare  CBC  and  Struder  programmes,  the 
authorities  have  established  strategies  very  close  to  the  objectives  of the  Community 
Regional Policy. 

However,  some  important issues  will  have  to  be  dealt  with.  The  territorial  organisation 
and  institutional  structures  need  to  be  improved  for  the  future  management  and 
implementation of Structural Funds programmes and projects.  At the institutional level, 
the Polish authorities are considering several options of regrouping voivodships, possible 
. redistribution  of competencies  between municipalities  or the  creation of additional  tiers 
of self-government. 

Proper administrative structures at national level including clear ministerial responsibility 
and efficient inter-ministerial co-ordination procedures are needed. 

Conclusion 

The Polish Government is  committed to  the introduction of a regional  policy through its 
adoption  of the  recommendations  of the  Task  Force  for  Regional  Policy.  Indeed,  the 
84 

implementation  of  these  recommendations  would  constitute  a  major  step  towards 
adapting  to  the  EU' s  regional  policy  and  applying  an  integrated  approach  to  regional 
development.  Subject  to  the  establishment  of  the  appropriate  administrative  and 
budgetary  structure,  Poland  should,  in  the  medium-term,  be  ready  to  apply  the· 
Community rules and channel the funds from the EU structural policies 

3.6  Quality of Life and Environment 

Environment 

The  Community's  environmental  policy,  derived  from  the  Treaty,  aims  towards 
sustainability  based.  on  the  integration  of environmental  protection  into  EU  sectoral 
policies, preventive action, the polluter pays principle, fighting  environmental damage at 
the source, and shared responsibility.  The acquis comprises approximately 200 legal acts 
covering a wide range of matters, including water and air pollution, management of waste 
and chemicals, biotechnology, radiation protection, and nature protection.  Member states 
are  required  to  ensure  that  an  environmental  impact  assessment  is  carried  out  before 
development consent is granted for certain public and private projects~ 

The Europe Agreement stipulates that Polish development policies shall be guided by the 
principle  of  sustainable  development  and  should  fully  incorporate  environmental 
considerations.  It also  identifies  environment  as  a  priority  for  bilateral  cooperation,  as 
well as an area for  approximation legislation to that of the Community. 

The  White  Paper covers only a small  part of the  environmental acquis,  namely  product 
related legislation, which is directly related to the free circulation of goods. 

Descriptive Summary 

Despite  developing  one  of  the  most  sophisticated  approaches  to  environmental 
management in the region,  Poland still faces  severe environmental problems, with major 
challenges in waste water and air pollution. 

Industrial  pollution,  sharply  reduced  during  the  recession,  has  failed  to  rise  at  the  same 
rate  as  the  economy,  thanks  to  a  large  investment  programme,  industrial  restructuring, 
and  the  incentive  effect  of the  economic  instruments  developed  after  1989.  However, 
Poland  still  generates  a  great deal  of industrial  waste  from  coal mining  and  other heavy 
and  extractive  industry.  Upper  Silesia  and  the  "Black  Triangle"  bordering  the  Czech 
Republic  and  Germany  are  particular "hot-spots".  Coal  fired  power  generation  is  still  a 
problem,  with high sulphur levels  and  particulates from  many  plants.  Non-point source 
air  pollution  has  received  attention  in  some  areas,  with  coal-to-gas  conversion 
programmes in place. 

There  has  been  little  progress  in  hazardous  waste  management,  though  the  country's 
recent accession to  the  OECD is  expected to  provide a stimulus  for  improvement in this 
area.  There  has  been  some  success  in  reducing  pollution  loads  in  Water.  Poland  has 
channelled significant resources to  this  sector,  upgrading  or completing  some  300  waste 
water treatment plants since 1989.  However, much more investment in this sector will be 

85 

required,  given that all  Polish waters  flow  into  the  Baltic,  a  'sensitive area'  where  high 
standards of water management are demanded.  Regarding policy on radioactive waste, a 
repository for institutional radioactive waste has been established (hospitals and research 
centres).  Poland retains some areas of great natural value which could represent an asset 
to the environment of an enlarged Union. 

Poland was  the first  country  in the region to  develop  a new  environmental policy after 
1989.  A National  Environmental Policy was adopted in 1991, setting short, medium and 
long term priorities, and listing policy tools for development.  In  1995  a detailed review 
of policy  implementation  was  published,  setti~g new  and  detailed  targets  to  the  year 
2000.  An  environmental  protection  law  was  passed  in  November  1996.  The 
environmental administration was developed and re-cast in the early  1990s.  Permits are 
granted  at  the  regional  level  by  Regionar Environment  Inspectorates,  according  to 
calculations  of ambient  air  and  water  quality.  Although  air  emission  standards  set  in 
1991  are  perceived  to  be  unrealistically  high  - higher  than  EU  standards  - they  have 
formed  a  useful  basis  for  monitoring  and  management.  Monitoring  equipment  and 
procedures have been introduced in some of the worse polluted areas for air and water. 

Poland's  environmental  investment levels  as  a  share  of GDP  are  average  for  the  region. 
The country has been successful in mobilising financial  resources through fees  and fines 
channelled  to  national  and  regional  environmental  funds: 
the  National 
Environmental  Fund income was  800  million dollars,  most of which  was  re-invested  in 
reducing  industrial  and  water pollution.  However,  the  Fund's  income  recently  dropped 
as a result of improved compliance levels and lower fines. 

in  1995 

Current and Prospective Assessment 

Since  1991,  Polish authorities  have  checked  as  a  matter of priority  new  legislation  for 
compatibility with  EC  legislation.  This  has  been  a priority  for  the  Ministry,  and  some 
cost-compliance work has been carried out. An accession strategy should be ready by the 
autumn  of  1997.  Work  is  progressing  on  a  Water  Act  to  introduce  river  basin 
management  and  strict  standards  for  water  discharged  to  rivers  and  soil.  A  law  is 
awaiting  adoption  on  Waste  Management,  where  legal  approximation  is  still  low.  The 
approach  to  reducing  air  pollution  has  been  dominated  by  economic  instruments  and 
environmental  management  in  selected  areas  (e.g.,  a  pilot  project  in  tradable  permits), 
rather  than  legislation,  which  therefore  will  need  considerable  attention.  Particular 
attention should be given to the quick transposition of framework directives dealing with 
air,  waste and water, as well as the establishment of financing  strategies for  legislation in 
the  water,  air  and  waste  sectors  requiring  major  investments.  The  foundations  for  the 
procedures  needed  under  the  Integrated  Pollution  Prevention  and  Control  (IPPC) 
Directive are to a large extent in place. 

The process of transposition should mark significant progress in the medium term.  There 
are  however  concerns  about  the  pace  of  legislative  work  in  the  Parliament  where 
numerous pieces of environmental legislation are waiting for adoption.  The prospects for 
substantive  compliance  depend  to  a  large  extent  on  the  resources  made  available  by 
government  and  enterprises,  since  very  important  investment  is  necessary,  while  weak 
implementation  and  enforcement  could  be  an  additional  bottle-neck.  The  country's 
environmental  accession strategy  should  include  implementation  timetables  for  meeting 

86 

the  EU  environmental  acquis,  starting  amongst  others  with  implementation  of  the 
framework and IPPC directives mentioned above. 

Conclusion 

. Given the recently enhanced efforts and focus on approximation, full transposition of the 
environmental  acquis  in  Poland  could  be  expected  in  the  medium  term.  However, 
effective  compliance  with  a  number  of pieces  of legislation  requiring  a  sustained  high 
level  of  investment  and  considerable  administrative  effort  (e.g.  urban  waste  water 
treatment,  drinking  water,  aspects  of waste  management  and  air  pollution  legislation) 
could  be achieved only in the long term. It will necessitate increased levels of public and 
private investment. 

Consumer Protection 

The Community acquis covers protection of economic interests of consumers (including 
control  of misleading  advertising,  indication of prices,  consumer credit,  unfair contract 
terms, distance selling, package travel, sales away from business premises and timeshare 
property)  as  well  as  the  general  safety  of goods  and  the  specific  sectors  of cosmetics, 
textile names and toys. 

The  Europe  Agreement  provides  for  approximation  of  legislation  with  EC  law  and 
cooperation with a view to achieving full compatibility betweeri the systems of consumer 
protection in Poland and the Community.  Stage I measures of the White Paper focus  on 
improving product safety, including cosmetiCs, textiles and toys, and on the protection of 
the  economic  interests  of  consumers,  notably  measures  on  misleading  advertising, 
consumer credit,  unfair contract terms  and  indication of prices.  Stage II  measures relate 
to package travel,  sales away from  business premises and time-share property. New  EC 
legislation  which  has  been  adopted  recently  (distance  selling)  or  will  be  adopted  soon 
(comparative advertising, price indication) will also need to  be taken into account. 

Descriptive Summary 

Poland does  not  yet  have  a  general  Consumer  Protection  Act.  While  there  are  several 
proposals under discussion in the Parliament, there  is  no  consensus  on a single draft.  In 
October  1996,  Poland  transformed  the  Anti-Monopoly  Office  into  the  "Office  for  the 
Protection  of  Competition  and  Consumers"  with  the  responsibility  of  co-ordinating 
consumer policy.  This might help to  overcome the conflicts of competence which have 
hampered the development of consumer policy in  Poland.  The  Office  seems willing to 
give a new impetus to consumer policy in Poland. 

Consumers  are  well  represented  through  a  number  of active  consumer  organisations, 
from  the  Polish  Consumer  Federation  which  is  based  on  regional  and  local  consumer 
groups  to  the  Association  of  Polish  Consumers,  to  the  P.olish  Home  Economics 
Association.  Since  there  is  no  legal  framework  concerning  relations  between  the 
government and  the  consumer movement,  the  involvement of the  latter depends  largely 
on  the  willingness  of the  government  to  consult  them.  The  consumer  organisations 
participate  in  the  Council  for  testing  and  certification  as  well  as  the  Committee  on 
Standardisation. 

87 

Current and Prospective Assessment 

Consumer protection in Poland has suffered from  the absence of an overall strategy,  and 
the result has been fragmentation.  Proper legislation to protect the economic interests of 
the  consumer  is  missing  in  many  important  areas,  such  as  unfair  contract  terms, 
consumer credit, product safety, timeshare property and distance selling.  There  is  a  law 
on misleading  advertisement  but  it  does  not  fully  implement  the  EC  Directive.  A  new 
draft law in this area is under discussion.  Existing laws on the indication of prices, sales 
away  from  business  premises  and  unfair  contract  terms  need  to  be  amended  and 
improved  to  match  the  required  EC  standards  ofprotection.  Some  progress  has  been 
made in drafting a new text on package travel. 

The  area  of general  product  safety  remains  unregulated,  although  a  draft  law  is  under 
preparation.  In addition, further efforts are needed to align and implement legislation on 
cosmetics and toys.  A draft law on textile names is expected. 

The development of a strong and independent consumer movement,  sustained by  public 
authorities, will need to accompany the introduction of the acquis. 

Conclusion 

The  level of consumer protection in Poland is  insufficient.  To  meet the  requirements  of 
the  EC acquis on consumer policy, Poland will have to make a substantial effort to  adopt 
a number  of new  and  important laws.  Many  existing  laws  need  also  to  be  amended to 
comply with  EC standards. 

3.7 Justice and Home Affairs 

The Present Provisions 

The Justice and  Home Affairs  (JHA)  acquis principally  derives  from  the  framework  for 
cooperation set out in Title VI  (Article K)  of the Treaty on European Union (TEU),  "the 
third  pillar",  although  certain  "first  pillar"  (EC  Treaty)  provisions  and  legislative 
measures are also closely linked 

The  EU  JHA  framework  primarily  covers:  asylum;  control  of  external  borders  and 
immigration;  customs  cooperation  and  police  cooperation  against  serious  crime, 
including  drug  trafficking;  and judicial  cooperation  on criminal  and  civil  matters.  The 
TEU  stipulates  key  principles  upon  which  such  cooperation  is  based,  notably  the 
European Convention on Human Rights  and  the  1951  Geneva Convention on the  Status 
of  Refugees. 
It  is  also  based  implicitly  on  a  range  of  international  conventions 
concerning  its  fields  of interest,  notably  those  of the  Council  of Europe,  the  United 
Nations  and  the  Hague  Conference.  The  legislative  content  of third  pillar  acquis  is 
different from the first pillar;  it consists of conventions, joint actions, joint positions and 
resolutions, (including the agreed elements of draft instruments which are in negotiation). 
A  number  of EU  conventions  (including the  1990  Dublin  Convention,  and  conventions 
relating  to  extradition,  fraud  and  EUROPOL)  have  been  agreed  by  the  Council  and  are 
now  in  the  process  of ratification  by  national  Parliaments;  several  other  conventions, 
including  one  on  external  frontiers  are  in  various  stages  of negotiation  in  the  Council. 

88 

The  JHA  acquis  involves  a  high  degree  of practical  cooperation,  as  well  as  legislation 
and its effective implementation. 

The New Treaty 

For  many  of the  above  matters,  the  entry  into  force  of the  Treaty  resulting  from  the 
Amsterdam Inter-Governmental Conference will mark the end of the current cooperation 
framework. 

Reiterating the objective of developing the Union into an "area of  fre~dom, security and 
justice",  the  new Treaty  brings  these  matters,  including  the  free  movement  of persons, 
asylum and immigration, into the Community's sphere of competence. 

On  the  free  movement  of  persons  in  particular,  the  new  Treaty  provides  for  the 
incorporation  of the  Schengen  acquis  into  the  framework  of the  European  Union  and 
binds any candidate for EU membership to accept that acquis in full. 

With  regard  to  matters  remaining  within  the  cooperation  framework,  i.e.  policing  and 
criminal justice, the new Treaty provides for the reinforcement of the cooperation system. 

