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Central Europe: Trade Group Gathering Strength

By Sue Tapply and Carolyn Tang

Vienna, 4 March 1997 (RFE/RL) -- The five-nation Central European Free Trade Area, or CEFTA, which has hitherto led a rather shadowy existence, appears set to take on more substance and a greater sense of direction this year.

Consisting of the Czech Republic, Hungary, Poland, Slovakia and Slovenia, the organization has no bureaucracy, no headquarters and not even a post box address. Slovakia has tried unsuccessfully several times to establish the group's main offices in Bratislava.

CEFTA originated from a meeting in Visegrad on February 15, 1991 among the heads of state and government of Poland, Czechoslovakia and Hungary. When the Czechs and Slovaks divided, it became a band of four. The formal agreement setting up CEFTA came into force early in 1993, and in January last year Slovenia joined.

In past years CEFTA has been pushed out of the limelight by the urgent drive of nations in the region to join the European Union as soon as possible. But with Brussels only lukewarm to the prospect of taking in new members in the next few years, CEFTA has come more into focus in its own right.

Now both Romania and Bulgaria are prospective new members, and Lithuania is also interested in joining.

The question of Romania's CEFTA membership is sure to figure in the agenda of talks in Prague next week between Romanian President Emil Constantinescu and Czech leaders.

As to Bulgaria, Polish President Aleksander Kwasniewski told reporters only last week he backs Sofia's bid to enter CEFTA. Bulgaria's President Petar Stoyanov, who was visiting Warsaw, said in turn that his country would try to follow Poland's example of how to transform its economy.

As to Lithuania, Deputy Foreign Minister Algimantas Rinkunas recently said that Vilnius sees membership of CEFTA as a step toward integration into Western structures, including the European Union.

At the moment, trade among the member states is not particularly high, with the exception of trade exchanges between the Czech and Slovak Republics. Those two countries, with their well-standing economic and historic links, make up more than a third of CEFTA's trade activity.

However, the bloc's activities are making an increasing impact. The director of foreign economy and integration in the Austrian Chamber of Economics, Egon Winkler, told RFE/RL that Austrian exporters in the east can already feel increasing competition from the CEFTA countries, and that this pressure will increase.

And Russian officials are also worried. An irritated Russian foreign trade minister Oleg Davydov has described CEFTA as a sort of economic "buffer zone" between east and west, and says it could harm Russia's economic and political interests. He says Moscow just can't stand by and watch this happen.

Davydov has said cooperation between Russia and individual countries instead of with CEFTA as a whole would be more beneficial for all sides. And Russian officials have spoken of imposing special tariffs against CEFTA countries in order to protect Russia's own domestic market.

But CEFTA rolls on, and is taking an active part in seeking foreign investment for its members. It is jointly sponsoring a conference with the New York-based Business Council for International Understanding. The two-day conference, scheduled for April 7 and 8, aims to promote U.S. investment in CEFTA countries. Delegations composed of ministerial representatives and business leaders from member countries will attend. More than 150 U.S. corporations are expected to attend, as well as high-ranking U.S. government officials.