1. COUNCIL OF MUTUAL ECONOMIC ASSISTANCE (CEMA): PRICING PROCEDURE 2. CEMA SESSION IN PRAGUE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00246A052400490001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 22, 2016
• Document Release Date: August 23, 2010
• Sequence Number: 1
• Publication Date: January 26, 1960
• Content Type: REPORT

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INFORMATION REPORT I N FORMATION REPORT
CENTRAL INTELLIGENCE AGENCY
This material contains information affecting the National Defense of the United states within the meaning of the iaspionage Laws, Title
18, U.S.C. Secs. 793 and 794, the transmission, or revelation of which in any manner to an unauthorised person L prohibited by law.
S-E-C-R-E-T
COUNTRY Poland/Czechoslovakia/Soviet Bloc REPORT
SUBJECT I. Council of Mutual Economic DATE DISTR.
Assistance (CEMA): Pricing Procedure 1 6 JAN 198Q
2. CEMA Session in Prague NO. PAGES 1
DATE OF
INFO.
PLACE &
DATE ACQ.
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report containing information on
the Council of Mutual Economic Assistance (CEMA) which is concerned,
for the most part, with a review of pricing procedures for intra-Bloc
foreign trade. The document contains further: a list of the seats of
the various CEMA committees and a special section on the 10th Session
of CEMA, held in Prague in December 195g.
1STATE ARMY X NAVY
(Note: Washington distribution indicated by "
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IN-FORMATION REPORT I N FORMATION REPORT
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continuation of the review of IWVW'Wnder COU
Prague session. 10th in sequence which took place
in december 1958 had following subjects under discussion
- development , specialization and co-operation inproduction
of plestics,man-made fibres, synthetic rubber (foremostly based
on such raw-materials as u tilization of gat from oil-fraationing,
.as well as natural gaz) and mineral fertilizers. As to fertilisers,
it was decided that fart i hers based on nitrates and phosphors
will be developed in every country, whereas phosphates- only in these
count ries which dispose of sufficient minerals.
- specialization and cooperation in production of different diameter
of rolled iron semi-finished products and tubes of ferrous metals
(iron tubes mostly)Specialization in t ibes and rolled iron
was meant t o be closely t#sr~ct11t related to specialisation in
machine industry*
construction of a pipelines which will enable transportation
of Russian oil t o Hungary,East Germany,Poland and Czechoslovakia.
This was meant in it a t urn to be closely connected with-i-44(
planned increased deliveries of Soviet oil into these countries
in t he years 1961-1965. These pipelinea will be constructed
by each country on its own territ ory wit h t his country's own
materials and labor, whereas technical side of this construction wil:
be supervised by Russia.
- in order t o create an efficient basis under the future, more
exact synchrinization of long-term plans tttx1.i---c, on
the same session long-run foreig n trade contracts on deliveries
e- oF'T
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Product
coke
oil
iron orei
cast iron
rolled steel
copper
aluminium
phosphates
rubber
pulp
cotton
to be carried'out in the years 1959-1965,have been signed.
These contract include deliveries of machines&equipment, and raw-
materials such as iron-ore,ferrous and non?Esrrous metals, coke,
fertilizers.
Figures are unfevtunately known only for East Germany and
Czechoslovakisq which signed contracts with the Soviet Union on
spot. As considers other countries and fostmostly'Poland,signing
of major contracts have been postponed till the meeting of chiefs
of appropriate foreign trade enterprises.
For the said countries contracts do represent following figures:
(final deliveries for 1965) {thousands metric tons)
East Germany Czechoslovakia
from the Soviet Union from all From the Soviet Union
sources
1 55o .. ..
