PARTICIPATION OF THE SINO-SOVIET BLOC IN INTERNATIONAL TRADE FAIRS AND EXHIBITS

Created: 5/1/1956

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intelligence memorandum

PARTICIPATION OK THE STNO-SOVIET BLOC IN INTERNATIONAL TRADE FAIRS AND EXHIBITS

CIA/RR6

INTELLIGENCE AGENCY Office of Research and Reports

Page

Summary

Scope and

Economic

3- Other Implications

Appendixes

Appendix A. Anticipated Participation of the Sino-Soviet Bloc

In International Trade

Appendix B. Estimated Expenditures by the Slno-SovietInternational Trade Fairs, by Host

Appendix c. Source

'fables

of the Participation of the Sino-Sovlet Bloc

in International Trade Pairs and

of the Slno-Soviet Bloc in International Trade

Fairs and Exhibits, by Sixe and Estimated Expenditure,

J. Participation of the Slno-Soviet Bloc Ln Internationaland Exhibits, by Size and Estimated

Estimated Expenditures by the Sino-Sovlet Bloc onTradey Host5

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CIA/RR-JJ-'T,

(ORR)

PARTICIPATION OP THE SIHO-SpVIST BLOC IN INTERNATIONAL TRADE FAIRS AND EXHIBITS*

Summary

The program of the Sino-Soviet Bloc for participation in International trade fairs is part of the battery of techniques used to implement the foreign economic policy of the Bloc. This program and the otherwhich include trade agreements, attractive barter deals for agri-cultural surpluses, and credits for the purchase of capital equipment by underdeveloped countries, are being expanded considerably In what appears tolosely coordinated effort by the entire Bloc. By employing foreign economic policy as an instrument of foreign political policy, the Bloc lias scored recent diplomatic successes in the Middle Bast and Asia.

The planners of the Sino-Sovict Bloc believe that there are four internal conditions which make possible their successful entry into the new arenas of world diplomacy In Asia, the Middle East, Africa, and Latin America. These conditions, according. Shepilov, Soviet Communist Party Secretary and Chief Editor of Pravda, are "enough economic resources, cultural bases, technical personnel, and aordered domestic scene." In connection with the firsthe remarked that the "current re-emphasis on heavy industry had helped totockpile of capital goods for trade withcountries." It is possible that the recent attempt to moke Stalin the scapegoat for the Communist purges, coupled with the current emphasis On "collective leadership" and "socialistill result in an eventual increase in domestic tranquility and morale, thus further satisfying another or the four conditions.

* The estimates and conclusions contained in this memorandum represent the best Judgment of ORR as

CD*

The foreign economic policy of the Sino-Soviet Bloc, using tested techniques and relying on satisfactory internal conditions, probably will continue to be expansive in the hope of gaining further diplomatic successes.

Scope and Trend.

Mikhail V. Nesterov, President of the Soviet Chamber of Commerce, recently stated that the USSR plans to Increase its participation in international trade fairs and exhibits6 byercent * Ihe other members of the Sino-Sovlet Bloc also are expected to lncicase their participation ln trade fairsreliminary list of fairs in which various members of the Bloc have announced their Intention of participating in shown In Appendix A. Althoughartial compilation of fairs and exhlbts In which the Bloc will participate6 can be compiled at this time, the list Indicates the expansive nature of the program. From this compilation and other available data. It is believed that the expansion will be manifested ln three ways: (a) an increase in the number of trade fairs in the Free World in which the Bloc participates, (b) Increased participation in trade fairs in underdeveloped countries, and (c) more impressive exhibits.

Information concerning trade fairs6 indicates that ln fairs within the Slno-Soviet Bloc, emphasis generally will be laid on those fairs which Influence relations between the Bloc and the Free World. It is anticipated, therefore, that the major Bloc fairs6 will be the Spring and Fall Leipzig Fairs and the Poznan and the Plovdiv Fairs-

A substantial expansion is expected in participation by the Slno-Soviet Bloc in Free World fairs. Major efforts by the Bloc In Europe wll> be made in Austria, the UK, France, Italy, West Germany, Sweden, Greece, and Yugoslavia. Noteworthy exhibits will also be sent to Afghanistan, Syria, Lebanon, Turkey, Bgypt, India, Indonesia, and Japan. The Bloc also will venture into the relatively new markets or Africa and Latin America with participation at fairs In the Belgian Congo, Morocco, Tunisia, and the Union of South Africa, as well as Brazil, Colombia, Paraguay, Uruguay, and other Latin American countries.

