INTERNAL AND FOREGIN TRADE OF ESTONIA
Internal Trade

In the Ministry of Economic Affairs internal trade policy is regulated by the Trade Department, whose task in this area is to elaborate trade, tourism and consumer policies, implementing related development plans, specific programmes and foreign assistance projects and to co- ordinate and direct the operations of Tourist Board, Consumer Protection Board and Public Procurement Office according to state policies.

Trade policy must guarantee a stable favourable economic environment for the entrepreneurs and promote the development of Estonian entrepreneurial climate as well as the improvement of the consumer climate and the spread of fine trade practice.

The main task of tourism policy is to achieve a balance between the interests of tourists, local habitants, tourism enterprises and local governments through developing export of tourism services and internal tourism and to guarantee sustainable economic growth in the regions active in tourism. Tourism is an important factor of Estonian regional development.

The aim of the public procurement related activities is to guarantee the rational and economic use of financial resources used for public procurement through creating legal bases and co- ordinating public procurement activities.

The main goal of the consumer protection policy is to strengthen and guarantee the consumer's position on the market guaranteeing the health and safety of consumers and protecting their economic interests. Meanwhile it is important to implement principles of sustainable development in consumer patterns and preferences.

Pursuant to the requirements of accession to the European Union a considerable amount of legislative acts have been elaborated in order to develop the legal bases of internal market, tourism and consumer protection and the transposition of the related legislation to that of the European Union is continued.

Multilateral relations with WTO

Accession process

• Estonia’s observer status at the GATT since June 19, 1993.
• Application for full membership at the GATT submitted on March 8, 1994 (Decision of the Government on Jan 25, 1994). After the establishment of WTO the application was reformulated, and submitted the for membership at the WTO.
• Negotiations started in autumn 1994.
• The accession protocol was signed on May 21, 1999.
• Estonian Parliament ratified the WTO Accession Treaty on Sept 29, 1999;
• President declared the Act on Oct 11, 1999.
• Ratification letter was submitted to the WTO Secretariat on Oct 14, 1999.
• The Treaty entered into force on Nov 13, 1999.

Estonia had bilateral negotiations on customs tariffs with the USA, Canada, Australia, Mexico, Poland, Hungary, and New Zealand. Negotiations in trade on services were hold with the USA, Canada, Poland, Switzerland, and the EU.

Estonia is the 135^th member of the WTO.

Impact of the negotiation on the development of Estonian legislation:

In the course of the negotiations, as well as thereafter, a large number of questions about various issues directly of indirectly related to different trade sectors were elaborated. As Estonia is obliged, as a member of the WTO, to observe the provisions of the Treaty in trade-related legislative questions, Estonian experts together with the WTO-experts from WTO member-states analysed the conformity of Estonian legal acts to the requirements that are set by the WTO instruments. Pursuant to the above-mentioned a number of necessary legal acts have been elaborated in Estonia and adopted thereafter to remove the existing gaps. In addition to the obligations that are provided in the Accession Treaty, Estonia has to, as a member of the WTO, follow the obligations provided in the Accession Protocol complied for the accession.

Membership at the WTO is the best possible recognition at the global level for the development of Estonian legislation on economics, and the best guarantee for irreversibility of the processes currently taking place.


Status of Estonian trade partners:
European Union and all its member-states are full members of the WTO. Shortly before Estonian became member of the WTO, Kyrgyzstan and Latvia obtained membership at the organisation. Lithuania is the only Baltic country who is not yet member of the WTO.
As regards other Estonian trade partners Ukraine and Russia belong to the WTO, however, both countries currently hold only active observer status, but have expressed deep interest in full membership in the future. The membership the Russia at the WTO is improbable in the near future. The countries who hold observer status are not subject to rules and restrictions provided by the WTO treaties. (country who wishes to become member of the organisation must fulfil certain obligations upon accession, in practice, however, full conformity is reached progressively over a longer period of time.


Further developments:

Estonia’s membership at the WTO should not be taken as the end goal. In the next round of negotiations (the in the so-called Millennium Round) it is planned to lay down the groundwork for new developments for the WTO and reach a new level of trade liberalisation. Estonia has the right to participate in the negotiations this time.

Estonia, as a future member of the EU has to consider also the common positions and interest of the EU. Therefore, Estonian positions that will be elaborated for the next negotiations round must take into considerations that positions of the EU as well.

Foreign trade

Since the restoration of independence, Estonia has been committed to pursue the principles of liberalisation and will promote the cause of fair and free trade as the most vivid examples of how liberal trade policies support the development of a country in the long-term perspective.

Liberalisation

Estonian foreign trade policy is based on the principle of liberalisation and can be described by the following features:

• no restrictions to the free movement of goods and capital;
• minimal rules for wage formation, foreign trade and right of establishment;
• import duties only for agricultural products with weighted average 3.3%;
• liberal price formation - the Government has the responsibility to set prices to land, oil shale, electricity, growing wood, medicaments, health insurance, medicine services as well as to transport, communication and some utilities.

State's non-interference into foreign trade operations

Minimal interference into foreign trade operations is one of the principles of Estonian foreign trade policy. The Government supports foreign trade activities (exporting) only by developing the framework for business support centres.

WTO

Estonia is full member of the World Trade Organization (WTO) since Nov 13, 1999. Estonia obtained an observer status in the General Agreement on Tariffs and Trade (GATT) since June 1992. In March 1994, Estonia submitted an application to accede to the GATT. After GATT was transformed into the WTO, Estonia submitted an application to accede to the WTO.

The accession negotiations had very positive impact on Estonia's economy, especially on foreign trade. As member of the WTO Estonia benefits from stable liberal economic environment as well as from the principle of non-discrimination of the partner states. The member status in the WTO provides equal treatment for Estonian exporters in every market applied to WTO.

European Union

The proof of Estonia's political interest towards EU can be seen in concluding the Free Trade Agreement with the EU, as well as by Estonia's first wave applicant status at the accession negotiations. As a future member of the EU, Estonia has made real progress in adopting EC law, among others, in the field of foreign trade legislation.

International Agreements

Estonia has free trade agreements with the EU, EFTA, the Kingdom of Denmark and Faroe Islands, Latvia, Lithuania, Poland, Slovakia, Slovenia, Czech Republic, Turkey, Ukraine, Hungary. The Free Trade Agreement between Estonia and the EU entered into force in 1995 and included also some new members (Austria, Finland, Sweden). Free trade agreements with Bulgaria and Romania are currently under negotiations. Estonia has signed a trade agreement with Cyprus and a co-operation agreement with Flanders.

Estonia has agreements on trade and economic co-operation with Azerbaijan, Australia, Egypt, Georgia, China, Croatia, India, Island, Kazakhstan, Moldova, Poland, Romania, Slovakia, Finland, Denmark, Czech Republic, Ukraine, Hungary.

Estonia has agreement on business and trade with Canada.
Estonia has agreements on the favouring and mutual protection of investments with EU member states, Israel, China, Lithuania, Latvia, Norway, Poland, Czech Republic, Turkey, Ukraine and USA.

Estonia has also agreements to avoid double taxation with 21 states and several agreements on the favouring business and trade with 51 states.

Lauri Soopalu   Tartu Kommertsgümnaasium     2001