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In December 1971, Poland submitted a $350 million list of machinery and equipment that it wished to purchase in the United States. In April 1972, a Polish trade mission submitted an expanded list containing about 30 items valued at more than $400 million. So far, Poland has awarded contracts to several U.S. firms, including one for catalytic cracking technology to Universal Oil Products, a 10-year agreement for the assembly of heavy construction equipment to International Harvester, two sausage plants to Alan Scott, two meat processing plants to A. Epstein, a foundry plant to Swindell-Dressler, a Sendzimir rolling mill for a new silicon steel mill to Textron Inc. (Waterbury Farrel Division) of Providence, two freezer plants from A. Epstein Companies of Chicago, and a long-term agreement on technical and trade cooperation and co-production in hydraulic building machinery to Koehring International Corporation.

In addition to conventional trade contracts, Poland actively promotes cooperative ventures with Western firms. Poland claims that exports resulting from such deals totaled $15 million to $20 million in 1971. Illustrative of recent co-production agreements are the deals with Fiat, Berliet, International Harvester, and Koehring. Another such deal is the 10-year agreement between PONAR, the Polish Machine Tool and Industrial Association, and the Swedish state-owned SMT Machine Co. The agreement calls for a two-way trade of $30 million during 1971-76 and includes plans for bilateral deliveries and the assembly and sale of machine tools in domestic and foreign markets. Poland is also interested in cooperative venture arrangements in tourism, but so far has entered into only a few such deals. One of these is a franchise and technical agreement with Intercontinental Hotels, a subsidiary of Pan American World Airways, for a 750-room hotel in Warsaw. A Swedish firm is to do the actual construction. Intercontinental Hotels is to assist in planning, decorating, and managing, and will provide worldwide reservation services as long as the hotel meets Intercontinental's standards.

Poland announced recently that is is in the final stages of preparing a law permitting foreign investments in Polish enterprises. The only other East European Communist countries having foreign investment laws are Romania and Hungary.

4. Balance of payments (S)

Net receipts from noncommodity transactions have enabled Poland to run sizable import surpluses with both the Communist world and the West in most years since 1945. During 1946-72, the country incurred a cumulative trade deficit of $3.0 billion, of which $2.1 billion was incurred after 1955. A large part of the trade deficit has been financed by credits from both Communist and non-Communist countries. Total indebtedness as a result of these credit rose from about $0.8 billion in mid-1960 to an estimated $1.9 billion at the end of 1971. Indebtedness on medium- and long-term credits from the industrial West rose from about $0.25 billion to an estimated $1.2 billion. Because of a doubling of imports of advanced capital equipment, indebtedness to the West rose to an estimated $1.5 billion by the end of that year.

a. Communist countries

The bulk—$1.9 billion since 1955—of Poland's trade deficit has been with other Communist countries, primarily East Germany, with which the deficit rose from an average annual value of $46 million during 1956-60 to $106 million during 1961-72. The average deficit with Czechoslovakia was $34 million a year throughout the 16-year period, while that with the U.S.S.R. dropped from $130 million a year during 1956-60 to $16 million a year during 1961-71. In 1972, Poland realized a $205 million surplus with the U.S.S.R. as the result of a 20% increase in exports coupled with a very small increase in imports.

Poland has financed trade deficits with Communist countries in part by drawing on credits—especially credits extended in the late 1950's for the development of its mineral resource base—but primarily through earnings from transportation, communications, and maritime-related services. Poland is estimated to have earned between $100 million and $150 million a year during 1960-68 for services provided in the transport of goods for other Communist countries. By far the greatest share of earnings came from railroad services on the East-West corridor between East Germany and the Soviet Union. Additional payments for transportation services came from the transport of petroleum over the CEMA pipeline from the U.S.S.R. to East Germany and from the carriage of goods on its inland river network. In addition, Poland earned an average of $20 million to $25 million a year during 1960-68 for port services and maritime shipping services rendered to Czechoslovakia, East Germany, and Hungary. Poland also earns several million dollars a year, mainly from the U.S.S.R., for the use of its telecommunications facilities. Since 1957, the country is believed to have received some $15 million to $25 million a year from the U.S.S.R. in payment for local goods and services sold to the Soviet military force of 30,000 men stationed in Poland. On the other hand, Poland spends more than it earns—about $11 million a year during

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200070030-5