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105th Congress 
2nd Session              JOINT COMMITTEE PRINT                  S. Prt.
                                                        105-51
_______________________________________________________________________

                                     

 
                      COUNTRY REPORTS ON ECONOMIC
                       POLICY AND TRADE PRACTICES

                               __________

                              R E P O R T

                            SUBMITTED TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          COMMITTEE ON FINANCE

                                 OF THE

                              U.S. SENATE

                                AND THE

                              COMMITTEE ON

                        INTERNATIONAL RELATIONS

                      COMMITTEE ON WAYS AND MEANS

                                 OF THE

                     U.S. HOUSE OF REPRESENTATIVES

                                 BY THE

                          DEPARTMENT OF STATE

       IN ACCORDANCE WITH SECTION 2202 OF THE OMNIBUS TRADE AND 
                      COMPETITIVENESS ACT OF 1988

                                     
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>



                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia              PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska                CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon              JOHN F. KERRY, Massachusetts
CRAIG THOMAS, Wyoming                CHARLES S. ROBB, Virginia
ROD GRAMS, Minnesota                 RUSSELL D. FEINGOLD, Wisconsin
JOHN ASHCROFT, Missouri              DIANNE FEINSTEIN, California
BILL FRIST, Tennessee                PAUL D. WELLSTONE, Minnesota
SAM BROWNBACK, Kansas
                     James W. Nance, Staff Director
                 Edwin K. Hall, Minority Staff Director
        
                              ----------                              


                          COMMITTEE ON FINANCE

                WILLIAM V. ROTH, Jr., Delaware, Chairman

JOHN H. CHAFEE, Rhode Island         DANIEL PATRICK MOYNIHAN, New York
CHARLES E. GRASSLEY, Iowa            MAX BAUCUS, Montana
ORRIN G. HATCH, Utah                 JOHN D. ROCKEFELLER IV, West 
ALFONSE M. D'AMATO, New York         Virginia
FRANK H. MURKOWSKI, Alaska           JOHN BREAUX, Louisiana
DON NICKLES, Oklahoma                KENT CONRAD, North Dakota
PHIL GRAMM, Texas                    BOB GRAHAM, Florida
TRENT LOTT, Mississippi              CAROL MOSELEY-BRAUN, Illinois
JAMES M. JEFFORDS, Vermont           RICHARD H. BRYAN, Nevada
CONNIE MACK, Florida                 J. ROBERT KERREY, Nebraska

           Franklin G. Polk, Staff Director and Chief Counsel

      Mark A. Patterson, Minority Staff Director and Chief Counsel

                                  (ii)

                                     


                  COMMITTEE ON INTERNATIONAL RELATIONS

  BENJAMIN A. GILMAN, New York, 
             Chairman

WILLIAM GOODLING, Pennsylvania             LEE HAMILTON, Indiana
JAMES A. LEACH, Iowa                       SAM GEJDENSON, Connecticut
HENRY J. HYDE, Illinois                    TOM LANTOS, California
DOUG BEREUTER, Nebraska                    HOWARD BERMAN, California
CHRISTOPHER SMITH, New Jersey              GARY ACKERMAN, New York
DAN BURTON, Indiana                        ENI F.H. FALEOMAVAEGA, American 
                                                 Samoa
ELTON GALLEGLY, California                 MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida               DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina             ROBERT ANDREWS, New Jersey
DANA ROHRABACHER, California               ROBERT MENENDEZ, New Jersey
DONALD A. MANZULLO, Illinois               SHERROD BROWN, Ohio
EDWARD R. ROYCE, California                CYNTHIA A. McKINNEY, Georgia
PETER T. KING, New York                    ALCEE L. HASTINGS, Florida
JAY KIM, California                        PAT DANNER, Missouri
STEVEN J. CHABOT, Ohio                     EARL HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South 
    Carolina                               WALTER CAPPS, California
MATT SALMON, Arizona                       BRAD SHERMAN, California
AMO HOUGHTON, New York                     ROBERT WEXLER, Florida
TOM CAMPBELL, California                   STEVE ROTHMAN, New Jersey
JON FOX, Pennsylvania                      BOB CLEMENT, Tennessee
JOHN McHUGH, New York                      BILL LUTHER, Minnesota
LINDSEY GRAHAM, South Carolina             JIM DAVIS, Florida
ROY BLUNT, Missouri
JERRY MORAN, Kansas
KEVIN BRADY, Texas      
                    
                  Richard J. Garon, Chief of Staff
           Michael H. Van Dusen, Democratic Chief of Staff

                              ----------                              


                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 (iii)

                                     




                            C O N T E N T S

                              ----------                              
                                                                   Page

Foreword.........................................................   vii

Letter of Transmittal............................................    ix

Introduction.....................................................    xi

Text of Section 2202 of the Omnibus Trade and Competitiveness Act 
  of 1988........................................................  xiii

Notes on Preparation of the Reports..............................    xv

Some Frequently Used Acronyms....................................  xvii

                            COUNTRY REPORTS*

Africa:

    Ghana........................................................     1
    Nigeria......................................................     5
    South Africa.................................................    11

East Asia and the Pacific:

    Australia....................................................    17
    China........................................................    22
    Hong Kong*...................................................    30
    Indonesia....................................................    34
    Japan........................................................    40
    Korea, Republic of...........................................    45
    Malaysia.....................................................    51
    Philippines..................................................    57
    Singapore....................................................    63
    Taiwan*......................................................    68
    Thailand.....................................................    73

Europe:

    The European Union...........................................    81
    Austria......................................................    91
    Belgium......................................................    95
    Bulgaria.....................................................   100
    Czech Republic...............................................   105
    Denmark......................................................   110
    Finland......................................................   115
    France.......................................................   122
    Germany......................................................   126
    Greece.......................................................   131
    Hungary......................................................   137
    Ireland......................................................   141
    Italy........................................................   146
    Netherlands..................................................   152
    Norway.......................................................   157
    Poland.......................................................   161
    Portugal.....................................................   166
    Romania......................................................   171
    Russia.......................................................   174
    Spain........................................................   180

                                  (v)

    Sweden.......................................................   186
    Switzerland..................................................   190
    Turkey.......................................................   194
    Ukraine......................................................   199
    United Kingdom...............................................   204

The Americas:

    Argentina....................................................   209
    Bahamas......................................................   214
    Bolivia......................................................   218
    Brazil.......................................................   223
    Canada.......................................................   230
    Chile........................................................   235
    Colombia.....................................................   241
    Costa Rica...................................................   247
    Dominican Republic...........................................   253
    Ecuador......................................................   259
    El Salvador..................................................   264
    Guatemala....................................................   268
    Haiti........................................................   273
    Honduras.....................................................   277
    Jamaica......................................................   283
    Mexico.......................................................   290
    Nicaragua....................................................   297
    Panama.......................................................   300
    Peru.........................................................   306
    Trinidad and Tobago..........................................   311
    Uruguay......................................................   316
    Venezuela....................................................   320

Near East and North Africa:

    Algeria......................................................   329
    Bahrain......................................................   333
    Egypt........................................................   338
    Israel.......................................................   345
    Jordan.......................................................   351
    Kuwait.......................................................   358
    Morocco......................................................   362
    Oman.........................................................   367
    Saudi Arabia.................................................   372
    Syria........................................................   377

South Asia:

    Bangladesh...................................................   383
    India........................................................   389
    Pakistan.....................................................   395

                               __________
*Reports also cover the following areas: Hong Kong and Taiwan.




                                FOREWORD

                              ----------                              

    The reports on individual country economic policy and trade 
practices contained herein were prepared by the Department of 
State in accordance with section 2202 of the Omnibus Trade and 
Competitiveness Act of 1988 (P.L. 100-418).
    Modeled on the State Department's annual reports on country 
human rights practices, the reports are intended to provide a 
single, comparative analysis of the economic policies and trade 
practices of countries with which the United States has 
significant economic or trade relationships. Because of the 
increasing importance of, and interest in, trade and economic 
issues, these reports are prepared to assist members in 
considering legislation in the areas of trade and economic 
policy.

                                               Jesse Helms,
                          Chairman, Committee on Foreign Relations.

                                      William V. Roth, Jr.,
                                    Chairman, Committee on Finance.

                                        Benjamin A. Gilman,
                    Chairman, Committee on International Relations.

                                               Bill Archer,
                             Chairman, Committee on Ways and Means.

                                 (vii)

                                     



                         LETTER OF TRANSMITTAL

                              ----------                              

                                       Department of State,
                                  Washington, DC, January 31, 1998.
Hon. Jesse Helms,
Chairman, Committee on Foreign Relations.

Hon. William V. Roth, Jr.,
Chairman, Committee on Finance.

Hon. Albert Gore, Jr.,
President, U.S. Senate.

Hon. Newt Gingrich,
Speaker, House of Representatives.

Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations.

Hon. Bill Archer,
Chairman, Committee on Ways and Means.

    Dear Sirs: Section 2202 of the Omnibus Trade and 
Competitiveness Act of 1988 requires the Department of State to 
provide to the appropriate Committees of Congress a detailed 
report regarding the economic policy and trade practices of 
countries with which the U.S. has significant economic or trade 
relationships. In this regard, I am pleased to provide the 
enclosed report.

            Sincerely,
                                            Barbara Larkin,
                          Assistant Secretary, Legislative Affairs.
Enclosure

                                  (ix)

                                     




                              INTRODUCTION

                              ----------                              


         Country Reports on Economic Policy and Trade Practices

    The Department of State is submitting to the Congress its 
Country Reports on Economic Policy and Trade Practices in 
compliance with Section 2202 of the Omnibus Trade and 
Competitiveness Act of 1988. As the legislation requires, we 
have prepared detailed reports on the economic policy and trade 
practices of countries with which the United States has 
significant economic or trade relationships. This is the 
Department of State's ninth annual report. It now includes 
reports on 75 countries, customs territories and customs 
unions.
    Each report contains nine sections:

  <bullet> Key Economic Indicators: Each report begins with a 
        table showing data for key economic indicators in the 
        national income, monetary, and trade accounts.
  <bullet> General Policy Framework: This first narrative 
        section gives an overview of macroeconomic trends.
  <bullet> Exchange Rate Policies: The second section describes 
        exchange rate policies and their impact on the price 
        competitiveness of U.S. exports.
  <bullet> Structural Policies: The third section examines 
        structural policies, highlighting changes that may 
        affect U.S. exports to that country.
  <bullet> Debt Management Policies: The fourth section 
        describes debt management policies and their 
        implications for trade with the United States.
  <bullet> Significant Barriers to U.S. Exports and Investment: 
        The fifth section examines significant barriers, formal 
        and informal, to U.S. exports and investment.
  <bullet> Export Subsidies Policies: The sixth section focuses 
        on government actions, policies, and practices that 
        support exports from that country, including exports by 
        small businesses.
  <bullet> Protection of U.S. Intellectual Property: The 
        seventh section discusses the country's laws and 
        practices with respect to protection of intellectual 
        property rights.
  <bullet> Worker Rights: The final section has three parts.
    --The first (subsections a through e) outlines the 
            country's laws and practices with respect to 
            internationally recognized worker rights.
    --The second (subsection f) highlights conditions of worker 
            rights in goods-producing sectors where U.S. 
            capital is invested.

                                  (xi)

    --Finally, a table cites the extent of such investment by 
            sector where information is available.
    The country reports are based on information supplied by 
U.S. Embassies, which is analyzed and reviewed by the 
Department of State in consultation with other U.S. Government 
agencies. The reports are intended to serve as general guides 
to economic conditions in specific countries. We have worked to 
standardize the reports, but there are unavoidable differences 
reflecting large variations in data availability. In some 
cases, access to reliable data is limited, particularly in 
countries making transitions to market economies. Nonetheless, 
each report incorporates the best information currently 
available. Because the reports were researched and compiled at/
by post and due at State in mid-November, the conclusions and 
analysis may not fully or accurately reflect recent changes 
brought about because of the Asian financial crisis.

                                   Vonya B. McCann,
                        Acting Assistant Secretary of State
                                 for Economic and Business Affairs.




