President Bush Grants Hungary Most-Favored-Nation Trade Status
In July 1989, President George H. W. Bush visited Poland and Hungary, the two countries in Eastern Europe in which substantial political and economic reforms seemed most likely to occur first. Pursuing a new US policy he referred to as “beyond containment,” Bush wished to show US support for a movement toward the integration of Eastern Europe into the “community of nations.” During a speech on July 12 at Karl Marx University in Budapest, Bush offered “partnership” with Hungary in an effort “to propel reform” and promised that the US would grant Hungary permanent most-favored-nation (MFN) trade status, thus normalizing trade terms between the two countries, if Hungary passed legislation to comply with the Jackson-Vanik amendment to the 1974 Trade Act. That Act had been passed to encourage more liberal emigration policies in countries with non-market economies that had imposed barriers to emigration. Hungary had begun to dismember the barbed wire fences and mines surrounding its border with Austria in May 1989, prompting the largest exodus of East Germans since August 1961 (when East Germany constructed the Berlin Wall to stop the flow of emigrants to the West). In September, Hungary formally annulled a 1968 treaty with East Germany designed to prevent East Germans from escaping to the West, prompting Bush’s offer of MFN status, which was formally granted during the signing ceremony at which Bush spoke the following remarks. The Soviet Union, informed in advance of Hungary’s decision, had declined to object, and within three days of Hungary’s announcement, more than 13,000 East Germans emigrated to the West through Hungary.
George H. W. Bush, "Remarks at a Ceremony Granting Most-Favored-Nation Trade Status to Hungary," speech, The White House, Washington, D.C., October 26, 1989, Bush Presidential Library, Documents and Papers, Bush Library (accessed May 14, 2008).
It was my privilege to return to Hungary last summer and become the first American President to visit a nation that is so much a part of Europe and so much a part of America. . . .
At Karl Marx University, before the very statue of Marx himself, I met students, teachers, and entrepreneurs who are making a bold break with the past. And in their bright faces I saw a burning idealism and a determination to escape the dead hand of ideology forever. And I pledged my strong support to this process of democratic change in Hungary. I said I would ask Congress to authorize $25 million and to establish a Hungarian-American enterprise fund, $5 million to open an environmental center for central and Eastern Europe in Budapest, and another $6 million for a wide range of cultural and exchange programs. . . .
And I also promised to stimulate American business investment in Hungary . . . .
In Budapest, I also said that as soon as the Hungarian Parliament passed emigration legislation then under consideration that I would notify our Congress that Hungary meets all the emigration criteria under U.S. law. That would qualify Hungary for most-favored-nation treatment. And I am pleased to say that on September 26th Hungary fulfilled its part of the bargain, and I'm here today to fulfill our part of the bargain.
Before me are three documents, one advising the Secretary of State that I've determined that Hungary meets our emigration criteria; the others informs each of the Houses of Congress. And with my signature, these documents will grant Hungary the most liberal trade treatment possible under U.S. law, making it the first country subject to the Jackson-Vanik amendment ever to be granted a waiver from annual reviews of its emigration practices. But you see, we feel that today's action represents something far greater than a mere trade agreement. It signals the recognition that a quiet revolution is taking place in thousands of shops, farms, and factories. It signals the rebirth of Hungary as an entrepreneurial nation.