The Eurove Agreement and the  White Paper 

The Europe Agreement includes provision for  cooperation in the fight against drug abuse 
and money laundering. 

The White Paper does not deal directly with third pillar subjects, but reference is made to 
first pillar matters such as money laundering and freedom of movement of persons which 
are closely related to Justice and Home Affairs considerations.  Reference is also made to 
the Brussels and Rome conventions. 

Descriptive Summary 

General Preconditions for JHA  Cooperation 

Poland  joined  the  Council  of  Europe  in  1991  and  has  ratified  the  most  important 
instruments  concerning  human  rights.  The  Constitution  provides  for  an  independent 
judiciary according to the rule of law. 

Institutional  reform  in  JHA  institutions  is  well  under  way  and  significant  progress  has 
been  made,  but  there  is  still  considerable  work  to  do  to  transform  them  into  effective 
democratic  institutions  measuring  up  to  the  tasks  of the  JHA  acquis.  The  size  and 
geographical position of Poland at a cross-roads  of migratory  and  trade  flows  in  central 
Europe poses a particular challenge.  A new data protection law to be in conformity with 
EU requirements,  is  being  drafted.  Poland has  not yet ratified  the  1990  data· protection 
convention.  (See also separate section on Single Market). 

Asvlum 

Poland  has  ratified  the  Geneva  Convention  and  the  1967  Protocol.  The  Polish 
Implementing  legislation  is  currently  in  the  1963 
constitution  provides  for  asylum. 

89 

Aliens act (amended in  1991) and  the  Polish Administrative procedure code.  These  are 
deficient in a number of respects, for example relating to  accelerated procedures and safe 
third countries.  A new comprehensive Aliens act to  revise asylum  legislation as  well as 
more general. immigration issues is currently before the Polish Parliament.  Refugees and 
asylum  seekers have arrived  in Poland  from  the  Arab  countries,  former  Yugoslavia,  the 
newly independent states (NIS) and Asia. 

Immigration/Border Control 

Some  23 7  million  border  crossings  were  made  in  1995.  Many  illegal  migrants, 
especially from the NIS and increasingly from Asia, are seeking to cross to Germany, but 
also to stay in Poland, for economic reasons.  At present the Polish Government does not 
have  effective  control  on the  residence  of migrants  and  the  new  Aliens  Law  currently 
before  Parliament  aims  to  put  in  place  an  effective  residence  control  system.  Poland 
allows  visa free  visits  from  the  West.  Visa free  access, with an  invitation letter,  is  also 
allowed from  NIS.  Poland has in place the necessary legal and administrative measures 
covering deportation,  detention and liability of carriers.  Readmission agreements  are  in 
place  with  the  Schengen  countries,  Greece,  Bulgaria,  Czech  Republic,  Hungary, 
Romania,  Slovakia  and  Russia,  Ukraine  and  Belarus.  Border  control  is  a  particular 
priority for  Poland.  Parts of Poland's  borders  are  vulnerable to  exploitation by criminal 
gangs  seeking  to  bring  illegal  immigrants  to  the  West.  Poland  is  working  closely  with 
some  EU  Member  States,  on  both the  Western  and  Eastern  borders,  to  put  in  place  the 
necessary  procedures  and  facilities  and  is  keen  to  develop  these  to  the  level  that  will 
allow it to accede to the Schengen convention. 

Police Cooveration 

Organised crime has grown significantly since- 1989, especially in the fields  of economic 
crime, drug trafficking and production, counterfeiting, illegal trade in arms, trafficking in 
women,  stolen  cars,  money  laundering  and  extortion.  Partly  because  of its  domestic 
problems in this field,  Poland is very active in international forums,  including the UN, to 
promote measures to tackle organised crime, including the promotion of cooperation, and 
the  development  of further  legal  instruments.  Domestic  legislation  is  currently  being 
reformed  to  tackle  organised and  financial  crime  more  effectively.  An organised crime 
unit  was  formed  in  the  police  in  1994  and  special  units  also  exist  in  other  ministries 
(Finance, Central Bank, Justice), but internal coordination has been poor.  Poland has not 
yet  signed  the  1990  Money  Laundering  Convention  but  has  put  in  place  domestic 
implementing  instruments  and  mechanisms. 
(See  also  separate  section  on  Single 
Market).  Poland  has  a  significant  problem  with  the  forced  trafficking  of women,  both 
from  Poland  to  the  west  and  from  the  NIS  to  Poland.  The  effectiveness  of Poland's 
efforts  to  tackle  all  forms  of organised  crime  is  hampered  by  institutional  and  resource 
constraints.  Poland  experiences  no  specific  threat  from  terrorism,  but  the  Government 
has  taken  key  measures  against  terrorism  (including  ratifying  the  1977  Strasbourg 
Convention). 

Poland  is  a significant producer of synthetic drugs,  especially for  export to  Scandinavia, 
and  domestic  consumption  is  also  growing. 
In  recent  years  a  number  of  illegal 
amphetamine  laboratories has  been dismantled,  and  large  seizures of heroin and cocaine 

90 

have  been  made.  Poland  is  party  to  the  main  drugs  international  conventions. 
Its 
domestic  legal  and  institutional  framework  against  drugs  is  currently  being  reformed, 
including  putting  in  place  a  national  drugs  prevention  programme  and  information 
system; creating a central unit in the  Ministry of the Interior to  coordinate the  specialist 
units  working  on  drugs;  and  new  legislative  measures  including  controlled  deliveries 
(now in place) and an overall law covering drug prevention (in preparation). 

Judicial Coqperation 

Reform  of the  Polish judiciary  is  under  way,  with  emphasis  being  placed  on  tackling 
problems  of human  resource  development.  Provision  for  judicial  cooperation  in  the 
criminal  and  civil  field  exists  - Poland  has  ratified  the  main  international  criminal  and 
civil conventions, has bilateral agreements in place (e.g.  on the civil side with Germany) 
and  has  put  in  place  domestic  legislation  to  allow  cooperation  to  work.  Poland  has 
applied  for  accession  to  the  Lugano  Convention. 
It  has  acceded  to  several  Hague 
Conventions but has ratified none of them. 

Current and Prospective Assessment 

Because of its geographical position (bordering the EU, several Associated countries and 
the  NIS)  its  size  and  difficulties  with  reform  in  some  areas,  Poland  is  fac~ng  some 
significant  challenges in the JHA sector.  Poland has begun to  take major steps to tackle 
these.  For the most part the necessary domestic legislation and international 'conventions 
are in place, but important work still needs to  b~ carried out o~ data protection and issues 
such as  aliens  law.  Its visa policy towards the NIS  is  a matter of concern.  The  current. 
major  reform  of  the  Ministry  of  the  Interior  is  designed  to.  improve  the  overall 
effectiveness of JHA institutions within the  framework  of the  rule  of law.  But it  is  still 
not yet clear whether this will help to improve coordination between responsible services. 
Major  problems  also  exist  in  the  areas  of  corruption,  accountability  and  technical 
effectiveness.  The judiciary lack fundamental  experience of the rule of law and dealings 
with the EU.  Poland is making significant strides to  learn about the effective working of 
JHA cooperation and some experienced officials are now in place.  But a more intensive 
effort will be required. 

Conclusion 

Poland  is  facing  significant  challenges  in  the  JHA  field,  particularly  concerning  drugs, 
border management,  migration and transnational crime.  Provided that continuing efforts 
are  made  to  improve  the  situation  Poland  could  be  able  to  meet  the  justice  and  home 
affairs acquis (present and future) in the next few years. 

3.8  External Policies 

Trade and International Economic Relations 

The  acquis  in  this  field  is  made  up  principally  of the  Community's  multilateral  and 
bilateral  commercial  policy  commitments,  and  its  autonomous  commercial  defence 
instruments. 

91 

The  Europe  Agreement  includes  provisions  in  several  areas  requiring  parties  to  act  in 
accordance with  WTO/ GATT principles, or other relevant international obligations. 

The White Paper includes no provisions in this field. 

Descriptive Summary 

Poland is a member of the World Trade Organisation (WTO), and is therefore committed 
to the principles of an open, trading economy.  Poland is an active observer in the GATT 
Civil Aircraft Agreement and, upon accession would have to comply with the obligations 
of the plurilateral WTO agreements to which the Community is a party. 

At present  Poland  does  not  ma~ntain quantitative  restrictions  on  any  textile  or clothing 
products.  On  accession the  Community  textiles  policy  would  be  extended  to  Poland; 
any  Community  restrictions  still  maintained  at  the  date  of accession  would  require 
adjustment by an appropriate amount to take account of Polish accession. 

Current and Prospective Assessment 

On  accession  Poland  would  have  to  apply  the  Community's  Common  Customs  Tariff, 
and the external trade provisions of the Common Agricultural Policy.  The post Uruguay 
Round weighted average level of most favoured nation duties for  industrial products will 
be  9.9% for  Poland  and  3.6%  for  the  Community.  The  progressive  implementation of 
free  trade  between Poland and the  Community  by  the time  of accession will,  however, 
reduce the impact on the domestic industry of applying the lower  Community Common 
Customs Tariff. 

In its relations with international organisations, Poland should ensure that its actions and 
commitments  respect  the  Europe  Agreement  and  ensure  a  harmonious  adoption  of its 
future obligations as a member of the  Community. 

On  accession  Poland  would  become  party  to  the  Community's  various  preferential 
agreements.  Preferential  agreements  between  Poland  and  third  countries  would,  in 
general, have to be terminated on accession. 

Concerns persist in the  field  of trade  in goods,  particularly regarding  measures  taken or 
planned by  the  Polish authorities  in the  automotive  industry  and  the  steel  sector.  Such 
measures  should  be  brought  into  conformity  with  EC  legislation  to  eliminate  trade 
obstacles. 

In the area of trade in services and establishment, there are  some differences  in the  level 
of treatment offered under the  GATS  to  third countries;  Poland has,  however,  indicated 
that  it  is  willing  to  work  with the  Community  to  identify  and  deal  with  any  significant 
inconsistencies between its GATS commitments and those of the Community. 

On accession Poland would have to  repeal national legislation in the field  of commercial 
defence instruments, and EC legislation would become applicable there. 

Experience from previous accessions has  shown that the  automatic extension of existing 
anti-dumping measures to  new member states  prompts third  countries. to  raise  problems 
in terms of the compatibility of this approach with relevant WTO  provisions.  It has also 
shown  that  accession  creates  a  potential  for  circumventing  measures  adopted  by  the 

92 

Community  under  the  commercial  defence  instruments.  This  happens  when,  prior  to 
accession,  substantial  quantities  of the  products  subject to  measures  are  exported  to  the 
territory of the future member state and, on accession, are  automatically released for free 
circulation  in  the  enlarged  customs  territory.  These  two  problems  would  have  to  be 
addressed during Poland's pre-accession phase. 

Poland is  a member of three of the four regimes for the non-proliferation of weapons of 
mass-destruction,  and  is  a  candidate  for  the  fourth.  Poland  is  implementing  the 
Community  control  list of dual-use  items.  Arms  export is  also  controlled.  Indeed,  the 
export  control  legislation  in  Poland  appears  to  be  stricter  than  in  most  Community 
member  states. 
It  will  be  important  to  ensure  that  implementation  of  the  Polish 
legislation  can  be  maintained  at  an  effective  level  if trade  volume  in  sensitive  goods 
increases. 

Conclusion 

Poland is well placed to be able to meet  Community requirements in this field within the 
next  few  years,  provided  that  they  eliminate  existing  trade.  barriers  in  order  to  align 
themselves more closely with the Community trade regime. 

Development 

The  acquis  in  the  development  sector  is  made' up  principally  of the  Lome  Convention, 
which runs until early 2000. 

Neither the Europe Agreement or the White Paper include provisions in this field. 

Descriptive summary 

Poland  has  no  preferential  trade  agreements  with  ACP  countries.  However,  under  its 
GSP  scheme  Poland  grants  preferential  treatment  to  a  number  of countries  (including 
ACP countries) in which the value of the per capita GDP  does not exceed that in Poland, 
as well as to some Least Developed Countries.  No duty free access is granted by Poland. 

Poland  contributes  to  the  International  Development  Association  (US  $2  million  in 
1996).  There is also a Council of Ministers General Reserve from which funds have been 
assigned for humanitarian aid. 

Current and Prospective Assessment 

On  accession,  Poland  should  apply  its  preferential  trade  regime  to  the  ACP  States  and 
participate,  together  with  the  other  member  states,  in  the  financing  of the  European 
Development Fund (EDF), which provides financial aid under the Lome Convention. 

Applying  the  Lome  trade  regime  should  not  generally  be ·a  source  of difficulties  for 
Poland. 

Normally, new member states accede to  the Lome Convention by means of a protocol on 
the date of their accession to the EU. 

93 

Conclusion 

Poland  is  well  placed  to  be  able  to  meet  EU  requirements  in  this  field  in  the  next  few 
years. 

Customs 

The  acquis  in  this  sector  is  the  Community  Customs  Code  and  its  implementing 
provisions;  the  EC's  Combined  Nomenclature;  the  Common  Customs  Tariff including 
trade  preferences,  tariff  quotas  and  tariff ·suspensions;  and  other  customs-related 
legislation outside the scope of the customs code. 

The Europe Agreement covers the establishment of~ free trade area with the Community 
and the progressive removal of customs duties on a wide range of products, according to 
clear timetables starting from the date of entry into force of the agreement. 

The  White  Paper  mentions  in  Stage  I,  measures  to  consolidate  and  streamline  the  free 
trade established under the Europe Agreement,  including legislation compatible with the 
Customs Code,  Combined Nomenclature, etc.  Stage II  concerns the  adoption of the full 
Community legislation, with a view to joining the customs union upon accession. 