 TEXT OF SECTION 2202 OF THE OMNIBUS TRADE AND COMPETITIVENESS ACT OF 
                                  1988

                              ----------                              

  ``The Secretary of State shall, not later than January 31 of 
    each year, prepare and transmit to the Committee on 
    [International Relations] *and the Committee on Ways and 
    Means of the House of Representatives, to the Committee on 
    Foreign Relations and the Committee on Finance of the 
    Senate, and to other appropriate committees of the 
    Congress, a detailed report regarding the economic policy 
    and trade practices of each country with which the United 
    States has an economic or trade relationship. The Secretary 
    may direct the appropriate officers of the Department of 
    State who are serving overseas, in consultation with 
    appropriate officers or employees of other departments and 
    agencies of the United States, including the Department of 
    Agriculture and the Department of Commerce, to coordinate 
    the preparation of such information in a country as is 
    necessary to prepare the report under this section. The 
    report shall identify and describe, with respect to each 
    country:

    1. The macroeconomic policies of the country and their 
impact on the overall growth in demand for United States 
exports;
    2. The impact of macroeconomic and other policies on the 
exchange rate of the country and the resulting impact on price 
competitiveness of United States exports;
    3. Any change in structural policies [including tax 
incentives, regulation governing financial institutions, 
production standards, and patterns of industrial ownership] 
that may affect the country's growth rate and its demand for 
United States exports;
    4. The management of the country's external debt and its 
implications for trade with the United States;
    5. Acts, policies, and practices that constitute 
significant trade barriers to United States exports or foreign 
direct investment in that country by United States persons, as 
identified under section 181(a)(1) of the Trade Act of 1974 (19 
U.S.C. 2241(a)(1));
    6. Acts, policies, and practices that provide direct or 
indirect government support for exports from that country, 
including exports by small businesses;
    7. The extent to which the country's laws and enforcement 
of those laws afford adequate protection to United States 
intellectual property, including patents, trademarks, 
copyrights, and mask works; and

                               __________
*In 1995, the Committee on Foreign Affairs changed its name to the 
Committee on International Relations.

                                 (xiii)

    8. The country's laws, enforcement of those laws, and 
practices with respect to internationally recognized worker 
rights (as defined in section 502(a)(4) of the Trade Act of 
1974), the conditions of worker rights in any sector which 
produces goods in which United States capital is invested, and 
the extent of such investment.''




                  NOTES ON PREPARATION OF THE REPORTS

                              ----------                              

    Subsections a. through e. of the Worker Rights section 
(section 8) are abridged versions of section 6 in the Country 
Reports on Human Rights Practices for 1998, submitted to the 
Committees on International Relations of the House of 
Representatives and on Foreign Relations of the U.S. Senate in 
January 1998. For a comprehensive and authoritative discussion 
of worker rights in each country please refer to that report.
    Subsection f. of the Worker Rights section highlights 
conditions of worker rights in goods-producing sectors where 
U.S. capital is invested. A table cites the extent of such 
investment by sector where information is available. The Bureau 
of Economic Analysis of the U.S. Department of Commerce has 
supplied information on the U.S. direct investment position at 
the end of 1995 for all countries for which foreign direct 
investment has been reported to it. Readers should note that 
``U.S. Direct Position Abroad'' is defined as ``the net book 
value of U.S. parent companies' equity in, and net outstanding 
loans to, their foreign affiliates'' (foreign business 
enterprises owned 10 percent or more by U.S. persons or 
companies). Where a figure is negative, the U.S. parent owes 
money to the affiliate. The table does not necessarily indicate 
total assets held in each country. In some instances, the 
narrative refers to investments for which figures may not 
appear in the table.

                                  (xv)

                                     




                     SOME FREQUENTLY USED ACRONYMS

                              ----------                              

ADB--Asian Development Bank
BIS--Bank for International Settlements
CACM--Central American Common Market
CARICOM--Caribbean Common Market
CAP--Common Agricultural Policy (of the EU)
CCC--Commodity Credit Corporation (Department of Agriculture)
EBRD--European Bank for Reconstruction and Development
EFTA--European Free Trade Association
EMS--European Monetary System (of the EU)
ERM--Exchange Rate Mechanism (of the EU)
ESAF--Enhanced Structural Adjustment Facility
EU--European Union
EXIMBANK-- U.S. Export-Import Bank
FOREX--foreign exchange
FY--fiscal year
GATS--General Agreement on Trade in Services
GATT--General Agreement on Tariffs and Trade
GDP--gross domestic product
GNP--gross national product
GSP--Generalized System of Preferences
IBRD--International Bank for Reconstruction and Development 
            (World Bank)
IFIs--international financial institutions (IMF, World Bank and 
            regional development banks)
ILO--International Labor Organization (of the United Nations)
IMF--International Monetary Fund
IDB--Inter-American Development Bank
IPR--intellectual property rights
LIBOR--London Interbank Offer Rate
MFN--most favored nation
NAFTA--North American Free Trade Agreement
NGOs--non-government organizations
NIS--Newly Independent States (of the former Soviet Union)
OECD--Organization for Economic Cooperation and Development
OPIC--U.S. Overseas Private Investment Corporation
PTT--Post, Telegraph and Telephone
SAP--Structural Adjustment Program (of the IMF/World Bank)
SDR--Special Drawing Rights (of the IMF)
STF--Structural Transformation Facility
TRIPs--WTO Agreement on Trade-Related Aspects of Intellectual 
            Property Rights
UR--Uruguay Round of trade negotiations in the GATT

                                 (xvii)

USD--U.S. dollar
VAT--value-added tax
WIPO--World Intellectual Property Organization
WTO--World Trade Organization


                                 AFRICA

                              ----------                              


                                 GHANA

                         Key Economic Indicators                        
          [Millions of U.S. Dollars unless otherwise indicated]         
------------------------------------------------------------------------
                                                 1995    1996   1997 \1\
------------------------------------------------------------------------
Income, Production and Employment:                                      
  Nominal GDP \2\.............................   6,179   6,342     6,012
  Real GDP Growth (pct.) \3\..................     4.5     5.2       5.5
  GDP by Sector:                                                        
    Agriculture...............................   2,533   2,574     2,465
    Manufacturing.............................     525     539       511
    Services..................................   2,898   3,070     2,808
    Government................................     809     882       788
  Per Capita GDP..............................     370     375       340
  Labor Force (000)...........................   6,000   6,150     6,250
  Unemployment Rate (pct.)....................     N/A     N/A       N/A
Money and Prices (annual percentage growth):                            
  Money Supply Growth (M2)....................    37.5    34.2      40.0
  Consumer Price Inflation....................    70.8    32.7      27.5
  Exchange Rate (Cedis/USD-Annual Average)                              
    Official..................................   1,200   1,637     2,205
Balance of Payments and Trade:                                          
  Total Exports FOB \4\.......................   1,431   1,571     1,600
    Exports to U.S.\4\........................     196     171       166
  Total Imports CIF \4\.......................   1,687   1,937     1,903
    Imports from U.S.\4\......................     167     294       325
  Trade Balance \4\...........................   (256)    366)     (303)
    Balance with U.S..........................      29   (123)     (159)
  External Public Debt........................   5,074   5,347     5,400
  Fiscal Deficit/GDP (pct.)...................     0.9    -1.5       1.4
  Current Account Deficit/GDP (pct.)..........     2.0     5.0       5.0
  Debt Service Payments/GDP (pct.)............    10.6     8.0       N/A
  Gold and Foreign Exchange Reserves..........   592.9   709.9     700.0
  Aid from U.S................................      45      44        52
  Aid from All Other Sources..................     715     696       N/A
------------------------------------------------------------------------
\1\ 1997 figures are all estimates based on available monthly data in   
  October 1997                                                          
\2\ GDP at factor cost                                                  
\3\ Percentage changes calculated in local currency                     
\4\ Merchandise trade                                                   

1. General Policy Framework

    Ghana operates in a free market environment under a popularly-
elected civilian government. In December, 1996, Ghana had its second 
experience in multiparty elections, since the inauguration of the 4th 
Republic in January, 1993, with the reelection of President Jerry John 
Rawlings for a second four-year term.

    Rawlings headed a ``provisional'' regime from the end of 1981 until 
January, 1993, when democratic government under a written constitution 
was restored. Unlike the previous parliament, the present has an 
opposition presence with 67 seats out of 200. An independent judiciary 
acts as the final arbiter of Ghanaian laws. The next presidential and 
parliamentary elections are scheduled for the year 2000.

    Since 1983 Ghana has pursued an economic reform agenda aimed 
generally at reducing government involvement in the economy and 
encouraging private sector development. Inflationary pressures due to 
government expenditure overruns prior to 1992 and 1996 presidential and 
parliamentary elections and other factors continue to be felt. 
Government has introduced measures to control and monitor its spending. 
Despite measures being implemented to avoid fiscal deficit, first 
quarter data of 1997 still show another sizable fiscal deficit 
requiring continued high levels of domestic borrowing from the banking 
system and the public. While Ghana has benefited from IMP programs in 
recent years the current ESAF is off track due to fiscal and inflation 
problems.

    The Bank of Ghana is currently pursuing a high interest rate policy 
in an attempt to absorb excess liquidity and contain inflationary 
pressures. Short-term interest rates are now in the 40-50 percent 
range. Inflation measured about 70 percent at year-end 1995 and has 
consistently declined to about 28 percent at the end of September, 
1997. Adequate rains and good harvests this year have moderated upward 
pressure on food prices. However, growth in the money supply was 5 
percent in the first quarter of 1997 which follows trends of the past 
years. This could have serious consequences for inflation and 
inflationary expectations in 1997.

    The government's economic program has focused on the development of 
Ghana's private sector, which historically has been weak. Privatization 
of state-owned enterprises continues, with about two-thirds of 300 
enterprises sold to private owners. Ghana achieved real economic growth 
of 5.2 percent in 1996, up from the 4.5 percent recorded in 1995. 
Growth in the mining sector has been particularly brisk in recent years 
while agriculture (which still accounts for about 40 percent of GDP) 
and manufacturing have recorded much slower growth. Other reforms 
adopted under the government's structural adjustment program include 
the elimination of exchange rate controls and the lifting of virtually 
all restrictions on imports. The establishment of an Interbank Foreign 
Exchange Market has greatly expanded access to foreign exchange. The 
elimination of virtually all local production subsidies is further 
indication of the government's intention to move toward a market 
orientation for the economy.
2. Exchange Rate Policy

    The foreign exchange value of the Ghanaian cedi is established 
through the mechanism of an Interbank Market and Foreign Exchange 
Bureaus, and currency conversion is easily obtained. As the demand for 
imports has risen steadily, the government has allowed the cedi to 
depreciate. During the past 12 months the value of the cedi relative to 
the dollar has fallen by 28 percent and stood at 2260 cedi to the 
dollar in November 1997. Nevertheless, Ghana's high rate of inflation 
has resulted in an appreciation of the cedi's real exchange rate. In 
general, the exchange rate regime in Ghana does not have any particular 
impact on the competitiveness of U.S. exports.
3. Structural Policies

    Ghana progressively wound down import quotas and surcharges as part 
of its structural adjustment program. Tariff structures are being 
adjusted in harmony with the ECOWAS Trade Liberalization Program. 
Importers now are required to sign a declaration that they will comply 
with Ghanaian tax and other laws. Imported goods currently enjoy 
generally unfettered access to the Ghanaian market.

    The government professes strong support for the principle of free 
trade. However, it is also committed to the development of competitive 
domestic industries with exporting capabilities. The government is 
expected to continue to support domestic private enterprise with 
various financial incentives. Ghanaian manufacturers seek stronger 
protective measures and complain that Ghana's tariff structure places 
local producers at a competitive disadvantage relative to imports from 
countries enjoying greater production and marketing economies of scale. 
High local production costs frequently boost the price of locally-
manufactured items above the landed cost of goods imported from Asia 
and elsewhere. Reductions in tariffs have increased competition for 
local producers and manufacturers while reducing the cost of imported 
raw materials.

    The government repealed a 17.5 percent value-added tax (VAT) 
shortly after it was introduced in March 1995. The implementation of 
the tax was handled badly and resulted in widespread public protests 
and some street violence. The government has reverted to several 
previously-imposed taxes, including a sales tax. Government has set in 
motion a program to reintroduce a VAT bill and begin implementation in 
1998,at a somewhat lower level than the previous proposed tax, after an 
extensive public education effort.
4. Debt Management Policies

    Persistent balance of payments deficits have resulted in a 
continuing increase in foreign indebtedness. Swings in commodity 
prices, especially gold and cocoa, have a dramatic impact on Ghana's 
export revenues. In 1996 gold accounted for about 39 percent of total 
export receipts, while cocoa accounted for 35 percent and timber for 9 
percent. On the import side capital goods are the largest category, 
followed by intermediate goods, fuel, and consumer goods.