A mounting body of evidence Indicates that the exhibits of the Sino-Soviet Bloc6 will be larger, better planned, and more impressive than they were Reports from the sponsors of

trade fairs indicate that almost invariably the Bloc authorities are requesting more space than they had The Czechoslovaks, after experimenting with their large engineering exhibit within the Bloc, have announced their intention of displaying it in the Free World. Bulganln stated that the USSR may bring its "Atoms for Peace" show to Latin America. The Bloc has acquired considerable knowledge of Free World markets, and their exhibits probably willtrong commercial appeal. Even their propaganda, although tailored to the prejudices of the host country, will be less obvious and therefore will increase the over-all appeal of the Bloc exhibits.

It appears that the plans of tbe Sino-Soviet Bloc6 are to follow up and intensify their successful participation In trade fairs in Europe, the Near East, the Middle Boat, and the For East5 and to participate actively In fairs in Africa and Latin America.

The following quotation from an article by Mikhail V. Neoterov contains the essence of Soviet official policy concerningin trade fairs: "The International industrial expositions and fairs In vhlch the Soviet Union takes an activereat role in developing international economicand have/ the function of helping to develop and strengthen economic relations between the USSR and foreign countries. Participation of the USSR in expositions has become especially brood and systematic since the end of the war." This policy, like most international Soviet economic policy, has been adopted by tbe Sino-Soviet Blocnit. ummary of tbe participation of the Bloc in International trade fairs and exhibitsshown in

The growth of participation by the Sino-Soviet Bloc Incoramerical activity by means of the trade-fair technique also is nhown in This participation was restricted1inor share In fairs organized by the major trading nations of Europe. The initial expansion and broadening of the program began In that year the Bloc appeared for tbe first time in five fairs In underdeveloped countries. The trend of participation in underdeveloped areas continued were held in Egypt, French Morocco, Indonesia, Thailand, and Tunisia. Tho Bloc continued to partlcipato in fairs in Greece and

* ollows on p. k.

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Table 1

Summary of the Participation of the Slno-Soviet Bloc in International Trade Fairs and Exhibits a/

Bloc Exhibitions

^

World Countries

Bloc and Free World Countries

Number of Fairs and Exhibitions

Number

Of Bloc Exhibits

Bloc Expenditures (Thousand US $)

I1 the size of the Individual Bloc exhibits increased, andoc further Increased its participation in the fairs of thecountries. For example, the Bloc participatedarger scale in fairs in Turkey, Syria, Indonesia, Greece, and Egypt. Smaller efforts vere made in fuirn in Brazil, French Morocco, Iran, and Malaya.

The most significant Increase in participation by the Sino-Soviet Bloc in trade fairs and exhibits took place In this 3ingle year the Bloc participated in more trade fairs and exhibits than In the four preceding years. he Blocxhibits In someairs inountries, vith an estimated expenditure amounting toillion. 5 the Blocxhibits lnfairs incountries. Expenditures by the Bloc on ouch exhibits5 estimated to have been the equivalent ofillion, of which approximatelyillion were spent on exhibits in the Free World

and the remainder on fair* heldloc countrleB. The Bloc spent the equivalent of USillion ut the Spring and Fall Leipzig Fairs and the Poznun and the Plovdiv Fairs, of which approximately itO percent may be charged to Bloc efforts to influence East-West trade relations. Thus It is estimated that total Bloc expenditures5 on exhibits to affect trade between the Bloc and the Free World were approximatelyillion. Thus, although trade with the Free World constitutes only aboutercent of total Bloc trade, approximatelyercent of the Bloc expenditures on trade fairs was spent to influencebetween the Bloc and the Free World.

Tableshow the extent of participation by the various countries of the Sino-Soviet Bloc in trade fairs and exhibits both within the Bloc and in the Free World. Two noteworthy developments are apparent from these tables: (a) the emergence of Communist Chinaubstantial participant In trade fairs and (b) tbe leading role of Czechoslovakiaarticipant In trade fairs. The role oflends some substance to the belief that tbe Czechoslovak export Industry will concentrate principally on exports tocountries. It Is probable that the Czechoslovak export drive le designed to make "practical propaganda" for the Communist economic system as well as to Increase the economic dependence of certain countries on Bloc sources of supply.

