580 



commodities embodying modern technology will undoubtedly make 

 U.S. exports more attractive to Soviet buyers. At the same time, the 

 changes will allow the Soviet Union to import needed technology for 

 certain sectors of its economy. 



U.S. Restrictions on Import* From the Soviet Union; the Issue of 

 Most-Fa vored-Nation Treatment 

 U.S. tariff discrimination against Communist countries has its 

 origin in the Trade Agreement* Extension Act of 1951 (65 Stat. 72). 

 Section 5 of that Act directed the President to : 



. . . suspend, withdraw or prevent the application of any reduction in any rate 

 of duty, or binding of any existing customs or exercise treatment, or other con- 

 cession contained in any trade agreement ... to imports from the Union of 

 Soviet Socialist Republics and to imports from any nation or area dominated 

 or controlled by the foreign government or foreign organization controlling the 

 world Communist movement. 



Section 11 directed the President to prevent the importation of ermine, 

 fox, kolinsky, marten, mink, muskrat, and weasel furskins from the 

 Soviet Union and Communist China. The rationale for section 5 was 

 grounded in heightened international tensions, particularly during the 

 Korean War. The position was taken that Communist nations which 

 were aiding aggression in Korea should not share in the benefits of 

 trade concessions made by the U.S. to other countries. Section 11 may 

 have been enacted in part to protect domestic producers from foreign 

 imports. 



In accordance with the law. all concessions granted by the U.S. 

 in trade agreements with Communist countries (except Yugoslavia) 

 were suspended. With respect to U.S. -Soviet trade, this measure re- 

 sulted in abrogating the trade agreement concluded between the two 

 countries on August 4, 1937. That agreement had, in effect, granted 

 conditional most-favored-nation (MFN) treatment to the Soviet 

 Union in return for Soviet guarantees to import specified quantities 

 of American goods. 90 



The denial of trade concessions to Communist countries and the ban 

 on the importation of certain furskins were later embodied in section 

 231 of the Trade Expansion Act of 1962 (ID U.S.C. 1861, 1970) and 

 the Tariff Act of 1930 (19 U.S.C. 1202, Schedule 1, Pari 5, Subpart B, 

 1970). The MFN provision of the Trade Expansion Act differed some- 

 what from the 1951 legislation. While the original law in effect ap- 

 plied only to countries that, in the President's opinion, were controlled 

 by the world Communist movement, the 1902 Act was made applicable 1 

 to all Communist countries. Therefore, Yugoslavia and Poland, which 

 had previously enjoyed MFN treatment, were no longer eligible for it. 

 However, this provision was relaxed in L963 to allow those two coun- 

 tries to regain their MFN status. Subsequently, in the late 1960s and 

 early 197<>s. unsuccessful attempts were made to extend MFN status 

 to Romania and ( Jzechoslovakia. The prohibition against trade conces- 

 sions to the Soviet Union remains in effect, despite several attempts 

 nt repeal (most recently, in the proposed "East-West Trade Relations 

 Act of 1971"). 



"n See Vladimir N Pregelj ''Most -Favored Nation" Principle: Definition, Brief History, 

 and is, bu thi United state--. (Washington, D.C. : The Library of Congress, Congressional 

 Research Service, Oct. 26, 1972. Report No. 72-226E). 



