East-West Trade and Technology Transfer: Toward a Policy of Nonmilitary Free Trade

EAST-WEST TRADE AND TECHNOLOGY. TRANSFER: TOWARD A POLICY OF NONMILITARY FREE TRADE Gary K. Bertsch U 'nited States policy governing East-West trade and technology transfer is in need of a major overhaul. The policies of both the Carter and Reagan administrations have been spasmodic, ad hoc, and incoherent . These policies have aggravated tensions with our adversaries and strained relations with our allies. Lamenting the impact ofour policies on the latter, French Minister of Foreign Affairs Claude Cheysson stated in 1982 that a "progressive divorce is taking place." The American inclination toward a policy of economic warfare has resulted in precipitous declines in U.S. exports to the East, loss ofcredibility globally as a reliable trade partner, and worsening East-West and West-West political relations . Unless we come to a better understanding of the realities surrounding East-West trade and technology transfer, and develop a more rational policy based upon realistic assumptions and principles, we will continue to damage our economic and political relationships with allies and adversaries alike. the first reality deserving consideration concerns the Soviet economic situation. Like the world's other advanced industrial economies, the Soviet Union is experiencing significant economic difficulties. It is Gary K. Bertsch is Sandy Beaver Professor of Political Science at the University of Georgia. The recipient of numerous research awards, including a recent NATO fellowship, Professor Bertsch has conducted research on East-West trade and technology transfer in the United States, Western Europe, and the Soviet Union. He is the author of numerous books and monographs, including EastWest Strategic Trade, COCOM and the Atlantic Alliance (Paris: The Atlantic Institute for International Affairs, 1983) and coeditor of and contributor to National Security and Technology Transfer: The Strategic Dimensions of East-West Trade (Boulder: Westview Press, 1983). 93 94 SAIS REVIEW nowhere near, however, the economic collapse predicted in some circles in the United States. Nor is it likely to lose its overall strength, or suffer a sudden and sustained decline in economic growth. Even the generally pessimistic forecasts of the Central Intelligence Agency (cia) call attention to impressive strengths in the Soviet economic system. The cia, among others, recognizes the Soviet economy's great size, its large and increasingly well trained workforce, and its impressive level of capital assets and natural resources. The Soviet Union is believed to have 40 percent of the world's proved reserves of natural gas and iron ore in addition to the world's largest reserves of manganese, nickel, lead molybdenum, mercury, and antimony. With the great wealth in human, capital, and material resources enjoyed by the Soviet Union, the cia recognizes that the ability of its economy to remain viable in the absence of imports is much greater than that of most, possibly all, other industrialized economies. It cannot be easily influenced by crude attempts at economic leverage through embargoes or other sanctions. The cia and other qualified observers, nevertheless, have also called attention to weaknesses in the Soviet economy. As a result of poor harvests, declining increments to the labor force, and increasing difficulties in extracting and transporting energy and raw materials, the economy has suffered declining growth rates over the last few decades and especially since 1978. With tightening demographic, investment, and resource constraints, the overcentralized Soviet system and traditional Stalinist formula of lavish inputs are no longer doing thejob. Continuing and significant difficulties in agriculture, shortages and bottlenecks in the steel industry (especially involving high-quality products), snarls and disruptions involving transportation, shortages in the production of construction materials (for example, cement), and depletion of fuel and power supplies are presenting significant economic challenges to the Soviet leaders. No one is more aware of this than First Party Secretary Konstantin Chernenko. Although he and other Soviet leaders know that trade with the West may be of some help in addressing these problems, they are correct in concluding that American trade and technology are of marginal assistance. Even in the area of agricultural and grain trade— their greatest dependency—the Soviets have shown that they can get along with limited U.S. supplies by reducing feed use, drawing down their grain stocks, and by purchasing additional grain from U.S. competitors . Accordingly, the...