oversight

International Trade: Czech Trade Data

Published by the Government Accountability Office on 1990-09-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                                                     INTERNATIONAL
                                                     TRADE
                                                     Czech Trade Data




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                                 1
United States
General Accounting Office
Washington, D.C. 20648

National Security and
International Affairs Division

B-241103
September 20,199O
The Honorable Lloyd Bentsen
Chairman, Committee on Finance
United States Senate

Dear Mr. Chairman:
As you requested, we are providing information to help in evaluating
the impact of the trade agreementbetween the United States and
Czechoslovakiasigned in April 1990. This agreement,which is awaiting
congressionalapproval, would grant Czechoslovakia“most-favored-
nation” (MFN)* trade status. In particular, the report includes data on (1)
Czechexports and imports to selectedcountries, (2) tariff rates on U.S.
imports from Czechoslovakiaas compared to rates on imports from
countries with MFN status, (3) Czechoslovakia’seligibility for receiving
generalized system of preference (GSP)2 trade benefits, and (4) leading
U.S. exports to and imports from Czechoslovakiafrom 1987 to 1990.

Czechtrade data shows that 89 percent of its exports to the world are
manufactured goods.Machinery and transport equipment account for
over one-half of all Czechexports. The Soviet Union and East
European countries are Czechoslovakia’smajor trade partners,
accounting for about 70 percent of its total trade. The United States, by
contrast, is a minor trade partner, accounting for less than one-half of 1
percent of Czechoslovakia’strade.
Granting MFN status to Czechoslovakiawould reduce the weighted
averagetariff rate3on dutiable products from 29.6 percent to an esti-
mated 6.2 percent, a 24-percentagepoint drop. U.S. tariff rates on Czech
imports are generally high becausethe bulk of its exports are manufac-
tured goods,commodities with high tariff rates, as compared to natural
resourcesand semiprocessedgoods.A drop in tariff rates would prob-
ably encouragean increase in Czechexports to the United States. How-
ever, becauseCzechoslovakia’sshare of U.S. imports is less than one-
tenth of 1 percent, and its total exports to all countries amount to only
5.5 percent of total US. imports, even a substantial increase in U.S.
                                                                                                 ,c

‘MFN treatment generally refers to the practice of providing nondiscriminatory treatment in the form
of customs duties and other charges imposed on imported products.

2GSPprovides temporary duty-free tariff preferences for developing countries.

3The tariff rate is weighted using the actual values of U.S. imports.



Page1                                                     GAO/NSIAD-99-299BRIntemationalTrade
B-241103




imports from Czechoslovakiawould probably have only a small impact
on total US. imports.
Czechoslovakiameets the per capita income eligibility requirement for
the generalizedsystem of preferencesprogram. However, to receive GSP
benefits, Czechoslovakiamust first receive MFN status, Almost all of
Czechoslovakia’sleading exports to the United States would qualify for
GSPbenefits. However, providing Czechoslovakiawith GSP benefits
would not lower U.S. tariff rates on Czechimports as dramatically as
granting the country MFN status. With GSP, the tariff rate on all eligible
Czechexports to the United States would decreasefrom an averageMFN
rate of 6.2 percent to zero.
US. exports to Czechoslovakiaaveraged$61 million annually between
1987 and 1989, with hides and skins, measuring instruments and appa-
ratus, fertilizers, and specializedmachinery being the leading exports.
U.S. imports from Czechoslovakiaaveraged$82 million during the same
period, with footwear, glassware,tractors, and men’s coats and jackets
being the leading imports.

Appendix I provides information on Czechexports and imports to
selectedcountries. Appendix II includes information on tariff rates on
U.S. imports from Czechoslovakia.Appendix III discussesCzechoslo-
vakia’s eligibility for the GSP program. Appendix IV shows leading
U.S. exports to and imports from Czechoslovakia from 1987 to 1989.
Appendix V describes our objectives, scope, and methodology.
As agreedwith your office, we will distribute this briefing report to
other congressionaloffices and will make it available to additional inter-
ested parties upon request.
Pleasecontact me at (202) 276-4812if you or your staff have any ques-
tions concerning this briefing report. Other major contributors to this
briefing report are in appendix VI.
Sincerely yours,


Allan I. Mendelowitz, Director
Trade, Energy, and Finance Issues



Page 2                                  GAO/NSIAD-99-298BRInternational Trade
Page 3   GAO/NSIAD9@298BRInternational Trade
                                                                                           .


contents


Letter                                                                                           1

Appendix I                                                                                       6
CzechExports to and czechzxpofis                                                                 6
                                                                                                 9
Imports From Selected Czech
                         imports
Countries
Appendix II
Tariff Rates on U.S.    US. Tariff Rateson Leading CzechExports
Imports From
Czechoslovakia
Appendix III                                                                                    17
Czechoslovakia’s        The U.S. GeneralizedSystem of PreferencesProgram                        17
Eligibility for
Generalized System of
Preference Benefits
Appendix IV                                                                                     22
Leading U.S. Imports
From and Exports to
Czechoslovakia
Appendix V
Objectives, Scope,and
Methodology
Appendix VI                                                                                     28
Major Contributors to
This Report
Tables                  Table I. 1: Structure of CzechExports to Selected
                            Countries


                        Page 4                                 GAO/NSIAD-9@298BRInternatIonal Trade
.
    contenta




    Table 1.2:Leading CzechExports to SelectedCountries                    8
    Table 1.3:Structure of CzechImports From Selected                     10
        Countries
    Table 1.4:Leading CzechImports From SelectedCountries                 11
    Table 1.6:Czechoslovakia’sExports, Imports, and Trade                 12
        Balance for SelectedCountries
    Table II. 1: MFN and Non-MFN Tariff Rates on Leading                  14
        U.S. Imports From Czechoslovakia
    Table II.2 MFN and Non-MFN Tariff Rates on U.S.                       16
        Imports From CzechoslovakiaWith the Highest Rates
    Table 111.1:Per Capita GNP and GSPEligibility for                     19
        Czechoslovakia
    Table 111.2:MFN and Non-MFN Tariff Rates and GSP                      20
        Share of Leading U.S. Imports From Czechoslovakia
    Table IV. 1: Leading U.S. Imports From Czechoslovakia                 23
    Table IV.2: Leading U.S. Exports to Czechoslovakia                    24




    Abbreviations

    GNP        gross national product
    GSP        generalized system of preferences
    MFN        most-favored-nation
    SITC       Standard International Trade Classification
    U.N.       United Nations


    PageII                                  GAO/NSIAD&%298BRIntematioml Trade
Appendix I                                                                                                      L
Czechlkp~rt~ to and linports From                                                                           ’
SelectedCountries

                The bulk of Czechexports to the world are manufactured goods.
                Machinery and transport equipment account for more than one-half of
                all exports. Fuels and machinery and transport equipment each account
                for about one-third of Czechimports. The Soviet Union and East
                European countries are Czechoslovakia’smajor trade partners,
                accounting for about 70 percent of its trade. The United States is a small
                trade partner, accounting for less than one-half of 1 percent of
                Czechoslovakia’strade.


Czech Exports   States, and other selectedcountries and regions during the mid-1980s.
                The figures are basedon trade data reported by Czechoslovakiato the
                United Nations (U.N.).’ The Soviet Union and Eastern Europe account for
                $12.6 billion, or 70 percent, of Czechoslovakia’sexports. The United
                States, by contrast, accountsfor less than 0.4 percent of its exports.




                ‘The data are based on a 3-year average of trade to ensure that normal trade patterns are repre-
                sented. The averages are based on the latest years of available Czech data: 1983,1984, and 1986.
                Czechoslovakia includes arms trade in its aggregate trade statistics. However, Czech arms trade is not
                reported at any disaggregated commodity level.



                Page 6                                                  GAO/NSIAIMO-298BBIntemational Trade
         .

