USTR - 1996 National Trade Estimate-Poland
Office of the United States Trade Representative


1996 National Trade Estimate-Poland

In 1995, the United States trade surplus with Poland was $113 million, compared with a trade deficit of $26 million in 1994. U.S. merchandise exports to Poland were $776 million, $151 million greater than those in 1994. Poland was the United States' fifty-sixth largest export market in 1995. U.S. imports from Poland totaled $664 million in 1995, two percent more than imports in 1994.

Poland's economy grew by nearly seven percent in 1995, with GDP surpassing the 1989 level for the first time. By then end of 1995, inflation had dropped to 21.6 percent and official unemployment to 14.9 percent, both continuing the positive decreasing trends from previous years. The unregistered "grey economy" added an estimated 13-18 percent of GDP and employed over half the number of people officially listed as unemployed. Other important economic trends were positive as well. The government held the line against increased deficit spending, and the ratio of public debt to GDP declined to approximately 60 percent. Foreign reserves soared, and the zloty's small nominal depreciation led to a substantial real appreciation in 1995. Both exports and imports rose 38 percent. As a result, the Polish trade deficit for the first ten months of 1995 increased by half, to $4.3 billion from $2.9 billion. Some problems remain, however. Progress on privatization and the overhaul of the social insurance system has been slow and uncertain.


Tariff Barriers

In 1990 and early 1991, Poland took bold steps to stimulate its private trading sector through an open trade regime with low or suspended tariffs. Poland then reversed course by raising a large number of its MFN tariffs prior to granting duty reductions for certain EC (now EU) goods under the EC-Poland Association Agreement on March 1, 1992. In 1993, Poland agreed to suspend tariffs on many products for which the U.S. had requested relief, and established tariff rate quotas for computer-related products.

The new tariffs raised the 1992 average duty level to 14 percent. The average level in 1994 dipped to 11.8 percent, and in 1995 to 9.4 percent. With reductions as a result of agreements concluded with the EU, the Central European Free Trade Association (CEFTA) and WTO, the overall 1996 rate will be 7.3 percent (5.6 percent for industrial goods and 20.9 percent for agricultural products). Poland also chose to bind its MFN tariff rates at the maximum allowable level when it joined the WTO in 1995. As a result, the tariffs on certain goods, such as petroleum products, will rise in 1996 (in this case from 25-30 percent to 3137 percent).

Poland's European Association Agreement has made U.S. exports relatively more expensive vis-a-vis similar European products, disadvantaging high-growth U.S. sectors such as computer-related products, capital goods and equipment such as heavy machinery, refinery and gas pipeline equipment, agricultural products such as wine, citrus fruit, fruit juices, sugar containing products and dried fruit, as well as industrial commodities such as soda ash. While overall U.S. exports to Poland have continued to rise, it is difficult to estimate the loss in potential exports had such preferential arrangements not been established, particularly

for agricultural products. The 1992 agreement granted EU products a ten percent reduction rate in MFN tariffs. In January, 1995, Poland cut customs rates on most goods from EU and EFTA countries by 20 percent. In late 1995, Poland granted additional tariff preferences to the EU covering sugar-containing products and wine. As of January, 1996, Poland reduced duties on EU and EFTA industrial goods by an additional 20 percent, on EU and EFTA autos by 16 percent, and on agricultural products by ten percent.

In late 1994, in light of Poland's GSP status, USTR launched a review of Poland's reverse tariff preferences to the EU, as mandated by a statement of administrative action attached to the Uruguay Round Agreements Act. The review did not establish enough evidence to determine that Poland's preferential treatment of EU imports has had an adverse effect on U.S. commerce.

A temporary surcharge of five percent imposed by Poland on all imports in 1993 has been lowered to three percent as of January 1996 and is expected to be eliminated in 1997.

Tariff rate quotas on agricultural goods

In July 1995, Poland implemented its Uruguay Round agricultural commitments for about 20 percent of imported products, including those previously subject to variable levies and quantitative limitations, by establishing tariff rate quotas with out-of-quota rates at or below WTO ceiling bindings. Products subject to tariff rate quotas include beef, pork, poultry, milk and cream, unshelled eggs, honey, strawberries, cucumbers, spices, canola and mustard oil, wheat and rye flour, sugar beet seeds, malt extract, gelatin, sauces, processed tomatoes, wine and certain tobacco products. The tariff rate quotas are administered through licensing arrangements.