Estimated expenditures by the Sino-Soviet Bloc on international trade fairsy Bloc participant, by geographic area, and by host country, are shown in This table shows the areas where Bloc activities in trade fairs have been concentrated.

Although Western Europe is the major trading area in the Free World for the Sino-Soviet Bloc, its expenditures on trade fairs in Woiiturn Europe were somewhat less than those in the Fari lb- East. Bloc participation in trade fuirs in Indiareater financial outlay than In any other country of the Free World. Major outlays were also made in Pakistan, Indonesia, and Syria. Tbe Bloc also participated extensively in trade fairs in Yugoslavia, Turkey, Austria, the Netherlands, and Sweden. Not so costly as these, but also noteworthy, were the one-nation shows In Argentina, Egypt, and Iceland.

ollows on p. 6. ollows on p. Appendix B,elow.

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2. Economic Impact.

Participation by the Sino-Soviet Bloc in International tradeexhibits lo frequently dismissed as propaganda. This pointis reinforced by reports that In some cases thethe Bloc at fairs were reluctant to quote prices or discussdates. The apparent unwillingness of the Ccomunlstin these coses to negotiate on on-the-spot sale Isthe willingness of Western exhibitors to do businesstrade, however,ontrolledtate monopoly which ismore interested In the general development of tradein single. Isolated, on-the-spot sales. Thehich is the principal aim of Bloctrade fairs, is accomplished primarily through the medium oftrade and payment agreements. These agreements areafter negotiations involving governmental agencies, centraltrade monopolies, and Free World trade companies. rade faireans ofidetep in the process of negotiating tradeare indications, however, that the commercial policy ofat trade fairs is becoming increasing flexible. Therethat some European Satellites prepare sales piano ofgoods ln order to be able to take on-the-spotcases, items on display were offered to the hostfor sale orift. Some substantial contracts andhave been concluded at trade fairs. When it wasto conclude trade agrecnicntB, the groundwork was laidnegotiations. From these and other indications, it isthat If necessary the Bloc will deviate frtm its normalin order to ensure the commercial success of Its particlpa-

The USSR has commonly used what may be termed an "institutional" approach to the trade-fair medium by presenting its exhibits in an Impressive display, usuallyingle roofoviet pavilion, rather than dispersed among the various exhibits of individualof products. There has been considerable comment concerning the withdrawal of the USSR from trade fairs coincidental with US announcements of intent to participate. This withdrawal has popularly been coottrued as Soviet reluctance to compete with the US exhibit. Examination of the details of Soviet withdrawal indicates that one of

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the principal motives was the unwillingness or Inability of theof the fair to allocate sufficient spacearge, consolidated Soviet exhibit rather than fear of US competition, although the latter nay haveontributing factor.

An examination of the foreign trade of the Sino-Soviet Bloc with the underdeveloped countries in vhlch the Bloc has participated in trade exhibits indicates that the trade-fair program does have an economic impact. The impact appears to be cumulative and thus offers the probabilityong-term Increase in such Bloc trade. For example, the Bloc exhibits in recent Salonika trade fairs probably actedatalyst In the increase In Greek trade with the Soviet Bloc3ncrease which restored this trade to the levels. It is estimated that the trade or the Soviet Bloc with Greece5 increasedercent over that- The Bloc has successfully obtained an important market for timber and petroleum in Greece, and in exchange it receives needed supplies of tobacco, fruits, vegetables, olive Oil, and olives. The USSR is reported to be extremely Interested in obtaining needed bauxite from Greece. Several trade agreements between the Bloc and Greece have been concluded, and trade delegations and agents have been sent to Greece. Prospects of further increases in foreign trade are believed to be good. Although Greece cannot be sold to be economicallyupon the Sino-Soviet Bloc, Bloc trade with Greece has increased to the highest point on record sod has resulted in greatly improved economic relations which, in turn, have reduced the strain of political relations between the Soviet Bloc and Greece. Other countries in which Bloc participation in trade fairs and exhibits and attendant promotional activities have been Instrumental in increasing trade, although to varying degrees, are Afghanistan, Finland, Iceland, Yugoslavia, Egypt, Syria, Turkey, Indiu, Indonesia, Burma, and Argentina.

