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1994, the local price of wheat was 25 percent above the world price computed at the free market rate.

With the surge of private industrial investment, especially in textile and clothing manufacturing, private sector capital goods imports exceeded the public sector's in 1993. However, public sector demand remains significant. Contracts are awarded through the official tender system. These are open to international competition with no restrictions, other than language pertaining to the Arab League boycott of Israel and the requirement to post a bid bond. Syrian public sector entities will accept positive statements of origin to deal with the boycott issue.

Syria's tariff system is highly escalated, reaching 200 percent for passenger cars. Income taxes are highly progressive. Marginal rates in upper brackets are 64 percent. Salaried employees also pay a graduated wage tax, reaching 17 percent. Tax evasion is widespread. 4. Debt Management Policies

Syrian authorities have been unwilling to provide data on non-civilian debt, as well as accumulated obligations under bilateral clearing arrangements. Guaranteed civilian debt is officially estimated at approximately USD 3.4 billion. The diplomatic community estimates Syria's total external public debt at about USD 18 billion dol. lars. Very little Syrian commercial debt is held by U.S. companies, but sovereign debt is about USD 250 million.

In 1992, the government established various committees to negotiate settlements of supplier credit claims against public sector importing agencies. However, progress has been slow. Debt to the former Soviet Union and Iran (both clearing account arrangements) is estimated to be more than USD 12 billion. The government has had some recent success in settling with bilateral creditors, while refusing to deal with the Paris Club as a group. Syria suspended payments to the Russian Republic in 1992, but is negotiating a settlement. The government remains badly in arrears on payments to official export credit agencies and bilateral donors, including the U.S. Agency for International Development. Syria has been in violation of the Brooke Amendment since 1985. Syria resumed payments to the World Bank in 1992, and, except for a brief interval in 1993, has been making payments to the World Bank sufficient to prevent increases in its arrears. 5. Significant Barriers to U.S. Exports

Any product legally imported into Syria requires an import license, which is issued by the Ministry of Economy and Foreign Trade according to a policy aimed at conserving foreign exchange and promoting local production. Strict standards on labeling and product specifications are non-discriminatory and fairly enforced. Customs procedures are cumbersome and tedious because of complex regulations. In addition, duty rates are extremely high. Tariff exchange rates depend on the type of good.

Government procurement procedures pose special problems. Although foreign exchange constraints have eased, many public sector companies continue to favor barter arrangements which can be unattractive to US suppliers. In addition, problems remain in the prompt return of performance bonds.

Current bid bond forms stipulate that the guarantee becomes null and void if the tender is not awarded upon its expiry date, without need for any other procedure. Some government tenders include a clause allowing the bidder to cancel his bid at six-month intervals, provided a written notice is received within a stipulated time frame. If such a clause is not included in the tender, it can often be negotiated. Tenders for wheat and flour stipulate that bids are invalidated after one month, if no contract is signed.

Syria participates in the Arab League boycott of Israel. Many Syrian government tenders contain language unacceptable under U.S. anti-boycott laws. Public sector agencies reportedly accept positive certification from U.S. companies in response to tender application questions. Once interested parties obtain tender documents, they would be well advised obt

competent adv regarding the anti-boycott regulations before proceeding. One source of such advice is the U.S. Department of Commerce Office of Anti-boycott Compliance (telephone advice line (202) 482-2381).

Given the centralized structure of the economy, specific “buy national” laws do not exist. Strategic goods, military equipment, wheat, sugar, and items not produced locally or in sufficient quantities are procured by public sector importing agencies from the international market, provided foreign exchange is allocated by the Supreme Economic Council.

The government requires its approval for all foreign investments and theoretically encourages joint-ventures with itself. Concessions and services must be explicitly negotiated. The number and position of foreign employees in a company are usually

negotiated when the contract or agreement is signed. Land ownership laws are complex. In principle, only Syrians may own land. The right to repatriation of capital is legally recognized. The new investment law provides for tax holidays and exemptions on duties, as well as guarantees for the remission of profits. However, the law requires that repatriated foreign exchange be generated from export company operations. Despite the new legislation, poor infrastructure, lack of financial services, and complex foreign exchange regulations, including Law No. 24, which makes it a criminal act to conduct unauthorized foreign exchange transactions, continue to pose serious barriers.

