Commission Report (2002): Poland

Recent developments under the Europe Agreement, including bilateral trade

Poland has continued to implement the Europe Agreement and contributed to the smooth functioning of the various joint institutions.

The Association Council met in November 2001 in Brussels. An Association Committee meeting was held in Brussels in May 2002. The system of sub-committees continues to function as a forum for technical discussions.

The Joint Parliamentary Committee comprising representatives of the Polish and European Parliaments met in November 2001 in Brussels and April 2002 in Warsaw. The Joint Consultative Committee of the Economic and Social Committee met in Brussels, in November 2001 and in May 2002 in Warsaw. The newly constituted Joint Consultative Committee of the Regions met in November 2001 in Warsaw and in June 2002 in Brussels.

Bilateral trade continues to grow. In 2001 EC exports to Poland stood at EUR 35.4 billion (EUR 61.4% of Polish imports), with EC imports from Poland amounting to EUR 26.5 billion (EUR 69.2% of Polish exports). The EC trade surplus of EUR 8.9 billion showed a further decline from the 2000 surplus (EUR 10.5 billion) and represents the smallest surplus since 1996. Poland's share in total EC exports remained constant at 3.6% while Poland's share in total EC imports was also stable at 2.6%. EC imports continued the trend established since 1997 growing faster than EC exports; thus the trade gap --(expressed as the ratio of exports to imports) continued to decrease, reaching its lowest level since 1995. Concerning trade by product, machinery and electrical goods represent the largest sector for both EC exports to, and imports from, Poland. On the import side, machinery and electrical goods was by far the best performing sector, with 23% growth.

As a consequence of the agreement resulting from the first round of trade negotiations in the agriculture sector (adopted on an autonomous basis, pending the conclusion of an Additional Protocol to the Europe Agreement), approximately 96% of EC agricultural imports from Poland and 70% of EC agricultural exports to Poland are duty free or benefit from preferential reduced duty rates (average trade figures 1998--2000).

Negotiations on a further round of liberalisation, covering more sensitive sectors where current trade is rather low, in particular due to a high border protection, began at the end of 2001 and are still underway.

In the fisheries sector, the Additional Protocol to the Europe Agreement enacting the reciprocal concessions negotiated in December 2001 was adopted in July 2002 and the concessions came into effect in August 2002. Negotiations concerning processed agricultural products remain ongoing.

A number of issues are still outstanding with regard to the implementation of the Europe Agreement, ranging from complex long-standing issues such as steel restructuring and Special Economic Zones, to product-specific trade issues. There is a general willingness to seek solutions through the functioning of the various joint institutions, although in some instances satisfactory solutions have been a long time coming.

Although the Europe Agreement provides for entry into its second stage as of February 1999, a number of legal requirements for this transition have yet to be fulfilled. These requirements were covered in the 1999 Regular Report. The issue of transition is of increasing importance as it is only in the second stage of the Europe Agreement that capital movements from the EC to Poland will benefit from national treatment. During the reporting period there have been a number of high-profile disputes between the Polish administration and investors in Poland, as was also the case in 2001. While difficult to quantify, it is clear that, irrespective of the individual circumstances, such cases have had a negative impact on perceptions of Poland as a location for investment. Transition to the second stage of the Europe Agreement would be an important indicator that efforts are being made to rectify this perception.

Efforts have continued with a view to solving outstanding trade issues. The general level of co-operation is good, but some issues have proved to be more difficult to resolve than others, and problems persist with ensuring that solutions to both specific and general problems are fully implemented. Moreover, there has been a recent tendency to use trade measures as a palliative for difficulties whose root causes lie elsewhere, the increase in excise duty on second hand vehicles being the prime example. Progress has been made on the implementation of the customs code but some difficulties persist and the situation regarding the Polish safeguard measure on yoghurts remains unchanged.

There has been further progress in the area of certification with another amendment to the list of products requiring mandatory certification reducing the coverage of the list. The Polish administration has undertaken to further amend the list as appropriate. The administration has also taken steps to ensure that the process leading to the automatic issuing of certificates for products requiring either mandatory certification or producer certification functions smoothly and rectify the difficulties which had arisen as a result of some of the certifying bodies not implementing the new procedures. More broadly, some difficulties persist with regard to the issuing of certificates for products which fall outside the scope of the automatic procedure.

The Polish authorities asked to negotiate a PECA in February 2002. A mandate for negotiations has been agreed and these are now underway.

Concerning wooden pallets, the Regulation imposing definitive anti-dumping duties published in 1997 was further amended in August 2001, following what is termed a ``newcomer'' review of the anti-dumping measures. Undertakings were accepted from certain companies in May 2002 and withdrawn from others. A new anti-dumping investigation was initiated in May 2002 on imports of grain oriented electrical sheets and strips. Provisional duties were imposed in May 2002 on imports of welded tubes and pipes (iron and non-alloy steel.)

In March 2002, in response to the protectionist measures taken by the US, which greatly restricted access to their market and created the risk massive trade diversion, the EU initiated provisional safeguard measures, with erga omnes effect, on imports of certain steel products. The measures were partly confirmed in September 2002.

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