apparatchiks and entrepreneurs: u.s.-soviet economic relations

Apparatchiks and Entrepreneurs: U.S.-Soviet Economic RelationsAuthor(s): Raymond VernonSource: Foreign Affairs, Vol. 52, No. 2 (Jan., 1974), pp. 249-262Published by: Council on Foreign RelationsStable URL: http://www.jstor.org/stable/20038047 .

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APPARATCHIKS AND ENTREPRENEURS: U.S.-S0VIET ECONOMIC RELATIONS

By Raymond Vernon

IF the world should erupt before these words are in print, the fault is unlikely to lie with the policy of d?tente. So far, the

advantages of d?tente have been somewhat more evident than the costs. The capacity of the two superpowers to communi cate effectively in the white heat of the Middle East crisis, for

instance, must surely be counted as a significant dividend. The policy of d?tente, however, is extremely vulnerable. It is

exposed to the possibility that differences such as the Middle East

imbroglio may prove too large to be contained. And it is exposed to another source of peril?less obvious but no less powerful? namely, that the dividends from d?tente, including the economic

dividends, will be distributed between the parties in a grossly lopsided way.

During two decades of cold war, the economic contacts be tween the United States and the U.S.S.R. were reduced to a bare

minimum. On one side of the iron curtain, the Soviet Union sat sullen and withdrawn. On the other side, the United States was

busy imposing an Orwellian mesh of bureaucratic controls to choke off any initiatives that its own businessmen happened to offer.

On the surface, the objective of the U.S. controls was to pro tect or advance the security of the United States. But even a pass ing familiarity with these controls suggested that other standards also were being applied. At times the U.S. bureaucracy seemed to be screening all transactions by one simple criterion: How

would an ignorant, though well-meaning, patriotic Congressman react? Accordingly, exports were prohibited and imports dis

couraged even when the effect on U.S. security seemed remote.

The Soviet bureaucracy was treated to a dress rehearsal of what would happen if an embargo were applied by force of arms, and one can be sure that it profited from the rehearsal.

Among the various dividends that d?tente has yielded is a reduction in the masochistic impact of the U.S. restrictions on

East-West transactions ; no tears need be shed over that develop ment. But even as the United States moves off one set of doubtful

policies and dubious practices, it moves onto another set that may



250 FOREIGN AFFAIRS

be almost as undesirable. Though our restrictions of the cold-war

period did not serve U.S. interests well, it does not follow that the simple removal of such restrictions will serve our interests

much better. The distribution of the economic benefits from d?tente may be so unbalanced as to threaten the process of d?tente itself. While welcoming the thaw in economic relations with the

Soviet Union, I have always been troubled by the possibility that the United States might try to conduct those relations through the same laws, regulations, and institutions as they have applied to Canada or Italy or Taiwan. Concepts such as tariff protection, anti-dumping laws, most-favored-nation treatment, currency con

vertibility, and patent licensing have meanings that differ ac

cording to systems and circumstances. These concepts, and the

institutions associated with them, have evolved through trial, error, and adjustment, among nations that shared certain com

mon characteristics. Eventually, the application of these concepts in international economic relations produced a delicate equilib rium that like-minded countries were prepared to accept. Other kinds of economic systems, meanwhile, developed other rules of the game to govern their economic relations. Eastern Europe's economic bloc, COMECON, for instance, is based on rules and institutions quite unlike those in the West, yet quite compatible

with centralized trading structures. The use of concepts and institutions that are incompatible or

incongruous in relations between the United States and the Soviet Union generates a double risk. In simple economic terms, the

United States is likely to get less out of the relationship than it now expects. If that happens, the fragile foundations on which the mood of d?tente rests are likely to be burdened by still an other heavy weight, along with the conflict in the Middle East, the frustrations of the slow-moving security and disarmament

conferences, and other such difficulties.

II

At the risk of belaboring what is already known, some critical distinctions between the United States and the Soviet Union, bearing especially on their approaches to international economic

relations, should be stressed.

Stated simply?perhaps too simply?the prevailing rule of the U.S. government relating to transactions with the rest of the



?.S.-SOVIET ECONOMIC RELATIONS 251

world is that anything is permitted unless it has been restricted

by the state. The Soviet rule is just the reverse : nothing is per mitted unless it is initiated by the state.