Government monopolies in banking, insurance, telecommunications, and other public sector service industries preclude foreign investment. Motion pictures are distributed by a government agency and subject to censorship.

Petroleum exploration and oil service companies operating in Syria are required to convert their local currency expenditures at the over-valued official exchange rate with the exception noted in Paragraph 6. (See below.) Despite cost recovery schemes, this requirement has inflated company operating costs, exposing them to greater risk and contributed to the departure of two more foreign petroleum exploration companies in 1994. 6. Export Subsidy Policies

Export financing and subsidies are not available to either the public or the private sectors. In fact, some exports are subject to special taxes. Recent government decisions allowing private firms to transact exports and imports at the “Neighboring Country rate, instead of the unfavorable official rate, have encouraged private trade through official channels. Similar concessions to public sector companies to complete export transactions have enhanced the foreign exchange position of these companies. 7. Protection of U.S. Intellectual Property

Syria's legal system recognizes and facilitates the transfer of property rights, including intellectual property rights. There is, however, no copyright protection. Syria is a member of the Paris Union for the International Protection of Industrial Property. Prior registration of intellectual property is required to bring infringement suits.

Due to the unsophisticated industrial structure and existing limits on private industry, there are few major infringement problems. Local courts would likely give plaintiffs fair hearings, but any financial awards would be in Syrian pounds. Requests for payment in foreign exchange would probably be delayed indefinitely.

Most books printed in Syria are in Arabic and by Arab authors. The publishing industry is not well developed. Despite the lack of legal protection, major commercial infringements do not appear to be a problem. There are, however, individual entrepreneurs who copy records, cassettes, and videos, and sell them. In any event, enforcement and the associated litigation would be, if not impossible, extremely costly compared to any positive benefits which might result.

The U.S. motion picture industry estimates the home video market in Syria is 100 percent pirated. The industry is also concerned with unauthorized hotel video performances, which are said to be common. However, only a few hotels have internal video systems. 8. Worker Rights

a. The Right of Association. The 1973 Constitution provides for the right of the "popular sectors of society to form trade unions. Although the General Federation of Trade Unions (GFTU) is purportedly an independent popular organization, in practice the government uses it as a framework for controlling nearly all aspects of union activity. According to GFTU officials, the secretaries general of the eight professional unions, some of whom are not Ba'th Party members, are also each elected by their respective union's membership.

The Syrian government contends that there is in practice trade union pluralism. However, workers are not free to form labor unions independent of the governmentprescribed structure. Legislation is still pending which would grant the right of any trade union to be governed by its own by-laws without requiring that union rules correspond to those of the GFTU.

Strikes are not prohibited (except in the agricultural sector), but in practice they are effectively discouraged. There were no reported strikes in 1994, as was also the case in 1993 and 1992. There is at least one erson who has been in detention for 13 years for involvement in a strike in 1980. He was tried only at the end of 1992. Some members of the Syrian Engineers' Association who were arrested because of the strike action in 1986, along with Doctors' Association members arrested at the same time reportedly remain in detention.

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As with other organizations dominated by the Ba'th Party, the GFTƯ is charged with providing opinions on legislation, devising rules for workers, and organizing labor. The elected president of the GFTU is a senior member of the ruling Ba'th Party and a member of the party's highest body, its regional command. With his deputy, he participates in all meetings of the cabinet's ministerial committees on economic affairs. While the unions are used primarily to transmit instructions and information to the labor force from the Syrian leadership, elected union leaders also act as a conduit through which workers' dissatisfaction

is transmitted to the leadership. The GFTU is affiliated with the International Confederation of Arab Trade Unions.

In June 1992, the U.S. Trade Representative suspended Syria's duty-free privileges under the U.S. Generalized System of Preferences (GSP) due to its worker rights practices. The Syrian government has not made sufficient legislative and practical changes to prompt a reconsideration of the suspension.

b. The Right to Organize and Bargain Collectively:- In the public sector, unions do not normally bargain collectively on wage issues, but union representatives participate with the representatives of the employers and the respective ministry to es. tablish sectoral minimum wages according to legally prescribed cost-of-living levels. Workers serve on the board of directors of public enterprises, and union representation is always included on the boards. Unions also monitor and enforce compliance with the labor law.

