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Former USSR: U.S. Lists Ten Countries With Trade Barriers

  • Robert Lyle

Washington, 9 April 1997 (RFE/RL) - The U.S. government's annual assessment of foreign trade barriers lists ten former communist countries in Central and Eastern Europe and the former Soviet Union as still having some significant barriers to full and free trade and investment with American companies.

The U.S. Trade Representative's office, in its 1997 Report on Foreign Trade Barriers, says Armenia, Belarus, Bulgaria, Georgia, Moldova, Turkmenistan, Ukraine, Uzbekistan, Poland and Russia have problems with allowing foreign investment, permitting open trade or protecting intellectual property rights.

On a country-by-country basis, the report says:

Armenia: Transportation difficulties and high costs avert many potential investors from Armenia and the region. Armenia's trademark law is before parliament, although pirated copies of U.S. intellectual properties -- videos, audio, software, and books -- are widely available.

Belarus: "Significant informal barriers to investment exist, notably an unstable, unpredictable business climate," says the report. U.S. firms report serious and increasing difficulty in converting Belarus rubles into hard currency and one company has filed a claim with the U.S. Overseas Private Investment Corporation (OPIC) for the alleged expropriation of a munitions recycling project.

Bulgaria: Average import tariffs are relatively high, with many applied to capital goods for operation of investment projects, thus producing a "significant barrier to investment."

Enforcement of intellectual property rights "remains seriously deficient" in Bulgaria, a fact which prevents greater investment. A lack of coherent government strategy to encourage investment generally has kept out investments in mining, oil and gas exploration and telecommunications.

U.S. exports to Bulgaria were up 3.8 percent in 1996, but purchases from Bulgaria were down 31.2 percent from 1995.

Georgia: An "inadequate legal framework" impedes foreigners doing business in Georgia and a law on foreign investments requiring approval for a number of sectors is a "serious barrier" to investment, says the report, as is the slow pace of land privatization.

Still, it says, U.S. business interest in Georgia has increased, in part due to its successful macroeconomic stabilization program.

Moldova: Most U.S. companies limit their presence in Moldova to exporting through local representatives. Few firms directly invest in Moldova.

Turkmenistan: All foreign trade transactions valued at more than 3.5 million manats must be registered, requiring time-consuming procedures that make the importation of perishable goods "risky."

Ukraine: Laws on intellectual property rights have been implemented over the past two years, but enforcement remains "sporadic and inadequate."

Kyiv has passed a law giving greater protections to foreign investors and as of last December, more than 300 companies were working in Ukraine.

Uzbekistan: The sharply curtailed convertibility of local currency into foreign exchange has left many U.S. companies unpaid or unable to do business. The IMF has suspended its program in Uzbekistan because of this.

Piracy of western copyrighted materials "remains common" but on a small scale, says the U.S. report.

Poland: Despite Warsaw being a leader in the transition to a market economy, it has a number of barriers to trade and investment. Most Polish coal, for example, is priced below mining cost whether sold domestically or abroad. A number of "politically powerful state-owned enterprises" in mining continue to enjoy special tax breaks -- "the largest source of subsidies left for Polish industry," it says.

Poland continues to discrimination against U.S. goods, the report says, using its association agreement with the European Union. Warsaw has made "major strides" in improving protection for intellectual property rights, and piracy has decreased "significantly" in recent years. Still, a lack of manpower and resources leaves most preliminary enforcement up to the copyright owner.

Warsaw also keeps controls on foreign investment and uses its Insignificant minority interest in enterprises being privatized" as a device to influence management. One U.S. company was forced out of a telecommunications joint venture this way and a number of foreign telecom companies have complained of strong-arm tactics by the state monopoly, TPSA.

U.S. exports to Poland were up 24.7 percent in 1996 while Polish exports to the U.S. were down 5.6 percent from 1995.

Russia: Trade with Russia remains difficult because of excise taxes on certain imports and "frequent changes" in customs regulations without warning have created problems for foreign and domestic traders, the report says.

The government has eliminated centralized imports and government procurement, but has not replaced them with normal regulations and procedures, so sales to government bodies or general imports are dependent on individual negotiations. Government purchasers show "strong political bias" against foreign suppliers.

Moscow has made "considerable progress" in setting up a legal framework to protect intellectual property rights, but enforcement has been "limited." The report says there is "extensive piracy" of U.S. video cassettes, films, music, recordings, books and computer software while some U.S. companies have had difficulty registering well-known marks they have long owned.

Much of the discrimination against foreign investors and firms is coming from local and regional authorities who often act in violation of national laws.

The biggest barriers to investment in Russia, says the report, remain an incoherent tax system, lack of protection for property ownership and corruption.

U.S. exports to Russia rose 18.2 percent in 1996 while Russian exports to the U.S. dropped 11.8 percent from 1995.

The U.S. Trade Representative uses the report as the basis for adopting various measures against specific countries later in the year. Historically, not all, or even most, of the countries listed wind up on the trade sanctions lists.