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Trademark Office in The Hague. This trademark protection is valid for ten years, renewable for successive ten-year periods. The Benelux Office of Designs and Models will grant registration of industrial designs for 50 years of protection. International deposit of industrial designs under the auspices of World Intellectual Property Organization (WIPO) is also available. 8. Worker Rights

a. The Right Of Association.—Belgium has a long tradition of democratic trade unions. Workers have the right to associate freely, hold free elections and strike. Unions striking or protesting government policies or actions are free from harass. ment and persecution. Anti-union actions before a union is legally registered are effectively prohibited. Labor unions are independent of the government but have im. portant informal links with and influence on several major political parties. Belgian unions are free to affiliate with and are affiliated with the major international labor bodies. In the provision of essential public services, public employees' right to strike is implicitly recognized. Public employees may and often do strike. Laws and regulations, effectively enforced, prohibit retribution against strikers and union leaders.

b. The Right To Organize and Bargain Collectively.—The right to organize and bargain collectively is recognized and exercised freely. Management and unions ne. gotiate a nationwide collective bargaining agreement, which establishes the framework for negotiations at plant and branch levels. The right to due process and judicial review are guaranteed for all protected union activity. Belgian law prohibits discrimination against union members and organizers and provides special protection against termination of contracts of shop stewards and members of workers' councils and of health and safety committees. Employers found guilty of such discrimination are required to reinstate workers. Effective mechanisms exist for adjudicating disputes between labor and management. Belgium maintains a system of labor tribunals and regular courts which hear disputes arising from labor contracts, collective bargaining agreements, and other labor matters.

Belgium has no export processing zones.

c. Prohibition of Forced or Compulsory Labor.-Forced or compulsory labor is illegal and does not occur.

d. Minimum Age for Employment of Children.—The minimum age for employment of children is 15, but schooling is compulsory until the age of 18. Youth between the ages of 15 and 18 can participate in part-time work/part-time study programs. Students can also sign summer labor contracts of up to 30 days. During that period, they can work the same number of hours as adults. The labor courts effectively monitor compliance with nationals laws and standards.

e. Acceptable Conditions of Work.—The current monthly national minimum wage rate for workers age 22 and over is 42,469 Belgian francs, effective as of June 1994. Based on the exchange rate of October 19, 1994, this is equivalent to $ 1,374. Workers between 18 and 21 can be paid less than minimum wage. 18-year-olds can be paid 82 percent of the national minimum wage, 19-year-olds 88 percent, and 20year-olds 94 percent. Minimum wage rates in the private sector are established by nation-wide labor/management negotiations. In the public sector, the minimum wage is determined in negotiations between the government and the public service unions. Regular cost of living adjustments are made during the course of each year to the basic minimum wage rate. The Ministry of Labor effectively enforces minimum-wage laws. A maximum 40-hour workweek which provides at least one 24hour rest period is mandated by law, although many collective bargaining agreements have set shorter work weeks. The law requires overtime payment for hours worked in excess of a regular workweek. Excessive compulsory overtime is prohibited. These laws are enforced effectively. Comprehensive health and safety legislation is supplemented by collective bargaining agreements on safety issues. Workers have the right to remove themselves from situations which endanger their health or safety without jeopardy to their continued employment, and Belgian law protects workers who file complaints about such situations. The Labor Ministry implements health and safety legislation through a team of inspectors and determines whether workers qualify for disability and medical benefits. Health and safety committees are mandated by law in companies with more than 50 employees and by works councils in companies with more than 100 employees. The Ministry of Labor effectively monitors compliance with national health and safety laws and standards.

f. Rights in Sectors with U.S. Investment.-U.S. capital is invested in many sectors in Belgium. Worker rights in these sectors do not differ from those in other aeas. Worker rights are practiced and observed uniformly throughout the country. 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)

[blocks in formation]

Bosnia-Herzegovina remains a war zone with very little economic activity beyond smuggling and distribution of humanitarian supplies. U.S. Embassy estimates place the remaining industrial activity, which primarily supports the war effort, at five percent of the 1991 level. In a region which once boasted world-class resorts, there are now destroyed factories and burnt-out villages. The Bosnian Serbs, who are continuing their policy of “ethnic cleansing," have displaced or killed hundreds of thou. sands of residents.

