HUNGARY An remained unfilled and NGKM has issued licenses on request. import license may be denied on grounds of national security, compliance with international obligations or to ensure the supply of basic necessities. As of January 1991, general licenses are no longer issued, and all license applications must by law be processed in 15 days. Licenses are normally valid for 12 months. All licensing requirements are slated to be abolished by 1992. Standards, testing, labelling and certification: Hungary is a signatory to the GATT Agreement on Technical Barriers to Trade (Standards Code). National standards, which are in conformity with international norms, are issued by the Hungarian Standardization Office. They are binding and supercede any sectoral standards issued by ministries or other government agencies. The main labelling requirement is that basic data be indicated in Hungarian; there are some specific rules for products containing alcohol or vitamins, cosmetics, and human and animal pharmaceuticals. New consumer goods, including imports, can only be introduced into Hungary if they meet national health, safety and consumer protection regulations. Domestic and foreign pharmaceuticals must be registered with the National Hungarian Institute for Pharmacy (OGYI), after which an approval for merchandising must be requested from the Ministry of Health. Veterinary drugs, also subject to registration, can only be imported by designated importers. Imports of animals and animal products require a veterinary permission from the Ministry of Agriculture. Investment barriers: Because of the importance of foreign capital in Hungary's restructuring plans, neither investments nor services are subject to major restrictions. Poor telecommunications and transport infrastructure and unsettled housing and real estate markets are the main barriers to U.S. investment. Foreign investments currently enjoy more favorable tax treatment than domestic investments and are released from some central regulations. Joint ventures are guaranteed national treatment and protection against expropriation. There have been no cases of seizure of foreign assets in Hungary since the early 1950's, and in 1973 Hungary settled all outstanding debts for U.S. assets expropriated in the early days of Communist rule. In the area of services, foreign banks, airlines and other businesses may operate freely in Hungary, although banks continue to need special licenses and cannot be licensed for all banking activities. A 100 percent foreign-owned company is not permitted in insurance. The 1990 securities law lets foreign firms participate in stock and bond markets. Representation and service offices no longer need official permission to open, and now simply register their establishment as does any Hungarian company. A foreign-owned company may acquire any type of real estate as an in-kind contribution from a Hungarian partner, or buy it after the company is established. Acquired property can be mortgaged, leased, sold, or developed in accordance with relevant zoning and building codes. In practice, however, the lack of well-defined property rights complicates property acquisition by such companies. Property may not be acquired for speculative purposes. Customs procedures: Although customs laws themselves HUNGARY pose no significant barriers, local U.S. businesses have complained that customs officials' ignorance of regulations and lack of convenient customs facilities sometimes hinder business. Another barrier to increased U.S. exports is Hungarian firms' hesitancy to disrupt their strong ties with West European suppliers. Many U.S. firms also prefer to source Hungarian orders from West European subsidiaries. Government procurement practices: The Hungarian government discourages countertrade, but lets individual companies decide whether to conduct it. The phase-out of import licensing has resulted in a drop in countertrade. There are no specific legal provisions for government procurement, and Hungary does not apply any local content requirements. As of January 1, 1991 Hungary has adopted safeguard measures based on its GATT accession protocol; these allow one-year safeguard actions to be taken if any product is being imported into Hungary in such increased quantities or under such conditions as to cause or threaten serious injury to domestic producers of like or directly competitive products. Hungary has signed, and incorporated into its legal system, the GATT Antidumping Code. To date, Hungary has not taken antidumping actions, although it is reportedly considering antidumping measures against "unfair competition" from subsidized cement producers in other parts of Eastern Europe. 