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Go Slow in Trade With Moscow
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14409 |
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Section : |
CURRENT ISSUES
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| Issue
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6 / 1988 |
2,488 Words |
| Author
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Henry R. Nau
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In the American lexicon, trade has often been equated with rapprochement and peace, never more so than in the case of East-West trade. Today, once again, expectations are rising that the United States, through its trade policies, can play a significant role in economic and political liberalization in Eastern Europe and the Soviet Union.
The Soviet Union is doing nothing to discourage these expectations. Mikhail Gorbachev, general secretary of the Communist Party of the Soviet Union, met with American industrialists during the Washington summit in December 1987 and again in April 1988 to promote the idea of joint ventures and other business arrangements between U.S. and Soviet firms. He called for "a new system of coordinates in the economic relationship between our society and ideologically different countries."
Making such arrangements more attractive this time around are reforms in the Soviet Union meant to decentralize management and control of foreign trade, decontrol prices, and improve worker incentives. In addition, the Soviet Union has expressed an interest in joining the principal international economic institutions, such as the International Monetary Fund and the World Bank.
By any realistic measure, the obstacles to East-West trade are formidable. The reforms in the Soviet Union are in their early stages and remain uncertain. Bureaucratic resistance is evident; labor unrest is possible, especially in Eastern Europe. The Soviet capacity to export and pay for significant new industrial imports from the West is constrained by a weak dollar and low oil and gold prices. Soviet borrowing has already increased substantially, raising the Soviet foreign debt from a little over $20 billion in 1985 to almost $40 billion at the end of 1986. Soviet exports to the United States continue to be restricted by the Jackson-Vanik amendment, which denies most-favored-nation treatment to Soviet products, and the Stevenson-Church amendment limiting U.S. government financing to the Soviet Union through the Export-Import Bank.
Nevertheless, hope springs eternal, and there are prospects for an announcement of major new U.S.-Soviet business ventures when President Reagan and Gorbachev meet for the fourth time at the Moscow summit. Moreover, economic change and renewal are long overdue in Eastern Europe. These countries--Poland, Hungary, Yugoslavia--could clearly use Western help. Western Europe, especially West Germany, is gearing up to provide such help. The United States could be left out, and new and bitter issues of East-West trade policy could resurface in the alliance if the United States does not respond to the new interest in trade.
Whatever the specific prospects, however, the United States would do well to observe caution. There are both fundamental and contingent reasons to expect less from East-West trade during this round of U.S.-Soviet détente. The fundamental ones have to do with the limits of trade in relations between fundamentally different societies. The contingent ones have to do with current tendencies in the United States to reduce defense expenditures, weaken strategic export controls, and subsidize grain and other exports to the Soviet Union--tendencies that an aggressive expansion of East-West trade will only encourage, to the detriment of deterrence and stable long-term relations with the Soviet Union.
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