                                                      Appendix I
                                                      CkechExpomtoandImlmtskom
                                                      SelectedCountries




Table 1.1:Structure of Czech Exports to Selected Countries (Mid-1980s)
Dollars
----____ in thousands
                                                                                      European                        Eastern      Developing
    Commodity category                      World              USA        Japan      Community            USSR        Europe        countries           China
    All commodities                    $18,028,819-        $68,102       $44,580       $1,752,354 $7,744,353 $4,818,731              $1,497,082      $155,833
                                                                                Percent of country/region total
(1) Fuels, minerals, ._-.---
                       and metals             4.82              0.00       17.86             10.42           0.69          5.39             0.62           0.00
(2) Other primary commodities8                5.75             10.96       38.49             14.97           4.62          2.72             3.80           0.00
(3) Machinery and transport
        eaubment                             52.95             10.77         6.73            12.47         63.07         58.79             68.60         65.45
(4) Ot~hec;anufactures, of
l,_.-_-_l-~ ---- -___.-        .--.-         36.48             78.27       36.92             62.15         31.62         33.10             26.98         34.55
   (a) Textiles and
____------~--____   clothing                  6.05             22.08        6.57              9.39          6.22          2.98              3.07          0.00

    TotsIb                                  100.00          100.00        100.00           100.00         100.00        100.00           100.00        100.00

    Share of total exports to
      selected countries                    100.00              0.38         0.25              9.72        42.96         26.73               8.30          0.86
                                                      Notes: Export figures are 3-year averages for the latest years of available Czech data: 1983, 1984, and
                                                      1986. Commodity categories are those used by the World Bank’s World Development Report,

                                                      Czechoslovakia does not report arms exports at a disaggregated level. According to a US Arms Con-
                                                      trol and Disarmament Agency report, for the 5year period 198266, Czechoslovakia’s average annual
                                                      arms exports were $950 million, or 5.3 percent of its nonmilitary exports. The Soviet Union received 29
                                                      percent of Czechoslovakia’s arms exports; Eastern Europe, 9 percent: and developing countries, 62
                                                      percent (of which Libya and Iraq were the largest recipients, with 29 percent and 9 percent,
                                                      respectively).
                                                      aOther primary commodities include food and live animals, beverages and tobacco, inedible crude
                                                      materials (excluding mrnerals and crude fertilizers, and metalliferous ores), oils, fats, and waxes.

                                                      sFigures may not add up to 100 due to rounding.
                                                      Source: UN. Standard International Trade Classification (SITC) Revision 1 trade data; U.S. Arms Control
                                                      and Disarmament Agency, World Military Expenditures and Arms Transfers, 1987, pp. 127-126.


                                                      Manufactured goodsrepresent 89 percent of Czechexports, with
                                                      machinery and transport equipment accounting for 53 percent of the
                                                      total. Fuels, minerals, metals, and other primary commodities account
                                                      for the remaining 11 percent. Machinery and transport equipment
                                                      account for about 12 percent of Czechexports to the western industrial-
                                                      ized countries shown in table 1.1,compared to about 61 percent of its
                                                      exports to the Soviet Union and Eastern Europe and 69 percent to devel-
                                                      oping countries. Whereastextiles and clothing constitute only 6 percent
                                                      of Czechoslovakia’stotal exports, they represent 22 percent of its
                                                      exports to the United States.
                                                      Table I.2 provides a detailed breakdown of the average annual dollar
                                                      value of leading Czechexports to selectedcountries and regions. The


                                                      Page 7                                                    GAO/NSIAIMO-298BRInternational Trade
                                                     Appendix I
                                                     CzechExports to and Importa F’rom
                                                     Selected Countriee




                                                     leading 26 commodity groups account for 73 percent of Czechexports to
                                                     the world. The amount of Czechexports to each country covered by
                                                     these 26 groups ranges from a low of 21 percent for Japan to 90 percent
                                                     for China. The top six commodity group exports are machinery and
                                                     transport equipment.

Table 1.2: Leadlna Czech EXDOIW to Selected Countrio             (Mid1980s)
Dollars in thousands
  .___~_..-_.--  ____
                                                                                 European                       Fu;s;;     Developing
        Commodity group                    World       USA      Japan           Community         USSR                      countries             China
        All commodities               $18.028.819   $68.102    $44.580           $1.752,354   $7.744,353      $4,818.731    $1,497,082         $155,833
(1)     7 1g--Machines,
           nonelec., n&                 3,057,530       264             l            17,633      721,988         321,618       175,618             1,748
(2)       732-Road motor
              vehicles --
__...____......
              -.___-                    1,571,092       445        .    l            70,344      672,942         573,934        92,337           62,497
(3)       717-Textile,
               leather
               machinery                  837,182       681             *             8,938      583,289         166,094        31,545             5,720
(4)       718-Maths.         for
               spcl. inds.                709,214       307        986                9,218      384,531         192,077        58,563             1,565
(5) 715-
               Metalworking
               machinery                  616.205        57      1,502               22,621      318,866         181,378        41,323             7,012
(6)       731 -Railway
               vehicles                   558,730          t            *                33      388,761         120,750         7,007                     *
 ..__.._.“.-..._“__l-_--.---
(7)       851 -Footwear                   511,834     8,121             l            22,886      423,313          28,199         8,614                     1
.-___I.__......
            .-._--
63) 7 11-Power
               machinery, non-
               elec                       499,618          *            *             3,048      233,i 23         77,644        69,657            17,018
(9)     84;--$lothing,         not
                                          489,909     4,778        804               54,395      322,841          42,362         4,963                     l



(10)    712-Agricultural
          machrnerv                       454.964     1.687             *            28.785      149,272         192,061        28,660             2,267
(11)    673~Iron and
          steel shapes                    359,620                       *                                                       72,785             9,658
(12)    321 -Coal, coke,
          briquettes                      358,602          l                l        78,551        1,319         193,644                 I                 l



(13)     678-lronstl
           tubespipes,         etc.       339,345       241                 *        14,597      229,434          62,440         8,575             2,704
(14)     729-Electrical
            math., nes                    284,050          *           57             4,348       39,799         182,397         8,746               264
(15) 674-irn., stl.
            (plate,
             --.___--.sheet)
  .._. .._..._                            272,012     1,205                 *        83,243       20,555          44,216        23,342            21,228
(16) 512-Organic
            chemicals II                  268,861         *        918              120,847            t          53,679           547                     *
(17) 821 -Furniture                       240,705     1,182        456               26,296      169,570          33,262           238                     *
                                                                                                                                             (continued)




                                                     Page 8                                                 GAO/NSIAD-99.298BRInternational Trade
                                                                                 Appe-      1
                                                                                 CzachExportatoandImporLsFrom
                                                                                BelectedChuntrIes




                                                                                                              European                          Eau;&e;z Developing
                Commodity group
        .__--I---.-..                                                 World       USA           Japan        Communlty           USSR                     countries              China
(18)                          714-Office
                                machines                             239,063            .                *               *      154,408           71,632            5,363                 l



(19)                          581-Plastic
                                materials, etc.                      232,458            *        4,237           25.061          26,161           26,046           24.323         7.907
(20)                          724-
                                Telecommunications
                                eauip.                               228,792            *                l         789          160.092           35.392            1.731                 *
(21)                          861 -instruments,
                                apparatus                            217,655            *           49             435           87,798          100,677            3,417                19
(22)                          332-Petroleum
    I              I
                                products                             209,814            l                *       81,292           5,951           16,742                  *               l

        .- .._..       _...    ._ .._   --.-.   _._.   .-   .-

(23)     662-Clay,
             refractory bldg.
             prd.                       192,164                                         l                t       13,786          56,838          108,869            6,256                 1
 ._._.._....._.
          I_ .____...- - .-__._
                              -..-.-.--                                           ---
(24) 722-Elec. pwr.
             math., switchgr.           189,117                                         *                l       18,598          43,708           91,189           16,703                 *
(25)
.              I
                              653-Woven
                                textiles,
                                noncotton                            184,922     8,418             475           32,285          32,088           26,469           12,063                 l




                              Total (selected
                                commoditier)                     $13,123,459   $28,525          $9,484        $812,158       $5,280,107       $3,042,435       $702,378       $139,807
                              Percent of total
                                Czech exports                          72.79     41.89           21.27            46.35           68.18            63.14            46.92         89.59
                                                                                Notes: Export figures are 3myearaverages for the latest years of available Czech data: 1983, 1984, and
                                                                                1986.There are 248 3-digit SITC Revision 1 commodity groups.
                                                                                An * denotes less than $500.
                                                                                aNes denotes not elsewhere specified.
                                                                                Source: UN. trade data at the 3-digit SITC Revision 1 level



                                                                                Table I.3 shows the structure of Czechimports from selectedcountries
Czech Imports                                                                   and regions during the mid-1980s. The Soviet Union and Eastern Europe
                                                                                provide 46 percent and 28 percent of Czechimports, respectively. The
                                                                                United States accounts for less than 0.4 percent of Czechimports. Fuels
                                                                                and machinery and transport equipment each account for about one-
                                                                                third of Czechimports. Fuel from the Soviet Union represents 94 per-
                                                                                cent of Czechoslovakia’sfuel imports. Food, representing 7 percent of all
                                                                                imports, comesprimarily from developing countries and Eastern
                                                                                Europe.
                                                                                Table I.4 shows the average annual dollar value of leading Czech
                                                                                imports from selectedcountries and regions. The leading 25 commodity
                                                                                groups account for 74 percent of Czechimports from the world. The
                                                                                amount of Czechimports from each country covered by these 25 groups


                                                                                Page 9                                                    GAO/NSLAD4@298BRInternational Trade
                                                                                                                                                     ,
                                                     Appendix I
                                                     CzechIEwportr,to and Importa From
                                                     Sekted Countrlee




                                                     ranges from a low of 35 percent for China to 66 percent for Japan. The
                                                     top six commodity groups are petroleum products, nonelectric
                                                     machinery, gas, motor vehicles, nonferrous metals, and machines for
                                                     special industries.

