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TRade Agreement Signed

April 12, 1990

WASHINGTON (AP) _ Officials of the United States and Czechoslovakia signed a trade agreement Thursday, the second economic pact negotiated with an Eastern European nation since last year’s political upheaval.

The new accord is one of the steps needed to cut tariffs on Czech products sold in the United States. The document also seeks to foster increased business ties and tourism between the two nations.

U.S. Trade Representative Carla Hills participated in the signing ceremony along with Andrej Barcak, the foreign trade minister of Czechoslovakia.

Hills said that the congressional legislation needed to put the lower tariffs into place could be completed by early summer.

The United States is also negotiating a trade agreement with the Soviet Union and Hills said she was optimistic that the pact could be finished in time for the May 30 summit between President Bush and Soviet President Mikhail Gorbachev.

Both the Czech and Soviet trade agreements are necessary steps that must be taken for the United States to grant the countries ″most favored nation″ trade status. That designation would lower American tariffs to the level charged against most other trading partners.

Tariffs on products from the Soviet Union and Czechoslovakia now run as much as 10 times higher than those on goods from other countries.

The higher tariffs were imposed as part of the Jackson-Vanik trade amendment of 1974, which Congress passed in retaliation for communist restrictions imposed on the free emigration of dissidents.

Before tariffs can be lowered, the trade agreements must be in place and President Bush must certify that both countries permit free emigration. Both houses of Congress must approve the trade agreements.

The president’s certification is not expected to be a problem for either country. Bush has said he will make such a certification for the Soviet Union once the Soviet Parliament putting into law the current free emigration policies.

Last month, the United States and Poland signed a business and investment treaty. That pact did not address the tariff question because Poland had already been awarded the lower tariffs under the most favored nation designation.

In addition to the treaties with Poland and Czechoslovakia, Hills said exploratory discussions have been held with Hungary on adopting a new business and economic agreement.

Czech-U.S. trade is now fairly small, adding up to about $150 million a year in both directions. Major U.S. exports are hides, yarns, cotton and tobacco; major U.S. imports are tractors, glass beads, shoes and tires.

In his remarks to the U.S. business executives, Barcak made a plea for American investment, saying Czechoslovakia was moving rapidly toward a market economy.

He said his nation expected to take a major step next Jan. 1 toward making its currency fully convertible. That would mean that investors could freely take their earnings home in dollars - an important consideration to firms unwilling to tie up their cash abroad.

Barcak also promised tax breaks for foreign investors and permission for them to own all the stock in new firms they establish, without the need to take in lcoal partners.

But he said there was an on-going debate over whether foreigners should be allowed to own land. He said some people in the audience would be able to buy up all the land in Czechoslovakia with a single check.

″Some of us don’t want to live in a country where foreigners have bought up the land at its present value, and then we have to buy it back ourselves in five years time,″ he said.

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