In practice, of course, the difference in approach appears much less obvious. Using their various powers, U.S. authorities restrict some imports through tariffs and quotas, encourage some

exports through subsidies and credits, hamper some international

capital movements through taxes, and prevent the immigration of some labor. The Soviet authorities, for their part, display the

Moskvitch in Geneva, invite Pepsi-Cola's president to Moscow, and offer patent and copyright benefits in the U.S.S.R. to foreign inventors and authors. Is the gap not reduced thereby to manage able proportions?

The answer is no, not by any stretch of the imagination. In the first place, the capacity of U.S. interests to make contacts

within the Soviet economy is still brutally circumscribed, and the actions that U.S. businessmen can take on Soviet territory are

narrowly constrained. Besides, a fundamental difference condi tions the behavior patterns of the public authorities in the two countries. The U.S. government does not ordinarily buy or sell

anything; its role is to encourage or restrict buying and sell

ing by others. In the United States, therefore, it is for Occidental Petroleum and Pepsi-Cola to propose, while the apparatus of

government merely inhibits or assists. In the U.S.S.R., the deci

sion-making process also has its ambiguities and its strife. But

basically the causal flow is reversed ; once the apparatus of the Politburo and the Party has decided what is in the interests of the country, the role of the Soviet manager is to carry out the

requirements of the plan. He may grouse or evade, but his re

sponsibility is unequivocal. The U.S.S.R., in short, is a command economy, in which the

managers of productive facilities are normally charged with

responding to national requirements framed at the center. Those commands as a rule are couched in physical terms: to produce so many units of steel or shoes, using the ore or coal or leather that is being provided; to earn so much foreign exchange by exporting so much of the planned production ; and so on.

The implications of the differences between the United States and the Soviet Union are pointed up in many ways. The manner in which each country is wrestling with the present energy crisis illustrates the inherent difference. The approach of the U.S.



2^2 FOREIGN AFFAIRS

government in dealing with its energy problems is mainly to

exhort, to cajole, to bribe, to seduce, and only in the final crunch to restrict the country's enterprises. The shale-oil deposits of

Colorado may eventually be developed, but only when entre

preneurs decide that the combination of threats and promises is

enough to move them to action. The approach of the U.S.S.R. is to set its managers and technicians to the task of developing Si beria's resources, without the option of second-guessing; threats and promises no doubt play a role here, too, but a wholly differ ent role. It is not clear which approach better serves national interests and national values, but it is unambiguously clear that

they are profoundly different systems. Without thinking very much about it, U.S. policy-makers have

shaped their policy tools in international transactions?tools such as the tariff, the subsidy, and the interest equalization tax? on a basic assumption consistent with the U.S. system, namely, the assumption that domestic costs and prices play a causal role in international transactions. And the United States has helped create international codes, such as those of the General Agree

ment on Tariffs and Trade and the International Monetary Fund, based on the same set of assumptions. But in projecting the behavior of the U.S.S.R. in international economic relations, the assumption that domestic costs and prices as we know them

figure in such transactions would be quite fallacious. One kind of problem is ideological. For years, the Soviet

Union has felt obliged on Marxist principles to disregard the cost of capital as an input to production ; products like alumi

num, therefore, were much cheaper in Soviet eyes than capital ist calculations might have suggested. But a more profound dif

ficulty also exists. It stems from the fact that in the U.S.S.R. the

fixing of prices is an instrument of policy. The price of labor is determined in the light of a given set of social objectives, the

prices of various industrial materials are established in response to still another set of objectives, the prices of consumer products to still another. The managers of enterprises are gauged mainly by their capacity to satisfy certain physical norms. In those cir

cumstances, the meaning of any calculation of cost and price from the viewpoint of an enterprise economy such as the United States is largely lost.

Because the U.S.S.R. sets its prices in order to serve its national

objectives, the prices and costs of the enterprise are not the fac



U.S.-SOVIET ECONOMIC RELATIONS 253

tors that determine the import and the export patterns of the Soviet Union. The government bureaus that administer the

country's program of international trade can be separated from

the enterprises that produce the goods, without impairing the function of either. The trade bureaus have their goals, their in

centives, their restraints. But those bureaus are not guided or stimulated to achieve their goals by the domestic costs of the

producing enterprises.

Thus, an economy of this sort ordinarily has no need for a

system that links internal prices with the prices of the outside world. Accordingly, the international exchange rate for the ruble is of no consequence in determining the Soviet Union's interna tional transactions. The price of wheat inside the Soviet Union

may be very cheap in relation to the price of automobiles, at least by the standards of the rest of the world; yet that fact creates very little strain for the U.S.S.R. Its agents are still free to buy wheat and sell automobiles in foreign markets on a pat tern that would seem perverse or impossible for most countries in the West.

