TRADE: Those Soviet Buyers

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In U.S.-Soviet trade, grain deals get all the attention, and are provoking a red-hot debate about the wisdom of allowing the U.S.S.R. untrammeled access to American food supplies (see THE NATION). But almost unnoticed amid the hullabaloo, another type of American-Soviet commerce has been expanding far more smoothly and consistently. In an effort to modernize and expand their inefficient economy, the Soviets are turning to the U.S. for machines and technology. As a result, American sales of nonagricultural goods to the Soviet Union are likely to top $550 million this year, v. $309 million in 1974 and only $131 million in 1971.

The rapid rise is occurring despite the lack of any political agreement between the two superpowers on trade. Last January Moscow abrogated a trade-expansion treaty that would have lowered American tariffs on Soviet goods and made Soviet buyers of U.S. products eligible for long-term credits from the Export-Import Bank. Reason: Congress attached an amendment, promoted by Democratic Presidential Hopeful Henry ("Scoop") Jackson, that required the U.S.S.R. to allow freer emigration of minorities, especially Jews. At the time, the Soviets grumbled that they would get along without U.S. imports rather than allow such interference in their internal affairs. As recently as three months ago, Communist Party Chief Leonid Brezhnev greeted a U.S. delegation headed by Treasury Secretary William Simon by asking: "Which one of you blocked the trade agreement?"

Self-interest. Brezhnev, however, accompanied his words with a hearty clap on Simon's back—and other Soviet officials have shown in more concrete ways that they will not allow their anger to stand in the way of their self-interest. Since January, they have been signing deals with U.S. companies, both well-known and obscure. Some samples: a $50 million order to Allis-Chalmers Corp. for an iron-ore pelletizing plant, a $47 million contract with Gould Inc. for a plant to produce heavy-duty engine bearings, a $21 million order for Caterpillar bulldozers and a $7 million contract with General Instrument Corp. for technical assistance and equipment for manufacturing hand-held calculators. On the consumer front, the Soviets have placed a $23 million order with Intertex International for machinery to make synthetic furs and signed a contract (dollar amount unspecified) with R.J. Reynolds Industries for technical advice on improving the quality of Russian cigarettes and tobacco.

So eager are the Soviets for some American equipment that they are willing to pay hard cash—including almost $200 million expended over the past year just to buy U.S. earth-moving machinery. In other instances, the Soviets have suggested to U.S. sellers that a deal be made through an American subsidiary in a country where low-interest government-guaranteed credit is readily available. For example, the Gleason Works of Rochester, N.Y., arranged credits for a $14 million sale of machine tools and production technology through its Belgian subsidiary.