Hungary's foreign trade was about evenly split between the Comecon countries and the West. Trade with the Comecon market accounted for 53.1 percent of its trade turnover in 1986, an increase from 49.3 percent in 1980. Total trade turnover with the Comecon countries, measured at 1986 prices, increased from about US$6.8 billion in 1981 to US$10 billion in 1986. Exports to the Comecon countries increased from US$3.6 billion to US$5.1 billion in the same period, while its imports from those countries rose from US$3.3 billion to US$4.9 billion.

In 1986 more than 90 percent of the country's energy imports, 42.5 percent of its raw- and basic-materials imports, and more than 60 percent of its capital-goods imports came from the Comecon countries. In addition, 48 percent of exports of raw-materials and semifinished goods, 84.3 percent of its machinery and capital-goods exports, and more than half of the exports of industrial consumer goods and agricultural products went to the Comecon market.

In the late 1980s, the Soviet Union, plus three other Comecon countries--the German Democratic Republic (East Germany), Czechoslovakia, and Poland--made up four of Hungary's six most important trading partners. The Soviet Union was Hungary's main trading partner, accounting for more than 30 percent of Hungary's overall trade and 60 percent of its trade with the Comecon countries (see table 13, Appendix). Raw materials and energy dominated the structure of Soviet-Hungarian trade. Under the Soviet-Hungarian trade agreement for the Seventh Five-Year Plan (1986-90), Hungary agreed to export foodstuffs, computers, telecommunications equipment, buses, and other finished goods to the Soviet Union. In turn, Hungary imported mining equipment, heavy machinery, some consumer goods, and even larger amounts of Soviet raw materials and energy than it did in the preceding plan. East Germany, Hungary's third largest trading partner, Czechoslovakia, and Poland accounted for about 16.5 percent of Hungary's overall trade and 31.1 percent of its trade with the Comecon countries ,

About half of Hungary's trade was with Western countries. Trade turnover with the Western world was US$7.9 billion in 1986 imports totaled US$4.2 billion, and exports amounted to US$3.7 billion.

In June 1988, Hungary and the European Economic Community (EEC) signed a ten-year trade agreement, the first of its kind between the EEC and a Comecon country. The agreement provided for a reduction of quotas on about 2,000 items by 1995. Hungarian officials estimated that the trade would boost Hungary's hard-currency exports from US$25 million to US$50 million by 1995. In 1987 the EEC countries accounted for 24.4 percent of Hungary's imports and 19.9 percent of its exports. Hungary accumulated a US$5 billion trade deficit with the EEC countries between 1979 and 1986.

West Germany was Hungary's largest Western trading partner and second largest trading partner overall. Raw materials and semifinished goods made up about 65 percent of the US$1.2 billion of goods that Hungary imported from West 1000 Germany in 1986 machinery and equipment made up aboÍÍÍÍÍÍÍÍut another 20 percent. Hungary's exports to West Germany totaled US$771 million and included foodstuffs, live animals, machinery, chemical products, textiles, clothing, pharmaceuticals, and aluminum products. As of 1987, West German banks had furnished Hungary with more than US$16 billion in loans in the same year, the West German government guaranteed a twelve-year credit for Hungary, marking the first time that the Hungarian government has accepted credits backed by a foreign government. In addition, Hungary and West Germany concluded an investment protection agreement in 1986 under which the Bonn government, based on Hungarian assurances, guaranteed that West German firms with investments in Hungary would be able to repatriate their profits and not be subject to nationalization of their assets. In 1987 West German firms had about 330 cooperation agreements with Hungarian firms more than half were in engineering and machine industries. Siemens, Krupp, Telefunken, Volkswagen, and smaller West German firms were involved in about thirty joint ventures with Hungarian enterprises (see Relations with the West , ch. 4).

Austria was Hungary's second largest Western trading partner. In 1987 Hungary imported Austrian goods worth US$574 million and exported US$594 million in goods to Austria. In 1987 Austrian and Hungarian firms were engaged in 120 cooperation agreements and fourteen joint ventures.

Hungary and the United States signed their first trade agreement in 1978, and Hungarian goods bound for American ports enjoyed most-favored-nation status. In 1988 ten United States-Hungarian joint ventures operated in Hungary, but, excluding Citibank Budapest's holdings, the total of United States capital invested in Hungary stood at a mere US$58 million. In 1987 bilateral United States-Hungarian trade reached its highest mark ever at more than US$500 million. Exports to the United States, however, accounted for only 2.3 percent of Hungary's exports in 1986, and imports barely exceeded 2 percent of Hungary's total imports.

Trade relations with Japan were growing as Hungary sought Japanese capital and technology and hoped to gain a share of the Japanese market as that country opened its doors to foreign trade. Hungary imported US$142 million worth of Japanese goods in 1986 while exporting only US$42.4 million in goods. Basic materials and semifinished goods accounted for more than half of Hungary's Japanese imports machinery and consumer goods accounted for 27 percent and 19 percent, respectively. More than 65 percent of Hungary's exports to Japan were basic materials and semifinished products, including pharmaceuticals, aluminum, and chemical products foodstuffs accounted for another 16 percent. In addition, Hungary and Japan formed their first joint venture in 1984 to produce polyethylene sheets for insulation.

Hungary's trade with developing countries totaled about US$1.4 billion in 1986 and represented a 7.3 percent share of its total trade, down from 9.5 percent in 1980. Exports to the developing world consisted of machinery, vehicles, industrial consumer goods, and agricultural goods. Hungary imported from the developing countries tropical foods and other agricultural products, petroleum oil, clothing, carpets, electrical appliances, and steel products. In 1985 Hungary joined the International Finance Corporation and the International Development Association, both of which are World Bank affiliates.

Finally, trade with China rose dramatically from about US$112.7 million in 1984 to US$343.9 million in 1986. However, China accounted for less than 2 percent of Hungary's trade in 1986.

Data as of September 1989