Descriptive Summary 

On  accession  the  Polish  customs  authorities  would  be  required  to  assume  all  the 
responsibilities necessary for the protection and control of their part of the EU's external 
border.  Besides  the  provisions  on indirect taxation,  they  would  be  responsible  for  the 
implementation  and  enforcement  at  the  external  border  of the  Community's  common 
commercial policy, the common agricultural policy, the common fisheries policy etc. 

Poland's  capacity  fully  to  apply  the  acquis  presupposes  the  possibility  to  adopt  and 
implement  the  Community  legislation;  and  the  existence  of  an  adequate  level  of 
infrastructure and equipment,  in particular in terms  of computerisation and  investigation · 
means  and  the  establishment  of  an  efficient  customs  organisation  with  a  sufficient 
number of qualified and motivated staff showing a high degree of integrity. 

The  Polish  parliament  adopted  legislation  compatible  with  the  Community's  customs 
code  in  November  1996.  This  is  due  to  enter  into  force  on  I  January  1998.  Ten 
implementing regulations for the customs code and legislation on counterfeit and pirated 
goods, based on Community legislation, will enter into force on the same date. 

Poland  is  aligning  its  national  goods  nomenclature  to  the  Community's  Combined 
Nomenclature.  At the moment no binding tariff information system exists.  But Poland is 
working  on  the  preparation  of an  integrated  tariff,  which  should  greatly  facilitate  the 
comparison of the Polish tariff rates with the Common Customs Tariff rates. 

Poland  adopted  on  1  July  1997  the  new  system  of  cumulation  of  origin  between 
European countries. 

94 

Poland became a contracting party to  the EC/EFT A Common Transit Convention and to 
the Convention on Simplification of Formalities on I July 1996 . 

The Commission remains concerned about the level of customs control applied to goods 
which  arrive  in  Polish ports  for  transport  to  the  Community,  and  the  mangements  for 
certification of goods to be imported into the Community at preferential tariff rates. 

• 

Current and Prospective Assessment 

Poland  would  need  to  adapt  its  national  procedures  to  the  Community  legislation 
regarding  suspensive arrangements  and  customs  procedures  with  economic  impact,  and 
in  particular  the  regime  on  processing  under  customs  control  which  is  not' currently 
applied  under the  present law.  At the moment of accession,  some technical  transitional 
arrangements  would  be  needed,  notably  for  operations  beginning  before  the  date  of 
accession but which are concluded after that date. 

It will be important that the Polish customs authorities can participate appropriately in the 
various  computerised  systems  necessary  for 
the  customs 
union/internal  market,  of  the  customs  and  indirect  tax  provisions,  as  well  as  the 
computerised  systems  for  mutual  administrative  assistance  in  customs,  agricultural  and 
indirect tax matters. 

the  management, 

in 

Poland  would  need  on  accession  to  dismantle  customs  controls  at the  borders  with  EU 
member  states  and  with  other  acceding  countries.  The  resources  needed  for  the 
reinforcement of the  border posts  along  its  frontiers  with non-EU  member  states  should 
be taken it into account in its strategic planning. 

As  far  as  organisation  is  concerned,  Poland  is  making  some  effort  to  ·align  its 
organisation  and  staff to  the  duties  that  have  to  be  carried  out  by  a  modern  customs 
administration, although some differences to EU policy still remain. 

A  serious  misapplication  of the  Combined  Nomenclature  regarding  the  importation  of 
third country motor vehicles raises  questions about the  Polish authorities'  willingness to 
apply the system uniformly and consistently, as is required of all member states. 

Conclusion 

If the  alignment  efforts  are  continued  and  reinforced,  particularly  in  relation  to  project 
management,  especially  in  the  area  of computerisation,  Poland  could  be  ready  to  fulfil 
the responsibilities of an EU customs administration within the next few years. 

Common Foreign and Security Policy 

Since  1989  Poland  has  reoriented  its  foreign  and  security  policy  towards  European  and 
Euro-Atlantic  integration.  Improvement  of relations  with  neighbouring  countries  has 
also  been  a  priority  for  successive  Polish  governments.  Poland  has  been  an  active 
participant  in  the  dialogue  arrangements  provided  for  under  the  Union's  Common 

95 

Foreign and  Security Policy and whenever invited has  supported EU  actions  within that 
framework.  Poland is  a member of the  UN,  OSCE,  Council  of Europe  and many  other 
international organisations.  It is an associate partner of WEU, a participant in NACC and 
the  PfP;  and  has  made  clear its  desire  to  become  a member of the  WEU  and  NATO  as 
soon as possible;  it has  been invited to  open negotiations  for  membership  of NATO.  It 
has sent troops to participate in IFOR/SFOR.  It also participates in a number of regional 
organisations including the Council of Baltic Sea States, CEFT A and the CEI. 

There  are  no  territorial  disputes  between Poland  and  any  member  State  of the  Union. 
Neither does  Poland have  any  territorial  or  other disputes  with  neighbouring  associated 
countries.  All  state  frontiers  are  regulated  by  treaty  arrangements.  Border  crossing 
arrangements with Ukraine, Belarus, Lithuania and the Russian oblast of Kaliningrad are 
less  satisfactory than those with Poland's other neighbours.  There. are  significant Polish 
minorities in Lithuania, Belarus, Ukraine and Russia but their situation does not pose any 
serious  problem.  Poland  has  made  particular efforts  to  improve  and  intensify  relations 
with  Lithuania  and  Ukraine,  for  example  through  the  establishment  of joint  Polish 
Lithuanian and Polish-Ukrainian battalions for use in peacekeeping operations. 

Poland  has  a  substantial  diplomatic  service  which  would  permit  it  as  a  member  of the 
Union  to  play  a  full  and  effective  role. 
It maintains  67  representations  abroad  and 
employs some 700 diplomatic staff. 

Poland supports  non-proliferation of nuclear,  biological  and  chemical  weapons  and  is  a 
signatory to  all  relevant international arms control agreements.  It exercises strict control 
concerning  the  dual  use  of technology  being  member  of all  the  major  existing  export 
control  regimes.  Poland's  sizeable  armed  forces  are  under  democratic  control.  The 
defence  industrial  base  has  declined  sharply  in  recent  years  and  is  in  a  process  of re 
organisation. 

In its  memorandum accompanying  its  application for  membership  of the  Union,  Poland 
confirmed  that  it  was  ready  and  able  to  participate  fully  and  actively  in  the  Common 
Foreign and Security Policy. 

The assessment of Polish foreign and security policy to  date leads to the expectation that 
as a member it could effectively fulfil its obligations in this field. 

3.9 Financial Questions 

Financial Control 

The implementation of Community policies, especially for  agriculture  and the  Structural 
Funds,  requires  efficient  management  and  control  systems  for  public  expenditure,  with 
provisions to  fight  fraud.  Approximation of legislation is  moreover needed to  allow the 
system of "own resources" to  be introduced, with satisfactory provision for accounting. 

The  Europe  Agreement  contains  no  specific  provisions  on  either  audit  or  financial 
control.  The same applies to the White Paper. 

Descriptive Summary 

96 

The  Supreme  Chamber  of Control  (SCC)  is  Poland's  state  audit  body  and  undertakes 
external control and other audit work ordered by Parliament.  The latter's approval of the 
State budget is only given after it has reviewed the opinion presented by the president of 
the  SCC.  The  SCG also  presents  to  the  Parliament an  analysis  of the  execution of the 
State budget and  of the  monetary  policy  guidelines  as  well  as  their annual  performance 
report. 

There  is  no  central  independent  internal  control  body.  Each  Ministry/Department  is 
responsible  for  conducting  its  own  internal  control;  there  is  no  legal  act  consistently 
regulating the internal control in public administration. 

The Council of Ministers performs general supervision over fulfilment of the state budget 
and  may  issue  guidelines  on  principles  of budget  implementation.  The  Minister  of 
Finance has general  control  over State budget revenues  and expenditures  and  budgetary 
balances.  Separate  entities  (Ministers  and  Voivods)  supervise  and  control  the  total 
financial management of subordinated organisational units,  implementation of budgetary 
tasks  and  settlement of subsidies  granted  by  the  State budget  for  these  tasks.  Treasury 
control by the Ministry of Finance seems to be concentrated on those industries to  which 
large amounts of budgetary resources are transferred and which have a poor track record 
for infringement of laws and insufficient care of interest repayments . 

The  independence of regional  governments was enforced by the  introduction in  1993  of 
regional  Clearance  Chambers  thereby  allowing  for  independent  supervision  over  local 
finances.  The  Governing  Boards  of these  Chambers  have  certain  budgetary  financial 
management and control duties over the local .gminas. 

Fraudulent activities  and  their penalisation are  covered by  different legal  acts  according 
to  the  nature  of the  associated crime.  There  is  no  central  body  for  fighting  fraud.  The 
Public  Prosecutor's  Office  (subordinate  to  the  Minister  of  Justice,  who  is  also  the 
Attorney  General)  and  the  police  (reporting  to  the  Chief  Commandant,  who  is 
subordinate to the Minister of Internal Affairs) are empowered to fight fraud. 

Regarding  "own  resources",  the  Polish  customs  code  was  adopted  by  Parliament  in 
November  1996  and  will  enter  into  force  in  1998.  External  control  in  this  field  is 
secured  by  the  Supreme  Chamber  '-
J...  Control  and  the  Minister  of Finance,  and  internal 
control is assured by the bureau of Internal Audit of the Central Board of Customs and by 
the  Central  Board  of  Customs  departments  within  the  framework  of  functional 
supervision. 

The customs administration is  responsible for  establishment and collection of the import 
duties.  Customs  in  Poland  falls  under  the  competence  of the  Ministry  of Beonomy 
Finance. 

Current and Prospective Assessment 

Regarding  Structural  Funds,  there  is  currently  rto  uniform  structural  policy,  comparable 
to  the  EU  system;  the  Council  of  Ministers  is  the  main  decision-making  body  on 
structural  programmes,  and  implementation  rests  with  the  respective  ministries  and 
insti tu ti ons. 

The  state  and  outlook  for  acquis  implementation with  regard  to  Structural  Funds  in the 
coming  years  shows  that  the  system,  as  it  currently  exists,  provides  a  solid  base  for 

97 

further developments.  The general principles for an effective control system also seem to 
exist  in  the  area  of agriculture.  There  is  a  mixture  of internal  and  external  control, 
encompassing both regularity and value for money audit. 

With regard  to  the  control  of fraud,  the  Polish  system  for  penalising  fraud  against  the 
financial  and economic interest of the country  is comparable with those of EU Member 
States and there are no obstacles to compliance with EC Treaty Article 209(a).  The new 
customs  legislation  foresees  provisions  identical  to  those  of the  Community  regarding 
incurring the customs debt. 

Further cooperation with the Commission is required to establish whether the accounting 
system presently applied by Poland is compatible with Regulation  1552/89, and how the 
audits are performed.  Internal  and  external  control  bodies  as  such have  not yet reached 
the level  of maturity  and  efficiency which would  make  them  compatible  with generally 
acceptable European standards both at the Member State and Community levels. 

Conclusion 

Some  progress  has  been  made.  The  process  of implementation  of financial  control 
systems  will  need  significant  efforts  by  the  Polish  administration.  However,  if the 
necessary  resources  are  made  available,  Poland  should  be  in a position,  in the  medium 
term, to fulfil the EU requirements in this field. 

Budgetary Implications 

The  communication  entitled  "Agenda  2000"  sets  out  the  overall  financial  framework 
which should accommodate the budget impact of any future enlargements in the medium 
term.  This  is  to  ensure  that  any  enlargement  is  compatible  with  proposed  Community 
policy guidelines within reasonable budget limits. 

As things stand, it would be difficult, not to say premature, to attempt precise country-by 
country  evaluations  of the  budgetary  implications  of each  of the  applicants joining  the 
Union.  Exactly what the impact would be may  vary  considerably depending on a whole 
series of factors: 

the date on which the applicant country joins; 
developments  in  Community  policies  between  now  and  then,  in  particular  the 
decisions  to  be  taken  on  further  reform  of the  common  agricultural  policy  and 
new guidelines for structural measures; 
the progress made by the  applicant countries in terms  of growth,  increasing their 
competitiveness  and  productivity  and 
their  ability  to  absorb  the  acquis 
communautaire; 
the transitional measures that will come out of the negotiations. 

Only a few orders of magnitude for certain budget categories and an overall estimate can 
be given purely as a guide. 

Expenditure 

If the common agricultural  policy were  to  be  reformed  along  the  lines  suggested  by  the 
Commission,  once the reforms  were  fully  up  and  running  and  in terms  only  of  market 
98 

intervention  measures,  Poland's  accession  would  give  rise  to  additional  expenditure  of 
about  5-6%  of the  corresponding  expenditure  forecast  for  the  present  fifteen  Member 
States. 

After  a  phasing-in  period,  the  allocations  to  Poland  for  structural  measures  would  be 
within about 4% of its GDP. 

Application of the other internal Community policies in the new member countries would 
be likely to involve additional .expenditure probably in excess of their relative proportion 
of Union GNP,  since for  certain policies  the  additional  implementing  costs  also  depend 
on the target population, the geographical area covered or the number of Member States 
involved  in  the  coordination  and  harmonisation  measures.  The  GNP  of  Poland  is 
currently 1.8% of the total Union GNP. 

By contrast,  Poland's accession should not  involve  significant additional  expenditure as 
far as Union external action is concerned. 

It should not  be  forgotten  that  when  an  applicant country joins, the  Community  budget 
will  no  longer  have  to  bear  the  costs  of grants  the  country  was  eligible  for  under  the 
various pre-accession programmes, such as PHARE. 

