How the Restructuring Began
Hungary is a nation situated in Central Europe. Under the Communist government, there was an attempt to industrialize the country's economy. This was done without regarding the capabilities and resources of the nation. The focus on heavy industry hushed production of consumer goods and affected the ecology. To restructure the economy, the so-called New Economic Mechanism (NEM) was introduced in 1968. In the 1980's, the country ran out of fuel which resulted to a major economic crisis.
In 1980, of the 100% total of its industry, 96% went to the socialist sector while the remaining 4% went to the private portion. This situation had changed since industry privatization became the concentration of the post-Communist period. Other important industries are engineering and chemical.
For the agricultural sector, the Communists collected 64% of Hungary's cultivated lands. The remaining 36% went to state farms (27%), semiprivate lands (8%) and vineyards or private ownership (1%). Agricultural privatization is also being focused on. The primary crops of Hungary are corn, sugar beets, potatoes wheat and grapes while the most important livestock are hogs, poultry and cattle. Dairy production was supported by eggs and milk.
Hungary's trade relations with the United States were hampered by the Communist occupation especially after the end of World War II. Although there was a governing Hungarian Peace Treaty established on October 12, 1945, the friendship was affected. This was due to the fact that US-owned properties in Hungary were nationalized and the Americans were discriminated in the land.
After the fall of the Communists in 1989, Hungary was left struggling for its stature in global economy. Without any doubt in mind, US helped the nation stand from its downfall thus leading to a renewed alliance. In the years 1989 and 1993, the so-called Support for East European Democracy - also known as SEED - provided financial support to Hungary amounting to $136 million. The funds were used for both economic restructuring and the development of the private sector.
Financial aid had been outrageously coming from the United States to Hungary. The two nations had formulated the Hungarian-American Enterprise Fund for loans, capital and technical assistance to realize the dreams of the private sector. Law enforcement, free media, national security, environmental regulations, health care and education were also concentrated on.
Major Exports and Imports between the Two Nations
The major exports of Hungary to other members of international economy are machinery, vehicles, food and beverages, crude materials, tobacco, fuels, electric energy and manufactured goods. The country's primary imports from other nations are vehicles, machinery, manufactured goods, food and beverages, tobacco, fuels and electric energy and raw materials. Its major markets are the members of the European Union such as Italy, France, Austria, Germany, UK, Romania and Poland while its suppliers come from Germany, Austria, Italy, France, Netherlands, Poland, Russia and China.
Although the United States is not one of its major markets or suppliers, Hungary had considered a strong bond with the said country. In fact, the US Census Bureau continued to track the trade relations between the two and as of October 2008, US exports to Hungary amounted to $1.2 billion while the imports from the latter to the former amounted to $2.66 billion. The following data were gathered for the year 2007:
Trade Agreements between Hungary and the United States
- Hungarian Exports to US. The year 2007 was fruitful in terms of exports coming from Hungary to US with a total amount of $2.80 billion. Out of this, $648.96 million which is 23.18% of the total went to the sales of computer accessories, peripherals and parts. Joining the aforementioned product were: telecommunications equipment; other parts and accessories; new and used passenger cars; electric apparatus and parts; medicinal, dental and pharmaceutical preparations; measuring, testing and control instruments; industrial engines, pumps, compressors and generators; computers; and US goods returned and reimported. The last ones were sold for $78.34 million or 2.80% of the year's total.
- Hungarian Imports from US. Imports of the United States to Hungary made their own way in the Hungarian Market. For a total amount of $1.29 billion in 2007, computer accessories were sold at $149.13 million which is equivalent to 11.56%. Other commendable goods in the chart were: semiconductors; industrial engines; electric apparatus; other parts and accessories of vehicles; measuring, testing and control instrument; agricultural machinery and equipment; minimum value shipments; telecommunications equipment; and finished metal shapes. Finished metal shapes earned total sales of $36.05 million which is 2.79% of 2007's total.
- Fastest-Growing US Exports to Hungary. Exports of the US to Hungary became well-known to the locals as well as the companies in the land. In fact, several products were noted for making a remarkable increase from their sales records in 2006 up by hundreds of percentages in 2007. Tanks, artillery, missiles, rockets, guns and ammunitions were sold for $4.44 million or a percentage increase of 4,442% making it top the charts in terms of sales increases. Other noteworthy goods were: bodies and chassis for passenger cars; primary synthetic rubber; specialized mining; and hair and waste materials. The last exported goods were sold for $68 thousand which is 850% higher compared to its sales in 2006.
- Fastest-Growing US Imports from Hungary. While US exports to Hungary made a fair share in the market, goods coming from the latter to the grounds of the former gained excellent sales remarks as well. As evidence to this fact, specialized mining and oil processing equipment topped the charts with a sales increase amounting to $250,000 which is 8,333% higher than 2006's figures. Other products joining the list were: plywood and veneers; marine engines and parts; railway and transportation equipment; and new and used passenger cars. The last items were sold for a total of $177.35 million which is 839.77% higher than 2006's sales.
Since the efforts of Hungary to establish peace with the United States in its Hungarian Peace Treaty, other trade agreements between the two nations followed. There were two notable pacts which led to the bonds of friendship thus paving the way to economic restructuring for Hungary which struggled from its decline from the Communist government. Here are the two trade agreements it had established with US:
Trade Conflicts between the Two Nations
- Trade Agreement with the US for suspension/reduction of tariffs. There was no definite name for this trade agreement between Hungary and the US. However, the pact aimed at establishing the reduction or suspension of tariffs on US agricultural and industrial products. The primary US agricultural commodities included are pecans and almonds. The benefits of the Hungarian government were risked but there was a strong commitment from the former to form part of the trade relations of the US. This was not an act to pay the financial aid extended by the US government but more of a start of blossoming trade relations.
- Hungary Intellectual Property Rights Agreement. This treaty was signed to focus on the several aspects of intellectual property rights. One of its main goals was to protect the enforcement of patents, copyrights, trademarks, trade secrets and even layout designs for integrated circuits. Production of phonograms was secured against duplication as well. It evolves around all computer programs and other media.
Apart from Hungary's involvement in the war against the United States in the emergence of the World War II, there were other disputes which led to some trade problems. Interfering the supposed start of the comradeship of the two nations, there were several Communist legislations which prohibited the flow of goods to and from both grounds. The concern for protection of intellectual property rights were tackled accordingly via the trade agreement made to its name.
Other bilateral agreement issues include the high imposition of tariffs to agricultural products which was settled by a trade agreement. They have reached a consensus to lower down the rates and it started as early as April 2002. There should have been a trade barrier on this matter should it not be due to the trade agreement on the suspension and reduction of the tariffs.
The Future of Trade between the Two Nations
Hungary had regarded the efforts of the United States in its economic reconstruction. With the participation of the latter in making the former gain a name for itself in the world economy, all barriers were eliminated. They were able to come up with a commitment to stand alongside each other and improve the foreign trade they have started. They have disregarded the wars of the past and brought the alliance to higher grounds.
The future definitely holds a lot more of things for the two countries. The generations to come will see how strong the friendship is and the Hungarians will forever be thankful to the contributions of the Americans in their fight for democracy. As they have closed the chapter of Communist rule, they envision better and brighter days ahead of them. There is no more room for hatred and revenge as a wider area for privileges, hope and agreements will lead them to the right path.
US-Hungary Trade References