Created: 11/1/1971

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Background Paper

usss tpadi:ys wrenhesseis; couignij;:

f'rSpviet trade agreeniente

l"ost soviet long-tera agreements arc variations of those concluded vith Sweden-,United lUngdorv nnd; Italy. The ngreerr-ont with Austria (Attachment however,rore detailed liot of goodsraded: during -theyperiodand theSov.


It is unclear vhy it wan necessary to" includecooperation In this aareercne in viewo cewprohencivr. scientific, technical, and economic cooperation agreement concluded in ViCC. ro* the cooperation clause, the ICO agreorcenfc cullsu:liivi of trade over theriot- and for thoofr.-aaiest credit"

Soviet exports to the West increased during thoate ofbut the rate of lncronno In expected to drop in tha next five years. Soviet0 wore valued at core3 billion, and octinatcs5 range3 billion, iraplying an average annual increase ofo 7t. xports increased only 5t, and tho rate of Increase1 appears to be roughly the case. Soviet awareness of tho need to expand exports can be ceon in several recent contracts and in other negotiations in which thoan sought to tie repayment for Westernrvjnt to deliveries of the products fron thebuilt with Western credit. These include gas-for-pipc deals [yith. Austria, West Oertrany, Franco, andoviet-Japanesecontractr proposed oil and gas-for-pipo deals with .Tapani and proposed Western exploitation of Soviet copper at Udokan. Host of thaso arrangements would ultimately iraprova earnings, but aside fron tho gas-for-pipo arrangencnts with Western Europe and thecontract concludod with Japan, export earnings would not be affectedignificant way until,

An important factor which probebly wouldSoviet decision on what ltinito to set onthe Vest is the portion of export comingsbe repaynents on the debt. charges are rising rapidly andtof export darnings

as seems likely, the growth of Soviet exports slows rarhcdly, the ratio of debt service to exports willurpassand couldefore long. THO possible projections of Soviot indebtodnesw to the West under two assumptions as to the level of overall Soviet drawings on Wastern credits are given below (see either of thorn cculd be well off theut current trends indicate that total drawings will bo at least ralntained fornext few yearn and could decline. Theho debt service (repayments plus

interest) implicit inrojections, together with projections of exports5 attho upper Unit of estimated export growth).



U8 ?)


("Illion US S)


(Million US

Hoviet credit in'tho West is good, and Sovietovereconomy and over the usa of forolgn exchange resources insures that debtan bo net. however, the Soviet government probably wishes to avoid tho reduction in flexibilityigh debt service ratio would produce. For theatio much largerrobably would neon oxcooclve.

If exports increaseate much lose than 7t,UW have to nako difficult adjunt-rents, old debt service payments wltliinbounds, tho USSR would have to stop increasing drawings on now credits. paynents would than soon exceed drawings, and the net flow on crodit account would shiftargo surpluseficit. Vhis shift on crodit account would noan that purchasingver inporfciimport capacitywould incrcauv less than exports. These projectionson nanyny of uhieh could bo wrong* on if the overall projections arcx indivithial years could be Car off the taiY. Put unlofltfctc are grossly undcrestl-matod# soviet Liiport capacity apparently will in-croano rucbowly in tho next five years thanis oinco the

,Tho Soviet-Japanese agreement recently concluded Is unusual in that the USSR insistedioting of quantities and values of cjoodsxchanged.

m oh'

of other

cooperation egroecients, Jlor is tiie absence ofa hindrance to expanded tradei with. Went tGernnny liesn'the USSn*o' third raontcountries.

agroe-entse" 'USSR have createdor the Western partner.

corn liwm,

hi mwiricn i n

Long-Term Trade Agreement Between. and Sweden

Government of the Union <il -Soviet SodalUl Republics andluvwimnii of Sweden.

piveccdins hum the Trad*-Retuven Ihc. findh.

noting withonMilerahle expansion Of trade between the two countries. ail.iii.cil on Hie basis of the Agreement on Trade and Pavmenix

n' ,tK* cdn- "f

equipment ami other Swedish goods, such ih-pioductsulped paper industry, the-


. Ua'1'consider that an incrvas*

infltw*rom tin-

U.weden is of great Impfn-tancti ror it,.

development of trade between Ihc two countries

Both Governments consider it desirable io incrca

I2th Ja beingiirtl .benefithcje?pos:


having in view the possibilities provided by the. Apreemeni on hamumlc. Scientific and Tcclmojbgical

Cooperate ng^cenSedated Both Governments shah encourage and faei.ita.e



i ihi- mi hikvmiatit.radt;onecontribute to theoSweden, on (he

Article 5

therade,lietUTen Hie two countries,te traditional in this trade, and inori tliis^purrKwe the two Governments Jcrtl.ln^bwvjeinil mjulatlonSah' force in ei

