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                     Key Economic Indicators
       (Millions of U.S. dollars unless otherwise noted) 1/

                                     1992      1993      1994

Income, Production and Employment:

Real GDP (1985 prices)                N/A       N/A       N/A
Real GDP growth (pct.)              -14.8       2.0       6.0 2/
GDP (at current prices)           1,105.0   1,769.9   1,379.2 3/
By Sector:  (pct.)
  Agriculture                          13        11         7
  Energy/Water                          5         4         3
  Manufacturing                        33        27        18
  Construction                          5         6         5
  Rents                                 3         4         6
  Financial Services                    2         3         3
  Other Services                       34        34        45
  Government/Health/Education           6        10         8
Net Exports of Goods & Services       N/A       N/A       N/A
Real Per Capita GDP (1985 base)       N/A       N/A       N/A
Labor Force (000s)                  873.0     853.9     840.8 4/
Unemployment Rate (pct.)              1.7       2.2       1.5 4/

Money and Prices:

Money Supply (M2)                   209.0     439.3     493.8
Base Interest Rate                    N/A       N/A       N/A
Personal Saving Rate                 15.5      14.8      11.0
Retail Inflation                      N/A       N/A       N/A
Wholesale Inflation                   N/A       N/A       N/A
Consumer Price Index                  N/A      35.6      26.8 3/
Exchange Rate (official)             12.9      13.2      12.2

Balance of Payments and Trade:

Total Exports (FOB)                 430.1     806.2     967.9 5/
  Exports to U.S.                     8.1      15.2      16.0 5/
Total Imports CIF                   397.5     897.6   1,214.9 5/
  Imports from U.S.                   9.4      24.5      22.3 5/
Aid from U.S.                         N/A       0.9       1.1 5/
Aid from Other Countries              N/A      28.5      16.3 5/
External Public Debt                   29       108       327 5/
Debt Service Payment (paid)           N/A       N/A       2.1 4/
Gold and Foreign Exch. Reserves     194.0     406.4     444.5 4/
Trade Balance                        32.6      91.4    -247.0 5/
  Trade Balance with U.S.            -1.3      -9.4      -6.3 5/

N/A--Not available.

1/ Exchange rate used is 12.2 Estonian kroons to one dollar.
2/ Annualized estimated rate.
3/ Six month data.
4/ Eight month data.
5/ Nine month data.

1.  General Policy Framework

    Estonia is well on the road to economic recovery after its
economy bottomed out from post Soviet shocks in the second
quarter of 1993.  First quarter 1994 data indicate that GNP
growth may be as high as six percent on an annualized basis. 
Estonia's currency, the Kroon, remains stable and fixed to the
German Mark at an six to one exchange rate; no devaluations or
revaluations are anticipated.  Trade continued to expand in
1994, although Estonia fell into a deficit position with
imports outpacing exports by approximately 10 percent.

    Inflation remained higher than expected, but began to taper
off as the year progressed; inflation for 1994 is anticipated
to be approximately 40 percent.  Estonia's privatization
program made commendable progress in 1994, with approximately
50 percent of larger state enterprises now in private hands. 
Small and medium scale privatization is virtually complete. 
Housing privatization is just beginning and is moving
relatively slowly.  Estonia also made some headway in
introducing vouchers into its privatization scheme and in
creating mutual funds markets for voucher holders.  The
Government continued to report a balanced budget and due to
higher than expected accruals of tax revenues, two
supplementary budgets have been adopted.  This permitted some
modest increases to state pensions and salaries.  

2.  Exchange Rate Policies

    Estonia introduced its own currency, the Kroon, in June of
1992.  The monetary reform gave a major boost to Estonia's
sovereignty and economic progress.  The Kroon is frequently
cited as the most important factor in creating fertile
conditions for economic restructuring and recovery.  Estonia's
hard currency reserves have close to quadrupled since the
introduction of the Kroon, although the money supply has
contracted to a modest extent during the latter half of 1994.

    Estonia eliminated the last of its capital controls in
1994; there are no restrictions in opening foreign bank
accounts either in Estonia or abroad.  There are no
restrictions in exchanging Kroons for hard currency and
repatriating funds from Estonia.  The exchange rate policy of
Estonia is anticipated to remain unchanged.  There are no
perceived pressures on the Kroon for a reevaluation (or
devaluation).  Current policies should continue to exert
downward pressure on inflation which is expected to be
significantly lower in 1995.