    Ghana's total outstanding external debt, including obligations to 
the IMF, totaled approximately USD 5.4 billion at the end of the first 
quarter of 1997. Outstanding obligations to the IMF under medium-term 
facilities stood at USD 503 million at the end of the same period. At 
that time, outstanding long-term debt was about USD 4.2 billion (about 
78 percent of total debt), of which USD 1.2 billion and USD 3.0 billion 
were owed to bilateral creditors and multilateral institutions, 
respectively.

    During the last decade the stocks of both domestic and external 
debt have risen sharply. High domestic interest rates and the 
depreciation of the cedi on foreign exchange markets have caused the 
debt service burden in cedi terms to grow steadily. Nearly one-quarter 
of total government expenditures during the first half of 1997 were for 
the payment of interest on the public debt.
5. Significant Barriers to U.S. Exports

    Import licenses: Ghana eliminated its import licensing system in 
1989 but retains a ban on the importation of a narrow range of products 
that do not affect U.S. exports. Importers must simply sign a 
declaration that they will comply with the Ghanaian tax code and other 
laws. Ghana is a member of the WTO.

    Services barriers: The Ghanaian investment code proscribes foreign 
participation in the following sectors: small scale wholesale and 
retail sales, taxi and car rental services with fleets of fewer than 
ten vehicles, lotteries, and barber and beauty shops.

    Standards, testing, labeling, and certification: Ghana has 
promulgated its own standards for food and drugs. The Ghana standards 
board, the testing authority, subscribes to accepted international 
practices for the testing of imports for purity and efficacy. Under 
Ghanaian law, imports must bear markings identifying in English the 
type of product being imported, the country of origin, the ingredients 
or components, and the expiration date, if any. Non-complying goods are 
subject to government seizure. The thrust of this law is to regulate 
imported food and drugs; however, by its terms the law applies to non-
consumable imports as well. Locally-manufactured goods are subject to 
comparable testing, labeling, and certification requirements. Four pre-
shipment inspection agencies contracted by government also perform 
testing and price verification for some selected imports that are above 
USD 5,000.

    Investment barriers: The investment code guarantees free 
transferability of dividends, loan repayments, licensing fees and 
repatriation of capital; provides guarantees against expropriation or 
forced sale; and delineates dispute arbitration processes. Foreign 
investors are not subject to differential treatment on taxes, access to 
foreign exchange, imports or credit. Separate legislation covers 
investments in mining and petroleum and applies equally to foreign and 
Ghanaian investors. The investment code no longer requires prior 
project approval from the Ghana Investment Promotion Center (GIPC).

    Government procurement practices: Government purchases of equipment 
and supplies are usually handled by the Ghana Supply Commission (the 
official purchasing agency) through international bidding and, at 
times, through direct negotiations. Former government import monopolies 
have been abolished. However, parastatal entities continue to import 
some commodities. The parastatals no longer receive government 
subsidies to finance imports. There has been a recent government 
directive to centralize the purchase of government vehicles.
6. Export Subsidies Policies

    The Government of Ghana does not directly subsidize exports. 
Exporters are entitled to a 100 percent drawback of duty paid on 
imported inputs used in the processing of exported goods. Bonded 
warehouses have been established which allow importers to avoid duties 
on imported inputs used to produce merchandise for export. The Export 
Processing Zone (EPZ) Law, enacted in 1995, does not tax corporate 
profits for the first ten years of business operation.
7. Protection of U.S. Intellectual Property

    After independence in 1957, Ghana instituted separate legislation 
for copyright (1961) and trademark (1965) protection based on British 
law. Subsequently, the government passed modified copyright and patent 
legislation in 1985 and 1992, respectively. Prior to 1992 the patent 
laws of the United Kingdom applied in Ghana. Ghana is a member of the 
Universal Copyright Convention, the World Intellectual Property 
Organization, and the English-Speaking African Regional Intellectual 
Property Organization. IPR holders have access to local courts for 
redress of grievances. Few infringement cases have been filed in Ghana 
in recent years. Ghana has not been identified as a priority country in 
connection with either the Special 301 Watch List or Priority Watch 
List.

    Patent registration in Ghana presents no serious problems for 
foreign rights holders. Fees for registration vary according to the 
nature of the patent, but local and foreign applicants pay the same 
rate.

    Ghana has not yet become a popular location for imitation designer 
apparel and watches. In cases where trademarks have been 
misappropriated, the price and quality disparity would be apparent to 
all but the most unsuspecting buyer.

    Enforcement of foreign copyrights may be pursued in the Ghanaian 
courts, but few such cases have actually been filed in recent years. 
The bootlegging of computer software is an example of copyright 
infringement taking place locally. There are no data available to 
quantify the commercial impact of this practice. Pirating of videotapes 
is another local practice that affects U.S. exports, but the evidence 
suggests that this is not being done on a large scale. There is no 
evidence of a significant export market for Ghanaian-pirated books, 
cassettes, or videotapes.

    In summary, infringement of intellectual property rights has not 
had a significant impact on U.S. exports to Ghana. Pirated computer 
software may become a more significant problem in the future, however, 
as computer use grows.
8. Worker Rights

    a. The Right of Association.--Trade unions are governed by the 
Industrial Relations Act (IRA) of 1958, as amended in 1965 and 1972. 
Organized labor is represented by the Trades Union Congress (TUC), 
which was established in 1958. The IRA confers power on government to 
refuse to register a trade union, but this right has not been exercised 
by the current government or the previous military regime. No union 
leaders have been detained in recent years, nor has the right of 
workers to freely associate otherwise been circumscribed.

    b. The Right to Organize and Bargain Collectively.--The IRA 
provides a framework for collective bargaining and protection against 
anti-union discrimination. Civil servants are prohibited by law from 
joining or organizing a trade union. However, in December, 1992, the 
government enacted legislation which allows each branch of the civil 
service to establish a negotiating committee to engage in collective 
bargaining for wages and benefits in the same fashion as trade unions 
in the private sector. While the right to strike is recognized in law 
and in practice, the government has on occasion taken strong action to 
end strikes, especially in cases involving vital government interests 
or public order. The IRA provides a mechanism for conciliation and 
arbitration before unions can resort to industrial actions or strikes.

    c. Prohibition of Forced or Compulsory Labor.--Ghanaian law 
prohibits forced labor and it is not known to be practiced. The 
International Labor Organization (ILO) continues to urge the government 
to revise legislation that permits imprisonment with an obligation to 
perform labor for offenses that are not countenanced under ILO 
Convention 105, ratified by Ghana in 1958.

    d. Minimum Age of Employment of Children.--Labor legislation in 
Ghana sets a minimum employment age of 15 and prohibits night work and 
certain types of hazardous labor for those under 18. The violation of 
child labor laws is common and young children of school age can often 
be found during the day performing menial tasks in the agricultural 
sector or in the markets. Observance of minimum age laws is eroded by 
local custom and economic circumstances that compel children to become 
wage earners at an early age. Inspectors from the Ministry of Labor and 
Social Welfare are responsible for enforcement of child labor laws. 
Employers who violate laws prohibiting heavy labor and night work by 
children are occasionally prosecuted.

    e. Acceptable Conditions of Work.--In 1991 a Tripartite Commission 
composed of representatives from government, organized labor, and 
employers established minimum standards for wages and working 
conditions. The daily minimum wage combines wages with customary 
benefits such as a transportation allowance. The current daily minimum 
wage is Cedis 2,000, about 90 cents at the present rate of exchange. 
This sum does not permit a single wage earner to support a family and 
frequently results in multiple wage earners and other family-based 
commercial activity. By law the maximum work week is 45 hours, but 
collective bargaining has established a 40-hour week for most unionized 
workers.

    f. Rights in Sectors with U.S. Investment.--U.S. investment in 
Ghana is concentrated in the primary and fabricated metals sectors 
(aluminum smelting and gold mining), food and related products (tuna 
canning), petroleum marketing, and telecommunications. Labor conditions 
in these sectors do not differ significantly from the norm, save that 
wage scales in the metals and mining sectors are substantially higher 
than elsewhere in the Ghanaian economy. U.S. firms have a good record 
of compliance with Ghanaian labor laws.

Extent of U.S. Investment in Selected Industries--U.S. Direct Investment
            Position Abroad on an Historical Cost Basis--1996           
                       [Millions of U.S. dollars]                       
------------------------------------------------------------------------
              Category                                          Amount  
------------------------------------------------------------------------
Petroleum..........................                                 \1\ 
Total Manufacturing................                                 \1\ 
  Food & Kindred Products..........                 0                   
  Chemicals & Allied Products......                 0                   
  Metals, Primary & Fabricated.....               \1\                   
  Machinery, except Electrical.....                 0                   
  Electric & Electronic Equipment..                 3                   
  Transportation Equipment.........                 0                   
  Other Manufacturing..............                 0                   
Wholesale Trade....................                                   0 
Banking............................                                   0 
Finance/Insurance/Real Estate......                                   0 
Services...........................                                   0 
Other Industries...................                                 \1\ 
TOTAL ALL INDUSTRIES...............                                 219 
------------------------------------------------------------------------
\1\ Suppressed to avoid disclosing data of individual companies.        
Source: U.S. Department of Commerce, Bureau of Economic Analysis        


                                 ______
                                 

                                NIGERIA

                         Key Economic Indicators                        
          [Billions of U.S. dollars unless otherwise indicated]         
------------------------------------------------------------------------
                                                 1995    1996   1997 \1\
------------------------------------------------------------------------
                                                                        
Income, Production, and Employment:                                     
  Nominal GDP \2\.............................    47.0    48.7       N/A
  Real GDP Growth (pct) \3\...................     2.2     3.3       1.4
  GDP by Sector (pct):                                                  
    Agriculture...............................    31.0    31.2      31.0
    Manufacturing.............................     6.9     6.5       6.0
    Services..................................    22.9    23.0      23.1
    Government................................    10.2     9.9       N/A
  Per Capita GDP (US$)........................     260     250       N/A
  Labor Force (millions)......................    42.8    43.0      40.0
  Unemployment Rate (pct).....................    30.0    27.0      30.0
                                                                        
Money and Prices (annual percentage growth:                             
  Money Supply Growth (M2)....................    10.3    25.7       N/A
  Consumer Price Inflation....................    73.0    28.0      12.5
  Exchange Rate (naira/ US$ - annual average):                          
    Official..................................      22      22        22
    Parallel..................................      83      84        87
    Weighted Average..........................      72      82        82
                                                                        
Balance of Payments and Trade:                                          
  Total Exports FOB \4\.......................    11.7   13.95       N/A
    Exports to U.S.\5\........................     4.8     6.1       6.8
  Total Imports CIF \4\.......................     9.3     6.9       N/A
    Imports from U.S.\5\......................     0.6     0.8       0.6
  Trade Balance...............................     2.4     9.2       N/A
    Trade Balance with U.S.\5\................     4.2     5.2       6.2
  Current Account Deficit/GDP (pct)...........    -5.6     2.8       N/A
  External Public Debt........................    32.5    28.1       N/A
  Debt Service Payments/GDP (pct).............    16.4    15.3       N/A
  Fiscal Deficit/GDP (pct)....................    0.05    -1.6       N/A
  Gold and Foreign Exchange Reserves..........     1.4     4.1       8.0
  Aid from U.S. (US$ millions)................     N/A     N/A       N/A
  Aid from All Other Sources..................     N/A     N/A       N/A
------------------------------------------------------------------------
\1\ 1997 figures, except exchange rates, are all estimates based on     
  available monthly data in November 1997.                              
\2\ GDP at factor cost. Conversion to U.S. dollars done with official   
  exchange rate of 21.9 naira to the dollar.                            
\3\ Percentage changes calculated in local currency.                    
\4\ Merchandise trade                                                   
                                                                        
 Source: U.S. Department of Commerce and U.S. Census Bureau; exports    
  FAS, imports customs basis; 1997 figures are estimates based on data  
  available through November 1997.                                      

1. General Policy Framework

    Nigeria is Africa's most populous nation and the United States' 
fifth largest oil supplier. It offers investors a low-cost labor pool, 
abundant natural resources, and the largest domestic market in sub-
Saharan Africa. However, it also suffers from an autocratic military 
government, inadequate infrastructure, confusing and inconsistent 
regulations, and endemic corruption. Nigeria's crucial petroleum sector 
provides the government with over 90 percent of all foreign exchange 
earnings and about 60 percent of budgetary revenue. Agriculture, which 
accounts for about 31 percent of GDP and employs about two-thirds of 
the labor force is dominated by small-scale subsistence farming. 
Nigeria is a member of the World Trade Organization.