Plenipotentiaries of both Governments shall,agreed .meet, annually, alternately innd Sweden, to review, the progressen. andof trade relations -between the two countries.

wmcnl shall come .Into force I. lollowmr the csclranjre of note*

inn the cseltnngcofid! Moscow, confirming ihai it hadccordance with therocedure-current in each eounlrv. This 1

Article 6

promoteYirady" and ihcVcxchanee "iTiSS JanSfv feT'loNo* Sberwcen the>vo countriesutually. bcnc-ficinl p'^'in

been approved in a


meni.-of Sweden shall appoint-tln-lron lransaciiom&L

in .order to aprye. in the spirit of mutualof this Afiieenwiw."nr. an appiw.atefor the Import of those pood* On the same'date the Protocol of 7lhC

'SR-n-ocol of 5th PebruarvA-laS,1

Doncln Stocfcholni on 8ih0 in twoii; the Russian,ami Swedisheinj: equally authentic:

importedAgreement of 7thhall let

r ivernment

praee Milnlnniiiil oiilers inSwdviimie ; I

the Covernuieiit of lliv Unlon of Suvicf Socialist Ktpithlies N- I'-VUlMCtlf-.V

For (lie GovernmciH of SwedenNGF.


on Trade and Payments Between the Union of Soviet Socialist Republics

and the Republic of Austria

GownmCM of I've Union ol Soviet Socialist Republics and the Amiiijnkivcrnmoni.

in accordance with the prmi<iomhe Treaty an Tunis ,ind Navigation hclHveii lite Union ol Sovietcput>ln* and the Republic of Austria of October IT.

noting with satisfaction Ilic considerabletrace between ihccountries, tlK Union

of Soviet Socialist Republics anrf tin: Republic ot Austria of Ihc exchange of goods,

-taking inio account the mm* defined in Ihe Sovict-Ausiriau Agievmcnl uti Economic. Scientific and Technical Co-operation of May

desirous ol promoting trade rchilom between the

two countries on the basil of equably and mutual


have Burred on Ihc following:

Article I

The Government of lite Union of Sovietanil the Austrian Federal Governmentto promote trade between the twohoth in pood* which arc traditionaltrade, and new

Article J

To achicxc this aimenimcnn shall, as lar as each one of llirnin.tii.J. lake appropriate measures for the furthci expansion of Ihe volume of Soviet and Autuianarticularly Ihc import of wriii entered onnd II attached lo the present Apccnwnl.

Article I


Trade een Ihe Union "I Soviet Socialist Reptihlks am! Hie Republic of Austria shall be carried out in accordance with ihc import ami export laws each cot

and regulations in loice in

Article 4

Guod* (ti'liveitet under the prevent Apivemcntffected on the hasis of contracts to be signed betweenloieiyn Hade oi ji;int sat tons, on lite one hand, and Austrian natural and juridical persons, on the oilier.

Article 5

l-'iom Ihc date the piVM-nl Agreement becomes rlfwtive the Austrian Federal docemnHiu shall give

Soviet imports, into Austria the same treatment as ii applies to similar imports from any third country.

Article 6

Both Governments agree that prices on goods to be supplied under the present Agreement shall he fixed on the basis of world' the prices ol the basic markels lor relevant

Article 7

All payments, between live Union of Soviet Socialist Republics anil ihe Republic of Austria shall,with Januarye made in freely con. vertiblc currency in accordance with the foreign exchange legislation in force in each country.

Article 8

Representatives from both Contracting Parties shall, at the request ot cither, meet in rotation in Moscow or Vienna as frequently as possible, but not less thanear, lo check the fulfilment of Ihe present Agreement or to consider problems which may arise in connection with its fulfilment, including questions relating to the delivery of particular ponds.

They shall work uul recommendations on aof economic relations between the lwo countries which would satisfy both Contracting Parties, On the basis ot these recommendations flic two Contracting Parties shall take any measures necessary.

Article 9

The present Agreement shall come into cITcct on Januarynd shall continue in force tillI shall remain effective foryear unless cither Contracting Party gives notice to the oilier of its intention to terminate it. three months before Ihe expiration of the Agrccmeni. The same procedure shall operate for subsequent annual period*.

With the coming into (orcc of Ihc presentlite Trade Agreement and also the Payments Agreement between the Union of Soviet Socialist Republics ami the Republic of Austria ofhall cease lo have effect, piuvlded only that allaynwiiis under this Payment* Agreement shall be settled in accordance with its Article 7.