3.  Structural Policies

    Pricing Policies:  In January of 1992, the prices of 90
percent of goods became free, and the Government of Estonia has
liberalized even further since then.  The only prices still
controlled directly by the Government  are electricity,
precious stones and metals and energy inputs such as 
oil shale.  Some goods and services (telecommunications,
passenger transport) are subject to price regulation.  

    Tax Policies:  Most elements of a modern tax system -- such
as corporate income tax, personal income tax, and value-added
tax (VAT) are now in place.  Property taxes were introduced in
1993.  New tax laws became effective as of January 1, 1994,
which established a 26 percent across the board tax for both
personal and corporate income.  Tax holidays for foreign
investors were phased out as they were viewed as distorting and
discriminating against local enterprises; companies already
receiving tax holidays were grandfathered, however.  An 
18 percent VAT is levied on most goods and services.  VAT is
collected on imports as they enter Estonia; the importer gets
VAT reimbursed when the goods are sold in Estonia or
reexported.  The general trend with Estonian tax legislation
has been to decrease taxes associated with production of goods
and increase taxes associated with consumption.

    Regulatory Policy:  Estonia's import and export regime is
amongst the most liberal in the world.  Import duties exist for
fur and goods made of fur (16 percent), cars, bicycles,
launches, yachts (10 percent).  The only export duties are
levied on rapeseed oil (100 percent), values of culture (e.g.
cars from before 1950)(100 percent), and metals (ferrous and
nonferrous waste and scrap) (5 to 25 percent).  There are some
fields of economic activity, which are subject to licensing,
such as the trading of metals and precious metals, trading of
alcohol and tobacco products.  Any legal entity registered in
Estonia can apply for an operational license.

4.  Debt Management Policies

    With respect to external debts, Estonia has signed loan
agreements with foreign lenders of which 12 have entered into
force.  The total commitments of foreign loans as of November
1, 1994 was 251.65 million dollars.  An additional 
75.16 million dollars is in the form of government credit

    On the basis of current projections, the ratio of total
external public debt to GDP is envisaged to increase to a peak
of about 18.5 percent in 1995-1996 before declining to some 12
percent in the year 2000.  Debt service as a proportion of
exports to non-FSU countries is projected to remain in the
range of about 5 to 8 percent during the period 1995 to 1999
before rising to just over 10 percent in the year 2000.

5.  Significant Barriers to U.S. Exports

    Import Licenses:  With the elimination of import licenses
on all products except alcohol, tobacco, pharmaceuticals and
weapons, Estonia is a very receptive market to U.S. exports. 
Estonia has no major domestic impediments to imports, but minor
impediments involving infrastructure deficiencies and financial
institutions exist.

    Infrastructure Deficiencies:  While the Estonian telephone
system has improved considerably since the formation of a joint
venture with Finland and Sweden, telephone service is still 
uneven; telephone service in areas outside the capital is
greatly inferior.  This has been a major factor for the minimal
amount of foreign investment that has gone to regions further
from the capital, and since foreign investment is a major spur
to trade, trade performance in these same regions has suffered.

    Financial Institutions:  Performance of Estonian banks is
uneven, but several larger banks are offering services roughly
comparable to western banks.  Trade financing is difficult to
obtain (particularly for new enterprises without a track
record) and high interest rates present some obstacles.  Some
banks have very limited experience with trade financing
options, such as letters of credit.

    Investment Barriers:  According to the law on foreign
investment, foreign investors have the same rights and
obligations as domestic individuals or companies.  However, in
some sectors (mining, power engineering, telecommunications,
gas and water supply, transport, telecommunications, banking)
foreign investors require a license.  All property brought into
Estonia by foreign investors as an initial capital investment
is exempt from customs duties, but is subject to VAT.  A
foreign investor has the right to repatriate profits after
paying income tax on proceeds which it has received after the
liquidation of the enterprise.

6.  Export Subsidies Policies

    The Government provides no subsidies to Estonian exports.

7.  Protection of U.S. Intellectual Property

    The Estonian Government has passed several important pieces
of legislation designed to bring its intellectual property
regime up to modern standards.  As of February 5, 1994, Estonia
is a member of the World Intellectual Property Organization

    Patents:  Estonia has taken several significant steps to
improve patent regulation.  The patent law, which has been in
force since May 23, 1994, regulates the legal protection of
patentable inventions in the Republic of Estonia.  At the same
time, the Utility Model Law came into force.  On August 24,
1994, Estonia became a party to the Paris Industrial Property
Convention and the 1970 Washington Patent Cooperation Treaty. 
The number of objects exempt from protection has not been