    After a period of relative fiscal austerity in the late 1980s, the 
Nigerian government ran budget deficits of up to 12 percent of GDP 
beginning in 1990. The deficit decreased to seven percent in 1994 and, 
by postponing government spending (including for debt service), in 1995 
shrank to negligible proportions. In 1996, the budget had a surplus of 
1.6 percent of GDP. For the majority of 1997, the budget ran a reported 
surplus. The deficit reduction and ensuing surplus came about primarily 
through austerity--e.g., foregoing government projects and 
infrastructure maintenance--as well as stronger-than-expected oil 
revenue and the simple failure to budget enough to cover scheduled debt 
service, resulting in arrears to foreign and domestic creditors. 
Priority recommendations by international financial institutions 
include unifying the dual exchange rate, greater budgetary 
transparency, reducing large government fuel price subsidies (the 
official price of gasoline was equivalent to about 55 cents per gallon 
in November 1997), shelving a number of government projects which are 
of doubtful economic value, and reducing leakages from government 
income due to corruption.

    In previous years, monetary policy had been driven by the need to 
accommodate the government's budget deficit and a desire to reduce the 
inflationary impact of the budget deficit on the economy. Deficits at 
the federal level had been financed primarily by borrowing from the 
Central Bank of Nigeria (CBN), which held 84 percent of the 
government's domestic debt at the end of 1995. Since the Central Bank 
monetizes much of the deficit, budgetary shortfalls have a direct 
impact on the money supply and on price levels, which had risen rapidly 
for several years but have since slowed. In 1996 the government also 
began releasing money from an extra-budgetary account called the 
Petroleum Trust Fund (PTF) for infrastructure and other projects.

    In 1997 Nigeria has continued the policy of ``guided deregulation'' 
instituted in the 1995 budget. In conjunction with his 1994 budget 
announcement, head of state General Sani Abacha announced the 
abandonment of most 1986 structural adjustment program reforms and 
instituted tight government control over key economic variables. In 
response to the economic downturn caused by those measures, Abacha's 
1995 budget abandoned the tightly regulated economic policies enacted 
in 1994. Under the new policy, the Nigerian government reopened the 
Autonomous Foreign Exchange Market (AFEM), loosened controls on foreign 
investment and reduced tariffs and bans on some imports. The 1997 
budget continued the trend of fiscal austerity and the slow 
deregulation of the economy. Although Minister of Finance Anthony Ani 
had announced that privatization of the telecommunications and 
electrical generating parastatals would commence in 1997, virtually no 
progress was made.
2. Exchange Rate Policy

    In 1997 Nigeria continued the liberalizing of the foreign exchange 
mechanism instituted in 1995. Under the foreign exchange decree of 
1995, the AFEM was reestablished, allowing private companies to source 
foreign exchange at the parallel market rate (about 85 naira to the 
dollar in November 1997). The exchange rate of 22 naira to the dollar 
has been retained for some official government transactions. Companies 
can now hold domiciliary accounts in private banks, with account 
holders having ``unfettered'' use of the funds. Foreign investors may 
bring capital into the country without prior Finance Ministry approval, 
and may service foreign loans and remit dividends. Currency exchange 
offices are functioning, albeit with a limitation of $2,500 per 
transaction. The Central Bank has continued to intervene in the AFEM at 
regular intervals, going from monthly interventions in 1995 to weekly 
interventions in 1996. The Nigerian Finance Minister pledged to end the 
dual rates in the future.
3. Structural Policies

    As stated in the December 1986 circular, ``Industrial Policy of 
Nigeria,'' the Nigerian government maintains a system of incentives to 
foster the development of particular industries, to encourage firms to 
locate in economically disadvantaged areas, to promote research and 
development in Nigeria, and to favor the use of domestic labor and raw 
materials. The Industrial Development (Income Tax Relief) Act of 1971 
provides incentives to ``pioneer'' industries deemed beneficial to 
Nigeria's economic development. Companies given ``pioneer'' status may 
enjoy a non-renewable tax holiday of five years, or seven years if the 
pioneer industry is located in an economically disadvantaged area.

    In 1995 Nigeria promulgated the Nigerian Investment Promotion 
Commission Decree to replace the Enterprises Promotion Act. This decree 
liberalized the foreign investment regime, allowing 100 percent foreign 
ownership of firms outside the petroleum sector. Investment in the 
petroleum sector is still limited to the existing joint-venture 
agreement or production-sharing contracts with the Nigerian government, 
though there has been discussion of the Nigerian government selling off 
some or all of its part of the joint ventures. A foreign enterprise may 
now buy shares of any Nigerian firm except those on the ``negative 
list'': production of firearms, ammunition, narcotics, military and 
paramilitary apparel. The Investment Promotion Decree provides for the 
creation of an Investment Promotion Commission that will register 
companies for foreigners after incorporation under the Companies and 
Allied Matters Decree of 1990. The decree also abolishes the expatriate 
quota system (except in the oil sector) and prohibits any 
nationalization or expropriation of a foreign enterprise by the 
Nigerian government except for such cases determined to be in the 
national interest.

    Nigeria has begun to implement the 1995 money laundering decree, 
which introduced procedures designed to inhibit this practice, as well 
as a decree against advance-fee fraud, called 419 fraud after the 
section of the Nigerian criminal code that deals with it. However, as 
of 1997, this implementation has exhibited only marginal success in 
reducing financial fraud. The scope of 419 business fraud has brought 
international notoriety to Nigeria and constitutes a serious 
disincentive to exporters, since any international transaction must be 
thoroughly vetted and confirmed.
4. Debt Management Policies

    Debt service due, including payment of arrearages, is projected to 
be over $8 billion annually for the next several years; the result of a 
ballooning debt incurred during the latter half of the 1980s. The 1997 
budget allowed only $2 billion for foreign debt payments, thus ensuring 
continued build-up of arrears.

    During the period 1986 to early 1992, on the basis of a 
comprehensive structural adjustment program, Nigeria reached three 
standby agreements with the IMF. The most recent of these was approved 
in January 1991 and lapsed in April 1992. Discussions with the IMF 
since then have shown some progress, as evidenced by the 1996 decapping 
of interest rates and removal of the mandatory sectoral credit 
allocations for banks, but have failed to result in a new agreement. No 
new rescheduling agreement will be reached until an IMF program is re-
implemented and a successful track record has been established. In the 
interim, Nigeria has initiated discussions with the multilateral 
institutions regarding a medium- term economic program and has made 
some progress at meeting their criteria.

    In January 1992 in an effort to reduce its external stock of debt, 
the Nigerian government concluded an agreement with the London Club 
that gave commercial banks a menu of options from which to choose in 
reducing Nigeria's commercial debt. The menu included debt buy backs 
(currently at 56 cents to the dollar), new money bonds, and 
collateralized par bonds. As a result of the agreement, Nigeria was 
able to reduce its external debt by $3.9 billion, but the accumulation 
of arrears and late interest on other debt, particularly Paris Club 
debt, has essentially negated the gains. Including arrears, official 
foreign obligations exceeded $34 billion as of November 1997.

    Nigeria's Paris Club debt repayment obligations have continued to 
grow while its record on debt repayment has deteriorated Nigeria's 
record on debt repayment, meanwhile, has also deteriorated. In 1992 
Nigeria made debt service payments of $2.7 billion against interest and 
principal payment obligations of $5 billion. Faced with similar 
obligations in the following years, external debt service payments were 
only $1.6 billion for 1993, $1.8 billion for 1994, $2 billion for 1995, 
and $2 billion for 1996, and $2 billion for 1997 as well.
5. Significant Barriers to U.S. Exports

    As of November 1997, the importation of approximately 20 different 
items, principally agricultural, is still banned. These bans were 
initially implemented to restore Nigeria's agricultural sector and to 
conserve foreign exchange. Although the bans are compromised by 
widespread smuggling, the reduced availability of grains has raised 
prices for both banned commodities and locally produced substitutes. 
The government also discontinued subsidizing fertilizer for farmers in 
1997.

    In 1995 Nigeria announced a new tariff structure to be operated for 
the next five years. The revision was aimed at narrowing the ranges of 
many custom duties, increasing rate coverage in line with WTO 
provisions, with fewer import prohibitions. The following previously 
banned commodities are now subject to the indicated duty rates: rice, 
50 percent; day old chicks and parent stock, 5 percent; sparkling wines 
and champagne, 100 percent plus 40 percent excise; fruits and fruit 
juices, 75 percent; jute bags, 45 percent; cigarettes, 200 percent; 
cotton, 60 percent; wheat, 10 percent; and passenger vehicles, from 30 
to 100 percent. However, a 25 percent across the board reduction in 
import tariffs became effective in January 1997, and is now being 
implemented, thus temporarily reducing the above listed duty rates. 
This action followed complaints of importers that customs duty was 
calculated on the basis of 80 naira to the dollar, rather than the 
official rate of 22 naira to the dollar used in 1994. Also, in October 
1995 the Nigerian ports authority reduced port charges by 60 percent in 
Lagos and 70 percent at the other delta ports.

    Other import restrictions apply to aircraft and ocean-going 
vessels. Guidelines mandate that all imported aircraft and ocean-going 
vessels be inspected by a government authorized inspection agent. In 
addition, performance bonds and off-shore guarantees must be arranged 
before either down payments or subsequent payments are authorized by 
the Ministry of Finance.

    In April 1996, in an effort to reduce congestion and corruption in 
Nigerian ports and following a reported shortfall in customs duties, 
the Nigerian government changed the procedures by which goods enter or 
leave the country. The new regulations require a preshipment inspection 
for all unaccompanied imports and exports regardless of value, 
certifying the price, quantity, and quality before shipment; and 
imports must be accompanied by an import duty report (IDR). Goods 
arriving without an IDR will be confiscated by the Nigerian government. 
In addition, all goods will be assessed a one percent surcharge to 
cover the cost of inspection by the port authorities.

    Nigeria generally uses an open tender system for awarding 
government contracts, and foreign companies incorporated in Nigeria 
receive national treatment. Approximately five percent of all 
government procurement contracts are awarded to U.S. companies.
6. Export Subsidy Policies

    In 1976, the government established the Nigerian Export Promotion 
Council (NEPC) to encourage development of non-oil exports from 
Nigeria. The Council administers various incentive programs including a 
duty drawback program, the export development fund, tax relief and 
capital assets depreciation allowances, and a foreign currency 
retention program. The duty drawback or manufacturing in-bond program 
is designed to allow the duty free importation of raw materials to 
produce goods for export, contingent on the issuance of a bank 
guaranteed bond. The performance bond is discharged upon evidence of 
exportation and repatriation of foreign exchange. Though meant to 
promote industry and exportation, these schemes have been burdened by 
inefficient administration, confusion, and corruption, causing great 
difficulty and in some cases losses to those manufacturers and 
exporters who opted to use them.

    The NEPC also administers the export expansion grant program, a 
fund which provides grants to exporters of manufactured and semi-
manufactured products. Grants are awarded on the basis of the value of 
goods exported, and the only requirement for participation is that the 
export proceeds be repatriated to Nigeria. Though the grant amounts are 
small, ranging from two to five percent of total export value, they may 
constitute subsidies as defined by the WTO and raise questions about 
compliance with WTO obligations.
7. Protection of U.S. Intellectual Property

    Nigeria is a signatory to the Universal Copyright Convention and 
the Berne Convention. In early 1993, Nigeria became a member of the 
World Intellectual Property Organization (WIPO). Cases involving 
infringement of non-Nigerian copyrights have been successfully 
prosecuted in Nigeria, but enforcement of existing laws remains weak, 
particularly in the patent and trademark areas. Despite active 
participation in international conventions and the apparent interest of 
the government in intellectual property rights issues, little has been 
done to stop the widespread production and sale of pirated tapes, 
videos, computer software, and books in Nigeria.

    The Patents and Design Decree of 1970 governs the registration of 
patents, and the Nigerian Standard Organization is responsible for 
issuing patents, trademarks, and copyrights. Once conferred, a patent 
gives the patentee the exclusive right to make, import, sell, or use 
the products or apply the process. The Trademarks Act of 1965 governs 
the registration of trademarks. Registering a trademark gives its 
holder the exclusive right to use the registered mark for a particular 
good or class of goods.