Done at Vienna, in duplicate, this fifthn the Russian and Germantexts

fly authority nf Ihc

Gove runauthority ot Ihc

of ilic Mitlim

SovklGovern incut


t Annex to the Long-Term Trade andof August0

Schedule I

Goods for Export from. to Austria

and equipment, instruments and Spare.part*

machine tool* and tool* largo and pKM equipmentrear

mining and rolling equipment .

equipment to. ihs conHiurtWin. food, light, ami printing indusine*


moior vehicle*

ship* and marine equipment

planes ami helicopters Coal, including anthracite Coke Crude oil Oil product*

Natural gas Iron ore


M*'Cncludin6 copper and Chemicals

Fertilisers, including potassium salts.and opaiiic

concent rale Pulpwood


Comumcr goods, including watches, cameras, rad,..

and TV receivers, rc(riCerators Agncultural goods

Annex to the Long-Term Trade and Payments Agrccnieoi of August0

Schedule II

Goods for Export from Austrin to.

and equipment, instruments and spare parts including: fittings shins

railway waggons

electrical goods Rolled ferrous metals and meial structuresailed pipe SleH cable awl wirei it

Cable and cable good*

(jiamclled conductor

Abrasive materials

icIuclIng cigarette paper

Chemical goods. Including varnishes andcloth and cortfsilk and synthetic fibre

Consumerncluding woollen and artificial silk fabrics, kjiiiivd and sewing goods. leather footwear Agnoiltural goods



. and France on Trade and Economic Co-operation for Ilia1

Government of. and Ihc Government ot Ihc Kroneh Republic, noting villi satisfaction ihc considerable expansion ot trade between their two countries achieved on the basi* of ihc Soviet*Frenchonchnngc of Goods.

desirirr* to coniinue cooperation on the basis of mutual advantage, in particular, in Ihcand economic field, and developing the exchange of goods between the two countries in accordance With ihe provisions of the Soviet-French Declaration signed in Moscow onW-o. bv ihe two Heads of Stale.

considering ilic tasks defined in'iheAgreement on Scientific, TechnicalCooperation signed on September

basin- llieimehcs on lhe Agreement on Trade Interrelations ami the Status of the US SR. Track Mission in France.

considering ilic need to sign for thisew long-term agreement between Ihc. USSR, and France,

have agreed on the following:

Article J

Ilolh Governments, considering theot Ihe 3rd Session of the Permanent Mixed Soviet-French Commission on questions of trade and economic exchanges, will strive during Ihe period of Ihc present Agreement to double trade between the two countries.

Article 2

To attain this aim ihe two Governments shall, in that which concern* each one of than, make every elToi't:

(a) toinnimr with the first year ol tin- presenta tonsHhiable increase in Ihe total vnhllUC of Soviet imports IO Fiance, in particular, the importraw materials, semi- .

finished products, machinery, equipment and other finished articles, on normal commercial terms;

place, on normal commercialSoviet orders in France for aof machinery and equipment and alsomanufactures and raw materials,consumer goods, and raw materials for

continue the development ofbetween the two countries,by building some industrial complexesinterest of fhe two countries'part of the product turned out byis imported by interestedfirms in the other country to the fullthe supplied equipment andose operations shnll bo madewith the Payment AgreementIhe Soviet Union and France on April

(d) lo grant the easiest credit terms (or furthering the development of goods exchange envisaged by the present Agreement inwith the arrangements now in force between the two countries.

Article i

Dulb Governments shall make every cfTort to ensure that the prices of goods supplied Under tho present Agreement are fixed on Ihc basis of worldhe prices on the basic markets for the relevant goods.

Article 4

The Government ol. anil liteol Hi. French Republic shall appoint (heir lcpivscniatives who annually may meetn Pari* and Moscow lo writs ihcf fulfilment of the ptuseni Apivement ami lo work out measures for ensuiitn; this fill-

t lilmtnl. particularly Tor fixing the volume of exports to Trance of Soviet goods on which there are still quantitative restrictions.

Article 5

The provision* of the Agreement between the Government ol the. ami the Gmvrnmcnt ofeucli Republic on trade interrelations and the Status of the. Trade Mission in France signed on Septembers amended by the Protocol ofhich Itavc been prolonged by (he Contractinghall remain in foirc until

Tho said Agreement shall be extended from year to year unless one of Hie Contracting Parties gives to thehree-month notice of its

intention to terminate it. The same procedure shall also be applied in future.


Article 6

The present Agreement shall come into effect on Januarynd terminate on

The Contracting Panics shall reserve (hehold possible consultations arising fromcommitments, provided thesedo not jeopardise the basic objectivespresent ,

Done at Moscow on Mayn duplicate, each in the Russian and French languages, both texts being equally authentic.

authority of the Government of Union of Soviet Socialist publics: -.



authority of the Government French Republic J. do LIPKOWSKI

of the



In lite course of the negotiations which have ended with the signature of ihc Agreement "on trade and economic co-operation between our countries. you have drawn my attention to the existing quantitative restrictions on the CJPBDfl of some Soviet Roods to France.

