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December 22, 2016
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August 31, 2011
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October 26, 1954
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Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 1 CLASSIFICATION C-O-N_F-i CENTRAL INTELLIGENCE AGENCY INFORMATION FROM FOREIGN DOCUMENTS OR RADIO BROADCASTS COUNTRY GDR SUBJECT Econcmic - Foreign trade HOW PUBLISHED Daily newspapers, weekly periodicals WHERE PUBLISHED Berlin DATE PUBLISHED 8 Sep 1953-4 Mar 1954 LANGUAGE rr ? .onrnr w.,.u. uromner .n?*i.. r.r w .rn MI wu un.r ar in eorrwn~r. o.?..eurr .y r... u~ ..,mr.onc.. nnwrn REPOR CD NO. DATE OF INFORMATION 1953-1954 DATE DIST. -Z(- Oct 1954 NO. OF PAGES ._Q6 SUPPLEMENT TO REPORT NO. THIS IS UNEVALUATED INFORMATION INFORMATION ON GDR FOREIGN TRADE UP TO FEBRUARY 195 (Numbers in parentheses refer to appended sources.) The 1954 GDR-USSR trade agreement was signed in Moscow on 13 February 1954. I. G. Kabanov, USSR Minister of Foreign Trade, signed for the USSR, and Kurt Gregor, GDR Minister of Foreign and Intra-German Trade, signed for the GDR. Because of the cessation of reparations deliveries and the cancellation on the part of the USSR, of the GDR's indebtedness to the USSR, the quantity of commodities to be exchanged in 1954 is considerably higher than in 1953. It is about three times that exchanged in 1950. GDR deliveries to the USSR in 1954 will include mining equipment, dressing installations for mining products, installations for the metallurgical industry, cranes, machine tools, woodworking machines, presses and cutters, chemical pro- duction equipment, pumps, compressors and fixtures, refrigeration installations, equipment for the construction-materials industry, ships, rail vehicles, elec- trical equipment, precision and optical instruments, textile machinery, food- processing machinery, machinery for the beverage and tobacco industries; machin- ery for the cellulose, paper, and printing industries; chemicals, and consumer goods. The USSR will ship to the GDR in 1954 such foodstuffs as grains, protein feeds, meat, butter, vegetable oils, canned goods, and legumes. The raw materials CLASSIFICATION C-O-N-F-i-D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 si ferroalloys, nonferrous metals,. ores, pig iron, wool, other texti lene, and raw materials, chemical , precious metals, cotton, lane, and Phariaaceutical awRmaterials. products, crude petroleum The USSR will also send 1+00 additional 954.(1, 2) China uct C-O-N-F-I -D-E-N-T-I -A-L On 30 November 1953, ments of a Chinese trade delegation arrived in Berlin to initiate the fourth annual trade negotiations between China and the GDR. Like the agree- GDR-Chinese 1952 and 0 GDR-Chinese trade a 3 April 1953, this agreement will also be based on the provided for an trade agr e seeof o 10 October 1950. The agreement of p ~9ov 8 August 1 3 percent in the trade volume, as c 3 ed with 1953 a 1952. On for the excha a of ple entry protocol to this agreemennttawas signed pries. 50 million rubles' worth of commod_ The GDR and China signed a 1951+ trade agreement agreement provided for a 35 percent increase in theBvolumeoof to be traded, as compared March 1954. ompared with 1953?1 commodities China intends to import 15-19 billion rubles' worth of commodities during the next 2-3 years. Both the GDR and West Germany have an o in this trade. opportunity to share GDR-Chinese trade was at first beset with difficulties. GDR foreign-trade personnel was inexperienced. China was considered a bottomless barrel' willing to accept all types of goods. They had a priority in acco failed to realize that specific c rdance with China's owwn Five-Year Plan. ommodities Other difficulties arose from the GDR 's failure to make deliveries as ached- uled. This failure was caused by the fact that the EAs not turned over to the producing enterprises on time, so that they integrated into the s egrated goo5 production plans soon enough. could be . Many Peiping and Shanghai industrial exhibitionscontractsinfor1953 195and 4 at were the cludedt the or jr. FaOthers have already been concluded on the basis of the Order lists mitted by China. 953 Leipzig sub- It would be advantageous if the negotiations [of the annual trade agreements j, at least as far as GDR exports are concerned, were carried on in Berlin in future years. This would facilitate closer consultation with Producing Plants regard- ing specifications and delivery dates. - The following suggestions will also help to improve trade relations between the GDR and China: 1. DIA (Intra-German and Foreign Trade Enterprise) must be responsible for giving Chinese representatives proper advance notice that the commodities will be ready for shipment at a specific date. Such notification is the contracts, but it has been given only in about 0 queerly because the provided for in o f percent of hie se ne, frh- quet beca so the producing plmakeantthes t noarry Dep. The rthes neip d this tey the commodities and can charter the necessar ca gorships nts for the receipt of y cargo ships. 2- DIA must exercise greater control over the pacingin,; of shipments. C-O-N-F-I-D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C-O-N-F-I-D-E-N-T-I-A-L 3. DIA must make every effort in its correspondence with China to express itself clearly to avoid unnecessary expenses and delays arising from repeat inquiries and corrections. 4. Complaints about shipments should be satisfied quickly, without await- ing the decision of the arbitration court. 5. Labels on and instructions for machinery exported to China should be in Chinese as well as in German. 6. Catalogues and brochures sent to China are often unsatisfactory. Some are only in German. Others are in German, Russian French, Spanish, and English; but the specifications are given only in German.