How It All Started
Czech Republic is just one of the two nations resulting from the split of Czechoslovakia. Together with Czech, Slovakia is the other half of the division of the former republic in central Europe. The dispute between the Czechs and the Slovaks led to Czechoslovakia's partition in 1993.
As part of then prosperous Czechoslovakia, Czech Republic enjoyed the fruits of hard-earned labor. The level of its economic development was among the highest in central and eastern Europe. However, the performance of the economy was hampered by the high degree of centralization and political interference in economic life that characterized the Communist period. Communist leaders copied Soviet economic practice and organization when they came to power in 1948.
They emulated Soviet emphasis on heavy industry, mining, and manufacturing. They neglected agriculture and light industry. Agriculture, although almost entirely collectivized, performed fairly well in the last years of Communist Rule. Manufacturing and other branches of industry were handicapped by obsolete equipment, aging industrial plants coupled with shortages of raw materials, energy and even labor resources.
Although Czechoslovakia did not experience the acute economic crises of countries such as Poland, the standard of living for its population stagnated during the late 1970's. Political leaders acknowledged the need for economic reform but only a little portion was accomplished before 1989.
Under the post-Communist governments, measures have been enacted to privatize industry and agriculture and to facilitate foreign investment. Plans have been made to change trading patterns which until 1989 were heavily oriented to the Soviet Union and other socialist countries. It also planned to reintegrate the two republics into the world economy.
Now standing apart from Slovak Republic, Czech Republic paved its way into the world scene. It had brought with it the kind of strength posed by its mother nation. With high regard for international business, the Czechs began lifting themselves by trading with other powerful nations. This is where the United States came in the way. Despite its split from the Slovak Republic, the US had always helped Czech Republic culturally, economically and politically.
Major Trade Between the US and Czech Republic
After the historical division of Czechoslovakia, Czech Republic was not left lagging behind. In fact, it even gained enough recognition for itself. As proof to this, it was declared as the first post-Communist country to receive a remarkable international credit rating which comes from international credit associations. The Czech governments have welcomed US investment on its grounds. Foreign investment successfully boomed from the support of other Western as well as Asian Nations.
For the year 2008, at the end of July, the US Census Bureau showed a remarkable trade between the US and Czech Republic. Exports from US totaled $926 million while imports to Czech Republic amounted to $1.75 billion. For the year 2007, the following data were recorded:
Bilateral Investment Treaty Between the US and Czech Republic
- Czech Republic Exports to US. Out of the $2.43 billion exports of Czech Republic to US, the highest mark was given to electric apparatus and parts which comprises 7.55% of the total equivalent to $183.47 million. Other products found in the top ranks are: other parts and accessories; parts for civilian aircrafts; iron and steel products except advanced manufacture; automotive tires and tubes; other industrial machinery; computer accessories, peripherals and parts; engines and engine parts; toys, shooting and sporting goods and bicycles; and photo and service industry machinery and trade tools. The last products earned $68.16 million which is equivalent to 2.81% of the export total.
- Czech Republic Imports from US. The total amount of imports from US amounted to $1.26 billion. Of this total amount, 7.5% went to computer accessories with an amount of $94.37 million. Other products joining computer accessories on the top ten are: civilian aircraft; civilian aircraft parts; electric apparatus; generators, accessories; minimum value shipments; medicinal equipment; telecommunications equipment; laboratory testing instruments; and other industrial machines. Other industrial machines earned a total of $37.96 million equivalent to 3.01% of total imports of Czech Republic from US.
- Fastest-Growing US Exports to Czech Republic. On a very high note, there were a lot of products coming from US which have earned impressive amount of sales in the Czech Republic boundaries. Of all the products traded between the two, civilian aircraft garnered a commendable percentage increase of 3,038.77% from 2006. Following civilian aircraft are: vessels, excluding scrap; steelmaking materials; vegetables; and other precious metals. Other precious metals made a remarkable output of $2.6 million equal to 790.24%
- Fastest-Growing US Imports from Czech Republic. Czech Republic prime commodities entering the US have gained enough recognition for themselves. As proof to this, it was recorded that specialized mining and oil processing equipment dominated the charts with $1.23 million, up by 1347% from 2006. Along this line, other products were commendable as well such as: dairy products and eggs; television receivers, VCRs and other video equipment; complete and assembled goods; and marine engines and parts. With the last item, a good-enough increase from 2006 of 553% is already an advantage.
Czech Republic could be considered as one of the babies of the World Trade Organization (WTO). With merely 15 years of its stint as an independent nation from Slovak Republic, it could be said that support would be necessary especially when it comes from developing countries. Considering its trade relations with the United States, treaties were also essential.
Just like any other bilateral investment treaty entered into by a member of the European Union with that of US, the Czech Republic Bilateral Investment Treaty attempts to reduce if not eliminate the conflicts between the standards of EU and the US laws. Originally signed in October 22, 1991 for Czechoslovakia, it was amended in May 1, 1994 to serve specifically Czech Republic. Accordingly, it focused on the following areas:
Disputes Between Czech Republic and US
- Investment. This refers to all kinds of investment made by one country within the territorial jurisdiction of the other country. The investment may involve either a national or a company or both. All equal accord should be given to both parties when doing any foreign business with that of the other. This was always part of any bilateral investment treaty entered into by the United States with another nation.
- Tangible and Intangible Property. This gears to the protection of all properties whether movable or immovable, as well as the rights, pledges and mortgages contacted into by a national or a company. The treaty specifically refers to the fair valuation of these products which may be rented or acquired by the national or company of the other nation.
- Intellectual Property. This specifically refers to the protection of the intellectual rights of a person in terms of a literary work, recordings, inventions, industrial designs, semi-conductor works, trade secrets and all confidential business transactions. It is always essential for both countries to look into this particular aspect in order to derive respect from each other where the welfare of the people will be a core concept. It is always a must to adhere to intellectual property right laws in order not to shake the friendship that is blossoming through time.
Czech Republic is still on the verge of accomplishing things in international trade. Because of its prospering relationship with the US, there were some issues connected between the trade of the two. Military concerns must have contributed a lot to the scenario and whether or not they could contribute to trade barriers is still left unanswered.
Another hindering plan comes from the European Union's struggle to conquer the international trade scene. With its efforts, it had started building bridges between the friendships of Czech Republic and the United States by means of encouraging the former to join forces with Slovak Republic for a joint military unit. This was EU's own way of reacting rapidly to international demands on military warfare.
The Future of US and Czech Republic
There may be a disparity which may cause the flourishing trade between the US and Czech Republic to stop. However, there are other forces in the community which contributes to a more convenient and trusted relationship. In reality, a certain non-government organization was formed. This is called the American Friends of Czech Republic (AFoCR). This was established to foster ties in all areas from business and trade down to other essentials such as security, education, diplomacy and culture.
The AFoCR's core values are founded on the improvement of friendship between the people of both nations. This private organization attempts to educate U.S. government leaders and even the media and other opinion-oriented individuals about the immediate needs and goals of the Czech Republic people. With this kind of organization which naturally bloomed from the alliance of these individuals, the future offers something bright. The AFoCR should bear the fruit and be given due credit for its participation in building a better foundation to the trade relations between the United States and Czech Republic.
US-Czech Republic Trade References