INDUSTRIAL COOPERATION BETWEEN EAST AND WEST INDUSTRIAL COOPERATION BETWEEN EAST AND WEST FRIEDRICH LEVCIK AND JAN STANKOVSKY © M. E. Sharpe Inc. 1979 901 North Broadway White Plains, New York 10603 German text: Industrielle Kooperation zwischen Ost und West ©Springer-Verlag, 'Nien, 1977 Softcover reprint of the hardcover 1st edition 1977 978-0-333-26959-6 Translated by Michel Vale Published simultaneously as Vol. XIV, No. 1-2, of Soviet and Eastern European Foreign Trade All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First published in the United States ofA merica 1979 First published in the United Kingdom 1979 Published by THE MACMILLAN PRESS LTD London and Basingstoke Associated companies in Delhi Dublin Hong Kong Johannesburg Lagos Melbourne New York Singapore Tokyo British Library Cataloguing in Publication Data Levcik, Friedrich Industrial cooperation between East and West 1. Industry-International cooperation I. Title II. Stankovsky, Jan 338'.09171'3 HC59 ISBN 978-1-349-04777-2 ISBN 978-1-349-04775-8 (eBook) DOI 10.1007/978-1-349-04775-8 This book is sold subject to the standard conditions of the Net Book Agreement Contents List of Tables vii Introduction xi 1. General aims and definitions 3 2. New trends in the world economy as a basis for East-West cooperation 9 3. Types of industrial cooperation between East and West 19 4. Motives for cooperation 41 5. Legal and institutional regulations for interfirm cooperation between East and West in Eastern Europe 55 6. The special case of joint ventures: their possibilities and limits 69 7. Economic policy and industrial East-West cooperation 96 8. Objectives and significance of intergovernmental cooperation agreements 137 9. Industrial East-West cooperation and the business cycle 158 10. Interim evaluation of East-West industrial cooperation 166 11. Practical experience with East-West industrial cooperation 208 12. Evaluation and outlook 225 Appendix 1: Eleven case studies 231 Appendix 2: List of industrial cooperation agreements between East and West 243 Appendix 3: Agreement between the Council of Mutual Economic Assistance and European Economic Community on Principal Mutual Relations 265 Appendix 4: Excerpt from the Final Act of the Conference on Security and Cooperation in Europe, August 1, 1975 269 Bibliography 2 73 About the Authors 287 List of Tables Table Page 1 Product Specialization in Western and Eastern Europe in Terms of Foreign Trade Shares as Reflected in Trade Proportion 13 2 Specialized Products in Intra-CMEA Trade 14 3 Cooperation Matrix 20 4 Structure of East-West Cooperation by Type of Cooper- ation, 1968, 1972, 1973, 1974, 1975 25 5 Structure of East-West Cooperation by Type of Cooper- ation, Total (1975) by Eastern Country 27 6 Structure of East-West Cooperation by Type of Cooper- ation, Total (1975) by Type of Cooperation 28 7 Cooperation of U.S. Firms with the CMEA Collectively and with Individual CMEA Countries, 1975, by Type of Cooperation 29 8 Cooperation of U.S. Firms with the CMEA Collectively and with Individual CMEA Countries, 1975, by CMEA Country 30 9 Licensing Agreements of U.S. Firms with Individual CMEA Countries and the CMEA Collectively, 1975 31 10 Enterprise's Evaluation of Own Product Quality, 1974, in% of All Products 49 11 Poland's Licensing Agreements with Western Nations, 1966-70 51 12 Time Required for Start-up and Period of Validity of Licenses from Western Countries in Poland, 1966-70 51 13 Tax Rates on Profits of Foreign Joint Venture Partners in Yugoslavia 83 vii 14 Western Participations in East-West Joint Ventures in the East 87 15 Foreign Capital Involvement of the FRG, Total and with Eastern Countries 89 16 Structure of CMEA Foreign Trade by Groups of Countries 98 17 Foreign Trade of CMEA Countries by Groups of Coun- tries, Actual Development 1966-70 and Plan Figures 1971-75 99 18 Patterns of CMEA Foreign Trade by Groups of Countries 99 19 U.S. Exports of Industrial and Agricultural Goods to the USSR and other Eastern Countries 119 20 Agreements on Industrial Cooperation between Eastern Countries and Developing Countries by Industrial Branch, 1970-74 123 21 Tripartite Cooperation between East, West, and Devel- oping Countries, 1975 126 22 Long-term Bilateral Trade Agreements between Eastern Countries and Western European Industrial Countries 138 23 Long-term Bilateral Cooperation Agreements between Eastern Countries and Western European Industrial Countries 140 24 Long-term East-West Trade Agreements in Force at the End of July 1977 142 25 Economic, Industrial, and Technical Cooperation Agree- ments in Force at the End of July 1977 145 26 Intergovernmental Cooperation Agreements between Austria and the Eastern Nations 149 27 USSR Foreign Trade with Western European Countries 155 28 Relationship between the Business Cycle and East-West Industrial Cooperation in the FRG 161 29 Agreements on East-West Industrial Cooperation, 1965-67 168 viii 30 Eastern European Imports of Complete Industrial Plants and Licenses from the West, Country of Destination and Country of Origin, 1967 169 31 Cooperation Agreements between the West (without the USA) and Eastern Countries, 1975 170 32 Cooperation Statistics of Eastern Countries, 1965-75 171 33 Cooperation Statistics of Western Industrial Countries 172 34 Frequency of Cooperation Agreements of U.S. Firms with Eastern Countries, 1975 174 35 Hungary's Agreements on East-West Industrial Cooper- ation, by Partner Country 175 36 Industrial Cooperation in Poland's Exports to the West 176 37 Eastern European Imports of Complete Industrial Plants and Licenses from the West, by Industrial Branch, 1967 179 38 Structure of East-West Cooperation, 1972 and 1975, by Eastern Country and Branch of Industry 181 39 Structure of East-West Cooperation, 1975, by Industrial Branch and Eastern Country 182 40 Structure of East-West Cooperation, 1975, by Type of Cooperation and Branch of Industry 183 41 Structure of East-West Cooperation, 1972 and 1975, by Industrial Branch and Type of Cooperation 184 42 Structure of Interfirm Cooperation Undertakings (with- out Joint Ventures) between the West (without USA) and the East, by Industrial Branch, 1975 186 43 Structure of Interfirm Cooperation Undertakings (with- out Joint Ventures) between the West (without USA) and the East, by Purpose, 1975 187 44 FRG Agreements with Eastern Countries on Industrial Cooperation, by Industrial Branch 188 45 Cooperation Agreements of U.S. Firms with Eastern Countries, by Industrial Branches, 1975 189 46 Hungarian Cooperation Agreements with Western Firms, by Industrial Branch 191 ix 47 Cooperation and Foreign Trade Indicators of Eastern Countries 193 48 Hungarian Agreements on Industrial Cooperation, Total and with Austria, End of 1974 197 49 Evaluation of Cooperation Negotiations with Eastern Countries by FRG Firms 211 50 Multinational and State-owned Western Enterprises In- volved in Interfirm East-West Cooperation 214 51 FRG Industrial Cooperation Agreements with Eastern Countries, by Firm Size and Type of Cooperation 2H X