(3j EM&arZ On 30 January 1954 the GDR and Hungary signed a "Protocol on Mutual Commodity Deliveries in 1954" in Budapest. Hungary will deliver high-grade foodstuffs and consumer goods, agricultural products, and industrial goods. The GDR will de- liver machinery, precision and optical instruments, electrical equipment, pro- ducts of light industry, and chemicals. The protocol was signed by Hans Paul Ganter Gi7mans, State Secretary in the MAX (Ministry of Foreign and Intra-German Trade) for the GDR (fnu) Czimer, an official of the Ministry, of Domestic and Foreign Commerce, for Hungary.(4) Be_ 1Rium As a result of negotiations in Brussels during the period 2-8 February 1954, FIB (Federation of Belgian Industries) and DIA (for barter trade] agreed to increase the commodity-quota lists for trade between the GDR and Belgium by 200 million Belgian francs. The agreement, which was signed on 8 February 1954, also provided that trade with the Belgian Congo would be covered by this agree- ment.(5) France The 1.854 trade agreement between the GDR and France, concluded on 9 De- 'c""ember 1953, will allow an improvement in GDR-French, trade relations. The following are the specific advantages of the new trade agreement as compared with that of 4 January 1952: 1. The new trade agreement provides for an exchange of 4,150,000 dollars' worth of commodities, as compared with 2,030,000 dollars' worth in the earlier agreement. 2. The commodity lists of the new agreement include many commodity groups needed for carrying out the New Course. 3. The new agreement provides for 28 commodity groups to be imported into the GDR and for 24 commodity groups to be exported, as compared with 6 and 5 commodity groups, respectively, in the preceding trade agreement. The commod- ity groups in the 1954 trade agreement include such inclusive groups as chem- icals, machinery, and parts. 4. A "miscellaneous" commodity group has been included in the commodity lists. 5. A swing balance has been agreed on (amount not indicated].. C -O-N-F-I -D-E -N -T-I -A -L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 a sentatives in c red themselves willing to meet with GDR repre- the course of the year to check on thewillingutilitozation of the commodity lists. Each side has declared itself consult with the other regarding changes in the commodity lists.(6) 7. The French have A. l individual contracts J ~~ 1e uutt is no longer required. Instead, the concluded under this agreement will establish the terms under which transactions will be carried out. C -O-N-F-I -D-E-fl-T-I _A_L GDR IMPORTS During the period 1 July-15 September 1953, the GDR imported 28,000 tons of butter from the USSR. As a result, the total butter imports of the GDR from the USSR for the period 1 January-15 September 1953 amounted to 43,000 tons. During the same period, the GDR imported 435,000 tons of wheat, oa rye, and ts from the USSR. The supply of margarine and salad oil has also improved as a result of imports of all types of fats from the USSR, China, and other Oibit countries. During the pericd 1 January-10 September 1953, 36,000 tons of vegetable oil were imported into the GDR. Of this quantity, 23,700 tons arrived during the third quarter 1953. Magdeburg Will receive 410,OOO bottles of Rumanian and Hungarian wines during the fourth quarter 1953. The city will also receive some of the West German wines which were purchased by the GDR at the Leipzig Fair. Of these, seven ith wine bbottlesfrofeightedcwinears have ea rived. Sixty of Bordea wine h vehbeen're- ceived from France-(7) Imports into the GDR from the USSR received at Frankfurt/Oder during the first half 63' October 1953, included the following: Meat and smoked sausage High-grade liquors, including 1 n ev I?? Canned milk and-cacao powder 56 28 25 3 11 5 32 229 4 Imports from Poland received at Frankfurt/Oder period included the following: during the same Poultry Vegetables Brewing barley Eggs, canned fish, canned meat Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C -O-N-F-I -D -E-N-T -I -A -L s of mentsDfromgtheeUSSRsarriiveeddyat Frankfurtr 1953, the following import ship- /Oder: Frankfurt/Oder: Item Vegetable oil 131 Grain 28 Oil seeds 873 Canned fish and legumes 280 56 Wines, liquors, and chocolat es 25 During the sa at Frankfurt/ me period, the following imports from Poland arrived Oder: Item Canned and fresh fish, eggs, 49 honey, vegetables 47 (9) Wheat imports of the GDR from the USSR increased during the weeks preced- ing 9 February 1954. The lighter Tundra arrived in Wismar about 5 February 1954 with 3,000 tons of wheat. The steamer Ryazan, out of Riga, was unloaded at Rostock on 8 February 1954 (presumably it carried wheat]. 1954.,the motor ship Pyarnu, On 9 February out of Tallinn, was on its way to Rostock with were unloaded untons of loaded at abfirstout weekst of s lOfB grains, mostly wheat, 954( 0) During the first 10 days of February 1954, 1,796 carloads of grain and 50 carloads of legumes, canned fish, and vegetables arrived at Frankfurt/Oder from the USSR. During the. same period, the GDR imported from other Orbit countries 25 carloads of poultry and fish and five carloads of spices.(11) Textile Raw Materials During the first half of October 1953, the USSR delivered to the GDR 1,160 tons of cotton and 310 tons of wool.(8) During the period 1 October-13 November 1953, the USSR sent 130 carloads of raw wool to the CDR. Of these)40 carloads were loaded with half-coarse and fine wool. Two thirds of the latter will be sent to the Leipzig Wool-Combing Enterprise, and the rest, to the Schedewitz plant of the Zwickau Worsted Mill and to the Neuhuetten plant of the Rodewich Woolen Mill. After processing in these plants, the wool. will be sent to the worsted mills of Thueringen and Sachsen, as well as to cloth and felt factories, for further Processing.(12) During the first 10 days of December 1953, the GDR imported the following textile raw materials from the USSR: Item Cotton (3,000 tons) 260 Cotton fabrics and arn 24 y 9o (9) C-O-N-F-I-D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C -Q-PI-F-I -D-E-N-T -I -A -L tons of cotton, as well as ys of February 1954, the GDR imported 5,000 and hemp, from the USSR.