Commission Report (2002): Czech Republic

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 26: External relations

Progress since the last Regular Report

Since the last Regular Report, the Czech Republic has continued to align with the acquis on common commercial policy and to co-ordinate positions and policies within the World Trade Organisation (WTO) with the EU, in particular with regard to the Doha Development Agenda negotiations.

As regards the common commercial policy, upon accession, the Czech Republic will be required to align its tariffs with those of the EC. The Czech Republic's applied tariffs currently average 6.1% (MFN) on all products, 13.5% on agricultural products, 0.1% on fishery products and 4.5% on industrial products. By comparison, EC tariffs currently stand at 6.3% on all products, 16.2% on agricultural products, 12.4% on fishery products and 3.6% on industrial products.

In the field of dual-use goods, an amendment to the Act on Controls of Exports and Imports of Goods and Technologies Subject to International Control Regimes came into force in June 2002. The Czech Republic keeps the industry regularly informed of developments in this field and has developed bilateral contacts with the EU Member States to exchange best practices on export control issues.

In the field of export credits, in November 2001 the Czech Republic became a Participant to the OECD Arrangement on Guidelines for Officially Supported Export Credits, which sets terms and conditions for state-supported export financing and export credit insurance.

The Czech Republic has unilaterally applied a suspension of MFN tariffs levied on imports of twelve civil aircraft products. Despite the Commission's strong opposition, this exceptional measure, introduced in 2000, and due to end in December 2001, was prolonged until December 2002. The Czech Republic will need to ensure that this tariff suspension will not be prolonged beyond 2002.

As regards bilateral agreements with third countries, the free trade agreement between the Czech Republic and Croatia has been provisionally applied since January 2002 pending its ratification. Preparations have begun for ensuring the termination of the Czech-Slovak customs union by the time of accession. A protocol has been prepared to the Czech-Moldovian Agreement on trade and economic co-operation of 1999, relating to the establishment of a joint commission on trade and economic co-operation. Within CEFTA, the Czech Republic signed the Additional Protocol No. 10 relating to the liberalisation of agricultural and food trade, and the Additional Protocol No. 11 relating to the rules of origin of goods.

With regard to development policy, co-operation and assistance, the Czech Republic is an active member of the OECD and is adapting its development practices to the principles laid down by the Development Assistance Committee. In January 2002 the Czech Republic adopted the Czech Republic Foreign Aid Programme for 2002 -- 2007. It defines the objectives, principles and territorial and sectoral priorities of the Czech Republic's development aid and foresees institutional and financial changes which will bring the Czech system of foreign development aid closer to that of EU Member States.

Total bilateral and multilateral external assistance given by the Czech Republic to developing countries in 2001 amounted to over EUR 34 million (1 billion Czech crowns).

Overall assessment

The EU and the Czech Republic have established a framework for co-operation regarding WTO issues both at ministerial and at departmental level. The Czech Republic has been supportive of EU policies and positions within the WTO framework, in particular also during the preparation for and the launching of the Doha Development Agenda. This close co-operation should continue.

Close co-ordination is needed and should continue, to ensure the smooth alignment of the Czech Republic's GATS commitments with the EC's commitments and MFN exemptions, and steps have been defined to this extent. The Czech Republic is a signatory to the Information Technology Agreement and an observer to the WTO plurilateral agreements on Government Procurement and on Trade in Civil Aircraft. With regard to the WTO Agreement on Textiles and Clothing (ATC), the Czech Republic has co-operated with the Community in the process of third stage notification to align its list of integrated products under the ATC to the EU's.

In the area of dual-use goods progress has been made, however, the Czech Republic still needs to complete alignment with the acquis. Full alignment, in particular the general export authorisations, can only take place upon accession.

The Czech Republic currently has free trade agreements in place with Croatia, Lithuania, Latvia, Estonia, Israel, Turkey and EFTA. The Czech Republic is also a member of CEFTA. The Czech Republic needs to ensure that the Union is kept fully informed both about existing trade agreements and about any negotiations aimed at the conclusion of new trade agreements with a third country. Prior to accession, the Czech Republic will need to renegotiate or renounce all international agreements concluded with third countries that are incompatible with its future obligations as an EU Member State, including the Treaty of Friendship, Commerce and Navigation with Japan. Decisive steps are needed, as a matter of urgency, to bring bilateral investment treaties in conformity with the Treaty obligations. Failure to do so will mean that the conflict between the bilateral investment treaties and Treaty obligations will need to be resolved in the Accession Treaty.

The Czech Republic's alignment with and future participation in the common commercial policy is administered by the Ministry of Industry and Trade and the Ministry of Foreign Affairs. The administrative infrastructure, which needs to be in place with respect to customs services, is discussed in the chapter on customs union (see Chapter 25 - Customs union).

With the creation of Czech Aid within the Ministry of Foreign Affairs and the Czech Platform of development NGOs (Czech Forum for Development co-operation) the Czech Republic is advancing in establishing the framework for development assistance.

Conclusion

In its 1997 Opinion, the Commission concluded that the Czech Republic was well placed to be able to meet Community requirements in this field in the medium term, provided efforts were reinforced to eliminate existing trade barriers and to align more closely with the Community trade regime.

Since the Opinion, the Czech Republic has made steady progress in aligning with the acquis in this area, particularly as regards export credits where compliance has been achieved. Progress has also been made with regard to strengthening administrative capacity. Overall, alignment is on track and has reached a good level and administrative capacity is satisfactory.

Negotiations on this chapter have been provisionally closed. The Czech Republic has not requested any transitional arrangements in this area. The Czech Republic is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for membership, the Czech Republic's efforts now need to focus on finishing the process of legislative alignment, on taking decisive steps, as a matter of urgency, towards the renegotiation or abrogation of its bilateral investment treaties in full conformity with its EU membership obligations, on terminating its exceptional suspension of MFN tariffs on certain civil aircraft products by December 2002 at the latest, as well as on ensuring that the administrative capacity exists to fully implement and enforce the acquis in this field upon accession.

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