588 



PROBLEMS OF SOVIET LAW AND TJ.S.-SOVIET TRADE 



By Soviet law, a foreign visitor to the Soviet Union is accorded the 

 same legal rights and obligations that any Soviet citizen enjoys. In 

 actual practice, foreign businessmen enjoy considerably more rights, 

 such as private property ownership privileges denied to the average 

 Soviet citizen. The rights of foreign corporations are somewhat more 

 nebulous. The trade agreement stipulates only that American corpo- 

 rations "shall be recognized as having a legal' existence" in the Soviet 

 Union. The Soviet legal code adds little to this. It provides only that- 

 foreign juridical persons" (a term that presumably includes U.S. 

 corporations) may conclude foreign trade transactions with officially 

 designated Soviet foreign trade organizations. 101 



Issues involving Soviet accreditation of foreign corporations, banks, 

 and other commercial institutions are now being negotiated. Currently, 

 accreditation confers no special rights, such as the right to deal di- 

 rectly with Soviet enterprises or to travel freely in the Soviet Union. 



In recent years, the Soviet Union has entered into coproduction 

 agreements with Japanese and West European firms. Under such 

 arrangements, foreign companies generally provide machinery and 

 equipment and technical assistance for Soviet projects on long-term 

 credit and receive a share of the output in return. However, direct 

 foreign investments in the sense of equity ownership would appear to 

 be ruled out by Soviet law and by recent Soviet practice. Since the 

 early 1930s, the Soviet Government has prohibited agreements which 

 would allow foreign firms to participate in management or in control 

 over profits of economic activities inside the Soviet Union. A resolution 

 of the All-Union Soviet of People's Commissars on December 27, 1930, 

 discontinued the practice of granting foreign concessions for manufac- 

 turing and mining operations in the Soviet Union. 102 Furthermore, 

 private ownership of the means of production is prohibited by the 

 Soviet Constitution. 



If future joint Soviet-American projects require very large outlays 

 of American private capital, the usual coproduction arrangement may 

 prove to be inadequate. U.S. companies are unlikely to make huge in- 

 vestments without some managerial control. Soviet willingness to com- 

 promise on this issue is one of the important intangibles in future 

 Soviet-American relations. In a recent interview with the West 

 German magazine Der Spiegeh Dzherman Gvishiani, deputy chairman 

 of the Soviet State Committee for Science and Technology, suggested 

 that there were no basic obstacles "in principle" to the establishment 

 of foreign owned property in the Soviet Union : 



. . . Even now in our country the trend for multinational property is emerg- 

 ing. For instance, we are ready to set up and organize joint research institutes. 

 In Dubna we have the research institute for atomic energy, which is the property 

 of the countries participating in it. I think that this is no goal in itself. What 

 really matters is to find a favorable form of cooperation with the partners. 103 



However, he added that he saw no practical need for such arrange- 

 ments at the present time. lc 



104 



101 James Henry Glffen, The Legal and Practical Aspects of Trade With the Soviet Union 

 (New York, Praeper Publishers, 1071), pp. 1!">1-152. 



"'-' Sutton, op. Clt.. p. 17. 



m Dzherman Gvishiani. interview with Der Spierjcl (May 1, 1972, pp. G7-73), translated 

 In Foreign Broadcast Information Service (Western Europe), May 3, 1972, p. U3. 



,n « Ibid., p. U2. 