(11)bPecified quantities of] yarns, flax tow, Leather and Leather Goods The Import Branch of the DM (German Trade Center) for Leather in Halle received 55,000 pairs of leather shoes from Czechoslovakia during During shoes the second quarter 1954, this branch e February and44 a 's3) from Austria and ladies' sports sli ladies' shoe s s and and men's s slippp pers fros from Industrial Products During the first half of October 1953, the GDR imported 35 ZSP2-type mobile grain dryers from the USSR. Machinery delivered to the GDR by during this period included 12 rollers for metallurgical enterprises, weighing a total of 165 the wnduct 5 tons; 5 modern freight elevators for the building rY; 30 tons of nails; and 40 tons of track links for tractors.(8) Hea Machine The Karl Liebknecht Heavy Machine Building Enterprise, Magdeburg, is completing the USSR's "friendship order"[a euphemism for reparations order] for five ships' engines.(14) I/ The VEB (people-owned enterprise) "Erich We inert" Factory in Magdeburg produces both for export and for domestic use large fittings for industry, such as gate valves of various designs, wedge valves (Keilschieber), disk parallel-gate valves, and piston valves for gas, water, steam, and oil. These fittings are being built to su double- export to Orbit s PPlY the needs of the GDR, as well as for Belgium, rtand non-Orbit countries. Fittings are export exported to Luxembourg India, and Egypt. Hungary has placed orders for more than 11 tons of cast-steel fittings with this factory, which are to be delivered by 30 June 1954. However, the workers of the factory have obligated themselves to deliver the fittings 6 months ahead of schedule. In October 1953, the Rudisleben Machine Factory resumed crystallizers, to be exported to the USSR. Thirty crystallizers delivered, and 40 more are now being Production of Producing oxygen plants for rystallizers have already Th same en r5) is Poland and 50 miilkltanks for ethe USSRt(15) The 1954 export program of the VEB ERM (VEB for the Construction of Power- Plant Machinery and Motors) Halberstadt Machine Building Factory is 50 percent higher than the 1953 program. diesel installations for The plant plans to export large stationary electric power stations, ships' diesels, and cosres for large gas plants. Negotiations are under way for for the delivery tory's diesel-electric power stations to non Orbit countries, of this fac- In 1953, the VEB Germania Machine Building Factory, Karl-Marxported 30 percent of its production (o of the Czechoslovakia , ex- f unidentified commodities] to the USSR, facto , Bulgaria, Poland, and Albania. In 1954, 80 percent rS s production will be exported. The USSR, Poland, and Albania will re- ceive most of these exports. It is also planned to send a complete factory to Brazil.(16) fish-meal Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C -O-N-F-I -D -E -N-T-I -A-L The VEB Ernst Thaelmann Machine Building Enterprise, Magdeburg, recently delivered to the USSR the largest rotary cement kiln in the world. This huge machine has a welded steel tube measuring 5 by 4 meters in diameter and 135 meters in length.- It is designed to produce 1,200 tons of cement clinker in 24 hours. It requires 450-500 horsepower for operation, and it is estimated that its metal parts alone weigh 900-1,000 tons.(17) Transportation Machinery The VEB ABUS (VEB for Equipment for Mines and Heavy Industry) Eberswalde the USSR, Crane-Building the PolandFaRctory iais, astillBulgari uman n working[November d orders for a on a number19531of. 1953 Among export these orders is a bridge crane with cantilever extension, which is to be delivered to Poland. SAG (Soviet Corporation) Bleichert Transportation Installations Factory, Leipzig, had exceeded its 1953 export plan by 6.4 percent as early as the end of October [19531. It has further obligated itself to complete an export order for a bridge crane with a 40-meter span before the end of December. This bridge crane is part of the factory's export plan for the first quarter 1954. The fac- tory is now building three bridge cranes and two cable cranes with an 860-meter span width, as well as 20 excavators (Kugelschaufler) All of these are to be exported before the end of the year. y 20 mobileg thenpa. months [prior to November 1.9531, cable railways, cable cranes Dueler ic past as well as excavators (Kugelschaufler) have left theplantfor Bulgaria vunngar, Poland, Czechoslovakia, Rumania, and China. g , Hungaryy, Two floating cranes were delivered by SAG Bleichert to the Mathias Thesen Shipyard in Wismar to be mounted there. But the work at the shipyard has been progressing very slowly.(14) The "Ernst Grube" Motor Vehicle Plant in Werdau fulfilled its [19531 export plan on 10 December 1953, when it delivered [to DIA] the last 6-ton trucks for export to China.(l8) Newly s consists, Locomotive Building andelecElectrtric Worksced by the Raps arem being delivered primarily to Warsaw. These consists are capable of aospeedrof140 kilometers per hour. This plant also has orders for express train locomotives to be exported to Poland. Electric locomotives for export to China, Czechoslo- vakia, and Rumania are also on order, as well as several new types of chain- welding machines (Kettenschweissmaschinen), to be exported to the Orbit coun,._ tries.(19) Lirhty The Optima Office-Machine Factory, Erfurt, completed 79 percent of its 1953 export plan for exports to the USSR and Orbit countries by late November 1953. The balance of the export plan is to be completed by 20 December 1953? During October 1953, the factory shipped a large quantity of typewriters with Chinese characters, which had been developed in this enterprise, to China. A part of a second shipment of such typewriters left the factory in November [1953]? C-O-N-F-I-D-E-NT-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C-O-N-F-I -D-E-N-T-I -A-L In October 1953, the factory received an order from the USSR for business machines with Russian characters. The order is to be delivered on 15 December 1953?