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Poland Table of Contents


The Foreign Trade Mechanism

Centrally planned economies typically minimized trade with free-trade markets because their central bureaucratic systems could not adjust quickly to changing situations in foreign markets. The high degree of self-sufficiency that was a declared economic objective of Comecon made trade with the West a difficult undertaking for an economy such as Poland's. On the other hand, the basically bilateral barter agreements that characterized trade within Comecon often had made expansion of trade within the organization problematic.

State monopoly of foreign trade was an integral part of centrally planned economic systems. Even after some decentralization of this field in Poland during the 1980s, the Ministry of Foreign Economic Relations maintained direct or indirect control of all foreign trade activities. Originally, trading activities in the communist system were conducted exclusively by the specialized foreign trade organizations (FTOs), which isolated domestic producers of exportables and domestic buyers of imported goods from the world market. Then, in the late 1980s, some state and cooperative production enterprises received licenses from the Ministry of Foreign Economic Relations to become directly involved in foreign trade, and by 1988 the number of economic units authorized to conduct foreign trade had nearly tripled. Nonetheless, many enterprises still preferred the risk-free, conventional approach to foreign trade through an FTO, relying on guaranteed Comecon markets and avoiding marketing efforts and quality control requirements.

Prior to 1990, the Polish foreign trade system included the following elements: a required license or concession to conduct any foreign transactions; allocation of quotas by planners for the import and export of most basic raw materials and intermediate goods; state allocation and control of exchange and transfer of most foreign currencies; an arbitrary rate of currency exchange lacking all relation to real economic conditions; and artificial leveling of domestic and foreign prices by transfers within a special account of the state budget. Even among Comecon countries, Poland's foreign trade had particularly low value. Its share of total world exports, 0.6 percent in 1985, dropped to 0.4 percent in 1989. The share of imports dropped even lower, from 0.5 to 0.3 percent, in the same period.

In early 1990, Poland entered a painful process of massive transformation for which reintegration into the world economy was a primary objective. The first postcommunist government dismantled the existing foreign trade mechanism and replaced it with a mechanism compatible with an open market economy. This change eliminated license and concession requirements for the conduct of foreign trade activities, eliminated quotas except in trade with the Soviet Union, introduced internal convertibility of the zloty and free exchange of foreign currencies, and accepted the rate of exchange as the main instrument of adjustment of exports and imports, supported by a liberal tariff system.

Data as of October 1992