Table 1.3:Structure of Czech Imports From Selected Countries (Mid-1980s)
Dollars     in thousands
                                                                                   European                            Ea%;f;;     Developing
          Commodity category                World         USA         Japan       Community               USSR                      countries            China
          All commodities             $18163,642      $63,402       $74,137        $1,682,224       $8,354,520      $5,091,372        $846,227      $184,841
                                                                               Percent of country/region total
(1)       Food                                6.53       14.69          0.34             10.56              0.68            6.72          43.75          39.70
12)       Fuels                             30.53         0.00          0.09             %.25             62.36             3.90          12.53           0.24
(3)       Other primary
             commodities++                   11.69       24.67         11.35             11.92             10.56            5.34          34.37          23.80
(4)        Machinery and
              transport
  ^..     . .equipment
              ..---.-                       32.00        17.81         67.77             36.91             19.54          57.04             0.52          0.15
(5)       Other manufactures                 19.22       42.83         20.18             40.36              6.85          26.99             8.83         36.10

      TotsIb                                99.97      100.00         99.73            100.00             99.99           99.99         100.00           99.99

      Share of total imports   from
        selected countries                 100.00         0.35          0.41              9.26            46.00           28.03             4.66           1.02

                                                     Notes: Import figures are 3-year averages for the latest years of available Czech data: 1983, 1984, and
                                                     1986. Commodity categories are from World Bank’s World Development Report.

                                                     Czechoslovakia does not report arms imports at a disaggregated level. According to a U.S. Arms Con-
                                                     trol and Disarmament Agency report, for the 5-year period 1982-86, average annual arms imports were
                                                     $450 million, or 2.5 percent of its nonmilitary imports. Czechoslovakia receives 94 percent of its arms
                                                     imports from the Soviet Union, 1 percent from Poland, and 5 percent from other countries,
                                                     ‘Other primary commodities include crude materials (excluding fuels, oilseeds, and nuts), tobacco, and
                                                     nonferrous metals.

                                                     bDue to rounding, the totals may not add up to 100 percent.
                                                     Source: UN. SITC Revision 1 trade data; U.S. Arms Control and Disarmament Agency, World Military
                                                     Expenditures and Arms Transfers, 1987, p. 128.




                                                     Page 10                                                     GAO/NSIAD-W298BRInternational Trade
            .

        I

                                                       Appendix I
    *                                                  CzechExportu to and Importa From
                                                       SelectedCamtrIes




Table 1.4: Lwdlng &ch             Imports From Selected Countries (Mid-1980s)
Dollars in thousands
                                                                              European                       EaIaw;       Developing
            Commodity group                  World         USA      Japan    Community            USSR                     countries            China
            All commodities            $18,163,642      $63,402    $74,137     $1,682,224     $8,354,520   $5,091,372       $846,227         $184,841
(1)         33-Petroleum
               products                    3,664,091          0          0          2,351      3,528,276       55,774          35,586              452
(2)         719-Maths.,
               nonelec., nes               2,158,497        444      3,718        230,993         34,892      451,358            237               268
(3)         34-Gas, nat. 81
               manufctd.                   19463,769          0          0                0            0              0             0                0
(4)         732-Road motor
               vehicles                      554,269          0          0         16,069        124,891      381,543               0                0
(5)         68-Nonferrous      metals        548,571        188        523         68,118        240,461       57,326          38,171                0
(6)         718-Machs for      spcl. inds.   521,364      4,851      7,081         99,676         90,202      204,272               0                0
(7)         714-Office machines              405,345        145        285         12,250         80,605      282,732             292                0
(8)         281-Iron ore,concentrates        377,842          0          0              0        339,993        1,218          31,030                0
(9)         715-Metalworking
               machinery                     358,874        528        323         61.087         45,510      176,970              56                0
(10)        712-Agricultural
               machinery                     354,127        192          0         16,716         41,610      270,932            245                 0
(11)        711n;;;.';rmach.,
                                             336,115          0          0         25,720        172,886       96,680            403                 0
(12)        32-Coal,coke,
               briquettes                    309,197          0          0              0        122,282      129,294               0                0
(13)        729-Electrical    math., nes     304,431        504     20,363         21,162         38,949      173.695              75                0
(14)        724-Telecomm.
               equip.                        237,222          0      7,132          6,389         52,030      139,770               0                0
(15)        263-Cotton                       228.506          0          0          6.497        120.573            0          66.103           16.677
(16)        561-Fertilizers,
               manufctd.                     208,125     16,149          0          5,557         88,162       62,291           2,983                0
(17)
.       I
            512-Oraanic
               chembals                      185,488         58        228         86,140         32,563       32,355             166                0
(18)        861-Instruments,
               apparatus                     180,237        170        266         36,274              0       82,055                  0           449
(19)        717-TextileS leather    math.    160.293        818        720         42.947         14.735       75.429                  0             0
(20)        283-Nonferbase       mtl
               ore,conc                      157,672         73         81         19,332         52,648       13,242          28,668           14,133
(21)        841f;Clothing, not of
                                             157,165        581          0          8,108              0       38,619           3,320           18,062
(22)        541eTcyedicinal prods.,
                                             152,828          0      1,500         22,821         12,936       72,218               0            5,813
(23)        231~-Rubber(crude,svn.)          149.026          0      6546          30,682         41,804       16,533          39,547                0
(24)        051-Fruitfrsh,Futs
               frshjdry                      148,584          0          0         29,902              0       52,091          50,950             2,153
                                                                                                                                           (continued)




                                                       Page 11                                         GAO/NSlAIMW298BR Intemational Trade
                                                                                  European                            E$szpt      Developing
          Commodity group                World           USA         Japan       Community               USSR                      countries            China
(25)      061s--$malfeeding
                                        143,433         4,419              0           18,192             4,320          15,419          94,434          6,649

      Total (aelected
        commoditlea)               $18,4615,070      $29,119       $48,766         $866,983        $5,280,327      $2,881,818        $392,266        SS4,6S6

      Percentoftotal      Czech
        imports                           74.13         45.93         65.78                               63.20           56.60           46.35          34.98
                                                    Notes: Import figures are 3-year averages for the latest years of available Czech data: 1983, 1984, and
                                                    1986.

                                                    Due to incomplete reporting of trade data at the 3.digit commodity group level, e-digit commodity
                                                    groups are used for four items: petroleum, natural gas, nonferrous metals, and coal.
                                                    Source: UN. SITC Revision 1 trade data.


                                                    Table I.6 may provide someinsight into whether Czechoslovakiahas
                                                    managedits trade to achieve bilateral trade balances.Bilateral trade
                                                    balanceshave been sought within the Council for Mutual Economic
                                                    Assistance,the trade institution to which Czechoslovakiabelongs.It is
                                                    unclear whether achieving a bilateral trade balance will remain a goal of
                                                    the Czechtrade policy.

                                                    Table I.6 shows Czechoslovakia’sexports, imports, and trade balance
                                                    for selectedcountries during the mid-1980s. During this period,
                                                    Czechoslovakiahas generally run a trade surplus with market econo-
                                                    mies and a deficit with the Soviet Union and other East European coun-
                                                    tries. Overall, it had a trade deficit of about $136 million, less than 1
                                                    percent of its exports.