(20) The privately owned handi craft firm, Wendt & Kuehne, Gruenhainichen, is re-establishing its old business contacts' Outside the GDR. At the 1953 Leipzig Fair and at the 1953 St Erik's Fair in Stockholm, it received orders for novelty items and toys from all the Scandinavian countries, England, France, the US, Switzerland, Italy, the Netherlands, and Belgium. It has received an order for a large number of music boxes from Venezuela, and inquiries from other countries in South and Central America and from South Africa. The firm will have its own exhibit at the 1954 Frankfurt [Main] Fair. The enterprise still has several difficulties in meeting the demand created by this renewed interest in its products in other countries. Mechanisms for the music boxes must be imported from Switzerland at 8 Swiss francs a piece. Al' ' though the finished music boxes bring in much more in foreign exchange, the firm has had difficulties in obtaining the necessary forei anisms from the DIA. Similarly, the firm has had difficultiesginfobtaining the foreign exchange for Swiss clock mechanisms, selling at 2 Swiss francs a piece, which are to be installed in handcarved housings designed rooms. The firm also has difficulties in obtaining cr dit.foDNcinsists that it first sell its warehouse stock. But the firm must have a large warehouse stock on hand to meet all the demands of the export trade. Other private enterprises in the Karl-Marx-Stadt area are engaged in pro- ducing for export. The furniture-covering and moquette-weaving firm of Cammann and Companie, karl-Marx.Stadt. has received orders from all over the world. The firm produces damasks, brocade velours, gobelins. and other materials. The prod- ucts are made with domestically produced staple fiber of the types B and W and with artificial silk. The silk-like luster and other qualities of these new raw materials surpass those of the wool and cotton fibers formerly used. The fast- ness of the colors also measures up to prewar standards. At the GDR's irdustrial fair in Cairo, the firm exhibited all color variations, from the finest pastels to the darkest shades. All of the firm's designs come from its own studio and include the styles of all epochs. Craft organizations in the Karl-Marx-Stadt area are likewise producing for export. On the instigation of the recently organized Export Committee for Tex- tiles in Karl-Marx-Stadt, the Westsachsen Association of Knitters and Small Weav- ing Shops is now preparing samples for exports. However, the knitting industry has difficulties in obtaining materials needed to fulfill export orders. It hdS!. not yet obtained knitting needles, which have been on order from the VVB Textimai (Administration of People-Owned Enterprises for Machinery for the Textile and Clothing Industry) and the DIA for a considerable time. Likewise cotton, which was to have been received in December 1953 for an export order to be comple9;ed during the first quarter 1954, has not yet been received. Time Westsachsen Asso- ciation of Knitters and Small Weaving Shops is exporting staple goods to the USSR and Orbit countries, and is endeavoring to resume an export trade in madras cur- tains and in cloth fabrics. However, efforts to conclude export agreements at the 1953 Leipzig Fair failed because [the industry and GDR authorities] did not adjust [their prices] sufficiently to world market prices. The excessively low producer prices imposed on the industry, in most cases, the 1944 producer prices, are lower than actual production costs., These low prices stifle the incentive to produce marketable bed linen, twilled cottons, and colored shirt flannels.(21) 'C-O-S-F-I-D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Chemicals and FSzels have Fifty trainloads of products of the VEB Walter Ulbricht Leuna Works left the plant during January 1954. The shipments consisted of fertilizer Ported to 2 ' gasoline and diesel fuel. The products of this Primarily 1954 (22) 3 countries in 1953? This number is expected to be inereasedrinex- Seed I The Erfurt [seed industry] is again exporting Great Britain, Denmark, Poland, and other countries, Vegetable seeds are also being delivered to Great Britain, Poland, Hungary, and Czechoslovakia. iP.ht_ Iust The VEB Special Machine Building Factory, Karl-Marx ~Stadt, is the only GDR concern producing machinery for the production of pharmaceuticals. The pro- duction duction program includes machinery pro- pills, etc. Production in 1954 will be raisedtton128 pelves with 1953. In 1953, about 30 as eepo,ted compared Czeoslovakis, [Nosh percent of the production was exported to ].Korea, Rumania, Poland, Chile, Finland i6 , and Switzerland.(16) a The Hungarian export export order association for 3,300 of the wine cooper barrels, trade the Bezirk Halle has liters (each]. received inwhich are to hold ? 300-500 The Ruebsch firm in Seiffen is exporting furniture to the USSR West Germany. Italy, and Italy is to receive 200,000 Deutsche marks, worth of toys frc birge birge area in 1954.(21) m the Erzge- Trade 1952_1 5 In 1952, commodity lists were exchanged between the GDR and West German The GDR then promptly began to impost commodities from West Germany Germany did not license imports from the GDR West commodities amountin to 8 until late in 1 . As But West toles g 5 million VEs (accounting units) co As a result- , precision and optical instruments n, ttconsisting an of emit accumulated awaiting shipment. ' Paper and printed latter amounted to 92 million VEs underTsubaccounts22 and imports from West Germanicals, Germany under these subaccounts amounted VEsGDR e Y anted only to 55 millio.. xPorts to West In consequence of this situation, the GDR had an unfavorable balance of trade with West Germany on 1 January 1953 as follows; 37 million VEs 2.8 , 9- Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 During the first 6 months of 1953, the GDR limited Germany and thus achieved a complete normalization