Bosnia-Herzegovina receives its natural gas by pipeline from Russia via Hungary and Serbia. Adequate gas supplies were restored to Sarajevo in February 1994. The situation remains unstable, however, due to maintenance problems, war damage, and Bosnian Serb control of areas through which the pipeline passes. Electric energy supplies for greater Sarajevo fell from a pre-war level of 250 MW to about 50 MW in 1993. With international assistance, the daily electric energy supply in Sarajevo averaged 68 MW by mid-1994.

Bad weather, fighting, and Bosnian Serb blockades often block supply lines into Bosnia-Herzegovina, Sarajevo, and the eastern enclaves of Gorazde, Zepa, and Srebrenica. Sarajevo and the eastern enclaves remain under siege and are currently experiencing shortages of food, water, electricity, fuel, and many other basic neccesities. Humanitarian aid has been intermittent and insufficient to meet full requirements. Bosnian Serb sniper activity regularly halts use of the Sarajevo airport. In the winter months, when the need is greatest, land supply routes become impassable and airports often close.

The economic outlook for Bosnia-Herzegovina remains bleak. Even if hostilities ended at once, the infrastructure is heavily damaged and a large part of the most productive segment of society has been dislocated or eliminated. No financial reserves exist with which reconstruction could begin. In March 1994, the U.S. and United Kingdom launched a joint initiative to restore essential public services to Sarajevo. While this has resulted in some success, it will take many years for BosniaHerzegovina to recover from the current crisis, and massive donor support will be needed to continue the process.


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



1994 1



Income, Production and Employment:
Real GDP (1993 prices)OB

10,773 10,557 10,409 GDP (at current prices) LE

8,478 10,557 20,859 Real GDP Growth Rate (pct.)C

-5.6 -4.2 -1.4 Real GDP by Sector: 0,8 Industry


3,647 3,539 Agriculture

1,120 804 1,145 Trade/Services

4,632 4,164 5,724 Per Capita Income (USD) GE 2

1,209 1,195 1,181 Labor Force (000s) GB

3,796 3,787 3,827 Unemployment Rate (pct.) 8


15.5 Money and Prices: Money Supply (M1:bil. lev)


55.0 Commercial Interest Rate (pct.) O

61.1 58.2 377.9 Gross Domestic Savings Rate (pct.) LE


N/A Gross Domestic Investment

1,739 1,669 N/A Consumer Price Index (Dec. 1992 equals 100) LB


342 Inflation (pct.) (end-of-period/Dec-Dec)


63.9 110.0 Producer Price Index


NA Exchange Rate (year-end: leva/$) Official)

24.5 32.7

80.0 Parallel


83.0 Balance of Trade and Payments: ($millions, cur

rent) GEIS
Total Exports (FOB)

5,090 3,640 3,160 Exports to U.S. ....

85.3 115.3 163.0 Total Imports (FOB)

4,610 4,330 2,820 Imports from U.S.

78.9 158.7 106.0 Trade Balance ...

480 -690

340 Trade Balance with U.S.

6.4 -43.4

57.0 Aid from U.S. (fiscal yr.)


35 Aid from Other Countries 6



1,097 External Public Debt ($ bil.)


8.7 Annual Debt Service. Scheduled

2,918 2,211

850 Paid


Gold and Foreign Exchange.
Reserves ($ bil.)


1.2 NIA-Not available. BU.S. Embassy estimate. o Government of Bulgaria. I International financial institutions.

U.S. Department of Commerce. 1 1994 figures are estimates for year-end. *Per capita incomes are calculated at following exchange rates 1992 24.5 leva:dollar, 1993 32.7 leva:dollar; and 1994 80 leva:dollar.

