MINISTRY OF FOREIGN AFFAIRS
OF THE REPUBLIC OF HUNGARY
Press and International
Information Department
INFORMATION ON ACTUAL ISSUES IN HUNGARY
24 April 1997
Hungary and CEFTAHungary, together with the then Czechoslovakia and Poland, was a founding member of the "Visegrad Three" cooperation set up by the three countries in the Hungarian locality of Visegrad in February 1991. The successor of the organisation, the Central European Free Trade Agreement (CEFTA), began work from March 1993. CEFTA had four members from 1993, when Slovakia gained its independence, and was joined by Slovenia in January 1996 and by Romania at the start of this April. Bulgaria and Lithuania have requested membership in the organisation.
The Hungarian, the Czechoslovak and Polish governments signed a trilateral cooperation agreement in the north Hungarian town of Visegrad in February 1991, thus setting up the "Visegrad Three". The most important feature of the by now five-member CEFTA is economic.
CEFTA countries do not want to isolate themselves from the World Trade Organisation (WTO), quite the contrary, they are settling their relations with one another precisely in order to prepare and win membership in WTO. They also do not deny this work promotes their membership in the European Union and NATO.
Hungarian foreign policy is a good example of this. With the conclusion of basic treaties with Russia and Ukraine in 1991, Slovakia in 1995 and Romania in 1996, Hungary has played a major role in the stabilisation of the Central European region. Based on political confidence, the economies of the CEFTA members also began to develop with access to the new preferential markets of each other. Trade between member states now accords to 10 per cent of average foreign trade turnover, as against the 60-70 per cent average share of the European Union and OECD countries, indicating CEFTA is not an alternative to the EU, but a free trade agreement that promotes integration.
From the Hungarian point of view, trade with the CEFTA countries has become more balanced in the last two years. In 1996, exports to the Czech Republic were valued at USD 298 million, imports USD 487 million, the respective figures for Poland were USD 388 and USD 298 million, for Slovakia USD 251 and USD 382 million, for Slovenia USD 220 and USD 88 million. The Hungarian deficit has been cut to under USD 100 million, with total exports worth USD 1157 million and imports 1255 million.
The supreme decision-making body of CEFTA consists of the foreign ministers, who coordinate work and define the tasks. The prime ministers also meet regularly, while current issues are discussed by working committees of ministry experts. The last working committee session was held at the end of February in Ljubljana, Slovenia, which currently holds CEFTA's rotating presidency, at which participants stated the further liberalisation of trade is the most important goal for member states at present.
In mutual trade between the CEFTA countries, 90 per cent of tariffs on industrial products have been lifted, the remaining ten per cent will be abolished by 2000 and 2001. Vehicle industry products, certain metallurgy and steel industry basic materials, printing and paper industry production are protected by all member countries. As for trade in agricultural products, 80 per cent fall under various preferential measures, including duty-free trade, a unified tariff level and mutual advantages. Progress for easing trade in the remaining 20 per cent is considered more difficult as there are conflicts of interests between the members in this area, originating from supply, employment and home political characteristics.
Also at the Ljubljana session, ministry experts agreed cooperation should be meaningfully expanded, by amending several regulations in force, for instance, the acceptance of new members. This expansion is expected to ease capital flow, the exchange of services, cooperation in the fight against trans-border crime, and the mutual recognition of product certificates.
As for the acceptance of new members, talks began last autumn with Romania, which fulfilled CEFTA's conditions related to the EU and WTO, and the membership draft was prepared in Ljubljana. The agreement on Romania becoming a member of CEFTA was signed in Bucharest this April. Bulgaria, which has also met the membership requirements, is expected to follow Romania.
European integration and cooperation is also manifest in the relations between the CEFTA countries. In the course of a visit by Czech Prime Minister Vaclav Klaus to Hungary in mid-March, the sides stated they consider bilateral and inter-CEFTA cooperation to be important elements in Euro-Atlantic integration. The Czech and Hungarian prime ministers stated relations between the two countries are free from problems. Klaus said that if Russia were to punish the Czech Republic, which strives for membership in NATO, through gas and nuclear energy deliveries, that would make the Czech Republic's membership in NATO all the more justified. Hungarian Prime Minister Gyula Horn said Hungary and the Czech Republic are not rivals, rather consulting partners.