    The Copyright Decree of 1988, based on WIPO standards and U.S. 
copyright law, currently makes counterfeiting, exporting, importing, 
reproducing, exhibiting, performing, or selling any work without the 
permission of the copyright owner a criminal offense. Progress on 
enforcing the 1988 law has been slow. The expense and length of time 
necessary to pursue a copyright infringement case to its conclusion are 
detrimental to the prosecution of such cases.

    In the past, few companies have bothered to secure trademark or 
patent protection in Nigeria because it is generally considered 
ineffective. Losses from poor intellectual property rights protection 
are substantial, although the exact cost is difficult to estimate. The 
majority of the sound recordings sold in Nigeria are pirated copies and 
the entire video industry is based on the sale and rental of pirated 
tapes. Satellite signal piracy is common. Violation of patents on 
pharmaceuticals is also a problem. The International Intellectual 
Property Alliance estimated that U.S. companies lost $39 million in 
1997 due to copyright piracy, excluding losses from computer software.
8. Worker Rights

    a. The Right of Association.--Nigerian workers, except members of 
the armed forces and employees designated essential by the government, 
may join trade unions and may strike. Essential employees include 
firefighters, police, employees of the Central Bank, the security 
printers (printers of currency, passports, and government forms), and 
customs and excise staff. Nigeria has signed and ratified the 
International Labor Organization's (ILO) convention on freedom of 
association. However, the government has decreed a single central labor 
body, the Nigerian Labour Congress (NLC), and deregistered other 
unions. In 1994, the government dissolved the NLC executive council and 
imposed a sole administrator. Under Nigerian labor laws, any non-
agricultural enterprise that employs more than 50 employees is obliged 
to recognize trade unions and must pay or deduct a dues checkoff for 
employees who are members. However, in the past, the government has 
threatened to withdraw the dues checkoff provision and make payment of 
union dues completely voluntary if unions pursue strikes. Furthermore, 
the government continues to hold labor leaders in detention without 
charge. As a result of the government's failure to abide by ILO 
conventions to which it has subscribed concerning worker rights and 
freedom of association, it was the subject of an ILO ``special 
paragraph'' censuring the Nigerian government. The Nigerian government 
has yet to accept an ILO fact finding mission or take other steps to 
mitigate the adverse findings that led to the ILO censure.

    b. The Right to Organize and Bargain Collectively.--The labor laws 
of Nigeria permit the right to organize and the right to bargain 
collectively between management and trade unions. Collective bargaining 
is common in many sectors of the economy. Nigerian labor law further 
protects workers against retaliation by employers for labor activity 
through an independent arm of the judiciary, the Nigerian Industrial 
Court, which handles complaints of anti-union discrimination. Trade 
unionists have complained, however, that the Nigerian judicial system's 
slow handling of labor cases constitutes a denial of redress to those 
with legitimate complaints. The government retains broad authority over 
labor matters, and can intervene forcefully in labor disputes which it 
feels contravene its essential political or economic programs. It has 
taken such action in the case of the 1996 banning of the University 
Lecturers' Union to force an end to their strike, and in August 1994 
when it dismissed the executive councils of the NLC and the two leading 
petroleum sector unions and replaced them with ``sole administrators.'' 
The administrators remain in control pending national executive council 
elections that have yet to be held.

    c. Prohibition of Forced or Compulsory Labor.--The 1974 Labor 
Decree and the 1989 Constitution prohibit forced or compulsory labor. 
While this prohibition is generally observed in practice, forced labor 
has been ``employed'' in some community clean-up projects. The ILO has 
noted that, with the 1989 Constitution suspended, Nigeria may not be 
able to enforce the ILO convention against forced labor in the absence 
of constitutional guarantees.

    d. Minimum Age for Employment of Children.--Nigeria's 1974 labor 
decree prohibits employment of children under 15 years of age in 
commerce and industry and restricts other child labor to home-based 
agricultural or domestic work. The law further stipulates that no 
person under the age of 16 may be employed for more than eight hours 
per day. The decree allows the apprenticeship of youths aged 13 to 15 
under specific conditions. The government does not specifically 
regulate service of apprentices over the age of 15. Primary education 
is compulsory in Nigeria, though rarely enforced, and studies have 
reported declining enrollment due mainly to the continuing 
deterioration of public schools. The lack of sufficient public school 
infrastructure has forced more children into the employment market.

    e. Acceptable Conditions of Work.--Nigeria's 1974 labor decree 
established a 40 hour work week, prescribed 2 to 4 weeks of annual 
leave, set a minimum wage and stipulated that workers are to be paid 
extra for hours worked over the legal limit. The decree also states 
that workers who work on Sundays and legal public holidays must be paid 
a full day's pay in addition to their normal wages. There is no law 
prohibiting excessive compulsory overtime. The last government review 
of the minimum wage, undertaken in 1991, raised the monthly minimum 
wage from 250 naira to 450 naira ($20.45 in 1991 but only $5.60 in 
1996). The 1974 decree contains general health and safety provisions. 
Employers must compensate injured workers and dependent survivors of 
those killed in industrial accidents. Enforcement of these laws by the 
Ministry of Labor has been largely ineffective.

    f. Rights in Sectors with U.S. Investment.--Worker rights in 
petroleum, chemicals and related products, primary and fabricated 
metals, machinery, electric and electronic equipment, transportation 
equipment, and other manufacturing sectors are not significantly 
different from those in other major sectors of the economy.

Extent of U.S. Investment in Selected Industries--U.S. Direct Investment
            Position Abroad on an Historical Cost Basis--1996           
                       [millions of U.S. dollars]                       
------------------------------------------------------------------------
                   Category                                     Amount  
------------------------------------------------------------------------
Petroleum.....................................                      \1\ 
Total Manufacturing...........................                       61 
  Food & Kindred Products.....................         \1\              
  Chemicals & Allied Products.................          19              
  Metals, Primary & Fabricated................         \1\              
  Machinery, except Electrical................           0              
  Electric & Electronic Equipment.............           2              
  Transportation Equipment....................         \1\              
  Other Manufacturing.........................          -4              
Wholesale Trade...............................                      \2\ 
Banking.......................................                      \1\ 
Finance/Insurance/Real Estate.................                        0 
Services......................................                        0 
Other Industries..............................                        0 
TOTAL ALL INDUSTRIES..........................                      978 
------------------------------------------------------------------------
\1\ Suppressed to avoid disclosing data of individual companies.        
\2\ Indicates a value between $-500,000 and $500,000.                   
                                                                        
Source: U.S. Department of Commerce, Bureau of Economic Analysis        


                                 ______
                                 

                              SOUTH AFRICA

                         Key Economic Indicators                        
          [Billions of U.S. dollars unless otherwise indicated]         
------------------------------------------------------------------------
                                                 1995    1996   1997 \1\
------------------------------------------------------------------------
                                                                        
Income, Production and Employment:                                      
  Nominal GDP (at factor cost)................   118.8   112.6     115.5
  Real GDP Growth (pct) \2\...................     3.5     3.0       2.0
  GDP by Sector:                                                        
    Agriculture...............................    5.18    5.46      5.22
    Mining....................................    9.30    9.11      9.03
    Manufacturing.............................   28.84   26.75     27.43
    Wholesale/Retail Trade....................   19.35   18.10     18.53
    Financial Service.........................   20.19   19.54     20.65
    Government................................   18.05   17.10     17.72
  Per Capita GDP (US$) \3\....................    2880    2659      3041
  Labor Force (millions) \3\..................   14.37   14.49       N/A
  Unemployment Rate (percent) \3\.............    31.2    29.3       N/A
                                                                        
Money and Prices (annual percentage growth):                            
  Money Supply (M2)...........................    13.9    15.8      16.0
  Consumer Price Index........................     8.7     7.4       8.6
  Exchange Rate (Rand/US$ - annual                                      
   average):\4\                                                         
    Official..................................     N/A     N/A       N/A
                                                                        
Balance of Payments and Trade:                                          
  Total Exports FOB \5\.......................    28.6    29.1      22.9
  Exports to U.S \5\..........................     2.2     2.3       0.5
Total Imports CIF \5\.........................    27.0    27.0      21.4
  Imports from U.S............................     2.8     3.1       1.2
Trade Balance \5\.............................     1.6     2.1       1.5
  Trade Balance with U.S......................    -0.6    -0.8      -0.7
Current Account Deficit/GDP...................     2.1     1.6       1.1
External Public Debt \6\......................    33.0    32.9       N/A
Debt Service Payments/GDP (pct)...............     6.7     7.0       N/A
Fiscal Deficit/GDP (pct)......................     5.1     5.1       N/A
Gold and Foreign Exchange Reserves............     4.2     2.3       4.9
Aid from U.S. (US$ millions)..................     187     176       110
Aid from other Countries......................     N/A     N/A       N/A
------------------------------------------------------------------------
\1\ Estimates for 1997 are based on third quarter estimates, seasonally 
  adjusted at annual rates, unless otherwise noted. The source of the   
  data is the Reserve Bank Quarterly Bulletin for December 1997. The    
  rate used to convert Rand figures into dollars is the weighted average
  of the South African banks' daily rates based on their foreign        
  exchange transactions. The decline in the 1996 GDP estimate from the  
  1995 figure is due to the almost 23 percent drop in the value of the  
  South African rand against the U.S. dollar during 1996.               
\2\ Figure provided is a second quarter estimate.                       
\3\ Estimates of population and employment are speculative due to       
  incomplete censuses during the apartheid era. The increase in the per 
  capita GDP figure for the third quarter of 1997 is largely accounted  
  for by revised South African government numbers on total population   
  based on census statistics gathered in 1996.                          
\4\ Prior to 1995, South Africa maintained an exchange rate for non-    
  resident investment and another for other transactions. The dual      
  exchange rate was eliminated and a unified rand established in mid-   
  March 1995.                                                           
\5\ All South African trade statistics include export and import data   
  for the five member countries of the Southern African Customs Union   
  (SACU), i.e., Botswana, Lesotho, Namibia, South Africa, and Swaziland.
  Trade within the SACU is not included.                                
\6\ During the apartheid era, debt estimates were deflated by the South 
  African Government as a matter of policy. Since late 1994, the        
  accuracy of South African debt estimates released by the South African
  Reserve Bank has dramatically improved.                               

1. General Policy Framework

    South Africa is a middle-income developing country with an abundant 
supply of natural resources, relatively well-developed financial, 
legal, communications, energy, and transport sectors, a stock exchange 
which ranks among the twenty largest in the world, and a modern 
infrastructure supporting an efficient distribution of goods to major 
urban centers throughout the region. With over three years having 
passed since the historic election of President Nelson Mandela in the 
country's first multi-racial elections, South Africa remains the most 
advanced, broadly-based, and productive economy in Africa.

    After more than four years of negative real GDP growth from 1988-
1992, the South African economy responded in 1993 with 1.1 percent real 
growth. Since the election in early 1994 the economic has posted real 
growth rates of 2.5 percent in 1994, 2.8 percent in 1995 and 3.1 
percent in 1996. In 1997 the economic is estimated to have grown by 
1.5-1.8%. With the exception of the gold mining industry, most sectors 
of the economy have shared in the economic recovery, with manufacturing 
showing the strongest rate of growth.

    The new South African government demonstrated its commitment to 
open markets, privatization, and a favorable investment climate with 
the release of its macroeconomic strategy in June 1996. Called 
``Growth, Employment and Redistribution,'' this policy framework 
includes the introduction of tax incentives to stimulate new investment 
in labor-intensive projects, expansion of basic infrastructure 
services, the restructuring and partial privatization of state assets, 
and continued reduction of tariffs and subsidies to promote economy 
revitalization, improved services to the disadvantaged, and integration 
into the global economic. Together with its demonstrated commitment to 
its World Trade Organization (WTO) commitments, South Africa has moved 
slowly but steadily towards free market principles. Implicit in these 
policies is recognition of South Africa's daunting developmental 
problems resulting from decades of apartheid-era policies. Black 
economic empowerment, promotion of small, medium, and micro-enterprises 
(SMMES), the extension of telecommunications, transportation, and other 
infrastructure links to unserved rural areas, and extensive job 
creation to offset population growth estimated at 1.8 percent remain 
South Africa's highest governmental objectives.

    Recent economic news, however, has not all been rosy. In 1997, the 
South African Rand depreciated 4.0 percent against the U.S. dollar, 
with the exchange rate going from 4.68 to beyond 4.87. Economists have 
attributed the Rand's decline to turmoil in the Asian markets. The 
balance of payments has remained positive due largely to privatization 
receipts and international borrowing.