Ill

The Soviet system of production and trade has evolved over the past five decades through a continuous interaction between the lessons of experience and the requirements of ideology. Still, as the patterns evolve, there are some enduring elements worth

noting. One of these elements has been the execution from time to time

of a vast exercise in the absorption of selected Western tech

nologies. That phenomenon made its first appearance in the

1920s and early 1930s, as the Russians used firms like Ford, Du

Pont, and General Electric to catch up on the technology of the

production of trucks and tractors, heavy chemicals, and radios. It came to the surface again in the 1950s, with a great surge in the acquisition of plants and processes to produce fertilizers and

synthetic fibers. And it is appearing once more in the 1970s with the wholesale absorption of the technologies of automobile pro duction and selected branches of the electronics industry.

These technological splurges are no symptom of any lack of Soviet technical sophistication. On the contrary, the achieve

ments of the Soviet Union, both in the pure sciences and in indus trial and military applications, have been quite remarkable.



254 FOREIGN AFFAIRS

Other factors seem to explain the policy. One is the apparent fact that though the best of Soviet scientists and engineers can match those of any other country, the supply of skills just below the top still seems relatively thin. Accordingly, Soviet industry and Soviet technology often give the impression of conforming to

Herman Wouk's unkind description of the U.S. Navy: a system designed by geniuses to be run by clods.

One way of looking at the Soviet Union's periodic orgy in the acquisition of foreign technology, therefore, is that it is buy ing the embodied output of the middle-level scientists and engi neers of the West, paying with its more abundant natural re sources or semi-skilled labor. As between creating its own in

digenous technologies or buying them ready-made from the

West, the purchase route could easily be the better bargain. This is especially likely as long as the U.S.S.R. can afford to delay its

acquisitions in any branch of industrial technology until the time when a number of Western firms are in the field and can

be counted on to compete for the opportunity to supply the needed package of machinery and technology.

There is another way of looking at the technology acquisitions of the Soviet Union. In such an economy, it may be that large scale, lumpy, discontinuous changes in plant and technology are

more efficient than the small incremental ones that character ize Western economies ; indeed, no other pattern may actually be

possible in the U.S.S.R. as long as the center retains its jealously guarded powers. If significant questions of technological change have to be addressed at the overburdened center of the Soviet

system, the organizational costs of debating and analyzing any policy choice are bound to be very high; hence, the decisions themselves had better be large. Besides, in a system that is de vised by geniuses to be run by lesser men, there is always need for the extensive use of standard operating procedures; hence, uniformity and standardization have a tremendous virtue.

Though the factors that underlie the Soviet pattern may be

quite rational, the result has been a disconcerting pattern of fits and starts in Soviet purchases abroad. The discontinuities in the

patterns of Soviet acquisitions are exacerbated by the fact that the U.S.S.R. generally relies on foreign sources only for the

acquisition of prototypes, not for expansion and replacement. In

practice, technology acquired by any Soviet unit from abroad can generally be appropriated by other units in the Soviet Union




without further cost. Accordingly, once the Soviet Union has

acquired the necessary prototypical machinery and technology, duplication from domestic sources may well be the optimal policy. That source of discontinuity, therefore, could well be another logical aspect of the system.

Abrupt shifts are to be anticipated from time to time not only in the imports of the Soviet Union but also in the export mix.

This is not because the Soviet officials concerned with trade

policy are capricious or irresponsible; it is rather because of the

relatively centralized character of the decision-making process. In the United States the decision whether to export is made in

dependently by the various suppliers, each taking into account its own costs, expectations, and strategies; this leads to diffused

patterns of behavior. In the Soviet Union, on the other hand, the decision is generally one for central determination, leading to more angular shifts in trade patterns.

In practice the distinction between the U.S.S.R. and the United States may not always seem quite that clear. The U.S.

government, after all, has been known to embargo the export of some scarce commodity?witness its sudden imposition of an

embargo on soybeans for several weeks in the summer of 1973. However, the soybean case, far from blurring the distinction be tween U.S. practice and that of the Soviet Union, points up how

profound the differences in the two systems continue to be. The American gaucherie, it will be remembered, generated a brou haha of monumental proportions among foreign buyers of soy beans, precisely because the idea of an abrupt embargo by the

U.S. government was not within the range of normal expecta tions on the part of buyers. Purchasers of Soviet products, on the other hand, pursue their trade relations with exactly the

opposite expectation ; nothing is assured from the Soviet Union until it has actually been released, and continued releases are not to be expected if Russia sees no positive gain in the transaction.

