US-USSR TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00759R000100020008-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: May 10, 2010
• Sequence Number: 8
• Publication Date: January 25, 1985
• Content Type: MEMO

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SECRET/NOFORN
The Director of Central Intelligence
Washington, D.C. 20505
National Intelligence Council
NIC 00422-85
25 January 1985
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
FROM: David B. Low
National Intelligence Officer at Large and
Acting National Intelligence Officer for Economics
SUBJECT: US-USSR Trade (U)
1. At the 24 January 1985 meeting of the SIG-IEP chaired by Secretary
Regan, UnderSecretary of Commerce Lionel Olmer summarized the written
report on the results of the 4th session of the US-USSR Working Group of
Experts held in Moscow on January 8-9, 1985 (report attached). (C)
2. As a result of the meeting in Moscow, the US delegation has
concluded that the conditions necessary to assure a successful US-USSR
Joint Commercial Commission Meeting have been met and recommended to the
SIG-IEP that the US indicate to the Soviet Union a willingness to hold such
a session as soon as practical. (C)
3. The SIG-IEP approved the recommendation, authorizing the Commerce
Department to proceed with a view toward having a JCC Meeting during the
period of April-June 1985. This was approved by Secretary Shultz,
Secretary Baldridge and Assistant Secretary Perle, all of whom were present
at the meeting. The latter cautioned that the US must be careful to
distinquish such discussions on non-strategic trade expansion from the
issue of strategic trade. He stated that he was concerned that the US not
send confusing signals to allies and promote any perception which might
undercut the image of a very strong US resolve to enforce restrictions on
strategic items of trade. Secretaries Shultz, Regan, and Baldridge all
concurred, with Secretary Shultz noting that the message will have to be
outlined in public repeatedly. Secretary Shultz also requested that the
timing of JCC consultations be coordinated with him. (S NF)
David B. Low
Attachment:
As Stated
ON FILE COMMERCE RELEASE INSTRUCTIONS APPLY
SECRET
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SECRET
SUBJECT: Memorandum for the Record on US-USSR Trade
NIO/AL/DL:rr
25 January 1985 NIC 00422-85
Distribution:
Original
- Addressees
1
- DCI/SA/IA
1
- Executive Registry
1
- C/NIC
1
- VC/NIC
1
- NIO/USSR
1
- NIO/EUR
1
- A/NIO/Econ
1
- D/OSOVA
1
- D/OEURA
1
- D/OGI
1
- NIO/AL/DL
/AL/DL Files
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%.-# L. %J I N L. I
REPORT TO THE SIG-IEP
On the Results of the
Fourth Session of the U.S.-U.S.S.R. Working Group of Experts
Moscow, January 8-9, 1985
BACKGROUND
(U) On June 27, 1984, the President announced that as part of
the effort to engage the Soviets in a more constructive dialogue,
the Administration had proposed that preparations begin for a
meeting of the Cabinet-level U.S.-U.S.S.R. Joint Commercial
Commission (JCC). The Soviets were told by Secretary Baldrige'
that we would agree to such a meeting if sufficient common ground
existed for trade expansion and if concrete steps would result
to facilitate an increase in peaceful trade. The Soviets agreed
to a meeting of the Working Group of Experts to explore these
questions.
(S) On December 18, 1984, the SIG-IEP discussed the objectives
for the Working Group Meeting, and on January 4, 1985, in
NSDD 155 the President enumerated the U.S. objectives as being:
o To review the status of overall U.S.-Soviet economic and
commercial relations.
o To discuss present obstacles to our trade relations in an
effort to identify areas in which mutually beneficial non-
strategic trade could be expanded in conformity with present
export control policies.
o To help determine if there are sufficient grounds for a
meeting of the U.S.-U.S.S.R. Joint Commercial Commission.
(S) The President also approved positions to be taken on issues
the Soviets were expected to raise, approved using the meetings
to express serious human rights concerns, and stated that pending
further policy clarification we should not agree to an active
program of trade expansion in oil and gas equipment.
SUMMARY OF RESULTS
(C) The Working Group, chaired on the U.S. side by Commerce Under
Secretary Olmer and on the Soviet side by Deputy Foreign Trade
Minister Sushkov, agreed that the prospects for trade expansion
within present U.S. and Soviet policies were rel~tiv_ely modest,
b
ut o u Tent interest to act upon. Both sides agreed the
trade relationship could not be viewe apart from the overall
bilateral relationship.
