Current Support Brief
SOVIET MACHINERY OFFERED TO BRITAIN
CIA/RR03
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
Early in May the USSR offered to sell to the UK types of machinery, and, in particular, specialized machine tools, that the UK presently buys from Western producers. This move by Soviet officials, which ifwould modify the traditional flow of machinery, was maderitish trade delegation seeking to expand Anglo-Soviet trade and wasto answer British complaints that trade is limited by the lack of desirable Soviet goods offered for export.
The Soviet offer of machineryeduction in prices, resale rights, and the assurance of. reliable deliveries through long-term However, immediate prospects for large exports to the UK are not bright, because the quality of Soviet equipment now offered has not been proved competitively in that market. Two of the types of machine tools specifically offered for sale, copying millers and jig borers, do not meet Western standards of quality. Moreover, some of thein which the USSR sought to arouse interest is still scarce in the Soviet economy. It is therefore doubtful if more than nominal quantities of such equipment would be released for sale outside the Communist Bloc at this time.
A British trade delegation, headed by Lord Ebbisham (Vice Chairman of the London Chamber ofpentays in Moscow early in May endeavoring to implement the current Anglo-Soviet trade agreement. This agreement, covoring the3 torovides quotas for an expansion of Soviet sales of machinery to the UKrobable maximum value ofillion. U Although Anglo-Soviet commodity trade shows an over-allfor the USSRhe UK imported from tho USSR machinery and equipment valued0 and exported to the USSR machinery and equipment valued atillion. 2/ The pact includes provisions for Soviet sales of machine tools valued6 million (similar sales1 were valued at Other Soviet machinery products listed in theinclude ca rthmoving equipment, cranes, tractors, mining machine ry.
textile machinery, equipment for the food industry, bearings, and radio and electronic components. This list is remarkable because it contains many categories normally imported by the USSR. For this reason, it would be surprising if either the value or the commodity quotas were implemented by Soviet deliveries-
The British delegation visited Soviet plants, inspected Sovietoffered for sale, and discussed with Sovietumber of problems affecting trade relations between the two countries. J. B. Scott of the British delegation reported that his group was shown aof machines that in their opinion were "at least the equal of those imported into/ Two machines specifically mentioned were metalcutling machineopying miller ig borer. This was the first time that this equipment has been offered in Western markets by the USSR. The UK now imports jig borers from Switzerland, whose jig borers set the standard of quality for the world. Soviet jig borers rank far below those of Swiss manufacture in quality. Likewise, the UK imports copying millers from the US, whose product greatly excels that of the USSR. In fact. East German and Czechoslovak jig borers, now available through British dealers, also are superior to thoolish copying miller, also available in the UK, is at least the equal of its Soviet counterpart.
It is possible that the USSR mayompetitive advantage in price, which may be as low as two-thirds of the prices of comparable US and Swiss equipment. When allowance is made for differences in quality, however, it is unlikely that the Soviet price advantage would be decisive. It should be noted in addition that the British market forequipment such as jig borers and copying millers is very 2 the UK importedboring" machines from Switzerland.f which It is probable thatew were jig borers. The UK also imported only nine copying millers from the US in that year. 5/ *
It is not entirely surprising that the USSR singled out machine tools for display, for the USSR has placed great emphasis on the developmentomprehensive line of mctalworking equipment as part of itsto catch up with the US in industrial production. Soviet production
of metalcuttfng machine tools2 was officially reported, about four times the US output of comparable equipment. Jig borers, for example, are produced in five locations,ecentlyplant in Moscow. Other types, such as lathes, drilling machines, and grinders, are in some cases produced in serial production. Some of these types can meet more closely the technological standards as well as the prices of conventional Western machines. As the Soviet domestic demand for this equipment is more nearly accommodated, the USSR prob ably will investigate further the prospect for foreign exports. In this sense the present Soviet offer to sell machine toolsophisticated Western market may be the forerunner of more serious overtures to be expected in the future.
The Ebbisham delegation discussed in some detail other factors hindering the implementation of the current trade pact. Britishabout the nonavailability of Soviet goods were meteries of counterproposals that indicate the willingness of the USSR to take steps to expand mutual trade. The Soviet officials proposed that theong-term trade agreement and stated that reliableof Soviet goods would then be assured by making provision in Soviet production plans for the agreed types and quantities of equipment. The Soviet interest in expanding trade with the UK was emphasized furtherillingness to extend reexport rights to the British and by an offer to sell some machines not previously offered in foreign markets.
The Soviet proposals, which are attractive on the surface, give evidence of new avenues of Soviet policy as well as the continuing Soviet need for British plant and equipment. For example, the offer to extend reexport rights to the British would have the practical effect ofcertain British firms as machinery agents for the USSR and would facilitate sales of Soviet machines in markets not now cultivated by the USSR. The Soviet offer to extend production runs of machinery andto provide additional machines for Western markets implies that the USSR is prepared to adjust production planning and ultimatelyplans to provide for some Soviet participation in the world market for producer goods.
The British delegation also reported that Soviet regard for British products was still great, and the statement! of the delegation revealed that the USSR was especially interested in chemical equipment and other capital goodssuch as/ Of this interest the head of the British delegation remarked, "We should seise thee need thehe delegates were reminded by Khrushchev, however, that current trade "would have expanded if Britain had granted the USSR longer/
Analyst:
Coord:
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2. USSR, Ministry of Foreign Trade. Vneshnyaya torgovlya Soyuza SSRodu: statislichcskiy obtor {Foreign Trade of the USSRtatistical U-
J. Feron. James- "Britons May Buy Soviet Machinery.'1 New York Times. U.
Machinery. .. U-
Commerce. Bureau of the Census. art II. United
States Exports oi Domestic and Foreign Merchandise, (Calendar.. Feron. op. cit.bov*).
i. State. Moscow. Economic WEEKA,0. 3. U.
CONPrBBWIlAL.
Original document.
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