Content area
Full Text
Patricia S. Pollard is an economist at the Federal Reserve Bank of St Louis. Richard D. Taylor provided research assistance.
THROUGHOUT MOST OF THE post-World War II era, trade between the United States and Eastern Europe was minuscule. The United States maintained high tariff barriers on imports from most Eastern European countries and also restricted its own exports to these countries. In particular, the United States prohibited the export to these countries of high-technology goods related to national security interests. Eastern Europe also maintained various trade restrictions on imports from the United States. Most Eastern European trade was controlled by the state and conducted within the Council for Mutual Economic Assistance (CMEA), the trade organization of the Soviet bloc countries.
With the disintegration of the Soviet system and the collapse of the CMEA trading bloc, Eastern European countries began to re-orient their trade to the West. As these countries undertook political and economic reforms, the United States reduced its tariff restrictions on their products. Consequently, trade between the United States and Eastern Europe has expanded substantially since 1988. This paper examines the growth and pattern of trade between the United States and the three Eastern European countries which have made the greatest progress in adopting market reforms: the Czech and Slovak Federal Republic (CSFR), Hungary and Poland.(1)
Studies have shown that the U. S. economy is likely to be one of the principal beneficiaries of economic liberalization in Eastern Europe.(2) U. S. exports to, and investment in, the region should increase as the restructuring of the economies of Eastern Europe results in an increase in demand for capital goods and technology, and opens new markets for U. S. products. Such gains will be limited, however, if the Eastern European countries reverse the pattern of opening their markets and raise protectionist barriers against products from the United States.
Despite the initial steps taken to reduce trade barriers on Eastern European products, the United States maintains quantitative restrictions and other forms of protectionism on many products from Eastern Europe. Most significantly, the United States maintains a high degree of protection against the importation of textiles and apparel, chemicals, steel and agricultural products from Eastern Europe. These goods are produced by the sectors in which Eastern Europe is...