POLAND (FIA). Foreign investors are required to hold at least 20 percent of the capital stock of any joint venture and to contribute a minimum of $50,000 to the venture (the foreign contribution can be either in cash or in physical assets and capital equipment). As of September 1990 the FIA announced it had issued about 2000 permits for foreign investment since January 1989, compared to 40 under the previous 1986 joint venture law. The government is well advanced on yet another overhaul of investment legislation that would reduce the need for permits for new investments, expand provisions for repatriation of profit, and curtail or remove the special tax holidays for foreign investors. However, the status of this initiative is uncertain. There are currently less than twenty ventures registered which have a book value of more than $1 million. Approval of large joint ventures reached a virtual halt in the March-August period of 1990, pending changes in regulations on privatization of state enterprises. Following the creation of the new Ministry of Privatization, to which the president of the Foreign Investment Agency now officially reports, the Agency is not empowered to approve joint ventures with state enterprises where a foreign partner has more than a 33 percent share without the approval of the Minister of Privatization. While hard currency earnings can be freely repatriated under existing legislation, only 15 percent of zloty profits earned on sales in Poland can be repatriated. Other significant barriers to investment include inadequate telecommunications and banking facilities, uncertainty over tax reforms, lack of Western accounting firms (though this is rapidly improving) and standards, and shortages of business and office space. The purchase of land in Poland by foreigners is currently possible. New legislation liberalizing land acquisition requires that a permit be issued by the Minister of Interior. Periodic reporting by the Ministry to the Parliament is also required. In some other areas foreigners enjoy better than national treatment. For example, under existing legislation, foreign firms and joint ventures enjoy tax holidays for the first three (with a possible extension up to six) years of incorporation. The Overseas Private Investment Corporation (OPIC) signed an agreement with Poland in 1989 providing for the extension of OPIC credit guarantees and political risk insurance to U.S. investors in Poland. During the visit of Prime Minister Mazowiecki to the United States in March 1990, President Bush and Prime Minister Mazowiecki signed a comprehensive business and economic treaty which includes investment protection guarantees and other assurances. U.S. Investors receive assurances in regard to profit repatriation, intellectual property rights, business facilitation measures and dispute resolution under this treaty. The treaty has been confirmed by the U.S. Senate and should enter into force upon ratification by the Parliament. Government procurement practices: As Poland moves toward a western oriented market economy, improving procedures for transparent government procurement procedures through tendering has been signalled as a government objective. Current practice is that government procurement projects are normally submitted for tender. There is some question as to POLAND whether Poland can, overnight, escape from practices of its communist legacy including back room and under the table deal making. Poland is not a signatory of the General Agreements on Tariffs and Trade (GATT) Government Procurement Code. Poland has accepted the GATT Agreement on Customs Valuation, subject to parliamentary ratification. Poland introduced a new schedule of import duties in January 1989 which reduced tariff rates on average by one-third. This schedule adheres to the internationally recognized harmonized system of tariff nomenclature. In mid-1990, the government suspended tariffs on 2000 items (mainly production inputs and semi-manufacturers). Tariffs were reduced by 30 to 50 percent on many other items. This tariff holiday is in effect until the end of 1990, when a new tariff schedule will be introduced. In general, customs requirements do not seem to burden U.S. exporters. Poland signed a customs cooperation agreement with the United States in August 1990. 6. Export Subsidies Policies The government provides loans for expansion of export capacity through a recently modified Export Development Fund (EDF). This fund will be phased out by the end of 1991. The fund also attempts to compensate for differences in domestic over world prices and exchange rate irregularities related to CMEA trade in transferable rubles. The fund is self-financing from dividends from state-owned foreign trade enterprises and windfall profits earned by exporters who use heavily subsidized inputs. Polish authorities believe this fund is compatible with standards set under the GATT. However, Poland is not a signatory of the GATT Subsidies Code. The government has eliminated its past system of tax incentives for exporting firms. 