In the private sector, unions are active in monitoring compliance with the laws and ensuring workers' health and safety. Under the law, unions may engage in negotiations for collective contracts

with employers. The International Labor Organization's Committee of Experts (COE) noted Syria's continuing resistance to revising a section of the labor code which allows the Minister of Labor and Social Affairs to refuse to approve a collective bargaining agreement and to annul any clause likely to harm the economic interests of the country. Unions have the right to litigate contracts with employers and the right to litigate in defense of their own interests or those of their members (individually or collectively) in cases involving labor relations. Union organizations may also claim a right to arbitration. In practice, due to the relatively small size of Syrian private sector enterprises, labor disputes are generally settled informally. Social pressure to be seen as fair and generous are powerful factors in determining owners' treatment of workers.

Workers are protected by law from anti-union discrimination, and there were no reports that it was practiced. (See also Section 6.E).

There is no union representation in Syria's seven free trade zones, and firms in the zones are exempt from Syrian laws and regulations governing the hiring and firing of workers, although some provisions concerning occupational health and safety, hours of work and sick and annual leave do apply.

c. Prohibition of Forced or Compulsory Labor.—There is no Syrian law banning forced or compulsory labor; such practices may be imposed in punishment, usually in connection with prison sentences for criminal offences, under the Economic Penal Code, the Penal Code, the Agricultural Labor Code and the Press Act. There were no reports of forced or compulsory labor involving children or foreign or domestic workers.

d. Minimum Age for Employment of Children.--The minimum age in the predomi. nant public sector is fourteen, though it is higher in certain industries. The minimum age varies more widely in the private sector. The absolute minimum age is 12, with parental permission required for children under age 16 to work. Children are forbidden to work at night. The Ministry of Social Affairs and Labor is responsible for enforcing minimum age requirements, but the number of labor investigators is not adequate.

e. Acceptable Conditions of Work.-As mandated in the constitution, the government legislatively establishes minimum and maximum wage limits in the public sector and sets limits on maximum allowable overtime for public sector employees. The minimum wage does not enable a worker and his family to survive, and, as a result, many workers take additional jobs, open businesses, or rely on extended families for support. There is no single minimum wage in the private sector for permanent employees. According to the 1959 Labor Law, minimum wage levels in the private sector are set by sector and are fixed by the Minister of Social Affairs and Labor. Recommendations are put to him by a committee, including representatives of both the Ministries of Industry and Economy, as well as representatives of the employers' association and the employees' unions. Following substantial cuts in government subsidies of foodstuffs in April, the government raised public sector minimum wages to $50 per month. Shortly thereafter, the Minister of Labor decreed an average private sector minimum wage of $44 per month. In practice, private sector monthly minimums are not less than that in the public sector. In both the public and private

sector, the Ministry of Social Affair and Labor is responsible for enforcing minimum wage levels.

The Syrian labor law extensively regulates conditions of work. There are regula. tions that severely limit the ability of an employer to fire an employee without due cause, an issue that the employer may take to a labor committee, Labor committees are composed of representalives of the municipality, the Ministry of Social Allaire and Labor, and the union, as well as a judge and the employer. In the majonty of cases, such labor committees have decided in favor of the employee. Workers, once hired, can not easily be fired. In practice, workers also have exercised their right to contest even planned dismissals in the labor committees. One exception in the heavily regulated labor field relates to day laborers. They are not subject to minimum wage regulations and receive compensation only for job-related injuries. Small private firms and businesses commonly employ day laborers in order to avoid the costs of permanent employees who are well protected even against firing.

The statutory work week consists of six 6-hour days, although in certain fields in which workers are not continuously busy, a 9-hour day is permitted. Labor laws also mandate a full 24-hour rest day per week. Public laws mandate safety standards in all sectors, and managers are expected to implement them fully. A drast legislative decree is pending with the president of the council of ministers to provide compensatory rest for those who have to work on the weekly rest day, thus bringing the law into conformity with the international labor code. The ILO has also noted that a provision of the labor code allowing workers to be kept at the work place for up to 11 hours per day could lead to abuse. In practice, the public sector is in conformity with the schedule noted above. There were no reports of private sector employees having to work as many as 11 hours per day. A special department of the Social Security Establishment works at the provincial level with inspectors at the Ministries of Health and Labor to ensure compliance with safety standards. In practice, workers have occasionally taken employers to judicially empowered labor committees to win improvements in working conditions that affect their health.