Poland imposes few other import requirements. It eliminated all quantitative restrictions on imports in 1990. Any firm or individual registered as a business may participate in foreign trade. Some U.S. exporters have experienced problems with the Polish customs administration due to overworked officials, an outdated system, and slow communications between Warsaw and the borders.

Import licenses

Poland requires import licenses for: radioactive materials, munitions, military goods, transportation equipment, certain chemicals and fuel. It also allocates over 22,000 licenses to import goods enjoying limited duty-free quotas. The plant quarantine inspection service issues a mandatory phytosanitary import permit for all imports of live plants, fresh fruits, and vegetables.


Poland's practice of applying its own product standards and safety certification rather than recognizing international standards has raised concern among U.S. exporters. Polish officials have refused to accept U.S. companies' self-certification of conformance to international product standards, although the Poles have reached an agreement with the EU in which they have agreed to accept EU safety certification (the CE mark) for some products. The Poles require lengthy testing procedures for over 1,400 products at the Center for Testing and Certification (PCBC) or one of 15 specialized institutes supervised by the PCBC. As a result of EU and U.S. pressure, Poland suspended implementation of mandatory safety "B" certification until January 1, 1997. Had this not occurred, U.S. firms with products accepted elsewhere in Europe may have been liable for fines amounting to 100 percent of the value of the goods sold. Difficulty in obtaining information about testing procedures and product standards hampers transparency of this process, although in late 1995 Poland established a single source of information on standards, the Polish Standards Committee (PKN), as required by the WTO. All product standards are available for purchase at an associated store.

There are procedures to appeal negative test results on technical merit, particularly for goods which meet international standards. However, the appeals process lacks transparency, and in sum, Poland's system of standards represents an obstacle to trade that damages Polish interests as well.

Phytosanitary standards

Poland maintains a list of quarantined weeds which are not allowed to be in imported grain. Among the weed seeds on the list are several varieties of a common weed known as ambrosia or ragweed. The current regulations are not consistent with the requirements of other grain trading countries in Western Europe and the EU; they contributed to a nearly 20 percent drop in 1995 U.S. farm exports to Poland. Strict application of regulations could result in the loss of what is, in some years, a substantial market for U.S. grains. Amending the regulations to reflect EU phytosanitary standards would, in most cases, resolve a great deal of the problem.


Poland's new government procurement law, which came into effect in January 1995, at the national level and January 1996 at the regional (Gmina) level, is modeled on the UN model procurement code. It is based on competition, transparency, and public announcement. The only single source breaches of the stated preference of unlimited tender come for reasons of state security or national emergency. The law established a central policy office of public procurement listing all tenders over 20,000 ecu.

There are two elements of domestic preference in the procurement law. First, there is a mandated 50 percent domestic content law for all goods and services provided; for construction, it is 50 percent of both raw materials and labor. In addition, domestic bidders are given a 20 percent price preference. According to implementing regulations, companies with foreign participation organized under the Joint Ventures Act of June 14, 1991 may qualify for "domestic" status under procurement laws. There is also a protest/appeals process for tenders viewed as unfairly awarded.


With its accession to the WTO, Poland has ratified the Uruguay Round Subsidies Agreement. Poland also plans to join the OECD code on shipbuilding but has requested a derogation allowing transitional restructuring. The package would not involve direct export subsidies due to budget constraints but may include indirect support to struggling shipyards in the form of deferred tax payments and utilities payments at concessionary rates.

Poland has eliminated past practices of tax incentives for exporters, but it still offers, on a negotiated basis, some tax holidays to foreign investors who plan to export. Poland also provides for drawback levies on raw material imports which are processed and reexported in finished products within 30 days. A new law restructuring the sugar refining industry essentially creates export subsidies for sugar financed out of high domestic prices.


