Munich, and the payroll for a large staff of experts. Governments party to the European patent system will advance the money to build the patent headquarters and operate it during its early stages. Another factor that critics of the Europatent system cite is the problem of adapting a Europe-wide patent convention that satisfies the individual laws of the participating countries. The critics note, for example, that should a patent suit arise, in many cases it would have to be tried and decided in the country where the suit was filed. Should a national court find a patent to be invalid, the finding would apply only to that particular country. It's still not clear how Italy will adapt to the proposed EEC patent system in the case of pharmaceutical products, which now can't gain patent protection there. Presumably, the situation will change if the convention is adopted, thereby removing a major obstacle for drug companies competing with Italian-made products that now fall outside patent protection. During the 15 years after the Munich patent office opens, national patent offices will be able to carry out work for the European headquarters on an agency fee basis. During this transition period, a patent application can be filed and examined in the U.K. or some other local European office. To avoid confusion, the Europatent and EEC patent conventions will come into force simultaneously. At that time, too, it is hoped that the Patent Cooperation Treaty which was signed in Washington, D.C., in 1970 by delegates from 45 countries will become effective. In any event, the EEC countries intend to bring the pact into force on the same day.
Yugoslavia target for world chemical funds By 1975 a billion-dollar chemical industry will emerge in the fast-growing economy of Yugoslavia. With a gross national product (in western terms) of just over $16 billion this year, the country is obviously making chemicals one of its top investment priorities. To spur this development, Yugoslavia has hung out a big welcome sign for foreign investors, through a series of liberalized laws and international agreements, since 1967. Western chemical firms are now represented in more than 75 joint ventures that have funneled more than $100 million into the country since early 1968. After the first foreign investment of $5 million by Italy's Fiat came various ventures from chemical process companies, including Pechiney in France, Bayer and Farbwerke Hoechst in West Germany, and Ciba-Geigy in Switzerland. Recently, these western European firms have been joined by a small 12
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but rapidly growing number of U.S. companies. A driving force for U.S. investors is a bilateral agreement between the U.S. and Yugoslavia signed last January. The agreement has the important provision of allowing insurance in Yugoslavia by the U.S. Government's Overseas Private Investment Corp. In July 1972, Rohm and Haas' Italian subsidiary, Filital Industrie Chimiche, put the first U.S. chemical-related investment into Yugoslavia— $244,520 for a 49% interest (the maximum allowed) in Yugocryl, a venture with the Yugoslavian company, Commerce, to make acrylic emulsion polymers near the city of Ljubljana. The same month, International Flavors & Fragrances put $1.5 million into a venture with Etol, a Yugoslavian flavor and fragrance enterprise, in the Slovenian city of Celje. IFF says that one of its goals was to * 'enlarge our sources of supply of natural raw materials." Now two much larger moves have surfaced in the Balkan country. In September, Dow Chemical said it would sign a contract to set up a joint enterprise in Zagreb to make polystyrene and expandable polystyrene granules. Dow would be a minority partner with unspecified capital contribution in the scheme with Organsko Kemijska Industrija. Dow puts total initial investment at about $17 million, including technology, land, and fixed and working capital. Engineering has started, and construction is due for completion by the spring of 1976. The plant will supply raw material, now short, to the Yugoslavian plastics molding industry. The second move this fall is the biggest yet, a $40 million polyester fiber venture between Chemtex (New York City) and two Yugoslavian partners. Chemtex will have a 30% equity position ($2.75 million capitalization), with the majority interest held by Organsko - Hemijska - Industrija - Skopje and Zdruzeno Pretprijatie Na Pam Ucnata Industrija (INTEX). Loans of about $12 million from Stopanska Banka, about $2 million from the National Bank of Yugoslavia, and an expected $17 million from the U.S. Export-Import Bank will provide additional financing. The new venture plans to build a plant at Skopje, a textile center in the southern republic of Macedonia, to turn out 28 million pounds per year of polyester staple and 5 million pounds per year of filament when completed in 1975. License fees will go to Du Pont for staple technology and to Rohm and Haas for high-speed spinning and texturized filament manufacture. Machinery for the polyester plant will be almost entirely U.S.-made, according to Chemtex senior vice president Peter G. Prater. The cost of this equipment and U.S.-supplied services will be about $18.5 million. Earlier en-
gineering and equipment contractors for the Yugoslav chemical industry have included such chemical construction firms as Foster Wheeler, Crawford & Russell, and Chemtex itself. Raw material dimethyl terephthalate and ethylene glycol for the polyester plant will be imported, possibly from a European subsidiary of a U.S. company. Outlets for the polyester output will be primarily within Yugoslavia, with INTEX a leading customer. However, output also will be exported, with the emphasis on western Europe. Exports would bring in hard currency to both Yugoslavia and the joint venture. The country is driving toward a critical goal, official convertibility of the dinar (the national currency) into dollars and other currencies by 1975. Success depends on increasing reserves of foreign exchange, which shot up to more than $830 million in 1972 from just $200 million the previous year. The joint venture's profits for Chemtex also will depend on trade outside Yugoslavia. Yugoslav law allows foreign investors to repatriate hard currency profits only if these profits have been earned by the venture itself (for example, from exports). A government formula allows most enterprises to keep a basic 20% of hard-currency profits (the "retention quota"), with an extra 33y3% allowable for profits repatriation to foreign partners. However, the government also has set up tax laws on foreign investor profits favoring reinvestment in Yugoslavia. According to Overseas Private Investment Corp., at least one U.S. company is leaning toward no repatriation of earnings in return for early entry into East European markets. Novi Sad naphtha cracker is part of growing Yugoslav chemical industry
