East-West Trade and D

1
East-West Trade and Détente

• 28 February 2005
• Juhana Aunesluoma
• University of Helsinki
• tel. [phone]
• email. juhana.aunesluoma_at_helsinki.fi
• www.valt.helsinki.fi/staff/jauneslu

2
Economy and international relations why bother?

• what are international relations about?
• international economic system
• economic interdependence and security
• connected?

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Todays lecture

• economic matters in the CSCE
• developments in East-West trade
• Western economic warfare
• economic issues as a part of détente
• US, Soviet and European views

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CSCE I Basket (Security in Europe) principles

• 1 sovereign equality, respect for the rights
  inherent in sovereignty
• 2 refraining from the threat or use of force
• 3 inviolability of frontiers
• 4 territorial integrity of states
• 5 peaceful settlement of disputes

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I Basket principles

• 6 non-intervention in internal affairs
• 7 respect for human rights and fundamental
  freedoms, including the freedom for thought,
  conscience, religion or belief
• 8 equal rights and self-determination of peoples
• 9 cooperation among states
• 10 fulfilment in good faith obligations under
  international law

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CSCE III Basket (Co-operation in Humanitarian
and Other Fields)

• 1 human contacts
• 2 information
• 3 culture
• 4 education

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CSCE II Basket

• 1 commercial exchanges
• business contacts and facilities
• economic and commercial information
• marketing
• 2 industrial co-operation and projects of common
  interest
• 3 provisions concerning trade and industrial
  co-operation
• harmonization of standards
• arbitration
• specific bilateral arrangements
• 4 science and technology, 5 environment, 6 other
  areas (tourism, migration)

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Economic statecraft

• economic restrictions imposed for the sake of
  national security
• strategic embargo
• purpose is to limit the opponents military
  capability
• measures to influence the opponents
  decision-making
• sanctions
• leverage
• linkage
• long-term economic warfare/détente
• enourage/discourage trade
• purpose is to create long-lasting changes in the
  opponent

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East-West trade 1917-1945

• effects of the First World War and 1917 Bolshevik
  revolution
• 1935 US-SU trade agreement
• MFN status
• 1938 high water mark
• effects of the Second World War
• Lend-Lease Program
• wartime destruction and post-war reconstruction
  needs

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Early cold war1946-1953

• US economic containment policy
• 1948 control program for US technology and
  commodity exports
• 1949 Export Control Act
• 1950 China embargo (-1971)
• 1951 Trade Agreements Extension Act
• together with allies
• 1949 Coordinating Committee (COCOM)
• Soviet policies 1940s
• redirection of satellites economies
• Soviet-led integration
• effects on East-West trade
• 1950-53 rapid decline allround

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Economic Cold War 1954-1969

• US-Europe disagreements
• European openings mid-1950s onwards
• bilateral trade agreements with East European
  countries on the basis of MFN
• credits
• revisions of COCOM listed commodities
• US maintained a more extensive list
• changes in US policy differentiation
• Soviet policies
• 1950s attempts to increase trade in Europe
• 1958 Khruschev letter to Eisenhower
• effects on trade
• recovery and expansion (Europe)
• remains on low level (US)

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The Economy of Détente

• Europe intensified economic East-West
  interaction
• new US policy
• Kissinger Our strategy was to use trade
  concessions as a political instrument, witholding
  them when Soviet conduct was adventurous and
  granting them in measured doses when the Soviets
  behaved cooperatively
• 1969 Export Administration Act
• 1971 end of China embargo

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economy of détente

• 1972 US-Soviet negotiations
• agreements (trade, credits, facilities)
• problems for Nixon-Kissinger policy
• Jackson-Vanik Amendment 1973
• 1975 Soviet Union rejects 1972 agreement
• effects on trade
• 1969-1980 boom
• 1980-1989 stagnation, differentiated development

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II basket in the CSCE process

• East bloc interest greater in principle
• but demands were modest
• material benefits also for the West
• practical issues
• links to III basket issues
• reflected the contemporary East-West trade boom
• comprehensive notion of security
• North-South (Europe) dimension as well as
  East-West dimension

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II basket problems

• abstract principles symbolic value limited
• comparisons with III basket
• contracts and further official agreements
  required to achieve the stated ends
• existing bilateral and multilateral agreements
  and institutions
• GATT, MFN-status, bilateral trade agreements...
• Nixon-Kissinger economic engagement policy in
  trouble

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Epilogue after 1975

• a new life for United Nations Economic Commission
  for Europe (est. 1947) in the follow-up process
• advances in practical issues
• wider conception of security benefits of
  interdependence
• 1980s economic realities

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Selected reading

• John J. Maresca To Helsinki (1985)
• Gunnar Adler Karlsson Western Economic Warfare
  1947-1967 (1968)
• Michael Mastanduno Economic Containment. CoCom
  and the Politics of East-West Trade (1992)
• David Baldwin Economic Statecraft (1985)
• Angela Stent From Embargo to Ostpolitik. The
  Political Economy of West German-Soviet Relations
  1955-1980 (1981)

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Peoples democracies trade with Western Europe
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US trade with the Soviet Union 1950-1983 (million
)
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US trade with the Soviet Union 1950-1969 (million
)
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US trade with the Soviet Union 1970-1983 (million
)
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US exports to Soviet Union 1971-1982 (million )
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US imports from Soviet Union 1971-1982 (million )
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EC trade with Eastern Europe 1958-1983 (million
ECU)
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East German-West German trade 1950-1983 (million
clearing units)
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Exports to East Europe and USSR in of total
exports 1969-1982
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Importance of Eastern exports for Mannesmann A.G.
in 1970-1982
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FRG-USSR trade 1970-1983 (million DM)