Trade With Russia

All signs indicate that the free world seems bound to accept a prolonged state of coexistence with the Soviet Union, in fact if not by choice. Consequently, both the free nations and the Soviet bloc should seek to ease the tension to some degree; to relieve the strain and precariousness of an extended, perhaps indefinite period of tacit hostility; and to create, if not amiable relations, at least a Cold Peace not poised upon a sensitive trigger. Improved East-West trade relations, especially in United States-Soviet commerce, would be a large step in this direction.

Improved trade with the Soviets, if it is possible, would have permanent benefits. It would, certainly, lead to greater contact and communication with the Soviet Union, which could develop into a more commodious and less explosive world atmosphere. In addition, it would remove many restrictions on our allies' trade with Russia. This would remove many restrictions on our allies' trade with Russia. This would aid in sparking the economies of Western European and other non-Soviet nations, whose ruble-gap is far smaller than their current dollar-gap. Closer to the Soviet Union in distance and economic condition, these countries would benefit greatly from being able to extend their trade with Russia. Italy and West Germany, for example, could find markets for their goods in the Soviet bloc that they cannot find in the U.S. or in Western Europe. Finally, an American policy of extended trade with the Soviet Union would allow so-called "neutral" or non-committed nations, such as India, to breathe more easily. A relaxed East-West atmosphere would grant these countries a freer radius of action, and allow them to remain neutral with less fear of alienating either the U.S. or the U.S.S.R.

Some critics argue that increased East-West trade would allow Russia to divert resources from consumer production to industrial uses, by enabling her to import many consumer items. This, however, is not a vital consideration. Estimates of Russia's gross national product run to about $125 billion (converted to U.S. dollars and purchasing power). Of this, about fifty percent ($62.5 billion) probably goes for consumer items, thirty-five percent to capital investment, and fifteen percent to military uses. If the U.S. were to increase its trade with the U.S.S.R. to the tune of, for example, $200 million, which is practically a 200 percent rise, and if this trade were primarily in consumer goods, it would make a slight difference in the amount of resources the Kremlin could divert to industrial uses. If the Presidium seeks to sacrifice consumer convienience to industrial growth, it will do so regardless of this small trade increase.

Commerce Declines

Rehabilitating commercial relations between this country and the Soviet bloc is made difficult primarily by three factors: American export controls, Soviet purchase demands, and reticence on the part of U.S. business interests. A glance at the statistics illustrates how these conditions have decreased U.S.-Soviet trade.

In 1954 the United States exported about $15 billion worth of goods, of which about one-third went to Western Europe. In comparison, American exports to all Red-controlled countries totalled only about four million, of which approximately $200,000 went to the U.S.S.R. United States exports in 1954 to the Soviet bloc represent a drop of about ninety-nine and a half percent from the 1947 level. Korea accelerated the fall. The materials which formed U.S. exports to Russia in 1954 were mainly such agricultural produce as fats and oils, hides, and cigarettes. In the same year, American imports from the Soviet bloc totalled something less than $37 million, compared with a West European-U.S. total of two and half billion. These imports consisted primarily of foodstuffs, furs and fertilizers. Imports did not fall as sharply since 1947 as did exports, but still, the 1954 figures indicate a decline of sixty-four percent.

Trade Barriers

The apparent dwindling of exports to practically nothing, and the great drop in imports from the 1947 level, which was not itself substantially high, resulted from the previously mentioned factors of controls, Soviet demands, and business reticence. United States export controls stem from the Export Control Act of 1949 and the so-called Battle Act of 1954 (a product of the Korean War), which call for licensing controls on most non-consumer goods, and embargoes on most non-consumer goods destined for the Soviet bloc. In August, 1954, the embargo list was shortened slightly to put tighter control on a smaller number of "strategic" goods. Products that clearly have military end-uses are categorically restricted from exportation to the Soviets. The main difficulty arises with manufactured goods primarily employed for civilian purposes which might, however, make an important contribution to Soviet military potential if made available. The government determines what is "strategic" by several criteria: the present and prospective end-uses of the product in the U.S.S.R., its importance to Soviet military power, alternative Soviet sources or substitutes, the extent of Soviet efforts in recent years to obtain the material, the degree to which the product would enhance Soviet technological development, and the extent of American and allied sources of the product. The Commerce Department calls this a "more selective, more meaningful, and more effectively enforceable control coverage." In addition to specifically prohibited items, all goods require licenses for export to the Soviet bloc.

With a license, American exporters can deal with the Soviets in consumer items, semi-manufactured goods, agricultural produce, and similar products. Russia, at least the Kremlin, does not, however, demonstrate a desire for these goods. Official Soviet purchase demands include raw materials and capital goods which are specifically embargoed in the U.S. Red Square, claiming a goal of economic self-sufficiency, does not request what American exporters are permitted to send. Estimates show that the Soviet people sorely need consumer and agricultural goods. Their masters, unfortunately, are not primarily interested in these needs. They demand only articles necessary for rapid industrial and military expansion.

In addition to U.S. export controls and Soviet purchase demands, the reticence of American business plays a significant part in keeping U.S.-Soviet trade negligible. This reluctance results partly from public opinion, from lack of commercial representatives here and abroad, from the generally recognized instability and undependability of trading with the Soviet bloc, and from an unencouraging government attitude.

Removing Obstacles

The question then arises, how can increased U.S.-Soviet trade be accomplished? Barriers to such commerce will, obviously, have to be lowered. The U.S. Government should loosen its classification of "strategic" goods, and limit that category to those materials which are clearly and in the short-run directly applicable to Soviet military uses. In addition, the U.S. will have to specify that in order to receive the newly-released materials, the Kremlin will also have to accept consumer goods, and those in excess of other commodities. Some ratio can be created relating the amount of newly-released capital or raw goods to the amount of consumer goods Russia purchases. That is, the U.S. would sell to Russia previously "strategic" goods only if the Soviets agree to import a greater amount of consumer goods. In this way, the U.S. can equate Soviet purchase demands with American exportable items, thereby selling them what they are willing to buy. Exporters, subsequently, should not be discouraged from Soviet trade. Such trade would be profitable and possible for both East and West, resulting in disadvantage for neither but benefit for both.

In the long run, such a policy would prove far more useful than dangerous. It would improve world relations more than summit meetings and Martinis. Extended East-West trade would invigorate economies of our allies, and would also ease the pressure on "neutral" countries. It would alleviate much tension and discourage hasty or precipitous action by either side. Coexistence seems here to stay. Resuming a freer flow of East-West commerce would greatly improve the condition of the de facto situation that the world appears destined to accept for an inestimable length of time.