The United States and Poland signed a bilateral Business and Economic Relations Treaty in March 1990. The treaty, which contains provisions for protection of U.S. intellectual property, has been ratified by both sides; entry into force took place once Poland passed a new copyright law in 1994. Polish laws are adequate, but enforcement remains problematic, resulting in continuing piracy and trademark infringement. Polish law enforcement authorities have cooperated well with U.S. firms but lack the manpower and resources to address the situation adequately, often relying on right holders to provide preliminary evidence of violations.


The 1994 law guaranteed nearly all internationally recognized standards for the protection of literary, musical, graphic, software, and audio-visual works, as well as industrial designs. The remaining loophole, concerning sound recordings by foreign artists, will be closed by early 1996 as TRIPs-related provisions of the WTO agreement come into effect. The law also offers strong criminal and civil enforcement provisions. Poland adheres to the Berne Convention (Paris Text, 1971). It has declined to accede to the Geneva Phonograms Convention, choosing instead to work with EU countries to update the Rome Convention, which covers broadcasting as well as production of recordings.

Piracy of U.S. copyrighted works in Poland has decreased significantly. In late 1994, the government shut down major television broadcasters of pirated material, for example. Industry associations estimate 1995 levels of piracy in Poland to be: 30 percent in sound recordings; 10 percent in books and video; and 90 percent in computer software. With the advent of TRIPs in 1996, the level of pirated sound recordings is expected to drop to less than ten percent. Enforcement has also improved in the area of protection of computer software copyrights; in previous years, almost 100 percent of Poland's computer software market was pirated material.


The U.S. pharmaceutical industry has complained that despite numerous U.S. consultations with appropriate Polish officials, the patent bill signed into law in 1993 provides inadequate transitional protection for products already protected by foreign patents but not patented and not yet marketed in Poland. The law only provides protection for products introduced on the market in 1993 and after.


While Poland permits foreign banks to establish subsidiaries in Poland, either wholly owned or as joint ventures, the National Bank of Poland (NBP) has pressured foreign banks to become involved in bailing out ailing Polish banks as an informal condition for granting them their own banking licenses. NBP has also made it known that it is not inclined to grant any more licenses for foreign bank branches and has not granted any such licenses since issuing two in 1991.

There is a draft proposal currently being considered which would effectively prevent foreigners from legally offering tax advice in Poland. Finance Ministry draft regulations would require advisers to be either partners or individual sole traders, yet the foreign investment law requires foreigners to organize as a corporation only.


Polish law permits 100 percent foreign ownership of a corporation (partnerships and sole proprietorships are not allowed). In preparing for OECD membership in 1996, Poland has liberalized rules governing capital flows and foreign ownership of land and committed to the principle of national treatment. The revision of the law on the purchase of real estate by foreigners, last revised in 1933, was presented to Parliament in early 1996 and would eliminate the Interior Ministry's approval for certain foreigners to buy land in Poland and foreign entities to purchase real estate, up to 0.4 hectares in cities and towns and 1.0 hectares in the countryside. Purchases of more than 1.0 hectares would need the concurrence of the Ministries of Defense and Agriculture.

While foreigners may own 100 percent of a corporation, the Polish state treasury retains a golden share in many enterprises being privatized and restricts foreign ownership to less than 50 percent in sensitive "strategic" industries. While foreign companies owning a strategic stake expect to have managerial control of the enterprise, in at least one joint venture, Centertel (cellular phones), the supposedly passive Polish majority stake holder has sought to seize managerial control from the two minority foreign partners.

Under the law on broadcasting (1992), a foreign investor may not own more than a 33 percent stake in a radio or television broadcaster. After the recent relaxation of controls on foreign investment, only the management of airports and seaports requires a special permit from the Minister of Privatization.


The Polish Government's anti-monopoly office is empowered to fine state-owned monopolies who unduly prevent competition; a 1995 amendment to the anti-monopoly office act removed ambiguities about its authority, thereby strengthening its ability to act. Several U.S. telecommunications companies have complained of strong-armed tactics on the part of the state telecommunications monopoly, TPSA, in regards to interconnection agreements. As a result of this and other anti-competitive actions by TPSA, the anti- monopoly office has levied fines against TPSA and announced its intention to continue close scrutiny of the telecommunications sector.

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