WTO TRADE POLICY REVIEW OF THE CZECH REPUBLIC
Statement by U.S. Ambassador Linnet Deily
Geneva, October 17, 2001

Opening Remarks:

Thank you Mr. Chairman. The United States welcomes the delegation from Prague for the Czech Republic's second WTO trade policy review. We appreciated the insightful comments of Ambassador Hovorka when he recently served as the discussant for the U.S. trade policy review. We commend the Secretariat for its report on the Czech Republic's trade policy regime. We also appreciate the Government's report. These reports and the entire TPR process can be useful, not only in understanding and improving trade policy formulation but also in furthering coordination of trade-related activities throughout the Government. We have produced a series of questions stemming from these reports. We look forward to receiving answers and learning more about the Czech Republic's trade policies and practices.

U.S.-Czech relations are excellent and reflect strong historical ties. The U.S. and the Czech Republic cooperate on a wide range of issues. President Vaclav Havel is an internationally recognized advocate of human rights and social justice and we have been working with the Czech Republic and other partners to heal the wounds of war in the Balkan region.

The U.S. and the Czech Republic have strong growing trade relations. U.S. - Czech bilateral trade grew 22.9 percent to $2.2 billion in the year 2000 with Czech exports to the US increasing 24.9 percent and US exports to the Czech Republic increasing 21 percent. Actual U.S. FDI inflows from 1990 through 2000 is $1.2 billion. We hope to further expand these commercial ties with the Czech Republic.

The U.S. has supported Czech participation in international economic and political institutions and facilitated the Czech Republic's transition to a market economy. During the 1990's the US funded Support for Eastern European Democracy (SEED) provided considerable assistance to the Czech Republic to support privatization and enterprise restructuring, securities markets, a workable banking system, and facilitating professional training activities over a broad range of skills for a market economy. We recognize the successful efforts of the Czech Government and people towards economic reform.

The Czech Republic has one of the highest per capita income figures in Central Europe -- over USD 4,820. The economy is characterized by low unemployment, relatively low inflation, and success in global markets. The Czech government is strongly supportive of foreign investment, and further integration with international economic and political institutions. Recent legislation on procurement, conflict of interest, non-profit organizations and bankruptcy amendments continue to create a viable environment of continued growth.

The Czech Republic can be viewed as a model of successful economic transformation. Since 1989, the Czech Republic has transformed itself into a western-oriented market economy with more than 80 percent of enterprises in private hands. The Czech Republic has been experiencing a growth spurt, hitting 2.9 percent growth in 2000 and an expected 3 percent growth in 2001.

Ongoing Issues

The United States shares the view of the Czech Republic that the WTO is a key international body, which contributes to creating a stable, predictable and sustainable international economic environment. The Czech Republic has also wisely seen the implementation of WTO obligations as a tool to support structural changes, strengthen the economy, improve its competitiveness and increase living standards and as a result has incorporated the WTO Agreements to which it is a party into its legal system. In addition to reducing tariffs according to the agreed timetable, the Government liberalized the Czech services market in accordance with the schedule of specific commitments.

We are pleased that the Czech Republic is a signatory to the Basic Telecommunication Agreement and the Financial Services Agreement and encourage actions aimed at achieving even higher levels of liberalization in trade in services. We also welcome the Czech Republic's participation in the Information Technology Agreement and look forward to it eliminating its tariffs under the ITA. Furthermore we commend the Czech Republic for joining the initiative to extend the list of pharmaceutical products subject to elimination of tariffs. We are gratified that the Czech Republic intends to accede to the Government Procurement and the Agreement in Trade in Civil Aircraft and hope that Czech Government will join these plurilateral agreements soon.

The Czech Government has noted that there is pressure on the WTO to adapt to new developments, preserve its relevance and play a key role in positive channeling of globalization and ensuring more even distribution of benefits resulting therefrom. We share the Czech Republic's belief in the importance of a new round of multilateral trade negotiations and that a new Round is a prerequisite for a more effective involvement of the developing countries and the countries in transition in the multilateral trading system.

We also share their views on the importance of technical assistance to developing countries and over the past three years the US has spent more than $1.3 billion towards strengthening the trade related capacity of developing and transitional economies, $124 million of which in Central and Eastern Europe. We therefore would welcome the views of the Czech Republic on how to best use technical assistance to help developing and transitional economies implement WTO obligations to support structural changes, strengthen their economies, improve competitiveness and increase living standards

The Czech Republic has demonstrated much progress. Its policies are usually directed towards liberalized trade. However, some practices and policies reduce the positive impact of open trade. The Secretariat's report notes that while the legal environment is good on paper, it appears that weaknesses in the dispute resolution system continue to be a problem. The slow functioning of the overburdened commercial courts has been identified as a factor hampering the business environment. We encourage the Czech Government to improve the commercial courts.

The Czech Republic has enacted laws for the protection of intellectual property with international standards. However, as the Secretariat's report notes, enforcement appears to have lagged. A newly enacted law provides for tough criminal sanctions for infringement, but the Czech courts have not yet imposed such sanctions in practice. We urge the Czech Government to support imposition of tough sanctions.

The Czech Republic has one of the lowest average MFN rates for imports of agricultural products among WTO Members. We note with concern therefore the observation in the Secretariat's report that EU membership is likely to raise the level of protection in agriculture.

We appreciated the material provided in the Secretariat's and Government's reports but would also value having additional information on the Czech Republic's subsidies, state aid, new export policy, rules of origin, and tariff exemptions.

Conclusion

Mr. Chairman, the Czech Republic has made considerable progress towards economic reform. and trade liberalization. It is very encouraging to see a transitional economy like the Czech Republic make this progress. It shows what can be accomplished. We will continue to work with the Czech Republic to help maintain this momentum.

We look forward to engaging with other delegations in this review.