The Beginning of Trade
Poland is a nation found in East Central Europe. The deterioration of the Polish economy was a major factor in the crisis thus forcing its communist party (Polish United Workers' Party) to surrender its power. Heavy borrowing from western banks in the 1970's left Poland saddled with an unmanageable debt. In 1987, the Polish government reached an agreement with its creditors on debt restructuring. Western aid to Poland increased significantly after the political revolution of 1989.
The new non-communist government of Poland sought to bring about economic reformation. Price subsidies on foodstuffs and manufactured goods were removed and a lot of state-owned industries were sold to private owners as well as foreign companies and work-force collectives. At first, the attempt seemed to be chaotic. Inflation and unemployment rose dramatically while industrial production and its currency lost its true value. With the aid of foreign credits and investments, the situation was finally convenient for the Polish population. All things related to trade had stabilized and found its way to world trade.
In line with the Communist policy emphasizing heavy industry, iron and steel production, manufacturing was at the heart of it all between 1945 to 1989. The chemical industry was developed in the same period. The chief light industry was textiles. In the start of the 1970's, greater attention was diverted to production for the consumer market like motor vehicles, food processing and electronics.
Temperate-zone grains produced in Poland include barley, wheat, oats and rye. The country's production of potatoes and sugar beets ranks among the world's highest. Pork was the traditional animal stock bred on polish farms while cattle and sheep farming increased in the 1980's.
As a member of the so-called Council for Mutual Economic Assistance (Comecon), Poland's trade was primarily directed to other communist parties. In the 1970's however, the exports of the group declined. In the 1980's, Poland opened its gates to world trade finding a partner in developed countries. In 1989, Poland started a prospering bilateral relation with the United States. The Polish government plays a vital role in significant aspects of US government including the Global War on Terror, Operation Enduring Freedom in Afghanistan as well as coalitions with Iraq.
Major Exports and Imports Between US and Poland
After the decline of its economy, Poland was supported by United States in many ways. In fact, in the 1980's, the latter extended a $765 million agricultural assistance to its comrade. As the years go by, they have developed a sense of belonging in each other's trade.
For the period ending July 2008, the US Census Bureau tracked a favorable result in terms of exports and imports of the two nations. The United States' exports to Poland garnered a total of $2.72 billion while the imports of the former from the latter totaled $1.75 billion. For 2006, the following data were gathered:
Poland Business and Economic Relations Treaty
- Polish Exports to US. American imports from Poland earned a total of $2.3 billion with civilian aircraft engines awarded the top spot with a total amount of $236.3 million equivalent to 10.5%. Other products along this line are: other industrial machinery; electric apparatus and parts; household items like furniture and baskets; glassware, porcelain and chinaware; other petroleum products; measuring, testing and control instruments; alcoholic beverages excluding wine; other automotive parts and accessories; and advanced metal manufacturing excluding steel. With the last product, a $58.5 million earning was tracked at a rate of 2.6%.
- Polish Imports from US. For the year 2006, the United States exported a total of $2 billion to Poland. Of this amount, $346.5 million equivalent to 17.7% went to complete military aircraft. Included on the top ten list are: telecommunications equipment; new and used passenger cars; military aircraft including engines and turbines; pharmaceutical preparations; pulpwood; medicinal equipment; tanks, artillery, missiles, rockets, guns and ammunition; primary synthetic rubber; and measuring , testing and control instruments. The last product garnered a total of $38.4 million or 2% of the total imports.
- Fastest-Growing US Exports to Poland. Highest percentage of sales increase was awarded to commendable commodities from US. Complete military aircraft whose total sales went up by 532,000% from 2005 was found on first place. Other items with remarkable sales are: military apparel and footwear; tanks, artillery, missiles, rockets, guns and ammunition; parts for military equipment; and military aircraft engines including engines and turbines. The last product gained an increase in sales of 899%.
- Fastest-Growing US Imports from Poland. Of the total exports of Poland to the US, there were items found to increase significantly in terms of sales figures. Zinc, was found on top with a total earning of $2.8 million up by 17,030% from 2005. Following zinc are: rubbers, wood cork, gums and resins; other petroleum products; civilian aircraft engines; and pulp and paper machinery. The fifth-placer gained $8.5 million equivalent to a not-so embarrassing 236% increase from 2005.
Poland is a member of the European Union but is at the same time reliant upon United States' support. With these evident facts, the Polish government found it necessary to enact a trade agreement that presupposes excellent trade between the two nations geared to minimize the conflict between the US rulings and the EU laws. The key provisions were directed to the following:
Dispute Between the Two Countries
- Treatment. This specifically reiterates non-discriminatory treatment to foreign investment except for some specific provisions applicable to the laws of each land. The exceptions set forth within the treaty were done in order to protect the interests of the people. Poland have included a list of exceptions, however, the government have expressed removal of such as the privatization process progresses. Furthermore, Poland assured the US that MFN treatment will be given to both its nationals and companies for any interest to acquire government owned business under the privatization standards.
- Expropriation. Property interests for both parties were protected especially when it comes to international business. No investor from the US shall be deprived of his interest to invest in Poland and vice versa. Compensation which is equivalent to the fair market value of the expropriated amount should be paid with no delay plus accrued interests from the expropriation date.
- Transfers. Any transfer related to investment could be made on both sides. Particularly, these transfers refer to returns, compensation for expropriation, proceeds from sale of investment, payments under contract and capital contributions to the investment's development and maintenance. Transfers should be deemed made in the currency of the particular party involved at the present exchange rate.
As mentioned above, Poland was a member of the EU and with this fact, conflict between the US and Poland was seen to be in the way. With so many standards which were not met, the two nations found themselves on the verge of trade disparities. Other significant issues like the following needed to be resolved:
The Future of US and Poland Trade Relations
- Import Policies. Importation was significantly affected with some foreign trade barriers getting in the way. Certain agricultural products were permitted to enter the other side with an import permit on hand. Bulk importation was hampered because of the maximum limit set. Red meat and poultry products from the United States should also enter sanitary procedures which could either restrict or allow the importation of such commodities to enter the boundaries of Poland. The US actively disputes to this prohibition. Other importation issues extend to the high duties of ad valorem on alcoholic beverages.
- Government Procurements. Certain US and other foreign firms complained of a less transparent public procurement process in Poland. With this point, some have alleged Polish government of corruption. Price preference amounting to 20% was given to domestic bidders thus hindering foreign investors to come in. In this note, Polish businesses categorized under foreign status were given the right to transform themselves as domestic bidders. This, for other countries, was truly unfair.
Apart from the topics mentioned above, Poland had rejected the United States bid to host the Ballistic Defense System. On this regard the Poland's missile defense site was affected. Several arrangements and conferences were made and it even involved future rulers of the US Government, either John McCain or Barrack Obama. Little is known of the entire issue but speculations have been spreading like wildfire. In the near end, there are possibilities that Poland's site will be rejected by US as well.
With some of these pressing situations, some may think that it is too impossible for trade to flourish. However, it is always true that the governments of each country change. In time, when both officials from Poland and the United States come into terms, there is a great tendency that all conflicts could be resolved. The most important thing for any foreign trade to prosper is transparency at all times. Vested interests should always be eliminated. It should be stressed that trade relations are not one-way streets. It is more of a symbiotic process.
US-Poland Trade References