In  light  of the  above,  the  estimated  costs  in  the  three  areas  mentioned  arising  from 
Poland's  accession  should  fall  within  the  range  of,  annually,  ECU  7.5  to  9.5  billion  in 
2005-06 (at constant 1997 prices). 

Revenue 

Assuming full  application of the own resources  system, the new members'  contributions 
to  the  Community  budget  should,  in  terms  of total  GNP  and  VAT  resources  (taking 
account of the capping rules applying to VAT),  be close to the proportion of the Union's 
GNP  they  account  for,  which  in  Poland's  case  is  about  1.8%.  Poland's  portion  of 
traditional  own resources  will  depend  on  the  structure  of its  trade  flows  at  the  time  of 
accession. 

To  ensure that the  own resources  are  established,  monitored  and  made  available  in  line 
with Community regulations, Poland will have to  overhaul its current customs system. In 
addition,  for  the  purposes  of  accurately  calculating  the  GNP  resource  considerable 
improvements  will  have  to  be  made  to  the  national  accounts  to  ensure  that  they  are 
reliable,  homogeneous  and  complete.  Improving  the  statistics  will  also  be  essential  for 
drawing  up  the  VAT  own  resources  base,  which  will  mean  bringing  Poland's  VAT 
system fully into line with the Community directives. 

99 

4  Administrative Capacity to Apply the Acquis 

The  European  Council  in  Madrid  in  December  1995  concluded  that  the  harmonious 
integration  into  the  EU  of the  central  and  eastern  European  applicant  states  would,  in 
particular,  require  the  adjustment  of  their  administrative  structures.  This  chapter 
examines  the  current  state  of the  public  administration  in  Poland,  including  relevant 
aspects  of the judicial  system,  and  assesses  the  current  and  prospective  ability  to  carry 
out the functions  required of it in a modem, democratic state,  with a particular  focus  on 
the need to administer matters related to the acquis. 

4.1  Administrative Structures 

A  description  of  Polish  constitutional  structures,  their  powers  and  responsibilities, 
including those of regional and local government, is given in Chapter 1. 

Following  the  1996  government  reform  there  are  16  ministries  at  the  central  level, 
including the  Chancellery of the  President of the  Council  of Ministers  and  a number of 
bodies  of equivalent  importance  such  as  the  European  Integration  Committee  and 
the 
Centre for Strategic Studies. 

The Civil Service was established on independent, career lines by the  1996  Civil Service 
Act.  Full  implementation  of the  Act  will  take  some  time,  however,  provisions  entered 
into  force  on  1  January  1997  regulating  the  status,  recruitment,  remuneration  and 
disciplinary  code  of  Polish  civil  servants.  It  provides  for  the  establishment  of  a 
government  appointed  Civil  Service  Council  to  implement  the  law,  and  separate  Civil 
Service Commissions regulating Appeals, Discipline and Qualifications. 

The political independence of the civil service is generally respected. 

Central government employs about 21,000  officials,  local  government many times more 
again.  In the big towns and  in  western Poland,  civil  service pay is  low compared to  the 
private sector.  In eastern Poland and in rural  areas  civil  service jobs are  more attractive 
to potential recruits. 

The reform of the central administration has been a key policy of the current government 
with  comprehensive changes made to the organisation of ministerial responsibilities, the 
establishment  of a  coordinating  chancellery  for  the  Prime  Minister.  The  administrative 
bodies assisting the  Council  of Ministers termed the  economic  "Centre of Government", 
have been reformed.with effect from  1January1997. 

On EU  matters,  an  inter-ministerial  coordinating  committee  for  European  Integration 
affairs  has  been  created,  under  the  Prime  Minister's  authority,  alongside  the  creation  of 
European  Integration units  in  every  ministry.  (See  also  the  section  of the  Introduction 
concerning relatibns between the European Union and Poland). 

100 

4.2  Administrative and Judicial Capacity 

Poland  was  administered  under  central  planning  during  the  Communist  period.  The 
Communist system rejected the primacy of the rule of law and subjugated the law and the 
administration to the  implementation of Party policy.  Against this  background,  both the 
administration  and the  rule  of law  itself increasingly  came  to  be  seen  by  the  public  as 
instruments of political control. 

The overall structures of the Polish' public administration are broadly satisfactory. 

Some  parts  of the  public  administration  are  strong,  such  as  the  audit  system.  But 
significant  weaknesses  are  also  noticeable,  for  example  in  the  fact  of widespread  tax 
evasion,  and  in inadequate  enforcement mechanisms,  in areas  such as  health and  safety 
and the environment. 

The  legal  basis  of the  civil  service  is  sound  and  its  independence  is  not  seriously  in 
question. 

The  civil  service  is,  if anything,  understaffed,  at  the  policy  level  but  overstaffed  at  the 
level  of routine administration.  There is  a great problem in recruiting and retaining  high 
quality young staff with language skills for the key work on integration with the EU and 
other  bodies. 
In  response  to  this  inheritance  of the  past,  the  Polish  Government  has 
undertaken a far reaching reform of the legal basis of the public service and wide-ranging 
structural reforms in the economic centre of government.  As yet,  little has  been done to 
deal  with  the  particular  problems  which  affect  the  organisation  of  decentralised 
government. 

Public  confidenc.e  in the  civil  service  is  affected  by the  legacy  of the  past.  Most  public 
contact  is  with  the  more junior civil  servants  in  routine  administrative jobs;  this  is  not 
the  Polish  public 
widely  considered  to  provide  an  attractive  advertisement  for 
administration.  Corruption exists; where it occurs it is frequently exposed and attacked. 

Poland's efforts to  restructure and reform the functioning  of the  public administration at 
central government level have been well directed .  As regards quality of staff, reinforced 
efforts  will  be  required  to  ensure  that able  staff can  be  recruited  and  retained,  and poor 
quality staff removed. 

The  establishment  of  the  Inter-ministerial  European  Integration  Committee  and  the 
European  integration  units  in  each  ministry  has  been  an  important  development  which 
will facilitate EU-related work in Poland. 

Key Areas for  the lmvlementation of the Acquis 

The uniform application of EC law:  The effective application of the acquis presupposes 
that  the  judicial  authorities  of member  states  are  able  to  apply  the  provisions  of the 
Treaty  dealing  with  ensuring  the  unity  and  application  of the  acquis,  and  are  able  to 
ensure  the  proper functioning  of the  Single  Market  and  Community policies  in general. 
A  high  quality  and  well  trained  and  resourced judiciary  is  necessary  for  the  application 
by  the  courts  of EC  law,  including  cases  of direct  effect,  and  cases· of referral  to  the 
European Court of Justice under the terms of Article  177 EC. 

101 

The judicial  system  in  Poland  suffers  from  some  deficiencies  in  resources  and  relevant 
expertise.  Significant efforts of training and familiarisation with EC  law will be required 
for the system to ensure the effective application of the acquis. 

Sin~le market:  The  ability  of Poland  to  ensure  the  correct  application  of Community 
requirements  in the  Single Market,  particularly  concerning the free  movement  of goods 
and  services  presupposes  the  existence  of highly  developed  and  effective  regulatory, 
standardisation,  certification and  supervisory  authorities,  able  to  act fully  in accordance 
with  EC  rules.  An  analysis  of these  points  is. made  in  Chapter  3.1  (under  "The  Four 
Freedoms"). 

Concerning  the  administrative  capacity  in¥ respect  of  free  movement  of  goods,  the 
situation in  Poland  is  broadly  satisfactory,  while  requiring  further  efforts  to  ensure  that 
. the acquis will be effectively implemented.  The responsible institutions in the regulatory 
field  require  a  greater  measure  of independence.  The  creation  of market  surveillance 
authorities and mechanisms is also needed.  Concerning free movement of services, taken 
as  a  whole  the  Polish  financial  sector  is  supervised  in  a  satisfactory  way;  further 
improvements are in hand and could be expected to take effect in the next few years.  The 
General  Inspectorate for  Banking Supervision has 4 73  staff.  The  Securities Commission 
has 125  staff and the State Insurance Supervision Office 65. 

In order to  meet  requirements .in this  area,  despite  the  fact  that  much  functions  well,  a 
need remains to reinforce enforcement structures. 

Competition:  As  explained  in  Chapter  3.1  (under  "Competition")  enforcement  of 
competition  law  requires  the  establishment  of  anti-trust  and  state  aid  monitoring 
authorities,  and  that  the  judicial  system,  the  public·  administration  and  the  relevant 
economic operators have a sufficient understanding of competition law and policy. 

In  Poland  the  central  authority  is  the  Office  for  Competition  and  Consumer  Protection 
which has  140 staff; this is adequate.  The level of expertise is  good.  The administrative 
structures already exist to implement  EC requirements in this field,  although they do not 
currently function with the necessary degree of transparency. 

Telecommunications: 
In  order  to  formulate  and  implement  the  many  liberalisation 
regulations  contained  in  the  acquis  in  this  field  it  is  necessary  to  have  a  regulatory  and 
policy making body that is effectively separated from any operating company. 

The  Regulatory  Department  of the  Ministry  of Post  and  Telecommunications  has  45 
staff; this is probably adequate. 

The  effective  administration  of  the 

Indirect  taxation: 
indirect  taxation  acquis 
presupposes  structures  capable  of  implementing  the  EC  legislation  concerning  the 
harmonisation of Valued Added Tax and excise duties in an environment in. which  fiscal 
controls  at internal  EU  frontiers  have  been abolished;  and  the  excise  system is  based on 
the tax  warehouses,  duty  being payable at the  local  rate  in  the  member  state  at  the  time 
the  goods  are  consumed.  This  requires  a  highly  developed  and  well  trained  and 
resourced service, with a high degree of integrity. 

In  Poland  the  relevant  authority  is  the  Ministry  of  Finance  (a  central  Ministry,  79 
Treasury Chambers and 326 Tax Offices) with a total of about 4,000 staff.  Due to  a large 
102 

turnover of staff, resulting partly from  trained staff being recruited by the private sector, 
it  is  difficult  to  assess  the  capacity  of existing  staff.  In  order  to  ensure  the  effective 
administration of the acquls in this  area it will  be necessary to  consolidate and  improve 
the  overall  professional  standards  of  the  staff,  including  training  measures  and 
improvements in pay. 

Airicultuie:  The  administrative  requirements  in the  agricultural  area primarily concern 
veterinary  and  phytosanitary  control,  to  protect  public  health  and  ensure  the  free 
movement  of agricultural  goods;  and  the  ability  to  administer  the  mechanisms  and 
requirements  of the  CAP,  including  high  standards  of financial  control  and  official 
statistics.  These  points  are  dealt  with  in  Chapter  3.4  (under  "Agriculture");  general 
standards in the statistical field are examined in Chapter 3.3 (under "Statistics"). 

Concerning  the  administrative  capacity  in  respect  of  veterinary  and  phytosanitary 
controls,  Poland  has  a  relatively  elaborate  infrastructure,  both  at  the  borders  and 
internally.  Numbers  of staff in  the  food  and  veterinary  inspectorates  are  not  currently 
available  to 
Concerning  the  administration  of  general  CAP 
requirements, some adaptation of the current administrative structure will be required. 

the  Commission. 

In order to meet  EC requirements in this area some adjustments remain necessary. 

Traosp9rt:  The application of the  EC  Internal  Market and competition requirements  to 
the  transport  sector,  the  development  of  relevant  infrastructure  products,  and  other 
aspects  of the  transport  acquis  will  present  administrative  cnallenges  to  new  member 
states. 

The responsible government authority in Poland is  the Ministry of Transport (280  staff). 
There  is  a  shortage  of qualified  staff.  This  raises  particular concerns  with  regard  to  the 
enforcement of safety controls. 

Employment  and  social  policy:  A  central  administrative  requirement  in respect  of the 
acquis  in  this  area  is  adequate  inspection  capacity,  particularly  concerning  health  and 
safety at work. 

In Poland the National Labour Inspectorate has about  I, 700 staff although it is not clear 
that all of these are involved in strictly labour inspection duties.  Reinforcement may well 
be required. 

Regional policy and cohesion:  The main administrative requirements in this area are the 
existence  of appropriate  and  effective  administrative  bodies  ,  and  in  particular  a  high 
degree of competence and integrity in the administration of Community funds. 

In Poland the Ministries of Economy and Central Affairs deal  with regional policy.  (The 
number  of staff employed  in  ministries  on  regional  is  105).  These  arrangements  do  not 
yet  work  entirely  adequately.  The  situation  concerning  financial  control  could,  with 
further  effort,  become  satisfactory  (see  the  section,  below,  on  "Financial  control").  The 
effective  administration  of  the  acquis  in  this  area  will  require  improvements  in 
organisation  and  coordination  to  create  the  necessary  administrative  and  budgetary 
control framework. 

Environment: 
integration  of 
environmental  protection  into  EC  sectoral  policies  the  administrative  requirement  is 
103 

EC  environmental  policy, 

involves  the 

Because 

potentially very wide, affecting many bodies not normally associated  with environmental 
protection.  However,  the  main  responsibility  lies  with  environment  ministries  and 
various subsidiary bodies. 

In Poland the  Environment Ministry  employs  300  staff.  Monitoring  and  enforcement is 
carried  out  by  the  State  Environmental  Protection  Inspectorate  and  49  regional 
inspectorates.  These  arrangements  are  adequate.  The  effectiv~  administration  of the 
acquis  in this  area however will  require  greater  investment  in  hllinan  resources  (with a 
particular emphasis on training-in EU related issues). 

Consumer protection:  In this area, the effective administration of the acquis requires the 
allocation  of  overall  responsibility  to  a  specific  State  body  through  which  the 
formulation,  implementation  and  enforcement  of  consumer  policy  and  consumer 
protection legislation can be undertaken. 