of its imports from West The following is the balance of trade for subaccounts 2 and rY-31 October Subaccount 2 3 for the Deliveries by the CDR Deliveries by West Germany Balance in favor of the GDR 112'3 million VEs 68.8 Subaccount 3 43.5 " Services rendered by the GDR Services rendered by West Germany Balance in favor, of West Germany 18.8 14.8 On 31 October 1953, there was million VEs in favor of the therefOre an over-all balance of trade of 28.7 deducted from the unfa for subaccouuts 2 and 3 ce is .amount Of 39.8 million the unfavorable balance of the GDR ? When this balance CDR of 11.1 million there remains an on 1 January 1953 (in the VE5 on 31 October 1953 trade balance 953 for subaceounts 2 and of the The volume of trade on subaccounts 2 and 3 3 more Y groupssbeeextendedDasproposed repeatedly that trade have been considerably follows: in the following commod_ Decorative Porcelain Pot metal glass 400 Other '0 VEs glassware 250,000 An exchange of onl 250,000 The GDR disposal the disposal [in WestOO,o Vas' worth of these te , although The er Germany] of the dill was authorized upplies Proposed the Was assured through . change of 100 mostly pencils and pencilglead bOppseni sane w contracts of million VEs Teas , in he in the same value. toys for office prevented by West Germany. together, an ex- The following is the balance of trade for subaccounts 1 and 4 1 Jan r7-31 October 1953: Subaccount 1 for the period Deliveries by the GDR Deliveries by West Germany Balance in r..,.,.. _. 20.9 million VEs -Deliveries by the GDR Deliveries by West Germany 66.3 Balance in favor of the GDR 53.3 Thus, there is a 13 subaccounts net balance in favor of 1 and 4. West Germany of 1.9 million VEs on [This would leave a net balance of 13 million VEs on all subaccountson 31 October 1953, compared wit in favor of West Germany million VII in favor of West Germany , on as c accooutse2 andh a net 39.8 balance of 3 on 1 January 1953. Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C --N-F-I_D-E-H-T-I-A-L Source does not indicate whether there was any balance either for or GDR on subaccounts 1 and 4 on 1 January 1953. The GDR's against trade,balance amounted t 4 the o unfavorable interzonal 4.4 million VEs on 30 September 1953?].x' aammi.tte.e to Promote Intra-German Trade At an economic conference held in Berlin on tion of the GDR National. Council of the Rational Front, a C Intra-German Trade was organized. It will consist of 1 ~ittee to Promote many, 2 from West Berlin, and 10 from the GDR. 5 members from West Ger- More than 600 representatives of the West German and West Berlin economy, as well as of the GDR economy, attended the economic conference. made the following proposals: The conference 1? Expansion of intra-German trade to one billion VEs in each direction, as suggested by the GDR. ?? Acceptance of the proposal. million VEs. of the Magistrat of Greater Berlin [East] for a. trade agreement for the two East and West Berlin in the amount of 200 3. Increase of the swing balance of the GDR under subaccount 2 interzonal trade agreement from 40 to 60 million YEs. of the k? Long-term payme t n are terms for West German deliveries to the GDR such as granted by the GDR to West German businessmen. [No further details given.] 5. Establishment of permanent offices of the committee, which will give Prompt counsel on questions of intra-German trade to those who are interested. 6. Regular.consultative evening meetings between DIA and its West German and West Berlin trade partners. 7. Mutual visits of GDR and West German businessmen in the interest of better understanding and closer contact. In addition, the economic conference made a number of proposals concern- ing changes in antra-German trade procedure. These included billing procedures on the part of West Germs Parts by the GDR. ee and the assembly pos iblevto of exhibit GDR ~rther, West German decrees which make it im products [bearing trade marks also used in West GenY) ] a at te to German fairs must be revoked. West Among those attending the conference were Dr Moser,(ihuhec ckhief of the Geeellkchaft abet Osthandel (Company for Eastern Trade); Dusc the Magistrat of Greater Berlin [East); and Lubbe (?n.), the Hamburg ship owner ), of and shipping firm manager.(23) ' (ihu Trade Between GDR and West German Consumer Coo eratives The VDK (Association for German Consumer Cooperatives [GDR]) has to the GDG) Hamburg, that commodities valued at 25-30 million VEs be exchanged in 1954. In the near future, proposed Purchasing ompeny ar Ge the VDK expects to sell to the GEG of sugar, for which ny of G will deliver fats [West Ge )W3 the VDKB 2t) 3,000 ,000 tons Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 A VDK delegation has arrived in Hamburg to negotiate with the GSG for increased purchases by VDK from GM: million VE '4;v VDK Proposed that it purchase 25-30. sorth of commodities. The two parties had agreed at the [19531 Leipzig Fair that the VDK would Purchase 1.6 million VEs' worth of fish and fish products from GEG. But the West German government reduced this amount to 400,000 VEs.(25) The VDK delegation now negotiating with GEG proposed an agreement for the exchange of 32 million VEs' worth of commodities. GEG stated that it required the consent of the West German government for such an agreement, but that it could give a reply within 2 weeks. It was agreed that a standing commission of the associations of consumer cooperatives in West Germany and the GDR be appointed to deal with all matters of commodity exchanges between the two associations. To alleviate the current difficulties of the GEG in disposing of fish and fish products, the VDK agreed to purchase immediately 1.1 million VEs' worth of fish and fish products.(11) Fourteen members of a black-market ring who smuggled large quantities of 'cra be npput onetrrrous ial in East Berlin. Thepprincp Berlin are oOttWest Berlin driver, and Paul Uwira, trucking firm owner. o Boehler,htruck speed, The members of the ring drove trucks through the zonal barrier at high hout materialstfrom East Berlin, which werelthenrsold tod mTrore a than u) t est Berlin of scrap dealer in Berlin-Kreuzberg.