BNB basic (lombard) refinancing rate (period average).
*U.S. Department of Commerce figures.
$Rate depreciated from 32.7:1 to 65:1 from January to November 1993.
Includes international financial institutions

71994 estimate based on first six months data. 1. General Policy Framework

Bulgaria's transition to a market economy continued slowly during 1994. The nonparty cabinet of centrist economist Lyuben Berov successfully concluded Bulgaria's drawn-out negotiations with commercial creditors and the IMF. Structural reforms remained stymied and inflation accelerated, in spite of continued restrictive



fiscal and monetary policies. This, along with the collapse of Bulgaria's COMECON trade (80 percent of the pre-1989 total), the global recession, and United Nations sanctions against Iraq and Serbia resulted in a prolonged economic downturn, which finally may have bottomed out in 1994. After several years of decline, national output achieved zero growth and production in several sectors increased. Unemployment also declined during the year. Prime Minister Berov's resignation in September opened the way for pre-term parliamentary elections on December 18. The Bul. garian Socialist Party won a narrow majority in those elections. Pending the elections, a caretaker government was appointed by President Zhelev on October 17.

The Central Bank (BNB) sought to bring inflation down from a 3.9 percent to a three percent monthly rate by year end 1994, using a normal range of policy instru. ments. However, insation accelerated from 63.7 percent in 1993 to a projected 110 percent in 1994. The rapid depreciation of the Bulgarian lev in foreign exchange markets early in 1994 significantly boosted the lev value of foreign-currency accounts, thereby increasing the money supply. To control the fall of the lev, the BNB significantly raised interest rates. Later in the year there was concern that the money supply was being dangerously increased by BNB credit for several troubled state banks. Despite stagnation in the standard of living over 1994, exports of U.S. consumer goods to Bulgaria have risen given the relative weakness of the dollar versus european convertible currencies.

During most of 1994, the government kept its budget deficit within the 6.5 percent of GDP target agreed to with the IMF. It achieved this success through stringent restrictions on state expenditures and increased revenues from the new VAT (implemented on April 1) and excise taxes. U.S. Treasury Department estimates the deficit will reach about 7 percent of GDP by yearend 1994, due to increased social security outlays, expenditures on the elections, and interest on domestic debt. The Government of Bulgaria financed the deficit through a combination of central bank borrowing and treasury bill sales.

In April, Bulgaria rescheduled its 1993 and 1994 maturities with the Paris Club (official creditors). In June, it restructured 8.1 billion dollars in commercial (London Club) debt, resulting in a 47 percent reduction. The government and the IMF agreed on a Standby Agreement/Systemic Transformation Facility for approximately 300 million Special Drawing Rights (about 410 million dollars). The World Bank released the second 100 million tranche of its 1991 Structural Adjustment Loan. Talks with the Bank stalled on a Financial and Enterprise Structural Adjustment Loan.

The transition to a market-oriented economy continued, albeit slowly and against political and social resistance. Structural reforms necessary to underpin macroeconomic stabilization were not pursued vigorously. Restitution of urban shops and houses put capital into the hands of many ordinary Bulgarians, helping to fuel the rapidly growing service and consumer goods sectors. However, legal privatization of state-owned industry moved slowly, as did the breakup of state-organized collective farms.

Bulgaria's association agreement with the European Union (EU) finally took effect January 1, 1994. An analogous agreement with the European Free Trade Associa. tion (EFTA) entered into force in 1993. With the conclusion of its EU and EFTA negotiations, Bulgaria returned its attention to negotiating its GATT accession. The Bilateral Investment Treaty with the United States was ratified by the U.S. Senate and took effect in June. 2. Exchange Rate Policy

After several years of remarkable stability, and even significant real appreciation given inflation, in August 1993 the Bulgarian lev began to fall in foreign exchange markets. By March 1994, the lev had fallen 42 percent (from BGL 22.1 to 53:U.S. dollar) and a run on the lev_ briefly threatened before it stabilized temporarily at around BGL 51:U.S. dollar. The lev continued to depreciate gradually during the rest of the year. BNB intervention in the currency market reduced the country's convertible currency reserves from more than one billion to around 600 million dollars in February. Reserves increased significantly thereafter with the infusion of balance of payments support from the IMF, the IBRD, and the G-24 nations.

The BNB sets an indicative daily U.S. dollar rate for statistical and customs purposes, but commercial banks and others licensed to trade on the interbank market are free to set their own rates. A parallel market operates openly offering about a four percent premium.