I have live honour to inform you that the French Government intends to coutinu? Its policy of lihvrnltHtng trade In these good* so nv to lift these quanliiaivc re*. iduring the period of validity uf the prevent Agreement.

Accept. Mr. Chairman, the assurance of my high esteem.

J. de MPKOWSKI of the Trenchfuliun

To Ml.

tin- Soviet IkV^atiun




In your letter of thenst. yon have informed me of the following:

"In the course of the negotiations which have ended with the signature of the Agreement on trade ami economic co-operation between our countries. you have drawn myto the existing quantitative restrictions of the export of some Soviet goods to France.

ave the honour to inform you that the French Government intends to continue its policy of liberalising trade in these goods so as to lift these quant(lative restrictions during the period of validity of the present Agreement*.

I have the ir to confirm receipt of

Accent, Mi, Chairman, this assurance of my h'l'h esteem.


Tu the Ctvsumjn ol lite rlenvh




isacSiground Paper

potential ronotcrtc ofi-ATrniRLr; toiT):i; sr/.TbS

I- issueronxj;<.

An assessment of the possibilities for Soviet exports of selected raw materials to the United States as recently proposed by Kosygin.


(a) Surmary

Prospeqtc appear good for an increase in trade between the United Statca and the USSH in only two of the areas mentioned by Kosygincrude oil and natural gas. US willingness to license exports of petroleum oquipn^nt and technology to theould probablyondition for nuch trade. In all the ot!:er areas, prospects are not bo good, at least for the irraediate future. Tor tho longerubstantial trade in copper, received in payiicnt for US miniJitg equipment, could develop. Specific raw materials are discussed below.

etailed I'ackground

The "osyciin Proposals

The USSR has recently nhovn high-level interest in an expansion of Soviet-US trade and in obtaining ansistaiice from the United States for the dovelopuent of Soviet cineral resources. . Kosygin, speakingroup of proninent USho had attendod tho Sixth "Uartwouthn Kiev inrged the removal of U" restrictions on trade vith the USSr. and celled forf other of economic In particular, ho encouraged exchanges

7 onference of Icadinn US end Soviet citir.cno that 1'iactc occaoloncll'j to dicouna informally tr.attcre of mutual interest.


of technology ond licensing and ncntlonod theof joint efforts In the exploration of the continental shelf and in the development of Soviet raw Materials such as copper, timber, phosphates, natural gas, diamonds, titanium, and ctanganese. tie suggested that US companies participate in the planning of production, supply equipment andand be repaid in the product-of the venture. Ac precedent, llooygin noted tho current Japanese participation in the fcinbar resources in the Soviet Far East in exchango for timber and the exchange of Soviet natural gas for steel pipe produced in West Geroany. Ho alco observed that the USSP. is studying tho possibility of some similar arrangement for supplying oil to Western countries.

i iced for Foreign Assistance

The USER needs foreign technical assistance to develop its resources, becauseechnological lag and capacity limitations in particular areas of tho machinery industry. It favors barter-typo tradingecausecarcity of foroign exchange.

The USSR wants to develop its mineralto provide for the long-range needs of the Soviot economy; to meet its export comnitaontn toommunist countries of Eastern Europe, which are heavily dependent on tho USSR for tcany raw natcrialsj and to provide saleable items to tho Kest to cam foreign exchange.

Vrospects for Trade in Selected. Paw

Crude Oilatural Cae

The prospects for cooperation in theof crude oil and natural gas are good because tho USSP- urgently needs modern petroleum equipment and technology and has expressed interest in isany hinds of is exploration, drilling, production, and pipeline equipment, "oroovcr, oil and natural gas can be taken in payment by V'J suppliers for sale in the Hnitod states or elsewhere if the international oil coirr.anics can he persuaded to transport and procor.r. such oil. SP.illing to nay cashr,all amounts of fijuipment or technology, but Torransactions, direct barter of oil


and gasroducts vould probably boc-trntial solos art) lortN and could oaount tohundred KilUon foliar*:.

rotroleumcurrently in use inSlt for the extraction of oil and nay is cisjborffenc and inefficient ecx-yorcd vithuipncnt. Produc-tion techniques era also backward. Soviet oilhave acknowledged that5 must acquire modern technology and equipment if the Siberian areas ere to hOCOBOj nil, the major source of potXO-Icun in

r-enorally, the hnited States has an advantage over corwetitors ir. Taran and Westernecause US notrcleuTi technology and nouipaent is the host and most advanced in tho vrorld. i'ovever, in none areas nuch as tho oroduction of large-diameter pipe, non-US competitors are already abreast of tho Unitef! States. In other areas of oilfieldnu-facture also, non-US producerscosuingproficientd often charge lower price ito cin^plor cquiprcnt.

vhc rscj! has exnrotinod interestoint venture in the construction of undersea oil and gas pipelines from the Soviet Farto Japan andvict offshore drilling and erex'uetion objurations. Viie Soviets have little experience in offshore deep water drilling. Vha USSh has also shown an interest in having tho United Ktotoo assist in the construction of facilities for its natural gas industry in exchange fcr delivery* to the inited States of licuoficd natural gao. Hie attractivenessoint venture toUS participants vould probably depend on tho> terns that could bo negotiated.


