East-West Trade Trends. United States. Foreign Operations Administration

situation could be summarized something like this:

      The Soviet-bloc rulers have put on a more affable diplomatic face and made a number of conciliatory gestures to the Western world without altering their fundamental hostile objectives, and they have made a great fanfare about supplying more consumer goods to their people without basically changing their war-oriented economy.

      The conciliatory diplomatic tactics of Stalin’s successors have sometimes been called a “peace offensive,” but the term is hardly justified. Since last June the peaceful sounds have alternated curiously with renewals of the old name-calling and intransigeance. And behind their Curtain the Communists never stopped teaching their students that capitalistic society must be overthrown. The North Atlantic Council could not avoid the conclusion at Paris on December 16 “that there had been no evidence of any change in ultimate Soviet objectives and that it remained a principal Soviet aim to bring about the disintegration of the Atlantic alliance.”

      The evidence indicated that the Communist rulers, while making gestures to their multitudes, were trying not to interfere with industrial-military development.

      The evidence included the Soviet Union’s own budget figures, which indicated that the state investment (there is no private investment) in consumer goods ministries is still extremely small; that the extremely large specific allocations to the military in the 1953 budget were no lower than actual expenditures in 1952; and that the budget’s “unexplained” category, which almost certainly includes “sensitive” military projects, greatly increased.

      It seemed most unlikely that increases in domestic output of consumer goods, even supplemented by increased imports, could be large enough to make a substantial improvement in the traditionally low living standards in the Soviet Union.

      We must suppose that the intent of any steps to improve the lot of the Soviet-bloc consumer is to improve it just enough to rescue his productivity in the interest of the state, but not enough to give him such a taste of better living as would lead to a wider and wider opening of the valves and hinder the buildup of the totalitarian war economy.

      If that is a correct assumption, the world, yearning for assurance of peace, is entitled to wish that the Kremlin’s calculations might be upset and the consumer might get enough to whet his appetite in a big way.

CHAPTER III

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      The Kremlin’s Recent Trading Activities

      In midsummer of 1953, at about the time of the Korean armistice of July 27 and just before Malenkov’s major speech of August 8, the Soviet Union attracted world attention by a flurry of new trade agreements with non-Communist countries. There was another flurry around the end of the year.

      During the last 9 months of 1953 and the early part of 1954, the representatives of U.S.S.R. adopted a somewhat more polite and businesslike manner in their commercial dealings with the free world. They not only said they wanted more trade (they had never stopped saying it) but they took more steps to bring it about. Besides trade agreements, they signed more contracts with private firms. In Moscow they warmly entertained traveling salesmen from the West. In Western capitals they staged a few cocktail parties and press conferences. They poured more funds into eye-catching exhibits at “trade fairs” from Copenhagen to Bangkok. They made grandiose offers to buy, and gave them great publicity. Some offers to buy, sell, or barter they made quietly through commercial channels. They showed signs of wanting the nonindustrial portions of the world to regard them as a helpful “big brother” bringing both trade and aid.

      These activities, which many writers have called a “trade offensive,” carried with them important meanings for the free world. In this chapter we shall examine the activities and probe for the meanings.

The New Trade Agreements

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      In a period of about 3 weeks, in late July and early August, the U.S.S.R. concluded trade agreements with France, Greece, Argentina, Denmark, and Iceland. These were not mere renewals of expiring agreements. The U.S.S.R. had never before had trade agreements with France, Greece, or Argentina (or any other Latin American country). Its last trade agreement with Denmark had expired in 1950, and with Iceland in 1947. Its trade with three of the countries, Greece, Iceland, and Argentina, had been almost nonexistent in recent years. Considerable trade, however, had been carried on with France and Denmark without benefit of trade agreements.

      The U.S.S.R. also renewed existing trade agreements with Iran and Afghanistan and signed a “payments agreement” with Egypt. Most of these trade agreements signed during the summer of 1953 became effective as of July 1.

      The second group of trade agreements, clustered shortly before or after January 1, 1954, and mainly effective as of that date, was with India, Belgium, Norway, Sweden, and Finland. It was the first time the U.S.S.R. had ever had a trade agreement with India. There had not been one with Belgium since 1951. The others were renewals. Barter deals were also made with some of the countries already mentioned, and with Israel and Japan.

      Not since 1948, when the U.S.S.R. had entered into annual or long-term trade agreements with eight countries of Western Europe, had there been a period of Soviet trade-agreement activity that could compare with the paper blitzkriegs just described. And the result was that in the early part of 1954 the U.S.S.R. had trade agreements with more free-world countries than at any other time in the postwar period.

      This fact and the hefty amounts of trade which were called for in some of the agreements have given many people the impression that a historic increase in the size of East-West trade was taking place. The impression seems hardly justified.

      In the first place, trade agreements are usually only hunting licenses. They merely authorize—but do not guarantee—the exchange of goods. The governments agree to permit the export and import of the types listed—if contracts can be arrived at between Soviet monopolies and Western business. If the goods turn out to be unavailable, or if the demand is not forthcoming, or if the price is too high or the quality too low, the publicized amounts of the trade agreements do not materialize in the export-import statistics. And this fact rarely receives as much public attention as the original announcement. To illustrate, a spokesman for the Greek Foreign Ministry told the press on January 19 that the U.S.S.R. had lagged far behind in shipments under the 1-year trade agreement of July 1953. That agreement had been publicized as calling for trade of $10 million each way, but the Greek official said few Russian deliveries had been made and “it will be a miracle” if these deliveries reached $3 million.

      In the second place, even a big percentage of fulfillment would not necessarily increase trade between the U.S.S.R. and the free world to the high points of 1948 and 1952. The 1948 turnover—that is, the sum of exports and imports—had been about $1 billion. It declined to $545 million in 1950. By 1952 it was back up to $943 million. The preliminary estimate for 1953 is $790 million. Thus the year which saw the Kremlin’s new trading tactics was also the year that saw a slump of about 16 percent in the dollar value of its trade with the free world. The trade was rising moderately in the last part of 1953 and a further moderate rise in 1954 would not be surprising.