Table 1.5:Crechoalovakla’a        Exporta, Importa, and Trade Balance for Selected Countriea (Mid-1980s)
Dollars    in thousands
                                                                                   European                           pw31~:      Developing
                                          World            USA         Japan      Community              USSR                      countries            China
Exports
---                                  $18,028,819       $68,102       $44,580        $13752,354      $7,744,353      $4,818,731      $1,497,082      $155,833
Imports                               18,163,642        63,402        74,137         1,682,224       8,354,520       5,091,372         846,227        184,841
Trade balance                          ($134,823)       $4,700       ($29,557)         $70,130       ($610,167)      ($272,640)       $650,856       ($29,008)
Trade balance as a percent of
  exports                                  -0.75           6.90       -66.30               4.00          -7.88           -5.66            43.47         -18.61
                                                    Notes: Import and export figures are 3-year averages for the latest years of available data: 1983, 1984,
                                                    and 1986. Parentheses indicate a negative trade balance.
                              Y                     Source: UN. trade data.




                                                    Page 12                                                   GAO/NSIAD-SO-2BSBR
                                                                                                                               Intemational Trade
Appendix II

Tariff Rateson U.S. Imports
From Czechoslovakia

                                U.S, tariff rates on Czechimports are generally high becausethe bulk of
                                Czechexports are manufactured goods.Granting MFN status to
                                Czechoslovakiawould reduce the averagetariff rate on dutiable prod-
                                ucts by more than 24 percentagepoints, from the current 29.6 percent,
                                to an estimated 6.2 percent.’ This drop in tariff rates would probably
                                encouragean increasein Czechexports to the United States.However,
                                since Czechoslovakia’sshare of U.S. imports is less than one-tenth of
                                1 percent, and total Czechexports to all countries represent only
                                6.6 percent of total US. imports, even a substantial increasein Czech
                                imports would probably have only a small effect on total U.S. imports.
                                These effects, however, may vary for a few selectedproducts.


U.S. Tariff Rates on            An examination of U.S. tariff rates on Czechimports may help in
                                assessingthe possible effects of granting MFN status to Czechoslovakia.
Leading       Czech   Exports   Table II. I presents the value of imports and comparable MFN and non-
                                MFN ad valorem equivalent tariff rates for the 26 leading U.S. imports
                                from Czechoslovakiaduring the 1987-89period. The ad valorem
                                equivalent tariff rate is computed as a ratio of calculated duties col-
                                lected to total dutiable imports. The 26 leading commodity groups
                                account for 84.4 percent of all U.S. imports from Czechoslovakia(col. 2).
                                The averagetariff rate on dutiable imports from Czechoslovakiais
                                29.6 percent (col. 3).2This comparesto an averagetariff rate of 6.2 per-
                                cent (col. 4) for dutiable imports from all MFN countries. For the
                                26 leading commodity groups, the averagenon-Mm tariff rate on Czech
                                imports is 28.3 percent, compared to the averagetariff rate of 7.6 per-
                                cent for MFNcountries.




                                ‘This estimate of the average tariff rate on imports from MFN countries is based on the product
                                composition of imports from all MFN countries. While this is not the same product composition as
                                current U.S. imports from Czechoslovakia, the estimate may better approximate the average tariff
                                rate if Czechoslovakia is granted MFN status and diversifies its exports to the United States.
                                ‘The average ad valorem equivalent tariff rate is weighted using actual values of U.S. imports from
                                Czechoslovakia. Since Czechoslovakia may export few or no commodities with high tariff rates, this
                                weighting procedure may underestimate the non-MFN tariff rate facing Czechoslovakia.



                                Page 13                                                GAO/NSIAD-90-29SBRIntmnational Trade
                                                       Appendix II
                                                       Tariff Rateaon U,S,Importa
                                                       From C=Wti




Table 11.1:MFN and Non-MFN Tariff Rates on Leading U.S. Imports From Czechoslovakia (1987-89)
Dollars in thousands
                                                                                                   Rate on dutiable imports       Czech share of
                                                                       U.S. import8 from         Czechoslovakia    MFN countries    U.S. imports
      rmodity        group                                              Ctechoslovakla                 (wry;j
-._._-.                                                                                (2)                              (perce?l       (percei3
      All commodities                                                               $81,600                29.53             5.17           0.02
(1)     851 -Footwear                                                                 9,831                   20.01                10.-40               0.12
(2)     665-Glassware                                                                 8,775                   49.48                10.97                1 .Ol
(3)     722--$;ytors      (other than mechanical handling
-_-.--..^ _^__._____-                                                                 5,308                    0.00                 2.19                0.44
(4)     841-Men’s or boys’ coats, jackets, text. not knit
--. --..-.--                                                                          4,939                   59.36                20.65                0.11
(5)     054-Vegs fr, chid, froz; roots, tubers, fresh, dried
 --__---~                                                                             4,504                   10.35                 9,.98               0.52
(6)
-___-.- 673-Iron & nonalloy steel flat-roll prod, not clad., etc.                     4,498                   20.07                 5.13                0.20
(7)
---     625-Rubber      tires, inter treads, tire flaps, & inn tubes    .             4,375                   10.00                 4.09                0.18
(8)     654-Woven fabrics of text mat, not cotton or
.--.--____ manmade                                                                    3,345                   42.90                14.11                0.52
(9)
---_ 679-Iron & steel tubes, pipes, fittings, etc.                                    2,771                   14.14                 4.31                0.14
(10) 017-Meat & edbl meat, prepared or preserved nes
--                                                                                    2,544                    2.61                 2.72                0.36
(11)
-_      676-Iron & steel bars, rods, angles, shapes, & sects.                         2,009                    5.80                 3.19                0.11
(12)
--      821 -Furniture & pts; bedding, mattresses, etc.                               1,908                   41.22                 3.61                0.04
(13)
-___    964-Est    of low-valued items eligible fr informal entry                     1,439                    0.00                 0.00                0.06
(14) 112-Alcoholic beverages                                                          1,288                   20.79                 2.91                0.04
(15) 72~;ePr$;ng & bookbindng machinery & parts
                                                                                      1.224                   19.59                 2.73                0.10
(16)
-_^~- 897-Jewelry,    goldsmiths’ & silversmiths’ wares, etc.                         1,182                   81.56                 7.18                0.04
(17) 541 -Medicinal products, except medicaments                                      1,159                   11.49                 4.52                0.09
(18) 731cayh       tools workng by removing met1 or 0th
                                                                                      1,148                   30.00                 4.31                0.07
(19) 693-Articles,        of plastics, nes                                            1,123                   29.67                 4.35                0.04
(20)       848-Apparel&
.“._”l__-_-__---~.-          cl. act. ext. textile; hdgear, all mat.                  1,102                   52.06                 6.59                0.05
(21) 892-Printed matter                                                                 985                   22.67                 2.97                0.06
(22)       658-Made-up
..___...-__-     .._._ -- articles of textile materials, nes                            906                   33.27                 9.46                0.08
(23)       813-Lighting
.- .-.l----i.             fixtures and fittings, nes                                    850                   52.07                 6.87                0.10
(24) 652-Cotton fabrics, woven (not narrow or spec.
              fabrics)                                                                  848                   35.23                 9.25                0.08
(25) 724-Textiles & leather machinery & pts thereof, nes                                834                   33.10                 3.61                0.04

  Total                                                                            $68,884                    28.30                 7.62                0.13
  Percent of total U.S. imports from Czechoslovakia                                   64.43
                                                       Notes: Import figures are 3-year averages for 1987-89.Commodity groups are at the 3-digit SITC Revi-
                         Y                             sion 3 level. Tariffs on Czech imports are assessed at the non-MFN rate.
                                                       Source: Compiled from U.S. Department of Commerce trade data.




                                                       Page 14                                                 GAO/NSIAD90-298BRInternational Trade
    1*
         Appendix II
         Tariff Rates on U.S.Imports
*        F’rom Czechoslovakia




         The averagetariff rates on Czechexports to the United States are high,
         primarily becausethe bulk of its exports are manufactured goods-com-
         modities with high tariff rates compared to natural resourcesand
         semiprocessedgoods.Relatively few Czechexports enter the United
         States duty free. Only 14.9 percent of Czechexports enter the United
         States duty free. This comparesto an averageduty-free share of
         34.5 percent for non-MFNCountriesand 33.7 percent for MFNCOUntIieS.

