WHISTORICAL'REWEWELEASE AS SANITIZED
This report represents the ismediatethe originating intelligence
of the Offio. of Research and Reports.
.cedents ars solicited.
CfltTRAl INTmiOSBCB iOBOI Offloe of Research and Reports
The Economic Cccmisaion for Europe Comaitteo oa the Devolopaeat of
m** lnHS dele-
ga-.oa is expected to propose aoae type of.multilateral trade and/or pay-
faclIluU ^creased trade betveen Seat and West Tor some tine there has been tellesw cultilateral trade and
nd ooaclude loag-tera Tho British delegation arreei
ment of trade within Europe, eapeoially betweea East and -ost, andreactivation of the Trade Committee.
At subsequent ECS EsaUVest talks, the JBrade oleax that It strongly opposed long-term coatrecte sad multtfateral paymeata arraaceieata and suggested that the ece Trade Committee night confine its workS^!arbitration, servicing, aad the like.be Danish, llTtZend Austrain delegations, however, felt that this approach was too negative. The uk also suggested that payments oould bo made through Se X* at-rllni by the USSR selllag more goods or gold to
_ -be OT propoeel that Seat-Vest payasmte be handled throughr-ing also appears inadequate. The Bloo la intereated, of course, inasransferability emoag the foreign curreaeies it earns as poss.Dia. At present only slightly overercent of ita exports to Western turopo are to the DX and the rest of Its foreign exchange earnings la West Europe are in eurrenclse other than sterling. Sterling la fairly widely used for elsarinj purposes, its effsotiTsassa Is United fcy its aoeroity iae. Tha CX would naturally like to rsoelve Soviet gold ia return for sufficient sterling to finance Eaat-tfeat trade. The CSSR la likely to prefer an arraagsateat not based oa gold export*;.
At tbe conclusion of the East-West tradeinalwas issued to the effect that tho present system of bilateral payments arrangemonte wasather narrow and primitive system, likely toestraining and distorting influence on the development of/
Ths most publicited possibls alternative Is thatpsr clearing plan- between EPC arm ruble bloc countriee. U Such aa errtageseat appears unlikaly. The baaic obeteotle to increased East-West trade is tbe chronicbalance. fj With Bloo countries consistently j- debt, any pay-meats mechanism would require the provision of credits to be effootlve. A
number of count-loo lo fact specifically objeoted to the suggested Sost_West payments union on tha ground that it would requireurtherto anclearing plan ia tba faot that'tba EPTJ will probablybort life.
Even multilateral financial arrangements other than triangular deals appear unrealistic. The stronger Westorn currencies vill probably at leas', nova.further towards convortibijity within tha next year. This moveneat vill utomatically benofit tha USSR without foreirg it, In turn, to allow Western Suropo to transfer its earnings within the Bloc from country to country. The latter arrangement would appear incompatible with Soviet- type planned economics. ?urthormore, multilateralism night aotually hart Bloc exports slnco one of tbe main attractions of Bloo goods to soft-currency countries la the fact thatan be purchasedilateral basis.
If tha USSR should seriously attempt to change the baals of Its trade with tha Vest, core long-term agreements appear to bo the alternativelanned economy (although probably unacceptable to tbe VI and several other Western Europeanhese agreements might.be nultilatoral in the sense that sore than two countries would agree totated goods. Any further rultilatorollac, granting Western countries greater freedom to use^taeir export earnings where they wish, appears doubtful. .Ibis conclusion ia supportedtatement-in private to the Swedishha Bast-Mast trade talks by the Polish delegate that aa East-West payments mechanism was not feasible, fi/
ondon., y The Flnanc.ifll,Jlmoa',