So far, the Soviet Union has not been a critically important market or a key supplier to the United States and Western

Europe. Though Soviet trade has risen at an impressive rate in recent years, the totals themselves remain fairly small. Abrupt changes in Soviet trading patterns, therefore, have not been

deeply unsettling for the West, being easily lost in the vast vol umes of imports and exports among the advanced countries them selves. One outstanding exception to that generalization?an



256 FOREIGN AFFAIRS

exception not likely to be forgotten for some years to come?has been the huge program of grain purchases instituted by the So viet Union in 1972. That abrupt surge in demand threw Western

grain markets into a succession of wild gyrations from which

they are unlikely to recover for some seasons to come. But on

the record to date, this kind of impact has been the exception, not the rule.

The problem lies mainly in the future. Given the levels of trade that one hopes for in a period of d?tente, do the more-or less open economies of the West have to guard against the abrupt surges in supply and demand that seem possible under the Soviet

system of foreign trade? It may be that one is entitled to a cer

tain optimism on this score. After all, the Soviet Union's willing ness to discuss long-term deals for the development and export of Siberia's gas resources and to discuss long-term technological interchange agreements with some Western firms does suggest a new durability in Soviet trade relations, rarely glimpsed in the

past. But these remain fragile signs. One has to assume some

quite profound alterations in the Soviet trading system before such signs add up to any strong sense of organic change. And the

required shift could hardly take place without a major ideolog ical struggle in the arcane chambers of the Politburo and the

Party. The question of abrupt changes in trade patterns takes on a

special importance because the economies of the United States, Western Europe, and Japan have managed to lower their trade

barriers so dramatically over the past 25 years. For all the talk

about resurgent protectionism, the economies of the West are

relatively exposed to the risk of sudden surges in either supply or demand that arise in any one of them. To let loose a strongly disequilibrating source of supply or demand anywhere in the

system is to involve all the members of the system and to increase

the risk that the trade restrictions which were so painfully dis

mantled in years past would have to be reimposed. The introduction of Soviet trade on a large scale in the West

suggests still another problem, namely, the possibility that such

trade will undermine agreements among the Western countries

such as those embodied in the General Agreement on Tariffs and Trade. Agreements of this sort generally place limits on the use of highly discriminatory and restrictive devices. As long as

Soviet trade has been small, nations of the West have been able




to handle their trade with the U.S.S.R. as an exceptional fea ture of their foreign trade system. From time to time, European nations have been known to reserve corners of their national markets for Soviet products, by applying de facto restrictions on

competing imports. At other times, state-owned enterprises in the West have in effect bartered materials with the Soviet Union on terms that seemed implicitly discriminatory against other sellers. In cases of this sort, other nations have generally turned a half-blind eye to the discriminatory and restrictive aspects that have sometimes been involved in such trade. Once the So viet Union has increased its trade beyond some critical mass, however, such a studied policy of tolerance could probably not be continued without imperiling the whole system.

IV

From the viewpoint of many Soviet policy-makers, the ob servations of the past few pages will seem out of focus, perhaps even distorted. Seen through Soviet eyes, the marketing policies of that country are simplicity itself: purchases and sales are

made at going market prices, neither more nor less. What differ ence does it make, therefore, that these transactions are unrelated to prices inside the Soviet Union? And how can these transac tions be thought of as disturbing to the markets of the Western economies?

The Soviet reaction is all the more understandable because it is based upon a long period during which the U.S.S.R. was no

more than a marginal force in world markets. For decades, the

imports and exports of the Soviet Union were sufficiently small so that the Russian traders in world markets could be thought of as price takers, not price makers. Occasional exceptions occurred, such as the Soviet disruption of the world's oil markets in the

1920s, a searing episode that stimulated the agreements among the leading oil producers which created the world oil cartel. A

pale shadow of that sort of market role was seen once again in the late 1950s, as Soviet oil appeared briefly on world markets; but this time, the Soviet propensity to cut prices and disturb

markets was tempered by experience. Shaving prices by only 10 or 15 percent, just enough to persuade some marginal buyers to shift their sources of supply, the U.S.S.R. managed to leave the

oligopoly price structure of the oil industry only slightly ruffled. As a general proposition, therefore, Soviet officials are right.



