Document VI-22 Address by the Assistant Secretary of State for Economic Affairs (Solomon) Before the Salesmanship Club of Dallas, Tex., October 21, 1965 (Excerpt)01 The Question of Increased Let me turn briefly to the question of increased peaceful trade with the Soviet Union itself. It may be argued that facilitating peaceful trade with the small countries of Eastern Europe is clearly in our interest because it encourages national independence and liberalization but that these considerations do not apply with equal force to peaceful trade with the U.S.S.R., the most powerful Communist country in the world. One question is whether increased United States trade with the U.S.S.R would strengthen its power to mount foreign offensives and provide it with added resources for subversion abroad. This question deserves the most careful and thoughtful consideration. In the time that remains to me today I want to suggest some of the considerations that bear on it in the hope that these will provoke you, as the leaders of the business community in Texas, to undertake a balanced analysis of the issue. To begin with, we must recognize that the Soviet Union has a powerful military-industrial base, an advanced weapons technology and military production capability. The Soviet Union could not procure from us or our allies, nor would it permit itself to become dependent on us or our allies for, equipment related to weapons development. What it would seek in increased trade is civilian goods. But it would have to pay for such goods in real resources, gold or other commodities of real value to us. This would be a fair exchange. Why should we assume that we I would lose out in such trade? Nor are we the sole source of civilian goods of a kind of interest to the Soviet Union, whether it is wheat or machinery. Our allies in Western Europe and in the Western 1 Department of State Bulletin, Nov. 8, 1965, pp. 739-746. Hemisphere are prepared to make these goods available if the Soviet Union can afford to buy them. Is it the Soviet Union or our own farmers, businessmen, and workers that are disadvantaged when we put impediments in the way of such peaceful trade? What about advanced technology, advanced industrial plants, and our latest data that may not be available elsewhere? By and large, our business firms protect their advanced technology in which they have made heavy investment in research and development; they may be willing to exchange their technology for what they consider equivalent advanced technology from other firms. Whether such an exchange would be feasible with the Soviet Union deserves further examination, but if it were to result, it would mean that we had gained something of equivalent value from certain advanced Soviet industrial processes. Let me remind you that our export licensing controls would prevent the sale of advanced technology that has military implications. There is another consideration. The presence of American factories, machinery, and equipment in the Soviet Union surely can be a means of demonstrating the efficiency and excellence of American products and American technology. This is not a factor that works to our disadvantage. It works rather to the disadvantage of Soviet doctrine by demonstrating the superiority of the Western system of economic organization. We know that the U.S.S.R. is in the midst of a period of critical self-examination insofar as its economic institutions are concerned. The steady exposure of Soviet industry and agriculture to the hard facts of economic life internally and in world markets has led Soviet policymakers to think more and more critically about problems of attempting to run their economy efficiently and improve the quality of their products. Their dilemma is that they want some of the benefits of Western private initiative and risk-taking combined with centralized political control and planning. But a large and complex industrial economy like the Soviet Union cannot be tightly controlled at the top and expect to enjoy the full benefits of initiative and experimentation at the levels below. The web of controls in which managers of enterprises are ensnared inhibits innovation and experimentation. Periodically the Soviet rulers restructure the system, shift decisionmaking to the regions, then back again to the center. They are presently in the throes of such reorganization. This reorganization has new and interesting features. For example, it gives a greater role to profits, and it permits managers of enterprises some discretion in wage payments and incentives to labor. The Soviet reforms do not go so far as a number of reforms introduced recently in Eastern European countries, but they are a hesitant first step in the right direction. The Soviet rate of growth has been slowing down since 1960 while that of the United States has been picking up. During the 1960-65 period the Soviet rate of growth of gross national product has averaged about 4.3 percent a year, roughly the same as our own. Thus, during the past 5 years the Soviets have made no further progress in narrowing the relative gap between their economy and our own. In fact, because the United States GNP is approximately twice that of the U.S.S.R., the absolute gap has widened by roughly $60 billion. At present rates of projection the Soviets by 1970 will be further from matching the United States economically than at any time since Khrushchev first began talking about "catching up" with us. The fear has been expressed that peaceful trade might increase Soviet resources for mischief abroad. But if the Soviets must pay with real resources for what they buy abroad, whether from the production of goods or gold, they are not getting something for nothing. They are giving up hard-pressed resources for what they gain. There is no question here of long-term credits to the Soviet Union. The question I am examining is two-way trade on a commercial basis, not trade through aid credits. I think we might also give consideration to the implications of Soviet trade in civilian goods for its effect on the allocation of Soviet resources internally. If Soviet trade in peaceful goods with the United States could in fact develop substan 62 See supra. The Soviet Union tially in volume and value, the development would be a most hopeful one. It would reflect a concern of the Soviet regime with internal civilian needs rather than the singleminded and obsessive concentration of resources on military development, a concentration that has characterized Soviet economic planning over the years and has left the ordinary Soviet citizen with a narrow