Changes

The Czech Republic became a European Union (EU) member on May 1, 2004. Most barriers to trade in industrial goods with the EU fell in the course of the accession process. The process of accession had a positive impact on reform in the Czech Republic, and new EU directives and regulations continue to shape the business environment. Free trade in services and agricultural goods, as well as stronger regulation and rising labor costs, will mean tougher competition for Czech producers. Future levels of EU structural funding and agricultural supports were key issues in the accession negotiations. Even before accession, policy set in Brussels had a strong influence on Czech domestic and foreign policy, particularly in the area of trade.  

The Czech Republic became a European Union (EU) member on May 1, 2004. Most barriers to trade in industrial goods with the EU fell in the course of the accession process. The process of accession had a positive impact on reform in the Czech Republic, and new EU directives and regulations continue to shape the business environment. Free trade in services and agricultural goods, as well as stronger regulation and rising labor costs, will mean tougher competition for Czech producers. Future levels of EU structural funding and agricultural supports were key issues in the accession negotiations. Even before accession, policy set in Brussels had a strong influence on Czech domestic and foreign policy, particularly in the area of trade.  

The Czech Republic’s economic transformation is not yet complete. The government still faces serious challenges in completing industrial restructuring, increasing transparency in capital market transactions, transforming the housing sector, reforming the pension and health care systems, and solving serious environmental problems.

The Czech Republic's economic transformation is not yet complete. The government still faces serious challenges in completing industrial restructuring, increasing transparency in capital market transactions, transforming the housing sector, reforming the pension and health care systems, and solving serious environmental problems.

==History==

==History==

Although Czechoslovakia was the only east Central European country to remain a parliamentary democracy from 1918 to 1938, it was plagued with minority problems, the most important of which concerned the country's large immigrant German population. Constituting more than 22% of the interwar state's population and largely concentrated in the Bohemian and Moravian border regions (the Sudetenland), members of this minority, including some who were sympathetic to Nazi Germany, undermined the new Czechoslovak state. Internal and external pressures culminated in September 1938, when France and the United Kingdom yielded to Nazi pressures at Munich and agreed to force Czechoslovakia to cede the Sudetenland to Germany breaking their alliances with it.

Although Czechoslovakia was the only east Central European country to remain a parliamentary democracy from 1918 to 1938, it was plagued with minority problems, the most important of which concerned the country's large immigrant German population. Constituting more than 22% of the interwar state's population and largely concentrated in the Bohemian and Moravian border regions (the Sudetenland), members of this minority, including some who were sympathetic to Nazi Germany, undermined the new Czechoslovak state. Internal and external pressures culminated in September 1938, when France and the United Kingdom yielded to Nazi pressures at Munich and agreed to force Czechoslovakia to cede the Sudetenland to Germany breaking their alliances with it.

Fulfilling Hitler's aggressive designs on all of Czechoslovakia, Germany invaded what remained of Bohemia and Moravia in March 1939, establishing a German "protectorate." By this time, Slovakia had already declared independence and had become a puppet state of the Germans.  Hitler’s occupation of the Czech lands was a clear betrayal of the Munich Pact and still stirs passions in modern-day Czech society, but at the time it was met by muted resistance; the brunt of Nazi aggression was felt by Czech Jews and other non-German populations who were rounded up and deported to concentration camps in systematic waves. Over 100,000 Jews lived in the Czech lands in 1939. Only several thousand remained or returned after the Holocaust in 1945.  

Fulfilling Hitler's aggressive designs on all of Czechoslovakia, Germany invaded what remained of Bohemia and Moravia in March 1939, establishing a German "protectorate." By this time, Slovakia had already declared independence and had become a puppet state of the Germans.  Hitler's occupation of the Czech lands was a clear betrayal of the Munich Pact and still stirs passions in modern-day Czech society, but at the time it was met by muted resistance; the brunt of Nazi aggression was felt by Czech Jews and other non-German populations who were rounded up and deported to concentration camps in systematic waves. Over 100,000 Jews lived in the Czech lands in 1939. Only several thousand remained or returned after the Holocaust in 1945.  

At the close of World War II, Soviet troops overran all of Slovakia, Moravia, and much of Bohemia, including Prague. In May 1945, U.S. forces liberated the city of Plzen and most of western Bohemia. A civilian uprising against the German garrison took place in Prague in May 1945. Following Germany's surrender, some 2.9 million ethnic Germans were expelled from Czechoslovakia with Allied approval under the Benes Decrees.  

At the close of World War II, Soviet troops overran all of Slovakia, Moravia, and much of Bohemia, including Prague. In May 1945, U.S. forces liberated the city of Plzen and most of western Bohemia. A civilian uprising against the German garrison took place in Prague in May 1945. Following Germany's surrender, some 2.9 million ethnic Germans were expelled from Czechoslovakia with Allied approval under the Benes Decrees.