    The South African government has made steady progress in redressing 
many structural problems in the South African market. Over the last 
decade, quantitative credit controls and administrative control of 
deposit and lending rates have largely disappeared. In 1998, the South 
African Reserve Bank (SARB) plans to induce a repurchase agreement 
system to allocate Bank credit. Liquidity will be controlled through 
reverse purchase agreements and government paper. In the past four 
years, a restrictive monetary policy through the maintenance of 
relatively high central bank lending rates, has curbed domestic 
spending and reduced inflation to its lowest rate in over twenty years. 
The South African government primarily finances its domestic debt 
through the issuance of government bonds.
2. Exchange Control/Rate Policy

    Under South African exchange regulations, exchange controls are 
administered by the SARB's Exchange Control Department through 
commercial banks that are authorized to deal in foreign exchange. All 
international commercial transactions must be accounted for through 
these ``authorized foreign exchange dealers.'' This provides the SARB 
wide latitudes for determining short-term exchange rates. However, the 
SARB is no longer the sole marketing agent for gold, having begun to 
allow some private sales in 1997 and further liberalizing in early 
1998. Except for a period in 1987 when it followed an implicit policy 
of fixing the rand against the dollar, the SARB normally allows the 
Rand to float but intervenes as deemed necessary to smooth market 
adjustments and to ensure there is always a buyer in the market for 
Rand.

    The previous dual exchange rate in which a more favorable exchange 
rate applied to foreign investment flows and outflows (the financial 
rand) and a less favorable one to all other transactions (the 
commercial rand ) was not acceptable in the new dispensation. On July 
1, 1997, after more than three decades of strict controls, South Africa 
relaxed its exchange control regime on residents. Private citizens are 
now allowed a one-time investment of up to R200,000 in offshore 
accounts, and are free to hold foreign currency accounts in South 
African banks. Corporations can now transfer up to R30 million for new 
foreign ventures outside the Southern African Development Community 
(SADC) and R50 million for SADC investments. Institutional investors 
can now invest abroad 3% of net inflows, and unit trusts are now 
allowed to conclude asset swaps up to 10%. Dollar/Rand futures 
contracts have been introduced, but under Reserve Bank supervision. The 
ceiling on local borrowing by foreign-controlled resident entities has 
been raised to 50% of foreign capital invested, up from a previous 25%. 
However, foreign investments and assets swaps still require Reserve 
Bank approval, except as noted above. A cautious and gradual approach 
to further liberalization is the most likely scenario as current South 
African gold plus foreign exchange reserves provide for about only ten 
months coverage of imports.
3. Structural Policies

    Prices are generally market-determined with the exception of 
petroleum products and certain agricultural goods. Purchases by 
government agencies are by competitive tender for project or supply 
contracts. Bidders must pre-qualify, with some preferences allowed for 
local content. Parastatals and major private buyers, such as mining 
houses, follow similar practices, usually inviting only approved 
suppliers to bid.

    The main sources of government revenue in South Africa are income 
taxes (30%) and the Value-Added Tax (VAT- 30%). Both personal and 
corporate income tax rates are among the highest in the world. Although 
the government had wished to phase down both individual and corporate 
tax rates through year-end 1999, fiscal constraints have slowed plans 
to do so. While maintaining the maximum personal income tax rate at 45 
percent on incomes in excess of R100,000 (about $20,500), the 
government also imposed in 1994 a ``one-time'' levy of 5 percent on all 
income over R50,000 (about $10,250)--both corporate and individual--to 
finance overruns associated with the governmental transition.

    On a more positive note, the South African government has 
undertaken some measures in the past two years to ease the tax burden 
on foreign investors. It reduced the corporate primary income tax rate 
to 35 percent from its previous rate 40 percent in 1994. The Non-
resident Shareholders Tax on foreign investors was scrapped effective 
October 1, 1995. In addition, the Secondary Tax on Corporate Dividends 
was halved to 12.5 percent in March 1996. The effective rate for 
corporations is 42.2%.
4. Debt Management Policies

    During the apartheid era, actual debt estimates were considered 
state secrets of the South African government. Those debt estimates 
released by the government and reported by international financial 
authorities during the apartheid years must, therefore, be viewed with 
skepticism. With the election of the new government, the SARB has 
worked to redress this problem and issues revised estimates of foreign 
and domestic debt. Although these revisions reflect a significant 
upward adjustment of previous estimates, they, nonetheless, indicate 
relative debt stability in recent years. At the end of 1996, the SARB 
reported that total foreign debt, including Erobond borrowing, amounted 
to approximately $33 billion. The ratio of total foreign debt to GDP 
has remained steady at around 25-27 percent over the past four years, 
while interest payments as a percentage of total export earnings 
increase steadily declining slightly from 6.6 percent in 1993 to 6.8 
percent in 1996.

    South Africa is a member of the World Bank and International 
Monetary Fund (IMF) and continues Article IV consultations with the 
latter on a regular basis. In December 1993, after 27 years of economic 
isolation, South Africa became an IMF borrowing nation with an $850 
million drought relief loan, which South Africa subsequently repaid. 
South Africa receives some technical assistance and has a project loan 
with the World Bank.
5. Significant Barriers to U.S. Exports

    Under the terms of the Import and Export Control Act of 1963, South 
Africa's Minister of Trade and Industry may act in the national 
interest to prohibit, ration, or otherwise regulate imports. In recent 
years, the list of restricted goods requiring import permits has been 
reduced, but still includes such goods as foodstuffs, clothing, 
fabrics, wood and paper products, refined petroleum products and 
chemicals. Nonetheless, the South African Government remains committed 
to the simplification and eventual reduction of tariffs within the WTO 
framework, and maintains active discussions with that body and its 
major trading partners.
6. Export Subsidies Program

    The primary subsidy regime of the South African Government was the 
General Export Incentive Scheme (GEIS) through which South African 
exporting companies received direct non-discriminatory cash subsidies 
based on the value of exports, the degree of beneficiation or 
processing, and the local content of the exported product. The South 
African government has completely eliminated the GEIS program despite 
considerable opposition from local manufacturers. The Department of 
Trade and Industry ``revised'' the GEIS in early 1995, ``downsized'' it 
again in early 1996, and have now completely phased it out as of July 
11 1997. The stated reason for phasing out the scheme was that it was 
not WTO-consistent. Instead, the government has focused on other, more 
WTO-friendly means of promoting South African exports. The Export 
Marketing Assistance scheme (EMA) offers financial assistance for the 
development of new export markets, through financing for trade missions 
and market research. The Export Finance Guarantee Scheme for small 
exporters is the government's newest means of promoting small and 
medium exporters through credit guarantees by participating financial 
organizations. It commenced in November 1996, and to date 77 master 
guarantees to the value of R45 million have been issued. It has not 
been as successful as anticipated and concerted efforts to promote the 
scheme are required. Provisions of the Income Tax Act also permit 
accelerated write-offs of certain buildings and machinery associated 
with benefication processes carried on for export and deductions for 
the use of an export agent outside South Africa.
7. Protection of U.S. Intellectual Property Rights

    In May 1995, the new Trademarks Act of 1993 replaced the Trademarks 
Act of 1963, improving protection of internationally-known trademarks. 
Parliament also passed the Designs Act of 1993, which introduced a 
registration system providing protection for design proprietors for 10 
years from the date of registration or issue, whichever is earlier. In 
addition, the Patent Act of 1978 was most recently amended in 1988 to 
provide patent protection of inventions and innovations for a period of 
20 years from the date of filing, without extension. Other South 
African IPR laws include the Plant Breeder's Rights Act of 1976 and the 
Copyright Act of 1978 (amended in 1992).

    In 1996, the South African parliament passed the ``Intellectual 
Property Laws Rationalization Act, 1996,'' which integrated 
intellectual property rights in the former homelands into the South 
African system and extended South African intellectual property law to 
the former homelands.

    In 1997, two other intellectual property-related bills were passed 
by the parliament and became effective in November. The ``Intellectual 
Property Laws Amendment Bill'' amended the Patents Act of 1978, the 
Trademarks Act of 1993, the Copyright Act of 1978, the Designs Act of 
1993, the Merchandise Marks Act of 1941, and the Performers' Protection 
Act of 1967. It is intended to ensure, inter alia, complete compliance 
with the provisions of the WTO agreement on Trade-Related Aspects of 
Intellectual Property Rights (TRIPS) and Article 6 of the Paris 
Convention. The ``Counterfeit Goods Bill'' created for the first time 
in South Africa the offense of ``dealing in counterfeit goods.'' It 
conveys new powers to the police, Customs and Excise, and DTI 
inspectors to exercise powers of search and seizure of counterfeit 
goods and store them pending outcome of a trial.

    In recognition of progress made on the IPR front, United States 
Trade Representative Charlene Barshefsky announced on October 2, 1996, 
that South Africa would remain off the Special 301 Watch List, from 
which it was provisionally removed in April of the same year.

    South Africa is a member of international intellectual property 
treaties such as the Paris Convention for the Protection of Industrial 
Property, the Berne Convention for the Protection of Artistic and 
Literary Works, and the World Intellectual Property Rights Organization 
(WIPO).
8. Worker Rights

    a. The Right of Association.--Freedom of association is guaranteed 
by the constitution and given statutory effect by the recently-approved 
Labor Relations Act. All workers in the private sector and most in the 
public sector--with the exception of members of the National Defense 
Force, the National Intelligence Agency, and the South African Secret 
Service--are entitled to join a union. Moreover, no employee can be 
fired or prejudiced because of membership in or advocacy of a trade 
union. There are 201 registered trade unions and 47 unregistered trade 
unions, with a total approximate membership of 3.4 million or 44 
percent of the employed economically active population.

    South Africa's largest trade union federation, the Congress of 
South African Trade Unions (COSATU) is formally aligned with the 
African National Congress (ANC) and the South African Communist Party 
(SACP). Over 60 former COSATU members serve in national and provincial 
legislatures and administrations. The second largest trade union 
federation, the National Council of Trade Unions (NACTU), while 
officially independent of any political grouping, has close ties to the 
Pan Africanist Congress (PAC) and the Azanian Peoples Organization 
(AZAPO).

    The right to strike is also guaranteed in the constitution, and is 
given statutory effect by the new Labor Relations Act (LRA). The LRA 
has established a simple procedure for a protected strike, with the 
requirement that the dispute first be referred for conciliation. If 
conciliation fails to resolve the dispute, then a trade union is 
entitled to engage in a legal strike. Such a strike is not liable to 
criminal or civil action. The LRA does, however, permit employers to 
hire replacement labor for striking employees after giving seven days 
notice to the striking trade union.

    The International Labor Organization (ILO) readmitted South Africa 
in 1994. Originally an ILO member since its 1919 inception, South 
Africa withdrew from the ILO in 1964.

    b. The Right to Organize and Bargain Collectively.--South African 
law defines and protects the right to organize and bargain 
collectively. The government does not interfere with union organizing 
and generally has not interfered in the collective bargaining process. 
The new LRA statutorily entrenches ``organizational rights'', such as 
trade union access to work sites, deductions for trade union 
subscriptions, and leave for trade union officials, which will 
strengthen trade union ability to organize workers.

    The creation of the National Economic Development and Labor Council 
(NEDLAC), a tripartite negotiating forum, has served to solidify the 
role of trade unions as social partners with government and business in 
the in the formation of economic and labor policy. In addition, the new 
LRA creates workplace fora that will allow for better shop-floor 
communication between management and labor over issues of work 
organization and production. To receive statutory protection, these 
fora currently can only be initiated by trade unions is businesses with 
more than 100 employees.

    c. Prohibition of Forced or Compulsory Labor.--Forced labor is 
illegal under the constitution, and is not practiced.

    d. Minimum Age of Employment of Children.--Employment of minors 
under age 15 is prohibited by South Africa law. The LRA, however, 
grants the Minister of Welfare discretionary powers to permit 
employment of children under carefully described conditions in certain 
types of work, such as in the agricultural sector. Enforcement of child 
labor laws by the Ministries of Labor and Justice, however, are weak 
and reactive, depending largely upon complaints made against specific 
employers. As a result, use of child labor in the informal economy is 
quite common.

    e. Acceptable Conditions of Work.--There is no legally mandated 
national minimum wage in South Africa. Instead, the Labor Relations Act 
provides a mechanism for negotiations between labor and management to 
set minimum wage standards industry by industry. To date, over 100 
industries, including a majority of workers in the manufacturing 
sector, are protected by the provisions of the Act. In those sectors of 
the economy not sufficiently organized to engage in the collective 
bargaining processes which establish minimum wages, the Wage Act grants 
the Minister of Labor the authority to set minimum wages and 
conditions. The Wage Act, however, does not apply to farm or domestic 
workers.