7. Protection of U.S. Intellectual Property Poland is a member of the World Intellectual Property Organization (WIPO), the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, the Universal Copyright Convention and recently ratified the Patent Cooperation Treaty. Generally speaking, the Polish government subscribes to most western standards of protection of intellectual property, but retains some legal holdovers which create problems for western business. With regard to patents, only a few cases of infringement have been brought by U.S. firms. Polish patent law does not guarantee the patentability of chemical compounds, as does the law in western industrialized countries. This has implications for manufacturers of agricultural chemicals and pharmaceuticals. While Poland has been a party to the Berne Convention since 1920, only in March 1990 did it ratify the Paris Act of the Berne Convention. The act specifies minimum levels of protection for books, motion pictures, and music. A 1987 law on cinematography explicitly extends protection to videocassettes. Existing laws might also extend to protection POLAND of computer software, but Polish officials believe that more detailed protection is needed in this area. The level of protection of these or other new technologies has not been tested, and U.S. firms have been cautious about the transfer of software and have noted that much of it appears to be in use in Poland in violation of western copyrights. Although Polish law requires that satellite dishes be registered with the authorities, it does not address the question of pirating proprietary satellite signals. In addition, Polish copyright law does not include music. Piracy of musical recordings is a civil rather than criminal offense with consequently lower penalties for infractions. As a result, pirated tapes and The albums are freely sold and have a wide market in Poland. government recognizes the need for a full review of statutes on intellectual property, but this process will require some time to complete. All workers, including police, are entitled to form or join unions of their own choosing. While the current legal code makes strikes illegal, registering as a union is relatively easy under Polish law. Unions are independent and self-governing and there are no limits on the number of unions that can function at a single workplace. Membership and participation in labor unions is widespread in Poland. two biggest unions, the National Alliance of Trade Unions (OPZZ) and Solidarity, claim a total of 8.7 million members between them. Membership in these unions is diverse, including a large number of white-collar and administrative employees as well as pensioners. b. Right to Organize and Bargain Collectively The Polish workers have the right to be represented by a trade union of their choice and the right to organize new trade unions. According to the 1982 Labor Code, wages are set in negotiations between unions, management and workers' councils. c. Prohibition of Forced or Compulsory Labor Compulsory labor does not exist in Poland, with the exception of prisoners convicted of criminal offenses. d. Minimum Age for Employment of Children The Labor Code forbids the employment of a person who has not reached the age of 15. The employment of a young person, defined as someone aged 15 to 18, is permitted only if that person has completed basic schooling and if the proposed employment constitutes vocational training. Special exceptions sometimes are required if a particular job might pose a health danger. In efforts to enforce the law, government work inspectors recently have discovered small family firms in which children work rather than attend school. The legislated minimum wage is approximately $42 per month. The minimum wage is not effectively enforced; desperate people, especially invalids and pensioners, accept wages for as little as $8 per month. The average wage in Poland is $120 per month. In most families both husband and wife are employed. The standard legal workweek is 48 hours. Due to the ongoing economic recession, however, many people work two 40 hour weeks and two 48 hour weeks each month. Daily rest periods and annual paid holidays are legally required. The Polish legal code defines minimum conditions for the protection of workers' health and safety. The Office of Work Inspection, created by the Parliament, is the government office empowered to monitor the implementation of collective agreements and ensure that regulations covering safety and the employment of women and children are followed. The Council of Work Protection, another parliamentary body, is charged with overseeing the inspection office. According to the state statistical office, 1.5 million laborers are registered officially as working under hazardous health conditions. Although it is believed that many more cases are not officially registered. Chemical and dust norms are exceeded at many work places. Approximately 9000 new cases of work-related sicknesses are reported each year; the most common ailments are hearing damage, especially in mining and machining, and poisoning. It is estimated that 1000 fatal and 100,000 non-fatal work-related accidents occur annually. Safety experts believe many unreported accidents also occur among private farmers, who operate independently of the Office of Work Inspection. These accidents result from improperly maintained agricultural machinery and hazardous chemicals. f. Rights in Sectors with U.S. Investment Fifty-three U.S. firms have opened representation offices in Poland, and over 100 joint ventures with U.S. investors have been registered in the past three years. This investment is heavily concentrated in the services area. Before 1986, foreigners were only permitted to operate small scale "Polonia" enterprises. Approximately 80 such ventures are owned by U.S. citizens of Polish ethnic origin. Labor conditions in enterprises with U.S. investment are generally characterized by higher wages, additional pay incentives, and high safety standards. Worker productivity is higher in these enterprises. Workers in these enterprises are guaranteed the same rights, under the law, as those in Polish owned enterprises. Worker participation in ownership of privatized enterprises, a right under the new privatization law, has been cited as an impediment to U.S. investment in some enterprises. No sector by sector data is available on investments in Poland. * Section 8 is an abridged version of Section 6 of the Poland country report included in the Department of State's Country Reports on Human Rights Practices for 1990, submitted to the Congress January 31, 1991. For a comprehensive discussion of worker rights, please refer to that report. |