604 



Europe and Cuba— i.e., member nations of COMECON. The Soviets 

 might also find it advantageous to reduce a drain on hard currency 

 by limiting transshipment of grain to Eastern Europe and Cuba on 

 Soviet account. The 1972 Soviet purchase financed by gold sales or 

 dollars of U.S. wheat to meet delivery requirements to Poland is a 

 case in point. This kind of reappraisal, although increasing potential 

 trade with the United States in the short run, poses serious longer- 

 range political and strategic problems of control for the Soviet Union 

 in the Communist world. 



STATE TRADING POSES PROBLEMS FOR A COUNTRY W T ITH A MARKET 

 ECONOMY SUCH AS THE UNITED STATES 



Commercial relations between a market economy and a centrally- 

 planned economy with a state trading monopoly pose problems of 

 effective administration and may place the United States at a disad- 

 . vantage. 



Most Soviet-Japanese trade transactions are on a Soviet trading 

 agency — Japanese Corporation basis and are effectively resolved in 

 kind. This Soviet pattern of bilateral trade, accepted not only by 

 Japan but also by European countries, will inhibit a shift of balance- 

 of-payment surpluses from those industrial nations' accounts which 

 could otherwise help to balance possible Soviet deficits on the U.S. 

 account. U.S. trade too is thus likely to be tied to bilateral relations 

 with the Soviet Union. Similarly, these bilateral criteria, in coopera- 

 tive ventures with other industrial nations like Japan, may in turn 

 restrict the volume of hard-currency earnings available to support a 

 negative Soviet trade balance with the United States. 



One approach to trading with the Soviet Union might be the estab- 

 lishment of a governmental trading agency like the Canadian Grain 

 Board. There might also be other agencies, such as a Computer Board. 

 It is of mutual interest to have the most knowledgeable technical 

 people on each side working directly with each other. But there is a 

 possibility that all suppliers would not have equal access to the Soviet 

 market. The Occidental Petroleum Corporation made a commercial 

 agreement without Government help or knowledge. Is this to be dis- 

 couraged? Government participation runs the risk of Government 

 favoritism, whereby one or more companies might become "chosen 

 instruments.'' Although such a restraint of trade, under special cir- 

 cumstances where the national interest is involved, might perhaps be 

 permitted by U.S. law, there might also be serious reservations about 

 it in the Congress and in the country as a whole. 



The U.S. Government might provide improved information serv- 

 ices for U.S. business interests to keep them informed on economic 

 conditions and market prospects in the Soviet Union. It is also impor- 

 tant to take measures to protect U.S. citizens and their investments 

 in the Soviet Tnion. Even formal treaty negotiations on the status 

 of U.S. citizens in the Soviet Union, similar to "Status of Forces" 

 agreements on U.S. troops abroad, might be considered. For example, 

 the U.S. grain exporters and computer corporations should have 

 specific governmental connections with whom they may share 

 information. 



