1590 



some Communist countries access to a facility which continues to play 

 an important role in financing U.S. foreign trade — 'the U.S. Export- 

 Import Bank. The impact of denial of MFN and credits on trade varies- 

 from country to country. Some suggest the major impact on the 

 U.S.S.R. currently is political. Export controls prevent the export of 

 certain kinds of goods and technology which are considered to have 

 military applications. In the past, such controls have been applied 

 particularly to the kinds of goods which Communist countries are 

 most interested in importing from the West. 



RECENT MOVES TOWARD LIBERALIZATION OF TRADE 



In connection with its detente policy, the Nixon administration took 

 important initiatives in each of the three areas — ^^Grovernment credits, 

 most-favored-nation treatment, and export controls. With respect to 

 export financing, President Nixon issued determinations in 1971-72 

 that Eximbank financing of trade with Romania, Poland, and the So- 

 viet Union was in the national interest. (Such determinations were 

 required by law in order to make Communist countries eligible for 

 Export-Import Bank credits.) In addition, the Commodity Credit Cor- 

 poration began to play a major role in financing agricultural exports 

 to the Soviet Union and Eastern Europe. 



In October 1972, a comprehensive trade agreement was signed be- 

 tween the United States and Soviet governments, under which the 

 President agreed to seek MFN status for the Soviet Union. The agree- 

 ment included a variety of other provisions designed to facilitate and 

 promote a IT.S. -Soviet trade. Among the provisions were : Special safe- 

 guards against disruptive imports; a declaration of intent to place 

 large orders for U.S. machinery and agricultural and industrial goods; 

 the right of third-country commercial arbitration ; and improved facil- 

 ities for U.S. business in Moscow. This agreement could not, however, 

 be brought into force until Congress passed authorizing legislation. 

 The necessary authority was included in the Trade Act of 1974 (Pub- 

 lic Law 93-618), enacted on January 3, 1975. The Trade Act provided 

 that MFN status and U.S. Government credits could be extended to 

 the Soviet Union and other "non-market economy countries" only if 

 they adhere' to certain standards of free emigration. This provision can 

 be waived by the President, subject to Congressional approval by con- 

 current resolution, if he finds that such action will further the pur- 

 poses of the Act. In January 1975, the Soviet Government notified the 

 State Department that it refused to accept the conditions on emigra- 

 tion. Even if the Soviet Union should comply with the Trade Act con- 

 ditions, its eligibility for Eximbank credits would be limited by provi- 

 sions of the Export-Import Bank Amendments of 1974 (Public Law 

 93-646) , passed on January 4, 1975. Total new authorizations for loans 

 and guarantees for the Soviet Union could not exceed $300 million 

 without a Presidential national interest determination and congres- 

 sional approval. In addition, special limitations are put on Eximbank 

 financing of energy-related projects in the Soviet Union. 



The Trade Act provision did not apply to two Communist coun- 

 tries, Yugoslavia and Poland, which already enjoyed MFN treatment. 

 Another country, Romania, subsequently moved toward trade normal- 

 ization and acceptance of the conditions for MFN treatment. On 