    Trademarks:  Counterfeiting is not a significant problem at
this time.  The Trademark Law, passed in Parliament on 
October 12, 1992, stipulates what is protected by law and sets
out judicial proceedings:  There have been 15,258 applications
for trademark registration since 1992, about 60 percent of them
are from foreign companies, including 3,032 U.S. companies.  Up
to the present, about 7,200 applications have received
certificates proving trademark registration; this number
includes 61 companies from the United States.  The fee for a
trademark registration is approximately $250.00

    Copyrights:  The Copyright Law became effective on 
December 12, 1992.  This law provides for protection of 

software, cable television publications, records, video
broadcast, satellite signals, etc.  The Copyright Law applies
to works "which require protection in the Republic of Estonia
by virtue of international treaties to which the Republic of
Estonia is a party."  On October 26, 1994, Estonia acceded to
the Berne Convention for the Protection of Literary and
Artistic Works.

8.  Worker Rights

    a.  The Right of Association

    The Constitution guarantees the right to form and join
freely a union or employee association.  The Central
Organization of Estonian Trade Unions (EAKL) came into being as
a wholly voluntary and purely Estonian organization in 1990 to
replace the Estonian branch of the official Soviet Labor
Confederation, the all-Union Central Council of Trade Unions
(AUCCTU).  Workers were given a choice as to whether or not
they wanted to join the EAKL.  While in 1990 the AUCCTU claimed
to represent 800,000 members in Estonia, in 1992 the AUCCTU
claimed to represent 800,000 members in Estonia, in 1992 the
EAKL claimed to represent about 500,000 members, organized in
30 unions.  In 1993 EAKL's membership dropped to some 330,000
organized in 27 unions and in 1994 dropped further to about
200,000 organized into 25 unions.  The EAKL explains the drop
in membership by the breakup of large government-owned
enterprises and privatization.  EAKL officials estimate that
some 40 percent of an approximately 600,000 strong workforce is

    The right to strike is legal and unions are independent of
the Government and political parties.  There were no strikes in
1994.  There are constitutional and statutory prohibitions
against retribution against strikers.  Unions may join
federations freely and affiliate internationally.  The
International Labor Organization has not cited the Government
for failure to observe pertinent ILO conventions and standards.

    b.  The Right to Organize and Bargain Collectively

    While Estonian workers now have the legally acquired right
to bargain collectively, collective bargaining is still in its
infancy.  The Government remains by far the biggest employer. 
According to EAKL leaders, few collective bargaining agreements
have been concluded between the management and workers of a
specific enterprise.  The EAKL has, however, concluded
framework agreements with producer associations.  The EAKL was
also involved with developing Estonia's new labor code covering
employment contracts, vacations and occupational safety.  The
Labor Code prohibits anti-union discrimination, and employees
have the right to go to court to enforce their rights.  In
1993, a collective bargaining law, a collective dispute
resolution law, and a shop steward law were adopted.  EAKL
officials reported that the courts re-instated a union official
who alleged dismissal because of union activity.

    No Export Processing Zones have been established.

    c.  Prohibition of Forced or Compulsory Labor

    Forced or compulsory labor is prohibited by the
Constitution and is not known to occur.  It is effectively
enforced by the Labor Inspections Office.

    d.  Minimum Age for Employment of Children

    According to the Labor Law, the statutory minimum age for
employment is 16.  Minors aged 13 through 15 may work with
written permission of a parent or guardian and the local labor
inspector, if working is not dangerous to the minor's health,
considered immoral, or interferes with studies, and provided
that the type of work is included on a list the Government has
prepared.  State authorities effectively enforce Minimum Age
Laws through inspections.

    e.  Acceptable Conditions of Work

    The Government, after consultations with the EAKL and the
Central Producers Union, sets the minimum wage and reviews it
monthly.  In September, the minimum wage was raised from 300 to
450 Kroons per month (36 U.S. dollars).  The minimum wage is
not sufficient to provide a worker and family a decent standard
of living.  About three percent of the work force receive the
minimum wage.  The average wage is about four times the minimum.

    The standard workweek was reduced from 41 to 40 hours in
1993.  There is a mandatory 24-hour rest period in the workweek.

    According to EAKL sources, legal occupational health and
safety  standards are satisfactory, but they are extremely
difficult to achieve in practice.  They are supposed to be
enforced by the National Labor Inspection Board, the
effectiveness of which may improve with experience.  In
addition, the Labor Unions have occupational health and safety
experts who assist workers in bringing employers in compliance
with the legal standards.

    The overriding concern of workers during the period of
transition to a market economy is to hold on to their jobs and
receive adequate pay.  Workers have the right to remove
themselves from dangerous work situations without jeopardy to
continued employment.


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