    Occupational health and safety issues remain a top priority of 
trade unions, especially in the mining and heavy manufacturing 
industries. Although government focus on these issues has increased 
substantially (highlighted by the passage in 1993 of the Occupational 
Health and Safety Act), South African industrial and mining processes 
are still considered hazardous by international standards. Parliament 
is currently studying a mines commission of inquiry on health and 
safety issues in the mining sector, to determine ways to improve 
existing mine health and safety legislation.

    f. Worker Rights in Sectors with U.S. Investment.--The workers 
rights conditions described above do not differ from those conditions 
found in sectors with U.S. capital investment.

    g. South Africa does not as yet have any export processing zones.--
Labor practices in these zones usually present problems with the trade 
unions.

Extent of U.S. Investment in Selected Industries--U.S. Direct Investment
            Position Abroad on an Historical Cost Basis--1996           
                       [Millions of U.S. dollars]                       
------------------------------------------------------------------------
                   Category                                     Amount  
------------------------------------------------------------------------
Petroleum.....................................                      \1\ 
Total Manufacturing...........................                      778 
  Food & Kindred Products.....................          66              
  Chemicals & Allied Products.................         204              
  Metals, Primary & Fabricated................          59              
  Machinery, except Electrical................          33              
  Electric & Electronic Equipment.............         \1\              
  Transportation Equipment....................         \1\              
  Other Manufacturing.........................         236              
Wholesale Trade...............................                      119 
Banking.......................................                      \1\ 
Finance/Insurance/Real Estate.................                      \1\ 
Services......................................                       19 
Other Industries..............................                        1 
TOTAL ALL INDUSTRIES..........................                     1437 
------------------------------------------------------------------------
\1\ Suppressed to avoid disclosing data of individual companies.        
                                                                        
Source: U.S. Department of Commerce, Bureau of Economic Analysis        


 
                       EAST ASIA AND THE PACIFIC

                              ----------                              


                               AUSTRALIA

                         Key Economic Indicators                        
      [Billions of U.S. Dollars unless otherwise indicated] \1\ \2\     
------------------------------------------------------------------------
                                                 1995    1996     1997  
------------------------------------------------------------------------
                                                                        
Income, Production and Employment:                                      
  Nominal GDP \3\.............................   314.2   346.4     343.5
  Real GDP Growth (pct).......................     3.2     2.5       3.5
  GDP by Sector: \4\                                                    
    Agriculture...............................    10.5    13.3      13.5
    Manufacturing.............................    99.9   109.3     106.8
    Services..................................   176.7   193.4     192.3
    Government................................    11.1    12.0      11.9
  Per Capita GDP ($000s)......................    17.5    19.2      19.1
  Labor Force (000s)..........................   9,001   9,127     9,217
  Unemployment Rate (pct).....................     8.5     8.6       8.7
                                                                        
Money and Prices (anual percentage growth):                             
  Money Supply (M3)...........................     9.2     9.5      10.0
  Consumer Price Inflation....................     5.1     1.5       1.0
  Exchange Rate (Aust Dols=US$ annual average)                          
    Official..................................     N/A     N/A       N/A
                                                                        
Balance Of Payments And Trade:                                          
  Total Exports FOB...........................    53.0    60.4      61.7
    Exports to U.S............................     3.4     3.9       4.3
  Total Imports CIF...........................    57.3    61.5      60.5
    Imports from U.S..........................    12.4    14.1      13.7
  Trade Balance...............................    -4.3    -1.1      -1.2
    Balance with U.S..........................    -9.0   -10.2      -9.4
  External Public Debt........................    74.4    79.0      72.1
  Fiscal Deficit/Gdp (pct)....................     2.9     2.1       1.3
  Current Account Deficit/GDP (pct)...........     5.2     4.1       3.9
  Debt Service................................                          
    Payments/GDP..............................     2.5     2.5       2.4
  Gold and Foreign Exchange Reserves..........    14.7    15.8      16.6
  Aid from U.S................................       0       0         0
  Aid from other countries....................       0       0         0
------------------------------------------------------------------------
\1\ Exchange rate fluctuations must be considered when analyzing data.  
  Percentage changes are calculated in Australian dollars.              
\2\ All figures based on data available in October 1997. 1997 figures   
  are estimates.                                                        
\3\ Income measure of GDP.                                              
\4\ Production measure of GDP. ``Manufacturing'' includes mining,       
  utilities and construction.                                           

1. General Policy Framework

    Australia's developed market economy is dominated by its services 
sector (65 percent of GDP), yet it is the agricultural and mining 
sectors (8 percent of GDP combined) that account for the bulk (57 pct) 
of Australia's goods and services exports. Australia's comparative 
advantage in primary products is a reflection of the natural wealth of 
the Australian continent and its small domestic market: just over 18 
million people occupy a continent the size of the contiguous United 
States. The relative size of the manufacturing sector has been 
declining for several decades, and now accounts for just under 14 
percent of GDP.

    The Australian economy has been experiencing a cyclical downturn 
over 1996-97, and has only just started responding to the cuts in 
official interest rates made by the Reserve Bank of Australia (RBA) 
between July 1996 and July 1997 (five cuts totaling 2.5 percent have 
left the official cash rate at 5 percent). With inflation well under 
control (Australia recorded annual price deflation for the first time 
in 35 years during 1997), the task for economic policy makers is to 
lower the unemployment rate, which remains stubbornly mired above 8.5 
percent.

    The Liberal/National coalition government continued its program of 
fiscal consolidation in its budget for the 1997-98 fiscal year, 
announcing an underlying budget deficit (which removes debt repayments 
and assets from the headline balance) of $2.9 billion and a substantial 
headline budget surplus. The government has stated its intention to 
return the federal budget to balance by the 1999-2000 fiscal year.
2. Exchange Rate Policy

    Australian Dollar exchange rates are determined by international 
currency markets. There is no official policy to defend any particular 
exchange rate level, although the RBA does operate in currency markets. 
The RBA is active in what it describes as ``smoothing and testing'' 
foreign exchange rates, in order to provide a generally stable 
environment for fundamental economic adjustment policies.

    Australia does not have any major foreign exchange controls beyond 
requiring RBA approval if more than A$5,000 in cash is to be taken out 
of Australia at any one time, or A$50,000 in any form in one year. The 
purpose of this regulation is to prevent tax evasion and money 
laundering; authorization is usually automatic.
3. Structural Policies

    The Government of Australia (GOA) is continuing a program of 
economic reform, begun in the mid-1980s, that includes the reduction of 
import protection and micro economic reform. Initially broad in scope, 
the GOA's program now focuses on industry-by-industry changes. The GOA 
is also continuing with the privatization of government assets, with 
the national air carrier Qantas and the Commonwealth Bank fully 
privatized, and one-third of the government telecommunications carrier 
Telstra floated in November 1997.

    The General Tariff Reduction Program, begun in March 1991, has 
reached its conclusion, with most existing tariffs now at 5 percent. 
However, the Passenger Motor Vehicles (PMV) and Textiles, Clothing and 
Footwear (TCF) industries are still protected by high tariffs (22.5 and 
34 percent respectively). These tariffs are scheduled to decline to 15 
and 25 percent respectively by 2000 (where they will remain, pending 
further review, until 2005).

    There have been no major changes to the Australian taxation system 
in recent years, with the only change of any note being a rise in the 
tax on corporate profits from 33 to 36 percent (announced in 1996).
4. Debt Management Policies

    Australia's net foreign debt has averaged between 30 and 40 pct of 
GDP for several decades, and at the end of 1996 totaled around $150 
billion (39.7 percent of GDP). Australia's gross external public debt 
at the end of 1996 was $78 billion, or 21 percent of GDP. The public 
sector accounts for 40 percent of Australia's gross external debt; 
theremainder is the responsibility of the private sector. The net debt-
service ratio (the ratio of net income payable to export earnings) has 
remained steady between 11 and 12 percent since 1994, down from 21 
percent in 1990. Australia's credit ratings, as determined by Standard 
and Poor's and Moody's, remained unchanged at AA and Aa2, respectively 
in 1997.
5. Aid

    Australia receives no foreign aid.
6. Significant Barriers to U.S. Exports

    Australia is a signatory to the WTO, but is not a member of the WTO 
Agreement on Government Procurement.

    Import Licenses: Import licenses are now required only for certain 
vehicles, textiles, clothing and footwear. Licensing had little impact 
on U.S. products except for a small market among importers of used 
automobiles.

    Services Barriers: The Australian services market is generally 
open, and many U.S. financial services, legal and travel firms are 
established there. The banking sector was liberalized in 1992, allowing 
foreign banks to be licensed as either branches or subsidiaries. 
Broadcast licensing rules were also liberalized in 1992, allowing up to 
20 percent of the time used for paid advertisements to be filled with 
foreign-sourced material (far greater than the percentage of non-
Australian messages actually broadcast). As of January 1988, local 
content regulations require that 55 percent of a commercial television 
station's weekly broadcasts between the hours of 6:00 a.m. and midnight 
must be dedicated to Australian-produced programs (The U.S. regrets 
that this requirement was recently increased from 50 percent.) 
Regulations governing Australia's pay-TV industry require that channels 
carrying drama programs devote at least 10 percent of their programming 
budget to new, locally-produced programs. State governments restrict 
the development of private hospitals as a means of limiting public 
health expenditures (medical expenses for private hospital care are 
paid through government health programs).

    Standards: Australia became a signatory to the GATT Standards Code 
in 1992. However, Australia still maintains restrictive standards 
requirements and design rules for automobile parts, electronic and 
medical equipment, and some machine parts andequipment. Currently, all 
Australian standards are being rewritten to harmonize them where 
possible to international standards, with the objective of fulfilling 
all obligations of the GATT Standards Code.

    Labeling: Australian federal law requires that the country of 
origin be clearly indicated on the front label of some types of 
products sold in Australia. Various other federal and state labeling 
requirements are being reconsidered in light of compliance with GATT 
obligations, utility and effect on trade.

    Commodity Boards: Several national and state commodity boards 
control the marketing and export of certain Australian agricultural 
products. Activities for these marketing authorities are financed by 
the producers, but some boards enjoy export monopoly powers conferred 
by the federal or state government. While some of the boards' domestic 
activities have been deregulated, the export of wheat and rice remains 
under the exclusive control of commodity boards. The Government of 
Australia has indicated that the Australian Wheat Board (which strictly 
regulates wheat marketing abroad) will retain its export monopoly until 
at least 1999. The export of barely from certain states likewise 
remains strictly regulated.

    Investment: The government requires notification of (but normally 
raises no objections to) investment proposals by foreign interests 
above certain notification thresholds, including: acquisitions of 
substantial interests in existing Australian businesses with assets of 
A$5 million or more (A$3 million for rural properties); new businesses 
involving an investment of A$10 million or more; portfolio investments 
in the media sector of 5 percent or more; all non-portfolio investments 
irrespective of size; takeovers of Australian companies valued of 
either A$ 20 million or more, or for more than 50 percent of the target 
company's total assets; and direct investments of foreign governments 
irrespective of size. Investment proposals for entities involving more 
than A$50 million in total assets are approved unless found contrary to 
the national interest. Special regulations apply to investments in the 
banking sector, the media sector, urban real estate and civil aviation.

    Divestment cannot be forced without due process of law. There is no 
record of forced divestment outside that stemming from investments or 
mergers that tend to create market dominance, contravene laws on equity 
participation, or result from unfulfilled contractual obligations.

    Government Procurement: Since 1991, foreign information technology 
companies with annual sales to the GOA of A$10-40 million (US$8-32 
million) have been required to enter into Fixed Term Arrangements 
(FTAs), and those with sales greater than A$40 million into 
Partnerships for Development (PFDs). Under an FTA, a foreign company 
commits to undertake to local industrial development activities worth 
15 percent of its projected amount of government sales over a four-year 
period. Under a PFD, a foreign firm agree to invest 5 percent of its 
annual local turnover on R&D in Australia; export goods and services 
worth 50 percent of imports (for hardware companies) or 20 percent of 
turnover (for software companies); and achieve 70 percent local content 
across all exports within the seven year life of the PFD.

