5.

UNION OF SOVIET SOCIALIST REPUBLICS

Significant Barriers to U.S. Exports

As the ruble is inconvertible, the USSR's import capacity is limited by its ability to increase export earnings, and by its ability to obtain and willingness to use available Western credit or to draw down its dwindling reserves. During the 1980s, the USSR incurred sizable trade deficits with the United States--from $1 billion to over $3 billion, depending upon the size of U.S. grain exports. U.S. exports are likely to continue, particularly as the President on December 12, 1990, announced his decision to waive the Jackson-Vanik amendment to the Trade Act of 1974, thereby making the Soviet Union eligible for Commodity Credit Corporation and Export-Import Bank export credit guarantees.

U.S. business faces stiff competition from the Western Europeans and the Japanese, most of whom have been running trade deficits with the USSR, and who are offering the USSR sizable lines of export credits as they compete for Soviet orders for machinery and equipment, particularly for the food and light manufacturing industries.

6.

Export Subsidies Policies

7.

Not applicable.

Protection of U.S. Intellectual Property Rights

The USSR is a member of the World Intellectual Property Organization, the Universal Copyright Convention, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement Concerning the International Registration of Marks, the Patent Cooperation Treaty and the Budapest Treaty on the Internatioal Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure.

The USSR currently issues both patents and certificates of authorship. The right of the inventor can be protected, at the choice of the applicant, either by a certificate of authorship or by a patent, but only a patent provides the exclusive right for the applicant to use the invention. Certificate of authorship acknowledges the authorship of the inventor and grants the inventor rights and advantages stipulated by the legislation in force, whereas the exclusive right to use the invention belongs to the state for fifteen years. The Soviet government is working on more comprehensive patent legislation which should provide better protection.

Since Soviet accession to the Universal Copyright

Convention in 1973, foreign works have enjoyed copyright protection in the Soviet Union. At present, foreign authors and publishers can negotiate publication contracts with Soviet publishing houses. There had been instances of unauthorized publishing of works created abroad before Soviet accession to the Convention. The Soviets have announced their intention to modify their copyright law and to join the Berne Convention.

The U.S.-Soviet Trade Agreement, which was signed on June 1, 1990, would confer most-favored-nation status on the Soviet Union. The Agreement, which the President has not

UNION OF SOVIET SOCIALIST REPUBLICS

submitted to the Congress for its required approval, offers strong intellectual property rights protection by reaffirming commitments to the Paris Convention and the Universal Copyright Convention. It would obligate the Soviet Union to introduce legislation to provide for adherence to the Berne Convention for the Protection of Literary and Artistic Works and copyright protection for computer software, data bases and sound recordings. The Agreement would also provide for product and process patent protection for nearly all areas of technology and extend comprehensive coverage to trade secrets. In January 1991, the Soviets announced the establishment of a governmental working group to enact these provisions and complete a section on compulsory licensing for patents, as stipulated in the Agreement.

8. Worker Rights *

a. Right of Association

The rights of workers to form and join unions of their own choosing improved somewhat in the legal sense with the passage by the U.S.S.R. Supreme Soviet in December of the Law on Trade Unions. The law provides for the existence of trade unions as independent organizations which are equal before the law with official trade unions. In practice, the authorities showed an increasingly liberal attitude toward the free association of workers in 1990.

Virtually all Soviet workers had been almost automatically made members of an affiliate of the All-Union Central Council of Trade Unions (AUCCTU), an officially sponsored organization which has traditionally advanced Soviet and Communist labor interests. However, expectation of government reforms, the problem of strikes and other manifestations of worker discontent and the emergence of a genuinely independent grassroots worker movement caused the AUCCTU, on October 24, 1990, to vote to disband itself and reorganize as a "voluntary alliance of sovereign industrial and regional organizations with their programs and rules," under the new name of the General Confederation of Trade Unions (GCTU). It is unclear how the formal disbanding of the AUCCTU will affect its members.

b. Right to Organize and Bargain Collectively

Soviet authorities in 1990 continued to show a willingness to try to deal with the independent labor movement. The newly formed Independent Union of Mineworkers announced its intention to negotiate the terms and conditions of employment on behalf of its members. In September, the workers' movement in the Kuzbass achieved one of its major economic goals by convincing the new Russian Republic government to agree in principle to grant their region the status of a free economic zone. The vast majority of workers, however, must still rely on officials of the AUCCTU and factory and enterprise work collective councils to express their interests. Many workers feel these representatives inadequately defend their interests.