Foreign workers theoretically receive the same benefits but are often reluctant to press claims because employees' work and residence permits may be withdrawn at any time. Moreover, many work illegally and are not covered by the government system. Some foreigners are employed illegally as domestic servants in Syria. Residence permits are legally granted only to diplomats who employ servants, but some senior officials are also able to acquire the necessary permits.

f. Rights in Sectors with U.S. 'Investment. There is no direct U.S. investment, other than oil exploration and development, in Syria. US firms are required to comply with Syrian labor law.

Extent of U.S. Investment in Selected Industries.-U.S. Direct Investment Position Abroad on an Historical Cost Basis-1993

(Millions of U.S. dollars)

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Petroleum
Total Manufacturing

Food & Kindred Products
Chemicals and Allied Products
Metals, Primary & Fabricated
Machinery, except Electrical
Electric & Electronic Equipment
Transportation Equipment

Other Manufacturing
Wholesale Trade
Banking
Finance/Insurance Real Estate
Services
Other Industries
TOTAL ALL INDUSTRIES

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1 Suppressed to avoid disclosing data of individual companies.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

TUNISIA

Key Economic Indicators
(Millions of U.S. dollars unless otherwise noted)

1992

19931

1994?

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Income, Production and Employment:
Real GDP (1990 base) 3

14,581 14,960 15,723 Real GDP Growth (pct.)

8.1
2.6

5.0 GDP (at current prices) 3

16,470 15,190 15,965 By Sector: Agriculture

2,560 2,003 1,410 Manufacturing

2,474 2,211 2,909 Nonmanufacturing

1,824 1,575 1,752 Tourism

720
676

887 Services

3,964 3,582 4,788 Real Per Capita Income

1,742 1,496 1,846 Labor Force (millions)

2.50 2.56

2.77 Unemployment Rate (pct.)

16.0
16.2

16.4 Money and Prices: Money Supply

3,392 2,866 3,101 Commercial Interest Rates

Max 14 Max 14 Max 14 Savings Rate (pct.)

Avg 8 Avg 8 Avg 8 Consumer Price Index

187.8 196.2 205.4 Wholesale Price Index

N/A N/A N/A Official Exchange Rate (USD/TD)

1.20 1.02

1.02 Balance of Payments and Trade: Total Exports (FOB)

4,283 4,073 4,989 Exports to U.S.

36.7 31.0

27.2 Total Imports (CIF)*

6,827 6,366 6,640 Imports from U.S.

338.8 415.2 354.0 Aid from U.S. (FY basis)

26.2
14.9

1.1 Aid from Other Countries

N/A N/A

N/A External Public Debt

8,220 7,655 9,009 Debt Service Payments

1,387 1,391 1,637 Gold Reserves

5.2
4.4

4.4 Foreign Exchange Reserves

1,080 816 1,133 Balance of Payments

60.0 102.0 204.4 NIA-Not available.

1 Some 1993 figures are less than 1992 figures when converted into USD values due to a devaluation of the Tunisian dinar in 1992-93. * 1994 Annual figures are estimates based on data available through June, 1994. *GDP at factor cost • Merchandise trade. 1. General Policy Framework

Tunisia has a mixed economy composed principally of agriculture, tourism, manufacturing, hydrocarbon extraction and phosphate mining. The largest sector is services, comprising about 33 percent of GDP. Textiles are now the largest source of foreign exchange, earning an estimated USD 1.9 billion in 1994. Tourism will bring another USD 887 million of foreign exchange into Tunisia this year. The manufacturing sector comprises about 15 percent of GDP, and consists primarily of textiles and food processing. The nonmanufacturing industrial sector accounts for 12 percent of GDP, and consists principally of phosphate mining and hydrocarbon extraction. Agriculture comprises about 15 percent of GDP. A severe drought caused widespread crop failures in 1994. The cereal harvest was down 60 percent from 1993. In addition, the citrus and olive crops were hurt by adverse weather conditions.

In late 1994, the government predicted 5.0 percent GDP growth for the year. This decrease from the 6.1 percent growth rate predicted at the start of the year is largely the result of the poor agricultural harvests. However, exports are up 22.5 percent, and inflation is being held to 4.7 percent.

Tunisia completed a seven-year structural reform program in 1993 which emphasized export-led growth through price and import liberalization, privatization of pub

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