CIA SUPPORT FOR US GOVERNMENT POLICY ON EAST-WEST TRADE RELATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01495R000800060036-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 12, 2016
• Document Release Date: November 30, 2001
• Sequence Number: 36
• Publication Date: July 1, 1974
• Content Type: MEMO

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July 1974
SUBJECT: CIA Support for US Government Policy on East-
West Trade Relations
The bulk of CIA support on East-West trade matters is
.provided by CIA's Office of Economic Research. The nature of
the support ranges from the provision of statistics, to intelligence
support in the trade control arena, to the writing of broad back-
ground papers on trade-related matters.
The direct recipients of the support include middle-level
government officials concerned with East-West trade, cabinet
members, Congressional staff members, and committees of the
Congress. In all cases we have tried to provide facts and analyses
based on our long-standing research on the economies of the USSR,
Eastern Europe, and the PRC. A review of the principal topics
and channels of CIA support since the beginning of 1972 will give
a sound appreciation of the Agency's activities in providing intel-
ligence support on East-West trade policy issues.
The Subject Matter
Soviet, East European, and Chinese trade statistics are
incomplete and information on balances of payments is almost non-
existent. Therefore, the Office of Economic Research has spent
a good deal of time in reconstruction of the trade and financial
information that is necessary for policy discussions. In building
up the trade accounts we have had to trace the international
borrowing of Bloc countries, putting us in a position to assess
the net indebtedness of these countries to the West. At the same
time we have had to estimate Soviet gold production, using all
available sources of intelligence, since the USSR's gold position
is one of its most closely-guarded national secrets.
In addition to following the broad outlines of Bloc trade,
we have paid particular attention in the past 2-1/2 years to trade
in machinery, farm products, and oil. We attempt to identify all
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major contracts for the purchase of Western equipment and follow
them through completion. To the extent possible, we try to be
informed about the progress of negotiations for the sale of Western
machinery to the USSR, Eastern Europe, and China. This effort
requires the research and accumulated experience of international
trade specialists, country specialists, and experts in particular
industrial sectors.
On the basis of continuing research on agricultural and
consumption trends in Bloc countries, the Agency periodically
assesses harvest prospects and compares them with domestic
requirements. We then project international trade in grain and
other agricultural products, taking into account our incomplete
knowledge of domestic stocks and the intentions of Bloc leaders
witn regard to consumption levels.
The Agency has maintained a sustained effort on the petroleum
industries of Bloc countries, analyzing trends in both trade and
domestic consumption. In 1972 and 1973 we focused on the proposed
long-term cooperative ventures involving Siberian oil and gas.
Our particular concern was to derive cost and revenue schedules
for the projects.
Aside from the research directly related to the substance of
East-West trade, the Agency has been engaged during the past year in
a study of the impact of detente-inspired trade and technology transfer
on the Soviet economy. This work has focused on: (a) the present
and future channels of technology transfer resulting from increased
trade and bilateral scientific and technical cooperation, (b) the
major Soviet priorities in this area, (c) the impact of technology
transfer, and (d) the likely effects in the future.
We are continuing to refine our assessments of the importance
of the economic-technical side of detente--for Eastern Europe and
China as well as for the USSR. At the same time, we were asked this
spring to extend the inquiry to cover the political aspects of East-
West economic relations--the extent and durability of leadership
commitment to these relations, the potential for the development of
interest groups interested in preserving economic ties, and the
deterioration in economic relations.
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CIA also supports US policy makers in the trade controls area.
We serve in an advisory capacity with the Advisory Committee on
Export Policy (ACEP) and the Economic Defense Advisory Committee
(EDAC). Upon request, we provide information to the other member
agencies on (a) the activities of enterprises that are designated as
end-users in requests for exceptions to export controls, (b) the state-
of-the-art in the production of strategic commodities in Bloc and non-
Bloc countries, and (c) illegal diversions of strategic goods to un-
authorized end users or illicit deliveries to Bloc countries of controlled
commodities.
CIA routinely solicits information from a number of sources on
the diversion of embargoed high technology items in support of US
officials concerned with trade controls. The diversions of interest
include: illegal shipments from the US to Communist countries,
whether directly or through third countries; legal shipments to Com-
munist countries that are subsequently diverted (physically) from an
authorized end-user facility to one that was not authorized; on-site
diversion from an authorized end-use of equipment legally acquired.