         Column 6 in table II. 1 shows the relative importance of imports from
         Czechoslovakiato total US. imports for each commodity group. For only
         one commodity group, glassware, the Czechshare of U.S. imports is
         greater than 1 percent. For most groups, the Czechshare is less than
         one-tenth of 1 percent. Overall, Czechoslovakiaaccountsfor 0.02 per-
         cent of total U.S. imports under the current tariff structure.
         In addition to the low share of the U.S. market that Czechoslovakianow
         has, Czechexports to all countries amount to only 5.6 percent of total
         U.S. imports. This suggeststhat even if Czechoslovakiawere to divert
         all of its exports to the United States,this potential import expansion
         probably would not significantly affect the market share or prices for
         these leading commodity groups. In general, exporters with such low
         market shares do not have the ability to substantially affect prices.

         Table II.2 presents U.S. imports from Czechoslovakiawith the highest
         ad valorem equivalent tariff rates. The 25 commodity groups with the
         highest tariff rates account for 12.2 percent of U.S. imports from
         Czechoslovakia.The averagenon-MFNCzechtariff rate for these imports
         is 59.3 percent, compared to an averagetariff rate of 14.4 percent for
         MFNcountries. The amount of high-tariff goodsthat enter the U.S.
         market is small. This may be due to the high tariff rates. Four of the
         groups-jewelry, men’s and boys’ coats, lighting fixtures, and apparel
         and clothing accessories- are amongthe leading US. imports from
         Czechoslovakia,as shown in table 11.1.They account for 81 percent of
         the dollar value of imports included in table 11.2.Textiles account for
         9 of the 25 groups. Lower tariff rates under MFNmay causeCzech
         exports of these products to the United States to increase as well as
         those of other manufactured goodsthat Czechoslovakiadoesnot cur-
         rently export to the United States.




         Page 16                                GAO/NSIAD-90-298BRInternational Trade
                                                             Appendfx II
                                                             Tariff Rata on U.S.Imporb
                                                             From Czechoslovakia




Table 11.2:MFN and Non-MFN Tariff Rates on U.S. Imports From Czechoslovakia With the Highest Rates (1987-89)
Dollars in thousands
                                                                                                                         Rate on dutiable imports
                                                                                               imports from                  Figures in percent
             C$mmodlty group                                                                Czechoslovakia          Czechoslovakia           MFN countries
                                                                                                          (2)                     (3)                    (4)
             All commodities                                                                           $81,600                   29.53                        5.17
(1)     51 &Organ-inorganic      & heterocyclic compounds, etc.                                              61                 131.96                        7.51
(2)     844-Womens’ or girls’ coats, capes, textile, knit, etc                                                5                  89.38                       22.53
(3)     885-Watches and clocks                                                                               56                  84.50                        3.67
(4)     621-Materials    of rubber (pastes, plates, sheets, etc.)                                             0                  82.35                        3.54
(5)     897-Jewelry,    goldsmiths’ & silversmiths’ wares, etc.                                           1,182                  81.56                        7.18
(6)     653-Wov fabrics, mm text mat (not narrow or spec fab)                                               556                  72.86                       16.83
(7)     746-Ball or roller bearinas
!-L--.----
                                                                                                            213                  67.00                        8.91
(8)     845-Articles   of apparel of textile fabrics, nes                                                    52                  66.86                       20.99
(9)     656-Tulles, lace, embroidery, ribbons, trimmings, etc.                                               66                  65.94                        9.29
GO) 582-Plates. sheets, film. foil. & strip of blastics
\       I                                           1    I
                                                                                                             21                  6531                         4.81
(11) 511 -Hydrocarbons         & specified derivatives, nes                                                  70                  63.60                        8.50
(12) 514-Nitrogen-function         compounds                                                                170                  62.26                        9.36
 .-_
(13) 531-Synthetic        organic color. matter, color lakes, etc.                                           61                  61.77                       14.97
-.-----
(14) 542-Medicaments          (includina veterinarv medicaments)                                             20                  61.65                        5.26
  15) 655-Knitted      or crocheted fabrics, nes                                                             20                  61.59                       14.27
-_____--..----
(16) 659-Floor coverings, etc.                                                                                7                  59.99                        6.59
---~.-
(17) 841 -Men’s or boys’ coats, jackets, etc, text, not knit                                              4,939                  59.36                       20.65
fi8) 842-Women/airls’         coats, capes,
                                        .     tex fabric. not knit                                           98                  58.49                       17.40
._~_.-.-
(19) 846-Clothingaccs.,         of tex, knit or nt, ext. baby                                                96                  57.97                       13.33
(20) 629-Articles      of rubber, nes                                                                        12                  57.69                        4.48
-1--1               --
(21) 843-Men’s or boys’ coats, jackets, text, knitted                                                        50                  54.56                       23.87
-___._      -.-._--
(22) 664-Glass                                                                                              276                  52.09                        5.78
l--L-~.-...----..
(23) 81%Lighting        fixtures and fittings, nes                                                          850                  52.07                        6.87
(24)
----         848-Apparel&       cl act exe textile; hdgear, all mat.                                      1,102                  52.06                        6.59
(25)         512-Alcohols.     phenols & haloaenated derivativs                                               1                  50.00                        8.95

      Total (selected commodity groups)                                                                 $9,985                   59.34                       14.36
      Percent of total U.S. imports from Czechoslovakia                                                   12.24
                                                             Note: Import figures are 3-year averages for 1987-89.Commodity groups are at the 3-digit SITC Revi-
                                                             sion 3 level. Tariffs on Czech imports are assessed at the non-MFN tariff rate.
                                                             Source: Compiled from U.S. Department of Commerce trade data.




                                                             Page 10                                                 GAO/NSIAD-90-2QSBltIntmnational Trade
 Ppen
~~&~oslovakia~sIEligibilim for Generalized
Systemof PreferenceBenefits

                               Czechoslovakiamust first receive MFN status to be eligible for GSPbene-
                               fits. Granting GSP benefits to Czechoslovakiawould not lower U.S. tariff
                               rates on Czechimports as dramatically as granting CzechoslovakiaMFN
                               status. The tariff rate on all dutiable GSP Czechexports to the United
                               States would decreaseto zero, compared to an averageMPN rate of
                               6.2 percent. Almost all of Czechoslovakia’sleading exports to the United
                               States would be eligible for GSP benefits.’

                               Granting GSP to Czechoslovakiawould have little effect on U.S. trade,
                               however. Only 3.4 percent of U.S. imports from all countries enter the
                               United States under the GSPprogram. Even if all Czechexports entered
                               the United States under GSP, it would not significantly affect U.S. market
                               shares or prices for these commodity groups.


The U.S. Generalized The   U.S. GSP program, instituted January 1, 1976, provides for tempo-
                      rary duty-free tariff preferences for developing countries. The program
System of Preferences allows nonreciprocal, temporary preferential treatment to beneficiary
Program               developing countries to help them competeeffectively with industrial-
                      ized nations in the U.S. market. The principle underlying GSPis that
                               trade, rather than aid, is a more cost-effective way of promoting sus-
                               tainable development and of promoting U.S. exports. As of January
                               1990,27 countries, including Czechoslovakia,had provided GSPprefer-
                               encesto other countries.2

                                The President has the authority to grant GSPbenefits for certain prod-
                                uct@imported from eligible beneficiary developing countries, provided
                                that at least 35 percent of the product’s value is added in the benefi-
                                ciary country. GSP benefits are granted to a beneficiary country only up
                                to a certain dollar value (Le., cost of materials and processing)or certain
                                percentageof the total imported product. In 1989, GSPbenefits were
                                afforded to about 136 countries on approximately 4,160 products.


                                ‘Because these commodity groups are at an aggregate level, they include some individual commodi-
                                ties that are not eligible under GSP.These commodity groups are reported here at the 3digit SITC
                                Revision 3 level. (Individual commodities are reported at the 6-digit or higher level.) However, the
                                nqiority of individual commodities aggregated under these 3digit SITC codes are eligible for GSP.

                                2Cther countries extending GSP preferences include Australia, Austria, Bulgaria, Canada,
                                Czechoslovakia, European Community countries, Finland, Hungary, Japan, New Zealand, Norway,
                                Poland, Sweden, Switzerland, and the USSR.

                                3The President may not designate certain articles for GSP benefits that are deemed import sensitive,
                                such as textile and apparel articles that are subject to textile agreements, ss well as articles subject to
                                certain trade restrictions.



