The Fragile Foundations of East-West Trade

Courtesy Reuters

If wishing can make it so, the trade between the advanced industrialized countries of the West and the command economies of the East will be growing rapidly in the years ahead. The Soviet Union has made no bones about its strong desire to expand the scope of East-West trade. Businessmen, bureaucrats and politicians in the Western countries have been only a little more equivocal. Some countries have made an occasional effort to screen out technologies with important military application, while the United States has also sought to break down Soviet restrictions on the emigration of Russian Jews. But the West, too, has been on the side of expanded trade.

All told, the drive on both sides for more East-West trade has had its effect. Over the past 15 years, the annual trade of the U.S.S.R. and its COMECON partners with the advanced industrialized countries has managed to grow tenfold from about $3.5 billion to over $35 billion. What I suggest is that if such trade continues to grow at a rapid pace, frictions and obstructions will appear with increasing frequency. Under the existing institutions and rules of the game, increased East-West trade will strain the trading relations among the Western states, and will distribute the economic benefits of trade disproportionately to the East. As these effects become apparent, they will raise serious questions about the value of such trade for the West.

Yet it makes very little sense for the United States or any other country to attempt to suppress the growth of East-West trade. If appropriate rules of the game can be devised and adopted, such trade can bring economic benefits to both sides. Besides, if the United States were to attempt a policy of suppression, the effort would almost surely fail. But before it failed, it would generate major political costs both within the Western community and in relations with the East.

The challenge, therefore, is to devise a set of institutions and procedures that is compatible with a

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