As told by Pavel Andrle to Ravi Mehta

Czech Republic is very much export- oriented,
says its native trade finance specialist, Pavel Andrle

Pavel Andrle Member of ICC Banking Commission Secretary, Banking Commission, ICC Czech Republic Editorial Board Member of LC VIEWS International Trade Finance Consultant He personifies Czech's indigenous trade finance expertise

Q1: Why CZECH opted to open its economy to international trade after the political change which resulted in market-oriented economy? Does Czech use LC for conducting international trade?

The opening up of the economy to international trade has been part of the process of economic and political transition towards market economy and democracy. LCs are, of course, used here; the trend and percentage of the foreign trade being done by the use of LCs are pretty similar to the rest of the EU. Therefore, LCs are rarely used for trade with other EU countries, USA and other developed countries. They are, on the other hand, very common for trade with Russia and all CIS countries, Middle East, Asia, etc.

Q2: Export trade plays vital role in the economic development of developing and transitional economies. How Czech acquired expertise in export trade management, export-related risk management, and LC management? Are exporting businesses small, medium or large, family -owned businesses or corporate?

First of all I wish to stress the fact that any possible assumption that countries of former Soviet Bloc did not know how to trade or lacked export expertise is incorrect. Of course all these countries were active in foreign trade but the scope and ways how to achieve that were very different to "after change" period. Our economy was centrally planned, foreign trade was conducted by a few "special trading houses" using services of one special international trade bank (Ceskoslovenska obchodni banka). So there was expertise and experience, and I am not afraid to say exceptionally deep one!, but quite limited in quantity.

After "the velvet revolution" in November 1989 when our country started a new chapter of its development the biggest challenge was to spread the knowledge available among new banks. At early as 90ś it was necessary to educate thousands of bankers, exporters, importers, etc. The process was accommodated by the Phare Program; also British know- how significantly helped, etc. And many foreign banks started their operation in Czech Republic very soon (for instance Citibank, ING, Creditanstalt, Societe Generale), also brought know- how with them.

In Czech Republic, the biggest part of the export is now conducted by large companies, in majority of cases with foreign ownership. The biggest exporter is Skoda Auto, exporting cars, which is owned by German Volkswagen. Also SMEs play very important role in our economy and export in particular.

Q3: Apart from expertise, export business requires finance. What arrangements Czech has for financing export?

Generally speaking, our businesses have every financing service/product available as their foreign counterparts have in other EU countries. Czech Republic is very much export- oriented. We were accepted among the most developed countries by OECD in 1995. We joined EU in May 2004. We have all standard devices for financing trade like, for instance , fully functional ECA (EGAP since 1992 - www.egap.cz)

Q4: Export success requires friendly federal policies, regulations and procedures. Is Czech's regulatory environment exporter-friendly?

I am afraid I am not the best person to answer this question as I am trade finance specialist. However, I feel that the regulatory environment is very much compatible with all other EU countries, so basically no or very little practical obstacles in relation to "EU local trade" and other foreign trade exist. Our export promotional agency - CzechTrade (www.czechtrade.cz) is very active and significantly helps to boost export efforts of our companies.

Q5: International trade is open to disputes. What arrangements Czech has for resolving trade (payment) related international disputes?

In foreign trade it is common to use arbitration as means of solving possible disputes. Former Czechoslovakia was a signatory of the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Czech Republic confirmed its succession in 1993. There is an active Arbitration Court of Economic and Agricultural Chamber of Commerce as well as other options (ICC arbitration court for instance) are available.

Q6: Has CZECH mechanized its international trade and trade-related banking and financing practices like Western Europe?

Yes, we did. All but two banks (both owned by a biggest Czech financial group) are owned by leading foreign banks/financial groups. The biggest banks: Komercni Bank is owned by Societe Generale, CSOB by KBC, Ceska Sporitelna by Erste Bank, HVB Bank and Zivnostenska are owned now by Unicredito Group...... The services available to Czech exporters are thus of the western European standard.