C. Prohibition of Forced or Compulsory Labor

Soviet law contains no prohibition on forced or compulsory labor. Convicted criminals, including those confined for

UNION OF SOVIET SOCIALIST REPUBLICS

political offenses, are commonly forced to work, often under very difficult conditions, in local projects and to assist in the production of primary and manufactured goods. Prisoners in theory are paid the same wage as factory workers, but up to 90 present of their pay goes to prison authorities, supposedly to cover the cost of their maintenance.

d. Minimum Age for Employment of Children

Soviet law establishes a statutory minimum age for

employment of 16 years. No evidence of widespread violation of this law exists, although reports have appeared of child labor in central Asian republics.

e. Acceptable Conditions of Work

The Soviet Union has no legislated minimum wage although reform plans call for the establishment of minimum wages, usually republic by republic. According to official Soviet statistics, the average monthly nonfarm wage in mid-1990 was $10 at the current unofficial exchange rate. Wages for collective farm workers were somewhat lower. Workers living in the harsh climates of Siberia and the far north, as well as those facing harsh conditions on the job, such as miners and metallurgical workers, receive bonuses that can double or even triple their pay.

The Soviet workweek averages from 40 to 48 hours. Many workers, however, work far less than this, since the disordered state of the Soviet economy requires them to spend many hours a day, much of it during official work time, searching for basic necessities for their families. Workers receive other benefits in addition to their wages, such as heavily subsidized prices for basic goods and foodstuffs in state stores. The value of this benefit, however, has been significantly eroded by growing shortages of basic consumer goods and food. Meanwhile, prices for food in free markets have increased significantly.

Soviet law establishes minimum conditions of workplace safety and worker health. These conditions are frequently violated and no effective enforcement mechanism exists. Workplace accidents are reportedly common.

f. Rights in Sectors with U.S. Investment

In early 1987, the Soviet Union allowed direct foreign investment for the first time. Over 2000 joint ventures were reportedly signed by late 1990, including about 200 with U.S. companies. Compared to the scale of the goods-producing sectors in the Soviet economy, total U.S. direct investment is relatively insignificant.

There is no sector by sector data available on U.S. investment in the Soviet Union.

*

Section 8 is an abridged version of section 6 of the Union of Soviet Socialist Republics 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.

1/ 1990 figures are all estimates based on available monthly data in October 1990.

2/ GDP at factor cost.

3/

Figures are actual, average annual interest rates, not changes in them.

The UK economy is based on free enterprise and open competition. It has undertaken a methodical privatization of government owned enterprises and has eliminated virtually all

THE UNITED KINGDOM

controls on the flow of capital into and out of the country. It has an open financial services environment. The few barriers to international trade and investment which do exist include preferential treatment for UK firms in oil and gas, telecommunications and electrical equipment.

Recent economic policy has been dominated by efforts to control inflation and to integrate Great Britain into the European Community's Exchange Rate Mechanism (ERM). The public sector has run consolidated budget surpluses since 1987, but there is widespread expectation that these will disappear in the next year or two. Real GDP growth boomed in 1987 and 1988, but has come down into the 1.5 to 2.0 percent range in 1990. The forecast for 1991 is around 1.0 percent. Consumer price inflation in September 1990 was nearly 11 percent, but is projected to drop toward 6 percent in 1991. Unemployment fell in 1990 to as low as 5.6 percent and is on the rise presently, undoubtedly to exceed 6 percent in 1991.

Fiscal Policy: With strongly rising GDP producing handsome increases in tax revenue resulting from a tight fist on expenditures, and big proceeds from privatization, the central government and public sector in general have run surpluses since 1987. In 1989 the public sector surplus was 7 billion pounds, or about 1.5 percent of GDP. In 1990 the surplus may fall toward 3 billion pounds, and could disappear in 1991.

Personal income taxes have been simplified, with just two rates of 25 and 40 percent. The government has a long-term goal of reducing the the basic rate on personal incomes to 20 percent "as and when prudent to do so". Capital gains are adjusted for inflation and are generally taxed at regular income tax rates. Gains from the sale of a primary home are exempt. Corporate tax rates are 25 percent for smaller companies and 35 percent for larger ones (with incomes over 150,000 pounds).

As the government has kept a tight lid on public sector outlays, real public expenditures have grown more slowly than gross domestic product. They declined to 37.5 percent of GDP in financial year 1988, and have hovered in that region since. With the slowdown in the economy in late 1990, it is possible that this figure may rise. Over the longer term, the government expects the ratio to fall below 36 percent.

The privatization (sell-off) of government enterprises has strongly affected budget balances. Privatization has not only provided revenue from asset sales, it has also reduced the drain of subsidies from the Treasury. As the government is using its budget surplus to pay off outstanding debt, the burden of interest payments in future budgets is also being steadily reduced.

Monetary Policy: The UK faces two major, related economic problems at the present time, namely inflation and a large current account deficit (over 3 percent of GDP). With fiscal policy already generating a sizeable surplus, there has not been much room for tightening on that front. Therefore, monetary policy has borne the full burden of cooling the economy and reducing the demand for net imports.