In Poland, the main responsibility for consumer policy lies with a competition authority; 
the Office for  Protection of Competition and Consumers ( 4 staff employed on consumer 
protection).  As  regards  non-governmental  consumer  bodies  an  already  strong  and 
independent  consumer  movement  has  developed.  There  remains  confusion  about  the 
exact  scope  and  objectives  of consumer policy.  This  in  part  explains  difficulties  in  the 
effective  enforcement  of  consumer  laws;  however,  other  factors  which  need  to  be 
addressed  include  a lack <?f expert staff,  organisational  deficits,  and  a lack of sensitivity 
to consumer questions among the judiciary. 

Justice and home affairs:  Oversight of justice and home affairs questions falls  to  justice 
and  interior ministries.  The administrative structures need to  be  able  to  deal  effectively 
with  asylum  and  migration  questions,  border  management,  police  cooperation  and 
judicial cooperation.  There is an overriding need for  sufficient and properly trained staff 
with a high degree of integrity. 

In Poland the justice and interior ministries are adequately staffed. The capacity to handle 
asylum and  migration questions  is  not yet  assured  since  the  implementing  legislation  is 
not yet fully in place. Border management is weak in some areas, principally, due to poor 
facilities  and  lack  of competent  administrative  structures.  Specialised  police  units  have 
been created, but coordination is poor. The judiciary is being reformed, with an emphasis 
of training and human resources.  The effective administration of the acquis in these areas 
will  require  better  coordination  (internal  and  external),  further  development  of human 
resources, and steps to combat corruption. 

Customs:  Applying the  acquis  in this  area  requires  an  adequate  level  of infrastructure 
the 
and  equipment, 
establishment of an  efficient customs  organisation with a  sufficient number  of qualified 
and motivated staff showing a high degree of integrity. 

including  computerisation  and 

investigation  resources,  and 

In Poland the customs service employs  12, 100 staff.  Due to  a high turnover of staff,  it is 
difficult  to  estimate  their  efficiency,  and  therefore  the  adequacy  of staffing  levels.  The 
effective administration of the acquis in this area will require the retention of experienced 
and qualified staff, the creation of more effective structures for internal control, and more 
technical equipment (especially on the Eastern border). 

104 

the 

financial  control:  The  protection  of the  Community's  financial  interests  requires  the 
training  of  specialised  staff  (investigators, 
development  of  anti-fraud  services, 
magistrates)  and 
reinforcement  of  sy~tems  of  specific  cooperation.  The 
implementation  of Community  policies,  especially  for  agriculture  and  the  Structural 
Funds,  requires  efficient management and  control  systems  for  public  ~penditure, with 
provisions  to  fight  fraud.  Administratively  it  is  essential  to  have  a  clear  separation 
between  external  and  internal  control.  Police  and judicial  authorities  l)eed  to  be  able 
effectively  to  handle  complex  transnational  financial  crime  (including  fraud,  corruption 
and money laundering) which could affect the Community's financial interests. 

In Poland the main external control body is the Supreme Chamber of Control employing 
about  1,500  staff.  This  is  an  adequate  number.  However the  effective  administration of 
the acquis in this area will require Poland to  apply further resources to  the adjustment of 
its systems to specific EU requirements. 

4.3  General Evaluation 

If Poland  continues  its  comprehensive  reform  efforts  in  this  area  it  could  be  envisaged 
that the administrative structures would be in a position in the medium term effectively to 
administer the acquis. 

The  same  evaluation  applies  to  the  ability  of Poland's  judicial  system  to  ensure  the 
effective application of Community law. 

105 

SUMMARY AND CONCLUSION 

Poland submitted its application for membership of the European Union on 5 April  1994. 
Its  request  is  part  of  the  historic  process  of  ending  the  division  of  Europe  and 
consolidating the establishment of democracy across the continent. 

In accordance with the provisions of Article 0  of the Treaty, the Commission has,  at the 
request of the Council, prepared an Opinion on Poland's request for membership. 

Poland's  preparation  for  membership  is  going  forward  notably  on  the  basis  of  the 
Europe  Agreement which entered into  force  on  1 February  1994.  Implementation of 
the  White Paper of May  1995  on the  Internal  Market,  another essential  element of the 
pre-accession  strategy,  is  going  ahead  on  the  basis  of  a  National  Integration  Strategy 
agreed  by  the  government  in  January  1997.  The  government  has  put  in  place  the 
necessary mechanisms to coordinate its policies for European integration. 

In  preparing  its  Opinion,  the  Commission  has  applied  the  criteria  established  at  the 
Copenhagen European Council of June  1993.  The Conclusions of this  Council stated 
that  those  candidate  countries  of Central  and  Eastern  Europe  who  wish  to  do  so  shall 
become members of the Union if they meet the following conditions: 

-

-

stability  of institutions  guaranteeing  democracy,  the  rule  of law,  human  rights  and 
respect for and protection of min~rities; 

the  existence  of a  functioning  market  economy,  as  well  as  the  ability  to  cope  with 
competitive pressures and market forces within the Union; 

- the ability to take on the  obligations of membership,  including adherence to  the aims 

of political, economic and monetary union. 

A judgment on these three groups of criteria - poljtical, economic, and the ability to take 
on  the  acquis  - depends  also  on  the  capacity  of a  country's  administrative  and  legal 
systems  to  put  into  effect  the  principles  of democracy  and  the  market  economy  and  to 
apply and enforce the acquis in practice. 

The  method  followed  in  preparing  these  Opinions  has  been  to  analyse  the  situation  in 
each candidate  country,  looking  forward  to  the  medium  term  prospects,  and  taking  into 
account progress accomplished and reforms already under way.  For the political criteria, 
the Commission has analysed the current situation, going beyond a formal  account of the 
institutions to examine how democracy and the rule of law operate in practice. 

1.  Political Criteria 

Poland's  political  institutions  function  properly  and  in  conditions  of stability.  They 
respect  the  limits  on  their  competences  and  cooperate  with  each  other.  Legislative 
elections  in. 1991  and  1993,  and  presidential  elections  in  1995,  were  free  and  fair.  In 
1993  and  1995,  when they  led  to  alternation of power,  this  was  properly  achieved.  The 
Opposition plays a norm.al  part in the operation of the institutions.  Efforts to  improve the 

106 

operation of the judicial system and to  intensify the fight against corruption will need to 
be sustained. 

There  are  no  major problems over respect  for  fundamental  rights.  There  are,  however, 
certain limitations to freedom  of the press.  Particular attention will  be needed to  how a 
new  law  limiting  access  to  public  service  for  certain  categories  of  persons  is 
implemented.  Poland  needs  to  complete  procedures  for  compensating  those  whose 
property was seized by the Nazis or Communists. 

Poland presents the characteristics of a democracy,  with stable  institutions  guaranteeing 
the rule of law, human rights and respect for and protection of minorities. 

2.  Economic Criteria 

Before  1989 the Polish economy  was  suffering  seriously  from  stagnation,  inflation and 
its  foreign  debt  burden.  The  recovery  plan  initiated  in  January  1990  was  drastic,  but 
provoked only a limited drop in output (though output had already fallen substantially in 
the  1980s).  By  1992 positive growth had already started, and has  continued since (6.0% 
in  1996).  The  budget  deficit  has  been  reduced  to  below  3%  of GDP;  and  the  debt 
servicing  burden,  after  rescheduling  was  agreed  in  1991,  is  being  steadily  reduced. 
Inflation rates have declined over recent years, but still stood at  19.9% in 1996.  GDP per 
head is about 31 % of the EU average,  for  a population of 38.6 million.  The agricultural 
sector employed 27% of the labour force in 1995, and accounted for 6.6% of Gross Value 
Added.  70% of Poland's exports are directed to, the EU,  and 65%"of its imports originate 
in the EU. 

On the  basis of its  analysis,  the  Commission's judgment as  to  Poland's ability to  meet 
the economic criteria established at Copenhagen is as follows: 

Poland can be  regarded  as  a functioning  market economy.  Prices  and trade  have  been 
liberalised  to  a  large  extent. 
The  economy  has  been  successfully  stabilised. 
Commitment  to  this  policy  line  has  been  maintained  through  various  changes  in 
government. 
In  order  to  guarantee  longer-term  stability,  pension  and  social  security 
systems need to be reformed.  Financial services are underdeveloped.  The banking sector 
needs further reform. 

Poland should be well able to cope with competitive pressure and market forces within 
the  Union in  the  medium term,  provided  that  it  maintains  the  pace  of restructuring  and 
keeps the economy open.  Growth and  investment are  strong,  and the  rise  in unit labour 
costs in the manufacturing sector has been moderate.  Recently,  inflows of foreign  direct 
investment  have  accelerated.  The  main  problem  is  that  of  the  larger  state-owned 
companies,  where  management  failures  in  the  face  of foreign  competition  could  have· 
serious  consequences.  Agriculture  needs  to  be  modernised,  and  there  have  been  some 
reversals in trade policy. 

107 

3.  Capacity to take on the obligations of membership 

Poland's  ability  to  take  on  the  acquis  has  been  evaluated  according  to  a  number  of 
indicators: 

- the  obligations  set out in the  Europe  Agreement,  particularly  those  relating  to  the 
right of establishment, national treatment, free  circulation of goods,  intellectual property 
and public procurement; 

· 

- implementation  of the  measures.  set  out  in  the  White  Paper  as  essential  for 

establishing the single market; 

- progressive transposition of the other parts of the acquis. 

Poland  has  already  implemented  significant  elements  of the  provisions  of the  Europe 
Agreement, and for the most part according to the timetable for implementation set out in 
it.  Too many trade-related problems have arisen, though most of them have been able to 
be  resolved.  Poland  has  achieved  a  satisfactory  rate  of transposition  of the  rules  and 
directives  identified  in  the  White  Paper,  though  there  is  still  a  considerable  amount  of 
legislative work left to do. 

In  respect  of provisions  relating  specifically  to  the  single  market,  substantial  progress 
has been made on intellectual property, company law,  taxation, accounting, and financial 
services.  Work  is  still  needed  on public procurement,  data protection,  competition and 
liberalisation of capital movements. 

Notwithstanding  the  efforts  which  have  been  made,  the  progress  made  in  transposing 
legislation  still  needs  to  be  accompanied  by  concrete  measures  of implementation,  as 
well  as  establishment  of  an  effective  administrative  underpinning. 
Overall,  the 
administrative infrastructure is  either well-established or recently  set up  and functioning 
normally.  But the  work  of legislative  adaptation  is  proceeding  slowly  in  the  field  of 
technical rules and standards. 

As for  the other parts of the acquis, Poland should not have difficulty in applying it in 
the  medium  term  in  the  following  fields:  education,  training  and  youth;  research  and 
technological development; statistics;  small and medium enterprises;  development;  and 
customs. 

By contrast, substantial efforts will be needed for Poland to be able to apply the acquis in 
the fields of telecommunications;  fisheries;  and consumer protection. 

Polish  industry is  characterised  by the  existence  of both  a  dynamic  new  private  sector 
which  should  be  able  to  compete  in  the  single  market  in  the  medium  term,  and  large 
sectors, mostly state owned, which need restructuring in order to be able to compete. 

For  the  environment,  very  substantial  efforts  will  be  needed,  including  massive 
investment  and  strengthening  of administrative  capacity  to  enforce  legislation.  Full 
compliance with the acquis could be  expected  only  in the  long  term,  and  would require 
increased levels of public expenditure. 

For transport,  Poland made  notable  progress  in  taking  on  the  acquis,  but  considerable 
effort  and  investment  will  be  needed  in  road  transport.  Provided  that  these  efforts  are 

108 

made,  the  transport  sector  should  not  pose  major  problems  in  the  medium  term.  But 
investment will be needed to  extend the European transport network so  as  to  ensure that 
the single market functions well. 

In order to achieve the employment and social affairs acquis in the medium term, work 
is needed to adapt legislation in the field of health and safety· at work. 

In the field of regional policy and cohesion, if Poland implements the recommendations 
of its  Task  Force  for  Regional  Policy,  this  will  be  a  major  step  towards  achieving  the 
acquis.  Given the necessary administrative framework,  and the substantial improvement 
needed in the field of financial  control, Poland should be able in the medium term to use 
the Union's regional and structural funds for its development effectively. 

For agriculture,  particular efforts  will  be  needed  to  establish  a  coherent  structural  and 
rural  development  policy,  and  to  implement  veterinary  and  phytosanitary  requirements 
and  to  strengthen  the  administrative  structures  necessary  to  apply  the  common 
agricultural  policy.  Provided  these  targets  can  be  met,  the  common  agricultural  policy 
could be applied in an appropriate manner on accession  in the  medium term,  although a 
solution to Poland's structural problems will require a long-term approach. 

On  energy,  Poland  has  no  nuclear power programme,  and  should  have  no  difficulty  in 
complying with the Euratom provisions.  Poland should be able  to  comply with the  rest 
of the  energy  acquis  in  the  medium  term,  but  this  will  require  work  on  issues  such  as 
energy pricing, import barriers for oil products 'lnd state interv.entibn in the coal sector. 

On  the  basis  of the  analysis  of its  capacity  to  apply  the  acquis,  Poiand  could  be  in  a 
position in the  medium term to  take  and  implement the  measures .necessary for  removal 
of controls at its borders with member states of the Union. 

Poland's  participation  in  the  third  stage  of economic  and  monetary  union,  which 
implies  coordination  of  economic  policy  and  complete  liberalisation  of  capital 
movements,  should pose no  problems in the  medium term.  But it  is  premature to judge 
whether  Poland  will  be  in  a  position,  by  the  time  of !ts  accession,  to  participate  in  the 
Euro  area.  That  will  depend  on  how  far  the  success  of its  structural  transformation 
enables  it  to  achieve  and  sustain  permanently  the  convergence  criteria.  These  are, 
however, not a condition for membership. 