    The Information Technology Services Common Use Contract Panel 
(ITSCUCP), established in 1995, is used by GOA agencies in planning and 
implementing Information Technology (IT) purchases. The ITSCUCP 
comprises a broad range of private companies (unlike its predecessor). 
Any company may join upon demonstrating acceptable levels of Australian 
product development, investment in capital equipment, skills 
development and/or services support, local sourcing, and Australian R&D 
activities.

    The GOA's 1994 Employment and Industry Policy Statement requires 
Industry Impact Statements to be drafted for government procurements of 
A$10 million (US$8 million) or more, and establishes a two-envelope 
system for such tenders. Bidders are required to submit detailed 
information regarding Australian industrial development separately (in 
the second envelope), and bids are judged both on price/product 
specifications and industrial development grounds.

    Sanitary and Phytosanitary Restrictions: Australia's geographic 
isolation has allowed it to remain relatively free of exotic diseases. 
Australia imposes extremely stringent animal and plant health 
restrictions. The GOA is still examining measures that would allow the 
lifting of phytosanitary barriers to the importation of U.S. cooked 
chicken, but after more than seven years, no decision has been reached. 
Other areas of concern include restrictions on the import of salmon, 
pork, grapes, citrus, stone fruit and apples.

    Motor Vehicles: The import of used vehicles manufactured after 1973 
for personal use is banned, except where the car was purchased and used 
overseas by the buyer for a minimum of three months. Commercial 
importers must apply for a ``compliance plate'' costing A$ 20,000 for 
each make of car imported. Left-hand drive cars must be converted to 
right-hand drive (only by licensed garages) before they may be driven 
in Australia.
7. Export Subsidies Policies

    Australia has signed the GATT Subsidies Code and joined with the 
U.S. in GATT negotiations to limit export subsidy use.

    The coalition government severely curtailed assistance schemes to 
Australian industry in its federal budget for the 1996-97 fiscal year. 
Under the Export Market Development Grants Scheme, the Australian 
government gives grants to qualifying firms of up to A$ 200,000, to 
assist in offsetting marketing costs incurred when establishing new 
export markets. There are also schemes available for drawbacks of 
tariffs, and sales and excise taxes paid on the imported components of 
exported products. Such schemes are available in the passenger motor 
vehicle and the textiles, clothing and footwear industries. Grants 
schemes and tariff concessions were subject to expenditure reductions 
in the 1996-97 federal budget. The Research and Development Tax 
Concession (available to firms undertaking eligible R&D) was also 
reduced from 150 percent to 125 percent. ``Bounties'' (i.e., production 
subsidies) were also cut heavily in the 1996-1997 budget. The only 
remaining bounties are those for computer components producers (due to 
expire on July 1, 1999) The bounty on shipbuilders expired on December 
31, 1997.

    The ``Factor (f)'' Scheme is designed to compensate manufacturers 
of pharmaceutical products for the effects of the federal government's 
intervention (through the National Health System) in the market for 
consumer pharmaceuticals. Under the scheme, approved producers receive 
payments (to raise returns received for selected pharmaceuticals) to 
assist domestic drug research and development.
8. Protection of U.S. Intellectual Property

    Australia provides comprehensive protection for intellectual 
property, patents, trademarks, designs and integrated circuits. 
Australia is a member of the World Intellectual Property Organization 
(WIPO), and most multilateral IPR agreements, including, the Paris 
Convention for the protection of industrial property, the Berne 
Convention for the protection of literary and artistic works, the 
Universal Copyright Convention, the Geneva Phonogram Convention, the 
Rome Convention for the protection of Performers, Producers of 
Phonograms, and Broadcasting Organizations, and the Patent Cooperation 
Treaty.

    Patents: Patents are available for inventions in all fields of 
technology (except for human beings and biological processes relating 
to artificial human reproduction). They are protected by the Patents 
Act of 1990, which offers coverage for 20 years, subject to renewal. 
Trade secrets are protected by common law, such as by contract. Design 
features can be protected from imitation by registration under the 
Designs Act for up to 16 years (upon application). In 1995, a 
disagreement surfaced between the United States and Australia regarding 
the application of the TRIPS Agreement's requirement to protect test 
data. USTR has placed Australia on the Special 301 Watch List because 
legislation introduced by the Australian government does not provide 
adequate protection for test data submitted to regulatory authorities 
for marketing approval of pharmaceutical and agricultural chemicals. 
Discussions on this issue continue.

    Trademarks and Copyrights: Australia provides TRIPs compatible 
protection for both registered and unregistered well known trademarks 
under the Trademark Act of 1995. The term of registration is ten years. 
Copyrights are protected under the Copyright Act of 1968 for a term of 
the life of the author plus 50 years. Computer programs can receive 
copyright protection. The Australian government continues to consider 
broadening the copyright fair use exemption to include the 
decompilation of computer software. The Australian Copyright Act 
provides protection regarding public performances in hotels and clubs. 
Australia has effective protection against copyright piracy.

    The government has introduced a bill into Parliament that would 
permit parallel importation of sound recordings. If this bill passes, 
parallel importation may be expanded to include toys, computer 
software, and other goods. The Australian government is considering 
recognizing moral rights for screenwriters, directors, and producers of 
cinematographic works. Australia is listed as a ``Watch List'' country 
under Special 301 in part for its failure to provide adequate 
protection for pharmaceutical and agricultural chemicals test data in 
addition to the copyright concerns listed above.


    New Technologies: Infringement of technology does not appear to be 
a significant problem. Australia has its own software industry and 
accords protection to foreign and domestic production. Australia 
manufactures only basic integrated circuits and semiconductor chips. 
Australian television networks, which pay for the rights to U.S. 
television programs, jealously guard against infringement. The 
fledgling Australian cable TV networks appear to be doing the same.
9. Worker Rights

    a. Right of Association.--Workers in Australia enjoy and practice 
the rights to associate, to organize and to bargain collectively. In 
general, industrial disputes are resolved either through direct 
employer-union negotiations or under the auspices of the various state 
and federal industrial relations commissions. Australia has ratified 
the major international labor organization conventions regarding worker 
rights.

    b. Right to Organize and Bargain Collectively.--Approximately 30 
percent of the Australian workforce belongs to a union. The industrial 
relations system operates through independent federal and state 
tribunals; unions are currently fully integrated into that process. 
Legislation designed to reduce the powers of unions to represent 
employees has been passed by federal parliament but remains to be 
tested in the courts and through industrial dispute mechanisms.

    c. Prohibition of Forced or Compulsory Labor.--Compulsory and 
forced labor are prohibited by ILO conventions which Australia has 
ratified, and are not practiced in Australia.

    d. Minimum Age for Employment of Children.--The minimum age for the 
employment of children varies in Australia according to industry 
apprenticeship programs, but the enforced requirement in every state 
that children attend school until age 15 maintains an effective floor 
on the age at which children may be employed full time.

    e. Acceptable Conditions of Work.--There is no legislatively 
determined minimum wage. An administratively determined minimum wage 
exists through minimum wage clauses contained in several federal awards 
and some state awards (these effect workers mainly in the hospitality, 
hotels and tourism sectors). For the most part however, minimum wages 
in individual industries are specified in industry ``awards'' approved 
by state or federal tribunals. Workers in Australian industries 
generally enjoy hours, conditions, wages and health and safety 
standards that are among the best and highest in the world.

    f. Rights in Sectors with U.S. Investment.--Most of Australia's 
industrial sectors benefit from some U.S. investment. Worker rights in 
all sectors are essentially identical in law and practice and do not 
differ between domestic and foreign ownership.

Extent of U.S. Investment in Selected Industries--U.S. Direct Investment
            Position Abroad on an Historical Cost Basis--1996           
                       [Millions of U.S. dollars]                       
------------------------------------------------------------------------
                   Category                                     Amount  
------------------------------------------------------------------------
Petroleum.....................................                     1609 
Total Manufacturing...........................                     9360 
  Food & Kindred Products.....................        2031              
  Chemicals & Allied Products.................        2524              
  Metals, Primary & Fabricated................         517              
  Machinery, except Electrical................         875              
  Electric & Electronic Equipment.............         282              
  Transportation Equipment....................         916              
  Other Manufacturing.........................        2215              
Wholesale Trade...............................                     2511 
Banking.......................................                     3742 
Finance/Insurance/Real Estate.................                     3395 
Services......................................                     1437 
Other Industries..............................                     6715 
TOTAL ALL INDUSTRIES..........................                   28,769 
------------------------------------------------------------------------
Source: U.S. Department of Commerce, Bureau of Economic Analysis        


                                 ______
                                 

                       PEOPLE'S REPUBLIC OF CHINA

                         Key Economic Indicators                        
      [Billions of U.S. Dollars unless otherwise indicated]\1\ \2\      
------------------------------------------------------------------------
                                                1995    1996    1997 \1\
------------------------------------------------------------------------
                                                                        
Income, Production and Employment:                                      
  Nominal GDP................................   701.9   816.9      892.5
  Real GDPGrowth (pct) \2\...................    10.5     9.6        9.0
  GDP by Sector:\3\                                                     
    Agriculture..............................   144.5   167.3      170.1
    Manufacturing............................   297.8   350.4      442.3
    Services.................................   259.6   299.2      228.5
    Government...............................     N/A     N/A        N/A
  Per Capita GDP.............................   584.8   678.8      721.7
  Labor Force (millions).....................     687     697        707
  Unemployment Rate (pct) \4\................     2.9     3.0        3.1
                                                                        
Money And Prices (annual percentage growth):                            
  Money Supply (M2)..........................      29      25         19
  Consumer Price Inflation...................    10.1     7.0        3.4
  Exchange Rate (Rmb/US$ annual average)                                
    Official.................................     8.3     8.3        8.3
                                                                        
Balance of Payments and Trade:                                          
  Total Exports (FOB) \5\....................   148.8   151.1      181.0
    Exports to US............................    45.6    51.5       60.0
  Total Imports (CIF) \5\....................   132.1   138.8      142.0
    Imports from U.S. (FAS)..................    11.8    12.0       13.0
  Trade Balance..............................    16.7    12.2       39.0
    Balance with U.S.........................    29.5    35.8       47.0
  External Public Debt.......................   106.9   116.3        N/A
  Fiscal Deficit/Gdp (pct)...................     2.2     0.8        0.3
  Current Account Surplus/GDP (pct)..........     0.2     0.9        1.6
  Debt Service                                                          
    Payments/Exports (pct)...................     7.3     6.7        N/A
    Payments/GDP (pct).......................     1.5     1.2        N/A
  Gold and Foreign Exchange Reserves.........    73.6   105.0      142.0
  Aid from United States.....................       0       0          0
  Aid from All Other Sources.................     0.4     0.3       N/A 
------------------------------------------------------------------------
\1\ Estimated from third quarter and end August 1997 data.              
\2\ Growth rate based on constant renminbi (RMB) prices using 1978      
  weights. All other income and production figures are converted into   
  dollars at the exchange rate.                                         
\3\ Production and net exports are calculated using different accounting
  methods and do not tally to total GDP. Agriculture includes forestry  
  and fishing; manufacturing includes mining.                           
\4\ ``Official'' urban unemployment rate; agricultural laborers are     
  assumed to be totally employed in China's official labor data.        
\5\ Source: U.S. Department of Commerce (United States-China bilateral  
  trade data) for U.S. trade; PRC Customs (Chinese global trade data and
  1997 estimates).                                                      
                                                                        
 Sources: State Statistical Bureau Yearbook, People's Bank of China     
  Quarterly Statistical Bulletin, and U.S. Department of Commerce Trade 
  Data.                                                                 

1. General Policy Framework

    The Chinese economy has grown at an average rate of nine percent 
per year since the 1979 economic reforms, with growth rates of 13 
percent in 1992-1993, according to official data. The 1997 growth rate 
may exceed 9 percent, according to official projections. (Though 
China's official GDP figures tend to overstate growth, official data, 
in general, reflect significant economic trends.) China appears to have 
achieved a ``soft landing'' of single-digit inflation and stable growth 
in 1996 and 1997. Retail price inflation, which exceeded 20 percent in 
1994, stood at only 3.4 percent in September 1997 compared to the year-
earlier period. Price increases for services have been running somewhat 
higher, however. China continues to attract large inflows of foreign 
direct investment based on tax incentives, policies generally focused 
on the use of market forces to sustain growth, and the economic 
dynamism of the rapidly growing private sector. China's direct 
investment inflows are expected to be about $42 billion in 1997, about 
the same as in 1996.

    The Five-Year Plan for 1996-2000 reaffirmed the importance of