                                Page 17                                                    GAO/NSIAD90-298BRI~~temational Trade
                           AppendlxllI
                           Chf3choalovakla’oEUglbUty for General&d
                           System of Preference Benefita




                           GSP benefits can only    be granted if certain requirements are met. The
                           Trade Act of 1974, as amended,outlines the mandatory and discre-
                           tionary eligibility criteria that are used to evaluate whether a country is
                           eligible for GSP benefits. For example, mandatory criteria prohibit the
                           President from extending GSP preferences,except under certain circum-
                           stances,to any country that has nationalized property owned by a US.
                           citizen without providing prompt, adequate,and effective compensa-
                           tion. The criteria also prohibit the President from granting GSP benefits
                           to countries that fail to act in good faith when arbitration awards favor
                           the United States, or that aid any group involved in international ter-
                           rorism. Another provision states that GSP benefits cannot be extended to
                           designatedcommunist countries unless certain additional criteria are
                           met.
                           Discretionary criteria require the President to consider, among other
                           things, whether the developing country (1) has assuredthe United
                           States that it will provide equitable accessto its markets and basic com-
                           modity resources,(2) maintains reasonableexport practices and
                           enforces exclusive rights in intellectual property, including patents,
                           trademarks, and copyrights, and (3) has acted to reduce trade-distorting
                           investment practices and reduce or eliminate barriers to trade in
                           services.
                           In addition to the above mandatory and discretionary eligibility criteria,
                           a 1984 amendment to the 1974 Trade Act generally prohibits any
                           country that has exceededthe per capita gross national product (GNP)
                           limit on GSP eligibility from receiving GSP benefits. The GNP limit is calcu-
                           lated each year by the Office of the U.S. Trade Representative.In 1989,
                           the maximum GNP level was $10,149. The U.S. Trade Representative
                           estimates that the figure for 1990 will be $10,392. (Seetable 111.1.)


CzechEligibility for the   As table III. 1 shows, Czechper capita GNP is estimated to be $7,986 in
US. GSPProgram             1990, which would meet the GSP eligibility requirement4 In addition to
                           meeting this requirement and the other mandatory and discretionary
                           criteria, Czechoslovakia,becauseit is considereda communist country,
                           is required by the 1974 Trade Act to receive MFN status and to becomea


                           “The Department of Commerce is responsible for calculating a country’s per capita GNP to determine
                           ita eligibility for GSP benefita. Commerce uses World Bank GNP estimates for this calculation, not
                           Central Intelligence Agency data. The World Bank does not estimate a country’s GNP unless it Is a
                           member of the International Monetary F’und. Czechoslovakia became a member of the Fund in Sep.
                           tember 1990.



                           Page 18                                               GAO/NSIAD-BO-2fMJBItIn~rnatlonal      Trade
    c
                                          Appendix III
I                                         Clschocllovakia”s JGligibility for General&d
                                          System of Reference Beneflta




                                          member of the International Monetary Fund in order to receive GSP
                                          benefits.
Tablo 111.1:Per Capita QNP and QSP
Ellglbllity for Crochorlovakia (Current   Per caDlta GNP                       1985       1988         1987        1988        1989        1990
Year Dollars)                                                                            $7,360       $7,469      $7,702
                                          Czechoslovakia                     $7,183                                           $7,878      $7,985
                                          GSP eligibility   limit            $8,763      $9,001       $9,304      $9,728    $10,149     $10,392”

                                          Note: Per capita GNP figures are based on the Central intelligence Agency’s recently revised estimates
                                          of per capita GNP in constant 1969 dollars.
                                          BEstimate.
                                          Source: Czech per capita GNP is compiled from “Eastern Europe: Long Road Ahead to Economic Well-
                                          Being,” a paper presented by the Central Intelligence Agency to the Technology and National Security
                                          Subcommittee of the Joint Economic Committee on April 16, 1990. Per capita GNP for 1990 is estimated
                                          using real growth rates from the WEFA Group, an econometric forecasting company. GSP elrgrbrlrty
                                          limits for per capita GNP are provided by the U.S. Trade Representative.




GSPShare of U.S. Imports                  As column 6 in table III.2 shows, only 3.4 percent of all US. imports
Is Small                                  enter the United States under GSP. (Table III.2 is the same as table 11.1,
                                          with the addition of column 6, the GSPshare of U.S. imports.) On
                                          average,only 6.3 percent of Czechoslovakia’s26 leading exI?ortsto the
                                          United States are products that are imported from other countries under
                                          GSP. Even if Czechexports of these commodities doubled, U.S. imports
                                          under the GSPprogram would increaseby only 0.3 percent.




                                          Page 19                                                  GAO/NSIAD-90-298BBJntemational Trade
                                                              Appendix III
                                                              Cuecl~onlovakia’sEUgibility for Generalized
                                                              System of Preference Beneflta




Table 111.2:MFN and Non-MFN Tariff Rates and GSP Share of Leading U.S. Import8 From Czechoslovakia (1987-89)
Dollars in thousands
                                                                                    Rate Qn dutl&le imports     ” .ezech share of     QSP share of
                                                                Imports from      CzeChOSlQVakla MFN countries        U.S. imports     U.S. Imports
      Commodlty group                                        Czechoslovakia             (per-y;{
--.-- (1)--.-_ ----.                                                       (2)                          (perce?3         (perce%          (perc%i
          All commodities                                             $81.600                29.53            5.17            0.02               3.44

(1)      851-Footwear                                                   9.831                20.01           10.40            0.12               2.10
(2)      665-Glassware                                                  8,775                49.48           10.97            1.Ol               6.01
(3)      722-Tractors              (other than
              mechanical handling
              equipment)                                                5,308                  0.00           2.19       ______0.44              0.21
(4)      841 -Men’s or boys’ coats,
              iackets. text. not knit                                   4.939                59.36           20.65            0.11               0.00
(5)      054-Vegs fr, chid, froz; roots,
              tubers, fresh, dried                                      4,504                10.35            9.98            0.52               6.01
_-. .-                                                                                                                                     ,-
(6)      673-Iron & nonalloy steel flat-roll
              prod, not clad, etc                                       4,498                20.07            5.13            0.20               0.15
(7)      625-Rubber              tires, inter treads, tire
  ~-          flaps, & inn tubes                                        4,375                10.00            4.09            0.18               5.18
(8)      654-Woven fabrics of text mat,
              not cotton or manmade                                     3,345                42.90           14.11            0.52               3.73
(9)      679-Iron & steel tubes, pipes,
              fittinas, etc.                                            2.771                 14.14           4.31            0.14               3.58
(10) 017-Meat & edbl meat offal,
              prepared or presrved, nes                                 2,544                  2.61           2.72            0.36              12.93
(11) 676-Iron & steel bars, rods,
              angles, shapes, & sects,
       _l__-.------                                                     2,009                  5.80           3.19            0.11               0.02
(12) 821-Furniture & pts; bedding,
              mattresses, etc.
            -._--_--                                                    1,908                41.22            3.61            0.04              13.76
(13) 984-Est of low-valued items
              eligible fr informal entry                                1,439                 0.00            0.00            0.06               0.00
(14)     112-Alcoholic
 . .._.__ - _______       -.-       beverages                           1,288 -              20.79            2.91            0.04               1.57
(151 726-Printna & bookbindna
.     I       machine6
                     __-         & parts thereof                         1,224                19.59           2.73            0.10               0.77
(i6)897I:ewelry,                   goldsmiths’&
              silversmiths wares, etc.                                   1,182               81.56            7.18            0.04              20.54
(17) 541 -Medicinal products, except
    _..... medicaments      ..-. ..-..-_-.._-                       -___ 1,159                11.49           4.52            0.09               2.00
(18) 731-Mach tools workng by
  . -.__..-. removing
                   _-- ._..___.met1 or 0th mat. ______-                  1,148               30.00            4.31            0.07               2.19
(19).__^..._..
         893-Articles,
                  .._-.--.---- of plastics, nes                          1,123               29.67            4.35            0.04              11.80
(20) 848-Apparel&                    cl. act. ext.
              textile: hdgear, all mat.                                  1,102               52.06            6.59            0.05             10.39
(21) 892-Printed mgtter                                                    985               22.67            2.97            0.06              1.58
                                                                                                                                        (continued)




                                                              Page 20                                        GAO/NSIADW-298BRInternational Trade
                                                      Appendix III
                                                      Czechodovakia’r Eligibility for Generalized
                                                      System of Preference Beneflta




