Foreign Relations of the United States, 1969–1976, Volume XXIX, Eastern Europe; Eastern Mediterranean, 1969–1972

2. Circular Airgram From the Department of State to All Diplomatic and Consular Posts¹

Washington, March 26, 1969.

SUBJECT

• US Trade Policy Towards Eastern Europe and the Soviet Union

REF

• State 236888²

CA–1888

1. Recent reporting from certain Eastern European missions suggests desirability of a restatement of US policy on trade with Soviet Union and other countries of Eastern Europe in aftermath of invasion of Czechoslovakia.

2. (This message does not apply to trade with Yugoslavia which, although a Communist country, is not a Warsaw Pact member and is treated as a Western European country for US export control purposes.)

3. Existing US export controls are still more extensive than those exercised by our COCOM³ and NATO partners. 1968 ban in Export-Import Bank Act on Export-Import Bank participation in financing trade with Eastern Europe effectively places American firms well behind Western European and Japanese firms in doing business with countries of Eastern Europe. Eastern European countries are still handicapped in competing on an equal basis with other suppliers to the US market because of US legislation denying most-favored-nation tariff treatment to all Communist countries other than Poland and Yugoslavia.

4. The foregoing restraints on trade by US with Eastern Europe, together with those applied by Eastern European countries themselves, make substantial expansion of US trade relations with these countries unlikely. The maintenance of additional restrictive measures or guidelines imposed to reflect US concern at role of Warsaw Pact countries in invasion of Czechoslovakia last year would seem to have little additional impact in absence of parallel restraints by our allies.

5. By this time it is clear that other Western countries are not curtailing their trade with Eastern Europe or significantly altering pre-invasion policies on extension of credits. Under these circumstances, we have concluded that existing US trade control procedures are adequate to cover US political or strategic interests respecting East-West trade. Important new business is therefore no longer being discouraged. Export license applications are being processed in accordance with established procedures. Proposed export transactions for which licenses are sought are considered on their individual merits and licensed or denied according to their implications for the national security and welfare. In assessing these implications, Department of Commerce, in conjunction with Departments of State and Defense and other interested agencies, takes into account prevailing security and foreign policy considerations as well as the governmentʼs long range trade policy.

6. Businesmen who wish to trade with the Soviet Union and the other countries of Eastern Europe are being told that it is consistent with US policy to carry on such trade so long as it is conducted in accordance with applicable rules and regulations, but are cautioned that individual transactions are subjected to the consideration alluded to above. This policy is based on the view that trade can have a positive impact on Eastern European societies. It can also improve somewhat the climate of relations between Eastern European countries and the US, can help reduce their economic dependence on the USSR, and in turn lessen the economic integration of the Communist countries. In case of USSR, trade is one of the means available to us for the development of some useful non-official relations with that country.

7. To the extent that Czechoslovakia is able to maintain some independence and continues to seek to expand its trade with US, we believe we should respond as fully as possible.

8. With respect to Romania, its continuing independent foreign policy, including its non-involvement in the Czechoslovak invasion and its strong condemnation of this Warsaw Pact action, warrant continued special treatment in trade matters where strategic considerations are not overriding.

9. Missions may draw as appropriate on the foregoing in responding to inquiries by government officials or businessmen. It should be borne in mind, however, that the USG is reviewing its East-West trade policy. Modifications, if any, will be communicated to Missions promptly. This instruction supersedes previous guidance.

Rogers

1. Source: National Archives, RG 59, Central Files 1967–69, FT 1 EUR E–US. Confidential. Drafted by Robert B. Wright (E/ITP/EWT), on March 22; cleared by Toon, Carl W. Schmidt (EUR/EE), James L. Colbert (EUR/SOV), David G. Shaw (EUR/RPE), Ralph H. Graner (E/OT/GCP), Stanley Nehmer, Deputy Assistant Secretary of Commerce for Resources, and Mountain, Department of Defense; and approved by Joseph Greenwald (E).
2. Document 1.
3. Documentation on U.S. policy with regard to COCOM and East-West trade is in Foreign Relations, 1969–1976, volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972, Documents 288–387.