6. Export Subsidies Policies Hungary is not a signatory to the GATT Subsidies Code. In 1980, Hungary declared that, except in agriculture, it did not provide any export subsidies. In 1988, a value added tax was introduced which is refunded on exports. The Export Development Program (EDP) was established in 1985 to spur exports to hard currency markets, particularly in engineering, chemicals, food, metallurgy and light industry. EDP expenditures in 1990 were an estimated Ft 8 billion. Hungary also offers export credit insurance to cover economic, political and exchange rate risks. A Trade Promotion Fund (TPF) also supports hard currency exports with loans (to 75 percent of incurred costs) or grants (to 50 percent). The TPF received Ft 4.2 billion in 1990. The General Intervention Fund (GIF) has been used to support agricultural exports and ensure the supply of basic foodstuffs, but its export support function has been cut back; its 1991 budget is only Ft 700 million. In March 1991, Hungary set up an Investment Promotion Fund for infrastructure development, with an initial 1991 capital of Ft 1.5 billion. Joint ventures can receive grants or low-interest loans if their initial or share capital exceeds Ft 50 million, foreign participation is over 30 percent and at least half the foreign contribution is in cash in hard currency. 7. Protection of U.S. Intellectual Property Hungary provides protection for a wide variety of HUNGARY intellectual property rights including patents, trademarks, copyrights, and inventions. It is a member of the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, and the Madrid Agreement Concerning the International Registration of Trademarks. A draft law under discussion will protect integrated circuit layout designs. The Hungary's patent protection is far from adequate. existing patent law only protects the process by which chemical compounds are produced, not the product itself. Based on this, the Hungarian pharmaceutical sector has developed into a major industry by inventing new processes to make drugs developed outside of Hungary, then producing them for both the local market and for export. The result has been a number of disputes between Hungarian pharmaceutical firms, who have one percent of world trade, and manufacturers in other countries, including the United States. Pharmaceuticals are a key export for Hungary, earning up to $80 million in export revenues annually. The Hungarian pharmaceuticals industry has successfully blocked the government's efforts to bring Hungary's patent laws into line with those of the United States and the EC. The United States and Hungary are negotiating a business and economic treaty in which IPR issues are a central issue. Legislation passed in 1989 recognizes the right to organize, establishing the possibility of trade union pluralism. Excluding judicial and military personnel and the police, workers have the right to associate freely, choose representatives, publish journals, openly promote members' interests and views, and go on strike. A number of competing trade union formations have emerged. The 1989 legislation guaranteed workers the right to call strikes to defend their economic and social interests, but strike to defend their economic and social interests, but strike action has been limited and more often directed against government policies rather than employers. b. Right to Organize and Bargain Collectively The right to bargain collectively exists in law, although in practice wages have been excluded and are centrally negotiated in a tripartite macroeconomic policy body to control the rate of inflation. The right to bargain collectively was established in a 1969 law, which was amended in 1989 to allow collective bargaining at the enterprise and industry level. The Ministry of Labor is responsible for drafting labor-related legislation, while special labor courts enforce labor laws. the decisions of these courts may be appealed to the civil court system. Under the new legislation passed in July, employers are prohibited from discriminating against unions and their organizers. It is too soon to judge the effectiveness of this legislation. There are no export processing zones. HUNGARY C. Prohibition of Forced or Compulsory Labor Forced or compulsory labor is prohibited by law, which is enforced by the Ministry of Labor. d. Minimum Age for Employment of Children Labor courts enforce the minimum employment age of 16 years, with exceptions for apprentice programs, which may begin at 15. There does not appear to be any significant abuse of this statute. The legal minimum wage is established by the Interest Reconciliation Council (IRC) and subsequently implemented by Ministry of Labor decree. The average official workweek varies between 40 and 42 hours, depending upon the nature of the industry. The amended Labor Code of 1967 sets the workweek at 42 hours, but this varies slightly in some industries. Under existing law, workers receive overtime, a minimum of 15 days' paid leave per year, free health care, maternity leave, and pensions. Labor courts and the Ministry of Labor enforce occupational safety standards set by the Government, but specific safety conditions are not always up to internationally accepted standards. f. Labor Conditions in Sectors with U.S. Investment Labor conditions in sectors with U.S. investment do not differ significantly from those in Hungarian firms. (D)-Suppressed to avoid disclosing data of individual companies (*)-Under $500,000 Source: U.S. Department of Commerce (unpublished) Bureau of Economic Analysis, August 1991 |