Slovakia

Merchandise Trade

• Slovakia became a member of the World Trade Organization in January 1995.


• As a member of the EU since 2009, Slovakia is part of a customs union and single market that allows it to benefit from tariff-free trade with its EU counterparts. Intra-EU trade accounts for about 85% of Slovakia’s exports.


• Slovakia has one of the lowest average tariff rates (along with its fellow EU members) in the Central and Eastern Europe region at 1.5%, thereby putting it ahead – from a trading-cost perspective – of many of its non-EU regional counterparts. Slovakia is very eurocentric, as its top five exporting partners are all EU members (Germany, Czech Republic, Poland, France and Italy).


• Bilateral investment treaties exist between Slovakia and the following countries: Austria, Belarus, the Belgium-Luxembourg Economic Union, Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia, Cuba, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Iran, Israel, Jordan, Kazakhstan, North Korea, South Korea, Kuwait, Latvia, Lebanon, North Macedonia, Malaysia, Malta, Mexico, Moldova, Montenegro, Morocco, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovenia, Spain, Sweden, Switzerland, Syria, Tajikistan, Turkey, Turkmenistan, Ukraine, the United Arab Emirates, the United Kingdom, the United States, Uzbekistan and Vietnam.

Sources: WTO – Trade Policy Review, Fitch Solutions

Multinational Trade Agreements

Active

1. The EU Common Market: There is free movement in the transfer of capital, goods, services and labour between member nations. The common market extends to the 28 member nations of the EU, namely Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.


2. European Economic Area (EEA)-European Free Trade Association (EFTA) (Iceland, Liechtenstein, Norway and Switzerland): While it enhances trade flows between these countries and the EU, only Switzerland is a fairly major trading partner.


3. EU-Turkey: The customs union within the EU provides tariff-free access to the European market for Turkey, benefitting exporters and importers.


4. EU-Japan Economic Partnership Agreement (EPA): In July 2018, the EU and Japan signed a trade deal that promises to eliminate 99% of tariffs that cost businesses in both sides nearly EUR1 billion annually. According to the European Commission (EC), the agreement will create a trade zone covering 600 million people and nearly a third of global GDP. The result of four years of negotiation, the EPA was finalised in late 2017 and came into force on February 1, 2019, after the EU Parliament ratified the agreement in December 2018. The total trade volume of goods and services between the EU and Japan is an estimated EUR86.0 billion. The key parts of the agreement will cut duties on a wide range of agricultural products and it seeks to open up services markets, particularly financial services, e-commerce, telecommunications and transport. Japan is the EU's second biggest trading partner in Asia after Mainland China. EU exports to Japan are dominated by motor vehicles, machinery, pharmaceuticals, optical and medical instruments, and electrical machinery.


5. EU-Southern African Development Community (SADC) EPA (Botswana, Lesotho, Mozambique, Namibia, South Africa and eSwatini): An agreement between the EU and SADC delegations was reached in 2016 and is fully operational for SADC members following the ratification of the agreement by Mozambique. The remaining six members of the SADC that are not included in the deal (the Democratic Republic of the Congo, Madagascar, Malawi, Mauritius, Zambia and Zimbabwe) are seeking EPAs with the EU as part of other trading blocs such as the East African Community and the Economic Community of Central African States.

Provisionally Active

The Comprehensive Economic and Trade Agreement (CETA): The CETA is an agreement between the EU and Canada. CETA was signed in October 2016 and ratified by the Canadian House of Commons and EU Parliament in February 2017. However, the agreement has not been ratified by every European state and has only provisionally entered into force. CETA is expected to strengthen trade ties between the two regions, having come into effect in 2016. Some 98% of trade between Canada and the EU will be duty free under CETA. The agreement is expected to boost trade between partners by more than 20%; it also opens up government procurement. Canadian companies will be able to bid on opportunities at all levels of the EU government procurement market and vice versa. CETA means that Canadian provinces, territories and municipalities are opening their procurement to foreign entities for the first time, albeit with some limitations regarding energy utilities and public transport.

Ratification Pending

1. EU-Central America Association Agreement (Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Belize and the Dominican Republic): An agreement between the parties was reached in 2012 and is awaiting ratification (29 of the 34 parties have ratified the agreement as of October 2018). The agreement has been provisionally applied since 2013.


