ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140011-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 20, 2016
• Document Release Date: March 20, 2006
• Sequence Number: 11
• Publication Date: April 26, 1973
• Content Type: REPORT

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CIA No. 7416
26 April 1973
4 ''' ~
Coy No.= J~~
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Japan Remains a Leading Capital Supplier l
US Valves to Be Supplied for Soviet Reactor in Finland 1
? Soviet Car Plant to Be Expanded 1
? United States Faces Competition in Uranium Enrichment 1
Jordan Requests Immediate PL-480 Aid from the United States 2
Soviets Continue to Buy Grain So far this ~1ear the Soviets have
boasght, or are rumored to have co~ttracted for?, nearly S million tons
of grain ivor?th x'600 millioaz.
US Trade Deficit with Canada Persists The US bilateral trade deficit
remained at $1.1 billion last year, but accelerated Canadian
economic grou~tlr will Marrow it in 1973.
Summary of a Recent Publication
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ECONOMIC INTELLIGENCE WEEKLY
Notes
Japan Remains a Leading Capital Supplier
Long-term capital outflows reached $2.2 billion in the first quarter
of 1973 as Japan continues to gain importance as a supplier of international
funds. Outflows in the first quarter equaled nearly one-half the full year
1972 total and consisted of loans to multinational corporations, followed
by purchases of foreign securities and direct investments abroad. Tokyo
is encouraging these outflows as a means to slow down a further buildup
of foreign exchange reserves. (UNCLASSIFIED)
US Valves to Be Supplier' for Soviet Reactor in Finland
Rockwell International has received an order for valves to be used
in the containment vessel of a nuclear power reactor that the USSR is
building in Finland. The Soviet Union cannot produce valves that meet
the strict safety standards demanded by Western countries. Helsinki earlier
decided to buy an ice condenser containment system for the reactor from
the US Westinghouse Company, rather than accept aSoviet-designed system
with less rigorous safety standards. The USSR's inability to provide these
items hampers its competitive position with US firms selling power reactors
to countries that demand strict safety precautions. (UNCLASSIFIED)
Soviet Car Plant to Be Expanded
Construction of new facilities at the Volga automobile plant at
Tol'yatti, planned for 1975-78, may lead to substantial sales by US
producers of automotive machinery. The Soviets will double the capacity
of the plant from 660,000 cars a year to 1.3 million with the Delp of
Fiat of Italy. The TJSSR spent almost $600 million in the West to build
the Tol'yatti plant, including more than $50 million in the United States
for technology, licenses, and machinery. (CONFIDENTIAL)
United States Fac~as Competition in Uranium Enrichment
The United States faces competition in performing uranium enrichment
services for Western countries, a business that is expected to grow from
$61 million in 1972 to $1 billion annually by 1985. A recent increase
in the US price of toll enrichment, as well as proposed changes in contract
terms, have g1VCI1 other potential suppliers hope that they can compete
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in the world market for enrichment services. The USSR is actively seeking
contracts with several West European countries. The French have offered
enrichment services to West Germany, and the German-British-Dutch
centrifuge enrichment group plans to increase by one-third the size of its
initial demonstration plants. For the longer run, the EC Commission recently
re-emphasized the need for an EC enrichment capability in 1980-85 to
provide an assured supply of nuclear fuel for West European nuclear power
plants. (CONFIDENTIAL)
Jordan Requests Immediate PL-480 Aid from the United States
Amman is seeking accelerated deliveries of $10 millioyi in relief grains
to offset emerging domestic shortages resulting from drought damage to
the wheat crop. In some areas of East Jordan the wheat crop is a total
loss. Grain prices have soared more than 30% since mid-January, and lambs
are being slaughtered at a sharply increased rate because of a reduction
in pasture land. (UNCLASSIFIED)
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Soviets Continue to Buy Grain
So far in 1973 the Soviets have bought, or are rumored to have
contracted for, nearly 8 million tons of grain worth some $600 miilion.
Me,nbers of the Canadian Wheat Board are now in Moscow, possibly to
conclude a new grain deal.
Known contracts are with:
? Canada for 1.5 million tons of wheat and 500,000 tons
of barley.
? France for 300,00 tons of feed barley.
? Australia for 300,000 tans of grain sorghum.
? Hungary or Romania for 100,000 tons of corn.
Rumored contracts are with:
? The United States for 5 million tons of corn.
? Argentina for 100,000 tons of corn.
By this time last year, the Soviets had purchased 3.5 million tons of
the total 28 million tons ($1.7 billion) bought in 1972. Unlike last year
when the majority of the contracts were for delivery by the middle of
1973, almost all of the known new contracts are to be delivered by October.
This may mean that the Soviets have not yet received adequate imports
to tide them over to their next harvest. Almost all of the contracts are
for feed grain, reflecting the continuing need of the Soviet livestock program
as well as a desire to take advantage of the relatively ?lower world prices
for feed grains.
The Soviets now have time-chartered enough bulk carriers to enable
them to move a volume of grain during FY 1974 almost equal to the
amount moved during FY 1973. With charter rates likely to remain high,
the Soviets probably feel confident that they will be able to re-let some
of the chartered tonnage to other shippers in the event a bumper crop
eases their import requirements.
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US Trade Deficit with Canada Persists
The US trade deficit with Canada did not narrow last year, because
our economic upswing spurred imports and the Canadian dollar remained
basically undervalued. Labor cost differentials and pressing raw materials
requirements attracted substantial US funds into Canadian manufacturing
and mit-ing. These flows plus the provi,;cial governme;lts' borrowing across
the border kept the US basic balance deficit at about $1 billion.* The United
States ended the year with a small bilateral payments surplus only because
of a sudden increase in short-term capital inflows arising from a switch
in interest rate differentials.
Accelerating Canadian consumer spending and improved price
competitiveness for American goods generated a;i 18% rise in US exports.
Our own high economic growth rate caused imi~orts to increase almost as
fast, however, and the US trade deficit held steady at $ I.1 i,illion -- about
one-fourth of the global US deficit. One result of the Canadians' buying
spree was a slackening growth of Catadian automotive exports and a large
gain in automotive imports. The US deficit in automotive products trade
practically disappeared, whereas $194 million in deficits were incurred in
1970 and in 1971.
Although Canadian exports to the Utlited States will benefit from
February's currency revaluations in Japan and Western Europe, a small
decline in the US bilateral trade deficit is expected if Canada's economic
growth surpasses the US rate, as seems likely. Another large gain in Canadian
automobile purchases is in prospect, for example, and probably will result
in a sizable US surplus in bilateral automotive trade. Nonetheless, the US
basic balance with Canada is unlikely to improve much. Bullish business
conditions in Canada will accelerate requirements for long-term funds and
will further boost US capital exports. (UNCLASSIFIED)
* The figures in this article, which is drawn from a study of Canada's global balance of pa~:nents,
are from Canadian sources. US data on transactions with Canada typically show major differences
fmm the Canadian st+~Hstica. According to US sources, the basic balance deficit with Canada amounted
to $1.5 billion in 1972.
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Publication of Interesi
Eastern Europe: A Record Agricultural Performance in 1972
and Prospects for 1973
(CIA ER IR 73-5, April 1973,
Good agricultural results throughout Eastern Europe in 1972 permitted
a reduction in grain imports, an increase in livestock production, and
improvement in domestic food supplies. Current prospects for the 1973
winter grain harvest are mediocre, and grain imports, mainly from the West,
may have to be increased in FY 1974.
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