536 



careful review by appropriate government agencies to ensure that they do not 

 contribute significantly to the military capabilities of Communist countries. 



The President should be given authority to remove the existing tariff discrimi- 

 nation against imports from Communist countries, in return for appropriate 

 benefits for the United States. 



We should explore with other Western governments possible multilateral ar- 

 rangements designed to loosen the existing bilateral constraints on East-West 

 trade. 5 



The Nixon Administration's "New Economic Policy," inaugurated 

 in August 1971, proposed a program for attacking foreign, as well as 

 domestic, economic problems. With the new initiative in foreign trade 

 matters, interest in East-West trade grew. The issue of expanding 

 East-West trade ties became more closely linked to the broader range 

 of security and political issues that were to make up the agenda of 

 the May 1972 Summit meeting of President Nixon and Party Secre- 

 tary Brezhnev. In December 1971, Mr. Peter G. Peterson, Assistant to 

 the President for International Economic Affairs (later Secretary of 

 Commerce), issued a report ranging broadly over the foreign economic 

 policy interests of the United States. The Peterson Report called for 

 a new U.S. approach to Communist trade in order to improve the trade 

 prospects of the United States and to open the way for the Communist 

 countries to join the world trading and monetary community. 



Relations with the Communist world are now opening up rapidly. The United 

 States has a long way to go in matching the trade levels of East and West Europe 

 with each other. Presently, much of European trade with Eastern Europe and 

 the Soviet Union is on the basis of bilateral agreements. A major effort may 

 now be needed to see how to fit the non-market Communist countries into the 

 multilateral framework of economic exchange among the Western economies. 

 We shall also have to review at home the kinds of guidelines to apply in trading 

 with non-market enterprises." 



Mr. Peterson noted that the share of the United States in Western 

 trade with the U.S.S.R. and Eastern Europe was about 3 percent of 

 exports and 2 percent of imports — roughly unchanged from 1960. 

 With the tripling of total Western exports to the Soviet Union and 

 Eastern Europe during the period 1960-1970 (from $3.7 to $10.0 bil- 

 lion). Western European and Japanese exports accounted for most 

 of the increase. 7 



The trips to Moscow by Maurice Stans, Secretary of Commerce, in 

 November 1971 and Earl Butz, Secretary of Agriculture, in April 

 1972 resulted in optimistic appraisals of the future course of U.S.- 

 Soviet economic relations. Secretary Stans predicted that the level 

 of U.S. -Soviet trade would rise substantially in the next few years. 

 Secretary Butz was also optimistic, suggesting that significant grain 

 sales to the Soviet Union might take place for a number of years. 



The Summit agreements in May 1972 did not, however, include a 

 commercial agreement. Instead, the Joint Commercial Commission 

 w;is set up to negotiate : 



(a) an overall trade agreement including reciprocal most -favored- 

 nation agreement; 



(b) arrangements for the reciprocal availability of government 

 credits; 



s Ibid., pp. 15-16. 



• Peter G. Peterson, A Foreign Economic Perspective (Washington, D.C. : U.S. Govt. 

 Print. Office, December 1971), p. 28. [Hereafter cited as Peterson (1971).] 

 7 Ibid., p. 23. 