(26) PP fn, Wat Berlin Increased Trade With Underdeveloped Countries The GDR is interested in obtaining raw materials directly from the countries in-which they originate. It must therefore increase its trade with underdevel- oped countries, which, in any case, offer favorable conditions of trade to the GDR. The demand of these countries for machinery and industrial installations has not been met by non-Orbit countries. The underdeveloped countries must tthher forehf ndtrade partners willing to buy their traditional export goods and sell em te The Gto is mithe c pi buy goods they need to build up their national economy. Their cotton, jute, minerals, rubber, fruits, spices, and products. In return, the GDR will export to countries producing these commodities not only machinery, precision and optical instruments, and indus- trial installations, but also equipment such as sewing machines, small motors, and various tools, which are needed by'tht indigenous industries. These countries can also have a more favorable payment Orbit countries than with non-Orbit.-countries. Such arrangementsgarrencontained, for example, in the Soviet and Czechoslovak trade agreements with India. Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 s ould investigate the n these countries and become familiar with GDR must not only sell capital goods to these countries, but must also give technical assists them; (b) the them n nee, and this technical assistance can take such fo tech rmsasdis- g engineers to assemble machinery sold by the GDR su to instruct the native population in the use and maintenance of these and sending technicians to introduce new ' pplying personnel Countries; processes into the industries ofhth machines, its (c) the GDR must improve its supply of spare these machinery; and (d) the payments arrangements granted thetheGDR should be liberalized. This is purchasers are general. short of cash sufficient for large purchases.(27) If this increased tradebetween the GDR and underdeveloped countries is to be wholly succes:fuy, GDR trade Policies must be improved in a number of ways, including the following: (a) the network of GDR trade representatives in these countries must be en_arged, and these representatives economic conditions i h KfA Field Offices In spring 1953, the KfA (Chamber of Foreign Trade) organized field offices in the Bezirke where important export industries are located. These of- fices were to advise producers on export problems and were to coordinate the export activities within industries and between the state forei n-t field of- prises and industries. 6n-trade enter- Thus, the field offices arranged for several enterprises to use the same freight car, when each had a less-than-carload export shipment to the same des- tination. They also managed to locatr scarce)roduction materials for enter- prises producing for export. Experience showed that many of the problems brought offices could best be handled on the Bezirk and Kreislevelsothroug KfA operation operation of producers, foreign-trade enterprises, and the state administration the co- the co- For this reason, the KfA field offices undertook -,he organ, committees for individual industries on a Bezirk level.(28)zation of export EM2 Committees Each export committee will consist of representatives of the vate enterprises in the industry concerned and of a representative from each pri- of the following state administrati and trade : VEBs and pri- DIA, Department of Foreign Exchange and Finance ofetheeS Ger field office, VVB of German Forwarding Enterprises rt (German Bank om competent Bezirk Bezirk councils, and eutra ' the planning departments of the co it was De [was called Derutra (GDR-Soviet TransportationCom- Dany) (Gorman watransfi red to GDR ownership on 1 January 1954; it is called information applies to t Company) throughout this report, even when the representatives trathe (necessary, the committees ma tofliy include epepre) (Office for en y be eofaCo - DBZs, and the State Contracting Cgcys 2nd Each ex oom mittee will have a permanent secretariat located in theoffices of the export KfA field office. Enterprises e?m' compet fA field export of an industry located in a ich noent committee has been organized may xin which committees es for the respective industry through these secretariats. et existing stin - 13 - C-O-N-F-I-D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C -0-ft -F-I -D-E-ft-T-I -A-L The, 'export committees are to have the following tasks: 1. Exploration and opening of. new markets. 2. Improved cooperation between producers and foreign-trade enterprises by means of consultation between these enterprises and representatives of an entire branch of industry. 3? Cooperation between producers and DIAs in the preparation of exhibits at foreign-trade fairs. 4? Improved reporting on markets and prices. 5. The elimination of technical obstacles in foreign trade through con- sultation and cooperation among producers, foreign-trade enterprises, trans- portation enterprises, banks, and the state administration.