Generally, information on diversion is hard to come by because of the
strict secrecy prevailing in Communist countries and the extreme
reluctance to admit foreigners to their research and production
facilities.
When exceptions are requested for the export of communications
and recording equipment or related technology, CIA participation is
more active than its usual advisory role. In these cases the Agency's
concern is to identify exports that could seriously hinder foreign
intelligence collection by the US or enhance Bloc intelligence capabilities.
The Consumers
CIA provides intelligence support on East-West trade policy
iosues through several channels:
(a) Oral and written briefings are provided upon
request to high level government officials before their
trips to the USSR. Briefing books are frequently pre-
pared, for example, when cabinet-level and other senior
officials travel abroad.
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(b) Support is provided to some of the working groups
established to carry out bilateral scientific and technical
exchanges. Our briefings describe the level of progress
in certain industrial sectors as well as in agricultural and
science policy.
(c) The Agency also provides short oral or written
answers to specific questions. Most of this kind of support
in the past few years has been forwarded to the Council on
International Economic Policy, the National Security Council,
or officials (usually at the Deputy Assistant Secretary level)
in Commerce, State, Treasury, and Agriculture.
(d) The Agency participates in interagency studies on
East-West trade subjects. Usually, our submissions deal
with the balance of payments position of Bloc countries,
trade prospects, Western exports of high technology, and
proposed joint ventures. In most of these studies we are
represented on the drafting committees and participate in
the discussions leading to the published paper.
(e) We also publish intelligence memorandums and
reports on numerous topics bearing on East-West trade
These papers, which reflect most of the research material
that may have been prepared for special briefings or for
individual customers, are sent to the people in government
who we think have a professional interest in East-West trade
topics. But they are also given a special distribution to
officials at the under secretary, deputy assistant secretary,
or office chief level if they have a direct concern with East-
West trade policy.
The offices in this special dissemination list include the Council
on Economic Policy, the Council on International Economic Policy, the
National Security Council staff, the President's Special Representative
for Trade Negotiations, the Export-Import Bank, and the Office of
Management and Budgeting. On occasion, these papers have also been
sent to senior members of the National Security Council Staff.
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CIA economic reports are also disseminated to State (the Bureau
of Economic and Business Affairs, the Bureau of Intelligence and
Research, the Bureau of European Affairs, and--for papers on technology
transfer--the Bureau of International Scientific and Technological
Affairs); Treasury (the Special Assistant to the Secretary for National
Security and the Office of the Assistant Secretary for International
Affairs); Commerce (Bureau of East-West Trade and Bureau of Inter-
national Commerce); Agriculture (Assistant Secretary for International
.Affairs and Commodity Programs and many of the research and reporting
divisions); and Defense (Office of International Security Affairs) .
The briefings and published reports transmit CIA's analysis of
East-West trade issues to specialists or to high-level officials on the
eve of conferences concerned with East-West trade issues. Other highly
placed government officials receive short summaries of developments in
Bloc trade and commercial negotiations in CIA's Economic. Intelligence
vveekly and daily intelligence publications.
Finally, some of the most comprehensive CIA analysis of East-
West trade issues has appeared in successive publications of the Joint
Economic Committee of Congress. Agency analysts contributed four trade-
related articles to People's Republic of China: An Economic Assessment
(l 72) and seven such articles to Soviet Economic Prospects for the
Seventies (1973). This summer the joint Economic Committee is publishing
Reorientation and Commercial Relations of the Economies of Eastern Europe.
All of the four CIA articles in this volume treat East-West trade questions
to greater or lesser extent. In addition, we have briefed a number of
Congressional and Congressional staff members on trade issues. Since
1971, these briefings have centered mainly on Bloc acquisitions of high
technology items and the grain trade between the US and the USSR and
China.
Distribution:
Original & 1 - Mr. John E. Milgate, GAO
1 - Director/OER (_: -ction Office)
1 - OLC H0
DDI (File: GE )
1 - DDI Chrono
1 - ADDI Chrono
/- = STATINTL
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Mr. John E. Milgate
MEMORANDUM FOR: Associate Director,
International Division
General Accounting Office
Attached is the unclassified characteriza-
tion of CIA's role in providing economic intel-
ligence to support policy makers. This is the
statement I-promised you in my memorandum
of 23 July 1974.
STATINTL
Paul V. Walsh /
Associate Deputy Director
for Intelligence
Attachment 26 July 1974
(DATE)
FORM I AUGN54 10 I RELACES FORM 10-101'
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