                                                                              Rate on dutiable imports                 Czech share of         GSP share of
                                                        Imports trom        Czechoslovakia    MFN countries              U.S. imports          U.S. imports
      Commodity group                                Czechoslovakia               (percent)
  ..- -(‘)..-. ..--____                                            (2)                   (3)       (perce3                    (percelr:l           (perctIY
(22)   656-Made-up         articles   of textile
          materials,     nes                                       906                   33.27                 9.46                 0.08                 2.65
(23) 813-Lighting           fixtures and fittings,
.^ ..-.       nes _I___..
                      _.                                           850                   52.07                 6.87                 0.10                16.53
(24) 652-Cotton           fabrics, woven (not
-_-..._-. ..- narrow
               _-._--- or spec fabs.)                              848                   35.23                 9.25                 0.08                 0.32
(25) 724-Textile          & leather machinery,
           & pts thereof.     nes                                  a34                   33.10                 3.61                 0.04                 2.65

  Total                                                      $68,894                     29.30                 7.62                 0.13                 5.32
   Percent of total U.S. imports        from
     Czechoslovakia                                              04.43
                                                      Note: Import figures are 3-year averages for 1987-89. Commodity groups are at the 3-digit SITC Revision
                                                      3 level. Tariffs on Czechoslovakian imports are assessed at the non-MFN rate.
                                                      8CoIumn 6 is the weighted average of U.S. imports under the GSP program to total U.S. imports for
                                                      these 25 commodity groups.
                                                      Source: Compiled from U.S. Department of Commerce trade data.




                                                      Page 21                                                  GAO/NSIAD-90-298BRInternational Trade
Appendix IV

Leading U.S.Imports From and Exports
to Czechoslovakia

              Table IV. 1 shows the value of the 26 leading U.S. imports from Czecho-
              slovakia from 1987 to 1989 and during the first 6 months of 1990. From
              1987 to 1989, the United States imported an averageof $82 million a
              year in goods from Czechoslovakia.The five leading imports were foot-
              wear, glassware,tractors, men’s coats and jackets, and vegetables.




              Page 22                                GAO/NSLADW298BRIntematiod   Trade
                                                                        Appendix IV
                                                                        Leading U.S.Import8 From and JZxpocta
                                                                        to Czechoslovalda




Table IV.l: Leading U.S. Imports From Czechoslovakia (1987-90)
Dollars in thousands
                                                                                                                                           January -June          Average
         Fmodity            group                                                                  1987                     1989            1989      1990         1987-89
                                                                        -                            (2)                      (4)             (5)        (6)            (7)
         All commodities                                                                         $77,793   $84,891       $82,117      $37,598       $36,908        $81,600

(1)      851 -Footwear                                                                             8,974     10,410       10,108           4,623      4,042           9,831
(2)
.I_.     665-Glassware
               .I_....-._...- ---.-.~____                                                          8,060      8,226       10,039           4,514      3,707           8,775
(3)      722-Tractors         (0th than mechanical handling equip.)
                       ---.-- .~_
                                                                                                   3,608      6,237        6,077           3,622      5,761           5,308
(4)      841 -Men’s or boys’ coats, jackets, text, not knit                                        5,001      6,103        3,715           1,094         784          4,939
(5)      054~~r,ch~f&                     roots, tubers, fresh, dried                              8,590      2,413        2,508           1,851      5,699           4,504
(6)        673-Iron 8 nonallov steel flat-roll prod. not clad                                      2.936      5,280        5.277             239              0       4.498
(7)        625--Rubber
_“_ _..___._  ..- _ -___-.                tires, inter treads, flaps, & inn. tbes.                 4,334      4,377        4,415           1,855      3,301           4,375
(8)        654-Woven
 _--__ . ..__ --“_--~                   fabrics
                                         .-..       --of text mat (not cotton or manmade)          3,461      4,600         1,975          1,074        860           3,345
(9)        679-Iron & steel tubes, pipes & hl profiles, ftings.                                    2,057      3,477        2,779             541        605           2,771
(10) ._.   017-Meat                 & edbl meat, offal, prepared or presrved, nes
                -. _.__._”.-.....- --
                                                                                                   2,684      2,543        2,404           1,179       1,099          2,544
(1
..-_.
 _._- 1) . 676-iron
            -           .---.-- & steel  .._-- bars, rods, angles, shapes, & sects.                2,164      3,267          595                0             0       2,009
(12)       821-Furniture
.--_ _-.”.._.....-._____-.                    & pts; bedding, mattresses, etc.                     1,885      1,751        2,089           1,083       1,211          1,908
(13)       984-Est
-.--...-_-..           .__-_.-. of    low-valued          items elig. for informal ent.            1,408      1,560         1,348            629        863           1,439
(14)       112-Alcoholic
___.-_.- . .._.__.    ~--.                    beverages                                            1,151      1,345         1,369            498         298          1,288
(15) 726-Printng & bookbind= machinery & parts thereof                                             1,158        897         1,618            832       1,045          1,224
(16) -_ .._.897-Jewelry,
z-.-L         I..-- _._____...   -
                                            goldsmiths’
                                            -
                                                               & silversmiths’ wares, etc.         1,995      1,008           541            232         196          1,182
(17) 541 -Medicinal          -.. _._. ______
                                               products,      except   medicaments                 2,050      1,355            73             32              0       1,159
(18)
--...      731-Mach
           ._---..---                tools
                                   .. -          workng      by removing    met1 or 0th mtrl.        726      1,650         1,066            607         574          1,148
(19) 893-Articles,                         of plastics, nes                                        1,455      1,708          207              98              1       1,123
(20)       848-Apparel
--.- .__...-..__I. .__- -..__ --
                                           &   cl act exe textile; hdgear, all mtn.                  730        779         1,797            672         273          1,102
(21)
.._,_.
           892-Printed
              _..-.. __--- -..-__--
                                         matter                                           -___       539       911          1,504            806         262            985
(22) 658-Made-up                              articles of textile materials, nes                     976     1,091           652             319         207            906
         ..-        ---.-.
(23) 813-Lightrng
--..
-.I .___ .._ ._....-_-...- ...-
                                            fixtures and fittings, nes.                              691   -   782          1,077            471         242            850
(24) 652-Cotton                         fabrics, woven (not narrow or spec fabs.)                    714        696         1,133            491         322            848
(25)
.- I
           724-Textile & leather machinery & pts thereof,                         -----
                                                                                        nes          578        666         1,258            521         257            834

      Total                                                                                      $67,926   $73,135       $65,622       $27,880      $31,610        $68,894
      Percent of total U.S. imports from Czechoslovakia                                            87.32      86.15        79.91           74.15       85.64          84.43

                                                                        Note: Commodity groups are at the 3-digit SITC Revision 3 level.
                                                                        Source: Compiled from U.S. Department of Commerce trade data.


                                                                        Table IV.2 shows the value of the leading 26 US. exports to
                                                                        Czechoslovakiafrom 1987 to 1989 and during the first 6 months of
                                                                        1990. From 1987 to 1989, the United States exported an averageof
                                                                        $51 million a year in goodsto Czechoslovakia.The five leading exports


                                                                        Page 23                                                 GAO/NSLADBO-29SBR
                                                                                                                                                International Trade
                                                                                                                                              ,?
                                                    Appendix IV
                                                    Leading U.S.Importa F’romand Exports
                                                    to Czechoslovakia




                                                    were hides and skins (except furskins), measuring instruments and
                                                    apparatus, fertilizers, specializedmachinery, and automatic data
                                                    processingmachines.