258 FOREIGN AFFAIRS

With the passage of the years, they have gained in experience and information. They have learned the classic strategies of mar

ginal suppliers who sell in oligopolistic markets : to cut the price only to the point at which retaliation will not be provoked, lest the reaction wipe out the oligopoly rent that was being shared

by all the sellers. Forbearance of this sort on the part of the So viet Union has been seen at various times in the recent past, not

only in oil, but also in diamonds, aluminum, tin, and other non ferrous metals. Indeed, in some instances, the Soviet Union has

made a point of choosing distributors in the West whose loyalty to the existing market structure would be above question in the

eyes of other sellers. What may not yet be clear to Soviet policy-makers, however,

is that their role as price takers rather than price makers can

only continue so long as they are very junior partners in the markets of the West. If the Soviet Union manages to bring its

foreign trade up to much higher levels, its role as a price taker will be imperiled. In the oligopolistic markets that prevail in metals and minerals, it is likely to find itself among the leading sellers, playing a critical role in determining whether competi tion or forbearance is to be the prevailing mood of the market.

At the same time, the Soviet Union's decisions as a buyer may prove important enough to generate major ripples all through the markets of the Western world.

Having stated the problem, however, I have strong doubts that

many Soviet policy-makers would be persuaded to take my formulation seriously. Indeed, in Soviet eyes, the very articula tion of the problem may be seen not as an effort to avoid bear

traps on the road to economic d?tente but as a provocation de

signed to terminate d?tente. One reason why Soviet policy-makers tend to shrug off any

serious discussion of these problems may be that they are to some extent the prisoners of their own perceptions. Though the more

sophisticated Soviet scholars have long since discarded their

early primitive analyses of the U.S. economy, they (and not they alone) still see the United States as held in thrall by monopoly capitalism. They see Alcoa or IBM or GE as elements in a

"superstructure," a system of governance in the United States which also includes the Pentagon, the State Department and the office of the President. When warfare breaks out between

Alcoa and Kaiser or between IBM and Honeywell, this is




seen as a quarrel among giants that will shortly be held in check

by the system. When antitrust proceedings are brought by the U.S. government against IBM or Exxon or GE or du Pont, this is interpreted either as a cynical political gesture to deceive the public, or a struggle among the interests for control of the

system, or, simply, as aberrant pathological behavior. In any event, the model of the monopoly capitalist state exercises great force in shaping Soviet views of the pertinent and the possible in relations with the United States. In short, though the analyses of the U.S. economy by Soviet scholars has become quite sophisti cated, the conclusions continue to be doctrinaire and primitive.

The seeming Soviet propensity to analyze U.S. economic be havior in terms of the monopoly model is probably enhanced

by the fact that so much of the Soviet Union's interaction with the Western world has been in the oligopoly industries. When

selling fur and timber to the West and when buying grain from the West, Soviet traders often confront?and occasionally exploit

?the phenomenon of a decentralized competitive market. But their larger and more important experiences are with the oligop olistic industries, as they sell oil and metals and buy factories and power plants on world markets. Moreover, given the pro

pensity of the U.S.S.R. to demand long-term credits in connec

tion with the purchase of capital equipment, the experience of Soviet buyers with government banking agencies is especially extensive. Small wonder that Soviet officialdom seems to see the

foreign trade of the West as being conducted on a basis very much like that of the Soviet Union.

V

What can be done to reduce the risk that U.S. interests may eventually feel victimized as a result of increased economic con tacts with the Soviet Union? When the question is raised with Soviet scholars as a problem which should be of mutual concern, it is generally turned away with a standard response: "Don't expect us to change our system simply to meet your needs." When the question is raised with U.S. business interests, it generally elicits responses that are not much more helpful.

One approach that is supported by some American business men is to suspend the U.S. antitrust laws and to permit U.S. business to confront Soviet monopoly with U.S. monopoly. That step, it is thought, will deal with at least one problem, that of



2?O FOREIGN AFFAIRS

confronting the Soviet monopoly with a united position. There is an obvious irony in the proposal: it is altogether consistent with the Soviet model of monopoly capitalism and with Soviet per ceptions of U.S. political power. Despite the fact that the pro posal is sometimes made from business quarters and despite the fact that it fits Soviet expectations, it is rather doubtful that the

proposal would serve its intended purpose. The assumption is that the antitrust laws are the main impediment to concerted action on the part of U.S. business. For my part, however, I am not at all sure Occidental could be persuaded to lie down with

Mobil, nor Honeywell with IBM, even if the antitrust laws were

suspended. So the problem of matching power with power might still remain.