Only some of the commercial banks are licensed to effect currency operations abroad. Companies may freely buy foreign exchange for imports from the interbank market. Individual Bulgarian citizens may legally buy only 10,000 leva worth of hard currency per year without specific cause. Companies are required to repatriate, but no longer to surrender, earned foreign exchange to the central bank. Bulgarian citizens and foreign persons may also open foreign currency accounts with commercial banks. Foreign investors may repatriate 100 percent of profits and other earnings. Capital gains transfers appear to be protected under the revised Foreign Investment Law; free and prompt transfers of capital gains are guaranteed in the Bi. lateral Investment Treaty: A permit is required for hard currency payments to for: eign persons for direct and indirect investments and free transfers unconnected with import of goods or services. 3. Structural Policies

Bulgaria's new market oriented legal structure does not inhibit U.S. exports, which are more affected by the government's tight monetary policy and Bulgaria's isolation from trade financing. The enactment of an up-to-date Bankruptcy Law in 1994 was a significant step in bringing Bulgaria's Commercial Code up to international standards. Further revisions in the Code (regarding commercial activity) and security and exchange laws are under parliamentary consideration. Implementation of reforms is hindered by slow decision making and bureaucratic red tape.

Although Prime Minister Berov entered office pledging his would be the “privatization government,” privatization advanced only marginally in 1994, primarily in small-scale and municipal projects. It is estimated that only five percent of state en: terprises have been privatized so far. After prolonged wrangling, Berov announced in June a mass privatization plan closely patierned on the voucher system employed in the former Czechoslovakia. Parliament approved the “demand side" program, but had not yet approved the "supplyside” (including the list of 360 'firms to be privatized in the first wave) when it was dissolved on October 17. Implementation of the mass privatization program now must await the formation of a new govern. ment after the December elections, probably in early 1995. Meanwhile, caretaker Prime Minister Indjova took steps to speed up small-scale and municipal privatization. Until privatization is well rooted, one can expect a certain unpredictability in commercial dealings.

With the implementation of the new 18 percent unified-rate VAT on April 1, Bulgaria took a significant step in reforming its tax system. However, the revised Income and Profits Tax laws still have not been submitted for consideration to Parliament. While average tax rates are relatively low according to the IMF, U.S. experts believe that marginal tax rates are too high to stimulate the economy. There is no export tax. 4. Debt Management Policies

Bulgaria's former Communist regime more than doubled the country's external debt from 1985 to 1990. With more than 10 billion dollarg outstanding, the government declared a debt service moratorium in March 1990. Bulgaria continued to service three small convertible-currency bond issues. Bulgaria resumed partial servicing of its debt in late 1992. Of Bulgaria's current 13 billion dollar debt, more than 80 percent is owed to foreign commercial creditors; almost half of the commercial debt is trade financing. The cutoff of trade financing by the western banks because of the moratorium has been the main barrier to imports from the U.S. and elsewhere.

In April 1994, Bulgaria rescheduled its official (“Paris Club”) debt for 1993 and 1994. In June, it concluded a Brady plan-type agreement to reschedule 8.1 billion dollars of its debt to commercial creditors (“London Club”). This agreement reduced Bulgaria’s commercial debt by 47 percent. Even with this debt reduction, however, Bulgaria will be challenged to meet its total debt service requirements in the next few years. Debt to GDP ratio is 84 percent.

After protracted negotiations, the IMF approved a one-year standby agreement/ structural transformation facility of approximately 410 million dollars for Bulgaria in February 1994. To support the IMF stabilization program, the G-24 countries pledged 330 million dollars in balance of payments support for 1994. Bulgaria also complied with the final conditions of its World Bank structural adjustment loan, permitting the release of the 100 million dollar second tranche and 100 million dol. lars in Japanese matching funds. An additional 250 million dollars was loaned jointly by the IMF and World Bank to help finance the initial payment of Bulgaria's London Club rescheduling. 5. Significant Barriers to U.S. Exports

Import licenses are required for a specific, limited list of goods. Among others, the list includes radioactive elements, rare and precious metals and stones, ready pharmaceutical products, and pesticides. Armaments and military-production technology and components also figure on the list. (Prior to the dissolution of COCOM, Bulgaria was granted "favorable consideration status," which means a presumption of approval for COCOM applications and a shorter approval period. Bulgaria has ex

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