Table IV.2: Leading U.S. Export8 to Crechoelovakla            (1987-l 990)
Dollars in thousands
                                                                                                                          January - June Averaae
        C$mmodlty group                                                                      1987      1988      1989       1989     1990 1987-89
             ---~._                                                                            (2)     (3)     (4)     (5)     (6)              (7)
        All commodities                                                                   $46,942 $54,423 $51,287 $27,626 $29,338          $50,884
(1)     211 -Hides & skins (except furskins), raw                                           14,064    13,502    13,483     7,878   5543     13,683
(2)     674-Measuring/checking/analysing,         inst.& appt., nes                          2,467     4,966     3,725       715   1,613     3,719
~---~
(3)     562-Fertilizers   (except crude of group 272)                                        2,798         0     3,256     3,256     696     2,018
(4)     728-Machrv,     specializd for particulr industries, nes                               307     3.587     1.469       882     525     1.788
(5)     752-Automatic      data process maths & units thereof                                1,911     1,860     1,360       972     641     1,710
(6)     881-Photographic      apparatus and equipment, nes                                   1,020     3,427       299       205      54     1,582
(7)     122-Tobacco,     mfg, whether containing tobacco substitute                          1,820     1,162       906       363      14     1,296
(8)     651 -Textile varn                                                                      517     1.715     1.522       919     900     1.251
(9)     724-Textile & leather machinery & pts thereof nes                                    1,329     1,133     1,114       493     890     1,192
(10)598-Miscellaneous
~--                           chemical products, nes                                           534       927     2,099     1,109      97     1,187
(11) 522-lnorgan.      chemical elements, oxides, halogen salts                              2,564       197        504      212     897     1,088
(12) 722-Tractors      (0th than mechanical handlina eauipment)                                812     1,145     1,055       870     231     1.004
(13)743zPumps,        air or other gas compressors, and’fans    ’                            1,869       360       .718      327     132      ‘982
(14) 266-Synthecfibers           suitable for spinning                                         378       784     1,725       809      56       962
              ---
(15) 263-Cotton textile fibers                                                                   0         0     2,715     1,971   4,322       905
(16) 994-Estimate       of shipments valued under $1,501                                       422     1.044     1.087       512     781       851
(17) 541 -Medicinal products, except medicaments                                               273       706     1,246       515     617       742
@)- 778-Electrical
______-~..---            machinery and apparatus, nes                                          742       654        590      365     337       662
(19) 121-Tobacco, unmanufactured; tobacco refuse                                               988       917          0        0       0       635
(20,
--A------
          664-Glass -                                                                          663       783        441      177     427       629
(21) 764-Telecommunications            equipment, nes, & pts, nes                              390       983        365      245     263       580
w)
~--       742-Pumps   for liquids; liquid elevators & pts                                      130       884        622      247     225       545
(23) 714-Enps and motors, nonelect & pts, nes                                                    0     1,545          0        0       0       515
(24) 723-Civil engineering & contractors’ plant & equip.                                       438       488        570       10      25       499
(25)
“I-_- 212-Furskins,
      --...ll .._---___-_ raw                                                                  881       440        165      165      25       495

  Total                                                                                   $37,317 $43,211 $41,036 $23,216 $19,314          $40,521
  Percent of total U.S. exports to Czechoslovakia                                            79.50     79.40     80.01     84.04   65.83     79.63
                                                    Note: Commodity groups are at the 3-digit SITC Revision 3 level.
                          Y                         Source: Compiled from U.S. Department of Commerce trade data.




                                                    Page 24                                                GAO/NSIAIMb298BR Intemational Trade
Appendix
  t      V

Objectives,Scope,and Methodology


              In developing this briefing report, our objectives were to provide data on
              (1) Czechimports and exports to selectedcountries, (2) tariff rates on
              U.S. imports from Czechoslovakiaas compared to rates on imports from
              countries with MFN status, (3) Czechoslovakia’seligibility for GSPbene-
              fits, and (4) leading US. exports to and imports from Czechoslovakia
              from 1987 to 1990.
               For appendix I, we obtained information on Czechexports and imports
               from data that Czechoslovakiareports to the U.N. Generally, we used U.N.
               data at a 3-digit SITC Revision 1 commodity group classification level to
              report Czechtrade with selectedcountries. For somecommodities, how-
              ever, Czechoslovakiaonly reports trade at the more aggregated2-digit
               level. In these cases,we used the 2-digit reported data. In table 1.4,there
               are four commodities-petroleum products, natural gas, coal, and non-
               ferrous metals-that are reported at the 2-digit level.

              For all the tables in appendix I, the countries included under “Eastern
              Europe” include Bulgaria, East Germany, Hungary, Poland, and
              Romania. The countries included under the “European Community”
              include Belgium, Denmark, France, WestGermany, Greece,Ireland,
              Italy, Luxembourg, The Netherlands, Portugal, Spain, and the United
              Kingdom.

              We used a 3-year averageof trade to ensure that normal trade patterns
              were represented.All the values in this report are in current year dol-
              lars. In all the tables in appendix I, the averagesare basedon the latest
              years of available Czechdata: 1983,1984, and 1986. We reported infor-
              mation for the leading 26 commodities out of a possible 248 groups.

              Tables 11.1,11.2,and III.2 cover 1987-89;tables IV.1 and IV.2 cover
              1987-90.For these tables, we used U.S. trade data at the 3-digit SITC
              Revision 3 classification level as reported by the Department of Com-
              merce. We reported information for 26 commodities out of a possible
              263 groups.
              We obtained information on US. tariff rates, the Czechshare of total
              U.S. imports, and the GSPshare of U.S. imports from trade data reported
              by the Department of Commerce.In tables I.1 and 1.3,the definition of
              trade categories are from the World Bank’s World Development Report.
              For all the other tables, the commodity codesand descriptions are those
              provided in the U.N. or U.S. computer trade data bases.For all tables in
              appendix I, Czechimports and exports are reported on a free-on-board
              basis (i.e., transportation chargesare included).


              Page 26                                  GAO/NSIAD-S@298BR
                                                                       International Trade
                                                                                           .

Ame*      V
Objectives, Scope,and Methodology




For tables 11.1,11..2,111.2,
                           and IV.1, imports are reported on a customs
value basis. For table IV.2, exports are reported on a free-along-side
basis, which excludes transportation costs.
We computed the averagead valorem tariff rates as a ratio of calculated
duties collected, divided by the dutiable value of U.S. imports using data
from the U.S. trade computer data basemaintained by the Department
of Commerce.This is a trade weighted averagetariff rate with actual
import values used as weights. Sincehigh tariff rates may reduce the
quantity of goodsimported, this weighting procedure may underesti-
mate the averagetariff rate if there are many high-tariff items. The
averagetariff rates on imports from Czechoslovakiaand countries
granted MFN status may not be fully comparable at the 3-digit com-
modity group level.1In tables II. 1,11.2,and 111.2,the percentagecomposi-
tion of individual goodsin the MFN group may differ from the percentage
composition of Czechimports in a corresponding group. This may result
in weighting the averagecommodity group tariff rates differently. On
the other hand, if Czechoslovakiabegins to diversify its exports if it is
granted MFN status, the 3-digit MF'N tariff rate may approximate the
tariff rate for future Czechexports.
We obtained information on Czecharms exports and imports reported in
the notes in tables I.1 and I.3 from the U.S. Arms Control and Disarma-
ment Agency, World Military Expenditures and Arms Transfers, 1987.

For table III. 1, we obtained information from the Office of the U.S.
Trade Representativeon the per capita income eligibility requirements
for granting GSPbenefits for the period 1986-90.For the sametable, we
used Central Intelligence Agency estimates of Czechper capita GNP
included in a report presented to the Joint EconomicCommittee in April
1990.
In table 111.2,we computed the ratio of U.S. imports under the GSPpro-
gram to total U.S. imports to determine the percent of imports that cur-
rently enter the United States under GSPfor the 26 leading imports from
Czechoslovakia.To determine whether all individual commodities
within the 3-digit SITCcommodity groups are eligible for GSPbenefits, we
checkedthe concordancebetween selectedSITC groups and the indi-
vidual commodities in the Harmonized Tariff System of the United
‘Average tariff rates can be compared at the individual commodity group level at which the tariff
rates are established. For a comparison of tariff rates between the groups, the relative percentage
composition in the MFWgroup should correspond with that ln the Czech group. In all cases, the MFN
tariff rate must be lees than or equal to the non-MFN rate for that individual commodity.



Page 28                                                GAO/NSIADBO-29SBB International         Trade
Appendix V
Ob&ctlves, Scope,and Methodology




States, where GSPeligibility is designated.The 3-digit commodity groups
shown in this table are trade aggregatesand may include individual
commodities that are not eligible for duty-free entry under GSP.

We performed our review in August and September 1990 in accordance
with generally acceptedgovernment auditing standards. As directed, we
did not seek formal agency commentson this briefing report.




Page 27                                GAO/NSIADQO-298BRInternational Trade
Appendix VI
                                                                                            7L
                                                                                              _-
Major Contributors to This Report                                                              ‘:


                            JamesMcDermott, Assistant Director
National Security and       Elizabeth Sirois, Project Manager
International Affairs       Bruce Kutnick, Senior Economist
Division,     Washington,   Elizabeth Morrison, Evaluator
DC.




(resaea)                    Page 20                              GAO/NSIAD-!W298BBInternational Trade
-   ..-..   .   .   .   1   .._   “_-.--   -.-.-    ~__ll--l_-                       --                                            -




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