V. Restrictions on Soviet Trade With the United States 



The Nixon Administration and the Congress are considering steps 

 that would bring U.S. trade policy toward the Soviet Union more 

 closely into line with those of other Western industrial nations. Among 

 the changes which are under active consideration or which have al- 

 ready been made are: reducing tariffs on imports from the Soviet 

 Union to the same level as those of other trade partners, i.e., granting 

 most -favored-nation treatment : making available more credits, at 

 better terms; limiting export controls to items with direct military 

 applications; and reducing restrictions on shipping between the two 

 countries. What impact will such changes have on the volume of 

 U.S. -Soviet trade ? The answer hinges on a number of economic and 

 political variables — Soviet export capabilities, Soviet preference for 

 U.S. technology over that of other Western countries, the willingness 

 of the U.S. business and banking community and the Export-Import 

 Bank to finance transactions with the Soviet Union, and the ability 

 of the Soviet Union to adapt its institutions and practices to new roles 

 in expanded U.S. -Soviet economic relations. 



The following is a discussion of past obstacles to U.S. -Soviet trade 

 and of the likely consequences of prospective changes. 



U.S. Controls on Exports to the Soviet Union 



Several legislative enactments since 1945 have provided the author- 

 ization for the U.S. export control program. Their original purpose 

 was primarily to deny the Soviet Union and other Communist coun- 

 tries exports which could facilitate their industrial growth and en- 

 hance their military potential. The following text describes the major 

 acts which have regulated U.S. exports to the Soviet Union. 



The Export Control Act of 1949 (50 U.S.C. App. 2021 et seq., 1964) 

 authorized the President to "prohibit or curtail" all commercial ex- 

 ports except shipments to U.S. territories and most exports to Can- 

 ada. The purpose of the Act was to use export controls : (1) to prevent 

 domestic economic shortages; (2) to protect the national security: 

 and. (.'>>) to promote the foreign policy of the United States. The Act 

 was extended several times through December 1969. with some modi- 

 fications. The 1962 extension of the Act specified that its intent was to 

 prevent a significant contribution not only to a Communist country's 

 military potential, but also to its economic potential. 



To regulate U.S. exports, a licensing system was established. Under 

 this system, which is still in effect, the Office of Export Control of 

 the Department of Commerce regulates virtually all U.S. exports 

 by granting (or not granting) one of two types of licenses: a gen- 

 eral authorization which permits shipment of certain types of goods 

 to certain destinations without a specific application by the exporter, 

 or a validated license to an individual exporter for a specified export. 



( r,76) 