(C) The Soviets indicated strong interest in an expansion of
trade with the United States, however limited that might have
to be. The Soviet interest is particularly striking in that the
Soviets remained positive and non-polemical despite the blunt
U.S. statements on the need for human rights improvements as
necessary for any major gains in the relationship.
SECRET
Classified by: Lionel H. Olmer
Declassify on: O.A.D.R.
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CON FmENrI~[
(C) The Working Group identified areas where both sides were
interested in expanding trade. All of these areas are in full
conformity with present U.S. export control policies and other
laws and policies governing bilateral trade. The Working Group
also identified concrete steps which would facilitate growth in
peaceful trade, and which could be announced at a JCC meeting.
(C) Both sides expressed satisfaction with the tone and substance
of the meetings. Both acknowledged that the final decisions on
holding a meeting of the JCC would be made in the respective
capitals after reviewing the results of the Working Group meeting
and considering other relevant factors. Both'also agreed to
recommend that if a JCC meeting were held its agenda should be:
(1) Status and prospects of bilateral trade; (2) Results of the
Working Group of Experts; (3) Opportunities for expansion of
trade, including projects; (4) Business facilitation.
(C) The U.S. delegation believes that the conditions necessary
to assure a successful JCC meeting have been met, and recommends
to the SIG-IEP that the United States indicate to the Soviet
Union a willingness to hold such a meeting as soon as practical.
U.S. VIEWS'
(C) The U.S. delegation made it plain at the outset of the
meetings that our security and foreign policy interests remain
paramount and will continue to set limits to acceptable trade.
The delegation said the U.S. wanted to find areas where trade
could be expanded within the present framework of export control
policies and other laws and policies governing the bilateral
relationship. We were not interested in changing the framework.
(C) The U.S. delegation described three areas: (1) those with
major constraints that had little or no prospect of being
overcome; (2) those with constraints that could be resolved or
reduced considerably; and t3) areas where there were no
constraints. The U.S. view was to recognize the obstacles, but
to take a pragmatic approach of trying to find mutually agreeable
steps in the latter two areas.
(U) The U.S. delegation stressed that the trade relationship
could not change significantly independently of other aspects
of the U.S.-Soviet relationship. In particular, major improve-
ments in the trading relationship would not be possible in the
absence of major progress on human rights. Jackson-Vanik would
not be changed.
(U) We noted the Soviet view that the U.S. had created the
farriers to trade and had to bear unilateral responsibility to
improve the relationship. The U.S. admonished the Soviets that
this view was unrealistic, and that action to move trade forward
would have to come from both sides. The U.S. delegation pointed
to Soviet actions which have removed U.S. companies from bid
lists, have prevented U.S. companies from staging seminars and
trade promotions, and have branded U.S. companies as unreliable
suppliers.
(1(11 I r -o rrt 1 -1 n I
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CO N H DENI L
(U) It was the view of the U.S. delegation that attractive possi-
bilities for a significant increase in trade existed within
present constraints, without any change in framework. The Soviets
were urged to act on some long-standing contract negotiations
and to take a pragmatic approach to identifying additional project
possibilities.
(C) The Soviet delegation believed that a very large increase
in trade could take place if the U.S. would grant MFN and credits,
limit its_exDC~rt controls, and guarantee contract sanctity.
Otherwise, only relatively modest gains would be posse e. The
Soviets expressed disappointment with the firm U.S. position on
Jackson-Vanik and human rights, saying these concerns should be
separate from trade.. (In private conversations, some Soviet
leaders showed more flexibility. Gosbank Chairman Alkhimov, in
particular, said that if good relations were restored with the
United States, 50,000 Jewish emigrees annually would be "no
problem.")
(C) The Soviets accepted the U.S. view that the focus should
be on areas where there were few or no problems, and also agreed
that both sides would have to take trade facilitating steps if
a JCC meeting were to be held. The Soviets said they accepted
the right of the U.S. to control its exports, but it was critical
for any expansion in the relationship to let them know more
precisely what we were willing to sell them. They suggested that
this be discussed on a project-by-project basis.