Theretriking correlation between the activities of the Sino-Soviet Bloc in trade fairs and Bloc offers of credit tocountries. The Bloc has used participation In trade fairs in underdeveloped countries both as an opening wedge for theof economic relations andeans of maintaining interest in their further development. Almost without exception the underdeveloped countries mentioned above have been offered long-term credits for capital development. In perspective, both the long-term crealtand the trade-fair program appear to be parallel techniques for implementing' the foreign economic policy of the Slno-Sovlet Bloc

>

The total economic impact of the trade-fair program of the Sino-Soviet Bloc willtrengthening of the economic ties between the Bloc and selected countries of the Free World and may resulturther increase in trade between the Soviet Bloc and the Free World

3- Other Implications.

Participation ln trade fairs gives the Sino-Sovlet Bloc anto display Its new foreign economic program. Soviet leaders have clearly Indicated that they consider this program an important arm of their diplomacyoans of competing with the US for world influence and leadership. Most. Shepilov, SovietParty Secretary and Chief Editor of Prayria, stated that the USSR now has enough economic resources, cultural bases, and technicalas wellufficiently ordered domestic scene, to eater "new" arenas of world diplctnocy such as Asia, the Middle East, Africa, and Latin America. Shepilov. remarked that the current re-emphasis on heavy industry had helpedtockpile of capital goods for trade with underdeveloped countries.

Increased participation In trade fairs by the Slno-Soviet Bloc, therefore, has been accompanied by increased trade and by the offer and extension of credit to underdeveloped areas as well as by the establishment of trade representations and the signing of trade afireroents-

The Sino-Sovlet Bloc also employs the trade fairehicle for propaganda. Statues of Communist leaders and photographs purporting ta show life in tho Bloc countries are shown (althoughessor degree5 than'<). Written material is disseminated, and political speeches ore made that are filled with the current sloganr, calling for "peacefulrelaxation of worldemoval of trade embargoes, and the reunification of East and West Germany. Attempts are also made to secure formal trade agreementsrder to gain de facto recognition of Communist China and East Germany. The size of the pavilion and the number and variety of products displayed are designed to imprt'iia the visitor with the wide variety and technical skill displayed in products from the Bloc. The assistance of the local affiliate ofmmunist-front Committee for the Promotion of international Trade (CPETj Is enlisted by the

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Communist Party to insure tbe success of the fair. Trade fairs also bringarge number of Bloc personal. There arethat scan of these people have intelligence functions and that they attempt to make contacts with Local groups to influence their political orientation.

The Sino-Soviet Bloc participates increasingly in trade fairsombination of economic and political reasons. Economically, tbe Bloc trades with the Free World to obtain raw materials and industrialwhich it needs to supplement its own resources and production. Many of these raw materials are found in the countries of non-Communist Asia and the Kiddle East, which are underdeveloped and vhlch are short of foreign exchange. The Bloc, by exhibiting an array of capital goods and offering to exchange them on favorable terms for raw materials, proposes to facilitate the industrialization of these underdeveloped areas. The increased economic Influence of the Bloc unquestionably will be used for political purposes whenever and wherever onpresents itself.

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AHTICIPATbD PAlfriCIPATIOK OF TiDi SIKO-SOTngT BLOC IH INTERNATIONAL TRADE FAIRS

The followingist, of those fairs or exhibitions scheduled6 in which the countries of the Sino-Soviet Bloc have announced plans for participation ot* imvoisctrong interest* Bss&d. on information available ashe list is probablyartial compilation of those fairs in which the Bloc plans to partici-

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APPKKDIX C

SOURCE REFERENCES

""i- mat-rial for this memorandum was obtained fromm reports preparedoveriwnt agencies In response to standing requirements Tor reporting on trade fairs. Because hundreds or references were used, It was deemed Impractical to list each source separately. ew important sources, however, are listed below.

ollowing the classification entry and designatedave the following significance:

Source of

Doc

- Documentary

-

by other sources

-

reliable

-

true

-

reliable

true

-

reliable

.

-

usually reliable

false

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reliable

be Judged

-

be Judged

Evaluations not otherwise deslgnatcn are those appearing on the cited document; those designated "RP" are by the author or this report-

Bloc Plans Drive Tor More Outsideew York Herald

. 2. U. Eval. BR 2.

M.V. "Soviet Participation in International Pairs

andSliH Information Bulletin, ?li

. U. Eval. RH- Radio Free Eurooe. Item no U. Eval. RRc. 5-

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Original document.

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