Pronpcotsoint venture in tho case of copnor orehough the United Stated is the world'- largest producer of ccver, it ir>porti nearlyof its connirsption of prirtr-; rx uncertainty Oltititc nl out ti.c; chility of UVd United Statoo to raintnin its prenont cieereoIf-sufficiency, theith itr.fst bes auptlior. cnheaiicc, and Japan vor joint

development of Its largo UfloJkan deposit in fast Siberia and more recently has shown an intoroot in having tiie US participate. USy be willing to explore possibilities even though for various reasons the near-terra prospoctore unpronioing. US fims are increasing in-vontraent in domestic operations and arc exploring Other potential foroign sources of supply. The negotiation of satisfactory arrangements vith Soviet officials, and possibly vith other foroign firrasonsortiumuld present Gcrious Tho heavy invostnent and long lead timesayoff frora the remote Vdofcan deposit would also ba deterrents.


It is unllhely that US firms will undertake any largo-scale joint venture with tho USSR in the mining of diaraonds und or the tores proposod by Konygin. US finas probably would not wish totheir relationship vith the doBeors cartel and to jeopardize tho fina price structure for retail diortonds. ore plausible alternative io the Bale to the USSR of US equipment and technology financed by long-term credits. n diaoonds night bo acceptable, but onlyaall scalo.

Iron Ore

US firms have invested in the development of iron ore resources in Canada and Venezuela and are investigating tho possibility of helping to develop iron ore resources in Brazil. Futurefron these sources will lo adequate to noet US iaport demand.


US interestanganene oro venture would depond onviota offering attractive temE. conanles already have invented heavily in brazil and Caijon to produce nanyancsc ore. Supplies of eanganeMbe adequate to nect US needs for tho foreseeable future.


Korld demand Cor titanium is presently at alcvel* ys denand for titanium sponge hasoff sharplyesult of the cessation of the US supersonic transport progrera, and US uroduction has been cut bad;, orld capacity for the production of titaniu* is likely to be more than adequate to coot future demand.


The vforld nickol markot has been very weak forear and may continue to bo weak for socio time. Sizable increasos in world oupplies are projected over the next five years because of major expansion programs in Canada, Hew Caldonia, and Cuatemala. ,

Although market conditions make it unlikely that US firms will enteroint venture with the USSR, some sales of US raininc ecjuioment nay be possible. The USSR hascsecd an interest inillion worth of heavy off-highway dump cruefcn for nickel mining. The USSR has been negotiating with tho United Kingdom, Trance, and .Tapan to develop the EuruUhtal nickel deposits near Oxsk, in the Southern Urals. Tho value of the needed investment has boon estimated0 million.


Tho united states would have little interest in developing Soviet phosphate deposits. The world phosphate market is characterized by excess capacity, intense competition, and low prices. The United States is tho world's largest producor of phosphates. Assistance to the USSR would be counter productive as Soviet exports of phosphates huvc already cost the United states some markets in Scandanavia and probablyest Germany as well.


An agreement for the joint exploitation of Soviet forests is already in force between tne and



Background Paper

soviet scinHT-inc, tixiitiical, and ecokokictTioK AGi-'Krar.HTs hitmcouhTKir:s


A general discussion of scientific, technical, and economic cooperation agreements concludedthe USSP. and western countries.


During the early andho USSR enteredumber of technical cooperation agreements with individuallivetti and trade associations (Confederation of Britishhaco agreements covered such fields as numerically-controlled machine tools, computers, petroleumsynthetic fibers, and automation equipment. In general, those agreements appear to have resulted in little more than minor exchanges of information and delegations.

In its efforts to obtain Western technical data and know-how other than through outright purchases of equipment or licensing arrangements, the USSR evidently decided that it would bo useful toumbrella agreementsovemment-to-government basis. Dy this means the USSR hopes to facilitate contacts with scientific institutions and industrial eatabllslimenta within the countries with whom the agreements are concluded. Suchhave been signed with Prance, Italy, the United Kingdom, Finland, Australia, Belgium, Sweden, Denmark, and Canada. The agreements indicatespheres of cooperation, including exchanges of scientists and specialists, scientific andinformation, and so forth. They generally call for the establishment of mixed or jointto implement the agreements.