Poland faces  significant challenges in the field  of justice and home affairs, particularly 
concerning drugs,  border management and transnational crime.  Provided that continuing 
efforts are made, Poland could be able to  meet the requirements of the acquis in the next 
few years. 

Poland  should  be  able  to  fulfil  its  obligations  in  respect  of the  common  foreign  and 
security policy. 

In  addition,  Poland  has  no  territorial  disputes  with  any  member  state  or  neighbouring 
candidate country.  All its state frontiers are regulated by Treaty. 

,. 

109 

4.  Admjnjstratjye and legal capacity 

If Poland continues its comprehensive reform efforts  in this area it could  achieve  in  the 
medium  term the  administrative  structures necessary  for  the  essential  work  of applying 
and enforcing the acquis effectively. 

The  same  applies  to  Poland's judicial  system,  which  has  an  equally  important  part  to 
play. 

CONCLUSION 

In the light of these considerations, the Commission concludes that: 

Poland  presents  the  characteristics  of  a  democracy,  with  stable  institutions 
guaranteeing  the  rule  of  law,  human  rights  and  respect  for  and  protection  of 
minorities; 

Poland can be regarded as a functioning market economy, and should be able to cope 
with competitive pressure and market forces within the Union in the medium term; 

if Poland continues its  efforts  on transposition of the  acquis  relating  particularly  to 
the single market, and intensifies work on its implementation, Poland should become 
able  to  participate  fully  in  the  single  market  in the  medium  term.  Particular effort 
and  investment  will  be  needed  to  meet  the  acquis  in  sectors  such  as  agriculture, 
environment  and  transport.  Further  administrative  reform  will  be  indispensable  if 
Poland is to have the structures to apply and enforce the acquis effectively. 

In  the  light  of these  considerations,  the  Commission  recommends  that  negotiations  for 
accession should be opened with Poland. 

The reinforced pre-accession strategy will help Poland to  prepare itself better to meet the 
obligations of membership, and to  take action to  improve the shortcomings identified in 
this Opinion.  The Commission will present a report no  later than the end of 1998  on the 
progress Poland has achieved. 

110 

ANNEX 

COMPOSITION OF PARLIAMENT 

RESULTS OF THE LAST G_ENERAL ELECTIONS (1993) 

abbrev. 

No of seats 

Sejm 

~ 

Democratic Left Alliance 

Polish Peasant Party 

Democratic Union 

Union of Labour 

SLD 

PSL 

uw 

UP 

Confederation for an Independent Poland 

KPN 

Non-Party Bloc for Reform 

BBR 

Senate 

fam 

Democratic. Left Alliance 

Solidarity bloc 

Polish Peasant Party 

Independents' bloc 

Democratic bloc (mainly UW) 

Independents 

abbrev. 

SLD 

NSZZ 

PSL 

168 

130 

73 

35 

16 

17 

No of seats 

37 

12 

34 

5 

7 

5 

/// 

SINGLE MARKET: WHITE PAPER MEASURES 

This table is  based on  infonnation provided by the  Polish authorities and confinned by them  as correct as  at the end of June  1997.  It does 
not indicate the Commission's agreement with their analysis.  The table includes directives and regulations cited in  the White Paper which 
total  899.  These  have  been  listed  in  accordance  with  the  categorization  used  in  the  White  Paper  and  in  relation  to  the  policy  areas 
covered.  The  table  shows  the  number  of measures  for  which  the  Polish  authorities  have  notified  the  existence  of adopted  legislation 
having some degree of compatibility with the corresponding White Paper measures. 

White Paper chapters 

I.Free Movement of Capital 

Poland 

2.FM and Safety of Industrial Products 

3.Competition 

4.Social policy and action 

5.Agriculture 

6.Transport 

7.Audiovisual 

8.Environment 

9. Telecommunication 

to.Direct Taxation 

11.Free movement of goods 

12.Public Procurement 

13.Financial services 

14.Protection of personal data 

15.Company Law 

16.Accountancy 

17.Civil law 

18.Mutual rec. of prof. Qual. 

19.Intellectual property 

20.Energy 

21.Customs law 

22.Indirect Taxation 

23.Consumer Protection 

Total 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

. 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Measures taken  into account by  Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White Paper measures 
Poland 

Number of White  Paper measures 

2 

Directives 

Regulations 

Total 

I 

I 

Stage  Stage  Stage  Stage 
II/III 
0 
0 
0 
I 
0 
0 
0 
2 
0 
2 
2 
13 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
I 
0 
0 
0 
0 
0 
0 
0 
3 
0 
0 
0 
184 
0 
6 
0 
0 
2 
212 

II/III 
1 
I 
77 
104 
0 
0 
11 
15 
30 
46 
7 
15 
0 
0 
2 
7 
2 
7 
1 
2 
0 
0 
1 
I 
7 
8 
0 
2 
3 
3 
2 
2 
1 
I 
6 
16 
3 
3 
0 
2 
0 
I 
0 
54 
0 
3 
154 
293 

3 
3 
27 
56 
2 
3 
7 
12 
75 
93 
18 
19 
1 
I 
9 
31 
7 
9 
2 
2 
0 
0 
5 
5 
10 
13 
0 
0 
2 
2 
3 
3 
0 
I 
0 
2 
5 
5 
7 
10 
0 
2 
9 
15 
5 
8 
197 
295 

0 
0 
3 
4 
1 
I 
0 
0 
25 
62 
6 
8 
0 
0 
4 
7 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
3 
13 
14 
0 
0 
0 
0 
52 
99 

4 
4 
107 
165 
3 
4 
18 
29 
130 
203 
33 
55 
1 
I 
15 
45 
9 
I~ 
3 
4 
0 
0 
6 
6 
17 
21 
0 
2 
5 
6 
5 
5 
1 
2 
6 
18 
8 
II 
7 
15 
13 
201 
9 
75 
5 
II 
405 
899 

/12 

STATISTICAL DATA 

If not  explicitly  stated  otherwise,  data .contained  in  this  annex  are  collected  from  ,,Central  Statistical  Office  (GL6WNY 
URZAD ST A TYSTYCZNY)" with whom  Eurostat and Member States'  statistical offices are co-operating since several years 
in the framework of the Phare programme. Regular data collection and dissemination are part of this co-operation process with 
the aim  to enable the application of EU law$  and practices in  statistics. The data presented below have been compiled as far as 
possible using EU  definitions  and  standards which  in  some cases differ from  national  practices.  This  may  occasionally give 
rise to differences between the data presented here and those shown elsewhere in the opinion, which are generally based on the 
individual applicant countries'  updated replies to  the  questionnaire sent to them  in  April  1996.  The exact compatibility with 
EU standards on statistics and thus the  comparability with  EU  figures  can  still  not be guaranteed,  particularly those  statistics 
that  have  not  been  supplied  through  Eurostat,  but  have  been  delivered  directly  by  the  countries  concerned..  Wherever 
available, methodological notes are given describing content and particularities of statistical data presented in this annex. Data 
correspond to the information available as of May 1997. 

BASIC DATA 

Total Area 

Population (end of the period) 

-Total 

- Fem;les 

- Males 

Population density 

Utban Population 

Deaths rate 

Births rate 

Income and GDP per capita 

1990 

1992 

1993 

1994 

1995 

I OOO  hectares 

31269 

31269 

31269 

in  1000 

38418 

38505 

38581 

38609 

19753.l 

19792.l 

19806.4 

18751.9 

18788.9 

18802.6 

per  I km2 

123 

123 

123 

123 

in% oft<?tal population 

61.7 

61.8 

61.9 

61.8 

per  1000 of  population 

10.2 

13.4 

10.2 

12.8 

European Currency Unit 

9.6 

12.5 

10 

11.2 

218 

2359 

7.6 

33.3 

6.0 

53.l 

-Average monthly wage and salary per employee 

-GDP per capita 

Structure of production: share of branch GVA 

85 

1215 

in% of Total Gross Value Added 

-agriculture 

-industry 

-construction 

-services 

share of branch GVA in 1995 

.o.o 

.7.6 

053.l 

1133.3 

•  -agriculture 

-industry 

ta 

-construction 

0 

-services 

0 

• - Others 

3 

/lj 

c  NATIONAL ACCOUNTS 

1990 

1991 

1992 

1993 

in Millions or National Currency 

1994 

1995 

Gross Domestic Product (Current Prices) 

56027.l 

80882.9 

114944.2 

155780.0 

210407.3 

286025.6 

in Billions ofECU 

Gross Domestic Product (Current Prices) 

46.3 

61.7 

65.0 

73.4 

77.8 

90.2 

in Purchasing Power Standard per capita 

4331.0 

4727.7 

5318.1 

% change over the previous year 

5.2 

3.9 

4.4 

2.2 

13.1 

11.3 

83.l 

65.3 

17.8 

24.0 

23.0 

7.0 

3.4 

3.6 

2.9 

24.3 

23.6 

80.7 

63.1 

17.6 

18.0 

25.9 

24.6 

in % of Gross Domestic Product 

67.2 

48.5 

18.7 

28.6 

21.5 

82.0 

60.l 

21.9 

23.5 

25.4 

83.3 

62.6 

20.7 

23.7 

22.2 

83.5 

64.0 

19.5 

22.9 

22.0 

GDP(% Change owr the previous year) 

Gross Domestic Product 

Gross Domestic Product 

Final consumption expenditure 

-of households and NPISH 
-of general government 

Gross fixed  capital formation 

Exports of goods and services 

Imports of goods and services 

Fin-al consumption expenditure 

-of households and NPISH 
-of general government 

Gross fixed  capital forma!ion 

Exports of goods and services 

Imports o( goods and services 

7.0 

6.0 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

1991 

1992 

1993 

1994 

1995 

4 

/ 1'1 

MAIN ECONOMIC INDICATORS 

Inflation rate 

585.8 

70.3 

43 

35.3 

32.2 

27.8 

19.9 

1990 

1991 

1992 
1993 
1994 
percentage change over the previous year 

1995 

1996 

Industrial production volume indices 
Gross agricultural production volume indices 
Unemployment rate (ILO methodology) 

( 

-Total 
- less then 25 years 
- 25  years and more 

Gross Foreign debt 
Balance of payments 

-Exports of goods 
-Imports of goods 

-Trade~balance 
-Services, net 
-Income, net 
-Current account balance 
-Capital and fin.  acc.(excl. reserves) 
-Reserve assets 

previous year •  I 00 

105.6 
106.8 
in % labour fora: 

14 

in  Billions of USO 

37.28 
in millions ofUSD 

44.156 

49.411 

40.681 

15837 
-12248 
3589 
353 
-3386 
3067 
-811 
-2418 

14393 
-15104 
-711 
693 
-2896 
-2146 
2061 
830 

13929 
-14060 
-131 
728 
-4167 
-3104 
3901 
-616 

13582 
-17087 
-3505 
570 
-3613 
-5788 
5669 
.  -100 

113.1 
90.7 

110.2 
110.7 

108.8 

14.4 
32.5 
11.9 

35.856 

17121 
-18930 
-1809 
663 
-2563 
-2590 
4429 
-1514 

13.3 
31.2 
10.9 

12.4 
28.7 
10.l 

23463 
-26687 
-3224 
1459 
-1995 
-4245 
12920 
-8431 

Inflation  rate:  Percentage  change  of yearly  average  over  the  previous  year  - all  items  index  (data  are  based  on  national  CPis  which  are  not  strictly 

comparable) 

Industrial  production volume  indices:  Industrial  production  covers  mining and  quarrying,  manufacturing and  electricity, gas  and water supply (according to 
the NACE Classification Sections C,D,E).  Data on  industrial  production  relate  to  sold production (sales)  for domestic and  external destination  as well. 
Data cover all entities with more than 5 employees. 

Gross agricultural  production volume indices: 

Indices  based on evaluation of all  individual  products of gross agricultural  production. Constant prices refer 

to  1992. 

Unemployment rate (by ILO methodology):  Percentage of the unemployed labour force  .This rate  is derived from,LFSS  (Labor Force Survey) observing the 

following ILO definitions and recommendations. 

Labor force  employed and unemployed persons in the sense of the ILO definitions stated below. 

The employed  all  persons aged  IS+,  who during the reference period worked at least one hour for wage or salary or other remuneration as employees, 
entrepreneurs, members of cooperatives or contributing family workers.  Members of armed forces and women on child-care leave are included. 

The unemployed  all  persons aged  15+, who concurrently meet all three conditions of the ILO definition for being classified as the unemployed: (i) have 
no work, (ii) are actively seeking a job and (iii) are ready to take up a job within a fortnight.  In Poland, LFSS excludes members of armed forces. 

Gross foreign  debt:  Debt is extracted form  the OECD's External Debt Statistics. 

Balance of payments:  Data is  derived from  IMF database, their comparability with respective EU statistics can not be guaranteed, but balance of payments 
is  compiled  mainly  in  accordance  to  IMF  standards.  Balance  in  trade  of goods  in  accordan~, with  balance  of payments  principles.  Exports  and 
imports  are  both  in  f.o.b.  values.  Net  income  includes  direct.  portfolio  and  other  investment  income,  compensation  of employees.  Current 
account  balance  by  definition  of IMF  5th  Manual,  capital  transfers  ar~ excluded.  Reserve  assets:  it  means  changes  in  reserve  assets  during  the 
year;(+) signifies an  increase,(-) a decrease  in reserve assets. 

5 

/ 

/16 

c  FOREIGN TRADE 

Imports and exports (current prices) 

- Imports 

- Exports 

- Balance of trade 

External trade volume indices 

- Imports 

- Exports 

Structure of Import by SITC (current prices) 

- (O+ 1) food and live animals, beverage and tobacco 

- 2 crude materials, inedible 

- 3 mineral fuels  and lubricants 

- 4 animal and vegetable oils etc. 

