602 



exports of soybeans, feed and cereal grain, and computers, and other 

 high-technology products. The balance of payments deficit of the 

 United States and our program for expanding the export of high 

 technology may receive benefits which are, at best, only marginal 

 compared to those which may derive from potential changes in eco- 

 nomic relations with non-Communist countries. 



At the same time, if the Soviet Union should reorder its priorities 

 and permit more foreign decisionmaking involvement in domestic co- • 

 operative ventures, significant long-run benefits of a predominantly 

 political nature might accrue to the United States such as: a) the 

 potential reduction of the Soviet threat to our security from reordered 

 Soviet priorities; b) a degree of Soviet acceptance of the international 

 system, implied by the U.S.S.R.'s permitting domestic involvement 

 of foreign corporations as partners; and c) political advantages in- 

 herent in increasing international commercial and financial inter- 

 course. Overall, such political gains might far outweigh the relatively 

 modest economic returns. 



RELATIVE INCREASE IX U.S.-SOVIET TRADE MAY BE IMPRESSIVE BY 19 SO 



Still, the relative increase in trade may be impressive. From a level 

 of about $200 million (exports plus imports) before the commercial 

 agreement, the exchange may rise by the end of the decade to between 

 $800 million and $5 billion if the presently favorable environment for 

 expanding commercial relations continues. Three alternative dollar- 

 volume levels seem possible, depending on key variables in trade. 



a. Projection of Current Trends. — Up to $800 million average an- 

 nual turnover through expansion of Soviet raw material exports, in- 

 cluding diversion of oil and gas sales from other developed economies 

 to the United States, additional Commodity Credit Corporation 

 credits for agricultural imports (feed grains and soybeans), and ex- 

 pansion of tourism. 



b. Changed Credit and Export Structure. — Up to $2-3 billion if 

 MFN status is granted to the Soviets and if Soviet foreign trade orga- 

 nizations give priority to exporting industrial products. U.S. -Soviet 

 joint ventures in energy and raw material extraction, industrial pro- 

 duction, shipping, and development of tourism and increases in Soviet 

 gold exports could also push US.-Soviet trade turnover to this level. 



c. Major Joint Venture Development. — Up to $4—5 billion if (in 

 addition to the activities cited above) the several massive Siberian 

 liquefied gas projects in West and East Siberia are consummated. 

 These would probably bring about a very extensive American involve- 

 ment in Soviet exploration, construction, and production activity and 

 an equally unprecedented acceptance of risk by the U.S. Government 

 and private banks. 



FUTURE U.S.-SOVIET ECONOMIC TIES DEPENDENT ON CONTINUED 

 RELAXATION OF INSTITUTIONAL AND LEGAL BARRIERS 



The degree of Soviet flexibility in permitting cooperative ventures 

 to go beyond agreement on I : .S. financing and sharing in output, 

 toward managerial and investment decision participation, will deter- 

 mine how broad or narrow are the limits on change. The U.S. relaxa- 

 tion of barriers to East-West trade is symptomatic of a new willing- 