4 8oo 5 000 5 25o
... .. 10 loo
1 600
I 56o
32o ... 118
28 19
6e
As far as the problem concern specialization in the machines, comm
itee of experts has established that standarditation shall
eliminate some gauges and standards and reduce the number
of existing types in all CEMA countries in a following way:,
S Fes- .- ZPT
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STG
or or
member countries
machine tools for metal cutting
1893
1333
machine tools other than "
1454
1001P
2340
As considers the role of soviet trade in the total export of
other CEMA countries, some evaluations have been presented in
Prague by the Soviet delegation showing that soviet deliveries
play a following role in foreign trade of other countries
(in percentage) - evolution show also by the delegation on
this table. Percentage established in relation to the total in
each group separately
1950
1957
Machines and equipment
28,6
26,5
Iron ore
65,0
74,7
Cast iron
68,1
84,0
Rolled steel and t ubes
48,9
5795
Non-ferrous metals
26,5
59,4
Oil
47,3
97,1
Oil derivates
62,6
58,6
Saw materials
12,7
63,1
Cotton
79,3
66,7
Grains
77,9
83,9
Last problem treated was prices. Soviet delegation insisted that
prices be included int o contracts. This was opposed diplomatically
SECP-
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by Czechoslovak and East Germany a egation. Poland stood apart.
Reason for these attitudes were following:
Soviet Union represents most important raw-material exporter
and machine importer in these countries. World tendencies in pri
ces for raw materials in comparison wit h machines are since
1938 unfavourable to raw material prices which rise rapidly only
during short-termed peaks of propperity cad es and in the rest of
the time rise more slowly that machine&equfpment prices. So
Soviet delegation wanted to gain on terms of trade.
Germany and Czechoslwvakia were opposing for the same mt)~x
reasons. They were k owever tempted, and this weakened their
resistance, by the idea of having their machine export assured',
unt it 1965 (it is to be noted that thses countries encountered
certain difficulties in export of machines in the last period).
Polish delegation had n o attitude. Coal prices seem at the lowes
possible level actually it would have to fix contract according
these low prices. On the other hand its machine export of
relatively poor quality (except some machine tools for metals
and milling cutters)would have assured export markets.
Soviet delegation mot ioned a proposal, which was accepted, to
create in a short period a system of evaluations for foreign
trade commodities and products, based not upon the world prices,
but comparative costs, wit h roubles (with gold parity) as
basic unit a,. In this way commissions of economists are to be
charged with a task to establish relative and comparative costs,
increased by uniform profit for all countries (based upon inte-
rest rate of about 4-5% plus costs of export i.e. administrative
costs of foreign trade apparatus plus an average of transporta-
tion costs.
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For the time being contracts avs been concluded on the basis of
current world prices, which are meant t o be frozen for the
whole period of contract deliveries. This was called ."a price
of equilibrium" invented in order t o balance the value of
bilateral deliveries. Each contracting party had however a right
to ask officilily t o revise prices wtttifioc during these periods,
other country has , to these cases, a right to increase corres-
pondingly prices for their deliveries. Contracting parties have b
been asked t o resort to t hid clause only in really important
cases and if th one negot iat ions remain unloved, it it
CEMA Foreign Trade Commission which will serve as referee court.
A binding clause was however imposed that no country has
a right to export or import it to product Vie[ to countries
outside CEMA reg ion without the prior. consultation witn the part
ners as to their willingness to accept or supply these deliveriei
This concerns almost all'principal materials and products, a list
of which bas been established.
Meaning of these decisions are following.
assure a gain on terms of trade for the Soviet Unioon
temper a constant tendency twoards supremacy in all foreign
trade questions, shown by East Germany and Czechoslovakia
interwoven foreign exchanges of all CEMA countries in such
a way a s toc approach as much as possible industries
of these countries
leave strings in the hand of Soviet Union for both reasons:
deliveries of vital saw materials assured in a very high
percentage from the side of this country
unit value par for fut ore prices based omen it's.n.,tional
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6 I
weaken teAptations to ty wxxn e e an
enable toi cut off the structure of foreign trade from
the world market fluctuations
through uniform system of prices and unified pattern
of foreig n trader create a bloc with a powerful negotiating
power Id trade wit h the Common Market and Free Trade Asso
undertake common policies toward trade with underdeveloped
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