The most comprehensive of the agreementsby the USSR is tho cooperation agreement with France signed6 following PcGaulle's visit to the USSR. Although the basic agreement

in quite bland and uninformative (nee tho, tho institulorial ttructuro createdesult of the agreement is quite elaborate. The structure is toppedrandeolicy-lcvol group which meets once or twice yearly to provide guidance to operational groups. Tho so-called Petite Commission was created toindustrial cooperation agreements, and there aresectoral" working groups under the Petite Commissionroups dealing with metallurgy, metal working, wood processing, gac and oil, and others. There arc also three working groups dealing with space natters. Other commissions include the Joint Commission on Commorcialand the Joint Commission for Color Television. Jointand working groups also have been set up within the framework of agreements concluded with other countries, but they are small in number and the buroaucratic structures are relatively simple. Under an agreetrient concluded with Canada, for example, thero amozen working groups, and roughly the same number has been formed under the agreement with the United Kingdom.

Just what these cooperation agreements have accomplinhod is difficult to determine. The Soviet-Frencii agreement seems to have yielded some bene-fitisat least to tho Soviets. French scientists working at Serpukhov believe that the flow ofis basically one wayto the USSR,rench-Soviet agreement on oceanography has given tho Soviets access to the work and designs of Cousteau's Center for Advancod .Marine Study.esult of the space cooperation agreement, the Soviets have obtained access to Frenchcomponents and instruments. The USST: has supplied tho rocket boosters but has gained from using French, satellite technology.

If western countries enter into euch agreements hoping to generate additional trade, ttia French-Soviet agreement provides no encouragement. G agreement, Soviet-French trade rose substantially, but6 Franco lias not force! as well as West Germany and Japan. Neither of these two countries, at leapt up until now, hai concludedscientific, technical, and economic coop-eration agreements withfSP.*






The Government of ihc Union of Soviet Socialist Republics andof the French..' . .. .

Conscious of the advantages for both countries offered by theof thdr scientific, technical and economic relations.

Desiring to strengthen co-operation between the two countries, especially in the scientific and technical fields.

Expressing their satisfaction at the establishment and growingof contacts between interested organisations and enterprises of

Considering that such co-operation will strengthen the friendly relations thai are traditional between the Soviet Union and France, '

Have agreed as'

Article 1

The Contracting Parties undertake to promote the development of scientific, technical and economic co-operation between (he two countries in the scientific and technical fields, They shall determine by mutualthe different sectors in which such co-operation is desirable, taking into account the exjwrience acquired by their scientists and technicians and the opportunities existing in each area, especially in those which are closely related to the development of economic exchanges.

The co-operation envisaged in this Agreement may, in particular, take the following forms:

xchanges of scientific and technical delegations, exchange of individual scientists, research workers,xperts, trainees and lecturers, exchange of technical documentation and information ;

On*few onc dalehich thrtit,oilmjllea pv'n- (fleeteiienl had heminwith ankle-

Holding of bilateral scientific and technical symposia on problems of interest to Ihc two Parties,:

Joint research woil; on problems of theoretical and applied science whose results might later have industrial applications;

Joint elaboration or certain technological processes, such as thosein the rruKicrnization ol enterprises;

Joint study of the techniques of productivity and the organisation of.

. .Article 3.

On the basis of this Agreement, the Contracting Parties shall promote co-operation between interested organisations or enterprises of the two countries, in particular for the purpose of concluding appropriateor contracts.

Arrangements or contracts governing co-operation betweenor enterprises of the two countries shall be concluded in conformity with the legislation in force in the two countries. In particular, suchor contracts shall, where necessary, make provision for: {a) Forms of compeo5.ation for knowledge, such as the sale of patents or


(6) The exchange or joint registration of patents and the conditions for

granting licences; (c) The manulacture and marketing'of products.


In order to ensure (he implcmentation-of this Agreement, the Contracting Parties shallranco-Soviet Joint Commission. The Commission, shall meet'alternately at Moscow and Paris at leastear.

The Commission >hall be responsible for keeping the execution ofunder review and studying the specific fields in whichbe

Article 5

Any deliveries of industrial goods of the two countries effected under this Agreement shall be made in accordance with the trade agreement in force.


Each of the Contracting Parlies shall notify the other of the completion of the lc^al proccdmc required fur the entry into force of lliis Agreement. It shall take effect fiom iW dale of ihc Second notification.


UnitsUccucil dcs

UllOJiMSXf IfiU "

Nation*Treaty Series


This Agreement shall remain in force until such lime as it is denounced by one of the Parties. In that caw. il shall cease to he effective one year after notice of denunciation is given.

. in witness whereof the representatives of the two Governments have signed this Atnxawut and HfTiAid their seals thereto.

Done at Moscow, onune 1PCG. in duplicate, in the Russian and French languages, both texts being equally authentic.

