FORMER SOVIET UNION

republics cut off food exports to deficit republics, partly to stave off anticipated future shortages and partly to use the food as barter for other goods in short supply, such as fuel. While the Commonwealth of Independent States agreement cites the need to form and develop a "common economic space," such coordination may prove difficult.

If the region's new states do indeed develop separate currencies and customs regimes, trade between them will be sharply limited by the scarcity of convertible currency that in 1991 caused the central government to cut imports by 45 percent and to reach debt deferral arrangements with Western creditors.

The funding crisis also reduced military spending, although it is too soon to speak of a fundamental structural demilitarization of these economies. The substantial drops in energy and steel production may also, in the end, mean a shift away from heavy industry. So far, however, there has been no

significant increase in agricultural or consumer goods production to take its place.

Formerly an excellent credit risk in the eyes of Western creditors, the Soviets in 1991 were forced by hard currency shortages to seek debt deferral agreements with Western creditors. External debt was, by year-end 1991, estimated at $65-70 billion overall; in addition, there were between $5-7 billion of arrears in supplier credits.

After the coup attempt, the governments of the G-7 industrialized countries negotiated an agreement whereby a majority of the republics agreed to joint and several liability for Soviet foreign debt contracted before January 1, 1991. In return, they were granted a one-year grace period on principal repayments for medium and long-term debt, and short-term lines of credit were maintained. They were also offered the possibility of emergency financing by means of a gold swap. The 12 states then asked Western commercial banks to set up a bank steering committee with which they could to negotiate comparable terms for commercial debt.

Following granting of Special Association with the IMF and IBRD in the fall of 1991, these institutions began sending financial and banking experts to Russia and other states to help them set up Western-style financial institutions and systems.

As the ruble remained inconvertible, the republics' import capacity was limited by their ability to increase export earnings, and by their ability to obtain, and willingness to use, available Western credit or to draw down its dwindling reserves.

Despite the overall drop in Soviet imports, exports from the U.S. during the first 10 months of the year fell only

FORMER SOVIET UNION

slightly from the previous year's level ($2.72 as compared with $2.79 billion). These figures reflect President Bush's decision, in December 1990, to make available export credit guarantees of almost $4 billion from Commodity Credit Corporation and up to $300 million from Export-Import Bank programs for U.S. exports to the Soviet Union.

In November 1991, the Congress approved the U.S.-Soviet Trade Agreement, but the Agreement was not ratified by the Soviet government before its collapse. Thus, U.S. products still do not enjoy most-favored-nation status in the territory of the former Soviet Union.

U.S. business faces stiff competition from the Western European nations and Japan, most of which ran trade deficits with the U.S.S.R., and which have been offering the C.I.S. nations 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

Not applicable.

7. Protection of U.S. Intellectual Property Rights

Throughout 1991, the U.S.S.R. was 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 International

Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure.

While it continued to exist, the U.S.S.R. issued both patents and certificates of authorship. The right of the inventor was protected, at the choice of the applicant, either by a certificate of authorship or by a patent, but only a patent provided the exclusive right for the applicant to use the invention. Certificate of authorship acknowledged the authorship of the inventor and granted the inventor rights and advantages stipulated by the legislation in force, whereas the exclusive right to use the invention belonged to the state for fifteen years. In 1991, the Soviet government enacted more comprehensive patent legislation which was intended to provide better protection.

Following the dissolution of the Soviet Union in late 1991, the U.S.S.R. Patent Office continued to operate until January 31, 1992. On February 1, 1992, the government of the Russian Federation assumed the responsibilities for patent registration and enforcement. The newly established Patent Office of the Russian Federation has told the U.S. Government that it will now accept application documents, issue letters of protection, exchange inventor certificates and perform all other legal operations concerned with the protection of industrial property for all of the independent republics of the former Soviet Union, except Estonia, Latvia and

FORMER SOVIET UNION

Lithuania. It is not yet clear whether this arrangement is acceptable to the other republics.

In 1973, the U.S.S.R. acceded to the Universal Copyright Convention. Since then, works enjoyed copyright protection throughout the Soviet Union. During 1991, foreign authors and publishers could negotiate publication contracts with Soviet publishing houses. Prior to accession to the Convention, there were instances of unauthorized publication of Soviet works abroad.

Congress approved the U.S.-Soviet Trade Agreement in November 1991. This agreement offers strong intellectual property rights protection by reaffirming commitments to the Paris Convention and the Universal Copyright Convention. It would have obligated 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 have also provided for product and process patent protection for nearly all areas of the technology and extended comprehensive coverage to trade secrets. However, the Soviet Union ceased to exist before the Supreme Soviet was able to ratify the agreement.

