587 



most Communist countries, including the Soviet Union. Such ship- 

 ments are prohibited unless a validated license (for shipments from 

 U.S. ports) or an authorization issued by the Assistant Secretary (for 

 shipments from foreign ports) has been obtained. 



Soviet ships are also affected by U.S. restrictions on shipping to 

 Cuba and North Vietnam. Foreign vessels which call on Cuban or 

 Xorth Vietnamese ports are not allowed to carry U.S. Government- 

 financed cargoes shipped from U.S. ports (pursuant to National 

 Security Action Memoranda No. 220, dated February 5, 1963, and 

 No. 340, dated January 25, 1966). This restriction applies to Com- 

 modity Credit Corporation-financed grain shipments to the Soviet 

 Union. Moreover, the sale of petroleum fuels and other petroleum 

 products to vessels and aircraft which have recently called on, or will 

 soon be calling on, Cuban or North Vietnamese ports is prohibited. 



Until recently, Soviet merchant shipping in U.S. waters was severely 

 restricted by various port security regulations. For example, Soviet 

 ships were allowed to call on only 15 U.S. ports and were required to 

 give 14 days notice in advance. (The Soviet Union maintained similar 

 restrictions on U.S. shipping.) These restrictions were considerably 

 lightened by the Soviet-American maritime agreement signed on Octo- 

 ber 14, 1972. The agreement opened ports in each country to the ships 

 of the other upon four days' notice. Soviet ships are now able to call 

 at East and Gulf Coast ports for the first time since 1963. 



The maritime agreement also resolved the difficult problem of deter- 

 mining U.S. and Soviet shares of the maritime business between the 

 two countries. In the 1963-64 grain sales to the Soviet Union, shipping 

 was a major problem. Reacting to domestic political pressures, Presi- 

 dent Kennedy stipulated that 50 percent of all U.S. grain sold to the 

 Soviet Union must be shipped in American vessels. This provision 

 proved to be a barrier to further grain shipments. Because of the high 

 cost of U.S. shipping, U.S. grain shipments to the Soviet Union vir- 

 tually ceased. President Nixon rescinded the 50 percent requirement 

 in June 1971. The maritime agreement stipulates that each country's 

 ships will have the opportunity to carry at least one-third of the car- 

 goes between the tAvo countries. Third country ships can compete for 

 the remaining third. The agreement also provides that the Soviet 

 Union will have to pay shipping rates that are higher than the world 

 average for goods transported on American ships. 



Soviet Institutions and Practices 



A major barrier to expanded U.S. -Soviet economic relations is the 

 unfamiliarity of U.S. businessmen with Soviet foreign trade tech- 

 niques, with Soviet import needs and export possibilities, and with 

 provisions of Soviet law pertaining to foreign trade matters. Serious 

 problems inevitably arise from any attempt to widen commercial ties 

 between two countries with very different political, economic, and 

 legal systems. The U.S. -Soviet trade agreement has provided a mech- 

 anism for resolving some of the problems and facilitating commercial 

 exchanges between American companies and Soviet foreign trade 

 organizations. Other important problems remain to be solved. 



