583 



By facilitating imports of Soviet machinery and industrial prod- 

 ucts, the United States might reap an unexpected benefit from ex- 

 panded trade ties with the Soviet Union, namely, the acquisition of 

 new Soviet technology in a few industrial sectors. In certain high- 

 priority industries, the Soviet Union has devoted considerable re- 

 sources to research and development. Some Soviet industries have 

 made important technological innovations which could prove very 

 valuable to U.S. firms. The steel and aluminum industries and certain 

 mining industries are examples of U.S. sectors which could benefit 

 from such an exchange of technology. 



The structure of Soviet exports to other industrial nations does not, 

 however, suggest that a dramatic shift in the pattern of Soviet-Ameri- 

 can trade would follow tariff concessions. While the volume of trade 

 between the Soviet Union and Western industrial nations increased 

 in the 1960s, the structure of trade remained fairly stable. Although 

 some new Soviet products will inevitably be sold to U.S. buyers, past 

 experience indicates that the pattern of U.S.-Soviet trade outlined by 

 Secretary Peterson and others of U.S. exports of capital-intensive 

 products in return for Soviet raw materials will dominate U.S.-Soviet 

 economic relations in the near future. 



U.S. Restrictions on Credit Transactions With the Soviet Union 



In trade negotiations with the United States, Soviet representatives 

 have indicated that the availability of credits is an indispensable con- 

 dition to expanded U.S.-Soviet trade. Because of the Soviet Union's 

 shortage of foreign exchange reserves and its limited export possibili- 

 ties, the availability of credit is, in fact, crucial to expanded commercial 

 relations. Soviet leaders are seeking two types of credit from the 

 United States. First, Soviet trade enterprises need deferred-payment 

 credits for specific transactions. These are routine, short- or medium- 

 term loans which are 'commonplace in all foreign trade transactions. 

 Secondly, the Soviet government wants long-term "project loans" for 

 such large-scale projects as the exploitation of Siberian mineral re- 

 serves. U.S. Government restrictions have, in the past, inhibited both 

 types of credits. 



The Export-Import Bank plays an important and expanding role 

 in most U.S. foreign trade. However, past legislation has restricted its 

 participation in the extension of credits to the Soviet Union. Title III 

 of the Foreign Assistance and Related Agencies Appropriation Act of 

 1965 (P.L. 88-634) prohibited the Eximbank from lending or in any 

 other way participating in the extension of credits to any Communist 

 country except when the President made a determination that credits 

 to a particular Communist country would be in the national interest. 

 This prohibition was later included in Section 2 of the Export-Import 

 Act of 194S (12 U.S.C. 635, 1970), by an amendment approved on 

 March 13, 1968. The 1968 legislation added an absolute prohibition on 

 Eximbank participation in the extension of credit to any country fur- 

 nishing by direct government action "goods, supplies, military assist- 

 ance or advisers'' to a nation which engages in armed conflict with the 

 armed forces of the United States. The latter prohibition was not 

 subject to Presidential waiver. 



