Red Trade Offensive

President Eisenhower last week warned Congress of the dangers of the U.S.S.R.'s "intensive economic offensive," and Secretary of State Dulles took three opportunities to stress, with deep earnestness, the U.S. determination to meet Russia's threat in aid to underdeveloped lands. Even as they talked, the Soviet Union accented the urgency of the matter by probing energetically for economic openings and weaknesses in South America.

Moscow prepared to receive an official Argentine equipment-buying mission of delegates from the state-owned oil monopoly, the state railways, the government's Coal Board and its Water and Power Board. Said the mission's chief, Under Secretary of Industry Raul On-darts: "We urgently need machinery and capital goods. We do not care where they come from." In Brazil, top government officials re-examined their anti-Red-trade policies; President Juscelino Kubitschek said he knew "what dangers negotiations can lead to," but pointed out that Soviet-bloc countries "offer economic prospects that deserve to be studied."

Adroitly, the new Soviet economic offensive in South America focused on a pair of sensitive issues: U.S. oil policy and U.S. trade and tariff policy.

Oil. In the U.S., private-enterprise development of petroleum has been vastly successful, but Brazil and Argentina have long since adopted the French-Italian pattern of state oil enterprises. Frankly trying to export the private-enterprise concept, Washington has long refused loans to public companies.

This policy left Russia with a comfortable and obvious opening to offer oil-development loans and drilling rigs that the state monopolies now get, for-cash, from the U.S. Soviet government officials and South American Communist leaders met in Moscow in November and plotted a new Russian attempt at trade penetration, starting in Brazil. Nikita Khrushchev himself offered oil-drilling equipment to Brazil.

Trade & Tariffs. U.S. purchases from Latin America poured $4 billion into the area last year/---a sum half again as much as U.S. economic assistance funds for the whole world. But simply because the trade is so large and so vital, minor changes in U.S. tariffs can affect it drastically. The worst-hurt nation currently is Uruguay. Since 1951 U.S. imports from Uruguay have fallen from $102 million a year to about $18 million, mostly because Western sheep raisers in the U.S. got a prohibitive tariff put on Uruguayan wool. Now the Russians, smoothly operating through Dutch importers, have begun buying Uruguay's wool; The Netherlands has become the country's best customer.

Currently worrying half a dozen Latin American countries are proposals before the U.S. Tariff Commission to raise lead and zinc duties, and congressional talk of new tariffs on copper and petroleum.

Help in Sight. Because Soviet-bloc trade with Latin America is still small ($220 million last year) and the trade offensive is still more promise than deed, Washington is keeping cool--but thinking hard about the future. U.S. officials still argue that direct loans to state oil monopolies would be an invitation for other governments to expropriate' U.S.-owned oil companies all over the world. "I am convinced of the advantages of free, competitive enterprise in the oil business," explains a high presidential adviser. "But when my judgment is asked in Washington, I shall say that I believe we could make loans to Brazil and Argentina in such a way as to help them out." The probable way: general loans to governments that would allow them to divert other funds to the state oil companies.

As for tariffs, President Eisenhower last week asked for a five-year extension of the U.S. trade agreements act "with broadened authority to negotiate." In the specific case of lead and zinc tariffs, which within the law Ike could raise, Washington heard that the White House has quietly shelved its intention to give the U.S. mining industry that kind of relief. But the general level of tariffs is mainly up to Congress, struggling with its conscience and its lobbies.

/- U.S. business firms also make a whopping parallel contribution to Latin American treasuries. Department of Commerce figures show that U.S.-owned companies in 1955 paid at least $1.1 billion in taxes, or 15% of all Latin American government revenues.

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