- 5 chemicals and related products 

- 6 manufactured goods classified chiefly by material 

- 7 machinery and transport equipment 

- 8 miscellaneous manufactured articles 

- 9 goods not elsewhere classified 

Structure of export by SITC (current prices) 

- (O+ 1) food and  live animals, beverage and tobacco 

- 2 crude materials, inedible 

- 3 mineral  fuels  and lubricants 

- 4 animal and vegetable oils etc. 

- 5 chemicals and related products 

- 6 manufactured goods classified chiefly by material 

- 7 machinery and transport equipment 

- 8 miscellaneous manufactured articles 

- 9 goods not elsewhere classified 

1992 

1993 

1994 

1995 

1996 

in  millions of USO 

18769 

14187 

-4582 

21569 

17240 

-4329 

29049.7 

22894.9 

-6154.8 

previous year •  I 00 

118.5 

98.9 

113.41 
118.3 

120.5 

116.7 

in %  of  total  Import 

10.5 

4.6 

12.5 

0.6 

13.3 

18.5 

29.4 

10.2 

0.4 

9.6 

5.2 

10.5 

0.7 

14.7 

20.2 

28.8 

9.9 

in% of total  Export 

11.2 

5.5 

9.7 

0.1 

6.8 

26.4 

20.9 

19.4 

0 

11.5 

4.7 

9.1 

0.1 

6.7 

27.5 

19.8 

20.5 

previous  year~ I 00 

8.8 

5.4 

9.1 

0.7 

15 

21.6 

29.9 

9.3 

9.9 

4.5 

8.2 

0.2 

7.7 

27.5 

21.1 

20.8 

10.6 

5.4 

16.8 

0.6 

13.5 

11.8 

29.9 

10.3 

I.I 

13.4 

8.5 

10.7 

0.1 

8.6 

27.l 

19.2 

11.7 

0.7 

External trade price indices 

- Imports 

- Exports 

116.5 

116.5 

125.6 

127.2 

128.8 

119.2 

121.2 

Imports and exports (current prices),  External  trade volume indices and Structure of external  trade by SITC (current prices):  Trade  data exclude 
direct re-exports, trade in services and trade with customs free zones as well  as licenses, know-how and patents. The data are based upon the special trade 
system  and  are  regularly  updated.  Trade  Classifications:  Poland  is  using  the  commodity  classification  according  to  the  Conibined Nomenclature. 
Imports are recorded on C/Fbasis and are captured in  the same way as  exports.  Exports are  recorded on  FOB basis  and are captured with  the date on 
which  the  commodities  cross  the customs  border.  The  customs  statistics  is  utilized  for  monitoring  of foreign  trade  data.  Eurostat  has  converted 
National Currencies to the  US  dollar by applying the International Monetary Fund annual  average exchange rates. 

External  trade  price  indices:  Monthly  and  quarterly  transaction  prices  of imports  and  exports  are  calculated  as  a  quotient of turnover  value  in  PLZ  and 
turnover  volume  (exports  - FOB,  imports  - CIF);  annual  price  indices  are  obtained  on  the  basis  of direct  surveys  on  price  changes.  The  structure  of 
turnover value of the examined year is used  for the calculation. 

6 

//(p 

FOREIGN TRADE 

Structure of imports by main countries (current prices) 

1992 

1993 

1994 
in % of total imports 

1995 

1996 

lst partner 
2nd partner 

3rd partner 
4th partner 
5th partner 

others 

Structure of exports by  main countries (current prices) 

lst partner 
2nd partner 

3rd partner 

4th partner 
5th partner 

others 

DE 
RU 
IT 
GB 
NL 

DE 
NL 
IT 
RU 
GB 

DE 
IT 
RU 
GB 
us 

DE 
NL 
IT 
RU 
GB 

23.9 
8.5 
6.9 

6.7 
4.7 
49.3 

31.4 

6 
5.6 
5.5 
4.3 
47.2 

28  DE 
IT 
7.8 
6.8  RU 
5.8  GB 
5.1  NL 
46.5 

.DE 
27.4 
IT 
8.4 
6.8  RU 
5.3  GB 
4.6  FR 
4f5 

in % of total exports 

36.3  DE 
5.9  NL 
5.2  RU 
IT 
4.6 
4.3  GB 
43.7 

35.7  DE 
5.9  NL 
5.4  RU 
IT 
4.9 
4.6  GB 
43.5 

26.6 

8.5 
6.7 
5.2 
4.9 
,48.1 

38.3 
5.6 
5.6 
4.9 

4 
41.6 

Structure of export by main partners 
in 1995 

Structure of import by main  partners 
in 1995 

41.6% 

DE 
38.3% 

48.1% 

DE 

IT 
8.5% 

IT  RU 

4.0%  4.9~~.6% 

5.6% 

FR 

GB6.7% 

4.9%  5.2% 

DE 

FR 

GB 

IT 

Germany 

France 

United Kingdom 

Italy 

NL 

RU 

us 

Netherlands 

Russian Federation 

United States 

7 

J If, 

SOCIAL INDICATORS 

Population on l  January 

1991 

1992 

1993 
thousand 

1994 

199S 

38183.2 

38309.2 

38418.1 

38504.1 

38581 

Proportion of population by age l  January 199S 

in % of total population 

y0_14 
yl5_24 
y25_44 
y45_64 
y65_max 

Live births 
Deaths 
Infant deaths 

- Less than  1 year 
- Still birth 

Marriages 
Divorces 

Crude marriage rate 

Crude divorce rate 

Natural growth 
Net migration 
Total population growth 
Total fertility rate 
Infant mortality rate 
Late foetal  mortality rate 

Life expectancy 

- Males 
- Females 
Life expectancy 

- Males 
- Females 

545954 
403951 

8177 
2754 
233206 
33823 

6.1 

I.I 

3.71 
-0.42 
3.3 
2.05 
14.98 
5.02 

total number 

492925 
390874 

6610 
2549 
207674 
27891 

513616 
393131 

7422 
2511 
217240 
32024 

per  1000 of population 

5.66 

I.I 

3.14 
-0.3 
2.84 
1.93 
14.45 
4.87 

66.7 
75.7 

5.4 

I.I 

2.65 
-0.4 
2.25 
1.85 
13.41 
5.14 

at birth 

67.4 
76 

at 65 years 

481285 
386398 

7284 
3813 
207689 
31574 

5.39 

2.1 

2.46 
-0.49 
1.97 
1.8 
15.13 
7.86 

67.5 
76.1 

23.1 
15.5 
30.0 
20.5 
10.9 

5.4 

1.0 

13.6 

67.6 
76.4 

12.9 
16.6 

Proportion of population by age on 1January1995: Age of 85  to  89: data only available for  85  years and older. 

Net Migration:  Including statistical discrepancies. 

8 

/If 

LABOUR MARKET 

Economic Activity Rate (ILO methodology) 

Average employment 

Unemployment rate by age (ILO methodology) 

- total 
- less then 25 years 
- 25 years and more 

Registered unemployment (end of period) 

1993 

1994 

1995 

1996 

in percent of population age +IS 

60.9 

60.2 
in thousand 

58.8 

58.2 

8581 

8519 

8570 

8530 

in % of labour force 

14 

13.3 
31.2 
10.9 
in% of economically active population 

14.4 
32.5 
11.9 

16.4 

16 

14.9 

12.4 
28.7 
10.l 

13.6 

Average paid employment indices by NACE classes 

- Agriculture, hunting, forestry and fishing 
- Mining and quarrying 
- Manufacturing 
- Production and distribution of electricity, gas and water 
- Construction 
- Transport, storage and communication 

Monthly nominal wages and salaries indices by NACE classes 

- Agriculture, hunting, forestry  and fishing 
- Mining and quarrying 
- Manufacturing 
- Production and distribution of electricity, gas and water 
- Construction 
- Transport, storage and communication 

\ 

Monthly wages and salaries indices 
- nominal 
- real 

1993 

1994 

1995 

1996 

Previous year "'  I 00 

79.6 
85.5 

134.4 
147.1 
137.9 
147.5" 
i29.I 
136.9 

136.l 
98.7 

72.9 
92.8 
97.l 
101.8 
87.9 
94.5 

137.4 
155.8 
138.4 
142.7 
129.2 
. . 135 

78.6 
95.5 
101.7 
100.6 
96.2 
98.4 

147.8 
125.4 
134.6 
128.5 
133.5 
130.5 

137 
102.5 

132.9 
103.9. 

102.7 
95.2 
99.7 
99.9 
95.3 
98.9 

126.5 
127.7 
127.1 
123.5 
127.3 
127 

126.9 
105.8 

Economic activity  rate (ILO Methodology):  Percentage of labor force  in  the  total  population aged  15+.  This  rate  is  derived  from  LFSS 

(Labor Force Survey) observing the following ILO definitions and recommendations: 

Labor force  employed and unemployed persons in the sense of the ILO definitions stated below. 
The  employ~d  all  persons  aged  15+,  who  during  the  reference  period  worked  ut  kast  one  hour  for  wage  or  salary  or  other 
remuneration as  employees, entrepreneurs,  members  of cooperatives or contributing family  workers.  Members  of armed  forces  and 
women on child-care leave are included. 
The unemployed  all  persons aged  15+,  who concurrently meet all  three conditions of the  ILO definition  for  being classified  as  the 
unemployed: (i) have no work, (ii) are actively seeking a job and  (iii) are ready to  take  up a job within a fortnight. 
In  Poland,  LFSS 
excludes members of armed forces. 

Unemployment  rate (by  ILO  methodology):  Percentage  of the  unemployed  labour  force.  This  rate  is  derived  from  LFSS  (Labor  Force 

Survey) observing the ILO definitions and recommendations (see ILO definitions above). 

LFSS excludes members of armed forces. 

Average employment and A\•erage  paid employment indices  by  NACE  classes:  The data  for entrepreneurial  sphere cover all  entities 
with  more  than  5  employees.  The  data  cover  also  all  budgetary,  subsidised  organisations  and  persons  with  secondary job  are 
included. Armed forces,  apprentices, employees on child-care and additional child-care leaves are excluded. 

Registered  unemployment  (end  of  period):  Registered  unemployment  in  per  cent  - percentage  of unemployed  registered  in  civil 
economically active population, based on  Labour force sample survey (LFSS).  Registered  Unemployment covers  persons registered 
as looking for a job in Local  Labour Offices in the area in which they live. 

•· 

Monthly  wages  and  salaries  indices:  Monthly  real wages  and  salaries  indices  are  derived  from  net nominal  wages  and  salaries  indices 
divided by consumer price indices of households of employees and  employees  possessing farms.  The data for  entrepreneurial  sphere 
cover  all  entities  with  more  than  5 employees.  The  data  cover  also  all  budgetary,  subsidised  organisations  and  persons  with 
secondary job are  included.  Anned forces,  apprentices, employees on child-care and additional  child-care leaves arc excluded. 

9 

PUBLIC FINANCE 

Government budget 

-Consolidated central government revenue 

-Grants 
-Consolidated central government expenditure 
-Consolidated general government expenditure 
-Consolidated central government deficit/surplus 
-General government deficit/surplus 

1990 

1991 

1992 

1993 

1994 

1995 

in millions of national currency 

87857 

117595 

92754 
105256 
-4897 
-4954 

124019 
140201 
-6424 
-5508 

44.1 
50.0 
-2.3 
-2.4 

43.4 
49.0 
-2.2 
-1.9 

Government budget 

in % of Gross Domestic Product 

-Consolidated central government expenditure 
-Consolidated general  government expenditure 
-Consolidated central government deficit/surplus 
-General government deficit/surplus 

Government  budget:  These  data relate  to  central  and  general  government  as  published  in  the  IMF's  Government  Finance  Statistics 

Yearbook (1996)  (GFSY);  included also  is  the country's presentation  in the GFSY 

Because the  GFSY does  not present statistics for  general  government,  but for  individual  levels  of government separately,  the 
consolidated  series  presented  here  were  obtained  from  central  and  local  government data and  adjusted  in  consolidation  for  the 
identified intergovernmental transfers. 

Even though the statistics cover the central  and local  government published  in GFSY, the coverage may  not be exhaustive if 
some central  or local  government units  are  not included  in  that coverage.  A measure of the  exhaustiveness of the coverage can 
be obtained by  comparing in the GFSY the note on the coyerage of data for  individual  countries with the list of central  and local 
government units  provided. 

It should  be  noted  that  the  deficit/surplus  used  here  is  equal  to  revenue  and  grants  minus  expenditure,  and  does  not  take 

lending minus repayments into account (see further below). 

The  netting  of inter-government  transfers  carried-out  in  the  attached  tables  is  limited  to  the  current  and  capital  transfers 
consisting  of the  identified  grants  and  current  and  capital  subsidies  between  the  levels  of  government.  Other  types  of 
transactions occurring between government levels,  such  as  the payments of taxes  and  employers'  social  security  contributions, 
and  the  reciprocal  purchases  of goods  and  services  are  not  normally  classified  as  inter-governmental  transfers  have  not  been 
eliminated  in  the  consolidation  process.  Finally,  whether  the  absence  of data  for  current  and  capital  transfers  should  be 
attributed  to  the  absence  of transfer  or  to  lack  of data  is  unclear;  in  all  cases  absence  of information  on  transfers  have  been 
deemed to represent zero-transfers. 

a.  Government expenditure consists  of general  government cash  expenditures  on  current  and  capital  goods  and 

services, interest payments and  current and capital transfers  but excludes non-cash transactions. 

