Note: The successor states to Yugoslavia are Bosnia and Hercegovina, Croatia, Macedonia, Serbia and Montenegro, and Slovenia. Bosnia and Hercegovina declared independence in April 1992.

By Jeremy Keller

Trade with Yugoslavia's republics could recover fairly soon once peace takes hold. Trade opportunities may be limited in the short term, but clever American companies can still operate in the present situation.

U.S. exports 1991--$370 million U.S. imports 1991--$677 million

Six months of civil war have destroyed Tito's Yugoslav federation. Today, it exists only in name; its prime minister has resigned without a successor, and most federal offices in Belgrade have closed. Predictably, inflation and unemployment have risen dramatically, while productivity is steadily falling. War-torn Croatia has lost about 50 percent of its industrial base, and its communications and energy grid are wrecked. Its $4 billion a year tourism industry is dead.

Serbia's economy is badly damaged. It has financed the war by printing money. Thus, it is reentering a hyper-inflationary spiral reminiscent of 1989; inflation was over 50 percent from January to February 1992, a 26,000 percent annual rate. The Serbian government has reimposed mandatory import coverage through countertrade.

Inter-republic trade, which generated about one-quarter of the GNP, has collapsed, as warring republics have seized each other's assets. Yugoslavia has also lost its banking and monetary system. Slovenia and Croatia are issuing their own currencies; Macedonia is likely to follow suit. At present, no currencies in Yugoslavia are internally convertible for foreign exchange.

Following the European Community's lead, the U.S. government placed trade sanctions on Yugoslavia on Dec. 24, 1991. The sanctions strip Yugoslav exports of GSP privileges, terminate the bilateral textile visa agreement, and suspend U.S. aid for Yugoslavia except for humanitarian aid. The U.S. government is deliberating whether to join the European Community in recognizing Slovenia and Croatia as independent states.

Logic would suggest that the Yugoslav catastrophe would have crippled U.S.-Yugoslav trade, but this is not correct. Bilateral trade, worth $1 billion, remains larger than that with any other East European country, and only U.S. exports to Poland are greater than those to Yugoslavia.

While trade with any part of Yugoslavia is extremely difficult at this time, some imaginative U.S. companies have found opportunities in individual republics. In Serbia, for example, a California-based company has formed a major joint venture with Galenika of Belgrade, intending to become the dominant pharmaceuticals producer in Eastern Europe. A Colorado-based company has a $1 million joint venture to upgrade Serbia's telecommunications. A Washington State company is working with Slovenia for bilateral tourism development.

For the latest information on business conditions in this area, contact the Commerce Department's Yugoslavia Desk at (202) 482-4915.

Source: International Trade Administration, Business America Magazine