America's growing overseas trade ties; Confusion still reigns over trade with USSR
Washington — President Reagan's clear-cut signal to Moscow on arms control is not yet matched by an equally clear White House policy on East-West trade.
A battle goes on within the administration between those who would use trade to punish the Soviet Union and those who claim US exporters to the communist East are losing ground to Europeans and Japanese.
Where American farmers are concerned, the President already has made his choice, first by lifting the grain embargo against the USSR, then by promoting grain sales.
On May 21, against a background of three bad crop years for Moscow - and with indications that a fourth could be on the way - US and Soviet officials will meet in Paris to discuss the future of their grain trade.
With the Polish situation so uncertain, and with the White House convinced that Moscow is fomenting communist penetration of Latin America, the United States is not expected to begin negotiations in Paris on renewal of the US-USSR Long-Term Agreement on grains.
The current five-year agreement, designed to stabilize Soviet purchases of American wheat and corn, expires Sept. 30.
In lieu of a new agreement, President Reagan increased the amount of grains the Soviets might buy this crop year from 15 million to 23 million tons, of which 13.8 million tons has already been sold, according to US Wheat Associates.
The Soviets need American grain and cannot easily, if at all, satisfy their import requirements without massive purchases of US wheat and corn.
But the same is not true of manufactured goods, including middle-level technology. What the US refuses to sell on political grounds, the Soviets can and do buy from West Germany, France, Japan, and elsewhere.
The Reagan administration also charges that European countries unfairly subsidize their exports to Eastern Europe, by offering lower than market-level interest rates.
Even where Washington gives a green light to American exporters to sell a line of goods, in other words, European competitors often win the deal by offering easier credit to Moscow.
''It works like this,'' said a US expert. ''The Soviets place great emphasis on low interest rates. So the European exporter boosts the price of his product, but offers a below-market interest rate. The Soviets pay more for the product than they should, but get it on easier credit terms.''
European banks, manufacturers, and their government insurers - who protect the exporters from risk - combine to give European businessmen an advantage over American competitors, in the Reagan administration view.
The White House has abandoned hope of persuading the Europeans not to help the Soviets build a mammoth natural gas pipeline, designed to carry Soviet gas from Siberia to Western Europe.
''Eventually,'' said a West German official, ''that gas will provide 30 percent of Germany's needs and, in the meantime, provide thousands of jobs in the German pipeline and other industries.''
But US firms cannot participate in the pipeline deal. Last December, after the imposition of martial law in Poland, Mr. Reagan clamped an embargo on the sale of all US high technology and all energy-related technology to the Soviet Union.
The sanctions were a victory for administration hard-liners, including Defense Secretary Caspar W. Weinberger, who argues that hard currency earned from natural gas sales to Europe will allow the Soviets to spend more on defense.
A number of American firms, including some who manufacture parts of turbines designed for the pipeline, lost contracts. Caterpillar Tractor lost a $90 million contract for 200 pipelaying machines, a gap which the Japanese promptly filled.
Unless the embargo against the Soviets were across-the-board, embracing all trade, the government - under a new law - would have to pay farmers 100 percent of parity for all grain sales they might lose in a selective embargo. This would cost billions of dollars and swell the budget deficit.
This helps to explain, said an administration official, why grain is excluded from the embargo and various kinds of US technology are included.