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Siech, Werner
Article
Licences for East-bloc countries
Intereconomics
Suggested Citation: Siech, Werner (1967) : Licences for East-bloc countries, Intereconomics,
ISSN 0020-5346, Verlag Weltarchiv, Hamburg, Vol. 02, Iss. 5, pp. 134-135,
http://dx.doi.org/10.1007/BF02930366
This Version is available at:
http://hdl.handle.net/10419/137744
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w a y to c r e a t e a policy to c o v e r t h e e c o n o m i c risks
of e x p o r t credits. In A r g e n t i n a a n d Brazil t h e q u e s t i o n
of e x p o r t c r e d i t i n s u r a n c e h a s n o t y e t g o n e f u r t h e r
t h a n t h e c o m p l i c a t e d initial stage. W h e r e a s in Brazil,
after a n unfortun.ate start with a n i m p r a c t i c a b l e
system, it is possible, in theory, to c o v e r b o t h economic a n d political risks, in A r g e n t i n a p l a n s are still
shelved. By s e t t i n g up a special j o i n t firm, t h e p r i v a t e
i n s u r a n c e sector h a s s h o w n its w i l l i n g n e s s to c o v e r
the e c o n o m i c risks; h o w e v e r , it is a n t i c i p a t e d t h a t
from t h e b e g i n n i n g t h e State will b e p r e p a r e d to
a s s u m e t h e political risks. As far as t h e p r i n c i p l e is
concerned, t h e r e l e v a n t n e g o t i a t i o n s h a v e long b e e n
c o n c l u d e d in a p o s i t i v e way, but a deadlock h a s
b e e n reached o v e r technical details. In the r e m a i n i n g
c o u n t r i e s of La.tin A m e r i c a no d e f i n i t e steps h a v e y e t
b e e n t a k e n to set up e x p o r t c r e d i t i n s u r a n c e s ,
a l t h o u g h t h e n e c e s s i t y for t h e s e is g e n e r a l l y recognised arid is c o n t i n u a l l y r e i t e r a t e d in all r e l e v a n t
programmes.
Bureaucracy is often a Bottleneck
In spite of m a n y l a c u n a e a n d deficiencies - - a n d
c o n t r a r y to w h a t is often a s s e r t e d - - it must b e
EAST-WEST
said t h a t in t h e field of f i n a n c i n g e x p o r t s of capital
goods from Latin A m e r i c a t h e r e is n o p e r c e p t i b l e
b o t t l e n e c k - - at l e a s t f o r t h e v o l u m e of goods curr e n t l y b e i n g exported. H o w e v e r , ,the v a r i e t y of
s y s t e m s a l r e a d y in o p e r a t i o n s h o u l d not b e a l l o w e d
to o b s c u r e the fact t h a t much r e m a i n s to b e done.
W h e r e t h e r e are still c o n s i d e r a b l e gaps, t h e s e n e e d
to b e filled. The m a i n c o m p l a i n t of e x p o r t e r s is t h a t
the m a n y b u r e a u c r a t i c o b s t a c l e s m a k e it m o r e difficult
to t a k e a d v a n t a g e of such schemes. In m a n y c o u n t r i e s
t h e r e d - t a p e is so e x t e n s i v e a n d tedious t h a t exporters are m o r e often d e t e r r e d from m a k i n g use of
the o p p o r t u n i t i e s offered t h a n e n c o u r a g e d . For this
reason, c o n s i d e r a t i o n is b e i n g g i v e n to t h e p o s s i b i l i t y
of t i g h t e n i n g up a n d simplifying t h e a v a i l a b l e m e a n s
of o b t a i n i n g e x p o r t f i n a n c e a s s i s t a n c e b y setting
up s p e c i a l e x p o r t b a n k s . In t h e p r e s e n t stage t h e
i n d u s t r i a l i s e d c o u n t r i e s could c o l l a b o r a t e - - u n d e r
t h e i r d e v e l o p m e n t aid p r o g r a m m s - - m a i n l y w i t h
technical assistance, i.e. b y p a s s i n g on t h e k n o w - h o w
n e c e s s a r y to build up a n d i m p r o v e t h e s y s t e m of
f i n a n c i n g a n d insurance. It does not a p p e a r t h a t
financial s u p p o r t is n e c e s s a r y at p r e s e n t in this
sector.
TRADE
Licences for East-bloc Countries
By Werner Siech, Berlin
h e g r a n t i n g of licences to East-bloc c o u n t r i e s is
still a disputed problem, a l t h o u g h m a n y entrep r e n e u r s h a v e changed t h e i r m i n d s in a c e r t a i n - p o s i t i v e - - w a y as r e g a r d s this group of questions. In
the F e d e r a l Republic official a n d semi-official q u a r t e r s
are p r o m o t i n g this change of mind. For, i n d e p e n d e n t
of all political d e l i b e r a t i o n s n u m e r o u s m a n u f a c t u r e r s
are b e a r i n g in m i n d t h a t time does not stop a n d
t h a t m a n y o t h e r g i v i n g n a t i o n s are quickly p r e p a r e d
to t a k e a d v a n t a g e of opportunities, t h a t G e r m a n
e n t r e p r e n e u r s p o s s i b l y do not observe.