For thethe Government

of the French Republic:

of the Union of Soviet Socialist Republics:


M. Couvr de Murvule

cv.cnrvAnvcL uissic:t.

Background rarer

x. xssn: or problem

Soviet iaporta of western aachinery and equio-rrxrnt on credit nave ledapid rise in Soviet debt to tho rent. Unless tho ussr is able to expand rapidly its exports to the West, it nay to forced to curtail the qrowth of imports in the future.


Soviet outstanding indehtodncss toost rose to nore7 billion0 and probably will exceedillion If, as boors likely, Soviet export growth slove narhedly in, tho Soviet doht service ratiothe ratio of debt service to cxrortewould rise to the point where tho Soviet government night consider tho loco of financial flexibility unacceptable. It is nowevel rauch.ould probably cause the USSR to rationre strictly. Snleu of gold, however, would enable the USSR to increase importsate faster than exports.


In recent years the ussr has increasingly borrowed on long torai to finance imports of Western machinery and etruiprjent. esult, Sovietindebtedness to the developed Hast has risen to core thanbillion and probably will exceedillion by the end1 (so'jhroughout most ofhe ussr bought wore than it sold in trade with hard currency countries. Tho difference was financed in part by selling gold, but nninly by borrowing and by buying on credit. Soviet trade statistics indicate that curing thehe Soviet hard currency trade deficit0 nillion annually. It reached0 nilllon cark

Tnblo 1

Hstinatcdnwings and Scheduled Repayments on Western rodivua-vorr= and Long-Vorn Credits a/

Million US 5


nated Vear i'rawings rents






Interest Credits





Debt at Bod of







ural'iny cottr.atea are baaed largely or. datafron contractu indicating delivery and creditndvict imports of rtaokinery and ccuip-nettt. In general, earlyredit and S' interest. arge masher of contractsC have involved $SX credit and fS interest, payent periode for tUc earlier credits L'ore usually throe to five yearo follovin? Typical tervsZen tiffht years,elivery ofnt.

Table 2

Projections of Soviet Indebtedness to Western Creditors a/


Million US S

Debt at

Praw- of

Interest Cruditu Year


I'coauao of rounding, oonponento naj} noithe totals ohovn. ssumes aof0 level of plus scheduled pipa deliveries on croditall back to9 level after the pipe ehipaente are completed.eeuaeo other exports on credit uill replace pipe,

bm Credito are aeeutsed to be for an avoraca of eight ucare at CX inter- -.

eOTJT idekt ial

If merchandise exports do not grow -substantially faster than suggested above, tho USSR will have to finance imports by other means or ration itsrts more strictly. The USSH has added considerably to its gold reserve5 and now produces more0 million in gold annually. If tho Soviet leadership fuels that it can now part vith at least some of its annual production of gold to pay for imports, thin would enable tho USER to continue to import more than it exports. Increased not hard currency earnings from tourismpossibly0 Million annually by thewill also boost Coviot import capacity, as will increased nGt earnings from the Soviet merchant fleot, which may rise to0 million If Co USSR chooses to ration its imports more strictly, imports of highly prized Western equipment and technology will bo maintained to the extent possible, but there probably will be greater substitution of technology for equipment. The leading candidate for pruning in manufactured consumer goods, which the USSR has been importing from tho Westate ofnnually The leadership, however, probably fools it has less room for maneuver in this area than it did five years ago; it probably will have even Iocs five yearn hence. Should the leveling off or decline in import capacity coincido with poor grain harvests and the Uovietn have to import oven larger quantities of grain fron the wect and should imports of moat continue at tho level of the past two years apital goods imports would also be curtailed, an they wore.

p'XTa:?ARY of coxryyCT. rissicc:J 71

Background Paper PJXmi.bMS COKFaOKTIHG Tin: us BUSIKESSKMi


Usstem businessmen face throe major types of problcHs when trading with the Soviet Union. They include institutional problems related to tho'state monopoly of foreign trade as practiced in the USSK; bureaucratic delays inontract!or.onunications problem, which oftenpeeting of tho winds" of tho two sides.


Vho USSR subscribes to one of thorthodox interpretations of the state monopoly of foreign trade. Its foreign trade activities are completely separate from production activities and are carried outompletely different set of enterprises, the foreign trade organizations (FTOs). bach FTO is an independent legal entity, chartered to carry out narrowly defined trading activities, which are further specialised according to typo of commodity or geographic area. Thus, in addition to there being no competition among the Soviet buyers and sellers, tho result of such an arrangement makes it difficult, if not impossible,estern businossman to contact directly tho Soviet firr= with which he wants to do business. Other rigidities stemming from the separation of trade and production would include the difficulty or impossibility of modifying orders on short notice, or even at all, and other types ofonsuming delays.

