582 



legislation to the first session of the 93rd Congress to extend most- 

 favored-nation treatment to the Soviet Union. The agreement enters 

 into force only after such legislation is enacted. While the issue of 

 reciprocity was not explicitly addressed in the agreement, perhaps in 

 deference to Soviet views, the agreement included several features 

 which were undoubtedly related in part to the MFN question. The 

 Soviet agreement to repay the Lend-Lease debt, the assurance that 

 business facilities would be provided in Moscow for American busi- 

 nessmen, and the understanding that the level of U.S.-Soviet trade 

 would expand rapidly may all be interpreted as reciprocal concessions. 



These provisions are intended to assure that the United States will 

 receive reciprocal benefits in future U.S.-Soviet economic relations. 

 The new business facilities to be established in Moscow for U.S. busi- 

 nessmen should provide them with some of the necessary trade infra- 

 structure to expand their operations in the Soviet Union. Furthermore, 

 the understanding that the level of U.S.-Soviet trade will triple oyer 

 the next three years and the Soviet Government's announced intention 

 to place "substantial" orders for U.S. machinery, plant and equipment, 

 agricultural products, industrial products, and consumer goods portend 

 considerable benefits for U.S. exporters. 



Soviet leaders also expect considerable economic benefits from MFN 

 treatment. Some Soviet exports currently face very high U.S. tariffs 

 which would be substantially reduced if the U.S.S.R. received MFN 

 status. The Soviet Union will need to increase its exports to the United 

 States if it is to pay for the American technology and agricultural 

 products it apparently needs. The effect of MFN treatment on Soviet 

 exports is uncertain. In the past, most Soviet exports to the United 

 States have consisted of raw materials and primary products. Such 

 goods are largely unaffected by the absence of MFN treatment because 

 the rates of duty in the U.S. tariff schedules tend to escalate according 

 to the degree of processing. A recent U.S. Tariff Commission study 

 suggests that, with the current structure of exports by the Soviet 

 Union to the United States, no significant increase in exports would 

 result from MFN treatment. 5 '- 



However, if the structure of Soviet trade should change — for ex- 

 ample, if some industrial products of advanced technology and Soviet 

 manufactured goods were available for export— MFN status might 

 bring significant advantages. Given the Soviet Union's chronic need 

 for hard currency, Soviet foreign trade enterprises might be expected 

 to take advantage of lower tariff rates and make a vigorous effort to 

 export machinery and manufactured goods to the United States. In 

 some lines, this effort might he successful. For example, businessmen 

 in the United States and other developed countries have already shown 

 mi interest in advanced Soviet metal-working machinery, machine- 

 building and electronics industries, electrical engineering technology, 

 mid other areas. Furthermore, some low and medium quality machin- 

 ery and consumer manufactures may become competitive in segments 

 of the U.S. market. 



O2 .\nton P. Mnlisli. Jr., United States-East European Trade Considerations Involved in 

 Granting MostFavored-Nation Treatment to the Nations of Eastern Europe (Washington, 

 D.C. : United States Tariff Commission, 1972). 



93 See above, p. 30. 