(28) An export committee for precision instructions and: optics for the Bezirke Gera, Suhl, and Erfurt was organized in Jena on 24 November 3.953. The committee consists of 26-members, of whom 12 represent the VEBs; 7, private industry; and 7, the state agencies. Dr Gottfried Lessing, president of the KfA, and Grosskopf (fnu), chief of the Jena field office of the KfA, were among the speakers at the organization -meeting. Speakers during the discussion pointed out that the industry should have foreign-trade representatives abroad. It was also stated that the assort- ment and quality of the products of the industry must be improved so that these products will regain their former reputation on the world market.?001 The following additional Committee Location Precision instruments and optics Ceramics Chemicals Keyed [musical] instruments Glass Dresden Erfurt Halle Leipzig Ilmenau December 1953 December 1953 December 1953 December 1953 (28,31, 32) Textiles January 1954 (31,32) Machine building Karl-Marx-Stadt Magdeburg 19 January 1954 26 January 1954 Essential oils Leipzig 27 January 1954 Halle (to be established) The GDR industrial ministries are still underestimating the importance of exports committees. Representatives of the HV (Main Administration) for Precision Instruments and Optics of the Ministry of General Machine Building [this ministry was made part of the Ministry of Machine Building on 21 November 1953] were invited to the organizational meeting of the exports committees for precision instruments and optics in Jena and Dresden, but they did not attend. Likewise, no representa- tive of the RV for Glass and Ceramics. attended the organizational meeting of the Export Committee for Ceramics in Erfurt.(32) The organizational meeting of the export committee for textiles in Karl- Marx-Stadt on 19 January 1954 was attended by representatives of the Ministry C-O-N-F-I -D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 50X1-HUM The following customs offices have been established under this regulation: Berlin N 3, Oranienburger Strasse 70 Cottbus, Sandower Bauptstrasse 4 Dresden A 24, Bayerischestrasse [no number given] Erfurt, Mao-Tse-tong-Ring 110 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C-O-N-F-I -D-E-N-T-I -A-L of Finance, the Ministry of Light Industry, and the MAI, Although such matters were discussed as the financing of exports, a bonus system for exports, invest- ments for the replacement of motor vehicles, and better material supply, the representatives of the ministries failed to ti par cipate in the discussion. Apparently, these representatives were nothing more than mere observers for their superiors.(31) VEB German Sea Freight Office DRS (German Sea Freight Office), a small office directly under the authority of the MAI, represents the GDR in all matters involving sea transport. Partic- ularly, it supervises the sea transports of GDR imports and exports and seeks the most favorable rates for these shipments. The growing GDR trade with China was the immediate occasion for the organization of the office. As a result of the GDR's great need for shipping space from China, the Levant countries, and the Black Sea area, the DKS has become an important customer of the world's shipping firms. The DISS far exceeded its 1953 plan for making shipping space for [imported and exported] mass consumption goods available at the proper time. The DISS also obtained considerable savings for the GDR, particularly in rates payable in foreign exchange. The terms of GDR delivery contracts have often been such that the offices of the DES could not be used. This condition is likely to continue during 1954.(33) FOREIGN TRADE PROCEDURES AND CRITICISMS A new procedure has been establishe f ____. _ the d e e export samples, according to a regulation of 14 November 1 f 953? The new regulation became effective 14 November 1953. The AZKW has established the customs offi listed - , . ces name of the appropriate customs office from this list-on-,sheet Now 11ofethergeneral export permit. [Presumably such small Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 C-O-N-F-I-D-E-N-T-I-A-L The central production Machine Building has stated that production the enterprises pMmustt receive eeexp rt orders at an early date to be able to obtain the necessary raw materials. In 1953, factories received export orders for the most part not before the end of the first quarter or in the second quarter. The specifications in many of these orders were found to be unclear. The [former] Ministry of General Machine Building, moreover, found it difficult to obtain a clear picture of the export orders on hand in the factories because the marketing department of the ministry and the DIA did not cooperate. DIA was too late in certifying the individual export orders to the ministry. For this reason, the ministry could not compare the export orders reported by the factories and the orders certified by the DIAS on a continuous basis. The ministry intervened in those enterprises in which the fulfillment of the export plan was threatened. Special working teams were organized, and these overcame the difficulties in most cases. Other measures were taken by the [former] Ministry of General Machine Build- ing on the basis of the decision of the Council of Ministers of 14 September 1953 regarding the fulfillment of the export plan. The production managers and the marketing departments [of the production enterprises) were directed by the central production department to start production on all export orders. These were to be completed by 21 December 1953. The officials of the production enterprises were to determine and analyze the production status of each of these export orders. On the basis of these surveys, measures were to be taken to speed up and facilitate the production of these items. Exchanges of raw materials between plants were undertaken, and the ministry helped in securing raw materials which were lacking. When an enterprise lacked production capacity, a transfer of the export order to another plant was arranged. The DIAs were informed of needed raw-material imports, which had not yet arrived. A system of priorities was established in consultation between the ministry and the various DIAs.(30) Criticisms The export committees [organized in December 1953 and January 1954] made the following suggestions: Gera, Amthorstrasse 11 Halle, Ernst-ICamieth-Strasse [no number given] Karl-Marx-Stadt, Strasse der Nationen 78 Leipzig C 1, Johannisgasse 7 Ludwigslust, at the railroad station. Magdeburg, Praelatenstrasee 5-6.