choice of low-quality and relatively high-cost consumer goods and long queues and waiting lists even to procure many of these. We should welcome such a development if it could come to pass. When consumers have not enjoyed goods sturdy in quality, aesthetic in design, and available in quantity and variety, they accept drabness as a way of life. But if these goods do become available to them as a regular matter, it becomes difficult then for the regime to reverse direction without generating widespread and unhealthy dissatisfaction. Luxury becomes necessity, and, barring emergency situations, resources committed to civilian requirements tend to continue to be so committed. One last consideration I would like to put forward is the influence that increased trade with the Soviet Union might have in encouraging the adoption by the U.S.S.R. of Western standards of international behavior, observance of rules of arbitration, protection of industrial property and copyrights, limitations on freedom to engage in disruptive trade practices. If the U.S.S.R. I wanted to increase its trade with the West substantially, it would have to bring its trade practices into line with those of the established world trading community. Only this summer the Soviet Union adhered to the International Patent Convention." And it would have to open up its economy to commercial representatives, facilitate entry and travel. This normalization of behavior in economic intercourse would not, of course, entail a reorientation in political thinking and political objec 63 The Soviet Union's accession became effective July 1, 1965. An article by Harold A. Levin, Chief of the International Business Practices Division, Department of State, concerning the Soviet Union's action is printed in the Department of State Bulletin, May 17, 1965, pp. 758-761. The text of the Convention revising the Convention of the Union of Paris of Mar. 20, 1883, as revised, for the protection of industrial property, done at Lisbon, Oct. 31, 1958, appears in TIAS 4931; 13 UST 1. [Doc. VI-221 575 tives. Trade is not so revolutionary an instrument as that. But is it unreasonable to believe that small steps toward more normal intercourse might over the longer term have a cumulative beneficial effect in reducing the aggressive thrust of Soviet policy? I have tried this afternoon to put forward food for thought, not a specific agenda for action. My primary concern is that whatever policies we do adopt be taken on the basis of a full and rational examination of their implications and following a full exchange between an informed citizenry and their representatives and public servants in Washington. the Kremlin decided in the early 1960's to stay their hand in Europe and see what could be done elsewhere to ascertain the area in which their writ might run. They worked hard, despite their lack of success, to pick up large pieces of Africa and Asia set free by the old European empires. They aimed much of their verbal fire at targets outside of Western Europe at the United States, at the leaders of newly independent countries, and at their own obstreperous and unruly allies in Peiping. But if the Soviets are aiming their talk over the heads of Western Europe, they are still aiming an enormous proportion of their actual military strength at targets in Western Europe. Anybody who gets a peek at what our intelligence services know about Soviet military technology is instantly cured of any tendencies to euphoria. The Soviets are continuing to invest very large chunks of their own controlled economy in developing, producing, and deploying more intercontinental ballistic missiles in harder sites; they are working on an antimissile defense; they are constructing an impressive fleet of submarines and other instruments of naval warfare; and they have aimed medium-range ballistic missiles at every relevant target they can find in Western Europe. We cannot forget that this dynamic technology is at the service of Communist politics; that is, at the service of a party which thinks it has a monopoly of truth and wishes it had a monopoly of power. As long as this is true, the rest of us are compelled to maintain an effective deterrent at all levels of armed conflict which are in the range of Soviet capabilities. That does not require us to behave as though the Soviet Union were about to pounce. But we cannot know what the Soviets intend to do with their very large and modern armed forces. Aggressive intent without capability would not be particularly dangerous; but a known capability combined with ambitious intent is not to be trifled with. It takes years to make significant changes in military capabilitiesbut military intentions can be changed in a minute or days or hours. So with confidence and prudence we maintain the strength to main tain the peace until alternative guarantees are available. And while we hope and work hard-for more cooperative relations with the Soviet Union, the reality is that, as of this week, the détente is less a reality of political settlement than a hope for future progress based on the maintenance of Atlantic strength. As of this week, the Soviets still stand pat against any form of verified disarmament, still freeze a division of Germany and harass the access to Berlin, and still keep trying to drive wedges between the members of the North Atlantic alliance by the familiar alternating current of belligerent noises and beguiling nostrums. Document VI-24 Replies Made by the Director of the Office of News (McCloskey), Department of State, to Questions Asked at a News Conference, November 2, 1965 (Excerpts)0 Soviet Unwillingness To Implement Part of the United States-Soviet Cultural Exchange Program On the 28th of October, our Embassy in Moscow was informed by the State Committee for Cultural Relations with Foreign Countries that the Soviet Government is not prepared to discuss the appearance of the Robert Wagner Chorale as the 5th American attraction under the performing arts section of the Agreement." Nor are they willing to discuss any other such attractions. The Soviet Government also indiIcated it would not commit itself to receive the American Education Delegation in Science and Mathematics which was due to go to the Soviet Union on November 15th. They also said they would send no further individual artists and will therefore not receive a number of individual American artists under the current Agreement. TO Department of State files. 71 Text of the U.S.-Soviet Cultural Exchange Agreement, signed Feb. 22, 1964, is printed in American Foreign Policy: Current Documents, 1964, pp. 648–663. |