Even if that difficulty could be mitigated or solved, two other difficulties of a much larger order would still remain: how to ensure that the business conducted by a state monopoly on the Soviet side and a private monopoly on the U.S. side was of a kind that served the interests of American society as a whole; and, further, how to incorporate the activity of the U.S.S.R. in a global system of trade and payments that was consistent with the interests of the United States and its friends.

Despite the existence of such a formidable array ?f questions, only one issue bearing on U.S. trade policy with the Soviet Union has been ventilated publicly so far?namely, whether the

U.S.S.R. should be granted most-favored-nation treatment in

the application of U.S. tariffs. As matters now stand, the U.S. tariff rates applicable to Soviet goods are considerably higher than those applicable to the same goods originating in other

parts of the world; the question is whether to eliminate that discrimination.

It is a reflection of our national innocence that this issue should have become the center of the debate over economic relations with the U.S.S.R. The most-favored-nation question may have

symbolic significance of a sort; but it is evident from one or two

serious studies of the subject that the substantive economic im

plications of extending most-favored-nation treatment to Soviet

products are trivial. For one thing, many Soviet exports are ad mitted to the United States free of any duty. Even where a duty is applied, however, it is unlikely to affect the Soviet decision to export. Under the Soviet system, it should be remembered, the usual cost-of-production calculations that an individual firm




would undertake do not apply, and Soviet trade officials can set their price at any level necessary to sell the product in the United States. Naturally, if U.S. tariff rates were prohibitively high, Soviet officials might hesitate about giving away so much to

acquire so little in net revenue. But the U.S. tariffs that apply to Soviet exports are generally not high enough to provoke that sort of reaction on the part of the Soviet Union.

For one thing, many of the products exported by the Soviet Union are counted as having a very low social cost, either be cause they provide a basis for populating the empty spaces of

Siberia, or because they are the result of errors in Soviet plan ning, or for similar reasons. Moreover, in light of the curious

preoccupation of Soviet officials to balance their trade in every major currency zone, sales are bound to be pushed in the United States if purchases are planned in that market. Accordingly, the

question of most-favored-nation treatment boils down mainly to how much revenue the U.S. Treasury will collect in duties on Soviet goods. If tariffs are high, the U.S. Treasury collects a bit more revenue; if tariffs are low, the U.S.S.R. pockets the difference.

On any reasonable assumption about the future level and com

position of trade, what is at stake in the most-favored-nation

question may be a few millions of dollars a year in government revenue, perhaps even a few tens of millions. This is no trivial

sum, but it is hardly the key question on which economic d?tente should turn. More to the point would be the question of how far the United States is prepared to centralize and control its trade

with the Soviet Union in order to ensure that the interaction be tween the two economies brings adequate benefits to the U.S. side. Though a simple relaxation of the antitrust laws may not

strengthen the U.S. capacity to increase its benefits from trade with the Soviet bloc, other means of pooling U.S. buying or

selling power may conceivably produce larger benefits for the U.S. economy. Moreover, there is something to be said for en

visaging a bilateral negotiation with the U.S.S.R. which begins with an assumption of total embargo and total non-access on both

sides, and which commits each side to a relaxation of its embargo according to explicit measures appropriate to its system.

Finally, there is the question of adapting the international

regime of trade and payments that prevails in the West to the existence of a higher level of economic interaction with the So



2?2 FOREIGN AFFAIRS

viet Union. Any effort at coordination which the United States

sponsors in the field of East-West trade starts out under a heavy handicap, a legacy of the fact that its coordination efforts in the

past were largely devoted to restrictive ends and largely pro pelled by exhortation and arm-twisting. The ill-conceived ex ercises of the past will not easily be lived down. Yet unless some

cooperative action is undertaken, a greatly expanded level of trade with the Soviet Union could generate new stresses in the

already overburdened trade and payments system of the West. Some of the shopworn issues that nations have felt obliged to

place on the agenda for the current trade talks in Geneva?pre liminaries to the Nixon Round?could well be deleted to make

place for an exploration of this pressing question. Possibilities advanced from various sources in the past need exploring once

again, such as securing guarantees from the U.S.S.R. regarding the minimum size of its global imports and guarantees regarding the practices to be used or eschewed in the conduct of its foreign trade.

The instinct of officials in most countries will be to draw back from these sensitive questions. The reaction is understandable, even laudable; it stems in part from a fear of upsetting the

process of d?tente itself. In our eagerness to continue the process of d?tente, however, it is dangerous to pretend that the problems outlined here do not exist. If we succumb to that very strong temptation, one of the casualties of pretending may be the very process of d?tente itself.



apparatchiks and entrepreneurs: u.s.-soviet economic relations

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