Thus, by the end of 1991, adequate and effective protection of copyrights still did not exist in the former Soviet Union. The independent republics which made up the former Soviet Union appear to be prepared to assume responsibility for intellectual property rights but lack the experience to deal with complex IPR issues, the legal framework and the administrative infrastructure required for effective enforcement. The establishment of adequate copyright protection throughout the entire territory of the former Soviet Union is likely to take some time.

8. Worker Rights

a. The Right of Association

The right of workers to form and join unions of their own choosing showed little change in 1991. Although a December 1990 law made independent unions equal before the law with official unions, official unions retained inherent advantages arising from close links with enterprise directors and exclusive control over workers' vacations, recreational facilities, and other social benefits. Independent labor leaders considered the official trade union control of social functions usually performed by the state as the greatest obstacle to the growth of true, independent trade unions in the U.S.S.R. Attempts during 1991 by the independent unions to break this monopoly had little effect.

Independent labor activists reported that throughout 1991 enterprise directors, together with local government officials, police and judicial authorities applied various forms of pressure on workers who attempted to exercise their right to form and join unions. Notwithstanding the obstacles, the independent workers' movement continued to grow impressively, gaining strength in several regions and sectors

FORMER SOVIET UNION

where it previously had been weak or absent altogether. The nine-week miners' strike in March and April found support in some areas of Byelarus, long considered a bastion of Communist Party stability. Although there were reports of workers forming local independent unions in many areas of the country, the coal miners in the Donbas region of eastern Ukraine and Kuzbas region of western Siberia represent the largest and most potent centers of independent organized labor in the former Soviet Union.

The U.S.S.R. formally established the right to strike in 1989, but both the Soviet and Ukrainian governments issued strike bans in the spring of 1991. Independent labor activists noted, however, that since the failed August coup, persecution of labor activists appears to have become a localized rather than systemic problem.

b.

The Right to Organize and Bargain Collectively

Soviet authorities had revealed a reluctant willingness to deal with the independent labor movements. Although the government in July 1990 had conceded the Independent Union of Miners (NPG) the right to conclude wage agreements with the central government, the union resorted to another strike in March 1991 after failing to get the Government to the bargaining table. Following the 1991 strike, the Government again granted the NPG the right to negotiate on behalf of its members. However, enterprise directors often refuse to negotiate with independent unions. Outside the mining and air transport industry, the vast majority of Soviet workers still had to rely on the official unions and factory and enterprise work collective councils to express their interests. Many workers felt these representatives inadequately defended them, since they tended to side with management.

C.

Prohibition of Forced or Compulsory Labor

Soviet law had contained no prohibition on forced or compulsory labor, although a "Declaration of Human Rights and Liberties" adopted by the Union Congress of People's Deputies in September 1991 expressly forbids it. Convicted criminals, including those confined for political offenses, were commonly forced to work, often under very difficult conditions and for minimal wages. Labor camp prisoners were widely known to be the main labor force for the Soviet lumber industry. Inmates at some correctional labor colonies struck over harsh work conditions.

d. Minimum Age for Employment of Children

Soviet law had established a statutory minimum age for employment of sixteen. Widespread reports appeared of child labor in the Central Asian republics.

The bottom rung of the official pay scales for each industry served, in effect, as an administrative minimum wage. Soviet reform plans called for the establishment of minimum wages, usually republic by republic, but by the end of 1991 these had not been legislated.

FORMER SOVIET UNION

The Soviet Labor Code set a limit of 41 hours to be worked per week. However, in practice, workweeks can range from considerably less than this to considerably more, depending on local circumstances. Officially, workers receive other benefits in addition to their wages, such as heavily subsidized prices for basic goods and foodstuffs in state stores. However, the value of this benefit was eroded by growing shortages of basic consumer goods and food in state stores, as prices on the open markets climbed weekly.

Soviet law established minimum conditions of workplace safety and worker health. However, these conditions are generally ignored, and no effective enforcement mechanisms exist. Workplace safety issues emerged as major issues in the miners' strikes, among airline pilots and air traffic controllers and in the armed forces.

f.

Rights in Sectors with U.S. Investment

In early 1987, the Soviet Union allowed direct foreign investment for the first time. Over 3000 joint ventures were reportedly signed by early 1991, including about 250 with U.S. companies. Total U.S. investment is estimated at $360 million. Because of the increasing devolution of power to republics, hard investment data is becoming increasingly difficult to obtain. Compared to the scale of the goods-producing sectors in the former Soviet economy, total U.S. direct investment is relatively insignificant.

Extent of U.S. Investment in Goods Producing Sectors

No sector by sector data is available on U.S. investment in the (former) Soviet Union.