AREAS FOR POTENTIAL PROJECTS
(C) The Working Group agreed that the basis for discussing
potential projects should be the list of 15 s tonal areas
suggested by the U.S.-U.S.S.R. Trade and Economic Council (USTEC).
The fifteen areas are: food processing, fishing, service
industries, energy, pulp and paper, pollution control, textiles,
land reclamation, materials handling, biotechnology, transporta-
tion, petrochemicals, chemicals, consumer goods, and medical
equipment.
(C) In addressing the energy sector area on the USTEC list, the
U.S. delegation reiterated existing policy on export of oil and
gas equipment and technology to the Soviet Union. Oil and gas
exploration and production equipment, along with a few items of
transmission equipment, require a validated export license and
most of this equipment has a presumption of approval. Virtually
no refining equipment requires a validated license. Oil and aas
technology for exploration and production requires a validated
icense, and there is a presumption of denial. The Soviets
asserted that their energy development plans would proceed with
or without the United States. Sushkov stated that if the U.S.
Government does not endorse the proposed USTEC energy, pollution
control, and recycling exhibit, he will recommend, that plans be
dropped for the exhibit at the !March meeting of the USTEC
executive committee.
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t;u IUENTf.
.C
) On the cther 14 areas, the U.S. delegation indicated that
in most of them there would be few licensing problems, and
projects in many areas could be endorsed. The Working Group
agreed that each side should narrow the list according to its
interests, and that discussion of specific project possibilities
should be. undertaken where there was overlapping interest.
(C) Each side indicated a number of specific actions it wanted
the other to take in the context of a JCC meeting, either seeking
to resolve the issue prior to the JCC or to discuss it at the
JCC.
U.S. List --
1. A joint statement of support for mutually beneficial trade.
- The Soviets agreed, but want the U.S. to make the first draft.
2. Put all interested U.S. companies back on bid invitation
lists. The Soviets at first denied they had any policy against
U.S. companies, then admitted that de facto there was such a
practice and agreed to take visible steps to end the practice.
(This is the mayor barrier to non-strategic trade expansion, in
the view of U.S. companies.)
3. Provide Trade Ministry guidance to all Soviet Foreign Trade
Organizations to treat U.S. companies equally with other Western
suppliers. The Soviets agreed to do this in a visible manner.
4. Sign some contracts that have been under negotiation with
American companies for a long time. The Soviets agreed in
principle, but refused to specify which contracts.
5. Develop specific new project proposals in mutually-
agreeable areas. The Soviets agreed.
6. Allow resumption of seminars and other promotions at the
U.S. Commercial Office in Moscow. The Soviets agreed, and also
offered to pay half the cost of setting up an entity to promote
added business by small U.S. companies.
Soviet List --
1. Terminate furskins embargo. The U.S. delegation expressed
willingness to discuss options with Congress if the Soviets act
to improve U.S. business prospects in the U.S.S.R.
2. Restore Aeroflot landing rights. U.S. stressed the need
to reach an understanding on North Pacific air safety measures
so that discussions on other aspects of our civil aviation
relationship might be resumed between our experts. U.S. also
noted that eventual agreement would have to contain full balance
of economic concessions for U.S. carriers.
1 i.
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3. Conclude new tax protocol. U.S. indicated readiness to
move forward on unsigned 1981 protocol, but noted changes may
have to be made.
4. Eliminate nickel prohibition. U.S. noted recent Treasury
offer as good basis for resolution, and invited Soviets to
respond.
5. Antidumping, especially action on potash. U.S. agreed to
discuss, but noted limited administrative flexibility.
6. Supplier Reliability. U.S. agreed to discuss the matter
if a JCC were held.
7. MFN and Credits. U.S. agreed to put it on agenda, stressing
that there would be no change in U.S. policy. Soviets noted firm
U.S. position, but want it on JCC agenda anyway.
8. Renew maritime negotiations. U.S. agreed to discuss
maritime matters, but in the traditional maritime framework and
noting that U.S. maritime industry interests would have to be
addressed.
(U) This report has been reviewed and cleared by all members
of the U.S. delegation, which included representatives of the
Departments,of State, Treasury and Commerce, the U.S. Trade
Representative and our Embassy in Moscow.
JAN 18 1935
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