EAST-WEST TRADE: Moscow Wants a Deal

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One big obstacle to trade is that the Russians have had little to market in the U.S.—only $56 million worth last year. Unfortunately their manufactured goods are generally shoddy and not in much demand, even in the East bloc. But Moscow would like to sell jetliners (including the supersonic Tu-144), wristwatches, cameras, pharmaceutical supplies, medical instruments—and the natural gas that Butz bubbled about. Soviet experts have conferred with men from Tenneco and Texas Eastern Transmission about shipping Siberian gas to the U.S. It could be pipelined to Murmansk, liquefied and shipped to the U.S. East Coast in special tankers.

First, however, fundamental issues between the two nations must be resolved. Many of them are hangovers from cold war days when the U.S. believed that trade could aid Communist war-making potential. But the Communists developed a tremendous potential anyhow, and most diplomats now argue that greater trade may help ease political tensions. Among the issues:

LEND-LEASE DEBTS. The Soviets have yet to pay back the first kopeck on the U.S.'s $10.8 billion lend-lease aid provided during World War II. The real issue centers around payment for "civilian" goods, which accounted for one-quarter of the total. The Russians must at least partly clear up this default before Nixon can offer them Government-backed U.S. Export-Import Bank loans. The lend-lease talks were broken off in 1960 but, at Soviet request, talks have just been resumed in Washington. The U.S. has offered to settle for $800 million, but it wants hard Western currency. The Russians are willing to make a payment of $300 million and want it to be in rubles or raw materials. Prospects for a compromise soon seem good.

CREDIT TERMS. On the grain deals, the Soviets seek ten-year credits at an interest rate of 2 or 3% v. the prevailing average U.S. rate of 6%. The Russians are unlikely to get specially low interest rates, but Butz hinted that if they offer to make really big purchases in the U.S., Washington might devise a combination Government-private credit for five to seven years.

M.F.N. STATUS. The Soviets are eager to get back the "most favored nation" trading status with the U.S., which they lost in the cold war. M.F.N. status would cut the tariffs by 50% or more on some Soviet exports. So far the U.S. has granted M.F.N. standing to only two Communist countries, Poland and Yugoslavia. Washington would be wise to extend M.F.N. treatment to all of Eastern Europe, including the Soviet Union, to tear down trade barriers.

Above all, the U.S. must get rid of its old concept that trade is a cold war weapon. It makes no sense to continue to forbid U.S. companies to sell computers and other sophisticated equipment to the Communist countries when the Communists can buy the same sort of equipment through other Western sources. Similarly, it is self-defeating for U.S. businessmen to be forced to fill out reams of questionnaires and licensing applications for trade with Russia when such delays result in lost sales. Minnesota Mining and Manufacturing was a recent victim of U.S. bureaucracy. Though it developed magnetic tape, it lost a substantial sale to the Russians because its export license remained mired for so long in Washington offices that the Soviets took their business to 3M's imitators in Western Europe.

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