· 

b. Deficit/surplus equals cash revenue and cash grants minus cash expenditure.  This measure of the deficit/surplus 
differs  from  that  used  in  GFS  which  equals  cash  revenue  and  cash  grants,. minus  cash  expenditure,  minus  net  lending.  This 
exclusion  of net  lending(consisting,  in  the  GFS methodology,  of operations  in  financial  assets  and  liabilities  carried  out  for 
specific policy purposes, rather than for  liquidity  purposes) brings the measure of the  deficit/surplus presented here closer to the 
national  accounts concept of net borrowing/net lending.  Also, as  a result of this exclusion, receipts from  privatisation (classified 
as  repayments  in  the  GFS methodology) do  not enter in  the  determination of the deficit/surplus  presented  in  the  attached tables 
(and therefore do not reduce the deficit). 

10 

/Zo 

FINANCIAL SECTOR 

Monetary aggregates 

- Monetary aggregate MI 

- Quasi money 

1990 

1991 

1992 

1993 
Billions (10"9) of US Doll111 

1994 

1995 

1996 

9.18 
17.01 

11.28 
20.47 

15.15 
27.11 

17.14 
29.77 

Total reserves ( gold excluded, end of period) 

Millions (10"6) of US  Dollan 

Average short term interest rates 

- lending rate 
- deposit rate 

.  Official discount rate (end of period) 

USO exchange rates 

Average of period 

End of period 

ECU exchange rates 

Average of period 

End of period 

4091.9 

5841.8 

14774.1 

17656.9 

•;. per annum 

35.3 
34 

I USO• ... PLZ 

32.8 
33.4 
28 

33.5 
26.8 
25 

26.l 
20 
22 

0.95 

0.95 

1.0576 

1.0957 

1.3626 

1.5767 

1.8115 

2.1344 

2.2723 

2.4372 

2.425 

2.468 

2.6961 

2.8755 

I ECU• ... PLZ 

1.210 

1.295 

1.311 

l.769 

1.909 

2.121 

2.381 

2.703 

2.998 

3.172 

3.244 

Monetary Aggregates:  Money (Ml)  Includes demand deposits and currency outside banks.  Quasi money (QM)  lnclud~ time, savings 
and  foreign currency deposits.  Eurostat has converted National  Currencies to  the  US  dollar by applyihg the  International  Monetruy 
Fund annual end of period exchange rates. 

· 

Average short term interest rates:  Data are extracted from the IMF's monthly International  Financial Statistics (IFS).  Average short-term 
lending  and  deposit  rates  relate  to  period  averages.  Lending roles  generally  consist of the  average  interest  rate  charged  on  loans 
granted by reporting banks. Deposit roles relate to average demand and time deposit rates  or average·time deposit rates. These rates 
may  not  be  strictly  comparable  across  countries  to  the  extent  the  representative  value  of the  reporting  banks  and  the  weighting 
schemes vruy. 

Total  reserves  (gold  excluded,  end  of  period):  The  statistics  on  official  foreign  reserves  are  extracted  from  the  IMF's  monthly 
International  Financial  Statistics  (IFS).  Total  reserves  (gold  excluded)  are  defined  as  the  sum of central  bank  holdings  of foreign 
currencies  and  other (gross)  claims on  non-residents;  this  definition  excludes  claims on  residents  denominated  in  foreign  currency. 
According  to  the  definition;  official  foreign  reserves  are  calculated  at  market exchange  rates  and  prices  in  force  at  the  end  of the 
period  under consideration.  Total  reserves  (gold  excluded)  published  in  IFS  may  differ  from  the  figures  published  by  the  national 
authorities.  Some  factors  contributing to  possible  differences  are  the  valuation of the  reserve  position  in  the  Fund,  and  a  different 
treatment of claims in non-convertible currencies.  Data for  1996 refer to November 1996 data. 

USO  exchange  rates: 

International  Monetary  Fund  exchange  rates  as  present  in  the  publication:  "Statistiques  Financieres 

Intemationales". 

11 

/ 21 

INFLATION (12 months changes) 

Percentage change of the CPis with the current month compared with the corresponding month of the previous year (t/t-12) 

Jan 

Feb 

Mar 

Apr 

May 

Jun 

Jui 

Aug 

Sep 

Oct 

Nov 

Dec 

1993 

1994 

1995 

1996 

34.7 

31.7 

31.6 

32.4 

32.2 

33:4 

33.9 

33.l 

35.7 

37.l 

34.2 

29.4 

32.4 

33.7 

·33.2 

32.4 

32.6 

30.9 

27.8 

26,2 

24.4 

23.0 

22.4 

21.9 

21.l 

20.4 

20.2 

20.l 

19.6 

19.6 

70.6 

20.7 

19.4 

18.9 

18.9 

18.7 

Inflation (%  change of CPI) 

40.0 
35.0 
30.0 
25.0 
20.0 
15.0 
10.0 
5.0 
0.0 
v 

"' c <':I 

...... 

Inflation  (12  months  changes): 

Inflation  rates  (12  months  changes)  are  percentage  changes  of the  CPis  with  the  current  month 
Inflation  rates  are  based  on  national  CPis  (as  described  in  the 
compared with  the  corresponding month of the  previous  year. 
statistical  part  of the  enlargement questionnaire)  which  are  not strictly  comparable  between  candidate  countries  or with  those 
based on EU HICPs (different methods, concepts, practices in  the calculation of CPls.  Inflation rates (12 months changes) based 
on ILO data. 

12 

llZ 

INDUSTRY 

Structure of GDP by economic activities (NACE, current prices) 

- Mining and quarrying 
- Manufacturing 
- Production and distribution of electricity, gas and water 

Industrial production volume indices by NAC~ classes 

-Total 
- Mining and quarrying 
- Manufacturing 
- Production and distribution of electricity, gas and water 

1993 

1~94 

1995 

1996 

in % or Gross Domestic Produce 

3.7 
25.2 
4 

105.6 
88.9 
112.2 
81.2 

4.4 
20.7 
3.6 

previous year •  I <JC! 

113.1 
106.1 

.  114.9 

105 

4.2 
21 
3.7 

110.2 
99.1 
112.4 
100.6 

-

108.8 
100.8 
l11 
98.9 

Industrial production volume indices by NACE classes 

CO!Tesponding period of the previous year• 100 

-Total 
- Mining and quarrying 
- Manufacturing 
- Production and distribution of electricity, gas and water 

109 
89 
116 
86 

103 
79 
109 
80 

108 
100 
112 
90 

110 
99 
113 
105 

109.1 
99.8 
110.8 
102.3 

119.9 
117.2 
120.9 
112.6 

113.l 
109.9 
115.1 
102.3 

1993Ql  1993Q2  1993Q3  1993Q4  1994Ql  1994Q2  1994Q3 

1994Q4 

1995Ql  1995Q2  1995Q3  1995Q4  1996Ql  1996Q2  1996Q3 

1996Q4 

CO!Tesponding period of the previous year"' 100 

113.7 
102.7 
117 
100.4 

112 
106.4 
113.9 
100.7 

107.1 
100.8 
108.7 
96.4 

108.4 
88.6 
110.8 
103.9 

108.8 
105.3 
109.5 
103.5 

107.4 
97.4 
110.2 
93.7 

110.3 
98 
112.4 
102.6 

108.9 
101.9 
111.3 
96.9 

Structure of GDP  by economic activities (NACE, current prices):.  is  calculated  for  1993  at producer prices  and  since  1994  at basic 

prices. 

Industrial  production  volume  indices  by  NACE  classes: 

Industrial  production  covers  mining  and  quarrying,  manufacturing  and 
electricity, gas and water supply (according to the NACE Classification Sections C,D,E).  Data on industrial  production relate to sold 
production (sales) for domestic and external d~stination as well. Data cover all entities with more than 5 employees. 

13 

/(13 

INFRASTRUCTURE 

Railway network 

Railway transport 

- freight transport 

- passengers transport 

1991 

1992 

1993 

1994 

1995 

in  Km  per  1000 Km2 

82.7 

80.8 

79.7 

78 

77 

in million tonlpuscngers-km 

64359 

65788 

69116 

30865 

27610 

26635 

in  I OOO of population 

Number of telephone subscribers 

93.l 

102.5 

114.7 

177 

197 

inhabitanu 

Number of inhabitants per passenger car 

6 

6 

5.4 

5.4 

5.1 

14 

AGRICULTURE 

Land area by land-use categories 

- total 

- agricultural  land 

- forest 

- arable land 

- pennanent meadows and pastures 

Agricultural land by legal status 

- state enterprise 

- Co-operatives 

- others 

1992 

1993 

1994 
in  1000 Hectares 

1995 

1996 

31264 

31269 

18664 

18642 

8772 

14337 

4044 

8785 

14305 

4047 

31269 

18648 

8783 

14300 

4055 

31269 

18622 

8822 

31269 

18474 

8861 

14286 

14087 

4047 

4125 

in % of agricultural  land 

13.9 

3.3 

82.8 

10 

3.1 

86.9 

7.3 

2.9 

89.8 

Share of GDP 

- Agriculture,  hunting,  forestry  and  fishing (Nace A+B) 

Gross agricultural production volume indices 

Main crops ~y area 

1992 

1993 
1994 
1995 
in  % of Gross Domestic Product 

1996 

6.7 

6.3 

6.6 

Previous year = I 00 

106.8 

90.7 

110.7 

100.3 

in  I OOO  Hectares 

- Cereals 

- of which:  wheat 

- Potatoes 

- Sugar beet 

- Fodder beet 

Main crops by yield 

- Cereals 

- of which: wheat 

- Potatoes 

- Sugar beet 

- Fodder beet 

8441.9 

8579 

8533.5 

8609.7 

2405.1 

2476.9 

2407 

2406.8 

1757 

1761 

1697 

1522 

376 

191 

399 

195 

401 

196 

385 

143 

in  I 00  kg/Hectares 

23.5 

30.6 

133.1 

294.1 

331.6 

27.5 

33.3 

206 

391.6 

431.7 

25.6 

31.8 

135.9 

291.5 

359.9 

30.2 

36.0 

163.5 

346.1 

377.2 

Sales or procurement of animal for slaughter 

1992 

1993 

1994 
in  IOOOtonsofliveweight 

1995 

- pigs 

- cattle 

- poultry 

Livestock breeding intensity (end of period) 

- cattle 

- of which:  cows 

- sheep 

- pigs 

- of which:  sows 

1194.1 

1095.9 

446.8 

290 

366.6 

242.1 

914.9 

367.3 

284.2 

1134.9 

346.9 

324.3 

Heads  per  I OOO  Ha of agricultural  land 

390 

207 

52 

382 

199 

41 

386 

191 

33 

Heads  per  1000 Ha of arable  land 

1218 

112 

1320 

122 

1420 

130 

1240 

8651 

2453 

1349 

451 

29.4 

35.1 

203 

387 

1996 

959.8 

283.5 

379.9 

376 

186 

Share of GDP:  is  calculated for  1993 at producer prices and since  1994 at basic prices. 

Gross  agricultural  production  volume  indices: 

Indices  based  on  evaluation  of all  individual  products  of gross  agricultural  production. 

Constant prices refer to  1992. 

Sales  or  procurement  of animals  for  slaughter:  TI1e  data  refer  to  the procurement of agricultural  products  run  by  legal  entities  and 
independent units  with legal  incapacity.  Semi-annual  and  annual  data cover also  procurement nm by  natural  persons,  when  its  value 
exceeds  I 0 thous.  PLZ. As a result of this, the semi-annual and  annual  data arc not the sum of particular quarters. 

15 

/J( 

·-~------------ ---~---.  • • - - ' ' - .  -- - ------------------

LITHUANIA 

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CZECH. REPUl3LIC- · 

,/' 

UKRAINE 

Poland 
1994 

Legend: 

N 
N 

Country boundary 
Region boundary 

COUNTRY NAME 
REOIONNAME 
crrYNAME 

0 

Selected major settlements: 
(1  OOO Inhabitants) 
200· 250 
250·  500 
500-1000 
:>1000 

• 
• 
• 

General information about the country: 
Age groups (In years): 

CJ  <15 
. .  15· 65 
. .  >65 

Living standard (In 1993): ECU 1 905 
{GDP per oepl9) 

Area: 322 sn kfnl 
Administrative regions: 49 
Population: 38 580 600 

8ouroe: c.... ....... Ollloe 
0Mognlphy .ncl gll09lllphlo lnfanndaR mm...-nt Gl800 

0 

50 

150 km 

~ 

v'"·· 

t) 

"r-.0:. 

1. 

_.,. 

~. 
~ i~ 
.,, 

If 

\_  , 
;"<{ 
\ 
l) 

./ 

/( 
'i 

LITHUANIA 

Poland 
1994 

N 
N 

Country boundary 

Main railway line 

Ferry connection 

Motorway 

National road 

National road, Double lane 

/V 
N 
/\I 
IV 
/\/ 
Infrastructure data not available for AU, LT, BY, UA 
Selected major settlements: 
(1  OOO inhabitants) 
250- 500 

Principal road 
Main navigable waterway 

• 

• 

• 

500- 1 OOO 

>1  OOO 

General information about the country: 
Age groups (in years): 

t__J  < 15 
. .  15- 65 

. .  >65 

Living standard (in 1993): ECU 1 905 
(GDP per ceplta) 

Area: 322 sn km2 
Administrative regions: 49 

Population: 38 580 600 

Soun»: Centnll 6tldlatlcal Ofllce 
Cartography and geographic lnformallon ~nt: GISCO 

0 

50 

160km 

~ 

UKRAINE 

ISSN 0254-1475 

COM(97) 2002 final 

DOCUMENTS 

EN 

11  01  06 

Catalogue  number  CB-C0-97-382-EN-C 

ISBN  92-78-22950-4 

Office for Official Publications of the European Communities 

L-2985  Luxembourg 

/ '}  r;