566 



Its enlarged fleet gives the Soviet Union the capacity to earn sub- 

 stantial sums of hard currencies. Since the early 1960s. Soviet mer- 

 chant shipping has made net contributions to the Soviet balance of 

 payments with hard currency countries. One estimate, for example, 

 put the Soviet merchant marine's net hard currency earnings in li)6fi 

 at 106 million rubles. 76 Its earning capacity is undoubtedly growing. 

 However, the Soviet fleet's contribution to its balance of payments in 

 Soviet-American trade will be limited by the terms agreed to in the 

 recently signed maritime agreement. The agreement stipulates that 

 vessels of each country would have the opportunity to carry one-third 

 of all cargoes between the two countries. Moreover, the Soviet Union 

 contracted to pay higher than world rates for shipments of agricul- 

 tural goods in U.S. ships. 



MULTILATERAL RELATIONS 



Although the Soviet Union has shown a preference for bilateral 

 trade in the past, it could conceivably attempt to use multilateral bal- 

 ancing arrangements to alleviate its negative trade balance with the 

 United States. The Soviet Union has enjoyed a favorable balance of 

 trade with some of the major trade partners of the United States, 

 including Japan and the United Kingdom. Ideally, it could transfer 

 its positive balances with those countries to pay for needed imports 

 from the United States. A precedent for multilateral balancing in 

 East-West trade is the pattern of Soviet trade with the Sterling Area. 

 The Soviet Union has used its earnings from trade with the United 

 Kingdom to buy from other countries in the Sterling Area. 



However the potential for multilateral balancing arrangements is 

 limited at present. The Soviet Union does not have many positive 

 balances in its trade with hard-currency countries, partly because 

 some hard-currency countries are unwilling to accept deficits in then- 

 trade agreements with Communist countries. Generally, the Soviet 

 Union runs an overall deficit in its trade with Western industrial 

 countries. 



COPRODUCTION AGREEMENTS 77 



New forms of industrial cooperation between Soviet state enter- 

 prises and Western firms help the Soviets to import high-technology 

 machinery and equipment without large outlays of hard currency. 

 Most joint ventures in the Soviet Union involve the technical and 

 financial participation of Western firms in the exploitation of natural 

 resources or the construction of plants. The Western partners generally 



78 Robert E. Athay, The Economics of Soviet Merchant-Shipping Policu (Chapel Hill: 

 The University of North Carolina Press, 1971), p. 6S. 



77 A distinction Is sometimes made between the terms "reproduction arrangement" and 

 "joint venture" on the grounds that the latter involves equity ownership and more control 

 by the foreign investor. In this paper, the terms are used synonymously. 