The negotiationontract is seldom short, ranging anywhere fror. one week to as muchear or norc, depending on the complexity of tho items to bo traded, 7ftic- is true oven if tho Soviets arc very interested in the particular transaction. There have been cases of Western businessmen, who after investing months or even years in preliminary talks, come up emnty-handed and courcd by their experience. In part, this is attributed to inefficiencies within


the foreign trade organizations, which are usually understaffed and lack personnel to deal with all transactions. The concern of Soviet officials not to ovorcxtcnd their limited authority at timestho introduction of representatives of new parts of the bureaucracywho might not be readily avnilablcinto tho negotiations. It appears, however, that this penchant for long, drawn out talko isargaining tactic often employed by the Soviet negotiator, who seems bent on wearing out his Western counterpart in order to obtain the price and terms according to his instructions. In other cases, these long, drawn out negotiations are merely information seeking venturos by the Soviets, who may have no serious intention of buying the Western product. Soviet negotiators may request detailed blueprints and specifications and then uso this information to bargain with competitors.



Background Paper



A discussion of Soviet reactions to recent economic policies instituted by tho President.


Within hours of the President's announcement of his economic stabilization program in August, tho USSR saturated its news mediaboth domestic and foreignwith critical analysis of the profound problems plaguing the US economy and what it terms tho ineffective measures adopted by thoto deal with these problems. Throe weeks later the Soviet media was keepingigh volume of reporto and commentaries, although with reduced frequency. Present coverage of the- topic remains critical in tone but is now becoming more sparse, having been overtaken by rcore newsworthy events such as the President's decision to visit Moscow, the recent visits of Kosygin to Canada and Brezhnev to Franco, and the decision at the United nations to admit Communist China.

Tho general content of tho Soviet coverage has been consistent with its past analysis of the ailing US economy and the disruptive effect of the US dollar on the international monetary scone. The theme of unemployment in the United StateG was cited in the coverage of the Secretary ofV interview in mid-October, and was repeated in tho coverage of the President's Veteran's Pay speech: "Nixon also admitted that the participants in the Vietnam war moot many problems when they return homo, the moot acute of them being unemployment." How, however, tho USSR is able to pick and chooseide variety of world press comment. Often, the Soviet media lias merely repeatedwithout commentaryexcerpts fron tho Western media, which have been full of caustic comments by various Western governmental officials.


The rain thrust of the Soviet commentary ishronic disequilibrium in the US economy resultspending by tho military in spport of USpolicy, in this connection, the arms race, the war in Vietnam, support to Israel, and the United States a3 the world's policeman have been singled out as causes of the drain on the economy. An effective economic policy by tho United states, therefore, would have to be precededundamental change in us foreign policy whereby the United States wouldmaller role in world affairs, rather than try to bo dominant. Unless these fundamental changes in US policy are made, the economic stabilization program adopted by the President will bo ineffectivei tho wage-price freeze will bo at the expense of the American working class; the surtax on imports will be an attempt to chift tho burden of adjustment to tho trading partners of the United States and will not help the US balance of payments; andeduction in foreign aid, coupled withon imports, will be an unfair burden placed on tho less developed countries. The Soviets conclude that since the stabilization methods adopted by the administration are the wrong remedies, they are apt to be counterproductive.


srcpj:tary or

Background Paper

DSSPi cononlc Indicators

Cross National Product in tho us.and the USSR (Confidential)

US and USSR: Average Annual Sates of Growth in Cross National rroduct. Selected Years (Unclassified)

Per Capita Cross national Product in Selected0 (Confidential)

Relative Size of Gross National rroduct, by End Use, in the US and the0 (Confidential)

Indexes of Industrial and Agricultural Production in the US and tho USSR (Confidential)

US and USSR* Annual Mates of Growth in Industrial and Agricultural (Unclascifled)

US and "SSRt Production of- Important Industrial0 (Unclassified)

US end USSRi Production of Important Minerals and0 (Confidential)

US and USSR: Production of Important Agricultural0 (Unclaoclflod)

US and USSR: Population and Labor0 (Unclassified)


Gnpest us ll





M n

Pf(Iftt US 1>



Oil J*


ercent of US

I 1





orcenl of US










US and USSRi Annual Sates of Growth In industrial and Agricultural




nd USSR: Production of important Industrial Items

trlc Tons


Polled steel


Caa (million cubic


Electric powerhours)



Timber (rillion

L'nlaa'n' othoruiBeb. ShipHcnto. o. L'atinato.

OS androduction ofincrals and0













etric tons in 1JC3.


US ami UGSHi Population and Labor0

rsonr. at rirlyear



Labor force 9

Civilian labor forco 7

Honagricultural labor force

Agricultural labor forco

tho arrrad forooe and tho

employnont. She data forlabor force are annual avcraaeadata that esolude the amedfor agricultural labor force are for


Original document.

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