Lured by liberal trade policies, sweeping privatization programs, a stable currency and laws that encourage foreign investment, U.S. and other foreign businesses increasingly are testing the waters in Estonia.
Since seceding from the former Soviet Union in 1991, the Baltic state has taken steps to improve commercial relations with the West. The government has entered into trade accords with Sweden, Finland and the European Union, and last year it signed a trade agreement and a bilateral investment treaty with the United States, establishing dispute-resolution mechanisms, protection of intellectual property rights and national treatment for U.S. investment in Estonia.Atlantic Veneer, PepsiCo Foods and Cotter & Co., parent of True Value hardware stores, are among the U.S. companies already in the market. McDonald's opened its first eatery there in April; the previous month, more than a dozen U.S. executives visited Tallinn, the capital, on a U.S.-government-sponsored mission to explore opportunities.
Dick Shay, vice president of corporate and legal matters for Orion Satellite Corp., a satellite communications provider of Rockville, Md., was along on that mission. He said Estonia's telecommunications environment, although not as close to an EU-style regulatory regime as that in neighboring Latvia, is generally positive and workable.
"In Latvia, officials immediately brought forth a copy of the telecommunications act and provisions of what I'd see in Western Europe. In Estonia, it was not quite as clear-cut," Mr. Shay said.
However, he said, "if we had a customer requirement to have a link into Estonia, the capability is there in a practical and regulatory sense."
According to a recent report by the U.S. Department of Commerce's Central and Eastern Europe Business Information Center, there is promise for U.S. investment in numerous other industries in Estonia, including food processing, light industry, building and construction, business services, tourism, computer software and electronics, biotechnology and wood processing.
Textiles and related articles, prepared foodstuffs, wood and related articles.
POTENTIAL GROWTH EXPORTS
Wood and related articles, building materials.
PRINCIPAL FOREIGN MARKETS
Russia, Finland, Sweden, Latvia and Germany.
EXPORT PROGRAMS/INVESTMENT INCENTIVES
Estonia has most-favored-nation tariff status with the United States; its products enter the United States at reduced tariffs under the Generalized System of Preferences program. Investment laws allow 100 percent foreign ownership of companies and repatriation of profits after income taxes are paid. Property imported by foreigners into Estonia as initial capital investment is exempt from customs duties. There are no export-subsidy programs.
Commercial rate: U.S.$1=approximately 11.3 kroon. (Fixed rate: 8 kroon=1 deutsche mark).
There are more than 20 commercial banks; Hansabank and Estonian Investment Bank are the largest. Many have correspondent relationships with American Express, Bankers Trust Co., Republic National Bank of New York and several European banks.
The labor force comprised 516,519 people as of 1993, with most employed in manufacturing, education and transport, storage and communications.
Estonian is the official language. Latvian, Lithuanian and Russian also are spoken.
Maritime; wet, moderate winters and cool summers. The average Fahrenheit temperatures in Tallinn are 23 degrees in January and 62.6 degrees in July.
GMT +1, EST +6.
The main rail line links Tallinn with St. Petersburg, Tartu and Pskov in Russia and with Parnu and Riga in Lativa. There is regular passenger-ship service between Tallinn and Helsinki, Finland, and between Tallinn and Stockholm, Sweden. Estonia has air links with most major cities in the former Soviet Union and several Western European cities.
OFFICIAL (BANK) HOLIDAYS
1995: Jan. 1; Feb. 24; April 14; May 1; June 23-24; Dec. 25-26.
Government: Monday-Friday, 9 a.m. to 6 p.m. Banks: Monday-Friday, 9 a.m. to 5 p.m. and Saturay morning. Commerce and industry: Monday-Friday, 9 a.m. to 6 p.m.
BEFORE YOU GO
U.S. travelers must carry a passport, as well as a visa for visits longer than 90 days. For additional information, contact the Embassy of Estonia, 2131 Massachusetts Avenue, N.W., Washington, D.C. 20005. Telephone: (202) 588-0101.
Machinery, mechanical equipment, mineral products including fuels, textiles and related articles.
PRINCIPAL IMPORTS FROM THE U.S.
Wheat and meslin, telecommunications equipment, cosmetics and toiletries, mineral oil additives, antifreeze, motor vehicles, sugar confectionery and automatic data processing machines.
POTENTIAL GROWTH IMPORTS FROM THE U.S.
Computers, telecommunications, pharmaceuticals.
BARRIERS TO TRADE
Imports, as well as domestic products, are subject to a 18 percent value- added tax. Excise taxes apply to imported alcoholic beverages and tobacco products. A 100 percent duty applies to exports of rape oil and values of culture such as pre-1950 model cars; a 5-25 percent duty is levied on metals, ferrous and nonferrous waste and scrap. Foreign investors require a license in mining, power engineering, gas and water supply, transport and telecommunications.
PRINCIPAL FOREIGN SUPPLIERS
European Union, Sweden and Finland.
Population is 1.6 million, growing at 0.52 percent annually. (July 1994).
Oil shale, shipbuilding, phosphates, electric motors, excavators, cement, furniture, clothing, textiles, paper, shoes and apparel.
The agriculture system is very efficient by Soviet standards. Main exports: meat, fish, dairy products and potatoes; main imports: feed grains from livestock, fruits and vegetables.
There were 627 miles of railroad in use in 1992, of which 82 miles were
electrified. The main rail line links Tallinn with Narva. More than 95 percent of the 18,786-mile highway network is paved.
INFRASTRUCTURE/FREE TRADE ZONES
The main coastal port for freight transport, at Tallinn, is being expanded and upgraded; other coastal ports are at Novotallin and Parnu. The main inland port is at Narva. The Baltic's deepest port, at Muuga, is being expanded in a bid to become the region's main center for shipping cargo in and out of Russia. Improvements of the antiquated telephone network are being made piecemeal, with an emphasis on business needs and international connections.
Inflation, 89.8 percent in 1993 and 41 percent in 1994, is expected to be 30 percent in 1995.
ECONOMIC GROWTH OUTLOOK
After bottoming out from the post Soviet shocks in the second quarter of 1993, Estonia's economy is recovering. The International Monetary Fund estimates the economy expanded 3 percent in 1994 and will grow between 3 percent to 6 percent this year.