T
It s t a n d s to r e a s o n t h a t t h e t r a d i t i o n a l e x p o r t b u s i n e s s
--i.e. d e l i v e r i e s of g o o d s - - n o w as e v e r comes first
a n d will a l w a y s b e p r e d o m i n a n t . H o w e v e r , it s h o u l d
b e as much a m a t t e r of c o u r s e t h a t e n t r e p r e n e u r s
deal w i t h o t h e r forms of b u s i n e s s in t h e East, if for
v a r i o u s r e a s o n s t h e e x p o r t of goods c a n n o t t a k e
place. Due to t h e p r e v a i l i n g conditions or t h e limited
d e l i v e r y powers, respectively, of the E a s t e r n countries a n d d u e to t h e i r b i l a t e r a l t h i n k i n g t h e a c t u a l
t r a d e v o l u m e will a l w a y s b e limited.
Preparation of Llcence Transacflons
A m o n g o t h e r s it s h o u l d b e a s y m p t o m of t h e s e n e w
t e n d e n c i e s that the G e r m a n Federal Bank in its q u i t e
i n f o r m a t i v e m o n t h l y r e p o r t of April, 1966, p e r t a i n i n g
to t h e " D e v e l o p m e n t of P a t e n t a n d Licence Transactions w i t h F o r e i g n C o u n t r i e s in 1964/1965" h a s
134
c o v e r e d also the Soviet U n i o n a n d Poland w i t h r e g a r d
to data a n d branches, w h i l e in t h e p r e c e d i n g P a t e n t
a n d Licence R e p o r t of April, 1964, (in 1965 n o such
r e p o r t h a d b e e n published) this h a d n o t b e e n the
case. A l t h o u g h in this c o n t e x t it is n o t p o s s i b l e to
e n t e r into p a r t i c u l a r s of t h e s e statistics, it s h o u l d b e
m e n t i o n e d , h o w e v e r , t h a t t h e G e r m a n b a l a n c e of lic e n c e s vis-a-vis t h e s e two East-bloc c o u n t r i e s h a s b e e n
f a v o u r a b l e for t h e F e d e r a l Republic in 1964 .and 1965.
Of c o u r s e t h e A g f a - G e v a e r t c a s e in M o s c o w
caused
some
uneasiness
in
the
minds
of
Western
licencers.
This discomfort
can,
however, b e o v e r c o m e t h r o u g h a n u m b e r of p o s i t i v e
d e l i b e r a t i o n s : A c c o r d i n g to e x p e r i e n c e s h i t h e r t o
m a d e ,as r e g a r d s t h e issuing of licences to East-bloc
c o u n t r i e s - - a n d in this c o n n e c t i o n n o t o n l y p a t e n t s
are m e a n t b u t also brands, t r a d e n a m e s a n d k n o w h o w - - o n e should n o t j u d g e too hastily. I n d e p e n d e n t
of t h e o n e or o t h e r i n d i v i d u a l case, t h a t " s o m e h o w "
m i g h t b e different, t h e r e are t h o u s a n d s of firms in
the W e s t which n e e d not a p p r e h e n d a n y conflicts in
licence t r a n s a c t i o n s w i t h t h e East. Let us not forget
t h a t also in the p u r e l y W e s t e r n l i c e n c e b u s i n e s s
similar m a r g i n a l cases o c c u r occasionally.
O n the a s s u m p t i o n of most p r e c i s e c o n t r a c t terms,
t h a t u s u a l l y are the r e s u l t not o n l y of n e g o t i a t i o n s
b e t w e e n t h e two p a r t n e r s but also of v e r y d e t a i l e d
a n a l y s e s of licences, t h e so-called p r e - i n v e s t m e n t
INTERECONOMICS, No. 5,1967
studies, no complications will arise due to the wellk n o w n observance of contracts by Eastern countries.
Moreover, it should be taken into consideration that
there is a vast number of cases w h e r e trade mark
problems cannot arise at a l l - - a s did in the AgfaG e v a e r t case in M o s c o w - - s i n c e brands and trade
names do not exist.
It would therefore be deplorable and unrealistic if
the true conditions w e r e not recognised :and a
certain case would s e r v e "to treat .all things alike".
As regards all similar occurrences it is in any case
always commendable to examine all particulars and
contexts beyond the conventional reporting of the
press. Unfortunately language barriers frequently are
a major obstacle. M e r e translations often do not
suffice to clear up backgrounds, to take mentalities
into consideration or to avoid misinterpretations.
