Firming the Soviet Connection

On the flat banks of the Moscow River three miles from Red Square, workmen are excavating the site for a Soviet version of Manhattan's towering World Trade Center. Scheduled for partial completion in 1978, the $110 million complex, which is largely financed with U.S. money, will contain offices for 1,200 employees, plus 625 apartments, 600 hotel rooms, restaurants, a swimming pool, convention hall and shopping mall. All are supposed to provide aid and comfort to American and other foreign businessmen visiting or living in Moscow while doing business with the Soviets.

In the past two weeks the chances that the trade center really will attract many U.S. tenants have dramatically improved. U.S. trade with the Soviet Union has been declining this year, to an expected total of $1.1 billion, from $1.4 billion in 1973. But now breakthroughs on two key issues have increased the prospect that U.S.-Soviet trade will flourish, perhaps rising to $2 billion annually by 1980.

In early October, the White House at the last minute blocked a $500 million sale of U.S. grain to the Soviet Union. Then Washington relented and announced that it would approve a Soviet purchase of about $380 million worth, apparently in the belief that the scaled-down deal would not siphon enough grain out of the U.S. to worsen American food-price inflation.

New Deal. Even more important, President Ford and Democratic Senator Henry Jackson of Washington have agreed, with Moscow's quiet cooperation, on a deal that should clear the way for congressional passage of an omnibus U.S. trade bill (TIME, Oct. 28).

Under the agreement, the U.S. will extend to the Soviet Union and six other Communist nations in Eastern Europe* the same tariff terms that most other nations get in the U.S. market. American tariffs on imports of Soviet goods, such as linens and plywood, will be lowered from about 40% to 10% or less. But those concessions can be revoked unless the Communist countries permit freer emigration by dissident minorities, notably Soviet Jews. Moscow may let out 60,000 emigrants of all kinds each year, almost twice the current rate.

Passage of the omnibus bill should spur U.S. trade with many nations outside the Communist bloc as well. Ever since key provisions of the 1962 Trade Expansion Act expired seven years ago, the White House has lacked the authority to negotiate tariff changes. The new bill grants the President unprecedented power to raise or lower tariffs and negotiate other trade concessions. Its enactment should vitalize the round of trade-reform bargaining among scores of nations that officially began in Tokyo in September 1973 but that has been marking time until the U.S. Administration got the authority to conclude new agreements.

The implications of the Ford-Jackson-Kremlin understanding for U.S.-Soviet relations are still more momentous. The agreement indicates that increased trade, or the prospect of it, really can soften dug-in political positions. The Russian press so far has made no mention whatever of Soviet commitments to increased emigration by Jews and other minorities; instead, it contends that, in the words of one Tass correspondent, U.S. businessmen "believe that trade with the Soviet Union can be an important factor in solving present American economic difficulties." The truth seems to be that Soviet leaders are so anxious for American trade and technology that they have made the unparalleled decision to submit to outside monitoring of their own domestic affairs.

Bigger Crops. U.S. firms are already helping the Russians to solve consumer, technological and agricultural problems. Pepsico is dispensing to thirsty Russians 200,000 bottles of soft drinks each day from a plant in Novorossisk. Coca-Cola may attempt to ease the critical Soviet food shortage by building vast greenhouses where crops will be grown in artificial climates. The U.S. design firm Raymond Loewy/William Snaith, Inc. is teaching the often stodgy Soviets to add contemporary touches to many of their products, including autos.

Even so, the U.S. lags far behind Western Europe in opening the Communist market. Western Europe's trade with the Soviet Union and Eastern Europe is more than ten times greater than that of the U.S. (see chart). Many Soviet citizens now eat spaghetti and breadsticks made in Italian-built factories, drive Fiat-designed autos called Zhigulis, and wear clothes made from fibers spun in a British-designed plant. Soon they will watch color television developed by France's Thomson Co. The West Germans plan to help build a $1 billion steel complex at Kursk, where the Wehrmacht, ironically, suffered defeat in the biggest tank battle of World War II. When West German Chancellor Helmut Schmidt visits Moscow this week, he and Soviet Communist Party Chief Leonid Brezhnev may discuss plans for a project to build a generating plant in Kaliningrad, on the Baltic, that would supply electricity, carried through East Germany, to West Germany.

IBM, No. American firms often miss out on big Soviet sales for reasons that the omnibus U.S. trade bill would not touch. General Motors has just turned down an offer to build a truck plant in Siberia because the Soviets refused to grant G.M. any role in sales or service of the vehicles to be made there. IBM cannot get Washington clearance to sell the firm's system 370 computer to the Russians because the Pentagon fears that the computers might be used by the Soviets for military purposes.

International Lawyer Samuel Pisar, a longtime advocate of more U.S.-Soviet trade, believes that the U.S. and U.S.S.R. must formulate a set of principles to spur commercial interchanges. Among other things, Pisar believes that the Soviets must agree to announce plans for grain purchases in advance in order to avoid inflationary disruption of world markets. The agreement on the U.S. trade bill has opened opportunities for businesslike relations between the world's most awesome nuclear powers that for the sake of peace, cannot be allowed to go unexploited.

* Albania, Bulgaria, Czechoslovakia, East Germany, Hungary and Rumania.

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