592 



deficiency. Business facilities for U.S. companies and a large trade 

 center are to be built in order to facilitate U.S. -Soviet foreign trade 

 transactions. 



Another set of problems arising from Soviet institutional arrange- 

 ments is related to the necessity of dealing with state agencies. As dis- 

 cussed above, trading with a government agency raises a number of 

 difficult legal problems. In addition, state trading can degenerate into 

 politically motivated trading. A state trading monopoly may reward 

 or punish a trade partner for purely political reasons. Among the 

 political devices at the state trading monopoly's disposal are market 

 disruption, preemptive buying, discrimination against imports, and 

 denial of exports. As the State decides what to buy and sell on a some- 

 what arbitrary basis, the existence of such practices may be difficult to 

 prove and counteract. 



Prospects for Removal of Barriers to U.S.-Soviet Trade 



A definite trend toward trade liberalization has characterized recent 

 Soviet-American economic relations. U.S. policy changes with regard 

 to exports, imports, credits, and shipping arrangements have removed 

 many of the artificial barriers to normal economic relations with the 

 Soviet Union. Furthermore, the maritime and trade agreements and 

 the agreement on the Soviet Lend-Lease debt have demonstrated a 

 willingness on the part of both countries to make concessions on many 

 substantive matters. 



The Nixon Administration took another step toward normalization 

 of U.S.-Soviet trade relations when it submitted the "Trade Reform 

 Act of 1973" to Congress on April 11, 1973. 107 Among the measures 

 in the comprehensive trade legislation were two important sections 

 which are applicable to U.S.-Soviet trade. One proposal would grant 

 the President the power to extend most-favored-nation treatment to 

 countries not now enjoying it (including the Soviet Union). Another 

 would repeal the Johnson Debt Default Act, thus removing another 

 barrier to U.S.-Soviet credit operations. 



Some innovations and experiments in the Soviet foreign trade sys- 

 tem may in the long run help to normalize U.S.-Soviet commercial 

 relations. Export councils composed of government officials and in- 

 dustry representatives now act as a liaison between domestic industries 

 and foreign trade enterprises. This development could alleviate some 

 of the problems confronted by the foreigner who deals with the Soviet 

 foreign trade apparatus. A small percentage of Soviet foreign trade 

 is now conducted by local officials in border regions of the Soviet 

 Union. Such decentralized state trading is now taking place between 

 outlying regions and neighboring countries including Japan, North 

 Korea, Iran, Turkey, and several European countries adjoining the 

 Soviet Union. 108 Material incentives have been introduced to encourage 

 production for export. Industrial enterprises which successfully fulfill 

 their export targets are allowed to use part of their foreign currency 



107 U.S. House of Representatives. Committee on Ways and Means. Trade Reform Act of 

 197 S (Washington, D.C. : U.S. Govt. Print. Off., 1973). 



108 Keith Bush, "A New Impetus for Border Trade," Radio Liberty Dispatch, August 21, 



