USTR - 1996 National Trade Esimate-Newly Independent States
Office of the United States Trade Representative

 

1996 National Trade Esimate-Newly Independent States

In 1995, the U.S. trade surplus with all of the New Independent States (NIS), except Russia, was $3 million, down from $292 million during 1994. U.S. exports to the NIS were $703 million, $107 less than those in 1994. U.S. imports from the NIS totaled $700 million in 1995, an increase of 35 percent over 1995.

In 1995, the NIS continued their efforts to create stable political and economic structures. Most economic reforms were aimed at stabilization, liberalization, privatization, and laws on banking, budget, and bankruptcy. In spite of these efforts, the legacy of several decades of Communist rule will continue to slow economic reforms.

OVERVIEW

The NIS is comprised of the following countries: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Takikistan, Turkmenistan, Ukraine, and Uzbekistan. Although economic transformation in these countries is moving slowly, a primary objective of U.S. trade policy has been to create a legal framework for productive trade, investment, and protection of intellectual property between the U.S. and the NIS; this policy encompasses trade agreements, including most-favored-nation status (MFN) and intellectual property provisions, and bilateral investment treaties (BITs). In addition, Armenia, Belarus, Kazakhstan, Krgzystan, Moldova, and Ukraine have applied to join to the World Trade Organization.

The United States now has Bilateral Investment Treaties (BITs) in force with Armenia, Kazakhstan, Kyrgyzstan, and Moldova. In 1994, BITs were signed with Belarus, Georgia, Ukraine, and Uzbekistan. The Belarus and Ukraine BITs await ratification by the U.S. Senate; the Georgia and Uzbekistan BITs await ratification by both sides.

In addition to establishing the legal framework for trade with these countries, the U.S. government is also providing the NIS with technical assistance in areas of potential concern to US businesses, including copyright and patent protection, foreign investment laws, and IPR enforcement. The goal is to prevent problems which could result from implementation of laws which are incompatible with international trading standards.

Trade with the NIS will be restricted in the immediate future due to the limited infrastructure and foreign exchange resources in these countries. In addition to changing legal structures and banking systems, the NIS are struggling with currency convertibility problems, inflation, unemployment, and – in some cases – border disputes. Many of these countries also lack adequate road systems, power supplies, and communication structures. However, despite difficult commercial environments, U.S. companies are pursuing business opportunities. Over 80 American firms have established offices in Almaty, Kazakhstan. Prospects for commercial development in the NIS exist in mining, aerospace, defense conversion, and oil and gas. In September 1994, the Government of Azerbaijan signed an $8 billion oil production sharing agreement with a consortium of Western investors, five of which are American. U.S. investment in Ukraine is also significant -- according to official Ukrainian Government reports there are currently 476 US/Ukrainian joint ventures operating in Ukraine. According to U.S. sources there are more than 200 U.S. companies resident in Kiev.

Russia, Belarus and Kazakhstan are in the process of forming a customs union. In most cases, the non- Russian members of the customs union are raising their tariffs and value added tax (VAT) to match the Russian levels. For example, in the summer of 1995, tariffs in Belarus were raised five to ten percent to 20- 40 percent to match Russia's. In August 1995 a 20 percent "border" VAT was instituted on all imports to bring Belarusian import policies further in line with Russia's. Russia has, however, granted exceptions to its tariff rates on a few goods, such as sugar, cars and carpets. Bureaucracy, lack of infrastructure and a variety of complexities arising from the customs union often result in burdensome customs procedures. Commercial truckers can wait at the borders from Poland and Lithuania for as long as three days.

In December 1995, the Belarusian Ministry of Agriculture stopped providing health certification for U.S. chicken imports.

In Turkmenistan, all commercial transactions are regulated by the Commodity and Raw Materials Exchange (CRME). By decree, only the CRME has the authority to issue export and import licenses. All foreign trading companies must register with the CRME. Certain goods require licenses from the President or the Cabinet of Ministers. Consumer goods imported into Turkmenistan must be certified by the State Standards Committee, which issues a release document. This procedure can be time-consuming and, as a result, importation of perishable goods is considered risky.

LACK OF INTELLECTUAL PROPERTY PROTECTION

In 1993, the Armenian Parliament adopted a law on patents; it is now considering passage of trademark and copyright laws. On December 21, 1991, Armenia joined the Paris Convention, the Madrid Agreement, and the Patent Cooperation Treaty. Belarus has a draft law on intellectual property. A parliamentary commission in Georgia is currently drafting a package of intellectual property laws. The package will be submitted to Parliament following passage of a foreign investment law, expected in the first part of 1995. Georgia is also a member of the Paris Convention and WIPO. Kazakhstan protects IPR through its civil code, but in practice there is lax enforcement and no criminal sanctions are applied. In 1991, Kazakhstan acceded to the Geneva and Paris Conventions and joined the World Intellectual Property Organization.

The Government of Kyrgystan has submitted a package of IPR laws to its Parliament, but the President dissolved Parliament in September 1994, before Parliament voted on the legislation. The new 1995 Parliament is expected to review the proposed legislation. Kyrgystan adhered to the Paris Convention in 1991 and is a member of WIPO.

Moldovan laws on intellectual property remain poor, although the government introduced a new IPR law that was reviewed by Parliament at the end of 1994. Tajikistan has many IPR laws in place, but lacks the means to enforce them. Incidences of piracy of U.S. goods are small, however. Tajikistan has adhered to the Paris Convention and is a member of WIPO. Turkmenistan has signed the Paris Convention in 1994 and the International Intellectual Property Convention in 1995. The government of Turkmenistan has adopted a copyright law and a patent law. With the help of appropriate international bodies and comment from U.S. officials, Ukraine implemented a set of intellectual property laws in 1994. Enforcement remains sporadic and inadequate, however. Ukraine has also adopted international conventions such as the Paris Convention and acceded to the Berne Convention in 1995. It is a member of the WIPO. Uzbekistan adopted a trademarks law in 1993; in 1994 Uzbekistan adopted a patent law covering inventions and industrial designs and a law covering protection of computer software and data bases. Uzbekistan is a signatory to the Paris Convention, PCT, and the Madrid Agreement, as well as a member of WIPO. A draft copyright law is currently under review within Government ministries; copyrights are currently covered under the civil code. Once the new legislation is passed, it is expected that Uzbekistan will accede to the Berne and Geneva Phonograms conventions. Piracy of Western copyrighted materials remains common on a small scale.

EXPORT SUBSIDIES

In January 1996 the Government of Belarus announced a series of export stimulation measures. Under the new government plan, exporters will reportedly pay ten percent less tax when they operate a barter regime between enterprises. A Presidential decree sets different exchange rates for local exporters purchasing raw materials abroad and for importers of "non-essential" goods. In accordance with the law on foreign investment, firms with at least 30 percent foreign participation are exempted from the requirement. The revenue from the higher exchange rate will go into a special fund to support exporters.

 
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