1580 



of the agreements is limited to economics, trade, and technology trans- 

 fer, its political significance is judged by U.S. leaders to be high; costs 

 and benefits of both the economic and political consequences need to 

 be assessed. The Hardt-IIolliday study sought to provide a pre- 

 liminary assessment, and in particular to identify the imponderable 

 questions that need to be monitored in the futuie as the process of 

 building the relationship unfolds. 



Importance of the Case 



Any bilateral undertaking or transaction involving the United 

 States and the Soviet Union is of inherent importance to the extent 

 that it reflects change in the relationship of the two superpowers. 

 This relationship between two nations which are joint custodians 

 of ultimate military power can determine the well-being of the rest of 

 the world, as well as their own. Any agreement that promotes accom- 

 modation or reduces tension, that promotes peaceful dealings or 

 reduces competition in military technology, has importance _ for 

 world peace and security and accordingly for the security of the United 

 States, which is the Nation's ultimate (liplomatic goal. Trade, accord- 

 ing to the hypothesis favoring the 1972 detente, influences internal 

 policy as well as external dealings of nations; and, "in the long run, 

 selected trade, intelligently negotiated and wisely administered, may 

 turn out to have been one of our most powei-ful tools of national 

 policy", (p. 585) 



The importance for the United States of the series of 1972 trade 

 agreements is only moderately in the field of economics. U.S. exports 

 are limited by Soviet willingness to accept trade deficits, U.S. willing- 

 ness to extend trade credits, and U.S. acceptance of Soviet expoi-ts. 

 Totals allowed by these constraints on Soviet dollar earnings and 

 credit are not impressive. 



However, the policy implications of Soviet adjustment to the 

 changed U.S. -Soviet trade relationship are seen to be of potentially 

 high importance. They affect such factors as the military arms race, 

 Soviet allocation of resources as between military weapons develop- 

 ment and civil goods production, long-term trade commitments, and 

 long-term commitments to technological development programs 

 incompatible with a vigorous military posture. 



It would seem beneficial to U.S. diplomatic goals that Soviet 

 interest in improved economic relations with the United States should 

 be expressed in terms of a reordering of Soviet priorities favoring 

 "technological change and improvement in the availability of desirable 

 consumer goods to the Soviet workers and ])easants". (p. 603) It does 

 not appear likeh^ that the Soviets can pursue vigorousl}^ both the 

 arms race and expanded productivity to sustain exports and pay for 

 imports in connection with programs to modernize their economy and 

 to increase the availability of consmner goods. 



From the Soviet ])oint of view, the ti'ade pact might be ex])ected to 

 yield such selected benefits as: The closing of the technological gap 

 in Soviet production of civilian goods (p. 54o), ex])an(le(l production 

 of Soviet oil and gas based on U.S. technology (p. 544), increased 

 production of nonfcrrous metals (p. 546), and improved quality of 

 consumer goods (i.e., better diet, clothing, ])ei'sonal transportation, 

 and housing) (p. 547). But the overall aim is to raise the level of their 

 civilian economy to the technical level of the other industrial nations. 



