International Trade Law
The sweeping political changes that began in 1989 were to have a profound impact on virtually every aspect of commercial life throughout the CEE and NIS regions. In particular, 1991 was a year of profound change throughout the region. By early 1991, market prices, hard currency payments, and international commercial practices began to replace Soviet-era mechanisms of trade throughout most of the region. In July, the Council for Mutual Economic Assistance (CMEA) was formally dissolved. In late August, Ukraine declared itself a sovereign state. Three months later, Romania adopted a new constitution. Finally, Kazakhstan declared itself an independent nation in early December 1991.
The sweeping impacts were particularly marked in the foreign trade sector, which was both highly centralized and tightly controlled by specialized state trading organizations. With the collapse of the Soviet Union, individual firms found themselves cut off at both ends - input supply on one hand, and marketing outlets on another. Further, due to the segmentation and specialization common under the state trading system, firms were faced with a debilitating lack of information or experience upon which to draw in establishing their own foreign trade relations. Added to this, many state trading monopolies seized the opportunity spontaneously privatize under perestroika, and utilize special hard currency and commodity trading licenses to perpetuate their monopolistic position in the sector.
It is widely stated that a country's openness to foreign trade and investment is a major determinant in its overall rate of economic growth and the stability and vitality of its markets. Empirical evidence tends to support this view, however, the recent Asia Crisis has caused some to challenge this orthodoxy. Despite this, a central organizing assumption upon which this analysis proceeds is that a legal regime consistent with international norms and practices is a fundamental requirement for a modern, market oriented economy.
Trade law and the institutional framework for its implementation is an extremely broad and complex subject. As a result, it has been necessary to define the parameters of this analysis somewhat narrowly. One principal theme, however, will be the extent to which the country has embarked upon the process of accession to the World Trade Organization (WTO). The progress which a country has made in negotiating and enacting implementing legislation to accede to WTO agreements is a good preliminary indicator of the overall development of a country's international trade law. Among the many areas addressed by these agreements are market access, subsidies, health standards, trade in services, intellectual property, and government procurement. We will also focus extensively on each country's customs laws and procedures, especially the tariff levels, classification system, and whether Most Favored Nation (MFN) status is afforded to its trading partners.
It is important to note the impact of many ancillary laws on the overall trade environment. Among those which could represent substantial non-tariff barriers are tax laws, currency convertibility restrictions, and immigration and banking laws. Obviously, a detailed investigation of each of these areas is well beyond the scope of this project. It should, however, be possible to include specific examples of discriminatory treatment in an overall analysis of the country's receptivity to foreign trade.
From an institutional perspective, we will focus on the major trade regulatory bodies from the Ministry level to the customs point of entry examining staffing, budgets, information management resources, and liaison with other agencies. We will assess the degree of detail, consistency and transparency in agency procedures and compare statistics regarding enforcement. We will also attempt to gauge the degree of political support for open trade policies as expressed in public statements by government spokesmen, opposition leaders, legal academics and the popular media. Finally, we will attempt to assess the degree of satisfaction Among those most affected by the trade laws including, e.g., shipping firms and foreign chambers of commerce.