(6) Measures to Fulfill Export Plan 1. The voluminous and time-consuming paperwork required under the exist- ing export procedure should be reduced. -16- C-O-N-F-I-D-E-N-T-I-A-L Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 50X1-HUM 2. The planning system should be more flexible. Planning is insufficiently coordinated and balanced. Production plans must be so elastic that the export contracts concluded by DIA can be fitted into them at a late date. 3. The work of the transportation industry should be improved. Freight cars are often unavailable, and the export commodities are en route too long. 4. The producing enterprises should be informed regularly of market conditions and prices. 5. The producing enterprises should receive foreign technical journals regularly. 6. Imported commodities should be stockpiled to assure steady and even ex- panded production. 7. The work of DIA should be improved, especially in respect to the follow- ing complaints: inquiries are handled too slowly; personnel lack technical knowl- edge and market information; prices are set without regard to the competition. 8. The producing enterprises should appoint foreign representatives and have direct contact with them. 9. Restrictions on foreign travel by representatives of producing enter- prises should be eased. 10. Easier.payment terms should be given, particularly in case of goods sold on credit. U. There should be wider participation in foreign fairs and exhibitions by GDR producers. Exhibitions should be held by individual producers.(32) H. Gaertitz, an official of the Ministry of Light Industry, stated that cooperation between the MAI and the Ministry of Light Industry has consisted of monthly conferences in which representatives of the DIAs, the marketing department, and the technical departments of the Ministry of Light Industry participated. These conferences have been successful and should be continued. Export orders, completion of which was imperiled, were discussed, and the re- presentatives of the two ministries jointly decided on measures to assure the delivery of these export orders on schedule. However, these conferences dealt only with export orders completion of which was not assured. It is necessary that the two ministries cooperate to arrange in advance for the production of export orders. To this end, the DIAs must transmit their export orders to the production enterprises at an early date. In addition, the DIAs should conclude an annual general contract with the Ministry of Light Industry for the entire quantity of light-industry prod- ucts to be exported. Light industry fulfilled its 1953 production program for export goods by 97 percent on 30 November 1953. It is DIA-s fault that it, did not export the same quantity of product manufactured by ].ight industry. The Ministry of Light Industry attributes the following operational faults to the DIAs in their dealings with production enterprises: The DIAs submit their export orders to the production enterprises so late that the latter do not Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 An effort is being made to improve cooperation in 1954. Representatives of the Ministry of Light Industry and of the DIA for Textiles are consulting frequently.(28) GDR industrial enterprises producing for export have complained that they have difficulties because of the following failings in the foreign-trade pro- cedure: 1. There are frequently discrepancies between the provisions of the EA an ththhe EWBS (Export Bill of Lading), particularly respecting the delivery date. facto in the EA for sulansuitslprroddcction schedule on the basis of a delivery be placed in a position where it mustweitherhincur heavy expenses ~ tv igthe order on time, or it must let the EWBS lapse and incur xhersd to deliver obtaining a new one. further delays in n 2. There are often long delays between the time when the producer is first informed of a pending export order and the time the EA is finally sent to him by the DIA. 3. The EA sometimes does not allow the time necessary for production, as the producer had indicated it on the proforma invoice submitted by him in response to the initial inquiry. 4. In other cases, export orders were produced on receipt of the FA; but no EWBS for them ever arrived. As a result, these commodities stayed in ware- houses for months and tied up the operating' funds of the enterprise. ' to be It made suggestedethatithefEA and the EWBS be combined into a single form, original agreement between producer pannddu[fr s g invoice, which is the foreig nn) ] cust customer. GDR foreign trade has also been hurt by delays in the granting of IWBS (Import Bill of Lading) for GDR products returned to the manufacturer for re- pairs and service. Producers of cameras and X-ray equipment, whose repair service competes with that of foreign producers, have been particularly hurt by these delays-04) have the production capacity in the short time before the end of the year to complete the efxport onrders. Export orders submitted he tted by the necessary DIM often lack ccurate speciicatios DIAs fail to furnish once orders have been completed. a shipping papers C-O-N-F-I -D-E-N-T-I -A-L SOURCES 1. Taegliche Rundschau, 16 Feb 54 2. Die Wirtschaft, 19 Feb 54 3. Der Aussenhandel, 8 Dec 53 4. Neue Zeit, 5 Feb 54 5. Taegliche Rundschau, 14 Feb 54 6. Der Aussenhandel, 26 Jan 54 Sanitized Copy Approved for Release 2011/08/31 : CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33.. 34. Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Neues Deutschland, 27 Sep 53 Taegliche Rundschau, 21 Oct 53 Ibid., 19 Dee 53 Ibid., 9 Feb 54 Ibid., 17 Feb 54 Ibid., 13 Nov 53 Ibid., 27 Feb 54 Ibid., 24 Nov 53 Ibid., 2 Dec 53 Ibid., 20.Feb 54 Ibid., 26 Feb 54 Die Wirtschaft, 11 Dee 53 Ibid., 8 Jan 54 Taegliche Rundschau, 26 Nov 53 Die Wirtschaft, 29 Jan 54 Taegliche Rundschau, 4 Mar 54 Die Wirtachaft, 12 Feb 54 Ibid., 5 Feb 54 Neues Deutschland, 13 Feb 54 Taegliche Rundschau, 15 Jan 54 Der Aussenhandel, 16 Feb 54 Ibid., 22 Dec 53 Die Wirtschaft, 20 Nov 53 Der Aussenbandel, 1 Dec 53 Ibid., 2 Feb 54 Die Wirtschaft, 22 Jan 54 Der Aussenhandel, 5 Jan 54 Ibid., 8 Sep 53 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7 Sanitized Copy Approved for Release 2011/08/31: CIA-RDP80-00809A000700200172-7