Under the regulations of 1971, as amplified in 1972, and unlike earlier conditions, the financial results of export operations are directly reflected in the producer's profit position. This circumstance is counted upon by the leadership to motivate trusts toward attaining optimum efficiency in export production and toward adjusting output to foreign market requirements. Financial incentives to surpass official foreign trade targets are provided by allocating the producers and foreign trade organizations a portion of the receipts from excess exports and a portion of savings made on imports through import substitution. Excess exports may not be made by diverting output scheduled for the domestic market, and savings on imports may not be made at the cost of quantitative or qualitative deterioration of the domestic supply.
Producers for export are obligated both to produce the items called for by the export plan in accordance with specifications and to meet contractual delivery dates; with few exceptions, they have no direct contact with foreign buyers. It is the responsibility of the foreign trade organizations to seek out the most profitable markets and to handle all physical and financial details of the trade transactions. It is also their duty to keep producers currently informed about changing conditions in world markets and to make them aware of needed adjustments in production.
Standard subsidies per 100 leva, differing by trading area, are granted on all exports. These subsidies, in effect, modify the official exchange rate so that trade is actually conducted on a multiple exchange rate basis. Subsidies from the state budget are also provided for exports, the returns from which do not cover costs. Special bonuses are offered to economic trusts and their branches that fulfill or surpass their export assignments to noncommunist markets. Proceeds from exports are credited to the economic trusts and not to the foreign trade organizations.
Relations between economic trusts and foreign trade organizations are determined in broad outline by government regulations. Specific details, however, including precise financial arrangements that are the core of the relationship, must be worked out by the parties to the contract. This situation provides opportunities for friction that may be harmful to the export program. Trusts and export associations were therefore enjoined to undertake negotiations in a cooperative spirit and to avoid taking advantage of their monopoly position as producers or exporters. Disputes that threaten to involve financial losses are to be settled by the Ministry of Foreign Trade and the Ministry of Finance.
Total trade turnover increased more than 3.5 times in the 1960-71 period to a level of 5 billion leva, including 2.55 billion leva in exports and 2.45 billion leva in imports. The growth of trade was erratic, particularly in the case of imports. Over the entire 1960-68 period, however, the average annual growth of exports and imports was almost identical—13.9 and 13.8 percent, respectively. In the subsequent three years exports rose almost twice as rapidly as imports, though at a lower rate than in earlier years. The change in the relative rates of growth during the 1969-71 period—10.5 percent for exports and 5.6 percent for imports—helped reverse the consistently negative trade balance of the earlier period and produced trade surpluses in three consecutive years.
The great bulk of the trade has been carried on with communist countries, primarily the Soviet Union. The share of these countries in total trade, however, declined from 85 percent in 1961 to 78 percent in 1970; it had fallen to 73 percent in 1966. Communist countries outside COMECON, primarily Cuba and the Democratic Republic of Vietnam (North Vietnam), accounted for only 3 to 4 percent of the trade annually. The Soviet Union alone provided more than half the imports and absorbed an equal amount of exports. The German Democratic Republic (East Germany) and Czechoslovakia were the main COMECON trading partners after the Soviet Union, but the volume of trade with these countries was very much lower. The share of East Germany in the total trade had been 10.5 percent in 1960 but ranged between 8 and 8.6 percent in the 1965-70 period. The proportion of trade with Czechoslovakia declined from 9.7 percent in 1960 to only 4.8 percent in 1970.
The orientation of trade toward the Soviet Union has been based largely on political factors but has also been dictated by the shortage of export goods salable in Western markets and the inadequacy of foreign exchange reserves (see ch. 10). Trade with COMECON members is conducted on the basis of bilateral clearing accounts that do not involve the use of foreign exchange. Furthermore, the Soviet Union has supplied Bulgaria with a large volume of industrial plants and equipment in exchange for the products of these plants. In the 1971-75 period trade with the Soviet Union is scheduled to increase by 60 percent over the volume in the preceding five-year period, and the share of the Soviet Union in the total trade volume is planned to reach 68 percent.
Trade with noncommunist countries rose from about 15 percent of the total volume in 1961 to 27 percent in 1966 but declined thereafter to 22 percent in 1970. From three-fourths to four-fifths of this trade was accounted for by Western industrialized nations, primarily the Federal Republic of Germany (West Germany), Italy, France and Great Britain. The balance of the noncommunist trade was with developing countries, mainly India, the United Arab Republic (UAR), and Iraq. Trade with the United States has been negligible.
There has been a gradual shift in exports from agricultural to industrial commodities and from raw materials to manufactured and semiprocessed products. Yet in 1970 exports of agricultural origin still constituted 55 percent of the export volume, including 8 percent of raw farm products. The share of industrial exports rose from 25 percent in 1960 to 45 percent in 1970, of which 13 and 27 percent, respectively, consisted of machinery and equipment. In 1972 the proportion of machinery and equipment in exports was reported to have risen to 34 percent.
Machinery and equipment have been exported almost exclusively to communist and developing countries. In 1968, the last year for which information was available, machinery and equipment constituted only 1.8 percent of exports to Western industrialized nations.