Some of the trade fairs and exhibitions staged in
Moscow r e v e a l e d another fact, that might give the
traditional thinking in terms of pure goods exports
new impulses for the issuing of licences. M a n y exhibitors used to W e s t e r n trade fairs and exhibitions
as well :as corresponding transactions could not book
one single order. The exhibitors therefore realise
by now that the Soviet Union ist not so much interested in buying as in copying on the basis of licences.
W h o e v e r wants to do business with the East should
realise that he must get rid of the u s u a l - - W e s t e r n - stereotype w a y of thinking. While formerly--i.e, in the
years preceding 1939 or, in the case of the USSR, before
1941--just in business with the East the motto had
been: produce, export and m a k e m o n e y - - t o d a y the
granting of licences must be included additionally.
The disappointments and disillusions experienced
during trade fairs and exhibitions staged so far
in the East m a y in some cases h a v e been quite a
shock, but, on the other hand, t h e y may .also h a v e
had beneficial effects, as thus the actual conditions
h a v e been revealed, within the scope of which the
future business with the East m a y be carried on.
Transaction of the Licence Business
As regards the practical procedure in licence trans,actions, one should start from the fact t h a t - - a p a r t
from Y u g o s l a v i a - - i n the whole East t h e y can only
be carried on with the official central agencies established just for this purpose. With that we do not
mean the well-known Foreign Trade Agencies but
the Licence-Holding-Corporations, of which a few
shall be mentioned in this context: in Poland the
~Polservice", in Czechoslovakia the "Polytechna', in
H u n g a r y the "Licencia", in Rumania the "Masinimport ~, in the USSR the ~Licensintorg", in the
People's Republic of China the ~Techimport', in Bulgaria the "Technoexportstroy ~, in Yugoslavia the
~Gramex", etc. It must, however, be taken into consideration that this list is not obligatory in all cases.
In practice there m a y be shiftings between competences and responsibilities. In most instances especially
the Eastern country's Foreign Trade A g e n c y will
INTERECONOMICS, No. 5, 1967
h'ave to be contacted to whose province the particular branch of Industry or line of business belongs.
Apprehensions with regard to the observance of
contracts need not be entertained today. It is, however, much to be recommended to formulate the
contracts so unambiguously and clearly that no
w r o n g interpretations should be possible. Moreover,
all Eastern states did not only sign the European
A g r e e m e n t on International Commercial Arbitration of
April 21, 1961, but their legislative bodies approved
and ratified it, too.
Potential interested parties may like to k n o w the
dates at which in 1964 the agreement became effective in the individual Eastern countries: Bulgaria:
Aug. 11, 1964 YugoslaVia: ,Jan. 7, 1964, Poland: Dec. 14,
1964, Rumania: ,Jan. 7, 1964, Czechoslovakia: Feb. 11,
1964, USSR: ,Jan. 7, 1964, Hungary: ,Jan. 7, 1964.
An impartial balancing of all present conditions may
come to the conclusion that the granting of licences
to East-bloc countries is to be recommended, if the
licencer is prepared to adapt himself to the special
conventions of the licence business with Eastern
states, i.e. long-drawn, tough negotiations, a most
accurate stipulation of each individual clause in the
contract and much patience. Only in such cases where
the Eastern licencee himself is v e r y much interested
in a licence from the West, a shorter duration of
negotiations m a y be anticipated. W h a t is always
decisive is the v a l u e of the licence in question to the
Eastern economies. With regard to licence fees paid
by the Eastern countries the following summarised
v i e w may be offered: If so far lump sum payments
h a v e been usual, today there would be no hesitations
about concluding also traditional licencing agreements with Eastern nations, if a basis for that can
be found in negotiations. The adaptation to W e s t e r n
patent and licence principles, respectively (e.g. international commercial arbitration, the Soviet Union's
accession to the Paris Convention of March 20, 1963,
as of ,July 1, 1965) makes the just stated opinion
appear justified.
Some figures from the USA may be interesting in
this connection: In 1965 the US Department of Commerce a p p r o v e d 264 applications for the export of
technical data to East-bloc countries and 608 applications for the registration of US patents. In the
first quarter of 1966 these figures w e r e 76 and 123,
respectively.
In any case there should be hardly any doubt that
of the three trade opportunities with the East--i.e.
goods trade, compensation transactions and the granting of l i c e n c e s - - t h e latter will experience a considerable expansion during the coming years. While the
former two activities, a b o v e all the traditional goods
trade, against foreign exchange will necessarily be
limited due to the always bilateral transactions, such
a limitation does not exist as regards the granting
of licences. By no means must it be always a question
of patent licences, for also know-how licences are
in v e r y great demand.
135