2. EU-Singapore Free Trade Agreement (FTA) and Investment Protection Agreement: The parties signed the agreement in October 2019 and the European Parliament consented to the agreement in February 2019. The EC states that the ratification process is ongoing. On November 8, EU member states endorsed the trade agreement between the EU and Singapore. This means the agreement will enter into force as soon as November 21, 2019.


3. EU-Vietnam FTA: In July 2018, the EU and Vietnam agreed on final texts for the EU-Vietnam FTA and the EU-Vietnam Investment Protection Agreement (IPA). In June 2019, the final text of the agreement was signed by both parties in Hanoi, Vietnam. It is now awaiting consent from the Vietnamese National Assembly and the European Parliament.

Under Negotiation

1. EU-Australia: The EU, Australia's second largest trade partner, has launched negotiations for a comprehensive trade agreement with Australia. Bilateral trade in goods between the two partners has risen steadily in recent years, reaching almost EUR48 billion in 2017, and bilateral trade in services added EUR27 billion. The negotiations aim to remove trade barriers, streamline standards and put European companies exporting to or doing business in Australia on equal footing with those from countries that have signed up for the Trans-Pacific Partnership or other trade agreements with Australia. The Council of the EU authorised opening negotiations for a trade agreement between the EU and Australia on May 22, 2018.


2. EU-United States (Trans-Atlantic Trade and Investment Partnership): This agreement was expected to increase trade and services, but will require consent from the European Council's 28 members, a majority within the European Parliament, as well as both Houses of Congress and President Donald Trump, to be passed.


3. EU-New Zealand: In June 2018, the EU and New Zealand launched trade negotiations to remove trade barriers for goods and services, and the development of trade rules to facilitate easier and sustainable trade between both parties.

Sources: WTO Regional Trade Agreements database, Fitch Solutions

Foreign Direct Investment

• Value Added Tax: 20%
• Corporate Income Tax: 21%

Source: Ministry of Finance for the Slovak Republick

Foreign Worker Permits

There are few restrictions for visas and work permits, allowing businesses to import workers efficiently and at a low cost. Slovakia has visa-free arrangements with 141 countries, which is one of the highest in the region. EU citizens, EEA citizens, Swiss citizens (and members of their family) do not require a work permit to be employed in Slovakia, which is a major advantage for businesses operating in the country. Non-EU/EEA/Swiss citizens must get a work permit from the National Employment Agency and the permit must be requested by an employer for those with a specific skill or specialised knowledge. It is issued for one year and can be renewed for a further three years.

Localisation Requirements

Membership of the EU means that Slovakia has minimal restrictions for foreigners. Slovakia is considering implementing a range of immigration-supporting economic policies; however, the country is struggling to attract significant levels of migrant workers, which is partly attributable to inadequate compensation levels compared with competing emerging Europe states.

Visa/Travel Restrictions

Most citizens outside the Schengen Area require a visa to travel to Slovakia. Citizens from Hong Kong do not need a visa to travel to Slovakia (valid for a stay of 90 days).

Sources: Government websites, Fitch Solutions

Sovereign Credit Ratings

Sources: Moody's, Standard & Poor's, Fitch Ratings

Hong Kong’s Trade with Slovakia

Export Commodity	Commodity Detail	Value (US$ million)
Commodity 1	Telecommunications and sound recording and reproducing apparatus and equipment	118.2
Commodity 2	Electrical machinery, apparatus and appliances; and electrical parts thereof	57.5
Commodity 3	Professional, scientific and controlling instruments and apparatus	14.1
Commodity 4	Office machines and automatic data processing machines	8.7
Commodity 5	Manufactures of metals	7.6

Import Commodity	Commodity Detail	Value (US$ million)
Commodity 1	Electrical machinery, apparatus and appliances; and electrical parts thereof	10.2
Commodity 2	Photographic apparatus, equipment and supplies; optical goods; and watches and clocks	4.8
Commodity 3	Office machines and automatic data processing machines	4.3
Commodity 4	Road vehicles (including air cushion vehicles)	3.1
Commodity 5	Professional, scientific and controlling instruments and apparatus	2.4