Soviet Union tries to boost its trade with the West

By , Staff writer of The Christian Science Monitor

If there is a political thaw, can an economic thaw be far behind? That is the question being explored here as the United States and the Soviet Union slowly begin trying to warm up trade relations which remained chilled as political relations froze up.

One indication of thaw is the opening of talks between US and Soviet trade negotiators here in Moscow. The meetings taking place this week mark the first time in nearly six years that high-level government delegations have explored trade questions.

This time, the US is represented by Undersecretary of Commerce Lionel Ulmer. But officials do not rule out the possibility that if the talks are successful, Secretary of Commerce Malcolm Baldridge might himself visit Moscow later in the year.

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These developments -- taking place even as political negotiations are restarted in Geneva -- have encouraged some businesses to believe that US-Soviet trade, now estimated to total some $3 billion, could increase sharply.

T. Mitchell Ford, chairman of the Connecticut-based Emhart Corporation, a major supplier to the Soviet shoe industry, has predicted a new era in US-Soviet trade in coming years. Total trade could double by the 1990s, he predicted in mid-December.

Experts here do not discount the possibility that for some specific industries, the trade outlook is probably somewhat brighter now than it has been for several years.

But they caution against undue optimism. There are, they point out, a number of factors that still inhibit Soviet-American trade. Among them:

Restrictions on the export of high-technology equipment to the Soviet Union, since the technology might be diverted to military uses.

Continued Soviet restrictions on emigration, especially Jewish emigration, which strengthens US congressional opposition to expanded trade links.

Signs that production of Soviet oil -- this country's chief export earner of hard currency -- may have plateaued or even declined, forcing the Communist government here to make hard choices about what to buy from the West.

The inability of the Soviet economy to produce finished goods for which there is a market in the West.

Of these factors, the Soviets clearly see the first -- restrictions on technology transfer -- as the most onerous.

These restrictions are known by the acronymn ``Cocom,'' which stands for the Coordinating Committee on Export Controls of Western nations that have agreed not to ship items with potential military applications to the Soviet Union.

These restrictions have hampered the Soviets in efforts to build sophisticated radar and missile guidance systems. But some American companies claim they've also prevented the export of other equipment that has no apparent military application.

The Soviets have tacitly admitted that they're dependent on imported technology in certain key areas of the economy. Moreover, they've repeatedly called for an end to trade restrictions.

But some Western diplomats say that, given the Soviet Union's continuing arms buildup -- and its efforts to steal Western technology -- there is little prospect for easing the restrictions.

``The Cocom restrictions have just been renewed,'' says a Western diplomat, adding, ``and they're not going to change.''

If the Soviet Union wants to improve trade relations, it will also have to ease its continuing restrictions on emigration, specifically its treatment of would-be Jewish 'emigr'es. That does not appear to be in the offing.

The so-called Jackson-Vanik amendment to the 1974 US Trade Act tied most-favored nation (MFN) trading status for the Soviet Union to Jewish emigration. It required that prior to the granting of MFN status -- which allows better terms for financing trade and lowers certain trade barriers -- the numbers of 'emigr'es would have to reasonably correspond to the numbers of applicants. An annual total of 60,000 was unofficially pegged as the minimum acceptable figure.

For a few years, Jewish emigration soared, reaching a record 51,320 in 1979. But the figures have since plunged, and now appear to be below the 1,000 mark for the first time in more than a decade. The National Conference on Soviet Jewry, an American organization, says 1984 was a ``bleak year,'' in which just 896 Jews were allowed to emigrate. Unofficial estimates are that some 350,000 Soviet Jews have applied to emigrate.

Western diplomats speculate that, should US-Soviet relations improve, some increase in emigration could result, but probably not in numbers sufficient to sway American critics.

Moreover, says one Western diplomat, the Soviets do not seem to be signaling a willingness to respond to American concerns. On the contrary, says one diplomat, efforts by the US to expand trade with China, a former Soviet Communist ally, ``really has them irritated.''

And the Soviets are probably going to have to make some difficulut choices on how to spend hard currency that they earn from exports. That will have an inevitable impact on foreign trade.

Oil and gas account for the bulk of this country's exports, and agricultural products for most of its imports. Indeed, one Western analyst says this country already spends some 60 percent of its hard currency export earnings on food imports.

In order for the Soviet Union to alter trade patterns dramatically, those numbers would have to change for the better. And a combination of factors suggest that is unlikely.

For one thing, Soviet oil production seems to have plateaued in 1984, and some analysts speculate that the annual figures, when they become available, may actually show a drop. That, plus continued weakness in world oil prices, does not suggest that the Soviets will have much extra hard currency to spend. (Though, it must be pointed out, Soviet reserves of hard currency, gold and other precious metals are thought to be substantial.)

And 1984 saw the country's fifth poor harvest in a row. Unless 1985 is radically different, the USSR will still need to import substantial amounts of food.

The Soviets do not like to have major trade imbalances, either, and that militates against greatly expanded trade with the US. Already, the Soviet Union imports much more from the US than it exports. Total US exports to the Soviet Union for 1983 (the last full year for which official figures are available) were over $2 billion. Soviet exports to the US, on the other hand, were only $341 million.

The Soviets have been pressing many of their trade partners to accept more finished Soviet goods in order to redress trade imbalances. But Western countries have a hard time finding markets for Soviet-manufactured goods, which many analysts say are of poor quality, outmoded design, or both.

As one Westerner involved in Soviet trade says, ``So much of it is such junk that [their trade partners] just turn around and get rid of it, often at a loss.''

The Soviets are touchy about the subject. An article in the newspaper of Moscow's Young Communist League argued that US restrictions on trade with the USSR actually hurt the West. As evidence, it noted that Soviet foreign trade organizations offer licenses for some 15,000 products or processes, and that Soviet inventions are used in over 20 capitalist countries.

The Soviet news agency Tass, in announcing the startup of the trade talks, said, ``The USSR stands for the development of mutually beneficial trade, economic and other contacts'' with the US.

And in trade, as in arms control, the Soviets claim it is the US which must change its ways if things are to improve. ``Much will obviously depend,'' Tass said, ``on how constructive the approach of the US side will be in a search for ways to resume mutually beneficial trade relations.''

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